These Are the Worst Things That Could Happen in 2017

We look for the things that we want to see happening. Well, how about this, how about we think about the worst possible things that could happen next year and beyond, and we prepare ourselves for the that worst case scenario that's really grim. I like it that. Let's do it. Hi, I'm brad Stone, and I for our final episode of two thousand sixteen, we bring you the Bloomberg Pessimus Guide

Global Technology Edition for two thousand seventeen. These are the most dire doomsday scenarios are reporters could come up with the things that might happen in the world of tech. Hopefully not if it all goes terribly wrong. Okay, So buckle in and grab some tums to settle that ominously grumbling stomach. Or maybe that shouted tequila. Actually, we should have a bottle of tekula with us. Now, Well, the US is still digesting the shock eleection of Donald Trump.

So let's start with the potential for doom and gloom in Washington, d C. And bringing us that scenario is Josh Brustein. He's our reporter in New York and he's on the line with us. Hey guys, Okay, Josh, so scare the heck out of us. What do you have for two seventeen? Well, the great thing um for a pessim us in seventeen and the surveillance realm, is that

there's plenty to be terrified about. Whether your main fear is mass surveillance or whether your main fear is the intelligence agencies of the United States being being hampered in some way or another. That is a perfect pessimas. Okay, So there has been this ongoing debate over over the Vice Acts, the Foreign Intelligence Surveillance Act. What do you think Trump is likely to do with this law? Yeah, I mean, I think the thing is that nobody knows

and that makes people very nervous. This law has been very controversial. A major part of it is going to come up for renewal, and if it's not renewed by the end of the year, it just goes away. And Jess, is that a bad thing? Though it is seen as a very bad thing. If you are in the intelligence community, if you're in the a c. L U or the Electronic Frontier Foundation UM or your privacy advocate, then you

actually kind of might welcome this. They have a website where they're actually counting down to the expiration of US Section seven two. Of course, Trump as a candidate, you know, was for forms of torture. I mean, it does suspect that he will push these things to the limits. So what does what does it mean not just for privacy of of Americans, but for you know, the u S relationship with its allies in Europe and the and the

status of American Internet companies abroad. Yeah. Absolutely, so if Trump is more aggressive with surveillance, something you could do even aside from this law, because the president has a lot of power just to start claiming just start claiming authority under executive orders, and the if he starts being more aggressive or is suspected of being more aggressive, because it's a possibility that we wouldn't really know what's going on. You could see europe uh start to put pressure on

American companies. We've already seen a lot of skepticism about whether American companies can protect the information they have against the U. S. Government, and that could become a bit of a hot button issue for European governments in Silicon Valley. Okay, Josh, well, thanks for bringing that to us today. Absolutely, thank you. All right, So, how are you feeling so far? Acky? Uh? I really wish we brought that bottle of tequila here. Okay, So let's move away from the federal government now and

take a look at blue chip tech companies. Alex, you are our Apple reporter and you're here with us here in San Francisco. Hi. So, Alex, welcome to the Bloomberg Technology Pessimist Guide, where we're doing our best to ruin

everyone's day. So tell us what's the worst thing that could happen to Apple in two thousandev So Apple could lose its credit rating, and this has huge implications for a company which has succeeded in keeping shareholders happy by rewarding them with cash in recent years while they've been waiting for the next blockbuster product to plump up the share price Simco, the CEO has sold debt in order to fund buybacks and dividends and keep investors pockets plot flush.

What about iPhone sales? So they continue to prop up the company. So iPhone sales are still pretty healthy, but they are falling and flattening. Um. So you know, there's been at the first revenue decline in over a decade in the most recent fiscal year. So the expectation is one hopes that the iPhone coming next year will be a real blockbuster product. But if for some reason it isn't and it's vastly disappointing and it doesn't encourage and huge new fresh burst of sales, then that could be

a problem for Apple. All right, So we should remember that Apple is the world's biggest technology company, actually the world's biggest company period. So if credit agencies suddenly decide that Apple is no longer credit worthy, that's going to have implications for every other tech company out there, every other publicly traded company in the world. It is something

that could also have implications for someone like Microsoft. Now the is an Apple raises this debt is because while it has vast amounts of cash in the bank, most of it is offshore. Of the two billion in cash reserves that it has, two six billion dollars of that is outside the US. In order to repatriate that money, Apple has to pay a thirty five pc tax rate in the US, which is clearly great news for the Treasury,

but not such great news for Apple itself. There is hope that in Congress they will pass some legislation which will reduce that tax bill, which increases the likelihood and that Apple's willingness to repatriate money from off shore that would essentially reduce their need to sell debt in order to reward the shareholders and come up with that sort of Donald Trump has signaled the willingness to do that, yes, and it's been one of his big campaign pledges that

would help spare investment in the US. So there is a real appetite to make that happen in the new White House. Is there a chance where we might see another miracle product category spring from Cooper Tino that averts this worst case scenario. I mean, that's the question every investor in the world is asking. We know they've looked at cars, they've broadly scrapped the Apple s hardware part of the car project that they're still carrying on with software.

We think they're exploring some things in glasses. We've reported that maybe something in healthcare. We don't quite know what that is, maybe just some sort of healthcare platform. They're investigating a lot of avenues, but we're yet to see anything concrete surface just yet. All right, so we just asked you to tell us the worst case scenario. But

how likely is it? I was speaking to the Moody's analyst who looks at this staff as his job, and he said that if Apple continues to raise debt at a faster pace than it's cash balance increases, then this could happen within eighteen months. One hopes that the blockbuster new iPhone next year renders such a likelihood impossible, but we'll have to look and see. All right, Alex Webb, thank you for contributing to the dark mood in the studio.

We appreciate it. Happy Christmas, sorry I should say Holidays in New Yestian so Akey, who's up next? We are now going from the blue chips to the unicorns, and specifically we're going to talk about the worst thing that could happen to Uber, which is now the world's biggest private technology company. And we have Eric newcomer here in San Francisco. Eric, Eric, Hey, thanks for having me. All right, so scare us. What could possibly happen to our beloved Uber?

You know, what what if? What if the unicorn with the biggest private valuation in the world sixty nine billion dollars saw its valuation fall? I mean, this is a company that's been built around sort of the ever growing rise of that that number. We've just watched it. When it was three billion, we thought it was crazy and up and up and up and up. You know, there are no short sellers against it. It's it's a number that's climbed. So what happens if it falls? So who cares? What?

What would be the impact of that? The problem is one for Uber morale would be heard. Some employees would see their stock compensation fall dramatically. A lot of them have sort of counted on that is why they're working there and not sort of the lush offices of Google. Uh. Uber's reputation would fall. You know, it's been this gigantic titan. But I think you know the problems for Uber aside it would be a bad sign for Silicon Valley. This

is a valuation that towers above all other ones. It sort of sets the brominter for what companies should be worth. If Uber's value is misguided, then I think a lot of other companies are gonna have to question how much their worth and that could have broad implications for you know, not just these technology workers, but also the broader San Francisco economy too. Right, maybe housing prices would come down

to Well, that's a good point. I mean, would a decline in unicorn valuations be good for some people presumably incumbents and everyone that these unicorns have been able to use a flood of cheap money to sort of suppress I mean, Uber has helped drown out the taxi cab market. Here.

If it turned out Uber was operating on margins that were unsustainable, had to raise its margins, heard its valuation, lower its market share, that might see we might see a resurgence in taxi cabs, or maybe Uber sort of steamrolled too many of them to really make a strong comeback. I mean, it really is hard to imagine Uber making money off of these uberpool routes. I mean they are so cheap. Yeah, for Uber. It's all about volume, drive price to the bottom, and then expand into pool, expand

into food delivery. So they know the margins are going to be pretty thin, but they just need to do a lot of them. Let me see this though, as a consumer, I think the worst case scenario for me would be for Lift to go out of business and for Uber to have a complete monopoly over the San Francisco market and check out prices like crazy and make my transportation costs spike. I think that's a fair point.

Lift has about a billion dollars in the bank probably and is slowly spending down that money, and maybe you know, about six million dollars a year or less, so it has some time to figure it out. But at some point there's a ticking time bomb for Lift to figure out how it gets more money, goes public, gets money from those investors, or gets bought and has somebody subsidized their business. Okay, taking time bombs, Thanks for unsettling us further, Eric,

Good job, Brad. Are you ready for the next one? There's more? I feel like I need to go get some anxiety medication. Well, this one is particularly scary. Lizette Chapman, you are our venture capital reporter here in San Francisco, and you're going to tell us about how personal health data could be collected against our will and used against us. What do you mean could be collected? It is being

collected right now, and we're volunteering it. Everybody has not everybody, but like sixty million plus people have absolutely fallen in love with all of these different wearable devices with different sensors on it that track our steps that you know, track our sleeping, and sensors are getting better and better. So what's the problem. I thought all this was supposed

to make us feel healthier. It's true, a lot of people have improved their health because they're able to quantify how their habits range day to day and even sometimes compete with their friends. The problem is that a lot of people are just volunteering this information. You're not even reading, you know, kind of like the terms and conditions when you download an app. You just click it and move on. Well,

that could be a problem going forward. But how much data can these insurers or employers really get out of the number of steps we take every day? We'll see, But that's just it. It's not just about steps anymore. I mean now sensors are becoming so cheap and so much better than they have been in past years that they're able to monitor everything from blood oxygen levels to heart rate to to you name it, it, just like

you would in a doctor's appointment. So the worst key scenario is these insurers might use this against us that you know, they'll see the number of steps we're taking, our heart rate, our blood oxygen levels and say, maybe this person has a good chance of getting heart disease down the road. It could happen. We're volunteering this information. I haven't seen any legislation saying hey, you know, uh, you know, don't reach out to these different customers because

it hasn't happened yet. They're not they haven't made the connection yet between this massive trove of data that's being generated every day by Americans to um to health insurance policies. Yet, just earlier this year, ETNA UM gave out fifty thousand Apple watches to their employees so they can start working on a joint venture with Apple to figure out how to use the data. So I think it's might be coming.

That sounds scary. Does the potential repeal of the Affordable Care Act Obamacare does a factor into this legal ambiguity that might allow insurance or healthcare companies to penalize us for unhealthiness. Perhaps it's kind of mes you know, you look at that, that's kind of a big, hot red mess right now. I think the larger point that that you're getting at, I think is a good one, which is that you know, health insurance is broken right now

and they're looking for new revenue streams. There's high cost, low satisfaction um with the big data, the use of big data, this is a new revenue stream and if you think about it, you know we're just giving it away. It's kind of like when you download an app and you just agree to terms and conditions. Well, thanks for sharing that with us today, Lizette Brad. I think it's time for you to kick it off my Apple Watch right now, at least change your privacy settings on your tracker. Well,

I'm going for a run. So this brings us to our very last scenario of ready for one more bread? Probably not, but let's do it. This one, you could say, has been long overdue. Here's Dina Bass calling in from Seattle. Hey, DNS, what have you got for us? So? My scenario is that the a group of hackers working for a hostile nation state or a stateless entity like a terrorist, scre criminals, or hacked of US will hack into the industrial systems at UM some critical infrastructure, say a power plant or

a damn public transport. They will tweak the software too, in a manner that shuts down or destroys the hardware and damaging the facility. Yeah, this sort of thing has been possible for a while. I'm thinking of that attacked by US and Israeli hackers on an Iranian nuclear facility a few years ago with the stuck snet virus. Yes, absolutely, that's exactly what they did there. They used a virus to basically speed up the way the center fugees in

the reactor we're spinning and damaged um um. And you know, the US government has been doing some tests going back as far as two thousand seven, if you look at Fred Kaplan's book, where they were trying to see whether a remote programmer in d C could take out a twenty seven ton power generator all the way across the country in Idaho. And of course it took just twenty one lines of code to send the generator to an

untimely death. That's incredible. I mean, one of our previous podcast episodes was about how these hackers in Russia managed to penetrate the Democratic now stional committees email servers and they were able to read quite a bit of havoc on the election campaign cycle. So if they were able to hack emails in this way, he really makes you think what happens if they actually hack physical infrastructure that could put real lives in danger. Sure. Absolutely, we've had

a couple of, you know, examples of that around the world. Also, there was hacking of of a damn in Westchester, New York that was attributed to the Iranians. In we had was sort of the first reported takedown of an electrical power grid in Ukraine. Uh And the point you make about the d n C hack is a good one as well, because that that happened with you know, as far as we know, not a lot of repercussions, and you know, my sense is that that could embolden people

in twenty s to try something more seriously. Well, Dina, considering all these very public instances, how prepared our computer security experts for these kinds of attacks? So it's gotten. Things have gotten better than stucks net. You know, companies like Semens, which was theo that have made the controls that were impacted in Iran, have worked to harden their systems. They now go in and signed contracts with these companies to go in and update the systems more frequently. But

you know, there's still a fair amount of issues. Just last week, there's a Presidential Commission on Enhancing National Cybersecurity and put they put out a report and a number of the recommendations were related to these issues of defending key infrastructure um, you know, and also they talked about coming up with clear ideas of who does what and you know, to respond to these kinds of attacks, and what are the rules of engagement for state and local governments,

for the for the federal government, and also for private companies who are are going to be helping out to protect. And of course, as we bring more and more of our systems connected to the Internet, the stakes are only getting higher. Yeah. Absolutely, that was something that was flagged by the Commission as well, and they were talking about,

you know, our cyber and physical worlds increasingly converge. You know, earlier this year we saw that massive distributed denial of service attack that took down a decent chunk of the Internet, and that was basically, you know, people, the Internet was attacked via webcams and and DVRs. It's great that we have all of these Internet of things devices, but they're now on networks that are connecting or can connect in certain ways to our critical infrastructure, which is another thing

this Presidential Commission brought up. These two things are converging the largely unsecured world of Internet of things devices and our critical infrastructure. Well, let's keep our fingers crossed. None of this is making me feel any better. Thanks for that prediction, Dina, Thank you. How are you feeling, Hockey? I don't know. I don't know if I'm ready for twenty Neither apard the Optimist Guide the two after this episode. Oh my gosh, I know, what's your worst case scenario,

brad Well. I mean, everyone gave gave me a lot of food for thought here, you know. The one that I contributed to the larger Bloomberg Pessimist Guide was that we would find out that the law enforcement authorities were wire tapping some of these passive listening devices like the Amazon Echo or even some of our phones that are kind of waiting for these watchwords like Hello, Google or Alexa. You know, can they just turn those on and listen?

And if they do do that and or may be able to, you know, to to amass some intelligence on some bad guys. But what is it due to the overall trust in these devices that are now populating our lives? That's my question for two thousand and seventeen. How about you, well, how about this? How about I reject the premise altogether because I'm feeling terrible right now, and I give you

an optimist prediction next year. All right. So I was talking to our biotech reporter Caroline Chen earlier, and she was telling me about, um, all these really incredible advances that doctors, researchers, biotech companies are making right now in

this in the few yild of cancer research. UM. Apparently there's a new method called immunotherapy where instead of using radiation to just kill off entire parts of your body, right, UM, you can go in UH and implement this really targeted form of therapy that makes your immune system attack the cancer cells. And so far in university labs and the biotech research labs, UH they're producing a lot of really good results. That sounds very promising. It's two thousand seventeen,

the year when I make a difference in patients lives. Well, let let's see. It sounds like I'm some therapies are up for FDA approval right now, so they could become widely available pretty soon. And you know, maybe they wouldn't cure cancer altogether, maybe they wouldn't be able to prevent it, but maybe it could make cancer this form of chronic disease that you live with for the rest of your life,

kind of like kind of like AIDS. So a very nice optimistic prediction to end to end our podcast today, and that's it for this year on the Decrypted Podcast. Thanks for listening. We're going to take a short break for the holidays next week, but we'll be back with a full slate of new episodes starting on January ten. If you have an iPhone, please subscribe on your native podcast app and leave us a rating and review there.

It helps more listeners discover the show and tell us what you think could be the worst possible thing that could happen in I'm on Twitter at Akio seven and I'm at Brad Stone. This episode was produced by Pied Good, Cary Magnus, Henrickson, and Liz Smith, with help from Aaron Plack. Alec McCabe is head of Bloomberg Podcasts. We'll see you next year, Happy New Year, Land Land