tv Best of Bloomberg Technology Bloomberg July 7, 2019 1:00am-2:00am EDT
♪ caroline: i'm caroline hyde, in for emily chang. this is "the best of bloomberg technology," where we bring all our top interviews this this week in tech. coming up, tesla sets a new record for quarterly vehicle deliveries, easily beating analysts' average estimate. and the company's stock soars. we bring you the details. bitcoin having major swings in the past few months.
and two fairly uneventful presidential debates, uneventful on social media, that is. twitter is out with a new label that flags tweets that break the rules. the move might even make president donald trump walk a fine line on the social site. tesla, it set a new record for quarterly vehicle deliveries. on tuesday, tesla handed over 95,000 vehicles to customers in the second quarter, beating the average analyst estimate of 88,000 units. this all due to accelerated shipments to europe and china and u.s. consumers rushing to buy model 3 sedans before a federal tax credit shrank in half. c.e.o. elon musk told employees in an internal memo last week that the company was close to setting an all-time record, urging them to go all out in the last few days of june. we caught up with morningstar analyst david winston and greg trudell on tuesday. >> on the model 3 side, you have to separate the lineup.
on the model 3 side, this quarter was just a blowout quarter and, i think, exceeds everybody's expectations. i do think you sort have this up and down quarter where we hit a trough of everybody getting really concerned about demand for the model 3, and toward the end of the quarter, you started to see some of the analyst commentary pick up where people were a lot less concerned about that. but on the model s and model x front, they still have a problem there. so 95,200 was the total for deliveries. less than 20% of that, about 17,650 of those, were model s and model x. and those are the higher margin, higher priced vehicles in the lineup. and so you know, that's sort of what remains to be seen here is just how much this big jump in deliveries was at the expense of profitability. >> max, give me your take over there in san francisco. you heard craig say it's good news, but you wonder about the profitability. is this a clear win for elon musk, or do we still face some
clear headwinds on the horizon? >> i mean, any time you kind of blow the estimates out of the water this way, you have to look at it as a win. you know, coming into the end of this quarter you had sort of two concerns. one was demand, as craig said. the other piece was logistics. could tesla literally get these cars to people in a timely and cost-effective manner? and so i say on the logistics piece, they're performing well, despite, you know, some acknowledged difficulties. on the demand side, as craig says, the real question is here like, what happens in the long run? so you obviously have consumers in the u.s. kind of rushing to get -- to buy these model 3's now and take advantage of this tax incentive which is going to shrink. and you also have people not buying the more expensive cars. and again, we just don't know how this will shake out. tesla is still a relatively new brand. it will be interesting to see what happens when -- you know, if and when they refresh these luxury lines.
you know, that could be just the thing that causes, you know, people who are model 3 buyers to want to trade up. >> craig, that tax credit, as it shrinks in half, how much of a headwind was that this quarter and then -- i should say tailwind, excuse me, and then going forward with that tailwind removed, how much do car sales slow? >> that's going to be the big question on the conference call for earnings in a few weeks, right? because this tax credit is going to go from $3570 to $1875. and what we saw at the end of 2018 was the fourth quarter was the previous record for deliveries. and a lot of that ended up being in hindsight, you know, a lot of consumers going out to buy the model 3 and the s and the x before the tax credit at that time was $7,500 before it was cut in half. i think people sort of
underappreciated how much of that was demand being pulled ahead into the fourth quarter of last year. and that was part of what fueled this big dropoff in the first quarter of this year. so that is the big question for the third quarter, can they sustain this momentum with the model 3, even with this smaller amount of support from the federal government? >> i now want to bring in david wiston, a morningstar analyst joining me from chicago. david, we've been having a discussion here where it seems to be like we're in the all clear. model 3 is coming in better than expected. from your fundamental analysis, fold in here for me the demand and profitability mix of the s and the x, which are key given they're higher margin cars to get elon that profitability to where he needs to be? >> right. for all this controversy around
the demand problem, i never believed there was a model 3 demand problem, but the s and x is getting old to consumers, so to speak. they do have a new operated range of 370 miles. blame is one thing. but also about profits and cash flow, where you won't know until we get the q-2 results how much a shift to 3 over the s and x matters. s examine x year over year and they were good numbers s and x was still down 21%. >> david, what does your analysis say in terms of the path to profitability for tesla? we've heard elon musk talk about this a lot. when do we get there? >> well, they did it for a couple of quarters last year. and it's hard to say exactly what is the tipping point, though, because they're still growing internationally. you got the china factory online , you will have a european factory, and you still have more new models coming out. so the trick is, how do they balance profitable growth? that's very hard for any startup business to do. and they're a pretty big startup
now, so to speak. >> craig, is the chinese demand where it needs to be? >> i think the demand we don't really know at this point, in part because they aren't set up with that factory that was just mentioned that's going up near shanghai. so once they do that, they will avoid these import tariffs that affect any car that is built outside of china. and so we don't really have a true sense of demand for teslas in china because they are so priced out of the market. i think there is a buzz within china of this brand and this aura around elon musk that we see around the world. but we don't really know yet just how much sort of untapped potential there is for china as david was saying, you know, we also -- that isn't something that's going to come for free. it costs money to build up a plant. they are doing a lot of
borrowing with local banks there, so there's a possibility that it won't have a huge drag on the earnings of the company. but that is something that's going to be more of a 2020 story as we see local production start of the model 3 there. >> david, as we look forward of course to the end of 2019 and 2020, what do you see as the biggest left side tail risk downside? is it elon musk's tweets? is it profitability? is it the fact that they need to go out and raise more cash? is it demand headwinds? what do you see as the biggest left-side tail risk event? >> probably two things. one is just general economic risk, and that applies to any company, really, in any industry, just the business cycle. we are late cycle for auto sales, for example. but that's a new product. but the other point would be a bigger, longer term happening of what happened in late may and early june when the sentiment and the fear started to get into this name. this is a name that's always traded more on option value and what is it going to look like in 2025 and 2030?
and elon is awesome and all that and a brilliant guy. but when all of a sudden people start to freak out and say oh, they actually have a lot of debt -- and they have about $3 billion in debt due between now and 2022, some of it is convertible so it could get paid off, but if all of a sudden the street looks at more of the downside reasons to fear tesla rather than be optimistic about tesla, the stock will get pounded pretty hard. caroline: coming up, half of the year is already in the bag, and we've seen 22 tech companies hit the public market. will the momentum continue? we discuss. this is bloomberg. ♪
go public, but a significant shadow or two going over these newly traded companies. google and amazon have a significant hold on a number of the tech companies that have hit the public market. on monday we spoke with mark mahaney of r.b.c. capital and garrett de vynck, who wrote the interesting story. >> lyft, for example, spent $90 million on google ads in a single year last year. those people went to an apple app store, downloaded the lyft app when they opened it. google maps was powering the maps behind it, something else that lyft had to pay google for. all of this was hosted on amazon servers. lyft has a $300 million contract with amazon web services and google has 5% of lyft and a board seat itself. so it's obvious that google and amazon are very deep within the digital economy, but when you look through these files you really see how concretely they are kind of -- that the infrastructure behind how many of these companies work. >> and in some ways, this is a blessing and some ways it's a curse. mark, you focus on both amazon
and google. and from the blessing side of the equation, do you see it as a good element that they -- that these companies have so much riding on, whether it be financial or from that future revenue stream from these recent i.p.o.'s? >> i don't know, caroline. there's good and bad to that. the benefits of cloud computing is that it allows startup companies, companies that have eventually want to go public, or are going public to avoid a lot of infrastructure costs. you can treat all of your i.t. needs as variable costs rather than big fixed costs you don't need to buy and build up a very large i.t. department to scale up a business. that's been the magic behind a.w.s., amazon web services, also behind microsoft and google cloud. so in many ways what they're offering is a real benefit to these companies, but there's no doubt that in order to scale up on the internet, you probably are going to need to pay one of those three cloud providers. and if you're a consumer oriented service and you need to get consumers to use your
service, to use your app, to get to know you, you're probably going to be spending money with google, facebook, and -- probably just those two. that's how you get brand awareness on the internet these days. so i don't know if they're toll keepers. that's probably too strong of a word, but they're clearly the biggest channels out there and you are going to be dependent on them. hopefully companies that are really successful and that investors like to look at are companies like an uber and lyft long term that can create brands that are strong enough that they can avoid having to get traffic only through those paid channels. >> and garrett, your piece also shows how many of these i.p.o.'s, 17 of the recent 22, that are in some ways mentioning google, amazon in their statement. is this something regulators are looking at? are they worried that, perhaps, they clamp down too hard or try and push for breakups and the like and this could actually impact those downstream? >> yeah. on the one hand you could say look how powerful these companies are and we need to
break them up, and on the other hand they're not interested in disrupting the smaller companies because they're their customers and they want them to keep growing. google wants lyft to keep growing and still use google maps and pay more and more for it every year. so you can kind of look at it from both directions as the argument goes forward. i'm sure you'll be seeing the arguments from both sides. i want to say i don't necessarily think by breaking up these companies you would necessarily disrupt that web -- you know, in a really deep way. you could still buy google maps from google maps limited and buy google cloud services from google cloud services limited. so, you know, we'll see how it plays out, but i'm sure this will be a topic of conversation when it comes to antitrust. >> before we go, the equation for the behemoth, mark, i want to talk about the fact that you cover lyft. you cover pinterest as well. when you saw that their filings show this competitive exposure and general exposure in terms of supply side needs from amazon and google, did you see that as much of a risk factor? does that worry you? would you like them to invest in
their own independent service, for example? >> i think the answer to that question is no. i didn't see this as a risk factor. i hadn't really thought about the way you set up the question. so if they didn't -- if they were going to have a cloud services provider, it is going to be one of three names. either a.w.s. azure or google cloud. and chances are it was going to be a.w.s. that's usually the lead cloud provider. they have almost 50% market share. so if they didn't do that, then the p&l they would have gone public with and they would be going public with would look a lot different. and you would have a lot more cap-ex spending. so it probably would be, frankly, a less attractive business model. and you would also raise the question of why are you trying to vertically integrate and build out all that infrastructure and manage all those data centers and those server stacks and i.t. departments when there are three companies that are doing a phenomenal job of allowing you to outsource it? so i'll just twist that question back at you, caroline. it's a great question. i hadn't thought about it before.
i don't see that as a competitive issue. i don't think that's a dependence risk. and there is the option, by the way, of switching. and we have seen companies snapchat went public and switched and started switching over migrating over from google to amazon. so as long as you can migrate, i don't think there's risk. >> and mark, what about the risk from a competitive perspective from the regulatory viewpoint that we're starting to see coming from capitol hill upon amazon and google? is there a risk that they are seemingly so intertwined with the rest of the tech ecosystem? >> possibly. i just -- on regulatory risk, it's something that's clearly become a major investor issue across technology. we actually just hosted a call earlier today with an antitrust expert to talk about the risk that these large platforms face, particularly google, but also apple, amazon, and facebook. i think the chances of these companies having to be forced to divest assets, i think that's actually extremely unlikely. i generally think they view companies that they hold assets for multiple years, i think
government regulators would be very loathe to unwind that and it would also be very hard to do that. you're already looking at the margin changes in business practices. i would make one quick comment. we just listened to a weekend of presidential democratic debates, and big tech really didn't come up at all. the one time it did was in concerns whether amazon is paying its fair share of taxes. the issue of google's strong market position or facebook's or anybody else's actually didn't come up, and that's probably the best political barometer. if it doesn't come up in a presidential debate, it means it probably doesn't matter. caroline: still ahead, bloomberg's scoop of a potential deal with broadcom and security firm symantec. analysts are divided over strategy ahead. you'll hear from one next. this is bloomberg. ♪
caroline: at&t is considering whether to sell its regional sports networks as a plan to reduce debt. bloomberg learned this week the four networks could fetch up to $1 billion and the sale would include tv rights to teams such as the nhl's pittsburgh penguins and the nba's houston rockets. and another bloomberg scoop, broadcom in advanced talks to buy the cyber security firm symantec. for broadcom, a deal would mean a further expansion into more profitable software businesses. we spoke with piper jaffray analyst harsh kumar on wednesday for the details. >> i think symantec at the initial stage passes a smell test for broadcom. broadcom has 52% operating margins. for them to consider an acquisition, it has to be immensely profitable. there aren't a lot of companies that can reach or have the potential to reach 60% plus.
i would say that would be the threshold or hurdle to look at an acquisition. the last deal they did, which was computer associates, c.a., actually is performing extremely well. and when we look at something like symantec, it has shares that are similar to c.a. in terms of the two businesses. one already at 50% operating margin and with a little tweaking could potentially get to 60%. and the other that they could just drop into the platform and strip it of costs, mostly marketing and sales costs, to drive operating margins. so from that angle it would be an immensely profitable deal, and it would be an extension of the portfolio that they have with c.a. >> yeah. interesting, because we've been waiting for years really to work out what they would go after c.a. and after the qualcomm deal fell away. what makes symantec sort of all the more vulnerable, so to
speak, to being bought out at the moment? >> there's been a lot of drama at symantec. as we've been following, their c.e.o. greg clark had been ousted a few months ago. there have been an acting investigation. and then starboard value, an activist investor, came on the scene and was pressuring the company and they got a few board seats. so it really is a vulnerable time for symantec for a takeover. >> we were just talking about the t-mobile-sprint deal and the regulatory issues at that. are there going to be cfius or regulatory issues with this deal, considering broadcom in the past wasn't able to get through the qualcomm deal? >> before broadcom went after qualcomm, they had a singapore headquarters. they have now moved totally to the u.s., so they are trying to alleviate that issue. cyber security is a national security issue and symantec does work for the u.s. government. so the cfius review is something investors will be watching to see how it goes. there could also be an e.u. review. so no slam dunk for any large deal where there is this national security element.
>> harsh, putting regulatory concerns to one side, you really have spelled out why you think this might be a perfect fit and why it might be accretive to the business. the other analyst and investors have perhaps been questioning management's strategic direction here. do you think it's the right direction to be going more focused in to cyber security? we've seen other players do it, but how does it really fit with broadening outside of the chip space? >> i think broadcom is focused singularly on capital returns to the shareholders, driving free cash flow, and driving profitability. understand this is a company that was at the cusp of 50% operating margin, a region that another no other company in the past had been able to approach in the semiconductor land. with the c.a. deal, they were able to push that envelope closer to 53% in the last quarter, now running about 52%. so really, for them to be able to expand and build on that,
they need something outside of hardware, something outside of semiconductors. typically software companies tend to have extremely high gross margins and tend to spend a lot of money acquiring new clients. the strategy with c.a. revolved around what i with call dig deep and all you can eat strategy. dig deep into existing clients and don't worry about getting new clients. in c.a.'s case, it was roughly $1 billion spent on acquisition of new clients per year. so that cost went away. with symantec, it would be easy to go back to the same clients with a bigger portfolio and thus drive profitability. that's why we think it's a perfect fit. >> interesting. and we have seen the shares pop for symantec today, closing about 14% higher, harsh. what sort of premium do you envision? this is a company as spelling out under duress to a certain extent. could there be a bidding war and could this go higher? >> i think it is certainly possible that other people could come in. i'm not an expert son -- you know, m&a or investment banking
aspects of the deal. but a premium from current prices would still work as far as broadcom's ability to take it and generate the kind of returns, particularly given the success they've had with software in the past. caroline: and interestingly, both of these companies have a private equity background and history. will p.e. be involved in this? >> symantec board has some private equity representatives from bain and silver lake, so they will have sob involved somehow. they are major shareholders in the company. broadcom was also built up through private equity roots. originally they had worked with silver lake and some other firms. so private equity does weigh heavy here, but at this point we don't know exactly the structure of the deal and how they'll participate. caroline: coming up, twitter announces rule that might heighten tweets from president trump himself. will this set a new standard for other social media?
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they had teams in place ready to pounce in case there was that moment. they didn't seem to be. >> maybe they were doing it. this tweedlk about flag. what is your take? >> it is just politicians. which is why it is specific to president trump. like, rockething man, you are not going to be around much longer. wouldn'tpeople asked, this normally get a user suspended? they said, sometimes politicians newstweets that are so worthy, we do not take them
down. >> you have been talking for about hows, years difficult it is for them to flag content that crosses a line. do you think this will work? the right step in direction. we need to acknowledge some very famous and powerful people are misbehaving, but twitter has rightly acknowledged up until now that certain people on twitter are of a different nature than others. it is also a lot of judgment calls required. even that tweet you cited about kim jong-un, i think could be debated whether that is a violation. is that a country threatening another country or an individual threatening an individual? this is the right kind of step to take, and i'm glad to see it happening.
emily: the president is always quick to talk about conservative bias on social media and there was an expectation he could get angry or tweet about this new rule, but he has not mentioned it. is there any pushback or reaction from washington? naomi: it is pretty quiet, but a bit of a bold move for twitter given the accusations by republicans that tech companies are biased against them. they've held multiple congressional hearings on this topic, and polls show public trust intact platforms is waning. republicans have not showed signs of slowing those criticisms down. they just gave them more ammunition to continue making those claims. emily: meantime, one of the biggest flareups on social media was the nancy pelosi video where she was slurred in an appearance
to make her look drunk and it was kept up. mark zuckerberg said there was "an execution mistake." mark: it took a while for our systems to flag it and fact checkers to rate it as false, which they did within an hour, but it did more than a day for our systems to flag it. during that time at got more distribution than our policy should've allowed, so that was an execution mistake. i do not think we want to go so far toward saying that a private company prevents you from saying something it thinks is factually incorrect to another person. emily: is it another facebook sorry, not sorry moment?
david: facebook probably did handle -- their rules are good on that. i don't think the pelosi video should have been removed. as he said in that same interview, which i happened to be at, there are so many gray areas that if facebook is being asked to make a determination of what is and is not legitimate, it will be extremely controversial. when the news -- giving it less weight in the newsfeed strikes me as right. nancy pelosi's reaction was very extreme and inappropriate, acting as if that proved they tolerated russian interference in the presidential election. it really was not that. these are tough decisions. emily: that said, pelosi's
reaction is certainly an example of just how angry politicians are right now at facebook on both sides of the aisle, or they think it is politically expedient to act as if they are angry. naomi: republicans and democrats have bones to pick with facebook and other tech companies. what you see on the house side in particular as house democrats announced they were investigating the technology industry as a whole and looking at antitrust issues that might be going on. that could reveal -- that committee, the antitrust committee on the judiciary committee might end up holding multiple hearings with facebook executives, google executives, twitter executives, and give them an opportunity to continue raising their criticism about misinformation, russian interference, and discrimination.
emily: we have a tweet from representative jim jordan -- last year they -- why can't twitter respect free speech? kurt: it is a common theme to think anyone who voices a conservative point of view -- these are private businesses and they have rules and community guidelines people need to follow. they are not held to the same free speech laws that the united states is. that is a tough distinction for some people to make, and i don't know what tweets he is talking about, but this has been a continuous conversation that has
dominated almost three years. emily: facebook has said they are planning to create a content oversight board. could that work? david: i am not certain, but it is a step in the right direction. what we are seeing at twitter and facebook is because of the election of donald trump and the connection that has two abusive social media, so much scrutiny is focused on these platforms that they realized they have to do something, come up with more judicious approaches to content management. an outside review board is a good idea. the execution will be excruciatingly difficult. caroline: bitcoin's turbulence continues. we will hear about the slump, next. if you like bloomberg, listen on the radio. this is bloomberg. ♪ caroline: now to a story we
continue to watch, bitcoin continuing its roller coaster ride, so much so that a battle erupted over twitter. rishaad caught up with both in taipei. >> and has been around for five years, 10 years. what are the killer apps? there are none? these apps are casino games and ponzi games. rishaad: he was questioning finance and you got rather fragrant. >> he is a hater. he's a no-coiner. someone who doesn't have any bitcoin and watched the price rocket in their face. rishaad: a bit harsh, isn't it? >> it is true. caroline: they went head to head on wednesday.
taylor riggs gotta take with mike novogratz from galaxy investment partners. michael: we had a spectacular rally. around $4000 for bitcoin two months ago, we traded up as high as $13,800. that was a parabolic moeve where everyone got excited for real reasons. because of facebook, uber, mastercard, saying let's participate in the cryptocurrency world. want to all of these things went from guys like him saying these are all tulips and the biggest companies in the world say they will participate on top of yale, harvard, stanford. the question around stabilization has been answered. now it is a question of taking the time to build out the systems. people are rushing into front
run institutional accounts. things are getting a little carried away. we went up to $14,000, down to $10,000. i think we are at $10,800 right now. i think we will see the market consolidate between $10,000 in $14,000 for a while before it takes off for the next leg higher. the new institutions, the state of x, the state of wisconsin or the texas teachers union. until those guys start coming in, then you will see bitcoin go toward the old high of $20,000 or higher. taylor: when you say parabolic move, our ears perk up. talk to me about when you sold. in hindsight, it was a very smart position. you said you wish you had sold more. what is your next pricing which you would be another seller? michael: by the time i was on tv, the market had fallen 20% so of course i wish i had sold more.
i did think we had gone parabolic and there was too much energy in the market, and we are going to consolidate. i am a buyer below. i trade a portion of my corporate coin position all the time. i don't think i am selling the next time up to $14,000. the next time we get up there, the second time we get up there, i think it is probably closer to $20,000. i don't expect that in the next few weeks. i probably don't expect it towards the middle to the end of the fourth quarter. we will see kind of a period of consolidation. what is interesting is, nuriel lost the debate. i was with him in las vegas. i got it when it was $6,000. he has lost the debate because all of the biggest fish -- microsoft is building identity solutions on the blockchain. these are big companies.
taylor: talk to me more about critics like dr. roubini who came out at the blockchain summit and said he doesn't believe in it because there are massive amounts of price manipulation. how do you respond? michael: it is a new technology. there's lots of hype around it. there has been price manipulation. it is being weeded out. you are getting exchanges that are being regulated. you are getting more players in the game. you are getting more pipe's. more ways for people to participate. you can buy bitcoin on your td ameritrade account. that is a big deal, because the general population hasn't signed up and got a coinbase or circle wallet yet. we are going to see over the next three months, six months, 12 months, 18 months, there is more and more ways you can buy this stuff. i would bet you, in two years, mastercard and visa accept bitcoin with their credit cards.
visa has 50 million merchants worldwide. the fact that they are part of this libra, facebook coin, is a huge statement. taylor: talk to me about facebook entry into the bitcoin market. does it give bitcoin and other cryptos legitimacy? michael: it does. it doesn't really compete against bitcoin directly. facebook is working on creating a stable coin that can be used for payments. currencies need to be relatively stable because otherwise, why would i spend a currency if i thought it would be worth a whole lot more in three months? you need lower volatility to be a paying currency. bitcoin, i think, is legitimized by being a real hard asset. it has a fixed supply. it is very difficult to change
the rules around bitcoin. until it becomes like a digital gold. people don't own enough of it yet. i see the price going significantly higher over the next couple of years. if everyone buys just a little bit of bitcoin. taylor: you say the price would go higher over the next couple of years. do you have a call? michael: like i said, i think if we can get to the old high by the end of this year, every bitcoiner will be happy. once you get to $20,000, it opens up $40,000 next. much higher over time. when i think about bitcoin, it has probably about a $150 billion market cap right now. gold has a $8.5 trillion market cap. so bitcoin has a long way to go before it replaces gold. it has very similar features. gold has a limited supply. you can take all the gold that has ever been mined in the history of the world and fill three olympic swimming pools. that is a crazy statistics.
we could build a cube of gold in central park and it would be worth $8.5 trillion. hard to get your mind around. we don't use gold for much. jewelry, some, but mostly it sits. bitcoin is a digital gold. taylor: who do you see as the next big companies entering the market? we've talked about facebook, mastercard, paypal. who are some of the other big companies you see really starting to make an investment? michael: i think you will see in time the investment banks need to move into the space. we are trying a galaxy to carve out our niche before they all show up. at one point, the foreign-exchange desks are going to trade dollar-yen, the euro, the great british pound, libra coin, bitcoin, ethereum. they will be parts of the financial infrastructure of the world. so i do think the investment banks will end up the space
sooner than later. taylor: talk about the divergence in price action we have seen with bitcoin having a very big move year to date. some of the other big currencies like ethereum and ripple, not so much. michael: bitcoin has carved out a really interesting lane, which is digital gold. it doesn't need to change to fulfill its mission. the way it is today is perfect. gold has a big market cap. ethereum is fighting to be what i would call web 3.0, a decentralized supercomputer that can process tons of transactions. it is a revolutionary project and it is not finished yet. there is a lot of technical work that needs to be done for to scale properly, for it to be usable on a wide range of things in a very fast way.
caroline: samsung has completed a redesign of its galaxy fold to fix embarrassing screen failures. they will debut the new phone and time for the holiday season. problems with the screen were reported on test version. a number of big american companies may shift production out of china. according to nikkei, hp, dow, and amazon are considering to make the move.
apple hinted it might have to raise prices because of tariffs. users swipe right and left to find their next hook up on tinder, and it was feared it would make it possible to find success in asia where dating rituals like arranged marriages are still common. tinder reinvents itself as a winner for asia. emily chang covered the story. olivia: tinder is huge in the u.s. and has totally dominated the north american market. it is owned by match group, another u.s. company which owns many of the big dating apps. while tinder's users and subscribers are growing in america, they have almost 5 million subcribers, and they are looking for other areas where they could grow. there is no better opportunity than the asia-pacific region. there are more than 250 million
single people in the asia-pacific region, most of whom who have never tried a dating product. tinder is looking to the asia-pacific as an area of potential growth. emily: how is the product and marketing of tinder different in asia than in the united states? olivia: in america, we all know it is a hook up app. it is known for casual dating and sex among young college graduates and on college campuses around the country, where people connect and get to know one another. that would not fly in korea. the dating culture in korea, they would meet through blind dating where friends connect to different people who had not met one another before. tinder knew the hook up reputation and casual dating would not work in korea, so it
decided to attempt to reinvent itself in a friendship app so it claims to be a social discovery network. on the billboards outside university towns the advertisements read -- new year, new friendships, new you, so it is more around building friendships rather than dating. emily: will this fly in china where there is tough regulation or are they focusing outside of china? olivia: they are not looking at china right now, but they are looking at different countries across the asia-pacific, a huge focus in korea, japan, and india where they have local managers on the ground trying to connect and learn the cultural customs. we heard from the ceo of match group that they are spending
more marketing in korea, japan, and india than anywhere else in the world and will potentially expand into taiwan, indonesia, singapore. emily: what is the outlook for match more broadly, now owning all of these properties, although the original match app has been criticized for being old and stale. olivia: one of the strategies is getting local managers on the ground to look for potential acquisitions. in japan, they have acquired the app called peers which is a model where only the men pay. it is their biggest online dating app, and they are trying to build up tinder as well. being strategic in terms of trying to encourage the managers on the ground to look for acquisition opportunities,
because some of these countries have different customs than what match is used to. in korea, dating apps do things pretty different than tinder. one app, in order to apply to be on the product, you have to get rated by the users out of 10. there is another app where men can only get on if they hold down a job as a doctor, lawyer, or a major conglomerate company, or went to a prestigious university. caroline: amazon will hire more than 2000 workers in the u.k. to develop its newest technology ventures, including engineers and data scientists. that will raise the british workforce to almost 40,000 people by the end of the year. that does it for this edition of "the best of bloomberg technology."
haslinda: it has been a busy year for mahathir mohamad. iran is still trying to fix an economy that is painted by the 1mdb scandal and a transition of power remains uncertain. this is a conversation with mahathir mohamad. ♪ haslinda: right out of the gate, after you assumed the prime ministership for the second time, you were ambitious, and a year on, some people say that quite a number of promises are still unfulfille