♪ >> i'm emily chang in this is "the best of bloomberg technology," where we bring you the best interviews from this week in tech. coming up netflix sets the bar. the stock pops on user growth. we break it down. plus, tesla's second timeout. the electric car manufacturer stops production on the model 3 sedan and sends workers home, only to reverse course and declare a 24/7 operation. we will explain. and pain for prime.

jeff bezos says the premium subscribers have topped more than 100 million. lead. to the netflix shares popped after reporting the strongest surge from the start of the year. added 7.4ing pioneer million subscribers in the first quarter, beating the estimate of 6.4 million. netflix now has more than 125 million paying customers, the most of any online tv network. the company is the best-performing stock in the s&p 500 this year, proving one quarter at a time that investor confidence in its online tv service is justified. we dug into the numbers on monday after they came out with caroline hyde, who caught up with paul burnet and henry lake fox. they are making shows that everybody wants to watch, so as long as that is the case, people are going to subscribe and state with netflix. it's been an amazing story for

them. >> an amazing story that they have continued to be able to show. as they expand their user base, they are able to up the prices consistently. ar you expectinge the amount of numbers they are seeing, the subscription numbers, the revenue they are bringing, to be able to be repeated quarter after quarter? >> i don't know if the kind of growth they have posted in the last three quarters is sustainable on a percentage basis. i think at some point they reach saturation and they get to a point where they really can't post those kinds of revenue increases every quarter. but i do think that as long as they keep making these great shows, that people will continue to tune in. they still have a lot of international expansion ahead of them. they're on a good track. they are not going to sustain these kinds of numbers forever,

but i think anyone waiting for the other shoe to drop for netflix is going to have to keep waiting. >> henry, this is phenomenal user growth have seen. content is king. can anyone play catch-up? >> that's a great question, and i think it is interesting to look at the landscape of people who might yet find a way to compete with netflix. amazon is clearly one company who has invested, started to invest heavily in original content, has a lot of data on users, has a very big distribution channel it can deploy. it is an open question whether anyone will catch netflix. but itn a netflix bull, is interesting to think about how disney might find a way yet to compete. if you go forwards a couple disneyand believe manages to acquire 20th century fox and goes live with plant streaming services, bringing its historical archive, bringing the very high quality production focus that it has in the movies sphere, to movie

leave in merchandise an in a way netflix has not yet been able to do, it could become a competitor. >> fascinating points henry brings up. where are you seeing the competitive landscape? do people just have more subscriptions to more products, or is it something that takes all expectation? >> there has been a rising tide with more and more subscription services and more spending on them, and no sign of that slowing down yet. when giving else, that's not sustainable -- like everything else, that's not sustainable. competition is coming from all quarters. century fox in disney could be competitors, especially if they tie up. then you have amazon, hulu, and potential competitors like apple in facebook that haven't tipped their hands in this game fully, but once they start, they have the kinds of budgets netflix has been throwing around, and they

have the expertise, the relationships. they could also give netflix some serious competition going forward. >> talking of how the share price has performed and whether there's competition, i'm going into my bloomberg gtv, you can see how netflix has left the rest for dust when it comes to share performance. we are seeing a vast outperformance versus the likes of amazon, versus the likes of alphabet, apple. clearly they are ahead in that respect. henry, one about the world you are looking at, the startup world? further people trying to emulate what netflix does? -- are there people trying to emulate what t netflix does? >> absolutely. it's a very broad revenue. we see increasing numbers of subscription models across all media formats, from traditional press publishing and twitch, through reinventing audio and

podcasts, film and tv subscriptions. there is a huge allure in subscription models. they tend to have sticky revenue patterns, and there's a large barrier to entry, as it becomes clearer that extremely high quality production content is required to lure people into these packages. but it's an area where we see enormous amounts of activity, over the last five years, people have tried to play in paid content, but the tide is beginning to change. consumers are beginning to understand that there is a proper value exchange in being a customer and not a product of these services. i often cite the guardian media group, who's having a very strong subscription increase in their revenue streams. there are opportunities not just for new companies, but traditional media businesses to reinvent themselves. >> interesting.

i'm also looking at -- you said anyone who is betting against netflix will probably continue to fail. i'm looking at short interest at netflix, in that has continued to tail off. bloomberg,nto the you can see on the white line how we will continue up in the netflix share price. in the blue line, there's a continued downward trend in terms of short interest. 4% of equity is currently shorted. do you remain out the game, do you think this is a bull's view of the world? has think netflix always and is still playing the long game. one thing that's interesting about content libraries is that they are cumulative. they build up. you invest in content, and it is always there for you to return to. a show that is popular today may go through ups and downs, but

eventually people come back to it. they wanted to tune into the next season of the show. i think netflix has been doing that very, very well, building interest and retaining their customer base. as long as they keep doing that, they could have some ups and downs in future quarters, but i don't see the story changing for the worse unless the market underneath them tanks or something drastic happens to their business or the content. but as long as they keep doing what they are doing, they will keep succeeding, and they are also going to have that library to fall back on. >> that was carolyn speaking with paul verna and henry lane fox. we got some details on facebook this week, on what data it collects from users when they are locked out of the social media site, and even when they don't have a facebook account at all. that useand apps

facebook services to serve more targeted contact and ads send information back to the social network on all users. in a statement, they said that users can opt out these kinds of ads entirely. meantime, the company announced it is branching out, building a team to design its own semiconductors. this is part of a bigger trend among tech companies to supply themselves and lower the dependence on big chipmakers like intel and qualcomm. the social network which i never -- would join other giants like alphabet and apple. coming up, tesla suspended production of the model 3 sedan, and elon musk acknowledged using too many robots to assemble them. that story, had. and if you like bloomberg news, check us out on the radio. this is bloomberg. ♪

♪ >> tesla is shifting into

overdrive to reside the model 3 production problems. after earlier reports that the manufacturer was temporarily halting production on the sedan, there was a new report that they will begin round-the-clock production in its fremont, california plant. elon musk acknowledged the production problems, and argued with "the economist" magazine saying they will be profitable in cash flow positive this year. so what is happening on the tesla production line? to answer that, we spoke with max chafkin, who has been covering tesla. musk appears to these 24/724/7, shifts are three different crews of people. it is not as if people are working around the clock, although many executives probably are. the other thing that is happening here is that musk is saying in this memo, published just a few minutes ago, that the

plan is to have the shutdown and to ramp up. we saw a similar shutdown followed by a ramp-up a few weeks back which allowed them to hit this 2000 unit milestone that we saw at the end of last quarter. the plan now is that they want to be at 6000 by the end of the second quarter, and he says in this memo, which is a fascinating look at the psychology of elon musk, that the idea is to build a cushion, so that even if they fall short of the 6000, which tesla has been wont to do, they will probably get 5000, which is what they have been promising all along. also information about a plan to add a lot more employees. he said they will be adding 400 employees a week to their factories in the coming weeks, a really big push to get to profitability. >> tesla shares are up on the news. "we're burning the midnight oil

to burn the midnight oil." obviously the production halt is not good news. and is hard to know, caution people into reading into the tea leaves too much, because production halts, as tesla has said, are slumping, and that happens. when it happens at tesla and lots of companies, you have to reset the line, make sure the tooling is right. there are reasons to stop production that are not bad. that said, there have been lots of these unexpected things, and that would cause someone who is a tesla skeptic -- and there are lots of those -- to say that there's another sign that the company is in over its head. that said, if the numbers keep moving in the right direction, i think investors will be happy, and elon musk will look like a genius. >> what do you make of his comments last week on cbs, that he overdid it on automation?

>> that's a huge shift. one of the key things that tesla had been talking about as a differentiator is that this will be the most automated car factory in the world. that would allow them to hit these crazy, ambitious production numbers. the problem is, we've been learning with automation that it is harder to call people in. differenttart pulling pivots, tesla is moving much more toward a traditional, human focused manufacturing process, which is why they are adding all these employees, which is why they are adding shifts, which is why they have to focus on profit. they spent all these moneys -- all this money on machines, which will save money in the long run, but now you have to add employees on top of it, which will put a lot of cost pressure on the company that already is losing money. >> so shares are up, but at one

point my customers start asking for their deposits back? a superpower that tesla has, that people are super fans of this company. in terms of those who have already put down a deposit, about half a million people, this is not their primary car. we are only talking about $1000. i think we're still a long way off from the. that said, the longer this drags out, the more we get these delays, and you will start to see other car companies coming out with compelling products, the greater the danger is for tesla. it's not so much about these companies, as investors are buying into a larger vision of tesla as the biggest auto manufacturer in the u.s. if only half of the customers putting in deposits, that's not good enough. they need to keep adding giant customer cores each year to hit

the vision you on musk is talking about. >> i want to knowledge between, elon musk -- i knowledge the adversariale relationship with the media. tweet talking about how ideas pop into his head. a follower asked, what were you thinking when you came up with such and such, he said too wasted to remember. at what point do investors start getting distracted by this state of mind? >> he has always been a technician is sort -- a tenacious sort. that is part of what people like about him. in terms of the tweeting and things like that, i think the greater area of concern would be these side projects. in addition to tesla and spacex, there is the ai thing, the tunnel thing, he's apparently

"theg humorists from th onion." i think it is more about distraction rather than elon musk tweeting intemperate things. many of his admirers enjoy the intemperate comments, and for us in the press, it gives us something to talk about. bloomberg businessweek columnist max chafkin. coming up, microsoft president brad smith joins us. why more than 30 major tech companies, including microsoft, facebook and,, dedll are joining forces to fight cyberattacks. this is bloomberg. ♪

>> u.s. regulators moved to the extent the crackdown on china agreement makers, backing the ban on federal subsidies to buy networking for manufacturers. the federal communications commission voted 5-0 in favor of banning federal funds from being spent on companies deemed to

u.s. national security risk. the ban won't be final until a second vote by the fcc. these steps coming as trade tensions grow between the u.s. and china. yet another chinese technology company is headed for an ipo. said to be seeking an ipo at a $4 billion valuation. the online fashion retailer is said to be in talks with several investment banks. as of 2016, they had about 15,000 merchants on its site and 100 million downloads for its mobile app. and 32k, microsoft, other tech companies have pledged to protect their customers from cyberattacks in a nuew commitment -- in a new commitment. notably absent from the initial roster is apple, amazon, twitter, and google. on monday, officials issued a statement that after years of the warning was

only the latest in a series on russian threats to elections and electoral systems. we spoke with microsoft president. >> i think our industry really needs to come together on a global basis to strengthen cybersecurity. we need to be principal, and there are fundamentally two principles that are part of this pledge. the first is that we will step up our work to protect every customer everywhere from cyberattacks, and the second is that we won't help governments launch cyberattacks against innocent citizens are enterprises, and we will use those and a number of concrete steps we can and will take to make those effective. >> so are governments asking you for help? for them to perpetrate cyberattacks? requestsof all, we get from governments every day to help defend against customers, and we are doing more in that space.

in the world today, if you're r principles are unclear, you run the risk to be asked by governments to do think that you will regret having done. we have seen that over the last 15 or 20 years. i think by being clear about what we will and will not do, we in effect give governments guidance so they don't have to ask us, they know where we stand. >> so you referred to this as the digital geneva convention, yet apple, amazon, twitter, google have not signed up. why not? >> i think we will see more companies sign up in the coming weeks and months. a lot of people have been very focused on the wide variety of privacy and security issues recently. we have 34 major companies with us today for this tech accord. what we are also doing is calling on governments to sign up for a digital geneva convention, in effect a new convention that would put new rules of the road in place so

that governments understand that they can't tax the way we are seeing in the world today. >> facebook has been in the spotlight for inadvertently allowing state actors to meddle in elections. why should we think of this as any more than an empty promise, or a marketing ploy? >> i first of all think that in the world today it is important for companies to be principled. you can't be principled unless you define clearly and in a transparent way what you were going to do and what you will stand up for, and we are doing that. but i also believe you are making a fundamentally important point. at the other day, people should not judge us by our words alone, they should judge us by our deeds. this gives people a clear standard against which they can judge us. i should welcome that. now it is up to us to prove every day we can live up to this pledge. >> facebook, as you know, also under fire for data privacy.

i'm curious where you think facebook went wrong, and whether you think more regulation is sinceary in big tech, that can ultimately impact microsoft as well. >> i think it is a broader question that's the most important. it's a question for all of us. we at microsoft called for national comprehensive privacy legislation. we did that in 2005, 13 years ago. this whole privacy issue does not get better with age. we do need to come together as a country, in our view, and we will benefit from having good laws in place. we will benefit because there will be a consensus nationally about what companies should do, and we will benefit because that can play an important role in sustaining the trust and confidence of the public. >> you have also announced a new defending democracy program to help prevent campaigns from being hacked, to defend against

disinformation, misinformation. can you give us some specifics about how you intend to do that? are you working with particular campaigns or particular states, or working to secure voting machines, for example, ahead of the midterm elections? >> the answer is basically going to be yes to all of that. we have identified four specific areas on which we want to focus on. the first is protecting candidates and campaigns from hacking. the second is protecting voters in voting from tampering or hacking. the third is supporting measures to ensure integrity in political advertising, including on social media platforms. one of the things the honest ads will do. the last is in some way the hardest, the job we all need to do, to try to address the willful misinformation campaigns we are seeing, even from foreign sources. in some of these areas, we have fast steps we can take right away. in other areas, we have a lot of

hard work ahead of us, but we need to get started. >> so last question. you are announcing a new micro device product, a teeny, tiny product that could be in anything from toys to remote controls, works with aws, with google cloud. what are the dangers you are trying to protect against? >> this, i believe, is a fundamentally important problem for the country and the world. this year there will be shipped in the world 9 billion of these small chips that are increasingly going into toys, refrigerators, cars, and they will all be connected. if they are connected without being protected, then we have a much bigger cybersecurity problem than we do today. >> microsoft president brad smith there. coming up, tech takes on malaria. we talked to the man who went

from creating labor soft to rid the world of one of its deadliest diseases. our conversation with bill gates is next. and all episodes of "bloomberg technology" are live streaming on twitter. check us out weekly. this is bloomberg. ♪

>> welcome back to "the best of bloomberg technology," i'm emily chang. today's technology is playing an evermore present role in health care. in particular, new developments and data analytics and ai are increasingly able to help stem the spread of infectious disease. one man who knows the benefits of the technology well is bill gates, founder of microsoft in the world's second richest man. he has long been focusing his wealth outside the world of silicon valley on combating infectious diseases that affect the poorest. caroline hyde cut up with him at the malaria summit in london. >> i think focusing has always been on data, the use of big data, the ability to map, to

track outbreaks and be able to target them. notably, we are also hearing the likes of google earth being able to help monitor the outbreaks, and the use of smartphones on the ground. somewhat thatle the founder of the biggest software company in the world, bill gates, thinks that perhaps the key use should be in software itself. have a listen. >> some of the more advanced software techniques are used. we run rich simulations. we have to create a new group in modeling to use the ferry latest software to try to project if we get a new drug, how beneficial it would be, and should we go after the mosquitoes or the human reservoir? designed, some of the advanced modeling techniques are letting us speed up that process

and picking molecules and making sure they don't have side effects. anything that helps cure malaria, cure cancer, that will have a lot of human benefit. fronthnology really was and foremost in a lot of this discussion at the malaria summit today. >> and he has previously talked about how technology can be used for bad, in this case for good. what did he say in particular about artificial intelligence? >> you are right. we heard from him in the past talking about potentially taxing and within artificial intelligence he has been talking about how he's not quite yet convinced about the future of ai in terms of its control, about where the role of institutions is in ensuring artificial intelligence is in the hands of the right people. i wanted to get his view on where the future of technology goes, if it is indeed a smooth

path, and he thinks there are bumps in the road, and governments have a role to play. have a listen. >> every technology brings with --both a lot of advancements the automobile net is a very good thing -- but it brought in huge safety challenges. here, where you are communicating online, the government will have to decide in what is hate speech that should be censored, what is free speech. only the government gets to draw that line. so yes, government is very at why theselook new technologies may need new rules to go with them. >> the rules, hate speech, it made me think he was hinting at what facebook have been facing on capitol hill. was athat note, gates

the center of congressional testimony a couple decades ago. what are your thoughts on facebook, and whether facebook and big tech at large should be better regulated? >> he wouldn't actually go as far as to say, yes, regulation is necessary, particularly for the likes of facebook. i asked him directly, should facebook be regulated? he seemed to think that perhaps it is unavoidable but didn't say necessary. have a listen. >> there are privacy rules. those rules will continue to evolve as people see what is going on, and europe has a new round of privacy rules, at every two or three years i think you will see more activity there. >> i asked him, look, any advice for the man, mark zuckerberg, as he comes up in front of regulators? and saidgave a smile these things will come. >> bloombergs caroline hyde in london.

sticking with philanthropic tech giants, the man who sits ahead of gains as the world's richest man is trying to make his mark in the battle against cancer. up, bezos cancer start seeking to raise $1 billion to boost growth ahead of its ipo. grail, which plans to list in hong kong, is trying to create screenings that can diagnose people with early-stage cancer before they show any symptoms. another investor is none other than bill gates. still ahead, apple jitters mounted on wall street this week after a supplier announced the sale. this is bloomberg. ♪

>> the defense department isn't budging from its decision to award a single contract for a cloud computing project, and is it saying why, even in a public exchange with vendors over details of the multibillion-dollar competition. rifle contractors like oracle are complaining that the winner take all approach favors amazon, the biggest supplier of client services. ibm and other potential bidders say no major commercial enterprise should risk the single cloud solution, and neither should the pentagon. meantime, google's former ceo

thinks big tech companies should be working with the pentagon when it comes to artificial intelligence. appearing before the house armed services committee on wednesday, eric schmidt said ai would be "useful for defensive and perhaps offense of purposes," and that any efforts to make it easier for the pentagon to work with the private sector would be welcome. his former employees don't agree. over 3000 google employees wrote to the current ceo, demanding d to deals that what the military use their ai technology. now amazon shares gained after jeff bezos sent his annual letter to shareholders. in it, he touted the company surpassing more than 100 million paid prime members. he also said he will continue to invest to meet ever rising customer expectations. we spoke with our covering editor for amazon just as the news was breaking on wednesday. >> the music streaming sub numbers. there's a reasonably publicly

traded company that has north of 70 million paid streaming s ubs. amazon has a lot of work to do to catch up. i'm not sure amazon needs to catch up, but it is a nice service and there will be nice, incremental business for them. the golden ring for amazon will be signing up for prime. if music or video gets them to do that, great, and they have 100 million of them. in terms of hardware sales, this is what matters for amazon. getting about 100 million of these devices out and installed, that you get a system where you can get apple tax or google tax revenue. sales, i don't find those two surprising. we are looking to see how many installed units there are of alexa devices. if they get to that 100 million

devices installed, maybe by the end of the year but certainly somewhere in 2019. >> i'm reading through the shareholder letter now from jeff bezos, and i want to bring in spencer soper. bezos, spencers saying one thing i love about customers is that they are divinely discontent. their expectations are never static. , they go out it is human nature. you cannot rest on your laurels, customers won't have it. he says they will continue to invest for the long term. one of the highlights you are pulling out of this? >> i think the 100 million prime members is the big takeaway. it's a lot of familiar themes, a highlight reel of stats we have seen over the past year. the big thing is that 100 million prime subscribers, it is something they use as a building block, foundation. we are seeing more and more

additional tiers to that. if you want to pay a little more and get using, you get video. become this platform they can build upon with more on the cart services, to make amazon prime more valuable. >> so he talks about prime video, about amazon devices, about fashion. amazon has become a destination for tens of millions of users to shop. this is interesting, given the competition in retail, in , the challenges facing the retail industry today. do you think, mark, that amazon can become a huge player in go-to?, or ag >> i wonder about that. they are very large already in clothing and apparel. i'm not the expert on fashion, but in terms of playing in

clothing and apparel, yes. high-end fashion, though, that may not work for amazon. that may be too hard to brand that far. that could be where potential acquisition of a retailer may make a lot of. -- a lot of sense. >> like what? what's rumored is that other high-end retailer based in seattle that begins with an n, nordstrom. would amazon by target? absolutely not. they are the leading mass-market retailer of the future. couple of look to a injury acquisition of a high-end fashion retailer? possibly. if it's a high quality brand. that's amazon in fashion. and we haven't mention what must be of the shareholder letter, that is where half the profits of this business are. i haven't seen the letter yet, i know amazon investors should be

looking, because that's half of the story going forward. >> absolutely. it is here, it is exciting to see amazon web services. it's already got healthy growth. spencer, talk to us about the group of aw west and what the company expects to see. >> well, it really is the fuel for all of amazon, and it's the thing that gives amazon a lot of leeway from investors about all its other low margin or money-losing initiatives, including its international expansion. without amazon's cloud computing segment, they would have broke even last year. it is basically feeling everything, from its investments in voice-activated devices on the alexa platform to its original programming helping us get people more engaged and get deeper into people's homes, to its international expansion,

where it is trying to replicate its success in the u.s. abroad. the fuel for all of that. >> that was spencer soper and mark mahaney. the apple iphone business may be wavering. the unease after a taiwan semiconductor, the major apple supplier, announced forecasts that fell short. the global smartphone market may have peaked, and shipments declined for the first time. we went live to tokyo to get the view from asia with peter astro-med. is particularly closely watched, it is a key chipmaker in the supply chain with apple, and they give these forecasts. we were able to dig out this information about early yesterday, where the forecast for next quarter is lower than

people anticipated. and that was taken as a negative but not just from tsmc, others in the supply chain for smartphones in particular. >> so talk to us about what we are seeing with qualcomm. china,b cuts, a probe in what's the latest? the probe in china is a bit concerning at this point. qualcomm has to go to the chinese government to get approval for this acquisition. the proposed that more than a year ago and it has been dragging on and on. so what china's regulator said yesterday is -- this is the first time they said this on the record -- that they have been reviewing the deal, and that qualcomm has been offering some remedies, and they are not sufficient at this point. qualcomm had to pullback that application and refile the application with this new

deadline three months from now. what they wanted was some reassurance that the combination of the companies will not have detrimental effects for other companies. they buy a lot of semiconductors in china to put into different products that are then shipped around the world. >> how does this fit into trade tensions happening now? like to qualcomm would say that this doesn't have anything to do with the tensions between u.s. and china, but it could become a bargaining chip between the two countries as they are trying to work out these trade negotiations. hasourse, donald trump written tariffs against china for practices that his administration has called unfair. in response, china has responded with its own. you saw thisweek, very dramatic move where the commerce department in the u.s. decided to cut off the big qualcomm equipment maker from

buying any components from american suppliers. that includes qualcomm, not coincidentally. so qualcomm's approval from chinese regulators may end up getting caught up with these other negotiations over what tariffs will be, what kind of approvals, what kind of chinese companies will be able to use as the work with the united states. >> that was peter elstrom from tokyo. in other news, the tech giant announced its plans to integrate texture into apple news in debut its own premium subscription. people familiar with the matter say they want to generate more revenue from online content and services. apple agreed to buy it last night, which allows users to subscribe to more than 200 it isnes a month and suspected to launch next year. next, josh silverman joins on this week's multibillion-dollar

u.s. supreme court hearing on online sales tax. this is bloomberg. ♪

>> cambridge analytica may have harvested even more data than we already know, 87 million facebook users, according to a second whistleblower who came forward. britney keiser testified before the u.k. parliamentary panel at the company used a wide assortment of surveys together data. alexander nix, the former ceo, refused to appear before the same panel. his legal team claims he could

appear due to the information commissioner's ongoing investigation. the panel rejected his excuse and said it is considering a full summons for him to appear. online sales taxes at the center of a multibillion-dollar supreme court case on tuesday, and supreme court justices signal they are divided about whether the u.s. should collect billions of dollars in sales tax from internet retailers that don't currently charge tax. president trump weighed in on twitter tuesday, accusing internet retailers of cheating. justices are considering overturning their 1992 ruling that made much of the internet a tax-free zone by exempting retailers who don't have a physical presence in the states. overturned, this would put new pressure on online retailers that don't always collect taxes, including amazon, ebay, at sea, and thousand -- etsy, and thousands of others. >> what we are talking about

here is the new mainstream, the digital mainstream, being subject to a patchwork of 10,000 different tax jurisdictions, where micro-businesses are asked to comply with an unmanageable number of tax law. >> so complexity abound. what about whether or not there's a risk you could see back tracks -- back tax being collected? >> the most important thing -- one of our sellers in the state of washington, she sells marshmallow pops and pecan bars. it turns out that marshmallow pops are qualified as a candy, which has no tax, because it doesn't include flour or need to be refrigerated, welhile pecan bars are classified as big goods, so she needs to know that to comply with one jurisdiction in the state of washington. unless it is back to school, in

which case there might be a tax holiday. in the state of connecticut, she needs to know whether the sandals she cells are for athletic purposes, unless they are being bought by someone from the pta, in which case they might have a tax holiday. so the challenge here is that there is a really unmanageable number of jurisdictions for which no small seller could truly comply. >> so back taxes are not on the agenda, of the complexities front and foremost. if the supreme court doesn't overturn this role, do you think we might see states crackdown? and how do you manage your business for the future? taxes,s not about back it is about state-by-state. about 25 years ago, the supreme court ruled that individual states cannot force people that do not have presence in their jurisdiction,ical to comply with each and every tax jurisdiction. that is what that risk right

now. so if one rule gets overturned, a micro seller who sells on at etsy from her living room leaves to comply with 10,000 different tax jurisdictions. the way it works right now, if she doesn't have physical presence in a particular state, that she is not subject to the tax jurisdictions within that state. >> have you put in place provisions if it is overturned? have you factored in the extra cost your business of having to comply? >> it is more than cost, really, it is about how much time she's going to have to spend trying to comply. we will have the backs of our sellers, but should the supreme court overturned the quail ruling, which is what's being discussed, it would likely go to congress, and congress would need to decide how to make this manageable for sellers. the worst-case scenario, we think, is that every state gets to impose its own tax rules on every single person who sells into that state.

create really going to terrible friction, and it is going to hold back jobs, and it is going to hold back the success of micro-entrepreneurs, so much of the current engine of the economy. >> talk to us about having the back of your sellers. you say you are improving your service, you will be helping them target potential shoppers, but many feel perhaps you have abandoned them going into brick-and-mortar within state-by-state. what are you doing for your own sellers? >> we have been working very hard to make the etsy platform even better for buyers, which will make it work even harder for sellers, and we have been seeing terrific progress. sales have been accelerating quarter over quarter. in the fourth quarter, we did over $1 billion of sales. the work we have to doing has really paid off and sellers are being more successful, selling your product as a result. >> that was josh silverman, ceo

of etsy. that does it for this edition of "the best of liver technology." we will bring you all the latest in tech throughout the week. tune in next week for a slew of big tech sector reports on facebook, microsoft, and intel. tune in every day. remember, all episodes are live streaming on twitter. check us out, weekdays. that's all for now. this is bloomberg. ♪ welcome to the xfinity store.

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♪ nejra: europe's next big deadline, the general data protection regulation goes into effect next month. how significant will it be for business? mifid ii back in focus, how compliance has been since the law went live. the dodd frank debate begins again. how many changes will be made in congress? we get the latest from washington. welcome to "bloomberg markets: rules and returns." i am nejra cehic in london. this is the show where we delve into the regulatory challenges