♪ emily: this is "bloomberg technology." i am emily chang in san francisco. big tech names are hovering at record highs. can bullish sentiment hold, or will global headwinds change the tide? plus, tesla's wild week. elon musk shocked investors of his plan to take the company private, but we are still missing answers to some key questions. and spaces next frontier. how nasa is launching a spacecraft that will attempt to

touch the sun. we will speak to an engineer on the mission. that first, to our top story. after an earnings season with lots of surprises, positive and negative, we are looking ahead to the outlook for the tech sector for the rest of the year. despite challenging headlines in worries about regulation tech is leading gains in the overall market. what are the standouts and where are the headwinds? for more, i want to bring in our chief strategy officer, as well as our own caroline hyde in london. i will start with you -- what are you looking ahead to, challenges and upsides. >> there is definitely challenges in the macro in geopolitical issues. in our opinion you are seeing strength on the enterprise died in terms of spending especially areas like loud and cybersecurity that we think will be robust with m&a on the horizon and obviously apple has been a groundbreaking week but i

think fundamentally there's a separation between the strong fundamental trends in the enterprise and the consumer side versus the headwinds we've seen across social media names. >> caroline, we've seen a broader selloff largely due to the risks in turkey, but some parts of the tech sector underperformed even that will stop displaying. >> really in the doldrums, the chipmakers. this is floating the bad news that chips came from your part of the atlantic into the u.s. where we saw microchips have a particularly bad debt of numbers. typically it was on the back of the trade tensions concerns. this is about warnings that with was reducing orders trade wrapping up in consideration and we saw it is down about 14%.

chipmakers were off by about 2.4%, worse than the overall stoxx 600 benchmark and in the u.s. we saw them underperform goldman sachsear was saying intel would underperform, cutting the price target. they are worried about the competitive pressure in the support of their margins. that was equally another headwind for chipmakers in particular. notably you saw chipmakers in telecom start to underperform, even in the face of the geopolitical tensions drilling down in the rest of the market when it came to the auto sector in europe. chipmakersy of these is often tied into the story of apple. we saw them retesting that line. what do you think is the longer-term story for apple in particular through the rest of the year. >> it is really about the product cycle.

disappointingas and we believe there are about 350 million iphones -- can they get to 230 million? china's at the epicenter in terms of the demand trend and that is some thing they are keeping an island, but it comes down to the software services in that continues to be the core of 350 billion to 400 billion. near-term, the trifecta iphone cycle is very focused. showinge a chart here the others coming behind apple, francine: alphabet, microsoft, all pushing toward that $1 trillion mark. despite the fact that we are in the midst of summer. how does this play out? >> i think apple is probably expected to tested once again.

we are close to the trillion dollar mark once again all over. despite lackluster trading we still had earnings keep an eye out and we see how tencent and china performs. what we had to keep an eye on is how important these tech companies are. notably the outperformance from apple. over the last six months since we came up from the lows of the s&p 500, apple alone has contributed 12% to the rally we've seen over the last six months. microsoft is not far behind. they are contributing 8% of the rally and amazon is outperforming as well. these companies are so important because of the huge market cap and importance to the rest of the market. when you look at the facebook, alphabet, netflix, and overall as well as the amazons and other companies, you are seeing microsoft and apple are really

contributing to the overall importance of this sector and overall heavy lifting. amazon in particular, i think the big ones will be amazon, apple, and microsoft in the last six months. emily: amazon hit another all-time high this weekend. on the flipside, facebook is reeling after the $100 billion wiped off its market cap. how do you expect those two stories to play out? dan: looking in microsoft and everything happening on the cloud, that has been the golden touch. you are seeing it on the aws side as well. there's a massive shift going on and that has been a tailwind for amazon. when you look at facebook and social media in light of privacy post cambridge, this is a fork in the road. i think investors are looking at

some of the enterprise plays in big data. social media definitely has headwinds and black clouds on the horizon. emily: we never want to see black clouds. we will be watching and caroline hyde, in london and dan ives. thank you both. shares of dropbox fell dramatically after the company said dennis woodside is stepping down overshadowing second-quarter sales and earnings that topped analyst estimates. he was instrumental in the ipo in march. the company said it would remote two vice presidents to report, but will not look for a new clo. coming up, fake news and conspiracy theories, hate speech, facebook is ripe with all of them. if you like us, listen on the bloomberg radio app and on

sirius xm in the u.s. this is bloomberg. ♪

♪ emily: microsoft is the latest tech company taking a stand against hate speech. they threatened to suspend web hosting services to social media platform gab over anti-semitic posts. the microsoft cloud division gave gab today's to take the content down. they were founded in 2016 as an alternative to twitter and has attracted several alt-right users and conservatives to the site. this is after conspiracy theories were banned from

facebook and youtube. twitter continues to host his -- jone's content. the story around alex jones comes at a time where more and more americans are using platforms as news sources. twitter youtube and snapchat have seen double-digit growth in users who get their news from social media according to research. facebook only saw a 2% growth in the same timeframe. this is something confirmed by president trump's campaign manager for 2020 when we spoke to him last month. >> you watch for four hours and next year you are watching three hours of facebook and one hour of youtube. that changes. i think youtube and google continues to change to make adjustments on a platform. google continues to put a lot of focus and they understand the

value of the youtube platform. we're using it for a lot of things now. we're using it more now than in 2016. emily: let's go to the president and ceo of the medianews alliance to discuss. david, these platforms have struggled with all of these things for years and years. are we stuck with them this way or can they be cleaned up? david: in some respects, it is way overdue. alex jones has been spewing his garbage for years, so why now? why this week? a big part of it is the platforms are finally and appropriately losing the argument that they are neutral. for long time they maintained that they don't take positions and are neutral. when the platforms are the opposite of that. would make billions of decisions on content you and i see. the kind and i see may be different than the content you

see -- the content i see may be different from the content you see. i think it is a good thing ultimately that they are more held responsible. emily: we have to confront the idea it is a big deal when a technology platform can decide who stays and goes. other better solutions than banning alex jones? >> sure. let's start with the understanding that they are not neutral platforms. they are the opposite. they make lots of decisions on what we see every day. moving from that frame, they are wrestling with these issues about fake news and bad content. i represent 2000 news publishers and, as i always say, if you have a fake news problem, we are in the real news business. why can't we work more closely together? a number of platforms have

marginalized news publishers and pushed them away at a time where they should be embracing what we do. they should highlight actual real news content. and let's work together to deliver more actual, credible quality journalism to people. they seem to have a hard time getting their mind around that. part of it is their engineering perspective. part of it is not understanding how those issues are evolving in ways that do not work for them over long terms. emily: companies like facebook and twitter have refrained from hiring journalists, and at the same time, in the midst of this controversy, the twitter ceo suggested it was journalists job to clean up the platform and decide what is right and wrong. what is truth and what is not. he has retracted that statement in a way.

he said his original suggestion was wrong. he said we need to work together to make decentralizing and everything possible. should they be hiring journalists? david: the jack dorsey thing, first of all, he correctly notes what journalists do. they check facts and run leads. he seems to want to have them do it for him for free. more broadly, they do not need to hire journalists. that is what we do. that is what my members do. we have editors and hire journalists, and have a long history of doing incredibly. how about highlighting our content and having away for us to make a sustainable financial deal to wear, moving forward,

journalism can thrive on the platforms rather than being completely marginalized. they don't need to do it. we do that. at the same time, they love to stiff arm the news business when we should be working together. we should be an answer for them rather than a problem. emily: i spoke to alan powell yesterday, the ceo who disagrees with the decision twitter has made. take a listen. >> i think people are realizing this is not where i want my kids all day long. this is not where i want to spend my own time, so how do i manage that? as people get smarter and realize that this is not the best place for having conversations, learning new ideas, there is so much that are information out there. hopefully, there will be another source where people will get better information and have better conversations.

emily: are you optimistic, david, but there could be a nether source at this point given the critical mass that facebook has? david: facebook is a perfect example. they talk about community and social, meaningful social interactions. while we all know is that when you have social interaction, some of it is good and bad. they cannot take credit just for the good stuff and not take blame for the bad. it all comes there. what they do have that is positive is this incredible connected platform where it could be an incredibly vibrant way for people to get great news and information about their communities. the information the community needs and wants. what they need is to focus on quality. how can we highlight the people that produce good quality

content, a financial way for them to succeed on the platform. by the way, that helps us as well because we deliver high-quality journalism and content to people. at the end of the day, you cannot solve all of the problems. what they need to do is have a higher percentage of good content which will effectively suppressed the amount of bad content on the platform. emily: interesting. one solution there. david chavern ceo of the news media alliance, thank you so much for joining us today from washington. coming up, how are big tech companies finding the next mark zuckerberg or steve jobs? one experimental fund says the playing field is unfair. we take a look at what they are doing to find the next generation of creators. this is bloomberg. ♪

♪ emily: big kick is known for some of the best and brightest, the industry may also be limiting its own talent pool. disparities and socioeconomic

status, race, and gender are producing what one study called lost einstein's. talents going unnoticed because of lack of equal opportunity. many got their start in the ivy league and they are also white and male. now, and experimental fund called pioneers is looking to address the opportunity gap. the group is hoping to be a search engine for talent putting more science into discovery with a more global search. to tell us more is the founder. at 27, she is a former partner who's search company was bought by apple in 2013. thank you so much for joining us. how do you plan to be a search engine for talent without having any bias at all? >> thank you for having me on. pioneer is a project looking for millions of lost einstein's around the world. for every elon musk or albert einstein, there are many more

that do not reach their full potential. we're trying to use the kind of power of software and internet to find the people at scale. emily: how? >> unlike traditional grant programs, what happens with pioneer is prospective applicants compete in what we call the pioneer tournament which is a 30 day event ticking place over a month. instead of submitting one -- taking place over a month. instead of some of the one application, you submit information for 30 days. we have a community, the other prospective applicants vote on whether they find your work interesting. we think the power of crowdsourcing has a tremendous role in highlighting people from unrepresented or more diverse backgrounds. emily: so you're are not just looking for entrepreneurs? this is across many fields?

>> we are looking for many people that seem interested and curious about the world and have a project they are working on. it could be anything. it could be a company want to start or working fundamental physics that you want to do or art. we think that there's a lot of people out there in the world that are self editing themselves out of success. they're not even sure they can reach their full potential. one of the main benefits i got was not just the investment but it was somebody telling me that i should take the idea i had more seriously. emily: and you apply from jerusalem while you were attending a military prep camp. how old were you? >> i was 18 when i applied. i was the youngest to apply at the time.

i want to find people that will be significantly more sex full -- successful than i was. emily: how do you find those people? daniel: our application process is unlike any other. no one has tried to use software to find these people. second, we are trying to get the word out using the same growth techniques that silicon valley has used to get the products out to different markets in the world, looking for people trying to get visas in various countries,, looking for people that are doing research in various companies. we created a whole network of a diverse set of experts and industry experts from different categories and backgrounds. hopefully they will serve as inspiration to people looking to apply. emily: there are many people backing this. my question is, let's take gender as one example. how do you make sure the people who are voting, the people who are part of this more collaborative process do not bring their own bias into the process itself? words like genius and visionary,

we don't often use those words to describe women, using gender as one example. daniel: we don't use the word genius. we call them creative outsiders and ambitious outsiders. we spent a lot of time thinking about this and making sure we do not bring the site in a way that would be negative to anyone. i came to the site many times and felt that it must not have been for me. we are sensitive to the fact that the main barrier we work against is people's own self editing. we are cognizant of reducing the activation energy required to get a submission in. emily: you are actually on the show many years ago for your original company which was a search engine for the iphone, right? you got bought by apple. what if you learned from the process that you want to bring to this?

daniel: the largest observation i made in the entire journey i had coming out from practically nowhere in israel to silicon valley and raising the series a and b, running a large set of machine learning at apple read there was one thing i kept -- apple. there was one thing i noticed over and over, the role luck played in my success. what we are trying to do with pioneer is remove the lock you need to be successful. the fact i had a serendipitous encounter with someone that took a bet on me is something we want to systematize. we want to look for talent, ambition, and potential, not the lock. emily: we will be tracking you guys and girls. thank you for stopping by. still ahead, tesla's wild week and more on the twist and turns following elon musk's tweet and issues that may await the electric carmaker.

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♪ emily: this is "bloomberg technology." i am emily chang in san francisco. bloomberg is reporting that tesla is considering going private to avoid concentrating ownership between too few holders. they are apparently canvassing investors, including large asset managers. for reaction, take a listen to what a few people had to say. >> it doesn't economically make sense for him. at the stage the company is in, it doesn't make sense because he is in a growth stage. companies go private that are

usually generating significant cash but shares are not getting a valuation that shows their value. he needs to raise financing for both equity and debt. >> no, this doesn't change my perception or my outlook and it hasn't changed my short position. we are shorting more shares today on the strength of the stock. >> it would remove the stock from the scrutiny of the central markets. it may be comfortable near term, but they probably don't generate enough resources from growth. it would make sense in private at this stage. we can only take what was said with a grain of salt. >> this is not going to happen. it may be to put the fear of god

and investors. do i think this is going to come to fruition? i don't. but if you bet against elon musk, it's a very bad bet. emily: indeed. we have liam denning of bloomberg opinion. there is reporting from cnbc that the board has called on elon musk to recuse himself. what do you think that tells us about the relationship between musk and the board at this point? matt: this is what you would expect if there is a buyout. normally a ceo has to recuse himself. it's just that it's happening way before you would announce it. the board coming out and saying well, we kind of talked about it a week before, that's not much time at all. if you read about the dell

buyout, that was going on for months and months. this is proceeding along. some people said it was possibly a joke or a ruse, but the longer it goes on, you think maybe there is an offer here. emily: liam, there are still questions we don't have answers to. we have been trying to get answers over the last three or four days. one is where is the money. who are the funders? do we have any clue? liam: i don't think we really do have any clue. a lot of people are calling this a leveraged buyout. it can't be a leveraged buyout. this company is consuming cash as it grows and is already a leveraged buyout. heavily in debt. it would have to be super patient capital.

public markets have been very patient over the years. very accommodating to dilution, misconduct, a lack of profits. frankly, i don't know who would be willing to write a check that large. emily: is there a clue in that we don't have clues? >> it's not that surprising that the banks didn't know. i mean, it is surprising, but in this kind of non-reality that we live in, it's not. i think what we should be looking at is silicon valley in terms of people invested in unicorns like uber and airbnb. if you squint, you might see tesla looking a little bit like uber. apple and amazon and google all have an interest in cars.

google has something, but apple doesn't. that could be one possible angle, either an equity investment or an outright acquisition. it would not be totally surprising were totally out of character. emily: it's a good reminder, as you put it, how far elon musk has veered from his master plan in 2006. remind us what that plan was. liam: you take revenue and plowed into a cheaper version and sell it. and that kind of made sense. the problem is, these businesses are famously capital-intensive.

at the beginning, tesla went public and threatened to raise more money, a fairly standard thing. but from about 2013 onward, which is when we saw the first big uptick in the market cap, the companies ambitions began to metastasize. i think where we are now is this is a company with a high stock price that has been underpinning its finances for a wild. it really has to kind of expand its ambitions to fulfill that stock price. the problem is what has been happening with the model three and the setbacks there has really started to test people's faith in the vision of the company.

emily: i can think of a couple other capital-intensive businesses, and one of them is a. is it realistic to think elon musk could use the same model he is using at spacex, which is still a private company, that that could be applied to tesla? >> think it makes sense in elon musk's mind. because he runs a spacex and things are going -- at least they are more stable than they are at tesla. you could see why applying a similar structure to tesla makes sense. spacex's structure is similar to uber and other privately held venture companies. the problem is the rocket business is a lot different from the car business. spacex has a lot of revenue. each of these launches costs 62 million dollars. once you open the gates and let people in, which tesla did, there are all sorts of complications.

one obvious one is the tesla employs a lot of people. they will not be thrilled to have their liquidity taken away. they will not have as much freedom to sell their shares. being public is really good if you have capital. it's what you want to do. it makes it easier and cheaper to raise money. emily: unless, apparently, you are elon musk. thank you. we will continue to follow this. i am sure there will be much more to chew on next week. after about five years at the company, doug steele is heading back to apple. he will likely join the car unit. apple kicked off an ambitious effort to create a self driving car. after opening new offices, car engineering machine shops and hiring thousands of engineers,

apple shifted away from building cars with self driving technology. consumer dna tests have taken off in popularity, promising clues to your heritage. but who owns your genetic data? bloomberg data explains why you should think twice before sending in that file. >> personal data doesn't get much more personal than this, your dna. consumer testing companies promise to reveal your heritage. it's called direct to consumer genetic testing. the industry has boomed in popularity. sales are predicted to triple in the next five years. but watch out. after the test is done, those companies still have your genetic data and there are a few limits about what they can do with it. >> if you read the privacy policies for any of these genetic testing companies, they outline for you all the reasons

you might want to think hard before you participate in them. 23 and me struck a deal with glaxosmithkline that provides them data to develop drugs. that's a huge part of the business. >> these agreements also save the company may have to share data with law enforcement if compelled by a court order. they have not yet complied with requests, but they may not need to. in the case of the golden state killer, police believe they cracked the long cold case by matching dna from a crime scene to that of one of his relatives on an open source dna site. privacy laws are meant to bar employers and health insurers from using people's genetic information against them. >> could they use your information to decide whether to offer you a policy or not? >> but at least the products do

what they advertise, right? yes and no. >> one thing they can 100% tell you is other people you are closely related to. after that, you get declining accuracy. >> for example, breast cancer. >> what if you get a test result back that says you are negative for one kind of breast cancer, but maybe you are at risk for other kinds. there are thousands of markers and they are not all well understood. >> the science is not there to effectively say how you should be exercising or eating, or what skin care products you should be using based on your dna. >> even if you decide a dna test isn't for you, you may want to convince your relatives as well. there dna could inadvertently reveal a lot about you. remember, spitting into that tube is not just personal, it's the meal you.

emily: coming up, for the first time in history, humanity is setting out on a mission to the stars. we will discuss the lunch to the sun. this is bloomberg. ♪

♪ emily: for the first time ever, we are going on a mission to a star. nasa solar probe plans to travel closer to the sun than any spacecraft. if all goes well, it just might change the way we look at our solar system. the launch is scheduled for august 11. the upper stage rocket will lift off from the kennedy space center in florida. joining us to discuss it is steve condon, lead engineer for nasa's solar probe. explain why this is so groundbreaking and what people

hope to learn from this mission. >> we have never been this close. to put it in perspective, if the earth and sun were on a football field, we would be on the five yard line. we are getting really close. there is a lot about the sun we don't understand. it sounds technical, but we don't understand how solar wind is accelerated. which is an import feature. we also don't understand why the corona is hotter than the surface of the sun. the corona is the hazy region we all saw when we looked at the eclipse last year. and it is hotter than the surface of the sun and we don't know why. we are going to that region to try to understand what's going on. emily: you were instrumental in developing the heat shield that will make this all possible.

you have been working on this technology for nine years. >> yes, i have spent the last 10 years working on the heat shield. it is about four and a half inches thick. it is a lightweight composite form of carbon and carbon foam. the spacecraft will only be 85 degrees fahrenheit. we are keeping everything cool behind our shadow. emily: talk to us about the timeline. went you arrive, wendy return? >> the spacecraft will be launching tomorrow. we go through 24 passes in the next seven years and get closer and closer to the sun using

gravity. it is a seven-year mission. as we get closer and closer, we are going to learn more and more. we expect to get data back and start learning things right away. emily: i am curious. once we get that information, how will that change our lives? >> space weather is an important phenomenon and it affects how satellites are going around the earth. our understanding why solar forms happen is important to our understanding of life on earth. understanding why they happen and what happens, how the sun is interacting is vital to us understanding how to interact

with our star. we will also understand more about other stars by exploring our own. emily: space has become such a controversial new frontier. the trump administration is proposing a space force. is that something that you, given all your work in space, feel is necessary? >> i don't have anything to say about that. emily: what are you most excited to learn on this particular mission? what are you going to be pouring through for that first piece of information. >> hundreds of thousands of people have made this mission possible. being part of the team is so special. i am looking forward to -- i know we will be rewriting the

textbook about the sun and learning completely new things no one could ever imagine. to be a small part of that is amazing. emily: betsy congdon, nasa engineer, thank you for joining us. coming up, we will hear from the ceo of movie pass about his turnaround plans. this is bloomberg. ♪

♪ emily: a service that was too good to be true for customers and an easy target to bet against. the ceo of movie pass joins bloomberg to talk about the new subscription plan. >> over the last year, and 3 million subscribers, we have

been able to watch the segmentation of our subscribers by the movies they go to. 50% of our subscribers cost is 40% of our goods. by capping it at 3 -- if we said we were going to give you $45 worth of movies for $9.95, you would be saying that's a good deal. it's going from a movie a day to three movies a month. most of our subscribers see an average of three month. that's why the model is sustainable. the average cost in the united states is $10 per movie. we make our money through advertising, studio partnerships. we generate income from going to dinner, etc. julie: in addition to questions

about sustainability, there is the service itself. people love talking about the company when we bring it up. two of our producers had been members. both canceled the service, for different reasons. one said every time he tried to use it it wouldn't work. you can't call someone. you have to digitally contact them. she ended up paying for the movie anyway instead of being able to use her pass. are you fixing some of the technical issues? >> nothing makes my hair raise more than hearing those stories. but we are half the size of cinemark without owning real estate and we have grown 15,000% in 10 months. julie: but how many cancellations are you getting?

>> we are still well over 3 million subscribers. yes, we have people who are canceling, but we are delivering amazing value every day. >> why not just go to amc, cinemark, or cineworld, which is now in the u.s.? you have four or five significant competitors. >> with movie pass, you can go to four times as many theaters as amc's program, which is the largest out there. our target is the occasional moviegoer who was only going for her five times he year. that's the group we are trying to focus on. if there's any mistake, it's

trying to serve all movie customers. we are half the price of amc. that appeals to moviegoers. >> what is your confidence that this latest changes going to set the plan in place? you are trying to raise the price to $14.95. you have surge pricing. how do you assuage subscribers who think it's just a matter of time before you come at my purse more. >> only time will tell. this change is built upon a huge amount of data. there is no other movie subscription service with this amount of data. we are confident this is the last big change. emily: that was the movie pass ceo.

finally, competition in the ranks of the most popular app on the blockchain. it looks like people are turning to gambling instead. over a recent 24 hours, a fomo app got more than five times as many users. it's not just fomo 3d. gambling is a category is only second to exchanges. that does it for bloomberg technology. that is all from san francisco. i am emily chang. this is bloomberg. ♪ retail.

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