11/08/2017 BBC Business Live


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11/08/2017

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This is Business Live from BBC News with Susannah Streeter

:00:00.:00:00.

Snap, crackle and pop - the bubble looks to have

:00:07.:00:15.

well and truly burst for Snapchat's parent company.

:00:16.:00:17.

Shares plunge on bigger than expected loss.

:00:18.:00:19.

Live from London, that's our top story on Friday August 11th.

:00:20.:00:36.

Snap shares plunge by close to 17% as losses mount.

:00:37.:00:41.

We'll be discussing what's gone wrong for the company that was once

:00:42.:00:44.

From one troubled tech firm to another - Uber's ousted boss

:00:45.:00:50.

Travis Kalanick has been sued for fraud by one of the company's

:00:51.:00:53.

Also the latest on the European financial markets, cannot see

:00:54.:01:05.

exactly what is happening at the moment but stocks have opened more

:01:06.:01:09.

low following losses in Asia and the US as the war of words between

:01:10.:01:13.

America and North Korea rattles investors. And we will talk about

:01:14.:01:20.

the Google diversity road, the founder of Uber being sued. And as

:01:21.:01:32.

tourists in Spain face a backlash from locals protest against tourism

:01:33.:01:37.

we want to know have you ever faced hostility on your holidays from the

:01:38.:01:39.

locals? Snapchat is the disappearing

:01:40.:01:46.

messaging service that just keeps Its parent company Snap has

:01:47.:01:53.

seen its share price sink like a stone in after-hours trading

:01:54.:01:59.

as it reported widening losses. Snapchat launched in 2012

:02:00.:02:03.

as a mobile app that allows users to send photos that

:02:04.:02:05.

vanish within seconds. It's been a big hit with millennials

:02:06.:02:09.

but has never made a profit. Perhaps the most keenly-watched

:02:10.:02:13.

number by investors is the number That rose to 173 million -

:02:14.:02:16.

up only 4% compared with the first Compare that with Instagram Stories,

:02:17.:02:23.

a service on the Instagram platform Revenues at Snap almost doubled

:02:24.:02:28.

for the quarter to $181.7 million, which seems positive but is also

:02:29.:02:39.

lower than analysts The tech firm lost close to half

:02:40.:02:41.

a billion dollars in the quarter, and investors will be very aware

:02:42.:02:48.

that that's just not sustainable. Today's results came out

:02:49.:02:54.

after the closing bell but the company has had a rough ride

:02:55.:02:57.

on the markets since it went public in March,

:02:58.:03:00.

with blockbuster valuation It's not shown on this

:03:01.:03:02.

graph but in after-hours, trading shares were down by close

:03:03.:03:08.

to 17%. Simon Collister specialises

:03:09.:03:14.

in digital communications at the marketing firm Blackbook

:03:15.:03:15.

London. Which of those numbers should we be

:03:16.:03:29.

paying attention to, the user numbers, profits, revenues? It

:03:30.:03:33.

depends who you asked, a lot of the focus has been on daily active

:03:34.:03:36.

users, the number of people interacting with the platform on a

:03:37.:03:39.

daily basis and whilst there has been growth, it's clearly not good

:03:40.:03:48.

enough. But if you asked the founder and CEO of the platform he is keen

:03:49.:03:55.

to point investors away from that, saying there is too much focus on

:03:56.:03:59.

that and we should look at the engagement rates. And what are they

:04:00.:04:04.

doing? They are looking quite impressive. What are they? How

:04:05.:04:11.

people spend on the platform on a daily basis? It is a beacon of light

:04:12.:04:16.

in terms of the results. Numbers of up to 40 minutes per day. That is

:04:17.:04:21.

important to him because the longer they spend on it the more they pay

:04:22.:04:25.

attention to advertising which means it's more attractive to advertisers.

:04:26.:04:32.

That is a key point he is making, Facebook have an average time of

:04:33.:04:36.

engagement of 20 minutes a day so this is double. And it's a much

:04:37.:04:40.

younger demographic. They have always believed they can grow

:04:41.:04:45.

revenue from the existing user base. But investors want a faster return

:04:46.:04:52.

given the huge valuation. Yeah, that's where they are going to find

:04:53.:04:57.

themselves in a difficult situation. They have been reluctant to

:04:58.:05:01.

entertain ideas of quick growth, growth hacking as it is known in

:05:02.:05:08.

marketing circles. Allowing users to add their own network, and they have

:05:09.:05:14.

been against and that as they think it would compromise integrity. One

:05:15.:05:20.

good idea seems to be fantastic then it runs out of steam and other

:05:21.:05:25.

people copy it as well, look at Instagram. Yes and that's going to

:05:26.:05:30.

be a challenge. The opening valuation was always based on the

:05:31.:05:35.

idea they could out innovate Facebook, but Facebook were very

:05:36.:05:38.

quick at copying what they had done. It's about how they can innovate

:05:39.:05:43.

which will keep them ahead. And if they do not will they get snapped

:05:44.:05:50.

up? CHUCKLES That is the big question, there were

:05:51.:05:52.

rumours Google was interest last year and it seemed like an ice pick,

:05:53.:05:57.

Google has always struggled to build its own mobile social network. Thank

:05:58.:06:04.

you so much Simon. Europe's egg safety scare has led

:06:05.:06:09.

the European Union Commissioner in charge of food safety to call

:06:10.:06:12.

an urgent meeting of ministers Vytenis Andriukaitis has also called

:06:13.:06:15.

on Belgium and the Netherlands to stop blaming each other

:06:16.:06:21.

for the problems. Millions of eggs have been pulled

:06:22.:06:23.

from European supermarket shelves over fears they contain

:06:24.:06:26.

a banned insecticide. Google's parent company Alphabet has

:06:27.:06:30.

cancelled a company-wide meeting to discuss a controversial memo

:06:31.:06:34.

on gender diversity. The firm said there were concerns

:06:35.:06:38.

some staff might be attacked Earlier this week the male software

:06:39.:06:42.

engineer who wrote the memo was sacked for arguing the lack

:06:43.:06:49.

of women in top tech jobs was due to biological differences

:06:50.:06:52.

between men and women. Australia's financial regulator says

:06:53.:06:56.

it's opened its own inquiry into accusations of money laundering

:06:57.:06:59.

against Commonwealth The regulator's chairman said

:07:00.:07:01.

the country expected better The bank has said a computer coding

:07:02.:07:06.

error was behind more than 50,000 alleged breaches which could cost it

:07:07.:07:13.

billions in fines. Let's go to China where

:07:14.:07:20.

the country's largest social media platforms -

:07:21.:07:22.

Weibo, WeChat and Baidu Tieba - are under investigation for alleged

:07:23.:07:24.

violations of cyber security laws. Our correspondent John Sudworth

:07:25.:07:27.

is in Beijing and he's been What are the accused of doing? These

:07:28.:07:46.

are amongst the most powerful social media platforms in the world, each

:07:47.:07:50.

of them used by hundreds of millions of people here in China and beyond

:07:51.:07:59.

and the cyberspace administration of China has issued this directive

:08:00.:08:03.

today saying they are now under investigation and the concern seems

:08:04.:08:06.

to be the idea that some of the content, some of the charts and

:08:07.:08:12.

messages and material being shared in danger as national security and

:08:13.:08:15.

the cyberspace Administration points to things like spreading false

:08:16.:08:23.

rumours, issues related to terrorism, concern about the content

:08:24.:08:27.

there as well as pornography and a general sense that these platforms

:08:28.:08:33.

are harmful to China's maintenance of political stability and order.

:08:34.:08:39.

They are already very, very heavily monitored and censored but I think

:08:40.:08:43.

this sends a message particularly at this moment in time just a few

:08:44.:08:48.

months away from an important Communist Party congress, we have

:08:49.:08:51.

seen a tightening of Internet controls in other areas and I think

:08:52.:08:57.

a lot of people are reading this as sending a strong message that they

:08:58.:09:01.

need to get the houses in order and get much better at policing

:09:02.:09:06.

themselves. The signal is much more censorship and control to come.

:09:07.:09:12.

Thanks very much. We'll keep an eye on that.

:09:13.:09:14.

The standoff between the US and North Korea has been

:09:15.:09:16.

Appetite for risky assets is low - instead investors are piling

:09:17.:09:22.

into perceived safe haven assets like gold - the swiss

:09:23.:09:27.

franc and the yen and that's put a bit of pressure

:09:28.:09:29.

up reasonably well - but other indices in asia also felt

:09:30.:09:33.

stocks suffered their biggest losses in nearly three months -

:09:34.:09:50.

with around $30 billion wiped off the value of US blue chip

:09:51.:09:52.

One firm that's hoping to be on wall street in the not too

:09:53.:09:57.

distant future is Ride sharing giant Uber.

:09:58.:09:58.

In June its co-founder, Travis Kalanick, was ousted as chief

:09:59.:10:01.

executive after a series of scandals hit the company.

:10:02.:10:03.

He is now being sued for fraud by one of their biggest investors.

:10:04.:10:06.

Dave Lee is in San Francisco with the details.

:10:07.:10:08.

When Travis Kalanick was forced out as Chief Executive of Uber he kept a

:10:09.:10:13.

seat on the company 's board and a 10% stake in the farm but since then

:10:14.:10:15.

it has alleged he has been concocting a plan to get his title

:10:16.:10:20.

back. He reportedly told close allies he was Steve Jobs it, a

:10:21.:10:25.

reference to the Apple founder who was forced out of the farm only to

:10:26.:10:28.

triumphantly return more than a decade later, this alleges Travis

:10:29.:10:34.

Kalanick fraudulently expanded the board to fill out with allies to

:10:35.:10:39.

make such a return possible. Benchmark capital said it would not

:10:40.:10:43.

have agreed to more board seats if it had known Travis Kalanick's

:10:44.:10:49.

plans. If successful this legal action could see Travis Kalanick

:10:50.:10:52.

kicked out of the company he helped build.

:10:53.:10:55.

Simon Derrick, Chief Markets Strategist at the Bank

:10:56.:10:57.

Have to talk about a country we do not normally talk about, North

:10:58.:11:11.

Korea. The influence the geopolitical tensions have on the

:11:12.:11:15.

markets, it's been rather slow in coming, nobody really paid attention

:11:16.:11:19.

to this until about three days ago. And that is the interesting thing,

:11:20.:11:25.

the markets not been that sensitive, I think monetary policy joined

:11:26.:11:31.

everything out but over the course of last 18 months we have had no

:11:32.:11:36.

consensus events happening, things like the election in the US, the

:11:37.:11:41.

Brexit vote here, market suddenly becoming rather more sensitive and I

:11:42.:11:44.

think this will prove to be another one of those and at the moment the

:11:45.:11:49.

market is waking up to the fact that perhaps this is a rather different

:11:50.:11:56.

kind of red like -- rhetoric. It is hard to read directorate coming from

:11:57.:12:01.

the Trump administration, the Defence Secretary saying one thing

:12:02.:12:05.

and President Trump seeing a much more hardline stance. And that is

:12:06.:12:11.

the thing, this is taking place in August which is traditionally thin,

:12:12.:12:18.

it can be more volatile, some of the larger moves taking place in August.

:12:19.:12:27.

The risk is the market, with that uncertainty starts to take an

:12:28.:12:30.

increasingly risk averse tone and I think that's going to be an issue

:12:31.:12:36.

going into next week. Briefly on one company, some results from News

:12:37.:12:42.

Corp, it showed a fall in their print advertising income. Yeah, that

:12:43.:12:49.

move away, remember of course, one of the key newspapers within UK was

:12:50.:12:53.

the content for Facebook,

:12:54.:13:02.

our Technology Correspondent Rory Cellan-Jones will chart a path

:13:03.:13:08.

through all the big tech stories You're with Business

:13:09.:13:11.

Live from BBC News. A flight delay is one

:13:12.:13:27.

of the worst possible Well, according to new BBC research,

:13:28.:13:29.

air passengers using Gatwick Airport and flying on EasyJet have suffered

:13:30.:13:33.

the longest average delays Kevin Peachey is in our

:13:34.:13:36.

business newsroom. you have been looking at these

:13:37.:13:48.

figures, what more do they tell us? You could have been unlucky and got

:13:49.:13:53.

a flight from London to New York on a particular airline with average

:13:54.:13:56.

delays of an hour and a half but overall it is Gatwick that you

:13:57.:14:01.

mentioned with the worst average delays, 27 minutes on average and

:14:02.:14:06.

for the airlines it is easyJet, 24 minutes average delay. There are

:14:07.:14:11.

others, British Airways, Thomson, they also have delays of more than

:14:12.:14:17.

15 minutes. These are figures from the last two Summers and past

:14:18.:14:20.

performance does not necessarily mean it will be the same, but if you

:14:21.:14:28.

look at the calculator on the BBC News website over past delays if it

:14:29.:14:32.

has a record it might be worth packing an extra book or downloading

:14:33.:14:37.

some cartoons for the kids. Is this way can gauge which airports and

:14:38.:14:43.

airline to use? Yes, past performance is only a guide of

:14:44.:14:46.

course but airlines and airports will say there are things beyond

:14:47.:14:51.

their control, strikes and congestion in the skies and there is

:14:52.:14:56.

a broader point over airport capacity and our demand for cheaper

:14:57.:15:00.

flights and clearly there needs to be a quick turnaround for these

:15:01.:15:04.

flights to keep the costs down and that leaves them more prone to

:15:05.:15:06.

delays. Thank you Kevin. A story from The Today Programme

:15:07.:15:21.

which interviewed the former aide to the Brexit Secretary David Davis. He

:15:22.:15:26.

said on that programme the voters had been, quote, sold a pack of

:15:27.:15:31.

lies. Mr Chapman added, my view is that the Conservative Party brand

:15:32.:15:35.

has now been damaged to such an extent that it will never again get

:15:36.:15:38.

a majority. He said the hard Brexit plan will

:15:39.:15:43.

make Black Wednesday look like a picnic. There is lots more you can

:15:44.:15:47.

read about on the BBC News website about the impact of Brexit. Or the

:15:48.:15:52.

perceived impact of Brexit. He has had lots of coverage over

:15:53.:15:56.

last couple of days, done several interviews saying the same thing.

:15:57.:16:00.

You can read that on the BBC website, as we say.

:16:01.:16:06.

You're watching Business Live - our top story:

:16:07.:16:07.

There's been another sharp fall in the value of shares in the social

:16:08.:16:11.

At one stage they slumped nearly 17 percent, after Snap reported

:16:12.:16:14.

more than $400 million in quarterly losses.

:16:15.:16:24.

The former Uber chief executive has been making headlines.

:16:25.:16:27.

Google's been embroiled in a big row about gender

:16:28.:16:29.

Meanwhile Facebook is launching a new video service and Netflix

:16:30.:16:33.

and Disney have parted company over access to videos.

:16:34.:16:35.

Lots to talk about. So much going on.

:16:36.:16:37.

Our Technology Correspondent is Rory Cellan-Jones.

:16:38.:16:41.

I would like to ask you for your take on Uber, the latest twist and

:16:42.:16:51.

turn Uber story. What an extraordinary story. I can think of

:16:52.:16:54.

a previous occasion where a venture capital backer of a major company

:16:55.:16:59.

has got into a mud fight with that company, or at least its founder,

:17:00.:17:05.

while still being a major backer. Benchmark Capital, one of the big

:17:06.:17:10.

names in Silicon Valley, basically accusing Travis Kalanick of all

:17:11.:17:15.

sorts of misdeeds, unhappy with the culture he has created at the

:17:16.:17:19.

company, unhappy with the idea that he will still have influence. What

:17:20.:17:22.

have they been doing the last few years?! Have they suddenly woken up

:17:23.:17:28.

to what is going on?! Arianna Huffington has been brought onto

:17:29.:17:34.

board. There has been a huge weight of money coming behind this company,

:17:35.:17:38.

an extraordinary amount of backing, $8 billion or so, and you would have

:17:39.:17:44.

thought that people putting that money bind the company would have

:17:45.:17:48.

asked a few questions a bit earlier. Moving onto Facebook, Disney pulling

:17:49.:17:55.

out of Netflix, starting its own streaming. Is this part of a general

:17:56.:18:01.

trend? Another fascinating week in the ongoing battle between new and

:18:02.:18:06.

old media, in a way. We know about Netflix making huge strides, we know

:18:07.:18:09.

about Amazon Prime video signing up lots of people for OnDemand video.

:18:10.:18:16.

Facebooked, there is already a lot of video out there, making a

:18:17.:18:22.

determined pitch that they will be a place for original content.

:18:23.:18:25.

Facebooked, funnily enough, the company said we are not a media

:18:26.:18:29.

company, we don't need to be regulated like a media company, now

:18:30.:18:32.

they are saying they will have original content which they will

:18:33.:18:37.

commission. Treading on Netflix's toes? Yes, taking on YouTube, they

:18:38.:18:43.

will reward people in the same way that you tubers get rewarded, they

:18:44.:18:46.

will give them a share of advertising. A big battle going on.

:18:47.:18:53.

The other development this week is Disney, you could count that as an

:18:54.:18:58.

old media company, waking up to the fact it has been giving away its

:18:59.:19:02.

contents, or at least rewarding a new platform with its content,

:19:03.:19:06.

Netflix, saying we will take that off and do it ourselves. About how

:19:07.:19:11.

will they do that? They said they would set their own platform? There

:19:12.:19:18.

are already various Disney Digital platforms which have not made a huge

:19:19.:19:25.

splash, this is the dilemma for a lot of old media companies. We are

:19:26.:19:32.

all putting our content is old media companies on Facebook, including the

:19:33.:19:37.

BBC. A great way to access new audiences. But we are watching as

:19:38.:19:42.

they take the profits under control. Is there a problem for Netflix, the

:19:43.:19:47.

fact it will not be working with Disney any more, all is Netflix too

:19:48.:19:51.

big for that? I think Netflix is already past that stage. It has been

:19:52.:19:56.

an incredibly bold company. When they first said they would spend

:19:57.:20:00.

hundreds of millions of dollars, billions of dollars, on making their

:20:01.:20:06.

own content as well as buying it in, everybody thought it was a bit

:20:07.:20:08.

bonkers, it has turned out to be a pretty wise move. Google, there was

:20:09.:20:13.

a big meeting to be held about gender diversity but it seems like

:20:14.:20:19.

it has been cancelled. What is the update? Extraordinary upheaval over

:20:20.:20:25.

this week. It is a mark of how big a crisis it has been for Google that

:20:26.:20:30.

when this memo we merged questioning their diversity policy, the chief

:20:31.:20:34.

executive broke off his holiday, came back and said we would have a

:20:35.:20:39.

big meeting on Friday, he has cancelled bats because there has

:20:40.:20:42.

been a huge backlash, which is quite scary to people inside Google, with

:20:43.:20:47.

pictures and details of people published online on Conservative

:20:48.:20:55.

websites. There is a mood of extreme disquiet within Google that they

:20:56.:20:59.

will be caught up in a sort of culture war and people are feeling

:21:00.:21:03.

pretty vulnerable. I gather he was so keen to make the point that

:21:04.:21:06.

immediately after the meeting was cancelled he went to a coding course

:21:07.:21:11.

and was talking to girls, a coding course specifically for girls and

:21:12.:21:15.

saying we need you to come into the industry. I think it is part of this

:21:16.:21:20.

attempt to undo this image that Silicon Valley has of being sexist?

:21:21.:21:26.

Talking about it Uber has had all sorts of issues with its treatment

:21:27.:21:31.

of female staff. Google has wanted to get ahead of that, knows it has

:21:32.:21:37.

an issue, has put in all these diversity programmes, that is what

:21:38.:21:41.

this engineer who was sacked was objecting to, the extent of the

:21:42.:21:44.

diversity programmes. And I think the Chief Executive was good --

:21:45.:21:49.

doubling down and saying we will carry on. While still trying to say

:21:50.:21:54.

we have free speech in the company, a tricky balance.

:21:55.:21:55.

Thank you, Rory, as usual. And you can hear more

:21:56.:21:57.

about the latest from the tech world with Rory on his Tech Tent programme

:21:58.:22:00.

on BBC World Service radio at 14:00 GMT today

:22:01.:22:03.

which is 15:00 here in the UK. And if you miss it you can download

:22:04.:22:06.

the podcast via the BBC website. In a moment we'll take a look

:22:07.:22:14.

through the Business Pages but first here's a quick reminder of how

:22:15.:22:17.

to get in touch with us. The Business Live Pages Where You

:22:18.:22:30.

Can Stay Ahead With The Breaking Business News we will have insight

:22:31.:22:34.

and analysis from the BBC editors right around the world.

:22:35.:22:38.

We want to hear from you, get involved on the BBC Businesslike web

:22:39.:22:51.

page, on Twitter or Facebook. Business Live on TV and online,

:22:52.:22:54.

whenever you need to know. What other business

:22:55.:22:55.

stories has the media been Simon Derrick, Chief Markets

:22:56.:22:57.

Strategist, Bank of New York Mellon Let's talk about holidays, it is

:22:58.:23:08.

holiday time. There is a story on want a cheap holiday, to be saying

:23:09.:23:15.

Spain is too expensive, go to Bulgaria. What is interesting is

:23:16.:23:20.

there has been a rise of protests taking place in Spain are people

:23:21.:23:24.

essentially saying tourists seem to be taking over our cities, it should

:23:25.:23:30.

be rather more balanced, not just in Spain, Venice has a very similar

:23:31.:23:34.

movement taking place. On one hand you could look at this as being

:23:35.:23:39.

simply about the sheer success of these cities as tourist

:23:40.:23:43.

destinations, there is another side, which is there has been a recovery

:23:44.:23:47.

in Europe but it is perhaps a recovery that is only benefited...

:23:48.:23:54.

Surely it is also Tui trying to expand its market to Bulgaria? It is

:23:55.:24:00.

a great marketing move, nobody would argue that. Maybe we should do more

:24:01.:24:08.

of that in the UK. But I think it is a major thing that we are getting

:24:09.:24:13.

movements like this in place. It is part driven by how we have driven

:24:14.:24:18.

the recovery in Europe. This story has been picked by Bloomberg. They

:24:19.:24:22.

have statistics showing the managers are making the most of the recovery,

:24:23.:24:28.

it seems as if the recovery is not benefiting those workers and those

:24:29.:24:32.

people trying to find houses in Barcelona and some of the big

:24:33.:24:35.

Spanish cities, they are fed up with being squeezed out and not making

:24:36.:24:41.

the money? It is really a mark of how this recovery is different to

:24:42.:24:45.

ones we have seen in previous decades. Feels as though there has

:24:46.:24:53.

been a real split between the relatively well-off who seem to have

:24:54.:24:55.

come back relatively well and relatively quickly, and those

:24:56.:25:00.

further down... Why is that? I think it is to do with what has been used

:25:01.:25:04.

to drive the recovery. A lot of that was due to the ultra-easy monetary

:25:05.:25:10.

policy, quantitative easing. That is great if you owned a house, shares,

:25:11.:25:17.

assets of any kind. Yes we have had one of the longest ones for a long

:25:18.:25:25.

time, it has been driven by easy monetary policy. If you had a

:25:26.:25:28.

pension or own day house he did very well, if you did not own those

:25:29.:25:33.

things you left stomach felt left behind. People trying to rent in big

:25:34.:25:38.

European cities in seeing tourists coming into Airbnb properties feel

:25:39.:25:42.

disgruntled? That is what you see behind these movements. In fairness,

:25:43.:25:48.

you suspect it will continue. The people who own the houses are making

:25:49.:25:54.

the money? That's it. Thank you. Thank you for joining us.

:25:55.:25:55.

There will be more business news throughout the day on the BBC Live

:25:56.:26:00.

web page and on World Business Report.

:26:01.:26:02.