emily: i am emily chang in san francisco. this is "bloomberg technology." in the next hour, amazon joins the trillion dollar valuation club. how bt giant will fare alongside apple. plus, tech testified. jack dorsey and sheryl sandberg face the bright lights of capitol hill. can they keep lawmakers at bay? should musk be worrying about an sec ban? some legal analysts say not so much. we discussed the likelihood of the tesla ceo being suspended.

first, to the top story. amazon is starting with a bang. septembershares of the tech giant pushing the company beyond a market value of one between dollars. a milestone apple reached last month. a big accomplishment, not just for the company but for the ceo jeff bezos, who is currently the world wealthiest person. most notably the speed at which they hit the milestone. shares have more than tripled in the last three years. tech competitors are closing in on the markets as well. joining us to discuss is the tigers financial partners chief investment partner and bloomberg tech global editor brad stone. brad, you started covering amazon in 1999 and it was two or three steps beyond being just an online bookstore. how did we get here? >> when i first visited jeff bezos, amazon stock price had fallen into the single digits and the employees were panicking

back then. we are not our stock price they said. it is something employees might remember today because as the chart you show demonstrates, this company has been propelled by strong fundamentals and increasing net income, but really by a wave of optimism. everything amazon is involved in will turn out well. this market capitalization has tripled in the past few years and everything has to go justifyy for amazon to the valuation and to keep growing. amazon is not a stock price, it is doing well in all of its core businesses. it has transformed its operation into a marketplace and service that helps other customers and retailers sell online. clearly, there is a lot of optimism. emily: let's talk about the reality. how likely is it that everything will go perfectly as brad said, -- said? ivan: i don't think they expected to go perfectly.

-- expect it to go perfectly. they invest in growth and they are expanding outside of their core business adding different services into their online retail supply chain management system, and also their web host services. they're adding big data analytics, ai capabilities, so they keep expanding what they do. i think the next big area amazon moves into will be focusing on health care. emily: i am looking at the chart from 1999. looking at the speed they have risen over the last three years, is this rational? brad: the market decides that. clearly, yes. these are all rational actors for buying and holding amazon stock. this is a company that has executed well over the past 10 years. the acceleration and loyalty to amazon via amazon prime, increasing success of amazon where they turn their warehouses over to third parties. all of the things it does well,

and online retail is 5% of total retail in the u.s. it is much smaller than other markets. some of the optimism is that investors rationally are looking and seeing amazon is a well-run company in markets that have so much room for growth. emily: petrochina recently passed the mark. oil prices crashed in 2007. ivan, do you see big potential challenge or headwinds out there challenge or headwinds out there that could lead to downside risk year? ivan: with the recent run-up and long-term run-up, there could be profit tanking. there is a lot of value in other leading tech stocks, specifically google. i think google is a tremendous value and has not increased and does not get the valuation amazon does, yet it has a lot of key business drivers similar to amazon. also, microsoft is getting close

to the trillion dollar mark is well. it is little ahead of google. microsoft is evolving into a leading cloud play as well. i think you could have some profit taking in amazon and people reallocating money into other stocks having potential to go across the trillion dollar or increase in value as well. emily: what about the threat of regulation? is that the biggest threat? brad: we talk about the trillion dollar mark when it is really a subjective number. amazon is not different than it was yesterday that it will be tomorrow. it is important in one context, which is that it puts an incredibly visible target on the backs of these companies. there is no better illustration that they dominate our landscape. amazon seeing it from the right with trump and his tweets about taxes and the post office, and of course jeff's ownership of the washington post.

assistance in amazon fulfillment centers. there is a big conversation on whether amazon's commitment to low prices is having an impact on macroeconomic indicators like inflation. i think amazon is the biggest target around. i think regulation is one of the biggest challenges and obstacles in the years ahead. emily: one venture capitalist thinks amazon will be the first company to hit the $3 trillion mark. i know it is hard to look that far ahead that what do you think of that production? ivan: i think the stock has the potential for a number of reasons. it is the dominant stock in the s&p 500 along with apple. as money goes into the market, passive investors, they are both 500. to 4% each to the s&p 4% going into the s&p index fund goes in to amazon and apple. with the rise in the market it will attract more money. i think it continues to trade up on that basis.

the second thing, they are a fast-growing company and continue to evolve into new businesses, and develop new markets and go after markets fast-growing that they can bring their operating efficiencies to. i think they will continue to do that which will drive more growth. i think there is further upside in the stock. 3 trillion is probably a ways away, but at some point, when the market rises significantly, amazon will rise significantly as well. emily: brad? brad: it seems excessive, with one trillion in 2018 would have surprised me as well. amazon makes a lot of bets, plants a lot of seeds. alexa is one of them that is a new computing platform that is leading the voice market. if they bring that into cars and enterprise and workplace, i see a lot of different opportunities for amazon. too bad you cannot buy

shares on that day in 1999. investment officer ivan, great to have your views here on the show. coming up, sheryl sandberg and jack dorsey get ready for their congressional hearings. what kind of reception can they expect from lawmakers? if you like bloomberg news, check us out on the radio. listen on the radio app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪

emily: representatives from the two biggest u.s. social media platforms are set to testify before congress on wednesday. sheryl sandberg and jack dorsey are expected to face questions on their progress in fighting russian election meddling and more.

the two will appear together in front of the intelligence committee in the morning before dorsey has the solo hearing. with the house energy and commerce committee. they will be feeling the heat. joining us now from washington, senior behavioral scientists. in august he testified before the committee on russian influence. any york we have columnist. a day ahead of this testimony, what do these two companies have at stake? >> the stakes for them are that they do not want to misstep or say anything they shouldn't. i think both jack dorsey and sheryl sandberg are pretty practiced spokespeople for their companies at this point. i do not anticipate they will set a foot wrong. the challenge is you never know what members of congress will ask.

the hearings are about election interference and free speech. and the censorship. members of congress can ask whatever they want. that is the real risk that they will be asked something they cannot answer and say the wrong thing. emily: knowing what you know about russia's influence, what kinds of questions you think they should have to answer to given what you know about the scope of this interference and the likelihood it is happening again? >> last year, when the lawyers for the tech companies testified, the key question was, how did russia use the platforms in the 2016 election. this year the questions will be different. now, the fundamental issue is one of these platforms done to protect the united states against future russian information attacks. emily: what do you think about what they have done?

they are adding artificial intelligence, they are adding thousands of jobs, gets a couple -- just a couple of weeks ago we heard the company's both shut down hundreds of accounts tied to not just russia, but iran. dr. helmus: it is a steep issue they have to climb. what's particularly interesting about recently is that they detected a number of pages that appeared to be russian in origin and some have been up for 15 months before they got detected. a fundamental issue is can these companies detect russian action or other foreign government actions on their sites, and once they do detect it, what will they do to shut it down. that is a fundamental question. the recent intrusions show detecting is not an easy task and it is an uphill battle. emily: we spoke with ryan costello last week and he is on the house energy commerce committee and will be questioning jack dorsey.

take a listen to the questions he would like mr. dorsey to answer. >> can you demonstrate or open your alder rhythm -- algorithm up us so we are able to see that there is not content bias there, and i think the other thing that is less about whether there is a philosophical bias there is something even more fundamental which is, does your algorithm , in essence, reward extremist rhetoric be it on the left or right? we are at a moment in time with the very fabric of our political culture continues to deteriorate. emily: mark zuckerberg has been through this already. we can expect sheryl sandberg will stick closely to what zuckerberg has said. what makes dorsey's appearance different? obviously the platform is completely different in size and scope. twitter talks about they do not

have the resources facebook has to stop. shira: resources are certainly an issue. facebook does not have a resources problem. it's interesting that the representative talked about opening up algorithms to outside review which is an issue that has come up on the left side and right. i don't think something that any of the internet companies would permit to happen, but it is an interesting idea that what we see on facebook and what we see on google is not the result of s reactingal computer to the ideas of billions of people. they are the result of algorithms created by human beings and human beings with all of their inherent biases. those are interesting questions about what actually goes into the search results we see on

google, or how our facebook newsfeed is ordered, and does it reward the most egregious and strongly held opinions the matter how wrong they are or, what if anything should be done to stop it. i think those are big questions about the internet, what kind of internet we want to have in the future. emily: to that point, human beings are flawed, bias, and they build technology and the artificial intelligence fighting this kind of meddling. given what you know about how the russians achieve what they achieved in 2016, is it really possible for facebook and twitter, run by human beings, to stay ahead of the meddling when we know the attackers are always achieved in 2016, is it really one step more grants to then we -- one step more advanced than we are, if not, more? dr. helmus: that is the fundamental problem. it's an arms race out there because as facebook and twitter and others, and researchers look

to detect ways of identifying content of the russians and certainly other governments such as chinese -- china and other actors, will be detecting new ways to insert that content in there. some of the ways they have been used to detect the content right now, what russia has paid for, some is social media campaigns in rubles and they will not make that mistake again. it will be an arms race. the trick is to continue the research. it will make it a very easy arms race and they are going to conduct relevant research on this. and if the platforms do not continue to try to fight the good fight. emily: walk us through how google fits into this given they are not sending their ceo and congress was not very happy about that, but google will still be present. shira: it's going to be incredibly awkward. there is basically an empty chair where the google representative is supposed to go, that will make them an easy

punching bag at this hearing in the senate tomorrow that we just -- they are obviously part of the internet conversation. both in terms of certain -- in terms of search and on youtube. and to not have a representative there, it feels like a misstep by google. i understand they did not want to send larry page who would be awkward in that setting to say the least. emily: we will be covering these hearings throughout the week. facebook's revenue slowed down and heightened scrutiny to a -- amounts to a toxic brew. that is according to michael that is according to michael nathanson who downgraded his rating to neutral from buy. he said regulators will weigh on markets.

he was to reassure regulators will weigh on margins. still ahead, china is considering its position in the race for 5g dominance. will the nation get the jump on the united states? we will discuss that next. bloomberg tech's livestreaming on twitter and be sure to follow our global breaking news twitter -- network tictoc. this is bloomberg. ♪

emily: the global fight to dominate 5g is on. china is said to be exploring a megamerger with two of the three nation wireless carriers. a merger between the second and third biggest. china, unicom, and telecom merger would create the second-largest wireless operator after china mobile and give greater scales of speedup of 5g and gain advantage over the united states. let's bring in the asia society senior fellow isaac. walk us through the benefits and to whom a merger of the size.

>> if china unicom and china telecom, or whatever they decide to call it, if they merge, you will see a much larger customer base allowing for a lot more data analytics, trials, ability to hit a really large market. it would immediately put them up in second right below china mobile. also, they would get a lot more government support which is always key in china. this is an example beijing is trying to make this company into a global player and would put a lot more resources behind it. emily: what are the drawbacks especially for post-china mobile? the drawbacks for china mobile is that it has another big domestic competitor and assign -- a sign that perhaps beijing and the party is looking a little less favorably to what the company has and is doing. another drawback for the two

second and third largest chinese telecoms in china is that putting companies together like this will not lead necessarily to more innovation and efficiency. this is not a market driven move, this is a party driven mode. we don't even know if the fundamentals make sense to put these companies together or if this is something beijing is doing for inscrutable reasons. emily: we see a similar situation in the u.s. with t-mobile working to a merger with sprint. on the day that was announced, the ceo of t-mobile said if we do not take decisive positive action, we risk feeding global leadership in bowl 5g and the entire nextwave to a country other than america. would a chinese and telecom merger mean that the u.s. loses when it comes to 5g? isaac: i like how he says a company other than america, like he is afraid of saying china. i think this will be bad news for major american telecom companies. i think it is too early to say

that this means they are losing their footing when it comes to the 5g. as far as american competitors are facing it, it is a step in the wrong direction. emily: in the meantime, to another story out of china, they are obsessed with the arrest of the founder of jd.com facing charges in the united states of sexual misconduct. it is very unclear what the charges involve. sexual misconduct, where he was arrested in the state of minnesota, can mean a lot of different things. he is a huge figure in china, very popular figure, and the billionaires and tech giants often become tabloid fodder. what you make of this particular situation, what it means for him and the company? isaac: we know very little about the accusations and whether or not any indications of if he is

guilty of what he is accused of doing. it's hard to see this as anything but bad. even if it turns out the charges are groundless, it is bad press, it is embarrassing for china. not necessarily in the way we see it, but it's very easy to imagine people in beijing will say this makes china lose face by having these embarrassing allegations and there's almost no sense this has anything at all to do with u.s./china trade or any political dynamics. it just feels like this is something he was accused of doing. emily: there are also reports that something happened that one -- at one of his residence in australia for which he was not charged, but another one of his guests was. and i guest was convicted. what does this mean for rivals? could this give alibaba a leg up? isaac: it is certainly good for rivals.

jack ma certainly has a reputation as not a boy scout, but as someone who handles issues in a bit more of a moralistic fashion whereas the other is a little brasher, younger, charismatic. it gives him ammunition to go after his character. it is also time for them to possibly move into some of jd.com's business. i will say that as soon as he got back to beijing, liu attended an event or signing trying to say this is business as usual, but if the minnesota police come back with serious allegations, it will certainly be a big distraction. emily: i should mention there are no charges, just accusations at this point. the story we will continue to follow and bring you more details as we have them. senior fellow isaac stone fish

for us in new york. coming up, mark zuckerberg first big-name tech to testify and now sheryl sandberg and jack dorsey are in the hot seat. we will discuss. this is bloomberg. ♪

emily: this is "bloomberg technology." back to our top story, amazon finally joined the $1 trillion valuation club, a milestone that the tech giant apple hit just last month. while it's great news for the company, no one is benefiting more than founder jeff bezos. he's added $67 billion to his fortune just this year. this gives him a $167 billion net worth on the bloomberg billionaires index as of early tuesday. i'm joined by tom metcalf who has been following this wealth accumulation. talk about how quickly bezos' wealth has ballooned as the stock has run up in just the last three years.

tom: it's been absolutely incredible. watching it for three years, he's got a $160 billion fortune, which was big enough at the start of the year at $100 billion. you go back a few years and that was in the low tens. amazon's share price is up 74% alone this year. for a company that size, it is unprecedented. emily: and his family has also made out. both his parents invested in the company, his siblings invested in the company. to what end? tom: they been investing in amazon as early as they were able to. $.20 a share, you're looking at over $2000 a share. it's one of the all-time great investments. as a family, they need no more assistance, i think. they are just trying to work out how they can give away their money fast enough to keep pace with this great growth. emily: how does the speed that

they accumulated this wealth compared to other wealthy founders like mark zuckerberg, like the founders of google, like bill gates? tom: in terms of number there is no comparison. bill gates did hit $100,000,000, that would be worth about $150 billion today. bezos has blown by that. in terms of sheer billions being accumulated, there's nothing in history to compare. emily: tom, what are the risks here? he's got a lot of money, he's investing in a lot of things, he has his philanthropic efforts, he has a space company, blue origin. what are the risks once your fortune gets so large? tom: he's just not diversified at all. more than 95% of his wealth is in one stock. in the case of amazon it has worked out perfectly.

when i speak to wealth advisors they would have their head in their hands for in ordinary wealthy person. they would take them to sell more stock. much for blue do origins, which is one of the riskiest things you can find out there, that is the space exploration company. from a risk reward perspective, it's very, very risky. emily: tom metcalf, thank you so much and for all the work you do on the bloomberg billionaires index. we are continuing our look at this week's testimony on capitol hill. facebook, google and twitter sent their lawyers to explain what they're doing in the fight against russian election meddling. it was mark zuckerberg's turn in april as he defended facebook on the grounds that it was careless with users data. now jack dorsey and sheryl sandberg will appear before congress for the first time. the focus is back to where it all started in october, russian election interference. i want to bring in the man who

literally wrote the book on facebook, david kirkpatrick. you know better than anybody else how mark zuckerberg and sheryl sandberg had very different communication styles. sheryl sandberg is much more used to being under the bright lights. she is also fairly scripted. how do you expect her to perform tomorrow in the hot seat? david: i'm not hoping for too much candor. expecting it. i actually would suspect that in comparison, we will think that zuckerberg did an extremely good job. she has done such a poor job of i would hope for it, but i'm not expecting it.

i actually would suspect that in comparison, we will think that zuckerberg did an extremely good job. she has done such a poor job of being candid in responding to tough questions in the last 6-9 months that i really wonder how she is going to handle what are likely to be some very unfriendly and tough and probing questions from people like senator mark warner, who really knows a lot about the subject. emily: we do have sheryl sandberg's written testimony in front of us. at the beginning she said we were too slow to act, it violated the values of our company and the country we love. she goes on to talk about what facebook is doing about this. yet here we are weeks now away from the midterm elections. we already see signs that this is happening again. what do you think sheryl sandberg is really going to have to answer to here? david: if i was a senator, rather than have her repeat the same thing she said before, that is old news. i think it is more or less meaningless. why did it happen? how did they allow this to happen? who was asleep at the wheel that allowed a system to emerge that was so intrinsically manipulable? i think that is a question that needs to be asked. you need to ask how global the problem might be, what is the

prospect that facebook might be able to ameliorate interference in literally every country on the planet, which i frankly think is small. i don't think they can ameliorate it successfully. the new york time had two articles in the last one about 24 hours, libya which is really hair-raising. in libya the warlords are targeting people for death and selling weapons, and all the stuff on facebook that is completely a violation of their rules, and yet it is happening. the article says, new york times pointed out to facebook and he took down this page in that page. why don't they find this stuff themselves? those are the question senators ought to be asking. the same sort of issues apply in u.s. electoral interference. emily: the same thing could be said for what's happening in myanmar, in the philippines with the help of facebook. i do want to talk a little bit about google because google will not be testifying.

they decided not to send the ceo or larry page or sergey brin. we have written testimony from their top lawyer saying google remains deeply concerned about attempts to undermine democratic elections. we have now fulfilled all of our commitments to provide increased transparency in election advertising. so taking the same tack, we see this happening, we find it unacceptable, and here's what were doing about it, yet google won't even be there to defend it. how big a problem is that going to be for google in the months ahead? especially given that the president is very much focused on google right now? we have the phil -- they have already solved the problem? that sounds completely implausible. i think google has done a lot of excellent things to control

content, to restrict bad content, but to suggest that they've done what they need to do, to me is not true and is disingenuous and the wrong thing to say. this is an arms race like all bad things in digital. these companies are going to be finding new ways to manipulate their services, coming from unexpected directions for the foreseeable future. therefore what we need is a whole new set of processes from the companies and probably from external actors, whether government or other advisors, to help these companies figure out what to do. i do not believe, or have confidence that these companies have the tools to really address the scope of the problem they have encountered. the bottom line is, they thought they were building social and informational and advertising platforms, but they also built weapons, which are being weaponize that a very rapid pace in all kinds of ways.

it's a big, big problem. emily: david, hang on because wednesday's tech hearing isn't the only big showdown on capitol hill this week. in fact, the confirmation hearings for brett kavanaugh nomination to the supreme court began tuesday. democratic senators tried to have the hearing adjourned within seconds of it beginning. the court will have its share of tech related cases to hear. bloomberg intelligence tech litigation analyst matt larson is here with me now. david is still with me. talk to us about, as we are watching the supreme court nomination hearings, what comes to mind when you think about how brett kavanaugh might rule on some of the upcoming tech cases. >> certainly. some of the hearings going on with facebook, with google submitting statements, a lot of these hearings preview legislation and legal hearings. it is important to take that context in mind when thinking about how kavanaugh or any supreme court nominee would fit into the existing court.

issues of privacy, cybersecurity, intellectual property, tax, antitrust, there are a bunch of different things that fit together when thinking about the tech applications for the supreme court. at the forefront of everyone's mind at this point are the privacy concerns, how it translates over to the digital world. kavanaugh was involved in the net neutrality rulings. from a tech perspective, that is at the forefront of everyone's mind when getting into some of the legal decisions and how he is thinking about cases. emily: free speech is very much an issue as well, what stays up, -- especially when it comes to tech, what stays up, what comes down on the social media platforms. how has he ruled on free speech, especially when it comes to digital platforms? >> the overarching way to think about how he has ruled in the past is pro-free-speech from a corporate perspective. when you look at the net neutrality rulings and view those as some kind of

restrictions on how the internet service providers are able to restrict flows of data or certain information, kavanaugh was highly critical of that. in similar cases he has landed on the pro business side of free-speech issues, which goes with kind of a general trend of pointing to allow more free speech, but also a little bit of concern when you think about how to best regulate some of the companies moving forward if there are not sufficient protocols in place. there are also national security concerns in general security concerns that are implicated. it strikes a balance between free speech, and he's also a staunch supporter of national security interests. i guess it is a balance between those two issues. emily: so is it a good thing or a bad thing for these tech companies that you have a judge who is pro-business, pro-free-speech, but also as the president is ratcheting up the

amount of attention he is paying to these tech companies that have made a lot of money under the prior administration. david: certainly we are increasingly living in a technology guys -- technologized society. the supreme court will be facing tech related issues more and more as time goes on. i would say on balance what he believes would probably be good for the companies. america is all about free speech. he believes in the constitution, clearly. these companies would dearly love to have some authority tell them from above what is and is not allowed when it comes to what is said in the public sphere that is digital. the thing about kavanaugh the interests me is that he is such a legal scholar, and he seems to be, for all of his extreme conservatism, deeply well respected for his scholarship. i have seen it said that he's probably going to be the most scholarly supreme court justice, if he gets on their, that we

have had in a long time. it may be that his sheer thoughtfulness will be beneficial. there are a lot of issues coming up that are not right or left issues, that will just require some solid, hard thinking. emily: both liberals and conservatives have these -- have criticized these platforms for being biased. as of late you heard president trump say google has a bias. how might his appointment and kavanaugh way on an issue like that? >> it's interesting in the context of all the senate judiciary committee weighing in and doing some grandstanding today, both sides will paint him as either too extreme for the supreme court, when you look through his record, he has reached across the nomination aisle. judges do not have an official

affiliation, but he has been able to work together with judges who have shown both conservative and liberal biases. he has been on the same side as merrick garland in a number of criminal cases. he seems to take things from a textual perspective, looking at the letter of the law and trying to apply that strictly. ideally, that is somewhat agnostic as to conservative or liberal view. i would tend to think it cites more weight you classify of the conservative side. what we have seen from a lot of his jurisprudence, he tends to look at the rules, he likes it if there is a bright line rule as to what contents or behaviors crossed the line, what is permissible like in an employment law context. we have seen some of that type of thinking. i guess it is yet to be seen how it will play out. some judges when they get in the peer group of the supreme court may start to view things a little bit differently.

probably conservative leaning but also by the letter of the law or the agency regulations that are set forth, that tends to be how kavanaugh has ruled in the past. emily: david, great to have you here. coming up, they are looking to go public. we'll talk how morgan stanley might be leading the data mining company to its ipo, next. plus, bloomberg swirling around in fcc investigation into elon musk. we'll look at how extreme a penalty the tesla ceo could face. this is bloomberg. ♪

emily: 14 years after entering the data mining scene, palantir technologies is nearing an ipo. morgan stanley may be taking the lead. the bank is emerging as the advisor of choice, having earned about $60 million in fees, arranging private funding and that could be doubled in 2019 or early 2020. what do we know? >> colleagues and i dug into this and found that in helping delay palantir going public, and arranging private financing, morgan stanley not only deepens the relationship with palantir but came up with $60 million in extra fees, about the same amount that would be able to generate by taking it public. if the valuation stayed as it was back in 2015. which is emily: there is a 20 billion. question about the valuation,

right? >> there are a lot of questions about the valuation. since the peak in 2015 it has been revalued multiple times by various private and public investors including morgan stanley, who most recently slashed their valuation after series of reductions down to $4.4 billion from a high of $23. -- 20 billion -- $20 billion. so this is a massive and steady woulde in value which reduce the amount of fees should morgan stanley decide to take it public. emily: which one is it, which way is the wind blowing? >> this is a challenge and from an excitement around privately traded companies. we reported before when some of the markdown star started happening back in 2016, this is a two-year long history that involved not only palantir but companies like dropbox and snap and others where perfectly

reasonable assessors of these values disagree on how much it is valued at because they are liquid shares, they trade in large blocks infrequently and the people assigning the values don't describe what they are using to base it on, although it can range from different public comps to what their internal projections are like for that whole market they are attempting to address. emily: what palantir does has been controversial given who they work for and the perceived values that they actually add. how do you think investors will see that? >> that's a good question. i think there is an issue as them as a company providing software service. it has been heavy for a long time. what it does is it can pull all sorts of information in from financial transactions to last known location of the roadside

bomb, to status of someone who is attempting to immigrate, and pull it together in one spot, mine it for meaning and pull out certain patterns that someone can dig into at a later date. that's what it does. just like microsoft or ibm or other products that do that, and they make it very, very easy to use. that gets to the second part of the question you just addressed, which is how is this being viewed? there are some concerns right now about the half of its business that services government agencies, including the department of defense, department of homeland security, the irs, and other groups. emily: i know you will be walking us through every step of the way on the road to potential ipo. thanks so much for joining us. still ahead, elon musk's fate partially lies in the hands of the sec. we will talk about why they

should be concerned, next. this is bloomberg. ♪

emily: investors may be concerned about elon musk, but some say not to worry, the probe about taking tesla private is unlikely to lead to his ouster. though the agency has the power to ban musk, doing so because pain for shareholders. here to tell us more, our guest from washington, d.c. what does the agency have the power to do, and what is the agency likely to do? >> what we know so far is the sec has not acknowledged that it is investigating tesla. we have reported, and other media has as well, there is a probe looking into elon musk's tweets early last week. -- last month. the sec has power to do everything from fining individuals or companies

responsible for wrongdoing, all the way up to what executives considered to be the ultimate penalty, which is some type of temporary or permanent ban from serving as a director or executive at a company. we understand just talking to people who pay attention to these types of cases, what we know so far, it doesn't seem likely that taste on these tweets, that that kind of direction is what the sec might go in. all that said, we don't know where this will go. this is a probe that the sec has not even acknowledged. it is early on and we will see where this goes. it doesn't seem likely that the sec would go there because as you mentioned, shareholders would bear the ultimate brunt and there's no suggestion at all that mr. musk benefited financially from insider information and what he actually did write tweeting out that funding was secured in early august. emily: what about the bigger picture? other analysts and former sec lawyers told us that at the

speed of which the sec moved here when they issued that subpoena was quite fast and meant that clearly had another open inquiry or open investigation that we believe could be related to model three production. so what about the bigger picture of what the sec is interested in? we reported that the sec's enforcement attorneys out of san francisco were already looking into some of the company statements about production goals and performance metrics, even before mr. musk's tweet. what happens though is, once the investigation gets going, it's kind of like a black box. we ultimately don't really know where things are going to go. it is common that there's a lot of back-and-forth between the attorneys for the company and the attorneys for mr. musk, and the agencies, they will be requesting lots of documents, lots of information. eventually if the sec does decide to go somewhere with

this, we will get a better idea, but it could be months or years away. emily: i know you will keep us posted. that does it for this edition of "bloomberg technology." tune in tomorrow, we will have full coverage of those hearings from capitol hill. this is bloomberg. ♪

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