emily: i am emily chang in san francisco. this is "bloomberg technology." 2019 could be the year of silicon valley's most anticipated ipos from uber to lightspeed venture partners -- to lyft. plus, a tesla teardown. we talked to the company that .ore apart a model three

and, canada legalizes marijuana. grower nation's largest will join companies in the green rush. 2019 is shaping up to be a big year for ipos. softbank has lined up commitments for about $9 billion for its giant vision fund. companies providing the money likede the underwriters goldman sachs. news broke after that we could see post mates as well as uber and lyft. elizabeth, we have and selina wang. selena, i want to start with you. explain this loan softbank is getting from the same bank that is doing the ipo for the wireless business. selina: we reported they have received commitments of a $9 billion loan for his vision fund

which we know makes more and -- takes more more capital to fuel these bets they are taking. this is coming from the same banks underwriting the ipo of their wireless unit. it is not entirely unusual for companies to pick banks that have worked with them on past deals for ideas. we have reported that masayoshi son was telling these banks to sweeten the deal and be part of this enormous ipo, we would also like for you to loan to another part of the softbank empire. ist is unusual in this case that the loan would not be given to the same part of the business. it would be given to a different unit entirely which is the vision fund. the ipl is a big deal for softbank meaning mafiosi son -- will separate the business with the operational telecom unit. emily: what do you make of the

unusual nature of this loan in the context of what is happening , and the factbia that the saudi government continues to deny the allegations connected to the murder of this journalist. , softbank'stime vision fund has taken a lot of money from the saudi government. elizabeth: we are party seen the effect on softbank shares from the situation, but this has been going on behind the scenes for a long time. this is something masayoshi son has been talking to the banks about for a while. they've chosen banks to work on the deal that they have been talking to them for a while. this is part of that process. it will be interesting to see how that plays out for the next couple of months. for the moment, the focus is on the ipo. emily: have we gotten any word from softbank about their response to this international scandal and how it could affect

them? selina: right now there is no on the record comment. still in thisy wait and see mode. they want to see the full releasebefore they were any statement. it's possible they would want them to cancel the event entirely and they may want them to postpone the event. also been -- have speaking to portfolio companies. the uber's ceo has already pulled out and other startups are considering moving the conference as well. it is hard from the expected of -- the perspective of the attendees. they don't want to be associated with a regime coming under so much pressure for a horrible thing. emily: uber again in an awkward position in the fact that they have taken billions of dollars in investment from softbank. we got newtime,

information about uber's potential ipo, potentially at 100 $20 billion valuation -- $120 billion valuation. elizabeth: it is not unusual for the first numbers to be large. were closealuations we should think of these as early numbers as the banks pitch for this work and i want to win it. emily: talk to us about what we know about the uber and lyft offerings and how we expect those to proceed potentially one after another or at the same time. selina: they are expected to be listed next year and it will be a race to see who goes first. who goes first will set the precedent for the following listing. uber is several times larger,

but lyft has capitalized on the struggles of uber increasing market share as a result of those struggles. -- now these valuations are incredibly lush and should be taken with a grain of salt. recentlyveral listings that have ended their listing at less than half and expectations months before they were sold to investors. the valuation for uber is expected to be a $120 billion and it will come down to what the investors make of the underlying financials of over -- uber and lyft. emily: elizabeth, is there any thatdent for two companies have almost exactly the same , anyess and any respect president for two been companies like this to go public at the same time? elizabeth: there is. you have to get back to 2014 to

see it. jd.com go out and within months of each other. people are looking to the first to see how the reaction is. the private market valuations for both of these companies will have an appetite for both. emily: what can you tell us about a potential post mates offering? elizabeth: a much smaller company. if you think about food delivery in the same breath as cars and some of the driverless technology happening there, it will go into a crowded market. we are talking about the first half of 2019 which is the same timeline we are seeing from lyft . whenever it comes and however big they will be, they will go into a crowded market. elizabeth and selina wang, think about.

a lawsuit accuses facebook of hiding inflated at nectar. one company claims the company knew about this letting -- misleading advertisers and lied about it. facebook says the lawsuit is without merit. --ll ahead, 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. ♪ is bloomberg. ♪

emily: with increasing concerns about data privacy, apple is taking another step towards transparency. the tech giant will allow users

to download a copy of all the data they have stored with the company from a single portal. apple has previously rolled out this functionality in europe following the general data protection regulation rule. this will allow u.s. users to download data from their contacts calendar and previous apple repairs. a new privacy page will be rolled out detailing what data the company collapse. there is another option. aboutera where you hear another data breach, imagine if you could own euro data and house it on your own server. that is what halma aims to do. tople devices you can do contact videos and photos and host your own email and kyle and are -- and calendar.

investor is backing halma -- helm. you are full-time bc now. this is the biggest check you have ever written. >> in an early stage investment, alwaysunder and i have been long on wanting to work with founders that are seeing the future before we as investors can. we've never seen a team a strong to come in tackle this with a brilliant solution that was easy to use and look at. emily: how is your work different from what to can get from dropbox or icloud? >> helm is a personal server that goes in your home. you just hook it up to your home network and you said it up within three minutes. it is different from services like dropbox in that those types

of services take your data and house it in the cloud. with helm you have the data on a server in your house. this means the helm server has your data in your home. very the company know little about our customers so we do not have access to any data on the server. emily: is it encrypted? giri: yes. we have full disk gingrich and. only the user has access to the keys. emily: so you have been using the service for a while. what is the experience like an how does it differ than what else is out there? alexis: there was no alternative aside from having to install a server in your own home. there are plenty of hobbyists and hard-core techies that would go through the trouble of installing a server but it is a lot of work and upkeep. what was so appealing is that they had the vision three years that waske something so user-friendly i could hand it to my dad and he could set it up and know he was secure. emily: it is not cheap.

$499 for the server and every year you pay -- >> $99 year after the first year. emily: so how can this protect you on a practical level if you still want to use facebook or gmail? giri: we look at your evil account as the root of your online identity. does the account you use to manage all of the other online account in your life. it is important to take every step you can to protect that account and own that data. livess a way people's have been turned upside down. if someone can get into your you know account, they can likely get into your bank account and social media accounts. this is the first step to take back ownership of your data. emily: is it inconvenient to the? alexis: it is one extra step. thatnk one of the signs they were onto something is that three years ago they knew this was a coming trend.

in the age now where the average consumer is thinking a lot more about their privacy and data breaches, this is a very real situation. butink it is one extra step one that's more and more americans and people all over the world are more keen on taking. emily: how much do you think people care about their privacy? if it came down to you can't use facebook, when they stop using facebook because despite all of these data breaches, when you look at facebook's results, they continue to see engagement and have 2 billion users. alexis: i think what was so spectacular about this is that by starting any now, you create a user experience that is no different from what to do today. the differences, the servers where your mail is stored is secured, in your home, and physically yours. that is the foundation that got us so excited. emily: how many customers do you have and how much growth are you expecting given the cost and concerns? giri: today we come out of

stealth mode and we are announcing availability for sale. we have been running a private beta program it that has been very successful. we have been excited about the demand so far. there is a lot of engagement online, on hacker news -- alexis: hacker news is happy folks. giri: our early adopter audience has been highly engaged. emily: we seem to be going through a reckoning with big tech whether it is google or facebook. some people seem to be angry with how they have been treated. do you think that is a prolonged trend or do people forget about it and go back to business as usual? alexis: people will always default toward a great experience. in the long-term, that is where we are long on these tech trends because the user experience is

starting to become better and better. this is a water ship moment because users want this. users care about this, but the barrier to getting access to it was a lot higher. it's no surprise to see apple proactively give users the chance to own their data. that is a direct response to users caring a lot more about this. as the user experience get better, consumers why ask why can't i have this for so many other parts of my digital life. that otherd you say social media services are vulnerable in the long-term? pitches forseeing decentralized social networks. at the end of the day, there has to be a draw to get someone to want to download an app and share parts of their personal consumer i think this trend in 2018 is similar to

2004, 2005. i think we do care more. i think just doing coming to the home of someone who has a device -- this device, it will get people thinking and my really doing enough to secure my family digitally as i am physically. alexis andright giri, we will be watching. up, if the tesla teardown. a team of engineers in detroit point on major flaws in the tesla model three. how bad could this hurt the company? we will discuss, next. this is bloomberg. ♪ ♪

emily: tesla's model three has some of the most oppressive technology and one of the best motors of any electric vehicle. but, a team of engineers said there is a major flaw in the car's design and that is hurting

their profit margins. we have the report from detroit. >> detroit, a city you would associate with building cars at a massive scale. in an engineering warehouse, we found the man who tears them apart piece by piece. his latest project, tesla's model three. munro and associates does quite a bit of engineering work. reverse engineering and benchmarking the vehicle. >> they tore down to bang model threes and compared it to a bmw and a chevy volt. their conclusion is that they are ahead of the game in all areas but one. complex, body is too expensive, heavy, and difficult to build. >> this car has a lot of good features.

i'm standing in front of the worst one right now. this is the reason i feel tesla has problems. the body in white and the closures along with it are not designed for manufactured building. they do not do a good job, the ts are too high, the body is stiff, the wheel wells have nine parts that would normally be one part in the conventional car. they use him in the fastening methods that it is incredible. it goes on and on. in many cases, the design is so poor that am surprised no one caught it before it got into production. >> the model three they analyzed has a sticker price of $50,000 according to munro. they estimate the cost is three 34,700 to build.

the model three was built in tesla's factory where they employ 10,000 people. the cost of labor and automation is high. >> 35, 40% of the people probably disappeared from the factory based on car plants and that would have to happen after they strip out a lot of robots. this product been built and a conventional ford, toyota have been awould brilliant design and enter the marketplace in unbelievable fashion. they could have clobbered everybody. no one would have been able to catch up. --munro and associates forhat they put together making this battery module is a brilliant piece of engineering

and i do not think there are many people that could help them make it better. their management system is one of the best i have seen. this is probably going to be a long lasting battery. >> all cars need a motor. according to monroe, the model three's electric motor is one of the best. every dollar and every kilo counts. puts the teslas motor at $750. a mark i three has spencer motor at $841 and ways slightly more. is alsoy volt motor more expensive at $836 and ways the most at 51.9 kilos. tesla also outshines and performance. >> this is wicked fast. this is a much more agile and exciting motor to have than the chevy volt or bmw counterpart.

>> monroe and associates are unsure what type of motor the model three has. they have discovered a unique magnet design which they think gives the model three its impressive performance. >> these are for magnets glued together. this gives us something entirely backrent called the held effect. it gives you different performance characteristics. this is one of the things we think gives tesla extra umph. >> tesla declined to comment on , but musk has previously said that tesla's processes have gotten more efficient since 2017. he also knowledge to the body shop could be more efficient. they could potentially have

faster production and higher margins, something investors are watching closely. bloomberg's ed ludlow there. after this report came out, theness insider reported manufacturer had left the company. speaking of tesla, $140 million will be paid to where they build a factory in china. this is the first time china has allowed a foreign automaker to fully on a factory there. this will allow tesla to sidestep terrorists -- tarrifs. recreational marijuana comes to canada. major economy to legalize pot start a global trend? this is bloomberg. ♪

this is bloomberg technology. i'm emily chang. canada is going green. wednesday it became the second nation ever to legalize recreational marijuana. opened upations have across the country in celebration. canopy growth is celebrating. canadian the first grower to debut on the new york stock exchange in 2014. joining me on the phone is the ceo. shares have not reacted quite so positively.

>> the price on the market is not cheaper. come into the store and they are so actively impressed. the difference in price is one thing. our prices are on par. washes their hands so it has a lot of things you don't wish to have. market will find that you cannot do that anymore because they put in punitive measures. it, itare caught selling can be up to 14 years and prison. in canada, we are regulating and educating. the price and product

quality is better i think. how do you expect demand and sales to evolve? i think it will normalize as we get into early 2019. at this point, everything in stock is selling. the lineup has been around the block. e-commerce stores have been flooded. next quarter we will see more stores open across the country. 2019, the half of government will enable us to make products like beverages and edibles. if they do that, that will drive more demand. thank you so much.

from aup, we hear congressman who serves on the house intelligence committee. thathe thinks of the news china pulled off a hardware hack that infiltrated amazon and apple. that's up next. this is bloomberg. ♪

out thehina has carried most significant known hardware hack ever. according to sources, chinese hackers implanted tiny microchips in the surfers -- servers of many u.s. companies. week.orted last is a member of the u.s. house intelligence committee. thank you for joining us. 10, howle of one to much did the scenario for trade

in this story scare the intelligence community? >> i think on an ongoing basis, the intelligence community is afraid of this. the real question here is, how surprised would they be? most of them would not be surprised at all if a story like this was found out to be true. the threats are very real. emily: we spoke to 17 primary sources with direct knowledge of the compromised hardware sources. what do you believe the house intelligence committee should do? first, they should talk to the manufacturers and the intelligence community to get more fully briefed. they should complete a thorough investigation. part of that is already taking place. i understand the leadership of

the house select committee on intelligence has asked for that brief. >> what sort of dialogue has the intelligence community had with other government agencies about this? >> there is an ongoing discussion and relationship that is taking place for some time now. this is a threat i learned about since i was on the committee and even before as a member of congress. threat is that china will attack our intelligence community. it will attack our sources of information and our intellectual property at every possible point. we are not prepared for that at this point in time. amazon and add that apple have issued statements

denying knowledge of these allegations. hardware, howto vulnerable do you believe we really are? given that the supply chain of these companies go on back to china. the supply chain is extraordinarily complicated. the threat is extremely real. we saw this only saw the zte phone issue. congress reacted to the national defense reauthorization act. unfortunately they did not demand the same from the private sector. i think you'll see more of that. i don't know that we can pick up the demand. it proves that we will have to build more of these materials that are put into all of our communication and can your communication and

computer equipment. it is a more complicated world and it will be harder and harder to trace sources of the materials they go into this equipment. >> how should companies be looking at the security of their supply chain? how would they go about moving their supply chains out of china given the many years they have been entrenched there? >> it is just that the sheer volume that is needed is going to be hard to make up for all of the lack of material. it will take some time. there needs to be partnerships within these corporations working together to understand the threats. needs to be an enhanced relationship with government and academics to understand the threat and to cooperate to meet this more fully head-on. the government's role needs to be to help these entities face

this challenge, give them the information they need, and the in rampingthey need up the work they need to get done to create the material here. given what we know now, would theirvocate apple moving manufacturers out of china? unless they find a summer rec -- some miraculous way, i think it will take some time. thatll have to recognize threat and find the way to move the supply chains elsewhere. andeast with allies partners we can trust and work with. >> i would love to get an update on the russia investigation.

beingare 54 transcripts scrubbed of classified information. wendy you expect them to be released to the public? >> most of them should have been released already. involve onlyrity unclassified material. to get those released immediately and we were met with opposition. will take some time to be scrubbed by the intel community. we are fine with that. we ask that this information be released half a year ago. on the last day that we were in session, in the middle of the kavanaugh hearings, they released this information to the intel community to be scrubbed hoping that people would forget it existed. >> whitey think it is important from -- for the public to see these? >> to help them begin to understand what i have learned for the last two years.

attack on the democratic process. it was the russians who acted alone. they did it to benefit one candidate and hurt another. those in the trump world communicated on an ongoing basis attempting to conspire with the russians. i believe the transcripts will bear that out. i think it will also bear out that my republican colleagues worked nearly as diligent in notng questions -- were nearly as diligent in asking questions. we were stymied at many points trying to find out what took place. a gag order from the white house. the fact the witnesses were not subpoenaed. who did show up were not required to answer questions. >> facebook is banning misinformation on the platform

about voter suppression. whether their vote will count. how you can vote. is this enough or should facebook do more? fact checkers would be downright but not removed from the platform. other social media platforms were slow to react to this. they were unprepared during the last election. they are slowly coming to realize what a threat this is. what an attack it is on the democratic process area i welcome the reforms as they come area in the final analysis, it will be up to the american people to recognize this threat and beware of anything that seems unrealistic. whate you satisfied with you see facebook doing so far? facebooklistic that

can have control over all of this? >> it will take more than just facebook. withll take involvement all of the social media platforms and the american public laying a role as well. there is always more that they can do. it will require a lot of resources to do the policing of this. at least the american public can expect. accountability. if you voted in the primary, you don't have to vote in the general. or if you click on this you are devoted. posts like that if they support -- suppress votes, it is worth

writing against. >> thank you so much. this is bloomberg. ♪ >> thank you so much. this is bloomberg. ♪

emily: shares of netflix got up to a big start. the global total was boosted to a hundred 37 million subscribers. 28.9 millionadd customers this year. can the growth be enough to lift the family of faang stocks? our guests join us to discuss. reminder --

if you look at the growth in general in the market, it is pretty strong. .hat is changing is the margin spending on data centers that is happening. margins are still the overhanging worry. the organic demand behind the sector continues to be strong. >> you are optimistic about netflix. can netflix keep up this kind of growth? a lot of it is coming from international markets where they are going to be required to make country specific language specific content. that is a cheaper production budget. we are looking for them to perhaps adding accelerating the number of subscribers. we have known that their growth story is international.

the u.s. is slowing to a modest pace of growth. as long as they continue to add, we are talking 30 million subscribers per year most localizeonally, content is relatively cheap. >> let's talk about amazon. they have a competing service to netflix. how do you expect amazon video to evolve given that netflix is showing such strong growth and original content? they just bought a studio in mexico. >> amazon will continue to ramp up their investments in original content. this is a part of a grander .trategy for amazon

this is a critical element. we continue to believe they will increase spending. what about netflix spending a billion dollars on a physical studio when real estate can be a risky investment? is it worth it? >> my understanding is they got a good deal for the outlook studio. if they have been paying a lot of money to rent studio space elsewhere, it might be a good deal for them. the netflix story is about original content production. not just licensing originals. making their own shows. will comeover time from that. they can achieve a lower cost to produce the shows, that will help your bottom line. >> netflix believes it has a huge potential in india.

amazon is already strong there. think that can be were the next hundred million comes from? >> i wouldn't put a hundred as the subscribers achievable target number. i don't know what it is. it is an active service for india. you have a lot of competing services and it can be much cheaper for the average consumer. it is a different marketplace. there is a lot of opportunity because it is a population of dramatic content. potential huge growth there but i don't know if it will be 100 million. >> thank you both. space, as ifcloud he is gaining speed. is drivingant strategy to its cloud suite.

>> in 2016, i told you we would be the number one cloud company in the world. and we are. users have 150 million running our technology in the cloud. the cloud business model has superseded the on premise business model this year. we are getting more revenue from the cloud. change is happening very quickly in i.t.. companies can be intelligent enterprises. they can serve their customers better. >> you are collaborating with other big tech layers in a way that feels new. that must've been interesting territory. scalars for

example, if you think about alibaba in china and you think about amazon and google in the united states. they are all very strong companies. thatwill provide solutions are multidimensional to companies. over time, it is very important that we chose a strategy where our reference architecture and technology can also run. we should be where the customer wants us to be. if that can help them to run a simple and achieve their goals, we are leaning into that change. it for you or we can team up with other great companies. we have chosen a collaborative approach to the partnerships and the cloud. that has helped. growing concern

about data security and the management of data ethically. where does sap fit into that? europe, security and privacy around data has been a long-standing issue. the europeans are way ahead in this regard. we were the first company that was certified by the british standards institute for data privacy in the world. data privacy is our forte. we do this in terms of any human,, any device, any any consumers worldwide. ,hen they do business with sap we make sure the customer's data is the customer's data. when make sure the privacy of the individual consumer is detected. that is an absolute must. >> do you worry about certain jurisdictions?

you do business all around the world. >> we have worked in china for some time now. if you think about the state owned enterprises, they all run sap. if you think about the technology companies, they all run sap. we have worked with china in good faith for many years now. i am confident that the cloud and the reference architecture insecurity and privacy standards we have put around the data is fully protected. >> that was the ceo of sap. that does it for bloomberg technology. for an tomorrow interview with steve ballmer. ♪

welcome to daybreak australia. we are counting down to asia's major market open. here are the top stories we are covering. u.s. stocks edged lower. concerns about rate hikes to a toll on investor confidence.