♪ emily: i'm emily chang in san francisco, and this is "bloomberg technology." robert mueller indicts 12 russian intelligence officers for hacking offenses related to the 2016 presidential campaign. we go to washington to talk about them in depth. boeing reaches new highs. we show you the company's design for a plane that can fly passengers across the globe in a fraction of the time it takes traditional commercial jets. netflix earnings, the company hit a new milestone with more than 100 enemy nominations

leading hbo. can they live up to rising expectations? to our top story, major development in the u.s. investigation. robert mueller has indicted 12 russian intelligence officers for hacking the 2016 presidential election. rosenstein announced the indictment. they say russia used a pathway to influence u.s. elections. for more on this, steve, who covered this for bloomberg news. how big of a break is this for robert mueller? they can actually named these 12 russian spies. >> i think it is very significant because it is the clearest evidence we have seen so far in this year's long look at russian interference now that this effort went to high levels inside of the russian government. the intelligence community has been saying now for a while that

vladimir putin ordered this effort. now you have names next to that conclusion. a dozen russian intelligence officials, a sophisticated effort to spearfish democratic accounts with one team, and to weaponize that information and really get with another team including contacts with of the trump, or people who were close to the trump campaign. so there could be a lot more here after -- with future indictments potentially. for right now, the fact this is coming just a few days before the president sits down with vladimir putin, the timing is also a big deal here. emily: talk to us on how they did this. there was a team here not only charged with stealing information by disseminating information and hacking into state election systems

specifically. steve: there was really a multi-pronged attack. they spearfish individual email accounts, people like john podesta, the chairman of the clinton campaign, got him to enter his password thinking it was a real email and were able to hack that way. they also hacked systems directly input malware onto democratic systems which enable them to steal documents. then, there were efforts to probe state election machinery. you have all of these different things happening, starting in about march of 2016. the timing is also interesting, on july 27 of 2016, that is the date that trump asked the russians to find hillary clinton's 30,000 emails. the indictment on july 27, that is when they changed their approach and started trying to spearfish some of people close

to hillary clinton's personal a -- email. there are things unfolding over the next weeks and months over this investigation and as a continues. emily: this is three days before the meeting with putin and they revealed that the spies used cryptocurrency to find their operations. what are the next development we are expecting here? steve: we are having a lot of -- we are seeing a lot of democratic officials like chuck

schumer calling on the president to cancel the meeting with putin. others are saying that if he does meet with putin, he should not meet one-on-one. there are other officials there. if they do meet, the meeting should be about the hacking and not about "let's have a better relationship" and a lot of democrats feel trump has never taken on putin. they just dismissed this as a witch hunt, and they wanted him to come out to say this is not a witch hunt, robert mueller has found a lot, and we need to do something about it to counter these attacks. emily: he has repeatedly referred to this as a witch hunt. us to follow, steve dennis for us in washington. we will have more reaction to the story later in the hour with the mcafee ceo. on thursday, the u.s. department of justice filed an appeal on hopes of undoing the merger of at&t last month. president trump criticized this deal. >> they are trying desperately to suppress my vote and the voice of the american people.

as an example of the power structure of fighting, at&t is buying time warner and, thus, cnn. a deal will not approve and my administration -- in mike ministration because it is too much concentration of power in the hands of too few. [applause] emily: at&t closed the deal to 14th. this was after the judge's ruling. what happens now? to answer that we get to the senior analyst for -- >> i think the government does not have good odds here. it was a risk to bring the case to be with to the district court and it was a thorough and clear fact-based opinion after a lot of evidence was entered and weighed by the judge. at this point, i think it is likely that it will be upheld on

appeal. in some respects, it might depend on the panel that the doj draws to heal the oral argument -- hear the oral argument. i would bet on companies winning at this level. emily: does the government have a new argument? the original decision was based on former findings, and not on subjective interpretation of the law. >> it was primarily not based on that, and that is why this is such a upheld climb. it was fact-based. when the trial court decision is fact-based, the judges have to defer to the district court judge on the interpretation of facts. they have to find it is clearly and completely wrong to overturn that decision. that is what one of the problems of the doj will have here. the doj feels that there was error committed by the district court judge, maybe in the way the judge interpreted their economist model, and the way the judge gave to the testimony of

at&t and time warner cable executives. it is missing some of the competitor testimony and competitors that took the stand. it could be anyone of those things or all of them that the doj will challenge. emily: say the government twins, the deal is done, we are reported on at&t executives going to hbo and talking to them about how they need to revamp their strategy, could they unwind this deal? how would they do that? >> technically the court has the authority to unwind the deal if they determine this close to deal was anti-competitive and violated antitrust laws. i think that is unlikely here. in the event that the department of justice wins, a more likely remedy would be to ask the company to divest the assets. right now, that would be a fairly easy thing to do. at&t agreed to hold the facets

separate, not integrate them, have turner executives make their own pricing decisions and make the business separate from the broader at&t business until the end of february 2019. it would not be a situation where the judge would be asking them to unscramble the eight. emily: i know you will continue to keep us updated, jennifer. thank you so much for sharing that update. the u.s. is officially letting the te get back in business weeks after president trump announced a lifeline for them. cte relies on u.s. parts to make its gear. the ban was instituted because they violated u.s. sanctions and lied about doing so and had essentially forced the company to hold its operations. as part of the deal, to let them off of the hook, the company paid a billion dollar fine and deposited $400 million in escrow. coming up, the great purges on. everyone for president trump to the ceo is seeing their follower count fall.

this is bloomberg. ♪

♪ emily: this week, twitter give a warning, your follower count will drop. the company recently said it is identifying almost 10 million dubious accounts a week and is putting all accounts through a security check printing the ones that do not appear to be run by a human. the new startup investors causing a major dent in statistics. we currently have sarah frier and our other guest. >> it is not necessarily they are accounts wiping out of

twitter, but they are locking until they can prove they are real humans. i lost about humans, there are a select portion of the followers who are maybe potentially bots. it is not that bots are banned on twitter. there are a lot of companies that run bots that do good things or humorous spots accounts -- humorous bot accounts. what, the ones that are trying to spread misinformation or cause trouble on twitter, they are working to crackdown on ways that don't not -- don't eliminate them but make them less visible. they are identifying 10 million accounts a week are fake. we going to see a lot more accounts disappearing here

because president trump has 50 plus million twitter followers 11% is a great average to look across the board. >> some people are going to have a lot higher, some have a lot fewer. i think elon musk dropped half a percent. i think this is something that twitter will do where they will constantly try to bring more trust back into the social platforms. emily: how do you decide because the fake elon musk comments on every real elon musk tweet. is that a fake account or does that qualify? >> i think that is another problem and another huge issue that happens. you don't want these fake accounts to promote fake topics. emily: they are active and being used. is that against their terms of service? >> the problem is they are saying i'm elon musk and trying to hop on his bandwagon and get people to do something else.

they are tricking people into doing things that they might not normally do. then, leverage his identity. >> these are gray areas because parity accounts on twitter are ok. it is ok to make fun of a famous person like elon musk on twitter. accounts where people are pretending to be him are not. the line between the two is very thin. emily: how is twitter making the decisions? there are lots of problems. >> some of it is machine learning and a lot of it is improving the training of the people who go through and do the checks on accounts when they are reported. in another big move that twitter did recently, in people's replies, when they have somebody saying -- you between being put out and somebody replies with something that is nasty or violence, or whatever it may be not related to the tweet,

they're trying to use machine learning to hide those. it is called gray boxing. when you click on them you can see them, but it will not so you automatically. they're trying to create an environment for people that is a little less terrible. emily: krishna, how is this going to impact celebrities who have made their names with big, pumped up social media followings? >> it is a huge issue for brands. a proudly lost over 200 -- they probably lost over 200 billion over boston fake followers. influencers will have to focus on growing their audience organically. brands will have to look at different ways of judging how to price content from an influence or standpoint. it is no longer about followers, it is about authentic engagement. emily: facebook has talked about the fake account problem. how does twitter's compared to instagram and facebook's fake account problem?

>> it is very similar. facebook mentioned they deleted about 500 million accounts or something of the sort. emily: what about instagram? >> i think it instagram has a constant pers that happens. a lot of the influencers you can see, there is a steady decline of a number of users getting eliminated off of the platform. i don't think the social platforms need to raise their hands and jump in the air saying we deleted a bunch of body counts. they should be doing this on an ongoing basis. emily: and another facebook controversy, one of the biggest internet companies in china had access to facebook's platform even after they cut off access to developers. people are up in arms about this. facebook has said no data was misused, but there is not necessarily a way that they can ensure no data is misused. what is your take on the latest round of controversy?

>> it is a big popular service in russia. facebook has always wanted to be where the people are. they want to be something where everyone around the world can use. in hindsight, they say that was a bad decision, why did you not cut them off when you could have. i think it will be difficult for the company to deal with these revelations that are coming up at a much constantly now about the way they try to work with everyone very neutrally in the past. now we are realizing that maybe wasn't the good business decision. emily: do you think the social media companies will be able to stay ahead of the problems? are people going to find new ways to deceive twitter or deceive facebook?

>> completely. it will be an ongoing battle. the minute someone uses a social platform and the use visual recognition to look at photos, these bots and other platforms will find ways to fight against them. it is something that will continue to grow. emily: krishna, the cofounder of captivate and sarah frier, thank you. bloomberg operates a global news network on twitter called tictoc. we go under the tesla tent to go under the full story on what elon musk has called production hell. this is bloomberg. ♪

♪ emily: let's talk tesla. in "bloomberg businessweek," for news reporters took a deep, dive look at tesla's production of the model three in all of its grid and glory. elon musk has turned to robots

and finery -- firing contractors and a big tent. our senior reporter joins us to talk about the different conditions faced with tesla workers. you spoke elon musk and he said he wore the same close five days in a row. what other insights did you hear from him? >> we've been watching tesla, and you know this is a company that is having a hard time, they tried to grow from making 100,000 cars he year to 500,000 cars year. elon told me this was an existential crisis point for the company. he said he bet the company now three times with the roadster, then the model x.

then, he bet the company with the model three. he said this will be the last time the company has to bet and put it all on the line. what we decided to do with businessweek is rally all of our resources because this is a very polarizing company. so much so that it can be difficult at sometimes to get a beat on exactly where they stand. we wanted to find out exactly what was going on with a them. what we came away with what the company that is trying to grow up, and it is having a lot of growing pains in the process. emily: josh, let's talk about the growing pains. the conditions are more unsafe than other car manufacturers, and you uncovered horrifying examples. talk to us about what workers told you. >> one of the incidents we wrote about took place in late 2016.

there was an injury with a forklift that osha had described as an ankle fracture. we found out that osha had not interviewed the actual injured employee, and according to people who spoke to him and photos we saw, in fact his leg was amputated after this forklift accident. emily: lots of problems there. especially on a government agency not following up with the actual accident. >> tesla said they try to make this person available and the agency says they made efforts to

reach him, but certainly it raises eyebrows to see that someone involved in such a serious injury, allegedly, and the person knew personally suffered it was not interviewed as part of the investigation. emily: if tesla had pushed back on the story and they say to you that's nothing is more important than the safety of our employees, this is not to say there are real issues best -- that there are not real issues to be dealt with or that we made mistakes with the 40,000 people working at our company. tom, haidi reconcile a company that is just growing up with some really disturbing stories like this one? tom: auto making is a very difficult and sometimes dangerous process. four people died at various auto companies across the united states. i think has the says they are working very hard to take safety very seriously. they point out during the model three production, their safety statistics have improved significantly, that they are now below the industry average on incidence rate. i think it is a sign of mistakes

the company has made, and how it is trying to course correct. especially at a time where it does not have a lot of time to do that. from my reporting standpoint talking to all of the engineers, a lot of the problems they have had can retrace back to some of the decisions elon has made, including the empowerment of his engineers. it is kind of a double-edged sword as tesla's engineers, they will take a look at the thing like the model three, and decided to redesign the entire heating and air-conditioning system. for company just trying to become a mass manufacturer for the first time, do you really need to be read inventing -- be reinventing the air conditioner? at the same time, they created this new experience where you have event that crosses the whole panel in front of the car.

it is causing problems and what people love about it. emily: we didn't get to the raw sewage part of the story, you have to read the story to find out. they do so much, we will have more when we return. ♪

♪ emily: this is bloomberg technology, i'm emily chang. the hacking of the 2016 u.s. election. earlier on friday right rosenstein announced charges against 12 intelligence officials for hacking democratic officials and systems during the u.s. presidential campaign. this just two days after lawmakers on capitol hill heard testimony from officials about securing mr.'s midterms. and that bloomberg was told we reached a new era in regards to protecting the upcoming elections and she added that both parties concerned with russia's interference are trying to solve the problem going forward.

how secure is severed offense going forward? oftentimes hackers go completely unnamed and unaccounted for. what you make of the fact that the u.s. government was able to name and indict the spies? >> they caps off to the many investigators that were involved in this. there had to be hundreds if not thousands of people involved to get to this point. as you pointed out a lot of times cyberattacks happen and very little accountability on the other side of the investigation. it is a big step to have names and people accountable. >> these officials are in russian, what can they do? >> to be determined. it is a big step forward to make sure we actually are able to identify the perpetrators and ultimately start this process of holding them accountable.

>> the u.s. government is trying to safeguard our current election process. is that possible in this matter of time? >> the first step is to make sure that we understand this securing our elections got to be a pet of paramount and artists. it is critical infrastructure. it is foundational to our entire society. as we head into the 2018 elections, everyone must be treating the cyberattack potential with a level of importance. >> can they do this by november? >> you have to different things you have to think about. number one is information warfare. the second is the systems and processes themselves that are used to execute an election. there are thousands of state and local governments that are involved in running the election and ultimately tally the outcomes that we see whether they be at the national or local

level. you have thousands of organizations that have to be involved. >> we don't have information yet that the vote itself was hacked. do you think it's possible? >> it is possible. >> is it possible that these hackers are always one step ahead. could it happen in 2018? >> if you're running an election and part of one of the state or local entities that are responsible for running the election, the most important thing you can do is try to break the problem down. understand what systems i have in place, where do i have my biggest vulnerability? try to focus your effort. if you have a really complex problem, break it down into its most basic components and start by going after your most important pieces of the puzzle. >> what new threads emerge with the rise of cryptocurrency and blockchain?

>> one of the biggest increases in malware that we are seeing right now, a 600% increase this year was in the crypto jacking malware. it is malware that is infecting users not only pcs but mobile devices as well. it basically uses the cycles on your device. to mine for cryptocurrency. it is using your device and your capability to generate cryptocurrency which is how that is made. >> does that mean the bad guys will have more resources to fund bigger operations? >> the back as our market-driven. they will go up to the highest probability of getting a return on their investment. they are finding that by infecting browsers mobile devices etc., they can mine

cryptocurrency and cash out on the other end relatively effectively and with little risk on their end as well. >> using mobile threats are on the rise. what do consumers and businesses need to be most worried about? >> you have to make sure you think about what are my risks with my mobile device? who are my users that are using mobile? what information do they have access to? what systems didn't connect to? where do i have potential risk and how do i mitigate that? there are a lot of security tools that are available to better protect mobile devices. a lot of organizations and a lot of individuals have not traditionally thought about adding more protection to their mobile device simply because we have not seen traditionally as many attacks on the platform. that is on the rise, it's something we have known about for a while. this is something that will become higher and higher priority not only for companies

before individuals. >> how is mcafee adapting? people are not downloading antivirus on their phones. how do you stay ahead and make sure you have most current technology to fight this? >> we are trying to educate people. a big part of this is educating consumers and organizations that the mobile platform is something that can be compromised. we actually have over 300 million mobile devices that would protect globally every day with mcafee software. it is not an unused technology today. it is different than a traditional pc environment but it is something we pay attention to. were trying to educate more people around it. we are mobile security capabilities across the board. from how would protect our consumers, government, etc.. you will see us at, we have a lot of capability already. you will see us at more to our portfolio overtime.

>> thank you for stopping by. microsoft wants the u.s. government to weigh in on the use of facial recognition technology. brad smith said there are concerns about how the technology will be deployed more broadly. microsoft is coming over -- under scrutiny. it said it will take steps to make the same id technology less prone to bias. coming up, imagine being able to fly almost anywhere in the world in just a few hours. we will talk to a boeing hypersonic expert on the future of commercial flights and how maybe faster than the speed of sound. this weekend on the number tv we will bring you our best interviews from the week. tune in on saturday for the best

of bloomberg technology. ♪

emily: we work is taking meat off the menu. the shared working space operator has told its staff that they will no longer be able to expense meals that include meat area to save the environment. in an enough to staff, there's a new research shows a cutting out meat is more helpful to the environment than a hybrid car. they will also not pay for any red meat poultry or pork. the aviation world is plotting to soar into the future.

never has a 10 year plan which will help accelerate aviation research. in the plan they tend to design and implement time-limited exploits. it will cap advanced like biofuels and battery-powered aircrafts. we all remember the concorde which flew from new york to london and three half hours. the plane stopped flying in 2003. boeing thinks it can do better. an aircraft they can get you almost anywhere in the world in less than three hours. their idea, carcinoma -- commercializing hypersonic travel. a working parent could fly overseas for a business meeting and be home by dinner. this didn't work with the concorde, what you think it will work now? >> it is many decades later and we have been working on hypersonic technology for 60 years now. we started out the extra team that led us to the space shuttle

which was successful. in the past, we have been flying hypersonic engines and developing technology and doing a lot of work in design. we have a lot of very powerful compute computers today. we bring all that together, the propulsion technology, the materials and simulation and design, we think that in maybe 20 years or so we will be able to design a hypersonic airliner. >> just how fast are we talking? >> mach five. attends the speed of sound. but in terms you might be able to understand, that is one mile per second. 3600 miles per hour. it is very fast. next what would this technology

mean for me or for an average passenger? >> it is really saving time. what is the value of speed? today we fly fast. if you go supersonic you will be twice that. that is 6.25 times faster than how we fly today. inc. of getting from new york to london in just over two hours. from l.a. to tokyo in about three hours. it is so fast that you can get there in a day and come back. you can wake up go there for business meeting come back and sleep in your own bed. that is revolutionary. >> what are the safety concerns here for the aircraft moving at such speeds and for our physical condition within them? >> i will start with the latter. physical condition. you will feel anything different than you feel today. your body doesn't sense speed. what you feel is acceleration. what will be different about this airplane is the feeling

that you get on take off. how you are pushed back into your see, that will last about 10 minutes. it will be gentle. you will accelerate up to 95,000 feet at mach five. the one thing that is quite different is the faster you go, the hotter the temperature of the airframe structure. this is due to frictional heating of air that heats the surface. flying at mach five at temperatures about 1100 degrees fahrenheit, that means you can't use aluminum. you have to use higher temperature materials like titanium. now the air as it slows down to the airplane, the air is hot as well. thinking of managing that temperature, we will not have a cooling system the cools the air that goes in before the cabin. we talked about decompression and how we would deal with that.

cooling air that is supplied to the cabin, we think we can manage that safely. boeing built safe airplanes so this'll be as safe as any boeing airplane. >> the concorde had a plan with costs and making this economical. what would be different now? >> part of it is technology. we have more efficient engines, lighter materials, the overall plane will be more efficient. the other part of it is economics. what is the value of speed? we don't know. we aren't exactly sure. it is a revolutionary change in speed so it will come down to what is the value of such a large increase in speed? that is something we are setting. we don't know. before this happens there has to be a convergence of the design, the regulatory aspects, and the market area windows converge, we will be ready to do something like this. >> when will commercial travel

on a hypersonic jet be available? >> we don't exactly know what the time is. we anticipate it will take at least 20 years. it will take some time for all the things to come together. any airplane takes a fair amount of time to develop. this latter little more time and higher technology etc.. >> chief scientist of hypersonics for boeing. think you so much. this monday bloomberg television will be interviewing the ceo of boeing. be sure to tune in. coming up, netflix stole the show during the emmy nomination announcement. this is bloomberg. ♪

emily: tech and media ceos gather this week for the allen company conference. the events offering crucial phase time to talk about the biggest trends and hurdles facing the industry. we caught up with joe 11 to talk about how netflix became a powerhouse. >> netflix changed everything. amazon is changing everything. facebook and google, those are massive threats to those businesses. >> in which case we can look at the scaling up that is going on. as being a defensive measure. is scale alone going to be enough to protect them from that?

>> i think scale helps, but it has to be product. one of the things that could come out of this comcast digital fox thing is one controlling shareholder of hulu and no be an interesting platform and whoever the winner is in that thing and what content they put onto it could be interesting if they put on the all content onto lulu and try to amount the asset as a real offense, that could be very interesting. you have been very successful and growing businesses who have done well at warding off the big tech. what is the secret to that? how do you identify and build businesses and not just let those companies still the march. >> product and brand. if you build brand that is

trustworthy, you can and will compete because your customers in that sense fight for you. if one of these platforms comes after you or they want to hurt your business, your customers are going to fight for you. >> you have to be delivering on products later customers will fight for you. online dating space. you are the owners of tender and match. how do you deal with something like that because they have such a huge market and customer base already. you are looking for something where you are strong for growth. do you look for partnerships? what's the solution? >> we are absolute able to withstand that. we don't know when or if the product is coming out or how it comes out but we do know the right now we are helping our customers build relationships all over the world. we have customers in every country across many brands using

our products to find successful relationships. we will continue to do that. people will not stop doing that because another product comes into the market. if we fail to deliver on that premise than facebook or anything else, they will lose. we have been executing in his category for a very long time. this is something that we are passionate about and we have a team that is best in class, mark must experienced in the category. i like our chances there. >> joe 11 speaking with ed hammond in sun valley. more on netflix now and have a streaming giant not hbo out of the top spot for emmy nominations for the very first time. the maker of the crown and stranger things secured 112 nominations. hbo came in just under that at 108. is this an indicator of the company's growth prospects? when it releases second-quarter

earnings next week, we are joined in l.a.. are these nominations an indicator of netflix's future success? >> they are an indicator that they are in the ramp -- running for any wins. what they did this year was record-setting for the streaming platforms in that they took over hbo which has a 17 year run with enemies and has been winning enemies. some analysts are doubtful that it will turn into wins. what they are investing in his capturing people's attention and capturing talent that may be drawn to netflix. to work and produce more attractive shows and attract more subscribers.

>> i have a chart in my gtv library showing netflix subscriber additions. talk to us about what we are expecting when it comes to growth and not just in the u.s. but internationally. >> this last quarter netflix really had a stormy one. they added one million more subscribers than analysts were predicting. now analysts are more cautious about the second quarter because they are wondering if they can sustain the growth. there is an expectation that they do keep growing and middle that will be more enhanced overseas. they recently rolled out in india. my colleagues and bloomberg have been reporting about a fair amount. their expansion is going to be in focus as well.

the question is are the going to be able to meet or exceed analysts growing expectations? some have a price target on netflix. over $500 a share. it will be interesting to see if it reaches that or if analysts will be bit disappointed next week. >> netflix has an $8 billion warchest. they are planning to spend on content this year. if you look at the nominations hbo still did fairly well. the real victim of netflix's success is basic cable. not a strong showing. >> it also shows the issues that will play out with hbo. there has been some coverage in the press about its new owner, at&t. basically we had executives they're telling executives at hbo that you need to do better. also there is rising competition from other platforms like hulu.

they are in there with the handmaid's tale. applicants first nomination for carpool karaoke. pressure is going to be building on netflix to have to spend even more. wall street is focused on the amount that netflix is spending on content and marketing of the content. >> thank you so much. new shows to watch this weekend. that doesn't for this edition of bloomberg technology. that's all for now. i'm emily chang. this is bloomberg. ♪

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