angie: i'm angie lau with an update of your top stories. deutsche bank has agreed to settle an investigation in the united states for $7.2 billion. that includes a $3.1 billion civil penalty from the justice department and the provision of $4.1 billion in relief to consumers. the justice department is suing barclays for allegedly deceiving investors who bought mortgage backed securities between 2005 and 2007. it alleges that bank deceived investors about the quality of more than $31 billion in loans. barclays family new york. lockheed martin fell following a

tweet from donald trump. costs andtremendous overruns of the f-35. i've asked boeing to price out a comparable super hornet. earlier, boeing said the cost of a new air force one could fall after trump criticized its price tag. dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. let's look at the markets. afternoon trading just underway in hong kong. asian stocks follow the u.s. lower. this is bloomberg.

caroline: i'm caroline hyde. this is bloomberg technology. alibaba's credibility crisis, the sequel. jamie dimon opens up. the ceo speaks exclusively to bloomberg and discusses dealing with disruption. and after another lackluster year on the tech ipo red carpet, a star-studded lineup. but first to our lead. a fair punishment or political power play? alibaba is named on a u.s. blacklist for featuring confi counterfeit goods on its site. back forassing step the company. shares slid in thursday trading, with analysts suggesting the move was politically motivated, given heavy-handed rhetoric on china from the incoming u.s. president. alibaba's ceo, daniel zhang, wrote, we will not focus on

whether it was fair. we will focus on how we improve. we also need to recognize that protectionism is ever present around the world and influences that are not free-market oriented coming to play. joining us now is our guest host andthe hour, bob o'donnell, bloomberg reporter selina wang. how embarrassing is this? in october, they took drastic steps to reduce counterfeit goods. selina: this is a big surprise. they've been off this list since 2012. they say they've done everything possible to address concerns, yet they are on the list again this year. unfair,i see this as probably politically motivated, but there have been rising complaints this year. we saw high-end brands like gucci come out with a lawsuit, saying alibaba was profiting

from goods using their ip. there were companies complaining. the ustr is not saying that alibaba hasn't tried. they're just saying it is not enough. caroline: bob, fascinating reading your bio. you've been on lists for the most influential tech analysts out there. are you thinking it could be politically motivated? bob: i think it is a little early to say that. the trump administration is not in office yet. given that, there's going to be some influence toward that. i think you have to look at the legitimate nature of the issue. in china, the idea of using other people's ip to make products is rampant and it has been. i'm not saying that alibaba is the culprit, but as the largest provider of goods through their bao store, they are participating in a climate of copyright infringement. caroline: how much do customers

care? how much will that limit growth in the united states? bob: there are people who specifically look for low-cost knockoffs of major brands. owner,i'm a major brand i want to be somewhat in control of that. the situation you have with alibaba as they continue to grow their influence and try to make a big statement in the u.s., the sense is, the big brands are saying, we have to watch this closely. if they are legitimately complaining, the trade group has to recognize that. caroline: celina, you look at how the shares have performed since 2014. it has been a roller coaster ride. how much do you think this affects investors' desire to buy the stock? selina: i think it does impact alibaba. realistically, this isn't going to hurt their business in china. this does impact their ability

to set themselves up as a big international brand. this might harm their goals of reaching half their revenue from outside their domestic country. to get all that revenue outside of china, they need to gain the trust of international brands. let's not forget that alibaba has plenty of competitors. j.d..comstors may see has a better growth value investment. caroline: bob, the winners here, jd.com, amazon, ebay? bob: amazon is a potentially interesting winner. what we're seeing is amazon trying to reach out into other places. fundamentally we will see a global battle for online e-commerce. we will see players from both sides of the ocean battling it out. i think there will be people that take positions in particular areas and can point to something being critically important. in the long run, there are

interesting opportunities for amazon if they play their cards right. mind you, it is tough to compete in china. maybe we end up with much larger regional players, and not that much global competition. caroline: as bob just mentioned earlier, donald trump is not yet in power. the political climate that potentially the executives have blamed, is it going to get worse? bobselina: it looks like the government of china is hoping that donald trump's rhetoric would change, but now it seems that will escalate. i do think it is important to recognize that what executives are saying may be a scapegoat. it is unclear what impact the political climate had. our analyst wrote an incisive column that they need to stop

blaming the political climate on their own fake issue, and they need to do better cracking down and not blame it on broader issues. caroline: in october they removed 318 million products. bloomberg technology reporter, selina wang. bob, we want to move to another key story. uber pulls its self driving cars off of the road in san francisco, backing away from a fight with california, and sending them to the friendlier streets of arizona. the right hailing giant unveiled it without seeking permission from the authorities. while the department of motor vehicles stepped in, threatening legal action. uber has rarely stepped down from a clash with regulators. i have to get your take. are they doing the right thing? should they have played their cards like alphabet, like baidu, or do you play it like tesla and

say, i don't count? bob: clearly uber seems to think they can be above the law. i think uber represents the apex of silicon valley egotism. that is not a popular thing to say. it is not a big thing to do to pay $150 and register. this is to make a statement. was it really worth it? it is fine to go to arizona. yes it is a friendlier environment. but where is the biggest market for autonomous cars going to be? no question it will be california. yes they are trying to play people off of each other. fundamentally, there has to be national standards around autonomous driving. those will eventually happen. you're not going to be able to do this in the long run. caroline: will they be able to do this if they become a publicly traded company?

bob: clearly management seems to think they can do whatever they want in a lot of places around the world. fundamentally that becomes a challenge moving toward becoming a public company. those questions will be raised. this seems shortsighted, a bit about a bullying match between two people. i don't think it serves many in the long run. caroline: state versus state. great to have your thoughts. bob o'donnell is sticking with us. we get jamie dimon's take on the future of automation. our exclusive interview with the chief and chairman of j.p. morgan chase. all episodes of bloomberg technology are live streaming on twitter. weekdays at 5:00 p.m. in new york, 2:00 p.m. in san francisco. this is bloomberg. ♪

caroline: a stock we are watching. gopro spiking on concerns of a takeover. last month the company announced it is cutting its workforce as it struggles to gain traction with its newest lineup of cameras. the company is not profitable and shares are down 15% this year. bloomberg businessweek editor megan murphy sat down with j.p. morgan chase chairman and ceo jamie dimon for an exclusive interview. that will be featured in the "good business" edition of the magazine today. murphy asked about how advances in technology and automation are changing the way we live and work. take a listen. jamie: technology is the greatest thing that happened to

mankind. until we had agriculture -- we would still be hunting buffalo and living in tents. agriculture helped specialization. knowledge built on top of each other, with institutions, we went from fire to wheels to steam engines, to these wonderful phones in our pockets. this is the reason that mankind is living today. i am not going to deny the problems we have. when my grandfather was born, there were no cars, no planes, no health care. you got sick, you died. now it is 120 years later, and it is pretty good. there is a book called "the better age of our nature," and it examines things like people that were murdered at the hands of the people. that is coming down every

century, including last century from world war i and world war ii. i believe this century so far is better than last century. in spite of what you read in the paper. i hope we don't destroy ourselves with nuclear weapons. technology drives it. yes, it is scary. we have done a bad job in being disruptive. let's not hold back technology -- let's use it to improve mankind. people were worried about autonomous driving. 40,000 people die a year in cars. my guess is that when we have autonomous driving, it will be about 5000 people. it will be a good thing. warren buffett talks about 11 million people working on farms 40 or 60 years ago. now it is one million. that is a good thing. do you want people going back to picking corn? is that going to make society better? not really.

we cut the workday to five days a week. i suspect we are already down to four. [laughter] jamie: if you and i in running the government, all of a sudden you have 10,000 jobs plus technology, you would use of it down. this is not about youth now. this is about someone loses a job.d-paying if a trucker loses a job, he does not want to go back to earning seven dollars per hour. he wants to live with dignity. there you can redevelop, retrain, and maybe ease the issue. i think it is doable. i wouldn't stop it, maybe slow it down or modify how it will function. megan: that is why i am glad you brought up trade. people have felt that global trade has hollowed out their community. it is difficult to explain to

people, yes, globalization of industry generally lifts boats higher, but not your boat. those jobs have gone to more efficient factories in mexico where labor is cheaper. that is a message that has flown back in the election cycle everywhere across the world. people are sort of saying, resisting globalization, that is a trend that if it deepens, it will be bad for business. jamie: there are issues where we did not deal with it properly. hugely beneficial to the united states. helps 98 people, maybe two people are really hurt. you are all getting cheaper sneakers, but somebody lost their job manufacturing them.

most manufacturing jobs have gone from 20 million to 11 or 12 million. 75% of the job loss was automation, not jobs going overseas. some of these were very tough jobs. mankind adjusts. caroline: that was megan murphy in an exclusive interview with jpmorgan ceo jamie dimon. you can watch the full interview tonight, 9:00 p.m. eastern, only here on bloomberg television. coming up, meet the london-based startup whose technology may be a game changer in the foreign exchange market. this is bloomberg. ♪

caroline: networks are scaling down on tv shows for the first time in years. the move signals the pressure from streaming outlets. the industry produced more original scripted series than

ever in 2015 but all the growth came from one sector, online services, where production is soaring. online outlets doubled in the past year. netflix spent a whopping $5 billion on programming this year. currency markets are no strangers to jolts, with at least three flash crashes in the last few years. when it happens, the market is so disjointed it is hard to track erroneous trades. cobalt aims to use the technology behind bitcoin to simplify this very issue. we spoke to the ceo about the issue. >> cobalt set out to focus on cost and risk reduction for the institutional fx market. there is a lot of investment in the fx market that has gone into execution, but little into post-trade. we thought post-trade deserved a look.

also the fact that banks are more focused on cost than they ever have been. was the primary agenda for the banks. we thought that a shared distributed ledger was a way of making that happen. it is the newest concept to come to the market. we believe this could have been done a long time ago. the reality is that fx is a very good use case for a shared infrastructure. caroline: does the arena become less fragmented through adopting this digital form of settling trade? it feels like there are many companies coming out with their own form of technology. does it become less fragmented as an industry? >> i think that is right. the industry gets an opportunity to create an effective utility that takes care of things where institutions like banks do not

differentiate on. they don't make money on post-trade. it is a cost they have to bear. tens of billion dollars of expense in the industry. there is an opportunity to create something more utility-like, whether by cobalt or third parties. we are very open to a flexible infrastructure. the key is to normalize transaction data across the industry so that everyone is working from the same common denominator, if you like. caroline: tens of billions can be saved in fx. what other asset classes could this be applied to? >> i think the principles are the same no matter the workflow. there are different elements to the asset classes that have to be taken care of. it is very important that i

think these concepts can translate easily to other asset classes. the main expertise is important. you have to have people that understand how the industry works. i've spent my career in the post-trade fx space. i have a clear idea of what has to happen, how transactions behave during their lifecycle. the main expertise is very important. in terms of the different asset classes, i think there will be a coming together of concepts and ideas about how to use this technology. in thee: say i'm a vc bay area looking at the united kingdom and i want to see how banks are going to adopt this. how much money will be coming to finance some of these industries? andy: there has been a lot of money going into fintech in past years.

i think that is widely accepted. i think vc's are looking for meaningful use cases. that will be a game changer in the way that markets operate. there are a lot of campaigns focused on specializations, whether it is regulatory reports or other services. this is an infrastructure play we are working on. i think it is a game changer in the way the market operates. as i said, more utility like versus what the banks are doing today, running internal copies of the same transaction. i think vc's themselves are becoming more aware that there are some real applications of this technology. it is less theoretical than it used to be. caroline: how do you prove that you have won out when it comes to market share? will it be signing certain key clients?

will it be adoption across a certain amount, say, $5 billion being traded in spot fx. how much do you need to share to show that you are the horse that needed to be backed? >> critical mass is key. investors are very important -- that is an endorsement of what we are putting together. we have other institutions joining the beta we are working on. any shared ledger, it doesn't matter what asset classes, requires critical mass to get the most out of it. that will drive cost further down and allow services to be more effective. that is the goal. without critical mass, it doesn't work. caroline: that was the cobalt dl ceo. in the tech world, there were some big ipo successes and mrs..

we will discuss going public in 2017. this is bloomberg. ♪

angie: i'm angie lau with an update on the top stories. italy is to offer more than $21 billion in state aid to the country's troubled banks. monte dei paschi has confirmed it will seek assistance after failing to secure a private bailout by selling shares. italy's banks have been struggling under the weight of loans that have gone sour. in a bond offering that imperial , it is said to fund to have been put on hold. raising questions about the project's future. we are told the company wanted to raise up to $400 million but potential investors wanted a higher yield.

challenge to the building of sydney's crown casino has been dismissed. the community groups had claimed the resort project was building on an area set aside for parkland. the court rejected the case. the company has been under pressure from china's crackdown on corruption. china has commented on relations with america less than a month from the inauguration of donald trump. the ministry of finance said two-way trade fell slightly in 2016 but remains complementry. the ministry also said that any confrontation would only damage the interest of both nations. global news 24 hour was a day powered by more than 2600 journalists and analysts in more than 120 countries. let's get a check on how the markets have been trading. here's juliette saly. juliette: a pretty quiet day as you would expect.

volumes very low as we head into this holiday break. many markets will be closed on monday and tuesday. australia closed the session earlier down 0.3%. it did hit a 2016 high during yesterday's trade. a rally coming through in new zealand. shortenedup 0.4% in a days trade. hong kong is seeing significant weakness. this is an index that has not .one well at all this quarter hong kong stocks now sinking deeper into correction territory. we're still seeing a lot of with miss in these property players. shanghai also being sold off in late trade, down by 0.8%. this was a market that it six-weak eyes in tuesday's session. japan is closed. no real action there. you are seeing most southeast

asian markets trading lower. the exception is the,. we are going to be live from london at the top of the hour. this is bloomberg. this is "bloomberg technology care, we talked about alibaba's return to the u.s. blacklist. back to more positive days for the tech giant. just a few years ago, its share sales signaled a frenzy of ipo activity. that has since slowed down. there is optimism that 2017 can be a big year for companies around the globe to go public. here is sammy miller. his firm invests in some of the hottest tech companies eyeing going public next year. then there's matthew wong.

he just published a report this week giving highlights in the ipo market. and of course bob o'donnell still with us in the studio. i'm hearing from silicon valley banks, talking of the role of ipo's may be doubling, maybe troubling, then i see blue apron stepping back. is this the right time for your companies to be going to the public market? >> i think it is a great time. we had a really weak year in 2016, which is remarkable. i've been involved in technology ipo's for over 40 years. we never saw anything like it. we had high tech prices in the stock market, a lot of great companies, investor interest, and yet only 13 u.s. venture backed tech companies. that is the core of the ipo market. only 13 in 2016. but they did well.

they are mostly niche companies. i think as we look to 2017, there's a few changes. there is a large number of companies ready to go public. in my whole time in technology, we've never had more companies of real scale, growth, excitement, that are ready to go public than we have today. out of that is because so many have delayed because of how frothy the private markets were for several years. they were able to get easier money in the private market. the public market now offers more attractive things. i think we're going to see some of the big names coming out. i think we're going to see -- i think we will see -- once again, looking at the tech u.s. venture backed companies, i would expect 30 to 50 of them this year, i'm in here, in 2017. caroline: matthew, do you agree? they were few and far between, but the likes of twilio did

pretty well. how important is it that the share prices do well? snap will beink very closely watched, not just in its initial trading, but in the next 30 or 60 days of when it eventually goes public. i think the other thing to keep in mind is, when you think about the public, the private markets, that frothy mess, when we look at the data, a lot of the traditional investors who got into the private markets have really slowed down in 2017 -- 2016. they've done fewer new deals this year than they have in the past. firms who were very active in the private markets, doing over 30 new investments in private tech companies in the u.s. in 2014, doing very few this year. you are starting to see some of that capital that a lot of companies tapped into really slow down in terms of where the

sources of capital are coming from. >> matthew, one of the big questions is the particular areas that we're going to see investments in. do you see hot areas in ipo's? matthew: when you look back at 2016, the companies that did go public, almost all of them were non-consumer companies. at 2017,hen we look there is a very strong batch of companies who are on the ipo pipeline, and they do span the gamut. expect to see do offerings. when we look at some of the companies, companies like inside across a lot of areas within enterprise who have grown and in some cases are profitable companies. caroline: i've got a great chart

for all of you. i'm a bit addicted to one of bloomberg's new functions. it is about the startup barometer. this shows the health of the startup ecosystem in the u.s. we seeing growth, about 14%. the yellow line, the vc exits, have been in negative territory. 20% indown more than terms of how much we've seen the exits slow down. how much is the lack of exits stopping feeding in the ecosystem? europe could finally start to see a little more money coming back into the ecosystem and getting more startups coming, if exits start to sustain the system. we need exits. it is remarkable that the private equity market has been as robust as it has despite the

dearth of exits. but that is not sustainable long-term. there's a large number of exits, both ipo's and m&a, because m&a, we always think it is going to be countercyclical, but it cycles exactly with the ipo market. as companies gear up, the big corporate acquirers who have massive amounts of cash, tech companies with massive cash hoards, those companies are really going to come in and take up some of these private companies once they are thinking of going public. for is always the catalyst making a final decision about moving forward. i think we're going to see exits and it is critically important to the health of the overall ecosystem. caroline: bob, give us a sense of regional differences. there's been signs that may be asia has been cooling. where do you see regional growth coming from? the regional question is

going to be political. the big question in the u.s. is, what impact does the trump administration have? we can talk all day long about the possibilities and all that could get blown out of the water. question,at is a big what kinds of political environments we will see, not only in the u.s., but there's a lot of other nationalistic movements in europe, a lot of things happening in china as well. i think the political environment may have a bigger impact than we've seen in quite some time on overall investment activity. caroline: fascinating. bob o'donnell, you're going to be sticking with me. great thanks to sandy miller and matthew wong. great to have you gentlemen on today. hackers in russia are now targeting publishers and advertisers. we dig into the new technology getting used to siphon millions in revenue. this is bloomberg. ♪

caroline: the same malicious code that breached the democratic national committee's computer networks has resurfaced. this timing ukraine. versioners say that a of the same code was designed to infiltrate an app used by ukrainian artillery forces. crowd strike first identified russia's role in the dnc hack as well. they say there is further evidence that links russian military evidence to far-reaching hack attacks. a russian ad fraud operation is siphoning up to $5 million a day away from u.s. brand advertisers and media companies according to a new report from white outs.

the technology allows the cyber criminals to steal advertising revenue. we should note that bloomberg.com was on the list of publishers affected. host with us, our guest for the day, bob o'donnell. joining from new york, michael tiffany. fascinating report. quite the list of companies affected. new york times, wall street journal, yahoo!, even facebook. it is actually fake internet users we need to be worried about now. >> this was an extraordinary cyber forgery. the criminals were counterfeiting ad inventory on all of the most popular websites on the internet. -views of thoseo ads. caroline: they are doing this in one way -- how are they doing this? you got on the call with some of these companies on tuesday. how could they defend

themselves? >> great question. there were some extraordinary elements of this attack. they were actually penetrating some of the architectural systems of the internet so that servers that were under their computersoked like spread across the entire country. so the robo-views they were generating looked like the views of real engaged consumers. real engaged consumers visiting namebrand properties across the web. the way that advertising is sold on the web is by the impression. in this case, they were serving video ads, the most expensive kinds of advertising on the internet. so many advertisers were eagerly bidding and serving ads to what looked like these engaged consumers. two follow-up questions.

page views and counting of media hits has been an issue for over a decade. how much worse is this than what we've seen in the past? >> this goes beyond a measurement problem. we're talking about a real cyber criminal. this is not just a mistake and way of counting the metrics online. systematically exploiting every measure of advertising success. the ads they were serving looked like they were going to real consumers who were interested, who were engaging in the content, who were clicking on these ads. and the ads appeared as if they were on namebrand websites, which means that this was really a counterfeiting operation. the money that was going to the for was really meant namebrand publishers.

it wasn't just the advertisers who were victims. it was actually all of these websites as well. that is clearly an issue, but it does raise the question in my mind and probably other people's minds, how do we know the accuracy of these counts in general? we've had websites talking about billions of users. numbers that are just staggeringly high. you have to wonder if there are some concerns about the viability of those kinds of numbers as well. >> i'm glad you asked that question. the industry has been struggling with those metrics issues for some time. the call that we had on tuesday action-oriented call. this news broke as part of a call to action on the part of the entire industry to expunge this group.

when we came together tuesday, it was not to commiserate. instead it was to exchange the actionable data that was necessary in order to completely cut off the operation. this operation was substantially more sophisticated than say the dns changer ad fraud ring run out of estonia, however, we just ended it far faster than any such operation before. caroline: michael tiffany, great to have you on. thank you, and bob o'donnell, sticking with me. it is becoming quite the coast. former martin shirley, pharmaceutical ceo, will be on the show. be sure to tune in for the bad boy of pharma. tech continues to be breaking ground with huge leaps in ai, autonomous driving, and drones.

but will the momentum come to a halt? we will discuss next. this is bloomberg. ♪

caroline: the tech industry is having a monumental 2016. spacex landed on an unmanned rocket and amazon is taking flight in commercial drug delivery. the industry now faces possible disruption under trump. bloomberg technology executive editor brad stone writes about silicon valley's reckoning with its own political power. brad stone joins us now. still here is bob o'donnell. brad, talk us through the high points. >> it was a time to reflect. certainly a great year for tech.

one of the interesting moments from the summer was when the five most valuable companies in the world by market cap where the five big tech companies. that lasted about seven weeks. a little window into the future where tech dominates everything. you mentioned the breakthroughs, uber driverless cars. if there was a theme, it was artificial intelligence moving into people's homes. i don't think we've yet grappled with the impact. it will be tremendously disruptive. it will amplify our lives. it could take some jobs as well. the year ends with the election of donald trump, which takes silicon valley by surprise. it was very vocally in the corner of hillary clinton. caroline: what i think is also fascinating here is, kicking off at davos, what is the

responsibility of these tech giants? >> i'm interested to hear what bob thinks. there was a philosophy in silicon valley of neutrality. we are platforms. all traffic is equal. if things are engaging, great. that doesn't fly anymore. we've seen it with facebook and fake news, with google and spam, and i write in the article, tech -- wills have to be they build a muslim registry? they are so big that they can't escape. bob: these are all great issues. you have to start thinking as well about the implications of what it is that you do. a lot of the effort, the implication has been about, how do i make money? that makes sense, but some of the implications of these larger socioeconomic type changes, because that is what many of these things are. what are the impacts of that?

implications of those? how do jobs get affected? how can technology be applied to areas perhaps that hasn't been looked at? a shared dog walking service? that is interesting for like 0.05% of the world. but things that help with agriculture and health care and other areas that haven't been looked at by a lot of the tech firms, that is going to be critically important. trying to address some of those issues is part of the problem. caroline: what will investors demand? until now, it is don't be evil, but will investors start to say, it is part of your corporate responsibility? >> that would be wonderful, but as we know, investors by and large are worried about the next quarter. there has been a reevaluation of silicon valley. how do we organize our companies for the long term benefit?

you've got amazon and these companies like google and facebook that have been able to insulate themselves from the market, but not everybody can do that. you've got efforts like the long-term stock exchange to try to create a new set of rules for companies to orient themselves toward the public good, not just what investors want in the next quarter. bob: there are funds that have been specialized in companies that do good work. those kinds of things have been in play. but they are not a huge piece of the overall puzzle. i think another big question we have to consider is going to be around the value that you can provide to areas outside of tech. there have been some principles that i think have to be questioned. crowdsourcing has been considered the ultimate way. if it is popular, then therefore

that should win. that is not always the best case. i think some of those core principles have to be reconsidered as well. caroline: fascinating place to leave it. i urge people, get into "business week." it is a wonderful way to end the year. thank you very much indeed. brilliant to have you with us for the hour. that does it for this edition of "bloomberg technology." tomorrow, we are focused on the future of the commercial space industry as president-elect trump assembles his nasa transition team. we are joined by one of the experts who helped shape president obama's agenda. and one last piece of crucial news, huge congratulations to emily chang, who welcomed a baby boy into the world last night. dylan alexander came out at six pounds 11 ounces. end thisppy way to

show, and what a wonderful festive season for emily chang. this is bloomberg. ♪

>> deutsche bank reaches a $7.2 billion agreement to settle a u.s. mortgage probe. the details come from berlin. the justicesued by department after refusing to pay what the government demands. manus: italy readies a 20 billion euro bank bailout as monte dei paschi fails to raise the funds it needs. we are live to malan. -- milan.ia saudi arabia produces a budget to prove to the world a you can balance the books. vladimir putin holds his annual news confe