♪ emily: i'm emily chang and 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. leading the charge for the next quarter a big earnings, and the stock pops on user growth. we break it down. plus, tesla's second timeout. this week, the electric or manufacture stops production on its model 3 sedans, and sends workers home, only to reverse course and declare a 24/7 , operation. we will explain. and pain for prime. jeff bezos says amazon's premium

subscribers have topped more than 100 million. first, to the lead. netflix shares popped after reporting the strongest surge from the start of the year. the streaming pioneer added 7.4 million subscribers in the first quarter, beating the estimate of netflix now has more than 125 6.4 million. 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's 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 analyst paul verna 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 -- and stay with netflix. so, it has been an amazing story

for them. caroline 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. thean, are you expecting amount of numbers they are saying, the subscription numbers they are saying, the revenue the are bringing on, 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 it's some point, they -- theysaturation, reached saturation and 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. so, they are on a good track. they are not going to sustain these kinds of numbers forever, anyone waiting for

the other shoe to drop for netflix is going to have to keep waiting for a while. caroline: henry, i mean this is , phenomenal user growth they have seen. content is king. can anyone play catch-up? henry: that is a great question, caroline. 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 very heavily and original content. -- 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. i remain a netflix bull, but it is interesting to think around how disney might find a way yet to compete. if you go forwards a couple an imaginary world and believe disney 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 movie weave inand to

merchandise in a way netflix has not yet been able to do, it could become a competitor. caroline fascinating points : henry brings up. paul where are you seeing the , competitive landscape? do people just have more subscriptions to more products, or is it something that takes all expectation here? paul: well 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. like everything else, that's not sustainable. i agree with henry that competition is coming from all quarters. the companies he mentioned, couldnly fox and disney be competitors, especially if they tie up. then you have amazon, hulu, and potential competitors like apple in facebook that haven't tipped fully in this game, but once they start they have , the kinds of budgets netflix has been throwing around, and they have the expertise, the relationships.

so, they could also give netflix some serious competition going forward. ofoline: i mean, talking perhaps how the share price has performed, and whether there is competition, i am diving into my bloomberg, and 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 in the blue, versus the likes of alphabet in the purple and apple in the pink. clearly they are ahead in , that respect. henry, one about the world you are looking at, the startup world? are there people trying to emulate what netflix does? henry absolutely. : it's a very broad retinue. we see increasing numbers of subscription models across all media formats, from traditional press publishing and twitch, through reinventing audio and

podcasts, right through to film and tv subscriptions as well. i think there is a huge a lower in -- i think 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 and failed. 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 being a product of the services. i often cite the guardian media group, who's having a very strong subscription increase in their revenue streams. so, i think there are opportunities not just for new companies, but for traditional media businesses to reinvent themselves on the netflix model.

caroline: that is interesting. paul, i am also looking at, you said anyone who is betting , against netflix will probably continue to fill in this respect. i'm looking at short interest at netbooks at the moment, and that is continued to tail off. if you go into the bloomberg, you can see on the white line upwardcontinue to see interest 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? paul i think netflix always has : and is still playing the long game. and one thing that is 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 want 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 may have some ups and downs in the 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 back library to fall back on. emily: that was caroline speaking with paul verna and henry lane fox. we got some details on facebook this week, data it collects from users when they are logged out of the social media saipan he and even when they don't have a

media site, and even when they don't have a facebook account at all. websites and apps that use facebook services to serve more targeted contact and ads send information back to the social network on all users. in an online 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 semi conductors. 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 would join other giants like alphabet, apple, and google. coming up, tesla suspended production of the model 3 sedan, and ceo elon musk acknowledged using too many robots to assemble them. that story, ahead. and if you like bloomberg news, check us out on the radio. this is bloomberg. ♪ ♪

emily: tesla is shifting into overdrive to reside the model 3 production problems.

after earlier reports that the electrical 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 spent time on twitter last week acknowledging the production problems, and argued with "the economist" magazine saying they will be profitable in cash flow positive this year. so, just what is happening on the tesla production line? to answer that, we spoke with bloomberg's businessweek max chafkin, who has been covering tesla on tuesday. max although elon musk appears to be working 24/7 famously, these 24/7 shifts are three different crews of people. it is not as if people are -- it is not as if these tesla employees 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 here is to have the shutdown, and into sort of 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, he is saying, 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 here is to build a cushion, so even if they fall short of the 6000, which tesla does not want to do they will , -- that tesla has been wanting to do they will probably get , 5000, which is what they have been promising all along. there's also information about a plan to add a lot more employees. he said they will be adding 400 employees a week to their two factories in the coming weeks, and a really big push to get to profitability. emily: tesla shares are up on the news. here is a quote from musk on that memo. "we're burning the midnight oil

to burn the midnight oil." that said, max, obviously the , production halt is not good news. how bad is this bad news in the grander scheme of things? max: it is hard to know, and i caution people into reading into the tea leaves too much, because production halts, as tesla has said, are slumping, and that happens. now, the thing is, when it happened that 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 the sort of unexpected things, and that would cause skeptic,who is a tesla and there are lots of those, to say that there is 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 you know elon musk will look , like a genius. emily: what do you make of elon musk's comments last week on cbs

that he overdid it on automation? max: that is a huge shift. one of the key things that tesla had been talking about as a differentiator is that this would be the most automated car factory in the world. that would then allow them to get these crazy, ambitious production numbers. the problem is, we've been learning with automation that it plug people and. when you start pulling different -- plug people in. when you start pulling different 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. because they spent all of this money on these machines, which is supposed to say money in the long run, but now you have to add employees on top of that, which is going to create a lot of cost pressure on a company that already is losing money. emily: and so, shares are up, but at one point might customers

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

the tweeting, elon musk continuing his adversarial relationship with the media. another tweet talking about how ideas pop into his head. and follower asked, you know, what were you thinking when you came up with such and such? wasted tod, too remember. at what point do investors start getting distracted by the state of mind here? max: he has always been a pugnacious sort. i think that is part of the appeal, that is a part of what people like about them. in terms of the tweeting and things like that, i think the greater area of concern would be all of the side projects. spacex,ion to tesla and there is the ai thing, the tunnel thing, he's apparently hiring humorists from "the onion."

and so, i think it is more about distraction in terms of possible danger to tesla rather than elon musk tweeting intemperate things. i think many of his admirers enjoy the intemperate comments, and for us in the press, it gives us something to talk about. so, i don't think it is an area of risk. emily: "bloomberg businessweek" columnist max chafkin. coming up, microsoft president brad smith joins us. why more than 30 major tech companies, including microsoft, facebook, and dell, are joining forces to fight cyberattacks. this is bloomberg. ♪

♪ emily: 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 on tuesday 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. shop --backed mainly tencent back -- it's 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. facebook, microsoft, and 32 other tech companies have pledged to protect their customers from cyberattacks in a new commitment call the cybersecurity accord. notably absent from the initial roster is apple, amazon, twitter, and google. on monday, officials issued a statement that after years of cyberattacks, the warning was only the latest in a series on russian threats to elections and

electoral systems. we spoke with brad smith, microsoft president. brad: i think our industry really needs to come together on a global basis to strengthen cybersecurity. we need to be principled as we do that, and they're 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 these cyberattacks. and secondly is that we won't , help governments launch cyberattacks against innocent citizens are enterprises, and we would use those as two north stars, and a number of concrete steps we can and will take to make those effective. emily: so are governments asking , you for help? for them to perpetrate cyberattacks? brad: first of all, we get requests from governments every day to help defend against customers. and we are doing more in that space. in the world today, i think if

you're principles are unclear -- i think if your 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. and i think i be 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. emily: so, you referred to this as the digital geneva conviction, yet apple, amazon, twitter, google have not signed up. why not? brad: well, 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. and then 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 -- they cannot tax civilians the way we are seeing in the world today. emily: facebook has been in the spotlight for inadvertently allowing state actors to meddle in elections, in u.s. elections. why should we think of this as any more than an empty promise, or a marketing ploy? brad: well, first of all, i 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're going to do, and what you're going to stand up for and we are , doing that. but i also believe you are making a fundamentally important point. at the end of the 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 think we should welcome that. now it is up to us to prove every day we can live up to this pledge. emily: facebook, as you know, also under fire for data privacy.

and i am curious where you think facebook went wrong, whether you think more regulation is necessary and big tech -- necessary in big tech that can , since ultimately impact microsoft as well. brad: 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. emily: 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? brad: the answer is basically going to be yes to all of that. we have identified four specific areas on which we want to focus focus with this new project. the first is protecting candidates and campaigns from hacking. the second is protecting voters in voting from tampering or hacking. the third is really supporting measures it to ensure integrity in political advertising, including on social media platforms. one of the things the honest ads act will do. and the last is in some ways the hardest the job we all need to , do, to try to address the willful misinformation campaigns we are seeing, even from foreign sources. and so, and some of these areas, we have fast steps we can take right away. in other areas, i think we have

a lot of hard work ahead of us, but we need to get started. emily: so, also last quick question. you are announcing a new micro device product, a teeny, tiny product secured into and that producted end-to-end 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? brad: 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. and if there connected without being protected, then we have a much bigger cybersecurity problem than we do today. emily: microsoft president brad smith there. coming up, take text 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 a reminder all episodes of , "bloomberg technology" are live streaming on twitter. check us out on technology weekdays. this is bloomberg. ♪

♪ >> welcome back to "the best of bloomberg technology." i'm emily chang. today, technology is playing an evermore present role in health care. in particular, new developments in 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 and 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. caroline: i think focusing has always been on data, the use of

big data, the ability to be able 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 smart phones on the ground. it made me smile somewhat that 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. mr. gates: some of the more advanced software techniques are used to model the disease. so we run rich simulations. we had to create a new group in disease modeling to use the very latest software to try to project if we get a new drug, how beneficial would that be, and should we go after the mosquitoes or the human reservoir? even drug design, some of the advanced modeling techniques are letting us speed up that process of picking molecules and making

sure they don't have side effects. so anything that helps cure malaria, cure cancer, that will have a lot of human benefit. caroline: technology really was front and foremost in a lot of this discussion at the malaria summit today. emily: and you know, he has previously talked about how technology can be used for bad, though in this case, using for good. what are his thoughts in particular about artificial intelligence? caroline: you're right. we heard from him in the past talking about potentially taxing robots, 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 that artificial intelligence is in the hands of the right people. i wanted to really get his view on perhaps where the future of technology goes, if it is indeed

a smooth path or not. clearly, he thinks there are bumps in the road, and governments have a role to play. have a listen. mr. gates: every technology brings with it both a lot of advance -- the automobile net is a very good thing -- but it brought in huge safety challenges. here, where you are communicating online, the government is going to be involved in deciding what is hate speech that should be censored, what is free speech. it is not a simple issue. only the government gets to draw that line. so yes, government is very important to look at why these new technologies may need new rules to go with them. caroline: new rules in the future, talking of hate speech, it really made me think he was hinting at what facebook has been facing on capitol hill. emily: on that note, gates

himself was at the center of congressional testimony a couple decades ago. what are his thoughts on facebook, and whether facebook and big tech at large should be better regulated? caroline: yeah -- he wouldn't go as far as to say yes, regulation is necessary, particularly for the likes of facebook. that is why 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. mr. gates: 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, but every two or three years i think you will see more activity there. caroline: i asked him, look, any advice for the man, mark zuckerberg, as he comes up in front of regulators? here is a man who has experience in it. said i gave a smile and seem to think these things will come. emily: bloomberg's caroline hyde

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

emily: the defense department isn't budging from its decision to award a single contract for a cloud computing project, and isn't saying why, even in a public exchange with vendors this week over details of the multibillion-dollar competition. rival contractors like oracle are complaining that the winner take all approach favors amazon, the biggest supplier of client services. -- cloud services. ibm, another potential bidder, says no major commercial enterprise should risk the single cloud solution, and neither should the pentagon. meantime, google's former ceo thinks that 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 that ai would be "useful for defensive and perhaps offensive purposes," and that any efforts to make it easier for the pentagon to work with the private sector would be welcome. one problem, though -- his former employees don't agree. over 3000 google employees wrote to the current ceo, demanding an end to deals that what the -- let the military use the company's ai technology. now amazon shares gained after ceo 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. our editor who covers amazon for bloomberg just as the news was breaking on wednesday. >> the music streaming sub numbers -- this is what we know in the market.

there is a recently publicly traded company that has north of 70 million -- based on its public disclosures -- 70 million paid streaming subs. apple has been clear on how many they have, they have 40 million. 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 it will be a nice, incremental business for them. the golden ring for amazon will be getting people to sign up for the prime program. if they get -- 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 alexa devices out and installed, then you get an echo system and you can start getting apple tax or google tax revenue. sold,e of all the apps either directly or indirectly off of those platforms. so hardware sales, i don't find those too 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. emily: i'm reading through the shareholder letter now from jeff bezos, and i want to bring in spencer soper, who covers amazon for bloomberg with us in seattle. jeff bezos is here -- one thing i love about customers is that they are divinely discontent. their expectations are never static. they go up, it is human nature. you cannot rest on your laurels, customers won't have it. he goes on to say, of course, they will continue to invest for the long term. what are the highlights, spencer, that you are pulling out of this? spencer: 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. but the big thing, really, is 100 million prime subscribers, it is something they use as a building block, a foundation for them. we are seeing more and more additional tiers to that.

if you want to pay a little more and get music, great. if you want to pay a little more and get video, great. if you want to pay a little more and get amazon fresh -- it has become this platform they can build upon with more a la carte services to make amazon prime more valuable. emily: so he talks about prime video, about amazon devices, about fashion. amazon has become a destination for tens of millions of users to shop for fashion. this is interesting, given the competition in retail, in brick and mortar retail, and the challenges facing the retail industry today. do you think, mark, that amazon can become a huge player in fashion, or really a go-to? mark: i wonder about that. they are clearly very large already in clothing and apparel. i'm not the expert on fashion, far from it, but in terms of playing in regular clothing and

apparel, yes. high-end fashion, however, that might not work for amazon. it might be too hard to stretch the brand that far. that could be where potential acquisition of a high-end retailer may make a lot of sense. emily: like what? mark: well what is rumored -- what could be on the radar? mark: that other high-end retailer based in seattle that begins with an n, nordstrom. would amazon buy target? absolutely not. they are the leading mass-market retailer of the future. but they look to a compliment acquisition of a high-end complementary acquisition of a high-end fashion retailer like that? 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 don't know where that is. know amazon investors should be

looking for that aws language, because that's half of the story going forward. emily: absolutely. it is here, it is exciting to see amazon web services. the $20 billion revenue is accelerating, it's got healthy growth. spencer, talk to us about the aws and what the company expects to see. spencer: 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, amazon would have been about breakeven last year. it is basically fueling everything, from its in voice-activated devices on the alexa platform to its original video programming that is helping us get people more engaged and get amazon deeper into people's homes, to its international expansion, where it is trying to replicate its success in the u.s. abroad.

that is really the thing that is fueling more and more revenue growth. but yet, aws is the fuel for all of that. ♪ emily: that was bloomberg's spencer soper and mark mahaney. faith in apple for the iphone -- apple's iphone business may be wavering. the unease after a taiwan semiconductor, the major apple supplier, announced forecasts that fell short. the imf noted this week that 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 bloomberg tech's peter elstrom. peter: tsmc 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 a bit early in the presentation yesterday, where the forecast for next quarter is quite lower than people had

anticipated. as you saw on the market today, that was taken as a negative tsmc, but for for others you depend on it in the supply chain, like apple, who depend on it for smartphones in particular. emily: so talk to us about what we are seeing with qualcomm. more job cuts, a probe in china, what's the latest? peter: well, the probe in china is a bit concerning at this point. so qualcomm has to go to the chinese government to get approval for this acquisition. they proposed that more than a year ago and it has been dragging on and on and on. what china's regulator, the ministry of commerce said yesterday -- 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. so qualcomm had to pull back that application and refile the application with this new deadline three months from now.

what they want is some reassurances that the combination of the two companies will not have detrimental effects for other companies in particular. they buy a lot of semiconductors in china to put into different products that are then shipped around the world. they have a big say in this deal. emily: how does this fit into trade tensions happening now? peter: well, qualcomm would like to say that this doesn't have anything to do with the tensions between the u.s. and china, but it appears it could become a bargaining chip between the two countries as they are trying to work out these trade tensions, these trade negotiations. of course, donald trump has written tariffs against china for practices that his administration has called unfair. in response, china has responded with its own tensions. earlier this week, you saw this very dramatic move where the commerce department in the u.s. bigded to cut off xzte, the

telecom 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 exactly the tariffs will be, what kind of approvals, what kind of practices chinese companies will be able to use as the work with the united states. emily: that was bloomberg technology's peter elstrom from tokyo. in other news, the tech giant announced its plans to integrate its recently acquired magazine app texture into apple news in debut of 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 texture last month. it allows users to subscribe to than 200 magazines at $9.99 a month and is suspected to launch next year. next, josh silverman joins on this week's multibillion-dollar u.s. supreme court hearing on online sales tax.

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♪ emily: cambridge analytica may have harvested even more data than the already known 87 million facebook users, according to a second whistleblower who came forward. britney keiser testified before a u.k. parliamentary panel at -- that the company used a wide assortment of surveys together data. nix, ame, alexander nick'

former ceo of cambridge analytica, 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 formal summons for him to appear. a debate over 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 to let states start collecting billions of in sales tax from dollars internet retailers that don't currently charge tax to their customers. 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. if overturned, this would put new pressure on online retailers that don't always collect taxes, including amazon, ebay, etsy, and thousands of others. we spoke with at sea ceo josh silverman -- etsy ceo josh silverman ahead of the hearing.

mr. silver stream: what we are talking about here is the new mainstream, the digital mainstream, being subject to a patchwork of 10,000 different ourjurisdictions, where sellers, 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 taxes as well being collected. is that a risk or is that not on the agenda? mr. silverstream: 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, while pecan bars are classified as baked goods, so she needs to know that to comply with one jurisdiction in the state of washington. perhaps is

back to school, in which case there might be a tax holiday. in the state of connecticut, she needs to know whether the candy she sells 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. caroline: so back taxes are not on the agenda, of the -- but the complexity is front and foremost. if the supreme court does not overturn this rule, do you think we might start to see states crackdown in some way? how do you manage your business for the future? mr. silverstream: it is not about back taxes, 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 state, do not have physical jurisdiction in their state, to comply with each and every tax jurisdiction. that is what that risk right

-- that is what is at risk right now. so if one rule gets overturned, a micro seller who sells on etsy from her living room leaves to -- will suddenly need 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, then she is not subject to the tax jurisdictions within that state. caroline: have you put in place provisions if it is overturned? have you factored in the extra cost to your business in this respect of having to comply? mr. silverstream: it is about 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 overturn 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. that is really going to create

terrible friction for sellers, and it is going to hold back jobs, and it is going to hold back the success of micro-entrepreneurs, so much of the economic engine of our current economy. caroline: talk to us about having the back of your sellers. notably, keybank has been saying you are improving your service, you will be helping them target potential shoppers much more, 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, your own customers? mr. silverstream: 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. so sales have been accelerating quarter over quarter. in fact, in the fourth quarter, we did over $1 billion of sales. so the work we have to doing has -- been doing and sellers are has really paid off being more successful, selling more product as a result.

emily: that was josh silverman, ceo of etsy. that does it for this edition of "the best of bloomberg technology." we will bring you all the latest in tech throughout the week. be sure to turn in next week. full earnings coverage slew of , a 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. ♪ retail.

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♪ taylor: coming up on "bloomberg best," the stories that shaped the week in business around the world. a busy week and earnings with banks wrapping up record profits. new nominations continue to fill out the powell fed, a meeting in mar-a-lago is one of many geopolitical matters moving markets. >> there is a lot of frustration. >> it is a meeting that is not going to be fruitful, we are not going to go. taylor: south africa's new president speaks exclusively about his nation's financial future. >> we are embarking on reforms that will lead t