chang in sanily francisco, and this is "bloomberg technology." a new data scandal brewing at facebook after the company revealed that shared user data with four chinese companies, including lenovo. we will get reaction in washington with congressman greg walden of oregon. tesla ceo elon musk gave a reasonably be -- upbeat assessment and investors rejected proposals to reshuffle

the board. t a turning point for tesla? alphabet shareholders voted down a staff proposal to tie executive pay to progress on workplace diversity at its annual meeting. will it backfire? first, our top story, another day, another round of outraged datas handling of user this time it's not about a consulting firm with ties to president trump or apple, it is four chinese consumer device makers, huawei, lenovo, and others. huawei was one companies barred from having its products soldthe pentagon. a familiar spotlight, h concerns that it is failing to be transparent in how its user data is handled by third parties. joining us now to discuss, eric prior, who covers facebook for

bloomberg. are chinesee companies, which the united states has talked about being possible security risks. how much fuel does this add to the fire? >> it adds a lot of fuel to the fire, but i want to be clear that huawei and facebook have both said no data was ever stored onwei'rver the problem with that stais we'k anymore, after all the revelations and apologies of the last few years. lawmakers are not really taking that as a response to this concern. they want to know why zuckerberg didn't mention them when he had 10 hours of congressional testimony and he was talking about third-party relationships. why not bring up these relationships, too? so, there are a lot of angry people on the hill today about faceok. emily: senator mark warner saying, "we need answers from facebook, the whole story now,

not six months from now." senator marco rubio, "why didn't facebook reveal this data sharing deal with huawei months ago?" what do we know about the nature of this data? sarah: what facebook was allowing these device makers to do is build facebook app experiences into their phones. these are legacy partnerships from before the app store even some people are still using these devices that have these old versions of facebook apps, so they have not unwound these partnerships. facebook said in april that it was planning to. remember, they did this big review of all of their different relationships to try to find potential privacy holes and they themselves noted that this was one potential harmful relationship that they should end. they showed -- said that in

april. the blog post was full of jargon that was difficult for a regular user to understand, that this is your information flowing through a device in a way that you didn't necessarily expect. emily: i want to go back to that memo the executive sent to the company, where he mentions china and taok will go to to achieve growth. "that's why all the work we do l of theh is justified. ces, all the subtle language, all the work we do to bring more communication in, the work we will likely have to do in china someday, all of it." it certainly is not a good look. sarah: it's a teook. the huawei phones are used all over the world, including in the united states. what facebook is arguing is that they need to have their app on one of the most important phone manufacturers around the world.

and so, that's kind of the way , thathey are saving this other companies includingoogle and twitter have their services on why way's phones, too. yet to be seen if there is any harm that has come out of this deal that we have not seen yet in the report. emil in the meantime, facebook says it is going through a long auditing process. take a listen to what mark zuckerberg said when he testified on the hill. mark: it will take many months to do this full process. it's going to be an expensive process with a lot of auditors, but we think this is the right thing to do at this point. we thought that when developers told us that they were not going to sell data, that that was a good representation, but one of the big lessons we have learned here is that, clearly, we cannot just take developers' word for it. emily: explain to us what that.

facebook is doing right now, and are we going to see more of this? every week, every day -- new skeleton coming out of the closet. sarah: that's the problem. it is this constant trickle. we don't know what else is out there. the issue with this auditing process is that facebook does not necessarily haveibility re the data has gone once it ends up on a third-party server. they can sell it to a consulting firm, do whatever they want with it. these audits may not be super effective. facebook did suspend 200 different apps that it just may have violation of their rules, but they don't know yet. they are still looking into it. situation,wei facebook said it actually had people that were managing this relaip and trying to make sure that the way the app on their phones was built would not send information back to huawei servers. this kind of stuff is much more closely monitored by the company, because they don't --

emily: how do they know what's going back to huawei servers or not? sarah: they don't. the u.s. government ed about these phones. there are many other apps these phones, too. are -- we get into hypotheticals here. what's different about this and cambridge analytica cambridge analytic a -- cambridge analytic was fromw that data consumers who had not given her mission for that transfer -- given permission for that transfer. whether there was any harm in transfer of this data beyond users' expectations, we don't know that yet and that's what we are hoping to find out. emily: sarah frier, "bloomber tech." we will come back with this story with one of the congressmen who questioned mark

zuckerberg back in april, greg walden. we will be asking for his thoughts. twitter is celebrating its entry into the s&p 500 by selling $1 billion in bonds. twitter's second ever debt offering comes a day before it becomes part of the index. shares have doubled since last year's low as twitter has boosted its appeal among users and advertisers and posted earnings -- positive earnings in back-to-back quarters. eatn musk gave an outlook, but did investors buy it? we will discuss. listen on the blmberg app, and in the u.s. on sirius xm. this is g. ♪

emily: tesla shareholders sided with the company board at its annual meeting, redirect -- reelecting three directors. outlook, saying he expecttoistic meet the production goal for the crucial model 3 sedan by the end of this month. i think we can probably get wk with the current two general assembly lines, but with the thi one, i am highly confident we can exceed 5000 vehicles per week. emily: for more reaction to this eting, we are joined by an analyst. max, i want to start with you. atabouthat stood out this meeting, given all the drama leading up to it. the 5000 figure -- if the

able to hit that, that will be huge. the stock opened the morning after the meeting really strongly, i think that is what investors are reacting to. for the last few months, it has been all about how many of these model 's can they get out the door. the demand is there. the question is, is tesla able to get this,-on, production -- this, quote-unquote, "production hell." emily: he says they canet to 5000 cars per week. production goals have been pushed back and pushed back. do you believe him this time? >> i'm optimistic. greatmusk is capabl of things. even if he were to miss the goal by a week or two, even a we are long-term investors. we have high confidence in tesla. it is on the top positions in a few of our funds. we are looking to the lhere

it goes past the production numbers. we this is an autonomous electric vehicle story. it is a $10 trillion market globally. we are excited tt musk has it seems like he is on track to tesla ig its attention to expanding its manufacturing capacity, talking about opening another plant, which will produce cars, battery packs, and power trains in shanghai. take a listen. excited tobuild our first tesly outside of the u.s. in china, specifically in shanghai. we h been holding discussions with the government's -- various governments in china, really great discussions, great partners. them in the yearsrd to

to come. emily:ax, e there any concerns that tesla is moving ahead to quickly with this -- toly with its global erations, given that it cannot move fast enough here at home? max: it depeon your point of view. when you talk about the tesla optimists, what they aooking at is this future story. for the future story, china isc, even today. people don't realize this, but many of the best-selling electric cars are being sold in china. the country just changed the allowing tesla to open this factory without doing a joint venture. there's a lot of opportunity if you are taking the long view, yes, absolutely. it's a great time. there are these que of distraction. the threat to tesla is if they

are not able to make these quickly enough, you start to see other competing automakers with better and better offering. maybe customers t down huge reservations in huge numbers. they start to get skeptical. in tesla,the china investment g deal. emily: let's t about cash burn. if you look at other automakers like fiat chrysler, gm, these which tesl not.a lot of how concerning is that? >> we think of tesla as a technology company. it is built from the ground up as a software company. that's where their competitive advantage lies, and other automakers are still catchin up to get there. are looking for the future. once elon musk is able to turn these vehicles autonomous, the business model changes.

it's no longer a one-off sale of a vehicle, it's a recurring revenue model, because they will get revenues from the per mile rates of an uber-like service. those will have really good margins, better margins than the car business. we think that opportunity should be valued at trillions of dollars in the equity mar it is basically not accounted for at all. cash burn will not be a questio. we are really looking ahead to the long-term there. emily: but other tech companies like alphabet have giant piles of cash, and they are also working on cars. tasha:hat'true. on the cal their competitive advantage will really lie in the expertise. we think of tesla as a start up. compared to these technology us, they have mur scale. they have thousands of cars on the road, actually collecting comped to just millions of data,

miles at waymo, google's alphabet, or even gm's operation, and they are the only automaker who can do that because they have this over the air update capability and they have a direct link to the car that no other automaker has been able to accomplish so far. emily: shareholders voted to reappoint the directors who were in dispute and to not split up musk's roles. do you expect there will continue to be a push from some shareholders to break up the power structure here? max: definitely. if elonor somehow pushed out of tesla or his role were reduced in s way, that would hurt the value of tesla. a lot of what -- you are hearing it from tasha now. a lot of what investors are doing is betting on this guy and that he has enough energy to focus on rockets and building od knows what else.

so, i think this idea that tesla should have more conventionalcot makes sense on a broad level, philosophical company, in terms of where the investors are, whererybody uying the company is, are buying elon musk, to some extent. it is hard to ine him having his role reduced. emily: digging tunnels, april fools jokes, the list goes on. max chafkin, sha -- tasha keeney, thank you both. one of the biggest fintech startups in europe. we will hear from the ceo next. this is bloomberg. ♪

emily: the fintech sce europe is getting hotter.

a processing firm is valued at more than $8 billion, planning an ipo. meantime, paypal -- for more, bloomberg's caroline hyde in london, take it away. caroline: it was such a last-minute deal. anothere hoping to swedish tech company after spotify's listing. i got speak with the cofounder about the sudden decision to sell and whypal is a good place to grow in this competitive landscape. >>t almost a year preparing for the ipo. learly whereheading. very close to listing, paypal started -- initiated discussions with the company. -- ittty quickly became

was very clear for us that we shared the same kind of vision when it comes to addressing the needs of the small businesses of the world. looking the size prior to the ipo, we had somewhere in the range of 500,000 merchants using our services across 12 different markets. paypal has in the area of 20 million small businesses that can leverage from what we have built over the last couple of years, effectively through a commerce platform for small businesses to start, run, and grow their businesses. wehus, we came -- with us, came to the conclusion that the visions were very aligned. paypalus an oppoto the vision and reach our ambitions and targets quicker with paypal. working together with them,

across their 200 current markets. caroline: what are those ambitions and targets? effectively, looking at what we've been doing over the last couple of years, the reason why we srted the company was small businesses in general are completely underserved in every possible aspect of fin servic. the vision for izettle was to provide small businesses with the tools to help them grow and compete with the giants out no matter whether it is taking payments or taking e-commerce payments or having access to tools so they can sell online or work with inventory online and off-line, etc., they are underserved in every capacity. the vision for us is to get out there and help all small businesses out in the different markets to grow faster. average, 96% mall bit -- are small businesses.

they account for 20% of the gdp in any given market. historically, nobody has really cared about them, neither politicians nor financial service providers. we think it is time that someone takes the lead and helps them build a backbone to the economies around the world. caroline: how will you integrate your technologies with that of paypal? s ll winut? reason whyess the paypal saw this as a good opportunity is that we have built a fantastic commerce platform for small businesses out there. it is apparently something that paypal was missing out on in their own offering. given the fact that they currently have the 20 million boardnts already on across their 200 markets, i

think they are the low hanging fruit in terms ofntegon, cross-selling what we have been building over the years to their current merchant base. but i think it is still too early to say. the deal has been signed, but it is still subject to approval. with pawe best move fo. caroline: who is the key competition now? is it all about taking on square? jacob: time will tell. , square isive one of them. one of ther players in world. they will definitely be part of the competition moving forward. caroline: there are plenty of them, as you say. there seemed to be more and more payment companies being ar.

landscape is extremely scattered and fragmented. i think what we have been doing over the last couple of years is to create one platform that ties all the different types of services that small businesses need to grow their business in a good and cohesive way. i think there will be more payment companies. i think there are very few platforms offering the kind of solutions that we te do to this merchant segment in a good and comprehensive way. caroline: plenty of opportunities. ceo. de geer, izettle emily? emily: thank you, caroline. coming up, more on facebook's latest eta controversy. .overll get the view -- latest we will get the view from greg walden next.

check us out, at sign technology -- us out @technology. this is .

d -- emily: this is "bloomber technology." i'm emily chang. continuing revelations over facebook's data sharing policies. it was sharing data with one companyme up in natio security discussions, and that was huawei. congress is demanding the company come clean again. yet another example of questionable business practices by facebook that could undermine basic consumer privacy. it's hard to know what is true anymore." congressman greg walden joins u now. secondesents oregon's

congressional district and is the chair of the house energy and comment -- commerce committee, which questioned mark zuckerberg in april. representative how concerning is this? greg: it's concerning. silicon valley has an issue about trust and communication between silicon valley and washington, d.c., and lawmakers and silicon valley and trust and an indication with their users. you have to have clarity in the conversation. you have to have full disclosure in the conversation, whether that is at a witness table before congress or in agreement with your customers. that is why users are frustrated and why members of congress as their representatives are frustrated. we have a lot more work to do here. emily:you think mark zuckerberg was truthful i testimony? was he misleading? greg: i don't know about either of those things. i think he was truthful.

there was more they found out along the way, some they may have nuanced. in situations like this, you are much better to get it out on the table early on and especially when you're dealing with congress. we aregure out what where did it happen, with whom did it happen, and what kind of exposure did user'' data have and to whom, and whatr it. that's what gets back to this trust and communication issue that is so important, whether it is with us in congress or with users. emily: other lawmakers are incensed. senator mark warner tweeting, "we need answers from facebook, the whole story now, not six months from now." senator rubio saying, "why didn't facebook group they'll -- reveal this months ago?" concerning about the fact that these are chinese telecom companies that are already under scrutiny by the

u.s. government? greg: i think that's the heart of the matter here, specifically. it's twofold. one is the alleged past practices or current practices of some of these companies is troubling. that's why there are these discussions in national security settings. it's a pretty big question, but? a pretty easy question. why wouldn't you fully disclose? they should have. this gets back to why i think silicon valley would be well served by ceo's, other than when they are in a crisis situation like facebook is now, to come and share with us in congress at the strategies are, what their agreements are, what their recommendations are. that's why i've invited them to do that before my committee, and so far we don't have any takers voluntarily, but we benefit from their presence. emily: e you gog to demand arberg ce back? greg: first of all, we will follow-up on our demand that he

answer the questions we have submitted. for the record, there are some 3000 questions that came from congress to facebook, so i realize they have to sort simp disclosure andd give us a communication back. clearly, with each one of these revelations, it starts a whole other cycle of what did you know and when did you know it and did you know it in time to have disclosed it, but did't. that's not good for facebook. facebooka great american compit's a great innovator. they have gotten to a place where they are under intense scrutiny now, and they have to get it right and they have to be fully transparent and improve their communications and their disclosures. spokespersonok's said the relationships didn't need to be disclosed because they were already public, announced by huawei at least twice in 2011. facebook mentioned huawei as one of its partners in a 2012 bob -- blog post, and set other

companies had similar arrangements. what's your response? greg: sounds like it was written by a technical lawyer. i hat we were going back and looking at every post ever posted. this gets to the point about trusting communication -- trust and communication, whether it is a relationship in your family or with conve to realize and understand what's fair and what is fully disclosing. we will look at questions that our members asked and the answers we were given in much greater scrutiny of the detail, because if we are going to lawyer this up, then things get pretty technical pretty quickly, and that's not good for facebook or other companies. but if that's what we have to do, i guess that's the path we have to go dow emily: you have been pushing other silicon valley ceos to testify. you recently met with twitter ceo jack dorsey. are you concerned that other tech companies like twitter, google, have similar relationships with the chinese

government or chinese companies in a market they have been trying to court for a very long time? greg: let's face it, we don't know the answer to that fully. when we had mr. zuckerberg for the committee for five hours, this was not disclosed. they felt they had disclosed it in the past. we don't know. we should know. we think this is where companies would benefit from coming before our committee voluntarily and sharing and answering questions. the american people have a right to know more than some legalese in a disclosure agreement that, frankly, nobody reads or understands. they are just ignored. you hit click and agree and off you go. who knows what is behind it? that's what really troues consumer they are not sure they can trust now some of these agreements and how their data are used or not and with whom or not and what has been scraped or not. and i think they are saying in

this information age, something needs to change here. my preference is that the tech andanies would realize this come to terms with it on their own. otherwise, they're going to end up in a regulatory scheme that may not be what's good for them or, frankly, the country. frequently, congress tends to overreact, and we don't need to do that if we can get the answers and trust in those answers and improve that communication. the invitation is wide open for the ceo's to come, and i hope they will, because different companies manage this differently. they ought to make their case before the representatives of the people, much like they do at conferences all around the world. emily: i want to ask you about zte. if the trump administration does do this deal to save zte, are the national security risks that the u.s. government has associated with this company -- are they still valid? is zte as much of a national security risk as it once was?

greg: you know, i have gotten more into this discussion with the administration as late as last night, because i was concerned and have been about zte and these other companies or any foreign company and their role in the u.s. and what they do and how they do it. based on what i have learned, i'm a little more at ease that they would put in place requirements and audits and things that would make sure independently of what these devices do or do not do. if that's the case, it fixes it a bit, but i think we have to be on guard. we know the kind of cyber attacks our country faces from bad actors all around the world, whether it is chinorth e it. we have to be vigilant. they are playing for keeps in these other countries. often this is state-sponsored. we have to understand the repercussions for national security, intellectual property theft. it is just out of control.

so, we have to be very careful. but i will tell you what, i think the president gets it. he is putting america first in these debates. so'm willing to give him the benefit of the doubt right now as we dig into it. rubio andators warner have talked about super majorities that could overridtrh zte. do you think the house would also nullify it? greg: people need to get educated on what that zte of the future would look like and what kind of controls and safeguards are there to prevent bad actors from doing bad things to the american public. first of all, i think we have to start with that. i don't think most members have been briefed on this yet. i'm not saying anything about senators, some on the intelligence committee. i'm not. i've had a number of briefings. if they get it right, then i think president trump should be given the benefit of the doubt here. i believe he is standing up for the best interests of our

country when he is going down these paths. emily: all right. representative greg walden of oregon, thank you so much for weighing in. switching gears now to ride-hailing. last month, a european ridesharing company surpassed caroline hyde caught up with the ceo earlier and asked what they plan to do with the money. >> we are investing heavily into the technology in the ride-hailing space. without investing years of engineering efforts, you won't be able to compete. just a few areas where we are investing is real-time pricing, estimating arrival times, pooling multiple passengers in one car, etc. emily: he also went into taxify's international expansion plans. >> we are looking at a few other countries.

we are in the eaphases in mexico and australia. we continue to invest in both markets. there are many more countries in the world where there is a monopoly in place. it is becomingar for everybody that ride-hailing will -- so, we are currently looking at all of the markets globally where there is still room for expansion. emily: what do digital currencies and uber have in common? we will talk to mike novo gratz novogratz next. this is bloomberg. ♪

says: mike novogratz institutional investors are coming to the digital currency space eventually. he spoke to erik schatzker on tuesday and also noted that crypto regulators were caught left-footed last year. take a listen. mike: the regulators had to get involved, so they are getting involved and doing what they are supposed to be doing. let's calm things down. let's go after fraud and market manipulation. the first things regulators are going for is fraud and market manipulation. the department of justice talked about market manipulation with indices inflating their volume numbers. it's all true, so we are going to knock out some of the craft from the system -- crap from the system. i actually think it's healthy, but there are bigger decisions to make. bitcoin has already had -- in a theory him -- in etherium, they have not

ruled yet. they are stuck. y were not ahead, there is this group of tokens that were issued, probably 2500 total, but probably 200 that matter that are in this kind of regulatory no ma land. they have to figure out how to deal with that. my gut feeling is they will take out a law firm, take out a token, take out some of the promoters of these things, just to say, you have to play by the rules. when we talk about going forward in the future, they want tthis f financing companies, bringing liquidity and access to markets to the general population that they ner had. erik: you have made pretty clear that you are, and i have accused you of being, a true believer, and you are.

at the same time, you trade this stuff. so, how do you reconcile those two halves of your one hand the p mike novogratz that says i believe in this stuff, it will change the world, and the other part of you that says -- that is screaming short? mike:stl gravity. market rultillwhen you see thin, aernight, go from an idea to $1.5 billion market cap, these guys have only hired three people, that doesn't make sense to me. it probably doesn't make sense. it is using the same rules and understanding of market psychology that i've learned over 30 years and applying them to this new market. erik: the ballet of the charts? mike: it's also just being disciplined. listen, sometimes you make mistakes.

ethereum.lot of it started rallying a lot. i started selling, maybe too early, but, broadly, it has benefited me and our organization. to do work on which companies -- they are not even companies, they are ecosystems. which ecosystems do we believe have a shot of really growing emily: mike novogratz also made mention that, like uber, there will be regulation. he just doesn't see it coming for another two years to three years. coming up, alphabet's annual meeting was turned on its head when google employees took to the stage to criticize their boss' pay. we will have the details on how shareholders voted down a proposal on diversity pay next. this is bloomberg. ♪

emily: alphabet shareholders have voted down a proposal to to executive a -- pay progress on e diverss of alpha'a push to close the current gender pay gap. google employees have criticized the company for not doing enough to address workplace harassment and have backed up addition to create better policies and procedures. mike is here to discuss. also with us, who covers all things alphabet. talk about how this vote went down. >> this is rare to have google employees stand before the executives at the shareholder meeting. typically you have activist investors who stand up. the investors will submit proposals, and they are often voted down. there always voted down.

because the company is tightly controlled by the founders. this morning, the employees put forward their proposal about tying management and executive pay to diversity metrics. thlso, as you mentioned, raised concerns about harassment. that proposal was voted down. emily: the department of labor has an ongoing investigation into google pay, correct? what is the status of that? mark: that is still pending. google has been hit on all sides. there is a former female employee who brought a case around gender and pay. there is the case the former engineer brought about the opposite, that google was discriminating against white men. thnext question this morning after the employees spoke was a shareholder proposal about that, that google is biased against conservatives. emily: mike, shareholders often vote down proposals at shareholder meetings, yet you have other companies like intel,

thatsoft, qualcomm, ibm are doing much more to tie gender pay to executive performance, executive compensation. what do you make of this? mike: it's clearly a very topica i across the board. this is something that, i think it's great that these organizations are being proactive about. i think the vote with google board -- google's board shows how important this was. this was an employee driven initiative to get this in front of the organization, and i think it's wonderful to see that. emily: but they voted it down. this is where the founders, mary and sergei, have a lot of -- larry and sergei, have a lot of voting power. do you think the founder control at technology companies in particular is a problem? mike:or me to comment about google's structure specifically. as mark pointed out, google is getting lawsuits on both sides of this issue. i'm sure the board is taking that intorationreally

trying to do the right thing for their organization. emily: mark, what is google saying about how they might address this otherwise? mark: they said this morning they will certainly take into iteration -- consideration. they talked about how their board is not that diverse and how they will work on certain metrics to diversify their workforce and the board. i think typically with these measures, google likes to do things on their own terms rather than dictated by what they see as activist shareholders or a proposal outside the company. emily: interestingly, amazon a few weeks ago -- there was a proposal that amazon be required to interview a directors when choosing new board members. amazonotested. , amazon a few days later said, ok, we will do it. what sort of data are you seeing about the gender pay gap in silicon valley?

i've seen data that it is five times the national average in silicon valley. ike: it is clearly -- mike: it is clearly pronounced. they have looked at the gaps, no just representation gaps. women in tech roles are underrepresented. you have seen that diminished as seniority in those types of increases. this backs up why this is such an important topic companies to address -- topic for companies to address at every level in the organization. emily: you have other executives like salesforce's marc benioff. talk to us about the other significant point at this shareholder meeting. a lot of issues came up. mark: the biggest issue right now for the company didn't come

up at the shareholder meeting at all. last week they said they are not going to renew a contract -- cloud contract they have with the pentagon after some pretty sizable employee protests. google is putting out an ethic al aiharter this week they pe will address that. i've never seen so many employees very vocal about concerns. they are saying they don't want their technology used in military applications. they are saying they feel harassed. the engineer brought up the issue that this is detracting fromrodu they said these issues are keeping us from being the best performing workers that we are. emily: meantime, new story e fts poised to give alphabet/google a hefty fine as the result of its android investigation. tell us more. ike: there being -- mike: they a

re being hit on all sides today. is the second of three existing investigations around google is most concerned about this, even more than the case lastwere can -- fined summer. this is the crux of what google -- what makes them very successful on mobile. google search, maps, all of its ices -- the biggest concern for investors is less the fine, which google can handle, and some sort of structural changes to how they operate android. emily: all right. ,ark bergen and mike triggs thank you both. that does it for this edition of "bloomberg technology." from san francisco, i'm emily chang. this is bloomberg. ♪

haidi: signs of a split, germany says the g7 and not issue the traditional unanimous statement. ramy: fears of a trade war hitting home. j.p. morgan say conflicting comments have cost investors more than $1 trillion. haidi: falling flat, few political gains as australian wages see no real growth. ramy: five days to the