tv Best of Bloomberg Technology Bloomberg March 23, 2019 11:00am-12:00pm EDT
big tex since the 90's. we will hear from the attorney general of texas. u.s. digital service was born in the wake of a bumpy rollout of health care. now it is stepping up efforts to give americans better access to government services. isst to our top story, lift a fierce challenger to uber. can the start up when them over? we take a closer look. many19, the year that so tech companies planned to go public. among them, to stand out. a race best described as focused versus frenzied. frenzy being uber. sharing,very, bike
lyft may best be described as focused. it is focused solely on growth in the united states. going from less than a dozen cities and 2009 to 95% of the country in 2019. lift now claims that controls a large percent of the market. it is starting to go international. rivalping up with its top in many ways. they arty have a slew of investors. as it prepares to go public, it
is trying to lower more hoping to impress by doubling the right cap -- ride cap. with an estimated valuation of $25 million -- billion dollars. while they were second out of the gate to launch, they are first in my to go public weeks or months ahead of over. --uber. emily: this week we also caught up with an early investor. >> on the very first pitch they
came in with, it is a pitch that i still have and i like showing it to students. they talked a lot about why transportation was so critical to the fabric of the united states. they started off with ken vowels than railways and highways. how actually the physical landscape of the country changed. the economy changed as a result. the question that was posed was what is the next transportation revolution? do you want to be a part of it? wasnswer to that absolutely, yes. there was nothing else in the market that was a transportation revolution. uber did not exist at the time when it -- invested. >> when they first launched they were a taxi and then they became
uber black. when they launched, there was a. we could findll was a zip car. that is what we were comparing it against. mike, what did you see? >> when you invest as early as we do, you have to have an opinion about where things are going. we had an idea that the internet lets you locate something that is unused and the smartphone would let you locate something unused and moving. we were just looking for transportation. when they described their vision for how things could be, we said those are our guys. emily: this is a country that was losing money. that toou justify public market and investors who are buying in now?
>> i think this is really about the long game. we would always return as early stage investors to the origin story. i think the unique nature of this business was that the transportation revolution still has not played itself out. there is so much more to be done. if you think about the potential of network transportation, the ability for people to not just share the ride but also figure out the different ways in which spake and get from point a to point b. whether that includes an autonomous vehicle or not, there are so many new ways in which we are going to be adding and thinking about transportation that is going to start to change where people live and how they make choices about where they go.
just scratched the surface of what is possible. that is my excitement about the future. isn't unusual for a tech company to go public and still not be making money. why should investors buy into that? ti don't want to speak to lyf or their numbers but the way i look at some markets, the product is so compelling and the value proposition is so compelling that it will be satisfied. ridesharing is just one of these ideas where i don't know if you remember the first time you ever took one. you just knew instantly it was going to be a huge success. people throughout the world would be energized to want to get to places this way. when the market will be satisfied, sometimes the best
way to create value is to move very quickly. our belief is that transportation is being reinvented and that it is a race to be the category king. in the early days, value gets created by creating market share and satisfy the demand. the right always strategy but in this case, the company to have moved quickly have one over the ones who did not. i agree that it is something that users want. what is the value? who's to say that this is in the next snap? >> there is very little i can say about the company specifically and the financials specifically. of whened to the notion you look at the original pitch
that they pitched, the founders letter, there is an incredible consistency to why they built this business. we are investing in businesses that we believe will be here not just 10 years from now but 25 rfid years. them legendary businesses. whatever you want to call them. we want to see companies that have this incredible length in terms of stories that they have. one of the things we have seen consistently is that these companies that have that characteristic, they have a storyline to them that is consistent from day one but it also goes throughout the length of the story of the business. when you compare these three
documents that i have seen, there is an incredible story of why they need to exist and why we need to believe that investing into these founders, nine years ago was a good idea. that story is so consistent and that creates an authenticity that we love and founders that we like. emily: those were representatives from floodgate. coming up, attorneys general are looking at google. that is next. if you like bloomberg news, you can check us out on the radio, the app or serious xm. this is bloomberg. ♪
emily: last september, jeff sessions called a meeting. it now, we know that a smaller group of those officials have been looking into possible antitrust or consumer protection violations by google. this comes at a time when presidential hopefuls are calling for a big -- breakup from the tech firms. to discuss, i spoke with the texas attorney general on monday. >> we have serious concerns about both of those issues. antitrust, the power and the wealth of those companies. we have a history of looking at those issues and breaking of companies that are too big. also, privacy. the lack of transparency and how
they collect information and use information. consumers are not being paid for this. vulnerablelso populations like children who are getting their data gathered and we have no protections for them. >> google says privacy and security are built into all of our products. what kind of action given all of your concerns do you think needs to be taken against google? >> i think we need more information from them. the questions are answered with very general answers about analytics. there is not a lot of clarity to state attorney general's understand what they are doing with our data. google has thousands of data points on every consumer that uses them. they know more about you than you do.
it is concerning that most consumers are not aware of the massive data that these companies have and how they are using and selling it. the consumer is not getting any of that money. i'm sure you're aware of senator warren's proposal to break up big tech at this point. here is what she said about a week and a half ago. >> the opportunity to do what you do best, to come up with a great idea to work your heart out to make it happen, to be able to compete on a label -- level playing field is being taken away by these platform giants. my view is break those things apart and we will have a much more competitive robust market in america. >> you have republicans on your side of the aisle like ted cruz agreeing with her. do you think the tech needs to
be broken up? >> i have talked to their they have no choice in how they respond because there is such control by a company like google. it does put these smaller purchased-- they get or get pushed out. there is a question about competitors and competition. emily: republicans generally resist the government getting too involved in the marketplace. what makes this different? we definitely tended to be free market. we want lots of competition. when you have companies that dominate the marketplace becoming almost monopolistic, competition goes away and you have the argument that consumers may be harmed. the eu has already find google billions of dollars in different cases. there are concerns about the
competitiveness and being able to make products that google doesn't push out of the marketplace. emily: how do you feel about facebook specifically and would you be interested in taking on a similar exploration of whether facebook deserves scrutiny as well? at companiesking like facebook and google. it is not just limited to those two. these giant companies are dominating the marketplace. accesssumer doesn't have and they don't get paid for it. they don't know how it is being used. consumersyou think should get paid for their data? >> i think that should be looked at various it is incredibly valuable information when you know about every consumer and you are selling that data and the consumer doesn't even know.
there should be greater transparency. emily: if you're looking at these big tech companies, is it fair to say you are also looking at amazon, apple, and microsoft? >> we don't have specific companies that we have targeted. we are looking at a broad range of companies in the marketplace to determine are they involved in viewpoint discrimination? are they protecting consumer data? transparency more and make sure consumers are treated fairly and their information is protected? we don't know how much these companies are protecting consumer data and who they are selling it to. last year there was a concern that these companies conservativeing
views. were you at that meeting with jeff sessions? >> no i was not. the texas senate caucus put up a facebook post about a born alive bill to protect children who are born alive from being aborted after they are alive. that content was taken down by facebook. they argued it was engagement based. down content from someone else about the same issue. i don't know what engagement is that that is a subject coming up more and more often. up, facebook relies heavily on algorithm to stop extremist content. that doesn't always work. we dig into why, next. this is bloomberg. ♪
technology's global executive editor. >> we knew it was bad not just on facebook but on euterpe -- youtube and other platforms. we knew it was bad when this many people can see this kind of violent imagery and when companies struggle to use the tool that they have at their disposal to pull it down. it is a terrible thing. that's a lot of use. over the weekend, we saw those things are getting politicized by other parties. >> we know that it took 17 minutes for the video to be caught and taken down. why did it make it through the isn'tthm when it clearly wanted on the platform? >> it is clear that facebook does not want this on the platform. liveve to recognize that videos are particularly problematic.
most of the firms including facebook, they have a three-pronged approach to catch this kind of content. first, they created a large database of known offensive or extremist content. live videos by definition don't look like a video they had seen before. emily: why have live video at all? is for their business. it is an area of growth they have been looking at. it has a lot of potential. people are at a music concert and they can stream what is happening. i can stream to my friends, hey i'm on bloomberg. bunch of machine learning algorithms that look at this content and predict the likelihood that the content is offensive but it is not an exact science. is have a video that someone shooting that could be terror related or it could be someone at a shooting range.
uploading amewhat video game. a gets to be problematic. live video is very hard. is a: they know this problem. is there any way to put the genie back in the bottle now that this is a feature on the site? disable it or delay live video? >> that is a question of delay. on live television, you don't see the terrible things that happen. the wardrobe malfunctions what have you. speaking, when you have millions of people at any given moment putting live video how youe, i don't see can physically delay live video. it doesn't even become my video. >> you call it live. but you delete a little bit. that helps to some extent.
end, no out will have 100% accuracy. you do rely on human beings. flagging rely on users offensive content. that takes a few minutes or a few hours sometimes. one has to in some ways deal with this. the real question is not why did the video get through. it's unavoidable with live content. the question for me is what are these firms doing to police the content? more transparent? either independent audits done? these platforms have done a lot to take down isis related content. not nearly the same efforts have been taken to eliminate white supremacy. that this isn hear free speech or doesn't quite
crossed the line. what about the bigger problem that white supremacy and hate online can often feed some of these violent acts? linethink it is a tough between what is free speech and what is purely promoting hate. for every decision, there will be someone on the other side. they have to take an aggressive action. they have to view themselves as media companies and have to on the responsibility of curating. they cannot hide behind we are a platform. users do want some policing. coming up, europe slammed google with another fine. it is the third and possibly final penalty. there are other tech giants.
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emily: welcome back to "the best of bloomberg technology." google was fined $1.7 billion by the e.u. in an antitrust judgment, the last of a trio of probes that have racked up $9.3 billion in penalties. the search giant is making changes with how it displays ads. there is less risk of new fines in the future. >> when i find that the numbers that we have now, and the intentions of google in the android decision, this is also to say, we don't have a
noncompliant issue as it is now. we will of course keep following this, but i think it is positive that google takes steps that allows for more consumer choice. emily: richard stable, ceo at a search engine, and garrett give and go culvert -- joined us to discuss. richard: we have quite a large fine but the balance sheet, this is baked in. investors are not expecting these fines to cost a ton of money. i do not think it means they will never be looked at again by european competition authorities, but there are bigger fish to fry. what the last 10 years has shown
is that european regulators can go after these big tech companies and extract large fines, get support for it politically without getting major pushback from consumers. emily: you have applauded the e.u.'s decision. what does google changing its practices mean for your business? richard: thank you for having me. this fine today is something that we welcomed and consumers welcomed. it will not change an awful lot in the marketplace. google had been given basically a cease-and-desist order which says, stop doing what you have been doing and they stopped in 2016. in these two-sided markets, the market is tipped in google's favor. they will go out of this and say, we paid a tax for taking over another market. we ask for the commissioner to
go further and ask google to right the wrongs it has done to this market like in shopping and android. emily: what does putting right the wrongs mean? google controls 75% of this ad market from 2006 to 2016. richard: you have to look at this and say, google has all the data, basically has all the market. people say, why can't you compete? they have got this and trench meant with -- and trench meant -- entrenchment and -- give up market share. emily: what is google's response to this? they pointed to this being just
a few complaints. geritt: google's response is that they one -- they won because they have the best business in the best algorithms to provide these ads and products to the people who pay for them. when they were in control of 70% of the market, that gives them that power to continue and grab more and more of it. it is difficult to see how that would be changed. google and its investors are confident they will not be kicked out completely from these markets. the fines, they are willing to pay them. emily: if google has owned 70% of this ad market, with these changes, how does that percentage change? richard: i do not think it changes very much at all. they will continue to control it and have at least 70%. nothing has changed in their behavior since 2016 when they removed exclusivity clauses.
this is a company that has lost its moral compass. this is the third time it has been found guilty of anticompetition. this very big fine today along with the others, but from google's perspective and is just a tax to take over more odd -- markets. emily: google is betting big on gaming, unveiling its new game streaming at the game developers conference in san francisco. it will let players access high-end games on the web without buying expensive consoles or personal computers. it is nicknamed the netflix of gaming. google introduced its own game controller. i spoke with the vice president bill harrison tuesday after the announcement. bill: the new generation of platforms combines playing and watching games into the same
experience. it is powered by the technology that only google can bring to bear. emily: can only google bring certain types of content? will this have exclusive content? phil: we announced the formations of google's first game, and we have shipped hundreds of development tools to leading studios. they are hard at work creating games. emily: will you be licensing content? gaming content is more expensive than typical video streaming content. phil: we partner with game publishers and developers big and small. some of the leading lights of the game industry such as take two, bringing there an aging -- amazing experiences to our platform. it is about bringing youtube
creators in the mix where a youtube creator can bring their fans into the game, and allow game developers to connect with more and more people seamlessly across all the screens in their life. emily: if this is successful, it could mean a huge shift in the gaming market. how do you make sure the experience is consistent, given differences in bandwidth? phil: that is the magic of google technology that runs in our data center that allows us to utilize our advantage of investments in -- and that allows us to take the developers original division -- vision and stream it to the gamers home. it allows us to stream up to four k with all the latest greatest visual and audio capabilities and technologies that gamers are used to, but without the need for a dedicated
box console or pc. emily: from google to the white house, we talked about how his career in tech helped prepare him for his time in washington. check it out on instagram, shoppers will be able to buy what they like right from the app. could it be the next big revenue driver for facebook? this is bloomberg. ? ♪
emily: in the heart of washington, a nonpartisan tech group has been working to bring government services to americans online. it has helped speed up veterans disability claims and breakdown technical barriers for immigrants. we caught up with the administrator and started by talking about the long and bumpy history of health care services like healthcare.gov.
>> it is crucial. you do not always see in government people bringing user centered design. it is about the veteran, the doctor, and the student, and putting them at the center. if you write specifications and do not talk to users, you do not end up with a good consumer experience. emily: you worked for google where things work at light speed. why move to the government? matt: the mission and the impact, the meaningfulness of being able to see the impact you can have is deeply gratifying. technology, you can cherry pick. you can choose to serve one particular market. government needs to serve everybody and when he talked to somebody over thanksgiving dinner table, they can see the impact.
emily: has it been a culture shock? matt: yes. we like to joke that we are a bridge between the worlds of technology and government and they do not always speak well together. emily: you worked under the obama administration and you now work under the trump administration. what has it been like working for two different presidents? matt: we care about implementing systems so government systems that millions of people use work really well. we have had support in both administrations. it is not a partisan issue to say technology is broken, or a veteran trying to get their benefits or a student going to college, for them to get the information they need and the service to work well. we are gratified to make progress. emily: the president is taking on google and facebook, accusing them of bias. is that fair? matt: i am just worried about, if you have a particular doctor
that wants to submit a payment for medicare, does it work? i think in the same way that d.c. does not always understand silicon valley, silicon valley does not always understand d.c. and the more cross pollination, the better. emily: what does silicon valley need to understand better? matt: i was at sxsw and i sat down eating a hot dog and somebody pitched me on an augmented reality dance lesson. i think silicon valley can do more about the services everyone needs. emily: many democrats gathered
there and are taking on big tech , and the attorneys general are investigating whether google presents an antitrust case. do you think so? matt: i do not want to take a position on that, but when i worked in government there were earnest people making sure the best quality of search results showed up. the federal trade commission, the department of justice, they need to look at consumer harm and good. emily: how about a broader question, senator elizabeth warren saying big tech needs to be broken up and amy klobuchar wants an investigation. do you think big tech broadly needs to be broken up? matt: for me personally, it is not so much a matter of breaking up as big companies need to realize they will be scrutinized . i think most realize and accept the fact that no matter what, they have to think about their impact not just amongst their consumers and their markets, but among the entire country and the world.
emily: you handle some of the most sensitive data about americans. google and facebook have a lot of data about us. isn't it clear way cannot trust them with our data? matt: if a tech company or any company loses trust, people will start to leave. they can take their data out or stop using the company. what interests me, if you think about the u.s. government, what is the trust and how can we make that work better? a poll came out and for the first time the u.s. government was listed as it were a company. of the top 100, it was dead last . there is a lot of ways technology could make government work better. emily: we see areas where technology is failing, a massacre in new zealand being posted.
they were almost powerless to stop their own power, so what can they do? matt: that is an interesting case, because there is the notion of something you do not want to show up like spam, and the notion of real-time things. this idea of something going viral and people live streaming terrible stuff, i suspect the tech companies have not had the time to adjust to that model. i would not be surprised if engineers throughout silicon valley are thinking about adjusting so it does not happen again. emily: we are seeing technology working with the government, and that has caused in google's place, employee protests around the work with the pentagon. google ended a contract to help the government interpret aerial drone footage. is that a mistake? matt: reasonable people can have
different viewpoints. i was speaking to the ceo of microsoft recent way, and he had an interesting position that microsoft is a platform and the platform should allow all kinds of customers and clients to come clean. you cannot -- come in. you cannot anticipate how everybody will use it so people will be grappling with these issues. emily: if you like what you see on instagram, you now have the option to buy it. the new e-commerce strategy, this is bloomberg. ♪
instagram is testing a shopping feature with a handful of retailers including nike and revolve. shoppers can pay with fees are, mastercard, and paypal. -- visa, mastercard, and paypal. >> in the instagram app, you will be able to check out and purchase a product which is unlike we have seen -- what we have seen before. they would redirect you to a website or app to complete your purchase, but it gives instagram another line of revenue beyond advertising, which will be extremely significant. emily: how much business and traffic do you think this will drive for paypal? bill: this is building on a phenomenon with small retailers and businesses having new forms to meet buyers. instagram is a great new experience and instagram has been a great forum for sellers
to meet buyers. this has been building for a long time in terms of buyers connecting with brands and sellers. now they can complete the purchase in context on instagram . it helps more activity happening . this is something we hear from sellers all the time, this is important for them. this is an interesting new place for sellers to make more buyers.
emily: how big do you think it can be for you? bill: if you look at our marketplace and partner business, separate from ebay who was a partner we have worked with for a long time, our top 20 marketplaces that we work with our already -- are already $85 billion in volume and growing 41% year on year. our aspirations are read want to connect our 30 plus million sellers -- we want to connect our 30 plus million sellers with buyers. there were a couple places a smaller seller could go to sell online. now there is an explosion of new forums that they can sell, and we want to help them to the best places where they can be buyers. instagram is quite important and we are excited about enabling the checkout. we are quite excited to be powering some of those capabilities, especially buyer transactions as well as seller transactions and partnering with them. emily: facebook is going through a lot of changes.
we talked about ad targeting. mark zuckerberg said they will shift more towards private communications. how much revenue do you think this will drive, instagram commerce will drive for facebook? sarah: it is hard to say because it is so early, but it is important to keep in mind that facebook's legacy business, the news feed and advertising will not grow much more from here. it is already so saturated in these big advertising markets around the world, so the company is invested in figuring out there next business models. e-commerce is something they mentioned on the earnings call is a big priority for the future as well as things happening in messaging which may be harder to monetize. this is one of the few bright spots they have that is maybe more proven than some of the other things like cryptocurrency and encrypted messaging. emily: let's talk about the less
bright spots. facebook and instagram are getting played by hate and misinformation -- played to -- plagued by hate and misinformation. bill: we partnered with facebook across multiple forms for some time. we have a growing partnership. one of the things that we enable is fraud tools, things that enable market place operators to make sure they are getting buyers that are legitimate and sellers that are legitimate. it is something that across all the different forums, we provide buyer and seller protection. separate from how we engage here
, across the way we engage with our consumers and help them shop without sharing financial information. we help merchants connect to more of these forms. a number of things are being addressed. can this be a great forum for commerce? i think you see a number of sellers engaging with buyers, so it is a great forum but this makes it better. we are excited to partner on this, not only providing tools that will help with the sales going in and out, but how do you combat fraud. sarah: do you think consumers will have hesitancy about sharing their credit card number with facebook through this kind of transaction? well paypal present -- event that from having to happen?
bill: when you use the paypal button broadly, it is helping you do not have to go through the friction of giving a card. users want to provide a card directly and users can make those determinations where they feel comfortable. we provide the ability to check out and not type those things in, which puts it out of the process. either way, we will give the user the choice. emily: you are taking friction out of the process, but in light of the more recent privacy concerns with facebook, well users want to share and store their payment information with instagram? bill: you see a lot of users wanting to connect with sellers and brands already, so making a place where users feel comfortable doing that is important and something we are working together on. i think you see a lot of users engaging and something. i think that is already happening. this makes it even better for those users.
emily: we mentioned nike, revolve. what other retailers? sarah: i think it will be a small group for now, but in the future, all these people that have created their businesses on instagram, based off their followings will be able to build a marketplace. that is uncharted territory. emily: you will be able to buy kylie jenner's lipstick on instagram. sarah: a business today just had a more than $1 billion valuation. businesses that have been built up via instagram followings will have a more direct way to sell and maybe will be able to see more into how that works. emily: that does it for this
nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. the fed grows more dovish, saying it won't tighten in 2019. scott: i'm a little surprised. i think they're overreacting. andrew: the real question now, will we get through the end of the year with no rate cuts? nejra: with brexit d-day looming, the u.k. pleads for an extension. mr. barnier: we have done our best.