>> i'm brad stone in san francisco. i'm in for emily chang. this is "bloomberg technology." coming up in the next hour, security breach at facebook. the media network says 50 million accounts were affected by an incursion allowing hackers to take over a member's account. the sec is suing elon musk over his tweet suggesting he will take the company private sending shares into a freefall.

u.s. lawmakers finally get the chance to grill the google ceo, behind closed doors. we will discuss what he said when he visited the hill. first, to the top story, more drummer for facebook -- drama for facebook. they discovered a security breach of affecting almost 50 million accounts. they are investigating the breach allowing hackers to take over accounts. mark zuckerberg held a call earlier related to security. here's what he said. >> this is a serious issue. we have already taken a number of steps to address it. we patched the security vulnerability to prevent this attacker or any other from stealing additional access tokens. we invalidated the access tokens for the accounts of up to 50 million people who were affected causing those people to be logged out. brad: joining us to discuss is jordan robertson who covers

cybersecurity. also with us is brian wheeze or over the phone. jordan, let's start with you. what did we learn about this breach? >> thanks for having me on. what we have learned is that facebook had a nasty network intrusion into potentially 50 million people's facebook accounts. to put that into context, there are a lot of big numbers around cybersecurity. hundreds of millions of accounts get compromised via credit card. 50 million for facebook is not a huge number, but the type of access the hackers were able to full account takeover, makes this significant. the mechanism they used as a flaw in their coding -- facebook's coding that allows them to look up an account, steal a token to the account, and login as the user. for social media breaches, this is as bad as it gets. brad: let's compare it to the

cambridge analytica breach. access to as had user's public profile. scale and scope of this attack compare to what happened earlier in the year? >> i watched the cambridge analytica stuff. some of it was puzzling because what the researchers were able to scrape, which they were not allowed to scrape, was public data from people's public facebook profiles. the reason people went so crazy is because what the data was used for which was a successful election campaign of donald trump. what facebook has disclosed today is that this hack allowed ,he attackers to access fully up to 50 million people's accounts. that means login and send

messages as them, download photos, access contact lists. facebook works hard to prevent people from logging into accounts that do not belong to them. accesslowed hackers to 50 million people's accounts. me turn to you. i think it's fair to say you're not been the most optimistic analyst about facebook's prospects. you have a negative rating on the stock. today's news does little to change your perception, i imagine. brian: it is hard to say if this could have happened to anyone with a platform like facebook. safe toick to say -- say, i have been cataloging for the last two years what i call a taxonomy of mismanagement. there is all of these little things which electively roll up into a obvious picture that the company is not well managed.

i don't think investors appreciate that yet. something like this will have no commercial consequences. i don't think, by itself, it will cause advertisers to stop spending money. fines mightke follow from this would be enough to dent facebook. consequences -- where there could be consequences, have they been skirting on cost in order to break stuff or move fast essentially? whether you look at the absence to makent moderation sure people are not getting orled in a genocide myanmar making sure instagram is not recommending child-abuse videos or make sure they know who their customers are and whether or not

they are violating laws related havevertising, they automated so much stuff and have not baked in enough process to to afford have barely begun the costs they need to incur to make sure the business is run to prevent as much as possible. even then, it does not seem like they are making great choices. brad: they have talked about doubling their security staff, but you are saying we perhaps do not know the impact that will have on the business model? >> i think the bigger problem is i do not trust when they say they need 20,000 people that that is the right number. having -- they need 2500 people in germany to look for horror -- holocaust denial. will 20,000 be enough to cover the world the echo i doubt it. brad: let me ask you a final question.

i was one of the 90 million facebook customers that got locked out automatically. they took it as a percussion. if you find out you were impacted by this hack, what do you do? facebook has been proactive in disclosing this breach. it was not long ago they discovered it. they were proactive in changing the access tokens for up to 90 million people. i think that is good. it is a positive step. in terms of what you should do, there's a bigger lesson that asking if these nationstate hackers will expend the resources to do these types of attacks. the bigger question needs to be, if somebody accesses your account to spy on you, with they get what they are looking for? the share so much information with these companies that, if a foreign spy were to look at your account, they get what they are looking for.

if you hold information back from these companies, you can retain privacy and enjoy the platforms. brian: an important point, i don't think they get brownie points for letting consumers know within three days. , and they did not do it under 72 hours, the fines would be massive. this is mission-critical. they have to let consumers know within 72 hours. brad: jordan robinson, and brian wieser thank you for joining us. the sec is suing elon musk raising the possibility of the company losing its founder. what this means for the future of mosque and tesla. if you like bloomberg news, check us out on the radio.

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brad: shares of tesla have full in most since 2015. the sec accused elon musk of misleading investors with a tweet last month about taking the carmaker private. ban him fromnt to serving as director or officer of a public company. musk called the action unjustified. for more, we're joined by the founder of bloomberg ventures. and also with us is a former attorney and founder of ceo of the good group -- goodie group. i guess we could say lawsuit secured. the tesla stock is down dramatically. investors seem to make

assumptions about how this will turn out. what do you think about the assumptions? are they premature? >> for the near term for investors thinking of the next three months, it's understandable the stock is down. this will weigh on some investors's decisions. it'll take probably longer than three months. it may go on for a year. and whatr picture, investors need to get their heads around, is a situation where it line is still part of the company and an employee of , and maybe him not being as an officer or director of the board. i think that would be a positive does the needs to be structural changes. something we have been advocating for for the last several months. it is understandable that the stock is where'tis. we are believers -- where it is. we are believers tesla will survive.

next monday they talk about their production report. that will probably shift the focus for the near term back to the fundamentals. attorney ande an the sec's general counsel office, what do you make of these reports? a close settlement between tesla and the sec will are tesla will have to agree to some provisions and elon have to give up the chairmanship. according to the reports, tesla pulled out of the agreement. what does that tell you? >> it looks like a pretty good deal for him given the sec complaint. i think their complaint is well drafted. in a casen and clear of fraud. it distracted well as a foundation for a criminal indictment. the fact he pulled out of this, it seems like it was something he should have taken. brad: let's look at it closely. what's with the implications be

a big -- b of a criminal indictment? the sec's complaint is clear that there were numerous violations of purposefully omitting information, misleading statements to investors, and he fully did it. that is a criminal violation. i found it interesting that they file this in the southern district of new york. the investigation is ongoing in the san francisco office. the action was brought in new york which is a much more preferred forum for fraud cases. it also works in tandem with the district of new york in bringing the companion criminal cases. attorneye deputy u.s. former director of enforcement.

there's indications with the ongoing criminal investigation, that often times when the criminal investigation begins, i we heard the inquiry has, that is because the sec on the basis criminal activity could occur. then, they passed that information to the doj. it is a very good foundation of a criminal indictment. romaine: considering the scenario -- brad: considering the scenario that theresa is outlining, we have to consider a possibility of a tesla without elon musk? >> we need to consider it, but it is a small probability. i would be curious in her perspective that i have not heard that there is a criminal side to this. as far as removing him from tesla, altogether, it does not

seem to be front and center here. removing his officer ship -- officership is part of it. to answer your question, investors should not be worried that the line will be rude -- removed entirely. they should be making the safe bet he will not hold -- and we put the odds at 50-50, there is a lot of litigation to go through here, but we see a 50-50 that he retains his ceo. again, i think that is best for the company. when you put all of this together, i don't think the tesla story is bad as it sounds -- is as bad as it sounds. -- as bad as this sounds, it does not change their trajectory. brad: are there any precedents we can look at as a guide on how

this might be resolved? .eresa: we can look back people have been talking about martha stewart and others in the fact that there are officers that's go forward. it is more unusual to have a permanent director bar which is what the sec is going for here. i think we can look to that to see it does not matter whether someone is a celebrity, how innovative their technology may seem, or anything that once you take -- partake in this conduct, the sec is going to seek to remove you as a director or officer of any public company. that is for the protection of the shareholders and the market. gene: let me jump in. when you talk about protection of the shareholders, you think shareholders are better off if elon musk is completely removed

from the company? think tesla will have a very difficult time having its founder and visionary removed from the company, but that is also a separate analysis from the legal implications when somebody breaks the law. market andion to the those investors, when somebody does not take their obligations as a public company ceo the way they should, and they don't fulfill the obligations. orther or not he is capable will fulfill the obligations that enable him to be a public officer is something separate from whether the company, going not he willther or be good for it in that way. there are two different analysis going on here. you cannot break the law and think because you are a smart businessman and very intimate and very intimate to the law does not apply to you.

brad: we have to leave it there. theresa -- teresa, thank you for joining us. blackberry looks beyond phones for its future. we will hear from the ceo, next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, tictoc, on twitter. this is bloomberg. ♪

brad: blackberry shares received a boost after the company's latest earnings beat estimates and outlined how the company is expanding into new markets including security software and

health care. the ceo spoke with us earlier. this in aat longer-term trend. quarter, 99% of our business, our software and securities. >> there were so many sectors of your business where you are focused on winning business. example.s a great we saw wins in that quarter. a few weeks ago, the headlines would read blackberry losing hardware business on wall street to say apple and the iphone. do you feel now, on the software side, qr business -- you are winning business back? >> absolutely. firms around the softwares blackberry to manage everything.

managing blackberry phones, iphones, android phones, windows phones, and all kind of environments. we are extending that to endpoint management. everything we have with clinics and around power by them is also of why we are winning today. the answer to your question is absolutely. we are winning back our wall street customer. >> you have had a lot of wins on the business you are ready have. there is a lot of conversation about possibly using some of your cash for acquisitions. , in terms of valuations for possible businesses to buy, a much money would you be willing to earmark to continue the software growth for acquisitions? >> we have $2.4 billion. we're generating cash every quarter.

we have about 600 million of convertible cash. at a minimum, we're willing to -- $1.88 million billion for the acquisition. i do not think we should limit it to from that perspective. it is about to the values. if the values are there, we will spend as little or as much as we possibly can afford to get into expanding our business. portfolioe a patent side to the business. a lot of people have highlighted some of the legal battles taking place. one directed at facebook and facebook battle back with you. i know you are not commenting specifically on that's legal action, but at the ceo level, why have these battles through the lawyers? is there not an opportunity to call mark zuckerberg and settle these differences? >> that's a great question. i would love to.

on any not comment specific lawsuit going on, but, of the time99.99% we settled it amicably through business and not illegal settlement. -- a legal settlement. is notes, the other side willing to address the business side of the equation and only want to settle it on the legal side. then we do what we need to do for the shareholders. >> another area of growth has been inside of the card today and the car of the future is the blackberry software. there is a lot of trade tensions and frictions between countries like canada and the u.s. trump site that brett of auto tariffs. as someone who's business depends on healthy auto business -- auto sector, any message to

the trump administration on auto tariffs? aren general, any tariffs not good outcomes for businesses. all of the conversation is adding uncertainty. uncertainty is never good for business. i'm sure they know that very well. they all have their political reason what they need to do and i'm not a politician so i cannot comment on that. i wish they said the lid quickly. as far as the auto business, our business is global. only thing that could negatively affect us is the number of cars built being reduced. as long as the number of cars is not being reduced, meaning a be the cars are built and local countries by consumption, we will still be ok. brad: that's john chen speaking with bloomberg. up, facebook fallout. hackers breached 50 billion

accounts as congress has big tech in sight. will big regulation follow? we will discuss. this is bloomberg. ♪

brad: this is "bloomberg technology." i am brad stone in san francisco. the revelation that facebook's data breach compromised 50 lanes account. a hack the social media giant said it has fixed. it comes at a time where facebook and google and others facing scrutiny over how they are protecting users data. washington, mark rosenberg, president of the electronic privacy information sector and bloomberg opinion columnist. mark, let's start with you on

the news of the day, this facebook breach. how in your opinion has facebook handled the so far? mark: i'm sorry to see this news. we have been working for many years to try to strengthen privacy protections for the personal data that is collected by internet firms like facebook, but i also have real concern at this point that the federal trade commission here in washington could have done something to stop this from happening. there's a pending order against facebook to protect data. said back in march after kmart analytical, they would reopen the investigation but six-month has passed. there has been no report and we have another data breach. we can talk about what facebook should've done but we should start talk about what the federal trade commission should do. brad: i'm tempted to ask, can facebook catch a break in 2018? >> well, on the one hand, a day of chaos in washington is a

good day to announce a massive security vulnerability, but, no, it does seem like facebook keeps stepping in it. it's computing to this loss of faith we have seen it facebook this year. these repeated scandals. and it does seem like facebook did the right thing this time with the security vulnerability that disclosed it relatively quickly. it is investigating and notified law enforcement and with drew appropriate steps but any time we had facebook and security vulnerability in the same headline in 2018, it brings up all those concerns about russiage analytica, propaganda around the election and data misuse at facebook. it just underscores that this not of trust in facebook is something that is going to be re-won anytime soon. brad: so, as facebook is explaining this data breach, the ceo of google is in d.c.

meeting with lawmakers. it is an omnibus meeting p you have got privacy, his efforts in the issue ofe got an ideological bias planted again conservatives. let'what kind of questions will sooner get and what does he have to answer for in terms of privacy? was thee privacy issue big issue p he was brought to washington to address some of the concerns about anti- conservative bias on the search platform. but what the state attorney generals want to talk about and what others want to talk about is what is going to happen with the personal data that google is collecting, still not subject to privacy protections. also, the recent news of this project in china called dragon fly. privacy stuffg for a long time but it is still possible to be scared. and dragonfly is scary because

what google is proposing to do for the chinese government was not only to keep all search histories but to tie all search ers, using us their telephone number. and that would be essentially perfect surveillance for the use of the internet. google said they are not sure this is going to go ahead. there has been a lot of question about it. their privacy officer testified this week in the senate commerce committee. i think lawmakers are going to ask about that as well. that is not a good direction for u.s. firms to be heading. brad: and let's be clear, if google wants to compete in china, it probably thinks it needs to play by the rules. so, it's creating a search engine to please the chinese government. let me ask you, why does google want to go back into china? the search market is basically lost to baidu. that's exactly the

right question to ask -- why is google doing this? it can't possibly believe it is going to make a dent in the s earch market where baidu ru les. so, from what i understand google believes, it wants to do other kinds of business in china. it believes it's artificial intelligence and the cloud and maybe other business-to-business kind of services that google provides, china is a fertile and wide open market for those school services and i guess a believes it needs to do search if it does a.i. and other things in china. how theyecessarily see are connected but i am not in those negotiations with china. the problem is that google is incredibly disingenuous about his explorations over google search in china and it in been raked over the coals

washington for some of the work it is done internally to prepare for if and when that happens. i just, there are so many questions about what google might do in china that google has entirely sidestepped. brad: marc, is there any way for google to go to china? marc: i think it should continue to promote internet use and access to information online. without restriction. those are universal values. that are respected in the technical and engineering community. there's always and needed to accommodate local governments when you move into their markets. but i iwa really taken aback because google really has pushed for a number of years to oppose censorship and now with china there developing what would be the world's most advanced ch service.e seasrcr that cannot be right. brad: let me ask you one last

question as we are nearly running out of time, this question of ideological bias. do conservatives have a legitimate reason to be concerned about this? shira: let's say yes and no. i don't think there's legitimacy to some of the claims that president trump and others have made that google is suppressing conservative viewpoints. i just don't think there is evidence, but the google search and other services are powerful and influential in what we see and read or don ''t see. we don't really know what it's eight into the algorithm and that causes suspicion and it should. brad: ok, we have to leave it there. mark rosenberg of the electronic privacy information center and shira, thank you for joining. black technology is gearing up for an ipo in the first half of next year according to "the wall street journal." it could see the workplace

valued atapp $7.1 million, one of the biggest tech ipo's since snap. the company has raised $1.3 billion since it launched in 2013 and has 8 million active users every day. biotechp, a surgeon and entrepreneur and owner of the l.a. times. he may be revolutionizing the energy sector. we'll discuss next. still to come, asteroid mining may be around the corner. mission by a japanese aerospace expiration agency would change the way we think about how we get precious resources in space. this is bloomberg. ♪

brad: over 100 years ago thomas edison attempted to create batteries from zinc. it was unsuccessful and since then lithium ion batteries have become the norm for electric panels and winter vines and while electric cars and solar panels become more common, listhium batteres are contribute into our carbon footprint. now the development of a first rechargeable zinc battery, and says it will make use of abundant resources at significantly lower cost than

lithium. first of all, give us a history lesson. a century ago addison tried to pioneer this technology. what were the limits he hit on? >> it's exciting that 100 years ago he filed the first patent. being theue for zinc one of the most signatures is the issue of re-charge ability. tryproblem with zinc as you to recharge it, it grows dendrites and that problem could never be solved. brad: so lithium ion is sorts ofle for all environmentally frilly technologies for wind turbines to solar panels. remind us with a problem is with them. >> lithium ion requires cobalt. so, lithium is a common vision of two metals. cobalt is mined in the congo.

lithium requires cooling, it's expensive. and it creates explosions. so, there are multiple downsides to the issue of lithium. zinc is the new lithium. brad: isely, the supply of zinc not endless. i've seen some predictions there is a 20 year supply. how do you go about sourcing zinc responsibly? >> zinc is one of the most abundant mineral metals in the earth's crust. cobalt, it is or not only abundant it is essential for you and i to live, a for prenatal growth and for all your living cells, essential for you to make insulin. so, it is one of these materials that is not only natural, if you combine it with the natural oxygen and photons from the sun,

you have green energy. brad: so, patrick, talk about the applications of the new batteries. do you expect that we see those ouroyed by utilities in electric automobiles soon? where does nantenergy view the first application? >> the first application we think is by going into countries. if you look at the map at night, africa and asia, there is no electricity. imagine giving a child the ability to read at anight instead of a kerosene lamp. things we want to replace off the bat. and we have done that. we are now in 110 communities where, 110 villages where 200,000 people are completely off the grid. where we're going next is also cell towers. one of the most exciting stories for us is that duke energy, that was reported yesterday in "the new york times," duke energies

has decided to give 13 acres of land back because of a system has been running there through florence and even through irma. the ability for cell towers, cell towers deployed including a mexico with 5g, coming, the ability to put cell towers uoff the grid is excited. brad: a hard pivot. i wanted talk about your ownership of "the l.a. times." what are your plans for the iconic plaaper? paper. a 136-year-old that we not onlyneed to grow but thrive .we need to go from a paper to a media . and that is what we are doing. but more importantly, continue to build what i consider great stories, great investigative reporter.

i'm really proud about the people that stayed and more excited by the work they've done, our executive at her and has helped to recruit some very exciting talent to the paper. andwe are going to hire bring on the best talent and make this a very strong paper again. brad: earlier this week i heard cancerl social media a on society. i cannot imagine the online discussion this week around events in washington and elsewhere have changed your mind about that. >> no. look, to be clear, it is more deep than that. it is the issue of fake issues, and the idea of fake news being of the cancer. how do we because of social media spread information as a form of metastasis. if we can differentiate truth from fake news, it is so important for democracy. i come from apartheid. i understand how important we

need to actually provide important, truthful information. and because of the unintended consequences of social media, whose model is an advertising model, how do you differentiate from opinion, advertising is truthful news? brad: indeed. >> that's our responsibility. brad: thank you for joining us. coming up, the japanese aerospace exploration agency is beaming back photos from a rover on an asteroid. why this mission could be key for the future of interplanetary space travel. this weekend we bring you our best interviews from the week, including outspoken salesforce ceo marc benioff on sharing of title and his thoughts on regulating the tech industry. tune in this saturday for the

best of bloomberg technology. this is bloomberg. ♪

brad: i japan aerospace historyon agency made this saturday becoming the first country to land unmanned rovers on an asteroid. launch in 2014, the goal is to bring back a sample from beneath the surface of the r.e.u.g.a asteroid 280 kilometers from earth. they went to see an asteroid could bring water to earth. this week, two hopping rovers sent back images. some say this mission is a first step towards the first business of -- the future business of asteroid mining. tom, thanks for joining us. tom: i spoke in a separate interview with the president. he's very excited about the scientific expiration to see if asteroids brought water molecules to prehistoric earth but he also knows the -- being

used by a spacecraft could be used for asteroid mining one day. han solo in"ht empire strikes back" taught us to never land on an asteroid. tom: they have tried this before. they sent one to an asteroid in 2005. they tried to send a very similar rover to the asteroid, and it flew off into space. second time's a charm. they sent two this time. the gravity on the asteroid is very weak. brad: talk about the long-term promise of asteroid mining. the moon is also talked about as a potential hub to stop and mine fuel for other missions to mars. why would you want to land on an asteroid? tom: the person you have to realize about space economics is a cost a lot of money to take anything to space. a figure often cited is $10,000

per pound. space companies are working to reduce that number but you should assume you're going to spend 10 grand per pound. water can get really heavy, air, fuel. you can get all of those from water on the moon or on asteroids. nasa has confirmed there is water ice along the polar regions of the moon. people have been talking about water ice within asteroids. they are going to try to get those resources while they are out of earth's atmosphere. it will save them a lot of money. asteroids have advantages for this kind of fuel manufacturing the moon does not? tom: the moon is often talked ebout like jeff bezos says h wants to send a letter to the moon by 2023 and eventually turning water from the moon into rocket fuel, because you have

hydrogen and oxygen. asteroids, there are companies like deep space resources who have spoken about that. still awhile away. a lot of the asteroids are between earth and mars. we still need to get humans to mars. brad: these rovers are japanese. why japan hasut led the effort, the exploration of asteroid mining. tom: this is a sign of how international the international space expiration is heating up. because india center probe to the moon in 2008 which scientists used to confirm there is water ice at the polar regions. they had a spacecraft in 2008. jaxa sent a spacecraft to an asteroid a decade ago. founded at their agency by merging the different corporations within japan. they, also, they have a colombo

-- going to mercury. they are stepping it up. brad: we have been talking about elon musk with regards to tariffs earlier today but he is the ceo of spacex. whatu are elon musk, you take from today's news about this japanese copper spent? -- this japanese accomplishment? this japan startup approached space ask about launching a lunar landing mission in 2020. so, spacex is involved in offering launch services. the two big ways to make money off rockets and satellite. asteroid mining could be a future business but by providing launch services spacex is in the game. brad: interesting to note the passenger on the forthcoming spacex orbital mission is also japanese. tom: i asked about that on the i-space, they announce the deal with spacex. they've very happy.

this billionaire who founded the clothing retail site approached spacex. they are interested. they know they are offering launch services may say i have these big plans to go to space. let's do this. . brad: let me ask you one last question about this jaza miaxa mission. we have these images, what we have to learn from the samples? collected ave not subsurface sample before. they are going to release a blasting cap. it'll create a crater and collect the first sub-surface sample from an asteroid. there is a lot they can learn, see if there is water molecules, organic compounds. that would tell us a lot about what an asteroid is made of. then we can plan from there. brad: fascinating. forrisen, thank you joining us. that does it for this edition of "bloomberg technology."

i am brad stone. this is bloomberg. ♪ this isn't just any moving day.

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david: if president trump called you and said i need you to come in and help your country, what would you say? condoleeza: i am happy to be doing what i am doing now. david: you negotiated with north koreans. condoleeza: when i first heard he accepted the invitation, i thought, nothing else has worked, so why not? david: on the iranian agreement. condoleeza: i did not support that agreement. david: let's talk about vladimir putin. condoleeza: he likes me. david: what are the qualities you think great leaders have? condoleeza: a sense of humility about what they can achieve. >> would you fix your tie, please? david: well, people wouldn't

recognize me i