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U.S-China Trade, Amazon, Future of Open Source · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,
0:05
Speaker 1: along with my co host Lisa Brahma wits each day
0:07
Speaker 1: we bring you the most noteworthy and useful interviews for
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Speaker 1: you and your money, whether at the grocery store or
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Speaker 1: the trading floor. Find a Bloomberg Penil podcast on Apple
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Speaker 1: Podcast or wherever you listen to podcasts, as well as
0:17
Speaker 1: at Bloomberg dot com. Well, the Chinese trade delegation is
0:23
Speaker 1: in Washington, d C. They are meeting with the US
0:25
Speaker 1: delegation today and tomorrow. President Trump just tweeted out that
0:30
Speaker 1: he will meet with Vice Premier Leo hey Uh tomorrow,
0:34
Speaker 1: suggesting that there may be some light at the end
0:36
Speaker 1: of this trade tunnel. To get the latest, there is
0:38
Speaker 1: absolutely nobody better to speak to than Leland Miller. He
0:41
Speaker 1: is the CEO of the China Basebook International Uh. He
0:44
Speaker 1: joins us here on a Bloomberg Interactor Broker studio. So, Leland,
0:46
Speaker 1: thanks so much for joining us on what could be
0:48
Speaker 1: a very very important two days for the US and
0:51
Speaker 1: China and the overall financial markets. What is your sense
0:56
Speaker 1: of what would be a success here over the next
0:58
Speaker 1: couple of days. I think expectations have been peeled back
1:02
Speaker 1: dramatically over the last twelve to twenty four hours simply
1:05
Speaker 1: because there's been a lot of bad news. I mean,
1:07
Speaker 1: earlier this week you saw sanctions against Chinese companies and
1:11
Speaker 1: visa restrictions on Chinese individuals. Uh. And then you know
1:14
Speaker 1: the threat that Chinese we're gonna leave early, and and
1:17
Speaker 1: and so it's been nothing but bad news. But look
1:19
Speaker 1: that a lot of what's happening with the administration on
1:22
Speaker 1: China is getting more aggressive. On the other hand, they
1:25
Speaker 1: still have a desire to reach a deal on trade,
1:29
Speaker 1: a medium mini deal on trade in twenty nineteen. If
1:33
Speaker 1: they can get what they want, which means more than
1:35
Speaker 1: agg purchases. That they need the Chinese to start delivering
1:38
Speaker 1: on some of the substantive commitments from the May text.
1:41
Speaker 1: But that's where this is going, tariff punts and pullbacks
1:45
Speaker 1: and return for some substitive concessions and some abus. Here's
1:48
Speaker 1: the reason why there's a lot of confusion right now.
1:51
Speaker 1: We're getting mixed messages. On one hand, it seems like
1:55
Speaker 1: the US is kind of drilling down and trying to
1:58
Speaker 1: get some serious concessions uh and and going after even
2:02
Speaker 1: just the investment the flows of capital from the US
2:04
Speaker 1: into China. And on the other hand, it looks like
2:07
Speaker 1: we're more amenable to some sort of agricultural deal. What
2:11
Speaker 1: do we make of this sort of push pull, Well,
2:13
Speaker 1: there really are two tracks that are forming with an administration.
2:16
Speaker 1: This has always been true, but I think right now
2:18
Speaker 1: what you're seeing is that people focused on the national
2:20
Speaker 1: security side are really digging in and getting more aggressive.
2:23
Speaker 1: And you are seeing more um more moves against Chinese
2:28
Speaker 1: companies and against Chinese individuals, and and you are also
2:32
Speaker 1: seeing um things that on the pension money side, US
2:36
Speaker 1: gunment pension money is being looked at very closely in
2:39
Speaker 1: terms of how to wool that away from going into
2:41
Speaker 1: Chinese companies and and then into the into the p
2:44
Speaker 1: l A as they would as they would say um.
2:46
Speaker 1: On the other hand, trade is being handled a little
2:48
Speaker 1: bit differently, and there is a belief within the White
2:50
Speaker 1: House that the best case scenario for President Trump and
2:55
Speaker 1: his re election is to scale the terrorifts back to
2:58
Speaker 1: to sort of cruise through at two or fifty billion
3:01
Speaker 1: if they can do that, so putting a lot of
3:03
Speaker 1: pressure on the Chinese, but not too much pressure to
3:06
Speaker 1: hurt the U s economy. Getting those agg buys in return,
3:09
Speaker 1: and that's the sweet spot. It doesn't mean they can
3:11
Speaker 1: get that. They're not just going to give that away,
3:13
Speaker 1: but that's what they're angling for. If they can get
3:15
Speaker 1: some substantive concessions back from the Chinese. Well, I think
3:19
Speaker 1: the one of the issues is October and the tariffs,
3:21
Speaker 1: so they're scheduled to go up again. Is that something
3:24
Speaker 1: thing is on the table today and tomorrow, Let's maybe
3:28
Speaker 1: table those things. Yeah, the October terrorists are misunderstood and
3:31
Speaker 1: they're probably the trickiest part of this entire discussion. December,
3:35
Speaker 1: the White House is laser focused on trying to get
3:37
Speaker 1: rid of December tariffs because I think they they there
3:40
Speaker 1: can most people are convinced that they'd be bad for
3:42
Speaker 1: the U S. Economy. September is also on the table.
3:45
Speaker 1: It's it's part of the discussion to pull back on
3:47
Speaker 1: September tariffs if the US can get the concessions on
3:52
Speaker 1: i P. But October is very interesting because the U
3:55
Speaker 1: S side is not very focused on October, but markets are.
3:58
Speaker 1: Markets are looking at the October tariff hikes as this
4:01
Speaker 1: bell weather for whether the US is going to move
4:05
Speaker 1: forward with a potential deal. Or a deal is dead,
4:07
Speaker 1: and I think it's a mistake because there's just not
4:09
Speaker 1: enough attention being put on those October terraces right now.
4:12
Speaker 1: They're a minor the a minor issue for the White House,
4:15
Speaker 1: but they're huge issue for markets, and that's where you
4:17
Speaker 1: could have some miscommunications. There seems to be, though, a
4:20
Speaker 1: disconnect also with the market looking at a trade deal
4:24
Speaker 1: as sort of a comprehensive one track thing, and you're
4:27
Speaker 1: talking about a two track issue. I'm wondering how China
4:30
Speaker 1: looks at the US is two track approach. Can they
4:34
Speaker 1: isolate some of the capital flow issues and some of
4:37
Speaker 1: the I P issues completely while they deal with sort
4:40
Speaker 1: of immediate tariffs and agricultural purchases in order to get
4:44
Speaker 1: a narrow deal, or are they going to be put
4:46
Speaker 1: off by some of the other demands and and sort
4:47
Speaker 1: of crackdowns. I think they're definitely put off by it,
4:51
Speaker 1: but I think they can also cease some reap some
4:53
Speaker 1: rewards from it. So while this trade talk, these trade
4:57
Speaker 1: talks are going on, we've also heard word that magically
5:00
Speaker 1: we're going to start seeing some Hawaiwi spatial licenses. Now
5:03
Speaker 1: Huawei has been separated from the trade talks, the Chinese
5:06
Speaker 1: agreed to do that. Everyone agreed with a good idea,
5:08
Speaker 1: and magically, even though the things are connected, you're seeing
5:12
Speaker 1: some movement on Huawei, while the trade talks have some
5:14
Speaker 1: potential to move forward. So what you do is your
5:17
Speaker 1: ring fence these things. But I think the Chinese understand
5:19
Speaker 1: that good things can happen for them if they make
5:22
Speaker 1: President Trump happy, and bad things will probably happen if
5:25
Speaker 1: they don't. And so a lot of this is is
5:29
Speaker 1: whether things are formally connected versus everything is informally connected
5:33
Speaker 1: in some way twenty seconds, what's the probability of us
5:37
Speaker 1: seeing some sort of deal, however narrow within the next
5:41
Speaker 1: couple of days. I think you. I don't think you'll
5:43
Speaker 1: see a deal, But what you could see is the
5:46
Speaker 1: outline of what would be the White House and the
5:48
Speaker 1: Chinese understanding of what a deal would be for along
5:51
Speaker 1: the lines of what I've already explained. But I think
5:54
Speaker 1: that is more much more likely than than gloomy markets
5:57
Speaker 1: have been expecting for the last day or so. Of course,
6:00
Speaker 1: we saw something akin to that in February, and uh, well,
6:03
Speaker 1: most we saw where that went. Leland Miller, thank you
6:05
Speaker 1: so much for being with us. Leland Miller, chief executive
6:07
Speaker 1: officer of China bege Book International, with an incredible view
6:11
Speaker 1: into everything having to do with the trade negotiations as
6:14
Speaker 1: well as frankly the Chinese economy. He's been prescient on
6:17
Speaker 1: how the slowdown has accelerated more than some of the
6:19
Speaker 1: official numbers have been suggesting. So it looks like perhaps
6:38
Speaker 1: that we may get another report about Amazon spying on
6:42
Speaker 1: people through their camera security service. Here to explain all
6:47
Speaker 1: the ins and outs here over day. She's a technology
6:49
Speaker 1: columnist for Bloomberg Opinion, joining us in our Bloomberger Active
6:53
Speaker 1: Broker studios. So Amazon st spying on us? Is that
6:56
Speaker 1: the is at the bottom line here? Well, yeah, and
6:59
Speaker 1: I think we already knew that the companies you know,
7:05
Speaker 1: Echo home speakers and related devices powered by its Alexa
7:09
Speaker 1: voice assistant that you know, they're used as sort of
7:12
Speaker 1: data collection machines so that Amazon in parts, so Amazon
7:16
Speaker 1: can improve the technology behind Alexa. But what are colleagues
7:20
Speaker 1: in in Europe and on the West Coast here reported overnight? Uh,
7:24
Speaker 1: is that Amazon has sort of human reviewers overseas basically
7:30
Speaker 1: looking at snippets of video from cloud Cam, which is
7:34
Speaker 1: Amazon's kind of home motion detection security camera. Um, there
7:39
Speaker 1: are people reviewing those snippets of video again for use
7:43
Speaker 1: in kind of training the artificial intelligence software behind Alexa.
7:48
Speaker 1: And you know, Amazon says this is more or less
7:52
Speaker 1: disclosed that people are doing it voluntarily, either kind of
7:55
Speaker 1: Amazon employees or others, or people choosing to have these
7:59
Speaker 1: snippets viewed by people because there's some kind of crash
8:02
Speaker 1: or bug. But you know, sources told Bloomberg News that
8:06
Speaker 1: in some cases the video snippets were things that people
8:10
Speaker 1: would probably not voluntarily give up, including in some cases
8:14
Speaker 1: snippets of people having sex. Yeah, so do people do
8:17
Speaker 1: we know? Is it clear whether consumers opt into this
8:21
Speaker 1: or is it not clear? Well, I mean, as as
8:24
Speaker 1: you can see from the sort of examples of very
8:27
Speaker 1: sensitive people are probably not opting into having snippets of
8:31
Speaker 1: them having sex reviewed by humans. Um. So Amazon says
8:36
Speaker 1: this is voluntary. There's obviously some dispute about that. And look,
8:41
Speaker 1: I wrote a piece that published today that's basically asking
8:45
Speaker 1: is sort of opting in or is disclosure in fine print?
8:49
Speaker 1: Really enough? Like, no one who buys a home motion
8:53
Speaker 1: detection security camera is really expecting that somewhere in India
8:57
Speaker 1: or Romania, there are people sitting there computers reviewing little
9:02
Speaker 1: snippets of their from inside their homes. Honestly, though, if
9:06
Speaker 1: you put a camera in your home and you're asking
9:08
Speaker 1: a company to provide some sort of security, come on,
9:12
Speaker 1: I mean, at a certain point, the likelihood of someone
9:15
Speaker 1: actually reviewing that is not insignificant, and you're basically asking
9:19
Speaker 1: them to do it. You're just hoping that the bots
9:21
Speaker 1: are better at it than the humans, which it turns
9:23
Speaker 1: out they're not always. So I mean, honestly, what alternative
9:26
Speaker 1: is there? No? I think I think that's a fair
9:29
Speaker 1: point that um and I think that's an attitude that
9:32
Speaker 1: lots of people have that what do you expect if
9:34
Speaker 1: you are buying one of these devices, whether it's a
9:37
Speaker 1: voice activated speaker or a cell phone that we carry
9:39
Speaker 1: around with with us everywhere we go, what do you expect?
9:42
Speaker 1: Of course, they're always listening or watching. But I feel
9:46
Speaker 1: like there is some kind of limit to this, right,
9:49
Speaker 1: that this is a case of boiling the frog slowly.
9:53
Speaker 1: Maybe we got okay, although we shouldn't be okay with
9:57
Speaker 1: the idea that everything we do online and in the
9:59
Speaker 1: real world is basically being monitored and tracked by you know,
10:03
Speaker 1: Google or Facebook or Apple or one of these other
10:05
Speaker 1: gigantic tech companies. Again, we should not be okay with that,
10:09
Speaker 1: but over time we got kind of inured to that.
10:12
Speaker 1: But I feel like humans reviewing audio clips of sort
10:16
Speaker 1: of what we ask Siri, or again, video snippets from
10:21
Speaker 1: footage inside of our homes being reviewed by humans. That
10:25
Speaker 1: feels like a different level. And the same thing with
10:28
Speaker 1: sort of these kind of facial recognition cameras. Again, this
10:31
Speaker 1: is all about collecting as much data as possible and
10:34
Speaker 1: then using human reviewers to kind of train the next
10:38
Speaker 1: generation of the software to make it smarter and more automated.
10:41
Speaker 1: But we're basically human guinea pigs for technology, and we
10:46
Speaker 1: did not agree to this. Just because you buy a
10:48
Speaker 1: home security camera doesn't mean you agree to be a
10:50
Speaker 1: free guinea pig for a big technology company. But as
10:53
Speaker 1: you suggested earlier, it just seems like we're on this continuum, uh,
10:57
Speaker 1: we as consumers of giving up more and more and
11:00
Speaker 1: more of our personal security, of personal privacy in the
11:04
Speaker 1: name of technological you know, improvements are just ease, you know,
11:09
Speaker 1: whether it's credit card numbers or access to our homes.
11:13
Speaker 1: But we all know this, and people still buy the devices.
11:16
Speaker 1: So I've got to say at a certain point, you know,
11:19
Speaker 1: it hasn't been shown to be materially harmful so far,
11:23
Speaker 1: and that is the question. At what point will it
11:26
Speaker 1: reach a tipping point? And will the frog be boiled? Yeah,
11:30
Speaker 1: that's why I mean, to me, the boiling frog, the
11:32
Speaker 1: dead frog moment is humans reviewing video video footage. For me,
11:38
Speaker 1: I definitely don't have those. But I think that's a
11:42
Speaker 1: very fair point, is sort of do people really care
11:45
Speaker 1: about this or do they care enough about it to
11:47
Speaker 1: not buy one of these devices? And I think the
11:49
Speaker 1: easy answers people don't care. I think it's more nuanced
11:52
Speaker 1: than that. They're people definitely do care. We do see, obviously,
11:57
Speaker 1: you know, pretty significant growth of um people purchasing echo
12:03
Speaker 1: devices and similar kinds of home automation or voice assistant technologies.
12:08
Speaker 1: But I don't think that necessarily means people are tacitly
12:11
Speaker 1: cool with kind of perpetual surveillance by gigantic rich technology companies. Yeah,
12:19
Speaker 1: if you put it that way, I'm sure sure over there.
12:21
Speaker 1: Thank you so much for joining us. Here's a technology
12:23
Speaker 1: columnist for Bloomberg opinion. Joining us here in our Bloomberg
12:25
Speaker 1: Interactive Broker studio, you can read more of sharers at
12:28
Speaker 1: work and more from Bloomberg Intelligence. I'm sorry, Blueberg Opinion
12:32
Speaker 1: at Bloomberg dot com slash opinion, and you can do
12:35
Speaker 1: it on the terminal as well by typing O, P,
12:37
Speaker 1: I N go. President Trump saying that he is willing
12:58
Speaker 1: to meet with China's top delegate as trade talks heat
13:01
Speaker 1: up in Washington, d C. Joining us now to discuss
13:04
Speaker 1: Mike McDonough, chief economist for financial Products for Bloomberg LP.
13:07
Speaker 1: He is down there in Washington, d C. Mike, Are
13:11
Speaker 1: you taking part in the trade negotiations? I? I am not.
13:15
Speaker 1: But I do think that that meeting, the agreement to
13:18
Speaker 1: have that meeting, is probably a pretty big deal. Really,
13:22
Speaker 1: I do, actually, because I don't think. I mean, from
13:25
Speaker 1: my own perspective, President Trump hasn't seemed to be one
13:28
Speaker 1: to deliver bad news face to face. He seems to
13:32
Speaker 1: when things are going poorly, he seems to have other
13:35
Speaker 1: people communicate that message, or he does it indirectly via Twitter.
13:38
Speaker 1: So the fact that there is an agreement and a
13:40
Speaker 1: meeting occurring makes me think that's a positive sign. Mind you,
13:44
Speaker 1: there's a meeting occurring as of right now, ten minutes
13:47
Speaker 1: from now. We don't know right that could change, but
13:50
Speaker 1: assuming I think one of the riskiest headlines you could
13:53
Speaker 1: see right now is that that meeting is canceled. Actually, yeah, exactly.
13:56
Speaker 1: Um So, Mike, is is it your sense that on
14:00
Speaker 1: the Chinese side they would be happy with kind of
14:03
Speaker 1: a you know, a light trade agreement or even you know,
14:07
Speaker 1: a signed document that we're going to continue talking in
14:10
Speaker 1: the interim tariffs are going to be delayed. Is there
14:12
Speaker 1: is there a senseim your side that China do that.
14:15
Speaker 1: I absolutely get that sense. I think that the mentality
14:18
Speaker 1: has changed pretty dramatically from earlier in the year to
14:23
Speaker 1: where something is better than nothing and let's you know,
14:27
Speaker 1: try to get some agreement. Uh kick the can I
14:30
Speaker 1: guess who could say on some of the larger issues,
14:33
Speaker 1: but you know, it gets something out of way to
14:35
Speaker 1: at least remove the uncertainty from the market of how
14:38
Speaker 1: bad this could potentially get. So, Mike, we were speaking
14:42
Speaker 1: with Leland Miller of China Beige Book earlier on the show,
14:44
Speaker 1: and he was talking about sort of two tracks to
14:47
Speaker 1: the negotiations. On one hand, you have sort of a
14:49
Speaker 1: crackdown and a hardening in the stance when it comes
14:52
Speaker 1: to things like capital flows and I P. Theft. And
14:55
Speaker 1: on the other hand, there seems to be a softening
14:57
Speaker 1: when it comes to trying to go back to the
14:59
Speaker 1: February agreement, when it comes to agricultural deals. Uh, in
15:03
Speaker 1: addition to a couple of other things. Do you see
15:06
Speaker 1: that also? You know that makes sense? And I guess
15:09
Speaker 1: at the heart, you know, at the heart of the
15:12
Speaker 1: issues between the US China relations. You know, it's not
15:15
Speaker 1: the trade deficit, it's not trade, it's not tariffs, it's
15:19
Speaker 1: it's some of that stuff where there there is a
15:21
Speaker 1: harder stance being taken. So I'm not shocked by that. Uh.
15:25
Speaker 1: And and that sort of action may help hasten or
15:29
Speaker 1: expedite some of the longer term solutions in those areas.
15:32
Speaker 1: But that is a far more complicated type of conversation
15:36
Speaker 1: than whether or not you're going to have some tariffs
15:38
Speaker 1: on soybeans or automobiles or whatever else. Are you Here's
15:41
Speaker 1: my confusion. Does China see this as a two pronged,
15:45
Speaker 1: two separate tract issue. Can they come to some sort
15:48
Speaker 1: of agreement with the US in order to alleviate that
15:51
Speaker 1: the proposed tariffs that have to do with agricultural goods
15:55
Speaker 1: and still be dealing with the US. That's hardening. It
15:58
Speaker 1: stands on the other hide. Well, to be clear, you know,
16:01
Speaker 1: the last time we were on the show, I was
16:03
Speaker 1: mentioning I thought that there was a very high probability
16:06
Speaker 1: that we would see a ceasefire in these trade deals.
16:08
Speaker 1: And I think right now what everyone wants, uh, like
16:11
Speaker 1: I said, is to remove that uncertainty. From a Chinese perspective, Uh,
16:14
Speaker 1: the economy has been weakening a bit more than I
16:17
Speaker 1: think they may have expected, so that would help alleviate
16:20
Speaker 1: some of that. And from a US perspective, you're starting
16:23
Speaker 1: to see the economy turn a bit, You're starting to
16:26
Speaker 1: see sentiment diminish somewhat. Uh. And if you're the president
16:29
Speaker 1: and you want to remain the president, uh, it's that's
16:32
Speaker 1: these are all bad inputs to your re election odds.
16:35
Speaker 1: So you know, both sides have a reason why they
16:38
Speaker 1: want to get something, some win, even if it's if
16:41
Speaker 1: it's a minor win. Uh. And and so it's interesting, Yeah,
16:45
Speaker 1: it's interesting, Michael, what do you think would constitute a
16:49
Speaker 1: win here? I know, expectations have been lowered. Uh, probably
16:52
Speaker 1: on both sides. UM, but you know, is an agreement
16:55
Speaker 1: just to kick the can down the road, that doesn't
16:57
Speaker 1: seem like that would be enough of the markets? What
16:59
Speaker 1: do you would be a quote unquote win. I got
17:02
Speaker 1: a sense that, um, like I said earlier this year,
17:04
Speaker 1: that China would not accept a deal where any of
17:08
Speaker 1: the tariffs remained in place. UH. And I think that's
17:11
Speaker 1: what the US had been pushing at that time. I
17:14
Speaker 1: think now, Uh, the hope is we will agree to
17:18
Speaker 1: do X, Y and Z, you know, make more agricultural purchases.
17:22
Speaker 1: There's some talks about a currency pact. UM. They might
17:25
Speaker 1: have done some stuff on the margins on intellectual property, uh,
17:28
Speaker 1: and make this agreement just to not have the next
17:31
Speaker 1: round of tariffs in a couple of days or a
17:33
Speaker 1: couple of weeks whenever that's scheduled to be put in place.
17:36
Speaker 1: And I think from the U S side, you know,
17:38
Speaker 1: getting you know, making some progress and just not putting
17:42
Speaker 1: on more tariffs and leaving the ones that are there
17:44
Speaker 1: in place, UH, can probably be viewed as a win
17:46
Speaker 1: as well, at least an interim win for a ceasefire.
17:49
Speaker 1: How much agreement is there in the White House about
17:52
Speaker 1: how to approach these trade deals to have a sense.
17:55
Speaker 1: I mean, the wild card for me and this whole
17:59
Speaker 1: thing is, I'm some times don't know if President Trump
18:01
Speaker 1: knows what he's going to say before he says it,
18:04
Speaker 1: he might have a last minute change of heart go
18:06
Speaker 1: up to the podium. And that's the biggest wild card
18:09
Speaker 1: in this. And then if you look at this staff,
18:10
Speaker 1: I think that you probably have um, obviously some your
18:16
Speaker 1: your Peter Navarro's, etcetera. Have rather hawkish views on how
18:20
Speaker 1: we should be treating China. And then other members who
18:22
Speaker 1: have more dobbage views and who has influence and who
18:26
Speaker 1: has listened to most. I think that could be a
18:28
Speaker 1: function of how the markets are performing and how the
18:31
Speaker 1: economy is performing. Uh. If the hawkish members are saying
18:35
Speaker 1: we should do this to China, let's take a strong stance.
18:37
Speaker 1: The markets are doing well, the economy is doing well.
18:39
Speaker 1: Why not listen. Uh Suddenly things turn uh, and the
18:43
Speaker 1: people who have more slightly more dobash stance that this
18:46
Speaker 1: is what we said would happen. Here's the approach we
18:48
Speaker 1: maybe should take to reduce risk that we ourselves have
18:51
Speaker 1: a slow down and then I think they get the
18:53
Speaker 1: greater say, there's sort of an inverse relationship of how
18:55
Speaker 1: the how the relation to the negotiations are going to markets, right, exactly, right, Hey, Mike,
19:00
Speaker 1: thanks so much for joining us. Mike mcdonna, Chief Economists
19:03
Speaker 1: for Financial Products at Bloomberg, joining us uh in our
19:06
Speaker 1: DC studio. Well, let's shift gears from global trade from brexit.
19:25
Speaker 1: Let's talk technology growth. We welcome Melissa di Donado. She
19:29
Speaker 1: is the CEO of SUSA, based in London but headquartered
19:33
Speaker 1: in Germany, but she joins us here in our Bloomberg
19:34
Speaker 1: Interactive Broker studio. So, Melissa, thanks so much for joining
19:37
Speaker 1: us here at Bloomberg. Just let's first off, just give
19:40
Speaker 1: us a sense of what SUSA is, kind of what
19:43
Speaker 1: markets you're operating in and who you know, who your
19:45
Speaker 1: customers are. Our customers are enterprise customers across the globe.
19:49
Speaker 1: So even though we're out of Germany, word global business
19:51
Speaker 1: with the largest the world's largest independent open source company
19:55
Speaker 1: in the world right now, All right, then, so you
19:58
Speaker 1: focus on providing so for etcetera, within the cloud, within
20:01
Speaker 1: the idea of having something that is in the ether. Yeah, yeah,
20:07
Speaker 1: kind of something like that. We're an open source software business.
20:11
Speaker 1: Right to find open source for US. Open sources software
20:14
Speaker 1: built in a community, so there's no proprietary components to
20:17
Speaker 1: open source, so open sources for example, it is Yeah.
20:20
Speaker 1: So the core of our business is Linux space. It's
20:22
Speaker 1: where the world's largest Linux provider independent company in the world, UM,
20:26
Speaker 1: and it's all based on open source. That's exactly right.
20:28
Speaker 1: So I guess where is the expansion opportunity here? It
20:31
Speaker 1: seems to be a fast growing area with a lot
20:34
Speaker 1: of competition with everyone wanting to get into this. Where
20:37
Speaker 1: where are you seeing opportunities? So UM. I've been on
20:39
Speaker 1: board now for sixty five days as the new CEO.
20:41
Speaker 1: I was appointed in July. UM. In my first one days,
20:44
Speaker 1: I've taken the mission to meet a hunter customers UM
20:47
Speaker 1: in my first one hundred days, and that includes customers
20:49
Speaker 1: and partners and vendors. And we're a very big channel business.
20:52
Speaker 1: So it's been enlightening for me and I've been saying,
20:54
Speaker 1: you know, where do we expand where do we grow?
20:56
Speaker 1: We were acquired by eq T, which is a private
20:58
Speaker 1: equity from Mount of Sweden as our growth investor. UM.
21:01
Speaker 1: We were independent as of marks of this year. So really,
21:04
Speaker 1: you know, we're looking at where do we grow, where
21:06
Speaker 1: do we invest, where do we spend our time? So
21:08
Speaker 1: for US, we're doubling down the US market, So that's
21:10
Speaker 1: a big one for US UM. You know, we're looking
21:13
Speaker 1: to see how we can really transform. And during this
21:15
Speaker 1: journey and with my customers and visiting them in the
21:17
Speaker 1: last sixty five days going towards a hundred, the message
21:21
Speaker 1: has been allowed. They want us to help them simplify, right,
21:24
Speaker 1: how do these businesses take potentially big, monolithic global enterprise
21:28
Speaker 1: applications and get them at some point in their journey
21:31
Speaker 1: to the cloud. That's that's that's one. The second thing
21:34
Speaker 1: is how do we accelerate? How do we allow ourselves
21:36
Speaker 1: as enterprise customers to SUSA really you know, accelerate and
21:40
Speaker 1: modernize their applications as they go. So, Melissa, I saw that,
21:45
Speaker 1: you know, one of the things I don't know much
21:46
Speaker 1: about the open source business full disclosure, but I do
21:48
Speaker 1: IBM made a big acquisition of red Hat and that
21:50
Speaker 1: was kind of interesting. Does let's just suggest that maybe
21:53
Speaker 1: some of the more big traditional vertically integrated technology companies
21:57
Speaker 1: are thinking about open source. We are absolutely thing gamout
22:00
Speaker 1: open source, open sources on the mind of everyone. And
22:02
Speaker 1: why well, because it creates a borderless enterprise of solutions
22:06
Speaker 1: built with innovators across the board. So the software is free.
22:09
Speaker 1: You don't pay for for our software. What we do
22:12
Speaker 1: is we support the environment and that's how we obviously
22:14
Speaker 1: have a commercial model, but the most important thing is
22:16
Speaker 1: that open sources delivered to our customers with innovators across
22:21
Speaker 1: the globe, with interaction side of a community. You support
22:24
Speaker 1: that environment and that's how you make money. Please explain, yeah,
22:27
Speaker 1: of course. So um, we like to think of ourselves
22:30
Speaker 1: the best most valuable insurance policy in the world. So
22:33
Speaker 1: what we do is we work with our customers to
22:35
Speaker 1: understand their business needs, what the application need in the
22:38
Speaker 1: software needs to deliver through their services. So we take
22:41
Speaker 1: in part and parcel their requirements, their business solutions and
22:43
Speaker 1: the outcome we're looking to develop. We put that into
22:46
Speaker 1: the community and we certify that release and those components
22:49
Speaker 1: into our software every year that we deliver service and
22:52
Speaker 1: then of course provide the maintenance on top, so ensuring
22:55
Speaker 1: that when they need help where they need help with
22:57
Speaker 1: the kernel and above that we're there to help them.
22:59
Speaker 1: Are you expecting or getting any feelers from potentially bigger
23:04
Speaker 1: technology companies to be acquired. Um, maybe not quite yet.
23:09
Speaker 1: Let's not rush, and I think we want to be
23:10
Speaker 1: the acquirer rather than inquiry. So we're gonna be very looking.
23:13
Speaker 1: We are looking, Yeah, we are. We are definitely looking.
23:16
Speaker 1: We're gonna grow in organically and organically, but acquisitions are
23:19
Speaker 1: definitely in our future. So you could just give us
23:21
Speaker 1: a sense that like the competitive landscape, who were the
23:23
Speaker 1: big players and maybe kind of where SUSSA fits in there.
23:26
Speaker 1: So whilst we're the largest independent open source company in
23:29
Speaker 1: the world, we stand behind red hatters Number one is
23:32
Speaker 1: probably know they're they're they're much larger. They're acquired for
23:34
Speaker 1: um quite a bit of money by IBM, and we
23:36
Speaker 1: were acquired by e q T just in March of
23:39
Speaker 1: this year. So we're we're second but rising in the
23:42
Speaker 1: market because we provide a very different landscape. But SUSA,
23:44
Speaker 1: we're the open open source company, were agnostic. We don't
23:47
Speaker 1: have platform lock in, we don't try and take the
23:50
Speaker 1: entire stack for our enterprise customers. It's much more about
23:53
Speaker 1: allowing support across the open source market. So we provide
23:56
Speaker 1: a very different level of service. So we like to
23:58
Speaker 1: think that we're quite unique in the market, in fact
24:00
Speaker 1: or the best of our kind. So when you're in
24:03
Speaker 1: the US, so, I mean you mentioned that it's a
24:04
Speaker 1: big you just this is organic growth. We're just gonna
24:06
Speaker 1: go try to sign up customers take them away from them. Ever,
24:09
Speaker 1: is that the strategy? No? I mean, you know, when
24:11
Speaker 1: when you look at who are enterprise customers are, We've
24:14
Speaker 1: got four of every five customers sitting in retail, We've
24:16
Speaker 1: got four to five in in banking, in telco. So
24:20
Speaker 1: we've got to really study footprint. We're looking to expand,
24:23
Speaker 1: to go up the value chain of the enterprise application
24:25
Speaker 1: stack move much, you know, from the bottom which is
24:28
Speaker 1: the operating system, all the way to the value services
24:30
Speaker 1: across the enterprise. Melissa de Donado, thank you so much
24:33
Speaker 1: for being with us. Thanks for having me. Melissa de
24:35
Speaker 1: Donado is chief executive officer of SUSA. She is based
24:38
Speaker 1: in London. The company is based in Germany. Talking about
24:41
Speaker 1: open source, the expansion within it, and it really does
24:45
Speaker 1: seem to be a fertile Area's sort of interesting. The
24:48
Speaker 1: value of providing software for free, basically saying come build
24:53
Speaker 1: this up. This will help us actually gain a critical
24:56
Speaker 1: mass and be able to have some sort of broad
24:59
Speaker 1: reach uh software that we can work from. Thanks for
25:02
Speaker 1: listening to the Bloomberg pen L podcast. You can subscribe
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Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast
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Speaker 1: platform you prefer. I'm Paul Sweeney. I'm on Twitter at
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Speaker 1: pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at
25:13
Speaker 1: Lisa Abram woits one. Before the podcast, you can always
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Speaker 1: catch us Worldwide'm Bloomberg Radio