emily: i'm emily chang in san francisco. coming up, elon musk's settlement with the ftc. he is out as tesla chair and he combined will pay a $40 million in fines. we will look at the road ahead. instagram has a new boss. the vice president of product will lead to come to me -- the company, taking over for the founders.

the u.s. agrees to trade deal with mexico and canada after months of high-level negotiations. we will look at the impact for tech as the china trade war continues. the securities and exchange commissions is making elon musk pay a price for his tweet.s funding secured musk agreed to step down as chair of the company he founded. the settlement mandates separate 20 million-dollar fines for tesla and musk. the money, going towards harmed shareholders. the chair praised the agreement, saying the matter has been followed by investors. when companies and corporate insiders make statements, they must ask -- act responsibly. what happens now for tesla? and what about musk, who remains ceo? studio, you in the have been busy this weekend covering tesla. what happened over the weekend that triggered this?

>> we don't know exactly but the stock tanked 14% friday and that probably had influence on musk's thinking. he took the deal and this was a big weekend for deliveries. the narrative is back on, how did the quarter go? what the ftc wanted in the original suit was more extreme than this result. did musk and tesla get off easy? >> the end result for musk and was very, tesla positive. the concern was if he was no longer ceo, the company could suffer, it could hurt employees and shareholders and car owners. i think this is an excellent outcome and allows him to be ceo . the company needs to have more governance in place. this may notore, have happened. i think it is good for the company that they separate the role.an and the ceo

they are adding 2 independent board members, and i think elon musk is lucky and this is a great outcome for him in the company. emily: you role. they are adding 2 expect separae chair and ceo roles will have an impact at the company, where it elon musk's larger-than-life? appear to be moderating his behavior. dana: he is still on the board and could be reelected as chair in three years. it is a timeout from the chairman role but he is not banned for life. what matters is, who are the independent directors going to be? is the independent chairman going to be someone existing or someone new? emily: do you expect this will have an impact on the governance of the company? yes. although the board is very friendly to elon, they needed to increase their governance, and i think it will have a positive effect.

i think the outcome is very positive. there was concern on friday that this could be detrimental to the company and there were people predicting if he was removed as chairman, it could put the company into a death spiral. would have negatively impacted the company, but having him remain as chairman, or as ceo, is most important and that was the outcome. i think this is a positive step and they can focus on production of the model three and the introduction of the semitruck and the new model y and the roadster. emily: we are waiting for metrics on model three production. you have been reporting all weekend. dispatched reporters to multiple tesla locations to monitor delivery. what did we find? dana: they were jammed. across the country, the brooklyn store was quiet saturday, but in

chicago there were 75 people jammed into the showroom. multiple reports on social media of people getting their cars as late as sunday night. it was a heroic end of quarter push. employees were volunteering at the showrooms. lots of existing tesla owners helped out. we need the actual numbers. emily: what are the numbers you will be watching in terms of whether tesla can deliver on these promises, in the midst of the controversy? ivan: anything over 3000 model threes per week would be positive. week a few in one months ago but there is huge demand for the car, which is good. the model three is spectacular, x. there is and lot of demand for it. there is a lot of excitement around the car and the company and that is the key that will keep everything moving forward. emily: why is this quarter so critical? dana: musk needs to be

profitable. he expects to be sustainable -- sustainably profitable in the second half of the year. if they have a strong delivery showing, they could show a quarterly profit for the first time in several years. we now have suggestions on independent board members. we will speak with gene munster later. he is suggesting al gore as a potential chairman for tesla. what do you make of these names thrown out there? isn: i think somebody that from the auto industry as chairman would really be more positive than somebody like al gore, who is outside the auto industry. emily: like the leeco -- like who? ivan: bob lutz has been very , butcal of elon and tesla there are a number of retired and even current executives that would be very additive to the

company. emily: what are your reactions to the names we are hearing? dana: their name -- there needs to be another woman of the board. somebody with utility experience. traditional auto, i can't see tesla going along with that. been to disrupt votto. i don't know what the process is for searching for the new board member who will decide if they are bringing in a search firm or not. emily: what we know about the timeline? i am imagining they will try to get new board members as fast as possible but i forget what the exact deadline is. emily: aside from model three production, what are the other challenges ahead? he promised profitability. early sundaynday, morning after the settlement was --ounced, he said another sent another he mailed to the entire staff talking about what

needed to be done in order to deliver on this goal of profitability he has promised. ivan: i agree that the new board member should be a woman in light of the new bill that was signed, and they need to have some diversity on the board. to bee focus is going continuing ramping up the model three production, and the goal to profitability, because those are the key promises elon has made. then, it will be the introduction of the semitruck, which is getting a lot of orders. canada just placed an order for 30 more trucks, because their goal is to be 80% renewable fuel for their entiren truck fleet by 2020. there is a lot of interest from trucking companies and consumer product companies that truck goods in the new truck. that will be the next game changer for the company. emily: ivan is referencing the california bill just signed into

law requiring all public corporate boards have at least one woman by the end of 2019, and more aggressive goals in coming years. thank you so much. i know it will be a busy few days for you, thank you as always. coming up, the latest facebook breach is the biggest ever, 50 million accounts. unlike cambridge analytic up -- i analytic up, the integrated -- the outrages dialed down. check us out on the radio, on our mobile app and sirius xm. this is bloomberg. ♪

the co-creators

of instagram threw in the towel and facebook just named its new leader. he was the vice president of product at instagram and has been with facebook since 2008. he will be tasked with running one of the company's most important product. joining us is a reporter. adam mosseri? >> he worked on the news feed and was brought to instagram in the spring to be the director of product. in someped bring facebook goals for instagram, and now he will take it over. the way this was managed, you are seeing the picture of several people together announcing this as a friendly transition. he says on his instagram that he plans on establishing the same

sort of values and focus on the communities the founder has. after the news we reported about attention there has been in recent months between instagram and facebook that led to the areder's departure, they trying to explain today that not a lot is going to change, although gradually, it will. emily: you reported he was the most likely person to get the job. we heard employees have been frustrated, nervous. what is the feeling now? mosserieople expected would take over the role. the employees are facing a problem. there won't be somebody with a founder level authority to advocate for what instagram's vision of the future will be. maybe few were bold bets that are instagram specific. the battle, for example, instagram had to fight to launch instagram tv, a competitor to facebook watch. will instagram be able to do things like that in the future?

this is something that, the title for mosseri is head of instagram, not ceo. what are the anxieties gekko instagram because more of a product division of facebook and less of its own company within a company. emily: other news about facebook that we have been digesting all weekend. this book says it was a sophisticated attack that led to the attack of 50 million accounts. these are the words of the facebook vice president at a panel monday, talking about the latest and largest data breach in facebook hit story -- history. unlike the cambridge analytical scandal, this was an actual hack. what can the fbi do? and headark, director of digital investigations. he was a special agent with the

fbi, investigating international cyber crimes. what do you imagine the fbi is doing here and how are they moving ahead with facebook? mark? they are leveraging some of the preestablished relationships they have at facebook. this would involve partnering and away with facebook or outside investigators and law firms they brought in to try to preserve the evidence. bring the main reasons to in law enforcement and working with the fbi is to preserve perishable evidence that may be on servers domestically or internationally. emily: what makes this different lyticahe cambridge ana scandal, they were using information that users, whether they understood with a consented to, had consented to be used. here, you have an actual attack on facebook accounts, at which point the hackers had access to everything in your private

profile. why aren't we hearing the same level of outrage? there was a tangible misstep in the cambridge situation, humans decided it was fine for this developer to get all this profile information from users. facebook said, take information on these people and their friends. once you have it, we trust the you won't do anything bad with it. the developer passed it along to cambridge analytica, which helped donald trump yet elected. -- get elected. the actual information in this case is much worse. this is not just public information, this is private information, your private posts, the ability to post on your behalf, the ability to log into has aother app that facebook login connection. it is more serious. emily: how serious would you say this breaches? is very significant,

by far the lead just -- the largest data breach of facebook. it is very large. so manyhack, unlike large data breaches in the past where people are socially engineered out of their shingntials or other phi attacks that may do them into providing their password. this seems to be a true hack. a vulnerability was taken advantage of by the attacker, who surreptitiously took advantage of people's accounts. it takes a sophisticated attacker to pull off something, having intimate knowledge of facebook's applications. emily: facebook says we may never know who is behind this. what is your suspicion? or ais a nationstate criminal organization? how are the consequences different? mark: i think based on the number of users involved and the type of attack we heard, i think

investigators need to look at all options. that means the criminal element, nation-states.d don't forget insiders. somebody had intimate knowledge of this. the amount ofbout data available, think back to the yahoo! hack and other large data breaches, it is a wealth of information. you have to think about what motive would somebody have. somebody can't take 50 million personal information of 50 million users and sell it on the dark web. the has to be an alter your motive. emily: what you think it could be? of myespionage is the top list. if you look at the groups that , beyondnefit from this what tech was attributed to russian intelligence officers that were using it for targeting individuals, government officials and executives in the private sector. there is a wealth of information on facebook from 50 million users that could be used for

espionage purposes. mark zuckerberg and sheryl sandberg were also targeted. the mention of an insider is intriguing. mark. so much, sarah and the fbi has a busy week this week. coming up, competition to be the first five g network has heated up. verizon may be a step ahead of the others. ♪

has begun race to 5g and verizon is off to a head start. they announced what they call the world's first commercial 5 g network. they are offering three months of the service to residents in houston, indianapolis, l.a. and

sacramento, with plans to expand in 2019.le 5g network caroline sat down with the ceo to talk about the future of 5g. casee first use [indiscernible] it is a revolution, what you can do with wireless. we announced two weeks ago that you can order it and today, we will make the first come -- the the world gets in 5g. >> why is it revolutionary? to many, the internet of things and the application of 5g doesn't become a reality until five -- until 2019. >> there will be a lot of enterprise solutions. of course, as consumers we will get smartphones in 2019, which will be a new experience. there are so many facets of 5g.

there are two things you can trade on. now, you have latency that is low. but relies can be extended for a long time. there are so many things you can do. marketk this is a new where we can address our customers. >> how many signed up? >> we had massive interest. inhad so many people coming and checking if there's a code is included. we are starting small, and -- their zip code is included. we are starting small. >> when does it help your bottom line? 4g, this time we have enterprises, home, wireless customers and a lower cost by using 5g. the return is easier to see that

in 4g. >> how quickly? >> you will see this over years. 4g customers are important to us and they will be there for a long time. we need to see they have a seamless experience. volume-wise, in 2020 or something like that. >> competition is heating up. you feel about that? >> we are focused on our customers in this moment and i think we are more focused on executing our strategy. great set of assets to execute on. we don't spend too much time thinking about what others are doing. >> you have been streamlining your workforce. when you might you see this add to jobs at verizon? >> right now, we have a volunteer offer because we want to be ahead of the curve when we are to fence boring -- when we are transforming. we have a program we launched working onand we are

another one. they are not correlated. we are doing a volunteer program because we want to see employees have a way to take the offer if they want to. >> when will you see the enterprise make important moves? how important is it when you are rolling out on the internet? >> it is important. when you come to 5g, you can think about the real-time enterprise. we're talking many enterprises. we have good relationships with big accounts. probably the latter part of 2019, when the devices will be more mature and the network will be there. >> what about the regulatory perspective and the way in which , peoplere fighting out are looking at net neutrality. how much do you feel like, come from europe, the

u.s. is where you want to build a business focused on consumer enterprise? >> the regulatory environment is important. come from europe, the u.s. is where you want to build a[indiscernible] and need to go hand-in-hand make the rice investment -- the right investment in the country. this country has their own set of rules and we are supporting those. 5gou have gone the route of rather than content. at&t thinks content is king. how sure are you that you made the right decision? >> we have a lot of content. we have our brands with yahoo!, yahoo! finance and entertainment. the discussion has been more the distribution of television and all of that. that is an area we are not that interested in, but content will play a vital role. we partner in some areas. >> no acquisitions? >> not a large entities everybody is talking about. we are happy with assets we have. back, asen we come

elon musk prepares to step down as chess left -- as tesla chairman, we will discuss who could make the shortlist. ♪

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emily: this is bloomberg technology. a new chapter for tesla and elon musk. he learned it is tough to win a fight with the fcc when -- the ftc one-day agency plays hardball. he is out as chairman for the next three years. i caught out with gene munster -- caught up with gene munster to talk about how this will impact the governance of tesla. >> it allows the company to have more structure. has has been the piece that been missing, especially over the last six months in terms of behavior.ig -- elon's

giving up the chairmanship will provide a new level of structure. that allows the company to better retain existing employees, which has been a problem over the past year or it separately, recruit new people. this, getting rid of his dual citizenship as chairman , it provides an important opportunity. this is a gift tesla got from the ftc. the board didn't -- the sec. the board didn't do this on their own. emily: you are suggesting names for the new directors. ceo and former boeing another is al gore, who you suggest could be chairman. he is a fairly divisive person, though he has been very supportive of tesla in the past. why these names? have you had conversations with them? >> i haven't had conversations with them but i think they make a ton of sense for two reasons.

, his takee of al gore is, renewable energy is a big part of what he has been advocating for many years, and i think tesla's mission, which may surprise some people, is to accelerate the adoption of renewable energy. that sits well with his mission. the one challenge with his chairmanship is that he is currently on the board of apple, and i think he enjoys that role. to me, he is the ideal person. in terms of bringing in the old boeing ceo, this could be appealing to elon in the sense that the space industry, aerospace and his expertise on the manufacturing side i think would bode exceptionally well. either of those would be a home run for the company, and i think people toose are two

elon would agree to, which is important. noty: tesla's problems are behind it. we are waiting for an update on model for reproduction. what is the biggest challenge i had? -- the biggest challenge i had? we will get numbers probably tomorrow, maybe today. they typically report those at the beginning of the third month of the quarter. based onst expectation the september 70 blog post from elon musk was it they have doubled the production of model three. if they do that, that is better than 50,000 model threes produced for the september quarter. i think they'll be a positive. some investors look at elon's published comments with a grain of salt, so the fact that these are formal numbers will be viewed as a positive. it is a big deal because this is what they need to do to scale. emily: let's continue our

conversation on how tesla's governance may change with max. do we think musk's behavior will actually change? >> i think in all likelihood this was embarrassing for elon musk in terms of his relationship with employees, his public relationship periods -- his public relationship. penalty that tesla agreed to, you would think that would make him think twice before he tweets something. gene pointed out, this is still elon musk's company. even when you add in the independent directors, he is very close with many board members. he is still ceo, still the guy in terms of the person customers think of as associated with this. pretty muchine him

going back to the way things were, maybe with a little bit more caution than before. sentiment also requires the board to create a committee to oversee his tweets and any communication with the public. how do you think that will work? max: good luck. , itway it was phrased looked like they only have oversight over tesla related tweets so i don't understand how that will work. my guess is there will be some sort of audit or some sort of way they can formally say you shouldn't have tweeted that. it is hard to imagine he will have to run most of his tweets by compliance. you would think they would try to come up with a system where if you will tweak something that has to do with financial information, there would be a process. emily: we have learned tesla is applying to set up another 4000 square foot tent to protect

produced.hat it has what are the implications about how well production is going and whether they can meet the goals musk has said they would meet? max: the tent is not as big a deal as the last one. wereast tent, they actually making cars under it. by auto industry standards, that is kind of strange and maybe a little desperate. this is a way to store the cars that have been piling up, the tesla hasn't been able to deliver, without them getting rained on or damaged. piece ofnother evidence showing they are having trouble getting these cards to customers, which is no small thing.

the question of how many they made is obviously a big one. we will see, everybody assumes that because of the september seven blog post, they will meet their goal and exceeded by some amount. we will see how much that is. the other big question is, how many are they able to deliver? deliveries will lead to revenue and profitability. profitability is crucial for tesla now because elon has gone around saying they have to be profitable, and tesla has all this debt. many people think it will have to go back to capital markets. if they can get to the fidelity sooner, that will be huge and give them the upper hand -- profitability sooner, that will be huge and given the upper hand. emily: we will have those numbers when they come in. max, thank you. the trump administration is

suing the state of california over its net neutrality laws after jerry brown signed a state bill in defiance of federal regulations. the legislation prohibits isps from stratifying users and who can paythose for faster speeds. it prohibits locking broadband foriders and charging faster access. the trump administration filed a complaint accusing california of trying to second-guess the government's authority to regulate internet providers. [indiscernible] 165 companies with all-male boards will have to find one or more female directors. berequires at least two female, and those with six or more directors will need at least three women on the board. this is a threshold that many of

the state's biggest companies, don't currently meet. still ahead, nasa is no more. toh a new agreement set replace nafta, what it means for tech.

emily: the u.s. has reached a trilateral they deal with canada and mexico covering $1.2 trillion in trade. the replacement for nafta comes

after months of negotiations between the nations. president trump touted the deal from the white house. >> it is my honor to announce we have successfully completed negotiations on a brand-new deal to terminate and replace nafta. emily: what does it mean for the tech industry? the deal has a focus on auto and intellectual property. let's discuss with the co-author of a new book, "the leadership how consequential is this for the business and tech community, especially given the trade war that is happening with china? >> i think it is very important. just renaming the deal gives it new life. there are certain specific fundamentallyt mean we will have more inflation in the united states. it will make prices go up. for the tech sector, it actually shows there is hope for a deal with the chinese, we will get a

lot of aggressive language and suddenly, you get a deal. this is potentially promising. ofly: there is the question tother the bluster will lead the consequences the president threatened, or whether this will ,n general, it is just bluster potentially marketing on behalf of the president. pippa: bottom line, the president is a property guy. this is how you do property deals. you put everything in the -- on the table and say everything is up for negotiations. you make a lot of threats. this reflects the president's negotiating style whether we like it or not. usually on trade negotiations, you reach impasse after impasse. emily: we know the traditional auto industry is affected by trade with canada and mexico and has been fiercely competing with

tech giants in the realm of self driving and connected cars. what does this mean for u.s. automakers? pippa: automakers are going through vast change. already, we will enter the driverless car era we won't need the combustion engine. so much innovation is taking place anyway. is going to raise the cost of purchasing automobiles in the u.s., so workers will get paid more, parts will cost more, and that cost will get passed on. it will show up in the form of higher inflation rates and higher inflation rates for the general public. that will be an issue for the fed. take from one hand and give with the other. we get a deal, but it has consequences that are beneficial for workers and adverse for .eneral inflation circumstances it is an interesting exercise in

leadership. the president will claim credit that he has gotten something done that people said was impossible and it is hard to take away from that. it has to make you encouraged that we will get some sort of equal outcome on china. emily: the dynamics with china are very different. the threat, the concern there is there tech leadership -- their tech leadership, whether they an aibeat the u.s. in arms race, how will that impact the actual fallout from this potential trade war, or a resolution if there is one? pippa: i have a section about this in my book. race, in the new arms which is for computational power. the chinese are building a facility right now which will have one million times theutational capability of entire planet today in about two years time. we introduced a supercomputer second whatin one

takes a human 6.3 billion years to calculate. this is where the action is. the more data you have, the more you need computational power to support it. that is the arms race. whatever deal we make on trade, it doesn't begin to encompass what the new issues will be. author of "the leadership thanks for weighing in. the deal is timely for automakers. manufacturers, they are engineering a return in a decade with a car sharing service and selling vehicles. bloombergoke with ahead of the paris motor show. >> this is a timely decision because we are now preparing for our u.s. come back, and this is part of the framework we need to

know before we make the final decisions, which we intend to do within the next few months. we are eager to listen to president trump on this matter, adapt at psa group to conditions in which we operate. we will adapt our strategy to the conditions that will be set -- byu.s. administration the u.s. administration. >> you said psa would come back to north america within the next 10 years. could that accelerate your plans? >> i don't think it will accelerate because we want to do things property -- properly. we want to learn about the u.s. consumer expectations, and we are already operating in the u.s. in terms of mobility services in order to learn and understand this market as precisely as possible. we will go step-by-step. we are preparing our preparingon model and

one needs to be done in terms of manufacturing. we have started to prepare the engineering of our products to .e u.s. regulation compliant all of this is under planning and we need to synchronize the different parts of this business model to make it happen. that should be done within the next few months. this is relief in the short term. we have seen new tariffs between the u.s. and china. how have the new tariffs impacted your production and prices? >> most of our production is in europe for the european market, and china for the chinese market. of course, there is cross manufacturing around the world, but it is reasonably limited. we think we need to produce our cars close to the market where they are bought. we believe manufacturing our

cars near the final destination makes sense from a business model standpoint, from an environmental standpoint, and from a customer expectation adaptation standpoint. so.us, it is natural to do of course, for global companies like ours, we are sensitive to the tariffs and we believe in terms of wealth creation, it is better to have lower tariffs than higher tariffs. less tension and better collaboration across nations and communities. but we will adapt. ceoy: that is the psa speaking to bloomberg ahead of the paris motor show. a science fiction series has a dystopian view of tech. way we watchge the the show. how netflix is giving viewers a say in "black mirror," next. ♪

emily: netflix changed the tv game once with binge watching, and now, it is switching things up again. the company is developing a series of 20 and venture specials -- choose your own adventure specials. science fiction series "black mirror" will be one of the first a the projects, debuting choose your own adventure series . how will this work? >> we don't know all the details yet, but people will be of the watch, then choose from several different endings of the episode. the season will start in december, and this is not totally new for netflix. they tried this a couple times

on children's programming. this is the first time they have taken a hit show and tried to do this. emily: how do you think multiple storylines will impact viewership? with the kids' show, maybe not as much but when people have an emotional connection to a series, part of that engagement is driven by how it ends and not knowing. chris: this is not entirely new. hbo tried this. if you think about the lives singing shows, you could call in and pick the wing -- the winner. a lot of people are watching on mobile devices, so it is easy on your ipad to click a different ending and if you think about, the last episode of the sopranos and wondered if this was a better way it could end. maybe this is the future. emily: netflix is a huge budget. that this will

entail? is it a drop in the bucket? chris: it will cost more, which is why studios have avoided this. you may even pay double work in all these differentchris: endin. in the overall budget, netflix has 700 chosen development, $7 billion of production spending. this won't cost that much. emily: there will also be video gaming elements incorporated into this series? explain how that will work. chris: there were rumors whether netflix would get into gaming directly and that is not the case, but they have been licensing a lot of ip like minecraft, and turning those into tv shows. that is a videogame that is interactive. they are trying to use this technology in the same way. minecraftit is just starting. " will belack mirror one of the first shows they are experimenting with.

is this something we would expect netflix to do season after season? chris: we will see. a watching has always been passive thing. you come home and lay on the out and whether people want to interact with their tv that way remains to be seen. if there is a company that will try it and a time to try it, it is netflix, and now. thanks so much. fascinating. we will see how this works out. that does it for this edition of "bloomberg technology here: -- don'terg technology." miss our show tomorrow. this is bloomberg. ♪

>> welcome to "daybreak: australia." >> i'm in bloomberg world headquarters in new york. >> and i'm in hong kong. we're counting down to asia's major market opens. >> here are the top stories we are covering over the next hour. u.s. stocks ending mixed with multinationals rising. domestic: the most since july. -- domestic, falling the most since july.