criminal investigations into jeff sessions nearly a year ago. the probe reportedly looked into whether sessions withheld information when testifying before congress about contacts with russian operatives. president trump is defending his decision to congratulate russian president vladimir putin on his reelection, saying his predecessor, barack obama, did the same in 2012. trump tweeted "getting along and russia is a good thing, russia can help solve problems from north korea to the coming arms race." authorities searched the home of the texas bombing suspect, who police say blew himself up as they closed in. authorities believe he was behind the explosions in austin and suburban san antonio. andsuspect's motives whether he acted alone are unknown. it is the first a of spring and the eastern u.s. has another nor'easter.

getyork city is on pace to between 10-14 inches. it is the fourth storm in three weeks. thousands of flights have been canceled. the worst of the storm is expected after sundown. global news 24 hours a day, i'm mark crumpton in new york. this is bloomberg. ♪ caroline: i'm caroline hyde. this is "bloomberg technology." hisng up, zuckerberg breaks silence after facebook's muted response to the cambridge analytica fallout. our dive into the crisis mode at the social media platform. musk gets his money. shareholders approve a multibillion-dollar compensation package.

potential $50 billion in executive pay for the tesla founder. on profit ands revenue is up 50%, but celebrate the good news with a warning. the latest earnings report as asia's most -- on asia's most valuable company. first to our lead. facebook is in the midst of its to date,ontroversy following reports data for 50 million users was obtained by a firm that helped elect donald trump. lawmakers and regulators in the u.s. and u.k. are scrutinizing facebook, whose shares have dropped dramatically. mark zuckerberg broke his silence. in a facebook post, he wrote, "we have a responsibility to protect your data and if we can't, then we don't deserve to serve you." bloomberg so far has written about what went on behind the scenes, and the current -- in the current issue

of bloomberg businessweek. welcome. i want to start with you. the latest mark zuckerberg said, what caught your eye? >> a few things. he is, as people hoped he would, outlining concrete things to make sure this doesn't happen in the future. among those steps are things that facebook should've done years ago, which is, they are going to restricted developer access to your data if you haven't used to their app in three months, for example. these are issues that have to do with developers on facebook as related to the cambridge analytica scandal. this isn't a big privacy overhaul for facebook. many note ons twitter, didn't specifically apologize. however, he did say he is taking responsibility for what happened here, and sheryl sandberg, the coo, says she did really regrets

-- deeply regrets what happened. caroline: i'm digging into our bloomberg terminal. hashtag, wein our can see how much of an effect this has had on market capitalization of facebook. it was slightly higher, 490 $2 billion, still a lot but it is down significantly. is also down his morale inside facebook. >> we were able to talk to people who were at the meeting with the deputy general counsel. what was striking there, despite zuckerberg's statement today, is normally, zuckerberg has been the one to be the damage controller, to come out and address employees. the fact that they put this lawyer in front of the company was a disappointment to some. i think there is a big disconnect at facebook. it is a largely left-leaning staff, obviously based in

silicon valley, most of them voted for democrats. on the other hand, this is a company that has to be neutral because they want to have people from both parties. the trump phenomenon, and this specific scandal, presents a bit of a problem for them, because it requires zuckerberg to be balanced, but also cater to these, a lot of bleeding heart liberals who work there. ,aroline: talking of catering potentially the business for the future. talk to us about the business from here.it fares some analysts talk about radical action that needs to be taken, more radical action than has been taken in the past, particularly regarding how you might limit segmenting of the audience. you might be able to limit, therefore, privacy data breaches going forward. is this not the business model? let me draw a distinction between what cambridge analytica

did, which was gather data that a developerapp that used, and the advertising model. cambridge analytica later used data like that to target people in the trump campaign. the advertising model on facebook uses a different kind of data through facebook's actual let form, where you can target certain segments. it is a little different, but this whole situation has raised a lot of questions from regulators. the question is what the risk is to their business. the risk is regulators say, we don't trust facebook's privacy. you need to put more walls and there in terms of how you share data, not just with developers but also with other properties like whatsapp and instagram. we have seen a lot of this concern in europe, which has seen the rollout of the gdp are rules. we could see something similar in the u.s., but mostly we will see calls for zuckerberg and sandberg to testify, for them to

come out and explain to congress what is going on, and try to educate them. if congress sees problems here, they can take action. caroline: regulatory issues abound here. max am i want to ask you particularly about the ramifications on you and i and the user. i am looking at a statement from zuckerberg on facebook, and it says this was a breach of trust. this was a breach of trust between cambridge analytica and facebook, but also a breach of trust between facebook and the people who shared the data with us and expect us to protect it. what about the feelings of the user base are changing? if you stop trusting the data, how the data is used, before we were fine to sacrifice data for the product, that is not the case anymore. you might say people are falling out of love with facebook of it. in north america, which is the

core market for facebook, the numbers glide for the first time in the most recent quarter -- declined for the first time in the most recent quarter. there is a sense that people are thinking about the company a little differently. , the cools going from thing you do with your friends to something that is a little ,it more like linkedin something you have to do. i think that changes the calculus in terms of what you are willing to share. theother point is, as zuckerberg statement alludes, there is a lot of data floating around between facebook and its app developers and advertisers, and facebook hasn't done a great job of keeping an eye on it. i think what this scandal brings to the forefront is how much of our information is out there in the ether, waiting for somebody to do something with it. that can be a little scary. caroline: can be a little scary for the whole social media arena right now.

you cover facebook, sarah, and twitter. zuckerberg taking to the stands, but other social media giants? sarah: absolutely. we have seen the lawmakers want to hear not only from zuckerberg, but also from google, twitter. they want to hear all of tech explain how this stuff works, because one of the trends we have seen happen, as people see this crisis unfold, not just this crisis but also the issue with russia's influence of the presidential election using social media, they are being scandalized by the way things have worked for years. they are wanting to understand the things that years ago, we gave these apps permission to do. now, they are so much bigger, stronger, have more power over the shape of democracy in the road. one of the problems is that they have taken what works for a

commercial advertiser, if you are trying to sell someone shoes, and they are doing it for political advertising without much of a differentiator between how they treat those two things. caroline: it is a fascinating time. we have seen twitter reaction. they are taking to social media to tell us about these issues, ironically. tristan harris was at google design and is now the closest thing to silicon valley -- that silicon valley has to a conscience. he says when the stakes are so high, the integrity of elections , the data of 50 million people, i ask employees of all tech companies, what is more important? your loyalty or protecting the fabric of society from eroding? max, a longer-term question. is this a time of reckoning? do social media giants realize how giant they are, and are they willing to start to address this a little faster and discuss this with the public? max: it is tempting to say this

is a turning point. the only counterargument would be that we have had many of these turning points with facebook over the years. every time, mark zuckerberg, with the help of sheryl sandberg, when she joined the company, have been able to get past this. there have been users involved from the jump. what feels different here is the caliber of people who are stepping up. tristan harris is one. the cofounder of whatsapp tweeted the "delete facebook" hashtag, which is stunning because he sold his company to facebook for $19 billion. you are talking about somebody who benefited from facebook coming out and saying something. facebook is doing great. notwithstanding this drop in the market cap, i don't think they want to change too much if they don't have to. that is why there's a bit of a reluctance to come out and do

something really dramatic here on the part of mark zuckerberg. 3. we -- caroline: we will see. ,eporting from sarah and max thank you. look for their articles in the new bloomberg businessweek. the european union wants to hear from facebook. we look at how they could punish the social media giant, next. if you like bloomberg news, check us out on the radio. listen on the blue work -- the bloomberg radio app. this is bloomberg. ♪

♪ the calls for facebook to speak to government officials over use of data are growing louder. theresa may made her demands to

the social media giant provide answers. >> people need to have confidence in how their personal data is being used, and i would expect facebook, cambridge analytica, and all organizations involved to comply with the investigation that is taking place, and i am pleased to say that the beale -- the bill will strengthen legislation and give the information committed -- commissioner's office more power to make sure they comply. the response to facebook. the penalties for violating consumers' privacy are stick for -- stiffer in europe and america. they can avoid paying $25 million or 4% of their annual revenue, whichever is higher. the european commissioner for justice spoke to bloomberg about that scenario. what she expects to hear from

facebook. have several serious questions, especially on how this could of happened, whether they have neglected the privacy rules, whether they were following the rules which should of insured -- should have ensured the privacy of the people. inoline: you are curtailed what kind of sanctions you could impose. were you defined -- you said you would be imposing drastic sanctions. how? how would you do that? europe,is moment in member states are responsible for imposing sanctions. the united kingdom, in the case of the breach, they can impose a sanction up to half a million pounds, and the sanctions differ

from state to state. they will stop in may this year we are unifying the rules, including the sanctions, and the protection regulations. the member states are enabled to enforce higher sanctions, which cannot be applied in this case. >> that starts may 25. you are asking the working party's,he 29 working to investigate all of this. how do you -- have you contacted every single nation in the eu? are they all on board? >> all the member states are represented and they met yesterday, and they confirmed that they are unified in launching the investigations.

if they find out privacy rules on the rights of people in their ,tates might have been breached this is an important moment, connecti think if they and join their power, they can consolidate it. >> could this set some kind of ?resident -- precedent what are you hoping for is an outcome if facebook were found guilty or negligent? >> i am not happy at all about this because in my view, is not only about data protection breaches. this is about democracy and individual freedoms of people. of course this will serve as a precedent for the future, and i can say in europe, we are ready for these cases. also, for the preventive measures, because as i mentioned, regulation is very

tough. in theire strict rules theespecially as far as consent of the people is concerned, because we want providers to have the consent of people. the people who must understand why the data is collected, and what the provider will do with the data. of course, the providers are monetizing the data, but the people must know what is behind that and what are the plans. >> will you be specifically act -- asking facebook for mark zuckerberg to come to europe and speak before parliament or national parliaments? likely come the request of such hearings, and tomorrow, the prime minister's of the memberents states will gather in brussels

and at the request of emmanuel macron, this will be on the agenda. we can expect a consolidated approach from the member states. it is very likely the national parliaments will require to get the explanation. >> that was the european commissioner for justice speaking to bloomberg. terminal,crossing the twitter's chief's information security officer is said to be leading the company. he joined the company in 2015, and announced his departure three weeks ago internally. it is now going externally. this is hot on the heels of the news that information engineers and -- at google and facebook have announced their departures. this is bloomberg. ♪

♪

caroline: a story we continue to watch, uber's co-founder is buying a controlling stake in a real estate company and installing himself as ceo. the company develops industrial and parking real estate. he was ousted as uber's ceo last year and has sold $1.4 billion of the company's stock. tesla shareholders approved elon musk's $2.6 billion pay package. voted inker's board favor of stock options. turn the automaker into one of the biggest carmakers. if successful, he could end up with $50 billion. now, you have a fascinating story out and a significant amount of wealth

tied up with tesla. why do they think of intent -- incentivizing more? >> that is the question everybody was asking, when the package was announced back in january. , a verylly, it is a way expensive way to show shareholders that elon musk will be around for the next 10 years. he is not going anywhere. he will remain focused on tesla, and it provides a roadmap for the company, outlining ambitious goals to become one of the just companies in the world. >> talk to us about those goals. do 2.6 billion dollars in options become $50 billion? company,he size of the the option package will gradually, if the company continues to grow, the top goal

is $650 billion, which is bigger than facebook and berkshire hathaway. the company needs to grow revenue and earnings before certain items in tandem with growing the market cap. how that will be achieved is nowhere to be found in this award, so that has led to speculation as to what tesla will do. will it by other companies? thisould imagine that outlines the plan for tesla to go beyond electric cars and solar panels, because there is no carmaker in the world that is , that has a $650 billion market cap. how tesla will get there, we are not sure. those thathat about perhaps didn't like the sound of this payday? not every single shareholder was pro-, including the california state teachers retirement association. what are their concerns? we have biggest concern

heard is, a 2.6 billion dollar award for one person is too much money. although musk is integral to and they recognize that, they say they are fully behind elon musk and they like what he is doing with the company, they think it is a bit outsized. caroline: $50 billion. how can that be outsized? thinks for joining us. coming up, the facebook scandal has wiped out more than $40 billion from its market cap. we will hear with -- we will hear from analysts with opposing outlooks, next. ♪

♪ >> here is a check of first word news. kristen nielsen and jeh johnson, the current and former

secretaries of the homeland security department, testified about past and present efforts to protect the integrity of the american election system. is this of extreme urgency to the department, but as you know, we are expanding resourcesxtraordinary to provide any support at the request of states, but we are prioritizing election efforts and vulnerability assessments for critical infrastructures. the un security council voted unanimously to extend the mandate for the panel's experts are assisting the north korea sanctions committee. >> they do a crucial job. through their expertise, we are able to see the ways in which evadersh koreans sanctions and close those down. so it is important that we that work, and it is the pressure from sanctions that has brought us to this moment where there is a political

opportunity in north korea. >> the mandate is extended for 13 months. a person in the paris prosecutor's office says former president nicolas sarkozy has been charged with accepting campaign contributions from muammar gaddafi's regime before the french election in 2007. sarkozy has been in police custody since tuesday. this is bloomberg. 5:30 p.m. in new york. paul allen has a look at the markets. l: we are seeing gains in new zealand at the moment. a quarter of 1% despite the weak lead from wall street. facebook is higher after two days of declines, although the nasdaq was lower. we will keep an eye on tencent at the open, after fourth courting -- fourth-quarter estimates beat estimates.

in sydney, weaker by a 10th of 1%. trading resumes on the nikkei after the public holiday. traded out of chicago, weaker by two thirds of 1%. we saw gains in the new zealand dollar after the reserve bank of new zealand held the cash rate at expected, one and three-quarter percent. after the u.s. federal reserve lifted rates. central-bank action comes from indonesia, taiwan and the philippines. gold is flat, oil breaking through, $65 per barrel. more from bloomberg technology next. ♪ caroline: this is "bloomberg technology." our top story,

facebook and broil do its biggest controversy over the exposure of personal data from millions of customers to cambridge analytica. the news wiped billions from the social media giants market cap, while the price stabilized today . headline risk is not going away. we are joined by brian, an analyst. , an analyst with the opposite view. welcome both of you. brian, i will start with you. yourmic mismanagement is worry. how will this hit the business from the mental -- fundamentals? >> i saw it accelerating before all of this. was becauseor that i think most of wall street was a ignoring the limits to growth, advertisingital faces. they are ignoring costs that would be rising, and people are

looking past this when you go beyond 2020. we had a lot of issues over the last 18 months that were concerning. we had advertising measurement at a reverse inability to take down inappropriate content when requested without a police report, a ton of other issues. selling illegal ads and not having processes in place to stop that. you could look at those in s. thenon and say, oop you get this and you read the original guardian article from december 2015, and it lays out this path that was so clearly not followed. facebook can claim that, we sent a letter, that's it. good for them. like there ise some operational problem. that is a new risk. you are expecting more than just letters in the future. you say there could be more radical actions taken, but this won't dent your view that this

is a by -- this is a buy? stock is relatively cheap. a lot of interesting issues are raised by the recent headlines, but my job is to be an equity analyst and find out what the financial impact is. thus far, we don't see significant impact. i don't see changing my model dramatically based on these things. lots of interesting social issues to discuss. some of those could impact the company, but in terms of the actual financials now, a lot of negative headlines but i don't see a lot of negative impact to the actual financial model. caroline: respond to that, brian. it worse thankes i would've expected. again, i don't think i am far from consensus on current year or next year. that is not the issue. it is beyond that where there are issues in terms of growth. that there are new risks are amplified, when it comes to

something like gdp are, in europe, that is the most important thing that will impact digital advertising. caroline: it is eu rule. data: this is the general protection regulation. it is unclear how this will play out in terms of what decisions advertisers will make. ambiguity and uncertainty rules, even among large advertisers two months away from implementation, about how you can use data. it is probably negative for the overall industry, but it is not certain. it is defined, and it wasn't clear whether the eu would pursue facebook and google aggressively, it is unambiguous, they will go after them. this is the problem. you get that element of regulatory risk where you could think, maybe they can out-litigate or out-last. that will happen. you can look at the possibility of that in the u.s., these are risks you can't anticipate. they will have to incur more costs and will have to do things

that will do the effect of having slow growth -- intentionally to manage the business. -- theill impact a model model. those are risks. caroline: have you incorporated risk within your model? ben: i have been covering this almost 20 years. political, regulatory, legal risks have been around since the beginning. they are legitimate concerns, but we have seen the internet and advertising in particular grow at dramatic levels over the entire timeframe. i don't want to dismiss these or get too comfortable with these issues. brian raises some valid points, but this is where users are. as long as users are there, advertisers will have no choice but all of them. tothese headlines do lead more people leaving these platforms, that is a real legitimate risk, something we will watch for. not a lot of these issues are dramatically new, and the

reality is, they are not different than they have been in the past. they are getting more focused now and i think there are interesting social issues to discuss, but our role as analysts is to focus on the model and i don't see a lot of meaningful changes now. coverne: both you and ben facebook, brian. i want to delve into the bloomberg and bring up our this shows the impact we are seeing on twitter. we have seen the issues of facebook have a contagion effect. people are having to pay up more to hedge their exposure on the twitter stock. what about twitter? what about google come a youtube? how much could this be contagious? brian: i don't see much of an impact on twitter or snap because of this. it is possible the tertiary players or independent publishers could benefit, the issue and gdpr is

at hand. anybody who has a direct relationship with consumer probably does relatively better, but i don't think the regulatory risk impacts twitter. iche offeringsn aren't affected. health of that and google is different. they may be a beneficiary. advertisers can say, where else will you spend the money? the obvious place is alphabet and google. they are better positioned if facebook becomes the whipping boy. caroline: what are the impact on the rest of the social media giants? ,en: overall, the political regulatory, legal risks are risks for the industry. can we take the data to better target advertising? how will that work in the context of political advertising and the issues around news? those are systemic issues across the industry, but these are issues that have been around

since the beginning of the internet. this is not necessarily dramatically new. i think there is more focus on it today. you are seeing new regulations put in place, but i don't see it dramatically changing how advertisers are able to use targeting across these platforms. caroline: that is why the price chad remains $200 for facebook. -- remains at $200 for facebook. thank you, gentlemen. networkp, one social ceo is betting big on bitcoin. jack dorsey's thoughts on bitcoin. this is bloomberg. ♪

haveine: cryptocurrencies not been off to a hot start. bitcoin hasn't been able to come to its all-time highs. positive.y is staying he believes bitcoin will be the world's single currency in 10 years. he has doubled down on the currency in an interview published by the times of london. he said in january, bitcoin provided an opportunity to get more people access to the financial system. staying with the current landscape, i want to bring in salina, standing by in new york. >> that is right. i am here with david, the chairman of lbj capital. capital. he is the head of a crypto

focused hedge fund. thanks for joining us. the bitcoinlk about rally. we are seeing lots of optimism after the g20 conference. we didn't see a unified clampdown on the currency. what is your take? >> it has been a cold winter. in 2011.volved it will be a cold winter. regulators have been giving us -- haven't given us guidance on how to deal with this. this is the biggest market in the world, and asia is hot for cryptocurrency. this year is the cryptocurrency wall street time. we said that before, as well. cryptocurrency and bitcoin, worth $30,000. >> to you think there will be a single currency of the internet, or will there be multiples? >> right now, we have 1500. if is taking a hit because the other ones chasing its tail --

ether is taking a hit because others are chasing its tail. they are starting to execute and create products that are similar supplying quicker solutions. they are chasing the top five. i think we will see changes this year. has preservation to be. >> do you disagree with dorsey that in the last -- in the next 10 years there will be a single currency for the internet? >> there will be hundreds. today, we have 1500. he may have meant that will be unacceptable currency on a global basis because it was the first one in 2009, but there are too many out there. aren, some of them fraudulent and weird and strange. there is too much hype. we have to come down. >> your fund invests in many of these initial offerings. waysis one of the easiest

to be funded to run scams on. how you are -- how are you screening for legitimate investment? the revenge of occupy wall street in 2009 was bitcoin. today, it is crypto wall street. this year, public companies, i am on the board for six of them and the real companies are saying, how do we create more loyalty and tracking of what we are doing with coins? how do we know what is going on? blockchain online cryptocurrency allows you to track everything from the beginning, and it is a forensic accounting solution. we get companies like atari, cvs , dakota, mainstream companies saying, this technology is great youhe blockchain because can track things. the crypto portion of it is the next step, when you trade these blockchain's on exchanges. this year is when the rest will come in and say, can we take

these loyalty programs, offer solutions, and add value to shareholders by adding more to it? >> obviously, there are legitimate reasons for doing an ico, but what proportion are illegitimate? >> the way i look at them today is like i did in the bc days. we understand shareholder value. they have a solid team? do they solve a problem we need to have solved? until now, those were hard to gauge. they are ideas building something that didn't exist. we will see more of those. yourest, such as dogecoin, have all these strange coins and there is no business area. focus on real businesses. that makes my life easier. >> seems like it is the wild west when it comes to ipos. the fcc said they should be registered with agency. >> they are right.

there are countries like korea and other markets that have said too early that they will do this or that, and they have made the market go up and down. the fcc is taking their time and clamping down. there were 80 subpoenas last month, as well as changes. you can't break the rules. are supposed to be utilities. they are shaking the tree, cleaning things up and telling everybody, we have rules in the u.s. they are created to make sure we don't get fleeced and get a depression like 1929. >> twitter is trying to ban ads that promote cryptocurrencies. what is the impact? >> it removes all of the safe ico's. i am behind it. i think they are doing the right thing. it legitimate size -- legitimizes my investments. it gives us more value by taking away the easy ways to pump and

dump. it is not illegal to pump and dump in crypto, but it should be according to me. for your time, david drake of lbj capital. back to you. caroline: fascinating. thank you very much. we are coming up, tencent raking it in. just how well the chinese internet giant did during its fourth quarter. that is next. ♪

♪ isoline: president trump planning to announce trade sanctions on china thursday. to 60ime, it amounts million dollars worth over

intellectual property violations. the president instructed trade representatives last year to investigate allegations that china steals intellectual property and forces companies to transfer technological know-how to chinese firms as a condition of doing business in the country. wall street journal reports china prepares to retaliate with levees aimed at industry's and states that employ trump supporters. big news for chinese internet giant tencent, announcing wednesday its profits doubled during its fourth quarter. the growth continues to be in wechat. the chairman pointed this out. >> we continue to gather steam. increasedau of wechat year-over-year. at one billion after the 2018 chinese new year. caroline: for more, let's bring

in stephen engle live in hong kong. talk to us about this. the profit goes up but there is warnings about the margin. it has stuck to its bread-and-butter, mobile and pc gaming. also, leveraging off its more than one billion users in its wechat social messaging platforms. also, qqq. to drive the user base to other services that they are spending a lot more money to build out, to go beyond the core competency, like cloud computing and artificial intelligence and the financial services and the like. the margins have been squeezed. when you have more than a alone insers on wechat the first quarter of this year, it begs the question, and this question was raised to pony ma, is there a chance to have a

security breach like facebook at tencent? had to what martin lau say, basically saying there is no chance that could happen. >> is is at the top of our at the top ofs is our concern, because we felt this is really our responsibility, and the basis of our users' trust with us. so that is why we have a lot of different measures, including technical measures, to prevent the leak of data. a couple other notes from the tencent press conference, another reason why the margins are being squeezed -- for cost soared over the fourth quarter, as they are requiring more content in video and music and martin lau saying they are getting closer to a possible ipo for the music

division, saying if the market conditions are correct, they could return to china with a domestic licit thing -- listing. the rules in china would need to be changed. the chinese government wants these big tech companies to list on the mainland. tencent is listed in hong kong. tencent is spreading its investment, even in europe. this week, we had tencent put money into a syntax startup taste in germany called and 26. this is country leading to profits. you say about listing at home, what about the general focus of the business going forward? are people worried about investments they make in these areas? this is a heated competition with the likes of alibaba, which creates its a ecosystem in china had globally. tencent has acquired more than 600 companies, acquired or

invested in more than 600 companies. they are definitely going beyond their bread and butter in gaming and social media, into payment and financial services and other developing parts of the world, including europe. caroline: fascinating stuff. stephen engle, thank you for getting up so early to join us. that does it for this edition of "bloomberg technology." check thursday's show. we have a chief technology officer joining us. let's take a look at one last chart. ag. the stockasht has fallen the tech is trading at -- at a premium. this is bloomberg. ♪

♪ haidi: mark zuckerberg offers a response to the data scandal site mistakes are made and user information must be protected. betty: sheryl sandberg says it is a violation of people's rights and facebook must work hard to regain trust. haidi: jerome powell indicates another two hikes this year and more to come in the future. betty: you must is giving 2.5 billion reasons to stay in the driving seat at