♪ i'm emily chang, and this is "the best of bloomberg technology," where we bring you the top interviews from this week in tech. coming up next, tesla's plan to take tesla -- elon musk plan to take tesla private. now the same question -- where is the money? and snap reporting its first-ever drop in daily active users. what is the company doing to stay on the radar? in.google wants back in china, the search engine left the mainland in 2010 over beijing's censorship rule, now

is working with the chinese government to do it all over again. but first to our top story, elon musk could be switching lanes. on tuesday, the tesla ceo sent shockwaves down wall street after tweeting that he is considering taking the company private at $420 per share. the board, apparently not surprised. tesla directors said they knew last week about musk's bombshell proposal, but both the board and ceo had a long way to go to convince investors this idea is credible. now wall street and washington are asking the very same question -- where is the money, where is the funding? we caught up with max shaft in -- max shaft in. the question desk did musk's tweet violate sec fair disclosure rules? max: the sec has been kind of clear that companies and individuals can make announcements about materials, nonpublic information through

social media. on its face, tweeting this out on twitter is not necessarily a violation. but the issue, as you talk to people, will really be about if to look intoes this -- and we do not know if they will or are going to -- if whether what he says was actually true. if the funding is secured. that said, funding is secured. sophie people will be wondering, what does that actually mean, and does he have what that tweet indicates? he doubled down on it a few hours later on tuesday, saying that indeed, he did have investors. so we will have to see how this plays out. but it will come down to how sure was what he said at that time, and how much did that actually reflect what the reality was? investor support is confirmed, but we do not have any evidence from our sources or

bankers close to the company that investor support is indeed confirmed. your point that the sec has decided that it is ok to disseminate information on notional media this way, that dates back to a rule the sec made back in 2013 in regards to the ceo of netflix, who announced at the time some pretty important numbers on facebook. the sec decided that was ok. to this point of funding, max, what do we know about who could be supporting it and if indeed they are? max: the universe of possible funders is pretty small. we are talking about sovereign wealth funds, and of course the saudi's, reports came out just before these tweets started that the saudi public investment fund had up to 5% in tesla, so you can imagine a big sovereign wealth fund, a big tech venture investor like softbank or a big tech company like an apple or a google.

in terms of a traditional -- normally, this deal would be a leveraged buyout, but companies that are normally targets for leveraged buyout's have profits, and that is not something tesla has. so it would be more like trying to turn tesla into something like uber, basically a high potential, private company with a very high valuation. emily: meantime, this is a company -- i have this chart in my library showing tesla's free cash flow. this is a company that has never made money and has been burning billions and billions of everys worth of cash year, essentially. what are your sources on the regulatory side saying what happens next? what are they going to look into? ben: this may be kind of to the point of why ceos and corporate executives don't usually announce this kind of stuff on twitter. this is like a long, deliberative process.

so even if this were to move forward, we are talking months of back and forth where probably the board would have to form some kind of special committee to actually look at this. there are going to be lots of lawyers. there is going to be lots of back and forth -- and don't forget, investors who feel this isn't the right deal could also take legal action. so what we are basically hearing right now, we have to see how this is going to play out. the tack that elon musk ultimately takes here will go a long way in determining how he is going to have to deal with delaware state law, too because don't forget, tesla is a company that is registered in delaware. so really, we are kind of trying to get a sense of where this goes and the funding question, i think, is really central to all of that. he says he has funding carried -- funding -- where is the funding going to come from and what does that deal ultimately look like? emily: that was bloomberg

businessweek's max chafkin and then a bane. meanwhile, spacex has launched its 15th mission of the year. elon musk, other company -- elon musk's other company deployed an indonesian satellite into orbit early tuesday. the reusable falcon nine rocket lifted off from cape canaveral in florida. about eight minutes after launch, the first stage landed on a drone ship in the atlantic ocean. spacex is targeting 30 total missions this year, up from the record 18 in 2017. coming up, snap's revenue was second quarter solid, but daily active users are on the decline. snap's best days behind us? and if you like bloomberg news, check us out on the radio, listen on the bloomberg app, bloomberg.com, and on serious xm. this is bloomberg. ♪

emily: on tuesday, snap posted quarterly revenue gains that showed it can compete in the mobile ad market dominated by facebook and google. the catch, snap also reported the first decline in daily active users. that worried analysts, who were looking for rapid growth. but snap did win the endorsement of the saudi billionaire, who has taken a $250 million stake. so has snap hit a peak or is this just a bump in the road? we spoke with a guest who has an -- a market perform rating on the stock, as well as david kirkpatrick. >> not a great surprise. they had warned us that the changes they made to the app last year had caused some disruption, and so it is not a great surprise that we saw a little bit of softness. the question investors are

asking is can they return to growth and over what time period? they have also been struggling with the android platform. the user experience on android is somewhat inferior to ios. they have been working on re-platforming the app for android, and it is in tests right now. we will see of that has the impact of growing android users, returning the growth to android users both in the u.s. and globally. as of now, they did slip sequentially and now the question is whether the trend continues? emily: right. david, this isn't something we saw at facebook in the early days or even twitter. i mean, do you think snape's the snap's best days could be behind it, given we are seeing a sequential decline fairly early in its lifecycle? david: they have a problem facebook never had and facebook tried to give to twitter but never successfully gave them, which was they have a head-to-head competitor copying their every move, and that is instagram.

i think that is slamming them. on the other hand, the ability to withstand that thus far is generally impressive, even though they did show a slight decline in daily active users. the fact that revenue is going shows that advertisers, which are really the key constituency, are still pretty much happy. emily: so what about the revenue, peter? we are seeing significant revenue growth. we are seeing they are able to compete in a market where it is kind of a duopoly. what do you make of even though the user trends are not promising, the revenue is? peter: revenue growth in the quarter was over 40% and that is impressive, but when you dig a little deeper and look at the regions, you see trends that could signal some alarm. revenue growth in the u.s. was 20%, and the question is whether that decelerates further. revenue per user growth is only 12% in the u.s., comparing to much higher growth in europe and the rest of the world. so what investors are looking at

is how much more room today do they have? keep in mind, snaps business in the u.s. is only 3% the size of facebook. but facebook last quarter grew almost twice as fast. so really, you have the question here of what is the headroom on monetization per user and is the actual design of the app an issue here, and is the demographic skew an issue? that is our thesis. the user skew of the snap user presents a limiting factor on growth and they have to expand the older users. to david's comment earlier, instagram is a key competitor and they need more older users to open up advertisers who can spend significant sums on the platform. emily: instagram, a key competitor, also responsible for copying a lot of snap's features and sometimes doing them better than snap had. david, what do you think of that thesis and whether snap can actually succeed at getting older users? david: well, it is a tough

challenge. they have done a good job of product innovation over time -- even if every time they do it, it is copied by instagram. i would not put it past them, because i think it is a well-managed, very creative company, that they might come up with some way to appeal to older people, but even the brand shouts teenagers and young people. so to get older people to use it really would be more than a product design change issue, it would be a branding issue and it could turn off the younger people they still depend on. so that is challenging. the one thing, though, i don't think anyone should ever have any allusions, snap will never be the scale of facebook. it is a good company, it probably still has some potential growth, but don't think it is the next facebook. it is never going to be. twitter ceo jack dorsey continues to defend twitter's refusal to ban conspiracy monger alex jones. on wednesday, dorsey appeared on the sean hannity radio show

to reaffirm his stance. jack: in the past, we did not communicate why we would take action on tweets, or why we might suspend temporarily or permanently. we want to communicate those reasons to the person who was suspended or the tweets in question, and also the reporters. so simple communication within the product, but broadly, we haven't done a great job of communicating our principles, the guidelines that help us make the decisions in the first place. we are getting better and better step by step, but have a lot more work to do there. emily: for reaction, we went to someone intimately familiar with the perils of online hate speech, ellen pao, the former intern ceo of reddit. -- interim ceo of reddit. after she resigned, she said "in my eight months as eeo, i have -- ceo, i have seen the good, the bad, the ugly on reddit. the good has been inspiring and the ugly has made me doubt humanity." after that, how was a client at

perkins, when she wanted the firm to invest in twitter back in 2007. the company past, but pa eventually invested in 2010 and pao later sued for gender discrimination. she lost, but has become a vocal activist for equality in tech and is the ceo of project include. we start with her reaction to dorsey's defense. ellen: it feels like he is standing on his own and feels he can change twitter on his own without following what has happened in the past, without seeing what other platforms are experiencing and without learning. that is the part that surprises me. we have learned so much in the past five years and he is not incorporating any of that, building any empathy for the people who are being harassed on his platform and instead, he believes there should still be this free-for-all on twitter that he can somehow control and manage. emily: it also seems to reverse some of the progress twitter has actually made in the last two months. ellen: it is confusing to me. it is a surprise that he would not take this opportunity to

people on his platform who are being harassed, and i have seen people leaving the platform. i have not decided for sure that i am to leave, but i am not tweeting -- i have not tweeted for a day and don't feel like participating anymore. you feel like you are contributing to this site that is allowing harassment and these hate speech and harassment that comes from it on the platform and contributing to it if you are participating in it. emily: now, despite the fact that facebook, google, apple, modify have all taken action -- spotify have all taken action against alex jones, the app info wars is rocketing on the app charts. it is more popular than cnn, new york times, even fox news, but is all this helping him? ellen: we will see, but at least the people at those companies can feel like we have stopped their platforms from spreading it as much as possible. apple was keeping it on its platform.

i am not really sure. google -- emily: it is still in the app store, but they took off some of his podcasts. ellen: you make it a little harder, that is better than doing nothing, which is what jack is doing. emily: karen fisher wrote a post about how rules won't save twitter, values will. the rules, to be fair, have never been clear at twitter, nor has how they enforce the rules. but forget about where you draw the line. is there a different way to draw the line? how you draw the line? could twitter do that differently? ellen: so i am empathetic to the problem, because the rules can't address all the changing circumstances. so you have this clear rule that -- rule, but people are trying to get around and you will make mistakes and it is always a problem, it never seems clear. but here in this case, this is a person who is perpetuating harassment across the internet and your product is being used as a tool for harassment. and these families who have had

to go into hiding, where is your empathy for them? is this what you want your platform to contribute to? i don't understand how you can keep this -- encourage this type of information and encourage this use of your platform. emily: it is also a question of how off-line behavior should be considered. so alex jones, for example, could be potentially guilty of perpetuating violence against these families off the platform. how much should a platform like twitter or facebook consider that? ellen: so had this horrible experience at reddit in 2013 in april where people were trying to figure out what was happening in the boston marathon bombing, and somebody incorrectly identified poor -- you know, a a potentialhe, as person who -- a potential bomber.

and that person was a missing person. his name was --, and his family got harassed. they said terrible things about him all over the internet and what i took from that is no, you can't just look at what is going on on your platform and it doesn't matter what people's intents are, trying to find the bomber. the frenzy that social media creates and the immediate actions that people take without thinking, and the immense harm that that inflicts on individuals for no apparent reason -- like that is something you need to take into account. the fact that you are not the only reason does not mean that you are not a contributing factor and don't abdicate all responseability. emily: given the hard choices you made at reddit, if you were running twitter right now, what would you do?

ellen: i would take that content off. i would look hard at off-line and online and i think harvey sent out a message saying they are doing that. emily: who is running trust and safety right now. ellen: i think she is a very smart person. this is your opportunity to be transparent. like, where are the rules? where do you want people to want where are you going to take people off the platform? harassment should be a key thing. talk about free speech -- when people like lindy west, like coats, when others are coming off your platform because they don't feel it is safe with them -- for them to share ideas and these are people who have resources, who are out in the public i in general and they don't feel your platform is safe for them, where is the free speech? where are the healthy conversational environments? emily: coming up, a close look massive turnaround

with ceo josh silverman. later this hour, more on uber. the scandal start anthony levandowski returns. this is bloomberg. ♪

emily: since taking over as ceo last may, josh silverman has overseen an impressive turnaround at etsy with shares up 300% in his tenure already. the company is expanding business and eliminating areas that weren't growing. now, etsy has raised its guidance in the year in its earnings results. josh: we are at the very beginning of opportunity for etsy. when you look at our total addressable market, if you take just our top six categories in just our top six markets and look at only the online portion, billion market

opportunity. we are just beginning and it is about creating a better buying experience, which translates into more successful sales for our sellers. emily: no pressure, though the share price has increased considerably, up over 300% since you took over as ceo. do you have any concern that investors are being too enthusiastic? josh: my job and the job of my team is to focus on delivering results for all of our stakeholders, for our sellers and buyers and employees and shareholders. they benefit as well. so we will continue to deliver the best results we possibly can. and we are very focused on doing the fewest things we can exceptionally well and we are seeing great gains from that. we think the results of the past few quarters have been encouraging and we are looking forward to continuing. -- continuing to deliver more. emily: what areas are you exploring that may be new or unexpected? josh: you know, i think that part of where we maybe lost our way was losing focus and trying

to turn too quickly to too many new things. if you look at -- just take three of our biggest categories. home furnishings, jewelry, and apparel. each of those are multi-hundred billion dollar categories where we have more than $500 million of sales today, but so much room to run. we have got to make it easier for buyers to find the products they love and to buy those products and then to come back and buy more and more. and i know with over 2 million sellers selling over 50 million items, items that are beautiful, items that are made with care, there is so much opportunity to do better just in the core categories and core markets we are in today. emily: the supreme court made a big decision recently that states can now force retailers sales tax, even without a physical presence there. that means more taxes for online shoppers. how does that impact etsy, the business, how does that impact your buyers and sellers? josh: it is not a existential

threat to etsy, but it does create more friction for our sellers. there are about 10,000 different tax jurisdictions in the united states alone, and each of those have different classifications for what types of goods are subject to what types of tax. that is very difficult for anyone to implement with excellence, so we think it is bad law and we will be working with the congress and the state legislators to come to something that is more effective and easier to implement. in the meantime, we will have our sellers; back -- sellers' back and are investing in tools to reduce the burden and make sure we comply. emily: you also said at the time of the decision you would continue to lobby congress. what actions have you taken? josh: we are engaged in dialogue with congress. the nice thing is i don't think this is a partisan issue. we are trying to help states achieve their financial goals, but do it in a way where we can succeed and most importantly,

where e-commerce can succeed and innovation can succeed, because that has been a key driver of the u.s. economy. for us, we have 2 million sellers, 87% are women. they exist in 99% of the counties of the united states. most of them are businesses of one running a global enterprise from their living room. so we think needs of these micro-entrepreneurs are really important and we are making sure their voice is heard. emily: that was etsy ceo josh silverman from new york. still ahead, samsung unveils its priciest phone yet, hoping a larger screen will rejuvenate sales. but is it enough for the struggling flagship line? and bloomberg tech is livestreaming on twitter. be sure to follow us and follow our global breaking news network, tictoc on twitter. , this is bloomberg. ♪

♪ emily: welcome back to "the best of bloomberg technology." i'm emily chang. samsung unveiled its galaxy note 9 this week at an event in brooklyn, new york. the phone will be faster and last longer without a recharge, with somelso come automatic photo editing. but these changes come with a hefty price tag. the 6.4 inch screen will start at $999.99 and maxing out at $1299.99. if they are struggling to fend off apple's upcoming iphones over the holidays.

but will it work? bloomberg tech's mark gurman and bob o'donnell went to the samsung unveiling in brooklyn and came to us with a full report. mark: they are positioning it as this new big thing for consumers, but the reality is, what looks new to consumers in this phone, does not look different than its predecessor. it has a slightly bigger screen, much upgraded stylus, more stores capacity, but a faster processor, but i do not think that it is enough to move the deal to spur upgrades. emily: bob, would you agree? bob: generally i would agree. people are not upgrading every year for any phone anymore, so the market realities have changed. right? people are upgrading every two to two and a half years. people are older phones, it is nice. look, mark is right. it is incremental advance. the pen technology is kind of interesting.

there were more interesting announcements later in the event, and frankly, if you look at the time spent across the entire event, the time spent on the phones was modest because it was a relatively modest upgrade. mark, you have done incredible reporting on the iphones to come. how does what was revealed today compare to what you expect apple to unveil in the fall? mark: that is very kind of you. it is a team effort. it fits right into what we were expecting from samsung and apple this year, not really significant upgrades. apple's upgrades are not significant on the feature side , but significant and how many versions of the iphone x they will have come a different screen sizes and pricing strategies. it will really be an exercise in marketing, and that is the same thing going on with the note eight. emily: bob, there have been questions about whether customers are going to pay that $1000 for the iphone x?

same question here, do people really want to pay that much for a samsung phone? bob: look, if samsung has an apple fan girl, fan boy equivalent. it is the galaxy note owners. they are the most dedicated, most faithful to the brand first, and there are people in that group that want the best android phone. by the way, the 512 gigabyte $1249.s going to be but this is not the entire market and samsung knows that. this is their dedicated galaxy note people who like using the pen, which is why the primary focus of the new features were around the pen. and so from that perspective, it makes a lot of sense, but to me, what is more interesting is the spotify news. to me, that was interesting because it reflects a bigger picture strategy story from samsung across the board, across all their different devices. emily: and how does that, mark, compare with apple, which of

course has apple music? mark: that is a good question. spotify, at a low level, is not going very much in-house and not building up the streaming music service themselves. they used to have one called "milk." they have had a few over the years and they have terminated their projects. spotify, which still has the best brand recognition, it is a smooth move by samsung. and even spotify investors seem pretty impressed by it. the stock is up several percent this morning. emily: other announcements or revamps, smart watch, home, the digital speaker. you have been tweeting about the speaker, one and a half times the home pod which is quite large. what is your take on these other products? mark: well, the galaxy watch is a revamped version of the smart watch strategy. i do not think it will move the needle. the market has truly become saturated with the apple watch.

i am not sure where samsung is going to fit in. on the other hand, the home speaker is also coming in extraordinarily late. the amazon echo came out 3, 4 years ago, announced in 2014. almost five years ago now. the home pod was late as well. coming out in february. but amazon and google have a handle on that market, so i am not really sure what percentage of the market samsung is going to be able to grab with this device, especially with such few details they are providing on this. i would not be surprised if it is not released until the end of this year or 2019. so, they are extraordinarily late to the game with the home speaker and it does not appear they are bringing any new innovative functionality to the table that would inspire anyone to buy one of these. emily: bob, is it too late for samsung and apple in smart speakers? bob: well, it is going to be very challenging. you have a strong position for google and amazon. look, the one thing i will say

across the board for the different galaxy products is we are seeing samsung talking about the galaxy brand. they changed it to galaxy watch and call it galaxy home. they are trying to build this overall connected device story, which i think is a unique opportunity for samsung. they are the only company in the world that potentially could do that. but again, the real test is going to be in execution, how well this will actually work on that speaker? how did spotify bundle with a smart speaker -- having spotify bundle with a smart speaker i think is attractive and a unique opportunity from a general music perspective. but look it will be an uphill , battle. emily: that was mark gurman and bob mcdonald. out auto co-founder will fit into the ride-hailing company, next. this is bloomberg. ♪

♪ emily: new york city council dealt a huge political blow to uber and other app based car companies this week. a one-year cap on new licenses. minimum pay standards for drivers. the passage is sweeping industry regulations is showing the change toward the so-called gig economy and car hailing services. another day, another shakeup at uber. but this time, it is a former employee that is returning. lior ron will start uber freight, the trucking service. ron left uber in march after uber settled with alphabet for $240 million.

now, ron is returning to uber after a month-long behind-the-scenes negotiation to rework the terms of the auto deal, announced almost two years ago. we spoke with lane kasselman and also with us, eric newcomer. eric: what seems to have been happening as behind-the-scenes , there is been the renegotiation of this part of this auto acquisition two years ago so that uber can really invest in uber freight. they're human, trucking, logistics business. once those negotiations got settled with anthony levandowski and lior ron, and cleared the way for ron to come back. emily: but if he really at peace? is there a risk of bringing back someone who has some baggage? lane: there are a lot of people at uber who maybe are

entertaining coming back now that there's new leadership in place. but the reality is, there is not a lot of people with expertise in this space, so uber doesn't have a deep bench to pick from. emily: let's talk about the bench, eric, because we have seen the head of hr resign in the midst of an internal investigation into whether she was ignoring complaints from employees. a very high-profile woman at the company. what really happened there dealt? -- what really happened there? eric: there is a lot we don't know. there was this investigation. the whistleblower that had complained, and lawyers told the whistleblower there were some things we can confirm, some things we can't, we are not going to tell you which. and their chief legal officer you know, basically said, you know, trying the sort of issues in the court of public opinion is not a great idea, and it can

be unfair. horsleymately, leanne resigned right after an all hands meeting. it was sudden and unexpected and it came amidst media scrutiny. we do not know what particular incident convinced her to resign or uber to push in that direction. that: meantime, the coo was brought in to help right the ship "the new york times" has , some off-color remarks he made about in that featuring mixed race couples. how often do you really see mixed raced couples? lane: the defense is analyzing the ad, trying to understand whether it represented the people they were targeting. people in the room felt it was off-color. we don't know exactly what was said. he is certainly soul-searching and trying to get leadership help around exactly what he should say. it was a terrible moment for the turnaround

crude get hit with the same type of turnaround -- turnaround crew get hit with the same type of allegations that travis kalanick and his leadership team have faced. very hard, so you have this guy doing a lot of the heavy lifting, now is sort of emblematic of the behavior they were trying to leave in the past. has made somera other high-profile hires. has not made high-profile female toes, lane, and also seems be having trouble getting the ship in order. what do you make of this? lane: it is not a question of if but when? dara has a lot of work to do ahead of an ipo next year. he will look to the existing bench outside the tech sector. right? a lot of folks in corporate america have proven themselves in various capacities and he has to convince them this is a company it is ok to come to now, and bring them on board. it is not overnight.

he has not been in the job long enough to get a full leadership team. emily: i spoke with tony west and he said it was a tough decision to leave his job at pepsi in join uber. what are you hearing from people who work inside the company as to whether there has been a true culture shift? lane: yeah, that is a great question because the culture shift is being felt among the entire team. folks who have been there long time, four years plus, because years is a say four long time, but in the real world, it is not. those who have been there for more than four years feel like it is a new day, new leadership, and the problems are behind them. they are excited and bold about the future. emily: eric, meantime, read literally issues continue in new york. the city council is poised to approve a cap licenses for uber another ridesharing drivers. eric: terrible for uber, terrible. i mean, i think, i'm curious what lane thinks. uber built de blasio back and

gave it room to grow. and obviously, it has locked in , but anyhose gains idea of the cap would be terrible for uber, and minimum guarantees on drivers would distort the marketplace. from a business perspective, it is pretty shocking, and you know, definitely the travis kalanick crowd asking, did dara invest in the war room-style fight with new york that they had done? i am curious. emily: terrible. did he mess up? eric: there is a question of whether or not tech companies need to hire policy people, and this is definitely an example. but i think most tech companies are going to need more and this is why. regulations always come back. regulators are always looking for the easy way out, and in this case, this is the easy way out. congestion pricing, changing the price of taxi medallions, helping the most honorable

people in new york is a huge problem to solve but an easy one, capping uber. emily: now, got to ask you about one more story. become -- before you came on the show you sold some of your tesla , shares before elon was speaking about it being private. you still have some shares? lane: maybe not enough. [laughter] emily: what is your take on this as an investor? lane: i am hopeful the news means something big is happening , and that it is good for my remaining stock, and you know, on the other hand, i hope i really did not screw up this morning. eric: uber preparing to go public next year and now tesla floating going private, it is such a reversal, you know, just two ships passing in the night. emily: we have not determined how serious elon musk is about this, but does his capriciousness and unpredictability bother you? lane: one of the reasons i am an investor in tesla is because it is so exciting. emily: that was lane kasselman and eric newcomer.

coming up, google abandoned china in 2010, taking a moral stand against censorship. now, it wants back in on the economy, but at what cost? we will discuss next. this is bloomberg. ♪ ♪

emily a semiconductor company : that makes chips for iphones says it was crippled this week by a cyber virus similar to last year's wannacry ransomware. the outbreak shuts several factories down just as the company was ramping up for the new iphone. ksmc says full operations have resumed and they expect a drop in revenue. google is secretly trying to get back into china with a censored search engine comes the news that it is working with chinese companies on cloud offerings. google said be working with tencent and others to offer its

health services in the second world largest economy. just eight years ago, google abandoned mainland china because it refused to comply with beijing's censorship practices. so, what's changed? we spoke with shira ovide and bob boorstin. before that, he spent seven years at -- as google's director of public policy, and was on the original tina determined google's entry into china in 2006. bob: i think there are three factors that play at first, is economic. -- i think there are three factors at play. first is economic. they see a market and i think that is incredibly important to them. they want to be a player. the second thing they have to look at, and now we go negative, is a political side of this. you are seeing senators in washington asking questions about why they are doing this,

and also, you're seeing a number of human rights groups taking exception. and finally, there is a moral question. part of the reason google pulled out in 2009, 2010 was moral, and certainly, nothing has changed on that front. in fact, chinese internet regulations are now a lot harsher than they were back then. emily: exactly. 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 on the reaction of lawmakers. take a listen. sen. rubio: i am outraged by it. number they will not work for one, the department of defense because they do not want to be involved with killing people, but they work closely with a university in china to provide technology to the chinese military. and then here they are in the for freeng they stand speech, but they are prepared to go into china, and help the chinese government since information, and deny people access to information.

it is hypocrisy. it is sickening. an excellentd piece when the pros and cons, most of the cons of this. talk to us at what cost this would come to google. there is user trust and you point out, does google have a potential to break back into the market at all given the dominance of the chinese services? shira: that does seem on the commercial front that china has moved on without google for better or for worse. but, for people like me who want the world to come closer together, the internet was supposed to help make that happen. instead, but we have seen of the last few years is not just in china, but another countries around the world, where the government has used the internet as a tool to make the world a more closed place, to crack down on global information, to censor, to shut down dissent, and that is selling what we have

seen in china to a large extent, without google being there. and now of course, they are trying to make these compromises to potentially come back. emily: so, bob, the economic potential is obvious. 722 million internet users in china. but on the moral side, wasn't it larry page and sergey brin who personally decided to pull out in the first place? they are still at the company. what is different? how has the moral calculation changed? bob: that is a very good question. i cannot answer that sergey one. 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 a personal offense to what was going on. also, the chinese had essentially invaded google's search engine, and that did not make anyone there happy. hat's changed?

it is only gotten worse as far as i can tell. emily talk to us about 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. shira: the politics are interesting. you had that clip from senator rubio, and i think he has been google on about how the one hand can refuse to do work with the u.s. department of defense on his military drone project, and all the other hand, it is willing to help the chinese government censor information from its own citizens. that is a little bit of a hard sell in some corners of congress. the politics will be very interesting, given the trade tensions or trade and beyond tensions between the united states and china. it is not even clear to me that google would be permitted by the chinese government to reenter the country with search, or with its other commercial services. emily: that is certainly another

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

, you know, going against freedom and access to information? bob: i would argue that facebook will never get into china, and the reason for that is that it's -- and the reason for that is that its fundamental utility, it has an organizing tool that allows people to organize. that is the last thing the chinese government wants its people to have. google is in a different place here than facebook is. there are already plenty of search engines ever there, and one of the big questions is, is it worth it economically when baidu, the chief competition, already has about 75% of the search market? emily: shira reminds us of a hack attack that originated in china in 2006 on google, where the hackers were trying to access human rights activist

information. bob, what was it like being on the inside of that? bob: i was not there for that exact attack. but it is definitely one of those things you worry about a lot from ever since something since the --r case. yahoo! had a partnership and had to turn over information on that dissident to chinese government. once they did, the chinese put them on trial and in jail for 10 years. any company operating in china, their data is fair game for the chinese government. and if so, they could be seen as , and in reality, complicit with that government. that is not something most companies want to have on their hands. emily: that was bob boorstin and shira ovide. and that does it for this edition of "the best of bloomberg technology." we will bring you all the latest in tech throughout the week. tune in every day, 5:00 p.m. in new york, 2:00 p.m. in san francisco.

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