♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, another high departure from facebook. what does this mean for zuckerberg's control of the company? saudi arabia's investment loses more top speakers. why the softbank cfo said, no thanks. and netflix's spending spree continues. the streaming giant turns to junk bonds to fuel its cost.

how investors are handling the new $2 billion in debt. but first to our top story, oculus cofounder is leaving facebook. he was ceo, but was later reassigned. he is the latest in a string of high-profile departures from facebook this year, including instagram's founders and a whatsapp founders. joining us to discuss, david kirkpatrick and sarah frier. what do we know about iribe's reasons for leaving and do they differ from that of the other founders? sarah: you're seeing a trend right now. all these companies were convinced to join facebook in part because facebook said they could remain a little bit independent, sort of like the same independent company they always were, but within facebook, with all these resources to grow faster.

it looks like that kind of promise is eroding a bit. iribe said he needs time off because he has been in the game for 20 years and he needs a break. whether that's the real reason, i'm sure we will find out soon. it's part of this larger trend of facebook taking a little more control over the future of facebook, which is, as we have spoken about on the show, the future of facebook will be more diversified than facebook itself and the newsfeed. it will be dependent on these other properties to bring money in that is more diversified and certainly v.r. is one of the longest-term bets. emily: iribe's departure is certainly not surprising. you have reported on tension between the oculus founders and facebook that goes way back, but him leaving in the context of all of these other founders leaving, david, sarah and i heard kevin speak at the wired conference last week, and he was very diplomatic.

he didn't sell mark zuckerberg down the river. but the way in which these departures have happened does not look good. how bad is this for facebook? david: there's no question it does not look good. but you have to remember all these people got a gigantic payday quite some time ago. and they are now in a company that they have to justify to all their friends why they are staying with. that's the reality of working at facebook today. facebook is increasingly perceived as a negative in society among the sort of sophisticated circles that these kind of people circulate in. and also, if you don't have much power to do anything about the significant central problems of , you areny is facing working in a peripheral part like oculus or whatsapp, you might just feel like you don't have the power to do anything

about it. mark zuckerberg doesn't listen to you, therefore clear out. of course they are tired. emily: is that the case, though, sarah? we had that rebuttal from facebook, which said mark goes to extraordinary lengths to protect founders. what are you hearing? sarah: he does protect founders as long as they are performing to his expectations. and i think in the case of oculus, facebook was a little disappointed about how fast it was moving a couple years ago. iribe stepped down from his job as ceo to leave room for another executive to take over the whole v.r. initiative. he has been driving that in a couple years that he has been in charge. they have released a few new devices that bring v.r. into a more mass-market realm. there is the oculus quest, the cheaper one that came out earlier this year that people

can buy for their homes. this is something that, the part of it that brendan was working high-quality of pc-tethered oculus will be a little more of a narrow market, if you think about zuckerberg's vision of eventually getting one billion people using virtual reality. emily: david, you just published a post where the first line is, "never before has one company's failure had such a devastating impact on the world." that is a devastating opening line, if you will. this is a company that is now working on its election response in multiple countries, not with just the u.s. midterms coming up, but also elections happening in brazil. what do you mean by that? david: it's not the only very strongly negative line in that story, sadly, which is called "facing facebook's failure." i really was unfortunately i felt forced, as someone who has been covering this company closely for 12 years -- i wrote a book called "the facebook effect," which was a generally positive portrayal. i still believe the company has

enormous positive potential and does a lot of good in the world, but it is doing some enormously negative things in the world that i don't think the company is acknowledging or fully reckoning with, and actually to some extent has sought to cover up. the story documents specific cases where they have dissembled, where they have refused to react after being presented with unequivocal evidence, particularly in cases like genocide in sri lanka and myanmar. all kinds of hate speech incidents that they have done a very poor job responding to. and never really taken a systemic look at their system and asked why is this happening. and my fundamental critique in the article is that they prioritize growth over governance. and we now have a global system which empowers anyone, including the most evil, dishonest people, whether they are political ,eaders, criminals, or whomever

and does not have governance or real tools to allow the malfeasance that takes place on this system to be regulated and contained. and that is causing enormous difficulty in the world. and it worries me tremendously. emily: walk us through what's happening in brazil right now, days away from a presidential runoff election, where whatsapp has been overrun by fake news and conspiracy theories and you have a candidate who didn't have a lot of public campaign funding manage to somehow run an incredibly successful campaign, exploiting social media. sarah: facebook would like you to think just of the good the platform has allowed to alsoferate, but there is the same use for the kind of activity that has gone on on whatsapp. facebook was able to take down a lot of spam accounts on friday, and that was their response to the fact that there was this proliferation of misinformation

that, in some cases, led to violence around brazil's first vote. there will be a follow-up vote on october 28. this is messy, as many of facebook's problems are. it's not just random bad actors in the community. it is not just a foreign actor. it's people from within the campaign. his son was kicked off of whatsapp and later restored. facebook is dealing with that at the same time trying to roll out this war room, where it is trying to convince the public it will be prepared for not just the brazil runoff election, but the u.s. midterms, coming up very soon. and the problem in brazil in particular is that whatsapp is an encrypted app. so the messages people send to each other, facebook cannot really see. they are using their machine training to try to

figure out where the spam is coming from. all they can do is get rid of the account. they can't necessarily track what's being sent to whom or how often it is being sent. and that is a very hard problem to solve. emily: david, sarah and i both went into this election interference war room that facebook has now set up, where they have teams of people from different teams across the country, company who can make quick decisions if something happens. they are tracking the elections in brazil. they are tracking the elections in the united states. the point has been made that facebook can't do everything. it's up to users to decide if they see a post, whether it looks false or not. is it too much to expect facebook to be able to do what apparently we are expecting facebook to do? david: i and no intelligent observer could expect them to keep all unpleasant and unproductive messages off of their system.

what we need is far better means to address the problems when they are identified. i think the war room is a great idea. it should have been begun probably four years ago. but you look at a situation like what happened in brazil with the son getting kicked off whatsapp or in myanmar where the general who runs the country got kicked off facebook, but they only kicked him off after he was recommended to be prosecuted by the international criminal court. that is how much of a signal they required. they had plenty of information, if they chose to look at it, to know that the generals who run myanmar were encouraging genocide against the rohingya muslim minority. in 130blem is this is languages in 190 countries, and the goal they had was to get there. now they are there. they don't know what to do to prevent it from having dramatically negative political consequences. there are certain kinds of politicians popping up in turkey, in hungary, in myanmar, in plenty of places, brazil,

in italy, where they don't really want to follow the rules. they want power at all costs. and they will do whatever they have to do. and facebook is a system that is easy to cheat inside. and facebook does not have the tools yet to prevent that cheating. it is something we at techonomy have made such a priority. we have a session at our conference in three weeks with two of the sources of our story, including one who has a sri lankan activist who tells the most shocking story in that article i published today. it is shocking how much facebook has allowed to happen. it is unacceptable. they cannot solve everything. they can't be perfect, but it is disastrous. emily: sarah, the other thing that's fascinating is simply the size of whatsapp in brazil. it rivals the size of facebook. i mean, does that happen anywhere else? sarah: it's very common in countries outside the u.s. for whatsapp to be so much more popular than facebook. so that is one of the problems here. when facebook comes out and says, we are going to solve

those problems, we are administering our machine learning algorithms, we are checking what's trending, we are figuring out who is saying what, and we are figuring out if there are fake accounts . that stuff doesn't necessarily apply to the main tools people are using in many of these countries. emily: bloomberg tech's sarah frier and david kirkpatrick, lots to debate and discuss days away before these elections in brazil and the united states. coming up, tech stocks attempting to bounce back after a miserable few weeks. could earnings from amazon, alphabet, and microsoft this week give them a boost? we will discuss. this is bloomberg. ♪

emily: with tech stocks suffering their worst month relative to the broader market in more than a year, goldman sachs has some advice for bears. make sure you are selling for the right reasons. outperforming has turned into concerns of overvaluation. one strategist says he believes these risks are overstated. equities are attempting to bounce back after a miserable few weeks. company results from amazon, alphabet, and others may provide a welcome stimulus in the coming days. joining us, michael and sarah. michael, i will start with you. is the selloff overblown? >> i think so. i think i am on david's page. if you look at the ratios, you the spx, you these periods where it really is underperforming. we have a broader discussion how late cycle are we, what is

the 10-year spike telling us on the broader macro theme here? what i think has been happening is the buy side has been playing it safe since q2, particularly with the stuff that has run a lot. but that safety also helps ensure further, you know, higher probability of a rally coming out of earnings. obviously, earnings do have to perform here. from a top-down perspective, i don't see many reasons they should not be reasonably strong. i would make the further comment here that of all the sectors we talk about in this late cycle discussion, if you think about unemployment pressures, sure, amazon just raised its minimum wage here, that broadly speaking for the tech mega-cap companies, they are largely less vulnerable to our a lot of these late-cycle the marketressures narrative seems to have been ly.using on late programming costs are not really

part of that discussion that the fed and others are still focused on. it's a different discussion, and i think that's another reason why they will get bid here if we do have good earnings. emily: what's an underlying reason investors are selling? >> there have been a lot of reasons out there investors have been blaming for the selloff in tech, whether that's the run-up in rates or that tech companies are more exposed to trade with china, as well as the fact that maybe this was a momentum trade that had to get unwound. and what we also heard from david was that maybe valuations may be got ahead of themselves and this is a crowded trade. as david pointed out, if you look at computer and software companies, they have been cheaper than they have been historically. at the same time if you look at holdings of mutual funds, they actually right now hold less tech than the average benchmark index. so in fact that idea of them being very overcrowded or extremely expensive just might not be the case for certain investors.

emily: michael, did this start earlier this year with facebook, with cambridge analytica, with that big, bad earnings report where they had $20 billion wiped off their market cap? michael: it's interesting you brought that up. because i think one of the reasons i might be more comfortable about being overweight or long on this sector is that since the facebook scandal with cambridge really erupted last spring, what you have seen here is a persistent bid for ndx volatility. which means people have been buying the dip with some insurance or protection, and that should help insulate downside risk if some of these -- whether it's a big earnings miss or maybe the prospect of a tail risk of government intervention starts coming more into the foreground here. i think that latter situation is a little bit more hypothetical than real right now, but it is

obviously something you need to obviously something you need to be wary of, particularly given how skewed the sell-side analysts are on the faang stocks and so many of the tech names, where there are a lot of buys, not a lot of sells. emily: facebook had some 20% wiped off its market cap, closer to $100 billion. sarah, is this kind of volatility here to stay, knowing that we have earnings coming up this week? sarah: there's no question this this week will be a big week for the market as a whole and for some of the tech names reporting. i think they are largely expected to come out strong. however, if we get any misses or hear management caution at all, we have seen that any news is bad news almost. if you miss on one number or if the executives do come out talking about price pressures or trade, then that could hit the stock. however, those are not really issues that should be expected with some of these big tech companies.

but if you look at the volatility index on the nasdaq 100, it has risen the past three weeks. it came off a bit for the vix last week. we continue to see volatility in these large tech names. emily: michael, what's your advice to investors knowing that netflix reported a strong quarter on the back of a not so strong quarter and that there are a few days left before we actually have this new information? michael: if you have a generally positive view on risk appetite and the broader equity market, you really need to be long tech and faang and growth stocks. every time we get a 2-10 curve spike here, you see this narrative about rotation in the value, but i'm not sure you necessarily, whether that argument will hold up this time, when it didn't hold up the last several times that happened. i would stay with what has been working. i think it's going to continue to work.

a lot of these big cap stocks are not burdened by the late volatility. the volatility adjusted over five years for these stocks has been far superior to what we have seen another equity indices. i don't see reasons why that superiority won't persist for at least the next six months to 12 months. emily: the point has been made that tech is relatively cheaper to what it once was. but is that a good benchmark? sarah: i think it depends on what you're looking at. what's interesting is you can find a valuation for almost everything. some people are looking at price to earnings, price-to-book. people will pull on what they really feed off of. so, yes, relatively cheap compared to history, yeah, that would be a good benchmark to go off of, but it depends on how you are actually evaluating the prices of these companies. and also you have to take into account their forward growth and forward price. you have to take this all into

account if you want to step in and buy. emily: all right. sarah, michael. we will be across all of these earnings over the next couple of weeks. tiger global has reportedly raised $3.75 billion for its 11th venture capital firm. the new fund, private investment 11, is set to specialize in technology with investments in consumer internet, cloud software, and direct consumer firms in the u.s., india, and china. sources say the fundraising exceeded the firm's target, bringing total assets under management to more than $15 billion. coming up, the hyperloop may become reality sooner than you think. where and when the high-speed transportation will begin testing, next. check us out on twitter, @technology. this is bloomberg. ♪

emily: more upheaval at cbs. richard parsons has resigned less than a month after being named interim chair. he was one of six new appointees after the departure of les moonves. parsons says he is leaving because of competitions from blood cancer. one of the new board appointees was named the new interim chair. he is, of course, the ceo of take two interactive, publisher of popular video games like "grand theft auto." in a dutchhares health tech company have fallen the most in years, posting profits that missed estimates. it says it wants to redesign its manufacturing output due to trade tensions. >> first of all, we will redesign our supply chains. we are in the good position to have factories in the united states, in europe, and in asia, and we can rebalance load going

forward in order to avoid some of the duty impact. besides that, i think we will have to look at raising prices selectively as well as taking further productivity measures to offset, for example, these currency headwinds. emily: elon musk has taken a step forward in his vision for the future of public transportation. he announced that his company's hyperloop test tunnel will open in less than two months. the tunnel begins on the site of musk's rocket company in california. coming up, saying no to saudi arabia. another big name leaves their investment conference. now the coo of softbank is walking away. that is next. plus, netflix just took on more debt to fund its appetite for new content. should investors be concerned? this is bloomberg. ♪

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♪ emily: this is "bloomberg technology." i am emily chang in san francisco. more big names dropping out of the saudi arabia investment time it is and this softbank's coo. that withdrawal comes in the wake of saudi arabia admitting that journalist jamal khashoggi was killed in the embassy from an alleged fistfight. the two new ceos jumping out are now part of a list of no-shows that includes richard branson, jamie dimon, steve mnuchin and more. the case has even prompted a rare on-camera response from a member who had a personal relationship with the crown

prince, mohammad bin salman. take a listen to what president trump's son-in-law jared kushner , who rarely speaks to the media , said to cnn. >> the world is watching. this is a very serious accusation and a serious situation. and to make sure you are transparent, and to take this very seriously. emily: to join to discuss, we are joined by the merck executive editor for the middle east and africa, riad hamade. here in the studio, we also have bloomberg tech's selina wang, who covers softbank. jared kushner left door open, because he said they were still working to gather the facts from different places. ceosto us about the refusing to attend in the context of the new information we are getting about a body double being sent in, and more signs of alleged premeditated

murder. riad: these leaks that are coming out, they have been this sort of the drip, drip of leaks been provided by the turks to various media outlets and i think every time the saudis come up with an explanation or a version of events, the turks seem to be leaking yet more information to raise it out and addingbout that, pressure on saudi arabia. that is basically making it very hard for senior officials of companies, senior ceos, to agree to be at the conference because they feel that right now, it may or raise questions against them about their relationship with the leadership of saudi arabia. so you are seeing people, really at the last moment, the conference is about to start, dropping out. emily: selina, we don't know yet if masayoshi son himself will

be attending this conference, correct? going is a not telling sign. >> it is interesting, he has not made a public statement about whether or not he is attending. he is also on the advisory board. this is starting any minute now, and he is probably preparing us to attend. i have heard from sources that the portfolio companies still slated to speak, they are still on the edge of their chairs about whether or not they will go. it is interesting that marcello decided not to go, but again, masa son is in a precarious position now because he is in a close personal relationship to the crown prince. the crown prince has personally committed $45 billion to the current revision fund and billions of to the next one, so dollars he probably wants to maintain that relationship, even though it is looking increasingly bleak and horrifying. emily: riad, you have seen an

entire evolution here. a point has been made about the discussion about doing business with the saudis should have happened a long time ago, and now there are so many tied up with business relationships with the saudi government. do you believe these relationships are at risk of unraveling at this point, or can they be saved? riad: i think it is hard to see them completely unraveling, because the investment linkages as you said, are really significant. if you think of just softbank alone, we're talking about $45 billion committed and another 45 billion promised, plus the park that wasthe signed personally by the ceo, masayoshi son.

when you think about it , the infrastructure fund that the saudis have invested in the u.s., looking at all the big wall street players, having great commitment and having placed a lot of -- really invested in saudi arabia and trying to work with saudi arabia. seeing that unravel completely is hard to imagine, however, i think what you will see is a willingness of fresh money coming in. the risk premium, at least, after the saudis may rise. emily: i wonder what happens to that. it has been said it is really difficult for softbank to find an investor who is willing to commit as much money as the saudis committed, not just to his vision fund, but others. i wonder if companies like qualcomm have also invested in the vision fund and if they don't reject that money, does a compromise other investors willing to come on board? selena: we had a recent interview with the crown prince

by bloomberg news and he said, "we are the creators of the softbank vision fund. without the pif, there will be no softbank vision fund." so clearly, are critically important for the vision found to exist. furthermore, masayoshi son may have his reputation tainted in silicon valley if it continues to take money from the saudi government. that may be hard for the entrepreneurs to swallow the fact that this is where the limited partners for the fund is ultimately coming from. emily: what is your take from the comments from jared kushner, ? this is first time he has done an interview since president trump took office, and at this particular time, given what we have also heard from the president himself, which is sort

of sending mixed signals. riad: i think if shows the difficult position that the trump administration finds itself in. jerod kushner is basically taking the saudi arabian line on this, which is, let us wait and see what the investigation shows. so they are deciding not to rush on judgment here. at the same time, he is telling the saudis, please take this seriously. my sense from being here today is that the saudis are taking this quite seriously. you can see that by the fact that they removed senior officials from their positions, basically getting them to take the blame for all of this. i think the key here is the role that the crown prince played or did not play in all of this. insisting that he did not know what happened or was not told what happened. i think the trump administration would like that to be the case

, but they're asking the saudis to really come the information they have about this. emily: won't that become a more difficult to defend, given the leaks coming from the turkish government? it seems like every time the statement, a new there is new information and new evidence that is coming to light undermining what they have said. riad: indeed. just to say, a lot of things coming from the turkish side are indeed leaks. they are not official statements by turkish police. we may hear more that is tomorrow,rom erdogan the starting day of the conference, so we may know for the turks actually have. we don't know. what the turks are doing,

sometimes the release pictures, they say they have tapes, we are not sure whether they do, whether it is audio or video, so there is a little bit of uncertainty about exactly what it is that they officially have. i think that is causing that the unease in people deciding what to do or what not to do. it seems right now that the top executives have decided that it is just not worth the risk for , the reputational damage, but the conference will have a lot of sort of mid-level managers coming from these banks, so i think there is clearly a sense of not wanting to cut off ties completely. emily: one last question. what is the reaction among the saudi population on the ground there, given -- obviously, these huge diplomatic relationships at stake, but a huge investment conference that is supposed to be about the future of this country being seriously compromised?

riad: first of all, it is hard to generalize. there are no opinion polls, fromom of expression, but people that reporters have talked to, there was shock. shock when the government finally admitted that there journalists had been killed, the foreign minister even called it murder. officials i have spoken with say yes, something went wrong, and i think the admission of that after 10 days of denying that jamal khashoggi had been killed, denying that he had left, which the crown prince told us in a interview, i think there is a sense of shock and great discomfort at this. people kind of feel this does not represent our country, not . this is not something that should have had and in their name, as it were. at the same time, there is a sense that the country is very much under attack. emily: fascinating.

i know you will keep us posted as a fence unfold. riad hamade, bloomberg editor for middle east and africa. thank you so much. meanwhile, the website of the saudi investment conference appears to have been hacked before crashing. the home page displayed an error message on monday after screen grabs taken from the same web address appeared on social media, depicting the crown prince standing over slain journalist, jamal khashoggi, with a flaming sword. the images also showed an islamic state flag unfurled in the background. coming up, netflix is turning to the junk bond market. can the streaming giant handle the debt. we will have more, next. this is bloomberg. ♪

♪ emily: netflix's appetite for new content is not cheap. 's plan toing giant raise $2 billion by financing debt securities. this is a week after our third-quarter earnings report where it announced over a billion dollars in long-term debt. can netflix handle the risk? joining us now to discuss is bloomberg's lucas shaw. can they handle it? >> as long as they keep growing, they can. they seem to borrow money every six to 12 months now because of how much they are investing in the original programming, which then attracts customers, boosts

subscriber totals, which makes wall street happy, which is how they raise money at decent rates. emily: why do they need to do this? is it all about the content spend? >> netflix has managed to account that makes it seem like they are spending less money than they are. on their balance sheet statement, they will say they spent about $7 billion so far this year, and they will spend even more by the end. so let's say $9 billion. on a cash basis, there are spending a few billion dollars more than that, which is why they need to keep raising money. the way they claim they are spending it, a lot of the upfront cash they have to spend on a show, they can amortize over time and pay for it in a couple of years. emily: that said, sales are still growing 30 or so percent per year. do they need to do this or is it just a strategy. reporter: i think they need to

do it if they want to keep increasing. so their whole strategy is to keep increasing and grab a larger share of the amount of time people spend watching videos. so if you are spending one hour a day watching netflix, they want to make it two and the way to do this is to give you something you haven't seen before, give you something new. and they are not just doing that for their customers in the u.s.. they are doing it for an increasingly global audience. if you notice, some of the bonds to they were in euros, probably because of the growing share of their audiences from europe. emily: should investors be nervous about the rest of all of this debt? lucas: if you are nervous about them raising more money and you if you are nervous about the netflix model at all. there are still investors who say that this is sustainable. i got an email ring master that netflix is stoned on a brand name. they are so excited that this company is still brand-new, but

model is not secure. but it is had to imagine netflix going anywhere at this point, they have so many customers and are growing at such a rate, the question is can they keep it going? if it comes out a reevaluation question, are they a bit overvalued? probably. is this a company disappearing anytime soon? not at all. emily: what about competitors, are they burning through cash at the same rate? lucas: no. most of the big media companies, some of them have plenty of leverage, like cbs has a lot of debt, but most of these companies are very profitable and they do not need to raise money. they are also not increasing their content spend the same way netflix is. companies like apple and amazon, made today are because of the rate they are increasing, but again, apple is sitting on so much cash that it is not a concern for them. same for amazon. these are companies with much more robust business is an

because entertainment is ing spend.a market emily: thank you so much, lucas shaw come up for keeping us updated. meantime, billionaire richard ranson stepped down as chairman of virgin hyperloop, the company that planned on building a supersonic transport system. he said that company is a more hands-on chairman. last week, the financial times reported that saudi arabia pulled on a planned deal with the company after richard branson halted investment talks in the wake of the disappearance of jamal khashoggi. coming up next, who wins the global ai race? china, the united states? someone else? this is bloomberg. ♪

emily: in the race to be the global leader in artificial intelligence, china wants to be

first place by 2030 and it is making its presence known in the startup world. beijing is funding 48% of global startups in that space, the u.s. is second with 38%. this is according to a research firm. china is also planning to invest at least $7 billion in ai by 2030. so which country will win? we sat down with kai-fu lee, who a ceo who authored a new book on the topic, "ai superpowers: china, silicon valley and the new world order," to find that out as well as what people are missing in the conversation about ai. >> well, i think people still have a mistaken assumption that ai is about human intelligence , and in the book, i tried to clarify a few things. one is that ai is a simple and effective way to do something. secondly, china is good at implementing ai, while u.s. is and technology.

and thirdly, ai will make a huge impact on the world, including creating a lot of value, wealth, implementable in every domain, but also causing some challenges, like displacement of jobs. emily: we talk a lot about china versus the u.s. in ai. game, orlly a zero-sum are parts of it a zero-sum game? kai-fu: i think it is not a zero-sum game at all. chinese vc's are investing in chinese companies to make products for chinese customers america is investing in american companies to develop products for world customers. that gain of any chinese company in ai does not come at the expense of the american company. it is like two parallel universes running. i think we ought to work together in this climate, if it would allow it. emily: should the u.s. be worried about china surpassing this country in ai, and vice versa? kai-fu: in research, china will not stop us u.s. for another 20

years, with or without any regulation. the u.s. is just so far ahead in research. however, in implementation , china has everything it needs. there is nothing the u.s. can do to slow down china, so it is pointless in ai to look at how to regulate. trump what about the policy on ai?s what are the consequences, especially given the choices that the white house has made, in taking on china? kai-fu: well, i think that traded disputes include a lot of issues outside ai, but i don't see a lot of in-depth understanding on the ai issue as , and i saw in the obama administration that the ai whitepapers were very thoughtful, well written and inclusive a lot of experts. i don't see that in the current administration.

emily: what are the dangers of that? >> well, i think china is quite willing to work with the u.s. theoretically, if we could invest in a company that has the u.s. research and technology and china data and market access, that is going to be the fastest-growing to accelerate ai. i think if the current policies make that not possible, i think both countries will have lost. emily: if it is not a zero sum game, should the u.s. not be worried about china stealing its ip, because that is in part the president sites as his concern? kai-fu: it is a universal concern. everyone, including the chinese, now see the errors are some companies, and i think any agreement protecting ip will be welcome by china. but to include everything in

this trade deficit is too much. emily: do you believe ai will share our values? kai-fu: i think at this point ai is just our tool. we program ai. we train it with data. we tell it what to optimize. there is no independent thinking by ai to not share our values. however, i acknowledge that for example, when facebook programmed their ai to get us to read the news feed more often, it has certain side effects. i think those side effects can be studied and controlled. i am not with some of the more extreme views that ai will reach singularity and be smarter than people. emily: you don't think that ai will become superhuman? kai-fu: no, i don't think it will happen, for sure not in the 20, 30 years. emily: what if somebody programs

it to have that capability? kai-fu: it is still missing about 10 breakthroughs. if you look at the last 62 years of history of ai, there has only been one breakthrough. we need at least 20 more breakthroughs, and when we start seeing five or eight breakthroughs, we can revisit the question. but now no one knows it all how to build it. i think many of the remarks about exaggerated ai impact into in the world are made by non-ai people, which is why ai people need to stand up and say, before you make those projections about this dopey a, let's see some engineering progress. emily: so elon musk is wrong? kai-fu: he is. emily: our conversation with kai-fu lee. and that does it for this edition of "bloomberg technology . from san francisco, i am emily chang. this is bloomberg. ♪

>> this is "bloomberg daybreak: middle east." he is stillump says not satisfied with saudi arabia's explanation of jamal khashoggi debt. manus: turkey is promising to reveal what he calls the naked truth over the journalist murder. the world waits to see what evidence president erdogan will provide. high-profile but he'so pull out, still going. manus: