>> this is bloomberg technology. coming up in the next hour, tesla sets its sights on china. how big of a blow is this to president trump's trade campaign against china? a brexit blow. what the divisions mean for tech investing and reporting in the u

k. will shoppers want deals on chicken or strawberries on amazon prime day? why the tech giant is betting on groceries for its biggest promotional day of the year. its foot --anding footprint in china. the first foreign automaker to open a wholly owned factory in china. the electric carmaker is planning to build a factory that could produce 500,000 vehicles a year. tesla follows harley davidson interesting plans to expand out of the united states under trump's escalating trade disputes. joining us now from new york is ivan and matt from bloomberg .usinessweek how big of a blow is this to president trump? tesla is hoping right now

that president trump doesn't view it that way. the difference between this and the harley davidson situation was that harley was manufacturing in the united states. something that tesla has terrible -- has telegraphed. this has been announced as part of their plan. we are in a politically dangerous waters once we start talking about u.s.-china trade right now. emily: how big is the market for tesla and china? >> it is heavily focused on electric vehicles. they want to be all electric by 2030. surpass theng to united states as the world's largest car market. emily: what will they be making

?here, how soon and how fast >> tesla signed a memorandum of understanding. this is the first step to opening this plan. teslasll be use to make lower end mass-market cars. model y. three and the the u.s. atling in around $35,000. this is the assumption going to end. we don't exactly know how this is all going to shake out. spent time in china. many cars in china are u.s.-branded cars. general motors build a bot of cars, for example. how does this compare to the

footprint of other u.s. automakers? the world'sl become largest market. they are focusing on electric vehicles. this is going to be a tremendous opportunity for tesla. you want to build locally because of the cost of shipping. to want to build as close the local market as you can. if you build locally, you will avoid tariffs. i think this is addressing a local market opportunity. we cannot ignore what is happening in the background. at what a former treasury secretary said. >> the trade tensions are a matter of great concern. the challenges facing the united states economy are not principally coming from trade. a lot of the issues being

addressed through the trade war are going to hurt the u.s. economy. this could take several years to get up and running. how big a concern are these trade tensions and tariffs for u.s. companies now? >> the argument that elon musk is going to make, we are an american manufacturer, doing something not too many people have done. part of being a global automaker is manufacturing globally. volatile and is so this stuff is happening so far out it is hard to know how this is all. going to play out. the plan is to allow people

to manage factories on their own. changing.agine that this is another version of the factory tesla runs in california, which has had a lot of problems. they have been struggling. tesla believes they are going to get there, but it is a time of unknowns. emily: there are a lot of unanswered questions. what do you want to hear from musk? >> he has a hard time with timetables, but does get it done. he has developed an incredibly successful car and company. demand exceeds his ability to produce them, and demand will continue to grow as he expands. that hee make promises doesn't necessarily for fell in terms of when and how fast he can deliver cars -- deliver in terms of when and how fast he

can deliver cars. are you concerned about the benchmarks for the rest of this year? >> the market seems to be forgiving on the fact he doesn't think his timelines as scheduled. as long as demand for the car remains strong, i think he will get some for business -- forgiveness. emily: thank you both. roadll be plotting tesla's through production hell. grab is opening its cap to external developers -- app to external developers and startups. it aspires to transform into an everyday super app, think vchat. revenuesces could push beyond a billion dollars this year. up, tech companies are

targets of increasing calls for regulation. google and apple are next. companies are asking for details on third party. listen on the bloomberg radio app, tim burke.com, and on. xm. this is bloomberg. ♪

profit -- and the boot and apple are facing questions about their privacy practices -- abet and apple are facing

questions about their privacy practices. what do you make of these questions from congress? risksre are three major to the large-cap tech platforms, competition, maturity, and regulation. data privacy regulations were imposed earlier this year. this has not impacted user interest. if companies don't respond well in public, it makes it more likely we will see regulations. emily: how forthcoming do you think apple will be? >> google and facebook have been fairly straightforward. page could do as good of a job.

emily: part of the problem is getting executives there. zuckerberg went with no small amount of arm twisting. senator mark warner had this to his colleagueser can come up with smart regulation. >> my colleagues are not that familiar with technology. i have been on this issue of social media for the last 16 months. we need the input of tech companies or we could mess up the solution. some of the questions that lawmakers asked mark zuckerberg were not particularly well-informed. willou concerned congress come up with regulation that is not helpful? >> that is a legitimate concern.

we did survey work of how concerned demographics are about privacy. consumer fear about privacy interruptions is overstated. not the younger cohorts, that great of a concern about privacy. surprise wasast the 70-year-oldsd. we are going through a post privacy generation, especially for advertising content companies. we give you free content, services, communications, i will give you some data. most people using the internet are relatively comfortable without -- with that. emily: even the uproar around cambridge analytic? >> that came and went quickly. you had a highly controversial election. /if somehow the tech platforms

were involved in foreign elections, we will come right back there. facebook was sideswiped by that. hown't think they realized their platform could be misused and i don't think they will be that vulnerable the next time. emily: facebook, hitting a new all-time high. have they emerged unscathed? >> there will be concerns about whether privacy regulations in ,urope will impact aau growth but there are few question marks. emily: we will see an impact on engagement and ad spending? >> no. companies still want to go to the largest platforms and have the best targeting tools. in terms of living up to regulations, it is the companies that have data that consumers directly give them that have the beast amount of changes.

google has entered enormous amount of first party data. neither does facebook. you have told them an enormous amount about yourself willingly. it is a medium-sized publishers that require third-party data. those are the ones that are in trouble. emily: it seems like so many people are not using facebook or are angry at facebook. maybe they are still using instagram. it is hard not to believe that won't happen impact. >-- have an impact. months we track user surveys. we have seen a decline in usage over time with facebook, but we have not seen that accelerate with concerns over cameras -- cambridge-gate. holidayoming up, one

has turned into the most important days of the year for amazon. candy company deliver on prime day -- can the company deliver on prime day? follow us @gttictoc. this is bloomberg. ♪ emily: air bnp picked a local

-- air bnbtrepreneur pick a local chinese entrepreneur to head operations there. the person he is replacing left after violating protocol by taking an employee.

what is the gameplan this year for amazon on prime day? it is promoting deals for groceries, but will customers fight? -- bite? how will prime day the differen -- be different now that whole foods is in the mix? >> they have 60 million prime customers and not as many whole foods customers. it is a clear win if they can get amazon customers to shop there. whether you can get people to buy groceries online is still unproven. fresh tried with amazon to convince people to buy groceries online and the pace was so glacial they had to buy a physical presence.

emily: this doesn't seem to work out so well sometimes. >> prior to the acquisition, same-store sales were flatter or negative at wholke foods. 2%-3% same-store sales growth is an improvement. these are the early days. if amazon can convince half of prime customers to shop near whole foods, you can almost double the total number of customers. walmart does a pretty good job with all my grocery delivery. cery delivery.very amazon's market cap dwarfs wal p

mart. how long will it take amazon to figure this out and how will it affect the bottom line? >> they will have to put in another decade with whole foods and hopefully get better results than amazon fresh. whattors are looking at seems like an industrywide inflection point and a lot of focus on advertising revenue for amazon. a no doubt about advertising revenue for amazon. we talked about how it could surpass facebook. >> i don't think it would surpass facebook, just compete. regulators are concerned online advertising has become a duop oly. we are finally starting to see a shift in that, we have three companies in the space. $25on is going to gain

billion in ad revenue within five years. it will become the third-largest ad platform globally. emily: will it become the largest digital ad market? will it give facebook a run for its money? budgetsade promotion are spent on in-store promotions, those kiosks in-store. i think it is it those dollars amazon will start tapping into. emily: will they expand into pharmaceuticals and health care? it is a part of overall consumer spend, total u.s. consumer prescription spend. amazon has zero presence. there is no downside. the valuation wasn't too out of

bounds. this seems like a natural add to the amazon basket. emily: let's talk about amazon prime video. i want to talk about netflix as well. there has been a want of turmoil in the leadership of amazon studios. have they gotten it together? davidmark: they are badly outgu. ,ash spent on content this year secret. ng the amounto-xi that amazon spends. total amount of content dollars matter. this could be a nice growth business for amazon, but their numbers are different. netflix has a new feature called smart download. when a user watches a download o

show, netflix will delete the episode watched and download the next one, making you more addicted. the autoplay like functionality on youtube. every other streaming service is now going to have to do this. emily: netflix is now competing with our sleep hours. what do you make of all the media mna that is happening? comcast is trying to buy fox and creating confusion in original content. mark: this has to be the golden age for content creators. look at how many multibillion-dollar bidders you have.

it has to be great for content creators. scale matters. it is going to be hard for someone to catch up, that is why traditional media companies have to consolidate. emilyu: any concern that netflix is overrated? what are the headwinds netflix will face? anyone can produce content if they have the money. netflix has to prove that they can generate sustainable three-cash flow. there are international markets that have done phenomenally well. asia is still a big? big? fo-- question mark for netflix. emily: always great to have you. pond, we, across the will hear how brexit is

investing -- affecting the investment landscape. later, the supreme court's tech docket. what tech-affected cases might the nominee weigh in on if confirmed? this is bloomberg. ♪

emily: this is "bloomberg technology." i am emily chang in san francisco. it has been more than two years since great britain voted to leave the european union. it was all but settled, but now the road ahead is being questioned. the prime minister has proposed to keep written closely aligned with the european union on trade and regulations after brexit, and while most of her conservative party seems happy, the move toward a softer brexit led to the resignation of her chief brexit negotiator david davis and foreign secretary boris johnson, the face of the campaign to quit the eu. pm may: we do not agree that the best way to bring our shared commitment to honor the referendum is a proposal that would take back control of our

borders, our money, and our laws. protects in a way that jobs, allows us to strike new trade deals through independent trade policy, and keeps our people safe and our union together. emily: with may's own future and the future of the uk's trade relationship and a possible second referendum in the balance, what does this mean for britain's vibrant tech industry? joining us from london, bloomberg's caroline hyde. you have been talking about the broader business and political concerns here, but how is the tech sector specifically receiving this possible softer brexit news? caroline: there are concerned about the proposal at the moment. they are really concerned about the fact that it sections out services in particular. about 80% of all exports from the tech sector in the united kingdom our services based. they are saying at the moment this is a lopsided deal, because what theresa may's proposal spells out is that you will have

some free trade arrangement in terms of goods you are seeing imported and exported between the u.k. and the eu, but not services. so they are saying we could see two separate regulatory environments. this is unnecessary concerns for u.k. based tech businesses, yet more headaches in terms of the regulatory environment they are going to be facing. they are also laying out that there is not enough visibility yet in terms of freedom of movement of people. this has always been a key battle cry for the tech sector -- we are worried about talent. the u.k. government has been backing new ways to have entrepreneurs come into the country, a new visa for entrepreneurs, but that is not enough in terms of hiring. they have other key concerns about the way in which brexit might occur and the regulatory environment for data as well, the way data is processed across the border. at the moment, tech u.k., a key

spokesperson for the tech sector , is saying, we are worried. emily: how likely is it that this deal -- it is clear that prime minister may's party is behind her -- how likely is it that this deal will be accepted in the u.k. and by eu lawmakers? caroline: at the moment, not very likely. it is believed already coming from michel barnier, the key negotiator on behalf of the eu. he has been in new york and today thatnding out he does not like what the sound and smell of what is being proposed at the moment. at the moment, all we have is three pieces of paper coming from the united kingdom government. paper, -- we don't have the actual white paper which is some 200 pages, but the fact that the u.k. is sort of trying to cherry pick, wanting to have a free-trade agreement in terms of goods but not services. they are saying, look, that is not cool. if you want to opt in to our single market, i am afraid that you have to allow the free

movement of people, capital, goods and services, and you cannot pick and choose. so it looks like michel barnier and the eu might push back quite hard, even though we have heard from businesses the likes of airbus, which has a big amount employees in the u.k., saying to go easy on the u.k. they are trying to extend an olive branch. but at the moment, emily, it sounds like this will not cut mustard when it comes to the eu, let alone get the support theresa may needs from her own parliament. remember, she does not have a majority in government and he will have to get all the conservatives to toe the party line and perhaps look across the bench to get the labour party to support her as well. emily: caroline, stay with us, because despite all the uncertainty around brexit, vc investments continue to hover near record high. pitchfork reports that european billion,invested $5.2 the fourth highest quarter of the last decade, and would match the last year's record pace of

investment. london-based vc index ventures has invested $7.25 billion to date in a portfolio that includes notable tech startups like dropbox, skype, and more. they have just raised $1.56 billion for two new funds targeting companies in the united states and europe. a partner with index ventures is here with me. did all of this political certainty around brexit impact your fundraising plans? did you guys talk about this? >> we talk about it because it is current news, but fundamentally not that deeply. 2018 has been a good year for us. we had four major multibillion-dollar exits, and --onosly with so knows s going public in a month or so, we will see another one. that provides us with capital to invest, so we were able to raise the money without too much trouble, fundamentally. the one area that we are always

on the lookout for is immigration and movement of labor. that is important to us. but most of the companies we invest in our small and young and cross-country borders and tariffs are not really their concern in the beginning, they are just trying to build a product that consumers love. emily: that is one of the biggest issues facing these companies. is it impacting your strategy at all? >> in terms of where you put this money not that deeply -- is that impacting your strategy in terms of where you put this money? >> not that deeply. competition for labor is critical. the different part is competition between larger established companies like google and facebook and companies like ours who are trying to get that same labor. having more of that labor is helpful but also competitively positioning against google and facebook and saying why working at a small company is more excited. emily: based on the numbers, it seems like other investors in europe are not holding back either. is that what you are hearing? caroline: london is not only a wherech help in terms of

companies are being born, but also where the money is. that hasn't changed since brexit. you see index ventures as a key hub in london, but a lot of vcs are based here and they are raising more and more funds. not only is there a whopping amount of money coming out of index ventures, but we have also heard from highland in europe, they are based in a key hub in london. eight road ventures has been raising money, optimist -- optimus ventures, dawn capital. record amounts are being raised. also being invested. despite the brexit uncertainty, last year we saw a record amount of money coming into u.k. tech funds. i cannot run a counterexample. i cannot tell you what it might have been if spreads it had not occurred, would it have been more. but as it stands, london is still the number one tech hub in all of europe. emily: so mike, you have got competition in europe in particular. what are you bullish on? >> there are a number of sectors

we like. one of the areas the u.k. has helped us a lot is that we were very early in the fintech field, we started early in that sector. audien justdy in -- went public. >> another one was robin hood, and the united kingdom really helped us in that context. we do like commerce and retail, companies like far-fetched and etsy. far-fetched is also largely based in london. we are seeing commerce thrive in that environment. another area we like a lot is urban mobility and transport. a company based in the u.k., like a door dash but quite a bit bigger all across europe. they were based in the u.k. at the same time, we are investing in urban mobility, like e scooters, famous bird. we did that when early. aurora, self driving cars. those sectors we still invest in deeply.

the technology, enterprise software and ai. emily: lost on fact there. let's -- lots to unpack there. let us start with e-commerce. amazon's ambitions seem to have no bounds. how concerned are you that amazon is going to destroy the competition? >> i think amazon is a formidable force. there is some talk in vc circles about how it is impossible to do anything in the vicinity of amazon. we found there are segments quite large, particularly in high-end fashion. we talked about far-fetched, which serves the high-end of the market. emily: amazon is also getting into fashion. >> if you think about the brand of amazon today, it does not necessarily carry over to the high-end of the market. most of the brands, you sound the wrong, gucci, do not necessarily want to be invested -- listed on amazon as a product. we have invested in a company

that makes high-end sneakers, not something that you would find in amazon. there are sectors that are quite large that you can still build companies around. they are a force, but it is not impossible to make good investments around that. emily: you mentioned bird. we just spoke to the founder of lime. they have a partnership now with uber. in so many ways, the service seems like a commodity, like the brand does not matter. you see people in thyssenkrupp using different brands -- people in the same group using different brands of scooters. is it really that big an opportunity? >> if you think about the market of people being transported in urban areas of distances of less than three miles, the notion that should be done by a car does not make sense. there should be a more effective way. when you put scooters on the road, consumers love it. the first thing to realize is it is a very big market. much like we see in

ride-hailing, you saw multiple players. uber andlyft and others in other geographies. you will see the same thing in ease cooder's, more than one brand. there will be some consolidation, but it is not a commodity in the sense that liquidity is important. you will only take one if it is close by, you are not going to take -- not going to walk three blocks. size matters and that is why fundraising is important. emily: there are a lot of fundraising issues with this sector. in london, uber nearly lost his license and won it back. there is a new head of the digital sector. how do we expect him to handle some of those issues? caroline: interesting fallout from the brexit furor. that wee digital menace spoke to a couple years ago -- weeks ago is matt hancock, he has now been elevated to head the health care system in the

united kingdom. we have a new person called jeremy wright, the minister for digital rule and media sport. this man, jeremy wright, is not that tech savvy. he has only tweeted a few times. has only tweeted -- has not tweeted since 2015. his facebook page does not seem to work at the moment. many are criticizing what jeremy wright might actually know about the digital sector. he is a lawyer by trade, so clearly highly educated. i am sure he has his head around it very swiftly. many are wondering about what sort of a force of positivity he will be for the sector, because this is an area of growth in the united kingdom and one the government has tried to find, putting more money in. there is a new fund that has been raised to put into new startups. a new startup visa. they are trying to make this a hospitable place to grow u.k.

businesses, but does not seem like they always get the most educated digital people to become the ministers. emily: mike, where will index be putting its money? what is overhyped? crypto? >> on a relative basis to our peers in the industry, there are a few sectors we haven't done. we have not done a lot of frontier tech. we have not done as much in crypto as some peers in the industry. emily: why not? mike: at the end of the day, we focus on can the company we are funding make products and services that tangibly make a difference that tangibly make a consumer's life better? ispto is interesting, but it hard to point to something that european and american customers that a fundamentally makes it better for them. in other geographies, it makes sense. bitcointina, owning might be an interesting way to keep your life savings. here, not as much. we tend to be more cautious

about it. that is not a know, it is a let because this -- it is a let's be cautious. does it make their life better, enhance their life? emily: by frontier tech, you mean -- >> dna products, drones, satellites. we have not done a lot. emily: ar, vr? >> a little bit of the art. ares -- a little bit of the -- vr. that is interesting for gaming and other opportunities. the technology is catching up to where it can be really useful. emily: thanks so much. thank you both. meantime, german chancellor angela merkel crazed china -- praised china opening up to a formal -- foreign investment. bloomberg news germany development editor tony judge got has this report from berlin.

tony: german chancellor angela merkel and the chinese premier met in berlin as trade wars with the u.s. push their countries closer together. last year, china's president brought diplomacy to berlin. this time, german industry stepped up with a chemical maker planning to build a $10 billion complex in china and bmw expanding its manufacturing footprint. merkel said the two countries are allies on free trade and li pledged to open up china's banking sector more. the two leaders took part in a self driving car demo. while li was in town, china said it released the widow of a piece laureate after a push by germany to resolve this high-profile human rights case. china overtook the u.s. as germany's biggest trade partner in 2016 and the two day german-chinese summit makes it clear how important that relationship willie. tony just got, bloomberg news, berlin. emily: coming up, president

trump's supreme court nominee is making the rounds on capitol hill. what tech aces might come before him. we will discuss that, next. this is bloomberg. ♪

emily: the pic is in. president trump has nominated conservative appeals court judge brett kavanaugh to replace anthony kennedy. his appointment has provoked strong partisan reaction. take a listen to senate minority leader chuck schumer. in selecting judge kavanagh, president trump did exactly what he said he would do on the campaign trail -- nominate someone who would overturn women's reproductive rights and strike down health care protections for millions of americans. emily: in the meantime, mitch

mcconnell praised the president choice. sen. mcconnell: judge kavanagh understands that in the united states of america, judges are not -- not -- unelected super legislators who we select for their personal views or policy preferences. emily: whether or not brett kavanaugh is confirmed, the supreme court's next session will have important tech-centric cases to hear. joins us now from new york to discuss. we do now how he has ruled on some tech-focused cases on the last dozen or so years. what do we know? >> probably the most consequential case that brett kavanaugh has had a say in in terms of tech today would be about net neutrality. he did not make a ruling that went into law, he dissented on a judgment made by some of the other judges. he actually was in favor of pushing back net neutrality.

now we know congress has legislated away those rules put in place by barack obama earlier. he was in favor of getting rid of net neutrality and his argument focused on free speech. he said internet service providers should have the free-speech right to decide what goes over their wires and how fast. that was his take on net neutrality, which is very important for big tech companies and people who follow tech today. emily: there are some upcoming tech related cases the supreme court could likely here in the near term. if he is confirmed, what does that mean for the future of the supreme court? >> he is pretty on for supreme court judges, 53 years old. in all likelihood, he will serve on the court for potentially decades to come. you can only imagine what kind of tech questions he will face. we may even get a ruling on whether ai's should be given the same rights as humans.

if we are looking forward 20, 30 years, you can only imagine the kind of tech questions that will come before the court. there is a case about apple and whether it has the right to charge the commissions that it does on its app store, while making developers only develop for its app store. that is an antitrust question, which is, of course, a very pressing and major question for the major tech companies. such as is amazon becoming too powerful, is apple too powerful, is facebook -- should it be regulated like a public forum rather than a private company that can decide what goes on in its own network? these are questions we could see coming in the near future. emily: meantime, other upcoming cases, one involving wireless spectrum, a copyright case, a patent case. how might he approached some of these issues? >> he is a conservative, he will be the fifth conservative voice on the court. he will not necessarily ruled in

any way specifically, but he does tend to favor government taking a step back. he has been relatively conservative when it comes to cases about ip and copyright. some more progressive activist might want to push back against the strict copyright rules we have seen in the music and recording and television industries. he ruled in favor of a more conservative interpretation of those things. at the end of the day, the safest thing to say about judge kavanaugh is he is skeptical about government getting too involved, but also conservative about business cases. emily: walk us through the timeline. democrats are fighting back and republicans have zero room for error, especially in mccain's absence. already some republican lawmakers who could be protesting this. what's next? >> as you saw in the clip earlier, the democrats are going to make this about roe v. wade. republican leadership did tell president trump that this was

reported by other publications that kavanaugh might be one of the more difficult ones to get confirmed because he has been a judge for so long and has ruled on so many important cases, it will mean a lengthy process. the big tech companies have not said anything. the lobbyists for startups and big tech companies are holding ir tongue. -- ther if you are facebook or google, maybe you want judge kavanaugh on the court, who will have a pro-business interpretation. emily: as you said, he is relatively young despite his long record and could influence the court for decades. thanks for weighing in. coming up, the war of tablets continues. microsoft is taking on apple's cheaper ipads with a device of just under $400. this is bloomberg.

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emily: microsoft is going after the low end of the personal computing market, coming up with a cheaper service tablet that takes on apple's cheapest ipad. the surface go has a 10 inch screen and goes for $399, half the price of the current surface pro tablet. however, the price comes at a cost, it has lower intel processors and about four hours less battery time. and it is a happy anniversary for the apple app store. on this day in 2008, they opened up the app store offering 500 applications. since then, there are more than 2 million apps just for iphones. the ap writes that during its first weekend, over 10 million apps were downloaded. according to apple, its app store is the fastest-growing part of the business. that does it for this edition of

"bloomberg technology." tomorrow, we should -- we sit down with pandora ceo robert lynch and talk about the streaming business and competition from spotify and now, tencent music. i am emily chang. this is bloomberg. ♪

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