tv Bloomberg Technology Bloomberg February 26, 2019 5:00pm-6:00pm EST
feature on the smart watch that could give it an edge in the sleep tracking market. first, to the top story. elon musk is at it again and the sec has noticed. a judge to asked hold musk in contempt for violating a settlement struck last year with regulators. musk is required to get approval from tesla for social media posts and other writings. the sec said he breached the agreement with a tweet about tesla production. theebruary 19, musk tweeted electric carmaker would make about 500,000 cars this year. a few hours later, he revised its tweaking meant to say annualized production rate at the end of 2019, probably around 400,000, 10,000 cars per week. deliveries are estimated about 4000 -- 400,000. around 400,000. in response to the request, the --ge
in new york is matt robinson who follows the sec in san francisco -- as you and in san francisco, we have dana hull. matt, i want to start with you. what are the most extreme potential penalties? matt: first, the sec has 2 -- the judge has to agree with the sec that he did violate the settlement from last september -october. could open that the discussions about penalties. it opens up a can of worms they had closed read easily and it has yet to be seen on how far the sec will go in terms of trying to go after musk. emily: dana, walkers who the actual numbers. transcript saygs
350,000 to 500,000 cars and does that give musk a defense? dana: his defense is that it is not new information, that it was just reiterating what he said on the call. he's not supposed to tweet without all of his tweets being vetted by this established security lawyer. emily: shares barely moved and investors don't seem concerned, are you? >> we are. it is funny. tesla shares, investors seem to be kind of immune to this soap opera, the never-ending news coming out of tesla and elon's behavior. we think the judge will require the company show that they have oversight of his social media posts, which to us, it does not seem to be there is any oversight in place at all.
judge is going to come down hard on elon. ,ost likely, additional fines perhaps social media restrictions, but the worst case scenario of elon having to step down as ceo and leave the company is probably not going to happen. emily: dana, musk supposedly has , there iscenter somebody at the company, a lawyer, who supposedly read his tweets, but tesla never disclosed the name of this person. what do they do and they read the tweets? dana: this person is an in-house lawyer whose job includes monitoring musk's tweets. from correspondence between tesla broilers best lawyers in the sec, he said this tweet on february 19 that the designated twitter center met read -- sent to read them, they draf
ted the subsequent tweet after. although, he is still treating without them. maybe he needs more training on what is material information. he tweeted again overnight that the sec didn't read the transcript and it is embarrassing. he clearly does not have respect for the agency. he's made that clear. emily: matt, what can we expect from the hearing? matt: the judge will take both sides. the sec is highlighting the fact that the tweets need to have preapproval. someone needs to look at them before it is sent out. i think that is the focus on that, and that is what they will present to the judge saying this is black-and-white and somebody needs to see this out. tesla is admitting no one did. i think that is the sec's arguments. the judge will decide if he violated the agreement. emily: the irony is that the point of the original tweet was to point out tesla produced zero
cars in 2011 and look at them now, production numbers have beat estimates over the last several quarters. theseu with all concerned side issues could be a distraction to the actual numbers and what tesla produces? no small feat what they have accomplished, going from zero cars to the rate of production that they are at today, but the real issue with the oversight, the settlement that he entered into with the sec last fall and whether they are in compliance with the settlement, that is the real issue. emily: how does this affect the previous settlement? matt: this could rip it up, potentially. i don't think -- i think part of the reason the way sec is structured is that they did keep musk running the company. they don't want to be in a position of picking executives,
but they want investors to have reliable, factual information coming from their most famous ceo. emily: let's talk about investors. you talked to a lot of tesla investors, dana. many of these investors, we should expect to but into musk as the rule breaking ceo. dana: i think musk always tangled with authority. this is a man who hung up on the chair of the ntsb over in autopilot investigation. he said the air force for the right to fight his rockets. he complained to nasa what a competitor -- when a competitor got a contract. he's always doing things his own way. -- thele ecosystem whole ecosystem of tesla -- eo h tesla- the whole ethos of is that they -- emily: how far and with the sec take this?
matt: it depends on how he reacts. the tweets overnight are saying the sec is not paying attention, doing embarrassing work. the 60 minute interview from last december where he said i don't respect the agency, they cited that in their complaint saying he is flouting the settlement. emily: we won't forget those words, what he said in the 60 minute interview. matt robinson for bloomberg news, dana hull, and gary nelson of cfra -- gareth nelson of cfra. see fra --nelson of cfra. court federal the rose ruled the justice department failed to show a lower court made a mistake. it rejected the government's antitrust argument. the governments it are decision is the t-mobile sprint deal. we will be following that.
>> huawei has a strong track record in security for three decades. 73 billion people around the world. accusation hasty no evidence, nothing. emily: to discuss, i want to bring in the executive editor for tech in bloomberg, tom giles. people to fun at the nsa. tom: it was hilarious. he was making a joke in front of the entire world. emily: and it was under the prism program the nsa head back toward into u.s. tech companies. tom: he is basically calling the u.s. a hypocrite. he is saying the u.s. is not doing any evidence of us, huawei
toiving china special access global telecommunications , atorks, which the u.s. mobile world congress and that anyone who will listen, has been saying for years now, don't use huawei. it will leave your networks vulnerable, there is this risk that they will somehow give china access to your state secrets, your ip, your intellectual property, trade secrets, your sensitive communications between governments, etc.. that would create a national security risk. this is the u.s. a statement. u.s. officials made the -- u.s.'s statement. u.s. officials made the same statement in our salina. huawei has been saying, where is the evidence? -- in barcelona. huawei has been saying, where is the evidence? emily: is. taking a risk -- is huawei taking a risk?
the u.s. right now is in the midst of a couple of different legal actions against them. one, they say they violated a trade embargo against iran, they've arrested the cfo and she is under arrest in vancouver. there is this whole extradition thing going on there. there has also -- they also accused huawei of stealing trade secrets from t-mobile. those are two cases the u.s. is prosecuting against huawei right now. it is very risky, but i think huawei recognizes that the stakes are high. out, big telecom companies around the world, not the u.s., the u.s. has said its companies arehe spending billions of dollars on the 5g buildout. what they have told us and said to u.s. officials is that we actually kind of like huawei equipment. emily: right.
, from europe, at nwc, they don't seem that upset about huawei. tom: and they say in the u.s., really? let us by what we want to buy and warehouse are you going to go? emily: president trump's -- where else are you going to go? emily: president trump is thinking about doing an executive order. tom: exactly. but, we are on the cusp of 5g. you can't afford to wait for some brand x to put together its 5g technology if you're concerned about falling behind china. emily: compare what is happened with what happened to gte, a company that the u.s. , aost destroyed and -- zte, company that the u.s. almost lifeoyed, and through this
fast. tom: it was an agreement hammered out between the u.s. and china. i can't remember exactly what his words were, but donald trump said something about he doesn't want to see all of these people lose their jobs. there was a last-minute deal put together, and we have seen from results, that zte has come back and shares are doing well. zte is finding customers out there. emily: what is next in the huawei versus u.s. saga? we know the cfo is awaiting extradition. tom: were waiting on canada's march 1 for extradition. all signals point to it will happen. we are waiting for an arraignment in the intellectual property theft case.
those two things coming to a head and they are against this backdrop against u.s.-china relations. it's all exciting, and we will bring that story to bloomberg viewers as it happens. emily: tom giles, thank you for that update. up, apple cofounder steve was the act speaks out in an exclusive interview. what he thinks about -- wozniacki speaks out in an exclusive interview. our nextthink about subject, next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪ ctoc, on twitter. this is bloomberg. ♪
zuckerberg watching him speak and answer questions and taking that were not one nickel or any of facebook's income. in the socialpany web called foursquare out of new york. at foursquare, you write different networks and companies keep a lot of data. they have been offered millions of dollars on data on users and turned it down because it was unethical. you can make a choice. you can draw the line at the good place and not a bad place. i quit my facebook account. i have never used twitter. >> is it time for the government to get more involved? there were a few legislative efforts, but clearly that needs to be taken more seriously. >> probably. regulation is a thing that says companies will not do certain
bad things. or governments will not to do bad things. we have a constitution, and the bill of rights in the constitution, the government shall not pass a law. it says you will not -- the government will not do certain bad things, and that kind of regulation, we need it when things are getting bad. we have mobile world congress on the way, 5g, many other technologies in focus. what are you most excited about? >> i used to track a lot of stuff going on in the mobile world and cell phones. every day i wanted to see what is new and cell phones-- in cell phones. i've lost that interest. i'm more interested in things like the new television sets , the 8k televisions.
i don't know if i would benefit from 5g or i really feel the need for an increase in bandwidth on cellular bandwidth right now. interested in, i'm interested in electric cars, where they are going, what the benefits are, what their problems are, and the infrastructure for them. at a low, i'm sort of point. i'm waiting for apple to come back into the game too with something. >> new and out striking is that what needs to be done from apple's side given what we have seen from the samsung? there's a sense that apple is falling behind. >> apple has been the leader in areas like facial id, touch id, and payment with a phone. everyone else had to follow, but they are not the leader in things like the folding phone and that worries me, because i want a folding phone.
it's one of those new technologies that does catch my attention. apple always has surprises. out.just got i'm looking for apple tv to come on. i prefer my roku. emily: that's the apple cofounder there speaking exclusively with bloomberg. fourth quarter shares are exceeding expectations. analysts were especially impressed that full-year guidance beat expectation. the upbeat earnings come as the company skills back on its marketing in the first quarter. coming up, a sleep tracker may be coming to the apple watch. how it works and what it could mean for wearable competition. toer in the show, we speak
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♪ is bloomberg technology global link where we joined bloomberg daybreak: australia to bring you the latest global tech news. i'm emily chang with haidi stroud-watts and shery ahn in hanoi at the sight of the summit between president trump and kim jong-un. shery, what are you following? startedet's get you with the u.s. cyber command saying it thwarted a russian attempt to interfere in the midterm elections. it disrupted internet access for russia's internet agency. it is the first of its kind and
aimed at preventing interference with u.s. elections, according to the washington post. now, arm holdings could be looking to ipo again. the ceo said he plans to hold another ipo in about five years. it first went public in 1998 before being acquired and made private by softbank in 2016. the ceo said being a private company let arm to invest much more than it could have done as a public company. jack ma is now china's richest person. billion, worth $42.5 placing him ahead of tencent ceo at $35 billion. the richest man in asia remains an indian oil magnate with $48 billion. those are the top global tech stories we are watching. haidi? haidi: well, as you well know, one of the side effects of the u.s. banning huawei's 5g
technology is driving interest towards other telecoms. that is what the nokia ceo told bloomberg tv in barcelona. take a listen. >> we are watching the situation closely. this is for government to decide. we will be there for our customers when they need us. we are getting more interest. there are concerns. there is also some uncertainty. we will just watch the situation closely. haidi: this is when huawei unveiled a brand-new, expensive nephone. let's bring in mark gurman in los angeles. huawei front and center, poking fun at u.s. intelligence. it was interesting hearing from phone executives, speaking with one voice and saying they need access and diversity when it comes to suppliers. and potentially, the huawei ban could risk the delay of a 5g rollout. mark: huawei has two main parts.
one, they provide 5g equipment for infrastructure and carriers around the world. the other thing is they make these phones. they introduced this $2600 foldable phone. huawei make some cool phones. they are well-received. their 5g technology is fairly advanced. that gives carriers a real conundrum. one, what if the consumers want to buy huawei phones that government and others are not allowing them to sell? also, 5g. what happens when customers are asking for 5g? the carriers will have a competitive advantage. it feels like in terms of both innovation and technology in the huaweiware space, really has the carriers in not so great of a position. emily: so, mark. , all of this negativity around huawei, the u.s. ban and other
countries, is that impacting business at all? mark: right now, it does not appear to be. you see verizon, at&t, t-mobile, sprint all discussing their 5g rollout plans. verizon said they would be in 30 cities by the end of 2019. t-mobile has indicated they will be in a handful of cities by 2019. you will see sprint and at&t and others really shown more progress in their 5g networking across 2020 and after that. in the u.s. at least, it does not appear huawei is having an impact on 5g networking, but that is a different story outside the u.s. where the international carriers are concerned about their 5g prospects because of the inability to carry 5g equipment from huawei. haidi: i remember the days of $1000 for a new iphone model. a $2600 vulnerable phone from
huawei. who will be paying for this? mark: since 2017 when apple announced a $1000 phone, we have seen prices skyrocket even more. samsung announced a galaxy for $2000. they would price it $20 under the $2000 threshold. $2600 for this folding phone. who is going to buy it? i don't think many people. i think that prices very much out of reach. this is what it costs to make. this is what they will have to sell it for. this is why they think it has to be so expensive because of the full optionality. i don't think you will find many people paying for it. i don't think that is some i would shell out that kind of money for. haidi: what have we learned when it comes to the big new thing for wearables at mwc this year? mark: wearable technology has been slow at mwc this year.
the bigger news we did get was from samsung a week ago. they announced their new devices. we are seeing a lot of the smart watchmakers, whether that is fitbit, garmin, reporting an uptick in their smart watch, people enjoying their smart watches and buying. apple released their latest smart watch in september. emily: you have a new story reporting that apple is testing a tracking feature for the apple watch. how will this work, what do you know about it? mark: before apple launches a new fitness feature on the apple watch or any other devices, they have put it outside, these people in labs they have outside their cupertino campus. they have these labs, one for swimming. they have special chambers that can simulate hot weather conditions.
emily: speaking at mwc in barcelona, fcc chair ajit pai says he wants to promote leadership in 5g by modernizing regulation. he said the agency is working to lower regulatory barriers in the telecom industry, but will the u.s. been able to compete in the global 5g race and continue its campaign to ban huawei equipment and other countries?
tom wheeler is the former chair of the u.s. fcc and an author of a new book. he joins us now from washington. great to have you back here on the show. tom: hello. emily: in the book, you argue the tech revolution is something we have seen before, but ar what are the risks of the tech revolution we might not be prepared for? tom: i think the lessons of the previous tech revolution is that a failure to engage is folly. and, it goes to such things as what you were just talking about insofar as regulation. there were new rules that we established at the beginning of the industrial era which made that era successful for both capitalism and for consumers and competition. we're in a similar kind of situation now where we need to be establishing new rules.
and, when you hear the chairman of the fcc, for instance, saying, no, regulation is bad. he overlooks the fact that even adam smith, the father of the invisible hand and laissez-faire, said you've got to have some basic level of rules for a free market to operate. emily: what are the risks of that if we don't have the rules that you believe we need to have in place? tom: the reality through history is that those who have taken advantage of the new technology have not only brought forward new good services, but also have made rules for the use of that technology that benefit themselves. look at the experience we are having right now with privacy. there is kind of an alchemy that goes on where your private information and my private information get captured and
third partyd by a company, whether it be a network or a platform that uses the network. what are the rules for that? how do we figure out what the basic standards are going to be, and we need to step up and do that, not just the night that there are -- deny that they are issues. emily: federal privacy regulations are apparently coming. what would you like to see be written in these roles? tom: let's hope it is coming. when i was chairman of the fcc, we passed privacy rules for the networks. they were repealed by the republicans when they got in office. i think we need to make sure that we empower consumers. i think we need to make sure we have expectations on the companies that go back to the old common law concept of a duty of care, that the job of the
companies collecting the data needs to be that they make sure that they anticipate and mitigate any potential harms, number one. and number two, that they don't newd that data to create cartels that prohibit competition in the marketplace. i think what we're seeing today is just the opposite of both of those goals. emily: do you think big tech companies need to be worried about regulation? tom: i think big tech companies ought to be welcoming regulation. like i said, even adam smith said you need to have rules. what you are seeing right now, for instance, is that the tech companies are coming to congress and saying, hey, let's pass a federal privacy law that preempts the states, because after they were successful in
the trump administration in eliminating old rules, states moved in. now, they are going, my goodness, the absence of rules at the federal level we are finding is humble for us. -- harmful for us. i think they would welcome rules and we need to make sure consumers and competition are protected in the development of those rules. emily: meantime, on the subject of 5g, you have chairman pai saying he wants the u.s. to be a leader in this. president trump talking tough on huawei, considering an executive order to enforce a u.s. ban on huawei equipment. do you think these actions towards huawei could backfire? tom: i think it is very important to worry about the type -- the cybersecurity of our networks. throughout history, again, going back to the points i make in the book, throughout history, networks have been attack vectors.
i don't care whether you are talking about rivers or roads, they have always been attack vectors. why should we be surprised when we find that the network of the 21st century, digital pathways, are the new attack vectors? we need to make sure that we are protecting those. i was disappointed that what the trump fcc did as soon as they came in was to repeal the activities that we had put in place in the previous sefcc to established cyber protections for 5g and to have an expectation the fcc would have a role in that. the new chairman came in and said no, we don't have a role in cyber and eliminated the kinds of things we had started to put in place. emily: former fcc chair tom wheeler. always good to have you with us.
emily: new reports about the working conditions of facebook's content moderators are causing the social media giant to once again defended practices. the company defended outsourcing of content moderation, hiring 15,000 workers who flag misinformation, graphic violence, terrorist propaganda, and revenge porn. want to bring in sarah frier who covers facebook. what is new here is facebook employees themselves are complaining about how facebook handles content moderation.
what are these employees saying? sarah: this is so crucial to our business and how our users feel about our product, why is it something that we outsource? the response from management is like, we really need to scale this up very quickly. we need to make sure these workforces are flexible and can move to different needs. and, of course, facebook thanks over time artificial intelligence will get good enough that it will be able to reduce the need for these contractors. emily: over time, decades? sarah: right now, hate speech is only 38% effective detection by the a.i. other categories like nudity are much better. of course, we have to look at is a flagging a naked statue or is it flagging a person? they have gotten better at those things, but still, the most crucial things that content moderators are looking at are
the gray areas. the things that really are subjective to make decisions about. facebook tries to cover it all in the internal rules, but it is really impossible to get some consistent policies to go across an entire global user base. emily: you have reported on the conditions that these workers endure. it is a tough job. you are looking at potentially very upsetting, very offensive things all day long. are the conditions for these workers getting any better? sarah: a tremendous report on monday explaining that at times, these contractors cannot take bathroom breaks. it is very difficult for them to deal with mental health issues. they see people shot to death live in have to decide what to do about that within seconds. it is hard for them to have a consistent approach towards policy and still move very quickly. this is a tough job that they are doing. they have three weeks of training, but then they are scarred for life.
some even have started believing the conspiracy theories that they sort through on facebook about 9/11 or sandy hook, or any of these things we have seen become at the core of internet discussion in the dark corners. emily: facebook has talked about the tens of thousands of employees. electric meddling, fake news -- to combat all of these things. are these third-party moderators counted? sarah: those numbers are not all full-time employees. some of them are contractors, which allows facebook to recycle very quickly. it also means they have to deal with this expanding workforce that is not going to possibly handle all of the trillions of interactions facebook users are posting every day. the amount of video that gets created, the amount of content that gets creative is just massive. and then, the contractors are relying on people reporting things. now, they have the a.i. flagging
things. it is a tremendous amount of volume and things change all the time. what is offensive in one country may not fairly mean anything in another country. they have to make sure their policies are keeping up with the changes on the internet. emily: tough job on both sides. sarah frier, thank you so much. fitness startup teleton is preparing for an idea that could value the company at $8 billion. up customaryching bikes that cost more than $2000. industry watchers say the real money is in the class subtractions that cost $40 a month. is it a fitness startup or streaming service for a fitness audience? i want to bring it olivia zaleski. which is it? olivia: i have been thinking of peloton more of a media company, not a hardware company which a lot of people here about the $2000 bike, they think that is
so expensive. but really, think the real money to be made is in its subscriptions for your classes, boot camps. they even have a class for running. those cost about $19.99 a month and apparently the company is selling a lot of them. emily: what kind of work is peloton seeking in the bikes themselves and subscriptions? olivia: we don't know what the growth looks like. they have not revealed those numbers yet. we understand from sources that the subscription for the non-hardware product, the classes is doing extremely well. investors are very interested in that. they are starting to value peloton as more of a media company. emily: $550 million in a funding round last year, following the company at $4.15 billion. the ceo was on the show at that time. what is the outlook for the ipo? olivia: incredibly, they are looking to raise -- to have
their ipo between $8 billion and $10 billion, a huge jump. clearly, they feel very confident going into this idea. they seem to think investors will jump in. we will have to see what happens. peloton's who is competition exactly? olivia: that is a very good question. i think it is really sort of like the gym, equinox. they are targeting very wealthy people who can afford the $2000 bike, but they are also now targeting people that can't afford the $2000 bike that just want to be able to go to a cycle class once in a while. maybe do it at home with a stationary bike they already own. emily: how does this fit into the tech ipo pipeline this year? we are waiting on lyft to happen very soon. olivia: that are so many ipos happening this year. this one we should expect to be happening early summer is what
it looks like. we really, again, don't know the exact timing. we are hoping lyft releases its s1 this week. there is a lot of things happening in tech ipo's. emily: we are going to be watching for direct listing as well. olivia zaleski in the newsroom, thank you so much. and, that does it for this edition of bloomberg technology. on tomorrow's show, we will talk to alibaba vice chair from the stanford business school sports summit. lots to ask him. jack ma stepping down as chair in six months. how is that transition going and what is his outlook on the u.s.-china trade war? and, bloomberg technology livestreaming. follow our global news network to cut on twitter. ictoc on twitter. this is bloomberg. ♪
shery: good morning. i'm shery ahn. haidi: i'm haidi stroud-watts in sydney where australian markets have just opened for trade. sophie: i'm sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ our top stories -- u.s. stocks turning south on the final hour as investors struggled to put a positive spin on jay powell's testimony to congress. sterling rose to a two-year high as theresa may promised to let government dec