♪ emily: i'm emily chang in san francisco. coming up in the next hour, gdp are are now being enforced in europe. tech companies had months to prepare, but are they ready? plus the trump administration has reached agreement that will allow cte to remain in business. and, spacex completes its test mission this year. meantime, china launches a satellite that ushers in a new era and the global a spirit we will discuss who is in the lead.

but first, your top story. the new era of consumer privacy has also arrived here at consumer data privacy. europe's data protection went into effect friday. here is everything you need to know. >> the eu is introducing new rules that will dramatically impacts how companies collect, store, and store data. it is the gdp are coming into effect on may 25. it is to act company that personal data. what will change for customers? instead of fine print and legal jargon, they will have to get unambiguous consent to collect data. these rules don't just apply to social networking site spirit it affects school, property management companies and a scout groups. companies need to notify authorities within 72 hours and

alert customers situations. just how huge might the fines become a up to 24.8 percent. for a company with worldwide sales of $100 billion it could mean penalties of 4 billion in certain circumstances. that is a good incentive to comply. emily: for more on gdpr, let's it straight to europe where caroline hyde is standing by. caroline: now, it has taken effect. gentlemen, welcome.

starting with you, 18 months they had to get it in place but still we understand some businesses are not yet lanford what are the challenges? >> it's two years they have had to get ready for the challenges are that the regulations have been written in a principle-based manner. there are no clear guidelines. there are principles that need to be adopted by businesses. that means there is an enormous amount of sensibility. caroline: flex ability and interpretation. let's get the interpretation of a lawyer. a lot of these companies we are hearing about our global in nature, but this is block in regulation. it is the eu so how does one company go around navigating that? do they make policy for the eu or does it make things more complicated? >> you're absolutely right. this is a global question because data privacy is on the agenda internationally. we are seeing clients look to do and raise the bar to a certain level like data security so

folks have some of the court eu and spills and implying them worldwide. some of the individuals they get in the eu don't joke with what is misses are doing international. sometimes it is worth having a couple of speeds to make sure businesses isn't working with one hand tied behind his back and markets it can do more. caroline: talking about hands behind back, you are working with companies to try to get them compliant. are there any opportunities to make this work for them to improve their transparency? their brand recognition? or is this a challenge for many business? >> is a big opportunity. the real challenge at the moment is getting into compliance and taking the boxes that make people feel comfortable.

when businesses get to grips with gdpr they will see it is a a government and the and transparent with their customers. as also to access more data than they previously had access to because data portability is a big access -- big aspect of the new relations. caroline: explain that a little bit more. >> data portability is one of the fundamental rights. we've all heard that we can go and request to have our information deleted from businesses. more interestingly, we can request access and a copy of all of our data and related information inside an organization and have it delivered to us in machine readable. that information can be used to provide personalized products and services that souped our history even though our history may not be with the company providing that personalization. there's a enormous opportunity for innovation around access to the greater amount of data. caroline: many people citing blockchain becoming a used in this.

going back to the right to be forgotten some of the stimulus to cling to. how will the right to be forgotten actually be to enact or -- how will the challenges there be interpreted light businesses? >> the buzz word has confused people of it. this is not, we are in a world where everyone's data will be raised. what happens if you are a business and you receive every is from someone who asks to race their data, you can look at that and decide, have a got a defense to that request? in many circumstances, we've seen this time and time again with people trying to game some of the new rules, we've seen businesses plan for that and think about how they will politely but firmly say it know when actually they need to keep that information for legitimate purpose because they have a dispute with the purse purpose -- with the person who says please forgive me. caroline: talking about gaming or not in this case come already we've seen for complaints lodged

in the first day by -- against google and facebook. saying, look, you are forcing people to accept these new privacy rules and you are all too important. talk to us about that potential case and how you think it might be interpreted? >> there's a fundamental aspect of gdpr where a business cannot withhold provision of a service pending the individual agreeing to having all their data accessed for any purpose. so, the argument is that those large organizations are really saying take it or leave it. if you don't want to use our service, then don't use it. if you do, you have to give us all of your information and you have let us use it the way we want to use it. really, that isn't what the intention of the gdpr is the it is to give incremental levels of consent around areas of data use that enabled the individual to have more control around where their data is like and how it is being used and who it is being

shared with. caroline: does the control of data affect the value of it. you're talking not only to businesses but to potential investors. data was the gold of modern day. our companies that want to buy data and focused businesses having to stop and think and are they talking to you about it? >> they absolutely are. because data privacy as a kind of value point has been growing over the past five to 10 years. what we see now is businesses watching, when they're talking to investors and scrutinized on what they are doing we're seeing a dialogue on exactly how the technologist in a business and the lawyers have thought together about how they will build a modular system. to julian's point, you could

huge amount of value out of this data and it is really and when the individuals can be able to push and pull on it in a modular way. if a business has built its system, that means it will be scalable and ready for the future. it might well be there for gdpr. caroline: we talked but the opportunities and challenges, there's one still out there and, the 72 hour. suddenly, potentially a breach. how on earth do they go about talking to regulators about that? >> is a really difficult area for businesses. many businesses can have breaches with no knowledge of that. particularly smaller businesses. is putting a lot of onus on the security of businesses of all sizes.

medium-size businesses struggle to have the adequate resources. to be aware of when they are breached and to be able to react quickly will be extremely tough. >> i do agree with that appeared 72 hours is a hugely short. of time. most people if they suffer from a crisis need at least a week or two to run some of the on six -- some of the forensics. what they do is think about how to plan for that. what will they do on day one? how do they escalate and have a show -- that things could happen to good people. there is death no one is going to be completely safe from cyberattack and businesses need to have the processes to enable them to respond. caroline: still plenty of questions to go and some compliance to be met. people have still got plenty to learn. thank you very much. emily: caroline, thank you so much. we will be back to you later on. coming up, can china's second-largest equipment manufacturer be saved? we look at the past, present, and future of zte next. this is bloomberg. ♪

♪ emily: the trump administration has reportedly reached a deal. the white house told congress that thanks to the agreement with the commerce department, zte would be paying a large fine. managerial changes, something commerce secretary pointed to on thursday. just how did zte wind up at the brink of closure? we take a look.

>> congress had been increasing pressure on resident donald trump to not we can sanctions on zte, the flashpoint in u.s. china relations. it is the come a central vocus since the administration crippled the company by cutting it off from u.s. suppliers for allegedly violating the terms of a 2017 sanction settlement and then lying about it. the u.s. also alleges that the state linked enterprises involved in china's military. trump, who has emphasized a hard-line stance on china made an abrupt reversal earlier this month. he was working on a way to get zte back in business and fast. take a look at how trump family to punish. >> i envision a very large fine of more than $1 billion. could be 1.3 billion. i envision new management and

new ward and airy strict security rules. i also envision that they will have to buy a big percentage of their parts and equipment from american companies. >> lawmakers are critical of the reconsideration of these penalties as a way to make a favor to the country's president. they argue cte should not be used as a bargaining chip and softening the blow could cost u.s. credibility. emily: to further discuss, i want to ring in the voice you just heard. bloomberg text lindo wing -- selena. how exactly would this compromise -- this agreement

work? >> this is what trump has been talking about for the last several days. he wants to impose a larger fine on zte, and put compliance office into the company. they will get a window into what zte is doing. if it does come into place, it will lift the ban on zte, which is already causing tons of iron from congress. we see marco rubio talking about how it is a great deal for china. the main concern is that trump is conflating trade issues with national security and he shouldn't be trading away national security concerns in order to be a bargaining chip in other issues. zte did violate the sanctions in 2017, it is very clear and they even lied about it later, so, weakening the blow, the concern is that it will weaken the ability of the u.s. in the future to have credibility and to have bargaining power in the future. emily: also, some might find it somewhat ethical -- what skeptical that they would allow washington inside a chinese what you make of the agreement? >> especially a technology

company that has such close ties to the date. one advantage of the u.s. during the steel is we'd get a lot of insight into china's largest telecom company. the chinese state. a lot of people information gathering that the u.s. could have on a national security angle and it is unlikely that beijing will allow things that it thinks are state secrets to be giving wide open to the u.s.. emily: there's all this happening against a complicated backdrop. how much do you think the situation has to do with the sanctions that were violated with the coming of a potential trade for and the concern that cte is a national security threat. >> i think it unfortunately has

to do very little but the sanctions that they violated and some of more to do with the political situation. that's a problem because it is sending a message to u.s. international firms that politics trumps economics and law. it says a message to beijing which does a lot more than the u.s. does that it is ok to have political issues and issues of trade and international relations be more important than your rule of law and your allegiance to how you do things. i think it could give aging license to behave more unpredictably with american tech companies trying to succeed in china. emily: how does the cancellation of this summit with the north koreans impact this? >> as we have seen, as isaac said, this has become a huge west point in u.s. china -- huge flashpoint in u.s. -- china relations. the concern is using this bargaining chip and show

american companies that political issues could the eight flashpoint for greater problems. the big question is the china 2025 industrial policy. a lot of trade talks have not been addressing this problem. in giving this concession tozte it could encourage the ip theft that has been alleged, causing u.s. companies to turn over some of their technology hearing everything that has happened so far only causes more impetus for china to ensure they are technology independent and that of their technology hearing the situation won't happen again. you get there, they want to out innovate. in order to do that there may be even more ip theft and concerns with that in order to get there. emily: how big a risk is there of retaliation in china? >> i think there is a large risk of retaliation.

the way this will work is because there are so many other factors complicating the relationship. your tensions on the first -- you tensions. the retaliation, when it comes won't be pegged to zte, but it will be a wink, wink, nudge, nudge. i think you know why this company can't get a license. they will leave some plausible deniability. emily: how could punishing zte in this way lead to potential backlash against the u.s. administration? >> obviously the great concern is that china could levy a similar problem on a lot of u.s. companies offering in china. the big issue overall is it is not a level playing field. chinese companies have been able

to come up the most part, invest broad. although the u.s. is putting greater clip dance on that. u.s. companies have historically had many issues operating in china. there is the requirement that they have to sometimes transfer their technology. so far, the impact on zte is that it has been mostly crippled, it has lost $3 billion and still having operating expenses and tens of thousands of employees that are idle but they are hopeful that if and when this concession comes through, they can immediately put those workers back into action. emily: how do you expect -- this is obviously a very unpredictable u.s. administration. how do you expect this to involve -- to evolve over the next it days and weeks. will it develop into a full-blown trade for? >> you gave me a nice out there. one way to track that is to see what goes on but the north korean summit. earlier on friday, trump said oh, the summit might happen on

june 12. the summit as a good or a matter for the u.s.-china relationships. if the summit happens the u.s. side will be more willing to help out on trade issues and be less likely to punish zte, but if the summit doesn't happen, a lot of u.s. lawmakers will blame china. it is hard to know if it is china's full or not but they will receive a lot of the blame and zte could certainly be a casualty in that blame. emily: i fixed on fish of the asia society. thank you both. we will be following. coming up, the verdict is in for apple versus m son. why samsung to date amble with its appeal and lost. this is bloomberg. ♪

♪ emily: seven years after the patent infringement battle, apple has 18 $539 million verdict from samsung.

the original case was about samsung in pitching on three of apple's iphone design. a jury in 2012 awarded apple over $1 billion though samsung cut the award on appeal. continuing to challenge 399 million of the payment in court. this means samsung already paid $399 million for infringing the patent issues. this week's verdict would increase that mount by $140 million. essential products cofounded by and read creator is considering selling itself. they have canceled development of a new start -- new smartphone. it was valued at up to billion dollars a year ago. an indonesian ride-hailing company says it is more focused on extending its footprint then

going public. they began talks with taxi operators in singapore in an effort to compete with grab. they operate ridesharing scooters, who delivery and digital wallet services in indonesia. they recently raised $1.5 million from investors. they plan to operate in vietnam, thailand, singapore, and that philippines in the coming months. coming up, what was the role out for the sweeping new regulation mike for one of the most big companies in the world? that is next. later we will discuss amazon's explanation for an echo speeder recording and sending eight-conversation to a contact and if this come -- of this problem goes bad amazon. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." new general data protection regulations are now in effect. companies are subject to the most far-reaching data privacy laws aimed at keeping people from losing control of their personal information. facebook and google have been hit with $9 million worth of losses, arguing they are not complying. my next guest has been on the front line of implementing the rules. she joins us in london, as well as caroline hyde. first of all, the suits filed by austrian privacy activists saying what google and facebook have done to complaint don't go far enough. do you think the case holds

water? >> the introduction of gdpr is making a change in the way society looks at technology, it is time to regain the trust between technology and society. these things are explaining how much society is looking for clarity in the use of data. the change will come, but it is time to rethink technology in a more responsible way so that individuals will regain control of the data and more trust in the way companies use their data. caroline: have you had to change the business model at ibm to make sure you are complying? cristina: we in 100 years have developed stronger security. it is a matter of adjusting what we had.

we had very strong practices on security and privacy good at this income, we want to look at gdpr or as an opportunity than a challenge. of course you need to comply, that is a challenge in itself. it is costly, but it is an opportunity. we are sincere. emily: ibm has been urging u.s. lawmakers not to adopt gdpr, even sending a delegation to washington to lobby against it. why? cristina: the ibm problem for implementing it has been globally adopted. we wanted to consider this a good opportunity to announce our privacy systems around the globe. we are also a leader in the fact

that there is no one solution to privacy. there are cultural dimensions and rights of individuals are different. a lot of that, we believe there should be an opportunity for companies to adopt protection for data in a way that is more consistent with those rights. we are implementing gdpr globally but we know other companies may adopt different. emily: how do you see it materially impacting or changing ibm's business? will we see an impact of this on the bottom line?

cristina: there will be an impact. i view it as positive, to be honest. it is an opportunity to prepare companies for the digital transformation and innovation. in particular, the transformation is about the requirement it imposes on cleaning the data the company has, so it can manage and analyze it and be prepared for artificial intelligence and machine learning technology. caroline: what is the hardest part is satisfied? is it up to interpretation, or the right to be forgotten that are the biggest hurdles? cristina: it has been confirmed by studies that the most difficult part of the regulation is related to the need to have

complete access to the data, the data cleaning, quickly complying with all of the other requirements. those are very difficult requirements. if you have control of your data, you are in a position to reply more rapidly and with more accuracy. struggling companies have not been used to cleaning the weight data was collected or used. that is making it more difficult for them to reach compliance, because they don't have that control. caroline: it is been difficult for some in the u.s. i tried to log on to some websites today and you cannot, it is blocked for half a billion people in the eu. have they decided that the audience is not big enough in the eu to scale this?

cristina: there are those that are just taking a very wait and see approach, there are those that are losing competitive advantage if they don't get ready and open themselves to the global reach of data. there are those that have started quite early in the process, and is not ready, very close to being ready. i am positive, i believe the opportunity that gdpr is bringing to society, the rights of individuals and the requirement of more transparency and the relationship between who manages the data in who earns the data is good. emily: now that the law is in place and this is your job, making ibm is in compliance, describe what your day-to-day will be like going forward.

cristina: i view myself as being divided into three fundamental tasks and responsibilities. one is to advise my company, business unit functions about what they need to do to be compliant and stay compliant. the compliance is not just today, but it continues in a cycle of change and adapting. second, i need to control the compliance. i have the compliance responsibility. third, i need to make sure that regulators and authorities are happy with the way we manage the data and the way we are complying. i also have an external facing responsibility to manage the relationship with authorities. emily: already, ibm's data protection officer. thank you. as well as caroline hyde in london. coming up, and unlikely possible theory about echo speakers. we will have all the details.

and this weekend, bloomberg television will bring you the best of the week, including an interview with the eu ambassador to the united states. this is bloomberg. ♪

emily: facing a rebellion among artists and even some employees, spotify will partially walk back move to ban musicians for personal misconduct. the streaming giant has told artist, managers and record executives that it will restore songs by triple x temptation to the playlist. they are talking to civil rights activists about how and why to adjust rules in a matter suitable to both sides. amazon faced a public blunder this week after it was revealed a voice activated echo recorded and sent a private conversation. amazon has said the device awoke after hearing a word that sounded like alexa, and it heard send message in the

conversation. the company added as unlikely as the string of events is, are explaining options to make it even less likely. it brings a larger anxieties and concerns around the possibilities for voice activated devices inside the home. we are joined by dan gillmor, senior staff technologist for the technology and speech projects. we have our editor, alistair barr. obviously amazon is emphasizing this is incredibly unlikely, and the fact it happened at all is worrying and feels like such an invasion of privacy. what should we make of this? alastair: the classic half of the great things you get from technology companies and what

happens in the background and a lot of people have fought the device, i am sure did not read the terms and conditions they don't know what is happening in the background, and now it's probably going to cause people to be concerned. i imagine the main thing people should do if they are really worried is to unplug their echo device and send it back. emily: not great news for amazon if that is the case. dan, are there any loss on the books for monitoring devices like this or should it be independent audits? dan: there certainly should be independent audits. the fact we have invited a whole number of computers into our houses, basically with sensors and the ability to record and network connections to send traffic off represents a real risk to privacy and the ability to have confidential relationships and private communications. this was the situation in someone's living room, but we don't really understand in society what it means to have invited this type of potential surveillance network into our

homes. emily: as it stands now, these features are opt out? is there a way to do that? alastair: we were saying this morning you should be able to shout gdpr. [laughter] alastair: the main thing you can do is the button on the top, that will switch it off. we double checked that this morning. if you switch it off, even the wake word will not turn it back on. emily: but that is fully turning it off. what about keeping it on and having some sort of thing where you can opt out? dan: you're not fully turning it off by pressing the button. it has microphones and speakers. pressing the button tells the software and the device to stop recording, that the software might decide to ignore the button.

these are network attached computers with all of the problems those have. they could be buggy, they could make mistakes. even to the point where we think the system is physically turned off, the microphone is still probably physically active. there are other technology companies starting to build devices -- emily: would the opt in feature appease you? dan: for me, definitely not. even to the point where we think they are listening over time it comes with the kind of mistakes that happened recently but also mistakes that can happen maliciously. it is not enough to engineer these devices well to make sure you don't accidentally pick something up. there have been a series of adversarial research on how to fool things like the recognition

systems of alexa and other technologies. you can look up dolphin noises, they are things humans can't even hear to act by these machines. they are being used in an adversarial context. it's hard enough to design them in a friendly context, as we can see, but the fact they will be facing over the years more and more adversarial interactions. i think the prospects don't look good for them. i think if people want to be private, it is important to take a second look around you and look at the systems you have in place, the systems that have sensors and network capabilities and consider is the advantage worth the privacy risk? i think for most people, the advantage is probably not worth the risk. emily: this is not just limited to amazon, alastair. the google home many was also

reporting back to google. google scrambled and said they fixed it. when i look at these devices, i definitely think to myself and wonder what they are hearing. alastair: this has the software in it as well, and it is technically listening as well. that was a big snafu for the google mini. they had the software update just not reassuring. emily: it is also built into smartphones. alastair: certainly. i said good night to it last night and it launched a new thing where it played me the sound of crickets for several minutes and it was disturbing. i think if you want to have a private conversation, you have to unplug these things. more important, on a longer-term basis, people are going to have to make a decision, we want to get benefits out of this or we won't privacy?

emily: dan, what is the solution? say no to technology? most people are probably not going to pick that option. dan: i'm a software developer, i wouldn't say no to technology, i think the people designing and delivering these systems need to think clearly about the risks they are exposing users two. this is a question of stewardship. the people who provide the tools need to think really about how they can provide the tools and away that users can understand and give them privacy guarantees you can understand. some manufacturers are starting to build machines that have sensors that can be physically disabled, it physically decouples the microphone from the computer, and it would go a long way toward convincing people it is not listening when they don't want it to. it would not be hard for an organization like amazon or

google to build into their devices. the companies that build them are often building them as part of the surveillance economy, where they tend to make their money on monetizing the information they have about user habits. it is in some sense in their business interest to gather as much data, and this might work against them. i think they are going to have a reckoning about who the customer is. is it a person who controls the device or the advertisers and other person who want to control the users of the device? emily: right. dan, thank you. alastair, as well. we are looking at who the players are from china and the united states, coming up. this is bloomberg. ♪

♪ >> 10, 9, 8, 7, 6, 5, 4, 3, 2, 1.

emily: the global space race is heating up, spacex completing its 10th mission of the year this week. spacex is keeping up the pace on its ambitious launch schedule for 2018. meantime, president trump signed his second of the directive designed to bring government oversight of up-to-date. for more, i want to welcome tom rice in, aerospace america reporter. tom: the satellite launched earlier this week and it passed by the moon today. it is on its way to gravitational parking space near the moon and will relay signals from a lunar rover that the chinese aim to launch later this year. it will go to the far side of the moon and will be the first rover to ever do a soft landing on the far side of the moon and

never faces earth. they need a satellite to send signals from the far side to earth. that's what this satellite will be doing. emily: meantime you have president trump in the united states focusing on reinvigorating coal and steel industries. you have a very active private u.s. space community, but how would you say the space race between the united states and china is shaping up? tom: china has invested very heavily in the space industry. it started the space program in the 1990's and early this week it launched a satellite to the moon, not even the first one. that is serious progress. they have a lot of ambitious plans to go to mars, plans to go to the moon. send humans to the moon. they are hoping to do a sample return mission in 2019, send a rover and bring a sample back. they are investing heavily. they also had a launch of a private company that launched of rocket last week, it launched a suborbital rocket.

they are definitely going to be a big player. a big factor is congress passed a law in 2011 that says nasa cannot work directly with china. they will be a big player, i think we have to think about how they will be involved. emily: how much competition is the between the u.s. private space companies, spacex, blue origin, how do they compare? tom: they are all in various stages of development of rockets. spacex is launching its falcon heavy rocket, it can do more missions to deep space. other companies, blue origin is testing a rocket on the ground -- no, testing the engine on the ground and they're hoping to launch a new rocket in 2020.

other companies are still planning on getting the rockets with customers and successfully tested in orbit. they are all in varying stages. emily: those that i have spoken to at nasa are concerned about the safety of spacex, given the speed the program is moving forward. have you heard those concerns? tom: the big concern i think you're talking about is nasa's safety panel is deciding whether they approve of spacex's fuel loading process. they keep their fuel as very cold temperatures so they can fit more of it in the tank, it becomes very dense in the have to load it very quickly before launch. they would do it, and this is launching humans, they have not launched humans yet, and nasa is considering whether that is safe to low that fuel oil astronauts on the rocket.

they are considering that. spacex has tested the engine. they lost two of the rockets a few years ago. they definitely have safety in mind. emily: tom from aerospace america in washington, thank you so much. that does it for "bloomberg technology," we will be off on monday for memorial day in united states but back on tuesday in speaking with the ceo of cloudflare about the nation's ongoing cyber war and why attacks are rising. this is bloomberg. ♪

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