this is bloomberg technology. coming up, the tech sector closes the book with some major standouts are we highlight what to expect. plus, racial recognition is here. we will discuss what major issue is emerging and debate how technology should be used. and, we take a look at

facebook's challenging new at rules. the first, chinese smartphone reached half its initial target. ipo, we havess the senior analyst at citigroup. thank you for joining us. what you think about the price? >> i think it is interesting. the smartphone industry is highly competitive. apple has said they are not interested in market share only. they won't profitable market share and some of the statistics brandsre, a lot of these we may not see in america are growing very fast globally.

the question is profitable share growth. to thect the world competitive. >> you expect xiaomi to stand out or be are of many -- the manyof many -- the part of -- be part of many? >> we think it will bring more attention and help it stand out. this ons always seen the radar screen. years ago, there were other companies that were supposed to dethrone apple. apple is a stock you want to own and there will always be competition. there is a lot of competition out there. on iphonee a new know

pricing despite they are potentially plateauing, you are optimistic. >> apple services are really growing. people are doing and at apphasing -- in purchasing. regarding the company's total units, we think they are grown single digits. thesurprise will be on trailing model, the iphone 7 in india and china, not so much the iphone x. $1talk to me about this goal.on market cap apple has been close. do you see apple getting there and when? $200 target price

on it. they need to keep innovating in coming out with new products. you think about the air pods, you -- they are doing fantastic. looking to the second half, we expect them to launch three new phones and expect them to be well received. we do see $1 trillion on the horizon, but we don't think it changes the story. war, how does that impact apple? >> trade wars are terrible for technology and the consumer. any increases are bad.

it causes the consumer to delay to figure out. apple has put higher costs through the consumer. we believe trade wars are bad. apple does have a global supply chains around the world. they can shift their production as needed, but trade wars are back for technology and the economy. >> it has been a volatile year for technology and tech. is it going to slow down because of political uncertainty? andou wake up every day something is changing. andave a lot of uncertainty there's also a lot of technology trends to come out whether it be ,he car of the future artificial intelligence, robotics, there are a lot of things coming out.

a lot of innovation is there. with that comes the innovation and the volatility of the winners and the losers. will it spark lots of momentum? >> we think given the tax-free creation rules are going to continue to increase. we think there will be more happening. in fact, you think about apple, most of them are private companies because the technology is better. apple has over $200 billion of cash and they are returning $100 billion of cash. is on the horizon. >> what could they be looking for? -- where do you

expect them to be looking? $3 billion was the biggest acquisition they had ever done. whether it be streaming video, audio, things like that. a lot of people do not use apple tv or apple music. we think those are areas they are looking into also. >> thank you. exciting year ahead. new frontier for tech has a identification problem. this is bloomberg.

launched its 15 the resupply mission for the international space station.

that they confirmed are now in good orbit. the floating basketball will be assisting astronauts aboard the international space station. while ai may be floating in space, there are more concerned uses of the technology. using facial to recognition software, there is a worrying problem. it is misidentified darker skin females than any other group. they huge problem. to discuss, we're joined by brian, ceo of the facial

recognition company that encountered this problem. also, we have linda chapman who has been writing about this. i want to start with you. you have a fascinating story. you realized it did not work on your own face. what was that like? >> you can imagine having a a child notagine knowing who you are. it is kind of unsettling. >> what did you do about it? >> we were pitching it to a large cruise line. >> you talk to companies like ibm and microsoft that have the same problem. what are they doing about it?

>> when the report first came out that highlighted this back in february, it found that werer skin females misidentified 35% of the time. but have been working to decrease that in the way they have been doing that is by expanding the data sets they used to train the algorithms. algorithms can see what they have been taught to see. as of the time we published which was earlier this week, the error rates had dropped significantly. there is a catch. resultsh is that the have not been independently verified and it is not out in

the real world meaning they are match to theerson or oneon people on earth million in a certain data set. real concerns about technology being used in law enforcement. it.lapd is art using in maryland, it was used to identify the shooter in the capital gazette shooting. what is your take on whether this is ready or prime time and >> -- the government? fort is not appropriate law-enforcement because it is just not there yet. theerent folks are going to misidentified, not identified or identified at a higher rate.

>> is it possible to get to 0%? possible. i'm a glass half full person. >> can we still trusted? sayinge are many people that if you get to a 0% error society willpe of that be when you can do ? thetime surveillance burden will then shift to the innocent to prove they are not who they are. pressure on amazon put

on amazon to stop the use of the recognition system and the orlando police department decided they are not going to do it. it is still being used in washington county however. if not law-enforcement, what are the best uses of the technology and will it improve our society? >> we are going to do it for business. likethere is a benefit , totally your phone reasonable. when there is some by you, totally appropriate. reporting by you. i know you will continue to follow this later in the show.

it will talk more about amazon specifically. coming up, finding a unicorn in china. the next $1 billion startup next.

>> in a crowded market, one firm has become one of the fastest-growing. venturert of our series. quite promising in china. found they want

global markets in the first day. , we want to put it .ll over investment you made it, that has -- >> yes, definitely. thatuld you have preferred the company spent more time growing prior to it being acquired? theseexpected the ipo for opinion.ave our we respect the decision of the

shareholders. >> will return did you make from your investment? we are happy on this and our lps are happy. the vc marketd is in china? vc's in0 bc's -- china. firm, they earn the reste money, so and 5% of the money, so it is really competitive. no rules or routines we can follow, so we need to be very

competitive. we have tried to stay in the 5%. >> a big question is who is going to be the next baidu, alibaba, or xiaomi. which startups in china are likely to make it big? right now, i think hotel has the -- and.nk it is on the social is quite fast. and alibaba the biggest. howard they shaping the landscape? >> i think they are really anxious about the startups.

that is why they make a lot of investment to make sure something doesn't happen. , it isu worry about that going to happen someday. here -- that was peter speaking with our own tom mackenzie. >> there are two main focuses for us. the first is the consumption of china going through. likether area is areas

artificial intelligence. >> what is the most dangerous area for a venture capitalist? >> one of the models we don't think is promising is buying products from overseas and selling them to domestic consumers. time, almost everyone made an investment in this area but we didn't. we decided to hold our money. longer exist.t no -- we do nothing the model is viable and now front runners are struggling.

was worth something like $5 billion last year. how does it feel to watch a company grow so quickly in a short amount of time? i will still look at it in a very rational way. it has been there for three years. >> do you think it can survive competition from alibaba? >> of course i think it can. otherwise, why would i invest in the? -- invest in it? >> coming up, we have gotten complaints. that is the assessment that facebook's cfo sheryl sandberg has said about the company's new ad policy. our network onlow

tictoc and twitter. this is bloomberg. . .

. this is "bloomberg technology." rollout has been new ads.they verify this is a critical part of business. even sheryl sandberg says this has been bumpy. there havehe says been delays, publishers, nonprofits, book authors, anyone who wants to promote something

about what of these broad political issues facebook is wanting to put in the ad archive. the archive will be the searchable database of political ads we can go back to for several years. of these advertisers, especially smaller ones, have been totally blindsided because they did not consider what they were doing to be political. political issues include anything from education to poverty to emigration, and that is a very broad set of things. it's not just candidates running for office. news organizations have been pushing back on these new rules. is anything changing? facebook says what they are going to do is divide them from the rest of the political ads in the archive. they do not really want to draw this isdline and say news and this isn't because there's a lot of news on facebook that is slanted or, you know, for a political -- a

particular gender or something masquerading as news that isn't in they do not want to be the ones to say, this site is not news, but the site is. it's a very tough call for them to make, so they are defaulting to making everyone go through these rules. here is the thing. if you want to be verified as a political advertiser on facebook , you have to not only send in your social, you have to receive a piece of mail from facebook to a residential address. these things take time. it causes delays for advertisers. not so badly that it screws up facebook revenue, but it definitely causes frustration for businesses across the country. facebook has said over and over again it will not impact revenue. it will not impact engagement. will it impact revenue? will it impact relationship? theh: i think it impacts

relationship. she said it will not having meaningful impact on revenue. that could mean that it is a smaller impact. anything that affects publishers here,r small businesses in this testing ground -- this is where it needs to work. facebook says they will roll this type of ad archive out to other countries in the coming months. they are going to have to figure out how to smooth this process, though sandberg says it is a necessary delay. emily: hang on, because there is another story i want to talk to you about. "the washington post" reporting that facebook and twitter have been holding secret meetings with the trump administration. for more on that i also want to correspondent who covers corporate influence for

bloomberg. what do we know about what has happened here? . areell, and facebook essentially taking a page out of the typical washington playbook. they are meeting with the critics. conservatives have been raising concerns that the social media platforms are biased against conservative voices. twitter ceo jack dorsey has been meeting with top trump aids, compensators -- top , commentators to build trust with conservative voices here in washington. h, what is your take on this? we saw in congressional hearings, lawmakers repeatedly asked about facebook bias against conservative views and mark zuckerberg really pushed back against that. what you make of the olive branch? we are talking about this we need to talk about it

responsibly. if you look at the news organizations in general that 'sve benefited from facebook algorithm change in january, one of the top beneficiaries has been fox. if you look at what has happened on facebook's platform, there is no hard evidence you can point hashat conservative content been suppressed in any way more than liberal content. but there is this larger fear of what these platforms have in terms of control of what we read and see and hear peru's thing updates on our -- as we peru's updates on our friends. that is real. that is something these executives want to address concerns about. theseeed to meet with critics to lock them understand how the platform's work. this is not just about facebook and twitter.

there is a large amount of distrust in the media and society. poll thata recent said that two thirds of people do not believe the news they get in social media and he more. i am all about critical thinking when you're reading the news, but if it is legitimate news from standard publishers, are we operating in a bind that were everyone has a different set of facts? that could be a hindrance. naomi, it is hard to imagine president trump leaving twitter, but you think there is a concern he could leave the platform given that he drives engagement? i don't think that's a realistic possibility. even if he did leave twitter, the fact is a lot of politicians and voices have gotten so big, even if he left i doubt it would have a major impact on the company. emily: what is next, naomi? in terms of these meetings, do we expect engagement to continue? emily: yes.

-- naomi: yes. the election was unexpected for tech companies and washington at large. i think what you will see is tech companies will increasingly be reaching out to republicans on the hill to form these relationships and essentially try to convince them this is the we are doing to address concerns you have raised -- whether that is russian manipulation of a platforms, the mixture of the algorithms. whether it is the issue of political ads. it will continue those conversations with republicans and democrats. and to build up those relationships in an effort to stop any potential regulation. emily: all right. srahberg's naomi nix and frier.

thank you. another shakeup at twitter. it's a move to better integrate the platform's design and video offerings. periscope ceo will become the sixth head of product since 2014. possibly a sign there will be greater emphasis on video. mike montano has been promoted to oversee all of engineering. coming up ai versus civil liberties. is new technology infringing on your rights yet that we will ask the aclu next. a quick programming note. the boston turn into pops fireworks special on this fourth of july. you can watch right here on bloomberg television, listen on bloomberg radio, or catch anywhere on bloomberg.com. ♪

emily: we are continuing our look at the biases in artificial intelligence and the pitfalls. gainingion is not only notoriety. it is being used by law enforcement to track civilians. maryland authorities say that they use facial recognition software to identify the gunman that killed five people at an annapolis newspaper. amazon'scalls

recognition software that it claims can five -- find 100 people in a single photo dangerous. revealed this and the orlando pd has stopped using that software. my next guest discussed recognition -- recognition in a blog post for the aclu last month. he joins us now. why is this such a problem, matt? matt: people should be able to walk down the street without being watched by the government. face recognition technology allows the government to track where we are and what we do, whether we go to the church or an abortion clinic. that is not some think they should be able to do. emily: what about the argument this could be a powerful tool for catching criminals or terrorists? there's a lot of unanswered questions about whether this technology works

reliably. multiple studies have shown that they are biased against people of color and women and just this week appointment ceo of official recognition company has said that this technology is not ready for prime time, the government should not be using this. it is important have a debate about this technology before we rush forward and use something that can be turned against immigrant communities and protesters and people going about their daily lives. emily: ok, but if they can directly, correctly it in five people, could it be h will enforcement or is it still dangerous? is not a question the aclu should answer. right now, we have over 150,000 sayingsigning petitions, that this technology is rushing forward without public debate, without rules to prevent its use. in a political climate where protesters are being villainous, immigrants are being targeted, and that is not the time to roll out a dangerous, untested,

unproven surveillance technology. you think is possible that the government could use this in a way at all that is safe? seen again and when surveillance technology is rushed out with the political debate -- to solve crime or tract of chemicals -- it quickly slides down into uses targeted against muslim americans, people of color. it's important that there's an informed public debate about how this can be used and how it can be abused in communities. emily: take a listen -- we had a guest on earlier talking about the government's potential role in ai. take a listen. . >> we needed public-private partnership and how to use ai. the issues like transparency, how the algorithms are used, we need to be clearer about how these companies are using them and are they respecting the core values of society echo emily:

general catalyst there, matt. what are the values we need to talk about? how can we find resolution on this debate? in your view, something that would not violate rules? right, right now the technology companies' secret rules are driving the debate. i think the person is exactly right. we need a conversation about the values of transparency, equality, and anti-bias that need to be built into these tools. right now these tools are being built by technology companies that may not have the expertise to know what it means to provide officers with dangerous technology that can make or second slate -- a split decision about really important public safety issues. officers hand technology that can harm public

safety, we should have a conversation about what is happening under the hood. emily: part of the problem -- was at chapman, our bloomberg tech reporter has said, there are nosafety, we should have a conversation about what is happening under the hood. standards law enforcement. this is all happening in real time. this seems to be the future. this is where technology is going. apple uses this technology to unlock every single iphone. how do we avoid this? yes, yes, right now is the time to have the debate about what the proper limits should be on this technology. communities deserve answers before dangerous tools are anded out on the street secret out rhythms are relied on. our elected representatives should participate in this debate and people who care about this should join the consumers that reached out to amazon and are asking them to take this issue seriously. emily: california governor jerry brown just signed a sweeping data privacy law that allows consumers to opt out of the sale

of their personal information. they can have their data delete it, and they have the right to know what is thing collected on them. the tech is not happy about this, but i assume you think this is a step in the right direction. we actually think that is a first step, but this bill does not go far enough to protect californians' privacy rights. it is essential that consumers have a robust privacy set of and help protect them stop future abuses of their data and help them address those uses. we do not think this goes far enough to protect and does not go far enough to provide consumers with the right tools to address those harms. cagle of the aclu, thank you so much for joining me. matt: thank you so much. emily: coming up, india was not even on netflix's radar, and now it is key. that's next on bloomberg.

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fory: netflix is coming europe's tv giants. as streaming companies like netflix intensify their push to new pillars,in netflix is beginning an all-out assaults. they have 12 additional series e in this year, up from on

2014. consideringg goal, even aggressive analyst forecasts suggest they will reach 3 million by 2020. why is netflix so optimistic you let's bring in our entertainment reporter lukas shaw, who covered edition ofs week's "bloomberg business." give us some insight. >> in a lesser do with the internet, basically. the business of netflix is delivering this better tv products than they are getting a home, and often cheap. so what we have seen in india is a complete revolution to how many people of access to it, where is five years ago there were maybe 5, 10 million who had broadband. now there are 50 million by some estimates and when you consider mobile broadband, there are 250

million people who constrained because that is better and more accessible -- more available. more available. yes. more available. emily: so, obviously every region has its own preferences. plan to appeal's to viewers in india? they havee plan everywhere else. they are rolling out their first next month based on an epic novel. they have released a few of their own movies there and have a lot more coming up and cheer they will really 16 or 17 original pieces of programming for india, which is the fastest ramp up they have at any country. the indian film industry rivals hollywood in size. could netflix be striking some

partnerships here? so concerned not with making deals with bali would. they want to differentiate themselves by going for something different. they will partner with all of the biggest players in the region, or at least the talent that wants to work with them. they are looking to convince actors, actresses, filmmakers that making shows for tv is just as good, just as popular, and just as premiere as making movies. emily: what is pricing going to be like? be 500he moment it would rupees two 800 ub's. that's a lot more than your average pay tv, which is three dollars, four dollars, five dollars, more in line with high-end tv. netflix has countered that it is similar to high-end movies.

the biggestne of hurdles. it's something read hastings has been asked about, something that executive tips -- executives, analysts have said that netflix will have to lower its prices. netflix has been steadfast. they say they have a one price fits all model, given patricians and currency, and they do not want to change that. right, lucas shaw for us in hollywood. bikely, the crowded sharing market. is now worth $2.5 billion. the ceo told bloomberg from shanghai how his company stacks up against the competition. believe we have definitely surpassed our competition which used to be much bigger than us, last year. >> where do you see how a bike going in the future? >> we do not want to be limiting

sharing, to only bike but bike sharing is a very important sector for us. once we feel we have enough user base, we will go vertically segments,o do other which is natural. >> the most recent round of ke atcing valued hellobi more than 2 billion u.s. dollars. you talk about this expansion which sums like it would be more fund-raising. do you have any more plans in that area? >> we will be doing that through generated cash flow and also if you want the extra financing. >> can you talk more about the internal cash flow, what does it look like directionally? >> it's really healthy. i would say we were under pressure last year. biggerket, someone much

initiated the pricing war. people are more rational. and we definitely followed also that sort of trend, basically increasing prices in more simple terms, right? that actually helped us. we just have to be very strong. >> can you describe that? can you describe that anyway -- double-digit? >> definitely more than double digits. onare mainly working providers, working with onshore. >> is an ipo something that is possible in the near future? to best of all, we have ready for that. when i say we have to be ready, our user base, our competitiveness, our market share leadership will have to be

further solidified to make it happen. hellobiket was the cfo. that does it for "bloomberg technology." ♪

david: let me just ask you about the country you're from, khaldoon: the united arab emirates are a coalition of seven emirates. we have to prepare ourselves for the future. david: you have a group that brought -- bought 18 and the premier league in england? khaldoon: the most successful club. david: do you ever go down the field and say, let me take a couple balls? you don't do that? khaldoon: in order not to embarrass myself. >> would you fix your tie, please? david: people would not recog