good morning it is 8:00 a.m. at the steve jobs theater in cupertino, california, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good thursday morning. welcome to "squawk alley." i am carl quintanilla with leslie picker, jon fortt at post nine of the new york stock exchange morgan brennan has the morning off. busy morning the street making big tech calls, including upgrades of

alphabet apple price target up to 300 couple upgrades at nike, goldman. a lot of research to the up side. >> facebook and google in particular have been in the penalty box over regulation concern, trying people in front of congress, having to answer questions. as that was going on, we saw earnings hold up i had the question how long before the numbers outweighed some sentiment while the upgrade seems to be happening. >> speaking with all of the market strategists day-in and day-out, they talk about the new trend of cyclical growth, not new per se, but some of the themes they're focused on while these companies play into that theme. interesting timing with the upgrade. seems like they've seen sundar pichai assuming the role as one that would lead to brighter future for the company

you know, also in terms of valuation, seems like that's another thing that they look at as being a net positive. >> the other element, facebook in check by the hsbc call that says 40% of market cap could be at risk. definitely some barbell strategies involving faang today. >> there are as you mention, there's that overhang, concern. facebook is already spending a ton of money on what they say is mitigating some risk, trying to protect the election cycle in the u.s. if they're reasonably successful in that, no new cambridge analytica, does the market look at the stock as being undervalued and does getting past 2020 become a lot of up side for them. let's move on and talk tesla it is day three of elon musk's

defamation trial out in los angeles over his now infamous tweet. the headline making waves is one over his financially illiquid comment. henry blodget joins us at post nine and stephanie meta, getting miked up glad to have you with us henry, i'm not sure how much this cash thing matters. elon musk has a billionaire sized reputation he's got a billionaire sized personality. and it is not like this guy is asking for all his cash. does this particularly matter or is it surprising gif en the size

of bets? >> there was a time ten years ago when elon musk was actually cash strapped because he bet huge during the financial crisis on spacex and tesla, he saved both companies they both worked he is a classic entrepreneur who actually takes risk. so many entrepreneurs pat themselves on the back, it is such a risky job, i deserve everything i get it is usually not risky. elon took the risk now my guess is he has enough money to handle this particular trial, which is a complete waste of time which is another issue for him. >> i wonder, is elon musk, stephanie, finally facing some of the music for his fast and loose twitter style? we thought maybe the sec would crackdown on him i guess to a certain degree they tried. he always seemed to me to be triumphant in those exchanges. he looks a little cowered in court. >> the surrenderings make him

look down in the mouth i think this is -- if he is looking at the impact of what he said, the fact his words have meaning, i think vernon gave emotional testimony and made a convincing case for how personally hurtful the comments were, this could indeed be a moment of reckoning for elon musk but i think a lot of us, henry included, have been saying for years just focus on the business we wrote a piece a couple months ago saying the world, whatever you think of elon musk, we need him to succeed the electric vehicle market and the entire sort of ecosystem around electric vehicles wouldn't be what it is if it weren't for elon musk. we're counting, if you believe in the sustainability model, saving the planet, we need elon musk to get his act together. >> his strengths are so worthy of praise here, they're so much

more important than mistakes he is making. both the sec mistake and this are just unforced errors doesn't need to happen a little more discipline never has to worry about any of this look at this this stupid trial, he is wasting three days of his time and all of the preparation it's such a waste of time. so relatively easy to ignore it. >> do either of you think he meant anything other than this guy is a pedophile it is some kind of comment in english language usage of hey, this guy is weird. >> you know, it is not a term of art i ever heard i only interpreted that he was implying the guy is a pedophile. >> yeah. >> in terms of being cash poor, this is silicon valley, 2019, almost 2020. a lot of entrepreneurs took out loans backed by the sharers in

companies, even if they're not liquid, they're able to get cash easily do you think the same applies for elon musk? is he actually cash poor when you consider all of the factors such as going to a bank for a loan >> i interpret it as cash poor relative to the amount of wealth in the stocks at spacex and tesla, which may be for all we know a billion dollars in cash so we'll see he can do fine sell 100 million today, wouldn't be a big deal. he is not cash poor. >> if i had his cash, i wouldn't consider myself poor i think that's about right i also want your take on larry page and sergei stepping down. elizabeth warren tweeting congrats on the move, larry page quick reminder, we do still expect you to testify before congress and changing title while staying on the board and retaining effective control of it will not exempt you from accountability

i had a mean rant about this yesterday yesterday. i feel similarly to elizabeth warren they still got voting control of the company. you can say sundar pichai is running it, he is working for those two specifically they've got all of the votes that matter. where do you think it leaves google, stephanie, better place or about the same? >> in terms of the leadership of the organization or in terms of having to testify before congress >> all of the above. i guess in a sense, sundar is maybe more on the hook than before, and larry is maybe less, unless you talk to elizabeth warren who says nothing has changed. >> i think elizabeth warren's tweet was smart in the sense she reminded the general public, even though they're stepping down, they're very much the boss of this entity and again, people that watch the show, they're sophisticated, they understand these founders continue to have incredible influence over alphabet and google but for the elizabeth warren voter, a good reminder that

these guys aren't going away, they're not fading into the sunset google has gotten away with not testifying i think elizabeth warren is saying we're going to continue to hold this company's feet to the fire. >> at the same time, very few said larry is behind the scenes controlling everything, he is micro managing i mean, my impression is they have been out of the management of the company for many, many years. when i saw this, i thought it was sort of a nonevent elizabeth warren, a lot of the platform is attack billionaires, did that in a nice tweet yesterday, if they have to testify, they have to testify. i don't think there will be much in that testimony. >> as the hammer continues to come down in washington, do you think there are other founders out there looking at this decision by page and saying i could maintain control of my company and take a step back and maybe deal a little less with the regulation, despite what obviously senator warren was saying do you think you have a bunch of other founders waking up to this

news this week and saying hey, maybe i could do something similar. >> i think -- i don't think so i think these people are incredible type a personalities, want to continue to be the ceo of their organization for as long as they can if anything, i think this shines an interesting light on importance for succession. when larry and sergey are still young guys they have essentially created a succession plan. they did it a few years ago when he was named ceo of google i don't see other silicon valley founder driven companies with similar succession plans i would like to get a better sense of who the next generation of leaders will be at these companies. >> google was the first company to say we're going to be a control company, have founder control. you looked at them, thought they're young. only 46 years old. already decided it is time to step back, not operate the company. who thought that was going to

happen bill gates was chairman at microsoft until just over five years ago, well into his 50s even though he stepped back from the ceo role, he was at least chairman they're saying we don't want that, we're going to sail the yacht and sail the oceans. >> the chairman doesn't necessarily have a lot of executives i think bill gates is a good example. he turned the company over to steve palmer and others. went and did something else full time. >> not really. he was still chief software architect. and then again, was chairman and his presence was that important i think, people felt like -- he said bill gates being here x number of days a week. >> bill is much more visible than larry and sergey.

larry disappeared. >> people don't know what larry's voice sounds like. >> given the fact he controls this nearly trillion dollar company, that's scary. thanks >> great to be here, thank you. any decline in major averages would be three straight for each dow on track for the biggest weekly loss. ckn mite (vo) the flock blindly falls into formation.

flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling. defy the laws of human nature. at the season of audi sales event.

let's take a look at tech. we're seeing stocks pair some of yesterday's gains, investors digest mixed headlines on trade. the sector up two-tenths of 1%. steve, obviously not all tech stocks think alike when it comes to trade how are you seeing the mix with some of the recent headlines on trade? >> well, it is a problem that doesn't seem to want to go away. frankly, even with a mini deal, there's a long term factor the u.s. will be at logger heads with china long time china is working hard to create an indigenous industry 20% of cap names are selling to the chinese, the rest of tech is suffering.

chip companies are waiting to see how much they can or can't sell to huawei we are underweight semis yesterday went to overweight on software selectively it is a mixed bag. >> overweight on software, what was the calculus that caused you to upgrade that sub sector >> the trends are good the group underperformed the last three to six months semis that outperformed. looking for semis to come in, they're at a high historically you have software selling ten times revenue, don't want to touch those. bigger cap names look attractive microsoft service now, sales force, maybe vmware, we're looking for software to come back after underperforming much of the year. >> with regard to internet, we spoke about faang names getting upgrades is faang attractive to you largely or no?

>> i think faang is. internet in general had a horrible earnings period a lot of midcap e-commerce platform names, pinterest, etsy, twitter had a tough time, but part of the problem was losing share to facebook andgoogles o the world. we maintained that the thing that really concerns me about the stocks longer term is technology disruption and i don't see that some new trends like ai are leaders. meantime, regulation will probably continue, probably limit up side in terms of ability to do m and a, but stocks are relatively inexpensive. the government seems to be coming to their aid, fighting france on digital taxes, concern about competing longer term with the chinese, so we think those are appropriate names. >> some of the software names you like, you named a few, microsoft, sales force, service now, palo alto, vmware, they're

depending on corporate spending, enterprise spending which when it comes to hardware has been touch and go i wonder what trends you think power those higher is it shift in spend away from hardware toward these or do you think that the sorts of services they offer are so essential that they're going to continue to see benefit no matter what happens in the macro environment >> there's a secular shift away from hardware to software and services going on more than a decade certainly i think what they're selling is extremely important. as you point out, hardware companies in particular are seeing big enterprises backing away concerns about more capital that could effect software, if the economy gets significantly worse. workday and others talked about some issues. in general, if you move into public cloud, you have to deal with amazon, microsoft, google, digital transformation you have to deal with sales force and a number of these

folks. larger names are in good position digital transformation isn't going to take a vacation >> steve, i want to bring in tom fort of da davidson, research analyst there into the conversation tom, we were talking a little earlier with steve about the idea you have a digital tax fight now which may imply an alliance between the trump administration and large tech companies. how do you see recent developments shifting regulation of big tech these days >> i think, amazon, apple, facebook, google, regulatory risk on a global basis is very important and must be monitored. but to your point on france, if you look at the tariff situation between the u.s. and china, to the extent that the u.s. government is trying to get the chinese government to honor intellectual property, that's beneficial for big tech firms.

to the extent you might see tariffs on french goods as combatting digital tax there, that could be beneficial for big tech, most notably amazon. not all tariff moves are necessarily bad for big tech, just some of them may take a long time to play out. >> maybe it is bad for french cheese and wine. thank you, steve and tom for joining us >> thank you. >> and bringing thoughts on tech stocks today huawei meanwhile suing the federal communications commission over the decision to curtail huawei's business in the u.s. deirdre bose has more. >> launching new legal action against the u.s., part of the defense here in america where it has little business left they're challenging an fcc decision that bans world carriers from using federal subsidies to purchase huawei equipment. huawei calls it unlawful, it

strips the company of due process protections. huawei's chief security officer telling us that they're fighting back >> this is our opportunity to use one of the legally permissible mechanisms to block the united states government carpet bombing of huawei in the united states, trying to destroy us around the world. they've gone too far this is our way of saying enough. >> not mincing words trouble is brewing for huawei at home in china. they're threatening the company's goodwill, strong position in the country at a time when business overseas outside of china is challenged the treatment of the employee jailed for 8 months stands in

contrast in a post of the anniversary of her arrest, she has time to read a book cover to cover, carefully complete an oil painting recent backlash in china contrasts to what's been patriotic support for huawei smart phones in the face of u.s. sanctions. third quarter, the company captured 42% of china's smart phone market, helping propel it to the number two smart phone maker worldwide. back to you. >> can't lose sight of huawei in the face of all this, thanks very much. no slacking off here slack raises a full year outlook, posted a smaller than expected loss, hear what the ceo stewart butterfield had to say next. 3m, the ceo said last hour a lot of global economic uncertainty adding it s enhabe a challenge to the company this year

take a look at shares of slack, up this morning, at session highs after a beat on the top and bottom posting a smaller loss than the street was expecting slack is raising the full year outlook. the ceo, stew butterfield, was on "squawk box" earlier talking about q3 results and what the talk about microsoft teams means for slack's business >> that's the thing we need to spend the most time on, probably the thing i want to spend the least time on. what's going on in macro competition, then there's the team, company organizational structure, bringing in the best executives, and more than anything else, customers, product and service we deliver to them. but we need to address it. there's a lot of confusion. >> do they cheat on numbers? >> what we said yesterday on the earnings call, they announced 20 million. it is a migration of users

>> it looks like they're on microsoft team, but they're not? >> they are using it using it for something that's fundamentally different. skype for business was rebranded from link. >> is the user experience that much better with slack >> i think it is fundamentally different. here in the city there are hundreds of thousands coming into the office that check slack first thing when they wake up, last thing they check at night, runs all of the work flows through the course of the day. i think that's fundamentally different. >> it is an argument that a lot of companies are having 20 years ago about microsoft, saying yeah, you know, they might be kind of bundling in the product, but it is not as good as ours. people stopped talking about microsoft in those terms for awhile but now, even for a hot startup like slack, competition with microsoft issue is back. i don't have the data to know whether what he is saying is

completely legit i looked at microsoft and how they evolve teams to be more of a competitor to slack, maybe they're not using it head to head in the same way. >> the bundle issue i think is the key question, key hurdle for slack. if you're an entir pricerprise, already are working with microsoft and can get the teams product for flee, there's a higher hurdle over slack and the business model depends on you converting users to being a user microsoft doesn't necessarily need that. >> we talk about the apple ecosystem from a consumer standpoint, don't talk about microsoft, outlook, linked in, teams as an enterprise ecosystem equally sticky >> it is sticky and sticky for different people, different workers for different reasons. i use excel little a lot of people on wall street use it all the time. certain enterprise applications

are consumer apps. you need workers to be productive if they're more productive on slack than teams, you'll end up buying slack eventually we'll see if butterfield's argument bears out or if microsoft can evolve, develop teams well enough that it catches up. >> and still working on clawing back the share price to where it was the day of direct listing. still down 43% from the first trade, for direct listing that's what we look for rather than ipo price. that's the first trade they're selling the stock. i think a lot of volatility centers around what goes on with microsoft. i wonder if over time we'll see the stock's ability to move beyond >> that was his argument european markets are set to close in a moment. seema mody has a breakdown of the action >> reversal for the stock 600

having to do with the uk, weeort performer. boris johnson's conservative party is poised to win majority in the general election next week plus weak data shows europe may not be out of the woods yet. in germany, factory orders posted a surprise drop in october. across the eurozone retail sales disappointed right now, technology, auto, financials are lagging want to point your attention to glencore, they're launching investigation into suspicions of bribery at the company shares down 9% the stock of the day is montclair. saying gucci is in talks to buy them throwing cold water on a deal. a deal would help expand the

growing portfolio of brands. and helping diversify profits. keep in mind, gucci brings in more than 60% of the total group sales, makes up 80% of earnings. bernstein analysts say kering could add value to montcler. >> so much going on in luxury. thanks let's get a news update and turn to sue herera at hq good morning, sue. >> good morning, carl. good morning, everyone here's what's happening at this hour a navy sailor shot three civilians, killing two of them before taking his life at a pearl harbor naval shipyard. the survivor in stable condition. no word what the motive may have been it comes days before thousands of scheduled to gather at the military base to mark the 78th anniversary of the japanese

bombing. north korea threatening to resume insults of president trump, consider him a dotard if he keeps using provocative language, like referring to kim jong-un as rocket man. it issued the warning after trump spoke of possible military action against the north. french media reporting riot police fired tear gas during nationwide strikes and protests, over the government's plan to overhaul the government's retirement system. rio de janeiro built a new structure to take advantages of thousands of beautiful views take a look at that. a massive ferris wheel, known as the rio star it rises almost 300 feet above the water and is scheduled to open tomorrow. i don't think i could do that. i'll look at it from the car

back to you. >> me either i know would make for a good picture, i don't know about the height is worth it thank you for that. up next, we weigh into the controversy taking over the internet peloton's latest holiday ad, soulcycle founder joins us at post nine after the break. stay witush woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. vo: take control of your online reputation. get your free reputation report card at reputationdefender.com. find out your online reputation today and let the experts help you repair it. woman: they were able to restore my good name. vo: visit reputationdefender.com or call 1-877-866-8555.

dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack,

attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere. welcome back to "squawk

alley. peloton's holiday add in focus ad criticized for undertones of sexism saying they're disappointed how some misinterpreted the 30 second ad. joining us, ruth zuckerman, soulcycle co-founder, author of riding high. how i kissed soulcycle good-bye, built a life i wanted. good to have you back. >> great to be here. >> i haven't asked you during the break. what's your first impression of the ad >> honestly, i didn't find anything wrong with it i feel there was a huge ova overreaction everyo everyone commented the woman was thin why did she need a stationary bike weight loss is one of the many benefits from a spin journey there's the endoor fin kick in which helps mentally, helps with

depression, there's building stamina, building strength weight loss is one component and frankly, wakt loss has to be in combination with the nutrition piece. that's probably the last thing that's going to happen. >> wouldn't the ad have been better if some of that were flat out said, right? hey, i feel better, the endorphins are kicking in. when i saw the ad, i see a woman that looked thin and fit but insecure, has the look on her face like i'm okay seems like her husband has given this thing because she needs it. he is not getting on the bike too, something that she needs. that makes me kind of uncomfortable. >> i understand that i think you make a good point. i think that explanation would have been helpful. it was almost assumed that everybody knew what goes into the spin journey, what happens during the journey the truth is yeah, she seemed nervous, insecure, for whatever reason, spinning has had this

intimidating factor. i'm sure that's what she was expressing going into it the truth was, they did a good job in 30 seconds of showing how she approached it, and then at the end, she felt like a new person, she felt transformed in that sense it was a good message. >> people seemed to take issue with the idea of someone spending $2,000 on a christmas present for someone, and this luxury nature of peloton which is an image they have been trying to move away from, especially after they've gone public, trying to attract more customers. did you see that in the ad at all? >> i definitely saw that in the ad truth is, in previous peloton ads, all of the peloton bikes are living in a gorgeous luxurious home or apartment. they can't get away from the fact it is a high cost item, their demographic is a wealthier demographic. i'm not sure how to get away from that the end of the day. >> is that a bad thing >> exactly there will always be luxury items and brands for that set.

>> we don't make fun of tiffany for diamonds and stuff all right. given your reaction to the ad, what's your reaction to their reaction, right, when they say we're sorry if you're sorry. >> i mean, i'm not sure what else they can say. they can't really apologize for what they think is a great product, and it is a great product and does a lot of good for a lot of people. again, agree with your point, if there was a little more explanation in it, it would have helped everyone. i guess the massive amounts of people not in that demographic have not experienced the ride, the journey. so yes, they don't know really what they're talking about, why she would react that way, why he would give it to her as a gift. >> on one hand it is like the lexus with a bow on it commercials we've seen for years, but there aren't the same body image issues that come with owning a car, right? is there a certain amount of self awareness that you need to have as a health and fitness

brand about the emotional baggage that all of us are bringing to the topic that's going to interpret, i guess effect how we interpret something like this? >> yes, i think there is again as i mentioned before for whatever reason, spinning has always had an intimidation factor to it people are not going to know that so she obviously acted that out. again, showed this great result by the end of the journey. >> do you think the ad is going to be a negative for peloton i say this because the ad has gotten more eyeballs than what it would have seen otherwise. >> i keep going back to any press is good press, and the amount of attention they've gotten over this is crazy. i understand there was an effect at the stock market, but i think it is going to reverse i really do. >> really? as a husband, i don't know if i'm buying my wife a peloton after seeing that reaction going to take that $2400 risk?

i don't know >> i like the idea maybe she asked for the peloton bike, we don't know >> we don't know and maybe we should. >> stock up 20% from initial trades thanks for coming in >> thanks for having me. >> okay. biogen was just reopening moments ago. >> there's a key alzheimer's presentation for biogen at a conference in san diego. this is the first time we're getting more information from the company about the drug that earlier this year said had failed and then in october, shocked everyone when it said it was bringing it back after it saw more data that implied it looked like it actually may work people were highly anticipating the information. now the stock is reopening it is down about 3%. i have been speaking with three people, two in the room there in san diego, who are analyzing data in real time. the presentation is still ongoing. the take away is that the data if anything looked slightly

better than what we saw in october from biogen. however, sounds like it is still confusing. they're not getting a ton of clarity saying it is a sure homerun. maybe that's why the stock is down slightly. it is not as if there's anything bad in the data beyond what we saw in terms of it not being super clear. we're going to bring you any more we get. the panel will ask questions a ton of excitement in the room. we'll bring it to you when we get it back to you. >> meg, thank you. still to come for retail, now cloud, the ftc is adding amazon's most profitable business to the anti-trust probe. more on that story after the break. first, rick santelli, what's on your mind today >> you know, the big numbers, 239. $239 billion japan's new fiscal package they rode the horse of monetary

policy as far as it will take them, now they're itinswchg horses we'll talk about that after the break. going to tell you about exciting plans available to anyone with medicare. many plans provide broad coverage and still may save you money on monthly premiums and prescription drugs. with original medicare, you're covered for hospital stays and doctor office visits, but you have to meet a deductible for each and then you're still responsible for 20% of the cost. next, let's look at a medicare supplement plan. as you can see, they cover the same things as original medicare and they also cover your medicare deductibles and co-insurance. but they often have higher monthly premiums and no prescription drug coverage. now, let's take a look at humana's medicare advantage plans. with a humana medicare plan, hospital stays, doctor office visits and medicare deductibles are covered. and, of course, most humana medicare advantage plans include

prescription drug coverage. in fact, in 2018, humana medicare advantage prescription drug plan members saved an estimated $7400, on average, on their prescription costs. most humana medicare advantage plans help you stay active and keep fit by including a silver sneakers fitness program at no extra cost. and, you may be able to save on dental and vision expenses, because coverage is now included with most humana medicare advantage plans. you get all this coverage for as low as a zero dollar monthly plan premium in many areas. and your doctor and hospital may already be a part of humana's large network. if you want the facts, call right now for the free decision guide from humana. there is no obligation, so call the number on your screen right now to see if your doctor is in our network; to find out if you can save on your prescriptions and to get our free decision guide. licensed humana sales

agents are standing by, so call now. dow down 51. let's get to rick santelli for the santelli exchange. hey, rick. >> you know, when it comes to fiscal policy, japan and many countries have been invisible. you know, there's a lot of talk as merkel's final days kind of come to a close as to how leadership in the future will

deal with the notion that germany, their biggest industry, of course being cars, exporting cars globally, biggest economy in the eurozone, cars, there's an industry that's in the middle of huge disruption you listened to four on the floor lebeau talk about electric cars how much production some very good production historically, good machining, good parts, good fit, good reputation of german cars and automakers, well, those days may be in the rearview mirror when it comes to japan, there are many similar issues. but add on the demographics and debt well, you can only take monetary policy so far. if there's one thing i've learned, it is that if you look at the cumulative balance sheets of all of the central banks close to credit crisis, the building up, quantitative easing, governments and central banks and agencies purchasing

everything, especially in japan, securities, etfs, corporates, you'll have somewhat of a controlled outcome so we saw stock markets globally following balance sheets then a year ago, balance sheets started to taper, you know how it ended now central banks do quantitative easing but don't call it that cumulative balances are still going up the long and short of it is monetary policy can do things in the short and medium term but it isn't the fix. you need real money, organic investor money to make a true vibrant market and economy look at japan's new fiscal stimulus plan, first one since 2016 it is smaller. 26 trillion now, just under 240 billion u.s. dollars gdp on an annualized basis from july to september, two-tenths of 1%, and had consumption tax in

october, from 8% to 10%. first of all, when you have an economy like japan's, i get it when you have 238% debt to gdp, this might look good, but the stimulus plan goes the other direction. i'm not sure if this is a great idea, it is better monetary policy sometimes you hit a point doing the right thing at the wrong time may not get the results that we all believe they can on germany's side, i think the future looks brighter for fiscal policies my guess is we'll be hearing about it shortly jon, back to you >> rick, thank you want to turn your attention to a report out of bloomberg ftc widens the scope of the antitrust probe into amazon beyond retail to include the cloud business aws, amazon's most profitable division i sat down with the head of aws

at the re-invent conference, talked about amazon's lead position in the cloud market among other things guys, seems to me that the toughest antitrust case to make in tech is in the cloud. you have amazon, sure, which is big. but you have microsoft gaining on them arguably they're a bigger company and they won the jedi contract and google that little company trying to gain share in the market you can argue apple is in the market with siri, trying to draw on their services business, which exists in a cloud. they're not selling infrastructure the same way, but trying to game change. all of the big folks are in it, arguing they have a shot to win. that's competition >> not to mention where pricing is done over time. but then again, people look at antitrust, think the rules have changed. maybe that's the way, it is not about consumer protection is not about price. >> maybe the fact that these are

the big tech names that they're looking at for other antitrust violations and just the sheer nature of the fact these are companies that are competing against each other, you're not seeing startups be able to succeed in this are abled to success in this area the way an amazon is, could draw additional scrutiny. >> you could argue you are see startups snowflake, all about building on the public cloud there's an argument to be made that there's a lot of profit to be had for businesses that assume a megascale public cloud is already there so -- >> but the model is the trick here because of the pricing, right? >> i scratch my head no matter what metric you want to measure on, if it's not price, saying we want to protect competition, well, there's competition. well, what about the smaller guys are they able to compete they're able to build on top of these clouds they're holding this big

reinvent conference. microsoft has their conference, so i don't know, ftc, we'll see what they come up with. >> and who benefits from all of that at the end of the day, enterprise, consumers, so forth. it will be interesting to see how they frame that case. when we return, apple tv-plus and $25 million? we'll tell you how all those things he tie together stay with us ugh, another electronic signature. you have to print, walk, sign, scan, recycle, walk, email yourself... really? more walking, try again, waiting, recycle, walk, email yourself, then get back to your day. or not. this isn't working. introducing samsung paperless workflow solutions. with the galaxy tab s6, you can sign digital documents on-screen, with a finger or your s pen. samsung business solutions.

california coming up on three years since it legalized marijuana recreationally, so why is nobody compliant? jane wells explains from los angeles. jane >> reporter: he, leslie, you drive all over l.a., you can see the billboards, but if you really want to make money, get into compliance. operators are finding out how tough it is to follow all the rules. operators like melissa etheridge, who has spent years trying tots h ing to get her bu the ground. >> i've invested six figures easily >> she said cannabis helped during chemotherapy. it's called etheridge farms. she finally got the first manufacturing license for santa cruz county, hoping to have product this summer. she compares the struggle here

to the time when she was trying to land a record label etheridge farms is not easily let's sell it and make a bunch of money, we are dedicated to compliance and to medicinally present this to the world. >> what's happening in california is a tragedy. etheridge hired julie crockett she does cannabis compliance for a consulting firm. she says nobody is compliant for example, california cannabis law says you can't give away freebies your salespeople can't hand out freebies, and everybody does that the state is also raising taxes on the legal industry next month. >> the way that taxes have inflated the prices and made the industry unable to compete with a wildly successful illicit market is demoralizing for the operators who are licensed and trying to do it compliantly.

>> reporter: the state has about 50 enforcement officers. they've really been overwhelmed. they haven't gotten around to compliance in a meaningful way, but stay tuned etheridge believes in the end legal with win, and she's patient. >> jane, that's a great look at how difficult it is to make this all work, even with all the performs our jane wells in california we're going to watch this market here, we're down 38 in othe dow. "squawk alley" is back in three minutes. fact: 1 in 4 of us millennials have debt we might die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right by consolidating your credit card debt into one monthly payment. including your interest rate right by locking in a fixed low rate today. and you can get your money right with sofi. check your rate in two minutes or less. get a no-fee personal loan up to $100k. get a no-fee personal loan

♪ ♪ ♪

- [spokesman] if you've tried colleg(group cheering)shed, snhu lets you transfer up to 90 credits toward you bachelor's degree. - [woman] it doesn't matter how old you are, you can do it, you can finish. - [spokesman] finish your degree at snhu.edu

♪ in case you missed it apple reportedly shelling out $25 million for the rights to an upcoming documentary on billie eilish eilish was named appear 8 music's artist of the year it's expected to stream only on the apple plus offering, not apple music. pretty good for 17. >> and a documentary i mean, you know, as we look at the content wars, you know, a decade ago nobody was walking

documentaries, let alone shelling out $25 million. >> i love what she represents. she's huge, popular, but also kind of dangerous. it's nice. >> worth $25 million >> that's exactly right. we'll see if we bust out of this range now let's get to the judge and the half front and center this hour, the big case for small caps, why those stocks could be the key to your money it's noon and this is "halftime report." >> announcer: small but might are you, the russ 82000 outperforming. fang in focus, big calls on facebook alphabet and apple. our experts take their positions. nike one of the best performing in the dow this year. while it still has more loom to run. and this stock is up more than 20% in the past