>> this is "bloomberg technology. coming up in the next hour the bulk of u.s. tech earnings are behind us and the banks have bounced back but morgan stanley says a tech sell off is about to start. plus, google wants back in, in china. the search engine left the mainland in 2010 over beijing's censorship policies and now is working with the chinese government to curtail search results. much to the chagrin of employees. and proposing to revoke

california's authority over greenhouse emissions and electric vehicle mandates the california attorney general is out to maintain the state's clean air. we'll hear from him ahead. first to our top story the bulk of big tech earnings are behind us. just snap is left to report this week. apple investors breathing a sigh of relief. the nasdaq composite lost as hutch as 4.2% since the july 25 high as investors sold shares of fatebook, netflix, and more. morgan stanley is arguing this is just the start of a bigger sell off in u.s. equities driven by tech and recommended selling u.s. tech stocks a month ago and now says traders are starting to heed their bearish call. joining us from washington the managing director in new york and our market editor. i'll start with you. what is -- what is morgan stanley saying here? what is the argument? >> their argument is based on

one valuation but also the growth we've seen out of these stocks. morgan stanley has been banging this drum for a while now. i should point out a lot of people have sort of called the end to the tech rally several times this year and the tech stocks continue to sort of find another leg up. it certainly is possible that we could have reached a peak. there are other analysts other than those at morgan stanley, other strategists i should say including over at oppenheimer also making similar calls and recommending that folks look to other areas, but, you know, at the end of the day we had a very good earnings quarter and the question is whether they can repeat that come the third quarter. >> ron, you cover amazon, alphabet, facebook. would you agree with morgan stanley's assessment here? >> i think there is more uncertainty in terms of the cost side and all the debate going on with security and privacy and what not. when you look across at least i cover the internet sector and when you look across the sectors in technology and see the secular growth continuing

here it is hard to say that tech is -- doesn't have continued upside. i guess i mean google and facebook and amazon and others. specifically online advertising continues to be extremely strong from our perspective. usage and engagement suggests it continues across the space and, frankly, you know, facebook, amazon, google, and others continue to innovate in their products. it seems to me there is a lot of secular growth that can continue. >> let's talk about facebook specifically. i believe you lowered your

target there but air still optimistic. why? >> yeah. we lowered our target simply just given the increased risk around, the guidance they gave risk around, increased costs especially, you know, around privacy and security. but, frankly, when talking to advertisers and thinking about the product we think the product is awfully sticky. we don't think engagement on core facebook is going to materially deteriorate. if it does we think instagram is a big winner there. specifically when it comes to the modernization of it all yes facebook is trying new things, perhaps showing stories more often in your news feed and what have you but when you talk to advertisers facebook still has the best targeting capabilities out there bar none. and until that changes, i think they'll continue to see an influx of more dollars coming online. >> ok. what about their credibility? the new story is out today about facebook reportedly requesting information about users' financial information from banks. facebook has said they're not actually asking for data. these products, investors are optimistic about. but this credibility cloud seems to be hanging over the company. i wonder when that goes away. >> well, i do think internally

they have prioritized privacy and security across most any other investment they're doing. you know, when you see stories like this about potentially integrating someone's checking account into facebook it seems a little bit of a stretch at least for now so, frankly, i sort of go back to the checks that we're doing and talking to the company that security privacy seems to be number one. if they do start working more closely with financial transactions perhaps that is more toward their e-commerce and what they call their market place business. but i think it's very early days. so i guess i'm not really -- i don't believe this integration we're talking about with banks where you can see maybe all the data i have a hard time believing that is going to happen here soon. >> now, row main -- romain despite the hype tech hasn't been the leader in this market the last couple months. >> no. there's been quite a rotation. if you look at the nasdaq the most interesting thing is the two leaders have been insurance and then health care. basically the biotechs. if you break down some of the s&p sectors again tech sort of falls down into the maybe fifth place if you measure from the end of june. this is partly what a lot of analysts are saying. ron kind of touched on this.

not many of the analysts and strategists are saying that these stocks are going to take a dive but they're saying relative to other sectors given how high value they are there might be times to sort of rotate elsewhere. there are also a lot of macro trends with folks rotating to some of the more defensive sectors. if you are in the tech stocks right now, there is a call by some of these analysts that you might want to protect yourself given that rotation. >> now i do have a chart here in my library showing the weight of the bank stocks in the s&p. you see a dip at the end on the back of facebook earnings. meantime, ron, amazon has been one of the factors in this market driving it up. and you raised your target on amazon and you say you're confident the company will continue to take wallet share. why? >> so just first maybe the prepare commentary, i think at the end of the day it is results that will drive multiples and stocks higher.

frankly when you look across facebook and amazon and google and many others i think you still see a lot of tailwinds around the secular shift. from amazon in particular, it is fascinating. they continue to drive very strong top line growth and, yes, whole foods helps for now until you start comping that but the core market place is doing extremely well. on top of a.w.s. seeing accelerating growth they are advertising business -- their advertising business is just beginning. the more you advertise on amazon the more probability that your products show up

higher in natural search results on amazon. so it could be the more you advertise the better overall. when we think about all of these names and the stocks and where they could go it seems to me at least from the profitability perspective amazon has more upside than perhaps what are in targets today. that might be the same for facebook and google over the long term for sure. >> what about alphabet? you know, positive earnings were rather a surprise. it seems you're maintaining your optimism there. there is this controversy about the company trying to get back into china, which obviously is a huge potential market. but certainly riddled with a minefield in fact. what are you watching for when it comes to alphabet? what are the specific trends that you're excited about and concerned about? >> yeah. actually looking across maybe the top large caps internet space i'd say google, alphabet produced one of the strongest quarters across the space. one reason is you're seeing 26% growth or maybe 23% growth on the top line for net revenue on their core advertising business and the key there is perhaps we're entering a new phase within their advertising and search where a.i. and m.l. is a lot more integrated in everything that you do. and if that's the case, maybe that attracts more advertisers to -- on the platform that advertise more. we come out of this earnings cycle with the large caps largely reported and feeling

very strong about where google can go with a.i. and m.l. being more incorporated in their ad product. remember a few weeks ago or mid july they revamped their ad product not long ago. there is a lot on google that's interesting. the china stuff we'll have to see what happens. i remember when they pulled out eight years ago or more and i think we'll have to see what happens there because it is definitely a different market. >> i remember as well. i was in beijing covering china at the time and it was a huge exit. what are you going to be watching for, romaine over the second half of the year for signals? >> it feels like there is a little bit of a rotation even within the tech sector. when you look at the earnings that we had that just passed it really wasn't the internet companies that folks got enthused about. it was a lot in the semiconductor space. and even in the hardware space. we talk about 27% year over year e.p.s. growth for tech as a whole but you have 52% for

the semiconductors and something like 30 plus% for hardware. when you look at the market reaction we had for a lot of these internet stocks it was among the lowest when you measure by sectors. it just really wasn't there. it is not so much that these companies aren't growing but they have reached a sort of maturation phase in the eyes of a lot of market participants and they're looking for yield elsewhere. if they can find it in some of the more i guess middle cap type of tech stocks, that's where they're going. it'll be interesting to see what type of catalyst we can get going forward from these big giants like apple and alphabet but they have to show what the next product or service is that is going to justify the valuations they're at right now. >> all right. i know ull a he keep an eye on it all for us. and, ron, thanks so much for stopping by. japan, considering a public offering for its domestic wireless business that could become the biggest ipo ever. bloomberg has learned soft bank

is talking about selling a thirled of soft bank mobile in the offering or about $30 billion worth. remember, alibaba made its debut in 2014 with a $25 billion ipo. that's the biggest public offering ever so far. coming up, could an e.t.f. for currencies help the price of bit coin? the company is optimistic its bid for an e.t.f. could be the first one approved by the sec. we'll talk with the c.e.o. about why, next. and if you like bloomberg's news check us out on the radio, listen on the radio app bloomberg.com and in the u.s. on sirius xm. this is book. ♪

>> bit coin fell below $7,000 to the lowest level in three weeks off the back of last month's rally which drove up the price by almost a third. that exuberance has been dampened by regulatory and other concerns. meantime the competition to launch a regulated e.t.f. for digital assets continues and one firm is optimistic that its bid could be the first to be approved by the u.s. sec. in late july san francisco based asset manager bitwise filed for a fund that would track not only bit coin but other crypto currencies, the first application of its kind. others have filed for bit coin nly e.t.f.'s but the bid was rejected. why does bitwise believe it has a stronger case? the c.e.o. is here with me now. why do you think you have a better shot? >> thanks. so the news from us is that we just filed the first ever s-1 prospectus. for the first crypto currency on e.t.f. the distinction is since 2013 people have been filing for

e.t.f.'s that would just track bit coin and provide investors with bit coin and we filed for an index product so a basket of 10 coins. we've been managing a private version of the funds open to investors today since last year. in our experience managing that product our feeling is that the issues you have to get comfortable with to approve an e.t.f., a listed vehicle, custody, trading, taxes, how you value the assets these arl things we've been dealing with since launching our private vehicle last year. we think you can effectively operate a public vehicle. >> i have a chart here showing the price of bit coin compared to the other top coins here to date year to date we know there has been a slide. do you think if something like this was approved it would help the price? >> yes. so one of the ways to think about prices in crypto is simple supply/demand. if an exchange traded product or some other listed vehicle

were approved you can imagine a number of investors through 401(k)s, brokerage accounts, institutional investors who don't want to work with one of the crypto brokers but would be comfortable purchasing listed products would feel comfortable investing in this space and that would create new demands that would impact the prices in the market. i think it is reasonable to expect if an e.t.f. were approved you would see prices lifted in the crypto space. >> does the rejection there dampen your hopes? >> yeah. so i think people have been applying for crypto currency, bit coin since 2013. i think the sec's response consistently has been to be thoughtful. they're very knowledgeable about the space. they actually put out a letter in january, 32 questions. they would have to get more comfortable to approve the product. he think they are very thoughtful but being cautious.

that is what you would expect from them. they want to make sure if they approve something it'll behave as expected. that investors will get what they think they'll be getting. >> what can you say about the volatility, liquidity, custody, market manipulation, arbitrage? >> yeah, yeah. good. those are the issues. custody, volatility, marking the price. i think that all of those things in our experience operating the vehicle are in a place where you can securely and effectively operate a vehicle. we look forward to having conversations about this. >> a-i, un, they couldn't cover the losses. because the price changed. >> i think what you are referring to is there is a position on ok. the hong kong based exchange and they had to claw back some investors holdings to cover that position. >> everybody lost. >> exactly. it was sort of like an austerity measure. they spread it across investors who had the exchange. we have seen this before with

exchanges if you keep the assets on the exchange there can be issues related to the exchange with a hack or something like this. where they take an action -- i would say i would set that aside and say that is an issue with exchanges that obviously exchanges need to manage around and work to avoid in the future. as it pertains to a fund, an index fund like ours or e.t.f. those assets should be held in cold storage. so in the case of this you wouldn't use that scenario. the best practice is cold storage on holding assets. there are a lot of options available. numera announced a joint venture where thed he a offer a cold storage solution. our feeling is those issues are in a place where you can effectively draw them. >> keep us posted on your progress. thanks so much. >> thanks. >> still ahead california is going head to head with trump over his new clean air proposal.

the attorney general sets up a legal battle, next. this is bloomberg.

>> president trump has once again taken aim at his predecessors' environmental legacy this time rattling auto makers throughout the country. on thursday the trump administration propose today roll back fuel economy and emission standards after 2020 while preventing states like california from setting more stringent greenhouse gas rules as well as electric vehicle sales mandates. along side 19 other states california has vowed to take a stand. california's attorney general joined bloomberg's balance of power to talk about the pending legal battle. >> we've actually already sued on a previous action in the e.p.a. and the administration trying to redetermine what they had already concluded before hand several years ago. and so what we're trying to do is make sure that the e.p.a.

and nhtsa follow their own laws that require them to try to move us forward in cleaning up the air rather than letting it get more polluted. >> but they would say certainly, sir, they are moving it forward. that the standards are tougher than the federal standards used to be. there was this rather unusual exception for the state of california but it is time to get them all the same. why isn't that consistent with the statute? >> you are conflating two different issues. california has been setting environmental standards on air for quite sometime before the clean air act even got passed at the federal level and before the e.p.a. started to regulate clean air. we've been doing this for a while. that is why for close to 50 years now california has had the ability to set its own standards. that's different from what the administration decided last week to do which was to undo the national standards. california right now is not asking to have separate standards from the rest of the nation. we're living with the national standards that were agreed on some five to seven years ago. the administration is the one

trying to break those standards and back slide from them. we're saying what they're trying to do not only is a violation of the law but arbitrary and capricious. >> well, i guess i am a little confused because it can't bind itself. the government can change its mind. once it has a rule in effect it is not cast in stone forever. they are saying we are still tightening standards over all. it just won't abs tight as it was under president obama. >> you are right, david. the government can change its mind. but the government can't change its mind on a whim or cavlyly because americans rely on the law. if you're driving 65 miles an hour on the freeway and toad the government says oh, we're going to change that to 45 and you've not had an opportunity to comment on that or to find out about it, that would be a violation of the law. it would be arbitrary and capricious. and what we're saying is that the e.p.a. nhtsa have acted arbitrarilyy and capriciously against the law. they are undoing standards that they, themselves, they,

themselves said not only that but they are violating the requirements under the laws that apply to them that require hem to continue to make advances to clean up our air. >> ok. so aside from the lawsuit how open has the government been in negotiating coming to the table and talking to you? >> not open at all. that is why we're at this point where we have to likely sue the administration to try to stop them from violating the law. if they were willing to sit down and have a serious conversation perhaps there could be a chance to make some progress but for the past year or so it has been clear from their actions they haven't been interested in really speaking because they keep taking actions that not only violateth own laws but show they're not interested in serious conversation. >> given this how long do you expect this litigation to continue for? >> that one is a tough one to answer. it depends on how obstructionist the federal government is in providing the data. remember, none of these regulations is put in place

without long periods of comment and with lots of facts and science put into the conversation and discussion. the administration really didn't do that. how much they're willing to reveal of what they used to guide them in trying to undo the back slide will determine how quickly any lawsuit moves forward. >> so attorney general, it's going to be years, you and i both have been involved in complex litigation. it doesn't tend to get resolved right away, doesn't go right to trial. what happens in the interim? if i'm general motors, ford, a major auto manufacturer, how do i know which rules to comply with? >> yeah. that's the auto makers understood the value of having national standards and that's why five, seven years ago when those were agreed to it was a great accomplishment. with the auto makers at the table reaching those national standards. right now it depends on what a court does with regard to the existing national standards.

would a court agree with the trump administration that it is ok to break these standards without the right evidence or agree with the states that would sue to say those standards should stay in place until we can reconcile the trump's illegal and capricious actions. regardless of that you get into the subject of california and the fact we have had a waiver for years to move forward and keep our air as clean as possible. you probably know california is crucial that we try to make improvements on air quality because what is required for us to keep the economy moving forward and be the economic engine of the country and now the fifth largest economy in the world. >> that was the california attorney general earlier on "bloomberg markets." coming up google abandoned china in 2010 taking a moral stand against censorship. now it wants back in. on the world's second largest economy. but at what cost? we'll discuss next. this is bloomberg.

thverages is bloomberg technology. hot off the internet report google is secretly trying to get back into china with a censored search engine comes the news that it's working with chinese companies on cloud offerings. google is said to be working with 10 cent and others to offer cloud services in the world's second largest economy. remember it was just eight years ago google abandoned mainland china because it refuse today comply with beijing's censorship practices. so what's changed to try to get to the bottom of that we have our bloomberg opinion columnist in new york and from wosh the senior vice president at albright stone ridge. before that he spent seven

years as google's director of public policy and was on the original team that determined google's entry into china in 2006. bob, i was covering china from beijing when google left the country and it was a huge stand that google took and i can't imagine what it was like being in the room as you were debating this in the early days at google. what do you make of the fact that the company is now considering going back in and agreeing to the same censorship practices it took a stand against? >> well, it doesn't surprise me, to begin with. i think there are three factors in play here. first is economic. they see a market of 770 million plus internet users in china. and i think that's incredibly important to them. they want to be a player. the second thing that they have to look at, however, and now we go negative, is the political side of this. already you're seeing senators here in washington asking questions about why we're doing this and also you're seeing a

number of human rights groups taking exception. finally, there is a moral question. part of the reason that google pulled out in 2009-2010 was moral. and, certainly, nothing has changed on that face. chinese internet regulations are now a lot harsher than they were back then. >> the laws are even more severe today than they were eight years ago. senator, marco rubio did speak to bloomberg thursday about this very issue speaking of the reaction from lawmakers. take a listen. >> i'm not concerned. i'm outraged. here they are number one thfment he won't work for the department of defense because they don't want to be involved in killing people but on the other hand they work closely with a university in china that provides all of the technology for the chinese military and then here they are in the united states talking about how they stand for free speech and all sorts of things but are prepared to go into china and help the chinese government censor information and deny

people access to information. it is hypocrisy and is sickening. >> you have an excellent piece weighing the pros and cons of this. talk about at what cost this would come to google. first of all user trust and second you point out does google even have a potential to break back into the market at all given the dominance of the chinese services there already? >> it does seem on the commercial front china has kind of moved on without google for better for worse. look, for people like me who want the world to come closer together, the internet was supposed to help make that happen and instead what we've seen is not just in china but in other countries around the world where the internet, the government has used the make the a tool to world a more closed place to crack down on information, to censor, shut down dissent. that is certainly what we've

seen in china to a large extent, without google being this. now of course they're trying to make these compromises to potentially come back. >> so, bob, the economic potential is obvious. 722 million internet use inners china. on the moral side it wasn't it larry paige and sergei bren who personally decided to pull out in the first place? they are still at the company. what is different now? why has the moral calculation changed? >> that's a very good question and i can't answer that one. sergei certainly at that point argued he did not like the authoritarian, totalitarian nature of the regime. he had come from the soviet union with his parents so he clearly took personal offense to what was going on. also, the chinese had essentially invaded google's search engine and that did not make anyone this happy. what's changed? it's only gotten worse as far

as i can tell. >> so, talk about all of the political atmosphere here. this would certainly not be something that i imagine president trump would be pleased about as he is waging the trade war on china. >> the politics are interesting. you know, you have the clip from senator rubio and i think he's been very clear on how is it that google on the one hand can refuse to do work with the department, u.s. department of defense on this military drone project. on the other hand it is willing to kind of help the chinese government censor information from its own citizens. that's a little bit of a hard sell in some corners of congress. yeah the politics are going to be very interesting, given the trade tensions, trade and beyond tensions between the united states and china now. it's not even clear to me google would be permitted by the chinese government to re-enter the country with search or its other commercial services.

>> wow, that is certainly another question. bob? >> i would agree with that. i think one thing we have to look at very closely here is uncertainty both in terms of what the chinese government will allow and in terms of what google twoonts do. people are treating this as a done deal and it is by no means a done deal. but the fact that just a beginning of a story about this has outraged so many should be taken as a pretty serious thing by google. >> it is anything but a done deal, bob. you're right. it also sets the standard potentially for a country's specific internet and you ask, whenever we ask alibaba or executives about censorship that they all abide to they say they are just following the law in their home country. google could certainly say the same thing. but if this happened what are the standards it would set for other companies like facebook for example which is still blocked in china? could you see a domino effect,

you know, going against freedom of access to information? > well, i would argue that facebook will never get into china and the reason for that is its fundamental utility is as an organizing tool. it allows people to organize. that is the last thing the chinese government wants its eople to have. google is in a different place than facebook. there are already plenty of search engines over there. one of the big questions of the company -- the company has to look at, is it worth it economically when by due the chief competition already has about 75% of the search market. >> now, sherry in her piece hack attack of a on google in 2006 that originated in china where they were trying to access human

rights activist information. what was it like being on the inside of that? >> i wasn't there for that exact attack but it is definitely one of those things you worry about a lot ever since something called dissident case, yahoo had a partnership and had to turn over data on that dissident to the chinese government. once they did the chinese put him on trial and put him in jail for 10 years. now, any company that is operating in china, their data is fair game for the chinese government. if so, they could be seen as, and in reality, accomplice us to with that government. that's nothing that most companies want to have on their hands. >> right. the government also requires all of that data be stored on local servers. ok, bob. thank you so much. great piece. check it out at bloomberg opinion. now, if you want to start a new big as an uber driver in new

york city, you might have to hurry. new york city's counsel is poised to approve a one-year cap on new licenses for uber and other ride sharing services. the counsel says this is part of a sweeping package of regulations intended to reduce traffic and halt the down ward slide in drivers pay. mayor de blasio tried to pass a similar bill three years ago but the city council killed it after an uber tv ad campaign featuring drivers and customers. the number of ride sharing transports in new york has jumped from nearly 13,000 in 2015 to more than 80,000 now. coming up the apple is one of apple's lifeblood. in india it rarely registers a pulse. how apple plans to change that next. facebook shares rose monday on optimism the company is keeping relationships with banks. what would the partnerships look like? how do users feel? we'll discuss ahead. this is bloomberg.

>> a semiconductor company that makes chips for iphones says it was crippled by a cyber virus similar to last year's ransom ware. the outbreak at the semiconductor shut several factories down just as the company was ramping up production for the new iphone. tsmc says full operations have resumed. it expects a 2% drop in revenue this quarter. and trying to up the iphone sales in one market where it lags slowly behind the leaders and that is india.

the iphone is one of the top selling phones in the world with nearly a hundred million units sold in the first two quarters but in india a very different story. apple sold fewer than 1 million phones there in the first half of 2018. apple is only about 1% of the smartphone market share in india compared with samsung at 29%. can apple turn this around? we have a partner from true ventures and bloomberg tech editor. so you spent a lot of time in india. we talked about apple's entry over the years. what did apple do so wrong there? >> they ignored the market for a long, long time. in 2013 i wrote a piece and i said they are blowing it. they are nowhere to be found. india became an android nation. >> too little too late? >> it is too little too late. right now you have another lux ury product like clothes and

stuff in that category, products, because it is so expensive for most people. there is a really growing class of rich peesm who can afford the iphone. unfortunately for apple they travel overseas so much that they can buy those anywhere else on the planet. i think they have really blown it. >> does it all come down to price? >> a lot of it does in india for sure. there is also the retail strategy which is very different in india. a lot of smaller retail stores and companies work very, very closely and offered special innocent iffers and they get special permission in those stores. apple has tried a version of at but it hasn't worked very well. the story today has quite a few details about how they're going to try to change that and have a major strategy. >> the story we talk about smaller retailers offering

holiday deals. that sounds short term. what else? >> the holiday deals they're going to be providing are things like special finance. are they going to run them throughout the year, not just holidays. i think there is going to be price promotional activity for sure but then special incentives the store owners got. those haven't worked very well so they'll be ramping those up. that implies over the long term that apple is not going to make so much money in india but maybe go for more volume. that is a very unusual place. they want to keep it the same. >> and the price of an iphone is the price. it can only come down so much. is the strategy really going to help them? > i think if i was apple which i'm not, they somehow just go premium and forget the budget market all together and create a premium experience, apple

brand, apple stores. it should be positioned like a luxury right 'em. they cannot win the market back now because there are so many options, fordable prices. as you mentioned they just nailed it. a y have hugo doing such great job kind of organizing the company and creating a community around the product -- line e lighten up up to buy that product. it is still affordable but not that common. they've found the right sweet spot. when apple sells a phone for $200 or even $too they come across selling their cheaper -- or even $250 they come across as if they're selling a cheaper phone. >> what is so different about apple in india? apple does a lot better. >> there are more rich people in china right now.

way more rich people in china. it's the same deal, exactly the same. india maybe 15 years behind the spending package and the economy is not as robust and growing, as big. sorry. not growing as big as china is. so they just fuel people with who can drop $10,000 and few things here and there. >> more broadly now we've been talking a lot about apple hitting a trillion. we saw positive signs in wearables for example and how time ons am l's side. what do you see as the next era of apple? >> i think a lot of the apple's future is based on the services they create like, you know, i think apple play, apple music, apple storage, cloud, apple photos, all of these are services they can expand upon and make more money plus i

think the wearables, seriously, like five to $8 billion a year business which diane exist three years ago is kind of like a shame we have to laugh at it because in any other company it would be a huge win. it's such a gigantic company they have to do outsized successes. i do think that they will be clearing more products around the wrist. i think they will be creating more products in your house. i think the apple pod is just beginning and they will keep coming back in a way that you've seen this company -- they don't give up that easy on product lines. >> and probably aren't going to give up on india either. we will see. thanks so much. you are sticking with me. all right. coming up facebook's never ending privacy controversy. this time reports the company has asked u.s. banks to share

financial information about their customers. we'll discuss. this is bloomberg.

>> facebook shares rose the most since april monday off reports the company is forging deeper relationships with banks to offer customer service products via chat app. facebook has for years worked to make messenger a natural place for consumers to communicate with businesses aiming to replace e-mail. in response to "the wall street journal" report facebook didn't deny pursuing the bank partnerships but did clarify any customer information it gathered won't be used for advertising. could this spark additional concerns around customer privacy?

back with us, my guest. investors are excited because the stock is up but it certainly raises the question can we trust thiem? >> no. one big thing people forget, this is in my opinion and in the opinion of many others, one of the least trust worthy companies on the internet right now. >> why? >> because everything they say is not truth. six weeks go by and what they said is not true. and it has been a battle. i think one of your competitors wrote a long piece about the lies and the unending lies of ark zuckerberg and facebook. i think we have to pause and stop believing these people and i think in many ways regulators and legislators have to stand up and just say, you know what? every single action they take should be put through a wringer because we don't know what they are going to do with this

information. they never said. and they only tell you the truth if only they are caught lying. >> so to be fair they've hired ousands of new people to handle -- look at fake news, look at online harassment, prevent election tampering, working on technology so a.i. can high school help. privacy concerns with facebook date back to in your giga owned days and the company made a lot of apologies but also worked to right some of the wrongs and change settings. does any of that matter? is itth atin entions that you think are impure? >> i think after watching this company for a long time the only way to describe it like if you have a donkey and paint stripes on it, it doesn't become a zebra. i think this is the same situation with facebook. it is not going to change as a core y because its entire

is baded -- based on collecting as much data as possible and brokering it. that isth core business. as long as they are doing that they will continue to may loose and easy with people's privacy. >> but investors want it. investors also was on twitter the other day -- investors just want to see the numbers going up without understanding there are consequences not just for society but also for the company. eventually the trust erodes please and where will people go? >> we certainly saw some pull back in new users, europe. there is a looming question of whether facebook is running out of new users. you have been off facebook now for a year. but i wonder, you are more tech aware than most. do most people care about this? >> not yet.

>> will they? >> they will. then they will switch to instagram and there will be another three or four years of instagram kind of playing loose and easy and then people will wake up to something else. the reality is we have to start monitoring these companies more closely now more than ever. because looking out five years om now when video and visual internet always around us creating fake news and having fake information out there which looks like real information can actually have a much deeper impact. you know what your eyes see is more effective than what you read or what headline you read. and i think this is why i feel that legislators now are actually worrying about the past too much whereas we need to be thinking about controlling these companies in the future. >> so what should regulation look like? >> it should be all around

data. how they use data. what they do with that data. having clarity around how they're using it in language that average humans can and also being able to localize what the information can be used for. i think it is actually putting -- negating the company's capabilities, the ability to use and misuse our data. >> is this a world in which you could see with the right regulation or right laws that you'd get back on facebook? >> no. >> why not? >> i think i'm done with it. the reason i left facebook was not just because of privacy. the reason i left facebook is because i felt i was living my life based on how i felt about other people. and i think that to me was the worst thing. >> om malik giving it to us straight as always. partner at true ventures, thank you so much for stopping by. digs oes it for this he

of "bloomberg technology." with that thought tune in tomorrow. we'll check in with josh silverman after the company reports its earnings. get new clarity on the new tax bill which affects amazon. this is bloomberg. ♪ this is bloomberg. ♪ this isn't just any moving day.

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