♪ emily: i am emily chang, and this is the "best of bloomberg technology" where we bring you the best of the week's interviews in tech. after the events in -- president trump council disbanding after the departure of several ceos. the tech industry is being tested over he could and he groups online. alibaba delivers blowout numbers.

sales jumped over 50% thanks to robust system. now to our lead story. president trump said he is ending two advisory committees after they have seen significant leave from companies following his inability to reject the hate statements made in shots phil, virginia. he has decided to end both. it is a big turnaround from a tweet that trump posted on tuesday. several ceos left the council earlier this year following disagreements over the president's approach to immigration and climate change. >> i think the president is clearly struggling with lots of issues.

first of all, i think the president is sort of a sociopath. i think he is revealing under pressure more of his characteristics. at the end of the day, when he gets attacked, he gets -- he will punch back. we saw this on the debate stage, and none of his opponents were willing to punch back and put him in his place. now, this is playing out on an international stage, and it is really not helping him should -- helping him. emily: where do you draw the line on free speech? >> people do not have the right to be violent, instigate violence, and they do not have the right in the united states which offends them should -- defend them. in 1977, when i was a kid, the president of the united states denounced them, and it was a one-day story. right now, the president is not willing to take sides.

free speech does not give you the right and it does not protect you from people having an opinion on one side or the other. emily: what do you make of the calculations that these ceos are making when they say they are out of these business councils? >> over the weekend, i do not think this was a partisan issue. they were leaders from both parties very explicit in denouncing what happened in charlottesville. so this is not a partisan debate. it is president trump and a small sliver of republicans who republicansinstream

and moderates. emily: what is your take on how tech companies should handle speech like this such as racist twitter accounts or youtube shutting down he group channels? >> i think most of the content companies have to be very careful. as they start deleting certain viewpoints, they do run some liabilities. once you start taking down pieces of content, you are technically liable for the content on your site. emily: what if it's nazi content? >> there is some constraints about the content such as inciting violence, that outside of that i do not think most technology companies can censor legally. so, i do not think content should be censored. emily: what is your take on the google engineer who was fired after he sent out a memo circulated widely in the company saying that there were biological reasons why there

were not as many women in tech and leadership? >> he made several points and one of which i agree with. first of all, the point i agree with is the sort of same mindedness that is in google. google has this culture were there have been these mailing lists with off-topic subjects. emily: take a listen to what the google engineer had to say the day after he was fired. >> it's hard to regret it just because i do believe that i am trying to make google and the world in general a better place by not confining us to our

ideological echo chambers where only one side of the story can be heard. emily: so, ideological echo chambers, political views that are only one thing. what if that political view excludes half of the population? >> i think the company has the right to say that you cannot express a range of views on a variety of topics. for example, it would not be inappropriate to publish a wide christian crusade document. however, i think google is playing with fire when it comes to saying certain views are acceptable and not. it might be more acceptable in saying that religion, politics, and other views such as those are not welcome in the company. there was a discussion about abortion, it would distract people from the work, and so ceos would have the right to say that they are not going to be discussing abortion during company time. emily: should he have been fired? >> no.

if you look at google's culture, fundamentally, i believe from what i have read that those mailing lists are pretty wide-ranging. insofar as that happened at a different company that had less of that president, it would be perfectly fine to fire summary for distracting people. emily: cisco narrowly beat out estimates for earnings and revenue in its latest results. right now, the company is

touting a major victory in the network business moving from hardware to software. the quarter of the country predicted revenue in the quarter may fall as much as 3%. the bloomberg daybreak: americas team spoke with the ceo about the efforts and the current local climate. >> we said we are going to begin to shift to a more soft square -- a software subscription model. we have made unbelievable progress. just this past quarter, 31% of our revenue was from recurring which is up from last year. we have our software deferred revenue which grew 50% and eclipsed $5 billion for the first time. two quarters ago, it eclipsed $4 billion for the first time, so that is moving rapidly. of our software business, 51% of our software business now is from subscriptions.

so, we have made a great deal of progress. i am pleased with where we are, and i think our team has made great progress. >> in terms of a long-term investor in cisco, what are you telling me to look at when i am certain it is going to turn around? what is on the dashboard there to show me that it is working or maybe not working? >> first of all, we provided some new metrics that indicated that this transition is working. metrics like this recurring revenue, software business in subscriptions, and if you look at our software business and compared to other software companies, you might be surprised at how big it is. if you look at the growth of that deferred software balance and the percentage of our software company, we are providing a lot metrics being

recorded on a quarterly basis help you feel better about it, but at the same time we are executing our initial models. -- our financial models. in the midst of a transition last year, we had record earning cash flows and earnings per share, so we are executing on behalf of our shareholders as we go through this transition. >> some of the biggest ceos in this country have distanced himself from the president of the united states following comments he made after the rally over the weekend. is this an administration you can still work with? >> first of all, hello jonathan. the events of this past weekend, first and foremost, it is frankly incomprehensible that we are in 2017 and having these discussions. i think most of america and cisco absolutely abhors racism, and it does not stand for it,

neo-naziism and white supremacy at all. we have made that very clear with our cisco employees. we still have a lot to do in this country. we need to drive gdp growth. if you look at where the country is in the latest numbers, there are other portions of the world which are starting to grow faster than we are. it is great that they are growing, but we need to be growing faster in the united states. we need job creation and tax reform. regardless of what is going on, we cannot advocate the need to get those things done. finally, from a country perspective, we have to find a way to focus more on the things that actually unite this country. the things that make us great

and not focus every day on the differences of opinion and things that divide us. so, i think that is important. it is incumbent upon business leaders here to continue to work to make sure that what this country needs to be successful in the next few years, that we are still playing a role in making that happen. emily: that was cisco's ceo chuck robbins. bitcoin continues to surge. what is driving the demand. we will discuss. tech firms are stepping up the policing of hate speech online. we will talk about the review of their policies. this is bloomberg. ♪

emily: it is another successful rocket landing for spacex, the 14th to be exact. monday's rocket carried a dragging capsule loaded with over 6400 pounds of cargo destined for the international

space station. the dragon will spend the next couple of days in orbit before meeting up with the station on wednesday. bitcoin continues to show no signs of slowing down. the cryptocurrencies sword passed $4000 for the first time this week. the rally comes after a split last week which threatened to jeopardize its growing mainstream interest. caroline hyde caught up with the president of an online platform which allows you to buy and trade bitcoin by linking into your bank account. >> we are seeing the market respond to a real improvement and leap forward in the technology which stands behind bitcoin. segregated witness is essentially an improvement to the core protocol which can have bitcoin processing the same number of daily transactions that we have seen from the likes of visa and mastercard.

>> what about geopolitics? other geopolitics at stake driving the high? >> i think with other digital currencies, they are all influenced by the macroeconomic factors at work. a good example is what we saw just last week at fidelity, one of the largest brokerages here in the u.s. they are making changes so that coin holders can make a connection to their earnings and holdings. it is those types of international exchanges like what is going on with korea, japan, parts of europe. these are all factors which influence traders in the price of bitcoin. >> fidelity is one of the institutional investors which is

ahead of the game when it comes to their digital currencies. they are mining their own bitcoins and also pushing technology to help users access their account. why does there need to be more trust to be built with these accounts? >> the dream ceo of fidelity is going to be looked back on as a bit of a visionary. while others may not be moving quickly in this space, they are absolutely investigating it. i am on the front lines of speaking with these hedge funds and proprietary trading funds -- trading firms which are all asking us to help them understand what bitcoin could become. asking us to help them understand the market. the watershed moment will be when we start seeing clear and

consistent regulation which will heart -- start giving confidence to institutions to start trading. how do we become the most compliant institutional customer provider here in this space? >> are you concerned about a hack which occurred back in may? it was a small one, i understand, but there are issues about liquidity. how do you set out to believe -- set out to relieve these concerns? >> to be clear, it was not a hack. we can see movements very quickly in the marketplace when customers place large buy or sell orders which is what happened in may or june.

we are recommitting to providing stability, transparency, and the market integrity that institutional traders require. we have done that in the two fundraising rounds. we are continuing to reinvest into the team and customer support operations. >> the individual who lost some $8,000, that was not a hack? >> oh, i see. what we call that is an account take over where individuals will get targeted to have their phone ported over whether passport -- or their password taken. we have a prevention team were we notified customers when we notice things happening, and we have some steps we do internally where we have anything suspicious we take the tatts to lock down -- we take the steps to lock down their account and

warned the customer as well. >> you have plenty of priorities, but what about the expansion of the crypto currency base that you currently accept? you are looking into bitcoin cash. are there any more? >> we want to be thoughtful and provide a variety of digital assets which can be traded. before we add any more digital assets, we want to get our current product to a place where customers are getting the experience they expect and we have a stable performance exchange. once we accomplish that, we will start adding more digital assets. emily: that was adam white speaking with caroline hyde in london. coming up, steph curry of the

golden state warriors has been busy investing in tech companies. where is he putting his money? we will hear from him next. plus, alibaba's earnings continue to dominate. can they go toe to toe with amazon? this is bloomberg. ♪

emily: pandora media will have a new ceo. the company has announced they have hired robert lynch. he is the fourth leader in less than two years charged with reviving the struggling music company. the appointment is effective september 18. two of the top players in the nba helped kick off the inaugural player technology summit in san francisco.

the summit brings together top leaders in tech, venture capital, and sports to exchange ideas and expertise. we caught up with steph curry of the golden state warriors who cohosted the event. we started asking about steph curry's investment in pinterest. >> it is something i like to use. for me, there is an opportunity there. a couple years back, i was waiting to get some skin in the game. just to see the growth of the company and to have that feedback of seeing how the company is doing and keeping track on that. so, that was the company i started looking at with my investment partner -- business partner. it has been fun learning from

that, and hopefully i can continue to grow my expertise in the investment game should >> you are all -- in the investment game. >> you are all over the place with investment companies. you have shaving and grooming product companies. and you also have some bond trading companies? >> yes, it is a bond trading platform mobiley, over your phone. bond trading has not really changed since the beginning of time. so, that was something posed to me as disrupting the market. so, i have had really good conversations with him about it. this whole thing started for me with an e*trade account. i started looking at a bunch of tech companies and things like that.

>> when you think of the history of athletes and investing, the bad stories are the ones that make the news, but there are some bad stories. your father was in the nba -- many athletes have had fathers who were great athletes themselves. your father was a fantastic basketball player, but they also raised their kids probably with lessons where we have come a large way from trolls oakley and his car wash investment.

now, it seems a lot more sophisticated. >> i think so. with the responsibility of what you do with your money, you want to start growing it in a responsible way. the tech industry is booming. if you can find open doors to that industry, it is huge. you can find buyers and posters you trust that can give you that information that you need. you want to invest in tech industries because it has that prestige. emily: coming up, tech firms are taking a closer look at the policies regarding hate speech. we will hear from the ceo of cloudflare about the bigger implications. remember that all episodes of bloomberg technology are streaming online.

this is bloomberg. ♪ ♪

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emily: welcome back to the best of bloomberg technology. tech companies from airbnb to facebook are going on the offensive against white supremacists and not seize in the wake of the violent rally in charlottesville, virginia that left a woman dead. the web security company decided to end its business with the daily stormer, a known neo-nazi website. clout flare was criticized for providing service to alleged terror groups in 2013. the ceo joined us to discuss. >> the daily storm or was a unique incident and it was the exception that we needed to rethink the rules.

not just with clout flare but with the tech industry in general. this came on our watch list. a few months ago, we started to get reports that they were harassing people that were submitting abuse reports throughout platform. earlier this week they were bragging on their bulletin boards that the people of clouflare were supporters of theirs. we think the content on the site was important -- of torrent --abhorrent. who can regulate what content is online?

i sit in a privileged position, i can make a decision that they shouldn't be online anymore. i'm not sure that i am the right person to make that decision. emily: we should take a moment to talk about what cloudflare does. >> we make sites faster, we help them stay online, we stop big cyberattacks launched on them and we see a huge portion of the internet. most of our big customers are fortune 500 companies. we have small customers like the daily stormer that get attacked all the time, the reality of the internet today is that it has become a dangerous place. if you don't have a major network sitting in front of your infrastructure and you do anything which is controversial online, hackers will be able to knock you off. emily: the reality of the internet is the daily stormer's online, a not see hate group online, there are others online -- are there others that are up and running thanks to cloudflare.

>> we still think this is a right policy -- emily: this was a one-time thing. >> this is a way for us to say, let's stop and think about, what is the right place for internet content to be regulated. google terminated the daily storm or from using their registrar service but they did not kick them off their ip. it tells me that not that google made a mistake but where in the internet back, something is being restricted or controls, matters. the rules for facebook or twitter or youtube are inherently going to be different from a company that runs a network like cloudflare level three. we need to have that conversation, where's the right place for content to be regulated and how will they make

those decisions? emily: this company has been called terrorists' little helper. a company that helps serve up hate on the internet. how do you respond to those accusations? >> the nature of being neutral is that there will be someone who you upset all the time. we have a project called project galileo. emily: terrorism is different than upsetting someone else. >> when we hear that there is analogous in, something that is terrorist, or illegal, we turn to the experts, law enforcement, regulators, -- what would you like us to do? that feels like the principle of due process. they are politically enshrined organizations that can make his decisions. as opposed to these decisions being made based on the

political whims of me or mark zuckerberg or jeff bezos are. emily: you think they need to be regulated? >> we need to have a conversation between different stakeholders. technology companies, content creators, consumers, regulators, civil society organizations. at this point it is the wild west. people are making decisions and they are not transparent. this has been framed as a freedom of speech issue. i'm a son of a journalist. i think free speech is critical. the uniquely american concept and idea -- on the other hand due process is something that spans the globe and something people believe in. that requires transparency and accountability and you can understand what is going on. i don't think that is necessarily what is going on with technology companies right now. emily: you warn that this is

dangerous territory -- what is the worst-case scenario? >> that you have a cabal of five to 10 tech executives who are choosing what content can and cannot be on the internet based on their own political and personal agendas. or what their economic incentives are. that again is something that, even as someone who sits in that privileged position, i am worried about as an internet consumer. it is important that there is accountability when technology companies make these decisions. emily: these people -- not seize -- nazis would find each other at the internet did not exist. people argue that this resource of the internet allows them to grow and to breathe more. do you think that by taking a moral stand, even if it is a stand that these companies have not taken before, they can actually make a dent in the fight on terror?

can tech companies make a difference with their policies and if so, does it make that moral choice worth it? >> i am that censoring content -- i am skeptical that censoring content makes it go away. on the other hand, i do think that taking content and saying, this is something we support them believe in and we will help promote that is important. emily: isn't that the opposite? a double-edged sword? promoting things you like verses condemning things you hate? >> people learn to hate. if we can teach them how that is not a productive and part of a modern civil society than that make sense. what we do at cloudflare, we work with over 100 civil society organizations that might be under attack. it might not be from hackers or might be from governments, lgbt groups in the middle east or human rights workers in china -- where they might be trying to be silenced, trying to make sure

they stay online. that is the role technology companies can play in saying, here is a way, an alternative way of looking at the world which is more progressive and aligns with the moral values. emily: are you still uncomfortable with the decision you made about the daily stormer? >> absolutely. again, i woke up one morning and got sick of these jerks using our platform. i flipped a switch and they were no longer on the internet. i'm not sure that is the power any individual, especially not an individual who has political legitimacy to them, and should be making. emily: that was cloudflare ceo, matthew prince. janus partners has a 2% stake in blue apron. shares are down since the ipo in june.

it owns nearly 600,000 shares in farmers market. -- sprouts farmers market. a $300 million windfall after selling a stake in whole foods in july. china's largest online marketplace boosted its dominance in e-commerce. we will break down alibaba's results next. apple is making an original push -- a push into original program in order to compete with netflix and amazon. this is bloomberg. ♪

emily: alibaba delivered blowout earnings last quarter with sales jumping more than 50%. jenna's online marketplace is setting its sights on new goals, stepping up -- alibaba -- stepping up. talking about the results and alibaba's future.

>> anyone who grows this size but at the same time we feel vindicated because for the last two years we have been saying it it was great and a lot of people had skepticism given the stock market crash of two summers ago. it has grown and grown. emily: i want to take a look at how revenue growth has progressed. take a look at your bloomberg -- showing revenue growing over the last several quarters. the company executives spent a lot of time on the call talking about a new retail strategy. another area they are expecting significant growth. what is that mean? >> alibaba like amazon and other e-commerce giants have been

talking about the future of commerce is when you combine off-line shopping with online shopping. alibaba wants to leverage consumers as well as data to deliver a mobile app that offers a seamless experience when you are in a brick-and-mortar store. a lot of alibaba's acquisitions have been billions of dollars poured into this off-line commerce. we talked about this new concept, incubating for the past two years, rolling out more than 10 stores around china. you take the app, walking to the store, scan the goods, check out with alipay, have your own food delivered to your home in 30 minutes. they are betting on this type of strategy to drive growth in the future. emily: how do you compare what alibaba is doing with the supermarket stores which double as warehouses? with amazon? >> in china, e-commerce, retail

-- the penetration rate is -- at over 3% a year, you need to figure out a way to tap the other 85% in the off-line business. they are doing this through the app. look at what is happening in japan over the past 20 years. most westerners have not been to tokyo. see the subway stations. you see tons of stores inside. in tokyo you can check in your luggage at the airport and get it sent to your hotel. china has learned from that and applied it to e-commerce. emily: i feel like alibaba is taking on grocery at the same time that amazon is.

how do the efforts compare? >> if you look at the market in china, in 2016, it is billions of dollars. the chinese consumers are very used to paying with their smartphone. making payments wherever they go. they go to the store and see something they like, they can make a purchase. the warehouse can send it to their home in the next 30 minutes. that kind of delivery and service level is something we don't see in the u.s. and more and more in china. emily: cloud revenue and other growing parts of alibaba's business, they are losing money there. talk to us about cloud computing? >> they reached a milestone. more than one million paying customers but growth slowed. digital media entertainment --

we also saw triple digit to just 30% which is still good but in comparison to previous quarters it is considerably less. a lot of the reason for the growing costs is with the cloud area, they need to spend on data centers and with the entertainment division they are spending very heavily on content. there is a big war being waged. they are all getting higher and higher prices for content. it is likely those losses will continue to widen before they get better. emily: is it warranted or will it continue? >> there is a chance that e-commerce will move from 15% to 30% over the next 20 years. as such, that will be a good foundation for growth for alibaba. emily: airbnb says asia represents the biggest opportunity on the planet.

we caught up with the company's cofounder and chief strategy officer in singapore. >> asia travel is a big deal. we have been promoting airbnb in a number of countries. singapore and australia were very ubiquitous. we are well known there. given investing in china. chinese travelers are going all around the world. the fastest-growing segment. the number one spenders on international travel. we are running a big campaign are now. growth in singapore and elsewhere is happening as a result of chinese travelers using airbnb to tour the world. >> you have airbnb wannabes, tied up with expedia -- today it has 450,000 listings and growing. you have become competing -- you have started competing. >> they have started focusing on

domestic travel. our strength is international travel. we have been marketing airbnb for a way to chinese people to explore the world. none of the local competitors in china have that. we make sure we play to our strength and not engage in direct competition. >> are you adopting a different strategy compared to in asia compared to the u.s. and europe? it seems like airbnb is low-key on the side of the world. you are aggressive in your marketing strategy elsewhere. >> in every part of the world we are trying to partner with governments. that is the new model. new policies have to be passed to realize the full potential of home sharing. we do that government by government. we have seen big success in japan recently. they have passed a new national

law basically saying home sharing up to 180 days is now legal. japan has been our number one destination in asia for a number of years. >> but even for japan and is a matter of implementation and that is a work in process -- progress. singapore basically passed a law saying it was illegal to rent a place for less than six months. what is your take on regulations across the board in all of asia? a more competitive marketplace? >> it is not a simple topic. this will play out over time. we try to be as proactive and a partner to governments as much as possible. figuring out exactly the right model and all the implementation details will take time. it is not a one and done type of situation. things will continue to evolve, even here in singapore. >> give us a sense of how important the asian market will be in the future? how do you see asia contributing to your profitability going forward? >> huge. the fastest-growing region.

from a low base, quickly catching up. this is not been the story for three years. our top growing origin region. if you look at the industry numbers it. is the biggest opportunity on the planet china specifically but if you look at southeast asia in general all the numbers are promising. emily: that was the cofounder and chief strategy officer at airbnb. apple is said to be throwing down the got let with a big-time investment in original programming. with other giants in the space will it be too little too late? you can listen on the bloomberg radio app, this is bloomberg. ♪

emily: amazon is selling bonds to finance the acquisition of whole foods. the online giant sold $16 billion of unsecured bonds in as many as seven parts. it is the fourth largest jumbo deal to date. apple is out to make a splash in hollywood. the tech giant plans to spend a billion dollars on original programming in the next. here that is according to people familiar with the matter. the company is creating a new l.a. based team. the news comes amid apple's intensifying efforts to compete with amazon and netflix with both already having solid footing in the space. we spoke with -- >> building a team in los angeles, they have an office there.

they now have apple music there. from apple music they have been doing small things in television programming. couple karaoke. they have carved it aside. they have a big wedge of cash amount to spend on original content. >> ahead of the earnings call a couple weeks ago, we have just learned they are getting started. subscriptions continue to move along and video will be a contributor overtime. how big a contributor? >> replacing revenue which is basically being lost from itunes. when was the last time you bought a film on itunes? >> i do all i can do not buy them. >> amazon and netflix are lugging that gap. it serves to glue people to

their products, iphones, ipads. you will be able to watch these films on pcs, you will probably not be able to watch them on an android phone or roku. >> house of cards, game of thrones arena? >> we weren't quite sure a few months ago what the ambitions were. this shows the extent of those ambitions. they said we will see what happens with the early shows and then take steps to see what is possible. they hired two prominent executives from sony who were behind it breaking bad. that gives a scale of what they are going for. >> what do we know about them? >> they are prominent guys. i can't name everything they have worked on but breaking bad is the most prominent.

>> not a bad record. >> when we spoke to jimmy back in april, he said they were aiming to have 10 original shows by the end of the year. we know three or four of those. it could be that some of those are substantial. to put it in context, the billion dollars that apple will spend in the next 12 months, that compares to $4.5 billion that amazon will spend and $6 billion that netflix will spend. it is a big some but not as big as the competitors. >> we have been looking at planet of the apps, it did not get the best reception. how much success of they had? >> there have been pickups. it is hard to know when it comes to viewership. this is been geared toward getting people to apple music. they don't necessarily have these experts, in productions, in procuring projects -- that is what they are doing now in bringing this talent from sony

and elsewhere. full credit to the wall street journal. they broke this first. they were saying they are hiring aggressively in the space and trying to expand says essentially -- trying to expand substantially. emily: that does it for this edition of bloomberg technology. tune in every day. all episodes of bloomberg technology are live streaming on twitter. check us out at bloomberg tech tv on weekdays. that is all for now. this is bloomberg. ♪

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♪ oliver: welcome to "bloomberg businessweek" i'm oliver renick. in this week's special double-issue on cities, why there is an overflow of bicycles in beijing, a parking lot experiment in san francisco, and mapping the underground of new york city. all of that ahead on "bloomberg businessweek" ♪ oliver: we are here with "bloomberg businessweek" editor-in-chief megan murphy. megan, let's talk about the story in japan. there is quite a bit of