♪ emily: i'm emily chang, and this is the "best of bloomberg technology," where we bring you all of the top interviews in tech. coming up in the next hour, our exclusive interview with the trump 2020 campaign manager, also known as the secret weapon who ran 5.9 million facebook ads for trump in 2016. his strategy for reelection amidst swirling concerns about russian meddling. plus, google slapped with a fine from eu antitrust enforcers who

ordered the company to change the way that it puts search and browser apps on android devices. plus, amazon finds its footing after a rough start with technical glitches on prime day. we speak to the man who heads up the prime business. first, our top story, the white house struggled to explain president trump's behavior in a widely criticized news conference with russian president vladimir putin. the president seemed to side with the kremlin, questioning u.s. intelligence findings that russia hacked the 2016 election, in essence attacking u.s. democracy. instead, trump made a belated clarification, undercut his own reversal, and made new comments contradicting u.s. intelligence again, sending his spokeswoman out to deny it happened. as the headlines have swirled swirled, we sat down with the 2020 campaign manager to try to get clarity. he helped then-candidate trump run perhaps the most successful media operation in presidential campaign history.

so much so that parscale has been elevated to running the entire reelection campaign for 2020. a job once held by steve bannon. parscale worked closely with facebook, twitter, and google to hone the micro-targeting strategy. one other company he worked with, one that affected the heart of facebook's data scandal, cambridge analytica. we sat down or an interview at a mobile marketing event in sonoma, california to talk about the groundwork he is laying for 2020 amidst concern for russian meddling. mr. parscale: my focus is on the midterms. you have to understand, for 2020, holding the house is very important. to get the agenda of the president done so we have a platform for 2020. it is important to hold those seats. what you see from a campaign standpoint is a supportive role. we are not taking a lead role,

we are taking a supportive role. we have money, options, content and creative, things we can do to help. we can help in other ways. that is an important role for us, to be sure that we can do everything for the president's campaign and committee that we can support them and make sure we do everything to hold the house. emily: what are lessons you learned? what would you do differently? mr. parscale: that is a deep question. what is funny in 2016 was i did not have a basis of information. i came in with a clean slate, which i think was an advantage for me in many ways. emily: you had never run a campaign. mr. parscale: not a presidential campaign. plenty of product campaigns. which are different. i had great support. the republican national committee came in. i had jared kushner side-by-side

on a daily basis fighting the battle. he was my boss. eric trump, also, we would bounce ideas off of one another. they are an amazing family and i had the best boss in the world, our political director. he was always leading in the right direction. i think what i learned was how important it is to understand data. i knew that going in, but now i know more. to learn to ask questions from those who have had experience doing that even more. i have been doing a considerable amount of reading. understanding past elections back hundreds of years. i did everything i could to educate myself in everything that has ever happened. this will be a more grinded out long-haul for me as campaign manager. i also believe the president, when he finishes what he is going to do, like getting rid of the unfair balance with china, the tariff problems, if he continues to grow the economy, people's wages increase,

personal economy improves, if he continues to make the world safer, i don't know if it will be a lot of work. it might be i get to drink starbucks on election day. emily: will you make that many facebook ads again? this was for super precise micro-targeting. mr. parscale: we'll have to see what the playing field is. some days i wake up and i think facebook, twitter, google, all of them will not play fairly. emily: what do you mean? mr. parscale: they decide they want to make the api harder. right now, facebook, it used to be we could put up an ad in a few seconds, now it takes a couple of days. it is hard to put up 5.9 million ads when you cannot use the api automatically. i met with facebook and brought that up as an item i was frustrated with. i said this is a change that is biased towards us.

understanding how our technology works, you created a rule that made it more difficult for us to use that. that is a frustrating standpoint. maybe they did take that away from us. i think right now, we have a popular president. he is more popular than he was on election day, the most popular republican president in modern history. i think we will see a successful trump 2020. emily: it is ironic you are frustrated by facebook, given that some people think facebook played a critical role in winning the election. mr. parscale: i have been specific that i think facebook won in a lot of ways. won, facebook is the .1% that delivered his message. if facebook hadn't existed, it would be tougher. facebook connected the country, people of different backgrounds. it is doing exactly what it was

designed to do, connect us all. i think facebook also is a liberal company. maybe its management isn't, but it has inherited bias. it is based in a place that is probably extremely biased. i can see it talking to you. northern california is not eastern kansas. and their employees have bias. those decisions probably go into everything they do. that is something they have to try to kill. i will tell you, i think facebook, probably more than all of the companies, is trying to kill it. the question is if they can crush that. i don't know if they can. i think the inherent bias is significant. i think it is up to me, as someone leading the campaign, to make sure the companies to everything they can to kill the internal biases and provide an even playing field. emily: what about twitter? mr. parscale: they did not

contact me back from the letter that i sent. i have spoken to mr. dorsey. i feel that company is more torn with bias. the platform itself is not that outul other than putting press releases and for the press to figure out what is going on in the country. emily: also ironic considering twitter is the president's megaphone. mr. parscale: as i said, great for press releases. i explain it like this, trying to convince someone on twitter of something is like going in a bar and 1:30 a.m. before they turn the lights on and try to sell them something. if you can do that, you consult something on twitter. facebook is more like church on sunday. emily: there are concerns about facebook and trust in social media. what are the digital platforms in 2020 that will matter most? mr. parscale: i think that youtube from google will play big role. as we see cable tv move over to internet-based shows, the continued use of watching

content on the internet is a significant change from tv. i think youtube will play a larger role than in 2016. emily: how so? mr. parscale: where eyeballs go. eyeballs are finite. you can only place them so many times. if you are watching facebook for four hours this year. next year, three hours of facebook and one hour of youtube. that changes. i think youtube and google continue to work on that platform. i think what google has done, the search algorithm to put youtube search results at the top, they continue to put a lot of focus and understand the value of that platform. we will watch it closely. we are using it for things now. probably more now than in 2016, even this early out. emily: how will you divide your budget between digital tv and -- mr. parscale: it is too early to make that decision. you never know. youtube could blow up.

we are all watching it on our phones and if it skyrockets, it will change my budget. when i make that decision with the team is the day i will split that up. it could change hour-by-hour as we see the data come in. i hope that google is paying attention to what facebook and twitter is doing. they are an even bigger company, they are probably even more biased. their ceo actually invests time and money into the races. whereas mark zuckerberg has been better at trying to stay less biased with his own personal views. he has a view of what he thinks progressive america is, but he tries not to influence politics as much, where others try to directly influence it. i will be curious if they can keep youtube as an even playing field. i think conservatives are starting to say they have been shut out of youtube videos.

videos are devalued in the algorithm. the conservative message in america is important. there are still a lot of faith-based people in the country. they believe in what that means. i would hope google would not cut any of that out. emily: you have been accused of crossing a line, suppressing the black vote. you hired cambridge analytica. when you look back, do you think anything you have done -- mr. parscale: i have been accused of it, or bloomberg said it? emily: bloomberg worked -- wrote a story quoting campaign officials that there were attempts to suppress the black vote. mr. parscale: an anonymous trump campaign official? right? yes. no, that is not something we did. did we show negative ads? yes. did we have a direct intention to suppress the vote? no. emily: that was our exclusive conversation with president trump's campaign manager.

shortly after this, president trump did retreat from his statements and helsinki, saying he accepts the conclusion russian meddled in the election, but quickly introduced doubt saying it could be other people also. meantime, top republican lawmakers attacked one of the legal protections most prized by media companies, if google and facebook should be liable for content published by users. goodlatte asked why they should be treated differently than hotels, who are responsible for illegal activity on their property. coming up, it is one of the most important days on the amazon calendar. this year it blew through spending records despite a technical glitch. we will speak to the executive in charge of amazon prime, next. if you like bloomberg news, listen on the bloomberg radio app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

♪ emily: the uber ceo says the ride-hailing company doesn't need to be profitable before a planned ipo in the second half of 2019. speaking in aspen, colorado, he said he was more focused on generating positive cash flow than making the company profitable. uber has burned through $10.7 billion since being founded in 2009. this week, shoppers brushed aside technical glitches that marred the beginning of prime day. shoppers spent a record $4.2 billion. that is according to estimates, up 33% from a year ago. the world's largest online retailer said it grew at a faster pace than last year despite the website crashing at the start of the sale.

we caught up with amazon's vice president of prime in seattle on monday before news of the glitch broke to ask how they get the right deals in front of the right customers. take a listen. >> you would be surprised. the launch has been the most successful for any benefit launch. i knew this going into it, i said at the time we launched, this was the most important since we launched prime video in 2011. the adoption of prime members for benefits and deals, and also signs in the lead up to prime day, has been phenomenal and humbling. members have saved millions of dollars through the purchase of whole foods. emily: what does it look like at whole foods in particular? >> prime day for us is a celebration. we launched prime day four years ago in 2015, celebrating 20 years of amazon, 10 years of the prime program since the launch

in the u.s. what is important for us is to try to engage as many members as possible, to make sure they have a great day, to find the deals they are looking for, and they walk away remembering why prime makes their life so much better. this is a celebratory event, engaging with members, exposing new members to what is still the best shopping deal in history. a unique combination of shopping and inner payment benefits. we continue to get positive feedback, and we continue to try to make it better every year. emily: amazon oficially raised the price of prime. talk to me about customer feedback. have you seen any reduction in renewal rates as a result? >> no. customers continue, most of them start engaging with us through shipping benefits. we see increasingly higher renewal rates as they engage with entertainment benefits like prime video, prime music, and prime photo.

many members start with shopping and will stick around for the entertainment. we continue to be humbled by the response. last year on prime day, we added more prime members than any day in history up to that point. we are expecting a big day this year as well. emily: you're raising the stakes. you have cash prizes, a car, deep discounts, shopping. is it working? and in what category? >> across all categories. it continues to be a great back-to-school shopping period. last year we sold more back-to-school supplies than any other day. customers were able to do all of their back-to-school shopping. we are expecting strong engagement across all of our hot categories, including devices. emily: is that voice-based shopping specifically?

talk to me about trends about how people are using echo to shop rather than just play a song or answer questions. >> got it. we are seeing customers engage in prime day in a variety of ways. i purchased using my echo devices many times for ordering and for deals. customers can ask, "alexa, what are my prime day deals?" they will get personalized recommendations. it as easyng to make as possible for people to find the phenomenal deals we have. emily: what are you going to do to make sure there are no hiccups? historically, there has been glitches, some people not able to fill up carts or not excited for the deals on offer. how do you make sure it is not like a rummage sale and it really is a cause for celebration? >> what i can tell you is we start planning for prime day the day after the prior prime day ends. it is a companywide effort.

we are focused on making sure it is a great event. most of the incidents you are referring to were relatively minor glitches that were resolved quickly, and customers are able to find the deals they want quickly. emily: that was some of my interview with the amazon vice president of prime. still ahead, a startup on the verge of transforming the transportation industry with self-driving robot taxis. we will go behind-the-scenes feud -- seems. and after netflix earnings stumbles, should investors be worried? we will discuss. this is bloomberg. ♪

♪ emily: blue origin completed the ninth flight of its new shepherd rocket on wednesday. jeff bezos is working to fly humans to space for the first time this year. the boosters and spacecraft

blasted off from texas shortly after 11:00 a.m. eastern and performed a test to ferry passengers to safety in case of an emergency. in the crowded self-driving space, a company is standing out by building an autonomous vehicle from the ground up. thereporter met with cofounders, who plan to make their robotic cars the go to for the ride shares of the future. >> we all make poor life choices. take these two guys, the founder s of the self driving car company zoox. they have decided it is smart to compete against this. zoox is different. its rivals are adding self driving technology to existing cars. zoox is making a new type of vehicle for the self-driving age.

basically, they are making a robot. its early incarnation looks like a love child of the matrix, mad max, and transformers franchise. this is one of the cofounders. he hails from australia. down under, he was a well-known designer and ad guy. one day he had a vision of the future full of robotics, and came here to build them. >> i saw the future of how the whole system could work. i said, i need to find a brilliant computer scientist. that led me on a six-month journey to find jesse. ashlee: that is dr. jesse levinson. a stanford grad sought after by none after -- by none other than google itself. >> i visited google x in 2013 to speak on my vision of autonomy. they said one guy was really good, and we can't get him. that was my signal to go get

him. ashlee: a lot of your colleagues ran off to companies like google to retrofit cars. what drew you to this approach? >> i've been working on self driving cars since 2005. even back then, it was clear it would be one of the more transformative technologies. it was not enough to sell the technology, you need a product and a business that makes sense. i have not seen that in any company until i met tim and he shared his high-level vision. ashlee: that is a system of completely autonomous robotic vehicles that can be summoned like a lyft or uber. >> we have a very clear vision. ai will take us out of the age of the automobile into the next mobility age, robotic autonomous transportation. ashlee: tim and jesse take me to the alameda naval air station,

where i am about to get a test drive. >> it is unique vehicle, designed in a way that could only make sense if it will be fully autonomous. the powertrains are designed for full autonomy. dual high batteries, they can drive without any human intervention. do you want to go for a ride? jump in. ashlee: he has put cones on the tarmac. the robot will drive out and try to dodge them. i get to do the test sitting backwards. because they thought it would be funny. with one swift keystroke, i give complete control of my life over to ai. ♪

old. really doesn't get it is like being on a ride at disney. the robot cranked through the course at 45 miles per hour. the vh5 is set to rip through at 75 miles an hour. steering, dual motors, and direction. ashlee: is it madness to take on many of the world's leading automotive and tech companies at the same time? of course it is. but i say, go for it. we all await the robotic rideshare of the future. emily: you can catch more of "hello world" on bloomberg.com. next, opening the android market. what does the eu decision against google mean for its competitors, smart phone makers,

and the android platform. be sure to follow our local news breaking network on tictoc on twitter. this is bloomberg. ♪

welcome back to the best of bloomberg technology. i am emily chang. it is a record google wishes it had not set. the european union has fined the company $5 billion over its android policies. that is the biggest fine ever in an antitrust case. the e.u. says illegal practices on android mobile devices pushed google services in front of users. google was also ordered to change the way it puts search ask on android smartphones. bloomberg's caroline hyde caught up with the e.u. commissioner after this decision was made. caroline: a key take away was the force in which she described it, very serious illegal behaviors.

you don't hear that often about such a significant company. the size of the fine is so eye-popping. $5 billion. sure, it is a drop in the ocean compared to the amount that google can afford. they have more than $100 billion in terms of cash and investments, but it is a record-breaking number. she went into length trying to describe how to vindicate this sort of a amount because of the dominance and search the rewards that go -- that gave google. the fact that it was so dominant means that they can a lot more chunk of change in terms of digital advertising revenue. that is why, because it has been going on since 2011, she can sort of weigh in this fine, the $5 billion. and also i think what is significant is once again she is talking tough while there are such strained relationships between the e.u. and the u.s. emily: so caroline talk to us a , little bit more about what the real impact will be here on google. i mean sounds like a lot of , money, but for a company of that size, it is a drop in the bucket. caroline: you are right, but now it is whether they change the business model. they have been given just 90

days to change the way in which they currently tie in the likes of google searching, the chrome browser into deals with mobile phone makers and telecom operators, that they have potentially agreed to be exclusive in the past. all of that has to be unwound within 90 days, otherwise they will be fined even more, up to 5% of average daily revenues for every single day they don't rectify the situation. but in the same way with the same way the shopping ruling happened last year when they felt that google pushed their own search engine for shopping too much and was hampering competition there they never , gave a prescriptive ideal of what google should go out and do to change their business model. so i really pressed her on that. here is what she said. >> the obvious minimum is that the contractual restrictions disappear. you find a lot of things in the contract. can't do this, can't do that. but it is for google, and it is their sole responsibility to make sure that this infringement

comes to an effective end. and that of course remains to be seen in what choices they make. caroline: she wants a change of contract. that was clear. also though i want to ask her, how do you make sure this is effective? as i mentioned with the previous record fine, 2.4 billion euros that google got in terms of practices of shopping in google. they once again there, some have complained that some of the tactics used have not actually rectified the situation at all. how can she ensure that competition will improve? take a listen. >> i think it is very important to see in the follow-up of the first google decision that we have taken no decision yet. that is of course for good reasons because we cannot say that google is complying with the decision. that is very much an open question. and we will do the same thing. we will monitor if google lives up to this decision. caroline: there is your hint. i think she is saying look, we have been monitoring how google

has responded to the previous fine and the previous desire to change the way in which they promote their own shopping website over and above other competitors. and at the moment, we cannot say whether they comply. i think this is a veiled threat that google, we might start fining you on that respect. on that respect you have got to start complying to this new respect. the android operating system. emily: google disagrees with this decision and says they will appeal. what exactly does google need to do now? caroline: yeah, i think google has already come out and are going to see a lengthy blog pitch from the ceo, also really trying to educate or to put their point of view across in this statement for example saying, today's decision rejects , the underlying business model that supports android, which have created more choice for everyone, not less. we intend to appeal. this is really google trying to spell out that the mobile system

they provide android, is free. , it is an open source free operating system. that has allowed mobile phones to increase in numbers, to become far cheaper because the phone makers themselves did not have to invest in making -- invest a lot in making operating systems themselves. they feel they have added to competition, benefit the consumer. what if, potentially, the change is that there operations can a longer be free if they cannot lock in revenue by making sure google search is the favored search engine within the phone. i think this is the key question of how google reacts. clearly, they feel they have done the economy and the industry a favor rather than then a curse. -- than been a curse. emily: google now has 90 days to end their illegal conduct. now, illegal conduct. appeal aside, what has been the reaction in brussels? caroline: yeah it has been one , of sort of a shrug of the shoulders. yes, it is an eye-popping fine and yes, they are going to have to change their business model,

but is it too little too late? i think some people feel it has been two years in the making since it was first shown a light on by the e.u. they feel perhaps that google has more than 90% in terms of market share for search. really, can this change matters now? i think notably, perhaps even if the fine is eye-popping, it is not able to rectify the competitive landscape. i caught up with one company that was affected by the previous fine and the previous ruling on google's shopping. this is the ceo of staples and he is saying, maybe we need to go even further in terms of the way google has to change. >> we want to see a competitive marketplace. at the moment, google doesn't seem to be able to do that. and the construct it is in a lot , of us say, the only way to do that is to break them up. we are not the only ones saying this. you have got, you know, the boston globe said this two months ago. and you have the chief economist of the competition authority saying only the other week this

is the only way to enforce google properly fixes markets. caroline: i put that to the competition commissioner as to whether or not google should be broken up. is that the only way you can do it? she thinks that would push the discussion into the long weeds and would take too long to make the market competitive. and, i think overall, she feels that these companies do benefit the consumer in terms of they make good quality product. they just need to apply by the letter of the law in her mind. interesting to see how the u.s. reacts and indeed whether u.s. regulators start looking quite so closely. emily: that was bloomberg's caroline hyde in brussels for us. on thursday, president trump weighed in on the record fine the e.u. slapped on google. the president tweeted quote, i told you so. the european union just slap a $5 billion fine on one of our great companies, google. they truly are taking advantage of the u.s. but not for long. google is appealing the fine. still ahead, the cofounder of grab joins us for a lengthy

sit-down. how they fought off uber and raise billions from investors like softbank and toyota. this is bloomberg. ♪

emily: a former apple engineer pleaded not guilty in federal federal court on after being monday charged with stealing driverless car secrets for a chinese company. he was arrested just before boarding a flight to china for downloading proprietary files, after leaving his position at apple. he admitted to downloading apple files to his wife's laptop for continued access. he claimed he never shared confidential information from apple. when it comes to ridesharing in the states, the first things that come to mind are uber and lyft. but in southeast asia, it is a different story. in the battle for ride-hailing supremacy. that market is expected to grow to more than $20 billion by 2025.

one of the top names in the space is grab. since its inception in 2012, grab beat out and bought out first uber's operations in the area as it operates in 225 cities across eight countries. now, grab is now setting its sites on creating a wechat like super app encompassing everything from maps, payments, to food delivery. we spoke with the cofounder of grab. and we first started the -- >> every year is a new journey. and we first started the company, the initial ambition was to sell safety for taxes in malaysia. since then, we have grown from strength to strength. emily: 225 cities, eight countries, what is the outlook for future growth? how much bigger can the market before you? >> we actually just launched grab platform which was our strategy to go from the ride-hailing company into much, much more. it serves food, logistics, payments, financial services, and we want to become southeast

asia's everyday super app. emily: talk to me about the vision here. grocery delivery is one of the newest ads? hooi: yes, so last week we actually launched a partnership with happy fresh. for grab fresh, which brings grocery deliveries to all of our users across eight countries. we think this is tremendous because groceries are the highest average household spend for all southeast asian families. emily: do you think you can do all of these things well? hooi: this is why we are very focused on a partnership first approach, and it is a critical pillar and how we are launching grab platform. we want to bring together the best partners on board to leverage the assets we already have. to date, we have more than $100 million. we serve more than 7 million drivers and agents. we have the largest distribution network in southeast asia. and of course, the technology platform that has been built as well for just southeast asia. emily: what areas are you considering to expand to?

hooi: we are focusing on every day, not everything. so things like, of course, groceries. we've also launched a cyclist andforms with ecycles scooter platforms. what you should not expect from massages or like the ability to get art. emily: how do you guys make money in the partnership structure? hooi: i think it is really different depending on what kind of business and what kind of services are working this. our partners can partner with us on three types of methodologies. like happy fresh is fully integrated into our product. they will have the use happy fresh in the app. for that, they will be using our services all block payments, deliveries, and a service. we will also have partnerships where we partner with e-commerce platforms where we use different parts of our technology platform where we can see grab pay and grab deliveries as part of the

checkout. there are these different kinds of transaction fee there. there is one that is engaging in our platform with grab rewards which is the largest platform for rewards in southeast asia. and also our news content feed, where we launched a partnership with yahoo! last week. emily: as you guys are expanding, singapore's antitrust agency recently accused grab of having monopolistic power in its home market. i know you have said you disagree and plan to appeal. but how? hooi: for context last week, the singapore government two weeks ago launched a preliminary announcement on some of the investigation into the acquisitions. firstly, we disagree with it, and of course, there is a form of appeals process which where we are in the process of doing. we are writing officially to them as well as having ongoing conversations. so if you step back and think about why this is happening, of course, this was one of the largest transactions of southeast asia has seen.

we are not surprised the regulatory bodies are doing their jobs. because they want to same things that we do which is for the best customer experience for the citizens of singapore, in a way that is pro-innovation and pro-business. emily: do you think you will monitor your strategy at all as a result of these inquiries right now? it is interesting to have the antitrust agencies, but you also say you want to be a super app. hooi: think about what we have been doing over the last six years. over the history of grab we have , been doing it consistently where we create markets and build new businesses via technology that changes the status quo. now, because of that, every time we do anything that adds value, it is growing, and it is changing, building in a way, disruption in a positive way. so: -- all of our conversations regulated today have focused on what we call a startup, and we

work together to figure out how to deliver this outcome. it always also takes a bit of time to figure out how we do it together. emily: last year, grab made a to swapp getting uber its stake in southeast asia. that said, this can be difficult. how is the integration going? hooi: actually stepping back it has actually been a fantastic experience so far. of course, it has not been 100% smooth. dara sits on our board. i saw him a few days ago. he has been great. the integrations are going well as well. all drivers on our platform uses it, and it has been pretty smooth relative to the size of the deal. emily: when they did this with didi, i never quite understood it. how does the communication between you and dara work, because grab and uber are still competitors and other -- in other territories? hooi: grab is very focused on southeast asia. uber no longer operates in

southeast asia. emily: so you have no plans to expand beyond the southeast asia? hooi: it's important to understand that southeast asia is a huge market. population wise southeast asia is the third-largest in the world. it is larger than north america . it is larger than the e.u. we are moving into platform play and for -- emily: what are issues that you and dara are working through? give me some examples, the future challenges and things we discussed. hooi: what we have been doing together with dara is him being a board member like all other shareholders, and he is great at. he is able to bring the lens of being an operator business , a partner and sitting on both sides, right he gets to share , what has worked in uber and what has not while he learns from my experiences as well. emily: you mentioned that grab was started to address safety, and a grab driver was stripped and robbed in what was a

harrowing sort of 12 hour ordeal. what are you doing to better protect drivers? hooi: we're doing a lot. in fact these incidents make us extremely sad, because we know there is so much more than we can do, not just for passengers, but for drivers as well. so some of the recent things we have launched have been like emergency buttons, which are connected to local police enforcement. we've also started looking into passenger ratings, which historically were not needed. i think it is really important to know that as the economy evolves, many different people are taking means that are not great to earn an income. and we are doing what we can fulfill the promise of becoming the safest platform in southeast asia. and right now we are five times safer than any alternative transportation. and we want to make it zero safety incidents. emily: that was the grab cofounder.

after netflix' disappointing earnings, there is likely to be more scrutiny for big tech firms reporting. can industry keep up with bullish sentiment after outperforming the broader market? we will discuss. this is bloomberg. ♪

emily: texas instruments has ousted the ceo over a breach in the company's code of conduct. he resigned after less than two months. the chipmaker said the violations are related to personal behavior inconsistent with our ethics and core values,

but not related to company strategy, operations, or financial reporting. his predecessor will resume the role on a permanent basis. netflix' disappointing second-quarter report raising big alarm along -- among investors this week as shares tumbled their biggest drop in , two years. the results were seen as surprising because of their massive growth, which shows no signs of showing down. but overall, big tech shrug off -- tech shrugged off the news. the nasdaq hitting new record tuesday. should there be more caution going into earnings season? we spoke with a leading chief global strategist and our bloomberg opinions reporter. >> i have been continuing to overweight tech for a few years. for all sorts of reasons, but having said that, if you look at the faang index, it is actually at a higher pe than it was in

january, before all the volatility. and the stock price is not at the index level for the faang is not quite as overextended as it was back then. it is certainly up there. i think, you know, regardless of what you might think about the individual companies, it seems like right now the earnings season for the other guys coming later next week, it really the stars have to line up. a lot of caution will be needed here. but again, longer-term i would expect that any dip in amazon, in facebook, in google, will be pretty aggressively bought. emily: and there is still a question of whether netflix's subscriber is a blip or a speed bump or part of a longer trend. >> and the interesting thing was it was not just the weakness in the second quarter subscriber number. netflix was also forecasting a

decline in third quarter subscriber numbers. and look maybe the company is , being conservative with its forecast seeing what happened with its second-quarter falling shy of his own guidance, but it's interesting that we were talking about sort of two soft quarters in a row for netflix. that makes it a little bit harder to argue the blip scenario. emily: now, michael, we had an analyst at bernstein saying crowded trades are typically already priced for perfection. as such stocks don't react much to incremental positive news. while negative news has much more pronounced effect. yet we've seen stocks run up and up and up even in the midst of , volatility around facebook and controversy around the cambridge analytics for data scandal -- cambridge analytic data scandal. even facebook has bounced back. so what should investors be skeptical about? >> i think there is a fair amount of caution that has been

coming with this rally since the facebook scandal erupted back in late you can see that in the march. options market. if you look at the ndx, that is actually much stronger than it is for the put/call skew for the sb exports. additionally if you just look at the level of ndx volatility relative to vix, it is in that top spread 10% and it's been that way for some time. what you are seeing is people are playing this recovery from the facebook scandal, that rally, but they're going into it with a fair amount of protection which i think is healthy and may mean whatever dips we get over the next few weeks out of earnings season are not quite as dramatic. emily: that said amidst the tech euphoria if you take a closer , look at the numbers, valuations are still incredibly high.

take a listen to the ceo of research affiliates earlier on bloomberg. >> netflix and tesla, my goodness, does any marginal buyer of netflix or tesla look at valuation ratios or do they look at the story? i think in both cases, they qualify as a bubble. being a bubble does not guarantee that they will underperform long-term but it , makes it awfully likely. emily: are netflix and tesla in a bubble? >> i mean, look those are two , stocks, throw tesla in there, that have never traded based on their valuations. you do you believe those companies are going to be huge, or you don't and you apparently don't care what you are paying. so those three stocks i think are the exception. if you look at companies like microsoft, and google, and facebook, they are not terribly expensive stocks in part because those companies had enormous earnings and enormous earnings growth and

profit margins, although they are coming down a little bit, at least google and facebook. so those, you know some of the , tech giants are expensive, but not all of them. emily: and you summarized netflix as a religion showing , cracks in the foundation and people are asking questions about it. expound on that. >> i mean, look, you put tesla and amazon in that religion bucket too. either those are stocks and investment stories you believe or you don't. , the problem with those kinds of narratives if you have these data points like an earnings miss, it called into question the entire belief of the faith system. emily: that was michael purvis and bloomberg opinion reporter shira ovide. that does it for this edition of "best of bloomberg technology." we will bring you the best on technology and the weekend stay on earnings with alphabet, facebook and google reporting.

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