>> from the heart of where innovation, money, and power collide in silicon valley, and

beyond, this is bloomberg technology, with emily chang. ed: i'm ed ludlow in new york, in for emily chang. in the next hour, a report about apple plans to scale back iphone releases. stocks down. the company plans to build phones, but extra demand never materialized. plus, amazon devices get a facelift. the company unveiled a bedside sleep tracker as well as updated kindle and ring cameras. we talk with the senior vp of devices. in the latest announcement about a conference partnership with robinhood.

let's look at the markets. an equity market rally after yields pullback wednesday. >> finally some green on the screen for the u.s. equity market. this is all coming after the market breathed a sigh of relief after the bank of england intervened in the u.k. bond market. we saw those effects across global financial assets. the s&p 500 up about 2% and the nasdaq 100 right in line. yields were falling -- 3.7% on the 10 year, about 4.1% on the two-year. those were levels we saw just a few days ago. tighter monetary policy, a more aggressive fed, higher bond yields. looking at individual movers in the equity market -- netflix up over 9%, the biggest gain since

january. definitely had an upgrade. it went from neutral to overweight. bullish on the prospect of advertising on netflix. the best performing stock in the s&p 500 was biogen, up almost 40%, 11 billion dollars in market cap added. they announced an alzheimer's drug in clinical trials showed signs of slowing the disease. a lot of optimism for biogen. apple, not so much. down about 1.3% to finish the day. this is after bloomberg reported yesterday that they are dialing back plans to ramp up production for the iphone 14. the anticipated demand, they say, has not materialized, so we are seeing that stock down. bitcoin, 19,000. it is kind of stuck in a range here. it has not done anything exciting. it is up higher with the broader

equity market, but it has been struggling to hit that $20,000 level. ed: let's stick with the apple story. bloomberg has learned apple's backing off plans to increase production of its new iphones this year. the company had expected a surge in demand, but that has not happened, according to sources. mark, what is the latest report question mark what is going on? mark: in 2022, apple planned to sell 90 million iphone 14 units -- including the plus and the pro. they had this recent extra credit idea for an extra 6 million phones on top of the 90 million, but the extra 6 million is no longer necessary because of concerns about the extra demand not happening in 2022. i would say that probably with recession and inflationary pressures that people are experiencing, the iphone 14 and 14 plus are not significant

upgrades over the 13. the pro is where the big upgrades are. that is what people want to buy. i think people are holding off until they can buy the pro max or upgrade to those pricier and far better versions of the phone. ed: have you seen evidence and data that consumers around the world are going for the higher price point pro? what have we learned? mark: in particular the iphone 14 promax, that's where it is at. people want those devices. if you look on the year-over-year level, the move from the iphone 13 to the 14, extremely minimal. i would say it is the smallest upgrade in iphone history. but going to pro, a very big upgrade. there is the dynamic system you are showing on the screen right now, and some of those video

upgrades. that is what people really want to hold out for. if you look at the apple online store, you can see in particular there the wait time for the pro phone is far longer than the regular model. that is a good indicator of demand. also, this is not an exaggeration -- you go to an apple store, there are lines around the block for days to look at the pro model. you ask people what they are lined up for, out of 50 people, maybe 48 or 49 are lined up for the pro. ed: i want to bring in forrester research vice president. julie, this is interesting. no matter what the environment, people buy iphones around the world. what is your read? julie: thank you. i think there are a number of factors. we know that apple's iphone owners and buyers are more affluent, even if you look at

the u.s. alone. the average household income of an iphone owner is more than $80,000. for android, it is much lower. if you look at households with incomes of more than $3000 annually, 3% for the iphone and only 1% for android. there is a lot of data that shows that iphone owners are more affluent than those that are purchasing an android. i think the second thing that comes into the mix is the upgrade cycle. last year and this year has been an interesting time because a lot of carriers shut down 3g and forced an upgrade. when we look at data across the u.s. and europe, 25% to 90% -- to 29% of consumers have purchased an iphone in the past year, which is a substantial number when you take into account that iphone represents less than 50% of share in each

of those markets once you get outside the united states. 61% of consumers expect a recession is coming, so they are slowing spending. 34% of u.s. online adults say we are going to spend less on electronics in the coming year, so there is hesitation in the market. consumers are pulling back on spending. ed: we love having you crunch the numbers. let's take a step back. a lot of cell ciders seem to be saying that it was going to be difficult to sell 90 million units anyway. what has changed? julie: it is hard to say what the analysts were modeling. there are always good reasons to think about where they could not grow the market. certainly, for example, one of the things we know is that 20% of consumers who buy apple products only buy apple products. they are buying a watch, signing up for apple one. they are more likely to be an ios smartphone owner.

apple predicted they would have converted more android users this year and they have a very deep lineup that is capable of competing at lower price points. i don't know what was going on when they did the forecast. 6 million is not a big number on top of 90, you know? it is not 10%. it is not a big number. ed: when you talk about the prospects of a recession, we are trying to look for clues about what is happening with the global consumer. what do you see broadly in the smartphone market, globally? are their spending habits that are changing? julie: yes, i think certainly when we look at the numbers and we are talking to consumers -- what concerns you? food is more expensive. rents are up. there are quite a few categories i would say or more essential than having the latest and greatest smartphone but keep in mind the upgrades -- these phones are amazing feats of

engineering. they are amazing devices, whether it is an iphone or one of the latest android devices. consumers are hanging onto these devices for 2, 3, 4 years. that could be conditioning to softer demands. ed: thank you very much. coming up, amazon's ambient intelligence. looking for a more personalized future in its devices, next. ♪

ed: on wednesday, amazon held its fall hardware event where it announced new gadgets. we spoke to the ceo of devices and asked about the strategy with so much competition. dave: we are trying to build devices and services that mostly focus on the home, although increasingly in the car, that follow a pattern of what we call ambient intelligence, which is the ability for devices to be very useful to customers when they are in the foreground and when they need it, but when they are not using it, they disappear in the background. we are at our best, we allow our customers to put their heads up and enjoy the family and let technology help that instead of

being absorbed in their phones are out in the metaverse somewhere. ed: with inflation higher around the world, how tough of a decision was it to not raise prices? dave: i think since the very beginning, our first kindle 15 years ago, we tried to make our products as affordable as possible. our strategy has been the same since the beginning. we want to make money when customers use their products, not necessarily when they buy them. we are always looking at commodity costs, but part of the ability to pass on that value to customers is that the business is at a scale where we can buy in volume, and we want to give that value back to customers. ed: you mentioned the kindle. it is a bit of a throwback, the first amazon device. you added a stylus. do you think this is going to be a volume seller?

dave: kindle scribe is not only the kindle we have always wanted to build -- we have some great kindles. we just announced some two weeks ago that are at $99. but this is the first kindle you can write on. it has a 10.3 inch display. incredibly high resolution, 300 ppi. there is a stylus. it does not have a battery. it just works. when you write on kindle scribe, he really does feel like you are writing on paper. it is amazing. you kind of have to try it to see it. i don't try to predict. we try to build great products and hope customers think for themselves. i know i will be buying one of these. ed: around the world, we see consumers feeling pain. at the same time, there is evidence that consumers are spending at the higher end of the market. what do you see in the market you operate in, in the spending habits of users?

where they are putting cash, or where they are holding back. dave: her first signal was a couple months ago with prime day. we had a good prime day from my part of amazon's business. i think customers tend to look for value in times when the economy tougher. it is hard to predict what is going to happen as we go into q4. there is no question there is tightening in the economy. the best thing we can do is get our inputs right, and price products correctly, so they are affordable. the rest is going to be up to the consumer. but i am an eternal optimist. i have a high level of conviction there will be a lot of echoes and kindles this year. ed: the deal with irobot, the news that the s.e.c. made a request for additional information -- how optimistic

are you that that deal gets done? how important is irobot? dave: obviously, we have to go through approval cycles around the world. until we do get through those, we will continue to operate at arm's-length. they are separate companies. i would not have sat down with collin if we did not have optimism we could get the transaction done. collin, the ceo of irobot, is the most -- one of the most missionary entrepreneurs i have ever met. i look forward to working with him closer. ed: there are so many product lines. we did not even get into tv's. all of that makes me think about your manufacturing footprint globally now. let's talk semiconductors. how is the supply chain? how is manufacturing?

how is access to key chips you need to go into these devices? dave: we are coming out of the other end, at least for the products under my purview. i don't think it is over. we still see disruptions in the worldwide transportation network, especially on the ocean. certain chipsets are still in shorter supply. one of the more critical components -- the actual processors in our products -- when you look at display panels of things like tablets, that supply looks better than it did a year ago. i don't think we are through it, but i start seeing a light at the end of the tunnel. ed: let's stick with amazon and bring in tom. something of a facelift --

updates to existing products. did any of that move the needle for you? tom: when i think about their strategy, i think of them is one of the low-cost providers of hardware and the consumer electronics space. i think it should be a popular product, that they are adding the stylus to the kindle. when i think of their different lines of consumer electronics, the kindle is probably amazon's most dominant. if you think about a lot of their echo devices, the good news is that amazon makes a lot of devices that leverage alexa, but a lot of other consumer electronic companies do too. leveraging alexa, it is not just the echo device line, but the fact that so many manufacturers -- take sonos as an example -- are making product integrating alexa. that is my initial take on their new hardware offerings.

i'm fascinated and i'm glad you talked to him about the irobot acquisition. what is it about the room but that attracted amazon, -- the roomba that attracted amazon and what made it think it needs to make the acquisition? ed: the timing is interesting because we just had news of essentially a second prime day next month. do you expect consumers to rush out and gobble up these devices? tom: that is a no. the second prime day in one calendar year -- as a longtime student of amazon, i remember when they had the first prime day in july, and the reason was they wanted to test their logistics to see if they were ready for the big sales day -- cyber monday. in my opinion, having to prime days in the calendar is actually a sign of weakness. it means their sales are not doing as well as i hope. i also think they want to

leverage their logistics to get return on their investments. do i think investors will gobble up there consumer electronic devices? generally speaking, they do well with amazon devices on prime day, but in general, i'm concerned that they're having to sales in one year. i think that is a negative sign. ed: why do we care about amazon's devices business? they price them competitively, but it seems the idea is just to bring more people into prime, more people using alexa. they are not making money through the hardware, are they? tom: definitely the opposite of apple, where apple makes the majority of its revenue from hardware sales. for amazon, hardware is essentially an enabler. what can i give a consumer that will make it easier for them to buy products on amazon? what can i give a consumer that would make it easier for them to watch videos on amazon?

in that regard, not-for-profit needle mover, but it can have a positive impact on e-commerce sales. everything that makes it easier to buy products through amazon. ed: you are concerned about a mixed reception for "rings of power." have the episodes changed your mind? tom: i essentially fell asleep in episodes 1, 3, and four. i have not watched episode five yet. it 38 approval rating on rotten tomatoes. i am concerned about the billion dollars invested by the company. ed: harsh critic. thank you very much. we will be back with more headlines of the day. ♪

ed: elon musk asked a federal appeals court to throughout the deal he made with the s.e.c. in 2018 over a twitter fit. the tesla lawyer has screened all of muska's company related tweets after the s.e.c. agreement which muska calls an illegal effort to muzzle him, adding it is smothering his freedom of speech. the judge refused his last plea to end the deal back in april.

tesla has added a board member -- the cofounder of airbnb. in the last four years, he has overseen the airbnb design studio and nonprofit foundation. he recently stepped back from his role in operations. he replaces larry ellison on the board. and general mills, the maker of cinnamon toast crunch and annie's pastas is battling a takeover attempt by san francisco-based groep market. money has a $2 billion valuation. the platform connects food suppliers with customers. grab market -- grub market is expiring and ipo,-- grub market is exploring an ipo.

more than $2 billion in fines for big banks, plus news coming from a conference. ♪

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ed: this is bloomberg

technology. i'm ed ludlow. the popular messaging app whatsapp is more than encryption connecting people worldwide. it has become a major part of wall street communications. regulators spoke to banks about failing to monitor employee communications on messaging apps like whatsapp. wall street has been hit with more than $2 billion in fines and what is becoming called the whatsapp investigation. america and citigroup were among those fined. let's go back to the beginning. what is the activity and what are we talking about? >> 12 we call it the whatsapp fine, we are really talking about something that is not whatsapp. regulators want banks to ensure they are monitoring all these messaging apps. they do not want unauthorized use of these apps. he could be signal, could be telegram. these acts of gotten so popular

in recent years. all the communications with banks and clients have gravitated to these platforms. their archiving -- they need to make sure their archiving these chats and complying with the technology rules. the pandemic is an accelerator for sure. but i think it's also a technology story. you have just gotten used to the idea that people are more comfortable using these apps to communicate. you are more likely to send someone a message then pick up the phone and call them or email them. that is why there is so much focus on these apps. of course the pandemic played a role, because you had a situation where everyone left their offices. and when you are at, you are more likely to be more comfortable with things outside your usual 826 schedule. -- 8:00 to 6:00 schedule.

ed: this is a big number. >> $2 billion -- we are scratching our heads. in 2022, we are talking about a fine of $2 billion based on a company with a market share of $20 million. the last fine for a record-keeping lapse was $15 million, back in 2006. the big banks are coming out and saying this is the kind of fine you pay? this is when you bring down an insider cartel or something like that. but this honestly is a reflection of the reality today. this is the biden administration approach to regulation. ed: some fines are bigger than others. these are big institutions we are talking about. they are kind of paying the

price. i guess the question is, what is the reaction? tell me about the whatsapp cop on wall street. >> we have created a new compliance role for the banks that are part of the settlement. they agreed with the fcc and s.e.c. to install a new compliance officer whose role is to make sure they are archiving and monitoring these communications properly. that has been dubbed the whatsapp cop. ed: i think they would argue this is a common pace -- commonplace practice. it is a cautionary tale as well. >> you look at everything the regulators asked about. when they talk about the messages they found, they talk about the great volume of messages, but it's not like they unearthed some kind of fraud. these everyday communications could have been about work. it is just a regular, everyday

communication. it could be about something else that is going on. it shifted from the email they would usually use these messaging apps. the regulator frustration comes because they cannot monitor it and they want to make sure that banks are saving the data. ed: thank you very much. the european union foreign policy chief is warning of retaliation for any attacks on europe's energy networks. the e.u. suspects damage to under strain -- underground nord stream pipelines running from russia to germany were sabotage, and they will support any investigation. meanwhile, the ceo of one of the largest private security firms in europe said it has had significant demand for its business since the russian more -- war in ukraine. here's what poppy gustavson told tom keene in london.

poppy: this is an area that has to be cutting edge, because so many businesses rely on their products, the energy and other sorts of supply. this is things like russia and ukraine. we have seen significant demand for our products from the energy sector because they are at heightened risk, high risk of effects on the supply to other businesses. tom: what are the specific channels they need? poppy: it is all of the above. think of how many businesses depend on energy in europe and the u.s., and that is a very easy target. if you are operating a business that can rely on some old system that has been around for decades , it is not necessarily at the cutting edge of capability. but if you are looking to enact

a cyberattack for nefarious reasons, there are very high profile targets, and it makes that idea. tom: are you saying this has picked up? are the threats emanating from russia? poppy: we are not making attributions. we are not saying it is coming from one nation or another. but since the invasion of ukraine, we have seen an uptick in attacks across the infrastructure sector, particularly in europe and the u.s. tom: are you seeing reluctance from buyers? are you seeing demand away? poppy: i think to be honest the core indicator for demand more broadly -- we are still supply constrained rather than demand constrained. so we are not as surly a good proxy about what is happening in

the market. we are still seeing very strong demand. tom: the acquisitions, are they inevitably going to be moving higher? poppy: i think you will see that in terms of employee costs and things like that. tom: a few months ago, there was talk about a takeover. it did not come off. can you give me some details as to why they ultimately walked away? tom: i am constrained in what i can and cannot say. but i will say is that there is a whole idea -- tom: was the question pricing or did they find something they did not like? poppy: it was a very, very early stage of engagement. it became public. in september, we said those conversations had ended.

i will be looking across the u.k., looking at what's possible. tom: does the falling pound make you a more attractive target? poppy: i would speculate that yes. but from my perspective and my business, we are really prioritizing the weeks ahead of us. we have a lot of ideas, a lot of innovation. we are really excited. ed: that was darktrace ceo poppy gustavson. -- gustafsson. and we talked with the ceo of circle next. ♪

ed: time for our crypto report. we had the ceo behind one of the most popular stablecoins in circulation. we turn to celani bostick. -- sonali. sonali: jeremy, you have this new deal, this partnership with robinhood. your somebody who has already worked at so many institutions. what does this ad for your base retail customers? jeremy: thanks so much for having me on. we announced a broad partnership with robinhood here today at converge, our first platform ecosystem conference.

you have thousands of people in san francisco, which we are excited about. this morning, to go on stage -- the robinhood cto talked about this. robinhood is an amazing retail investor platform. they have 23 million users. it really sort of represents the kind of mainstream user participating in this more democratized financial system, and what we have done with robinhood is a few things. i think the first is just making that one of the currencies people can trade on the hood. they started with some traditional popular cryptocurrencies. it has become a critical part of anyone operating in the digital assets stage, whether you are using exchanges, while it's -- having them built in to robinhood and their 23 million users is really powerful. the second thing really was they have launched a new wallet, a web three wallet. they are really trying to bring

that huge user base they have into web three. making frictionless fast and easy payments is a core part of what people want to be able to do in web three, and this is built in. sonali: i think about the linkage between the traditional financial system and the crypto world. what about what fed chair jerome powell had to say given the regulatory crunches? >> there is a real need for more appropriate regulation, so that as this starts to touch more and more retail customers, that appropriate regulation is in place. sonali: who do you think is going to take the biggest lead here in stepping in and setting the groundwork for the u.s.? how soon do you expect this? jeremy: i think this is a

critical issue and there is bipartisan support for this idea that came with stablecoins, as a critical piece of how the dollar is going to compete on the internet. and the focus of policymakers, regulators like the fed and treasury and others, is we need to have a clear set of statutes for dollars stablecoins in the u.s., to manage the risk but also to make it clear that this is a new model for using dollars on the internet. with that will come from and his legitimacy for not just stablecoin, but for the advancement of digital assets as a corporate of the financial system. sonali: you think about what is happening in china and hundreds of millions of accounts -- very early to get behind central-bank digital currency. do you think the u.s. is falling behind? jeremy: we like to say that the u.s. is already winning the digital currency space race.

dollar digital currencies are the most widely used digital currencies on the internet today, which says something. the dollar, the power of the open innovation of blockchain, the power of private-sector innovation in the space -- that already created a leadership position for the dollar and the united states. now, the united states needs to codify and solidify that, so the digital currency dollars that many firms will likely issue can become the foundation for how financial products and services and commerce are going to work on the internet. this is an opportunity for the u.s. to seize that existing leadership position and strengthen it. sonali: we are also coming at this conversation at a time of tremendous strength in the dollar. if you look at something tweeted earlier this week -- with the world be thinking differently about crypto prices if they measured it versus a world currency basket instead of just u.s. dollars? i'm wondering how you interpret that, and what that means for

currencies around the world and the relationship to cryptocurrency. jeremy: it is a fascinating time from a macro perspective. i'm going to be talking in a few minutes at converge with larry summers about the macro outlook and the role of the dollar, and what role the dollar is playing not just in currency markets today, but the role the dollar is going to play on the internet. right now, it is a pretty pivotal moment. i think the structure of the international monetary system is at stake. there is a new kind of competition happening in currencies. payment stablecoins and this form of digital currency aligns with these kind of changing macro dynamics. i think these play together. sonali: what does the future look like in a world where currencies have been all over the place? more recently, a lot of people really have worried about the value of what they are holding. what role does a stablecoin

play? jeremy: we have seen incredible adoption of dollar digital currencies all around the world. the demand for being able to transact in the dollar, using it as a medium of exchange on the internet, is very high. i think that says a lot about the strength of the dollar as an international currency. and i think the growth of these networks, the growth of these blockchain networks, the proliferation of more and more of these digital wallets like robinhood or coinbase or so many of the products that are out there, are going to make these kinds of fiat digital currencies even more popular in the world. it is a tremendous opportunity for the united states. sonali: a question for you about circle itself -- do you have any fundraising plans? what is next for you guys as you grow, and what is the status? jeremy: circle is in a really strong financial position.

we have been growing pretty rapidly over the past couple of years. you can see that in the company more than doubling in size this year. we are in a good financial position, the best we have ever been in. we are in a registration process with the s.e.c. to become a public company. we continue to go through that process to qualify to be listed on the new york stock exchange. hopefully, we will get there in the near future. sonali: what is the competitive landscape? in market cap -- what will happen? jeremy: i don't like to make timeframe productions or things like that. i think we have always been very heads down, focused on building something with a lot of trust and transparency, doing it in a regulated environment, partnering with great institutions, with great companies, working with the

development community to grow this. i think if we continue to do that, the rest of the work kind of gets done. we are in the very early stages of the adoption of dollars stablecoins and technology like this. we think the total addressable market for this kind of technology is in the tens of trillions of dollars globally. it is super early stage. we are just focused on trying to build infrastructure that works for developers, businesses, people, users all around the world. we will just keep trying to improve that. ed: -- sonali: jeremy allaire, on the heels of a new big with robinhood. ed: coming up, the u.s. push to close on a landmark antitrust bill in washington, d.c. ♪

ed: now the latest with congress's battle to regulate big tech. a rule to restrict internet giants from favoring their own content has a rough road ahead. legislators are trying to jam the legislation through the brief lame-duck period after the election. joining us is emily birnbaum. why haven't they voted yet? emily: thank you for having the. senate majority leader chuck this year that he would put this legislation on the floor. obviously, it has been months. we are hearing that he simply does not think it has the votes. the supporters of the legislation, such as minnesota democrat amy klobuchar, says they do have the votes, you just

have to put it on the floor to test that. schumer is uncomfortable with that. he does not want to force a vote ahead of the midterms. that is why it has gone this long without going to a vote. ed: i'm reading your story on the bloomberg terminal. hopes on lame-duck vote. i think the final push for legislation was plotted over pretzels and beer. give me the background. emily: there was an oktoberfest themed happy hour gathering last week. basically, it was activists, congressional lead supporting the legislation, the ftc chair, the doj antitrust head. so some of the most important people in the biden administration and in congress were plotting out, how are we going to get this bill across

the finish line before the end of the year? it looks likely the gop is going to retake the house. the gop is not one to take up the bill in its current form, especially under potential speaker kevin mccarthy. they were just trying to strategize and get together. ed: quickly, emily, how do they regroup? emily: folks are really pushing for the lame-duck vote. they think find a path to the midterms, and then there is no reason for vulnerable democrats not to want to take this vote. they will spend the next couple of months firming up the whip count and getting people on the record saying "i support this legislation" in news coverage. ed: that does it for this edition of bloomberg technology. thursday, we have workstream talk employment, particularly with front-line workers. you can find us on the terminal

as well as online on apple, spotify, and iheart radio. ♪

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