♪ emily>> this is "best of bloombg technology." bring you our top interviews from this week in tech. apple and ireland wage war on the european union. berry doubles down on software, and the move is paying off. sofi taking it

slow and pushing back plans for an ipo. e, europe isr lead challenging its $13 billion tax bill. apple,ht between ireland, and the commission has been building. the european competition commissioner explains why this fight will be a long one. >> we will continue to disagree on this decision. also because we have different legal traditions. i have learned that in the u.s. that it is the order of the day to a business negotiate tax rates with the state where it is situated, and we have had the prohibition to do that since 1958, so you have a clash of understanding. >> we discussed of the latest

developments with the david rosenblum. he spent years at the treasury department covering international tax law. david kirkpatrick, and bloomberg editor at large cory johnson. >> explained the history of this tax regime and the different pieces of apple, and which pieces should be considered irish, were considered irish, and which art. there are two ways to look at the news of the day. one is whether this backwards looking thing might bode differently for the future of apple and other countries as a relates to tax in the eu and ireland. it is a long tease, but gets to claimapple is certain parts of their business

were not and ireland even though money did pass through ireland, and that is what is at stake here. what business was irish and deserves to be taxed and ireland. >> let's go to david rosenblum. give us a sense of apple claiming they were selectively targeted by the eu here. do you think they have a case? >> yes, they have something of a case. investigations have focused to some extent on u.s. companies. on the other hand, it is probably true that u.s. companies have led the world in aggressive tax planning, so i don't find it particularly surprising. weigh inkirkpatrick, and give us a sense of your reading of the tea leaves. potential tax warfare between the u.s. and europe?

>> it is a confusing situation of where i think apple has been extremely aggressive in how they structure themselves when they faced these tax jurisdictions is an interesting question and whether it is appropriate whether they should be fine tuning their own structure when they are simply trying to do business around the world. it is legal in the united states at least. it's turning out that maybe not legal in europe. tore these companies have have a positive caring of the flag around the world, we might consider whether it is to our benefit. >> surely for many the shareholder would say it is the company's obligation to prioritize profits. >> in the context of a donald trump presidency and we might

have a big tax repatriation, you have companies like int e, apple and others who have set this up to make the best of a bad situation. you wonder whether the repatriation holiday might not be such a big deal for them because they found another way to get around these laws. >> that is a key question for the next administration. there is much under discussion from a global perspective, the to get allning up countries singing from the same hymn sheet. is that the way we can move forward, is that there is some sort of agreement? >> what is missing in the apple

debate and it is an answer to your question, the oecd necessarily reaches consensus at a high level of generality, and the issues come up at a factual these so that applying general concepts to the particular facts at hand is a real challenge. is possible tot reach international agreement on the kinds of issues we are talking about, and i might add that not withstanding the commission's decision, 130 pages , it is pretty slim on the actual facts of what happened. it has a great deal of history thet the dispute, about oecd, state aid, a lot of legalese and background that makes for tedious reading, but i was looking at it to find out what happened here, and boy, you look in vain to find out how it

was that one of these companies, apple'sk about half of profits in 2015. the commission says apple had $54 billion in profits in 2015, somewhere south of $25 billion. >> i thought it was fascinating reading for that same reason. it out chaptery and verse, but there was so much great detail and interesting to see they could sign so much profit to that particular region when obviously they have a global business and it was not all happening on ireland. >> what is the broader expectation? who wins out in this particular argument and what does it mean starbucks, ikea, other companies being analyzed

by the european commission? rational world, and unfortunately we don't live in a rational world, that in a rational world, apple wins in the dispute with the commission because the commission is advocating assigning all of this excess profit to the branches that apple had in ireland, and frankly the branches that apple had in ireland had nothing to do with most of this money, so the at theion is looking world from two very different perspectives. the commission sees these individual companies, asi booking $25 billion and we see a branch and ireland and there is no real head office here, therefore all the profits should go to ireland. the united states sees it differently. we see asi as a branch, not a separate corporation. the top-tierof

company which has branches all over the world, so from a u.s. tax analysis of this, it is a much more complicated situation than the commission sees, and that is because of profound differences in the way we look at tax laws. i think you will find similar structures of other high-tech in othercompanies countries, and the all pose similar questions. >> we will hear from the blackberry ceo as they boost forecasts with a new focus. that is next. facebook takes on fake news, but will it work? later this hour. this is bloomberg. ♪

>> a couple of headlines in the auto sector that caught our

attention highlights how this industry is seeing massive changes thanks to new technology. fiat chrysler announced the production of 100 minivans that will join the waymo vehicle fleet. reveals aa new study large amount of motorists shut down self driving technology in their car. according to hyundai, half turn off emergency brakes and lane the parts or warnings. drivers don't fully trust the technology. isertheless, blackberry opening a research center for self driving cars. speaking of blackberry, the company boosted 2017 earnings outlook and posted an adjusted profit margin of 70%, its highest ever. we caught up with john chen in

ontario and asked him whether these margins are sustainable. normal growing software company could deftly do better than 70%, yes. it will take us a while to get there, but it could do it. >> how about the software revenue growth? you said that will be 30% this year. next fiscalor year as well? >> know, something like 10% or 15% this year. it is renowned that angela merkel has used the blackberry, the belief in the security the blackberry offers. how in this time of cyber security threats and concerns -- i guess in a certain way the answer is yes. the answer has to be yes. i see a lot of discussion,

people try to get their arms around security and cyber security. mobility is one of the biggest from ability points -- biggest +++ there is a lot of conversation and we feel comfortable on where we sit with customers. >> you are announcing just yesterday in your research center, the focus on automation and driverless vehicles. this is a really crowded space. you are up against apple, not to mention the automakers. how do fight within this competitive space?

>> i don't fight with them at all. first of all, we announced a transaction or an agreement with , writingr company software to help them build the next-generation car. i will let them tell you what the next-generation car is, but we are helping them to do that. .hey are using our software this is just an example of what the autonomous driving innovation center will focus on. all the automakers will be our customers, our partners. ones like lg, panasonic, samsung, they will be our partners. we are very proud of the relationship with them. we are not setting this up to compete with the automakers, to compete with tier ones. in fact, we are embracing an open standard. we want to build the foundation so cars can be put safely on the road. thattomation is something we have been discussing, but not

long ago, we saw another announcement from blackberry, a licensing deal. you are letting the chinese partner build the hardware. how much of the relationships under threat with president-elect to donald trump? optimistic orusly concerned about the direction of u.s.-china relations? >> that is a very complex question. let's start with technology. where the majority of all the -- so there is no truth that if i build my phone in china by a chinese partner that my phone will not be more secure or less secure, whatever the right english is. our security is paramount. we control all the software and the security software associated with it. an office that

manages all of these devices in canada. we don't have any interest in outsourcing those things. the net of all that is i would not be concerned about security. what the united states government policy is and where the trade issue is going to go, nobody really knows the answer to it. i heard an earlier guest talk about putting a tariff on developing countries. i assume the guest is referring to china and the currency manipulation situation. or at least being accused of that, all that discussion going on with the president-elect. heads isthat cooler going to prevail and we won't get into a trade war. >> would you work with the

trumpet ministration like you did with bush? >> absolutely. is theerybody said, he president now, he will be. anything to help the country, we definitely will. dallas blackberry ceo john chen. coming up, facebook rolling out its third-party fact checking system to combat fake news. with the director of international fact checking. you,oming to a pub near the world's first beer brewed with the help of artificial intelligence. can machines really brew a better beer? this is bloomberg. ♪

since president-elect to donald trump that with tech leaders, we have not heard from many of the attendees, and the silent perhaps speaks bullion since trump has not had a strong relationship with silicon

valley. tim cook finally spoke out this week about the meeting. he explained why he attended the meeting saying, "we engage when we agree, and we engage when we disagree. i think it is important to do that because you don't change things just by yelling." facebook's outlook on fake news has evolved. the company turned to third-party fact checkers to flag false stories, but is it enough? we discussed facebook's new strategy. networks through its develop a code of principles for nonpartisan independent fact checkers. in orderbook decided to be a third-party fact checker on the network, as a minimum condition, you will have had to sign on to our principles.

>> facebook is the arbiter of who is a third-party fact checker? >> correct. depending on this code of principles which requires trance transparency -- >> many people signed up to the international fact checking network have been pushing for mark zuckerberg and facebook to take these steps. are the steps announced enough? days.are in the early i hope you don't think i am dodging the question, but the reality is we have will have to wait a few weeks to see how this works out. there has been a lot of pressure for facebook to do something. we need to see how this works out in practice. is ahe re-, we think it welcome choice, but it may not be effective. >> in terms of where it could

initially be tackling stories that are obviously false, but the more misleading articles come acrossthat social media and catch wildfire, do you think that will he able to be blunted to some extent? will we see those sort of misleading stories pushed down? the firstmportant in to stages, and facebook and a third-party fact checkers are aware of this, that concentration be on the 100%, totally fabricated stories. the pope and dorsey donald trump, those stories are the ones that did really well by the social network this year, and those are the start of where the fact checking can have an effect. when we start going into the grayscale and the half-truths, they are more complicated and there are other platforms to do that. i am convinced this experiment

could have a beneficial impact if it weeds out the totally fake stories. this as wertant is enter 2017, the u.s. election, germany, france, the netherlands, a wide range of political events happening next year, how is the institute preparing itself? electiond add in the this year and the brexit campaign and in italy, in in these campaigns we have seen tally fake stories do well on social media. it was not the case that the ballot box was stuffed and there , this is aound problem of international scope and it is believed that facebook is looking to roll this out internationally. checkingnational fact network has members from across

the world, and they are all eager and keen to see this rolled out cautiously and carefully, but in other markets beyond the united states. was the director of the institute fact checking network. the world's first beer root with the help of artificial intelligence is on sale in the u.k., four beers, each recipe based on customer feedback through a mobile app. we went to find out if machines can really brew a great beer. ♪ >> how you like your beer? y, bitter, dark? could it be that computers can find the perfect recipe? >> about how can you stated more constructively, and we thought

they are right in front of us. >> his epiphany led him and his friend to develop an algorithm that turns customer feedback into a better beer. on the back ofed the bottles directed drinkers to a survey that asks them questions about their taste preferences. the artificial intelligence comes next. >> that data goes into our reinforcement learning algorithm , automated brewing intelligence, then the algorithm takes all this information and then comes up with a recipe and gives the brewer a recipe. >> into the very human brewer last line of defense if the artificial intelligence goes rogue. >> most of the time it is batting on. some of it is just not possible, and that is where you still have that human aspect to it.

>> humans brew the beer and drink it too. kind of like seawater with cranberry. algorithm, when it come out tasting middle of the road? >> i like it the more i drink it. >> customer feedback, it can be fickle, but the technology points to a future of tailoring products to the people who use them. >> in the future, the same technique will be used for other products. the one i really like his perfume. the not-too-distant future, you will be able to give your feedback on just about anything, for what that is worth. uastill ahead, unicorn by should, where we keep seeing

valuation skyrocket in 2017? we will hear from one investor who is not so sure next. if you like bloomberg, check us out on the radio, the bloomberg radio app, and in the u.s. on sirius xm. this is bloomberg. ♪

to the "best of bloomberg technology". i am caroline hyde. and snap'se uber value is fair, and others warn of a bubble. take a listen. wedo believe and agree that are at the highest level of fund formation and company formation, and at the highest level of innovation and disruption, and that will continue going forward.

a lot of these companies will not be able to be funded going forward, but there will be a subsection of them that will create interesting things that change the way we work and operate. companies have delayed going public, valuations have soared, a rise in so-called unicorn's out there. how do you feel about that? there shoulde is be fewer instances of unicorns out there because the majority of the m&a happens under $1 billion and few companies are going public. there better be a high probability they can go public given the business model. moderates when growth and they are not profitable, they won't be able to go public and their valuations will get crushed. as we look at the past few years, there has been more of a focus optimizing valuation, so we hope that changes going forward. in aat said, you guys are

number of venture capital funds and they have a lot of unicorns and their vote for leo. -- their portfolio. does that concern you? >> they have had the opportunity to invest in these iconic elite companies. so for those managers and for those companies, and there is a market for those companies to go public, but for the broader venture community, we believe that m&a is the most likely outcome for those portfolio companies. >> and recent horowitz is one fund that made a big splash, some controversy about how their returns have been so far. do you have any concerns there are about the performance of andries and horowitz. >> they have delivered very good returns over the course of the

firm's life partly because they have been able to invest in some of the elite companies, so we are bullish on them. when they entered the venture capital game, they change the dynamic by offering recruiting, pr, and the sales pipeline by introducing strategics to companies. on a daily basis, they will fortune 500 companies to meet portfolio companies. that is a game changer. we hear that over and over again. and have had great returns invested in some iconic companies and are changing the way venture capitalists operate, and you're seeing other firms mimic these services. towhich then turn funds invest in and how they compare. venture capital and growth equity, particularly

technology and some health care. when we look at venture capital firms, we are modeling five x plus. a number of our managers have delivered three x net funds to us with lower risk. for venture capital, we are looking for five x plus funds due to the liquidity and an increased risk. >> wells fargo is charging into the biggest asset management battleground, exchange traded funds. it is considering launching its first etf next year, but is it too little too late as competitors already have a leg up in the $4.1 trillion etf market. >> listen, this is a struggling time for active managers. they are seeing outflows and inflows are going into passive andsting, etf's,

specifically this new greed of etf's that wells fargo is looking at that is taking off. this is the hot new product. if wells fargo once to be part of the next generation of investing, this is something they will have to be in. frankie many are surprised that this long -- frankly many are surprised that it has taken this long. the way inus about which they are trying to have a bit of -- here. >> these are quantitative-based etf's built around computer algorithms. that takesart beta the idea of etf, but does not use market cap waiting. i'm going to take the cheapest stock. from there, you go to multi factor, which takes those things and puts them together. i'm going to use a couple of these factors, so this is an

idea whose time has come and this is wells fargo -- where wells fargo is entering in. assets are growing, but not as much as smart data market as a whole. goldman sachs has the lead here, and that will be their biggest competition, but they are hoping by getting into this front they can differentiate themselves from what is already out there. david, you like the fact that etf's are catching on, right? applyt i like is that to algorithmic approaches to tools ordinary investors can get access to, because these are the techniques confined historically to the highest net worth individuals, the biggest institutions, and this is a great way for ordinary people to invest in a much more sophisticated fashion, basically allowing the software to assemble packages of stocks that would not historically be assembled because with the

software selecting from all these different variables, it can do things in real time that are much more sophisticated, so it's not just an etf of grocery store companies, but companies that have gone up and down in othern conditions and relations, and i think that is a great thing. >> i think that is compelling for these companies. some of the best investors, warren buffett, they found you could break it down using algorithms, so people who would having an dreamed of investor like warren buffett working for them, they can buy these products and essentially get the same returns. >> active and passive, the war continues. etf's --for ray into foray into etf's, -- >> they seem to have made a

bunch of mistakes in recent years in their larger business, so it is interesting that they would not have been in the advance of this kind of movement given that they are in the thick of the tech community out there. is a lot of startups that certainly are pressuring companies like wells fargo, and i am glad they are finally responding. i think we will see a ton of innovation coming from tech when it comes to investing. twitch is taking on the heavyweights of video streaming. we will catch up with the ceo next. sofi lays out the ipo timeline and what is in store for global looks ancient. this is bloomberg. ♪

ceo -- is making good on his $50 billion promise to the u.s.. invest $1 billion

and a broadband access company as part of a pledge to president-elect donald trump. it is expected to create 3000 jobs in the u.s. over the next four years. the satellite start up says it raised 1.2 billion dollars from softbank and existing investors. washer softbank investment with social finance, better known as sofi. the company is now on the hunt for additional funds and needs to raise $500 million. in 2011, the company was one of the fastest-growing online lenders. we spoke to mike cagney. take a listen. >> it was wonderful getting softbank support. essentially we are using the money for the balance sheet. one of the things we learned is the need to have a balance periodso generate from of market dislocation. >> is that why you're racing

more money? >> in part because we are looking for additional partners. one of the biggest challenges we have is the balance sheet challenge in terms of where we place production. in 2017, 16-20,000,000,000 dollars in loans, and that's a lot of paper we have to place, so having deep relationships is a catalyst for the round. >> you talk how you started off with student loans, but moved into mortgages, life insurance. what other products will you bring online? >> today we are heavy on the credit side, mortgages, student loans, refinancing. the wealthlooking at management, but in 2017, 1 of the biggest solutions will be the deposit account and the us to card, allowing deliver a full service of solutions to our member base.

interestingly, i come from europe, where i was banking, in germany, the united kingdom, plenty of other startups. is this competition? or is it coming from the banks? see more competition from the banks. we are going after a rich target that is important to the banks in terms of building goes relations. whether it is student loan financing, personal loans, mortgages, we are seeing more competition today and it's important to differentiate through our value proposition. value proposition, differentiation come you have all these products, how long until you take it to the finte ch? u.k. and path to the

broader asia, so it is important to deliver into that market. speed,elivering convenience, alignment, transparency, something that is missing and a lot of these markets. settingyou have done your self apart's help to foster the careers of some of these students, entrepreneurs meet and greet, people come to your house to be given advice, how do you scale that and how much is it hurt by when you have things like lending club not doing so well in the press? does that hurt you from an investor and consumer point of view? >> we have 200,000 members. we don't do that. we have 10% of our member base go to off-line events, career services, navigating salary negotiations, getting employed.

sell morethey can household units. it is part of our differentiation, and we are finding that the community is beginning to support itself. it's not a situation where everybody is coming to my house. back in the day. >> talk to me about the regulatory perspective. suddenly listening what is happening into p are two p are and crowdfunding, where talking about a u.k. that is a forward thinking open regulatory environment. where do you see regulation changing here? we are optimistic about the regulatory environment. from the statey regulation we have today to a unified national regulator. we hope that comes as the regulators become more familiar with the company and the people involved.

>> ipo in 2017? >> we definitely want to go public. today we have the luxury of being profitable and to determine when we do that and will do it when it makes the most sense. cofounder mike tag me there. the amazon-owned video platform is branching out its streaming offerings, taking on some heavy competition from facebook and youtube. twitches up with the ceo and asked him about his expansion beyond video gaming. bewe are always going to video game centric culture at twitch, but we are super excited to expand the platform and welcome a broader array of creators to use the technology we build to become part of our community. about 2 million per month creators.

how will this expand? you will use the creators out there and expand their knowledge base, or it is attracting new people to the platform? experimentingn with the creative category on twitch for about a year now. ofle there is a town crossover, you do see lots of gaming creators also wanted to comedy, wanting to be artistically creative. comingo see new people in who have never created before and who now feel like this is a place for me, so it is a mix of both. there are slightly more people crossing over from the existing community then coming in. i think in the long run we will see a time of new people creating, and that is our goal. we would like to get a lot of new people creating on the platform. >> is it marketing? the amazon platform? on theostly focus

product. we like to think the product should speak for itself and that we want to have a great product for creators that makes sharing the video, sharing your passions really fun, but the other thing we do is invest heavily in a team called partnerships twitch. the job is to find streamers, help them grow to the point where they can become a twitch partner, which would mean they have the opportunity to monetize their channel and get access to special events at twitch, so i think that we try to have a great product and then make sure we are in the community in evangelizing it. what is the reaction to this? >> we work closely with amazon when we can find something awesome to do with them. twitch prime is a twitch-oriented part of amazon prime, comes with all the amazon

prime benefits, but also twitch benefits. and is awesome for creators help to drive a lot of money into their pockets. for our customers because amazon prime is a great product. so far we areing in the learning phase. i am absolutely positive that we will find amazing things to do with amazon, but we are still focused on growing that nascent community. >> the community you have already that has loved you for the gaming side of things, are you worried about the expansion? wewe really did worry when started to expanding beyond gaming whether our community would in brace that or not, and the awesome thing is that they have. we recently ran a survey to ask people what you think about twitch adding non-gaming content? will it be good for the platform? 70% of our creators either

agreed or strongly agreed with the statement, twitch adding more content than gaming will be good for me and good for the whole platform. take a lookad, we at which tech and gadgets are sent to be the holiday winners this season. episodes of bloomberg technology are now live streaming on twitter. 5:00 them out weekdays p.m. in new york. this is bloomberg. ♪

as the holiday season all encompassing smartphone has become the dominant gadget for consumers, we look at the other gadgets that could be the winners and losers of the season. smartphones a one-stop shop, other tech hedges are

having a hard time gaining traction. it have cautioned investors by lowering their holiday sales forecast. in september, fit bid rolled out two new devices. soon after, the company issued week holiday sales guidance and the stock lost a third of its market value as result. about 30% of people in the u.s., u.k., and australia no longer use the device. this is followed by gopro telling investors that it expects a lousy holiday season. the ceo defended the product. >> there is a misconception that demand for gopro has been waning. i say misconception because sellthrough at retail has never been better. it and gopro our

young hardware companies that have fallen short of their promise. now virtual assistants like amazon excellent and google home are jumping in to compete against smartphone personal assistance. oppenheimer estimates 10-12,000,000 amazon echo and virtual assistants could sell during the holidays. it paints a rosy picture for the devices than what gopro or fitbit are offering. the little bit more for holiday season, with me now, first of all, which ajit should i get to solve all of my bills when i am at home? are two options, the google home, then there is the of.on echo and the array devices. it comes down to which you go system you are in. if you are on an iphone ecosystem, you can tap into both. ,f you have an android phone

you probably want to get the home device from google because that can take advantage of some of the android functionality and the google ecosystem. of a gamer orbit artist, i was at the facebook party playing away with the vr. vr is super early. the oculus rift has to be cooked up to a pc, and if you're not a big fan and just a consumer like you and i, i would not have one. over time, they will shrink and you will be able to wear them and buy them off the shelf, but being a consumer, google has their own. it is this fabric headset that is less than $100. you can connect it to the new pixel phone. that is where consumers will get -ar experience.

i think we will see more advanced equipment appear. apple is already working on their own ar, so there is a lot to come. >> apple are looking more at vr, the inside of cars, one key product you are writing about they have taken their eyes off the ball. , we have a big story today. there is a lot of detail in is taking ahe mac back seat to other products. given that it is only 10% of in this 2016 fiscal year, it makes some sense, but don't forget that mac users are a key group of people, professionals, creative's that

rebounded apple out of bankruptcy, so it is an important market and people should expect the company as rich as apple should be able to walk and chew gum at the same time. they should be able to get a new iphone every year and new macs out the door, and people are noticing. definitely not now. the macbook pros in november, but they are some newupgrades, imacs, and faster versions of the macbook pro that just came out. that does it for this edition of the "best of bloomberg technology". we will bring you the latest in tech throughout the week.

tuesday, we will weigh in on ch moving from london to germany post-brexit. all episodes are live streaming on twitter. check us out weekdays. this is bloomberg. ♪

megan: nearly a decade after the global financial crisis, jp morgan chase chairman and chief executive officer jamie dimon has emerged as one of the more sought after voices on banking and the global economy. i sat down recently with dimon in detroit, michigan to talk about the motor city's economic recovery, helped in part by j.p. morgan's $100 million investment in the city, to discuss whether strategies used here could be replicated elsewhere. jamie: without an mayor like this, i think it is a waste of time. megan: even though he will not be a member of president-elect trump's cabinet -- jamie: i don't think i am suited to be secretary of the treasury. megan: dimon gave his take on where president trump can affect real change. jamie: fixing corporate taxes, immigration, trade, all done properly, we will have faster growth in america, and we can fix those problems. megan: that it's all coming up