>> i am caroline hyde in new york in four emily chang. this is "bloomberg technology." in the next hour, softbank is set to be the largest ipo ever. authorities have an investigation into the broadcom deal. they wonder if the company is a stock market manipulation target. stocks --hare

first to the top story, u.s. stocks give backings friday following a strong early ra lly in the midst of using trade tensions. the index rose the most since may, however, other technology giants have collectively lost $329 billion of stock market value at the beginning of this month. for more, let's bring in a bloomberg opinion asked. opinionist.sked -- what has gotten china so spooked? faq configure poison. it is the same issues we have seen in tech that the rest of the u.s. market worries about. they were about stock valuations for these growth dependent tech

companies like netflix, amazon. we see in the chip sector, the tariff worries are where that is starting tstarting to be help -. that is linked to the stories of hardware hacking to. we get a bit more insight into this. particularly netflix. shira: i think netflix will be interesting to watch when they report earnings on tuesday. last quarter, there were hiccups in subscriber growth and the shares sold off sharply. now, earnings outlook is more important given anxiety we have seen from all of these factors including tech stock valuations. i think that's will be interesting and set the tone for the rest of the tech earning season. caroline: we got a window into the banking sector today coming up with numbers. even though they beat and many caution on still had

their stocks when they could not hold on to their gains. it's good to be important to listen to the calls and look at the numbers. shira: people are looking for any excuse to be anxious now. that seems to be the market sentiment we are in today. we'll see it next week. the tony caution or optimism will be important things to listen for. caroline: there are ongoing concerns about certain company's business models and their taking a hit from regulatory issues. we hear about facebook and alphabet, google being sued on the google plus issue. shira: this has been a phenomenon the last couple of years. this overhang particularly on google and facebook, but not only those companies. it is inescapable. it seems like this will be the cost of doing business for these big tech companies.

these fears that regulatory pressures will pinch their profits or growth. right now, it is all theoretical, but we will see what happens. caroline: it has not been theoretical in their share price . thank you shira. another story we watch, bloomberg learned softbank has picked banks as lead underwriters for the largest ipo ever. they plan to sell about $27 billion worth of shares. . shares to be lifted on the tokyo stock exchange. here to discuss is the technology research president and elizabeth from bloomberg. elizabeth, let's start from you. banks are finally getting named. winners the big

elizabeth: the three big names are goldman, in iraq, and .eutsche bank goldman comes and internationally and you have deutsche bank into european investors. caroline: it is interesting that they are going global. do they have to buy the cheer size and scale of it -- by the sheer size and scale of it? elizabeth: we are talking about of the third of the company. we can be looking at valuations toward 90 billion. if you look at alibaba and 2014, that was the last big sale of the size and that was 25. caroline: what do you make of the fact that today of all days is where we hear the banks being named after a turbulent week. bob: it is very interesting. i'm sure this is in the works for some time and it may just be

coincidental in terms of the timing, but when we think about why this one is so important, this is going to be about 5g and japan. you don't think of those things but japan is eager to reestablish themselves globally as the major player. masayoshi son is the favorite son in japan. there's a lot of interest in seeing what he can do. this telecom development will be the launch of five g. there is a lot of focus on making that not just faster smartphones, that enabling completely new type of capabilities like broadcasting over 5g. that ties into the 2020 alan thicke story. -- olympic story. concernsoftbank has that we have to think about from the investment they received from the saudis into the vision fund. fundamentally, it will be interesting to watch and i think it will be a big one.

it is a statement on how the world sees 5g. caroline: remind us of the vision fund and its link here. it's a 100 billion dollars fund. they are raising money and spinning off of their telecom to rise raise more cash on top of that. caroline: masayoshi son has been bob: much yoshiko has been --piling huge investments much yoshiko and -- he is thinking way ahead in terms of what he wants to do. he has bought two companies like arm. they have a big event in san jose where they are unveiling a bunch of new things. it is interesting to think about what he is trying to do. he's compiling a huge amount of companies and technologies

together. caroline: i want to go back to the overall health of the ipo seen at the moment. we have one show of strength coming from japan, but when we looked at china, tencent is in the eye of the storm and they have backed away or put on pause the ipo. elizabeth: when you think about it, the first places you see the effect of the market route is the bull market -- pole market. with tencent music, it is being delayed a little bit. they have not pushed everything off, but they are pushing back until more stable. caroline: they managed to stick had air guns and anaplan huge debut. elizabeth: it was a huge debut following on the heels of the elastic which had a killer first-day. bob, interesting that

software company did so well. what does it feel like on the ground in san francisco when you look at the market turbulence, how have investors and analysts assessed this particular route? as shira mentioned, it is about the feel of the market and how people are feeling is a little nervous. when we think about the tariffs and regulatory environments for tech, those are big concerns. they seem to be much bigger larger tech companies and more consumer friendly. you are seeing the smaller enterprise focused companies being able to pull off ipos and i think we will see that continues, because they are smaller names and it tends to be a lot less controversial in terms of what they do. you will continue to see that. it is the bigger ones that are issues. tencent will be fine, but there is the underlying question of is there a challenge going on in china. and, is this the beginning of a

potential challenge in china for tech ipos because of the fact that a lot of these companies are highly leveraged. there have been crackdowns in terms of china as well and what is the influence of the trade war in the chinese domestic market and how does that influence chinese companies. there is a lingering question about that, but it is he huge business and they will hold pretty well in this ipo. caroline: thank you for all of your analysis, bob. and, elizabeth as well. a journalist that has criticized the saudi government has gone missing. 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. ♪

caroline: the mysterious disappearance of a prominent critic causes attendees to drop out of the event in the desert. a reporter vanished after the --into the news has prompted high-profile exits from the investment initiative started in a few weeks time. recently, the saudi crown prince told the u.s., meeting with prominent members of the tech .lite like jeff bezos

what is silicon valley's responsibility when it comes to dealing with poor human rights records? whont to bring in someone looks and the corporate -- the reaction, is this the only way they can play it. searching companies -- >> there are some companies that have not taken a public stand. no longer attending a conference is notable that they are much easier to do to say several relationships with investors who are based in the country. that was a quick, easy step to take. whether there will be more actions from the tech companies or more actions by tech companies yet to take a public stand is an open question. caroline: we have to remind ourselves that is uber took a

decent chunk of change from the public investment fund that is run by saudi arabia a few years ago, and they have been really very active in the other tech investments linked to the vision fund. what is it mean for the tech ecosystem? bob: i think it raises serious questions. there was no awareness of these level of issues with saudi arabia back then. it has human rights concerns, but this is brought the issues to the fore. i think this will raise head scratching and moral dilemmas that these companies will have to deal with. we are in an environment now with the tech industry is so poorly looked upon by so many parts, within the world and u.s., it is a critical moment for them to make bigger steps. aagree, we are not can go to conference now, fine, that is

great and an important step. the question is, can they move beyond the symbolism and make substantive changes. that is a harder question to answer. the impact could be extremely large longer-term. i think you will see a lot of questions raised, discussions being had behind closed doors in terms of what should we do, can we do. in general, the tech industry needs to make these big moves, particularly in the overall environment we are in politically and economic and regulatory. the overalllking of political situation, naomi, how is trump reacted? it was not long ago the prince was touring the united states and last week the prince was saying how much he loved working with president trump. naomi: the trump administration has been reluctant to take some of the stronger actions but some lawmakers on the hill have asked for whether that be sanctions or

blocking arms sales to saudi arabia. the trump administration has formed a closer relationship with saudi arabia as it seeks to protect u.s. interests in yemen and beyond. i think that gives tech companies a cover as long as lawmakers are focused on their attention to try to convince trump to go one way or another. askinge not focused on tech companies to take bigger steps. what might happen is that we might see pressure internally from some of these tech companies to take action. increasingly, tech companies have to grapple with employees who are signing petitions and pressuring leadership to take political stands. whether it is at microsoft and their employees are trying to pressure them to sever relationships with ice, or whether it is google recently pulling out of a potential deal at the pentagon in part in response because employees raise questions about google should be

working with the military -- about whether google should be working with the military. that is something to be looking forward to. thatine: it is interesting one of the key companies desperately trying to reinflate its brand and perception from the rest of the world as to how it treats its employees and itself and those outside of the business, is uber. ceo ofoticeable that the uber says the reasoning behind why he is not attending the business -- the event saying he is troubled by the report to he -- out to show kashogi. think -- do you think more ceos will have to take the steps that he has taken? think they are.

if you look at what richard branson said, he took it further. he said the races -- this raises serious questions about future investments. billions of dollars at virgin would be deploying in saudi arabia. western companies will have to think about how they interact. that was a particularly strong statement. we will see if other companies are as courageous as that, but i think it is important. it is a good opportunity for uber to try to present a more positive image of the step that is taking. i think it was a great statement for them to make, and it is interesting to see if he goes further from the statement of richard branson. caroline: when it comes to saudi youian relationships, thank bob o'donnell and naomi. we should note bloomberg will no longer serve as a media partner for the future investment

initiative either. facebook updates on september's hack. how have the details changed? we discuss. "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. ♪

caroline: a major hack from facebook reported two weeks ago affected 30 million users. that is not the 50 million originally field -- feared. they also added intimate information of about 14 million users was accessed. that includes data like recent searches, location chickens -- check-in's. they explained the company cannot reveal the identity of the hackers. >> we are collaborating with the fbi. they are actively investigating and have asked us not to discuss

who may be behind the attack. caroline: joining us with more detail is sarah frier in san francisco. yesterday they scale back the infinite --there is intimate information that they garnered. there are fewer profiles affected then maybe facebook it feared, the kind of information that has been taken by these hackers is rather intimate. the thing about this kind of hack, as somebody get your password or somebody get your login information, you can change it. if someone get your personal life details, you are with that for the rest of your life. nothackers, even if we do see them immediately put the information to use, it can hold onto it for years and do very damaging hacks down the line knowing what they know about you. caroline: talk to us about the kind of details they have.

in particular, they have focused on 400,000 where they have gotten really up close and personal. sarah: those 400,000 accounts that they initially connected to served as a gateway to the rest of the 30 million that were affected. of the 30 million, it goes half and half. half they just got name and contact information. with the other half, they got intimateinite -- details like search history, information about who their friends with -- they are friends with, who they have had messages with. this is beyond what we would expect somebody to see if they were just looking at your profile. especially the location check-in data, they know the last 10 places you were check-in or tag in.-- tagged in the initial 400,000, it was

even more intimate than that. the hacker could see their profile at the lever of -- almost at the level they could see. caroline: trading friday, facebook got a pop in the start of the market, and it has now fallen back into negative territory. this could not come at a worse time in terms of the overall valuation of the company. sarah: not just the overall valuation of the company, but the journey that facebook has been on this year to try to restore trust with its users, we had the cambridge elliptica scandal -- analytica scandal in march of up to 85 million people which led to all sorts of hearings. they just sort of felt like they were covered from it in terms of the public discourse. then, this hack happens as they are trying to launch this device for people's homes to have them communicate with each other through the video chat portal. that is going to be difficult to

sell when people are worried about trusting facebook with their data. risks to theo to company -- all sorts of risks to the company. caroline: are you expecting any changes in the helm of facebook or the way they have been reacting? they have also been criticized --you can understand that when hacks occur, the company tries to rectify the situation, but ed fromve been criticiz how they reacted on the communications point of view. sarah: when i can say about this phone or ability is night and day from the camera janet at school -- the cambridge elliptica scandal -- analytica scandal. in this case, they are being more forthright. caroline: always great to get your take on this, sarah frier. broadcom has won over the european union. the eu has approved the takeover

of ca technology. we bring you the latest. this is bloomberg. ♪

jamal khashoggi khashoggi >> this is bloomberg technology. broadcome's proposed takeover. thatberg has also learned the u.s. is investigating with the technologies when -- the probe has to do with a memo circulating in congress, giving the pentagon's assessment of the risks involved with purchase.s planned broad com says the memo was fake. first of all, let's just talk about the european commission.

expected? >> yes. it was expected. very littlere's left in terms of regulated clearances. i think they only need approval in japan, which is kind of a foregone conclusion. it comesexpected but sort of along this backdrop of in bothl manipulation c.a. and broad com. >> let's begin with this memo. what exactly happened? live and everyone thinks initially it's real, that they're being investigated. it up evenck further, broad com is a company the crosshairsn of the u.s. before. so there has always been this them ofense around like, are they really trusted by the government? up, we see this memo show which, you know, purports to be from the department of defense, all thesehave concerns and it doesn't look like a deal we want to see

happen. rand paul cites some figures from the memo that were incorrect. in a conversation with bloomberg. and what we don't know is whether or not he actually had memo or whether he just, by of -- byse, was sort coincidence, was citing these figures. he thinks there are problems with it. we find out that the d.o.j. is looking into whether or not was actually market manipulation, because they've seen the memo, and they think fake.mo is a they think therefore that someone was trying to move the shares. think about 8% of the float was actually outshore. on the other side, the spread on deal is tiny. it's really, really tight. which the market expects this through. this isn't the same as qualcomm. mucha much smaller deal, less critical to sort of, you know, the infrastructure. qualcomm was the national champion that trump and his administration identified

that they wanted qualcomm to be the global leader in semiconductors. they said, look, if we allow companies to merge, that potential gives china a leg up. c.a.he same issue with >> does this stuff happen often? around?se letters go >> no, it doesn't happen very we don't if it does, get to see it. interestingly, we are in an it's becomewhere much more muscular in its willingness to block deals coming into the u.s. tighter ining much terms of what it will and won't allow through. we saw that when they bought with an! and in the e.u., we've just seen whichation come through makes it harder for foreign investors to come in. >> geopolitics at play everywhere. great scoop. we thank you for joining us. upset witholders are

google plus. investors are suing the company. the c.e.o.'s and the chief claiming theycer, should have been warned. garrett has morphology this story. and he joins us from toronto. garrett, talk to us about whether this was anticipated. >> i think this was anticipated. things these kinds of all the time, whenever you have a data breach or any other time when you can make an argument a company really should have talked to the market, talked to their investors about something that they did. then they didn't. in this case, that's exactly what happened, back in march. they had ad that potential, what they called a haveare bug, that could exposed the data of hundreds of thousands of their users to who knows who. they had no proof that happened, therefore it wasn't, in their opinion, a material event. they decided not to talk about it until their hand was

forced by some reporting earlier week. >> that is the important element here, that it was a glitch but it wasn't actually a data breach. who in fact is out there? who are the investors who are this move? and how worried would not only likes ofny be but the larry page, who are mentioned in it? >> there's law firms who sort of specialize in this sort of class action lawsuits. so whenever something like this happens, you have multiple law firms immediately trying to drum some publicity, trying to reach out to anyone who might want to sign up. ofn to get a certification their class action lawsuit. i mean, that's not to say that forward.dn't go i think there's a strong argument that google really messed up here. the were worried about political ramifications, they saw what facebook was dealing with, and they didn't want to the music for this glitch, potential breach, whatever you want to call it. that information back, especially at a time when they were preaching transparency and

they were talking about things. i think there's a strong argument here. this is something obviously that a long time to play out. at the end of the day, google is a nearly trillion dollar company. i'm sure any class action lawsuit would be a blip in their nothing compared to the mega-fines that the e.u. has been levying towards them. they've also been able to just brush it off their back with their cash on hand. at the end of the day, i think the important thing to take away is that, you know, google decided not talk about this. called out forng it. it's just another example of a not exactlypany getting ight right in terms of what users want from them when to transparency. >> interestingly, google's mucht company didn't see of a slide in shares. we got the news of this glitch.l why do you think there wasn't so much impact? do you think the regulatory be so significant in this particular term?

we're comparing that to what happened to facebook. when the cambridge analytica aandal came out, which was very significant hit, that they actually, in the subsequent months, were able to build up. they're down now again but that's more for business reasons. of the political fallout has already been played out in this scenario. there's a -- although there's a lot of noise, people do not expect major, deep changes to the regulation, even when you look at europe and what happened with the privacy regulation. there's a strong view that it actually helped entrench google, actually have the power to deal with those smallerons while competitors are finding them tougher. investor view is to take a cautious view. reporter, is a think that this has gone on longer than i would have expected. saying, this will blow over, people don't really care

seriousivacy in such a way. but i do think that as you see the noise continue to ratchet up, it shows that people do want to talk about this. as the midterm elections both parties, although they have a lot to talk about, they are talking about google, about tech. is one of their sort of points they're talking to their voters about. this is not going away. >> the regulatory overhang continues. we thank you from toronto. up, despite the crypto sell-off, some remain steadfast on their commitment to bitcoin. from draper, next. and streaming giant netflix is quarterlyort its earnings next week. find out why it's poised to set earning seasonch when we return. this is bloomberg.

>> draper associates and the venture capital founding partner bullish on bitcoin. he told bloomberg that he's his course in the cryptocurrency strength in the face of global market turmoil. >> when things are tough, when there's political turmoil, bitcoin does well, because people say, gosh, i'm not so government, my tobe, whatever it is, tied some artificial geographic border. i might like this decentralized world. be ank that's going to really interesting time. i think our next 10, 15 years major human be a transformation. >> well, we're seeing transformation in, you know, cross-border trade flows. how is the trade war shaping up estimation as far as

opportunity or, you know, risk? know, it's played up as a trade war. i feel like it's a trade negotiation. trying to just figure it out. countries know they're much better off having open borders. somehow, there are few things to tweak in their trades. and i think those things are i hope they'll solve themselves. i'm very concerned about the kingdoms, all getting more controlling over their people. if freedom equals prosperity, freedom and honesty equal prosperity. andif a government is free honest and open, that country well.o very and if the leadership is controlling and they give

special treatment to some people it's not fair. those countries sink economically. you still have a call for 2022.00 on bitcoin by what's going to be the catalyst for that? how is that possible? a matter of, over time, it takes a while for torepreneurs and engineers create all of the visions that we all have of this wonderful have there we decentralized cryptocurrency and we are open and the geographic and allhave fallen that. engineers take time to develop those products. you, once you are able to -- buy starbucks coffee and mcdonald's burgers with bitcoin easily, suddenly you'll make this trade-off. a decentralized,

frictionless, global currency i can pull down anywhere, or do i want one that's tied to to a government that swings back an forth depending on their political or -- >> is there overregulation, though? down.seen china crack south korea has cracked down on ico's. but again, there seems on the fear from regular -- there seems fear from regulators. spreadingulators are fear. their owngulating at peril. they're creating friction items toward progress. thewhen they do that, all best entrepreneurs, all the thet brains move out of country. so they're losing all their young population. anybody who wants to go start something, do something, of course those people are gonna be using bitcoin and all the technologies with

bitcoin, to start their business. it makes perfect sense. so when china or south korea gonna allowot bitcoin here, all those parens go somewhere else. think,, north korea, i is having a bitcoin conference this week. doing someking at sort of cryptocurrency. >> if north korea were to open up and say, hey, like japan did, bitcoins are our national currency, all of a sudden, you'll see all sorts of activity there. now, it might be the south koreans that want to get together with the north other wayn the around. freedom builds prosperity. free and open and fair environments build prosperity. a dictatorship and you're trying to control your country in some way or another, trying to overregulate your people, they'll leave. we can now leave.

speaking to us at the world knowledge forum in seoul. getting under is way. netflix will release its numbers on tuesday. hoping to prove that last quarter's growth was a one-off. u.s. director of research, paul sweeney, how are we gearing up for tuesday? >> this is definitely a very earnings release for netflix, given how the stock has performed over the years. again, investors will be focusing on the subscriber ad the metric that investors focus on, as opposed to eps or even revenue. it's, how many subscribers did they add globally? they're looking for about five million. we think that's a number they can hit, maybe even exceed. but that is the key number. last quarter, they missed on this very important metric and the stock took a big hit on that news. >> took a beating, down 15%

then. right now the stock has been beating since then. we've seen the biggest slump this particular stock. citi and some analysts now seeing opportunity. is it from a valuation perspective as well as united underlying growth? >> i think when people look at have toe, they kind of put their valuation hat aside and really think about the forward andt going the fact that consumers are spending more and more of their consuming content in a streaming content as opposed to traditional paid t.v. window, the cable service. so in that regard, if you think that is a global business and has a long-term growth story on a global scale, then netflix is the name. story for most bullish investors is, as long as they theirntinue to grow subscriber base, they can continue to increase their investment in programming which presumably will drive even more

growth going forward. subscriber the growth remains really key for this story. important is it that they can still entice people in while they hike prices as well? >> the company has proven that they have pricing power. they've raised prices several times over the last couple years and it has not impacted their subscriber growth. one of the concerns for investors is the fact that ony're spending so much programming. this year, they will spend more than $8 billion. fromis up dramatically last year. and the expectation is they will increase that spending next year. haveroblem is, they don't the free cash flow to support that, to fund that. foract, the consensus is about a $3 billion cash flow loss this year. so the company is financing this investment of programming in the debt market. now, they can continue to do that as long as they continue to grow subscribers, improve profitability and ultimately get the positive free cash flow so that this can become a

self-supporting business. latest did, orange is the new black. you.ank now, still ahead, luxury retail has been fighting against the tensions.ade some retailers are looking to their own content. next. this is bloomberg. ♪

>> ruksly retailers have -- luxury retailers have much to contend with. week's global luxury sell-off, many are looking for new ways to engage with shoppers. as part of our series on retail took aion, bloomberg look at one retailer's drive to generateontent to sales.

>> before, customers would go into a store, whatever they're they would then leave. i think in order to really gain and tost and the loyalty have the customer come back for purchases, you need to do more special than that. so we went on a content journey. years ago,nd a half and we really believe that in order to really engage with our to keep them coming back was to produce content in what sort of things are you producing? >> so we want to create the ultimate lifestyle for our customer, on every platform. they shouldn't have to go anywhere else for their travel stories. they shouldn't have to go for their fashion shoots, for inspiration on how for articles with musicians, people behind brands. build our content platform where they can come to us, everything that they want stylish life. >> in the end, content must also

be about driving sales. >> sure. it's that engagement. we find our customers who read our content are 24% more likely to make a purchase the same day than people who don't read our content. it is so powerful that people for the quality and the different type of content they would through other platforms. >> and you're happy with that conversion rate. >> yes. can do a lot more with it. >> you have also made another big move. a brand-new 7,000-square-foot, in the heart london's swankiest district. 95% of their sales online. why would you need to open a physical space if you're doing well online? >> we've always wanted to build an experience. and we always wanted to build a where people could experience the online world we've created. a shopping just space. yes, you've got floors of private shopping and we're going stations as well, exclusive product. we've also got a media hub.

live going to be streaming. we'll be doing podcasts, for the into the that come house. the idea that we're actually making an experience for the customer and doing something special. we're trying to create a theical manifestation of site. >> and so what do your competitors think about this? >> i think what we're doing is very different from what anybody else is doing. we are really creating a content space as well as a shopping space. think, by being really experiential, we're producing exclusive content. >> is there a difference between way u.k. and european retailers are attacking the way compared want to shop to the u.s.? >> i think what we have done as a business is always focus on innovation. there's something that is so intrinsic to the business and the brand that we will take risks. we want to try things that no one else has tried before.

be the trailblazer. i think that's really exciting. and i think that a lot of people to us, and then a lot of people will look to what they're doing, how they can produce more content in a different way. >> and how does your new your new owner -- $1y've invested almost billion in you. does that kind of investment risks?ou to take more >> so they are partners of ours. i think what that has done, it's us into the next kind of level of business. we have so much potential for growth and so much potential for innovation within our business. we want to keep pushing the envelope and doing things our doing things differently. >> what's the next situation for the business? moment, we'rethe just focusing on growth and focusing on being as innovative disruptiveging and as we can. always in a very luxurious way. >> chief content officer, kate, speaking to bloomberg.

oft does it for this edition bloomberg technology. emily will be live from the wide 25 summit. don't want to miss that. this is bloomberg. ♪

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>> you produce some of the most famous movies in american history. failed. we in order to figure stuff out, you're gonna make a mess. >> you decide to leave. certainly have been successful. but none of this is mine. did you gravitate towards the internet? >> i saw a use for something else. it was interactive. and it intrigued me. >> is that how it happened? it sounds quackers but that is how it happens. >> people have said, barry diller -- then they said i was crazy. >> would you fix your tie, please? >> oh, people wouldn't recognize me if my tie was fixed, but okay. just leave it