♪ taylor: i'm taylor riggs and this is "bloomberg technology." google gets fed. google gets fed. they will buy fitbit in an effort to boost hardware. plus, a matter of national security. is -- tiktok is said to be under review in the u.s.

launches.tv+ googleour top story, agreeing to buy fitbit for $2.1 billion in cash. taylor: san francisco blockchain the fitness tracking device company jumped on the news. will week is wrapping up. divina.ned by garrett there is still a lot of skepticism around the world what does fitbit know about about blockchain and cryptocurrencies. here to break it all down and hardware and software and health that google doesn't? tell us all about it is the garrett: a good question. firm's head of research. google has been rumored about yourt to talk about what talking about a smartwatch. firm is. on your website you have it very clear picture of solving the scaling issues of going and the but the operating system has been a collapsed and is not as security issues is that how you popular as android. what they are doing is saying let's buy fitbit and double our business from that -- and build our business from that. fitbit is seeing its

third annual year of sales decline. why is it an attractive choice? fewit: it's one of the are standing out? >> we like to position ourselves as the next generation of smart contact platforms. we like to position ourselves as the next generation of smart contact platforms. that is a platform to create an application on top of a blockchain and have it run in a decentralized way. even if your central server somewhere is taken down, your choices, i'm not sure attractiveness is what is going on. application will not be taken as you said, they have been in decline, they struggled as apple down. came out with the apple watch and can do things a lot of fit a network should be point -- fitbit devices cannot. decentralized and owned and run by its users. this idea of having a the price was a premium for decentralized blockchain fitbit that it is still cheaper an idea of came from than when it went public several years ago. it is a small amount of money building applications and smart contracts. for google and it can use the technology to add to its seriousome significant business and throw things against the wall. taylor: talk to me more about security holes. the ecosystem. when our team was at j.p. we know they bought the morgan, we did a bunch of research in all of the different intellectual property of fossil, also a watchmaker. blockchain's that are out there. combinations fitbit we decided we could do a good job making our own. integrate the hardware with software? gerrit: i am curious how much that had the innovation that was

ls comes out,le ls originally brought. taylor: i want to get the news of the day. you have a partnership launching on tuesday. what can you expect? >> we are doing a token sale on the coin list platform. or if they scrub it -- scrap it completely. i think it's likely google will it goes live tuesday, november 5 come out with its own watch, a pixel watch, so to speak, and at noon pacific time. complete the ecosystem. it is trying to play into what apple is doing, apple has phones, watches, laptops, and it is very exciting. we are still in that phase where google wants to do the same thing. taylor: i have to ask about the nobody is sure of the correct regulatory scrutiny. way to go from a blockchain more house of representatives members coming out in particular starting at zero to be a true decentralized network. get tokens into , a rhode island representative saying this does raise red flags. many people around the world. they can interact with people what is the antitrust scrutiny? gerrit: google already under around the world. we are doing a sale through coin list. scrutiny from state attorneys libra changeds general, the doj, house of representatives, individual senators who have an ax to grind the regulatory scrutiny around google, and a lot of the all of this? >> it is brought more energy

it waspull thought usual suspects have come out and said today, nothing in terms of particularly new investigations friends. but they said really? you are under scrutiny and you're going to buy another it has been great for us. country -- another company? started thinking critically about, if facebook are saying this is google thinks this is real, maybe it is not just some made up french thumbing its nose or regulators, saying we are still going to do this. technology. maybe this actually has from a traditional antitrust potential. in the corner of perspective, buying a watch company should not necessarily raise flags because google does thinking blockchain is usable not have a watch of its own, but for business and people to actually create resilient it is buying a lot of data. the goal is one of the biggest applications and transmit data data companies in the world and in a secure way. that will probably be the tack you can track supply chains, investigators take when they look at the deal. taylor: another day in big tech interactions between companies. and another use of cash. we are working on a partnership with a company doing medical thank you. device tracking. with more on the atmosphere the google/fitbit deal finds itself in, i want to bring in greg becker from silicon valley bank. i know you can't comment specifically on the deal, but generally, what is the m&a

environment like? facebook entering the arena has and ip market, it's a really increased regulatory scrutiny. taylor: who is on our heels? as a china? china?it >> i would've said they are not healthy environment. there are a lot of great companies still doing well, some a big player. but the president of china last week said that he believes with property, like fitbit and blockchain innovation is important. the google acquisition. maybe we might actually see as a lot of money, good china being more open to companies, and exits are healthy cryptocurrency in a way that right now. they were not before. taylor: when you say there is a the united states really gets to lot of money, are you seeing need their ducks in a row. taylor: thank you so much for more cash, credit, equity? two sources of joining us. that does it for this edition of technology." capital, equity and debt. for the innovation economy, the be sure to volatile -- follow dominant is equity. from venture capital, raising tictoc on twitter. this is bloomberg. larger and larger funds, ♪ sovereign wealth funds, family the game doesn't end after that insane buzzer beater. offices. if you think about it, where interest rates are right now, there aren't that many places in the world for growth, and innovation is a place for growth. obviously money goes where growth is, and you see a lot of

equity going into this space. i think it will stay that way quite a while. i don't see that slowing down. it might be bumpy that it will be fine. on the debt side, that's a place where companies can raise cash to support their business, that's what we do. it is important to us. it is a very competitive market and there is lots of money out there in the space as well. we have grown dramatically and part of it is to put money into the innovation economy. it is really debt and equity and both are healthy. term a i have heard the lot of cash being used a lot. we hear that, there is a lot of cash chasing too few investments. what is that doing to valuations? greg: let's take a step back. you look at how much venture capital is flowing into the system this year, through three quarters, about $97 billion. it will be the second year in a row that it is or than $100 billion invested.

in comparison to history, six years ago, that is a big jump. but it was back in 2000, it was only $100 billion. from the standpoint of almost 20 years ago, it's about the same amount of cash. when you think about it, the market is so much bigger than it was back then for all of the obvious reasons. companies are staying private longer, so for my standpoint, it is a lot of money, but when you put it in context of historical and you look at the $100 billion relative to the global capital markets, it's not that much money. ways,w is that in some valuations are heating up, but up, but it depends what sector you are in and what stage. taylor: has softbank structurally change your world? greg: it hasn't had a big impact on our world. if you think about the innovation space. what softbank has done is the following, they are putting large amounts of money into because with nba league pass on xfinity you can watch the out of market games you want- these companies that allows them to stay private larger, and it all season long. allows them to go after really and with the all-new xfinity sports zone,

you get everything nba all in one place- big ideas. those two things i would say even notifications about your favorite teams. watch the dropped dimes, help the innovation space. when you are making big bets monster blocks, and showstopping dunks. like that, they don't always plus get instant access to your teams work out and sometimes when they don't work out, get a lot of with the power of your voice. that's simple, easy, awesome. headlines and a lot of us are talking about wework. say nba league pass into your voice remote to upgrade for a great low price but i do believe it helps put - or go online today. more money into the economy, more money into the innovation space, and from that standpoint, it is ok. taylor: you have a lot of clients, i will bring up some of the specifics, palatine, data peloton, data dog. greg: over the early part of the year and even the prior year, it was all about growth. don't worry about profitability, focus on growth, and a lot of s1, becominga

profitable was so far out it was hard to comprehend viewed that's different than it was -- comprehend. that's different than it was david: historical. david: in the last recession, your firm performed very well. usually you saw profitability in a short time. >> in 2007, it was pretty easy to calculate. are less focusede when i go through those calculations, it is not the same. it would not be said to be an easy place to work. people love it or hate it. david: in high school where you on profitability now and that is healthy for the environment. interested in academics? >> taylor: more focused on profitability and more healthy for the environment, that is my take away. thank you, greg becker. coming up, the unstoppable hack that appears to be one chinese unleashedoup, being on how value targets. that is coming up. this is bloomberg. ♪ up. this is bloomberg. ♪

of the tiktok is one

most popular music video apps in the world and it is being investigated as a national security threat in the u.s. it was formally known as musicly and was bought two years ago for almost $1 billion. the committee on foreign investment in the u.s. is reviewing the app's growing popularity amidst increasing concerns about its growing influence in the u.s.. to us more is our editor for technology, tom giles. why now? they are taking a close look at a lot of things, even things that happened in the past. there was the acquisition of grinder, the dating app. now that has to be divested. the concern is chinese ownership of something like that could represent a national security threat. ok,t is happening with tikt

which is popular with a lot of young people, the concern is twofold. engages in it censorship that is against american values. two, what is it doing in terms of gathering data? it could be accessible to the chinese as a result. taylor: like you said, a bipartisan issue. you had a republican and a you had a republican and a democrat coming out and saying this should be reviewed. does that help or hurt the case that this is a bipartisan issue? tom: look, that probably has helped raise the level of urgency around it. this isn't just one party or the other party. sphere, whereal things are so partisan, it is interesting that there are some things that everybody can rally

around and one of them is fear of china. taylor: does this confirm from us isbirdseye view that cfi more involved in these technology deals across the border? tom: it is taking a deeper look at these deals, even deals that have happened years ago. smaller sized deals. scrutiny of anything that has to do with china. chinese investment in the u.s. chinese wants to buy a u.s. company, take an ownership stake or even minority stake in a u.s. in a u.s. company, it is all getting reviewed much more intensely. this is in light of the trade war. taylor: thank you for joining us. sticking with china and national security, chinese hackers are said to be targeting high-ranking military and government officials. a pt 41 is using malware to

steal text messages targets according to a cybersecurity firm. to discuss in washington is john eye.ist from fire what did we learn about targeting specifically sms text messages? a piece ofscovered malware designed to essentially look at sms traffic on a telecommunications provider. it allowed the chinese hackers to search by phone numbers and other distinguishing characteristics belonging to users, but it has also allowed trawl for specific keywords, intelligence and military terms, as well as related to groups politically at odds with the regime. taylor: john, is text messaging the new threat? we still often talk about email. why text messaging?

john: text messaging is used in a variety of applications. some people are certainly making more secure, encrypted applications, but it is important to remember that adversaries are going after them as well. is underl messaging threat right now. thisr: underscoring all of is the concerns about huawei. considering it has been on this list. does this underscore that fears were correct about huawei? john: i can't speak to any specific company but i can say that china is acting on a global scale to subvert telecommunications. taylor: john, what have you learned about increasing hacking in 2019? how has it changed? specifically from china.

china has strayed from a lot of the intellectual property theft we saw so much of before. they are refocusing on traditional, classic espionage targets, including dissident groups for them as well as military intelligence targets. one of the important things to know is that they are maturing and moving toward things like, places like telecommunications providers. they are moving upstream where they can gain access to a lot of people simultaneously. taylor: and some of the concerns about this sms messaging is that there is nothing that me as a user can do to protect myself, right? john: that's right. this takes place on the telecommunication provider network and not your phone. it's very hard for you to actually take some action to protect yourself here. you might look into an encrypted

service or in the worst case scenario, you have to watch what you communicate. taylor: do you have any sense of how effective it is? i hear that communication providers, it is the most secure method, you get off of wi-fi and rely on your provider. is there any evidence these aren't as secure as we thought? john: there has been some recent incidents where we know nation state actors are looking to gain access to those providers. as more and more people use single providers, or a handful willoviders, nationstates be interested in targeting them specifically. will be interested in targeting them specifically. they will put a lot of resources there. they make a great effort to keep your communication secure and they may be more secure than usual, but there should be no mistake that these adversaries are looking to break-in. taylor: finally, any sense as we

head toward the election, is it china or russia, who are you most worried about? john: i am most concerned about russian actors. they are still very aggressive. the news came out very recently that they are again targeting the olympics in response to some of their troubles as far as being accepted into the games. i think that is a sign that they have not given up their will beve ways and they equally willing to interfere in 2020. taylor: thank you for joining. coming up, the wait is over. apple has debuted its original content. we will talk about apple tv+ next. this is bloomberg. ♪

years ofpple ended anticipation about its next act in television on friday. they launched the apple tv+

streaming service, which will service, which will offer shows to match rivals. but it is liking what many consumers want, a big library of favorite movies and tv shows. to discuss, we are joined by our guests. apple?w far behind is dan: they are far behind from a contact -- content perspective. $10-$12e others spending billion. but it is an iconic brand with an unparalleled install base. so they are behind but they are also diving into the deep end of the pool. that given theny golden install base you can never count out. onlor: dallas, your take apple's position, the strengths

and weakness relative to its big competitors? dallas: they have two advantages key challenge. i think the biggest key challen. i think the biggest advantage is distribution. apple's position to be the number one mobile streaming platform in the not-too-distant future, which is huge, because mobile is the accelerant driving the growth and streaming. the second is a, apple has been at $4.99 assive month, and it is free for any apple subscriber in the next 12 months. that is critical because many adults do not stream and this is enabling them to dip their toes and for free and try content and hope they love it. advantage isar apple resources, a quarter trillion dollars, no studio has that to match. the other side, they have challenges, the content challenge is a norm us. .his is the -- is enormous

this is the weakest offering. none of the shows will be eable.le, -- be bing hopefully they can correct quickly. the second challenges competition. we will see a lot of streaming interests entering the market, including disney in the next two months. twice as many consumers are interested in disney compared to apple. so there are headwinds but also some tailwinds. taylor: dan, i want to talk about content for pricing. with content and $100 billion of cash on the balance sheet, do bid for old content, our old favorite shows, or use the cash on developing original content? dan: i think it will be a multipronged strategy. the first thing is, they are about $6 billion

a year, to build out the content. that will be more of a long-term initiative. i think they will start bidding on some of the content out there, but the issues with "friends" and others, it is an expensive proposition, but we believe it is a drum roll to them making a large acquisition of a studio in 2020. sony,talked about mgm, lionsgate. it is a one-two punch in terms of how they get there, they built a fortress and then they build the content. $4.99, is that appropriate? it is cheaper than competitors. and your thoughts on integrating the free service if you buy a new device, to further draw people into the business? apple doesn't have to win the streaming more.

it is do or die for netflix but this is about strengthening this part of apple's business. i will not be surprised in the near future if we don't see apple news, apple arcade, the gaming service, apple music, and apple tv bundled in a content platform that becomes the defect a way in which we enter the streaming universe. the other thing to remember is that apple is a platform where you can build your own mini streaming bundles, so you can subscribe to hbo and showtime within your apple device. $4.99 is very aggressive, the cheapest in the market by far, but they need to be in that space given the lack of content in the first 12 months. to dallas andyou dan. coming up, it has been a week full of earnings, acquisitions,

policy changes are political ads on social media. we go over the biggest tech stories in this week's tech in review. that is next. this is bloomberg. ♪

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taylor: now to our weekly roundup at the top stories in tech. the biggest toy of the day has to be google buying fitbit. $2.1 million in cash. it could increase scrutiny by antitrust regulators. let me pull you in here. as an analyst, what are the antitrust scrutiny issues like for you? >> this beltway versus big tex

battle will be getting a close microscope. this is something investors will focus on. taylor: as you have been following the fundamentals and technical portion of this, but to the technical show us as far as how google is positioned? >> the stock has had this great move. it had been underperforming.

it will be very bullish for the stock. some of thesome of the regulatod political headwinds that it faces, it could be tough. it could have very interesting implications. does this give them a fighting chance against the apple watch? >> that will be a massive uphill battle. look at what apple has done. they have really cornered the market. they have done a phenomenal job with apple watch. an opportunity they needed. they saw where apple is going. asset.w the fitbit this is an opportunity. i think this is an offense of move and a defensive move at the

same time. they continue to be at the top of the mountain. taylor: your thoughts on the general climate? does this continue to mean we are buying instead of innovating? >> it seems to be that way. the big players have so much money. they can force people out of certain areas. we are starting to hear from some of the venture capitalists. can build saying they this product and we will take the company public someday, they say they are worried about that market. there are all sorts of implications.

big is not so good right now. big is not so good right now. investors will be have to very be noble as they move forward. the election is almost one year away. thisr: as we talk about and the regulatory environment, let's switch to the second big topic of the week, facebook. we learned that regulators are zoning in on their purchase of instagram. that will be a key area focus for the antitrust perspective. and --the stock pricing in this and the regulatory if instagrame broken up? >> it is funny because when you get to these situations where the political efforts fall into play, it is usually not that big play, it is usually not that big

a deal. this will only grow. you have a lot of people, you talk about the impeachment situation. a lot of gop people will start to say, how can i differentiate myself. i will go even harder on the facebook's of the world. we saw things peter out before the election. that is still nine months away. thewill see pressure on presidential campaigns and the henan -- senate and house campaigns. whether they break them up or not, i do not know. headwinds surrounding these will keep facebook and google hampered. taylor: i have yet to hear your thoughts on facebook's stance on political ads versus twitters stance. who is right? >> i think it is a good move for facebook. the way they are approaching this, they are going on the offensive.

they're going into selection from a security aspect. they built out that platform. they are not shying away. that is the right strategy. you look at twitter and facebook, twitter continues to still be licking their wounds. this is a bit of a head scratcher. for facebook, they are confident in terms of where they are. they are not shying away. this is something they are trying from a messaging perspective to show. look at the numbers. and advertisement continues to be robust. taylor: the third big story of the week has to be about apple. phase one of the trade deal, you came in on your cell phone on your car on the way to the airport. you said if this was not a trade

deal, this could be as simple rewriting of apple stock. they have asked for a reprieve of the september 1 tariffs that are hitting the air pots and the watch. how much about trade is impending -- impacting apple? >> they are still the poster child for the trade battle. part of what you are seeing with the stock being re-rated is that it continues to be the china story. the tariff are contained situation. key datesnues to be a that everybody is focused on. instead of burning iphones in the street and having pro-nationalism, chinese consumers are doing is buying the phones. taylor: you get the final word

on apple. overbought or oversold? >> it is a little overbought. no question that it is a great company and a great stock. it is the most overbought it has been in two years. more overbought than it was last september. that correction had more to do with the broad stock market than anything else. i'm not saying you should short the stock. you will get an opportunity to buy a little bit cheaper on a technical basis. back five could pull to 7%. that would be healthy. the stock market asks -- ask and funny way sometimes. taylor: a lively week in review. thank you both.

we are getting some political news on friday. beto o'rourke has confirmed that he is dropping out of the presidential race. the former texas congressman has struggled for months to recapture the energy from his 2016 senate run. his campaign was said to be under extreme financial strain. he may have had to have some deep cuts to his staff to pay for ads. coming up, a canadian e-commerce company says it is not competing with amazon but helping other people to do so. we hear from the ceo.

shopify shall provide --

is one of canada's best performing stocks. us to discussth the company's growth plans. take a listen. we said we would invest a lot of money. it is something we want to have. we will have to spend some money. >> are you surprised by the negative reaction to continued growth and investment? >> i work every day. the way we think about it is, we

are working on sustained market value of the business. >> you were talking about systems. the purchase you made. making deliveries. anymore on your horizon? probably, but not that. this is very good. this is what we spend most of our time on. >> you talked about the need for two day delivery.

how do you find the constant competition finding from amazon? and the need of your clients being somewhat different? >> one of them was wonderful. our shoppers and merchants are always hiding us -- holding us to a higher standard. we will try to get things to everyone in two days. >> how do you think it will become more efficient as time progresses? >> things have to travel by any means possible.

it can go futuristic to drones. old school bicycle couriers. different situations. different distances. industryo learn as an how to utilize all of those. shopping centers at certain places outside of a city. a truck. you mentions that you have more than a million merchants that you work with. one what are the cultural nuances that you find? >> it is super interesting. commerce and retail is deeply woven into the cultural narrative. in germany, politicians decided what exactly they needed to say.

payments are very different. it is one of the most interesting things in the company. for everyone to figure out how do we take something that works and people are using. there is no answer. the ceo oft was shopify. in 2017form launched and believes the future of retail is local. joining us to discuss is the cfo. she is a 25 year industry veteran and most recently served

as cfo at a leader of licensed sports merchandising. great to have you. i want to kick it off with news of the week. you were put at a $1 billion valuation. what are you using the money for? >> we have a lot of growth opportunities. this is a business that has grown very rapidly since its founding a couple of years ago. our big priorities are continuing to add tools to the services of our marketplace. extent -- continue expanding categories. both of those businesses are doing well. we will continue to pursue those growth opportunities. lotor: your tagline goes a against what we hear. why are you betting on the local consumer? >> it is so interesting. i share this same perception.

everything is about a retail apocalypse. the apocalypse has missed rocha lead to -- retail. we have found the local retailers have really learned how to compete. the fair market places allowing them to have more tools at their disposal and be competitive. we give the makers an opportunity to find new retailers that want to find their goods on a whole soul basis. and the retailers have an opportunity to have 60 day terms. they can return products. we are making them more competitive. consumers are interested in that. having unique collections. shopping in their own communities. not have their main street set the dollar vacant. also say on your website that one of the big filters is not amazon. how consumers differentiating between what they want on amazon and what they want local we

think amazon is providing people with convenience. local retailers are able to provide people with something very distinctive. those retailers want to make sure they make a relationship with the consumer. that is why that is the number one filter. is the consumer as healthy as the data show? >> our growth suggests that is the case. we are seeing tremendous indications that the consumer is strong. we hope that will continue to be the case. taylor: what is the biggest question investors have asked to? >> around the notion of the

death of retail. it is the local economy really as vibrant. taylor: thank you so much for joining us. ahead, the technology is not a hype. it is already changing lives. this is bloomberg. ♪