emily: i am emily chang in san francisco. this is "bloomberg technology." coming of the next hour, more evidence of hacking and attempts in the u.s. midterm elections. facebook and twitter have discovered it accounts linked to russia and iran. they warned of an attempted hack into their database. earnings report from two newly public companies in tech. xiaomi proves it can dominate the smartphone market. we will discuss. and as elon musk faces scrutiny

sec,the can -- from the can he hold on to the ceo reins at tesla? first to our top story, the democratic national committee contacted the fbi tuesday after it detected what they believed is an unsuccessful attempt to hack into its voter database. the fed facebook and twitter removed hundreds of fake accounts aimed at manipulating global politics. the twist, this time another country besides russia has been implicated iran. , facebook said they shut down pages that you originated in a iran and took down an undisclosed number linked to the russian military. facebook ceo mark zuckerberg described facebook's finding in a call with reporters. mr. zuckerberg: we believe these campaigns and accounts -- were from two separate campaigns. first, was from iran including from ties in the state-owned

media. second, a set of activity the u.s. government and others have publicly linked to russian military intelligence services. we have been investigating some of these campaigns for months now, which highlights the tension in removing bad actors quickly and improving defenses overtime. emily: for more, let's go to washington where our bloomberg tech cybersecurity reporter is standing by. jordan, let's talk about the facebook issue. what you make of the fact that iran has potentially been implicated here in broader plans to meddle in u.s. politics? >> the big takeaway here is that this is a good sign that these organizations, facebook and taking active measures and the steps to eliminate these kinds of disinformation accounts. the fact that iran wants to get

involved into the election season is not a great sign. what it shows is that we all continue to be vulnerable to disinformation on the web, especially social media platforms such as facebook. it is a reminder that going into election season, we have to be vigilant about things that look suspicious online. it might deserve further scrutiny. emily: is there any evidence that these campaigns were specifically designed to influence the u.s. midterm elections, or just to sow general misinformation? >> it is hard to tell. it is a little bit of both. this is still election season, so whether these are campaigns designed to influence a particular congressional district one way or another, that remains to be seen. we are not seen from the data released. what does seem apparent is that election season is high tide for

the organizations and attacker groups to sow disinformation campaigns. this is when people are assessing their own political views and taking their information. it makes perfect sense this be the time for those attacks. emily: mark zuckerberg took a similar refrain and said security is an arms race. take a listen. mr. zuckerberg: security is not something you ever fully solve. our adversaries are sophisticated and well-funded. we have to constantly keep improving to stay ahead. but the shift we're made from reactive to proactive detection is a big change. and it is going to make facebook safer for everyone over time. emily: facebook discovered these pages, acting on a tip from a cyber security firm, and we certainly know they bungled their response to the 2016 meddling. is china doing this as well? could north korea be doing this as well? could the u.s. be using facebook

to do similar things in other countries? jordan: sure. it's good that we see a different facebook now with fake news and disinformation than we did before 2016. a lot of executives dismissed this idea of fake news as being something that would be irrelevant. we are seeing a very different facebook. they are being proactive and promoting these efforts. i think that is ultimately a really good thing. it reminds us these efforts are out there. to your point, there is no reason to believe other countries are not using the platform for the same purposes. from facebook's perspective, this is a hard problem to solve , like some of the russian examples in 2016. they pretended to be black lives matter activist pages. their propaganda did not look to o dissimilar from actual promotional materials for black lives matter events. the intentions and motivations were completely different. it is hard to distinguish sometimes between state-sponsored propaganda and legitimate activist content.

it all depends on the aims. emily: where there may be more direct links is this developing story that the dnc reported to the fbi an attempt to hack into its voter database, albeit unsuccessfully. walk us through what we know and where this might have originated. jordan: we know a security company called "lookout" alerted the dnc to a fake phishing page to be an identical replica of a website login page that the dnc uses to manage the registration database. the dnc alerted the fbi and a blocked access to that page. the really significant thing is, again, security organizations and political organizations are taking this threat of phishing and fake news more seriously. does highlight -- one of my issues is this voter registration stuff. if you tamper with those

records, you can cause a lot of chaos. you can cause people to go to the relevant places on polling days, they can be targeted with inaccurate ads, things like that. registration data, while qualify public -- quasi-public, is very valuable to hackers and political operatives. in this case, all it would have taken from my understanding is one democratic official, either a local or state or federal, to log into and fall victim to the fake phishing page, which would give their attackers access to the democrat's national voter database. what they could do with it is open to question, but it shows it does not take a lot for some of the hackers to be successful. emily: we often focus on whether the vote count could be changed or hacked, but the possibility of hacking into a voter database could be incredibly disruptive. jordan robertson in washington. i know you'll continue to bring us updates as the stories develop. sticking with russian interference, michael cohen's

lawyer said he had knowledge of russian hacking and collusion in the 2016 presidential election, and the president could be implicated. lanny davis told cnn that "it is my observation that mr. cohen has knowledge that would be of interest to the special counsel whether donald trump knew ahead of time of the hacking, which is a computer crime. let's go to kevin cirilli and this is another story developing by the minute. what do we know about what michael cohen could now potentially share about the president's knowledge of collusion or hacking before the election? >> i asked this to lanny davis when i interviewed him and he was very evasive in terms of saying what exact evidence his client, michael the president's former fixer and attorney, would be willing to

provide. he did say that they are actually expanding their investigation potentially into the trump organization. take a listen. >> yes, the trump organization was responsible for initiating the idea of paying off stormy daniels and karen mcdougal to keep them quiet. kevin: this goes beyond the issue of the russian hacking, emily: should we expect cohen to be speaking with mueller steam -- mueller's team at this point? kevin: he said he will fully cooperate with whoever he is speaking with. the prosecution from new york, which is really in charge of this case, did not strike any specific deal with michael cohen in terms of a cooperation agreement. that said, the special counsel,

and this is interesting, because bob mueller's investigation could in fact be trying to use, as a legal frontline, the case in new york. the first trial, literally so to speak, is going through new york. i asked lanny davis whether or not or why they did not strike a cooperative deal, and he pushed back against that notion. he said his client, michael cohen, will cooperate with whomever will be interviewing him and they are fully willing to cooperate with the special counsel. emily: the president has been responding to this on twitter. he tweeted "if anyone is looking for a good lawyer, i strongly suggest you don't retain the services of michael cohen." contrast that with what he is saying about paul manafort, who was convicted on several counts. "i feel very badly for paul manafort and his family." unlike michael cohen, he refused to break, make up stories in

order to get a deal. such respect for a brave man." all of this said, kevin, with the new revelations coming from michael cohen, or potentially coming from michael cohen, what could the implications be seeing how a sitting president cannot be indicted? kevin: when the president spoke in charleston, he said show me the collusion. his direct words. the republicans i spoke with in the last 24 hours are adamant there is no evidence to suggest any type of collusion between the trump can't and russia. the second point i would make is that this has a policy of implication between now and weeks from now with the midterm elections. if you have looked at the polls coming out of the special elections, democrats have seen a resurgence in the polls. i have had republicans tell me that they noticed democrats are more motivated right now in the special elections to get to the polls. that obviously gets interesting.

should something like the house of representatives split back to democrat-controlled, house minority leader nancy pelosi raising the issue of whether or not the president has put them in "legal jeopardy" her words. this sets up a political domino affect of what exactly it would mean on a host of different regulatory fronts should democrats take back control of one or both chambers. emily: there is still mystery around other payments flowing through the shell company that through the shell company that michael cohen created including payments tied to a russian oligarch who potentially had ties to president putin. kevin, would you say what we have learned in the last 24 hours could be the biggest break in the special investigation? kevin: i have to be candid, iran -- michael cohen at the trump hotel earlier and i asked him,

how are you doing, and he said he is trying to stay out of jail. now he faces 43 months minimum of jail time for pleading guilty to this. the new york courts did not strike a deal with him. i think we have to take a step back to your point, and a look at this for a second. president trump's longtime personal attorney has pleaded guilty and paul manafort, the president's ex campaign chairman was found guilty by a jury of his peers. it is a remarkable day as some of the president's closest men were found guilty and pleaded guilty to significant charges. emily: all right, sobering analysis from kevin cirilli in washington. thank you for reporting. kevin: any time. stocks are onup, a historical run in funding round for startups are hitting record levels. is there too much money moving around in the market? could it soon dry up? we will discuss. if you like bloomberg news,

listen on the radio on the bloomberg app, on bloomberg.com, and in the u.s., on sirius xm. this is bloomberg. ♪

emily: deal momentum is not slowing down. justin this week, slack closed a million dollar funding pushing the valuation to $7.1 billion. to gauge investor sentiment, i want to bring in the cohead of tech investment banking at rbc capital markets to talk about the broader landscape. it seems like there is so much money flooding into silicon valley in particular from all sources, whether it is softbank or private equity. expect this spout to continue? >> there have been record

fundraising activity. you talk about traditional private equity. last year was a record year. way toar is on its another 300 billion of capital being raised. isis not just equity, and sovereign funds. corporate have their own venture fund. you're talking about the venture capital community, corporate, and family offices. , will thising about continue in terms of fundraising? i think there is a lot of dry powder, being capital raised as well as assets in portfolio private equity firms out there and available to be put to work. people looking for returns and i do not see an end in sight. emily: so you don't see a time when the powder will dry up? michal: it's not a matter of the powder being dry, there is a lot of capital on the sidelines. if you are a disciplined investor, the big question is where do you put the money to work?

do the valuations justify making investment at this time? that is the bigger question. one of the data points coming out that there has been a drop in capital calls. folks have been raising money, yet capital calls, meaning actually asking investors to find the commitment has been dropping and distribution has been exceeding capital calls. emily: what does that mean? michal: a lot of money on the sidelines and folks are looking to put it to work. emily: i want to talk about tesla here because it is super controversial with a sovereign potentially involved. elon musk wants to take his company private. most people that we talked to think that is not going to happen, in fact there is a zero chance. how does that play into the current dynamics we are seeing? is there enough money to even fund a buyout of that size? michal: the answer is, over the last couple of years, we have

seen lbo's of sizes that i would say are record levels. we have seen the volume of vmc, we have seen thompson rotor, so capital is there. elon owning 20% of the company, if you have employees or other investors willing to roll over, that hole needing to be plugged in terms of funding could be put out there. i will tell you capital is a question, not the question. emily: what are the odds you would give such a deal happening? michal: given -- i can't comment on that, given i am in tech ban king. as a former lawyer, i would never say never. i went put the odds as rather low. emily: what other the pros and cons of giving another entity

like the saudi sovereign wealth fund as an example that kind of control? we have seen this fund take a 5% stake in the company and also seen news leak about some of their other investments. because of their large stake in tesla, they are completely vulnerable to any news coming out about the wealth fund and other prospects. michal: there has been news out there they are looking for funding of their actual public investment fund. they put money in uber as well . that was one of the leaks you alluded to. you look at the benefits -- i think you're looking at an economy looking to go from a petro state into a tech focused economy. it is an opportunity to try to leverage some of their core competencies. i'm not thinking about it from regulatory, but i think there are benefits to going outside of your traditional pools of capital, whether it be through

corporate's or saudis access to their region of the world. there could be benefits having them be part of an investment. emily: what about on the public market side? we have seen stocks in general on a historical run. will that continue? michal: that is like the $1 million question. it really depends. in terms of the overall valuations, one may argue we are at a point where valuations are kind of at a -- we are fully valued. it is an incredibly receptive market for new ipo's. ipo's have been one of the best improving asset class. derth of large transactions last year. at some point as valuations run-up, at some point you are being a disciplined investor. will you continue to want to play in the market? as long as the funds -- you

asked the question, will it continue? from where we sit today, corporate earnings have been doing well. the vix is 12 times. it seems like his bull run has some more leg to it. emily: all right. thank you as always. michal: think you for having me. up, thin tech excites investors with its first ipl earning report. we discuss next. this is bloomberg. ♪

emily: tech payment processor made a big splash when it launched its ipo and is keeping up with investor expectations after posting a strong first earnings report. the company which processes payments for uber, spotify, and netflix saw a 67% increase in revenue. walk us through these earnings, and why they were so strong.

>> one of the big factors would be the global e-commerce boom , which is boosting fintech firms worldwide. in this particular case, adyen pointed to changes in shopping behaviors and also mobile payments. they also pointed to important deals they had with valve, dunkin' donuts, and ebay. the bulk of the driving factor was their existing merchants. those will start factoring in in the near future. emily: who are adyen's competitors? natalia: adyen says they consider the big online payment providers that operate internationally to be the biggest competitors, companies like worldpay and chase

merchant. to some extent they also compete with companies like alibaba and amazon which offer their own payment solutions. adyen says it differs itself from the pack because it can, overall, make it easier and cheaper for merchants to purchase online payments. they do that by streamlining the payment chain so everything from check out to the payment settlement is streamlined and a one-stop shop solution for merchants. they also provide data analysis tools and, crucially, they can handle transfers in currencies and more payment types than competitors can. as a result, that has helped businesses spread around the world. emily: they are also reporting they see a lot of opportunities in hospitality. they have a new deal with ebay.

thank you so much for sharing that report. coming up, elon musk has defended his relentless work ethic, but it seems like tesla could move on without its ceo constantly on the factory floor. we will give you evidence, next. this is bloomberg. ♪

emily: this is bloomberg technology. i can emily chang in san francisco. during elon musk's interview, he defended his work ethic and made mention of his quick trip to wedding. his brother's musk said he had no time to savor the moment, saying he arrived two hours later and we pieced together his trip from musk's own tweet. he attended his brother's wedding in spain and took his kids to belfast so they can see the set of game of thrones. for five days, tesla survived without elon musk on the factory floor.

should musk's relentless work ethic be defended? i want to bring in ashlee vance, who wrote the bio on elon musk. you have seen all signs of elon musk. is see comingic off analysts on an erlang -- on ambienings call musk, musk. is this new? ashlee: in some ways, it is new and in some ways it is not. if you go back in his history, in 2008, it was really a crisis sort of like where we are at. the future was uncertain, and elon arguably was under as much pressure as he is no. he would do the same things. he would give his employees a hard time.

he went after the press that was bagging on tesla. i think he was not as famous back then. companies were not as successful, so there was not as much attention on this. this time you have elon on twitter. this was the first time the public has seen all sides of the elon that only his employees and family used to see before you tesla the in this huge success. there is a what more pressure on him. -- a lot more pressure on him. i think it is this public crucible which is strange thing to witness. emily: there's also a level of untruthfulness that he seems to be walking into. not only tweeting something that is untrue, that funding is secure when it is not, dashing and out of his brother's wedding when tweets even show he was not doing that. ashlee: in my experience, he has been a fundamentally truthful guy. although there have been

moments. in other ways, he is getting caught in making things up. there was another interview on said i would never go on vacation while my workers are suffering, but he took his kids to israel, so it is hard to match up. emily: look, i'm glad he is on vacation. he should be able to sleep. ashlee: i agree. people are entitled to vacations. it is just like, why? all of this is shooting himself in the foot. why would you say this to the new york times when it is easy to stitch this together. this time around, it seems to be too much, or there is too much going on in his life and it seems to be overwhelming. at the same time he was

doing this quick dash in and ou t, tesla hit that 5000 model three a week milestone. there is this question, how much does tesla need him to be there 24, plus, hours per day? ashlee: it's hard for me to separate tesla from elon and to imagine them keeping up this -- and to imagine these companies being apart. it is also hard to imagine them keeping up this pace and hitting this milestone. ,ven though he has been around i am sure he was checking his emails and letting people have it, even from far away. on wheree takes a lot he thinks it is his personal

responsibility to make this company succeed. i don't think he needs to be there is much as he thinks he does, but i don't think the company would push itself as much without him. times forlooked a few an opportunity, and has not been able to find one. he has been looking for one for a long time. tony fidel was brought in at what he thought would be ceo of tesla, then was told it would be more coo, so that faltered. that was 6, 8 years ago. this has been going on forever. you get the feeling that elon is setting the bar incredibly high and has some sort of having --

some sort of hangup about turning over control. x, which should be the harder company, i the mores reliable of the two. emily: it shows the value of number two if he could find one. at the end of the "new york times" interview he talked about if you can find another coo they can have the job. he doesn't mean that. does he? ashlee: he just doesn't think they could find anyone better than him . he has gone [laughter] through a lot of pr people in the past. people who have worked in the industry and done highflying he ends upltimately doing pr himself and he wants to take it on. emily: there are a number of investors on the board, people he has personal friendships

with. does this board have control over elon musk? well today call -- will they orl him on his mistakes, does he get to run free? free more gets to run than most ceos. the people that were there, the biggest chunk of the board have been with elon since tesla was going to go bankrupt. i think they put a lot more faith in him than most board members would. i think they give him an extraordinary amount of leeway. at this point, you've got to say get off twitter, stay out of the press for a while. stop doing these self-inflicted wounds. stuff onall this other

your plate. emily: large part of your reporting was done by former tesla employees. what do you think they think of this controversy, along with that the company could be going private? ashlee: the feeling i get from a lot of former tesla employees is the feeling of shock. they feel there is a different tenor to what is going on now. for them, and in the bigger picture overall, he has put himself in a real difficult situation now after saying he would take the company private and setting these wheels in motion.

if it doesn't work out and they can't hit these manufacturing targets, then the company will crumble. emily: if it doesn't work out which most people have told us they think there is 0 chance, what happens to elon musk? is he still the right people to run this company? ashlee: i sure there were a lot of people that would argue no. couldk the company definitely benefit cash -- the problem tesla has faced is this manufacturing problem. and if you look at apple, tim cook. he was this boring supply chain guy making sure factories were humming along and apple doing good deals. tesla needs someone of that x the machinery of the company and elon can do his elon thing. it is impossible for me to imagine tesla without him with the same kind of value. emily: we had an analyst the

other day suggest tim cook to work for elon musk. i cannot imagine .>> this is -- wrote the bookho on elon musk, so great to have your perspective on this evolving story. coming up, it has been a little over a month since xiaomi went public, and what it means for apple ahead. and embarking on a self-improvement quest. how this will change a style of leadership there? we will discuss. this is bloomberg. ♪

emily: apple and google face a result out of the app

store attacks. netflix is one of the companies trying to bypass app stores. if it moves up it can put a dent in apple and google profits. xiaomi's ipo turned out to the anticlimactic. on wednesday its first earnings report seems to be anything but. jumped up 68% to $6.6 billion. orchestrate a turnaround of this magnitude? so mark, how did they do this? >> it comes down to smart phones, right? there is showme saying i think

-- xiaomi is taking a different approach. we can sell a ton of phones if to we sell them close to what they cost to build. that means we are not passing costs to consumers. takell things cost, maybe losses away, but in the long-term set ourselves up for success. emily: what does this mean for apple? xiaomi is beating them in places like india. does stronger xiaomi mean a threat to apple? >> i think the biggest threat in the u.s. is same some. samsung. a bigationally xiomi is player. competition.ious it is a clear threat to apple.

a much bigger threat than people thought it would be a couple years ago. emily: what else does xiaomi have to prove? there are questions about whether they can turn themselves into this service company they have promised to become. question is the runway of the smartphones. the market is so dominated by samsung and google. thatwill have to pivot into a services business. if you look deep at the numbers, in reality it is about a $1 billion u.s. operating loss. we have a story on the terminal that explains that. overall, much better than what has been expected looking at the

original ipo situation. putting this into the context of the phones apple has unveiled, how do you expect the next next year in sales to play out? >> i think xiaomi will continue to dominate developing regions of india and china on the eastern hemisphere. i think apple will have compelling offerings with their own iphone model. that will still be about $500 more than these new interior phones.- midtier xiaomi there are two playing fields, one on the high end and one low end. emily: sticking with chinese text giants, alibaba reported

its financials tuesday and we have to support on what to expect. >> market pressures ahead of alibaba's first quarter result. giantcommerce probably sustained revenue growth in the latest quarter . the consensus calls for an increase of 60%. alibaba is investing into new services, including its off-line new retail initiatives. withtory cost have surged retail stores and supermarkets. that will likely pressure gross margins, which are the lowest since its ipo. the consolidation of the logistics business with this southeast asian unit could hold further pressure. margins may have plunged more than 10% than a year ago.

intense competition at the food delivering business that may force alibaba to step up marketing costs on a couple of its platforms. forill be listening payments down the line on ant financial, which tonight setting a timetable for a public listing. oh, and one more thing. that brewing trade war with the united states? we're going to hopefully hear the impact it is having over e-commerce and what alibaba had to say. lots to digest with quarterly earnings. emily: coming back snapping back, or trying to. how a social media company is trying to regain success. this is bloomberg. ♪

emily: after a disastrous redesign and inability to turn a profit, snap is trying to rebound. much of the blame for snapchat's kevines have fallen on siegel himself good in that time hisel has lost or replaced heads of engineering, legal, product and sales. bloomberg's sarah frier spent some time with the snap ceo. she joins us now. does he seem improved? committed toms fixing this misunderstanding in the public of who he is. he has written critiques of his

-- read critiques of his management style, that he is a secrets keeper and hates criticism, and his response to that is, well, i understand why you would think that, because you don't know me. i don'ti am a shy guy, talk about what i like or what i do, so i am getting better about that. he hired in management coach. these are the basics of running a company with 3000 employees, just starting to really think about that. emily: that is not just the reception from the outside, but from his own employees. he told you, you i had a pretty serious christian upbringing and i remember taught to be small. be a turtle. and i remember thinking why when i go around the company and chat with people? that would be so awkward. like get a bunch of emails

it was awesome you came by. do you get a sense of culture of the company is changing? thing thatbiggest has changed in the culture may not be what evan did himself, but the geographical location snaps employees used to working. they used to be scattered in cubicles in venice beach and were not allowed to visit each other, oxen -- each other, offices you did not have access to. now they are all in the same space in santa monica and seems more corporate. they have monthly all hands meetings that you would get at another company. in those ways, it is getting a little better. i talked to some employees who read my story and said, this is

not going to change, evan is who he is. emily: you made the point with facebook and twitter fighting harassment, this could be snap's moment to shine. why not? sarah: evan thinks snap hasn't communicated how different they are from other players. emily: isn't the product supposed to do that for them? sarah: yes, but the product is hard to use. they don't really advertise it. it is one of those things that its coolness comes from trying to figure it out and where to swipe and learn to communicate with it. that is why it is popular with young people, but parents are befuddled. have added a member to their board to help them tell

the brand story. siegel has been talking with members on the board, and a management coach who has coached others through tough times. he says he is committed to making that point clear to the public, but so so far it hasn't quite worked. emily: with snap users hitting a clientele, similar with -- a pla teau, similar with twitter. where do they go? sarah: they have become ok with twitter being more of a niche product than facebook. snap is trying to prove there is a hunger for a communication that is not permanent. but of course facebook has built snap functionality into its own products, which makes people

less likely to download the snap app if they think they are getting the same thing. the ads on snap, it is one of those problems where they have to put it in the media portion of the app. they have to make sure their users want to see stories from publishers, so it will be a very complicated road, which will siegel's opinion on performance. emily: i believe you with this library chart. it leaves us with this question, have we hit a social media peak in general? sarah: well, to note about these snapchat numbers is that this company is smaller and declining in daily usage. that is not what you want to see when facebook is still growing. emily: great piece in this edition of bloomberg's businessweek.

thank you for stopping by. and that does it for this edition of "bloomberg technology". from san francisco, i'm emily chang. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows.

this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. >> it is a must of :00 in singapore, and julia tolley. >> we are here at noon in hong kong. this is a special edition of -- $16 billion. >>