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tv   Bloomberg Technology  Bloomberg  August 30, 2019 5:00pm-6:00pm EDT

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♪ >> i am emily kane in san francisco and this is bloomberg technology. another round of tariffs on china to hit sunday, and how it could impact electronic purchases and the rest of tech. companyta storage transitioning its new model as m&a. ceo to be joined by
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find out their plan. plus, more of my exclusive interview with uber ceo. we will get his take on driver and why he believes we need to redefine gig economy. sunday will mark the next escalation in the trade war between washington and beijing. 15% import taxes on about 100 -- $120 billion of chinese imports. whether either side might be getting ready to blank. chinesescussions with and american friends and china is looking more and more alike we are not any closer. it seems that china has begun to hunker down. , and has waited this out china thinks that they can weather the storm more easily than president trump or americans think they might.
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china is beginning to look for other markets for their exports and they are doing a pretty good job doing that, so it is the longer haul. there is also a sense that it is becoming more political than economic. president trump might be timing potential deals closer to the election rather than earlier. that is the next couple of three weeks. people are starting to adjust to all of the changes. the trouble is there is still in months uncertainty. -- still in immense uncertainty. putting anability of deal together is creating uncertainty. my friends, chinese-americans, tell me in my judgment, we are in this for a few more months. hopefully it will break it, but i do not see any action yet. >> one of them is china of course, but the other is u.s. politics. you have one quite a few elections in your day. this president trump need to
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have some progress, tangible progress, relief and the situation before november 2020 in order to make sure he will be reelected? max: there is no question in my of americanlot farmers and producers certainly of soybeans and other agriculture products, a lot of american companies feel the pain. are adding additional cost to american business and consumers. i think president trump clearly understands that and that is frankly why he is putting so much pressure on the fed chairman. he wants the fed chairman to lower rates more to offset some of the pain that american businesses are facing. much hask he very his eye on of amber 2020. eye the chinese side -- his on november 2020. from the chinese side, they are beginning to think they can weather much more of this.
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endure pain. if you look at chinese history, itter"is a phrase "eat b which basically means, toughen up. back in the old days of the cultural revolution and the great leap forward, when people died of starvation, they ate bitter. the culture is to toughen up, and i think xi will try to weather out president trump as long as he can. both sides want a deal. president trump is trying to get china to push for structural changes, and we all know what forced transfer, technology transfer, et cetera. i think it will be difficult for
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trump to get that result. there'll be a rollback of figffs on both sides, and a leaf on china with the victory of the stock market going up, and i think that will happen. david: we know on sunday, there will be tariffs put on chinese imports, specifically consumer goods. how concerned would you be with the effect on consumers -- could it drive us into recession? max: clearly, consumers will pay more and they will have -- not have the products that they otherwise would. i do not think it is going to push us into recession. but the funny thing about recession, we all know that there will be one at some time, but we do not know what the day is going to be, but i don't think it is around the corner. emily: that was former u.s.
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ambassador to china max baucus speaking to bloomberg's david westin. we will now look at two companies impacted by the trade war. just, elon musk's carmaker won an important tax break it the rising trade tensions. google, and the process of moving manufacturing of its pixel smartphones from china to vietnam. we havess in new york, our bloomberg autos reporter and here in the studio, tom giles. this, i have to start with exemption for tesla from a very significant tax, and this after elon musk was in china this week meeting with local authorities and praiseworthy statements about the building of the tesla factory outside of shanghai. how did this happen? craig: i guess it was a charm offensive on the part of elon
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musk. they havecase that this factory coming on the outskirts of the city. this has been long in the works and was something that was planned before this trade war really started to intensify. it is something that tesla really needed to because if you want to sell in china and be competitive, you must make there. this is a nice little sweetener to the idea that they are going to be able to make their cars more affordable in that market by building locally and it is already the case that electric vehicles are exempt from this purchase tax if you make that electrical vehicle in the market, and china is getting a jump on that by enabling tesla to get this break before they even start production, and a break for the model s and model x which they will not be making in china anytime soon. emily: this means that tesla could be up to $14,000 cheaper
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if you are buying in china thanks to the exemption. china has threatened to put a u.s.-made cars in retaliation, but thatw has not happened yet. would tesla be exempt? craig: that is still to be determined. it is hard to imagine that china would offer an exemption to tesla specifically on import taxes because they have not carved out anyone american carmaker up to this point. they have also not carved out any exemption for the job and automakers that make suvs down in the south and and are exporting vehicles china. they have been an unfortunate casualty with the trade war between u.s. and china, and you have german car companies that are getting significantly hit as a result of the s collating
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tariffs.calating in this risk, it is really with tesla resulting in having to increase prices, this may be take some of the pressure off of them. emily: has you mentioned, plan to buildad a cars in china to avoid situations like this. tom, you have google moving pixel production to vietnam out of china. we do not know necessarily how large pixel production is in china, it is certainly not the iphone. what do we know about the plans? tom: not everybody is getting the exemption that tesla did, right? google has been over the last several months shifting production. we broke the news in june that they were taking production of the server hard war, motherboards out of china into places like taiwan. we knew they were looking for it. we have talked to people close
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to them who told us, it is upon us to find alternatives. now we see from the other reports that now the pixel will move into vietnam. it makes total sense. this trade war is causing everyone who manufactures in china to fundamentally rethink their supply chain and think about, is this the best place, is this going to remain low cost. even if this trade war gets resolved, longer-term, you have to have a really hard questions about whether this is the smartest place to be making your goods. emily: and president trump's tweets where he ordered american companies to find alternatives to china and yet, the companies that are a member of the council, most of them are committed to china and have no long-term plans tod what -- to do what google is doing here. extrat, apple doing some
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mentoring with production in india, apple's manufacturing company foxconn making some 's in india, does this -- lay thes this foundation for production in india? one of our reporters saw as they were experimenting with iphone productions there, and eventually, beyond there. apple is in a difficult place. they have demonstrated publicly, we are committed to china. we want to move more production of certain things to china. they have a very delicate balancing act to do. on the other hand, you have foxconn saying if apple needed to a could move everything out of china. not exactly a statement we are
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hearing from tim cook. it is a very delicate dance. emily: much to continue to follow, especially to the next few days ahead of the tariffs a potentially going into effect. bloomberg's tom giles, and craig trudell, thank you. coming up, the u.s. unleashes a cyber attack on iran, that is next. if you like bloomberg news, you can listen on bloomberg.com and bloomberg app. this is bloomberg. ♪
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♪ emily: it looks like even the man who created twitter is not immune to hackers. ownter ceo jack dorsey twitter account sent out a string of offensive two weeks containings
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swearwords, racist comments posted over the afternoon. andter confirmed the hack said, we are aware that jack was compromised. they started deleting the tweets after the messages went viral for more than 20 minutes. speaking of embarrassing hacks, for the second time in under a month, google hacking and research teams have revealed that what happens on your iphone does not always stay on your iphone. they did it thursday. basically, simply visiting a small number of websites could have left iphone user susceptible to the breach. that could possibly have affected thousands of users a week. thise let apple know of vulnerability months ago, apple updated its operating system less than a week later. apparently, it has been patched.
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but google has only now revealed the vulnerability existed at all. to discuss this and plenty more and cyber threats, we have chief strategy officerbut google here, and are bloomberg cybersecurity reporter. so give me your take on this apple versus google situation. what exact we happened? -- what exactly happened? >> what happened here is what we call a day vulnerability. hackersility exists and are aware of that vulnerability before any patch exists to close it. that vulnerability opened up with the iphone platform for any attacks. it could gain access which could be escalated to have full access to the whole device. malware like this could then get access to imessages, photos, locations, and can do all sorts of damage, all the way from deleting data, extortion of the
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user, as well as running a full espionage attack similar to what we saw about a month ago coming from the telco side, we now see the possibility going from the device itself. emily: it is interesting that google told apple about this privately and they had time to patch it, but still made it public. and embarrass them. which does not seem so white hat . what is your take? >> what is interesting about this one and what we ask is, is there anything that can be left behind? in this attacker, it seems the possibility exists which is concerning for users and for users to understand, no matter which device they are using, there are going to be vulnerabilities, there are going to be places where they may not be necessarily safe going into and to be smarter about where they are using their devices and
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how they are getting access. emily: do you believe there is something disingenuous about apple's privacy marketing and the billboard saying what happens on your iphone stays on your iphone when they cannot guarantee that? approach, apple has taken an approach of keeping a close and fully integrated technology stack which did help them to improve the platform, but it is fair to say that no platform is fully saf wheel -- fully safe. we need to assume that if it it can it is hackable, be breached, and has one abilities. emily: i want to get your take on another cyber story percolating today. news about a secret cyber attack by the united states on iran in fromto prevent them
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targeting oil tankers and ships going through the persian gulf. tell us a little more about what happened here. think, when we look at this type of attack, going back to the event that led to that, we had a drone that was shot down by iran, and an airstrike that was about to be launched by the u.s. which was turned down by trump. instead of that, a full cyber attack took place and that cyberattack actually attacked the critical infrastructure of iran that holds information fort routing, routes tankers as well as financial information for those tankers. used at this information to be able to target and plan attacks on tankers.
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what they actually did is completely a race and -- completely erase and wipe that infrastructure. those devices are still trying noteboot themselves and getting back to full functionality. but what we are seeing is a turning point in 2019 in warfare where cyberattacks are taking and fully stage integrating into how nationstates are looking at driving an attack campaign. we have not seen this before the same way we are seeing it now. what we will see as more and more of that. ol carmel, and our other guests, thank you. coming up, the pentagon awards another billion dollar contract without much controversy or it so it seems.
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we will discuss. this is bloomberg. ♪
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♪ emily: the second-biggest pentagon cloud deal has been awarded and so far, it is free from the controversy surrounding the biggest such a deal. from general dynamics to provide microsoft cloud-based software. office software. microsoft itself did not bid on this contract. closelyou have been following the controversial jedi contract which microsoft and amazon are still in contention for. tell us how this additional contract fits in. deal: this is a separate that was a lot less controversial than the jet icloud contract. -- jedi cloud contract. in this deal, the pentagon was looking for things like a word
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processor and spreadsheets. and microsoft was widely seen as the front-runner and perhaps the only contender to offer those kinds of tools for that project and like you said, it was vendors pitching microsoft product tools to sell to the government. whetheralk to us about or not this then affects the award of jedi. does this make microsoft a more or less likely pick or is it truly separate? naomi: it is completely separate. this particular procurement was run separately by a different group of people with the defense department and the gsa. what it does do is it helps the pentagon politically. the defense department has been accused by company like oracle which was eliminated from the jedi bidding competition that they design a contract was overly favorable for amazon.
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this is a way for the pentagon to say, we always said we would use multiple cloud vendors for multiple projects. look at this project, we are planning to use microsoft. if it ends up being that the jedi contract ends up going to amazon, this is a way for the pentagon to say we are playing fair. emily: amazon has been the front runner for the jedi contract, but president trump has asked that the process be investigated by which that contract is awarded, so where does the jedi contract stands now? naomi: it is in limbo. president trump has questioned whether the contract was competitively bid. the new defense secretary has said that he is ordering a review of the procurement process because we have heard so many complaints. meanwhile, the defense department's inspector general
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is investigating potential conflicts of interest surrounding former defense department employees that had relationships with amazon, and oracle just said that they were planning to appeal their lawsuits, challenging the contract terms. and of course, president trump would always wait in. things are in limbo. emily: i know you will continue to follow the trail and see what happens and bring us any news you have. bloomberg's naomi nix. -- i data i service company and how it is faring with the ceo at enterprise m&a. this is bloomberg. ♪
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emily: this is bloomberg technology. shares of enterprise cloud computing company nutanix shorted as much as 29% after posting fourth-quarter results that beat expectations. the biggest one-day gain since going public in 2017. 6. it helps businesses modernize their data center by combining their needs into a single package. the company gave its first forecast for the full fiscal year, projecting 19% growth. it transitions to a subscription model. joining us to discuss is the ceo. so, shares are way down from
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therir high a year ago but you had a big pot after these results -- pop after these results. what is it do you think investors are not getting about the long-term story? guest: the first years were about delivering innovation where customers were. we are doing infrastructure. the next 10 years is to take the customers where they need to be which is cloud. in the last two years, we want to prepare for the era of cloud to rearchitect the business model. customers applauded. from software to prescription which is even more bite-size infrastructure than ever before. we are asking, what is going on? i think it is the transition of the better job cleaning. emily: that might involve some pain internally. how are you navigating that transition? dheeraj: a big part of this is looking at the history of other companies that went through the transition.
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i learned a lot about transitions. microsoft is another. ptc. so many companies have gone through it. now what makes it harder for us, we had to go from hardware to software and software to subscription. never before in the history of i.t. has any company done this transition. emily: how long will it take? dheeraj: a couple of years, i would say. typically, it takes four years. once you get out of it, you are ready for the future which is cloud. emily: vmware did two huge deals. it certainly feels like whenever that kind of dealmaking happens, a chain of deals follows. what is your strategy? dheeraj: our strategy is the focus on ourselves and customers. at the end of the day, they have done some chunky deals. we think we can do a lot of that with open source and do a good job of remaking enterprise grid possible. emily: doesn't that turn up the
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competition for you guys? dheeraj: it does but at the same time it doesn't because they are coming from a position of strength. they come on the position of strength from the installed base. we come from a disgruntled installed base. the same time, we make things much simpler than any other company in our space. emily: how do you plan to become more profitable? twdheeraj: people confuse profitability with what we do. we have a lot of revenue that sits on a balance sheet. secondly, i think what investors are really see is why do you continue to invest? we are investing in the future of new products and commercial business. an amazing enterprise business and a core platform. we need to continue to invest for the next years. emily: would you consider buying a software company or acquiring other targets yourself in order to accelerate that transition away from hardware? dheeraj: what we have done in the last year of acquisitions is
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really good stuff. we have done things around cloud. if we can deliver in the next two years, we can have some large businesses in hand. emily: we should not expect you a? do any m& dheeraj: we will evaluate but our hands are full right now. making sure we are doing an amazing job on the transition and deliver on the acquisitions the last 12 to 18 months. emily: we are in the middle of a trade war. markets are volatile. a lot of geopolitical and macro economic uncertainty. how do you think that will impact trends in the enterprise market in general over the next year? dheeraj: some computing will actually shift as manufacturing shifts. we have to build agile infrastructure. emily: shift where to where? dheeraj: maybe from china to other countries. maybe southeast asia, india. india is trying to. some shift will happen. the question is how agile and these companies be?
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a lot of manufacturing needs to be morea gile. 5g is coming. the fact things have become smaller, need to become more secure. emily: we can sort of imagine how much work it takes to move a physical supply chain from one country to another, but how difficult is it to move the computing from one country to another? dheeraj: really hard if you do it with hardware which is one of the last 30 years of innovation was. if you do it with software, automation, you can do better. emily: are your clients making those decisions right now? are they changing course? dheeraj: we are seeing some large manufacturing companies really look at displacing things. there is some of that happening. we have what we call our robo business, our edge business. we see a lot of edge happening. a big part of that is really a concentrated place can you sell this. emily: you are saying moving from potentially china to
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dispersed across many other -- dheeraj: what happened 20 years ago when people moved away from u.s. and europe to china is probably going to happen from china to other countries. emily: does the trade war impact your business, the decisions you are making? dheeraj: in many ways, it is helpful because people are looking more dispersion in the cloud. we still have a centralized control plane. how to get the economies on the cloud. emily: how does the next year, given all of this uncertainty, look like? dheeraj: we are planning quarter to quarter. we have to go to our own macro subscription. as we go through our own macro, we are being more methodical in the way we should plan. we have to do quarter to quarter because everything is more agile and bite-size. emily: does that make it harder to think about the long-term vision? the job of the ceo, thinking short-term and long-term. dheeraj: it is the paradox. we are investing long-term but we have to be mindful about the
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short-term. emily: we will be watching how you navigate that text transition. nutanix ceo, thank you so much for stopping by. coming up, a california bill is threatening to checkup that gig economy. how companies are responding, next. this is bloomberg. ♪
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youtube has agreed to pay $150 million to resolve allegations that it violated child privacy laws. the settlement and ftc probe into whether youtube broke a law
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that makes it illegal to collect information on children under 13 and disclose it to others without parental permission. the ftc and google declined to comment. more now for my exclusive conversation with uber ceo. it has been two years since the former expedia executive took over the reins at uber. i spoke to him about the company's evolution as well its future, including plans for international expansion. guest: part of our business has the fight for money. if they are not deserving money, they are not going to get it. internally, there is lots of creative disruption, and if one part of our business is not carrying their own weight, we will pull back. we pulled back out of china. we turned a $2 billion investment in cash into what can be a 10 plus billion dollar stake in didi, a very big business in china as well. we are end to end looking to build a business.
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we are looking to build a business the right way. but if something is not working, we believe we have demonstrated the financial discipline to make the right call at the right time. emily: driver protests are not unusual. when we last visited, there was a driver protests outside. pete buttigieg was out there with them. he says gig is another word for jobs which means you are worker and you ought to be protected as a worker. there is legislation that would force companies like uber that rely on contract drivers and delivery people to make them full-time. why shouldn't they be? dara: they don't want to be full-time. some do. more than half of our drivers in the u.s. for example drive less than 10 hours with us a week. right now, california has a historic opportunity. we are at the table. we are having these discussions and we want to get to solutions. we are offering $21 minimum an hour when you are driving on the
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platform. we are offering benefits and we are offering a voice as far as what, how you are going to be treated going forward. $21 an hour compared to $12 an hour minimum wage. this is real money and these are real rights. and you get the flex ability that every single uber driver or courier wants because they can come into the market when they want to or out. this is a historic opportunity to revolutionize the gig economy. i don't think gig is a type of work. to say there is only one way to work and everybody needs to be full-time, etc., i don't think that is correct because it takes away flex ability and flex ability is something all of our drivers like. emily: can you give them flexibly and give drivers and riders safety at the same time? dara: if the legislature works in the interests of making something happen, absolutely. you know that we are making very significant investments in
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safety as far as the safety center, tracking your ride, etc. we believe we are the leader in safety as far as transportation goes in the world and we will continue to invest very aggressively. emily: as the stock is down, drivers are picketing outside, the press is writing about helium balloons, how do you stay focused on the long-term? dara: you put your head down and you work and you know this is a once in a generation company that is going to change how people access opportunity and how people move. the work we are doing is really important. everyone is going to look at the short-term prices. part of being a global company -- people have worked really hard and equity is a representation of their work. i think the people here understand that if they keep innovating, if they keep working hard, the rewards will come. you cannot control the timing, but you can control the outcome. emily: my exclusive conversation there with uber ceo dara khosrowshahi. he believes the driver should
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remain contractors and has joined other gig economy companies to step up that fight. uber along with lift and door -- pledged on thursday a $90 million ballot measure to ensure they don't have to reclassify the california workers as employees. california lawmakers have been weighing a bill which designates workers as employees if the work falls within the company's usual business. it is poised to go to the governor next month if it clears the senate. joining us to discuss, josh idols and. explain the latest developments because there is a lot of support in this legislature for legislation that would force companies to make these workers full-time. josh: that is right. these companies are putting in a combined $90 million behind this potential ballot measure strategy. that is a real show of force and a real show of concern. we have seen these gig companies
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since the state supreme court ruling that set off this ruling, that set off this controversy, first trying to get relief from the governor, then from lawmakers. going to try to make a deal with union leaders that would have support from the legislature could protect them from having to reclassify their drivers as employees. companies are still trying to get a deal. they are still trying to get something to happen in the legislature that would mean they don't have to reclassify workers as employees. that would involve instead extending them other perks and benefits. these companies see that may not happen. that would. 5, codify and expand the application of the state supreme court ruling that the companies did not like could instead become law and be signed by the governor. they are gearing up to be ready to go to the ballot in response. emily: we've got statements from
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three of these companies. uber saying our proposal would dramatically improve the status quo and protect the flesh ibility.-- flex lyft saying we remain focused on reaching a deal and confident about bringing this issue to voters if necessary. and this from doordash -- we are committed to a legislative solution that would protect the rights of workers and working as an independent contractor. and to provide new benefits and protections to them. tell us more about what's at stake here. you talk to drivers, delivery people. the vast majority of them do not think they are getting paid enough, but do they really want to be full-time? josh: you hear all kinds of things from people. the truth is being full-time or part-time is not the same distinction as being an employee or contractor under the law.
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there are various people who are part-time employees, but more broadly, there is this trend in the u.s. towards what some call the fishery of employment. more and more people are creating wealth for a company that sets rules for them without being considered that company's employees. that business model is at stake here. california, besides being the home of many of these companies, is a crucial market and a bellwether that will be looked to as presidential candidates and others debate what should happen in the gig economy. and should there be accommodation of these new models? should some of these models have to adjust to accommodate existing laws or new laws to extend some of the protection that historically have been tied to a particular definition of employment? we have seen 2020 presidential candidates weighing in on this legislation. we have seen these companies in sec filings referenced the
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threat that they would have to make a major change to their business model if they are not able to get the kind of compromise they are looking for. emily: what does this mean beyond california? josh: already, the week after the court ruling that set off this controversy, bernie sanders last year introduced a bill that would apply a similar to federal labor law. if you are not doing business, if you are not doing work outside the usual course of a company's business, you are not an independent contractor. if these companies are able to say that california itself backed away from and changed that test, then that will be a useful talking point for them in discussing whether that should happen at the federal level or other states. emily: all right, josh eidelson, continuing to cover all of these workers issues. thank you so much for that additional context. still ahead, first the operator became a robot and now the
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internet has fought replacing customer service representatives. we will look at those creating the automated answerers, next. this is bloomberg. ♪ erg. ♪
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emily: an illinois class action lawsuit alleges amazon deceives customers by allowing the sale of thousands of recalled and mislabeled comments -- product on its site. it claims amazon were misrepresented the quality of its products and has an injunction requiring amazon to remove recalled products. amazon is facing several suits by groups alleging serious injuries from its products. well, fashion designer's, interior designers, graphic designers. now there is also the chat box designer. aki ito looks at one company creating these automated tools that are now in almost every corner of the internet. ringing]
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♪ world,ound the businesses fill hundreds of billions of requests each year. we want our flights changed, a purchase refunded. a claim reviewed. that takes the labor of millions of agents who tend to our every need. but soon, automation will take over much of that. and it starts with the painstaking work of this 23-year-old. >> my name is laura morales, and i am a chatbot designer. aki: you probably know the dominican republic's beaches. but further west in the capital of santo domingo, there is a bustling hub of call centers for american businesses. laura works for one of them. ♪
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arey: some of the inquiries handled by traditional call center agents over the phone. others are handled by contact center agents over live written chat. last year, the company introduced a third kind of agent. a bot. bots for three u.s.-based clients. these bots greet customers looking for assistance online. the bots resolve simple queries on their own. the more complicated questions get escalated to a human represented if. >> me as an agent, used to take three conversations or just one call at a time. with bots, you don't have that limitation. >> alexa, will i need an umbrella tomorrow? >> it might rain tomorrow. 54% chance. aki: bots today are everywhere.
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the people who design their speech are in high demand. the job is kind of like writing a very dry screenplay with a choose your own adventure element for the many ways customers will respond. the hard part comes when the bot goes live. often, it is pre-scripted conversations and do not work out the way laura and her team hope they would. they are constantly tinkering. today, i needtart to check how the bots fared the previous day. i go into analytics. my favorite one is this. bots are the moments the did not know what the customer wanted exactly. i can see how many clients or visitors click on the first button or second button on the main menu. if my visitors are not interacting with my menu, that means maybe something is not right.
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>> used to be coaching a human agent and now you are coaching a robot. is that easier or harder? >> easier. i don't have to worry about hurting a bot's feelings. you are not emotional about it. you just do what you need to do for getting the results you want. aki: laura started out as an entry-level agent when she was 17 and work your way up -- her way up. last year, she was chosen to manage the company's first interactive chat bot. today, she makes about eight dollars an hour, four times what she earned when she first became an agent. ♪ emilyaki: the transition took at three months to learn various aspects of the job, including training and special software that does not require her to code. laura immediately saw the
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benefits. >> a bot is never late. a bot does not get sick or pregnant. specific human situations you cannot fight. automation is able to take that out. emily: that was bloomberg's aki oti. that does it for this edition of bloomberg technology. we are livestreaming on twitter. find us there. you can follow our global breaking news network, tictoc, on twitter. this is bloomberg. ♪
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david: so you started your own company at what age? john: i was 24. david: where did you get the money to capitalize it? john: my mom gave me everything she had that was liquid. my dad gave me what he thought he could afford to lose. david: one of the boards you are on is mcdonald's and it is said you eat mcdonald's every day. is that true? john: just about every day. david: in chicago, did you ever play basketball with barack obama? john: several times. david: is he that good a player? john: he's a very good player. >> would you fix your tie, please? david: people would not recognize me if my tie was fixed. just leave it this way. all right. i don't consider myself a journalist. and nobody else would consider myself a journalist.

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