our internet. which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. >> i'm in san francisco in for emily. this is "bloomberg technology." coming up in the next hour, tesla c.e.o. elon musk offers a bit more clarity on his funding secure tweet, pointing to interest from saudi arabia sovereign wealth fund. but questions still remain. we'll discuss. plus the f.f.o. of fret flicks -- c.f.o. of netflix is stepping own.

and china's tech earnings. what that means for the social media giant ahead of its second quarter results. first, our top story. elon musk is elaborating on what sparked his move to take tesla private. the electric car maker c.e.o. said the key to the gambit was the interest shown by saudi arabia's sovereign wealth fund. musk says the saudis approached him almost two years ago about taking tesla off the market. the fund recently bought an almost 5% stake. for more i want to bring in oppenheimer senior analyst, collin rush. also with us in new york is max. max, i want to start off with you. elon says he's continuing these talks with the saudi fund, that he's also talking to other large shareholders. do we have any idea who the large shareholders are and how far along these talks are? >> no. we have no idea about anything.

i think there's sort of even with the information that came out this morning from elon musk's blog post, you know, there's sort of a wide range of possibilities that could have happened. we know that there was some kind of concrete conversation between the saudis and elon musk, i believe on july 31. that timing is pretty tight for a buyout. we don't know if they talked about price. so the blog post says, you know, there's going to be some due diligence needed and some very vague things that would need to happen. we don't know if they've come to any kind of agreement. in terms of large shareholders, we're going to be talking about the big mutual funds, fidelity, van guard, and so on, that own big chunks of tesla stock. selina: so a lot of questions here as max mentioned, possibilities, large mutual funds, etc. but what are the other possibilities here? there a scenario where elon musk

brings in some of his other billionaire tech friends in silicon valley to help invest? >> the truth of the matter is we really don't know, as max mentioned. we don't know what the structure would like like, what the number of shares would be that people would need to buy, to actually take this company private. what sort of dividend there might be of any liquidity profile. there's an extraordinarily limited amount of information at this point. to make any sort of assessment. selina: now he also snuck in in his blog post that he considers himself a potential bidder. doesn't that bring in a host of legal issues, given that he is the c.e.o. and chairman of the company? >> absolutely. you have to go through a legal process to provide a tender for a company in this regard. it sounds like from the flurry of tweets and blog posts that this is happening on the fly. and then some regard, in response to the legal backlash,

that they're seeing, given the fact that it sounds like the tweets maybe were a little bit ahead of the process. selina: so there are these continuing discussions with the saudis but doesn't this bring into question the committee on foreign investments here? i'm sure they would take issue with a large foreign investor taking a stake in this iconic american company. >> yeah. i think especially in the trump era where we've seen the administration sort of willing to kind of do new things, to protect, as they see it, american national security, i think that's certainly an issue. obviously the american relationship with saudi arabia is not nearly as contentious as the relationship with china, where we've seen the trump administration really take action in some dramatic ways. the other thing that he is sort of interesting about this, a colleague wrote a really interesting column earlier today about how by doing this, musk has given quite a lot of leverage to the saudis. because now -- he's already said funding secure, this is just

going to happen. if they were able to sort of put out something that would put a little cold water on this, that seems like it would throw this whole process into chaos. so it's sort of a perplexing chain of events, to be honest. selina: on that note, i want to get your take on a question that our tesla reporter posed in a piece today. they said, is elon musk in the midst of pulling off the go-to private deal of the century or is he making the best of a weak hand in high stakes poker? >> i can't really say which way it's going to play out. like i said earlier, we're still waiting on a great deal of information. the company still has to perform. even if they do go private at $420, that -- some people are arguing that that may be a way to cover up some of the concerns around improfitability and not being able to reach those metrics. we obviously upgraded the stock a couple of weeks ago based on the potential for operating cash flow from the model 3 if they're

able to hit the 15% gross margin. but really we're still only a month into the quarter. a little bit more than that. and there's a lot of room to run here and a lot of unanswered questions. selina: right. bears would argue that musk here is the master of distraction. he's trying to get investors to look away from some of the financial issues, the production problems. what's your take on that? >> i think tesla by any kind of objective standard has had a pretty good couple of months. there were people who thought it would be very hard for them to hit the 5,000 cars per week number. for the model 3. and now they seem to be hitting it comfortably. if you look at the bloomberg production model, it's above 5,000 right now. so i think that's a good sign. that said, all of these issues that people have been worried about with tesla are still there. and i think that if your core concern is, thanks company that doesn't totally have its stuff

together, i'm not sure you're encouraged by the events of the last few days. that said, if you're a believer, if you see this as a big growth opportunity, then going private sounds good and it's kind of the same story we've been hearing from tesla for months and months. which is that within a certain sort of vision, version of the facts, it looks great. in another version, if you don't quite believe everything musk says, it looks like a disaster waiting to happen. selina: all right. colin and max, thank you both for joining us. we'll be following this very closely. in another story we're watching. alphabet deep mine plans to develop a medical product that will help doctors detect more than 50 conditions from a common type of eye scan. the london-based artificial intelligence company has trained software to detect signs of disease better than human doctors. deep mind and its research partners plan for trials of the technology in 2019.

coming up, a surprise shakeup in netflix's leadership. can a new c.f.o. get subscriber growth back on sflack we discuss next. -- we discuss -- back on track? we discuss next. you can listen to us on the bloomberg app, bloomberg.com, and in the u.s. on sirius x.m. this is bloomberg. ♪

selina: a surprise shakeup over at next flicks on monday. chief financial officer david wells is stepping down after eight years on the job. since he joined netflix in 2004, the company has gone from a d.v.d. by mail service to the preeminent name in streaming content. it's also aggressively pumped billions of dollars into original content to take on traditional studios. wells says he's leaving to focus on philanthropy and the c.e.o. had this to say about wells' departure. he's skillfully managed our finances during a phase of dramatic growth that has allowed to us create and bring amazing entertainment to our members. all over the world. while also delivering outstanding returns to our investors. with us to discuss, chief operating officer at ibc research and bloomberg intelligence. paul, i want to start out with you. do we have any other reasoning besides that he wants to join this philanthropy for why he's step down after eight years? >> no.

we really haven't seen any other news come out of the company and the stock is not really reacting much at all. oftentimes when a c.f.o. does depart, you know, on short notice, it raises concerns for investors, but that does not appear to be the case here. this appears to be a fairly well managed departure. david's going to stick around and help with the transition to a new c.f.o. and suspect that there will be no shortage of a-list people looking for that slot. selina: judging by the stock reaction it seems investors aren't overly concerned but what's your take on this? he did lead this company through the most dramatic phases of growth. >> yeah. if you look at this company, it has transformed itself a number of times. and the basis for its competition continues to change. and i think that this represents the beginning of a new chapter for ette flicks and a -- netflix and a new chapter for david. david had a great run at

netflix. fournette flicks as a company, i wouldn't be -- for netflix as a company, i wouldn't be surprised if they double down on data to try to figure out how they can delight customers and maybe even create new kinds of services around their content services. in new ways. they are now competing, increasingly, not only against hollywood, but against carriers. as we ccar yers acquiring more and doctor carriers acquiring more and more content. the competitive landscape fournette flicks is going to change -- for netflix is going to change and i think this is the beginning of a new chapter for the company. selina: what are the key priorities of this c.f.o. coming in? crawford mentioned a change in competitive landscape. carriers getting in as well. >> as c.f.o., first and for most, will be cash flow. trying to get this company to cash flow positive. right now they burn $3 billion today 4 billion a year in cash and that is -- $4 billion a year in cash and that is drew to

their ever-increasing programming budget. they've been financing their growing programming investments in the debt markets and that's something that obviously is not a long-term, sustainable, traditional way of funding it. so they clearly need to get their operations to cash flow positive. that appears to be at least by our model several years in the future. so there's going to be a real need to manage the cash flows of this company as it approaches cash flow -- free cash flow positive. selina: what is the path to getting cash flow positive? they are aggressively pumping money into original content and that doesn't look to be slowing down any time soon. >> no. so this is the thing. they're on this tread mill where they have to continue to create engaging content. they also have to invest -- sorry, continue to invest in the analytics, to not only figure out, as a lot of people like to say, the way we watch, but what we watch. and make sure that they're dialed into the kind of content that's going to be compelling

for people on a regular basis. and really drive a social conversation around that. so this is why -- what's going to get them to that cash flow positive situation is growth. which is what we had the concern about last quarter. they have to be able to attract new users and engage new users in new ways in order for them to continue to have that top line continue to grow. while over time they figure out how to not do as much experimentation but be able to reduce as a percent of revenue the cost associated with producing the content. selina: do we have any idea who's on this list of potential successers? would it be an internal promotion, an external hire? >> i don't know at the moment. this is pretty late breaking news. but what i will say is, again, there will be no shortage of a-list talent lining up at the door to get this position. this is probably one of the most high profile c.f.o. positions in corporate america, with a huge company, a huge disrupter company. one that has a tremendous stock

price momentum. so that can make it very attract to have a lot of candidates out there. so i think they will have the absolute pick of both internal and external candidates. selina: i want to get back to the point on competition. they have the traditional studio and carriers. disney's another existential threat. what is the biggest concern for them moving forward? >> i think that their biggest concern is not getting into a war that is fought on many, many, many different fronts. against some incredibly well-funded competitors. the likes of which either the biggest name on that list is amazon. from their standpoint, they're going to probably see companies like microsoft experimenting in this space, getting into this space. we haven't really heard from apple much. so they could be fighting -- their biggest problem here is how do they focus on delivering the kind of content that people crave and also that people are going to get excited about and come back to for more and not necessarily worry about all

these upstarts that are going to be coming into their fray. i think that competition is going to be coming from amazon in the future. selina: netflix also relies on programming from other players. do you think they're going to increasingly be locked out from also being able to stream that content from disney, etc.? >> this company operates at a tremendous scale. and they have an unbelievable ability to be flexible and really look inward to figure out how to do new things. i don't think they're going to get locked out or let them have it. i think content aggregation is also a way for them to drive cash flow in the future. selina: all right. paul, thanks for joining us. and crawford. you're sticking with us. coming up, concern over turmoil in turkey is creeping into global markets. so, how is it impacting tech? we'll greet the market week next. and bloomberg technology is live streaming on twitter. be sure to follow our global breaking news network on

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selina: let's focus on the markets. turkey's a big driver this week as its currency plunges in a political dispute with the u.s. intensifies. the appreciation is hitting a number of industries and turkey's public prosecutor has signaled there could be a clampdown on news and social media. concerns are now spreading to the global markets. the s&p 500 kicked off the week by falling for a fourth straight

day. still, technology remains a bright spot as the number of big tech names made gains. joining us to tie it all ogether is ibc research c.e.o. and our bloomberg markets editor. i want to start out with you. the markets are clearly shaken here. even the s&p is pearing back some of its early -- parring back some of its earlier -- paring back some of its earlier rather ralsy. >> i think the word that everyone is sort of banding around is the idea of taking a pause here. there's a lot of folks who don't really know how deep and how long this crisis is going to go in turkey and just how widespread the effects of it are going to be. so you're seeing a lot the -- a lot of money move to the sidelines. a lot of people take a breather until they can figure it out. keep in mind that a big part of the reason why we had so many gains in this market here in the u.s. and even in europe and in asia over the last few months and over the last few years was

because of this global synchronized growth story that everyone had bought into and now what you're seeing is that narrative doesn't really hold up quite the same as it did before. so a lot of money is moving to the sidelines until it can find a new narrative. selina:en to of this nose dive in turkey, we have the trade war escalation. we have the standoff with china. interest rates rising, emerging markets. how much further is investment sentiment going to fall in emerging markets? >> i think there's a lot of chatter and chop in these emerging markets. i think that term remains point. people are stepping back to see how things settle out. i don't think we have enough data to make a call on what the impact of some of these issues are going to be. because we're really in a new era. we have government leadership in the u.s. with a different kind of negotiating tactic. where our president will put something out there and people will kind of react to it. so you really have to take a

month view, a month and a half, a two-month view of these things to try to figure out what the real impact is. whether that's trade tariffs, whether that's what we're now seeing with this escalation going on in turkey. this is real money and it has a real impact. but i think that the knee jerk reaction is, take a step back, stand on the sidelines and i think that now people are trying to figure out, what is that impact on the emerging markets around turkey? clearly we're seeing that impact in the euro over the last couple of days. with the weakening of the euro. selina: so you agree on investors stepping back, going on the sidelines. but how much is investor fear driven by concerns of contagion? are we seeing signs that this risk is spreading to other countries? >> i'll tell what you one trader told moan friday that i thought was prescient. he said this is less about contagion and more about risk aversion. he pointed out the distinction. when you think about turkey's imports are 1/so of what china's

are, when you think about -- 1/10 of what china's are, when you think about its external debt is smaller than greece's was during its financial crisis, it shows you that the contagion risk, at least for now, is what contained to that particular region. however thrrks one big caveat there and -- however, there is one big caveat there and there is this idea that the global landscape has shifted. we don't have the same monetary policy accommodation that we've been used to and we don't have a lot of the same growth metrics that we were used to. so there is some concern that with the potential for a slowing economy worldwide, combined with the lack of central bank support, that something like turkey or something even bigger than turkey could sort of rock markets. and i think that's why you're seeing hesitancy in the markets over the past few days. selina: there doesn't seem to be many direct risks to the tech sector here but what are some possible impacts there, if this does spread to other emerging market countries? >> you're seeing to a certain extent in some of the europe companies, particularly some of

the telecom names like votophone, which is heavily invested in turkey, once you get beyond those names there are a few microchip companies, invida, micron and alumina it that have some broader e.m. risk. not just turkey specifically but in that broader e.m. space. but after, that you really just get down into some of the banks. some of the european banks and only really two of the u.s. banks, citigroup and bank of america. beyond that, most of the risk is really going to be found really in the european side, rather than on the u.s. side. much more on the financial side than it is on the tech side. selina: crawford, real quick. it's all negative, sad news today, but is there any buying opportunity in all of this? >> just to be clear, we don't do buy, sell, hold recommendations. what you're going see is that looking into this market, the telcos will be protected. if you're the government of

turkey, having telco exposure, having people not be confident in those telcos, that's not a long-term strategy. what you see erdogan talking about is we need to bring back confidence -- confidence. we need to get people confident so that people will realize that in the long term, turkey will survive the crisis that it's going through right now. which means that you'll likely see a scenario where we will move back towards stability over a pevered weeks here. selina: all right. hank you to crawford and romaine. coming up, tesla and yahoo just a few of the names to pass through the s.e.c. san francisco office this year. we take a look at silicon valley's watchdog next. ♪ and later in the program, china's tech giants get ready to report earnings. we look at what's on tap for companies like jd.com. this is bloomberg. ♪

selina: this is "bloomberg technology." the u.s. securities and exchange commission san francisco office is no stranger to high profile tech cases. the fire storm around tesla is just the latest one to involve the regional unit. on monday, c.e.o. elon musk offered a bit of an explanation for his funding secured claim. what might this mean for the s.e.c.'s investigation? ben, lawmakers have said that a key focus was understanding whether it was truthful at the time when he tweeted if funding was secured. now in the latest blog post it looks like funding wasn't

secured and there were just discussions. how st s.e.c. going to look at this? >> thanks. first, i mean, what we know so far is this is kind of a preliminary inquiry. i don't think we can yet say it's a formal investigation. we know exactly where it's going to go. we know that the s.e.c. is really a disclosure-focused agency. and when you have the c.e.o. of a company, its largest shareholder, going on twitter and saying funding's secured, it's going to raise a lot of questions. what we saw today is essentially an explanation six full days later what have happened. the response has kind of been all over the place. some people think it kind of puts a little bit of meat on beau the bones in terms of where -- on the bones in terms of where he was. others are a little more reticent to think this solves any of the potential problems. essentially what mr. musk said today was that he had had these conversations with the saudi sovereign wealth fund and that

led him to believe that it a deal could be close it's -- that a deal could be closed. funding secured to some people, based on an 11% share increase, may have meant something different. selina: what do we know about the people at the s.e.c. in san francisco who are looking into this? >> sure. so we reported last week that the s.e.c.'s enforcement attorneys at the san francisco office had been looking into some of tesla's public statements, even predating last tuesday's tweet. what we know about the san francisco office is just based on its proximity, it's very close to some of the high growth, large, important tech companies in the country and really the world. so i think you mentioned before the break the company formally known as yahoo!, just some of them that come to mind. really those are two of the biggest cases that the s.e.c. has had this year. those were both supervised out of the san francisco office. so the fact that the san

francisco office is involved in -- on one hand, it isn't really a surprise, but it's kinds of interesting to note that they do have a lot of experience kind of taking a look at issues like this. again, we don't know that this is a formal probe or investigation at this point at all. but we did report last week that the s.e.c.'s enforcement attorneys in that office are looking into some of this. selina: we've learned some new information since mucks' original tweet but a lot of questions still -- musk's original tweet but a lot of questions still remain. lay out the critical pieces of concern. you mentioned one of them earlier, whether or not it was truthful and definitive when he said it at the time. >> sure. i think what probably is again kind of worth looking at here is musk know, what did mr. know or think to be the case at the moment he made that tweet? that's from everyone we talked to. kind of getting to be the focus

of whatever regulators do ultimately look into. the other issue is also kind of how this played out. the s.e.c. going back to 2013 has said that it's ok for companies and executives to make statements about material nonpublic information via social media on 2013. but in this case, so we have 2013 -- twitter. but in this case, so we have twitter and the company's blog post this morning, we don't have any filings with the s.e.c. an 8-k is the form that would be used that lays out any of this information. so i think the next thing we're looking for is what is the company actually going to come forward and tell regulators here? selina: this inquiry from the s.e.c. is just preliminary. what needs to happen for an official investigation to be opened? >> these things -- it's worth noting -- generally take a long time. it's possible that the s.e.c. will decide not to pursue anything here and that it won't

ultimately even become a formal probe. even if it does, though, become a formal investigation, these types of probes at the s.e.c. can take months or even years. and it's not the kind of thing where they'll be out there talking about it in the meanwhile. in terms of how these investigations typically proceed, there's an information gathering phase, they analyze it. as you can imagine, eventually there's a lot of back and forth between lawyers on both sides. if it were to get there. but we don't even knows that going to get there. we just know there's an initial kind of preliminary review going on here. scrutiny. and we'll see where that goes. but it can be a very long process for any types of security violation cases to play out. selina: all right. we will be fom following that very long process very closely. thanks for joining us. now, sticking with tesla. the electric car maker's latest controversy drew its first lawsuit on friday.

bloomberg interviewed one of the lawyers for the plaintiffs. the managing partner of keller and lenkner, he stated the conversation by stating his grounds for the lawsuit. >> we're seeing to -- suing on behalf of a class of investers who purchased tesla stock between the minute of elon musk's tweet on august 7 that funding was secured and the close of trading on august 8. and the damages measure there essentially would be the inflated price that those investors who were purchasing securities on those days paid as a result of the market runup that the false statements by musk caused on the exchange in the trading of tesla stock. reporter: you have done a calculation to see how many people did buy the stock during that period of time? because it's a pretty limited period of time. >> sure. it's a limited period of time but volume was incredibly high on both of those days. again, as a result of the market news. so volume was almost four times the running average on the 7th

and almost three times the running average on the 8th. on the 7th alone, $11 billion in market clearing trade in tesla stock. so even to take the percentage of damages from those purchase prices that would be a result of the difference in price as a result of the tweets and the various public statements, and it's a significant number, even for the short class period. reporter: take us through the legal theory. in -- if in fact thraste liability. -- there is liability. >> yes. live by the twit, die by the twitter. public statements on behalf of the company are public statements on behalf of the company. they have to be accurate. in fact, back in 2013 tesla advised investors that elon musk would be tweeting about company news and that investors who wanted up-to-the-minute information about the company could follow his twitter account. so the fact that these statements were made publicly and that they were false and knowingly false when made, or that they were at least made with a reckless disregard for the truth, is the soffers

liability here and -- source of liability here and of course all the reporting we've seen subsequent to those initial statements bears out pretty conclusively that funding was indeed not secured and the company is in the very early stages of trying to secure it. reporter: one thing that struck me, i don't remember a complaint that quotes sokes tensively from the media. you've got the defendant's entire mem ran dufment you even quoted bloomberg at one point about what we were reporting. >> we rely on the best, of course. but that investigative reporting has been really solid over the last several days. and even the commentary this morning on the program i think shows they're scrambling to decide how and whether they can put this funding together. but that of course proves that it was incredibly false to say that the funding had been secured almost a week ago now. selina: turning our attention to crip toe. the -- crypto. the twins say they're not detered about wall street's slow embrace of cryptocurrency. they're going to focus on retail

investors to grow their business after the s.e.c. rejected their fund. theying to bloomberg news, say while wall street remains on the sidelines when it comes to cryptocurrency markets, there's another retail investor interest to drive growth. coming up, it was supposed to be them h hit video game for until the vie cheese -- chinese government said not so fast. plus, silicon valley is flooded with billionaires from tech giants, but who are the lesser known names prospering in the industry? this is bloomberg. ♪

selina: chinese regulators have dealt a blow to tencent's gaming ambitions. the social media giant was forced to remove a hit video game called monster hunter world from its p.c. download service. worldwide the title has sold over eight million copies and officials said they received a large number of complaints over the game's content. this is not tencent's first runin with beijing's video game regulators. the company was forced to change its popular mobile game over its addictiveness and gorey content. but they aren't the only chinese tech firm with a rocky start to the week.

foxconn, one of the main makers of apple's iphone, posted a surprise drop in profit money. foxconn, saw net income fall 2% to $568 million. the news comes amid slowing demand for apple's iphones. foxconn relies on apple for more than half of its sales and is seeking to change that with ventures including a panel planted -- planned in wisconsin. -- plant planned in wisconsin. here to look at is this -- we saw that surprise drop in foxconn's earnings partially because of slowing demand for iphones. how can they successfully wean themselves of being so dependent on the iphone maker? >> foxconn's founder for the last several years has been does to find out how foxconn exist a little bit more independently of apple. i think roughly 54% of the company's profits come because of its relationship with apple.

and i think he knows well enough that this is not a way to have a successful business, to be such -- almost like a subsid year to apple in some of -- subsidiary to am in some of these ways. he spun off a -- apple in some of these ways. he spun off a company. he's trying to make foxconn be more of an a.i. innovator in itself and less just a place that manufacturers put together parts for other companies, makes a lot of money doing, it but i think he wants to climb up the chain. selina: we have a whole slough of tech earnings coming out of asia this week and next. are you thinking that we're going to see any impact of the tariffs on their earnings announcements or is it too early to say? >> i think it's a very important question. i think if we do see a negative impact, it's a really good sign that investors are gearing in for a long-term -- not necessarily slowdown, but a long-term hit because of u.s.-china trade tensions and

conversely if all of the declines or increases we see from expectations out of some of the tech company's earnings are mostly positive, i think that's a sign that investors see this as just a little blip and that it's not going to have a big push on the economic story. selina: and we have j.d. reporting this week and alibaba next. they both have pretty small parts of their businesses that are exporting to the u.s. but what are some of the other risk facts that are these companies could be facing? we've heard many of alibaba's executives come out publicly and say that these tariffs are going to hurt the greater chinese economy and relationships. >> the most important asset that any chinese firm has is its relationship with the communist party. alibaba famously purchased the south china morning post, a newspaper that was sometimes critical of beijing, as a way most likely to help curry favor with beijing. so i think risk factors that

rarely get discussed for chinese companies but are very important are what is j.d.'s top leadership's ramona: with the party -- relationship with the party. we saw that from tencent and the banning of this profitable video game. it's unlikely chinese regulators thought, oh, gosh, a lot of people are complain being this, therefore let's pull this profitable game. much more likely it's a sign or signal to tencent to make sure it stays in line with what the communist party's goals are for the company and for china. selina: how much of tencent's struggles do you attribute to these regulatory concerns or do you think there are actual issues with their core business? >> i think a worry about this is that tencent before it built the hugely popular wii chat was a gaming company. and if they are not able to figure out how to license the very successful game and make it work in china, the game had, i think, a million preorders

before beijing pulled the plug, they're not able to do this and it's just a really worrying sign that maybe they're growing too big, too fast, and they are moving away from their core competency in a way that is not helpful for the business. selina: tencent was seen as this unshakable gaming and social media giant. what is the signal exactly that the chinese government is trying to send to them? >> it's very difficult to know. it's possible that it's much more focused on what they think the games are doing to china's youth. i think more likely is it's a reminder to tencent that the party is the one that makes the final decisions. wii chat has roughly a billion users worldwide. it is far and away the most popular chinese app for messaging, for ordering food, for ordering taxis. it is on the one hand a nice ledger that the communist party has the ability to see all of these transactions and communications between people. but i think beijing also wants

to make it very clear to tencent that this product cannot be used in ways that go against beijing's interests. selina: all right. thank you always for joining. coming up, the unicorn elite are signature on $60 billion in untapped wealth. we'll break down the big winners next. this is bloomberg. ♪

selina: data privacy for google users is yet again being called into question. this time over location services.

an associated press investigation found that several google services on android and iphones store your location data even with the services turned off. according to the a.p.'s report, location services when paused will only prevent activity from being saved to your account's personal timeline. it does not stop google from storing data from other location markers. tech giants like facebook, amazon and microsoft have created billionaires like mark zuckerberg and jeff bezos. but it's not just publicly traded companies producing enormous wealth. the rise of silicon valley unicorns has created an unprecedented paper billionaires club where pre-i.p.o. ral situations have built -- valuations have built up stakes of companies. unlike bezos and zuckerberg, the untapped wealth of these new tycoons is tied to ambiguous company valuations. here to tell us more is tom metcalfe who covered the story in bloomberg business week.

we're talking here about $60 billion of untapped wealth. is this unprecedented? are we at a peek here? >> yeah. i've been tracking this for several years. the trajectory is only going up. in recent times it's been driven by softbank and i think generally the whole startup scene is incredibly bullish right now. and that $60 billion figure is just gigantic. right at the top, elon musk with something like $14.6 billion tied up in spacex. and even guys at the bottom have 10-figure stakes. so it's just an incredible amount of wealth. i guess the key point is it's paper wealth and the challenges, how can they monetize it, do they crystallize it? will it come to pass? selina: these tycoons are matching up their valuations to these private markets, which can be rather foggy. so how closely aligned are the estimations of their net worth to reality? >> definitely wealth here. you can see that from the unicorns have gone public. snap, dropbox.

ultimately gone public, very big valuations. the interesting thing is when you look at someone like say uber and these valuations seem to vary dramatically from the headline figures we sometimes hear about. uber, take the softbank deal. uber raised money, $1 billion, sorry, $17 billion, when it took $1 billion from softbank. then existence shareholders sold something like $48 billion. so you have very big discrepancy. sort of putting an exact number on that is definitely more art than science at the moment. selina: at the top of your list was elon musk who we've been discussing extensively on this show. his personal stake in pace x is valid at $14.6 -- spacex is valued at $16.6 billion. is he likely to tap into that any time soon? >> absolutely not. he's part of the extreme example of this wealth all being on paper. he's kind of gone out there publicly and said, hey, spacex is not going to go public until we start flying regularly to mars. who knows when that will be. in terms of sort of to reinsure

investors, he's not really going to be able to monetize any of that stake at all. so then he obviously looks at tesla. he's saying he won't reduce his stake at all. so he could be a $25 billion guy, but actually pretty cash poor. selina: there is a rule change that they've considered in congress that would allow some of these big-time unicorns to sort of gauge big-time investor interest before taking the plunge at the public markets. what impact do you think that's going to have? will we see more i.p.o.'s as a result of this? >> i think it's really interesting. you should come out today and you suspect it probably will. because it has a bit more certainty about the kind of valuations that they're likely to hit on that first day of trading. funly enough, it might be more beneficial for the smaller companies out there, say not the ubers or the wii works which has bankers galore, but perhaps the smaller unicorns where they can get more certainty that we'll be able to move from private to public and still see these gigantic fortunes and valuations

come to pass. selina: and you mentioned uber earlier. what are some of the most egregious examples of just how spongy private valuations can be? >> so i think there's a real standout. in 2015 that raised funding at about $20 billion. investors sort of blown away by the possibilities offered by this data mining venture. since then they haven't really kind of delivered. so what you're seeing is companies like morgan stanley, which do own stakes in them, some of them have marked down palantir from $20 billion in 2015 to i think it's $6 billion from morgan stanley at their latest mark, which was the end of may. so that's a huge discrepancy. and the impact it would have on the founders include people like peter teal. their paper wealts could be $8 billion if you believe palantir is worth $20 billion. if it's worth $6 billion they're practically paupers with $2 billion or so. selina: that does it for this edition of "bloomberg

technology." tune in tomorrow when we'll be speaking with a slough of nba players at the players bloomberg tech summit clurksing jaylen brown of the boston -- summit, including jaylen brown of the boston sell. that's it for now. this is bloomberg. ♪

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