tv Bloomberg Technology Bloomberg February 2, 2017 12:00am-1:01am EST
the user base is continuing to grow. reported just of the 2 billion monthly active users and one point seven 5 billion users accessing the platform on their smartphones are in this move solidifies facebook's position in the market for mobile advertising just behind alphabet , google. joining us to dig into the numbers, david kirkpatrick and thank you for joining us. were there any clouds? some big silver linings here. the revenue, the earnings-per-share. >> clouds. i can't really think of any. i'm sure some people would be upset that the numbers aren't better than they are. but analysts were expecting some incredible results and pretty much everything beat it. we have 25% of the worlds population using the platform. i cannot see any clouds there.
caroline: on a daily basis, three times the u.s. population. that is just phenomenal. 1.2 billion people addicted to this particular app. dig into the growth drivers here. businesses are getting mobile. now 5 million for instagram. that is big growth. >> they are doing superbly on mobile. when i think of where it there real prospects are going all that going forward it is the , truly global nature of their business. if you look at the growth they are seeing in asia and the rest of the world, africa and latin america, they are doing surprisingly well. this has always been where i thought their long-term potential was. they make 10 times more per user in the united states than asia, yet the opportunity to build those numbers more to parity,
they are getting faster user growth in those regions and making somewhat more money per user. i was struck. asian revenue was up 59%. that is impressive. the rest of the world, that was up 52%. even though the numbers are small compared to europe and the u.s., this is where the opportunity is long-term. caroline: the potential needs, we are hearing the cfo telling me they are not backing away from the view they need to spend aggressively. it seemed to be the headcount, they are ramping up 34% in the fourth quarter and say they are going to accelerate that more in 2017. are they spending wisely? >> i think so. to achieve any kind of innovation, you have to have resources to do it. if you have the cash that is
where you could spend it. the idea of ad product innovation goes hand in hand with features. you have to give something to the users to keep them engaged. that is going to change as they continue to grow in global markets. the expectations for a social platform are quite different. then the expectations in the u.s. and the u.k. and the rest of europe. you have to invest smartly and you have got to get the best engineers to do it. i do think that it is smart. caroline: what about the move to video? video is what mark zuckerberg and sheryl sandberg have been picking up, still mobile instill video. and the wall street journal piece saying they may be developing a tv app. is video where it's hot? >> that is where they can compensate for this problem that they have acknowledged that they have saturated our newsfeeds with as many ads as we are likely to handle. particularly on mobile.
either have to charge more per ad, grow their user base or they have to find other kinds of ads that make more money. video ads can do that. i thought that journal piece suggesting they have a set top box was interesting. it was a little unclear how it might work. my guess is down the road they would like to have some kind of app that allows you to watch tv and all the ways we watch tv and still be on facebook in a fundamental way. they have tried this and it hasn't really worked. if they could make it work they could find new ways to show us ads while we're watching tv and they could break in more doubt. -- raking in even more dough. caroline: mark zuckerberg saying that he will seek original content deals and he's putting video first. i'm going to find a cloud admits -- amidst the silver lining. it looks as if facebook did lose
out. oculus it was role was potentially built upon stolen technology. $500 million is the damages they will have to pay. that is a quarter of the price tag. is there a particular concern? >> i don't know. i think it is a concern. it is a court ruling that is going to hit a pocket book. that is always a concern, i don't want to minimize that. oculus being an engine for innovation, anything that questions its source code is going to be of concern. $500 million is something that will continue to be litigated for a while. the growth we are seeing, i'm sure it is a concern. is it a deal breaker? i can't see it as being that. >> what about the fake news and how zuckerberg himself has been trying to respond to this? potentially a little awkwardly
to deal with best to begin with. trying to orchestrate the way in which he interacts with his own user base? >> it continues to be an issue of concern for the intelligentsia. it is not a concern to the average facebook user. mostly they just want to be entertained and then they are. facebook is taking the issue seriously. you're going to see them take more and more measures to try to avoid seeming to compound the partisanship that is so big a problem in so many societies around the world. the problem is they are so global, they are operating in so many different languages. this problem is global. even russian interference in the media is global. it is not going to be that easy for facebook to get a grip on this right away. i think they will over time. on oculus, i think it is something that is looking like maybe they overpaid for it. unlike instagram where they got a spectacular deal.
the guy who may be gets some of the blame for this lawsuit loss also had some pretty embarrassing behavior around politics and his own public statement saying maybe they are regretting a little bit their association with him. on the other hand, they have brought someone in to take over oculus and i think he will be a great leader for that part of the company. >> great insight. melissa parish, you are both sticking with me. you are coming back later. we will bring you all of the headlines as they cross. stick with us. now another bloomberg scoop. apple is designing a new chip. they could take on more of the functionality currently handled by intel processors. that is according to people familiar with the matter. the chips are being used in the latest macbook pro. more on this story later in the hour. it has been called the front page of the internet. we will catch up with the reddit
caroline: hewlett-packard is ramping up its m&a with the purchase of a security startup that uses machine learning and data analytics to find security threats. the deal will help connect everything from computers to handheld smart devices. hpe is continuing to look to spin off other assets. leaders had a visceral reaction to president trump's travel ban which bans people from seven prominently muslim
countries from entering the u.s. the ban hit a chord for the reddit co-founder. he took to the social media platform to share his family's immigration journey calling it deeply un-american and potentially unconstitutional. joining us is the reddit co-founder. we thank you for your time. i was moved by reading your piece. you said welcoming immigrants has been our countries unfair advantage. coming from an immigrant family has been mind as about her. that how do you think the community has been responding? it is bin laden consisted not just in silicon valley but across the country. one of the things i thought obligated to do is to tell the story on reddit, which we built
it to be a home for conversation. there are literally tens of thousands of comments, many of which are deeply personal stories of people whose families came here and they use us that thos of the the ehto people who really appreciate this country in a way that someone like me who was worn in brooklyn can't fully understand because i don't quite know just how good i have it. you have to look too far in silicon valley to see so many founders that are immigrant and selves or children of them. caroline: people born out of silicon valley, run by immigrant leaders. what about the response? it is wonderful to be able to put one's you across. the comments that you have sparked have been numerous. there is a surge in terms of a voice on the internet. what about action in terms of activity?
we are seeing legal steps and donations going to the aclu. is this tangible enough? >> it is a start. we basically donated our front page and advertising to the aclu yesterday. we are finding more and more opportunities whether it is an -- in civil protests, a very american right. donations to groups like the aclu working hard to make change and protect our rights and our constitutional rights, and good old-fashioned phone calls. five years ago i was part of hundreds of thousands of americans who defeated too bad -- two really bad bills. those bills that were considered inevitable. and that was simply because people picked up their phones, called their representatives and said this is bad. this is bad for america and here is why.
at the end of today, it takes individuals to create change. some of that is just old-fashioned phone calls. i am very optimistic. i have to be. because this great experiment is constantly in motion, constantly in flux. i believe constantly moving forward, we are always trending in the right direction, but i believe we are going to get there through more discussion and not less. caroline: how much would it have hurt reddit if you could not have immigrant talent? >> we are only 150 strong right now. we had a number of people within the office who themselves are immigrants to this country or who have families who were in so it was clear for everyone involved just how important an issue this was not just to
be able to hire the best people in the world to come here and create more jobs but for the spirit of our platform. we are proud of 280 million monthly active users, but we have more growing to do and that's when to come from having the most global platform possible and to do that we need to have voices and opinions that are as global and brought as -- and broad as possible. it is important for our success as a company. and i would argue important for our success as a nation. caroline: we have seen a lot of leaders of technology come out and stand opposed to what donald trump has done with the travel ban. some faster than others. in particular uber has suffered criticism. delete uber was trending. it has been hit by rankings on apple app store's. you are a supporter of delete uber. >> i have not publicly said anything about it.
mostly because i don't fully understand the depth of it. it was a decision made during a new york strike to keep running while taxis were not. i really only read one headline about it. i don't have enough to have an intelligent comment. generally speaking, i think what we as citizens are really starting to appreciate is the effect social media can have on changing perceptions and changing actions. uber made a significant donation. that happens because citizens take platforms, they speak their voice and make change happen. >> what about silicon valley? are you pleased they have a direct communication with donald trump? >> i don't know it will make an impact. it is too early to tell.
it is important. one of the things we saw is that the more voices we can have who understands technology in washington the better. a lot of people involved are not necessarily technologists themselves. a lot of this stuff we have, and so pretty straightforward once you cut through the technical jargon, can we be up to the challenge of having the patience and having the grit to educate and not come from a place of silicon valley snobbery but come from a place of wanting the best decisions possible. and bringing our expertise to the table as equals. caroline: talking of education, on a day where we have facebook earnings, news and the veracity of that is something that reddit has had to tackle.
is this something that your own network is tackling in the right way? is it anymore you would like to see be done? >> we were pretty insulated from the rash of the really explicit fake news because often the perpetrators of it were creating this news would try to game or cheat reddit to bolster it on the front page. we have tools and place that work to thwart people in gaming the system and that is the nature of the platform. it is about trying to use up votes and down votes to make sure good content bubbles up. our community does a good job curbing the obvious scamming stuff. the big gray area is where we are still trying to figure out how do we best address news that is not explicitly fake?
not just a random person has built a fake website. but our news organizations that are not always presenting the full story. we don't have a good answer for that. the trend that we are on, we want to give our users the most information. we want to give them the most ability through other users, crowdsourcing, the most information possible so they can make the best decision possible. this is definitely new territory. what we have seen is that alternate facts was the quote. that is not a world i think any of us are really familiar with. it is becoming more important than ever for the press to have a role in this world because every functioning democracy needs high functioning media. we shall see. caroline: i hope that this news organization can still lower you -- who are on to have these
debates. thank you. coming up, apple store popped as investors reacted to earnings. could this push them into overboard territory? another check on facebook shares, still higher as the earnings continue to dominate company revenue. david wainer just said that facebook. you will continue to break you updates. this is bloomberg. ♪
caroline: tesla started testing for fact -- four self driving cars on california public roads last year according to reports made public wednesday by the state department of motor vehicles. the four vehicles traveled 550 miles october and november of last year. with no accidents heard tesla officially dropped the word motors from its name.
tesla had shortened its name on the company website in july. as ceo elon musk began the process to acquire the name solar city. you may remember when apple dropped computer when it released the first iphone back in 2007. in shares of apple surged 6% in reaction to its earnings result after the bell tuesday. investors are cheering the record-breaking sales on the iphone. if you dig deeper the surge has , caused it to cross a key technical level. here you will see the rsi. the relative strength index. if you go below or above the red this is overbought territory. we are the most overbought for apple shares since march 2012. check out the price.
>> it is 1:30 p.m. here in hong kong. i am shery ahn with an update of the top stories. corporate america is said to be taking on president trump's mcgirt order. -- immigrant order. amazon, google and facebook are circulating an open letter expressing their concern. consumer goods companies may also add their names are fearful they aim to publish the letter this week. witnessed the swearing-in of former exxon ceo rex tillerson as secretary of state. voted mostly along party lines. tillerson's business background
gives in the connections and skills needed to promote the u.s. interests abroad they say. out ofso take the u.k. the european union has passed its first test in parliament. they allowed theresa may to start the negotiations by end of march. pro-eu members say the vote should not be taken for unconditional support. the government will push -- publish an outline of its exit plan -- later. there will be watching the level of demand for playstation consoles and gaming software. sony down .9%. the movie unit announced a near $1 billion impairment charge on waiting talks office returns. global news 24 hours a day howard by more than 2600 analysts and journalists and 120 countries, you are watching bloomberg.
let's get a check of the markets. a little bit mixed. in hand and shipping -- dropped.hipping has is underwater. the nikkei is down. hong kong still coming under some pressure as well. it only reopened after the lunar new year holiday. upare so saying them catch across asian equity markets so far this week. we have the fed decision overnight. since market investors are very much now moving and the bank of england. really not a lot investors to get excited about. a quick look at that yen.
up against the dollar. pushing past that 113 handle. we will be live from london at the top of the hour. this is bloomberg. caroline: this is "bloomberg technology." i'm caroline hyde. facebook still jumping in after-hours trade straight get into my terminal, a more than two percentage points. investors bullish on the social network after a report say 51% jump in sales to $8.8 billion. the company user base continues to grow. adding 217 million active users in just one year. facebook solidified its position as number 2 in the market for mobile advertising behind alphabet's google. how can it continue with momentum into 2017? back with us the ceo of tech
is economy and bloomberg contributor. let's start off with the share reaction we are seeing and the phenomenal growth overall we are seeing. almost 1/4 of one billion users added in one year. one of my colleagues, who writes for gadfly -- she was saying is basically an entire twitter. >> it is incredibly phenomenal. i see these numbers and it just -- it kind of blows my mind. even though i've been following facebook as an analyst for years, i think back to 1999, 2000, when i was in social media before we called it that and we ended with 10 million users and we are really excited. it is like adding a whole twitter in a year. phenomenal. caroline: in terms of how you think mark zuckerberg will be reacting, david, i know you know
him personally. notably, he's been adding about $3 billion to his wealth of the overall mark. we got a bit of a lean into what he's been saying. one of the key issues is fake news. this is what he said on the call. we just have a technical issue there. we will bring you that. he was basically saying, we are seeing -- they are still trying to tackle fake news. overall, is he going to be optimistic about the company? david: are you kidding. he has no choice but to be optimistic. he always has been a product -- chronic optimist. we've heard so much about his other activities in the last few months, more than we ever really have, the speculation he might run for president, which i don't think it's accurate. at least not anytime soon. his huge move into philanthropy, giving away his money or putting it into a different structure that will allow him to give it away over time. one thing that struck me listening to the results is that
i imagine he feels a little more comfortable devoting his attention to those other activities, whatever they may be, now, because sheryl sandberg is such a miraculously good business leader, then the business itself is so solid that even though i'm sure he continues to have as strong opinions as he ever has about product direction and all kinds of ideas about how virtual reality will change everything, he doesn't have to worry about it day today at all. it is a juggernaut. sheryl sandberg, having had a rough couple of years, is back in the saddle. clearly making all the great decisions she's always made great it is an astonishing machine. you were right to allow this 270 million figure. how could a company be adding 270 million users in one year? i don't think we seen any company or business do that. categorize some
companies like apple having $240 billion in cash. these companies at the scale, we've never seen anything like it. caroline: it is phenomenal numbers, they are mind blowing. what i'd also like to bring is perhaps a copycat that's been going on, and whether this is the right way to go. they could not buy snapchat. they seem to be pulling a few leaves out of their book. we saw instagram rollout stories. are they right to try and tackle snapchat as a direct competitor in such a way? >> it's a crazy question because pretty much any other company, i would absolutely say no, i'm not a fan of copycat strategy. it very rarely works. eventually you saturate the market and nobody wins from a user perspective. in this case when you have nearly 2 billion users, and you know a certain kind of feature is capturing the hearts and minds of a certain demographic -- sure, right?
why not. especially because it gives them some runway. some things will stick and some things won't. it's not going to hurt them. if they can build a future just as good as what anybody else has and see how it works for them, why the heck not? caroline: why the heck not build a snapchat competitor, but will it be able to draw over the millennials? facebook may be did not quite have the call factor that snapchat does. david: it seems like facebook is somewhat diminishing in its appeal to millenials. certainly younger millenials, and the group coming up behind them. considering that they made that brilliant move to buy instagram, they have a hedge strategy that is really effective, and they are going to keep those people in their community one way or another. they certainly are worried about snapchat, vis-a-vis instagram,
per se, whether it is facebook that is threatened or instagram, it's hard to argue. the good thing for them about snapchat, it is still pretty much a u.s. phenomenon. it does make sense for them to be borrowing, and even -- they admitted at instagram that they are copying snapchat. until snapchat really does get traction outside the u.s., since they already have traction elsewhere, they can pull these things out before snapchat can. it is somewhat brutal but probably effective strategy. caroline: fascinating to talk about their global growth. david kirkpatrick, and melissa parish. wonderful to have such viewpoints. now, general electric has recently been focusing in on analytics straight what can we expect from the industrial company in the near future? the general electric chairman and ceo jeff immelt sat down for an exclusive interview in boston.
>> wasn't an issue to be in the software business, per se. it was the recognition that our engines have a couple hundred sensors on them and they provide this continuous stream of data. we made the decision we want to model that data on behalf of our customers and not relegated to someone else. that led us back into the chain of adding software talent, building a software platform. our theory is every industrial company has to be additional. we want them to leave that kind of path and that's how we have invested. >> do you feel at home? >> i've had to relearn. one of the things when you are running ge, you always have to say why not us. it's kind of like, what's next. let's try. we brought in a lot of people from the industry to help us, but myself -- i've had to kind of learn new ideas. >> how do you deal with that? ge has a famously strong
culture. >> we've had a change. you've got to recruit the talents. you are never going to hope to do that. and then you have to get people who are comfortable with the speed and culture that silicon valley, the way people get paid, the pace which you have to go. people have to learn to live in a horizontal and vertical world at the same time, which is hard. but then we also have to bring additional people. if you're in an airplane at 35,000 feet, do you want to think the people who make the entrance quit their company every five years? no. you have to bring a bit of the industrial thinking into
additional help at the same time. >> what will ge look like in 20 years' time? >> i think we are going to be kind of still having an industrial core. we are going to be a big software player in 20 years' time. i would say -- i don't know that we will be broader as a company, but we will be much deeper. we will go from information all the way through how things get made. i think you will see ge that is deeper, maybe not broader. by doing analytics. that to me is more valued content in the industries we serve. >> did you say 3-d printing? >> getting back to your global point, about analytics and manufacturing, it democratizes the supply chain. it says you can do in a factory with 400 people it used to take 2000 people to do. we are investing in both of these in a substantial way. >> the idea of a conglomerate. you sit there, you are now i'm
much more focused company with perhaps the arguable exception -- that seems more separate than the rest of it. >> the genesis of our medical business comes from the global research center. we basically invented the x-ray tube 100 years ago. all the life science stuff we do comes out of our research centers. we see health care as part of the package. i think management is key. you always have to be good at culture and leadership. nothing is general anymore. when i first became ceo we were in pet insurance, media, we made jet engines. that's too hard today. you have to have this combination of depth and breadth. you have to have managers who are maybe more technical, know
domains better. we've had to reshape leadership and culture. >> the old system at ge, going to work at nbc -- shifting around. >> it's much more constrained today. we still want people to be broad, but they also have to be deep. or you can't pick the right ideas. you can't drive the change that is required. caroline: that was the ge chairman and ceo jeff immelt. france has issued an ultimatum to uber, pay drivers more or risk new legislation that would set a minimum wage equivalent for drivers. the country once an agreement -- wants an agreement in place as early as next week between the ridesharing company and drivers union, staging protests for better pay. a mediator has been appointed to coordinate discussions. if talks fail, france will recommend a legal minimum pay for the drivers based on time and distance traveled. looking to apple, shares rose more than 6% in wednesday
trading, the biggest gain since july, after posting record sales for the fiscal first quarter. that one day gain to the stocks is equal to $39 billion. to put that in perspective, that value is bigger than the entire market capitalization of companies, including ebay. hpe. just shy of yahoo!'s market cap of $42 billion. wow. and staying with apple, turning to a bloomberg school. -- a bloomberg scoop. the company designing a new chip for laptops, stepping into intel's turf. more details ahead. this is bloomberg. ♪
new ship that would take one more of the functionality currently handled by intel processors. the chip went into development last year and is said to be similar to the one already used in the latest macbook pro. scoop iss with this mark gurman, another great piece of reporting by you, mark. there is a functionality behind this chip. what can it offer? >> thank you for having me. it was a great story between me and our chips story. they're going to be doing more with the arm chip does some security in the touch id and payments functionality with touch id. now they're going to expand that to this new power nap feature, a low-power mode which should save some more battery life on mac laptops. caroline: arm holdings is a technology supplier, designer of the chip. tell us about the inroads it's
making on intel's turf. >> intel is a commonplace chip supplier to other laptop and desktop computer makers. they failed in mobile years ago with the transition to mobile chips, which owns samsung and qualcomm. the first iphone with its own apple in house chip came out seven years ago with the iphone 4, and the first ipad. so now apple is looking to do a bit more and step on intel's turf some more with its own mac components. caroline: what does it allow apple to do? why would it want control so much? >> there's a few things here. this is just one step in a long-term exploration of going completely in-house on apple chips. but apple is really known for its integration of hardware and software and making its own component, also, cost savings, but it puts the company on its phone roadmap.
if they want to have a more efficient laptop, and now they are finding ways to create these co-processors to speed up security, improve performance of battery components like we put in our report today, and they were doing their own chips. they don't have to worry about intel on that front. caroline: great scoop from yourself and ian king. mark gurman, thank you for joining us. now, sequoia capital shaking things up. the prominent silicon valley venture firm that ask the likes of apple, cisco, and google announced that longtime partner will be stepping back. he is famous for leading the investment in whatsapp, which was acquired by facebook for $22 million in 2014. it was one of the most lucrative venture investments. he will be passing the baton on to someone who co-led the venture business since 2007. up next, more takeaways. facebook's latest earnings report.
caroline: facebook's earning call continues and the stock is still higher. losing some of its steam. what is encouraging investors? perhaps the 51% jump in sales. mobile advertising continuing to drive facebook's growth. the company gained on its number one mobile ad rival, google. for more, i want to bring in our bloomberg intelligence analyst. give us some highlights. maybe the future is really about instagram. 5 million businesses advertising on the service? >> 500,000. caroline: give us a sense of instagram's future potential. >> this is just the start for instagram and video.
so far we are talking about one billion, roundabout that run rate. the potential here is massive. like the delta we saw between 500,000 versus 4 million. user growth was 51% in that year. daily active users, 400 million? that is a rocksolid number. instagram and video could help them offset some of the -- that facebook has for this year, where revenue is expected to slow down. they are expecting 33% earnings growth next year from 51% this year. caroline: quite amazing if you are saying 4 million advertisers on facebook, and they've got 65 million business pages. when you put that, 5 million businesses on instagram. for only 1/2 of one million advertising, the growth is clearly there. it's all been about video.
>> if you look at the video ad market in general, nobody has cracked the code on measurement. that's why video is still 10% of what the tv is. when they are able to do that, that's when the mass market is going to shift. we don't think that's going to have been near term, but they are partnering with third-party vendors. what instagram is going to do is an ad unit -- they could push videos and pilot the strategies on instagram and push that. i feel instagram has a potential that will be in luck this year. caroline: what about the potential of tomorrow? what about amazon? we will all be eyes on that particular company. >> the demand side of the equation is pretty strong.
that's not a worry. if you look at four to 2015, fda demand was so much more that they had to spend to meet the demand. now we already saw amazon wants to increase the headcount, and investments continue to grow. the profitability side of the equation is a little iffy. it is going to ebb and flow. on the cloud services side of the equation, it should be time. the growth is rock solid. look at microsoft. they are pretty much number one right now. they have a run rate of about $10 billion great if you look at the industry, by 2020 it is expected to top $70 billion. the runway is fairly long. cloud solutions should be fine. demand side should be fine from a top line. the profitability aspect, that might have some flags to watch out for. caroline: great to have your
>> holding fire. thefed gives little away on brakes as janet yellen awaits trumps policy impact. >> head of the bank of england's first thursday of the suit best will carney blank? >> how would an expected surge in fixed income trading effect europe's biggest investment banks? we get the numbers this hour. >> following facebook's timeline. the social networking giant beats earnings again.
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