♪ emily: i'm emily chang, this is the best of bloomberg technology, where we bring you all of our top interviews from the week in tech. coming up, big tech goes to washington. representatives from google, facebook, and twitter extend offers on russian interference in the 2016 election. plus, what's next? facebook increases security spending while twitter changes its policies on political ads. is that enough to avoid government regulations? and shares of tech companies continue to rally as fourth quarterly results from apple to facebook.

we have the biggest highlights from earnings season. first to our lead. facebook, google, and twitter go to washington. executives for all three firms appear before an executive committee this week to discuss how russia manipulated their platforms to manipulate the 2016 u.s. election. facebook, google, and twitter told congress they were not sure they had measured the full extent of russia's meddling in social networks. they do not yet have the technology to prevent it from happening again. i caught up with the former twitter ceo in the core founder of chorus to get his reaction. >> i think it would separate into two things. it would have responsibility once they understood the problem and the issue to discover the scope of it, then go address it. i think they are doing that. i think would be a mistake to say that they bear responsibility for missing it. this stuff has come to light after the election.

it wasn't anything i think anyone knew had happened in previous elections. everyone has been seemingly surprised by it. it is now a matter of doing the detective work to find out how deep and broad it was, then attacking it as quickly as possible. emily: what changes in twitter should do? >> they have made a broad and aggressive statement about the more aggressive on all political ads purchased and more aggressive on abuse. i think those are great steps. as i said when i was ceo, i would like to be a lot more aggressive. emily: the ads are one thing, but some people say those are not the problem. it is the fake accounts, a number of people pretending to be somebody else. >> i saw twitter yesterday, they think that 5% of the council -- emily: do you agree with that? some people think it is a lot

more. >> two things i would say that this. one, i trust the folks inside the company. if they are giving us a number publicly, particularly in front of the senate and house hearings, i expect that they believe that is the correct number. the thing you have to remember, some times there are researchers who come out and say this is the data. they are going off some of these raw api feeds. they are looking at the tweets that are coming through the programming interfaces before twitter delivers them to users. emily: is it true that, to some degree, these networks are essentially ungovernable? you have hundreds of people trying to monitor more than 300 million accounts? >> no, i do not think that is true. i think you can apply all sorts of machine learning techniques and other kinds of algorithms to do the things that you should be

doing and doing a better job of, like protecting the community and making sure the information being delivered on the platform, to the greatest extent possible, is not foreign propaganda and fake news, to use sort of the term of the day. emily: we had a guest on the show yesterday who called these proceedings "fraudulent." he used the word fraudulent. he said it's completely ridiculous to blame these companies, social networks, for potentially swaying the election and spreading misinformation and that there is a broad spectrum on what misinformation actually is. what do you think? >> i will try to take a more nuanced approach to the answer. look -- on the one hand, you can say that people lie on tv all the time.

you can point to one or two news networks and say, that was not even remotely true. it's not facebook, twitter, and google's problem. it's everybody's problem. my position is a little more -- look, we all have to take responsibility to prevent this from happening again. as the leaders in the technology field that are delivering a lot of this information to users, using algorithms that we think are best suited to deliver them the right information, we need to bear responsibility for addressing this. i do think -- i watched some of the hearings yesterday morning and was proud of sean ajit on twitter's counsel, he was one of the more ethical people you could ever meet. i do think it would have been better if those hearings were more about problem solving and finding solutions and less about political theater. you know, you get these long-winded statements that come with questions in the form of an accusation, they seem to be designed to make the person answering the question looked either complicit or stupid.

choose one. i would like to see it be more about -- let's work together to find solutions, and problem solve, instead of blaming people and trying to get on the evening news. emily: is twitter a media company, and what is it's responsibility as far as what is published? >> it certainly is in the media business. there is a sense in silicon valley that these companies are platforms, and only responsible for distributing information, and not making editorial decisions. the fact is -- i think jack has acknowledged this -- these companies, all of them, youtube, twitter, facebook, make editorial decisions all the time, we will suspend this account. this meets our standard for nudity or pornography or whatever, so he can stay.

this one does not meet it, so it has to go. these companies need to admit, if you well, we make editorial decisions all the time, and we need to live without that and understand that being in the media business, even if we are a technology company, means we are going to have to take more responsibly for those editorial decisions. emily: what are some solutions as you see them? you know how hard this is. >> yeah, listen, let's be clear. the ads are not coming from uncle vladimir wanting to pay for cornhusker moms for trump. it is not that simple. i do think you should probably only take political ads from organizations that are registered in the country that the election is taking place. that seems like an easy one. things like that, that don't let the election outside the bounds of that region in which the election is taking place.

or where its influence starts to extend out of bounds in the region in which the election is taking place. that seems like a simple and obvious one to me. the problem with legislation around just things like transparency are that the organizations are not going to name themselves like "the former soviet republic of so and so," they will name themselves something that sounds like the iowa or california grassroots republican organization or democratic organization. so it has to be more about making sure the organizations themselves are registered, paying taxes, filing their forms, etc. in the countries or regions where the elections are taking place. emily: you have been vocal about harassment on these platforms. i'm curious for your reaction --

twitter has said they will change the way they approach harassment. they will be more transparent in the way they approach harassment, this in the wake of the #metoo campaign, the harvey weinstein obligations, rose mcgowan's account getting suspended as she was talking about being sexually assaulted. do you think it is too little too late for twitter, or can twitter get this problem under control? >> it is a problem they should address. jack knows they need to address it, and they should be more aggressive in addressing it. the same was true when i was ceo. i do not think it is too little, too late. it is one of the most vital and important platforms in the world. it is literally the way to get information or your opinion about something out in a moment. and it will be that way for years to come. great, start now. get more aggressive now. emily: is it a matter of being more -- >> also, let me add one thing to that.

the word that is used is "transparent." i think what would also be helpful is for these organizations to provide context for why a certain decision was made. it is one thing to just say, we made this decision because of this specific tweet. but then people might draw the wrong conclusions from that. it would be helpful -- i get how hard this is, believe me. you could spend all day doing it. but it would be helpful to say, we made this decision about this content for these kinds of reasons. that might not solve all your problems or answer everybody's questions, but it will give people a better understanding of what is going on behind the scenes, and why some issues are as challenging as they are. emily: that was the former twitter ceo and the ceo of chorus. coming up, the parent company of bloomberg news is building a global news network with twitter. coming up, apple reports earnings results, along with new details on demand for its line

of iphones. details ahead. later, congress grills facebook, google, and twitter this week. were lawmakers satisfied? we will hear from congress and chris stewart of utah. this is bloomberg. ♪

♪ emily: shares of apple have soared more than 40% this year, in part due to anticipation of the most imported from the desk important product for other company in years, the iphone x. it is crucial for investors and apple, demand for the iphone x is going up, and we have updates on the iphone eight in china. we have reactions to the results. >> i think it is certainly a bold move to sell a device for $1000. but it is proof that demand for the device remains strong. emily: we have been looking at a delivery time of 5-6 weeks, longer than any phone. we did suggest some supply

issues when i spoke to tim cook moments ago, but he did not seem to worry. he said this is the most advanced iphone ever. we are just getting started, but he is happy with how the ramp is going. they will make reductions in wait time today or tomorrow. we can expect the wait time to go down. julie: that is the case. no organization builds capacity to hit peak demand. certainly, they have been producing these devices for a while. i think the other thing apple does well is always meets or beats expectations. so they may be setting expectations of four to six weeks, but i would not be surprised if consumers get them in the mail sooner than that. emily: what is your big takeaway when you look at the numbers, knowing that this is the quarter coming up, looking at people in line for their phones in sydney? julie: it is exciting for apple. when you look at the iphone x, it represents almost 70% of the

revenue. i think it will be interesting to see the details of the earnings release in terms of what is the other category doing, the number one watchmaker in the world, at what point will the breakout devices like that? certainly, there is a keen eye on their services businesses and to see what extent that is growing. emily: it grew 34% year over year. my question is how long can they keep up that kind of growth? julie: it is also hard to get a big growth number the bigger base there is, but there is only going to be more momentum in this market. if i own a watch, smartphones, tablets, computer, and the home part when it launches in december, there is only more incentive for me to sign up for services like apple music that can work across all of the devices. so this begins to play in their favor. emily: let's talk about china, apple returns to growth in china. there were big questions if people would want to pay up for a phone this expensive when you have alternatives that are half the price or less.

i asked tim cook about china, he said we have returned to growth there, the mac was strong, the best in mainland china ever. their services hit an all-time high in china. the ipad group double digits in china, so in addition to the iphone, the other businesses are doing well. and in response to this question over whether people a the iphone x, he said i suspect i know will really love the iphone x. julie: there is no doubt they are doing well here, and he does have more data than we do. he will talk more about that. but this is like a halo device. this is like going back to the early generations of the iphone one or two when people camped out outside the stores. you may see a lot of demand for the product. but we may see a slowdown in how frequently they refresh that. if $1000, it costs what our laptop does. do we replenish our laptops every two years? are we going to see people get closer to a 30 month cycle rather than a 24 month cycle to justify the cost on a month by month basis?

emily: tim cook is pleased with the sales so far, but are you concerned about the iphone x cannibalizing sales of the iphone 8? julie: apple is good at this. this is what they do. they bring out a product that is unique, and if there are two new products, they are very good at adjusting prices on the other products on the market longer, and they tend to still do well with those products. emily: as we watch the rollout happening around the world over the next 24 hours, what are you going to be watching for? julie: i do not know if there is something specific we are watching for, but i think it will be interesting to see the release numbers in what the preorders are, how much demand there is for the device. anecdotally, the demand seems to be very strong here in san francisco. emily: that was julie ask for forrester research. tesla still hasn't figured out how to overcome production problems that threaten its viability. the company will not make 5000 units per week of its cheapest

car until march, three months later than planned. tesla also reported a record quarterly loss and cash burn. coming up, the senate and house grilled big tech over possible russian interference in the u.s. election. we will hear from one of the representative's on the house intelligence committee next. plus, how exactly does a russian group buy political ads on a platform like facebook? we will explain step-by-step. this is bloomberg. ♪

emily: it was another successful launch for spacex. this was the company's 16th launch of the year. they carried a south korean satellite into space, which launched from florida's kennedy space center. as with previous launches, the rocket landed successfully back on her for reuse in a future mission. as we mentioned earlier, facebook, twitter, and google appeared for the house intelligence committee this week to answer questions about a possible russian interference in the 2016 u.s. election.

i spoke with chris stewart, a representative from utah, and asked if he was satisfied from the response of representatives from the big tech firm. rep. stewart: generally, we are satisfied. when you look at how the russians were so brilliantly able to manipulate public opinion, they have an enormous challenge in trying to identify that. finding the best way to respond to that. i think the executives we had before were very honest in their answers, but it is not going to be easy. emily: do you buy their response that it is too technically difficult to tell users that they were served russian ads and russian posts? rep. stewart: well, i don't know if i can answer that with real authority. i don't want to disagree with them, i certainly don't want to say they were not being honest.

but i think the answer is not sufficient. if what they told us is true, we have to dive deeper and be able to answer that question in the future. we do understand, and we have been able to develop policies and tools that will stop that from happening in the future. maybe that is the case now, it is not sufficient for what we need in our future elections another future policies. emily: these companies sent their top lawyers but not top executives. will you be trying to speak to mark zuckerberg, sheryl sandberg, larry page, or jack dorsey? rep. stewart: yes, it may be more publicly interesting to see and talk with them. i don't think we would get a different answer. i understand why they sent their lawyers. sometimes we were asking very technical questions or very difficult questions. i understand they wanted something else to maybe take the heat and be the public face for this, but i don't know that they would have told us anything different.

in fact, if that is the case, i do not think there is any advantage to bringing mr. zuckerberg in or any of the others. emily: do you think we will see regulation out of this? rep. stewart: i don't know, that is the real question, isn't it? my question is, they talked about fake news again and again. fake news -- we will identify it, we will help consumers understand this is fake news. i asked them what in the world does that mean? who is going to decide what is fake news and what is not? if you talk to mr. trump, his idea of fake news is very different than someone else's might be. if you are looking for a regulatory answer to this, that is an enormous challenge. i think at the end of the day, you have to trust the american people -- that they will use some judgment and a little bit of their own intellect in order to determine that does not sound right to me, this might. by the way, in that spectrum there are fact, but most of what we read or might view has some degree of opinion. i don't know how you would try to regulate that.

i think it would be enormously complicated and the potential for that to turn into a political bomb or political tool is very troubling to me. emily: what about government legislation or government cooperation? rep. stewart: that is another thing altogether. there is more we could do to further the cooperation between the government and private entities, but in many cases these entities themselves in their own terms will not allow them to share information with each other. i wish they would break down that barrier. i wish they would be more open. hey, this person, this customer, this account, we have identified as belonging to a russian troll or organization. i would certainly hope they would share that information with each other. the same thing is true between the barriers between the government, especially the federal government, and these private entities as well.

that is the type of information that could be shared and should be shared, and many times right now it is not. emily: we have now seen indictments from the special counsel's russia probe. you are doing your own investigation, where does that stand and what is next? rep. stewart: the house intelligence committee has been looking at this for almost one year. we started looking at russian interference with the election and we have tried to stay focused on that. these indictments we saw a few days ago really have nothing to do with russian interference. they were financial, apparently, anomalies that happened years ago. in some cases, it was several years before some of these individuals were associated with the trump campaign. you know, if they did something wrong or if they were truly laundering money or doing anything illegal, they should be held accountable for that. here in the house, we are really focusing on was their collusion? how do we stop that from happening in the future? how do we protect our elections a year away from now?

europe is experiencing much of the same thing. i think we need folks on those questions. how do we assure the american people that foreign entities are not breaking down that trust and democracy and trust in our own election. emily: what do you need to see from the investigation in terms of evidence in order to act legally? rep. stewart: well, i'm not sure how to answer that. if we find evidence that indicates there was a legal activity, then we will pursue that. we already our report, and if necessary, we would refer that to the department of justice or in some cases the special counsel. our primary objective is to report to the american people. we are not a law enforcement agency. friendly, congress does not have the tools and we are not tasked with enforcing the law. our job, in this case, is to discover what happened and to tell the american people. some people are frustrated at

this point. they have been saying collusion for a long time. that truth is we have not seen evidence of collusion between the trump campaign and russians. but we have seen some other activity that is concerning for us. we will continue to pursue that. once again, as quickly as possible, report to the american people. they deserve to know. it should not be in 10 years, it should be as quickly as we can wall it is still relevant, and again, to stop that from happening in the future. emily: that was my interview with house intelligence committee member representative chris stewart. just a reminder, bloomberg lp is developing a global news network with twitter. coming up, more reaction on this series of tech hearings in washington this week, exploring the role social media played in the u.s. election. what are the next steps, could regulation really work? and a reminder, all episodes of bloomberg technology are live streaming on twitter. check us out. this is bloomberg. ♪

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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. emily: welcome back to "best of bloomberg technology." i am emily chang. after weeks of waiting, the public finally got a look at some of the infamous russia link ads that were on facebook and twitter as part of the influence of the 2016 presidential election. according to senator mark warner, there should be more to worry about. senator warner: these ads are just the tip of a large iceberg. the real story is the amount of misinformation and divisive content that was pushed for free on russian-backed pages. which was then spread widely on newsfeeds of tens of millions of americans. emily: selina wang joins me, along with mark bergen and keith rabois, to talk about the events in washington.

we began discussing why the ceos for these three companies did not attend. >> i used to work in the senate. if they wanted the ceo's, they would have scheduled it when he was not in china. this was a done deal between the senate half end of the ceos. angus king was just speaking for himself. he probably violated an agreement they had. this happens all the time with public company ceo's. they find a convenient date the schedule the hearings. this was totally fraudulent. emily: the bottom line is that this is not done. they could still be asking for these folks to be coming to capitol hill. >> i guess google's defense, ken walker, could speak to him issues more clearly more than larry. he is probably much more involved in the day-to-day in these legal and security issues they talk about.

emily: and jack dorsey was just that a square event in new york city. i saw him the other day, he is definitely not going to be in d.c. it is telling that he is running two companies and only has so much time. emily: another point senator warner made an effort to point out is these investigations are not over. take a listen to something else from senator warner today. senator warner: do you believe that any of your companies have identified the full scope of russian active measures under your platform? yes or no? >> senator, our investigation continues. so i would have to say no, not with certainty. >> we are still working on this. >> we have done a comprehensive investigation, but these are ongoing issues we are continuing to investigate. emily: we still don't know the full extent of this. do you maintain it is not important? keith: i think everyone is being totally of critical and they are showboating. that is one reason the ceos were advised not to attend.

it would have brought more attention. most people will not watch sessions with general counsel testifying. but if the ceos show up, it is a more spectacular event. very newsworthy and people will tune in to see mark or larry or jack. that is not what these companies want. they do not want everybody in america tuning in. it's a very calibrated decision. they may eventually have to if they continue to mis-play these cards. people are being incredibly hypocritical. more people listen to terrestrial radio today than actually log into facebook in the united states. why aren't we calling on the radio companies? emily: you have to admit that facebook has a big influence. keith: i'm not sure it does. there is no evidence of this, by the way. show me one study the electorate in 2016 was more or less informed than americans in history. >> to be pushed back and say that facebook earnings right now are lower earnings for the quarter, google earnings last week, they talked about talking

about 100 million hours a day on youtube. google talked about their pitch to advertisers -- we are better than tv. we have more granular reach, more target reach. now you're saying the target maybe was not that effective. >> maybe not that effective, but in the grand scheme of things, all political advertisers have less than 1% of diet coke's budget. emily: what about posts? people are still posting. i get plenty of posts about political candidates. >> yeah, but do you read them? emily: i see them. >> you're looking at baby photos which is what everyone is doing. >> these posts that are coming into your own curated feed from these people you think are your friends are having a bigger impact than broadcasting radio. >> but they are my friends sharing this. this is a fundamental issue. my friends have the right to share any content they want unless it violates the law of the united states. nobody in america should be trying to stop that.

>> did you look at the study the house put out that was about 65 pages long about the russian bots on twitter deco what today demonstrated is these companies are flat-footed. twitter has been aware of this bot problem for a long time. emily: and they are now concerned about it on facebook. >> now it seems like congress is actually waking up to was really happening. >> i think the user expectation is that people are real and it's a real-world identity. there is something facebook should do about that, because it is inconsistent with the platform's design and vision of the company. twitter has encouraged fake accounts to encourage dissidents and various other countries. to twitter, i think the user knows it is not necessarily the real person. the expectation is pretty reasonable. i think it varies by user expectation, what the company should do about it. >> and what about fake news? >> i do not think there is a definition of take news that people will agree with, particularly the political context, which has first amendment protection. i have the right to say hillary clinton is a crook. that is not fake news, but if they try to stop that this

country would be just as bad as russia. emily: how many people died in the las vegas shooting, for example. >> there is things that are purely fax, but most of what people are objecting to is the mix of fact and opinion. emily: that was bloomberg technology selina wang, mark bergen, and keith rabois. meanwhile, facebook says russian groups spent $100,000 on ads to influence the election. how did they do it? it was actually more simple than you might think. bloomberg's sarah frier filed this report. ♪ sarah: facebook tells us russian groups spent $100,000 to influence the 2016 presidential election. how did they do it? it is actually very simple. there are only three things you need to run a very sophisticated advertising campaign.

facebook accounts, the ad itself, and a credit card. facebook's website holds your hand through the rest of the self-service advertising. let's it you have an ad you want to show to gun owners in pennsylvania. simple. facebook can route your ad to everyone who lists their home state in pennsylvania, has purchased a gun, and likes pages about gun ownership. you can do it by race, education level, anything. facebook can target specific demographic groups since it has so much specific information on its users. the articles they click on, the pages they follow, the things they like. all of it is recorded for later targeting by advertisers. there is also the information the users provide themselves, like what town they live in and what school they go to. this self-service advertising tool is how the russian group called the internet research agency ran its campaign. the ads are meant to stir up controversy over immigration,

gun rights and more. facebook says before the ads are distributed they are sent for a review, but it is a mostly automatic process that is not really block controversial ads called the internet research based on the content of the ad, which means the russians were able to run thousands of ads with factually incorrect information and inflammatory political speech, which facebook users could not tell came from russia. the russian group also created fake accounts and pages to run the ads, which looked like they were just coming from concerned u.s. citizens. just a little bit of money goes a long way. with $100,000, the russian group was able to reach 10 million people. remember that swing states in the election were won by near thousands of votes. mr. zuckerberg: i do not want anyone to use our tool to undermine democracy. sarah: facebook said to prevent election ventilation in the future, they plan to hire 1000 humans to help review ads that are politically or racially targeted. but they still have not said exactly what the group's new parameters would be. emily: bloomberg's sarah frier

reporting. coming up, another record quarter at facebook, but the company warns it will ramp up spending this year on security. and the merging of tech and wall street has ramped up thanks to automation and ai. we will hear from citadel's security chief information officer. this is bloomberg. ♪

♪ emily: new york city could be home to amazon's second headquarters. according to a new study by reese, the big apple tops the list, due in part to its extensive mass transit network. the study is based on factors amazon outlined in its proposal. san francisco was second for its large separate tech workers, and washington, d.c. was third on the list. facebook reported another quarter of record sales despite a tough week on capitol hill. revenue rose 47% to more than $10 billion, far above the top of the range of analysts' expectations.

david kirkpatrick, keith rabois, and gabby williamson joined me to discuss the results. >> you know what, at e-marketer we are more about looking at revenue and you mentioned at the top of the newscast, these quarterly results shredded expectations. they have shredded ours as well. it is all about revenue, up and to the right. everything they reported is higher than we had anticipated. emily: that said, david, you have taken a slightly different tack today, expressing concern about facebook shares and if they will continue to go up as a result of all this controversy. what is your take now seeing the results? david: facebook shares have a lot of reason to be strong. the reality is the very success

of the russian effort would probably reassure advertisers that facebook is the right place to advertise, sadly. so they are not going to stop magnetically attracting more and more ad dollars. the question is, how much are they willing to spend and how much social capital are they willing to expend in corporate capital, emotional and sort of reputational capital to do the right thing? i think they really have to step up and take a fundamentally different attitude toward their role in society. that goes way beyond election meddling. i have not he not yet. emily: would you agree? keith: i think this whole story is completely hypocritical. the cia has been doing the same thing in elections all across the globe for the last 50 years. the fact that the united states can do things but russia is evil for doing the same thing is ridiculous. the big mistake was by obama, when he said russia was our friend and he ridiculed romney when he was running for president for predicting all of this.

if the president of the united states thinks russia is our friend, why should facebook think russia is evil? emily: now we have evidence that russia was interfering. do you think the platforms should do anything about it? >> they should do the same thing, the same laws that require transparency. they don't allow foreign agents to buy ads to influence federal elections, for that is a small category and not really what people are talking about. the news came out today that russia spent about $48,000 on facebook, which is a rounding error on a rounding error. that is for facebook and even clinton and trump expenditures. clinton and trump together spent $81 million. russia spent $46,000. the most efficient $46,000 ever spent in the history of advertising. emily: david, what you think about that? david: i think what keith said about the cia is right but it is beside the point. these companies, facebook in particular, have a social weight a commercial enterprise has never had in america or the

world. we don't really have a governmental regulatory or citizen response to that. political meddling is just one piece. senator warner today named a number of other things he says he is certain are equally problematic. financial scams, fraud, meddling in various types of social behavior -- this is not going to stop, even if the whole russia thing went away tomorrow. facebook will be facing massive questions about its future as a platform for the public debate and why a company ought to be the one making decisions about what happens there. emily: keith, we had mark zuckerberg speaking of the facebook earnings. he said they are working with congress on legislation. so even the companies are taking some responsibility. keith: i do not think they will support any radical legislation. they may allow some a commensal transparency. facebook, to be true to itself, should require real-world

identity. i think the facebook platform is successful by being predicated on real-world identity. i think stamping out fake accounts is a good thing, something users would expect. but i don't expect facebook should be subject in any incremental regulation but does not apply to tv, newspapers, pamphlets, or billboards. emily: we heard from facebook's testimony of the lawyers that instagram was also affected. what sort of significance do you think this will have on some of the other businesses under the facebook umbrella, whether it is instagram or whatsapp? debra: you are right. it was new news that instagram came into this. you know, i think it is possible we will see other platforms involved as well. i have to say there is a lot of things going on. everything is new. it is always exciting to watch what facebook is doing and what role it is playing. the debate over facebook is not

going to end with this russia investigation. but i do agree, there is a lot that facebook has to do in terms of its role in society and its role in understanding and helping people understand what is news and what is not news and what is fake news and what is not fake news. so there are many, many things we will see over the coming months related to facebook and all those companies. emily: keith, mark zuckerberg just said he is dead serious about the pressure problem. keith: he should be serious about the russia problem, but ultimately users are voting with their feed to share this. facebook should be enabling users to share what they want to share. the "national enquirer" also has existed for 50 years. most of the stuff in the "national enquirer" is completely fabricated and false, but people like to read it. and not surprisingly they like to share similar stories on facebook. there is nothing wrong with that, people like to be entertained. if you want a serious news platform, which may be mark

wants to create, you have to make some editorial judgment there. what -- but that is not really what facebook users think the are getting from the product. emily: coming up, one financial firm is getting serious about machine learning and luring tech talent. we go behind the scenes with citadel security. if you like bloomberg, check us out on the radio. you can listen on the bloomberg radio app. ♪

♪ emily: gopro tapped a big name in sports to serve on its board. the company has named golden state warriors president rick wealth to the board, saying his leadership, creativity, and passion has made him one of the most respected individuals in the nba. the warriors were one of the first pilot partners to try the gopro fusion, a device for virtual-reality video. welts will be gopro's eighth board member. well, with machine learning and automation, the use of new technology has never been more important for financial firms. as chief information officer at citadel security, they are responsible for implementation the market making technology driving the securities business at citadel.

but he also got his start in silicon valley. he starts about going to wall street with erik schatzker. nawaf: that's an interesting story. as you observed, most of my time has been in the valley. companies like network appliance, cisco, juniper. the thing that was most interesting to me about citadel securities is they afforded me an opportunity, they afforded me a license to innovate. that is one of the things that excites technologists. employing technology for network, storage, in bringing it all together at the same time. the second thing interesting to me is i found such a high concentration of talent. people talk about hiring the best and brightest. what i found at citadel securities is we have set the bar so high in terms of who we bring in we are actually bringing in those types of people.

and having those types of people around you up levels your game. i found that to be the case with me. and the final thing was we are -- which was a bit of a surprise was we are able to deploy new technologies in days and weeks as opposed to months and years i have been accustomed to. technologists love seeing their creations come to market. erik: you make it sound this is a faster paced, more exciting environment and what everyone thinks is the holy grail. nawaf: candidly, it's as much a tech firm as i have ever worked at. so a tremendous amount of excitement and a tremendous amount of innovation. erik: what specifically about your background, skills, and expertise did citadel need? nawaf: we value diversity of experiences. if you only have people coming out of the one tech sector, they think a certain way. bringing in people with different perspectives from different companies and different experiences, that allows us different insights, which we can then apply to our

core mission. erik: you have worked in networking, as you mentioned, you have worked in storage and more. what are you applying most here? nawaf: we are bringing them all to bear. literally, networking is fundamental to our business, compute and analysis is fundamental to our business. the way we acquire and store data is fundamental to our business. unlike other places i have been, we are bringing it all together and are using it all at once. erik: explain why. help people understand the role that technology plays in a market-making firm. something like that at all securities. nawaf: our mission is to provide liquidity, to provide for stable, efficient, transparent markets. we use technology in many different ways. i will give you a few examples. in equities, for example, we do analysis that allows us to provide the best liquidity, particularly in illiquid markets. it enables us to optimize our

cost so we can provide a more efficient, cost effective transaction to our clients. it enables us to fulfill our obligations as a designated marketmaker on the new york stock exchange for the 1400 or so symbols we represent. we use our technology to enable a prompt and smooth opening and close. and then on the institutional side, we are able to stream live pricing. our technology allows us to do that as well. erik: if technology is the x factor, one of the principal things that separates good executors from bad ones, i have to believe there is an arms race going on. more, better, faster, more powerful. nawaf: it applies to the infrastructure that we deploy and the technology we deploy, but perhaps more importantly it applies to the people we hire. we look to bring in people from tech centers, tech companies across the world. we are doing more of that just this year. given the high bar, this is an impressive number. just this year, we hired over 20 people from traditional tech

firms. we are looking to connect with people even before they graduate. we have held 20 datathons across the world, and we have been able to hire some of those students as well. erik: where are the happy hunting grounds? where do you want to hire people from? nawaf: we will hire good people from anywhere in the world, but for traditional tech people the concentrations are in silicon valley and the seattle area and austin, texas. erik: googles and facebooks, the companies of that nature? nawaf: and many of the startups as well. erik: you are raiding silicon valley. nawaf: we are being very selective about it. erik: talk to me about the innovations. technology is all about innovation and i suppose disruption as well, terms people like to throw around, but talk

to me about the innovation you are implementing now and anticipate implementing that will bridge to be disruptive to securities trading. nawaf: data is at the heart of all we do, data and technology. our ability to analyze and glean insights from the data is fundamental. people, no doubt, talk about cloud computing all the time. cloud computing provides you an elasticity that can be a force multiplier to a business. it allows you to expand into resources for periods of time when you could not possibly afford to own them, not cost-effectively on an ongoing basis, but those of the type of things we look at. erik: what about machine learning? nawaf: it is something we deployed today. a lot of folks don't understand it and might not understand how it is distinguished from artificial intelligence. i think of machine learning is a state-of-the-art in artificial intelligence. what you are able to do is look

at past patterns of data and correlate them with known outcomes that occurred in the past. i actually to use the expression "those who ignore history are doomed to repeat it." we can train a model based on what happened in the past, correlated to the known outcomes we are associating with that, and use the technology to predict what would happen in response to an unanticipated set of circumstances, and improve the model over time because we provide feedback. that is the learning aspect of machine learning. we do deploy that in many areas of our business to get more insight into decisions we make. emily: that was nawaf bitar at citadel securities. that does it for "best of bloomberg technology." we will bring you all the latest in tech throughout the week. you can tune in every day, 2:00 in new york, 5:00 in san francisco. all episodes of bloomberg tech

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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