MARIA: WELCOME BACK, TECH IS
TAKING THE HILL, GOOGLE CEO
SUNDAR PICHAI TO APPEAR BEFORE
HOUSE JUDICIARY COMMITTEE LATER
THIS MORNING, GOOGLE CEO
EXPECTED TO ANSWER QUESTIONS ON
THE COMPANY'S BUSINESS PRACTICES
INCLUDING HANDLING OF USER DATA
AND POTENTIAL POLITICAL BIAS.
JOINING US TO TALK MORE ABOUT
THAT, FIRST THIS IS WHAT KEVIN
MCCARTHY TOLD ME ABOUT THE
HEARING.
YOU HAVE THE CEO OF GOOGLE TO
TESTIFY, WHAT ARE YOU LOOKING TO
GET OUT OF THAT?
>> WE HAVE LOOKED AT THIS FOR
QUITE SOME TIME.
TECHNOLOGY AFFECTS SO MUCH OF
OUR LIFE.
TWO-THIRDS OF EVERY ADULT
AMERICAN GETS THEIR NEWS FROM
THE INTERNET.
MARIA: THAT'S INCREDIBLE.
>> NO OTHER COMPANY THAT HAS A
GREATER CONTROL OVER THE
INTERNET ON SEARCHES THAN GOOGLE
AND GOOGLE HAS NOT BEEN COMING
TO ANY OF OUR HEARING, WHEREAS
TWITTER, FACEBOOK AND OTHERS,
90% OF ALL INTERNET SEARCHES
GOES THROUGH GOOGLE.
MARIA: BIGGER POWER?
>> THIS IS WHY WE ARE HAVING
HEARINGS, WHAT DO WE NEED TO
PROTECT, WHAT DO WE NEED TO STOP
THE BIAS, WHAT DO WE NEED PER --
FOR COMPETITION.
MARIA: DANIEL, THANK YOU FOR
JOINING US, AS INVESTOR, WHAT DO
WE NEED TO FOCUS ON IN TERMS OF
TECHNOLOGY?
>> REGULATION, THAT CONTINUES TO
BE THIS SORT OF BIG THREAT FOR
BIG TECH, YOU KNOW I THINK RIGHT
HERE, YOU KNOW, GOOGLE HAS BEEN
THE LAST ONE TO GO IN FRONT OF
CONGRESS, REALLY IN TERMS OF HOW
THEY NAVIGATE DATA PRIVACY AND
BIG FOCUS ON CHINA BECAUSE IF
YOU LOOK AT CHINA, ESPECIALLY
WITH EVERYTHING GOING ON,
GOOGLE, HOW THEY ARE LOOKING AT
POTENTIALLY GETTING IN TO CHINA
FROM A SEARCH PERSPECTIVE, THEIR
VIEW THERE AND OVERALL PRIVACY,
FRONT AND CENTER, BIG TECH IS
WATCHING THIS, THIS CONTINUES TO
BE OVERHANG ON THE SPACE FROM A
REGULATORY PERSPECTIVE.
MARIA: SPEAKING OF CHINA, GOOGLE
DECIDE TODAY WORK WITH CHINA IN
AI AND DIDN'T WANT TO WORK WITH
PENTAGON, DIDN'T WANT TO BE
ANYWHERE NEAR THE U.S.
GOVERNMENT AND NATIONAL SCORE,
INDIVIDUAL SCORES FOR PEOPLE
WHERE THEY ARE WATCHING YOU AT
ALL TIMES AND AT THE END OF THE
YEAR YOU GET A SCORE AND THAT
MAY DICTATE IF YOU CAN GET ON A
PLANE, GET A MORTGAGE,
INCREDIBLE AND GOOGLE IS
ENABLING THAT.
>> THEY FIND THEMSELVES IN THE
CROSS HAIRS, BUT THE THING
THAT'S HAPPENING WITH BROADER
CHINA, YOU LOOK AT 5G, BATTLE
BETWEEN CHINA AND U.S. AND TECH
AND BATTLING ON CHINA AND
ESPECIALLY 5G AI.
>> REGULATION IN THE U.S. IS
DIFFERENT FROM CHINA AND FROM
EUROPE WHERE THEY PASSED DATA
PROTECTION REGULATION THIS YEAR,
HOW DO THESE COMPANIES NOVEMBER
GAIT WATERS, WHAT DOES EXPENSE
DOES THAT CAUSE AND HOW DO THEY
GET TO POINT A FROM BEING ABLE
TO DEAL WITH THAT?
>> I THINK THAT WAS BIG FEAR
GOING INTO THAT MAY, I THINK SO
FAR, YOU KNOW, THAT'S WHEN IT'S
PRETTY CONTAINED, THAT WILL
CONTINUE TO BE UNICORN IN TERMS
OF HOW MUCH REGULATION OVERSEAS,
LOOK AT INVESTOR PERSPECTIVE
GIVING WHAT WE ARE SEEING IN THE
MARKET, THE LAST THING TO COME
OUT OF LEFT FIELD TODAY AND THIS
ALSO GIVEN WHAT WE SAW YESTERDAY
WITH APPLE, QUALCOMM AND CHINA,
SO THAT'S THE BROADER BACKDROP
OF TECH WHERE SOME OF THE THINGS
NEVER FACTOR INTO VALUATIONS.
>> GREAT RUN-UP BUT RIGHT NOW
TRADING ON GEOPOLITICAL NEWS,
THE TARIFFS KICK IN COULD HURT
GLOBAL SUPPLY CHAIN
SIGNIFICANTLY, DO YOU STAY AWAY
FROM APPLE HERE OR FINDING SOME
VALUE HERE AT LOWER VALUATION.
MARIA: LET ME ANSWER THAT
CHINESE COURT IS ORDERING APPLE
TO STOP SELLING OLDER IPHONE
MODELS AFTER FOUND THAT THE
COMPANY VIOLATED TWO PATENTS OUT
OF QUALCOMM.
>> QUALCOMM-APPLE SITUATION GONE
ON FOR A LONG TIME, YOU LOOK AT
WHAT'S HAPPENING WITH CHINA,
CHINA 2025, INCREMENTAL GROWTH
FOR APPLE.
IF YOU LOOK AT TARIFFS, YOU LOOK
AT THE SITUATION, WE CONTINUE TO
BELIEVE THAT THERE'S VALUE IN
APPLE HERE WHERE IT'S TRADING
BUT NO DOUBT, IF THE 90-DAY
PERIOD COMES AND TARIFFS GET UP
TO THAT 25% AND POTENTIALLY
IPHONES, THAT COULD BE BACK
BREAKER FOR APPLE.
WE CONTINUE TO BE BUYING THE
NAME JUST ON VALUATION OF
IPHONES.
MARIA: STOCKS AT LOWEST EARNINGS
MULTIPLES IN YEARS BECAUSE
THEY'VE TAKEN SUCH A BEATING,
WHAT ARE THEY TRADING IN NOW?
>> LOOK, $15 OF EARNINGS FOR AM,
SOMETHING THAT'S NOW TRADING --
12 TO 16 TIMES, TRADING BELOW
HISTORICAL RANGE.
YOU ARE STARTING TO GET DOWN TO
LEVELS WHERE YOU ARE BAKING SOME
SIGNIFICANT BAD NEWS TO AM.
LOOK EVERY DAY THE SUN COMES UP
AND BAD NEWS IN APPLE.
IT'S BEEN MASSIVE STRING OF BAD
NEWS OVER THE LAST SIX WEEKS BUT
SELF-INFLICTED.
YOU LOOK AT COOK, ONCE THEY TOOK
IPHONE AND TRANSPARENCY
DECREASED, THAT SET OFF THE
STORM HERE AND YOU CONTINUE TO
SEE THROUGH SUPPLIERS.
>> SERVICES GOING TO 10 BILLION
TO 50 BILLION, YOU THINK IT'S A
HARDWARE COMPANY DEPENDING ON
SALE OF THE IPHONES?
>> IT'S A SERVICES-LED HARDWARE,
50 BILLION IN SERVICES IN 2020.
WE BELIEVE THAT'S WORTH
40 BILLION THE SERVICE'S
BUSINESS.
3 TO 400 BILLION, HARDWARE
IPHONE BUSINESS IN NEAR TERM,
60% THAT'S WHERE IT COMES FROM.
THAT'S GOING TO RULE THE DAY
WHICH IS RIGHT NOW DISAPPOINTING
XR THAT'S BEEN GUT PUNCH FOR
APPLE.
MARIA: YOU STILL LIKE THE
STOCKS?
>> WE ARE NOT WAVING THE WHITE
FLAG ON APPLE.
WE MUCH RATHER OWN APPLE VERSUS
OTHER NAMES, LARGE CAP, JUST
GIVEN THE VALUATION AND GIVEN WE
KNOW THAT THERE'S A CYCLE THERE
WITH REGULATORY RISKS.
MARIA: GOOGLE ON THE HILL TODAY