tv Bloomberg Technology Bloomberg June 12, 2019 5:00pm-6:00pm EDT
global lenders but in the midst of a u.s. trade war, is it a risk to investors? first, our top story. facebook shares hit earlier after the wall street journal reported mark zuckerberg knew about the social network's problematic privacy practices. facebook uncovered emails and was in the process of responding to a federal privacy investigation, raising concerns that they would be harmful to the company if they became public. the journal says that is part of the reason why the company salt a quick settlement. we are joined here in san francisco. the nuts and bolts here. what is the journal saying that facebook uncovered? >> they are referring to an email exchange. they have not seen the males and we certainly haven't. we don't know where they got them. thisently there was
exchange in 2012, around the time that the ftc was handing down this consent degree punishment about facebook and its privacy practices. at the time, there was an exchange between a couple of employees, including mark zuckerberg, about certain types of information on millions of facebook users that were available on this third-party app available to its users. the question went something along the lines of, is this possible and is there anything we should do about it? the exchange went on after that, but it raised questions about what it facebook know, what did mark zuckerberg know, when did he know it, did the company take adequate steps to deal with privacy concerns on the data that was leaving the platform? >> based on my read, there is an indication that this happened around the time of the ftc consent degree that facebook agreed to abide by and indicated by thathaps abiding
decree or following orders was not a priority. -- a spokesperson for facebook said that no point did mark or any other employee knowingly violate the company's obligations under the ftc consent order, nor do anything else exist that indicate that we did. how do we make sense of the? this is why is companies settle litigation or settle internal investigations and regulatory probes. inevitably, what happens the intosomebody goes and executives email, information comes out that may not shine well on this executives. saw last year, regulators and lawmakers released this selective disclosure of emails and internal documents from facebook's earliest days that
did not paint mark zuckerberg in a flattering light. he appeared to be a money grabbing executive who cared more about facebook's bottom line than about protecting users. before,seen this movie where emails can be released that, at least without additional context, may not look great for these companies and that is why we may see facebook settle this case as they do other similar cases. the ftc does have the option of taking facebook to court. as i understand it, that would be more risky for both sides. asideok has said they set $5 million for settlement. been waiting for news about the settlement, but it hasn't happened yet. what is the latest? billion,et aside $5 which i haste and to add is chump change for facebook.
penalty, andh for are there people in the regulatory side of the trump administration who are saying, that is not enough? >> we you have to ask the question of do we have evidence and we don't know where it came from, but do we link it to the journal or other publications that might portray zuckerberg and others in an unflattering light and raise questions about whether the $3 billion to $5 billion that they might be fined is sufficient. it should we go to the place where we ask them to change exert --ctices and extract a bigger chunk of flesh from facebook. emily: meantime, the punches keep coming. there has been another fake video posted on facebook of mark zuckerberg in the style of the nancy pelosi video. facebook has decided not to take it down.
mark zuckerberg has reportedly called anti-pelosi a couple of times, but she has not returned his calls. the plot thickens. >> it does indeed. that thegoes to show only bipartisan issue in washington right now is hating big tech companies. we have seen this from nancy pelosi, from donald trump, who has said we may need to take a look at the monopoly power of some of these big tech companies and also he said that facebook and google and other tech companies press conservative voices. it hasn't been evidence of that. left and thee right side of the political spectrum that facebook is not popular. emily: was next? see what waiting to the settlement is going to be. we're also looking at what this
division of big tech between the doj and the ftc -- what does that hold for us? it sounds a dear jay is gearing up for a probe of google. doj will have oversight on apple. ftc has got amazon and facebook. lots of potential for headline risk to these companies ahead. emily: keeping a close watch on the latest. thank you so much. when say, spacex launched the constellation carrying a new generation of satellites. the falcon nine rocket and pay line -- payload rumbled along wednesday from foggy vandenberg air force base on california's central coast. the satellites began to employ about 54 minutes after launch. to cover the rockets for a landing on a military base.
emily: the year of tech ipos continues. shares of a cybersecurity company soared in its first they are trading. stop jumping 97% at one point. inwd strike raised millions its ipo, giving it an $11.4 billion market cap. ipos,any recent tech crowd strike is unprofitable. the reported a net loss on revenue of georgia $50 million come up let's bring in the ceo
who joins us from the nasdaq in new york. congratulations. it is a volatile market, so the pop in the stock is welcome. what made you decide, given all of the issues, a lingering trade war for example, that now was the right time to go public? on going focused public when we are ready. i'm our perspective, we have always taken a long-term view and today is one day where we raised financing round and we are to focus on the future. andhould look back at today celebrate, but tomorrow, we are back at it and focusing on customer success and preventing breaches for companies around the globe. >> how much are you following what is happening globally and how much exposure do you have to china? >> we don't really sell in
china. that hasn't really affected us. perspective, we typically see a lot of activity andnd geopolitical tensions the activity tends to manifest itself in cyberattacks. with this unrest, we continue to attacks and why we started the company was to help organizations around the globe event against these determined adversaries. certainly what is happening with the u.s. china trade war impacting u.s. companies. the cybersecurity landscape continues to change. the threat landscape continues to change. how do you state competitive in an ever-changing world? >> a big part of our success has been the fact that we have built a cloud that form and insecurity, there hasn't really been a security cloud. day,u think about service and workforce, there has not
been adequately company. part of our approach has been to collect a lot of endpoint data, security threat information. that has driven a lot of intelligence algorithms we have. the more data we consume, the torter our technology tends get in identifying breaches that have never been seen before. that is a big part of the overall story, and i think what we focused on is that platform approach, as opposed to building yet another product and that has resonated with our customers. what are the biggest trends you see on the horizon, given that we are going into the heat of the u.s. election season and the last election was certainly not secure? >> whether it is elections, intellectual property theft or distraction from ransomware, these are threats that organizations have to deal with. i think it does underscore how vulnerable companies and organizations are to these sort of cyber attacks.
unfortunately, they have been burdened with legacy technology that has been incapable of identifying these breaches. again, that is what we focus on, building technology not only to stop malware, but the broader issues actually stopping breaches. what trends are you seeing and company decision-making? our companies rising to this threat, are they as protected as they should be, or are they still very vulnerable? >> broadly, they are still viable. unfortunately, there is a tapestry of security products they have been using that have not given them the visibility or the protection that they need. from an awareness perspective, the good news is, boards of directors are taking this seriously. and when risk issue you look at some of the attacks we have seen a few years back, where ransomware literally took
companies off the map for many weeks and months on end, it moved from purely being infected too, while this can be a systemic risk for a corporation and worst-case, they are spending hundreds of millions of dollars in trying to recover their company and bring it back to health. emily: meantime, we reported that cisco held talks about a possible deal. the deal didn't happen, why did you decide that the right course was staying independent? >> i can't comment on rumors, but our goal has always been to be an independent company. i think we built the company, we have operated it as if it were a public company when we are private. our growth in our financials are of the scale of what a company should be. we went public when we wanted to and we have seen a warm reception today from institutional investors.
emily: last year, the ftc chair weighed in on u.s. efforts to ban huawei by suggesting his company may prohibit companies from using huawei increment. huawei has responded, telling the fcc that banning particular vendors on grounds of national security will do little or nothing to protect the security of america's telecommunications networks. to discuss, we have todd shields who covers the ftc. how big a deal is this potential action? >> it would be a big deal in u.s. domestic terms.
this is a problem over the fcc. we can see the filings by national security expert. it is a bellwether in that sense. in terms of huawei's business, they support a few rural providers. in terms of rural providers, big deal. they use huawei equivalent and need to continue to do so. emily: does huawei have a point in that changing out the equipment could actually make u.s. networks more vulnerable rather than less? >> the point is a little obscure to me in their filing. be buying presumably somebody other than huawei. perhaps the point huawei is making is that it would undermine the performance of those networks. ruraloint to some providers saying if you make us shut down our equipment, we may lose network performance, so would be hard to some and first responders, emergency services. emily: when will the fcc make a
final decision? >> there are a lot of lingering issues around huawei. >> this is interesting. the fcc chairman was in congress today and was asked, what will you do if mr. trump decides to resolve the huawei question as part of a trade deal. he said he would still be strong on national security, didn't tell us when there might be a decision or what it might be. delaying waiting for some things that are floating around here to resolve. emily: thanks so much. for that update. i want to continue this discussion on the security of five g networks. our next guest in new york, a principal at delight, and this just named the new leader of its u.s. cyber practice. in washington, ceo of national security services. i will start with you. what is your take on the
ratcheting up of u.s. action on huawei while we are still waiting for the u.k. government to make a determination about whether to use huawei in its networks at all? the geopolitical underpinnings of 5g are pretty interesting. the reality is, the u.s. government feels that some companies in china, because of the strong leadership or ability to influence these companies potentially could create problems in some of the hardware that they provide. this is a dialogue that has been going on with huawei since 2012 in the house intel committee report. this is a natural continuation. underneath this, you have the larger issue of the dynamic between the u.s. and china and who is going to control and have the most influence on information in the future? 5g is central to that. it is the next generation of the
industrial revolution. emily: is the u.s. government making the right call on huawei, given the importance of the future of 5g? >> i think incredibly well said, that when we look at 5g, it is the combination of industry and automation and when you think of all the different ways that we could be looking at the information coming in, it is aliens and trillions amounts of information, whether that is facial recognition, artificial intelligence, just the sheer amount of data, you will have to have a harder look at the cybersecurity -- cyber activity and threats occurring. emily: let's talk about 5g in general and where, if not huawei, the market will be concentrated. what are the companies that will be running the 5g networks? whose equipment will be embedded in these networks around the world? >> that is a great question and
somewhat misunderstood. there are three and to end hardware infrastructure providers. they can do and to end. we have a bunch of device manufacturers and all sorts of other players. chips that go in our u.s. companies. if you go away from huawei as the core provider, a lot of it would be nokia or ericsson and a combination of others. what 5gimportant is brings us. this is a huge change. we will be able to enable robotics. we are taking data that have been centrally managed in the early generations of the internet and spreading it to the edge. there is going to be a lot more layers of security associate it with that and an opportunity around security. this is going to change the way we occupied -- operate. much like 10 years ago when we had the advent of 4g, we didn't
realize what smartphones would be like. we will have similar things here. pretty of -- there are plenty of providers. i think the market will stabilize itself. the u.s. does not have a major player in that core backend. we have the telecommunication companies and other players in this business. world becomes more connected, as we move toward 5g, whoever's equipment is running it, there is a huge gap -- talent gap in cybersecurity. how big is that gap and what is being done to fill it? >> the gap continues to get larger. as was mentioned, when you think about supply chain, third-party risk management. we no longer have to look at cyber inside the four walls. cyber is in everything we do. everything that we do.
when you think about the cyber workforce, the talent, and where we will have to look to solve these problems and these challenges, we have to start looking broadly in creating new ecosystems looking at how to align with universities and joint ventures and venture capitalist organizations to find and identify new and distinct ways to be disciplined in the way we look at finding these workforces. emily: what direction do you think we are going? of these to, the u.s. is cutting off huawei. that could mean china will cut off u.s. and foreign suppliers. we're seeing moves by russia to create a sovereign internet. is that the trend, isolationism? at least digital isolationism globally over the next decade. >> let's not confuse the prison of 2019 with where we may be in five years. i think that is critical to understand. ultimately, we have created a global internet and we will
always have these connect points regardless of who provides what capability. the security is really about the data. deborah talked about the types of -- it is about protecting the data. that is what we do in 4g. we are going to do -- there will ultimately be resolutions from a standpoint where we can work with the various architectures, but the security opportunity around 5g is also great. that is why you see companies like crowds strike going up so much on the first day of an ipo. there will be determined is not a business opportunity. someone estimated something along the lines of $22 trillion worth of impacts globally in the next 15 years. this is a significant move. we will figure all this out, i am confident. emily: thank you both.
emily: this is "bloomberg technology." in hong kong, chaos in the streets. thousands of protesters have in demonstrating against a proposal to allow extradition to china. and have thrown bricks other objects at police. officers responding with pepper spray and water cannons. this has led hong kong's legislative council to postpone debate on the plan. the legislation would blow up the legal wall intended to keep hong kong's justice system separate from
china. what does this mean, especially at a time when wall street is lending billions of dollars to tech unicorns? guest has been reporting on why exactly u.s. banks are interested in china technology. obviously, there has been some sort of pay off, but have you sensed any amount of cooling in willingness of investors to lend chinese companies? >> we have seen quite the opposite, in fact. startupseen technology in china are tapping the market at an unprecedented pace. lenders arel street taking their playbook into china lending billions of dollars furtherhey will get benefits. what we have seen from this
particular protest in hong kong did have some impact on the market. some of the that ipo's have paused. they have decided to wait until the environment clears up. we should monitor very closely these companies that will be looking to go public in the next three, six months, if they will change their mind or have any other sort of contingency plan. emily: these companies may have a lot of potential, but they are asset-light. ? at is the drop >> investors are looking for high growth. that is generally the same. as you said, these are asset-light companies. the dude -- they do not have a track of profit making, but it is not an unfamiliar notion. it has happened in the u.s. for a long time. i think wall street banks are looking at this as a good
opportunity to build relationships early on with these companies in the hopes that further down the road when they go public, if they become, like, a billion-dollar company, they would get the mandate. emily: give us an example of specific deals. baidan, a mentioned big and growing company, but also one that has run in the challenges. raisedral companies have bank loans in the past. k, amentioned tikto popular streaming app. financing.n auto instead of raising private equity where you would dilute
investors at a lower price, you are raising private loans instead, so you keep that valuation and still achieve the goal of raising funds for further growth. seen many u.s. tech companies wait many years to go public. is that the trend with chinese tech companies as well? >> it is increasingly going that way. has been talking about raising funds but nowhere close close to goingre public yet. these are the big leading tech companies in china. they are taking the time and that of rushing to the public market like their other peers in china. emily: thank you for your reporting.
so-called father of electric cars said hydrogen will be the next big push. spoke tose government us and talked about what the ultimate goals are for the ev market. >> the market is huge. the key is to sort out the factors that have been hindering the development of fuel cell vehicles in the most appropriate markets. should establish a hydrogen society. compared to the hydrogen society, the electric society has been established, but it would be a process for the hydrogen society to be established. the next step, we will promote the adoption of hydrogen triales in selected regions instead of all over the country. we will work on setting up the system including hydrogen production, storage, transport, and refueling as well as a car transportation network. >> based on china's energy
structure, having no oil, based on pollution in the cities being a problem, do those add together to make fuel cells the best option for china in the future? >> what i want to stress is that it is not only fuel cells. it will be electric as well. the electric and fuel cell cars are both important. they have their own focuses. in cities, people prefer to take electric cars, while intercity, people prefer fuel-cell cars. they are based on market segmentation. >> do you think it's possible that some of the achievements, ,he progress china has made that has somehow prompted the u.s. to be a little more concerned and want to do things to try to contain china's development? of all the american and
european friends i have been in touch with, there is not anyone who believes they should be concerned because of china's development. they think if china does not develop, that is a big problem. change ish climate our common responsibility. we must recognize we are one of emitters oflargest carbon dioxide. we have a responsibility to reduce in missions. a responsibility to contribute to ecological civilization, which is why we have been working hard in this area for more than life years. >> the sale of new cars in china fell for the first time in almost 30 years less year. do you think that was an important signal for development? >> actually, i think it is a natural phenomenon. problemsissue is that in the markets have not been solved. it is those problems that made
the market hesitate and all. at the same time, the sale of new energy cars has increased nearly 60%, which is very fast growth. if there was a signal, it tells us we need new energy cars. emily: bloomberg has learned google is shifting hardware production away from china to allow the company to avoid u.s. tariffs and an increasingly hostile government in beijing. google has moved much of the production of u.s.-bound motherboards for its computers to taiwan. coming up, gearing up for a public trading debut. what investors are expecting from the untraditional listing next. this is bloomberg. ♪
rival an electric scooter -- an electric scooter company is acquiring its rival to help with moving to san francisco. the companies did not disclose an acquisition price but said scoot will operate under its own brand as a bird subsidiary. slack is expected to be valued between 15 million -- $15 billion.nd $17 slack is forgoing the traditional ipo route with a direct listing, and investors will be allowed to begin selling shares immediately. joining us to discuss this, our
next guest. is this being floated by bankers, coming from the company? >> it is coming from people familiar with talks about the deal as they get ready for the direct listing next thursday. we do not specify with home, but obviously, people involved with the company -- investors, bankers, people thinking about how much the company will be worth when it lists next week. what is interesting is they are doing this math based off of the projections about company's expected revenue for next year. year'se looking at this projected revenue, the expected growth rate and forwarding to fiscal year 2021 because of the way the fiscal year calendar works, and expecting basically 20 times revenue to make the valuation. emily: this brings to mind the uberines in which over --
was targeting a $120 billion valuation, which i understand was floated by company bankers, and that had to do with demand. that is far out from the ipo. we are now one week from ipo, so this feels specific. >> this will be different because it is a direct listing rather than an ipo. my understanding is that an ipo, there's a little more control over with the bank and the company, where everyone will agree where the stock will open. they will set a price and everyone will set boundaries around that. with a direct listing, it's different. at some point, a reference price will come out either from the exchange or the back -- the bank. as we found with spotify last year, the reference range was quite large. wide, not- pretty very specific. on the morning of trading, the
exchange and direct market maker, which in this case is a citadel, will collect, buy, and and try to figure out based on those orders where to open trading and that may take several hours. emily: the skeptics say slack financials do not appear to be as positive as, let's say, dropbox or dock you sign -- docu -sign when those companies went public. >> if you look at the growth rate of its revenue, it has been declining. what is interesting is when we for theut projections company, they are based off an assumption that the revenue will they50% next year because have just seen that it is expected to grow 50% this year, but if you look at it, a group near 80% the year before and over 100% the year before that,
so it has actually been declining. it is unclear if the growth rate slack saw and some of its earlier years will continue at the same rate. emily: because they are doing the direct listing, it means investors and employees can sell their shares right away. should people be worried if employees can suddenly cash out? >> we have already seen there has been some trading happening on the private market ahead of time. it has been pretty consistent with the expected price for the valuation of this listing, somewhere around $16 billion or $17 billion, and volume has been as expected. i think people are looking at on if theyindication will sell a bunch. spotify looking at the first few days of trading, there was not a lot of volume, and in the end, people will probably have a few that slack -- have faith that held is a company to be
for the long-term. emily: spotify was very quiet on direct listing. do we expect to see slack executives in new york on the floor of the exchange celebrating? >> i'm not sure if there will be banners and all that, but they will be, i believe, doing something that morning. we been talking to experts about what they expect or what they think no be a win, i news is good news. if it is quiet, if it stays stable, if there is some trading and nothing crazy happens, it will probably be seen as a pretty big win. emily: thank you for your reporting. we will be watching for your reports over the next week. just a reminder, the capital arm of bloomberg lp is an investor in slack. coming up, we will the future of cityondon tech seen as the
emily: netflix is the latest tech giant making its way into video games. the streaming company announced it is working with top videogame developers on games based on it shows. three the game" will come out the same day the showed abuse and netflix crystal, athe dark game that will debut later this year. a food delivery service is planning a major u.k. expansion. the company secured $575 million in new funding last month in a round led by amazon, bringing
its total raised to $1.5 million. to $1.5 billion. the ceo and cofounder spoke with our caroline hyde about the plan 's sooner than you think tech conference in london. >> in terms of what we will do with the money, one is just expansion in general, right? of thewe cover about 1/3 u.k. population. by the end of the year, we want to be at 50%. that means we will go into suburbs, not just city centers. we will go to some smaller towns as well. a think that this is universal problem, getting great food delivered quickly, and we think it will resonate with .eople that is probably number one. number two, we have been building an amazing tech team in london and we want to really scale that up and hire more world-class people.
that has been really exciting for us. go to the first prong of that, the expansion into the suburbs and into the smaller towns, the regions. how do you do that when it comes to, first of all, targeting the restaurants. you want to be a partner of choice, it's clear. talk to us about relationships that start with restaurants that already exist there. >> there's always great restaurants in every community and making sure to work with all of them and making sure you work with just about every restaurant out there. started as a business in central london. i personally curated all the restaurants in the very beginning, and luckily, that resonated with our initial customers, but i've learned over time that when you become more of a mainstream business, we need to work with all different halves of restaurants and let our personalization algorithms take over and then people will discover new foods or go to the ones they really like.
number two, probably the third thing we do with capital is really pushed out our delivery kitchens concept. is -- think about it as a warehouse segmented into 10 different kitchens. we look at our data and say we set this kitchen up in a -- call it off the high street area and say of these cuisines at these price points we think will be really popular in this neighborhood, and then we invite our restaurant partners to take of occupancy. what we have done is built in physical infrastructure layer for them as well as a software where they can operate their business. it is their staff, their concept, but we are facilitating that, really allowing restaurants to expand into new areas. example -- my favorite example is actually this restaurant, one of the first restaurants i ever lexington street
in soho. it is a to maki place -- it is a place. we have helped them expand into seven different additional sites in the u.k. and now two in paris . we took them to france, and they have been really doing super well in paris. it has been awesome to work with nicholas on that. emily: caroline hyde also spoke with the u.k. digital culture secretary at the conference and asked him about the country's givenon in the race to 5g concerns about huawei. take a listen. that we doportant have good quality equipment. it is important that we are at the forefront of the 5g revolution. what is just as important if not more so is that we have a safe and secure telecom
infrastructure. are doing is not focused on huawei or even just china. i'm looking in my department for a way in which we can develop a ande telecom supply chain whoever develops our equipment requirements on safety and security. caroline: when will the council and its reviews -- >> i cannot say exactly when decisions will be made. we need to work through the conscripts before we make a decision, but we will do that as soon as we can. caroline: how difficult does that make it? >> this is a hugely interconnected world and you cannot pretend that decisions made in other parts of the world do not have a bearing. components in america go into
components supplied by huawei into the u.k. telecom system so we have to work through the implications of all these decisions, understand them, then make our own decision. accept the reality, which is that this is a hugely interconnected world. caroline: your background as a lawyer coming into play in a big way, i'm sure. talk about the growth we are still seeing in london, outside of london as well. the u.k. has been focusing on technology growth. how much of a distraction do you ? ink brexit has been >> first of all, you're right. growth is happening across the u.k., and that's very pleasing. we are seeing huge growth in places like manchester. if you look at the report they cannot today, job opportunities ,or oxford, cambridge, reading all across the country. in relation to brexit, people are concerned that when we leave the european union, if you are in the tech sector you will
still have access to the talent you want to bring in and some of that talent comes from the european union. what will happen is we will be able to design our own immigration system. a way thato that in makes sure we bring in the people we need and want. what we're saying to the tech sector is we have this thertunity to design immigration system that we want. help us design it, tell us what it is you want to see in our immigration system that will enable you to continue to access that talent. does it for this edition of "bloomberg technology." remember, we're always livestreaming on twitter. and follow our global news network at tictoc on twitter. this is bloomberg. ♪
paul: welcome to "daybreak australia." sophie: we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering in the next hour -- hong kong's chief executive calls for calm your protesters say they will be out on the streets until the extradition bill is dropped. questions are being asked