♪ taylor: i am taylor riggs in san francisco and this is "bloomberg ."chnology lawyers for t-mobile and sprint had court wednesday. cleanup crew. goldman sachs arranging a massive line of credit to help with one of softbank vs biggest

wework.- biggest bets, a drop in ad sales and what that means for streaming. first, our top story, the challenge to t-mobile's sprint merger in a courtroom on monday. states and the district of columbia suing to stop the deal. but the latest, jennifer read, who was in the courtroom. takeaway --what is your big take away? jennifer: it started with a surprise because the judge said, we are not going to have opening statements. i read to the pretrial memoranda , let's go straight to the witnesses. the judges really intent on getting this done in two weeks.

this was part of that, getting things moving quickly. we cut right into the first witness, basically got through 2.5 for the day. overall, the witnesses were pretty good. documents some bad introduced with the first witness. ands only two witnesses part of the third but overall, i think the day was pretty good for the companies. taylor: we got a headline that sprint's chief marketing officer said in 2016 that he thought this merger would raise prices by about five dollars on average for a subscriber. is it too early to tell if that helps or hurts? jennifer: i think that was the worst of the day for the companies for this deal. roger, the chief marketing

officer, did suggest two other executives at sprint that may be what they could use as part of their negotiating package with t-mobile to get a better price was that the deal would mean an increase of five dollars on average per subscriber and that t-mobile was not taking that into account. he did do a decent job of trying to play this down. it is a damaging document in terms of the company's case. he said, this is just a hypothetical. i didn't do any real studies. i was just guessing. i am a marketing guy and this is the way that marketers think. i would say that was probably the most damaging part of the trial today for the company. taylor: bloomberg's jennifer rie, thank you for joining us. with more on the case and what is at stake for the industry, a

law professor at nyu in new york. first, are you surprised this is going to trial? >> well, no, given the way the case is set up. in general, this is a very unusual case to go to trial by the state and not the federal government. taylor: i was reading one of your documents on this case and thewere writing about justice department's proposed final judgment why is that critical? harry: states will have to prove that this merger actually will or might lessen competition, particularly by reason price. the testimony referred to earlier is a critical aspect. the second is that the justice department, in a second filing,

has agreed that this merger will raise prices by millions of dollars, but it has come up with a remedy. if the remedy is sufficient to reduce the competitive effect or make it not anticompetitive, that could be and presumably will be a strong defense by the parties. plaintiff states will certainly argue that even if that remedy goes into effect, that is not enough to reduce the anticompetitive effect, going from a market with four major competitors to three. taylor: are they able to say that if the merger goes through, they are still only number two? does that help them? harry: not a bid. less competition. the fact that there is some

competition, you can say that is nice. the antitrust laws don't say we wait until we get a monopoly and stop. congress as we stopped before m, stop mergers that won't necessarily create a monopoly but will hurt competition. taylor: i want to look at a chart that i am showing to my audience. what we are showing is basically , since the proposed merger was announced, t-mobile shares are off to highs and sprint shares have reacted poorly. this is leading a lot of analysts speculate that we could see a settlement, given that the states have a relatively good case. could you see a settlement and what would that look like? harry: that is always the

problem in these cases, a settlement. a settlement is supposed to restore competition. if there were a settlement like that available, maybe the justice department would have proposed it. this goes back to what we talked about earlier, that the settlement that was taken, from a state's point of view, is inadequate. given the arguments about why this reduces competition, it is hard to see what a settlement would look like. i expect the states to litigate this to the end. you can always be surprised. i think what the states are saying, just say no. this merger is anticompetitive and can't be cured. we can't create another sprint. we have one. taylor: does this case have broader implications for trump's

antitrust policy? harry: i think in some ways this is a test of how the trump ministration is proceeding with antitrust policies. views ofme different the justice department. been --e four ways there have always been differences among the various forces among the state. this justice department has been particularly vigorous in intervening in cases in which other forces have different views. it is not just the states. that is why i say this unusual to have the states litigating while the justice department is settling. the justice department has intervened with the federal trade commission in a case about qualcomm. it has been very aggressive in

this way, wanting to control what antitrust is look like -- antitrust has looked like. we have the states going one way, particularly new york and california, and the federal government going another way. taylor: thank you to harry first, law professor at nyu. coming up, xerox dressed to sell its plan to -- tries to sell its plan to hewlett-packard. taylor: this is bloomberg. ♪

xerox dangling carrots front of hp shareholders.

how are you getting $1.5 billion of future revenue growth? >> xerox is saying in its presentation to hp investors that, on a pro forma basis, the combined revenue would be about $66.8 billion, with hp contributing $58 billion of that total. they are also saying that there are certain products of hp that can be sold through xerox and certain efficiencies that could be made, and they could unlock $1.5 billion of additional revenue. the problem is, with a company that large, is $1.5 billion enough to convince those skeptical of a deal? and it also did not answer the question of whether revenue

increases over the midterm or long-term would be possible in a declining industry? taylor: revenue growth, synergy sounds great. is it realistic? nico: xerox would say yes, it is realistic. they have been crunching the math and they have found the right now hp is selling a lot of its computers and printers through either direct sales to large customers or through indirect channels, which means basically resellers. xerox has a whole team of folks who sell to small and midsize businesses. they say, we can sell your pcs to our existing customers. we can have your products sold through as a service or subscription offering, and we can also have manufacturing efficiencies, supply chain efficiencies. basically fire a lot of people.

they are really making an argument that it is rational. right now, the question is, will it be enough for hp shareholders to convince the company or force the company to do something? taylor: some of these are company-specific issues. a lot of this is structural change in the market where they are seeing declining in the printing business. are they prepared to take on the structural change underway? xerox has been sort of managing declines for a long time. these are both businesses that know that markets are shrinking, particularly in printing. hp got into a lot of trouble this year with investors because inc. supplies started to fall and contract. the problem, some would say, in

this deal, is that this would make a combined entity more subject to the whims of the printing industry, which is compacting -- which is contracting much more than the pc industry. i think what you would see is that, if the entities combined, revenue would shrink at some point. but xerox is arguing that it is better to take control in this kind of situation because the first movers that consolidate will have more power than the other companies left over. taylor: thank you to bloomberg's nico grant. now to the continuing saga of wework. goldman sachs playing their part in keeping the embattled company afloat. a pledge first step in put together of $5 billion for

wework as part of the bailout. softbank will be listed as the borrower and wework will be the co-buyer -- co-borrower. $1.8 in the scheme of the saga of wework? >> it will be meaningful to wework, a company that lost $1.3 billion in the third quarter. credit financing, it is definitely a line that wework needs. receiveany is going to $3.3 billion in additional secured notes, the second stage. taylor: what are they hoping to do with a of credit? -- a new line of credit? they look to continue expanding in 12 key markets

including new york and london, and they will continue to take on leases. in other cities, it is clear they will turn to a management agreement type structure which reduces liability. right now, they need the cash to meet their ongoing burden. taylor: i want to show a chart which shows improvement picture. in turquoise, the bonds of we work maturing in 2025. yielding 12.8% or so. are investors pleased with the small turnaround, tweaks, changes we have been seeing from the company? gillian: yes. today, just the story that goldman is involved in the new financing sent the bond up four cents on the dollar, i think. creeping out of distressed level a little bit. bondholders are feeling a little

more comfortable that the company is salvageable. package isn rescue coming together. a $1.5 softbank has had billion equity injection. when that is done, softbank's stake in wework will rise to about 80%. $1.75edit financing of billion, that will kind of shore up the company for the need for -- for the near future. taylor: does this give you any indication that softbank is looking to share the burden? muchan: it is not so sharing the burden, it is putting its name behind the company that it will be the major owner. by signing honesty borrower and oning wework -- by signing as the borrower and having wework as the co-borrower, it

takes some of the risks. softbank stepping up behind them saying, we are here, we are the fallback. taylor: it is notable to me that it was goldman sachs coming through with a potential line of credit. a couple of months ago, it was also looking at a deal with jp morgan. any thoughts of why goldman versus jp morgan? bankan: the jp diamond-led is known to be close to adam neumann. neumann is out now. gillianbloomberg's tan, thank you. , founder andework former ceo adam neumann is looking to sell some new york residences. he is looking to sell two units

that he combined into one. coming up, jedi mind tricks. prizedsays that a government contract that microsoft won is because jeff bezos is viewed as donald trump's enemy. blumer technology is streaming -- bloomberg technology is streaming live on twitter. this is bloomberg. ♪

taylor: apple is returning to the -- actually, i want to start with another company. lower,of data dog are provisions allowed it insiders and early investors to sell shares. the remaining locked up shares are eligible to be sold next march. apple is returning to the annual

ces tech conference for the first time in decades, this time with consumer privacy on the agenda. the company director of privacy will take the stage with facebook and a commissioner from the fcc. they will discuss regulation, consumer demand, and how companies build privacy at scale. apple has not attended ces in an official capacity since 1992. fight overazon's microsoft's jedi win continues. amazon web services seeks to reopen the $10 billion cloud deal in the lawsuit. joining us to discuss, bloomberg's naomi nix in washington, d.c.

what do we know about the he said, she said? naomi: they are saying that not only did the pentagon err in evaluating the bid, but those errors were made because president trump meddled. it is not clear how much the pentagon took trump's comments into consideration when they gave the award to microsoft, but it is definitely clear that those comments are out there and the pentagon could not have ignored them. we know that trump has made critical comments about amazon and the jedi cloud contract. the question is whether those comments influenced the pentagon's decision-making. taylor: is there a chance that this gets overturned or reopened? naomi: these kind of cases are tough to prove.

only has it shown that trump has been very critical of amazon and bezos in particular with his ownership of the washington post, but they will not only have to prove that trump has a long time animosity with amazon and jeff bezos, but they will have to prove that they were comments into consideration rather than establishing a winner based on the merits. taylor: as you have been covering this, any precedent that has been set to pave the way for this case? naomi: this is an unusual case. it is not common that a sitting president would be on record openly questioning whether a bid was fair. in july, trump really surprised the industry and procurement

world saying, i have been hearing reports from oracle, microsoft, ibm about whether this deal was fair. i will bes said, taking another look at this procurement. this is another case that this procurement has gotten controversial. normally, these things are not done in public in such a controversial matter. taylor: bloomberg's naomi nix, thank you. coming up, world leaders are looking to tax big tech. will the u.s. stand in the way of a global digital tax plan coming online? this is bloomberg. ♪

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this is bloomberg technology global link where we join bloomberg daybreak australia to bring you the latest in global tech news. i'm taylor riggs with shery ahn in new york and paul allen in sydney. let's take a look at the top global tech stories of the day. paul: thanks. the world's fourth largest smartphone maker is making his move in japan. shall me is entering the japanese market with a budget friendly smartphone and fitness tracker. the company is making the phone available for media preorder with shipment starting december 16. xiamoi will face a tough

challenge in japan where the market is shrinking and dominated by apple. speaking of apple, what was once a routine corporate espionage case now involves surface-to-air missiles. the u.s. an engineer is accused of stealing trade secrets from a chinese start of and files for the ma patriot missile program. the documents which belong to raytheon are not permitted to be taken outside of the department of defense secure locations. takingnese government is steps to remove foreign technology from state agencies and other organizations. beijing will likely replace as many as 20 million computers over the next three years. that is according to a report from china securities. the move for this increased technological independence comes amid the escalating trade tensions with the u.s. those are the top global tech stories we are watching. shery: thank you.

now to a story we have been following. the global digital tax debate. the organization for economic cooperation and development has outlined a plan to overhaul global tax, but the u.s. has reservations. the u.s. wants companies to have a choice to fully opt in or out of the plan which is driven by concerns that big tech companies are not paying enough in taxes or in the right countries. let's go to capitol hill in washington with our corporate tax reporter laura davison is standing by. explain to us this safe harbor proposal suggested by secretary mnuchin. what is the u.s. concerned about here? laura: what the plan would do is to say instead of with the current system where the company pay tax where the early incomes -- if they earn it in the u.s., they pay the income there -- they are saying they will pay taxes where the users are which is different from where the ir organizations are.

the u.s. says this is fine but we want to make it optional. the reason is they believe that if companies have a choice, they might be paying more taxes in the u.s. versus other countries. this is a play to keep the u.s. tax base within arms of the irs. taylor: big tech sort of wanted a cohesive plan because it is easier to follow with business planning. does this even solve the problem, because it is sort of an opt in, opt iout? could create confusion for companies to see which is the better deal. it opens up opportunities for companies to run the numbers, come up with different case scenarios. does a lot of work for tax lawyers and accountants, but not good for people auditing this and the countries to figure out what it looks like. shery: we know the french do not

like the u.s. proposal. could other countries like it? laura: that is possible. you look at the countries where they have a lot of consumers, maybe not a lot of operations. india, china. france is also one of these countries where they say we have an opportunity to get more tax revenue and we want to stick with that. we don't want to give people an opportunity to opt out. this is really a key sticking point going forward. one of the first roadblocks we have seen in these negotiations. there are 130 countries total. that is going to be an issue that they are going to face as they had into the next year. they are hoping to come up with a deal by this time next year. taylor: you and shery are smartly bringing up france as they seem to be leading the way. i want you to react to a soundbite. i spoke to the digital affairs over in france. take a listen. adapting to the new framework.

u.s. favoring the it would go for european solution. i think we need to create a level playing field. the best level is at the international level. if the americans do not want to go for that, we will go to for the european one. taylor: basically saying if they don't get a solution, they will just create a european solution. where are we in the midst of multiple solutions? laura: this is really the big question. what the u.s. does not want is for there to be a bunch of different solutions. now, you have countries like france, canada, new zealand coming up with their own taxes. having an eu specific solution would be better for the u.s., but the best solution is to have this global solution. the question though is if they can agree to some of the terms that negotiating partners are bringing to the table. that is where we will see if this can be done. it is going to be difficult to

get that done. the u.s. treasury officials are confident they can reach some sort of agreement. shery: what do the tech companies want? laura: but have not publicly said yet what they specifically want. they agree they want is multilateral deal. they want something that is easier to follow. they are very concerned they could end up paying more in taxes once a deal is reached. they are looking at both some to city and what makes dollars and cents for them. taylor: thank you to laura davison. plenty more global stories ahead. this is bloomberg. ♪

taylor: a follow-up to the story about the widely criticized peloton commercial. the commercial struck some of

it being sensitive and out of touch. now the actress has a new gig. commercial. they tell her she is safe there and toasted new beginnings. after, ryan reynolds is one of the owners and posted the ad on twitter with the caption "exc ercise bike not included." a bad year for the tv at industry. sales fell almost 4% in between 19, the deepest drop since the recession. signaling that advertisers are following viewers to the internet. there are some winners emerging from this market change. joining us to discuss, dell and florence, advisor at the marketing technology company in los angeles. dallas, i wonder if we are not surprised the fact we are migrating from tv to internet, but perhaps what is surprising is the rate of change that tv advertising is falling

off a cliff. dallas: we are seeing a maturation of television advertising. the dollars are finally following the consumer eyeballs as a micrthey migrate away from television. six out of 10 adults stream, and they stream a lot. the average streamer watches twice as much streaming content as they did linear content. that does not take into account the 42% of u.s. adults that say they will cut the cord. you look that the holiday season now, i third of consumers say they will watch zero live television during the holidays. a real challenge for marketers who spend 95% of the tv budget in the linear tv channels. it is becoming very aware of those dollars are moving towards where the streamers are going. there will be winners and losers. taylor: that is a fascinating statistic. you are going to watch zero ads livefe tv, zero hours of tv this holiday season. is that a new statistic?

dallas: a new survey came out researching consumers that say zero live television. there's three ad races to watch as we set up who is going to be the winner in the $75 billion ad race. the platform race, content race and data data. race. roku is the number one smart tv operating system in the world. hundreds of apps utilized roku. roku sells those ads for the apps. on the content side, a couple of platforms like hulu which is owned by disney and pluto tv that are really leaned into the ad supported model. a majority of consumers to support an ad supported model rather than subscription-based. hulu, 70% of their users are ad supported. the last will get the least about of attention and that is the date of reese. television advertising today is

bought and sold the way we have been doing it for 30 years. off a few thousand set-top boxes on nielsen that are trying to extrapolate the behaviors of 300 million americans. marketers are saying that does not work. we have begun seeing companies company that, a has software on most television manufacturers and devices. 25 million televisions across the world. they are able to provide would real-time data for marketers that is driving higher roi for the marketers. for other reasons, we will see ad dollars continue to migrate to streaming because they work better. taylor: dallas, i want to break down three of those that you just touched on, one of it is roku. you take a look inside my terminal, it is the stock and the average analyst price market. the trend is up, but it has been a volatile story as investors try to figure out what streaming wars mean for roku. do you believe you cannot launch

a streaming platform unless you also do it with roku? dallas: i think roku is the undoubted winner in the streaming wars when you think about what happens in the next couple of months and what has already happened. you look at disney plus for example. disney was seeing a million downloads everything will day of disney plus. during that same timeframe, roku downloads were up 50%. people were going to get the roku operating system so they can access disney plus. they are uniquely is issued in the ecosystem to benefit from the $8 billion to $10 billion of content that is going to be spent because you need to watch it on a platform. disney does not have a platform, neither does netflix. you will be going to get roku device. you have seen the roku television. number one tv operating system in the world. you can buy a 55 inch smart 4k cv for $200. they are in great position today. taylor: you talk about some of the winners, namely hulu, which makes me wonder if it is a price

or content? do i like hulu because it is four dollars, five dollars a month and not $15 a month? or is it a content story? dallas: hulu is having their cake and eating it too. they offering the user either the subscription model that has no ads or the ad-based model. the user is getting to pick and choose what they want. we have seen from holding that 58% of u.s. consumers prefer an ad supported model, around five dollars, six dollars a month. 40% prefer subscription-based model. i think the real challenge has to be for netflix. i said i believe netflix will have to introduce an advertising supported model. they have reached a saturation point. they cannot raise the pricing any higher with disney undercutting them. what hulu is done is they have read the market and understand there is an appetite for both and they offered both. taylor: i could do this all day long.

dallas lawrence of channel factory, thank you for joining us. now for a weekly look at the future of work in our series work shifting. this week, we have been diving into increasingly competitive software as a service market. aboutmpany just raised $60 million in series e funding round. the fourth round of funding in 18 months. it is taking on big players like salesforce and working with brands like rent the runway and more. joining us to explain how customers differentiate from their competitors, we are joined by ceo and cofounder brad. with $60 million, you take on new customers, do you hire? what do you do next? brad: we are focused on reimagining customer service. we are expanding in many different ways. we are expanding in different verticals. we are doing well with retail, gig economy type companies, internet of things type

companies. with additional capital, we are seeing great traction internationally and will continue to double down on that effort. taylor: we hear software as a service thrown around a lot -- ai -- give me a real-life example of how i would use your service and how it translates for the customer. brad: we rolled out kustomer iq, our machine learning platform. customers are able to view the vast amount of data they provide us with amazing support experiences to optimize the experience they are able to provide. they might be able to use machine learning for automated. artificial intelligence and machine learning for suggesting responses for checkboxes on how to respond to customers. they will be able to optimize those experiences. taylor: i want to talk about ai because we talk a lot about that and you have talked about ai able to transform the customer experience. is ai all that it's cracked up

to be? brad: it has come a long way and we are taking true medicine benefit. because we are able to leverage the vast amounts of data we are provided by our companies, we can do some amazing things with it and it is just the tip of the iceberg. taylor: how are you keeping customer data safe? brad: there are many things we are doing. it is encrypted. hippa compliant. we follow all of the various regulations. is incredibly protected within our system. we are rolling up the next generation of our platform which will further enhance who can see what, who can do what and how we are furthering protecting the data for customers. taylor: you talk a lot about ai being able to measure sentiment of a brand. how are you doing that? brad: this a lot of great tools we are taking advantage of. we do read all text communications between companies and customers.

we are able to run that through our sentiment analysis engine to decide whether it is positive or negative. we are able to see if the customer has been historically happy with that company and recently unhappy, and perhaps do something from a marketing perspective to merger the customer. we are taking advantage of that, coupled with csat, which is what customers tell you versus nps, thewhich is us reading interpretations, we can get the full picture of the customer. investorsny notable -- what is the most asked questions you have gotten from investors this year? brad: they are focused on the opportunity in front of us. with a total adjustable market, it is very large and growing rapidly. they want to understand how we are taking on -- it is david and goliath -- they want to know how we are taking on salesforce. it is far more modern. many people have told us if they

were to build their products today, this is how they would build it. what they are fascinated on -- because it is such a large opportunity, are we the right company to take those companies on? i think based on the roster of investors we have gotten, i think the answer is yes. taylor: kustomer's brad, thank you for joining us. brad: thank you. taylor: still ahead, will the u.k. election result in brexit uncertainty and how it will affect the tech industry. that is next. ♪

taylor: the european union's vowed three think how regulators make megadeal's. aimed at tackling how firms are dominating overseas markets and how european companies are willing to look for suppliers outside their home country. maria tedeo reports from brussels. commissionsuropean will review the way eu

regulators, following criticism that she was too rigid finding google and block intelligence deals. now, best known for finding big american companies, she said she wants to update rules that go back to decades. speaking in brussels, she said digital companies created an earthquake in europe and the new challenges mean the new european commission will have to use different tools. regulators will aim to look at the way companies operate, but also the way customers interact with them. and most crucially, whether or not they are able to find other alternatives. she said the case of google's android and apple's ios system. in that case, the european commission ruled that google's dominant position was not challenged by apple. maria tadeo, bloomberg news, brussels. taylor: with just days until the u.k. election, opinion polls show boris johnson is on course

to win a majority which would pave the way for a brexit vote in parliament by january 31. for insight on how this can affect the region's tech sector, we are joined by alistair mitchell of eq ventures. if we were to face a brexit, which we think we have been getting for multiple years, how does that change the tech sector and hiring? alistair: it is great to be here talking about this. this is a subject that is talked almost nonstop about, because it has been going on for a long time. i think everyone has realized no matter what happens in the election, there is going to be continued uncertainty. even if it goes the conservatives' way, there has to be a deal hammered out. we all know from the previous deal that there was many years of transition between european framework to where the u.k. plays a lesser part. taylor: has this uncertainty

weighed on consumer sentiment? alastair: absolutely. especially in the tech sector which is very fast-growing and relies a lot on cross-cultural, cross-country talents and investments. for sure, over the last two to three years, an awful lot of uncertainty in london. there have been funds that were not able to raise. lp's that can no longer invest in u.k. funds. there have been companies that might have started in london starting somewhere else. that has not hurt europe. europe as a whole has done very well over the last few months. last quarter, 8.7 billion euros invested in european startups. this year has already beaten last year on how much is invested in europe. london has meant what may have taken a bigger share of has going to other places like paris or berlin. taylor: as an investor, are you more comfortable going to other cities in europe to get away

from the uncertainty in london? bradalastair: we are european f. raised almost three quarters of a billion dollars to invest in european startups. we are huge believers. but it does mean we look across europe. 50% of the deals were in london and the rest were spread out. now, you are seeing a bigger spread in berlin and across europe, eastern europe. it is much more localized. startups stay in where they are because the talent you have got there and the rise of investors not just looking in one location. taylor: have have to look at tech visas in london and how you basically hire talent? alastair: we have the luxury of looking across europe. 40% of the last quarter of startup funding in europe came from u.s. and asian funds which is a record. there are more and more of the big names coming into europe. they are starting to locate in

london, specifically because geographics and language. for us, we can find the best startups. before joining as an investor, yeah, you care a lot about visas. the bet for u.k. based startups is there will be some visas that will make it easy to bring an amazing talent. or remote working. you can have teams living in other countries. taylor: eqt ventures alastair mitchell, thank you for joining us. brexit and tech story folding into one. that does it for this edition of bloomberg technology. bloomberg technology is livestreaming on twitter. check us out. make sure to follow our global blancaneaux was network, quicktake, on twitter. this is bloomberg. ♪

paul: good morning. i'm paul allen in sydney. under one hour away from the market open in japan and south korea. shery: good evening from new york. i'm shery ahn. sophie: i'm sophie kamaruddin and hong kong. welcome to daybreak asia. ♪ paul: our top stories this tuesday. a step closer is the u.s. prepares to fly to mexico. congressional approval could happen this month. morgan stanley wields the