♪ >> from the heart of where innovation, money and power collide, in silicon valley and beyond, this is "bloomberg technology," with emily chang. ♪ emily: i am emily chang in san francisco and this is "bloomberg technology." microsoft slowing crowd -- cloud growth as investors overlook the strong second-quarter report.

we break down the results. mission aboard, plans to abandon a $40 million deal. and owner softbank looking into an ipo. and by now, pay later seems to be everywhere now. i talked to one of the biggest companies behind this new approach. all that in a moment, but first a look at the markets and check results -- tech results after the bell. ed ludlow, microsoft is the one we are watching? ed: it is the first mega cap to report this quarter. if you look at nasdaq futures, they are paying attention, 20% topline growth in the quarter, $51 billion of sales, a beat on the bottom line and yet markets are focused on asia and cloud which grew at a humble rate of 46%, 46% growth in cloud and the

market is disappointed. the bar was very high for a topline beat, and there are worries about decelerating growth. some positivity, texas instruments, i love texas instruments. really interesting, the biggest maker of analog processors. they are going into all kinds of gadgetry, the market up more than 1.5% after hours because the outlook is good on a day when semiconductors are getting hammered. this was a risk off day, tech stocks under pressure, we saw the nasdaq 100 pare some losses, but he gave up, closing down after the session two point 5%. if you look at cryptocurrency, bitcoin came from $33,000 monday and trading $36,007 per token now. but there are a number of constituents roughly lower as lower-value coins are under

pressure. semiconductors, the philadelphia semiconductor index closes 1.3% up monday, down almost 4% tuesday. on the downside, nvidia. a bloomberg scoop, according to sources, nvidia is widely preparing to give up on its acquisition of arm. according to one source, they don't think the deal can get done come they don't think it can get past regulators. a big story that clearly has an impact on the industry in the market. emily: we are going to dig into nvidia more this our feedback to microsoft, and bringing in jeremy goldman of insider intelligence. microsoft shares under pressure, down 7.5% after hours, what is going wrong? jeremy: there are a lot of strong fundamentals to look at for the future. and there is a lodge market pressure. you can't extricate from the larger market picture.

there is that slowing cloud growth and that is something to pay attention to. another thing to pay attention to is that they have five or so divisions that are growing 29 percent at least year-over-year, which i think a lot of companies would be happy about. emily: does slowing cloud growth concern due to the extent that we are emerging slowly out of this pandemic, and what does that mean for a massive driver of their business over the next few years? jeremy: slowing cloud growth is notable, definitely a call out. at the same time, azure is making significant inroads into aws, something important. and as microsoft looks to the future, gaming and metaverse related immersive technology is going to be more important to their overall growth. to me, it is not necessarily

what has happened, but what does that portend in the quarters ahead? emily: let's talk about the massive deal for activision. does that make you more excited about microsoft's future? are you concerned about cultural issues? and it is a behemoth, a big deal to take on. jeremy: i come from the buys of, rather than being a financial analyst covering marketing and immersive technologies and how brands can take advantage of them. given that, microsoft seems well poised to take more revenue out of the gimmick space over the next few years. -- out of the gaming space over the next few years. they have shown they have the ability to make major acquisitions in the gaming world and then, figure out how to incorporate it into everything they are doing. eight is important to note -- it is important to note that the

metaverse was cited as a major acquisition, so based on that, you can see synergistic opportunities with the recent gaming planned acquisition. emily: do you see this getting microsoft they had started in the metaverse? perhaps faster and farther than meta so far or apple with it a are glasses that the company has been working on reportedly, but we haven't seen yet? jeremy: in short, yes. part of the reason is that microsoft is basically acquiring users right now. if you look at major games like "call of duty," they are fundamental building blocks to building a metaverse. you can take these games and that and come you can start to do things we wouldn't necessarily call gaming, and do them within gaming-like environments that are immersive. microsoft does not have as much

investment in the metaverse hardware as some companies like meta, but they still have quite a bit and i think user acquisition is often the name of the game. emily: jeremy goldman, thanks for your insight. now, to an anniversary like no other. one year ago, i wall street phenomenon basically kicked off the meme stock momentum that we are still seeing, leading to robinhood halting the buying of gamestop on his platform. the platform then faced a fury. to talk about the changes, bloomberg's annie joins us now. its crazy to remember where we were a year ago and what has happened since. talk about this milestone and what it signifies. >> robinhood has had a crazy

past year. they already had risen to prominence during the pandemic when retail traders were piling into the stock market and options and crypto. that really reached another dimension during the gamestop episode that happened exactly one year ago. that put robinhood on the radar of many more people and lead to a huge influx of retail investors. over the past year, robinhood had an ipo and is now a publicly-traded company, but its own stock price has been taking amid this slow grind of retail investors in the market. there is elevated participation, but nowhere what we were seeing a year ago when gamestop was reaching a fever pitch. emily: robinhood just put out a blog post reflecting on what a year it has been bit. -- what a year it has been in --

what a year it has been. robinhood put out a statement saying it was founded on a dream of helping more people invest in their futures. the retail investing revolution as shown is that a new generation of investors wants their voices to be heard. our work is just begun. what has changed? annie: you have seen investors come off this idea in the robinhood is purely a financial technology company doing things extremely different from other brokerages. right now, its brokerage in stock options, crypto trading, that is something that is available at other brokerages as well. there was also this moment where it seems investors were only choosing robinhood, or maybe it was the most prominent brokerage name for a while, and a bit of that luster may have worn off as investors dug in a little more. so, it is not necessarily going to dog them forever, but it has

been a setback as public markets investors have taken a closer look at this company. emily: we just covered robinhood adding new features to its platform and the ability for retail investors to ask questions of ceo's on earnings calls via the robinhood platform thanks to their safe technology acquisitions. earnings are coming up, what are your expectations? annie: something to watch for in the earnings on thursday is out retail investor participation has been going and how many people that have been using their platforms broadly across the market. we have seen retail investor participation in stock trading fall off of those highs from last year. that could be a setback for robinhood if that trend continues. emily: bloomberg's annie massa, thanks. president biden will meet with more than half a dozen ceo's wednesday who support build back

better, including big silicon valley names. the white house is looking for a way to pass the president's economic agenda that the administration says will strengthen the economy as well as workforce participation. we will be monitoring the meeting tomorrow. coming up, meantime, tensions between the u.s. and russia keep rising. >> we have no intention of putting american ground forces in ukraine. but as i said, there are going to be serious economic consequences if he moves. emily: more on those sanctions, plus a cybersecurity warning the biden administration just issued about russia, next. this is bloomberg. ♪

>> i was here in 2014, when the united states first took actions when russia create -- russia invaded crimea. the options today are far more significant than the options that were taken then. all options are on the table. we have done is work mostly with our allies in europe to make sure we have a carefully designed set of sanctions that would impact the russian economy. we have a shared goal in terms of respecting the sovereignty of ukraine, and in terms of standing up and ensuring we have sanctions at the ready in case russian troops enter ukraine. emily: the u.s. treasury secretary outlined the biden administration's plan to sanction russia. u.s. has put 8500 troops on alert for possible deployment does russia has as many as 100,000 troops on the border near eastern ukraine. the department of homeland security is issuing a warning that russia could levy

cyberattacks against the u.s. in retaliation, warning russia could target critical infrastructure. for more, i am joined by general keith b. alexander, former commander of cyber command and founder and ceo of ironnet. great to have your perspective. cyberattacks from russia and the threat of them are nothing new. what makes this time different? general alexander: i think right now, president putin is looking at his options of, how do i take over eastern ukraine? it is clear that moving 100,000 troops on the border is a significant statement by him and he is serious about this. i think he is still weighing his options. i think what our president and europe are trying to do is, how do we keep him from going in, going in to eastern ukraine a doing what he did eight years ago in crimea? that is what he is trying to do and i think he believes it is a good time to do it.

there is a lot of opportunity here, and he is weighing the consequences, those increased sanctions, and europe in the united states coming together to do that versus him getting eastern ukraine, which he has always wanted. this has gone on for a while. i think he is now putting a statement in your eat is a good opportunity from his perspective, what is the cost? emily: what is the cost? -- general alexander: the cost would be, they have nato in europe aligned on this. we have got everybody leaning in. it was a great mood by the administration and europe to start bringing more oil from the middle east to europe. that is a huge statement, because that is a long time, and during impact economically on russia. and it means europe can live without russian oil and gas and here is how we are going to do

it. i think that is key. what i worry about though, is the attacks on ukraine could go cyber, and if you recall, earlier attacks impacted the world, fedex, merck, and that caused a tremendous amount of problems for everyone. we could see the same thing and it could grow. and my concern is, this could get out of hand. cyber is now an element of national power. it is one element, and as soon as it escalates, we have a problem. that is what i would be most concerned about from my former time. emily: what about a possible cyber attack on the united states, what would you be most concerned about? is it an attack on critical infrastructure, hospital records, the power grid, supply chains? general alexander: each one of those has different consequences. if you think about what they are going to hit, there are

devastating attacks they could do against the energy, the oil and gas sector. take colonial pipeline and a number of those. actions they could do against hospital spit but if they do that against hospitals, that is a different set with our people, i think. going after energy and shutting down the pipelines, the oil and gas, what would that do to our will to engage? that is the question. russia is going to look at what they can do to impact will of the american people and impact the will of the european people in this conflict. that will to fight and push back is something we have to consider. it could backfire. they could think, we are going to do this and it could backfire, as it did in world war ii. these are things we have to consider. as you look at this, emily, it comes back to what chris english talked about a few weeks ago, and what they did in the commission.

we have to nothing about cyber as an element of national power, how we are going to bring the public and private sector together to defend this nation and work with our allies. we have got to get that going. emily: what kind of cyber actions on the united states or ukraine would lead the u.s. to retaliate, and what kind of offense of cyber actions do imagine the u.s. would take -- offensive cyber actions the u.s. would take? >> there are overt and covert things we could do and i am sure that would consider all of those. the national security council would bring all that together, they bring in the jungle and the team and say what options do we have, what can we do to respond, what would we do diplomatically, economically, what can we do in cyber? what actions can we and our allies take? all that comes up with a series of capabilities that the

president and principals committee would look at. you have hit some key things, critical infrastructure, what do they do? if you hit critical infrastructure and it causes significant damage to this country, i believe it will not go without a response. and what that response would be is where the president has a choice, and the secretary of defense. they can get together and say, what are we going to do? at each of those, the calculation has to go, we don't want another war, but we can't let people president putin take over countries like they did crimea. and we are going to see multiple sites of this, we are seeing it in the middle east and asia and this is a really tough time. and i believe it is going to get worse. emily: we will keep watching, thank you for that morning, general keith alexander, ironnet cybersecurity. netflix is betting big on the

asia-pacific region on the heels after a brutal selloff. our conversation with the vice president of aipac is next. this is bloomberg. ♪

♪ emily: the pressure on netflix, not easing up after its massive selloff, now looking to asia-pacific to drive growth. bloomberg spoke to the vice president of content for aipac and asked if she is concerned about climbing subscriber growth. >> not really. what drives our growth is the strong slate. and if i think about the slate upcoming in asia in 2022, me, my team at all our netflix employees, along with the fans of content made in asia are very excited about what is coming.

in covid, we have had headwinds in terms of production. there were production delays and omicron unfortunately setback us a little bit, but we are very confident we will be able to create another strong slate in 2020 two. and if you look at 2021, aipac was at the forefront of driving growth for our service. i do believe that will continue in 2022. >> let's talk more about that slate, because korean-language productions where the breakout hit of 2021 and you have announced the latest korean content lineup. how does that affect demand? >> leslie, we had an exciting announcement that freeze a lot of members in netflix and

outside netflix -- that pleased a lot of members in netflix and outside netflix. we announced about 25 shows, a wide variety of genres and format. last year, we all know that the world responded in huge numbers on their love for korean content. i think squid game really helped us drive that love and excitement. but on that slate, we have shows like "all of us are dead" and "money heights korea" which is an adaptation of our popular spanish series. we are excited to present our first step of original film production and also unscripted programming, followed by recent success. but when it comes to local

content, what we are really aiming for his local impact -- for is local impact. we want to make sure we program our service with korean content to please our korean members and our members in asia. and i think it is exciting that with increased demand for korean content, the world is just enjoying what we are watching together. emily: minyoung kim, aipac's vice president for content. more consumers choose buy now, play later. one of the industry's biggest players, coming up. this is bloomberg. ♪

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♪ emily: welcome back to "bloomberg technology," nvidia planning to abandon its purchase of arm from nvidia. $40 billion chip deal. softbank stepping up preparations for an arm ipo. ian king, who covers tips, joins us now, is the arm deal dead?

ian: there are significant groups within both companies that are bowing to what they believe is the inevitability of this not making it through the regulatory process, and that it is just not going to happen. publicly, we need to point out that the companies are both saying look, it is still going to happen, and are sticking with working their way through that process still. emily: what is next forearm if nvidia -- what is next for arm it nvidia can't buy it? ian: softbank has always said nvidia is our plan b. that was what happened before the offer of all the money. the question is how much can softbank raise in the process of an ipo depending on where chip valuations are? bottom line, it is probably going to be difficult for them to get the same kind of return if they were going to be made by

nvidia. emily: it is no secret that nvidia competitors didn't necessarily want this deal to happen. listen to what the qualcomm ceo told us a few months ago. >> arm already won because they are independent. it isn't like you need for one company investing in arm for them to win. emily: he wants arm to stay independent. what does this mean for nvidia competitors, good news? ian: you just had the ceo of a company publicly talking abou & m&a between customers and suppliers that we mentioned day host of companies in our story that don't like this deal either. nvidia would counter by saying we were going to give arm

a ton of money and keep it independent. who is the loser there? but they obviously don't buy that argument that nvidia could invest in arm and own it and keep it independent. emily: the biden administration today said the chick shortage is going to continue through the end of this year at least. what is the outlook on how to turn this around and other government can help? en: -- ian: that is the key question. we have no this report was coming for a while and they have said we are going to do something about this and come up with the answer, which says it is pretty much the industry -- pretty much what the industry said it was, that it is bad for some areas of the economy and we have to leave this to the private sector to sort this out. not a great conclusion for automakers and various other components of the economy that really are suffering because of the shortage of semiconductors. emily: ian king who covers chips

for us, thanks for your reporting. meantime, a host of new players and consumer finance have retailers getting excited and regulators asking questions. the so-called by now, pay later space let's shoppers take home - - buy now, pay later space lets shoppers take home items and pay for them later. joining us now is sebastian siemiatkowski, klarna ceo. glad to have you back. regulators are asking questions. what does it mean for growth this year, is it still about to jump 300%? sebastian: i think it is a good thing they are asking questions. we have seen similar things in europe. one thing to put into perspective, in 2019, american spade $14 billion in late fees to credit card companies. they paid $120 billion a year

and credit card interest and fees. and the buy now, pay later services are interest-free and free of charges for consumers. it does you how much global opportunity there is to disrupt that industry. emily: an investigation launched into the industry last month. i am curious what your interactions with the agency have been so far. do you at the cents they want to see the industry grow, or take a pause? sebastian: as any regulator, when something new comes along, they want to try to understand it, is it good or bad and what are the implications of -- implications for consumers? are they following best standards? i would look at this as more of a query than an investigation. but i think they should be asking questions and they may be asking about products where

regulation should be improved. it could be changed. we have seen suggestions for improved legislation and supports. but if you look at the data, which regulators and to start doing, we are 30% or 40% below industry standards and credit cards, so these platforms are better for consumers because there is an underwriting decision for every transaction. with a credit card, you get a huge limit and go out and spend it and they want to maximize your debt. emily: let's talk about what is better for retailers. as i understand it, most buy now, pay later operations ask the merchant to pay 6%. merchants aren't happy about paying 2% to credit card companies, so how are you convincing them to pay that 6%? sebastian: i think the prices

have dropped due to competition. i think those were levels that were slightly crazy, may be the beginning. but today, we are seeing more competitive rates. to us, if you look at klarna, we take part in a market in europe with debit and credit and have reached scale with 100 million users that we can compete with credit cards as well and are in a position to reach economies of sale in the u.s.. we are reaching now almost 25 million users. over time, we believe we can become really competitive when we are both pushing costs of payments down and providing this service to consumers. when you initially enter markets, you may not necessarily to price there just yet. i think we are going to see those costs come closer to each other over time.

emily: i have to ask how your thoughts are evolving on crypto. we are feeling the chill of a crypto winter, not sure how long it is going to last. how are you thinking about this and the future of klarna plus crypto? sebastian: we are one of the few players of our size that have kind of kept away. i think about it in two ways, i think about it as an asset and as a technology. as a technology, we have been trying to apply it to see systems work better or become efficient or at lower cost. we have not been able to apply the technology in such a way that it has helped anything eerie as an asset, people put money into tons of assets, some people put it in old paintings, some people in gold, some people in something else.

that is a matter of taste. but i am very worried about how it seems to be the case that none of the regulation that we have in regards to how to market assets or equity instruments that apply to stocks. if i did the kind of advertising on stocks that has been done on crypto, i would most likely end up in jail. that is very worrisome to me. i do worry there might be some crypto holders that have borrowed money, that have used credit to buy more, and if prices continue to drop, we may see some very sad outcomes. i sincerely hope that we will at least see some more sanity around how these products are advertised and that they follow the same standards as any other financial investment category. emily: i am glad i asked you for

an update. thanks for joining us, sebastian siemiatkowski, klarna co-founder. coming up, 21 was a record year -- 2021 was a record year for funding. will 2020 to bring the same, or a cooling? this is bloomberg. ♪

♪ emily: we all know 2021 was a record year for vc fund raising and investing, but as we watch markets reflect, some investors are wondering if there is a discct between valuations,

and if it funding correction could become it? it could take years. my next guest is issuing his own warning about the need to invest in companies that are sustainable and get away from the ones that flew fast and rake thing, facebook's old tagline. hemant taneja is the general manager -- is the manager of general catalyst and is out with a new book. what counts when it comes to responsible innovation, profits, building a diverse team? hemant: responsible innovation is a mindset and mechanism to build companies that simultaneously optimize financial and societal returns. if you think about technology, we don't build software for different stakeholders in the economy, we build very important businesses, sometimes health-care businesses or banks or insurance companies. the responsibility around those is much greater than what tech

used to do, we need a playbook around how to build these companies in a way that they are fundamentally in the interest of society. emily: vc's also have a role to play and you callout reid hoffman, cofounder of linkedin for his method of blitz failing. what is wrong with that? hemant: read is a great friend and blitz failing represents a playbook for growth, how we can build companies fast. there is nothing wrong with that except that when you are moving really fast, there can be unintended consequences. what we are advocating in this book is to have a playbook for responsible innovation. mindset, mechanisms, business model choices, product choices, governance, the lives you --

that allows you to make sure these companies are not moving fast and breaking things and are working for all stakeholders of society. emily: meta, formerly known as facebook, i spoke with andrew bosworth, here is what he had to say about responsible innovation there. >> we can do a lot better job than we have historically because we have a record of the types of abuses that have happened in digitally-connected spaces. emily: should we believe facebook or now, meta are they a responsible -- meta? are they a responsible player? hemant: any company has a chance to learn from its past and make responsible choices in the future. at meta, you have people making those choices as well. the key is to think through those thanks for stakeholders. emily: we are seeing a big public tech equity selloff.

is it leaving you concerned about a pull off in the private markets? we hear from vc's all the time, they are not paying attention to what is happening in public markets, but i wonder if all this money flowing income all these high valuations we are seeing, if there is a correction coming? hemant: most people don't understand the impact of interest rates on valuations. a 1% increase in interest rates leads to 15%-20% decrease in valuations. some of this is not a surprise. i think markets are interested -- are anticipating the interest rate rise and the world of near zero fed rate and 7% inflation anyways, this is actually helping. i am hoping that this mindset and correction can start to impact out we are also building companies and funding them.

because there is phenomenal opportunities and a lot of capital has been raised, but at the end of the day, we are not going to build rate companies if they are over capitalized and don't build responsibly. hopefully it will slow down and make us more intentional and we will build better companies. emily: we will be watching to see if that happens, hemant taneja, general catalyst managing partner, thanks for stopping by. emily: coming up, investors remain on edge over the rates we were just talking about. how the tech sector is playing a role. this is bloomberg. ♪

♪ >> apple's first product launch event of 2022 is fast approaching and it is likely be all about a new iphone and a new ipad. the company is planning to hold its first event of the year in either march or april. what is on tap is a new iphone with a faster processor and for the first time in that model, 5g. new devices will take a similar shape and offer apple users a low-cost 5g alternative to the iphone 12 and iphone 13. a new ipad is also likely with the company planning 5g and a faster chip to replace the current one launched in 2020. the new products will start a giant rollout for apple in 2022, slated to include revamped

iphone 14 models, three new apple variations, revamped macbook, a new desktop, a larger pro imac, updated airpods, and a new ipad pro. the fc in the air are not apple breadwinners but represent users in the larger apple ecosystem and can possibly pulling switchers. for those awaiting the iphone 14, expect a new design, much faster processor and better cameras. this is powerline. emily: you can subscribe to mark's weekly power on newsletter on bloomberg.com. back to the market as we dive into earnings for the world's biggest companies. we have gotten microsoft and ibm, numbers next up, intel and tesla wednesday, apple thursday and next week, facebook's parent and google's parent, alphabet.

our ed ludlow is here to break it down, still following microsoft numbers, not great investor reaction. ed: a lot of hope was pinned on this weekend next week. going into this week, volatility around tech stocks, the focus being the fed and the outlook for rates. then come you come back from the weekend, and a lot of nervousness about geopolitical risk, tensions between ukraine and russia. if you read the wall street notes, everyone was hoping for not just topline beats, but bottom line beats as well. before monday, seven of the s&p 500 companies that reported had done well from an earnings beat perspective. microsoft's aftermarket reaction, nasdaq 100 futures, etf's that track the nasdaq 100 are both down. did that set a grumpy tone for the rest of this week. emily: talk about what is

driving today. nvidia is not good for the rest of the semiconductors? ed: yeah, big scoop from bloomberg. if you look at where nvidia sits within the spectrum of big points movers on nasdaq 100 come i think it was the second-biggest points like. it has outsized influence. it has grown during the course of the pandemic in terms of gains in the share price so when we have news like this, it does move the index lower. again, it is another risk factor, uncertainty. investors saying this is something else we have to worry about in this industry. as you know, the index has had its worst start since 1994. you have to go back a long way for semiconductors to do so poorly. emily: talk about what is on tap this week, with tesla especially. ed: we have been talking in the newsroom, what do we treat tesla as?

in the last 18 months, we were getting upset about tesla being profitable and then tesla joined the s&p 500. it did that come in six consecutive quarters of profit, it has ramped up production of vehicles to numbers that we didn't think it would be able to achieve in the context of the semiconductors shortage and global supply chain crunches. what do we look to? boring stuff, financials, the margin, the gross margin, much money isn't making for regulatory credits? we know elon musk is going to appear on the earnings call because he said he was not interested in them anymore, but what he is -- what is he going to say? emily: we will be watching it we will have you break it down. thank you. the days of number two pencils and filling in bubbles are going away for high school students. the college board says the sat is going digital. it will make the change internationally next year, and in 2024 in the u.s..

the goal is to make the test more relevant as more colleges make it optional for admission. that does it for this edition of "bloomberg technology." tomorrow, more on the buy now, pay later landscape and we are joined by kevin meyer, former head of disney streaming and former ceo of tiktok. don't miss it. this is bloomberg. ♪ ♪

♪ paul: good morning. i'm paul allen in sydney, counting down to asia's market opens. shery: welcome to ""daybreak asia," our top stories, asia starts off to a cautious start after whipsaw trading on wall street. investors look ahead to the fed decision. rush's vladir