♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up, in the next hour, the big chinese hack. a bloomberg investigation revealed revealed hackers that it did not just impact hardware, but software. another tweak storm from elon musk. the ceo fired more than a dozen messages lashing out at fcc and short-sellers.

and tencent musics $1 billion ipo continues the surge of u.s. listings by chinese companies. competitor and investor, we ask what it means for the streaming music landscape. first to our top story, we take a look at the bombshell businessweek report for how china. the most significant data hack. they managed to install a hardware hack in the data centers of newly 30 companies, but they did not stop there. malicious software was introduced and that code allowed attackers to secretly take over servers. one customer targeted was facebook, which told bloomberg that in 2015, we were made aware ofmalicious manipulation software from industry partners from our threat intelligence industry. while facebook has purchased a limited number of micro hardware , our investigations revealed it has not been used in production

and we are in the process of removing them. and washington, we have one of the authors of this investigation. jordan, i want to start with you. you are reporting that we are looking at three potential avenues of attack, including the hardware attack we talked about yesterday. walk us through these three different avenues. >> sure, thanks for having me on. here is what we are looking at. we reported yesterday on the added chips, the malicious chips added that went up inside apple and amazon. its, it was the most significant, but according to u.s. officials, according to what the chinese hackers did, was in fact a super micro customer portal where customers

would go to update firmware and software on their servers. what this meant was that if you did not get the malicious network, you might've gotten the other element. it was a way to attack hardware in three different ways. --is quite a system sophisticated and broad attack. apple, they denied the hardware hack, but they have acknowledged a malware hack. explain. >> i will walk you through what we reported. we reported that apple discovered three different types of hardware and relations involving their servers. one was a discovery of the chips, two was the presence of outdated firmware. and the third was the presence of malicious firmware on the

website. what they mentioned in their statement, and as anyone who had read the story knows there is a , big gap in what we report and what apple and amazon say. what apple says happened was that there was a minor software infection a year after the events we describe from the same supermicro portal, and that is the reason apple says it cut off supermicro as a supplier. emily: as jordan and my colleague has reported, there is an open investigation into these issues. what are you hearing in the intelligence community about this? >> i think there is a lot of debate. the problem is that the information needed to verify this is so sensitive. have companies themselves limited access to information,

and it is highly unlikely that we will see this kind of public information that professionals would need to verify what happened, so we will just need to watch how this plays out. emily: how did this play out behind the scenes do you imagine? samm: we could look at a congressional hearing. the timing of this is interesting, because the news broke the same way that we had vice president penses's speech, in which she says we are in a technology and a cyberspace conflict that is only getting deeper. is just one peace of a deepening conflict we will see across multiple fronts. when we talk about these avenues of attack, they all go back to china? if china could have accomplished this god hardware hack, why would they need to do these other things? >> good question. according to our sources, the same group responsible for the added chips and components to the motherboard was also responsible for the compromise

of supermicro's customer software portal. it is a good question. if you can modify hardware at the factory, the thing we reported, why would you need to do anything else? is that these hackers want every avenue they can possibly get. and if the hardware implants are discovered, a customer portal is a great way to impact a number of other users. the added chips are very hard to put into computer servers, so they want easier ways, and these other vectors accomplish that. emily: is any one of these were said the other? -- worse than the other? i know we talked about a unicorn jumping over a rainbow with this hardware hack. is that the worst of it? jordan: the added chip we reported yesterday is the most sophisticated and hardest to detect. this idea of modifying the code

on legitimate chips, that is an easier attack and it can accomplish the same thing in many ways. you can have a technical debate about which is more permanent, but modifying existing hardware -- firmware is the simpler attack, it lasts just as long and is equally as damaging. emily: what do you think these ramifications will be all the way back to china? samm: china is trying to sell 5g to start their own chip industry. no one is going to want to buy from china now. i think this has the ramifications. i think this shows sometimes beijing's security goals underlined their commercial ambitions. emily: how do you think it will impact the relationship between the u.s. and china which is already high tension? samm: i think this will accelerate what we are seeing as a decoupling between the

industrial and technology relationship between our two countries. we are already seeing discussions of blocking chinese students in the u.s.. bandsooking at potential on a chinese companies coming out from the administration. this accelerates a trend are a underway to drive a wedge between the countries. emily: jordan, you are continuing to pull the strings. what are we waiting for and what are you looking at? jordan: the report yesterday was the tip of the iceberg. once we started looking at hardware and got that tip, which i should note the first tip came during the obama administration. once we started looking at security, it opened up a whole new world to us. and we have a lot more to come related to how to use secure indware and what is found some of these data centers. the big lesson is, you will not

find the stuff unless you look. when you look, you'll find interesting things. emily: jordan robertson, thank you. and samm, thank you as well. we will continue to follow this story and you can read the full story in this week's addition of bloomberg businessweek. bloomberg lp has been a supermicro customer but has found no evidence that bloomberg is affected by the issues in this article. coming up, elon musk takes to twitter. did elon musk put his recent settlement with the sec at risk ? we will discuss. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪ emily: well tesla seemed to

have quelled investor fears

earlier this week with its production numbers, the good news was short-lived. shares plunged after elon musk went into overtime with more than one dozen tweets targeting the sec and short-sellers. in one post he mocked the sec saying "just want to say that the sec is doing incredible work and the name change is on point." he then continued his tirade tweeting short-sellers are value destroyers and it should definitely be illegal. this comes less than a week after muska settled a lawsuit over his funding secured tweet. the deal, which has yet to be finalized will remove musk as , chairman and implement controls over his communications and social media. here to talk more is max chafkin. max, that did not last long. could these tweets compromise the settlement with the sec?

max: it's possible because the deal is not final. as part of the deal, tesla is not supposed to say it disputes the general thrust an -- of the accusation. this feels like a borderline thing. musk could argue he is making a dad joke or something, but it definitely feels like a company that is not fully in control. one thing that is strange about the whole thing is that tesla's stock was doing well. it's not as if the short-sellers were hammering it or anything, this just looks like another self-inflicted wound. emily: is this going to revive questions about his ability to run the company? max: you have to think some people will bring it up. especially considering the nature of the tweets. we have a bunch of them and there are typos and things like that. again, the problem here with

tesla and for the sec is that it is hard to imagine tesla existing without elon musk. a lot of the reason customers are buying the cars or fans of the company, has to do with his -- this colorful guy. it is hard to say the sec has to step down as ceo because that would probably hurt the value of the stock and hurt investors. on the other hand, when you have a situation where somebody is not listening to the thrust of what board members or regulators are saying, it is hard to know where you go. emily: a federal judge still has to decide whether the penalties agreed to our fair. what do you imagine is happening with regulators knowing the swiftness they moved to open this investigation in the first place? max: an article my colleagues

published earlier today said you can imagine the sec reading the rights act to his lawyers, they really mean it, that you have to not call us the short seller enrichment commission. beyond that, i'm not sure. i guess you can imagine the sec bringing a lawsuit again and trying to get a deeper penalty, but who knows. hopefully, from the point of view of investors, elon musk will stay off of twitter. we saw some of the biggest bulls yesterday tweeting at him saying settle down and not to throw a wrench in the machine now. emily: recent history would show that would lead us to not expect that to happen. you have earnings coming up in a month. as you mentioned, production numbers look good and things were moving in the right direction.

what does tesla had to do in the next few weeks to get from point a to point b? max: they have to just keep the production going. we don't know what exactly they did to give us production numbers to look good. what they need to do is make those cars sustainably. i guess the other important thing is that now that the production stuff is figured out, they need to sell the cars and get them delivered. we have been seeing these reports about various delivery problems or issues with customer service. then, there is this long-term question of, will people who have expressed interest in buying this thing pony up. we see tesla throwing out incentives including free supercharging. there was a promise they would send a picture into space for tesla customers. there are trying all sorts of things to make sure demand is there has production ramps up.

if they can do that, this looks like a successful car company and the company that has a car on the level of the biggest mass-market cars, at least in the u.s. emily: we will be watching the tweets. as always max chafkin, thank you , so much for stopping by. coming up, lingerie shopping has gone digital. how a company is using digital to take down the torilla secret. -- victoria's secret. "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: samsung electronics has

posted yet another record operating product topping estimates. but, concerns remain over weakening demand for memory chips. we have more from hong kong. >> resilient, that is the best way to describe samsung's memory chip sales in the third quarter which could ease concern of a , potential drop-off inch of command long predicted as the super cycle tries supply -- to plow forward. memory chips help samsung's profit rise to another quarter topping estimates to 17 and a -- 17.5 million yuan. this could be the peak for operating profit, as compact fells for server modules for the first time since 2016. 128 gigabit nam flash chips fell nearly 7% on waning demand and excess supply. memory chips account for the biggest portion of samsung's profit.

there is also concern about smartphone demand. handset sales have been sluggish amid challenges from chinese rivals. investors have taken note. shares are down this year. one of fund manager in taiwan has sold all of the samsung shares they held citing a slowdown in the global economic cycle. stephen engle, bloomberg news, hong kong. emily: victoire yet secrets secret owneroria's is the worst performer in the s&p 500. they are struggling to adapt to e-commerce and changing consumer tastes. its struggles have allowed a number of startups to steal market share in intimate apparel. one of the most successful is thirdlove. now one of the fastest growing consumer companies in america. as part of a series looking at retail disruption, emma chandra spoke with the founder and ceo who says technology is at the heart of thirdlove's success.

>> we are a direct to consumer e-commerce brand that makes it -- very comfortable bras and underwear. going set the genesis was into a victoria's secret store and not liking their offering. how have you disrupted what they do? >> a few ways. one is focusing on product quality and a range of sizes. we have 70 sizes and the secret offers about 36. we have more than double including half sizes. i always say, shoes have half sizes, why shouldn't draws bra's?she is half sizes, why -- shouldnt bra's. and we use real women in marketing instead of models. we also leverage data to help women find their fit online. >> you rely heavily on the machine learning and that helps you make business and product decisions. how does that work? >> if you think about how you get fit, usually, a woman might

come into a room with a measuring tape. size you up and bring you some that work for you. we have digitized that. we have a fit finder, and in under 60 seconds, you can answer questions and find a size and style. over 10 million women have done the fit finder. we have over 700 million data points. >> you have used in the data you had to refine the products? >> we use the data for product development and design. we use it in marketing and personalization and in inventory management. across every aspect we're using data. >> it sounds like a tech company rather than an apparel company. >> we are a blend. we create beautiful products , which is considered to be, i would say, retail. >> you use to work at google. how has that informed what you do at thirdlove? >> at google, i learned to push

the boundaries and think about new ways of solving problems and apply that to thirdlove. and i had also been at the -- a retailer after business school, so it is that blend coming together with my backgrounds that make me comfortable. >> does that differentiate you? >> absolutely. most people running companies in the space either have a tech background or have a retail background and not the blend. >> and you need to blend it for the modern consumer? >> absolutely. >> you say you are already profitable. can you tell us a little bit more about how profitable thirdlove is and your expectation of growth? >> we have been growing 300% year-over-year since 2012. we have 1.5 million customers and we continue to take on more and more market share. and in the industry, there

are varying figures of how big. how much of that industry can penetrate? >> victoria's secret, depending on the numbers you look at our somewhere between a third to 45% or 50% of the market. and in the are varying figures of how there is substantial amount of share to take. given that they are the worst-performing stock this year. >> can you give us an idea of what percentage of the market you have? >> a few basis points. >> thirdlove is one of the fastest-growing companies in america. it often happens when you are a new company. you have some big-name investors as well. what is the next step for thirdlove? might we see you go public? >> because of possibilities. i'm having a great time impacting women's lives and making a difference in the world so we're focused on growing the business now. >> that is a nice answer. >> your investors must be wanting something a little more specific. >> our investors are patient. they know we are building a brand and that they take a long time, so they are focused on the same thing we are. emily: that was the thirdlove ceo.

coming up, how will congress respond to the news of china's supply chain hack on the united states? we will ask a member of the house intelligence committee, next. our conversation with representative chris stewart, coming up. spotify hit the public market this year and competitor, tencent music, is ramping up. we chat with an investor who backed both music streaming companies. this is bloomberg. ♪

emily: this is bloomberg technology in san francisco. i'm emily chang. back to our top story. the continued fallout over the bloomberg business-week investigation revealing the extent to which china has hacked u.s. tech companies like apple and amazon. something that didn't seem to surprise the white house's top economic advisor. take a listen to what he had to say earlier today on bloomberg television. >> i think it's a good thing to be on guard because our chinese so-called friends have done a lot of mischief in that area, not least of which in addition to these chips and stealing of technology, cyber hacking. emily: now to get the view of someone in congress about this hack.

congressman chris stewart represents utah's second district and a member of the house intelligence committee. he joins us from utah. representative stewart, thanks for joining us, what is your initial thought on the report? rep. stewart: i can't comment whether it's actually true or not for a number of reasons. let's speak generally. if this is truly, this is the holy grail of hacking. this isn't implementing software or implanting software and being able to gain access by that. they apparently did this in the manufacturing process which makes it much, much harder to check, nearly impossible to counter and it opens everyone of us up, whether it's privacy issues, whether it's commerce or banking or worst of all, national security implications. this is a very serious concern and by the way, the fact we discovered this doesn't mean oh, good, man, we dodged a bullet. it's not like this is the only effort that china has made.

we have to, as you just said, we have to be constantly on guard and constantly on the defensive about this. emily: adam is looking to get more information from u.s. intelligence agencies, how you might go about doing that, getting that information? rep. stewart: we can have conversations with them. it's not something that is new to us. it's not like we woke up this morning, oh, my gosh, we never thought about this, we should check into it. it's something we have been very diligent about and aggressive in trying to pursue this type of information and making sure we are in the right information. this administration has been much more proactive and aggressive in putting ourselves in a position where we can defend about this. that is one of the arguments i have been making for a while, the previous administration was far too willing to suffer these hacks and not really have any retribution or any price to be paid.

it encouraged it and it made it too easy for our adversaries to let's go poke and prod and plant and see what we can do. we have to be more aggressive. china should pay a price in doing this. by the way, it's not the only thing that china is doing to is making us difficult to have a positive relationship with them. look at the south china sea, any number of things that we should be on guard with regarding china. emily: what do you believe is the price that china should pay for this? rep. stewart: a couple things. one thing it should be well known and advertised that they are doing this. so manufacturers who have moved so much of their manufacturing to china for economic reasons would then consider there are other concerns that we would have to weigh that against. maybe it's not smart to open up a new chip manufacturing facility in china. maybe we should do it in vietnam or maybe hopefully here in the united states. so i think that would be the first thing that i would hold them accountable for is the economic impacts of it.

there is more than that as well which is why some of our negotiations regarding trade and sanctions is an important part of this conversation. emily: so what action do you believe the committee should take? rep. stewart: well, the first thing is to be aware of it, obviously, as he has said and i just said to you. not the first time we have considered this, to continue to dive into it as best we can to make the american people aware, especially decisionmakers, business and government decisionmakers. i mean, my heavens, one of the things i'm concerned about is that potentially this chip that has been hacked in a very, very dangerous way, that those servers may find themselves as a contract to provide cloud computing for the pentagon or for the c.i.a. we know if that hasn't been done, it's certainly a possibility. that's the kind of thing that the committee would be diving into and just demanding to know the implications of that. emily: do you want to hear from the companies, do you want to

hear from apple and amazon and supermicro? rep. stewart: yeah, of course, we would. we can't understand this without talking to the manufacturing and talking to those who are distributing these products and we don't want to do it with a pointing finger. it's not like we want to go with a hammer on their head and condemn them, especially before we really understand what happened. by the way, it's not just apple and amazon. the distributor and the manufacturer of this particular server has been widely disseminated according to reports once again and something more than 30 manufacturers have this type of equipment. we can't understand the problem at least not in its entirety without talking to the manufacturers and those on the commercial side, not just the government side, we really got to look at both. emily: now, since we're in the of the mother investigation, there is a lot of talk about how big a threat russia is. do you believe china is a bigger threat than russia? rep. stewart: it depends on what you mean by threat actually. i mean, when it comes to, if you

want to look backward in our 2016 election, our focus was clearly on russia and it should have been on russia and it needs to continue to be. i have argued for a couple years, we're turning a blind eye sometimes when we focus on only one side of the world and that's towards russia because china has proven they're not a trusted partner and they're not a trusted friend. if you were to ask me strategically looking at the next generation, our children and the challenges they're going to face, i think i could argue pretty convincingly that china is the greatest threat we face in a very industrying sense. strategic sense. emily: vice president mike pence made a speech yesterday about his concerns around china. take a quick listen to what he had to say. >> beijing has mobilized covert actors, front groups and propaganda actors to change the perception of chinese policy. as a senior career member of our intelligence community told me just this week, what the russians are doing pales in

comparison to what china is doing across this country. emily: would you go that far, congressman, that it pales in comparison to what china is doing? rep. stewart: i think the vice president is right. whether i would use the word "pale" or something, a little softer modifier than that, i don't know. what he said is exactly true. i mean we have incidences where china is taking out advertisements in the middle of our country in the heartland hoping to affect public policy and public perception. look at the centers, hundreds of them, more than 500 of them around the united states that we know is used as a front for chinese intelligence and for chinese manipulation of commerce and government. look at how they intimidate their neighbors so that they don't take a pro-u.s. stand. i mean, i could keep going. the list is long. there is no question that what the vice president has indicated there is absolutely true, which is why going back to what i said previously, strategically, i think they're the greatest

threat that we're going to have to face and encounter. i don't think we've had that conversation yet where we have convinced most americans that that is true. emily: on the issue of the mueller investigation, i got to ask you, do you believe that robert mueller is conducting a fair investigation and that the president should sit down with him with no strings attached? rep. stewart: you know, i have always supported the mueller investigation from the very beginning. i have always said as well, i hope he does it thoroughly, but does it as quickly as possible. i think for the sake of these individuals who have been accused, that in fairness to them, they need to have their name cleared if they're innocent. i think primarily for the benefit of the american people he does it quickly so we get these answers. i support mr. mueller in his investigation and i want it to go forward. emily: representative chris stewart from utah, thanks for stopping by, good to have you. at the center of the chinese hardware hack is a san jose-based company super microcomputers.

this little-known company is actually one of the world's biggest suppliers of server mother boards, but what more do we know about supermicro? bloomberg tech executive editor tom giles is here and this truly appears to be the mother of all hacks if indeed it is all true as we have found, what do we know about supermicro, tell us more about this company. tom: they are as you said, one of the leading makers of mother boards, a crucial component to the servers that they also make and these end up in data centers around the world. as you know, there has been so much demand, as so much more information is sent digitally, more information scored, more computing down in the cloud. these companies around the world like apple and amazon have had to really beef up their data centers which includes buying thousands and thousands of servers one of the providers is , super micro. emily: and their servers are manufactured in china? tom: that's right, that's

right. sometimes in their own factories, sometimes by subcontractors. emily: tell me how super microfits into the supply chain infiltration. tom: investigators have told us that -- sorry, investigators have told us that a unit of the people's liberation army, very specialized unit worked on creating this. they would basically find their way to work with subcontractors working for supermicro, find a way to get the chips, either through threats, through intimidation. they found different ways to get the chips on to super micromother boards that then found their way across the ocean into the data centers of multiple companies. and the intent was to gain access to information that's traveling through the networks, whether it's i.p., whether it's government secrets.

remember, some of their clients work for the government, for example. emily: supermicrostatement says while we would cooperate with any investigation, any government investigation and bloomberg has reported there is still an open u.s. government investigation into this, we are not aware of any investigation regarding this contract nor have we been contacted by any in this regard. we have not heard of anyone dropping as a supplier for this issue and the shares are not doing well, but what do we make of this denial? tom: well, we do know, for example, a couple of things. apple dropping supermicroas a provider, that is something that has been in the public domain for more than a year. that is not anything new that we've reported. we have new insight into it according to the people we spoke to. so concerns about supermicro's products, that has emerged. they disclosed a couple of years ago that they lost a couple of very high profile customers.

one of them was later found to be apple. again, that's been in the public domain. customers asking questions about the reliability of their product. they also had high level departures in recent months. they've had questions about revenue recognition that resulted in them being d- listed from the nasdaq just in august. there have been these questions resolving their accounting, questions around personnel moves, questions around the reliability of their products, again, raised when apple dropped and another customer dropped them as a provider, so this stuff has been at a time when their sales have been rising, there has been demand for their product, there has been concerned about them as a company and their share price had been declining even before our story went out. emily: a lot going on behind the scenes. i know we're continuing to pull the string here. tom giles, our executive editor of bloomberg tech, thanks so much.

we should note that bloomberg l.p. has been a supermicrocustomer but found no evidence that bloomberg has been affected by the hardware issues raised in this article. coming up, a continued surge of u.s. listings by chinese company. tencent music is filing for an i.p.o. we'll talk with an investor in the company along with spotify. this is bloomberg. ♪

emily: in i.p.o. news, climbing in its trading debut after raising $237.5 million in its u.s. initial public offering. they sold 12.5 million shares for $19 each, a year-and-a-half ago, they took a private funding

round from soft bank and set a goal to sequence 1 million cancer patients in the next five years. bloomberg's i.p.o. reporter alex caught up with the c.e.o. and asked how that ambitious plan is going. >> it's going well. we have sequenced tens of thousands of patients and have a lot of opportunities behind those. we're seeing tail winds from medicare reimbursement and lung cancer. we're seeing a lot of private payers covering the test and we're seeing a lot of progress in terms of using our technology platform and applying it to cancer survivors for recurrence detection and using that data to apply for early detection for the rest of us. finally, we're seeing opportunities internationally as well we have set up a joint venture with soft bank to really accelerate our commercialization of our products in asia and the middle east and we're very excited about the opportunities we're seeing there. >> so as you said, you're in the market full force in the late

stage cancer patient phase. you mentioned early detection. that seems kind of like the end goal for a lot of companies like yours to be able to have a blood test that can screen for all cancers in an early detection scenario. is that kind of what you all are going here? is that kind of the golden goose at the end for guardant? >> it's had good progress, but mostly in the late stage disease setting and so it really is often too little too late. if we can develop tests that can bring that paradigm to the earliest disease state, around where early detection is most appropriate, we believe we can fundamentally change mortality curves in cancer. we have had a disciplined approach from day one starting by studying what late stage cancer looks like in the blood, using that data levering, that data to then solve the problem what early stage cancer looks like for cancer survivors and

then going eventually to early detection in a systematic approach. emily: and that early detection and systematic approach, you're not the only company out there who is trying to really crack the code on this one. your former employer kind of created a competitor to get to that end goal. across the market, how soon do you think it is before we see either guardant or another company come out with a blood test for all cancers? >> at this point we're not disclosing timelines with respect to early detection program, but i can tell you we're making radwanska progress toward that goal. -- rapid progress toward that goal. later this year, we'll be launching the first series of tests for the cancer survivor market for use with biopharmacompanies. we have released some data around our early detection program that looks very promising. i think we're quickly

approaching that goal and i would say stay tuned in terms of more data coming out of that program. emily: bloomberg with the ceo of guardant. speaking with i.p.o.s earlier this week, tencent music group filed in listings by chinese companies. it listed its offering size as $1 billion in an s.e.c. filing. it's a place holder and may change. for more on the filing, we're joined by mitchell green, lead edge is an investor in tencent music. mitchell, tencent is making money on only a sliver of those users. how optimistic are you about the ability to turn this into a sustainable and profit making business? mitchell: well, first thanks so much for having me on. let's not forget it actually is already very profitable. it has operating margins north of 20% and tencent music,

or t.m.e., i'll refer to it, is really a platform just like tencent is that is leveraging these 800 million users that t.m.e. has. i think they're going to monetize them in many ways, whether it's subscriptions, social entertainment, whether it's advertising, i think they're just starting to crack the code and it's around 3.5% of users right now pay and i think it's going to be multiples higher than that in years to come. you look at a company like spotify, it's north of 40% of users pay. emily: you're an investor in both tencent music and spotify. spotify is an investors in tencent music. despite the fact that they compete and are increasingly competing, especially in southeast asia. how does that competition play out? mitchell: we don't actually , and i respectively disagree with you, -- respectfully disagree with

you. i don't really see spotify and tencent competing. t.m.e. is really focused on the china market where it dominates, frankly. obviously in the u.s., spotify has competition with amazon and apple. in china, they're it. tencent music, if you want to listen to music online, they own all of the major music apps . emily: what about southeast asia? you don't believe that they will increasingly potentially compete there? mitchell: maybe potentially very long term. look, our thesis, we think of tencent music and spotify as collaborators, not as competitors at all. i actually think the two of them as a combined entity can be a very powerful force against the music labels. i think you'll see them working a lot together, which is why there is the equity interest. t.m.e. in order to monetize and build an enormous business is really focused on the chinese market. they've got the users. emily: ok.

>> go ahead, i'm sorry. emily: apple music is, of course, the main competitor to spotify, the more concerning competitor to spotify. pandora was just bought by sirius/x.m.. does that change the game at all? mitchell: not at all. i think pandora was irrelevant. you poll 100 people on the street and ask how they listen to music, under the age of 30. you are going to get streaming. pandora is old school radio, streaming is the future. and i believe spotify and tencent are both well positioned. . to benefit hugely from that over the decade. emily: apple isn't irrelevant, i would assume, you would agree. how do tencent music and spotify step up to that? mitchell: tencent music and apple don't compete at all. but in terms of spotify and apple, i believe that spotify -- i believe in the u.s. that spotify has a far superior

product to apple and i think that's how they've gotten to this point so far. obviously apple is a very, very large company that has an enormous amount of resources that it can spend, but a lot of our initial diligence on spotify, we started talking to a lot of artists and things like that and people in the music industry. it became very clear to us that spotify is more desired by the artists. one thing that we haven't talked about yet is the artist's tools. so spotify and company like tencent music that specializes just in music versus apple that does a lot of other things, are building these unbelievable tools that allow the artists to get very granular data on the consumers listening to the music. emily: mitchell green, thanks so much for joining us. as we go on bloomberg television, we'll give you the best interviews on the week

including our interview with boeing c.e.o. on how the 102-year-old country is planning on staying relevant on earth and in space during the next century. tune in saturday for the best on bloomberg tech. this is bloomberg. ♪ emily: saudi arabia is upping

its stake in the soft banks of vision fund. the middle eastern nation is adding $45 billion to the fund bringing its total investment in funds to $90 billion. this comes days after the two denied that their $200 solar venture was on hold. the benchmark asian tech index hit a 15 month low in the report that beijing hacked the networks using a chip built by their spies. lenovo fell 15%, saying it doesn't do business with supermicro, a company at the center of the investigation. that does it for this edition of

bloomberg technology. have a wonderful weekend , everyone. see you, monday. i'm emily chang, this is bloomberg. ♪

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