♪ emily: i'm emily chang, and this is "the best of bloomberg technology," where we bring you all the top interviews from this week in tech. coming up, netflix sets the bar. leading the charge for the next quarter of big tech 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 its workers home, only to reverse course and declare a 24/7 operation. we will explain. and paying for prime. jeff bezos says amazon's premium

subscribers have topped more than 100 million. first, to our lead. netflix shares popped this week 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 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's confidence in its online tv service is justified. we dug into the numbers on monday right 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, then people are going to subscribe and stay with netflix. so, it has been an amazing story for them.

caroline: an amazing story that they have just continued to be able to show as they expand their user base, they are able to up the prices consistently. i mean, are you expecting the theorts of heady heights, 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 that 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. so, they are 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 for a while. caroline: henry, i mean, this is phenomenal user growth we are seeing. 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 in original content, has a lot of data on users, has a very big distribution channel it can deploy. i think it is an open question whether anyone will catch netflix. i remain a netflix bull, but it think it is interesting to think around how disney might find a way yet to compete. if you go forwards a couple years in an imaginary world, and believe disney manages to acquire 20th century fox and goes live with its planned streaming services, bringing its historical archive, bringing the very high quality production focus that it has in the movie

sphere, and the ability to weave in merchandise in a way netflix has not yet been able to do, it could yet 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 different types of 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, either. i agree with henry that competition is coming from all quarters. the companies he mentioned, certainly fox and disney, big competitors, especially if they tie up. then you have amazon, hulu, and potential competitors like apple and facebook that haven't tipped their hands fully in this game, yet. 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. caroline: i mean, talking of perhaps how the share price has performed, and whether there is competition there, i am diving into my bloomberg, and you can see how netflix has left the rest for dust when it comes to share performance. up 60% so far year to date in yellow. we are seeing a vast outperformance versus the likes of amazon in the blue, versus the likes of alphabet in the purple, apple in the pink. clearly, they are streets 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? build on what netflix does with the subscription model and anyway -- in any way? henry: absolutely. it's a very broad retinue. we do 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's a huge allure in subscription models from an investor perspective. 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 onto these subscription packages. but it's an area where we see enormous amounts of activity, littered with gravestones all over the place over the last five years, people have tried to play in paid content and failed. but the tide is beginning to change. consumers begin to understand now that there is a proper value exchange in being a customer, and not being a product of the se services. i often cite the guardian media group, who are 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 along the netflix model. caroline: that is interesting.

paul, i am also looking at, you said, really anyone who is betting against netflix will probably continue to fail in this respect. i'm looking at short interest at netbooks at the moment, and that has continued to tail off. if you go into the bloomberg, you can see on the white line how we continue to see upward trend in the netflix share price. in the blue line, there's a continued downward trend in terms of short interest. 4% of all equity floating is currently shorted. do you remain out the game if you're going to be a bear on netflix? 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 the cumulative -- 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 a show. i think netflix has been doing that very, very well, building interest, and retaining their customer base. and as long as they keep doing that, they may have some ups and downs in future quarters, but i don't see the story changing for the worse, unless, really, the market underneath them tanks or something drastic happens to their business or the content. but it's really -- 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 founder's factory ceo henry lane fox. we got some details on facebook this week on what data it collects from users when they are logged out of the social 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 content and ads send information back to the social network on all users. in an online statement, the social media giant 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 would join other giants working to develop their own chips like alphabet, apple, and google. coming up this week, 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. listen on the bloomberg radio app, bloomberg.com and sirius xm. this is bloomberg. ♪

♪ emily: tesla is shifting into

overdrive to try and resolve its model 3 production problems. after earlier reports that the electrical manufacturer was temporarily halting production reporteddan, jalopnik 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 and cash flow positive this year. so, just what is happening on the tesla production line? to answer that, we spoke with bloomberg's businessweek columnist max chafkin, who has been covering tesla on tuesday. max: although elon musk appears to be working 24/7 famously, sleeping at the factory, these 24/7 shifts are three different crews of people. 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 musk is saying

in this memo, published by jalopnik just a few minutes ago, that the plan here is to have the shutdown, then 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 sort of a fascinating look at the psychology of elon musk, the idea here is to build a little cushion, so even if they fall short of the 6000, which tesla has been want to do, they will probably get 5000, which is the goal they have been promising all along. there's also information about a plan to add lots 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 for

profit, to make sure tesla gets 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, not good news. how bad is this bad news in the grander scheme of things? max: so, it is hard to know, and i caution people into reading into the tea leaves too much, because the thing is that production halts, as tesla has said, is sort of something 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 these sort of unexpected things, and that would cause somebody who is kind of a tesla skeptic, and there are lots of those out there, 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 are going to be happy, and you know, elon musk will look like a genius. emily: what do you make of elon's comments last week on cbs

that he overdid it on automation? max: so, yeah, that is a huge shift. because one of the key things that tesla had been talking about as a differentiator is that this was going to be the most automated car factory in the world. that was going to allow them to hit these crazy, ambitious production numbers. the problem is, we've been learning with automation that it is harder to plug people in. what it seems like what is happening in the factory, when you start pulling different tidbits that are filtering out there, 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, and which is why they have to focus on profit. because they spent all of this money on these machines, which is supposed to save money in the long run, but now you have to add employees on top of that, so that is going to create a lot of cost pressure on a company that already is losing money. emily: 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 sort of superpower that tesla has, that people are super fans of this company. and i think in terms of those who have, you know, already put down the deposit, about half a million people, this is not their primary car. and 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 to see 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 sort of buying into a larger vision of tesla as potentially the biggest auto manufacturer in the u.s. if all they have are the customers putting a deposits, that is not going to be good enough. they need to keep adding giant

customer cores each year to hit the vision that elon musk is talking about. emily: i do want to acknowledge the tweeting, elon musk continuing his adversarial relationship with the media. this two week to the economist, -- this tweet to "the economoist," now it's just boring. 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? and he said, "too wasted to remember." at what point do investors start getting distracted by the state of mind here? max: ok, so he has always been a pugnacious sort. and 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 probably greater area of concern would be all of these side projects. in addition to tesla and spacex, there is the a.i. thing, the tunnel thing, he's apparently hiring humorists from "the onion."

and so, i think it is more about sort of 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 certainly for us in the press, it gives us something to talk about. so i don't think it is definitely 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 equipment 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 a 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. tencent-backed meilishuo is 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 for the u.s. deal. 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 called the cybersecurity tech accord. however, notably absent from the initial roster is apple, amazon, twitter, and google. on monday, officials issued a joint warning about 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 there's 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 the second is that we won't help governments launch cyberattacks against innocent citizens or enterprises, and we will use those as two north stars, and there are 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: oh, first of all, we get most importantly 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

your principles are unclear, you do run the risk that you will be asked by governments to do think that you will regret having done. and we have seen that over the last 15 or 20 years. and 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. emily: so, you referred to this as the digital geneva conviction, yet apple, amazon, twitter, google, they are 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 a 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 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 that 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 that we can live up to this pledge. emily: facebook, also, i'm sure as you know, also under fire for

data privacy. and i am curious where you think facebook went wrong, and whether you think more regulation is necessary in big tech, since that ultimately can 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 i believe 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 with this new defending democracy project. the first is protecting candidates and campaigns from hacking. the second is protecting voters and 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 really in some ways the hardest, it's the job we all need to do, to try to address the willful misinformation campaigns we are seeing, even from foreign sources. and so, in some of these areas, we have fast steps that 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 iot product secured end-to-end product that could be in anything from toys to remote controls, works with aws, with google cloud. what are the dangers here that you are trying to protect against? brad: well, this, i believe, is a fundamentally important problem for the country and for the world. this year there will be shipped in the world nine billion of these small chips that are increasingly going into toys, refrigerators, thermostats, certainly cars and the like, 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, tech takes on malaria.

we talked to the man who went from creating microsoft 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 at technology weekdays. this is bloomberg. ♪

♪ emily: welcome back to "the best of bloomberg technology." i'm emily chang. today, technology is playing an evermore present role in health care provision in particular, , new developments in data analytics software 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 caught up with the tech luminary at the malaria summit in london. caroline: i think focusing has always been on data, the use of

big data am of 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, of such diseases, and just 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 of course, thinks 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. and so we run rich simulations. we had to create a new group in super disease modeling to use the very latest software to try and project if we get a new drug, how beneficial would that be, and should we go after the mosquitoes or go after 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 coming out of that. 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 you know in this case, using for good. what are thoughts in particular about artificial intelligence? caroline: yeah, you're right. we heard from him in the past talking about potentially taxing robots, and within artificial intelligence, he has been blogging about it himself, saying he's not quite yet convinced about the future of ai in terms of its control, about where then the role of institutions is in ensuring that artificial intelligence is in the right 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. and seemingly and 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 advanced, you know, 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 which -- versus 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, you know, 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, i think 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 , i said 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 you know, the -- 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. but he just gave a smile and seemed to think that 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. the jeff bezos backed 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 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 ceo sundar pichai, current ceo demanding an end to , deals that 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. we spoke with spencer, who covers amazon for bloomberg, and another reporter just as the news was breaking on wednesday. mark: the music streaming sub numbers, so 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, north of 70 million paid streaming subs. apple has been clear on how many they have. they now have 40 million. amazon has a lot of work to do to catch up. i'm not sure amazon needs to catch up to those two, but if 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 music or video gets them to do that, great, and by the way they have 100 million of them. , in terms of hardware sales, this is what really matters for amazon. we think 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. like a share of all the apps sold, either directly or indirectly off of those platforms. so that hardware sales were a record year or amazon 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 by the end of this year but certainly somewhere in 2019. emily: i'm reading through the shareholder now 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 here, spencer saying, , "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 in this world. 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: yeah, i think the 100 million prime members is the big takeaway. otherwise it's a lot of familiar themes and like a highlight reel of stats we have seen over the past year. but the big thing really is that 100 million prime subscribers, and it is something they use as a founding -- a building block.

it is 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 service like 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, he talks about amazon devices, interestingly he talks about fashion. amazon has become a destination for tens of millions of users to shop for fashion. you know, this is really interesting, given obviously the in retail, in brick and mortar retail and you know the challenges facing the retail industry today. do you think, mark, that amazon you know 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 , that may not work for amazon. it might be too hard to stretch the brand that far. that be where potential may acquisition of a high-end retailer may make a lot of sense. they clearly are doing very well -- emily: like what? well, what is rumored -- >> well it is rumored that the other high-end retailer in seattle, nordstrom, they are the leading mass-market retailer of the future. what looked like a compliment reacquisition, a high fashion retailer, possibly. if it is high-quality brand, management that is what i wonder about. that is amazon and fashion. we have not mentioned aws. that must be in the shareholder letter because that is where half of the profits of this business are. i haven't seen the letter yet but where that is, i know amazon

should be looking for that aws language because that is half of the story going forward. >> it is here, exciting to see amazon web service, $20 billion revenue accelerating already its healthy growth. talk to us about the growth of aws and what the company expects to see. fuelll, it really is the for all of amazon, and is the thing that gets amazon a lot of leeway from investors about all of its other kind of very low margin or even money-losing initiatives, including its international expansion. without amazon's cloud computing segment, it would have been about breakeven last year. so it is basically fueling everything from its investments in voice-activated devices on platform what form -- to its original video programming that is helping get people more engaged and get amazon deeper into people's homes, to its international

expansion namely where it is trying to replicate its success in the u.s. abroad, which is the thing that it is fueling more and more revenue growth. the fuel for all of that. >> at -- s bloomberg the faith in the iphone business may be wavering. unease on wall street comes after a taiwan semiconductor announced a forecast for second-quarter sales that fell short area this comes after the imf noted the global smartphone market may have peaked and the shipments to client for the first time. we went to tokyo to get the view from asia with bloomberg tech peter elstrom. is closely watched. it is a key chipmaker in the supply chain with apple and they get these forecast. we were able to dig out this information early in the presentation yesterday where the forecast or next order is lower

than what people anticipated. as you saw on the market today, that was taken as a negative sign not just for tsmc but others that depend on it beginning with apple and others in the supply chain for smartphones in particular. >> talk to us about what we are seeing with qualcomm here. more job cuts, you know, a probe in china. what is the latest? is a: the program china bit concerning at this point. qualcomm has to go to the chinese government to get approval for this acquisition of an xp. they a proof that a year ago, and it has been dragging on and on and on. what the china regulator, the history of commerce said yesterday, this is the first time they have said this on the record. they have been reviewing the deal and the qualcomm has been offering remedies, and they are not sufficient. qualcomm had to pull back that application and refile the

application and set this new deadline three months from now. they what's reassurances combination between the two companies will not have detrimental effects for domestic companies in particular. they buy a lot of semiconductors in china that need different products are shipped around the world, so they have a big say. emily: how does this fit into the trade tensions? oner: qualcomm and mosque would like to say this doesn't have anything to do with the tensions, but it appears that could be a bargaining chip between the two countries as they are trying to work out these trade negotiations. donald trump has written tariffs against china for practices that his administration has called unfair. china has responded with its own tensions. earlier this week you saw this very dramatic move where the commerce department in the u.s. decided to cut off zte, the big telecom equipment maker from

buying components from american suppliers. that includes qualcomm not with deadly. -- coincidentally. the approval from chinese regulators may end up getting caught up with these other negotiations over what the terrorists will be or the approvals, what kind of practices chinese companies can use as they work with the united states. emily: that was bloomberg technology's peter ahlstrom. in other news the tech giant announced this plan to integrate the recently acquired magazine after texture into apple news and debut in some premium subscription. they say the iphone was to generate more revenue from online content and services. apple agreed to buy texture last month. this allows people to subscribe to 200 magazine that nine dollars 99 a month. -- at $9.99 a month. it will launch next year. josh silverman joins on this week multibillion-dollar supreme

court hearing on online sales tax. this is bloomberg.

♪ emily: cambridge analytica may have harvested even more data than the already known 87 million facebook users, this according to a second whistleblower who came forward. britney keiser testified before a u.k. parliamentary panel that the company used a wide assortment of surveys together -- to gather data. meantime, alexander nix, a former ceo of cambridge analytica, refused to appear before the very same panel.

nix's legal team claims he could appear due to the information commissioner's ongoing investigation into the matter. the panel rejected his excuse and said it is considering a formal summons for nix 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 dollars in sales tax from 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, at thousands of smaller merchants. we spoke with etsy ceo josh silverman ahead of the hearing. ♪ >> 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 our sellers, micro businesses really are , asked to comply with an unmanageable number of tax laws. caroline: 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 of yours or do you think that is not on the agenda? mr. silverman: the most important thing is, let's take an example. one of our sellers in the state of washington, she sells marshmallow pops, and she sells 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. and so she needs to know that to complying with the tax jurisdiction and jurisdiction in one the state of washington. unless perhaps 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 sells are for athletic purposes or not unless , they are being bought by, for example, 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 perhaps not on the agenda, but the complexity is front and foremost. if the supreme court does not over to this rule for example -- overturned this rule for example do you think we might start to , see states crackdown in some way? how do you manage your business for that future? mr. silverman: it is not about back taxes, it is about forward-looking, and is exactly 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 is at risk right now.

so if that really gets overturned, then a micro seller who sells on etsy from her living room will suddenly need to comply with over 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 for if it is indeed overturned? have you factored in the extra cost to your business in this respect 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. of course we are going to have the backs of our sellers, but should the supreme court overturn the quail ruling, which is what is being discussed today, 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 is going to really 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. because notably, keybank has been saying you are improving your service for your sellers at the moment, going to help them target potential shoppers much more, but many feel perhaps you have abandoned them when going into brick-and-mortar within state-by-state. what are you doing for your own sellers, your own customers? mr. silverman: 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 that we have been doing has really paid off, being -- and our sellers are being more successful, selling more product as a result.

emily: that was josh silverman, ceo of etsy. and that does it for this edition of "the best of bloomberg technology." we are going to bring you all the latest in tech throughout the week. be sure to turn in next week. full earnings coverage, a slew of big tech sector reports on amazon facebook, microsoft, and , intel. tune in every day. 5:00 in new york, 2:00 in san francisco. remember, all episodes are live streaming on twitter. check us out weekdays. that's all for now. this is bloomberg. ♪

♪ >> concerns kim jong-un is holding -- president trump dialed back on the optimism. here with a mnuchin trade truce. beijing welcomes the chance to resolve their spats. protection asns it threatens the global economy. things are still good but the risks are out there. not, now it isas water. korean