emily: i am emily chang in san francisco. this is "bloomberg technology." tesla and turmoil. the company is said to be the focus of a criminal investigation into elon musk's public statements about private funding alongside another investigation by the sec. plus, a 20 year trade war. prediction over the conflict between china and the u.s. after more terrorists are levied. tim cook remains optimistic

there will be a resolution. a small win for apple in the patent dispute with qualcomm. -- ceo told us he based thinks the case can be settled this year. story, they are considering taking tesla private , funding secured. now, the company is the subject of a federal criminal probe. -- thebon of justice department of justice opened a probe which means tesla is facing inquiries from the doj and sec thanks to a tweet about a plan to take them private that is no longer on the table. it was maybe never realistic at all. from washington, tom broke this chafkind we have max who has been covering tesla and elon musk for a while. tom, what do we know? the justiceoint,

department is now asking questions of tesla regarding the tweets and what were behind it. we know that anytime the doj asks questions, things have gotten serious. do thesew investigations play out? what are the outcomes we can expect? tom: it depends on how far the investigation goes. for the dojcommon to run a parallel investigation to the sec. the doj would look at whether any criminal fraud laws were broken which would require some criminal or intent to deceive investors. a lot of times these things can take several months to play out. if anything is found, you get into the next stage of, what evidence is there, who knew what , potential fines for the company.

if there was anything found. one issue is how broad this investigation could go. tesla said today they have received queries from the justice department and were hoping they could answer all of their questions, and that this will go away. yet, we have seen in the past month the chief accountant for tesla abruptly resigned. that is not just something the sec will be asking about but the doj would want to know the story. emily: a number of departures from tesla. max, do you think this new criminal investigation will have an impact on tesla operations which are already under pressure? will it have an impact on buyers? max: the core tesla fans will not be dissuaded by this. if anything, people are attracted to the bad boy reputation of elon musk which seems to be only growing with

the latest criminal probe. recruiting will certainly be an issue. anytime you try to bring over experienced executives at the time where the labor market is tight, criminal probes will not be an enticement. on top of that, the stock price is not doing great. it is sort of this bunch of little things that all together could add up to a big thing for tesla. emily: in the meantime, the investigation is happening alongside the sec investigation or potential investigations. thatis the significance there is also civil investigations underway? that'sat is something lawyers for tesla would be mindful of because they do not want to inadvertently harm themselves in defending against civil actions in the way they

respond to regulators in the justice department. yet, the primary concern will be them, but it is always something running in the background that you do not want to harm yourself against private action while trying to resolve a government matter. emily: max, elon musk is still tweaking to customers about and do you expect to see shift in his behavior? max: you would think his lawyers and pr people are advising him to cool it on subjects. has beenheeling nature one of the strengths of the company. this is a company spending very little on marketing relying on its larger than life chief executive and reputation to drive customers. now seeing the other side with this probe. is that if tesla has

the doj or anyone else establish at the intent, they have this twitter account to look at where musk has been talking for months about the short-sellers. i'm not sure if that's what i'd up to anything criminal or civil but there is a lot to work with. on one hand, if you work for tesla, you would like to seem cool it, on the other end, that is his secret sauce. emily: we will be talking about this later, but could this be an opportunity for competitors? we will be covering the audi launch in a few moments. likeu think competitors some of these luxury car companies that have tesla in the sites could turn this to an opportunity? max: i think competitors are playing a long game. the audi car, which is still a anything thatink causes customers to doubt tesla

is a sensible choice is going to help the legacy planners. tesla has been arguing, you ,hould try this new bold thing and in fact it is a better car. -- if customers doubt whether they have staying power or not, that will hurt evidence and sales. emily: tom, say the doj fines musk and -- or tesla criminally liable, what kinds of penalties could musk face in the company face? that is a bit down the road, but the company could face -- it would depend on how much damage was done here. those are calculations kind of always done based on the evidence found, and in terms of a lot of the settlements that come out regarding major companies, are negotiated settlements.

the government is not necessarily looking to put a company out of business. they are looking at making sure companies are operating aboveboard. a lot of companies will spend a lot of money on new compliance programs. ask walmart to has spent a billion dollars on legal fees and a long-running investigation revolving around their matter. emily: great job breaking that job -- story, tom schoenberg, and matt check in, thank you. two of text biggest leaders are weighing into our next story. this is bloomberg. ♪

emily: china wasted no time in retaliating against trumps next escalation in the trade dispute.

beijing announced tariffs on $60 billion worth of u.s. made goods taking effect on september 24. this came after trump's announcement that the administration will levy 10% tariffs on $200 billion in chinese goods which will also take effect on september 24. tim cook told abc he has hope this will and is soon. >> trait is one thing where it is on a zero sum game. you and i can trade something and both win. i am optimistic the two countries will sort this out, and life will go on. emily: alibaba chair, jack ma, was less optimistic and he told investors that "this thing will last long. if you want a short-term solution, there is no solution." kongscuss, we go to hong and have been standing by and we have mark gurman. said this trade

war could last 20 years. tim cook and jack ma have different incentives. how could their opinions be so different? mark: tim cook has a responsibility to be optimistic about this. to onehe chief executive of the largest companies and one of the most valuable companies. he has to show optimism to investors because apple is the center of this thing. they are a u.s. based company manufacturing 90% of goods overseas. emily: apple products were spared in this latest round of tariffs, but that does not mean they could be spared in upcoming rounds. then, what is your take on the view from jack ma? 20 years? ben: i think he is wise to say that. regardless of whether trump is an office or not, we will see a continued amount of pressure from both sides of the u.s.

thetical spectrum to change existing relationship and dynamic between the two countries on the economic and on a political level. i think he saw that folks even the hillary campaign was looking to shape that relationship. just because trump loses the house in the november elections, or ultimately is not voted in two and a half years from now, he can still -- this type of policy will continue. emily: the war of words continues as well. trump said we have given china every opportunity to treat us more fairly but so far, china has been unwilling to change its practices. in the meantime, the china commerce ministry says we hope the u.s. side will take convincing measures to correct in a timely manner -- issues in a timely manner.

who is in a better position here? ben: it is an interesting one. at the offset of this, i think there was a view china was well insulated against this and had a lot of other options for trade partners. they were going to work on their own native industries and build consumer demand locally, but in the short term they missed the capabilities to whether this storm. they a share market has taken a deleveraging and the abolition of shadow banking institutions. the effect of this will be seen about a year from now when these policies and the damage in order books take effect. i think, in the short-term, the farmers, and some suppliers of products into china will be hurting. in the long-term, china will

struggle with the ramifications of the 25% tax hitting if it does on january 1. emily: talk to us about the impact on tech products and the potential impact from the additional $267 billion in goods that the president could tax and has threatened to. ben: just a little history -- mark: just a little history, products out what could be impacted by the tariffs from the trump administration. the two highlights were the air pots and the apple watch. yesterday, we got news yesterday morning that the apple watch and airpod were no longer affected because of a technology related code being modified. as far as the tech industry as a

whole, anyone who makes smart watches like fitbit, carmen, and apple, they caught a big break yesterday. that was good news for the tech industry. in terms of the $267 billion plan you mentioned that would be upcoming and still in the early development stages. there is no region -- raison d'atre smartphones would be affected. that can and will probably trump depending on the administration and what they get from these tech companies. it's important to know the tech companies give their feedback and that was one of the driving factors for the smart watch being removed yesterday. emily: then, how is the trade war being covered by chinese media and beautify chinese citizens? ben: it is interesting. it varies depending on whether it is coming from government or people. i think there is an overarching view that there is an attempt to

slow chinese development. certainly targeting programs like china 2025 which was a rallying cry in washington, with some of this rhetoric stating we're trying to prevent china from developing those native industries and providing a lot of components that ultimately used by those companies. i think there is a view that the united states is trying to siphon that growth and prevent the chinese dream in the long run. nothing outright from individuals in the streets, but i think the local government pr machine has galvanized on this point. i think it has embolden the local hawks who are advocating a change in their relationship with the u.s. and advocating greater independence with the folks in the belt and road

countries and the new trading partners. in the short-term, there is a lot of negative sentiment on the aim of this program, and much less coverage around key talking points coming from the u.s. side on reciprocity. the need that certain institutions and the wto needs to be respected. it is quite a different message here. ben, fascinating to hear the view from china and mark gurman nla, thank you both. will it be the hair or tortoise coming out on top? we talk about 21 -- we talked to one retired astronaut. "bloomberg technology" is livestreaming on twitter. and follow ourus global news network, tictoc, on twitter. this is bloomberg. ♪

this is bloomberg. ♪

emily: two some more positive news, elon musk's space exploration company has announced that one billionaire will be the first private customer to hitch a ride around the moon and back on the falcon rocket. the mission is scheduled for 2023 and will take four to five days to complete but he will not be going alone. he wants to take six to eight of his favorite artist with him. it is a project called dear moon. take a listen. >> i'm very glad to be here. i'm really excited. i really appreciate to be able to share this announcement with you and the people all over the world. emily: one man who knows a thing

or two about space travel is a -- nasaashe administrator who spoke to me from north carolina and shared his view of spacex and his own experience. >> it is a continuation of passenger flight. we have had an american company that had worked with the russians up to about 2009 and flew paying passengers, so we have had civilians fly before. nasa had a palis specialist program during the early days of -- payload specialist program during the early days of shuttle. emily: this trip is going to happen in 2023 but the rocket has yet to be built. what are the biggest challenges? biggest challenges is the life-support system. elon talked a little bit about

it yesterday in his announcement when he talked about the water like when going to something like the moon. they cannot just take a couple of bottles of water along with them. they have to wait to recycle water or produce it on the shuttle. we used the fuel cells with oxygen and hydrogen and one of the byproducts was what are. you are looking at closed loops -- what are -- water. you're looking at closed loops systems. yourant to make sure systems are as reliable as possible. that is the biggest challenge. emily: only two dozen astronauts made that journey in the apollo era, why is it taking so long to go back to the moon? >> a couple of things. you will get one opinion that when we went to the moon there

was an incredible geopolitical imperative. we had to beat the soviets. i think people will start to see in all of the documentaries about apollo 11 and how we got there that there was this space race, a real race, and the matter, back then we thought it was a matter of the survival of the nation against the soviet threat. that is something we do not have anymore. we don't have an arch enemy as far as space is concerned because we partner with almost everybody. as much as we cannot get along with the russians on earth, in space, they are probably our number one partner on the international space station. you have had the opportunity to visit spacex competitors. how do you compare the efforts of spacex to what you have seen at the other companies?

everybody isink doing their utmost and working at breakneck speed. we were talking beforehand and i the othero spacex and as the tortoise and hare. spacex is vocal and sets great goals. you have a company like blue origin that has many of the same aspirations but they are very quiet, and they are following a measured schedule of activities. i think you will see they will be side by side when we finally talked about humans routinely in space on a commercial spacecraft. my expectation is that blue origin and spacex will be out front alongside each other. that is why i refer to them as the tortoise and hare. emily: you have been in space, was it worth it? charles: was it worth it?

all i had to do was be a marine which was easy for me. it is incredibly worth it for anybody. see thistunity to planet from that vantage point is unlike anything else a human can or will experience. thisxcited about seeing new passenger take artists because people like me, astronauts, are not good at storytelling. i work on it hard but i use the word awesome for earth. awesome is an overused word. i think artists, musicians, visual artists, writers, they will help us understand this incredible planet on which we live far better than any scientist, mathematician, or engineer can do. emily: that was former nasa administrator and retired astronaut charles bolden talking to me about the falcon rocket

mission to the moon and back. can qualcomm and apple make nice? seems to thinko so but can he convince apple? that is next. this is bloomberg. ♪ s bloomberg. ♪ this isn't just any moving day.

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emily: is is "bloomberg technology." monday, qualcomm -- they took apple side saying it did not infringe on three qualcomm patents. the judge presiding on the suit may not follow that recommendation. the qualcomm ceo told us in upcoming episode of bloomberg studio 1.0 that he thinks there's a chance the case will be settled this year. >> we have a dispute over the price of i.t..

we think it's moving into a time when our strategy is unfolding and the environment is such that i think you are in a position where a deal can get done. at the same time, i think there is probably no better forrtunity and partner qualcomm than to work with apple. it makes sense that the technology leader in mobile should partner with the product leader in mobile. those things tend to work out. eventually you get the disputes figured out and you move on to a different period. emily: so you believe apple will remain a customer. steve: i believe so. i think your roadmap will eventually dominate the business relationship between companies and there's no reason why that should be the case here. are taking on the world's most viable company. they have stopped putting your chips in their phone. they say the patents they are paying you for are invalid. how do something so bitter get

resolved favorably for qualcomm? steve: i think better may be the wrong term. in the pastsputes over the price of ip. it's really no different from that here. it's just bigger companies. are both be companies. we are not a small company in terms of the network to execute strategy that we have. but the things that those things will get resolved. sometimes they get resolved on the courtroom steps, sometimes they don't. the strategy is playing forward kind of the way we always thought. qualcomm ande apple eventually make nice and settled the dispute -- so can qualcomm and apple settle the dispute? bitterfirst of all, is the wrong term for this dispute? filings and the accusations made by qualcomm they took the

strategy of throwing everything against the wall to see what will stick, damage qualcomm, boxed them into a corner and forced them to negotiate and give us the prices that we want. .ualcomm obviously struck that it's hard not to see this as a protracted and deeply ingrained process. they are do you think too optimistic? a lot of milestones are coming up. it's one thing to throw it accusations and another to go in arguing in front of a jury and judge. now apple has got to do that. does anybody want to roll the dice and have a binding decision given to them by a court? there is a chance that coming this year. tell us about what happened at the trial, which obviously was swayed in apple's favor. great you need to take a look at where the apple devices should

be blocked from u.s. markets. international trade commission staff attorneys participated in the investigation and said through that definition, they will get discovered. in this case, the staff took a look at everything on infringement and they advised the judge on that. the hearing is continuing through this week and after a few months after the evidence is presented, the judge will author an opinion based on everything that was presented. incrementally, it's a good thing for apple, that's the only party that seen the whole dispute from the inside. it's kind of a leading indicator of what the likely outcome is or the judge. emily: is a good sign for apple or a bad sign for qualcomm? qualcomm has a number of cases come in notably in germany and china, where they could

possibly get an junction that says nor more -e ho sale. anything like that is what qualcomm believes give it the leverage to force apple to come to the table. on the flipside, if the cases keep going against qualcomm, if the judges keep saying no, we are not interested, then apple is in a strong position to push forward. emily: put it in the context of the broader -- broader dispute that has been going on around the world between qualcomm and apple and threatens a huge part of their business, the licensing business. the licensingat business, before the apple dispute was about one third of qualcomm's revenue and about two thirds of profitability. it's very high-margin biscuit -- business. in terms of the legal dispute, which counted up over 100 individual legal proceedings that make up the patent litigation. there are administrative

proceedings challenging the past that qualcomm has asserted. it's looking at the standard essential portion of qualcomm's in some offolio and the add-ons, which is value that is in critical to phones but is kind of optional. a wide sweeping dispute across a lot of jurisdictions, and i think the timing from a litigation perspective is about right when you see something up for resolution. at the beginning of this quarter and next quarter, once so start to play out, everybody gets a sense of where the case is going, and reasonable minds are usually able to arrive at a settlement, what some clarity is provided by the courts. emily: steve was pretty clear that he believes apple and qualcomm will still be customers after this, yet apple is making its own chips, and all the stuff that we mentioned. is it realistic to think that they will still be up to work together after this and that

their relationship will be strong? >> if you believe in technology like steve does, there's no reason that wouldn't be the case. the key component allows the phone to connect to the network, why wouldn't they want an experience that was as good as you can have? if you look at a subjective perspective, you might say apple wants the best profits it can get coming clearly because qualcomm is expensive because you have to pay licensing, why wouldn't they try to do it themselves and maximize their own profits? so there is a business argument going on, it depends on whether the qualcomm technology can be push for nafta force apple to go the consequences of not using qualcomm are so great that it cannot afford not to do that. engineer or be an civics major to tell you if that would happen. emily: qualcomm has been

involved in licensing disputes before and not just with apple. is that the case that two parties come back to the table and end up working together and the relationship is just as fruitful? >> it's always darkest before the dawn. both qualcomm and apple have been in similar disputes as ericsson, nokia and both those cases involved multi jurisdictional disputes. there was bitter arguing in front of the lawyers and i -- in the case of ericsson i recall apple's lawyer saying ericsson's technology was old and not relevant anymore. in the weeks following trial, they resolved for a huge settlement and forward license moving ahead. so we do see these disputes resolved in the company's kind of shaking hands and proceeding with a fruitful business moving forward. some of the rhetoric is heightened during a legal dispute. certainly you have to make their case and there's a lot of advocacy going on.

a lot of companies are able to move past that once a reasonable business deal is done and look forward to future opportunities. emily: matt larson in new york and ian king in san francisco, thank you both. you can catch the rest of that conversation on bloomberg studio next week, september 26. you don't want to miss it. coming up, the electric car wars have begun. tesla unveiling a brand-new all electric suv. plus the countdown to the u.s. midterms is on, but will mid-november just be a repeat of 2016? officials are cracking down on election security and foreign meddling, ahead. this is bloomberg. ♪

the justice department's investigation into tesla isn't the only problem facing the carmaker. others are trailing tesla with their own electric cars. also joined the race. take a look. tesla customers are getting anxious. >> i noticed this popping up on twitter quite a lot. where are my model threes? it on monthhile promises to deliver, the company is facing new competition in the luxury electric car race. and as coming from within silicon valley. instead, a raft of traditional luxury manufactures are targeting tesla and one of them

in its own backyard. a battery-powered crossover that east you to hit showrooms in the year. of $75,000, it gives the model x a run for its money. >> we want to merge the new world of electric mobility together with 100 years of experience of manufacturing and in cars. that's bmw showed off its concept car this month. mercedes has announced its plan to develop a range of vehicles for its electric line with more than $12 billion already invested in the project. >> we believe technology is ready for the all electric were sadie's been. >> and we can expect to see more high-end rattles into the market , some saying the industry can billion -- worth $500 by 2020.

but they also need to meet increasingly stringent emission standards. some countries are working toward banning combustion engines altogether in coming decades. emily: bloomberg's david westin ceo.t up with the audi he started by asking, why now? >> at think we've hit the perfect time. there are three -- three things that are come together. the market acceptance is building each and every day. the second thing, of course, we wanted to launch with what we that isroper audi electric. and the third is the cost situation. with the cost of batteries in the technology, we can put ourselves in a position to make a profit as well. those three things came together, so that's why we feel good about the timing. x what is the price point and why did you pick that price

point? >> because we want to sell this vehicle. we want to make a little bit of $74,800.ut the car is it competes in what we call the segment. that is where the market is. we want to make sure we put one right in the sweet spot of where the consumer is. to rampave a whole plan up several over the next few years. are you going to go directly after the more inexpensive models, if you permit me to mention your competitor? our first three vehicles will compete on the higher in. we would like to establish ourselves as the premium player in electric before moving downstream. the three vehicles will be launching in the next year or two. .e will have a magnificent gt

it's not a pure play volume game. we want the prestige, the volume, the recognition, and then we will work down to b- segment cars. there a lot of hype about people saying there are cars, but physical luxury premium cars on the ground, the air is quite thin. there is tesla and nothing else is really hit the ground. enz, there is a lot of hype, but we will basically be the second car on the market. i think we are time perfectly, and frankly, the market is growing. we anticipate upwards of 300,000 premium plus vehicles by 2023. we want to get a big chunk of that. >> we seen various arrangements made for capital investment. we saw the saudi public

investment fund yesterday a different electric vehicle. do you have enough resources to make a huge capital investment required for electric vehicles? scott: we do. if you look at our outlay and a plan, audi has announced 12 electric vehicles and funded ourselves. the key thing to that is to be a successful company. mistake, these are huge technologies that cost a lot of money, but we can find it. frankly, these are technologies we want to have in-house and the apple to support because these will be future technologies, which means you have to have them under your wing. we feel we have the capital to develop this with a properly scale business at a properly scale company. that's what about the autonomous part of it? goesdoes this have that

toward being autonomous? scott: this vehicle is a level two. it allows you to cruise hands-free. that is dramatically from autonomous. autonomous means technically there is no steering wheel, no pedals that all come you could be sitting in the back seat. frankly, it will be a while before that is happening on american roads. scott keogh there with david westin. the electric car wars are heating up, and will be covering that more in coming weeks. coming up, november midterms are just around the corner, but as both parties fight to win control of congress, the threat of al qaeda forces meddling with results remain. will discuss how well prepared the u.s. is with less than 50 days to go. this is bloomberg. ♪

emily: the prime time in the

awards on netflix top the table for plenty of fodder for jokes. >> netflix had the most nominations tonight. and if you are a network executive, that's the scariest thing you could possibly here, etc. maybe, sir, row is online one. emily: the streaming service took way seven awards and a record 23 wards overall. i've ever company that started out as a mail-order dvd service. the less than 50 days until u.s. midterm elections and the results will largely impact the next two years of donald trump's presidency. democrats are hoping to take back control of congress while voters will get their first chance to express discontent with the president. for those in the military and overseas, voting will begin this friday. but as the intelligence community continues to

investigate russian interference in the 2016 election, the questions remain, what could go wrong this year? , lawrence, we've already seen evidence there are attempts to metal happening already by state actors. how well prepared are we now with less than 50 days to go? pretty good are in shape. people should know that the department of homeland security, electionthe federal assistance commission, all these agencies have been working with state and local officials to prepare for cyberattacks and in particular, to detect and if something happens to recover from those kind of attacks. days, the next 49 election officials will be looking at those plans, ruby we -- reviewing them to make sure they will be implemented. emily: there have been some far, some of the

machines malfunctioned or didn't work at all. how concerning are these issues? no election is perfect. the fact that we saw these kind of typical problems that we see in elections, they give us a little bit of a clue as to what could go wrong on election davis november. things that happened by accident can happen because of a bad actor, and obviously were talking about a cyberattack, the worry is that it could be much more widespread. the key is to be prepared for those kind of things ahead of time and make sure that you can recover if we do see that kind of thing on election day. emily: what kind of training have election officials undergone up to this point? have been a lot of things like tabletop exercises where the department of homeland security or the fbi will run through various

scenarios of the kind of things that can go wrong and asking election officials what procedures do you have in place to recover, if, for instance, a bunch of voting machines are not working, what do you do at that point? overhas been a big focus the last few months, and just basic cybersecurity trading as well. one of the things the brennan center has done, we have put out a checklist for election officials and were hoping this is useful to them as they are reviewing in the next few weeks to make sure they are ready for any kind of problems. emily: we talked in the past about problems with the election websites, with registration in general. last night one actress implored everyone to register right then, bring a friend to the polls. as more about making sure everyone has a voice, but what can voters do to do their part to make sure that democracy is not threatened? lawrence: first i mention the

checklist that the brennan center put out. tosent ted -- send that back 2000 election officials. they want to hear from folks to talk about what they're doing and asking about that checklist is something that would be very helpful. another thing you mentioned his registration. at most eight you can check your registration online. that can be an early warning sign. we know the russians in the 2016 elections try to access registration databases. if people see their information is wrong, letting officials know can be an early warning signal that something may be up. that is certain something that people should do, and of course, go vote. youy: so what are your -- and your team going to be doing over the next 48 days? withnce: checking in election officials, making sure contingency plans are in place. in the 21 states using electronic voting machines, have

emergency paper ballots available so it machines are not functioning, people can still vote. we saw this in the primaries, where emergency paper ballots they were not,re people were turned away. making sure all the plans are in place and that we can carry them out and that voters have confidence they can go vote and trust in the outcomes when they come down. lawrence, thank you so much for the work you are doing and for joining us here on the show. that does it for this edition of "bloomberg technology." i'm emily chang from san francisco. this is bloomberg. ♪

>> welcome to "bloomberg daybreak: australia." >> were counting down to asia for major market opens. haidi: these are the top stories we are covering in the next hour. war, back in the trade targeting 60 been dollars worth of trade war goods and global equity markets rising.