selina: i'm selina wang. this is the "best of bloomberg technology," where we bring you all of our top interviews from this week in tech. coming up, the roadblocks are piling up as tesla ceo elon musk tries to take the company private. we discuss who is on board and if government officials could step in to stop the deal. plus, what is the status of cisco's transition to a more software and subscription-based model? we'll hear more from ceo chuck robbins.

and highlights from the bloomberg players summit. how does one of the most high-profile in the nba balance his game on the court while tech investing on the side? we sit down with andre iguodala of the golden state warriors. but first, to our top story. elon musk is facing some roadblocks to take tesla private. the company has received a subpoena from the u.s. securities and exchange commission, indicating the regulatory scrutiny of his statements and tweets have reached a more serious stage. meanwhile, musk may be looking to saudi arabia's private wealth fund to secure the capital it needs, but it could give the fund leverage to exert significant influence. we discuss with bloomberg's detroit bureau chief david welch and bloomberg businessweek's max chafkin. max: the issue is that with the trump administration, it is not totally clear how cfius, which is the government body that regulates this sort of thing, foreign investments in u.s. companies, would treat something like this. earlier this year, the trump administration basically stopped

the broadcom-qualcomm deal on national security grounds. the idea being that if qualcomm were taken over, it would somehow hurt the u.s., hurt our interests. and you can imagine a similar argument made with electric vehicles and especially batteries, because tesla obviously has a big chunk of the total electric vehicle production, at least definitely in the u.s., and plans to have a huge amount of battery production. so you can imagine that being an issue and it will just be one of many headaches that tesla and elon musk will have to deal with in the coming weeks, months, maybe even years. emily: meantime, this report on the sec sending a subpoena. david, walk us through the continued hurdles that remain to getting a deal done. david: yeah, so elon has a lot of things he has to get done here. first of all, this issue with the sec seems to just be getting worse, and if this does mean

they are opening an official investigation, as max was saying, you now have this. it will take a long time to wind through this unless the sec quickly concludes he didn't do anything wrong. there are some shareholder lawsuits out there. he was sued when they did the solarcity deal, that is when tesla acquired solarcity in 2016. that didn't hold things up then, but this is now related to whether or not he had funding lined up and whether or not he manipulated the stock. so these lawsuits are sort of running in parallel with what the sec is doing. again, more hurdles for him that could take time. and then look, he's got to get a number of shareholders -- in his own words, about two thirds of them -- to agree to exchange their public shares for a private holding, something less liquid, and something that is controlled by a man who obviously doesn't like scrutiny and may not be, well, certainly won't be as transparent once the company is private. he has to do that just to get to the point to convince the saudis or others to buy out others who

don't want to go along with him. a lot of steps here that are both market-oriented and legal that he has to get done just to get to the point where he can really push the deal ahead. emily: meantime, max, the board is under even more scrutiny and looking at some of the board dynamics, musk has said he will abstain from these discussions, as will his brother, who is on also on the tesla board. you also have some tesla board members on the board of spacex. there are reports that the tesla board is lawyering up. talk to us about the very complicated board dynamics here. max: yeah, so i mean, even in a normal buyout situation, this would be sort of rough, right? because the ceo has kind of a huge amount of control and influence over the company and it is hard to have an arm's length transaction. this situation is worse for two reasons. first, because elon musk is so central to tesla's valuation. if he were to resign or be pushed out, you would imagine that the stock price would probably fall because a lot of people believe that he is

crucial to this company's future. the second problem is the board makeup, as you were saying, where a majority of the board members have very close connections to elon musk. so it is hard to imagine how they are going to evaluate this transaction objectively. and you could imagine further lawsuits from disgruntled shareholders who maybe say they are not getting the best deal possible. on the other hand, like, we are not seeing any deals right now. it is not clear that there is enough funding to make this original deal possible, so we may be getting ahead of ourselves a little bit. emily: meantime, david, you have a new story out about the leverage that the saudi sovereign wealth fund now has, as a result of musk revealing they will be a big part of this. at the same time, we are in the middle of administration that is working to limit the investment of foreign stakeholders in u.s. technology. you know, how does this add an additional really big wrinkle? david: yeah, this gets very interesting. so, the saudis already,

according to elon, have close to 5% in tesla, and the sovereign wealth fund, according to elon, as strongly hinted in his letter, they would take on a bigger stake to help them take the company private and he has been talking to them since 2017 about doing that. one analyst estimates that they could end up with a stake as large as elon's, around 20%. if that happens, sure, he is out of the public markets, he doesn't have a bunch of short-sellers sniping at him on social media and analysts asking questions on earnings calls, but what he does have is now a new shareholder sitting on his shoulder that has a stake potentially as large as his. now, the saudis aren't like bill ackman, they aren't like carl icahn in the sense that they are going to tell him how to run the company, but if you look at the investments they have made, they do often like those companies to make investments or hire people in saudi arabia. that is part of what they do is

bring technology, bring knowledge, bring jobs into the kingdom. you could see pressure on elon to build a giga factory in saudi arabia. that is one thing an analyst speculated about, but they are going to want something in exchange for helping him with this big project. selina: coming up, turkey's president calls for a boycott on american-made electronics in response to u.s. sanctions. what a prolonged crisis in turkey could mean for the iphone and more. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg app, bloomberg.com, and on sirius xm. this is bloomberg. ♪

selina: president erdogan remained defiant in response to u.s. sanctions in turkey, vowing to boycott american electronics like the iphone and stand firm in the face of what he calls a "explicit economic attack." here is what he had to say at a speech in ankara this week. >> [speaking turkish] president erdogan: every single product we buy should be produced by ourselves and we sell them to others, instead of buying them from others. electronic products of usa, we will boycott them. selina: the u.s. has shown no signs of relenting, warning there will be no negotiations about sanctions until a detained american pastor is released. bloomberg markets editor romaine bostick and bloomberg technology's mark gurman joined

us to discuss the boycott. mark: their market share in terms of smartphone os usage, ios, is very small, it's sub-20%, but this news is significant optically. now people are saying, why is the iphone banned in turkey all of a sudden? people who do not understand the trade situation, right? but what if this is the start of a new thing, where different countries are asking apple to build iphones locally or they will make it more difficult for them to sell? we have seen this in india already. now we have the china and u.s. trade war and now we have turkey. so will this continue to be a domino effect and we will see more of this in the future? that is the problem. emily: apple ceo tim cook did meet with president trump over the weekend. here is a clue on what might have been discussed. tim cook did address the trade dispute on the earnings call a couple of weeks ago. take a listen to what he had to say. tim: our view on tariffs is that they show up as a tax on the consumer, and wind up resulting

in lower economic growth, and sometimes can bring about significant risk of unintended consequences. that said, the trade relationships and agreements that the u.s. has between the u.s. and other major economies are very complex and it is clear that several are in need of modernizing. emily: in need of modernizing. so romaine, tim cook is sort of hedging a little bit there. what do you imagine transpired in the conversation with the president? how much sway does a company like apple have as the most valuable company in the world? romaine: well, it is the most valuable company in the world. it is also a major employer and has a major economic impact not just on california, but on a lot of other states as well. and i think tim cook knows that. we should also point out this isn't unusual. any time you have a ceo of one of the world's largest companies

in the world, you think in the past to names like general electric or boeing, other companies that were sort of at the top, they all had to have good relationships with the administration that was in power at the time in the interest of furthering their business and really, just making sure the economic environment was stable enough to sort of facilitate whatever it was they were trying to sell. emily: so, the president of turkey has called for turkish citizens to buy venus smartphones, which are made by vestal electronics. they are pretty excited. how do their products compare to the iphone? mark: oh, i mean, it is totally two different worlds. the iphone is this premium product while these venus smart phones are a little bit lower end, mass consumer. and if you think about the iphone's market in turkey, i saw a stat today on bloomberg indicating that an iphone x, obviously $1000 in the u.s., significantly more in turkey. it it is about about 5x the average income on a monthly for some people in turkey, or people on minimum wage income in turkey. so, the iphone x is not an

affordable phone, per se. certainly not affordable in the u.s., but definitely not affordable to many in turkey. apple does not have as much distribution as they do in other places, only two apple stores across turkey. so, in the scheme of things right now, not in the long term, in the short-term it is not a big deal, but the big problem long-term is if other countries start tacking onto this and are asking apple to build things locally. emily: so, romaine, given the strength of the turkish lira in general, what is the actual purchasing power of people living in the country to even buy american electronics in general? romaine: yeah, well, it is not high. keep in mind, mark just talked about the five times of what the income is there. keep in mind that right now, an iphone x, the lowest model there, would be about 7500 lira. at today's exchange rate, that is somewhere around $1200 or $1300 u.s. pretty pricey, particularly for

an economy that just really isn't at the same level as the u.s. keep in mind, even for other electronics, this really isn't a big market for imported electronics. i mean, when you think about the amount of products that turkey imports from the u.s., electronics is about 1/10 of that, less than 1/10 of that really, and when you get into things like smart phones and other things, it is much less than that. so this is not really an economy that was really in a position to afford a lot of these higher-end models to begin with, and now, with the depreciation of the currency, it is looking less likely they would be able to afford it given all that has happened. so i think that the message from erdogan is sort of moot to a certain extent, at least until this economy gets back on track. most of its citizens probably aren't going to be able to afford these products. emily: the same, mark, for broader american electronics outside of apple? mark: the turkish lira simply makes these products simply unaffordable to people in turkey. apple has their struggles in turkey. this is not the first time they have had to deal with it.

i'm really looking at this from the long-term, the long game right now. how is this going to affect apple in many other countries, one that are more important to them than turkey? emily: perhaps these threats are more bark than bite. i do want to stay on apple for a moment, though. hedge fund manager david einhorn sold shares of apple in the second quarter, before they are crossed that $1 trillion threshold. einhorn, who runs greenlight capital, trimmed his stake in apple by 486,000 shares, reducing his position to about $26 million, this according to regulatory filings. now, romaine, we are expecting more of these 13f filings in the coming days. do you think we will see more of the same from other big tech hedge funds? romaine: well, it'll be interesting. i did look earlier today. you did get a couple other hedge funds like piedmont, which did have a significant reduction in holdings. the green light one was a little interesting, especially considering einhorn is considered a value investor. it is not clear why he got out of this position, but he has really been on the wrong sides of a lot of trades this year,

including on tesla and on gm. as we get more of these filings, we have to keep in mind that the shares did have a pretty good run prior to the end of the second quarter. so it wouldn't be surprising to see some hedge funds sort of cash in their chips. you know, you could have easily looked at this stock at the end of june and thought that was the top. there is really not much higher this is going to get. of course, they would have been proven wrong, but it is not like they lost money on this trade. apple was a fantastic trade for the past couple of years, which is the timeframe a lot of these funds were in it. selina: that was bloomberg's romaine bostick and mark gurman. coming up, tencent has suffered its first profit drop in over a decade as the chinese government cracks down on new game releases. can the tech giant recover? and later, how an nba champion wants to build a winning team for his tech investment. we hear from golden state warriors superstar andre iguodala. this is bloomberg. ♪

selina: amazon has decided to aggressively broaden the programming on twitch to take on its video rival youtube, in a bid to grab a larger slice of the online advertising pie. amazon is pursuing exclusive live streaming deals with dozens of popular media companies and personalities. twitch is offering minimum guarantees of as much as a few million a year, as well as a share of future advertising sales and subscription revenue. it looks like facebook has company when it comes to disappointing tech earnings. this time the results were out of china, where tencent posted its first drop in at least a decade. shares plunged in reaction to the news. the chinese social media giant has now lost more than $160 billion in market value since january. and chinese regulators forced tencent to halt distribution of a popular videogame and has

frozen approvals of game licenses amid a government shakeup. despite that, gaming and its popular wechat app are still going strong. we spoke to ben harper, managing partner of msa capital in beijing. ben: in the gaming space in china, we have seen substantial amounts of government involvement around regulation, consumer protection. it has obviously been a theme the last few weeks. we have had faulty vaccines, peer-to-peer lending issues. so it is not too surprising to see them have struggled with some of the games coming out of the gate. i think in the long term, those can be corrected. for the sake of tencent, though, i think some of the bigger issues lie with the losses in total share of user time. so, other competitors are cropping in, taking up to 10% of what used to be a market dominated by tencent in that space. emily: that is sort of like china's version of youtube. mobile gaming revenue declined 19%. how much of this is a result of bigger issues at play, whether

it is trade tensions or the chinese government crackdown? selina: the largest cause of the substantial drop is really domestic regulatory processes and problems. there is a bureaucratic shakeup happening in the government right now and because of that, there has been sort of a power vacuum. and amid that, none of these bureaucrats want to step out and make a change that could severely hurt the government's broader censorship policy. because of that, these licenses have been halted for several months. for a long time, tencent was seen as this unshakable social media giant, but what people forget is that at its core, it is a gaming company and they make a significant portion of their profits, of their from gaming revenue from gaming and because of this, they can't cash out on some of their biggest blockbuster games, like fortnite. and the fact that one of their biggest blockbuster games was forced to be recalled shortly after it was announced shows that they are not immune to the issues of the chinese government, and that is why we are seeing this reaction. emily: it is ironic given that

the chinese government has helped the chinese tech giants flourish, in part by blocking u.s. technology companies from operating in the country. ben, do you have any insight into why regulators are now cracking down on these games in particular, and is there any end in sight? ben: china has been suffering from an epidemic of gaming addiction. some estimates put it at 23 million individuals in china suffering from addiction here. so consumer protection has come to the forefront of the chinese government's agenda, and i think that they are going to continue to look at different modes, platforms. others were hit by this as well that are responsible for grabbing extreme amounts of users' time and also obviously sucking their bank accounts dry through in-game purchases, so i think this will continue to be a trend for the foreseeable future, particularly in gaming. emily: selena, talk to us a little about the competition. where else are users spending their time?

selina: in terms of the gaming landscape, they have a lot of competitors but the regulatory crackdown is affecting industrywide. so we are going to see other players be impacted by this. in terms of engagement, wechat, tencent is facing some of the similar problems that facebook is. it is becoming so large and dominant that they are starting to reach saturation, so the growth rate is starting to slow. this new news aggregation app has their eyes on strong artificial intelligence that is able to draw in users and keep them in their ecosystem. there are also a slew of other video sharing apps that are also gaining a lot of traction in china. that being said, tencent still is the dominant place where chinese internet users spend their time. in addition to wechat, they also have alipay, their financial arm. they have a mini programs app that will draw users. users will be able to bypass

traditional app stores and directly use services within wechat. so they have a lot of things at work that are trying to keep people within their ecosystem, but that being said, they do have a lot of competitors. emily: ben, what is your short and long-term outlook here? ben: in the short-term, they are going to struggle. i don't see light at the immediate end of the tunnel for some of these games, particularly pubg, looks like it's stuck in the regulatory process until next year. some could get stuck in the regulatory approval process up until even next year. i think their main revenue driver, gaming, is going to continue to be hit. but i do think there is plenty of potential for them to expand what they do. they need to continue to squeeze the juice out of wechat through improving payment mechanisms. mini apps, mini games. looking to add additional services, as they have with identification, biometrics, things like that, and then expanding as well along to new revenue streams. we saw with things like cloud computing and payment surged for them in this quarter, 81%. their monthly active users, 800 million. so they have an ingrained

advantage over someone like alipay because people are already in the app and it makes it easy to use things like payments, but they will have to expand those offerings and cope with some of the new regulations by the chinese government that increases the reserve rate each company has to have in the central bank. emily: so in the meantime, tencent has invested $93 billion in hundreds of other companies, including snap and tesla. are there any upsides from some of these investments that tencent will benefit from? selina: they actually blamed some profit declines on fewer investment gains in order to bankroll some of their other investments and other services. their snapchat investment, we still have yet to see, but so far, they have not done well this year. tesla, there is a lot of question about where that stock is going to go. people also forget that tencent has a u.s. investment arm that is very strategic. they have -- here in the bay area, they look at a lot of very early-stage startups and looking at the data, they have been relatively active.

they have not come with any serious issues in terms of those areas. those are really focused on the early stages of frontier tech investment. and we have yet to see how those will play out. selina: that was ben harbourgh of msa capitals. coming up, they are friends on the basketball court, but rival investors off of it. we hear from golden state warriors' star andre iguodala on his tech investing rivalry with his teammate. and bloomberg technology is livestreaming on twitter. check us out at @technology and be sure to follow our mobile breaking news network at tictoc on twitter. this is bloomberg. ♪

♪ welcome back to the best of bloomberg technology. andre iguodala may have three nba titles, but he also has a host of tech investments. the golden state warriors start is the -- one of the growing number of sports stars making a name for venture capitalists. at thechang spoke bloomberg technology summit. invest in people.

taking the team under the wing and he always does invest. i have been on the sides. it is definitely the way to go. people that have a passion and really want to work hard and they had the credentials. will are the ones that most likely help you see through your investments. -- on and off the court? >> similar to being a general manager. thepeak a lot about putting right personalities together. you put a team together to win a championship.

you are getting the right marketing team in place to read you are going out. the best recruits to come in -- >> talk to us about what your portfolio looks like. >> i have been investing in a lot of different companies for while. time, sports related, gsm was my last investment. scooters have made a headline a wellness space with arrieta huffington. i have dealt with sleep deprivation and doing yoga. that is something that is close

to home that i can preach about to read -- preach about. money? you made any >> i have not had any exit. i have had some companies who are killing it. it is the largest shoe market platform and i passed on it. to donot quite know what with it. it was a learning experience. luckily i was able to get in on the last run. and steph curry are also in and that can mean competition. >> we share information.

there are some deals that i passed on. i'm seeing katie do some great things. it as african-american we getting into space that really haven't had much to do with or had that much access to. all of that is positive. the technology summit is going on right now. that is something you look on as a positive and that is the legacy you want to leave behind. launched,und was just $15 million to black celebrities and black athlete. the goal is to make money.

what is your take on this fund? are you part of it? >> i am not part of it, but i have a relationship with a lot of those guys. chris klein is a close friend of mine. me, i know a lot of people, it is a great thing. they teach young men how to code . code --black roles black roles code -- black girls code. see our community being embrace, we take that and

get back to our kids. that is what you see change and you start to see our culture be equal. access that we did not have previously. like that not seem much. it is not that big. it could be so much bigger. awareness, that conversation is actually good. what are we going to do to make it bigger or, do we do it on our own. you see that with lebron james and the amazing thing he did with the promise school. kevin durant is doing some amazing things.

michael jordan supposedly did backing ofough of a lebron, but his scholarship is given to kids every single year. conversation and hopefully we will continue to grow it every year. was our interview with andre iguodala. a group of tender founders have sued match group, claiming the owners of the group are trying to cheat. created anlaims they artificially low evaluation of tender. ceo onup, dropbox running a public company and the

recent departure of the ceo -- coo. weevil here from chuck robbins. this is bloomberg.

>> since going public in march, dropbox has had some ups and downs. the stock price spiked and then again in the summer, only to dramatically fall. despite another order of strong earnings. we caught up with the ceo and talked about what has been going on with him since going public. >> it is kind of back to business as usual. we have been running the company like a public company, so if

anything, it has been back to recruiting and building. >> you just reported stronger earnings. he also announced the coo is leaving and investors seem spooked to should they be concerned? >> i don't think they should be concerned. to work wek back were, we were a fraction of the size. now we are a global company. it is because that business is in such great shape that he can pass the torch. he is a team will miss him. i'm sure the team we have met he -- built moreat is your plan to get

corporations paying for higher-priced plans? >> we have been making a lot of progress. over the last quarter, we announced a bunch of improvements. we start their and then when we think about a higher tiered plan , some of the newer features are only available in the highest version,n the business so we focus on making the products as good as possible and then we do a lot on the back into drive conversion, ways to .atch people if you are running the space on a computer, we can show you smart sink and that has driven a

lot of the expansion and growth at last couple of years. >> at the same time, you have these cloud giants like amazon and google wanting a bigger piece of the pie. what is dropbox going to continue to do to differentiate? >> for us, competition is not zero-sum. what our customers turn to us to do is to tie it all together. they keep do within their apps, but when you look at the customers, they have everything. is helping them pull them together and so the fact we have partnered with everyone and we help organize content across ecosystems place to our strength. landscape is

changing dramatically. we have been talking the last eight years or so and it has always been about the competition. what keeps you up at night? there is a war for talent out there. making sure we had the best where and making sure placing the right portfolio. it is striking the balance between tabcorp is and also developing new products and planting seeds for future products. acquisitions? do you plan to do any? >> buying companies has been great>>. whether that is bringing great products wereew seated by an acquisition called ipad.

it makes it easier to do larger acquisitions and we will certainly continue to look at it. >> any area you are interested in? >> anything that helps you work better together. we look at acquisitions in -- s of great talent >> when you look at where the growth is going to come from, is it going to come from adding new customers or somewhere else? >> it is really both. we look at our business and we have hundreds of millions of people who are registered for dropbox. headroomhave a lot of among the people who use dropbox to grow. those numbers have gone up the

last few years. >> that was dropbox ceo drew houston. what like at the careers of the future. in rwanda and east africa, one company is underway. akihitog technology tells a remarkable story. this is rwanda. nestled between the plantations patch ofge homes is a land of bigger than a football field. here, this guy launches drones.

ima drone operator. he works for a startup called the line. we launched the drones. >> zipline is headlined and cap -- located in california. >> so beautiful. >> does it ever get old? >>. >> he and his workers are tackling a deadly problem here.

it has been incredible difficult forhospitals to procure emergencies. >> they have to come back and get the blood. it is complicated. >> when a hospital asks for blood, the zipline teen gets moving. you launch it and then you wait for the next order. the dronesy gps, flies to its destination and drops off of payload.

the drama has back to base. --the drone has back to base heads back to base. school,udying for grad but all the success is built from unimaginable tragedy. when he was three, the rwandan government stepped up its assault on minorities. in just 100 days, 800,000 people were slaughtered by their neighbors and their friends. my father was the first to

step out. basically, everyone with a machete -- siblings did not survive. >> the first couple years of school was really hard. after that, i found my life again. >> i think i got another chance to live.

>> that was bloomberg spock ego -- that was bloomberg's sake ego -- we care from chuck robbins about the company's transformation grade bloomberg.

>> in its latest earnings results, cisco to a bit of a victory lap. thechuck robbins discuss results with birch jon ferro. a good quarter. i think the strategy is working. growth very balanced.

the transition we talked about continues to take hold with our business continuing to grow. we have a lot of things happening, so if you look at our performance, we have clearly driven a significant amount of innovation. our teams have done an amazing job. now, we obviously have some dynamics with the rising dollar. we have some uncertainty in countries. those are things we don't necessarily control, but right now, things feel pretty good. >> we're going to talk about the transition in a moment. you bring up the u.s. dollar.

it is -- is it something you have hedged? we have gone through this at various times. have a set that our teams deploy and then we typically come out the other side. it is something we have dealt with. our teams know how to handle it. theo you see it related to balance sheet in general? which one is a question mark >> i think it is both. there is clearly a lot of

business confidence. at the same time, i think the launch we did in our networking portfolio, the security portfolio, those things really resonate with our customers. the last ramping product in the history of the company. obviously being bolstered by economic conditions. we will take both. some insight. one of the areas -- one of the areas at the moment question mark -- at the moment? going under a shift.

now they have applications in the private data centers. , so are consuming services there are networks on how the traffic is flowing is fundamentally changed. rethink theiro entire infrastructure. we are at the heart of how they think about that. was chuck robbins speaking to jon ferro. >> we will bring you all the latest. tune in at 5:00 p.m. new york, 2:00 p.m. san francisco. this is bloomberg.

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countdown. and china to tariffs on billions of dollars of goods on both side. the bellwether says the u.s. will be the big loser in a trade war. -- >> all of that points to