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tv   Best of Bloomberg Technology  Bloomberg  November 17, 2018 11:00am-12:00pm EST

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that's $150 off the mattress, plus a free pillow - and free shipping too. go to buyleesa.com today. you need this bed. ♪ i am emily chang. this is the "best of bloomberg technology," where we bring you all of our top interviews from this week in tech. coming up, amazon confirms what we already knew -- that it is splitting its second headquarters between new york and virginia. why some are calling this whole search a bait and switch. plus, this week, uber moved closer to releasing data on sexual assault in cars. our extensive sit down with uber's chief legal officer, tony west.
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and we speak to the ceo of micron. his company is the latest at the center of the u.s.-china tech dispute. and the doj is backing them up. but first, to our top story. it is official -- after 14 months, amazon has whittled down 238 locations to 2. amazon officially confirmed it is opening two headquarters, one in long island and one in arlington, virginia. plus, nashville will become the so-called operation center, with more than 5000 jobs. we caught up with their senior vice president, jay carney, and asked about the plan. jay: these will become full headquarters. we will have shareholder meetings in these headquarters -- board of directors meetings, our all hands meetings, our employee meetings in new york d.c. area, just like we have in seattle. he will move around. the rest of leadership will move around. as these headquarters grow, we will have senior leaders based in these locations.
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i, myself i'm on the leadership , team. i live in washington, d.c. now. i'll be going up to new york a lot, which i'm excited about. we are a seattle-based company. but we long ago became more than just seattle. we have employees in 46 states. we have 18 tech centers across the country employing 20,000 people. we have invested $26 billion in the u.s. over the last year alone. as you know, we hire a lot of folks, and we pay up and down the income scale. and these jobs will be high-paying and bring a lot of positive benefits to new york and d.c. emily: jay, how do you feel about the backlash, that amazon took advantage of cities and got useful data in return? or that a company of your size does not deserve such big tax incentives? jay: two things. first, on the question about the data we used were based on about 100 of different
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metrics and are all publicly available. housing and transportation and the like. this is information that cities readily provide to any potential investor or that you can find in surveys and other research. if you are looking to invest. that process helped us make our decision, and it should help other companies as they look to invest. one of the things we learned through this process is that there are some great places that may not have been the right place for us to create 50,000 jobs or 25,000 jobs, but there are great cities across the united states that are very appealing places for tech investment. we, even in this process, have announced over 6000 jobs in cities that were competing, were among the 20 finalists but were not selected for hq2, cities like vancouver, san diego, birmingham, alabama. we think that this process has been positive -- for us, obviously, but also for the cities that were chosen and the cities that were not.
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one thing that is unique about this is that we are planning in advance for the growth. instead of growing organically like we did in seattle -- amazon started in a garage, now we have more than 45,000 employees here. we are working ahead of time with new york, with virginia, to make sure that this growth has a positive effect on those communities. emily: that was amazon's senior vice president jay carney. now to talk more about amazon's decision to split it second headquarters in two between new york and virginia i want to , bring in the open market institute executive director barry lynn from washington. also with us, bloomberg's shira ovide. now the the suspect is over who , do you think the real winners are here? shira: i think amazon is the big winner. they have made the selection process highly public, so it has generated a year of free publicity, both nationally and in each of the cities in which -- in each of the cities vying
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places location of hq2, like birmingham, calgary, alberta. so i think amazon is probably the biggest winner. emily: barry, i know you are a skeptic about this, but do you think amazon took advantage of cities in this process? barry: absolutely. there's no doubt about it. as we were just talking about, amazon got an immense amount of data from cities across the country. and it is not just publicly available data. it is data about what kind of deals, tax deals, tax breaks, subsidies, will these administrations put forth in order to lure in investment by amazon. that information is entirely secret, available to no other company. amazon is, as just mentioned, a huge winner in this. this is a general problem across
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the country in terms of how we treat large companies. emily: shira, what did you think of jay carney's response to that? as a company this bay, creating this many jobs, shouldn't they be getting these tax breaks? and if the data is available, couldn't it be useful? shira: i think barry's point was right, that amazon was in secret -- in rooms and secret negotiations with economic authorities, so they have a good sense of what the cities and states are willing to offer. this is a company that has 600,000 plus employees. it operates warehouses and data centers and other facilities in just about every state in the u.s. and also around the world. so it needs to have information to figure out what are the best places to put our growing demand for warehouses and white-collar offices and data centers and places like that.
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so, you know, jay carney is right, but also, it doesn't tell the whole story about what amazon got out of the process. emily: barry, looking out, amazon has said this process is going to take two decades. two decades from now, how do you think this will change arlington, virginia and long island city? barry: well, i think the issue is how it changes these places today. what it reveals is that officials in long island city and new york city and in virginia, at both the local and state level, are willing to give away a whole lot for not that much. i mean, we have to remember that they were originally promised the whole deal. they were promised the whole headquarters, the whole headquarters, the whole hq2. secondin each case is, they got come at best, half of it. and it looks like it will be even less than half of it, given some of these other investments that have been revealed. so what we see, if you are a taxpayer, if you are a citizen
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in new york city, if you are a citizen in virginia, you say, hey, what did my officials, my mayor and governor, just give away? because it is like these subsidies and tax breaks, that is my money. emily: at the same time, shira, you have google talk about expanding its presence in new york but not getting all of this fanfare. is that fair? shira: yeah. and it is interesting. google has said it had not applied for some of the tax subsidies that amazon maybe has gotten, although google is maybe in an hatton and amazon is coming to queens, so there's a bit of a difference. but to be fair to amazon, economic development is a little bit of a controversial process, particularly this idea of giving tax breaks to already affluent companies, like amazon, for high-paying jobs that look -- are good for the city but also have the potential to make income inequality even worse in
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expensive cities like the washington, d.c. area and new york city. it is always a give and take of benefits and drawbacks when you are luring high profile employers, like amazon, to a place that has a large workforce but also a high cost space. emily: that was barry lynn, open markets institute director, and bloomberg tech's shira ovide. coming up, uber's report on harassment, misconduct, and sexual assault. we will speak with uber's chief legal officer, tony west. and if you like bloomberg news, check us out on the radio, the app, and in the u.s. on sirius xm. this is bloomberg. ♪
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emily: 53 pages. that is the length of a new report that outlines how uber will handle cases of sexual harassment, misconduct, and assault. written with the help of experts at the national sexual violence
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research center and the urban institute, it defines 21 different sexual infractions. uber has committed to releasing information of assaults and fatal roadside incidents sometime in the next year. this report will be key in that endeavor. it comes at a time when many tech companies like google, facebook, airbnb, and more are all changing their policies on handling sexual harassment and discrimination cases, some more than others. uber's chief legal officer, tony west, joined us thursday. tony: we are having conversations with other companies about adopting this taxonomy. because what this is -- it has never been done before -- is it categorizes exactly what kind of behaviors -- or i should say misbehaviors that make up sexual assault or sexual harassment or sexual misconduct. not always illegal conduct, but conduct that you do not want happening in a customer service environment. and what is great about it, even though it was developed with the
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uber platform in mind, is it can any company in a customer service environment. emily: the question is -- how do you balance your instincts as a former doj attorney when there are trends in the legal profession to enable companies rather than resist them? it is believed that the incidence reported are highly underestimated, that there are far more than are actually reported. so is this really good for uber's business? tony: it is very good for uber's business, but much more importantly than that, it is the right thing to do. it is good for all of us. we have always believed that if you enhance the safety of the platform for women, you'll make it safer for everyone. and what this effort does is it takes us closer to that goal of having a safer platform. i understand why some people might be reluctant. i mean, look, obviously the chief legal officer is usually the guy in the room saying "take less risk," not more.
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but the reason this makes sense for us is we have a paramount duty to our shareholders. no question. but we also have a duty to our stakeholders. those are the millions of driver-partners, riders who used -- who use the platform every day. we have to do right by them. this is a step toward making the platform sustainable in the long term. emily: months before google forced arbitration and sexual harassment cases, you have done it. you have done it for riders and drivers. airbnb is taking it a step further. microsoft allows class action around sexual harassment. why not go that far if there is an argument to be made that in getting this out in the open more you address more systemic , problems? tony: i'm certainly proud of our leadership position on this issue, and i have to applaud airbnb and facebook and google for following suit. we think that the fact the bar is being raised for everyone is a good thing.
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it is a great thing, right, when you have companies competing to raise the bar on an issue like this. when we took the step to announce the end of mandatory arbitration for individual claims of sexual assault, sexual harassment, we did so with safety primarily in mind. that is really what drove best decision. i said at the time that this is the first step. it is not mean it is the only step. so these are active conversations we continue to have. emily: so, you are considering the discrimination provisions? tony: definitely, that is one of many things we are considering. i should say there is nothing wrong with arbitration. arbitration is an appropriate tool that is used by businesses every day in a very appropriate way. what we determined is that it is -- its use when it comes to sexual harassment was inappropriate because it stripped control from the survivor, even continuing to do , unfortunately, what the original act can do in terms of
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stripping the control. it is not an appropriate tool there. you want to give the survivor a choice. and as we look at whether or not arbitration is an appropriate tool for other types of claims, that is the kind of frame that we will approach it with. emily: you now have an anonymous tip line for employees. and managing that has been challenging. some of your top executives, former hr head, your coo, have been in the crosshairs. another executive resigned over some of the allegations that came across this line. how do you balance corrective punishment and outright termination when people want to see consequences? tony: certainly, i cannot speak, obviously, about any particular personnel decision, but i can say this -- it is important, when you have a system of reporting and a system of consequences in any workplace, that there be a progression of responses that you can bring to bear. because what you are ultimately trying to do is make the workplace safe, inclusive, welcoming for the people to be
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there so that they can bring their best talents to work every single day. and you want to be able to support people in that environment. and if you can create that environment by giving someone coaching or by changing someone's assignments so they are not in the same environment, or doing whatever -- and sometimes you may have to terminate someone that is an appropriate response and some situations. the main thing is that you have to telegraph that you are going to take those actions. you are going to hold people accountable for their behavior. and that is going to be true across the board. i have said many times, no one is indispensable to a company. everybody has to be held accountable for their behavior. emily: you have reached a settlement on the hack with all 50 states. and yet there are still multiple open questions from your former into gravol, foreign corrupt practices violations, data scraping, stealing trade secrets.
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do you think that legal risks will factor significantly into the uber's ipo? tony: certainly, you always consider legal risks whenever you are looking at whether you are going to go public or not. and i should say that i cannot really talk much about whether or not we go public. i can say that we just had a bond offering. and part of the risks you put in a document like that include the legal risks that you face. one of the good things is that our legal risks are well known. as you have just recounted. so there is not a lot of secrecy there. investors know. but i think investors also know that we have been methodical and successful in mitigating those legal risks. in less than 10 months, we have been not only able to announce a data breach but then resolve it in all 50 states. i think that has got to be a record time, from the time you
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have announced a problem to the time you have actually resolved it with 50 different regulators. we are continuing to be very methodical about that. emily: uber's chief legal officer, tony west. coming up, apple just saw its youngest losing streak in more than six months, the lease and -- the recent rout erasing more than $1 billion. that conversation next. this is bloomberg. ♪
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emily: the bad news just keeps piling onto apple. at least four of their chief suppliers for iphone components have reduced revenue estimate. the latest was swiss company ams, which makes light sensors for smartphones. that ups concerns about weak demands for iphones. apple shares are headed for the longest losing streak in more than six months. loup ventures' gene munster. gene: surprisingly, it is not
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alarming. and i want to put it into some context historical context. , the supply chain, when there --when there is early feedback, it is still early in the quarter, these tend not to be good indicators. the reason is that apple already gave their guidance on november 1. so two weeks in, we are hearing my chain cuts. it is not alarming because what we are hearing from the suppliers you mentioned is that those comments were already reflected in apple's guidance, so there should not be anything new. in my history on trying to figure out the supply chain data points is this is clearly more an art than a science. one thing that is important to know is every year, going into a cycle, apple tells their suppliers they need to produce more than they will actually have orders or. and every year, the cut orders going into this period. so this is nothing new. emily: shares have come back a bit, but in general, how confident are you that the
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latest lineup of iphones has been a hit? or is that not the question to be asking anymore as they transition to a services company? gene: i am in the camp that that is the right question to ask. is can they grow the base of iphones in the low single digits? i think that they are still on track to do that. i suspect that, over the next 12 months, they will probably increase the base by 3%. it is not about a big, hit iphone. it is about maintaining the base and finding ways to grow from that. one way they can go from that is by increasing the asp's, which we have seen over the past year, and that will continue over the next year. another way is by selling services. and so i think that is the broader, bigger question. and i suspect that the street is slowly -- it will take a year plus -- adopt this view that the overall apple business operates like a service. the hardware included has some predictability that, historically, hardware companies did not have. but apple's iphone business,
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over the years, will start to yield a more predictable trajectory. emily: so look at the stock chart here. you can see the slide since around when the new iphones were unveiled. we know this is a company that has been dependent on iphone sales. going forward, do you see a point when services revenue is equal to iphone revenue? gene: it is probably a long time away. it's 15% of revenue right now. in four years, we expect it to be 20%. that compares to the iphone going from 16% to 60% of revenue. they're still going to be a big gap up there, emily. ultimately, the emphasis is to conceptualize that the hardware business is operating like a software services type of business. i think that is the real inflection opportunity around the stock. and i think that can pave the way, that we are going to look
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back, and this is going to be considered a buying window for long-term investors. emily: they are now well off that $1 trillion dollar market cap milestone that they recently passed. do you think investors aren't getting it? gene: i don't think investors are getting it. i think that this concern and anxiety about the health of the iphone franchise is misplaced. i understand that there are three factors that played into it. one is the overall market. second is apple giving less disclosures about iphone units, or no longer giving disclosure. and i think the third is what we are hearing in the supply chain. i think this caused the street to fundamentally miss the story. again, i believe the iphone franchise is intact. the chatter from the channel is essentially already priced into apple's december expectations. and the other piece i think investors don't get is that this story trading at -- let's call it 13 times -- trades below
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clorox or coca-cola, which is closer to 20, 20 two times. i think at a minimum, it should be on par with those two types of consumer staple companies. in fact, that is what apple has become, a consumer staples company. emily: what about globally? we know in india, for example, apple has sort of failed to break into the market in any significant way. in china, there is concern about these trade tensions. and the iphone is just so much more expensive than many, many other phones out there. we are talking $50 phones. are you concerned that apple will not be able to keep up with the global competition? or, you know, is the iphone always going to be the most desirable and aspirational phone out there? gene: i think that apple is going to continue to be that leading edge. call it 20% of the population is going to want to pay up for a better experience.
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as you said, a lot of people cannot afford it. india and china are two different stories. on the china story, i still am confident that, despite the availability of, as you talk about, $50 alternatives, a much different competitive environment then really any other market that apple competes in. despite that more difficult, competitive market, i think the sheer size of the opportunity in china still renders this an incremental positive for the apple story in the years to come. there are a lot of people who do make a lot of money in china who can afford these more expensive iphones. india is a different story. this has been needling at apple for a long time. and i still don't see the path where apple is going to get meaningful traction in india. they just simply don't have the brand in india that they have in the rest of the world. emily: loup ventures co-founder gene munster. still ahead, could facebook itself be the one now threatening to democracy? we will discuss a bombshell "new
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york times" report out this week, next. bloomberg tech is live streaming on twitter. check us out, @technology. and be sure to check out tictoc on twitter. this is bloomberg. ♪
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emily: it is no secret that facebook has been struggling to keep up with fallout from its platform being used for election meddling. spreading fake news and more. now, a blockbuster "new york times" report alleges just how far the company has gone to protect itself. specifically, how ceo mark zuckerberg and coo sheryl sandberg went on the offensive to fight back at facebook detractors. this includes direct lobbying of lawmakers and go after their opposition, even hiring a republican opposition firm to paint its accusers as anti-semitic. specifically, holocaust survivor and billionaire, george soros. a move that soros' philanthropy chief is calling reprehensible.
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he wrote in an open letter to sandberg, "the notion that your company, at your direction, actively engaged in the same behavior to try to discredit people exercising their first amendment rights to protest facebook's role in disseminating vile propaganda is frankly astonishing to me." "it is disappointing to see how you have failed to monitor hate and misinformation on the platform. to now learn you're active in promoting these distortions is beyond the pale." zuckerberg, for his part, defended the company against the "times" reporting on a call with reporters thursday. take a listen. mark zuckerberg: to suggest we were not interested in knowing the truth or that we wanted to hide what we knew or that we tried to prevent investigations is simply untrue. emily: he added that facebook will form a new independent body to review content decisions. here to discuss, who else, but bloomberg's sarah frier, who covers facebook, and bloomberg
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contributor, david kirkpatrick. both of you were listening in on this call. zuckerberg really seemed to be on the back foot here. reporters were firing questions at him, who's getting fired, who's getting fired as a result of this? sarah, walk us through what zuckerberg had to say. sarah: what i thought was interesting about this call in relation to calls past was that he was willing to say there could be some people who could be fired because of this area in previous calls, he said -- because of this. in previous calls, he said everything ends with him, and he takes full responsibility. in this case, he said we did things wrong, and we are always making personnel decisions. that is as far as we have ever gone as far as him saying he had to fire someone. one of the first pieces of fallout from this is that the firm that made that link with soros, although it was true there was some financial relationships there, that firm has been cut from facebook ties. they're no longer working with them. zuckerberg said on the call that
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he did not know about the definers' relationship, and he was not informed about the way that the company was using them. emily: this firm, the definers, as it is called, it's interesting that he and it'd on the call that he did not know anything about it. he learned about it in the "new york times" piece. i want you to take a listen to what he had to say about personnel, because i do think it is worth hearing exactly what he had to say. mark zuckerberg: i just generally don't talk about that, specific cases of that in public. it's not that "we run the company and people make mistakes and there is no consequences," it is that it is part of the normal process of running the company. we are evaluating performance and making changes, either in role or, in some cases, finding different people to do different roles when we need to. so that is an ongoing process. that is part of running the company. we will certainly keep doing that. emily: this after being pushed by reporters. david, you have read the article. you listened to the call. what you think, of these
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revelations, is the most daming -- damning? david: it was amazing the defensiveness with which the call was conducted. i think it is appropriate. i think facebook is coming to a sense of responsibility so egregiously late on many of these issues of misuse and abuse and political manipulation that they are forced into an extremely uncomfortable position. what the article most amazingly laid out -- i think it is not shocking to those of us who follow the company closely, but it was laid out in chapter and verse. it was in the title. "delay, deflect, and distract." that has been the company's policy. but the other thing in the headline was "leaning out." in effect, this article was very much about sheryl sandberg and her role, being a progenitor of a distracting, delaying, and deflecting tactic.
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it is very interesting to me that she was not on the call today. emily: you know, it is also interesting, sarah, to see some of the internal machinations of how facebook work. mark and sheryl have surrounded themselves with loyalists. obviously, for this story to get written, people were talking. we heard about an exchange with board members involved who were grilling mark and sheryl about why they did not respond to this sooner. that kind of detail is very unusual. the board has come out with a statement saying that they did push mark and sheryl to move faster on this russian interference issue, but to say they were not interested in figuring it out or getting to the bottom is grossly unfair. sarah: i think david is exactly right. the story points directly at the part of facebook that is run by hasyl and the strategy she -- the strategy she has been praised for. to be more politically savvy, to have contacts in washington, to
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be able to go to them personally. the story talks about her writing personal thank you notes after meeting with people to try to change their opinion about facebook. obviously, those things have a very different tone to them when you think about the broader narrative that facebook is trying to propagate, which is that they are on top of this, they care about it, they're willing to change, and then to have, behind the scenes, one of their top executives talking to members of washington, saying you really should not be as hard on us, this is not something you should look at -- that kind of thing is very concerning, because you have a behind-the-scenes that is different from the facebook people are trying to portray in the public. emily: now, david r some of these tactics -- you know, some of these tactics are reprehensible. but some are tactics used by other tech companies. all companies are lobbying on capitol hill. is it fair to criticize facebook for them when we can presume
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that other companies are doing this as well? david: i don't think there is anything wrong with a company managing its image. that is what pr is all about. but i think what is very unseemly here, and what the article laid out in some devastating detail, is that even as the company has been essentially inactive in addressing some of the disastrously harmful social effects it has, it has been extremely active in managing its image to try to undermine the impact of people thinking that it was bad at managing the social harms. and to me, the former is much more important. i think the article maybe did not hit as hard as i would have on that, but that is what they really need to be focusing on. not image, but substance. they did announced some things today that i thought were extremely positive. this board of oversight, which will be composed of, in large part, outside people, that is a very positive move. i would say, in general, zuckerberg tone on this call was
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the best tone i have ever heard in terms of taking, seriously, the set of problems they face. but why they do not take this attitude years ago is the real question that has not yet answered, and maybe cannot be answered, but has to be asked. emily: that was sarah frier and victor patrick -- david kirkpatrick. coming up, the u.s. government is targeting a chinese tech firm for stealing from micron. we get the latest from micron's ceo, next. plus, siri has become a household name, but with the arrival of alexa, can apple keep up? this is bloomberg. ♪
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emily: first, the u.s. government took aim at zte violating sanctions and nearly put the chinese telecom giant out of business. now, a chinese chip manufacturer is accused of stealing technology secrets from micron. monday, we caught up with the
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ceo of micron, sanjay mehrotra. sanjay: i think it's very important that intellectual property of companies is protected in all geographies across the world. a company like micron, we just turned 40. in those 40 years, we have invested billions of dollars into developing new technology that are truly the heart of all applications in the industry today. we make memory and storage that is absolute critical for all technology applications of the future. so it's very important to protect our intellectual property. emily: do you worry the move by the doj risks ratcheting up the tension with china, given that china is your largest market? sanjay: china is a large market for us. we are very well engaged with the customers in china, who very much appreciate the innovation capability that micron is able to bring to them. we engage with these customers for all their applications, whether they are data center
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related or they are mobile, smartphones, or related to various industry or consumer industrial applications. so china is an important market. our customers value the technology and the products that we bring to them. you know,that we are, one of the three companies in the world that provide memory and storage solutions. so our customers rely on us to bring advanced technology and solutions to them. we rely on them, in terms of working closely with them, to understand their requirements for the future, and we are very well engaged with the ecosystem of customers in china. and micron, of course, also has some manufacturing in china, as well as r&d. we are an important partner to china. all we want to make sure of is intellectual property is protected there is fair, level , playing field in the country. emily: you mentioned you have
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facilities there, employees there. on the other hand, the chinese government is accusing you of antitrust. how do you navigate that situation? sanjay: we work with them in terms of addressing their concerns. we absolutely openly work with them. and we're continuing to work with all aspects of technology, customer engagement, our manufacturing, as well as product development capabilities within china. and micron is a global company. we have 34,000 team members worldwide. we are strong here in the u.s. in terms of our r&d capability, our manufacturing capability, as well as designing products. and we are also well spread out throughout the globe. so very well diversified supply chain that the company has, as well as very well diversified footprint of r&d. emily: any indication, now that jeff sessions is no longer the head of the doj, that that would change the course of action the u.s. is taking in your case? sanjay: you know, we appreciate the action taken by the doj in
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terms of protecting the intellectual property and the theft of intellectual property by unauthorized companies. i do not ask for that that drive will change in any way. emily: you have been telling investors that the memory chip market has not changed. we are not seeing the mad rush to grab market share anymore. but i'm curious about the evidence that you are seeing. another one of your executives told a ubs conference that there had been some inventory issues recently. how do we make sure that there is not some big downturn coming? sanjay: well, we discussed in our september earnings call that, as is well known, there are certain cpu shortages as well as certain inventory adjustments, but the important thing is that memory and storage are in the very early innings of driving the growth and experiences that have enabled, whether it's in autonomous vehicles in the future, which are like data centers on wheels,
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really needing a lot of d-ram and a lot of flash, which we manufacture to ultimately, truly, process all of that data that the sensors on the car will generate in order to provide for a safe, comfortable driving experience for the future. or in the data centers today, in terms of really unleashing new business models. you need machine learning, artificial intelligence needs to process lots of data. that data resides in the memory and storage solutions micron made. emily: that was micron's ceo, sanjay mehrotra. sticking with china, blue orca's capital founder says a new short report that you shanghai raised pindu-oduampany in is uninvestable. after a review of multiple data points, we spoke earlier about the firm's short position. >> we are short for four
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reasons. their revenues are overstated and their net losses are greater than they reveal. we also think their headcount is substantially larger than they tell u.s. investors. three, we think there is evidence of an undisclosed party. and finally, their headline is wildly exaggerated. emily: still ahead, companies like apple, google, and amazon have invested billions in voice assistants. where we will see the tech integrated, next. this is bloomberg. ♪
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emily: in 2010, dag kittlaus received a phone call , proposing abs
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deal to provide the first true automated assistant. that was siri. siri became a launchpad for an onslaught of voice assisted technology. today, between kittlaus' siri, alexa, and google assistant, over 50% of households use intelligence assistance. and kittlaus did not stop with apple. vivlabs,ues to lead the company behind samsung's bit speed. down with dag kittlaus to talk steve jobs and the future of technology. take a listen. dag: it started out with a phone call. he literally called me out of the blue and said, "we love what you are doing. and could you come over to my house tomorrow, i'd love to talk about it with you." emily: did you fall out of your chair? dag: a little bit. it is not the normal startup routine. two weeks after you launch your first app on the app store, the jobs because the and invite you over to his house. but, yeah, we were flattered, but we were very interested the what they wanted.
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emily: you went, you met with him, what happened? dag: we had, like, a three-hour discussion in front of his fireplace. put our feet up and chatting about the future. he was convincing us that they were going to win the smartphone wars. we called it throwing in together, that we could really build a new way to interact, especially with the iphone. emily: at the time, a number of different companies were trying to buy siri, correct? dag: yeah. we had offers, previously, but we were not really willing to sell. when steve calls -- every technologist wants to take what they are working with, their baby, and go big with it. so that was a pretty hard thing to refuse. but we did decide -- it was a long process. like, 37 days in a row. he was calling me at midnight. so he was very involved and engaged in getting siri to be
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involved with apple. emily: so that is what you mean when you say relentless. dag: yes. emily: and then he went on to develop with him. what was that like? dag: he was very active in this. we met every week and went through what do we want siri to do for the first instantiation at apple? but it was fun to work with something like him, so detail oriented, that had a very strong opinion about what it should do. and we had a lot of debates about it. emily: what was his vision and how did it jive with your vision? dag: the first thing he wanted to do that was different from what we were already doing was to make it revolve around the basic, everyday use cases -- calling, messaging, reminders, some other things that you saw from the first version of siri. we also agreed that, eventually, we wanted to get into a lot more things like conversational commerce. so the ability to buy a book and reserve things, take things that previously much harder to do with your phone, and because you
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can just use your voice to do it, make it much easier. emily: there's a funny story about steve saying to siri, "are you a man or a woman? " what is your answer to the question of siri's gender? dag: siri is actually genderless. even though the name siri in norwegian means "beautiful woman who leads you to victory," we decided, deliberately, not to make it one gender or another and rather have it be a persona that is there to help you. emily: and you are right. you can choose male voices as well as the default. siri was first integrated into the iphone 4s. now, we are up to the iphone xs. has it lived up to your expectations? dag: well, so, on the positive side, it has gotten faster, speech recognition is better. i would have liked to see siri evolve to do more things.
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so have greater abilities, become a bigger part of your life, merely because it is doing so many things for you. that was really the genesis for the idea of the next company we started, was how do we make it not a novelty but a basic sort of utility in your life to something much bigger, a paradigm, be really reliant on and use in your everyday world. emily: why do you think siri has not gotten there? is it apple's fault? dag: to some extent. but i think they just had a different focus than where we started it originally. emily: what would you have liked to see apple do differently? dag: i would like to have seen them open up a third party ecosystem earlier. that is something we are doing now. we think that is the big missing piece. if you look at something like the app store, it is a perfect
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metaphor for this. so the iphone actually launched in 2007 with a just few apple apps on it -- you know, weather and basic things. when the apps store opened, it unleashed the creativity of developers around the world. that changed the world. emily: you took the rare step of selling your next start up to samsung and not a major u.s. tech company. why? dag: one of the big focuses for us in the viv world was ubiquity. when you look at the fact samsung sells 500 million devices a year, of all different types, we saw an opportunity to take our technology and really put it in place where it can affect many millions of people around the world, lots of different contexts, different kinds of devices. just this year scale that samsung has is an ideal platform. emily: you just reintroduced ai, to samsungs developers.
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what makes you think bixby can compete with apple and amazon and google at this point? dag: one of the points i made at the talk yesterday was that -- people don't remember this, but google was actually the 14th search engine to enter the market. so i think we are still in chapter 1 -- barely even reading the introduction to this story. so i don't believe there is a timing issue. what we want to do is really gain momentum and get the world of developers in an app store-like way but bring it to ai. when you have a thousand things you can do with an assistant, it becomes a much more important part of your day. emily: so when it comes to assistants, do you think we will be relying on one or two like google, just one? or do you see us using many assistants in the future? dag: i think that, ultimately, it will boil down to a few. but you will see minor assistants that will specialize in things. be a part of that game.
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-- but you will see minor assistants that will specialize in things be a part of that game. but ultimately, because it requires it to become such an important part of your life, all the personalization, all the things it learns about you, i think ultimately people will use one far more than others. i think it becomes more like the search market. emily: do you see this being integrated into washing machines and refrigerators? and what does that world look like? dag: it is already happening. you will actually see that sooner rather than later at samsung. within a few years, bixby will be on a billion devices, and that is just samsung. and we will open it up to other third-party hardware as well. emily: what do you say to the people who think these listening devices are creepy? and maybe they don't want them in their living room, and they don't trust apple and amazon and google and samsung not to listen to them when they do not want them to listen?
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dag: i would say don't buy them. but the reality is all the companies i have been associated with take the privacy and security aspects of this very seriously. people have asked me, "is my alexa listening to me?" or my home pod or my bixby? the answer is no. it is listening for what is called a "wake word." a wake word is the thing that lets it know that you are ready to tell it something and give it some sort of command. i would say the bigger risk is, yes, there is security concerns when your whole house is full of devices that could possibly listen in. there are security risks of hackers or somebody breaking in. but it is not with the companies themselves. there is no behind-the-scenes conspiracy to listen in on what everybody is doing. emily: that was dag kittlaus, ceo and cofounder of viv labs and the founder of siri. that does it for this edition of
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the "best of bloomberg technology." bloomberg tech is live streaming on twitter. check us out, 2technology. and follow our global breaking news network on twitter, tictoc. this is bloomberg. ♪
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