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

delegation today and tomorrow. President Trump just tweeted out that he will meet with Vice Premier Leo hey Uh tomorrow, suggesting that there may be some light at the end of this trade tunnel. To get the latest, there is absolutely nobody better to speak to than Leland Miller. He is the CEO of the China Basebook International Uh. He joins us here on a Bloomberg Interactor Broker studio. So, Leland, thanks so much for joining us on what could be a very very important two days for the US and

China and the overall financial markets. What is your sense of what would be a success here over the next couple of days. I think expectations have been peeled back dramatically over the last twelve to twenty four hours simply because there's been a lot of bad news. I mean, earlier this week you saw sanctions against Chinese companies and visa restrictions on Chinese individuals. Uh. And then you know the threat that Chinese we're gonna leave early, and and

and so it's been nothing but bad news. But look that a lot of what's happening with the administration on China is getting more aggressive. On the other hand, they still have a desire to reach a deal on trade, a medium mini deal on trade in twenty nineteen. If they can get what they want, which means more than agg purchases. That they need the Chinese to start delivering on some of the substantive commitments from the May text. But that's where this is going, tariff punts and pullbacks

and return for some substitive concessions and some abus. Here's the reason why there's a lot of confusion right now. We're getting mixed messages. On one hand, it seems like the US is kind of drilling down and trying to get some serious concessions uh and and going after even just the investment the flows of capital from the US into China. And on the other hand, it looks like

we're more amenable to some sort of agricultural deal. What do we make of this sort of push pull, Well, there really are two tracks that are forming with an administration. This has always been true, but I think right now what you're seeing is that people focused on the national security side are really digging in and getting more aggressive.

And you are seeing more um more moves against Chinese companies and against Chinese individuals, and and you are also seeing um things that on the pension money side, US gunment pension money is being looked at very closely in terms of how to wool that away from going into Chinese companies and and then into the into the p l A as they would as they would say um.

On the other hand, trade is being handled a little bit differently, and there is a belief within the White House that the best case scenario for President Trump and his re election is to scale the terrorifts back to to sort of cruise through at two or fifty billion if they can do that, so putting a lot of pressure on the Chinese, but not too much pressure to hurt the U s economy. Getting those agg buys in return, and that's the sweet spot. It doesn't mean they can

get that. They're not just going to give that away, but that's what they're angling for. If they can get some substantive concessions back from the Chinese. Well, I think the one of the issues is October and the tariffs, so they're scheduled to go up again. Is that something thing is on the table today and tomorrow, Let's maybe table those things. Yeah, the October terrorists are misunderstood and

they're probably the trickiest part of this entire discussion. December, the White House is laser focused on trying to get rid of December tariffs because I think they they there can most people are convinced that they'd be bad for the U S. Economy. September is also on the table. It's it's part of the discussion to pull back on September tariffs if the US can get the concessions on i P. But October is very interesting because the U S side is not very focused on October, but markets are.

Markets are looking at the October tariff hikes as this bell weather for whether the US is going to move forward with a potential deal. Or a deal is dead, and I think it's a mistake because there's just not enough attention being put on those October terraces right now. They're a minor the a minor issue for the White House, but they're huge issue for markets, and that's where you

could have some miscommunications. There seems to be, though, a disconnect also with the market looking at a trade deal as sort of a comprehensive one track thing, and you're talking about a two track issue. I'm wondering how China

looks at the US is two track approach. Can they isolate some of the capital flow issues and some of the I P issues completely while they deal with sort of immediate tariffs and agricultural purchases in order to get a narrow deal, or are they going to be put off by some of the other demands and and sort of crackdowns. I think they're definitely put off by it, but I think they can also cease some reap some

rewards from it. So while this trade talk, these trade talks are going on, we've also heard word that magically we're going to start seeing some Hawaiwi spatial licenses. Now Huawei has been separated from the trade talks, the Chinese agreed to do that. Everyone agreed with a good idea, and magically, even though the things are connected, you're seeing some movement on Huawei, while the trade talks have some potential to move forward. So what you do is your

ring fence these things. But I think the Chinese understand that good things can happen for them if they make President Trump happy, and bad things will probably happen if they don't. And so a lot of this is is whether things are formally connected versus everything is informally connected in some way twenty seconds, what's the probability of us seeing some sort of deal, however narrow within the next

couple of days. I think you. I don't think you'll see a deal, But what you could see is the outline of what would be the White House and the Chinese understanding of what a deal would be for along the lines of what I've already explained. But I think that is more much more likely than than gloomy markets have been expecting for the last day or so. Of course, we saw something akin to that in February, and uh, well, most we saw where that went. Leland Miller, thank you

so much for being with us. Leland Miller, chief executive officer of China bege Book International, with an incredible view into everything having to do with the trade negotiations as well as frankly the Chinese economy. He's been prescient on how the slowdown has accelerated more than some of the official numbers have been suggesting. So it looks like perhaps that we may get another report about Amazon spying on people through their camera security service. Here to explain all

the ins and outs here over day. She's a technology columnist for Bloomberg Opinion, joining us in our Bloomberger Active Broker studios. So Amazon st spying on us? Is that the is at the bottom line here? Well, yeah, and I think we already knew that the companies you know, Echo home speakers and related devices powered by its Alexa voice assistant that you know, they're used as sort of data collection machines so that Amazon in parts, so Amazon

can improve the technology behind Alexa. But what are colleagues in in Europe and on the West Coast here reported overnight? Uh, is that Amazon has sort of human reviewers overseas basically looking at snippets of video from cloud Cam, which is Amazon's kind of home motion detection security camera. Um, there are people reviewing those snippets of video again for use in kind of training the artificial intelligence software behind Alexa.

And you know, Amazon says this is more or less disclosed that people are doing it voluntarily, either kind of Amazon employees or others, or people choosing to have these snippets viewed by people because there's some kind of crash or bug. But you know, sources told Bloomberg News that in some cases the video snippets were things that people would probably not voluntarily give up, including in some cases snippets of people having sex. Yeah, so do people do

we know? Is it clear whether consumers opt into this or is it not clear? Well, I mean, as as you can see from the sort of examples of very sensitive people are probably not opting into having snippets of them having sex reviewed by humans. Um. So Amazon says this is voluntary. There's obviously some dispute about that. And look, I wrote a piece that published today that's basically asking is sort of opting in or is disclosure in fine print?

Really enough? Like, no one who buys a home motion detection security camera is really expecting that somewhere in India or Romania, there are people sitting there computers reviewing little snippets of their from inside their homes. Honestly, though, if you put a camera in your home and you're asking a company to provide some sort of security, come on, I mean, at a certain point, the likelihood of someone actually reviewing that is not insignificant, and you're basically asking

them to do it. You're just hoping that the bots are better at it than the humans, which it turns out they're not always. So I mean, honestly, what alternative is there? No? I think I think that's a fair point that um and I think that's an attitude that lots of people have that what do you expect if you are buying one of these devices, whether it's a voice activated speaker or a cell phone that we carry around with with us everywhere we go, what do you expect?

Of course, they're always listening or watching. But I feel like there is some kind of limit to this, right, that this is a case of boiling the frog slowly. Maybe we got okay, although we shouldn't be okay with the idea that everything we do online and in the real world is basically being monitored and tracked by you know, Google or Facebook or Apple or one of these other gigantic tech companies. Again, we should not be okay with that, but over time we got kind of inured to that.

But I feel like humans reviewing audio clips of sort of what we ask Siri, or again, video snippets from footage inside of our homes being reviewed by humans. That feels like a different level. And the same thing with sort of these kind of facial recognition cameras. Again, this is all about collecting as much data as possible and then using human reviewers to kind of train the next generation of the software to make it smarter and more automated.

But we're basically human guinea pigs for technology, and we did not agree to this. Just because you buy a home security camera doesn't mean you agree to be a

free guinea pig for a big technology company. But as you suggested earlier, it just seems like we're on this continuum, uh, we as consumers of giving up more and more and more of our personal security, of personal privacy in the name of technological you know, improvements are just ease, you know, whether it's credit card numbers or access to our homes. But we all know this, and people still buy the devices.

So I've got to say at a certain point, you know, it hasn't been shown to be materially harmful so far, and that is the question. At what point will it reach a tipping point? And will the frog be boiled? Yeah, that's why I mean, to me, the boiling frog, the dead frog moment is humans reviewing video video footage. For me, I definitely don't have those. But I think that's a very fair point, is sort of do people really care about this or do they care enough about it to

not buy one of these devices? And I think the easy answers people don't care. I think it's more nuanced than that. They're people definitely do care. We do see, obviously, you know, pretty significant growth of um people purchasing echo devices and similar kinds of home automation or voice assistant technologies. But I don't think that necessarily means people are tacitly

cool with kind of perpetual surveillance by gigantic rich technology companies. Yeah, if you put it that way, I'm sure sure over there. Thank you so much for joining us. Here's a technology columnist for Bloomberg opinion. Joining us here in our Bloomberg Interactive Broker studio, you can read more of sharers at work and more from Bloomberg Intelligence. I'm sorry, Blueberg Opinion at Bloomberg dot com slash opinion, and you can do it on the terminal as well by typing O, P,

I N go. President Trump saying that he is willing to meet with China's top delegate as trade talks heat up in Washington, d C. Joining us now to discuss Mike McDonough, chief economist for financial Products for Bloomberg LP. He is down there in Washington, d C. Mike, Are you taking part in the trade negotiations? I? I am not. But I do think that that meeting, the agreement to have that meeting, is probably a pretty big deal. Really,

I do, actually, because I don't think. I mean, from my own perspective, President Trump hasn't seemed to be one to deliver bad news face to face. He seems to when things are going poorly, he seems to have other people communicate that message, or he does it indirectly via Twitter. So the fact that there is an agreement and a meeting occurring makes me think that's a positive sign. Mind you, there's a meeting occurring as of right now, ten minutes

from now. We don't know right that could change, but assuming I think one of the riskiest headlines you could see right now is that that meeting is canceled. Actually, yeah, exactly. Um So, Mike, is is it your sense that on the Chinese side they would be happy with kind of a you know, a light trade agreement or even you know, a signed document that we're going to continue talking in the interim tariffs are going to be delayed. Is there is there a senseim your side that China do that.

I absolutely get that sense. I think that the mentality has changed pretty dramatically from earlier in the year to where something is better than nothing and let's you know, try to get some agreement. Uh kick the can I guess who could say on some of the larger issues, but you know, it gets something out of way to at least remove the uncertainty from the market of how

bad this could potentially get. So, Mike, we were speaking with Leland Miller of China Beige Book earlier on the show, and he was talking about sort of two tracks to the negotiations. On one hand, you have sort of a crackdown and a hardening in the stance when it comes to things like capital flows and I P. Theft. And on the other hand, there seems to be a softening when it comes to trying to go back to the February agreement, when it comes to agricultural deals. Uh, in

addition to a couple of other things. Do you see that also? You know that makes sense? And I guess at the heart, you know, at the heart of the issues between the US China relations. You know, it's not the trade deficit, it's not trade, it's not tariffs, it's it's some of that stuff where there there is a harder stance being taken. So I'm not shocked by that. Uh. And and that sort of action may help hasten or expedite some of the longer term solutions in those areas.

But that is a far more complicated type of conversation than whether or not you're going to have some tariffs on soybeans or automobiles or whatever else. Are you Here's my confusion. Does China see this as a two pronged, two separate tract issue. Can they come to some sort of agreement with the US in order to alleviate that the proposed tariffs that have to do with agricultural goods and still be dealing with the US. That's hardening. It

stands on the other hide. Well, to be clear, you know, the last time we were on the show, I was mentioning I thought that there was a very high probability that we would see a ceasefire in these trade deals. And I think right now what everyone wants, uh, like I said, is to remove that uncertainty. From a Chinese perspective, Uh, the economy has been weakening a bit more than I think they may have expected, so that would help alleviate

some of that. And from a US perspective, you're starting to see the economy turn a bit, You're starting to see sentiment diminish somewhat. Uh. And if you're the president and you want to remain the president, uh, it's that's these are all bad inputs to your re election odds. So you know, both sides have a reason why they want to get something, some win, even if it's if it's a minor win. Uh. And and so it's interesting, Yeah, it's interesting, Michael, what do you think would constitute a

win here? I know, expectations have been lowered. Uh, probably on both sides. UM, but you know, is an agreement just to kick the can down the road, that doesn't seem like that would be enough of the markets? What do you would be a quote unquote win. I got a sense that, um, like I said earlier this year, that China would not accept a deal where any of the tariffs remained in place. UH. And I think that's

what the US had been pushing at that time. I think now, Uh, the hope is we will agree to do X, Y and Z, you know, make more agricultural purchases. There's some talks about a currency pact. UM. They might have done some stuff on the margins on intellectual property, uh, and make this agreement just to not have the next round of tariffs in a couple of days or a couple of weeks whenever that's scheduled to be put in place.

And I think from the U S side, you know, getting you know, making some progress and just not putting on more tariffs and leaving the ones that are there in place, UH, can probably be viewed as a win as well, at least an interim win for a ceasefire. How much agreement is there in the White House about how to approach these trade deals to have a sense.

I mean, the wild card for me and this whole thing is, I'm some times don't know if President Trump knows what he's going to say before he says it, he might have a last minute change of heart go up to the podium. And that's the biggest wild card in this. And then if you look at this staff, I think that you probably have um, obviously some your your Peter Navarro's, etcetera. Have rather hawkish views on how

we should be treating China. And then other members who have more dobbage views and who has influence and who has listened to most. I think that could be a function of how the markets are performing and how the economy is performing. Uh. If the hawkish members are saying we should do this to China, let's take a strong stance. The markets are doing well, the economy is doing well. Why not listen. Uh Suddenly things turn uh, and the people who have more slightly more dobash stance that this

is what we said would happen. Here's the approach we maybe should take to reduce risk that we ourselves have a slow down and then I think they get the greater say, there's sort of an inverse relationship of how the how the relation to the negotiations are going to markets, right, exactly, right, Hey, Mike, thanks so much for joining us. Mike mcdonna, Chief Economists for Financial Products at Bloomberg, joining us uh in our DC studio. Well, let's shift gears from global trade from brexit.

Let's talk technology growth. We welcome Melissa di Donado. She is the CEO of SUSA, based in London but headquartered in Germany, but she joins us here in our Bloomberg Interactive Broker studio. So, Melissa, thanks so much for joining us here at Bloomberg. Just let's first off, just give us a sense of what SUSA is, kind of what markets you're operating in and who you know, who your customers are. Our customers are enterprise customers across the globe.

So even though we're out of Germany, word global business with the largest the world's largest independent open source company in the world right now, All right, then, so you focus on providing so for etcetera, within the cloud, within the idea of having something that is in the ether. Yeah, yeah, kind of something like that. We're an open source software business.

Right to find open source for US. Open sources software built in a community, so there's no proprietary components to open source, so open sources for example, it is Yeah. So the core of our business is Linux space. It's where the world's largest Linux provider independent company in the world, UM, and it's all based on open source. That's exactly right. So I guess where is the expansion opportunity here? It seems to be a fast growing area with a lot

of competition with everyone wanting to get into this. Where where are you seeing opportunities? So UM. I've been on board now for sixty five days as the new CEO. I was appointed in July. UM. In my first one days, I've taken the mission to meet a hunter customers UM in my first one hundred days, and that includes customers and partners and vendors. And we're a very big channel business. So it's been enlightening for me and I've been saying, you know, where do we expand where do we grow?

We were acquired by eq T, which is a private equity from Mount of Sweden as our growth investor. UM. We were independent as of marks of this year. So really, you know, we're looking at where do we grow, where do we invest, where do we spend our time? So for US, we're doubling down the US market, So that's a big one for US UM. You know, we're looking

to see how we can really transform. And during this journey and with my customers and visiting them in the last sixty five days going towards a hundred, the message has been allowed. They want us to help them simplify, right, how do these businesses take potentially big, monolithic global enterprise applications and get them at some point in their journey to the cloud. That's that's that's one. The second thing

is how do we accelerate? How do we allow ourselves as enterprise customers to SUSA really you know, accelerate and modernize their applications as they go. So, Melissa, I saw that, you know, one of the things I don't know much about the open source business full disclosure, but I do IBM made a big acquisition of red Hat and that was kind of interesting. Does let's just suggest that maybe some of the more big traditional vertically integrated technology companies

are thinking about open source. We are absolutely thing gamout open source, open sources on the mind of everyone. And why well, because it creates a borderless enterprise of solutions built with innovators across the board. So the software is free. You don't pay for for our software. What we do is we support the environment and that's how we obviously have a commercial model, but the most important thing is that open sources delivered to our customers with innovators across

the globe, with interaction side of a community. You support that environment and that's how you make money. Please explain, yeah, of course. So um, we like to think of ourselves the best most valuable insurance policy in the world. So what we do is we work with our customers to understand their business needs, what the application need in the software needs to deliver through their services. So we take in part and parcel their requirements, their business solutions and

the outcome we're looking to develop. We put that into the community and we certify that release and those components into our software every year that we deliver service and then of course provide the maintenance on top, so ensuring that when they need help where they need help with the kernel and above that we're there to help them. Are you expecting or getting any feelers from potentially bigger technology companies to be acquired. Um, maybe not quite yet.

Let's not rush, and I think we want to be the acquirer rather than inquiry. So we're gonna be very looking. We are looking, Yeah, we are. We are definitely looking. We're gonna grow in organically and organically, but acquisitions are definitely in our future. So you could just give us a sense that like the competitive landscape, who were the big players and maybe kind of where SUSSA fits in there.

So whilst we're the largest independent open source company in the world, we stand behind red hatters Number one is probably know they're they're they're much larger. They're acquired for um quite a bit of money by IBM, and we were acquired by e q T just in March of this year. So we're we're second but rising in the market because we provide a very different landscape. But SUSA, we're the open open source company, were agnostic. We don't have platform lock in, we don't try and take the

entire stack for our enterprise customers. It's much more about allowing support across the open source market. So we provide a very different level of service. So we like to think that we're quite unique in the market, in fact or the best of our kind. So when you're in the US, so, I mean you mentioned that it's a big you just this is organic growth. We're just gonna go try to sign up customers take them away from them. Ever,

is that the strategy? No? I mean, you know, when when you look at who are enterprise customers are, We've got four of every five customers sitting in retail, We've got four to five in in banking, in telco. So we've got to really study footprint. We're looking to expand, to go up the value chain of the enterprise application stack move much, you know, from the bottom which is the operating system, all the way to the value services across the enterprise. Melissa de Donado, thank you so much

for being with us. Thanks for having me. Melissa de Donado is chief executive officer of SUSA. She is based in London. The company is based in Germany. Talking about open source, the expansion within it, and it really does seem to be a fertile Area's sort of interesting. The value of providing software for free, basically saying come build this up. This will help us actually gain a critical mass and be able to have some sort of broad reach uh software that we can work from. Thanks for

listening to the Bloomberg pen L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at Lisa Abram woits one. Before the podcast, you can always catch us Worldwide'm Bloomberg Radio