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

first to the top story, u.s. stocks give backings friday following a strong early rally 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 opinionist. 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 to be felt. caroline: 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 marks, they still had caution on 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. who were the big winners elizabeth: the three big names are goldman, in iraq, and deutsche 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 5g. 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 olympic story. i think softbank has concerns 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. >> masayoshi son has been compiling huge investments -- 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 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 to their guns and anaplan had a huge debut. elizabeth: it was a huge debut following on the heels of the elastic which had a killer first-day. caroline: 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? bob: 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 going into the -- 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 elite like jeff bezos. what is silicon valley's responsibility when it comes to dealing with poor human rights records?

i want to bring in someone who looks and the corporate -- the reaction, is this the only way they can play it. >> 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. i agree, we are not can go to a 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. caroline: talking of the overall 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. they are not focused on asking 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 whether google should be working with the

military. that is something to be looking forward to. caroline: it is interesting that 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. it is noticeable that the ceo of uber says the reasoning behind why he is not attending the event saying he is troubled by the report to date about kashogi. who do you think -- do you think more ceos will have to take the steps that he has taken? bob: i think they are. if you look at what richard branson said, he took it further.

he said this raises serious questions about future investments. billions of dollars at virgin would be deploying in saudi arabia. he raised the question of all 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 arabian relationships, thank you 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 feared. they also added intimate information of about 14 million users was accessed. that includes data like recent searches, location check-ins. 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 number, but there is intimate information that they garnered. sarah: although 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. the hackers, even if we do not 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 these intimate details like search history, information about who 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 tagged in. in the initial 400,000, it was even more intimate than that.

the hacker could see their profile at 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 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.

there are 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 they have been criticized from 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 cambridge 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.

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♪ >> this is "bloomberg technology." i'm caroline hyde. broadcom has won antitrust clearance for its proposed takeover of ca, according to a filing early friday. bloomberg has also learned that that.s. is investigating their technology were the victims of a stock manipulation scheme. the probe has to do with a memo circulating in congress, given the pentagon's assessment of the security risks involved. broadcom says the memo was fake. for more, i want to bring in hammond. let's talk about the european commission.

is it free reign for them now? >> it was expected. there is very little regulatory clearance -- we only need antitrust approval in japan which is a foregone illusion. backdrop ofng this potential stock manipulation. >> so perhaps no wonder we got a sharemarket relief and the spike higher on the expected eu news. let's dig into this memo. happened?ly everyone initially think that israel. >> to bracket even further, this is something that has been in the u.s. government before, with qualcomm citing national security. there has always been this slight fence, are they really trusted by the government? then we see this memo show up, which purports to be from the department of defense, saying we have all these concerns, it doesn't look like a deal we want

to see happen. there were some figures in the memo that were incorrect -- in a conversation with bloomberg. know is whether or not he had the memo or whether he by coincidence had the same figures. anyway, he said he wants to review the deal and that there are problems with it. then we find out that the doj and fcc are looking into whether or not there was market manipulation. they think that someone was trying to move the shares. there is quite significant short interest, about 8% of the flow was out. on the other side, the spread on the deal is tiny. it is really tight. the market expects it to go through, it's not the same as qualcomm. you could draw some comparisons, but it is much less critical for u.s. infrastructure, and crucially, qualcomm was the national champion. to be thed qualcomm

global leader in semiconductors. they said if we allow these companies to merge, that gives china a leg up in the race. not the same issue with ca. >> briefly, does this stuff happen often? how often are they investigated? >> the answer is no, not very often, and if it does, we don't get to see it. interestingly, we are in an environment where it has become much more muscular in its ability and its willingness to block deals coming into it. china is being much tighter in terms of what it won't allow. seen inflationve comes through, which makes it harder for investors to come in. >> geopolitics at play everywhere. ed hammond, great skill. thank you for joining us. alphabet shareholders are upset

with the company over its handling of the security flaw in google plus. investors are suing the company, in fact. they are claiming that they should have been warned when the flaw was discovered. we have more following this story from toronto. talk to us about whether this was anticipated. >> i think this was anticipated. we see these kinds of things all the time, whenever you have a data breach, or any other time when you can make an argument that accompany really should have talked to the market and to their investors about something they did, and then they didn't. in this case, that's exactly what happened. back in march, google found that they had a potential software that could have exposed the date of hundreds of thousands of users, in they decided that they had no proof that happened, therefore it wasn't, in their andion, a material event, decided not to talk about it

until their hand was forced. >> that's the important element, isn't it? it was a glitch, but it wasn't a data breach. who is out there, who were the investors who are taking this move? how worried with the company beat, and the likes of larry page? there are a lot of firms who specialize in this kind of class-action investor lawsuit. whenever something like this happens, you have multiple law firms trying to drum up some publicity, reaching out to anyone who might want to find something.en to get i think there's a very strong argument that google really messed up. they were worried about the political ramifications, they saw what facebook was doing and didn't want to deal with it themselves. they didn't want to face this music for the glitch. they held that information back at a time when they were

breaching transparency, saying they were talking about rings. that wouldething take a long time to play out. this is a nearly trillion dollar company, any class-action lawsuit would be a blip in their financials, nothing compared to the mega fines the eu has been leveling, that they have been able to brush off their back. thehe end of the day, important thing to take away is that google decided not to talk about this.they are being called out , and it's another example of a big tech company not exactly getting it right in terms of what regulators want from them. >> interestingly, alphabet didn't see much of the slide in the shares after we got the news of this potential glitch. why do you think it wasn't impacted? do you think the regulatory boar burden won't be very sever? >> we are comparing it to what

happened to facebook, with the cambridge analytic a scandal. in the subsequent months they were able to hold up, more for business reasons. fallout haslitical been priced in and played out, and although -- people do not expect deep changes to it helped entrench google to deal with those regulations while those small competitors are planning a lot tougher. i think the investors you is to take a look on this political noise. i think that this has gone on longer than i would have asked acted. i kept saying it would blow

over, people don't care about in a serious way but as it ratchets up it shows that people want to talk about this and as the midterm elections are -- it is one of their points that they are hitting home, this is not going away for these companies. >> the regulatory overhang continues. we thank you. coming up, despite the quick selloff, some remain steadfast on their commitment to bitcoin. we will hear from draper associates next. in netflix is set to report quarterly earnings next week. the out why it is setting tone for taxis and when we return. this is bloomberg. ♪

♪ remainsr associates bullish on bitcoin. the ceo told stephen engle that he is standing by his call for the cryptocurrency strength in the face of global market turmoil. >> certain things are tough, when there's political turmoil bitcoin does well, because people say, "i'm not so sure about my government, my fiefdom, my tribe, whatever it is, tied to some artificial geographic border. i might like this decentralized world." i think that's going to be a really interesting time. i think our next 10, 15 years are going to be a major human transformation. >> we are seeing transformation in cross-border trade flows. how is the trade war right now shaping up, in your estimation, as far as opportunity for risk?

>> it has played up as a trade war. i feel like it's a trade negotiation. they are trying to figure it out. i know that both countries know they are much better off with open borders, in somehow there are few things they want to tweak in their trade. i think those things are going to -- i hope they will solve themselves. i'm very concerned about the idea of these fiefdoms, china, the u.s., russia, all getting more controlling over their people. prosperity,quals freedom and honesty will prosperity, and if government is free and honest and open, that country will do very well. controllingrship is

and they give special treatment to some people over others, those countries sink economically. >> you still have a call for $250,000 worth of bitcoin by 2020. what will be the catalyst for that? >> it's just a better -- overtime, it takes a while for entrepreneurs and engineers to create all of the visions that we have of this wonderful world, where we have the decentralized cryptocurrency, where we are open and the geographic borders have fallen. engineers take time to develop those product. once you are able to buy starbucks coffee in mcdonald's burgers with bitcoin easily, suddenly you will make this trade-off. do i want to decentralized frictionless, global currency

that i can pull down anywhere, or do i want one that's tied to sefiat, tied to a government that swings back and forth depending on their political will? >> is there overregulation? we saw china crackdown. south korea has cracked down. others are looking to making their areas of how, but there seems to be fair from regulators. >> yeah. fearful,egulators are and they are spreading fear. they are regulating at their own peril. they are creating friction items toward progress, and when they do that, all the best entrepreneurs, all the great brains, move out of the country. they are losing all their young population. anybody who wants to start something, do something, of course those people are going to be using bitcoin and all the associated technologies to start

their business. it makes perfect sense. sayschina, or south korea, we are not going to allow bitcoin here, all those entrepreneurs go somewhere else. >> north korea i think is having a blockchain bitcoin conference this week. they are looking at some sort of cryptocurrency. >> if north korea were to open up and say, "hey, bitcoin is the national currency," all of a sudden you will see all sorts of activity there. 40 years from now, it might be the south koreans that want to get together with the north rather than the other way around. freedom bills prosperity, freedom and open, fair environments built prosperity, and if you have a dictatorship and you are trying to control your country in some way or another, trying to over regulate your people, they will leave. we can leave. speaking tor,

stephen engle at the world knowledge for. earnings season is getting underway, and the first is netflix, who releases numbers on tuesday. last quarter subscriber growth was just one off. here's the u.s. director of research, pulse wiener -- paul sweeney. how are we doing? >> this is definitely an anticipated earnings release, it's always an event with netflix releases earnings, given how the stock has performed over the years. investors will be focusing on the net subscriber number, the metric that investors focus on as opposed to eps or revenue. how many subscribers to they add globally? this quarter they are looking at about 5 million, a number they could hit or exceed. as we mentioned, last quarter they missed on this important metric and the stock took a big hit. >> took a beating. right now, the stock has been

taking a beating, as well. we have seen the biggest slump since 2016. some analysts are seeing opportunity when it comes to netflix. is it from a valuation perspective as well as an underlying growth driver? >> it is tough to make a valuation call purse day. -- per se. people have to put their valuation at a side and think about the global market going forward. the fact that consumers are spending more time consuming content in streaming as opposed regard, ifin that you think that's a global business and has a long-term growth story on a global scale, then netflix is the name. the story for most bullish investors is as long as they continue to grow their subscriber base, they continue to increase their investment and programming, which will drive even more subscriber growth

going forward. that is why the subscriber growth remains really key. >> 125 times future earnings. that theyant is it, can still entice people while they hike prices? >> the company has proven that they have pricing power. they raised pricing several times, and it has not impacted their subscriber growth. when you take a look at this story, one of the concerns is that they are spending so much of programming, they will spend and than $8 billion on p&l, the expectation is they will increase that spending next year. the problem is they don't have the free cash flow to support that. the company is financing this huge investment of programming in the debt market. they can continue to do that as long as they continue to grow subscribers, improve profitability, and get the positive free cash flow so it

can become a self-supporting business. bloomberg intelligence analyst paul sweeney, thank you. still ahead, luxury retail has been pricing against a tide of trade tensions and equity selloff, but some retailers are looking to produce their own content. that is in our retail interrupted series, next. this is bloomberg. ♪

♪ >> luxury retailers have much to contend with is the trade war deepens and competition for cash grows. in this week's global equity selloff, luxury good companies are in the red on the year. many are looking for new ways to engage with shoppers, and as part of our series on retail disruption, emma chandra took a look at one retailers drive to produce content to generate sales. she works with a luxury fashion website. >> things have really changed in the retail landscape this year.

they have purchased whatever they are buying and then they told leave, and in order really gain the trust and the loyalty and to have the customer come back you need to do something special. we really started on the content journey, about six and a half years ago, we believe the way to engage with our customers was with the content. >> what sort of things are you producing? >> we want to create the ultimate lifestyle. so they don't have to go anywhere else for their travel, their fashion shoots, inspiration on how to dress. interviews with musicians, people behind brands. we want to build our content platform so they can come to us. >> in the end, content must have a business purpose. it must also be about driving

sales. >> sure, and it's about engagement. we find customers who read content are 24% more likely to like a purchase. it is so powerful that people come to us for quality and different types of content than other platforms. >> and you are happy with that conversion rate? >> yes, and i think we can do more. >> matches fashion has made another big move in recent weeks, a brand-new physical space, 7000 square feet in the heart of london's swankiest district, mayfair. it also gets 95% of its sales online. why would you need to open the physical space if you are doing so well online? >> we have always wanted to build an experience, and we have always wanted to build a space where people could experience the online world that we created. it's not just a so shopping spa. yes, there is private shopping, with retail space for exclusive product, but we also have a

media hub, where we will be live streaming power talks, doing podcasts. the idea that we are making an experience with the customers in doing something special, we are trying to create a physical manifestation. >> so content as well as a commerce up. >> exactly. >> what do your competitors think of this? --i think what we are doing we are creating a content space as well as a shopping space. by being really experiential, anyone can walk into the space, producing exclusive content in an inclusive way. >> if there's a difference between the way you came, attacking the new way customers want to shop, compared to what has been happening in the u.s.? >> what we have done as a business is focused on innovation. it is something that is so intrinsic to the business in the risks,hat we will take

we want to try things that no one has tried before, and we will be trail blazers and that's really exciting,. a lot of people will look to us, will look at what we are doing, how can they be more experiential. >> and how does your new investment, private equity ampany -- they invested rumored almost billion dollars. does that kind of investment allow you to take more risks? >> they are brilliant partners of hours, and what that has done is moved us to the next level of business. we have so much potential for , in we want to keep pushing globally and doing things our way. >> wets the next situation? >> at the moment, we are focusing on growth, being as innovative and challenging and disruptive as we can, but always in a luxurious way. >> the chief content officer of matches fashion, speaking to emma chandra.

that does it for this edition of "lumber technology." next week, emily chang will be live from the summit. i'm caroline hyde. this is bloomberg. ♪

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