emily: hello, i'm emily chang and this is "best of bloomberg technology." coming up in the next hour, we go inside facebook's selection war room where they are running interference on attempts to undermine the vote but will it be a enough? and we have a conversation with sasha and adele a -- sasha nidela. and a tesla tear down. we speak with the company that

tore down the model three. first, to our top story -- netflix shares rallied this week. all eyes were on subscriber growth and results recently topped that easily topped forecast. they reported 7 million globally. a record for the third quarter, up 31% from last year. the new programming is paying off. the company released 676 hours of new tv shows with the -- in the latest quarter helping to attract the new subscribers. --spoke with a true optic tru optic representative. the thing with -- guest: the thing with netflix is

it does not seem to matter -- the revenue story has been pretty positive. because they are boosting the amount of revenue they get per subscriber which means it each subscriber they sign-up should be a net positive for them but the take away as always is the subscriber number. they are on pace to add 29 million customers. i went into the quarter believing it was possible they would report a decline. instead, they will post their biggest year ever by about 5 million. you run out of superlatives to talk about their growth. emily: when you look at the data, what do you believe is driving this? the new netflix original shows? >> i do not believe so. i think it is -- i think there is a certain -- a certain part of their success can be tidebuted to a rising

floats all boats. the growth we are seeking over the top, not just domestically but pretty much every broadband interconnected in the world is phenomenal. i think at some point, the street has to stop looking at netflix from the standpoint of did they hit or miss? own estimates in terms of growth, look at it as a normal company. there are three things i would be really worried about in terms of the future if i were netflix regardless of the story this corridor. that would be at&t, disney, and free ott solutions. the value and demand for the and warnert hbo media will have when they launch their solution. disney content. and the massive growth of free add content at otc. that is more significant than what we have seen from netflix in the last two quarters.

is so faren netflix ahead of any other streaming provider at this point, it do you share these concerns? that it is about other competitors? >> the free one is not a concern for netflix. they have competed for the last few years with youtube and both companies have just -- have done just fine. the competition from disney and at&t is very real. both of those companies have ves of libraries. the netflix counter would be that they have been building a studio in the past few years. they spoke about it in a letter to shareholders. " is somethinggs they made themselves. point, i've's think you can see at&t and

disney grow without necessarily hurting netflix. there will be a lot of competition in the developed western markets. but overseas, netflix will be far ahead of those companies. emily: i am looking at a chart right now where we are following netflix results. this is a chart of netflix margins which appeared to be very strong. if it is not a result of the original content investment, are those investments in original content worth it? netflix is warning about a negative cash flow. recognize they are making huge investments in content what they believe it is worth it and will pay off in the long-term but will it? re: the team at netflix is very intelligent. they saw the economies of scale changing a few years ago when

they began to change their investment. they have no technological berries to entrance. of content that they rely on would eventually bring that in-house and that is why they have been preparing the original content strategy for quite some time. what i will disagree on is when looking at youtube, where it the content is user generated, the competition is not viable. ist you see now whether it pluto tv or other, is hype -- is high quality content and that is where domestically in the u.s., the majority of the unique growth has been in the last 20 months. in international markets, it is not having to worry about the , it iss or the at&t's the global tv in brazil that owns all of the rights. and netflix has had problems

competing in these markets. my concern is in order to compete on 100 different fronts at once and having original content in native languages and different genres, the amount of money that netflix will have to spend is so unprecedented that i would be concerned if i were netflix. still ahead, the problem of misinformation in elections. inundatedia remains by yet and facebook hopes it has a solution but is it too little, too late. and if you like bloomberg news, listen to us on the radio. you can listen to us in the u.s. on sirius xm. this is bloomberg. ♪

emily: facebook has been under intense scrutiny when it comes content on its

platform. the company has been investing heavily in cybersecurity and ai to diffuse threats before they spiral out of control but is it too little too late. we went to the newly created war room to see for ourselves. this is facebook's election war room. socialve center of the networks election interference operations where teams of engineers, cyber, policy, and data specialists are patrolling for fake news. what is happening right here? >> we have experts from across the company, data scientists are seeing at dashboards and if there is anything that could be related to voter suppression. did nothe war room exist in 2016. facebook executives seemed to be in denial that the social network could have influenced the presidential election at all. >> personally, i think that the

facebook fake news on of which it is a very small influencedontent, the election in any way i think it is a pretty crazy idea. emily: in the last two years, it has been made abundantly clear that russia has weaponize to facebook. facebook has apologized for not catching it and committed -- massive resources to come bob it -- to combat it but the behavior has continued. with midterm elections weeks away, facebook says activity is wrapping up in the majority of it is coming from inside the united states. >> to manipulate public debate you have to understand the culture and there will always be more people inside the country that will understand that than outside. the interference coming from

can be the united states particularly pernicious. you have a foreign state looking to meddle in another country's public debate. part of what we have tried to do -- we push as much of the decision-making to the teams as possible. we may need to move something up and we can very quickly. a 24: this effort expands teams around the world. monitoring other platforms. monitoring u.s. elections but also in brazil. these mere mortals are not alone. >> we can block them at the moment of creation. emily: there is an indefinite amount of nuance. said itk, the company would take down this information

about how people can vote and whether their vote will count what other types of voter suppression like whether polling places are closed or under threat by an active shooter would be outsourced to third parties and downright and flagged if false and lawmakers are watching. and thenk facebook other platforms were slow to react to this. unpreparedoefully during the last election as the russians weaponize to social media. they are slowly coming to realize what a threat this is and what an attack this is on the democratic process. i welcome the reforms as they come. it will be up to the american people to recognize this threat .nd aware -- and beware emily: expecting users to make that call may be usually unrealistic. mayreal problem others say be the way that facebook itself operates.

keeping users in their own social silos that further divide. whole thingn this is i believe that the the wrongg creates incentives for facebook. and that essentially it forces them to use highly addictive technology and to basically push people to increase it -- to increasingly extreme positions. polarization is good for facebook. anger and fear are good for facebook. emily: does it concern you at all that facebook could be hurting democracy more than helping? >> our goal is to make sure that we are helping democracy. we are ready. that does not mean that there will not be challenges. there are always unexpected threats and challenges. emily: the question remains, will 2018 be different?

lookingp, microsoft is to make the workplace inclusive for all including the more than one billion people in the world with disabilities. we speak to the ceo coming up next. check us out at technology. and follow us on tictoc on twitter. this is bloomberg. ♪

emily: this month is national disability employment awareness month and this year's theme is empowering all." microsoft is trying to do just that. earlier this year, microsoft announced a five-year ai accessibility program with rapid developments in aim machine learning. they plan to create accessible technology enabling all workers

to be productive in the workplace. live from san francisco where we spoke with microsoft ceo satya nadella and achieve accessibility officer. most ofs been deaf her life. as interpreter joined us well. you have championed the potential for tech to be used as an equalizer for people with disabilities and your nominating jenny as the next generation of tech leaders to watch. why? or four yearshree before i became ceo and she was already leading the accessibility efforts at microsoft. and in her come up i found someone who not only had the patience to teach me why accessibility mattered but quite frankly, it could bring about the sense of purpose and energy across the company on what a difference technology can make. think about i -- think about ai

-- for speech, vision, and language. how they are making amazing advances. when you couple that with universal design, it can help a billion people that have one desist -- one disability or another. to the leadership of jenny and the entire company for rallying around her. emily: you have lived with deafness almost your entire life and yet you majored in music and you are the chief accessibility officer for microsoft. what potential to you see for people with disabilities to use technology as a doorway to opportunity? antechnology can be incredible enabler. if you look at the demographics, you have an unemployment rate for people with disabilities versus those without. it can be an incredible area

that can get people to achieve whatever they want to achieve whether that is in education, employment, enjoyment, or life. we are beginning to see that. some of the technologies that we have been able to put out through the lens of ai -- we have one that allows people with to or at poorly -- describe what they cannot see. and having high quality captioning that is instantaneously provided. it will never replace the need for me to have an interpreter but it will mean that i am more able to be independent in my communications and in my meetings and in my relationships with people and friends. there are amazing opportunities and their is a lot more to be tapped. emily: this has been very

personal to you here you have a son with special needs. i am curious if other tech leaders have that personal understanding, how could tech be different? would they be different if they had the benefit of that kind of understanding? >> i think all of us have that empathy for people around us across all companies. this in terms of of competition. i think it is something that all of us have innately as human beings. in thestion is that we tech industry have an amazing opportunity and the responsibility to be able to take some of these advances and create increasing opportunities for people that to date have not had it. we are also trying to make sure that we take ai in other places where perhaps markets don't work that well. including on the environmental side. for.ve ai

we also did it for humanitarian actions. an area where i think technology can play a fundamental difference. technk all of us in the industry can do it. and we all have had personal experiences that encourage us. projects whether it is seeing ai or learning tools, they all came out of not because i said so or jenny said so, it was the employees of the company rallying around their passion and innovating. emily: and if i understand it, microsoft has considerably practice.s hiring in retraining managers. specific programs designed to hire people with autism. unlocked a lot of talent and potential that you may not have attracted otherwise. how did you do that? how can other companies learn

from that? >> when you think about creating productgy or any whether you are in the tech industry or not, disability is a part of that so you have to have people with disabilities in the fabric of your company to represent that expertise and bring that into whatever you are creating. for us, it was a business imperative that we have that skill base. we have been pushing the frontiers of how we can bring in some of these additional areas of expertise and talent to into the company. and we look upon disability as a talent. is coolally think that as well. if you look upon it as a town went, you think about it in a different way. the autism environment. this is an area where we have really continued to learn. we have learned that we were screening people out in our interviewing process. so we have gotten rid of that and we bring people in through

an academy. thatve amazing talent falls into 12 different sectors in our company. it is a learning journey. emily: what does "inclusive design" actually mean? design an example of a that was not inclusive that you have changed. when you realized that it needed to be different. >> i think you see it honestly all around you. even if you go back to the non-tech principle of the door handle. it used to be a round knob. you started thinking about that through the lens of someone an involvement in physical therapy, they suggested we could differentle with parts. people with disability whether

it is blindness, speech, mental health, autism -- whatever it may be come up bringing them into the process and ultimately you create products that work better for everyone. and if you do that from the beginning, we do not try to at theade -- retrofit end. crikey, becomes, o chrish we have missed it. >> if you start it at the beginning with powerpoint -- that is an example of having that those in your organization -- that ethos in your organization. emily: i would not be me if i did not ask you a couple of questions about the stories of the day. you have some employees that penned a letter protesting your pentagon cloud contract. what do you plan to do as a

result of that? will it change the decision you have made? that weve made it clear have served our federal customers whether it is the department of defense or the labor department or veterans affairs and we will continue to do so. importantly, we also welcome all views from our employees and have an open dialogue. the core for us is a set of principles that guide what we do and what we build and how we engage. emily: the other big business and political story of the day is what is going on in saudi arabia. the government has been accused of being tied to the murder of a prominent journalist. ties to sauding initiatives. big customerssome in saudi arabia. some linked to the government.

what will you do as a result of these allegations? >> what has happened there is it really sad and our heart goes out to the family. and it is a real step back. i was very hopeful for saudi arabia in terms of the opportunity for the citizens there. for the women in saudi arabia. small businesses. because of the reforms being put in place. this is clearly a step back. we continue to monitor and see what this all means but at the same time, i think it is clearly a step back in at least what my hope was for saudi arabia that creates more opportunity for all of its people. emily: that was satya nadella and microsoft chief of accessibility jenny. coming up, from cultural anthropologists to a leading we speak to-- genevieve bell on the future relationship between humans and machines.

altmanthat topic, stan thinks we have a chance to reset world the quality. this is bloomberg. ♪

emily: welcome back to "best of bloomberg technology." more now from our special coverage of the wire 25 conference in san francisco. one of the biggest themes is artificial intelligence. genevieve bell is a cultural anthropologist and at the center of ai development. she took the stage at the summit on how to manage human relationships and how we build a new cyber physical world that does not re-create social inequities. i think one of the things

around ai is something we need to be paying much more attention to. you are focused on real robots sharing our values. not will they take our jobs. will they share our values? >> we know that artificial intelligence is going to go to scale and it will end up in a lot of different places. the question is how do we make sure that is something we are comfortable with? that means asking questions beyond just what we can do technically -- technically. what do we want these objects to enshrine? emily: are these questions being asked? anthropologist so i think the answer is no. the good news is that they are starting to surface. andmore you talk about ai

public policy come ai and governance, those are the beginnings of the conversation about the world we want to build. has done al fascinating study on gender differences in perceptions of technology. they found that men are much more comfortable with emerging technologies than women. what are the implications of that? >> we did this study looking at american consumers and about what they imagine technology looking like in the next 50 years. we found there is a strong difference between what male parent versus female parents say. dads went -- more of that and mom's went -- i don't think so. it was a significant delta. it points to something. i think there is a place where we have a lot more questions to go and ask why is it that some parents were incredibly excited while other parents were going -- i don't know about that. in an what does it mean

industry where we know the vast majority of tech is produced by men and yet attempting to produce -- attempting to serve both female and male consumers? of peopleulation making technology and decisions about the technology does affect the population of people impacted by it. not just by gender but also by age, education and background. i always think that the more voices you have in the room when you're making solutions and inventing the future, the more likely you are to find something compelling. for me, the fact that study after study find that men and women have different attitudes towards privacy and security means that unless you have all of the rooms -- all of the voices in the rooms when you make those decisions, they will be less successful. as i think they were tapping into specific

aspirations, i think they would. you might have had a different starting point. emily: what do governments and companies need to do? i think there are some things that companies are already doing. security to data ideas about privacy. regulations coming on in europe now about data protection and data rights. there are still some questions to consider about how we treat data and how we deal with the data. we are going to see more companies developing intel policies. and governments around the world developing their own standards also. we are in the early days but i remain cautiously optimistic. emily: also at wired week caught up with sam altman. and stripes.

he is also the cochair of open ai, a research firm with a stated mission to make sure that humans and ai can safely coexist. who uttered to ask about the coming of the ai wife -- ai wave then sam altman? i view that as just around the corner. is debate as to whether it 10 years or 100 years, i don't think it matters too much. it is coming soon enough and it is a big enough deal that we need to think right now about how we want this deployed and how we can get the benefit from it. and how we will governor. emily: do you think ai will share our values? sam: we have a team working on that right now. values which human is difficult to code -- i will say that i am more optimistic than i was before that we will

be able to accomplish that goal. emily: do we even want ai to share our values? there are many inequities in society that we may not want replicated in ai. sam: my hope is that ai will our us he our best, amplify best and stop our worst impulses. i think we have a lot of known psychological flaws. there are deep inequities in the world. i think ai will be a way that we can decide what is good and make sure that ai honors that. there is a lot of good in us as well. the injustices, we will be able to address. emily: elon musk as you have been is concerned about this. how realistic is the apocalypse? sam: it is hard to say -- whenever you have any incredibly powerful technology, to know what it is going to do.

i am personally optimistic that we can get to a good future but it will take incredibly hard work. emily: you still spend half of your time at y combinator. termsrends do you see in of the values of startups being created? and their valuations? thati made this public three or four years ago when everyone was saying there was a bubble. i just looked at it recently and it is looking pretty good. everyone said it was ridiculous and that i would lose the bet. everyone said there was a bubble and that is why i suspected there was not. there is not says a bubble and so now i am nervous. i am much more in your wrists than i was when i made that post. i try not to get too focused on bubbles because i try to keep a

multi-decade view. however, when you look around at the moment, plenty of stuff seems out of whack. on the timeframe that i think about kamar i don't care that much. in terms of trends, one trend that we are seeing that is affecting all startups in the bay area at least is a competition for talent with the is veryer cap difficult. when you have google, facebook, finding the best engineers and putting these incredibly large competition packages in front of them, how the startups and attract enough talent to win becomes a very hard question. it is one of the first questions that i asked startups -- how will you approach this?

is astonishing how many people do not have an answer to that question. emily: how do they compete? sam: it is always different. any one of those things that i said could be an approach. the problem is that many people have not thought about it at all. emily: you believe we could be in a bubble? sam: i think we are -- i think some valuations are too high and some are too low. if the interest rates go up, i think there will be a ripple effect on their valuations. binary of is not that a question. it seems more likely to be true then in 28 -- 2015. speaking of values, you -- ntly sam: i don't have a lot more to

say about it than i did before that i feel way out of my expertise. questions.t of i would like to wait for them to be answered. hopefully very soon. before i decide on my commitment to the board. in general, i believe you should wait for the data. but this case seemed to be exceptional. emily: our interview with sam altman from open ai. speaking of the exceptional saudi situation, saudi arabia has pulled out a plan to deal one.virgin hyperloop it seems to be in retaliation for richard branson freezing ties with the kingdom until more details are known about the alleged murder of the journalist , jamal khashoggi. denied thatlly there was a murder in the consulate. a techup, it is

teardown. a team of engineers in detroit are pointing out major flaws. how badly can this hurt the company? we will discuss, and that. this is bloomberg -- we will discuss, next. this is bloomberg. ♪

hasy: tesla's model three some of the most impressive technology and one of the best motors of any electric car but a team of engineers in detroit say in thes a major flaw car's design hurting profit margins. we have more from detroit. -- a city you associate with building cars on massive scales. in an engineering warehouse north of the city, we found a man that tears them apart piece by piece. teslas modeloject,

three. -- tesla's model three. a bit ofo quite engineering work, mostly in reverse engineering and benchmarking the vehicle. >> the engineer who wrote her down -- the engineer toward down model threes.two the body of the car is too complex and heavy. >> this car has a lot of good features and a few bad ones and i am stuck -- and i am standing in front of the worst one right now. the body -- the volume and weight and the closures are not designed for manufacturing ability. aty do not do a good job part count, the weights are too high. the body is much too stiff.

the wheel well has nine parts. they do -- they use so many itferent fastening methods, is incredible. the design is so poor, i am surprised that no one caught it long before it got into production. >> it has a sticker price of about $50,000. he estimates the car would cost about $34,700 to build. that is a gross profit margin of 30% but there is a catch. that mucht would cost to build if it was built at a conventional car factory. three was built at a special facility. peopleor 40% of the would disappear from the factory. afterould have to happen

they strip out a lot of the robots. had this product been built in a conventional ford, toyota, or whoever kind of plant, this thing would have had a brilliant design and it would've entered the marketplace in an unbelievable fashion. they could have clobbered everybody. >> they are as -- they are excited by the model three factory. togetherhey have put for making the 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 battery management system is one of the best i have seen. this is probably going to be very long-lasting battery pack. >> all cars need a motor and this electric motor is one of the best. and in the world automotive,

every dollar in q low counts. was tested out at $754. the bmw i-30 has a more expensive motor and weighs slightly more. the chevy motor is also more expensive at $836 and ways the most. -- and weighs the most. tesla also outshines in performance. >> this is wicked fast. it is a much more exciting motor to have. >> they are still unsure what type of motor the model three has pending further analysis. but they discovered a unique magnet design which they think is the model three it's impressive performance. are four magnets and they are literally glued together. this gives us something entirely different. it gives you different

performance characteristics. this is one of the things we think gives tesla a little bit of extra oomph. >> tesla declined to comment. musk previously responded to earlier analysis saying the process has become more efficient. and body shops can still be more efficient. should go back and benchmark his car. production and increase margins. something investors are watching closely. bloomberg's ed ludlow. speaking with tesla, the company will pay when under $40 million or the land where it will build a factory in china. chinal be the first time has allowed a foreign automaker to fully own a factory there. the facility will allow tesla to

by thep tariffs sparked trump administration's trade war. we sita beating desk down with the always opinionated steve ballmer. this is bloomberg. ♪

the all stock deal worth 2 billion dollars would allow users to now manage emails in the software developing program. unit of the company and the deal is expected to close in the first half of 2019. is taking aon beating. the public's love affair with big tech is over. steve microsoft ceo

ballmer sat down with us on wednesday to talk about the current environment for big tech as well as a new clipper ai sports initiative. out, they in and day technology industry, like every other industry, has a key role in society and some of it is all positive and goodness and innovation and some of those things come with a downside. as the downsides get revealed whether it is security issues in software a number of years ago, privacy, election manipulation, i don't think that the spirit of excellent innovation will be anything other than applauded but the tech industry also has to take bumps and bruises and serious request from society to do better. i would not call it a once-in-a-lifetime but there will be excitement about tech issues overll be which tech needs to show responsibility. emily: i know your super pumped

about this. you are pitching this as a revolutionary way to watch clippers games and that this puts a viewing experience in the hands of the viewer. how does this work? steve: what we have done with very coolrs, a technology company here in los artificialto apply intelligence to watch, study the game, and then draw what is going on. if you would want to watch it as a player would watch and to see the probability that your teammates will be successful with a shot. to see real-time diagramming of plays. if you want various camera angles coming you can get that. if you want live commentating, you can get that. computer-generated highlights are generated in near real-time. the ability within the website or within the applications to

tweet things out. we provide all of that. the thing that is broadly available today which is very exciting for people here in the los angeles market is a that of augmented streams to do much of the things that i talked about which are available now on the fox sports app and people can watch the game that way tonight. emily: this is according to the viewers of tomorrow -- of tomorrow -- who are you trying to attract to this? steve: we are starting with fans that are already excited with the game and giving them a chance to get in deeper. with every business, you first have to feed your enthusiasts. tendcularly since nba fans to skew younger. we are also building out interesting things to draw in people that know less about the

game because this is a essentially a software service. newill continue to feed products and new ideas into this thing with great regularity. emily: given that you are collecting all of this additional data is this something that could also help the team win games? steve: this is actually built off of a set of technology that first came out in an analytic process. there are six cameras in the arena. first looks at the floor, it sees every player. and then there is a layer of so-called machine learning software that can tell you exactly -- that was this kind of pick and roll, the success rate is this way.a shot all of the core technology feeds a set of tools that the teams do

use to improve how they game plan. a product named eagle -- the clippers were one of the first users of this product. emily: where does the tech go from here? how could legalized sports betting be integrated into this platform? a platform where you can show additional data real-time during the game with which you can interact. it makes it a great platform with which to legalize sports betting. you may want to see fantasy points. you may want to see probabilities of certain things happening. there are a lot of things that may be legalized on which people may want to gamble. we can show those live on this green. and there is a possibility for online gaming partners to work with us to augment the experience in that way. emily: it will be an interesting season. going to the lakers.

how will the clippers up their game? team, i kind of love our i will be honest. it is a very different team from last year. we have guys back that were injured much of the season. we have new players. we have her. i love our team. i believe it is very close now. consistent with what i want with our team -- tough-minded and gritty folks ready to dive in and get things done. i love our guys. no one will want to play us night in and night out. emily: that was steve ballmer. and that does it for this edition of "best of bloomberg technology." we will bring you all of the latest in tech through the week. be sure to tune in next week. we will be a across all of the companies. be sure to tune it. and bloomberg technology is

livestreaming on twitter. technology.t @ and check us out on tictoc on twitter. this is bloomberg. ♪

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