150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need emily: i'm emily chang in san francisco. coming up, in the next hour, the big chinese hack. a bloomberg investigation revealed hackers implanted tiny microchips in servers that infiltrated centers of almost 30 u.s. companies including apple and amazon. plus, new rules for testing self driving cars are out. drivers no longer need to be human. we get the action from the hill.

and, a satire of silicon valley written by a formal google executive. jessica powell joins us later. story, the most significant known supply chain attack ever on u.s. companies. a bloomberg investigation revealed chinese hackers implanted tiny microchips in servers that infiltrated the data centers of almost 30 u.s. companies including apple and amazon. this is based on extensive interviews conducted with intelligence and corporate sources. both apple and amazon have disputed summaries of the and so has the company that assembled a servers and the chinese government responded calling itself a "resolute " butder of cybersecurity not directly addressing the allegations. washington, one of the authors of this exclusive story, jordan robinson and our

chief technology cybersecurity officer from mcafee. you spoke to 17 unnamed sources in this report, talk to us about what you found. >> we cite 17 different sources in the story. these are senior-level officials alsos the government and senior-level individuals inside of the affected companies, aws and apple. this is a constellation of sources that is robust and broad and it is a pretty comprehensive look at what happened in this attack. what happened here is that the chinese government installed malicious microchips on supermicro made -- supermicro assembled motherboards. think about this as an infection hardcoded into your computer. you cannot get rid of it without

throwing the machine away. a very powerful attack. very few countries would have this capability. what has alarmed u.s. officials is that china's control over manufacturers of -- manufacturing of computer hardware makes this possible. emily: steve, what do you make of this? we recognize a hardware-based implant would be one of the most powerful ways for a nationstate to spy on a data center infrastructure. required ismately that there is a chain of trust. applications need to trust the underlying operating system or cloud software, and that software has to trust the underlying hardware. if you are able to tamper with the hardware, you are able to have access to all of the other things that sit on top of it and

would provide tremendous insight and data to an adversary. iily: given the seriousness, want to read the responses of the companies in full. amazon said it is untrue that aws to about a compromise when acquiring elemental. that,s the company jordan, you reported was the source of the chip. apple saying they have never hardwareicious chips, manipulations, or vulnerabilities perfectly planted in any of the servers. supermicro said we remain unaware of any such investigation. in the meantime, the chinese government is not directly addressing questions of manipulation issuing a statement reading in part "supply chain safety in cyberspace is an issue of common concern. china is also a victim." jordan, what is your response to these companies pushing back so

far -- hard? jordan: the story speaks for itself. the constellation of sources ,hat we gathered from the story again, it encompasses senior-level officials across the government and senior individuals inside both the named affected companies. i cannot speculate, that is not my position, on why they might deny these allegations but i want to clarify where i did speculate on the why the companies would deny this. i can say the sourcing is brought in robust. multiple levels of corroboration between individuals and companies and the government. the story included the companies denials in full. -- extent oftate the data collected is unclear. steve, how difficult would it be

to determine that given this is a hardware hack and not a software hack? steve: one of the challenges with hardware is they are black boxes meaning they perform a specific function, but the underlying implementation of how they work is often only known by the designer. what makes this even more challenging in today's world is the way modern semiconductors and platforms are built. fore is massive requirement sub suppliers to supply many of the underlying technologies. chipmakers license what we call ip blocks, a thing that could create an artificial intelligence part of the chip or graphics part of the chip to do very specific functions. even the designer of the chip itself may not have full visibility as to all of the underlying -- how all of the

underlying components work. weaknessis any sort of in the supply chain or what i call the design chain, meaning how those components were designed, it is possible for an adversary to implant logic that would allow this type of spying to occur. emily: jordan, what is the u.s. government telling us here? you report there is still an investigation into this issue currently open. jordan: the u.s. government is in a tricky position. we thought for sure there must have been some private alert that went out and we started reporting or some mechanism for the government to alert people to this attack. we discovered the u.s. government was in a tricky position because if they nnnounced the breach, this is a issue that could potentially damaging u.s. company. problem with no

solution. that is what we walked away from in many conversations with people. what do we say to people? apple and amazon, found these chips. you're not supposed to find these. they were doing a level of analysis that most companies do not do. in many ways, they could be a model. if this approach could be a model for other companies. you have to think of hardware as a way your death toll will be compromised and many companies do not look at this. emily: does the story make this think that if this happens, what else is out there? steve: absolutely. one of the things we're thinking about is what are all of the different ways an adversary could tamper with the supply chain. even things like intentionally introducing defects into open-source software components that would then be implemented into products across the industry.

one of the ways to think of this is we are challenged already in cybersecurity by vulnerabilities accidentally introduced in the products. if there was an adversary whose goal was to intentionally place a vulnerability such that it could be exploited by them for a long period of time before it was ever found out, that would be an effective technique. in this case, the fact this was focused on a hardware component in the baseboard management controller portion of the hardware, that is really a portion of the hardware that is about making it easier to centersmachines in data . we know we can no longer have humans crawling through data centers to do all sorts of repair. that means that type of hardware has immense privilege and power. even though we have not done forensics on the specific case,

it is a plausible type of scenario that we have a lot of concern about. emily: jordan, we heard the vice president take aim at china in a speech earlier and we have also been in the middle of a trade war between the united states and china. what do you expect the fallout of this will be? the question is, what now. informationoriginal or tip about this came in the obama administration. what that signals to me is that both administrations were deeply security ofout the the supply chain and china. ands hard to tell impossible to predict what the administration will do what i will say one of the lessons we took away from the reporting, strongly, is that you will not find hardware manipulation if you're not looking for it. amazon and apple looking for these things and they found

them. in the vast majority -- and the vast majority of companies would not. a practical approach will be implementing some form of hardware analysis and inspection as part of their normal security practices. emily: jordan robertson and steve, thank you for joining us. bloomberg has found no evidence to suggest they have been -- beend in the affected by anything in this report. this is bloomberg. ♪

emily: the trump administration released guidelines for testing autonomous vehicles. drivers no longer need to be human. the transportation department's

guidance will no longer assume a commercial vehicle driver's human. toically, an initial step allow trucks to travel across stateline piloted by an autonomous system. the department of transportation already has the authority to set safety standards allowing for innovative automated vehicle design. to talk about this, i want to bring in gary peters of michigan who introduced bipartisan legislation to advance self driving cars. first of all, what do you like and do not like about these new guidelines? >> i think the guidelines are pretty clear that we have to make sure we have a framework to allow this technology to continue to move forward. existing vehicle safety laws do not allow an automobile without a steering wheel or break pedals. technologiese new piloted by advanced machine learning and ai systems. they will be piloted by machines

and we have to make sure we have that framework. emily: the administration is saying the dot has the authority and congress does not need to step in. why do you disagree with that? >> we want to do this quickly. it depends on how quickly the department of transportation will move forward on this. this gives flexibility to manufacturers as long as they are certifying they have safe vehicles and they are dealing with things like cybersecurity. this technology is moving rapidly. we want to make sure automakers have an idea of what that framework is. you are looking at some of them which will be putting up a level for cars as early as next year in commercial operation. we are looking at our international competitors. folks in europe and asia are moving full speed. we do not want to like behind. bureaucratic a

organization involved, it does not move quickly. however we get there, safely and efficiently, quicker will be better for international competitive positions. emily: what should congress have oversight of or input in? sen. peters: this creates the framework and allows companies to have exemptions to current regulations in place now. it will also ask the federal agencies to move quicker. in the meantime, they can put these cars out on the road provided there is validation has to their safety. not just physical safety and operating on the road, but cybersecurity as well. emily: given you want speed here, do you foresee passing legislation that you introduced anytime soon? sen. peters: we are hoping it will. it is passed through the house and our version passed unanimously. we are working with a variety of stakeholders related to this issue.

where close to coming to an agreement and getting its move forward. we would like to have this done by the end of the year. this is being done on a bipartisan basis. i'm working with the chair of the commerce committee who has been very focused on this as well. we hope we can get this moving quickly. emily: do you have a sense of whether senators in your own party will come to your side? sen. peters: that is why we work with everyone to make sure we have language people are comfortable with. we understand we need to have a consensus of folks who believe this is the right way to go. it did pass unanimously in a bipartisan way out of the senate commerce committee. it enjoys a bipartisan support. we have a little ways for the to go before it gets on the floor or is attached to another vehicle moving in the senate. emily: what is your biggest concern when it comes to the safety of self driving cars? sen. peters: obviously the

technology has to be tested. there needs to be a comfort factor that this technology will indeed allow these automobiles to move through a very competent environment if you're in the city. part of that testing requires these vehicles get out of the road. a fact that has been described saying a few hours on a public highway is weeks of test driving. the important thing to remember is we believe we can eliminate most accidents in this country. 95% of all accidents are human error. nearly 40,000 people die on the highways every year and hundred thousands -- hundreds of thousands are injured. emily: you travel to south korea and saw the competition we say's -- face. is the u.s. at risk of falling

behind? sen. peters: there is no question other places in the world are working very aggressively to bring these vehicles to market. i was with hyundai and they have a very advanced vehicle that i have the opportunity to ride in. they are expected to commercial that on a quick timeline. the chinese are investing billions of dollars of this technology, the same with european companies. there is a believe that whoever comes to the market early will be at an advantage versus all the other competitors. i want to make sure those are in american -- our american manufacturers. we have traditionally -- are american manufacturers. we have traditionally been a leader and we need to continue. emily: thank you for joining us today. the network for freelancers goes public. can it keep up with the likes of in?oln -- linked we 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. ♪

emily: the world's largest freelancing network has raised $187 million in the initial public offering. the platform was formed through the merger of competing companies in 2014. now it boasts 375,000 freelancers working for almost half a million clients. we caught up with stephan to talk about the idea. the excitement of the

freelance economy we serve, people tend to be highly skilled. they usually have a college degree so these are people that are truly doing this by choice. if they want the transitional job, they can easily get one. with up work, they can have more flexibility and they can work on the schedule they choose. they choose their clients. on top of that, you make more money they make through the local job market. from what we hear from freelancers, they would rather take a higher pay and choose their own benefits then what would happen through a transitional employer. 60% of the freelancers, we asked money wouldhow much a transitional employer have to pay you to convince you to take a full-time job with them? 50% of the respondents said no amount of money. this is something people do by choice as opposed to necessity. emily: where does the growth

come from? -- >> where does this growth come from and where would you put your money to work? stephane: we will continue to do what we have been doing which is getting more new clients signing up every day as well as getting the existing clients to spend more on the platform including cross-selling clients from one area to another. we see clients start by hiring and then we get them to realize we have designers on the platform. progressively, one thing leads to another. it is ultimately about creating more jobs on the platform because we need more of that to fulfill the need for work that freelancers have. >> you said this is an increasingly competitive market. in, google,nked

amazon, who are you most worried about and what are you doing to be sure some of these big tech giants are not taking share from you in what seems to be an attractive space for a lot of these tech companies? stephane: the reason why investors have been interested in the company is because the strength of the competitive modes in this business. this is not an overnight success. this company has been around for almost 20 years. it takes a long time to build a network. going,u get the wheels it works itself. 80% of the business on the buyer side comes through free channels including word-of-mouth. at some point, it will accelerate. that is one of the main sources of competitive modes and we think it will be hard for others to imitate. we continue to innovate and

spend a lot of money on research and development. we use freelance a lot. reallyable to attract tough talent from around the world to innovate and continue as we build this freelance economy. barinkahat was alex with the ceo of upwork. coming up, the top story of the day. china's big hardware hack. bloomberg reports a chinese military unit manufactured chips embedded in servers of almost 30 u.s. companies. morehead. plus, jessica how -- more ahead. -- wants toll make make sure that her new book is not a tell all. more on that, next. this is bloomberg. ♪

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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. emily: this is "bloomberg technology" and i'm emily chang. amazon and apple. the chinese government didn't directly address the allegations. the story has mike rounds in south dakota calling for more comprehensive exabets from the united states. he said ld us what earlier. >> over the next five years, defense capabilities aren't going to be enough but deterrence to slow down the

cyber interference that is occurring. emily: we have the senior fellow at the asia society. and issac, our reporting, 17 unnamed sources telling us if this is true, what is your response to this? does it surprise you or not a surprise at all? >> it is a surprise. this was an excellent story and deeply reported. i think where we are as a society in america is starting to wake up toll all the different things that the communist party and its various arms have done to perhaps medical is too strong of a word but to interfere in various american processes and this is a very detailed look at an example of where the party got very, very deep in disrupting the american supply chain. emily: i want to read the statement of the companies again. it is untrue.

amazon said they knew about the supply chain compromise with hardware -- this is a company that deployed the server that had these chips embedded from apple. on this we can be clear, apple never found it on any server. d also, we remain unaware of any such investigation the company that bloomberg is reporting made these servers. look at the statement from china. the chain is an issue of common concern and china is also a victim. the chinese government not dennying it, what do you make of that response from the chinese government? >> it's interesting that the statement comes from the foreign ministry, which is one of the few bodies of the party that has ar spokes person that speaks

regularly to the american press. it is possible that the people in the foreign ministry don't have any idea what the party's military was doing and that they got instructions to address it this way or frankly just didn't know. unfortunately, the party military does not have a person that speaks to international media and no way for journalists to go in there and get the military's view on any of this. even if we were able to, it is likely that the military would not admit to having done such a complicated and devastating process. emily: tensions between the u.s. and china already high. we are in the middle of a trade war and the administration has expressed concern about the national security concerns with respect to china. how do you expect a story like this might up the ante or

increase the level of tension that we are now seeing between the united states and china? >> with vice president pens' astonishing speech today which was the most critical by a president or vice president towards china as long as i can remember, i think we really are at the perfect storm in all these different areas of u.s. society having things that frankly they feel that beijing did wrong, ways that beijing has wronged them. we will see more reporting like this come out because people in the intelligence community will be willing to talk about it and see a response from government and civil society and academics about ways to push back on china's influence in america. i want to make it very clear, china's influence is not chinese people influence and neither myself or others would make it more difficult for a china

student to study here and it is about the communist party and not the chinese people. emily: are they going to move their supply chains outside of china? >> i think we will. and stories like this are good ammunition for the trump administration to say, besides the political wind that we got by you moving production to america or possibly to other parts of the borled, it is a security win for you. even though it is cheaper to manufacture in china, you have to bake in the risk. emily: thanks so much for weighing in. bloomberg has been a supermicro customer and no evidence to suggest that bloomberg has been affected by the issues raised in this article. jessica spent years shaking the communication strategies. that is google.

the former google v.p. describes rself as a technophobe and serves c.e.o. as a startup company in musicians. in her new book "the big disruption" but essentially true anry, she gives us a take on inner that is calling for change. the book is now out on media and the first full length book to be published and jessica powell joins us now. why did you write this? >> i wanted to shed critical light as the tech's hypocrisy. but we are causing a lot of serious problems. i wanted to approach that with a funny approachable way. emily: this is a sat tire and

not to be confused with a tell-all. you had a perch inside one of the biggest tech companies in the world and you put your name on this and thought about writing it anonymously. how did you weigh the risks and the benefits? >> you work behind the scenes, ideas doing this, it's kind of terrifying, but at the end of the day, and i didn't want to think it was about a specific company. but there are few senior people in tech that spec out. there are new companies or still on the payroll. i thought it was important to put my name to it. emily: your job was to defend silicon valley and when you look at the plot lines, the sales guys battling with the engineers and female employees and wild social experiment and the yoga -loving employees, i think they

love their lemon but is it fiction or fiction alimb? >> it is inspired by google. i worked in the startup and large companies. larry page is not a c.e.o. obsessive entrepreneur. emily: talk to me about some of the themes here. you are like a #me too and the woman who buys into the company. how should we interpret that given the diversity problems in silicon valley? >> i wanted to eliminate women or people of color because we wanted to make a point. we aren't given the same opportunities. so the one female character in the book is a female reaccept nigs who sambs the company p with her ininvestigation and she

is back to being a reaccept nift. emily: some of the challenges that google is facing, number one trying to get back into public. some employees don't seem don't seem happy with this. is it the right call? >> i'm torn on the china issue. i believe in moral imperatives. what google did was great. but on the other hand, i think it's a fair question to ask what tangible goods did it do? in that censorship is worse in china and there is an argument to be made that more search competition by google or someone else and might do less censorship. so i'm willing to give them the benefit of the doubt to see how they would plan to build in safeguards. i think the devil is in the details. emily: google did not take an

opportunity to testify before congress. now they are sending -- you were working at google and would have been part of that decision. was that a mistake? >> i don't know what the thought process was. but you kind of answered the question, they didn't go and now they have to go any way. emily: when you say at times you had to defend the indefensible. >> there is a real problem that we have kind of black and white thinking. lends to moral obstructionism. would you say two billion users, maybe a small percentage of that is bad actors. when you look at that, there is a tiny percentage and easy to forget there are thousands and millions and that is electoral interference. it's really horrific stuff but gets extracted to this data point where you don't look at

that in a human way and think how can we solve this in the best way. emily: we are entering where tech is unpopular. and facebook announcing that 50 million were attacked. is this the beginning of a pro hating?nged era of tech how would you handle it? >> absolutely. i don't think the valley has enough interaction with the outside world. they build what they want and impose it on the outside world and the outside world is getting angry about the power dynamic. it will come to a head. if i were at google or any of the large companies, i would want to have heart to heart and self-interrogation. are we asking ourselves at the start what the potential and

intended con sequences. you are building a platform for free speech and anyone can say anything. it's not rowses and wonderful things. what does that mean? the starting point in some of these companies whenever a problem arises, let's solve it with machines or a.i. a.i. doesn't do a great job today. and throwing your hands up in regulateors says. >> why media and what they say about the publishing industry? >> i thought it was appropriate that it would be on a tech problem. it was a free book that you can read it on your e arrive reader. and none of the publishing turn-roorned times which made it exciting. emily: jessica paul -- powell.

check it out on medium, "the big disruption." coming up the sustainable benefits of vertical farming is undeniable but what does it mean for farm labor. how it is changing tomorrow's jobs. this is bloomberg. ♪

emily: by 2019, the global population is to grow by 8.9 billion. indoor farms can transform industrial land into cash farm ing. what does vertical farming immediate for labor? e investigate.

>> it might look like we are inside a spaceship, but this is actually a farm. the crops are grown mostly by machine with a help of a few humans, like this woman. this is an early peek of new farming, promising twist. only if the robots don't replace her altogether. >> i'm a vertical farmer. > katie works for a startup. its farm is here in this industrial park here in new jersey. it's the last place you would expect to see any sign of life. ep inside and you will see a factory and a lab.

trays of produce are vertically stacked to save space and each of them is given the amount of light, water and nutrients at the optimal temperature and humidity. it is precision, which is why katie can grow faster and less ater with no pesticides. >> whoa! >> this is sour. >> i know. >> the majority of the facility s automated. the data is collected by sensors and a computer controls growing conditions for the crops. for the things that the machines can't do yet, katie and her fellow farmers fill in and that is dictated by the software that runs this operation. >> let me know and that's how i

et the data. >> after a full day of the farm she brings home samples to her husband jake. on the menu are two items from katie's farm. mixed or pesto pasta and greens for a salad. >> i'm terrified. cheers, guys. >> katie fell in love with environmental science. but after graduating, she struggled to find a full-time career in the field. >> has had to deal with me a lot. coming home to me crying and trying to figure out if i'm making the right decisions. and then somehow online valerie

popped up. >> she told me about this job. it's like an indoor vertical farm. this sounds like total b.s. i took my work truck and swing around and see what it was about. drove up to it and didn't look farm at all. >> i figured i would check it out. and exactly how he described, but i gave it a shot. >> in farm at all. >> 2017, katie joined. she became employee number nine. valerie is backed by some of silly con valley's top investors d $30 million funding, it is expanding and she got to lead a

team of her own farmers. the world's population is set to reach 9.8 billion by 2050. 2/3 will live in cities and we will need technology to sustainbly feed everyone. the key to making food affordable is to make more with fewer farmers. but no matter how the steps, katie thinks there is a step for her. >> i think we can work closely with technology. but it's nice to have a human there and have robots don't have nybody to talk to. emily: coming up, online education platform is the most popular way to earn languages online. ♪

emily: if you want to learn a language online, now with 300 million users. most downloaded and was chosen by apple. it is designed to make education feel more like a free game. can it be sustainable? >> yeah. we think it can. this is what we have been working on for the last few years. it is a company where we wanted to make free language education for the world. but at some point as a for-profit company we started tomon advertising. we actually put an ad and have enough users that has generated tens of millions of dollars and there is a subscription for turning off the ads and access

to dual language offline. we are pretty proud of the fact that we are in the top three grossing apps. but all of our content is free. emily: what sets you apart from row setta stone and the like? >> it was a mobile first -- it was an app for us. it was for p.c.'s. we realized that the main thing to learn a language is to keep yourself motivated. and make it as addictive as possible and get to learning a language and the third one it's free for the majority of the users and if you don't mind seeing ads as opposed to paying hundreds of dollars to use it. >> there has never been a multibillion company. do you think it will be you?

will you sell to a big-tech giant or go it alone? >> we think we can do it. this is not going to happen this year, but we are on track and probably be ready and don't know if we will be able to do it. but just looking at our revenue growth. emily: you get to that multibillion mark? >> i think so. emily: how high? >> it's hard to say. but i think we can do a billion dollar business. language learning in the world, people spend $808 billion. are the most popular app to learn language. mily: duolingo and we will track you. "bloomberg for

technology." i'm emily chang in san francisco. ♪ ♪ >> welcome to "daybreak

australia." shery: we are counting down to asia's major market open. haidi: these are the top stories we are covering in the next hour. u.s. stocks fall the most since june. the s&p 500 falling to a three-week low, crude plunging the most in seven weeks. releases a tweet calling