mark: i am mark crumpton in new york. you are watching "bloomberg technology." here is a check of news. president trump today took shots at democratic senator joe manchin in west virginia, the lawmaker's home state. pres. trump: he votes against everything and he voted against our tax cuts. he also voted against help and health care, and that's bad. we can't have it. you know, it is one of those things. and he does other things that i don't like, i will be honest with you. mark: six republican contenders are vying in the primary for manchin's seat. president trump says he still has confidence in e.p.a. chief scott pruitt, but bloomberg

obtained a new memo from an epa official that found fault with an initial review that cleared pruitt of any wrongdoing related to his rental of a d.c. condo from an energy lobbyist. the surgeon general is urging americans to carry naloxone, an antidote for opioid overdoses. naloxone it is marketed under the name narcan and is available without prescription in the united states. they recommended women -- pregnant women abstain from alcohol. the navy has performed shock testing on the u.s.s. gerald ford. the navy had previously asked the d.o.d. to delay testing for at least six years. in new york, i am mark crumpton. "bloomberg technology" is next.

emily: i am emily chang, and this is "bloomberg technology." coming up first on bloomberg, , our conversation with facebook c.o.o., sheryl sandberg on winning back the confidence of its 2 billion users in the wake of the cambridge analytica data scandal. plus, camping down the tariffs rhetoric. the trade battle brewing between the world's two biggest economies saying it can be settled diplomatically. and twitter war on terror. the company suspending more than 250,000 accounts linked to extremists. we will check in on the race to limit hate speech on the platform. to our lead. facebook's chief operating officer talked to bloomberg first. in the last 24 hours the social network has said the number of users impacted by the cambridge analytical data scandal could be as high as 87 million and that the public profiles of all of facebook's 2 billion plus users could have scraped. facebook is changing its policies and making them more clear in response. i caught up with facebook coo

sheryl sandberg at the menlo park headquarters in california and asked if it was too little too late. take a listen. >> let me address that specific issue and then talk more generally. on that specific issue we had a feature where you could look up people by name or e-mail, and that was important for finding people. someone made a directory they shouldn't have made with that information. but to be very clear and specific, all of that was public information. that was information that was already publicly available on facebook. now to your broader question, we know that we did not do a good enough job protecting people's data. i'm really sorry for that, and mark is really sorry for that. now what we are doing is taking strong action. starting monday, we will be starting the process of rolling out to people all over the world right at the top of their newsfeed all of the apps they have connected to and a very easy way to delete those apps. we are going to tell anyone who

might have had their data affected by cambridge analytica who they are. we are taking very strong steps to restrict more data that apps have historically had access to. we are looking beyond about -- beyond that. we announced yesterday that we are taking steps to shut down certain use cases and groups and pages in search. these are just the latest steps. this is going to be a long process. we are systemically looking the all the ways facebook data is used. we are going to find more things, we will tell you about them, shut them down. this is a forever process because security is always an arms race. you build and someone tries to misuse, you build, they tried to misuse. we are committed to this for the very long run. >> mark has personally taken responsibility. he said we didn't take a broad enough of view of what our responsibility is. it was my mistake. how much do you feel personally responsible?

>> i feel deeply personally responsible because there are real mistakes that we made and that i made. when you take a step back and you think about what has happened here, for a long time we were really focused on building social experiences. a lot of good happened because of those. and when we found problems, we would shut down that problem. so the specific case of the friends offense sharing that happened with cambridge, that shut down in 2015. what we didn't do until recently and what we are doing now is just take a broader view, looking to be more restrictive in ways data could be misused. we also didn't build our operations fast enough, and that is on me. we had 10,000 people working in security at the beginning of the year. at the end of this year alone we will more than double to 20,000. we are massively investing in smart technology, and we are doing all of this to make sure that we get to a place where we can proactively protect people's data. emily: facebook has constructed

a business model that leverages information users share with facebook, and you are the chief architect of that. assuming the business model will evolve as a result of the changes, how will that impact the bottom line and profitability? >> we have never run this company for short term gains, and we have never run this company to maximize profits. we have run this company for the long-term health of our community and business. we announced two quarters ago in earnings that these investments are big, and they will impact profitability, and that is the -- that is ok with us because it is the right thing to do. we will update at the next quarter. emily: with all we know now, do you believe facebook played a decisive role in electing donald trump? >> there is a lot of concern about what happened in this election. we are certainly concerned about foreign interference on our platform. the overall picture here i don't think anyone knows yet. it is an important question, and it will be studied for years and years to come. where we are focused now is taking the lessons of past

elections and making sure we apply them going forward every foreign interference, may have seen earlier this week we took very strong steps to take russian i.r.a. content off our site. that was a content that was in the u.s. election that we did not find quickly enough. but now we are analyzing ahead, and we found 270 pages of accounts linked to them that were deceptive, in russian, targeted mostly at russians. our message is very clear. there is no place for this deceptive content, for these troll farms anywhere in the world. we took this down in russia. we are looking for others from other similar groups, and we are going to take them down anywhere in the world. emily: mark has been asked if he is the right person to lead facebook. do you believe that he is? he said he is. do you agree? >> i believe deeply in mark. mark had a vision for what social services and social sharing could be, and that vision remains really important. mark also, along with me and all

of us, take full responsibility for what is happening here, and we are making a very important shift. we are going to keep building social products because sharing is so important to people all over the world. and we are going to be much more proactive. i am not going to sit here and say we won't find more problems. we will. we are going to continue to find problems. we are going to continue to shut down situations when we find them. and this is a forever thing, because security is an arms race. this is something we are signed up for not just now but on an , ongoing basis. emily: mark zuckerberg said he has not seen any meaningful impact in use. but we all have friends who have taken facebook off their phone, using instagram instead, who have sworn off social media. how do you explain that? >> we take that really seriously. for me personally, if someone were to wake up this morning or yesterday and say i don't want to use facebook anymore because i don't trust them, that is

something i take as seriously as possible. what i would say to them is that we are going to work hard to regain your trust. this is going to be not just a one-time thing, not one moment in time, but a long and ongoing battle, and there's a lot of good done on facebook. we want to make sure that people feel confident and comfortable and know that they can share safely. >> my conversation with facebook coo sheryl sandberg. i want to bring in our bloomberg tech editor, brad stone. the first time we are hearing sheryl speak in the last a lot 24 hours, of revelations that she is responding to. what dealmaker of what she had to say? >> good interview. the apology tour continues. what we saw from her is what we have seen from mark, which is apologize, take responsibility, outline action. for the first time sheryl said she felt deeply responsible

apologized again and again, but , then talked about increasing the security staff to 20,000 people, letting people know in -- if their data was scraped by cambridge analytica. the problem i have come new rules do not necessarily deter rule breakers. in fact, we know they do not. she acknowledges that, saying security is an arms race, but it is an arms race always fought. there is no such thing as a deterrent here and we are going to see this happen again and again. emily: and ultimately she told me afterwards the business model is not going to change. if the business model is not going to change, what does that mean? brad: it means they are asking users to continue to trust them, to continue to trust that the internet can be secure, that you can share personal information and not feel invasively targeted and that your information is being exploited by bad actors. they are going to have to go through the midterm elections in 2018 and probably the next presidential election in 2020,

and we will be looking very closely to see if facebook i ine way it was in 2016. emily: mark zuckerberg is going to be testifying two days before house and senate committees. what are you expecting to hear from him? brad: more of the same. apologies. i don't think we are going to get revelations next week. there will be pointed questions he probably cannot answer. congress is going to want to know, where is this personal information and what is being done with it? facebook has taken some steps to address the root cause of what led to the cambridge analytica fiasco. back int put the cat the barn. we will be seeing legislators using it for some political purposes. there will be some theatrics. i don't think he is going to necessarily have a great answer for that. emily: i do want to get this

quick headline out. the brazil supreme court, a judge has ruled that the former president lula has until 5:00 p.m. to turn him in. he was sentenced to 12 years in prison for corruption. we are going to continue to follow this story. he has until 5:00 p.m. on friday to turn himself in. that is one we will be watching. continuing this discussion about facebook, there are some things that are difficult to square. on one hand, zuckerberg said they have seen no meaningful change in using. she said there is a pause by some advertisers in spending. and a third, we all hear some people are disenchanted with facebook. is it going to hurt the platform? brad: you are right there is a disconnect between what mark said yesterday on the conference call, that they are not seeing much change in business activity, and what sheryl told you today, and then there is the fact that these revelations have

been getting worse. we just got the 87 million figure this week. i don't think we know yet. it is too soon. next week that testimony is going to be broadcast on the same level as the state of a union speech. people will be watching. everyone now, facebook's two billion users are probably in the midst of some uncomfortable calculations about whether the cost of the service and the price of the privacy is worth it. emily: brad stone, thank you so much for breaking it all down. coming up, taking on china. top white house economic advisor larry kudlow says the u.s. wants to pressure china over trade, not spark an all-out trade war. we will have the very latest, next. if you like bloomberg news listen on the radio app and , sirius-xm. this is bloomberg. ♪

emily: a story we continue to

watch apple ceo tim cook is , said to be deposed on the 27th in its law suit with qualcomm. they told the san diego federal judge they have reached an agreement for cook to be questioned by lawyers for the chipmaker, qualcomm. in a suit, qualcomm accused apple of lying to investigators and threatening to cover up the use of inferior parts in some iphones. president trump's top economic advisor, larry kudlow, told bloomberg earlier that the president is properly wary of china but still expects the u.s. , to reach an agreement in trade with its fellow economic superpower. take a listen. >> both countries have just proposed tariffs. there is nothing enacted. that is an important point. here in the u.s., we are going to put it out for comment for a couple of months. i don't want to pinpoint a deadline. that is bob lighthizer's area.

there is nothing around the corner. there will be big discussion about it. all the senators will weigh in, and we welcome that. emily: white house trade advisor peter navarro said the white house will hold high level talks with beijing before anything takes affect. navarro told cnbc the discussions will take place during a 60 day period when america can provide feedback. one company that could be potential he hit hard, a logistics platform. the ceo joins us. your company and the products you transport that we are talking about here, who is going to hit -- get hit hardest by the tariffs? >> there is a broad category. they tried not to hit things that consumers use every single day, so you may not notice it as much. they intentionally made it so it would not hit people too hard. it is things like fitness wearables fire extinguishers, thermostats, dishwashers.

there are a lot of consumer goods in there as well as agricultural equipment, beer making equipment, motorcycles, guns. emily: what about tech in particular? >> wearables is one i would have my eye on. emily: how would this impact flexport, given they are your customers? >> within an hour of the tariff codes announced, 7% are affected. it is not a huge part of the customer base, yet it is as much as 100% of their shipments that are going to get hit. emily: how do they handle that blow? >> supply chains take a long time to process. you have to make plans about where you produce what goes in, , the customs duty. it is not something that can be changed overnight. we are working hard over time to help them plan around this. emily: there are big questions

that we heard larry kudlow there saying nothing is going to happen for months, but there is a big question as to what the total damage will be? i think that is the problem here, businesses like to operate in an environment of certainly. if you don't know what is going to happen, how do you plan for that? every side of a chinese export is an u.s. importer affected. the chinese are now retaliating. u.s. exports to china are going to be hit, soybeans. those plans are already in the ground. we sold $12 billion of soybeans to china last year. if we can't ship them, what do we go? emily: had these tariffs been in place last year, what would the impact have been? ryan: it is about $50 billion of merchandise. you are talking about a 25% duty rate. these are big numbers. it is kind of hard for us to get our head around what they mean. for the companies affected, it can really be the difference between profitability and bankruptcy. emily: ultimately there are still a lot of questions about whether the u.s. is really losing in our relationship with

china, and therefore, is this trade war necessary? what is your opinion? ryan: i think it is really important to remember that trade has two sides. every single chinese export has an american business that is importing something, and they voluntarily participate in that trade because it makes their business better off. these businesses employ people and they have customers. suddenly changing the rules of the game makes it very hard for businesses to operate. customers depend on these products, so it is really chaotic. emily: what are you telling your customers, and what are your customers telling you? ryan: our first priority is finding out who is affected by -- and how much. it doesn't go into affect for 90 days. for some of them, it is real time planning. there is longer-term planning that has to take place. should you consider producing in other countries or should you engineer your product to get classified as a different code? emily: what do you make of the

president's war of words with amazon? he literally just landed from west virginia and said yet again amazon is not a level playing field. it is a company he is going to be taking a closer look at. we don't know how much of this is smoke and how much of this will lead to fire. but he is really taking direct aim at the biggest e-commerce company in the world. one of the biggest players in logistics, which is your territory. ryan: it is very interesting. he said they were making usps their delivery boy. it is really odd because amazon is one of the most successful, dynamic american companies. right now it is taking over a lot of industries. it is a great company, very innovative. it is hard to say on the one hand we want to support american industry, support american business, and we are going to put up tariff codes to protect the u.s. economy and then on the other hand pick a fight with our best company. emily: you wonder if he is

thecting his ire more at owner of the washington post, which jeff bezos is. thank you for joining us. we are going to keep an eye on these tariffs. i should disclose bloomberg beta is a venture capital arm and investor in flexport. coming up, shares of spotify are stabilizing as more analyst give a buy rating. this is bloomberg. ♪

emily: now to a stock we are watching spotify shares , finishing the day slightly down, 1.6%. but the interesting news is fewer shares were sold than expected in its direct listing debut on tuesday. just about 5% or 5.6 million shares changed hands of the opening price according to , bloomberg data. this potentially contributed to an initial shortage that drove

the price up according to people familiar with the matter. sales force is tapping the bond market for the first time in five years. a person with knowledge of the matter says the largest manufacturer of online software is selling unsecured bonds in up to two parts. salesforce offered $1 billion worth of convertible debt which matured this week. the proceeds of the new debt will be used to finance sales worth 6.5 billion dollars of mulesoft, its largest purchase ever. amazon is adding several jobs in riyadh, saudi arabia. this signifies it jeff bezos' desire to grow in the country. the crown trends met with amazon's c.e.o. in seattle last week. the 32-year-old heir apparent to the throne had planned to discuss a project for the minister of industry for amazon to build a data center in the country. this will be the first in the middle east for the world's

largest cloud provider. saudi arabia's 30-year ban on movie theaters is coming to an end. is looking for a grand opening night in the kingdom. it was granted the first cinema license in saudi arabia and plans to open 100 locations there. they say theaters will not be initially segregated by gender, but some showtimes may be. the first movie to be screened in saudi arabia, marvel's black panther. coming up, the e.u. is rolling out new data privacy laws just as facebook tries to repair its trust with government officials. we will talk about the next steps. bloomberg tech's live streaming on twitter. check us out 5:00 p.m. new york, 2:00 p.m. san francisco. this is bloomberg. ♪

>> it is 11:29 in hong kong. i am paul allen with the first word headlines. president trump putting fresh feel him trade war, threatening tariffs on $100 billion of chinese imports. in light of what he calls china's unfair retaliation for the initial levies on $50 billion of gerd -- of goods. will defendountry its interests against u.s. actions. japan and the european union want to join the wto case over china's alleged discriminatory tech licensing rules. new filing showed tokyo in brussels said they had a substantial stake in the

dispute. japan says it is one of the largest stakeholders. they hold a significant amount of patent rights in the country. saudi arabia has raised the cost asia, key arab crude in sending brent crude to its highest in three years. barrel.10 a the survey last week said refiners and traders were anticipating a $.60 a barrel decrease. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. ♪ i am sophie kamaruddin with a check on the markets. u.s. stocks looking mixed, futures off by nearly 1%. the yen rebounding after a three day drop after trump's latest salvo. perhaps haunted

by recent declines. the hang seng getting 1.2%. tencent, the backbone. that stock rising. samsung on the other end of the spectrum, sliding with other tech stocks in asia, despite delivering a surprise profit. outpacingning against revenue growth in the second half. the offshore won falling, set for its first week -- worst week in five months. china will use the yuan to hit back at the u.s. the ringgit up 0.2%. dissolution of parliament is hotly anticipated. reporting the prime minister is due to make a tv announcement at 5:30 local time. spread hasar cdf

widened. risk has been building since the start of the year. the opposition candidate for prime minister -- that is it for markets. ♪ this is "bloomberg technology." i am emily chang. the european union is watching facebook's actions in the wake of its massive data scandal. a spokesman will contact data production officials to follow up investigations into whether facebook breached e.u. privacy laws. speaking to the press yesterday mark zuckerberg said the e.u.'s , new rules set to go in effect next month are very positive. and he is going to make the same controls available for users everywhere. take a listen. >> we intend to make all the same controls and settings available everywhere, not just in europe. is it going to be exactly the same format? probably not. we need to figure out what makes sense for the different markets and laws. let me repeat this.

we are going to make all the same controls and settings available everywhere, not just in europe. emily: for more, i want to bring in caroline hyde in london. that was news that these e.u. privacy controls are going to go into affect worldwide. what do you make of it? caroline: interesting that we will not have one rule rolled out in europe and a slightly different set of privacy measures in the rest of the world. they're going to respond to the general data protection rules. really tough regulations coming into place in europe on may 25. they are going to respond worldwide to this. and remember, this is giving more access to your data for the 500 million europeans. more access and knowing and the ability to control that data and sometimes be able to delete that data. therefore we are seeing plenty , of measures being rolled out. in some parts, ironically, maybe this is what we are seeing at the moment, the fact that we are seeing this fast-paced reaction from facebook. some of those slightly more cynical in europe are going maybe these measures were

planned anyway and they are in response not to the data leak, that we saw at cambridge analytica, but in a response to gdpr that comes later in may. we have seen facebook ever since january, sheryl talking about new data measures, a new privacy center globally unveiled. and now we see more control of your apps. maybe all of this was planned anyhow. that is what the cynics are saying out there. emily: what have european regulators said in the last 24 hours since we learned that actually the number of people potentially affected in the cambridge scandal could be much higher at 87 million, and that two billion people facebook is saying, potentially all of its users could have had their public profiles scraped? i think that sent a few shock waves through europe. we have heard more talk coming from the leaders. you have heard the head of the e.u. in particular, justice commissioner, saying i am in touch with them.

we are going to have high level contacts over last few days. we have heard from germany. germany has some of the toughest regulations out there on social media. they worry about their privacy and data. they had the justice commissioner fighting one against. she was saying you need clear rules and that ethical values are being breached and sacrificed because of the bottom line. meanwhile, reportedly it is closer to home in the u.k. here. the i.c.o. is the watchdog actually doing the investigating on behalf of the whole of the e.u. now the i.c.o., the information commissioner's office, has 1ed -- has said they are in close contact with facebook. they say they are cooperating with the regulators over at facebook, and they welcome the changes that have been made by facebook so far, but they add it is too early to say whether they are sufficient under new law. >> and talking about the business, we got the first sort of indication of just how this scandal is impacting the bottom line. sandberg telling us a few

advertisers have paused their spending. at the same time, zuckerberg saying they don't see any significant change in usage andite the perceived anger resentment among users right now about the latest revelations. what do we know about how this could actually impact the bottom line? caroline: i think this is what is so ironic about the whole situation. if all these unveilings had happened prior to -- if we had 2015 seen these now -- if gdpr had been in place when all of this came to a head, we could have seen some hefty fines. the gdpr allows you to fine up to 4% of global revenue if they don't abide by the privacy rules that would have been broken if the cambridge scandal would have occurred under them. we could have seen one billion euros worth of fines if that that was the case.

but now going forward we are going to see whether this really does hit the bottom line. as you say, data as it stands, you need explicit consent going forward to use certain data. perhaps your race, your ethnicity or your political opinions. well, if you can't target your user bases you used to be able to, how are they going to keep attracting advertisers? this must be baked into analysts expectations. we know only two sell recommendations are out there on the facebook stock. analysts are going to have to look at the regulatory overhang. this is what you have a bank saying for the time being we are not allowing anymore purchase of facebook shares. caroline hyderg's in london for us, thank you. in the meantime, twitter disclosed it suspended 274,000 accounts in the last half of 2017, linked to extremism. the company says it has removed 1.7 million terror related

accounts. crisiss been an ongoing -- process. the second consecutive quarter it has declined. they are at your bidding that to twitter becoming a less desirable place for terrorism content. the sheer numbers are large and show it is an ongoing challenge for them. more than 1.2 million accounts being suspended over past two years. we have seen the companies really try to get ahead of potential regulation. we have seen lawmakers say if terrorist content is not taken off immediately there , could be fines for the companies. they have created this global counterterrorism forum to share the unique data of the most violent imagery to capture that content across board. but, there are still a lot of questions that remain. how often is this terrorism

forum meeting? do they have office space? where are they storing this data? there are still a lot of questions that regulators have, and every day terrorism experts are seeing content uploaded to terrorists. emily: in the midst of this facebook news, jack dorsey has been invited to testify, but we don't know if he will be in washington next week. talk about the facebook hangover that twitter is feeling? selina: twitter has declined to comment several times despite my continual asks about how jack dorsey is thinking about this problem. what i am thinking is they are going to be watching zuckerberg closely. they are going to see how he performs and how lawmakers respond. twitter is sitting in a better position than facebook because they simply don't capture as much data on their users. twitter as a platform is public, so most of what is shared advertisers is already publicly available. however, we are seeing users reacted negatively to twitter

because it is a social media platform and could be vulnerable to potential regulations that could hit facebook. wang, thank you so much for that update. coming up, the future of online security has come into questions over the last few weeks. what web performance and security company cloudflare is doing to protect your data. that is next. this is bloomberg. ♪

emily: over the last few weeks we have seen countless experts and analysts speaking out about the importance of data privacy. cloudflare is no different. however, the company is implementing something that could help create a faster, safer and more private internet for everyone. on sunday the company announced it is launching a d.n.s. service for users called one dot one dot one dot one.

providing users a way to shorten data. it keeps some data away from network providers. here with us, cloudflare co-founder michelle. thanks for joining us on the show. i want to start with at this idea that facebook and google are not the worst of these companies. there are other companies that know a lot more about us. explain? >> exactly right. i think right now in the news there is a lot of conversation around privacy as they should be. this has been a conversation we have been having a long time. with technology, more and more people are getting online, and more, whether internet properties, your internet service providers, add tracking -- ad tracking cookie companies. there are a lot of companies that know about what you are doing online. when you think about that, it is creepy. emily: what do they know? >> it depends on who it is. they can know which website you are going to, which one you are clicking more of versus other sites, different ads that

appear, which ones you click through and which ones you don't. maybe when you are shopping for a new couch or a new pair of shoes, and it follows you around online saying buy me. emily: do they use that data? >> a lot of companies do. there are two sides of the argument. one side is if a customer is coming and interested in learning more, i know they want this shoes, of course i want to be targeted and show it to them over and over again. eventually you are like fine, put it in my check out basket, buy it now. that is one side of the argument. the other side is where do you draw the line? as a consumer what we are seeing with tech companies in general, i want to know who has my data and what you are doing with it. i don't necessarily want people or businesses to know exactly what i am doing online. i think that is why the conversation keeps coming up over and over again around the privacy of what can i do to be more private in my life, and

what am i ok with a business having and what businesses in my ok with. restrict thed that amount of data those companies can have about me? michelle: one of the companies that knows a lot is who you are buying internet access from. most households have access. they know every single website you are visiting, every day, every night, every weekend. you think about that, and you think -- now they may not know what you are doing on that site, but they know exactly what site you are visiting. they know your name and where you live because they are your internet service provider. last year, the senate passed a new law where they said if you are the internet service provider, if you are buying internet from at&t or comcast, that those providers can now sell the data that they have about you to advertisers. you think do you want that? this idea privacy has been coming up.

six months ago our technical a bunch of engineers came up and said we have to do something. it is one thing to talk about it and another to come up with a solution to it. emily: so what are you doing? 1.1 is -- itat 1.1. is four ones. we launched it on april 1. basically, for your internet access at home or business, you sign up for 1.1.1.1. it takes less than a minute. it is a privacy first dns business. most people don't know what it is. you do need d.n.s. to get online. you keep comcast or at&t as your provider, but now it is privacy we will not track what you are first. doing online. they will not be above the sea where i am going if i use your product. michelle: exactly. emily: what is your take on the responsibility or the lack thereof that companies like

facebook and google have taken on this? should they be doing more to not collect that information? michelle: i am definitely a glass half full person. if i look for a silver lining in what is going on now, it is creating conversations of, what are the responsibilities. i think about as a leader, i run a large tech company, and there are four constituents we have a responsibility to. first is your shareholders. you need to do well by your shareholders, your customers, well by your employees, which is important, and you need to do well by your communities. i think new model of leadership for tomorrow is thinking about all four of those. i think a lot of the issues that come up are when you get one of them wrong. i definitely think the new age of leadership is to think about all four the companies who do constituents. that are ones who are going to grow and capitalize on the opportunity going forward, and i think that is a good thing. emily: michelle zatlyn,

cloudflare co-founder, thank for you stopping by. 1.1.1.1. coming up, fixing facebook. can the world's biggest social media platform protect its users? this is bloomberg. ♪

emily: earlier today facebook c.e.o. sheryl sandberg called protecting people's data an arms race and said facebook is committed to security for the very long run. but is that enough to create a truly socially responsible network? my next guest thinks it is time to regulate the internet. that is the title of his most recent article in the atlantic. before that he was taking on the existential threat of big tech in a book called world without mind. he also served two stints as the editor of the new republic. franklin, welcome to "bloomberg technology." let's get to that first question i asked. i know you saw the interview with sheryl sandberg earlier in the show. is what facebook is saying, what sandberg and mark zuckerberg saying, it is enough? >> no, it is not enough because

they have a track record now. they have been careless with people's data. iny have been voracious collecting information and surveilling. their business too deeply depends on that collection of data. without that collection of data, they are severely weakened. we can't trust companies at this point to be good stewards of data and privacy. we need to have rules just as we have rules in our financial system or agriculture, or every other part of the american economy. emily: what should the world's be? -- what should the rules be? franklin: we should formulate something close to our own view -- our own version of what the europeans are doing with their new privacy regime, which is going to come online next month. i think we need to create -- we need to give people opportunities to control their own data and control the ways in which they are surveilled i

across the internet. think we need to make it harder for companies to impose terms of service agreements on users where users have zero ability to negotiate the terms. i don't think it is that hard to come up with a set of rules. i think that there are lots of examples out of there. i think we need to have a regulator that is committed to those rules. right now the ftc is so lax and not on the ball when it comes to dealing with these questions. i think we need to have a national data protection authority like other countries do. emily: talk to us about the impact you think this has had on journalism and data science. obviously i know you worked at the new republic actually. you were pushed out under cris hughes, who is a co-founder of facebook, who interestingly has also talked a bit more freely about facebook's responsibility in the world and the lack potentially of them rising to

such a responsibility. but how is this affecting news and how we get it? franklin: there are two problems that exist in parallel. the first problem is the problem of privacy in data. but the second problem is that journalism has become hugely dependent on facebook. because of that dependence, because journalism needs the traffic that comes through facebook, the values of facebook end up becoming the values of journalism. journalism has ended up pandering in a lot of its decisions, or adapting in a lot of its decisions in order to be maximally successful on facebook. unfortunately, facebook has been terrible for journalism's underlying business because facebook has gobbled up such a huge percentage of the digital advertising market, there is just not a lot of dollars left there for journalism. journalism doesn't have data. journalism can't compete with facebook when it comes to the targeting of ads. so i think we are actually at a place where there is going to be

parting of the ways between journalism and facebook. we saw this long before facebook's most recent cambridge analytica crisis where facebook was starting to adapt to return to its core model of being a true social network that is about friends keeping in touch with friends and sharing pictures with friends, and journalism was going to be devalued in its algorithms. i think that decision and that separation is going to be healthy both for journalism and also healthy for facebook itself. because facebook doesn't want to be in the role of being the global arbiter of truth. emily: what would you like to see from mark zuckerberg next week when he testifies before congress? franklin: he has to -- he has got a serious trust deficit. there is nothing that mark zuckerberg can tell to me that will make me ultimately trust him again or trust him when it

comes to the handling of data. i think that he has really dug himself into a hole. i think that the company's reaction to the election and the way in which it hasn't really fully owned up to the lapses in its problems until journalism has essentially forced facebook to own up to the problems. how do you get out of a trust deficit like that? i don't know if it is really possible to do in one appearance before congress. he is going to have to sit there and take his licking. emily: franklin foer, author of world without mind. the existential threat of big tech. thank you for joining us. we are going to be in washington next week covering mark zuckerberg's testimony. that does it for this edition of "bloomberg technology." a reminder. we are live streaming on twitter. check us out 5:00 p.m. new york and 2:00 p.m. san francisco. that is all for now. this is bloomberg. ♪

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