tv Best of Bloomberg Technology Bloomberg December 16, 2017 4:00am-5:00am EST
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s! yes, indeed. amazing speed, coverage and control. all with an xfi gateway. find your awesome, and change the way you wifi. ♪ emily: i'm emily chang and this is "best of bloomberg technology ," where we bring you interviews from the week in tech. the end of net neutrality. the fcc votes to kill obama era rules for equal access to the internet. a massive merger that could shake the media landscape for decades to come. fox assets forg more than 52 billion dollars. we will hear from disney ceo bob iger.
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and the twins joined the ranks of the world's billionaires. thanks to bitcoin. they took a why chance on cryptocurrency. first, to our lead. net neutrality is no more. the fcc voted to repeal the obama era internet protections designed to keep rock band providers from favoring content. vote was 3-2 to end the protections. the book -- vote came amid protests from defenders of the rules, who say this will create have sent have-nots when it comes to accessing content. the fcc chair held -- heralded the return to what he calls a free-speech market approach, saying it is time to restart internet freedom. framework that has governed the internet for most of its existence. joining us now, one of the people who voted to repeal it, brendan carr, who was nominated
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by president trump. day,aid today is a great many say it is an awful day. what don't they understand? for the question. it is a great day for consumers, innovation and freedom. there is a lot of apocryphal reddick -- rhetoric out there. we are voting to go back to the 2015 regulatory framework, the title i framework that the commission had in place for the 20 years before 2015. this is not moving toward some mad max version of the internet where isps will have complete free reign to dictate your online experience. the 2015 framework has long legal protections for consumers. consumers will benefit that -- from those. sayy: a number of groups they will sue on the basis of broken process, flawed legal
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reasoning, willful rejection of evidence and regard for public -- this regard for public input. the attorney general eric schneiderman saying this is not just an attack on our internet, but on all new yorkers and the integrity of every american's voice in government. we will fight back. what is your reaction to these comments? acts inime the fcc internet regulation, there are lawsuits over the decision we make. the supreme court broadened internet access and found that the fcc did have the authority and that is the only classification the supreme court has ever found. it is a procedural matter and a abstantive legal matter is on sound legal footing. i'm confident in where we go from here. emily: we spoke with the former fcc chair that oversaw net
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neutrality and look at what he told us. >> for the first time since 1934, with this decision, the fcc is washing its hands, walking away from that congressionally mandated responsibility, and they are only doing it for the most important network that will define the rest of the 21st century. it is an inconceivable kind of action. emily: what do you make of this accusation that the fcc is absolving itself of responsibility, rather than taking responsibility? brendan: that is simply not the case. we are going back to the same framework that was in place in 2015. your viewers can remember the internet of 2015. there were protections. be backotections will in place. the federal trade commission is going to be fully empowered for the first time in two years to police isps conduct with respect to consumers.
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stripped theion fcc of 100% of authority to protect from isps. another piece of that is online privacy protections. premieris the nations consumer protection agency and has been prohibited from taking action because of the title two decision. the consumer is gaining protections. this is not a situation where there are no rules in place. said theycast has won't invoke paid prioritization, but let's say they do. what would happen? what happens here is there is a misconception about what title to did. right now, it is not stopping providers from blocking websites , creating fast lanes, paid prioritization. there are reasons that stuff is not taking place today. it is market forces regulating the conduct and after our decision, those forces stay in place. there are a lot of people who
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don't believe in market forces and that is fine, there are positive laws in place. federal antitrust law prevents isps from entering agreements ort unfairly block, throttle create anti-competitive pay prioritization. there will be rules out there that will be able to police any of this conduct that people are talking about. emily: what about the fake comments in the public comment section? does that give you positive? one million comments were written, potentially by a robot, to counter the vast majority of comments that were against this repeal? brendan: it doesn't, here is why. we have run an open and transparent progress -- process. run ourear how we rulemaking and record. we have an open record. anyone can file a comment. we don't require identification
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that would discourage robust conversation. filings, that shows the passion people have in the issue. emily: the vast majority of those comments were against this repeal. brendan: there was a wide range of views expressed and the question we have to confront is a threshold legal matter for the fcc. did congress, when they set up title two, did they intend the internet to be in one or the other? when you look at that legal determination we have to make as commissioners, this is clear this is a title i information service. emily: when will we see lawmakers actually enact this into law? brendan: our decision today goes into effect as soon as the omb and other government agencies review the transparency rule we adopted, and it will take effect shortly after.
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that is the timeline we are looking at. emily: how do you see the internet -- let's say the now,net five years from being different. it already seems like so much power is consolidated in the hands of a few powerful companies, many of those were against this repeal -- but how does the internet look different from you -- to you in five years? brendan: that is why this is such a great decision. title two is a monopoly style regulation, a lot of the debate at&t, comcast, verizon, the big isps. our record shows they have been unfairly impacted. when i talk to consumers, they want more competition and that is where title two heads in the wrong direction. there are thousands of small isps that are trying to provide consumers service for the first time or provide competition to larger providers.
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those are the ones who have been hurt worse by this decision. this rule, those providers will have an easier time competing, getting money and consumers will benefit as a result of the increased competition from repealing title two. emily: that was fcc commissioner brendan carr. order yet fromk pepsi. for 100 vehicles worth an estimated $102 million. walmart and don heiser bush have -- anheuser-busch have placed orders. production starts in 2019. consumer edge forecasts the tesla truck could generate $300 billion in annual revenue for the company. coming up on the disney is about to become an even busier -- bigger force in hollywood after reaching a deal to take over fox assets. what does it mean for the future of moviemaking? bloomberg news, you can listen on the bloomberg radio app, bloomberg.com and on sirius xm.
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♪ emily: this week marks 37 years since apple became a public company. steve jobs was 25 and held the chairman title. the company sold 4.6 million shares at $22 apiece and since then, shares of apples are up more than 40,000% with a market cap of $800 billion. a mega-media deal has been reached after weeks of speculation. disney is snapping up a large chunk of 21st century fox assets worth $52 billion. bloomberg tv, up with bob iger in l.a. he explained how the deal came about. a year ago, i didn't see this one coming either. a long known each other time, have a lot of respect for one another and occasionally get together to amuse about the business.
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a get together, we were talking about the disruptive forces we were seeing and the relative position of our companies and left thinking there might be an opportunity for us to do something with him. i thought about it for a few weeks, called him thereafter and suggested maybe we should get together and talk about it, and we did spend some time analyzing whether there was something to be done and what the value proposition might be for shareholders of both companies and ultimately, rolled our sleeves up, got into a negotiation and here we are today. what we are doing is creating not only a great company, but a great role -- global opportunity for consumers to not only consume great content made by ith entities, but to consume under circumstances that are innovative and compelling and much more user-friendly. that is what the user today demands. in 2020 onedown versus 2019 previously, what is the future for james murdoch? bob: we have talked a lot about
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potential role for him. he will be integral to the integration process and we will continue to talk about where there is a role for him at this company. we have had a great relationship and he has been helpful. i look forward to talking to him more about it. jonathan: a lot of people thinking james murdoch could be a part of that, is that something you could see happening? bob: i am now extended through 2021 and the board of the company will have ample time to consider its options in terms of my succession and reading gauging in the planning process for that. it is premature to speculate on that. it would ultimately be a board decision. emily: we're joined by bloomberg's chris palmeri in l.a.. eiger said he didn't see this deal happening and there was speculation about it for some time. walk us through the nuts and bolts. chris: thankfully, the bulk of what we know of fox is that most
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of its entertainment assets are going to disney. the fox studio, the national geographic's channel, fx, a big satellite provider in europe, it is a massive chunk of fox now merging with disney. think of this you idea that james murdoch could be i gura's successor, even if years from now. there was a lot about this going into the announcement that he would be named as some senior role at disney. kind of a surprise today was that nothing happened. neither side ruled it out, and him tor said he expects have an advisory role in integrating the two companies, but nothing clear yet. now saying he will stick around for four more years. it is hard to say at this point
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that james murdoch has any real clear path to the ceo of disney. emily: this is disney's biggest acquisition ever. how does it fit into the context of their m&a? previously, it was about content. they made smaller technology deals, but it was basically all theseging wonderful characters, pixar, marvel, lucasfilm into the film muchion and here, it is a broader play. it is really a doubling down on the film and tv business at this very pivotal moment where things are changing so rapidly. we will see a lot of exciting things out of disney from a technology standpoint. multi pronged strategy, an online version of espn launching next year, a disney branded channel in 2019 with all this marvel and star wars content, and hulu, which they will now control a 60%
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stake, will be the adult version of what they are trying to do and that is where fox programming comes into play. they are trying to create an online choice for everybody. emily: that was bloomberg's entertainment reporter chris palmeri. coming up, t-mobile's big plan for the small screen. we will hear from the telecom giant as it prepares to take on tv. apples roughly $400 million bet on facial recognition technology. we will break down the investment. this is bloomberg. ♪
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new tv service set to launch in 2018 and signed a pact to acquire layer three tv to build out the strategy. we caught up with the chief mobile operator in -- officer in denver and discussed the deal. >> this is a market that is filled with pain points. is thetalk about it, it most hated industry in america. eight of 10 companies with the worst customer service ratings in america are paid tv companies. with our brand as the uncarri ier and solving pain points in wireless, we are poised to make a difference in this $100 billion paid tv market. emily: at&t and verizon have explored the market as well as, a step beyond the wireless business, how is this different than what they are doing? see from at&t is more of the same. their way of getting into this was to buy directv, a traditional satellite-tv
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company, and create bundles that people don't want. to get a decent deal on at&t wireless service, you have to drill a satellite dish into your house and be fed linear, one-way, uncontrolled tv services from outer space. it is no wonder people are leaving this industry in droves. 2.5% is negative growth of in this industry, but that doesn't tell the whole story. millennials and generations he customers are leaving at rates of 25% a year. abandoning old fashion tv like satellite. at&t's strategy is wrong. ist we are offering to do bring together the best of mobile video and home tv and create something that is totally disruptive in a market that needs disruptions really badly. is saying heeo expects a deal to close in a matter of weeks. what are your regulatory concerns given the doj's opposition to at&t and time warner?
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mike: we don't expect any. we will close it after the new year. this is really exciting for us. we just met with the team at layer three tv, who will be a key ingredient of this new strategy. what incredible technology and an incredible team because we are going to build a service that people have never seen before. think about the services that we are forced to live with today's linear tv. you get this program guide and a little veep had remote control. comparison to the engagement of social media fed mobile video that our customers have come to love. we will bring together these worlds and make tv not an island of its own anymore and really change things up. the possibility of a sprint-t-mobile tie up has been simmering for years. what is the status of that and what are the chances of it happening in this regulatory environment? know, we looked
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long and hard at it. it is a shame it didn't come through because there are benefits to a merger like that. we were looking at layer three tv and the launch of t-mobile into the tv experience with or without that deal. it made sense if we did that deal and it makes sense by itself. this marketplace is a market that is moving way too slowly and it is not serving customers needs. it is a $100 billion market that we are in an incredible position to disrupt as standalone t-mobile. emily: you are saying a sprint/t-mobile merger will not happen him off the table? that.i'm not saying i'm saying we looked hard at it and it didn't happen. we are doing now as a team is what you would expect us to do. we are focusing on running this great company and boy, it is a great company in a great space. we are the only ones with
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service revenue growth. we just finished 18 quarters of acquiring more than one million subscribers a quarter. to main thing people need know is as you look at t-mobile as a standalone company, all these worlds are converging. we like to say that all content and communications are landing on the internet and the internet is transitioning to mobile. he we are, the leading and only growing mobile company. we are in a great spot. that was t-mobile's coo mike sievert. apple's appetite grows. investing nearly $400 million in finisar, a maker of laser technology that is critical for new iphone x features like facial recognition. apple confirmed it bot shazam for an undisclosed amount. we spoke with mark gurman. is part of apples billion dollar pledged to invest in manufacturing in america. this has come on the heels of
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president trump's proclamation about everything being manufactured in the u.s.. there are investing 100 -- in finisar. they make lasers they can put in air pods to little black circles in air pods, those are lasers shooting into your ears. if you take them out of your years, they stop playing. it is a laser used for facial id. it is an extremely important component for apple's latest string of products. emily: it is currently in the iphone x? they are, now they are going to invest in it and put a choke hold on that market of sensors so they can use them in products down the road. emily: how many jobs are they creating? >> lots of jobs. will beare -- finisar up to reopen in texas and hire a bunch of emily: people to work
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at that facility. element --ill this eliminate supply chain problems? that $90 million will ensure money is invested in the components apple will need. emily: right now, this tech is imoje tech.in the an in face id and that replicates with an emoji. and iphone x can scan your face, knows it is you, then the lasers can be used for animojes. are smiling,ou shaking your head, it is also used in air pods. there is broad application for the tech. emily: gene munster says it gives a competitive edge when it comes to ar. ahead ofle has been the pack in ar. they are one of the first companies to recognize the importance of ar over pr for glasses and phones. they are investing more deeply
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in this technology, more than samsung or google has done in recent history. emily: he reported on apple buying shazam. how does this new news give us more insight into their m&a strategy? mark: that is a good question because you see two different hats right now. you see apple doing more investment in order to prepare for its future, but also big-time acquisitions said as what you saw with shazam. they bought the whole company, resources,nology, integrate the company. the other arm are these big investments. not full on acquisitions, but giving companies money to have enough resources to build components apple needs down the road. i think we will see more on both pads. -- paths. emily: coming up, the week abbas twins may have missed out on becoming billionaires, but bitcoin has them joining the club.
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of "bloomberg technology. bitcoins massive rally is helping it overshadowed competitors. the fourth largest cryptocurrency surged to an all-time high. this on optimism bitcoin will attract to the emerging market. twins, cofounders of the exchange gemini, thought to be among the biggest holders of bitcoin spoke to bloomberg about why they made such a big bet. bitcoin is like gold 2.0, so whatever your reasons
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for investing, durability, fungibility, we think bitcoin matches or beats gold across the board in all those territories. scarce, it is fixed. you can send it like an email. it is hard to do that with gold. the market cap a bitcoin is 300 billion, the market cap of gold is 6 trillion. we have been saying this sense the market cap was one billion. we are 300 times more correct today. we think we will be more than 20 times correct here on out. >> is there any reason people are selling gold and buying it going? >> that is possible for sure. anybody who likes the characteristic of gold in their portfolio definitely will be attracted to gold. bitcoin, excuse me. research, he has not
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seen that yet because they have not seen outflows of gold. and a look at the client demand dynamic. >> you said you could be 20 times more correct. in other words we could see 20 or 30 fold increase and up price of bitcoin. how do you get there? on bitcoin,positive many say we could see a sharp correction. it might go back up, but it could be a rocky road to get there. >> part of that is trading access to it. we built gemini.com. we launched two years ago. in newheadquartered york. it makes it easier for hedge funds to get involved. we had the most sophisticated traders. a futuresis creating
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contract. a bitcoin futures contract is cash settled which allows institutions already trading in chicago exchanges to get exposure to bitcoin with cash and settle out in cash. they do not have to touch orfield bitcoin and they get the exposure to it. the next phase would be an etf product. theou had a filing with fec, it pushed it back like it has with all the filings. are you planning to refile? >> we are in process, we do not have to reap file -- we do not have to refile. we are waiting to be heard by the commissioners. >> what is the next step with the cme? it would be be based differently.
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from a combination of different exchanges. >> our contract settles to the gemini auction. we love our product does it is simple and easy to understand. welcome them to the party. they are settled on a blended index so it is a different flavor. we welcome more products and prices in this market. >> when contracts are being lost, one of the issues is daily auctions can be light on gemini. difficult for the exchange. what have you done to a dress that? >> auction mechanisms are tried and true. mechanism we chose is straightforward and simple, and it will organically grow as this contract grows. we are not concerned. we run auctions every day, even holidays and weekends. those might be more traded, but
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weekdays is where you want to focus. it is the largest global liquidity event in the entire bitcoin market. >> 1.3 million average. >> if you look at 4:00 and the constituents of another blended , one, and at 4:00 in time million to $2 million print, increased price discovery. >> a lot of these auctions are self-fulfilling. it builds the reason or relevancy of it. it is unfair to take a snapshot in time before there is something tied to that price. exchange.s are one many times you see diverting rises on different exchanges, which can make it difficult to and morecoin,
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difficult to transact in bitcoin. what do you think causes more price stability? does bitcoin need to be transactional more than it is right now? >> it depends on what exchanges you are talking about. not all exchanges are created weikel -- created equal. at the prices across the u.s. exchanges, they are regulated, it is a small deviation. we can track each other. if you're talking about unregulated offshore exchanges that are highly risky, there is going to be risk premiums. sometimes people cannot get there the up currency in or out. >> coin base is u.s. based and it is priced different from the other exchanges. getting moreabout sophisticated players in the ecosystem. ever bitcoin futures product will create for the
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first time an easy way to short bitcoin. there will be a two-sided market which will reduce volatility in the long run, increase price discovery and liquidity. emily: that was tyler and cameron winklevoss, cofounders of gemini. tom mech off covers billionaires and wealth. let's start off with the winklevoss twins. how did they amass such a stake question mark and how big is it? >> you can trace it back to facebook and mark zuckerberg. and got $20 million in cash facebook stock. he used that to go into various investments, and one was in 2013 they bought $11 million worth of bitcoin. we have been tracking the price of that, and in december. $11 million was worth one billion.
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after the last week, it has risen to 1.7 alien which has made them both billionaires. as long as you can liquidate that bitcoin holding. emily: is a truth the vast majority of bitcoin wealth is hold -- is held by a small number of people. >> there is interesting reporting out of bloomberg. there are dozens of wales -- whales who own 40% of the currency. wants to sell out, a big $100 million, how will it effect the market. it,r sales will influence in terms of other equity markets, more limited volume and trading. andy: do those whales hold
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oversized amount of influence in this rapidly developing new market? definitely. you can see that in these fluctuations. nobody knows when they are coming. nobody knows why and how. when big sales come through prices take a massive hit. it is the big boys who cause most of the movements. emily: you have been tracking a little-known business that is called crypto company that is on and even wilder ride than bitcoin. explain. >> it is called crypto company. its market cap is incredible. it was in the hundreds of millions, and this week it ballooned to 12 billion. it has fallen to 4.5 billion. asse numbers are not authentic as a bitcoin price.
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on paper, the founders who set this up in june, have built a billion dollars stock position but only on paper. on volatility is based volumes of a million or two dollars. another interesting story, about the involvement of women in the cryptocurrency market which was dominated by men, but the subhead is that the coin is welcoming to anyone who drinks the kool-aid. >> exactly. it is the nature of it. it is opportunity. anyone has the chance to exchange the future of finance. emily: coming up california governor jerry brown explains why the state is leading the charge on climate change, and how silicon valley is joining the effort.
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emily: california governor jerry brown was among the attendees. we caught up with him and asked about california's role in combating global warming. gov. brown: we're not going to convert donald trump or mitch oronnell the koch brothers mr. ryan. they are in a couple of denial. distractive of science, pulling back on research, trying to prevent california and other places that want to go on a renewable pathway. they want to resurrect whole which is dying. that is true.
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complications such as this does mobilize commitment. there are real financial statements that are going to be reflected, real commitment to dollars. indonesia,frica, for and for other countries. these are real things. we are doing stuff. we are converting people. we have to do it one company, one state, one nation at a time. this is not perfect. people are talking, but dam it the world is going on the wrong direction. we have to wait blood. because the cynical complacency of the powerful that scares the truth is no reason why people such as the secretary-general of the yuan and the president of
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france, from so many other countries, the vice mayor of china, there are a lot of people and there are more all the time. it is a real battle. i am going to do everything i can while i am in a position of power and responsibility to move the world toward a future that is sustainable. it will not be the destructive path that the cynics and those who do not understand climate science are stupidly moving the world toward. we are making progress. is the world on the right track? no. but we are taking steps, and next september in san francisco will have a similar conference and we will do it as long as we can, and eventually we are going to win. people on the side of truth, sustainability, and the science
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as we all understand it. >> governor, i have to you about edwin lee. he passed away in an untimely way. give us your thoughts about edwin lee. gov. brown: ed lee was a good guy. i knew him. i did not know him for a long time. he was a politician who spoke the language of the people. he was down to earth. he was genuine and had integrity. he was working hard and it difficult city that is divided on different lines. he will be missed. he represented california and the city. these things happen. we never know the time nor the hour when our time comes up. i would say we are going to miss ed lee quite a lot. emily: that was governor jerry brown of california.
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as david and the governor were discussing, san francisco and lee has died. he had a close relationship working with tech in the city working to lower startups and keep major tech firms in san francisco, involving taxes and housing. he trumpeted san francisco as a sanctuary city for undocumented immigrants and opposed trumps executive order. mayor lee was 65 years old and was a guest on our show several times. he will be missed.
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emily: facebook is changing its tax structure. it will pay taxes in countries where sales are made rather than funneling everything through its irish subsidiary. routing u.k. based sales through island and here in the states is locked in a battle with the internal revenue service that may cost it more than five
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billion.illion -- $5 >> these companies exist on the internet, so they have been able to be creative about where they book that revenue. revenuethe self-service will be routed through ireland, beyond that it is a big win for individual countries, italy and germany and france, prices that will collect taxes from facebook. give us some of the numbers. , is in.al tax rate . google, appleook trying the best they can to manage their tax issues. there is talk of her repatriation. united states it will get harder for them.
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in terms of numbers, this move does not mean that facebook's overall taxes will go up. emily: why not? >> it could be the same rate for them. it will be complicated to implement. it might not actually be fully operational until the end of 2019. this change is a long ways away. facebook is letting us know now. emily: what do you think of the timing of this? facebook is under pressure for fake news. >> this is a critical moment for the company where they have to make sure they are on the good side of the government's they are working with. in some jurisdictions there are elections where they come under pressure for the way they use their platform. they are told to tackle isis accounts in europe. they're working with governments and regulators on these issues.
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they are not going to be will to use the same tax rate in ireland for much longer. emily: you have an excellent story about they can use, where it gets propagated. partisan ands inflammatory news. you talk about how facebook is fighting on that front. steve bannon and breitbart tried to exploit the weaknesses in twitter's policies. just --what was the gist of this article and how did breitbart manipulate twitter? >> bannon and breitbart were seeking retribution to twitter. the platform was silencing their voices. bannon went on a hunt for a legal editorial wave to damage
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twitter's reputation. they wanted short-sellers to get galvanized about this company. this shows that the lasalle tackle conundrum. twitter's conception is how do they maintain an oak -- emily: to a certain extent, they succeeded. >> no matter what they do there will be people who have backlash against them. they wanted to be the free speech wing of the free speech party. they don't want to be the arbiter of appropriate information. that puts them in murky territory. they want to be an open townhall. in a way that has been the bane of their existence. call to action, that facebook was neutral, a would allow content that was viral.
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how do you make the best viral content? it is outrageous. it will spark emotion. it is partisan. it went further than fox news and terms of conservative leanings and appeared into fake news. with twitter, facebook had to make the same decision. how much content do we limit? what ways do we limit it? do we ban it? do we use and algorithm similar to twitter's? these past measures companies have done. his popular conservative website does get crushed by facebook's news efforts in their change of the algorithm ranking. emily: it is the same thing but it will not be viral? >> exactly.
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the thing with facebook, they this stuffto dampen from going viral. they do not want to be in arbiter of truth. explicitly want to say, this cannot go on our platform. that brings up free speech concerns. they understand their power over global conversation. they do not want to be seen as censoring anyone or appearing biased. with the president being on twitter and using it to , and people have questioned if he should be on twitter at all? think the cyber bullying, if it were a regular user, twitter would kick them off. however, twitter tries to way
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that against the disparagement and the content of the tweets. in the case of trump, we have heard from the executive chairman that they like that trump is using their platform. they like that global leaders are turning to twitter for their communication. it is keeping awareness of their brand. they're willing to put that over the concerns of users that trump is not a healthy addition to twitter. emily: comments from a former facebook executive, speaking at a conference last month, he said, i feel tremendous guilt. it is at a point where we have created tools that are ripping apart the social fabric of how society works. he never said facebook by name, but many people think he is talking about facebook.
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facebook has hit back on his comments. thisdo you make of situation? >> the companies usually stay silent in these circumstances. what he said must have angered someone at the top. he is using this moment to cement how he wants people to think about him and his contributions. he was on the facebook growth team back in the day. this is a moment for him to worries he isk using it opportunistically. emily: now for something out of this world. astronauts on the space station normally have to wait for movies. they are getting one notable exception. disney has arranged a special screening of " star wars the last jedi at the same time it appears in theaters. that does it for this version of the best of "bloomberg
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yes! yes, indeed. amazing speed, coverage and control. all with an xfi gateway. find your awesome, and change the way you wifi. >> the final countdown, we are weeks away from the method ii deadline. -- unintendedded consequences could have? when did the regulators step in? welcome to "bloomberg markets rules & returns." i am nejra cehic. get around up of news.
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