♪ >> i'm selina wang in for emily chang. this is "bloomberg technology." in the next hour, facebook user growth is its lowest since 2011. revenue growth declined. we dive into the third quarter results. plus, apple's big hardware overhaul. the tech giant revamped their macbook and ipad for the first time in years but is it too little too late?

and t-mobile earnings are out. what that could mean for the potential acquisition of sprint. but first, the top story. facebook shares fluctuating after reporting third-quarter earnings. the social network reported revenue missing expectations, with privacy scandals, data breaches and other problems taking a toll on the company, get mark zuckerberg still seems confident in the press release, stating "our community and business continued to grow quickly and more than 2 billion people use at least one of our services everyday. we are building the best services for private messaging and stories and there are huge opportunities ahead in video. and commerce as well. the earnings call is just starting and we will bring you the biggest headlines as they come in. joining us to go through the earnings report david , kirkpatrick and deborah in seattle. david, last quarter facebook already warned us there would be

slowing growth, rising costs, were things quite as bad as investors expected? david: i think it was pretty much what they predicted which is reassuring in a sense. i think the question is, is that enough? but that is different question entirely. clearly they are still capable of being an extraordinarily profitable company, but we have to ask will enthusiasm for using facebook and other properties continue to grow in developed countries like the u.s. and europe? selina: we have a mixed bag of numbers. revenue missed but profit better than expected. can you break down the numbers? what were key highlights? deborah for me, although the : revenue was a miss, it was not a large miss. so that i guess was partial good signs. also, we saw return to a slight amount of growth in monthly active users in the important u.s. and canada market.

we saw flatness in daily active users which is a bit more concerning, but on the monthly basis, we saw growth. on the other hand, there was declines in the european monthly active users, again probably do to gdpr fallouts. so like you mentioned, it is a mixed bag. it is as good as you have -- you could have expected for a company that has been in a lot of turmoil this year. selina: you were talking about the user growth. pretty flat for daily active user growth for north america. monthly active user growth, a slight increase in growth. what is the significance to this? is this reassuring to investors that things at least are not shrinking? debra: at least on a monthly basis they are not shrinking, and that is important. on a global basis, facebook has been able to maintain the solid 66% ratio of daily active users to monthly active users, something they have had over the past several quarters.

so again, they managed to eke that out quarter after quarter. if that number starts to decline, i think that is a bigger red flag. overall, this is about as good a quarter as you could expect for a company in the position facebook is in. selina: i wanted to point out as we go live, mark zuckerberg has just started speaking on the call saying we have had a solid quarter but he wants to point out costs are rising up 91% from the same quarter last year. what does this mean? are they still spending on the content management issues? is this where the 90% increase is coming? david: i'm sure that is the reason it is going up so much faster than ever before. i think the company wants to say, simply by spending and hiring, that they understand how serious the problems are and are doing something about it, but the proof is in the pudding. until we see facebook not having the pernicious effect it is having on elections and social

dialogue, which is still manifesting in all kinds of ways, in our country, the u.s., brazil, around the world, i don't think we are going to really be confident those measures are enough. nonetheless, it is good they are willing to spend money. i fault them for not being willing to talk about it bluntly and maybe on this call zuckerberg will be pressed to explain how he feels and thinks about the extremely negative role facebook has played in certain aspects of modern society which they have never directly confronted. but i'm glad to see them spending money. selina: i'm sure we will hear more about this on the call, but there are societal concerns hanging over their heads despite some positive numbers. are you seeing brand advertisers holding back because of the safety and security issues we have been talking about? debra: you know what, we have not seen any holding back on major advertisers. they are continuing to spend strongly on facebook. they are spending strongly on instagram as well.

we are forecasting instagram will have $9 billion in ad revenue this year amounting to about 25% of facebook's overall ad revenue in the united states. so an important and growing part and advertisers are enamored with facebook and instagram. selina: it seems like advertisers may be enamored but users are being enamored less and less. let's talk about instagram proving to be more popular. are they starting to pull that as a lever of growth here? david: certainly if december numbers are right, and they make $9 billion in ad revenue, that's a big number considering how recently it was zero. it wasn't that many years ago . i would like to see the company be more blunt and disclose what is really happening with their other properties in detail which they have not done. clearly, they have a hedge against whatever happens with facebook.

on the other hand, in some ways, even though it is photo oriented, the architecture of instagram is similar to that of facebook. many of the abuses happening on facebook are also happening on instagram. instagram has been exempt from criticism about it, but that is starting to change. we hear more and more stories of how instagram too is being abused for propaganda, hate speech, etc. clearly, they are doing well with instagram and that is good news for the company that otherwise might not have a lot of good news. selina: in terms of things other than the core platform, right on the call, zuckerberg is talking about whatsapp and improvements they have made there. we will continue discussing later in the show yo. debra aho williamson, thank you. david kirkpatrick will be staying with us.

staying on earnings. chinese search engine giant baidu has given a conservative revenue forecast for the rest of the year amid fears of a slowdown in china's economy in looming trade wars hurting consumer spending and advertising. the company posted third-quarter revenue of $4.1 billion, beating analyst estimates. but baidu's growth has been eroded by increased search competition and now there is concern on how escalating tensions will impact trade tensions. coming up, apple gives its ipad the most extensive upgrade since 2013, but will it be enough to reverse falling tablet sales? we have the latest. and 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. ♪ ♪

selina: we are listening to the facebook call live with analysts. mark zuckerberg is speaking now saying facebook stories is the future and the disappearing photos that facebook stole from snapchat is popular on instagram but zuckerberg admits watching launching it on the core facebook platform has not gone as well as he helped. -- hoped. we will continue to bring headlines as they come. tesla ceo elon musk could not wait to get his hands on more of his own company's stocks. regulatory filings on tuesday show musk bought about $10 million of tesla shares on the open market and did so while waiting for the carmaker to issue $20 million worth of new stock that he is slated to purchase by next week. apple has given its ipad its most expensive revamp in three years as the company looks to revive its product that has seen falling sales in recent years.

in new york on tuesday, apple executives unveiled new ipad pro models in two screen sizes. however, investors were nonplussed by the announcements, also including a new macbook air laptop and mac mini desktop computer. shares fluctuated throughout the event. we were counting down to apple's fourth-quarter earnings on thursday. joining us now is ryan reese and still with us is david kirkpatrick. apple unveiled major announcements, especially with the ipad, but were any changes truly game changing that will draw new customers? ryan: i think the design improvements they made overall were expected, but they are designed, improvements drawing consumers in these days. most of this is focused around narrowing the basil -- bezel,

removing the home button, going to face id, which really plays into what they have been doing with the iphone, which has been successful. those design features alone will draw consumers in and i think it was a good evolutionary step for the ipad lineup overall. there were other things that had to do with software that were probably ultimately more important, but overall it was a decent announcement for them. selina: david, ipad sales peaked in 2014 and the tablet industry has been contracting. do you think these changes are enough to regain that momentum apple once had with the ipad? david: probably not, but that does not mean it might not slow whatever decline they are experiencing or flatten it out. maybe it will stabilize things. these are not earthshaking changes. i do think face id is an important technology. i have it on my new iphone and find it enormously convenient to

not have to do anything besides pick the phone up and look at it. that would matter to me on an ipad. so i like that. but i do not think it is the right way to think about these announcements as significant game changers in any way. if it was any other company that an apple, we would not be talking about it. these are not the kinds of products that generate the excitement the phones do. that is a simple fact. selina: ryan, let's talk about price increases. the 11 inch model is up $150 from the version last year. the top of the line ipad pro costs more than most full-featured laptops. will this price some customers out of the market? ryan: no question. i take away more the ultimate strategy of what apple is trying to do with their mac lineup and ipad. it seems to me with them releasing the well anticipated refresh of the macbook air with a higher price point, that puts

the emphasis on this as being the most attractive large-screen product apple has to offer these days. yes, the price point puts this as a premium product, but then again, apple is not selling pretty much anything in the market that is not premium. they are driving up costs but adding features. ultimately, i do not think that will scare away buyers. as mentioned earlier, i do not think this changes the tablet industry as a whole. it's worth noting when you break down the tablet industry, there is really two sections. what we call detachable tablets, the ipad pro and service. growingment has been despite the overall tablet market declining. so it's not a surprise the focus was around ipad pro, adding the iphone features makes sense. i think they're looking to this to be probably a more productive device in terms of sales overall in the long run than the macbook air. selina: david, this was the first major revamp of the macbook air in many years.

what took the refresh so long? david: i think they have been focusing on the iphone because that is where the money is. i wanted to mention, ryan mentioned the surface and i think we have to give microsoft credit. they have done a more revolutionary set of changes in the way they have sort of morphed the pc and tablet into one device that basically serves as both. it is surprising to me that apple hasn't done that, and we don't really see a device that is effectively a touchscreen laptop, which i and many millions of users of mac products would like to have. in that sense, i would call an announcement like today a disappointment. selina: we will have to see if that comes through for the next product refresh. ryan, thank you for joining us. david kirkpatrick is sticking with us. coming up, this year's selloff has affected currencies like itcvoin, but coinbase, how

stays afloat. flat in shares, after-hours trading. he mentioned youtube as a primary competitor on video advertising. take a listen to what zuckerberg had to say about the quarter as a whole. >> we had a solid quarter. our community and business continue to grow quickly. 2.3 billion people now use facebook every month and 1.5 billion every day. revenue grew 33% year-over-year to $13.7 billion. ♪

selina: ebay's third-quarter earnings are out. the company grew active users by 4% to cost all platforms. a total of 177 million active buyers. cryptocurrency has tumbled more than 70% in the last year, but that does not mean there is no money in crypto. even in a bear market, crypto

exchange coinbase is skyrocketing in the opposite direction. on tuesday, the company announced a $300 million fund-raising round putting their valuation at $8 billion. that is a fivefold increase from the 2017 valuation, putting it well above companies like slack and instacart. coinbase is now expected to bring in nearly $1.3 billion in revenue this year. joining us in san francisco is coinbase president and ceo, and from new york our reporter. we mentioned in our story, you did not need to seek funding, so why did you decide to take such a large amount of capital? >> that's a good question. we were approached by some very high quality investors earlier this year, with a very constructive thesis on crypto and they wanted to invest in what they thought was the best name in the space. so when the opportunity prevents itself, you take it seriously. we looked at it. even know we did not need to raise the money, we felt it was

important to have tiger and others in this round as they can help build the next phase of the company with us. >> i know you said you cannot comment on specific revenue figures. you launched a number of new products toward the end of the year. what are your thoughts on what coinbase institutional impacts revenue moving forward? will that be a big chunk of that? asiff: over time, each of those businesses we would expect to do more than its fair share. we would expect those businesses to diversify our revenue streams. our revenues are 100% transactional. the other businesses are more fee-based or aum-based. that will grow as part of overall revenue which gives us more stability and predictability to the revenue stream. selina: the company has been growing dramatically, expanding the business, so speaking of 2019, should be expect to see an ipo? asiff: there will not be an ipo anytime soon. we have so much to do. at some point, yes, we will go

public, but that's not even close to the top of the list of things worried about. selina: what are the top priorities? asiff: just for my financial point of view, we want to diversify revenue streams to have a more predictable revenue. the p/e of an asset manager is much higher than the p/e of a broker which is much higher than the p/e of an exchange. we are a broker and custodian and exchange, but the fee structure at the moment is 100% transactional and that will morph as time goes. that's the first thing. julie: one thing you mentioned earlier this year, you launched the index fund. what did you learn from that ? that was something that did not work as planned, as you had tried to diversify the revenue stream. asiff: i would not say it did not work out. we launched the index fund and went with plan a which was let's bring on institutions and family offices and so on.

we found it was a much bigger hill to climb in terms of the regulatory requirements to do that. we think it is more efficient to offer it through consumer. we rebranded it called the coinbase bundles. it is a one click, almost a robo advisor type product available to consumers and institutions if they want it product available -- if they want it that way. this is a faster way of deploying the same thing. that path was too hard given the regulatory environment and this path is easier to create more value for the customer. that is why we did that. selina: by some estimates, the number of u.s. users on the platform has fallen roughly 80% since the peak of bitcoin prices. what you seeing amongst your client bases? asiff: volume is given a move in line with where crypto prices are. that is true of every exchange and broker. we find the number of engaged active users, people coming inside, checking prices, that continues to increase and regain we gain customers every month

and day. on focus at the moment is broadening the base of products we offer and accelerating the next phase of crypto, the utility phase. every technology goes through an investment phase and then utility phase. we are in an investment phase right now. our mission is to create a more open financial system for the world and we are driving things like the stable coin, and we think these things can benefit people who are not banked, underrepresented throughout the world, the u.s. or somewhere else. selina: you're talking about coinbase adding more assets to the platform recently. five in particular were reported. what is the timing? asiff: you should expect us to look, there are between 2000 and cryptocurrencies out 3000 there. let's assume 90% of them are garbage. that still means between 200 and 300 are worth investing in. we offer seven. so you can expect us to go to

the total number we think is worth it over the next year or so. we will add them geography by geography, because the u.s. has not kept pace with regulation throughout the world. some things will be offered in the u.s., but more things will be offered outside of the u.s.. over the next year, we will offer most of those that are worthy of being offered. julie: what does institutional demand looked like? when you launched, coinbase was around but crypto was falling in value. i would love to know, is there a lot of demand? because the retail demand has pulled back but i wonder what wall street and hedge funds are thinking about this phase. asiff: we get more and more demand from traditional wall street and institutions every day. so the biggest impediment for most of them is they need a custodian. they need a qualified custodian that can safely store crypto. we have been doing it for longer than anyone else. we store more of it than anyone else. we have the best track record in the industry which is why they came to us last year and asked

if we can become a qualified custodian to participate in this marketplace. that is the prerequisite. and we have a suite of institutional products that we offer for those institutions and that is where they are onboarding. there is a lot of shops already trading crypto and crypto is no different than any other asset in that it throws off a data exhaust that they can mine. the long only guys will be later, but there are big parts of wall street already trading today. selina: all right asiff, and julie, thank you for joining. >> thank you for asking. selina: coming up, we bring you the latest out of facebook's earnings call. sheryl sandberg is on the call just now illustrating how they are bringing ads to messaging. facebook shares continuing to fall, now down 4% in after-hours trading. we will stay on the headlines. this is bloomberg. ♪ selina: this is "bloomberg

technology." back to our top story. facebook's underwhelming third quarter earnings. sheryl sandberg talking about a tool turning horizontal ads to vertical ads so they can work in instagram stories. earlier mark zuckerberg earlier spoke about the competition. >> our biggest competitor by far is imessage. in importing countries like the u.s. where the iphone is strong, apple bundles imessage as the default texting app and it is still ahead. in countries where there's more competition between ios and

android, like much of europe, people tend to prefer our services. selina: back with us is david kirkpatrick. of bloomberg technology. we heard zuckerberg talking about competitors, youtube, it seems unprecedented to talk about competitors during the earnings call. what is your take on that? >> very rare for executives to talk about competitors. one of the things the investors are not liking right now, this idea that really zuckerberg is going from the news feed that made vast amounts of money, everyone knows what that is, how it works, and they are talking about how they will try to make money through messages, whatsapp, stories on instagram. investors are not quite sure how profitable those ads and content will be. so there's a big question, and zuckerberg was saying next year will be another big investment year to focus on those things. selina: shares are tanking right now.

our investors confident they can monetize this platform like with whatsapp and instagram when they no longer have to founder at the helm? david: if investors were confident, they would probably not be tanking the stock right now, so clearly not. there's an unusual number of question marks surrounding facebook right now. i don't think investors are confident about much of anything, except if the problems were solved, this could still be the best money machine anybody ever saw because that has basically been what it has been for the last several years. but it is a moment of enormous gray uncertainty around facebook right now. it is shocking to me that zuckerberg called out imessage as the biggest competitor of messaging. i think it's partly because he has been burned by tim cook's criticisms of facebook and he's trying to say the only reason tim cook is criticizing us is because he is competing with us, which is frankly in my opinion kind of a cop out. it's absolutely unprecedented for him to have said that.

whatsappith and instagram, what are we learning in terms of embedding ads into the services and the security of the product? alistair: i think the comments from sheryl sandberg show she is getting into the nitty-gritty of how ads are going to show up in what'sapp. before this quarter, most of the conversation was, we are going to monetize it in general. we are not sure exactly how. but when you see sandberg focusing on it, she's the operations person and the advertising expert. who actually does that. that shows they are really thinking about it and moving along, but again, there's still a question mark about how much money they're going to make. especially compared to the news feed. selina: i want to listen to what zuckerberg said about security on the call. >> it is worth noting that one of the main reasons people prefer our services because of its stronger record on privacy.

whatsapp is encrypted, does not store your messages, doesn't store the keys to your messages in china or anywhere else. this is important because if our systems cannot see your messages, that means that governments and bad actors won't be able to access them through us, either. ' selina: we just heard zuckerberg touting the privacy concerns on whatsapp. does that appease investors at all? when it comes to the privacy breaches over the last few months on the core facebook platform? david: probably not. -- interestingly it seems to be a sort of backhanded criticism of apple for allowing the chinese government access to apple products in china, and he is sort of presenting himself as holier than thou. the real problems with whatsapp, in my opinion, are its used as a broadcast role for political manipulation and propaganda in places like brazil, india, etc..

so far we haven't heard much about what is really the number one issue surrounding facebook, which is how it is being used to undermine democratic society around the world. we are in the middle of a two-part documentary on pbs that last night was in unremitting attack on this company and they are acting like none of this is even happening. selina: i'm just looking at our blog. the cfo saying they will get more user growth from parts of the world from where facebook makes less money. that doesn't seem to bode well. alistair: the earnings that came out in the third quarter kind of blew away analyst estimates, partly because they still managed growth in the u.s. and canada. that is another big concern. on the product side, how it's going to monetize, and on the growth site, you have countries where the people are not quite as wealthy and the advertising

markets are less lucrative. so those are big question marks going forward. selina: we will stick with facebook earnings later in the hour. alistair barr, thanks for joining us. david kirkpatrick, we will see you of it later. now jeff bezos has set off a new , wealth record, but not the kind he is used to. he saw his personal fortune fall by more than $19 billion of the past two trading days alone. that's the most ever in such a period, according to the bloomberg billionaires index. mark zuckerberg held the previous record, losing more than $16 billion in july on the heels of disappointing facebook results. joining us is sarah ponczek. amazon issued disappointing revenue and profit forecast but some analysts are saying investors are missing the point about the growth story here. are they overreacting? sara: what is interesting is that i think a lot of investors would say as were seeing growth roll over, many investors probably are overreacting. it is not just amazon.

yes, the numbers are astounding, down about 25% and it's lost a quarter of its market value, so that is very notable, but it's not just amazon, we've seen all the others lower as well. growth has started to take a step back. a lot of investors are saying that people need to come to their senses and realize that the likes of amazon did miss on revenue and maybe gave a disappointing forecast for the holiday season, but things are not much worse than that were and the fundamentals mostly are still in place. if you really believe in these companies going forward, what so much has changed on that level? selina: facebook shares have been all over the place in the last hour, now flat. what is going on here? sara: investors are trying to figure out what is going on here. immediately after the earnings release, it seemed like facebook

would take a leg higher, then suddenly it drags lower. it seems like investors are fickle and jittery and they don't know what they want. even if you look at the market as a whole, look at the s&p 500, yes it finished up more than 1.5%, but it has five intraday swings of at least 1%. that just shows you that investors don't have a consensus of where the market should be going, where stocks should be going right now. they are trying to figure it out but you are facing a headwind of selling pressure that we've seen over the last month and you don't know if you want to catch the falling knife and get in at . we see that at the index level, but also with facebook at a single stock level as well. selina: even company that reported stellar earnings are not changing sentiment and the s&p is moving toward the worst performance since the bull market began. what is it going to take to be a true catalyst here? sara: i've been asking this question to every investor every

day. what is next catalyst and what is the leg higher? the fact of the matter, the economic data is great, but a lot of people say, is this the best that gets? the same thing with earnings. people say if we get something on the trade front, maybe it will help us higher, but many are not expecting it to happen at least until after the midterm elections. at the same time, with president trump coming out yesterday and saying they are ready to tax the rest of the imports from china, it looks like it will probably get worse before it gets better. in the meantime, were sitting here with markets languishing. today they were higher, but still investors are trying to figure out what the next catalyst is higher and if they want to be positioned in this market that has been so downtrodden in october, if there really is that material catalyst that is so clear and at the forefront. selina: sarah, thank you for joining us.

bloomberg learned microsoft is replacing their cloud chips made by intel. azure will use them as co-processers in more than half of his units. it had been an exclusive for intel. coming up, t-mobile is taken on its rivals with promises of 5g through a potential merger with sprint. what would that mean for the prepaid market? this is bloomberg. and ceo mark zuckerberg was on the facebook call talking about the year ahead. let's listen. >> we are heavily investing in v.r., and hardware to bring people closer together like portal and oculus. with no wires attached. with all this ahead, i expect 2019 to be another year of significant investment. ♪

selina: sony has upgraded its earnings outlook for second straight quarter as the playstation business continues to thrive. the tokyo-based company said that revenue will be ¥8.7 trillion, compared to the previous outlook of ¥8.6 trillion. the ceo says the optimism is being fueled by videogame success during the year of uncertainty for smartphones. >> the smart phone market is very competitive, and our product field is not as strong as it should be. our new management team is working on rebuilding our brand through cost-cutting, mirroring of scope, structural reform, and improving product competitiveness. selina: t-mobile reported third-quarter earnings tuesday, delivering what the ceo called its best financials ever. the phone carrier rallied after

adding millions of monthly subscribers, and t-mobile posted $10.8 billion of revenue, beating analyst expectations of $10.75 billion. the company is still distant from rivals verizon and at&t. but the latest results give them fresh momentum as they await federal approval for its $26.5 billion acquisition of sprint. here to discuss is the t-mobile president mike sievert from bellevue, washington. congratulation on the positive earnings. what is driving the subscriber growth? >> it's great to be here. i can only assume you're wearing magenta to celebrate t-mobile's record quarter. so thank you for that. the brand is really performing. our network is second to none. our customer service is delivering same and notoriety -- fame and notoriety to our company. our team is firing on all cylinders and you see it in today's record revenues and 47% year-over-year growth in cash flows. it's all on the strength of

subscriber gains. our post paid phone subscriber gains, more than at&t, verizon, sprint, comcast and charter combined. so that was a big quarter and we are excited about it. selina: last year t-mobile acquired layer three tv to jump into the online tv space. can you tell us what the timing will be like? mike: we are busily building tv for the 5g era, and that's important. with the new t-mobile, we will have an ability to bring broadband service to 52% of u.s. zip codes through 5g. that's amazing because broadband is the most uncompetitive market out there. half of broadband customers out there have no choice at all. they have one or less options. that is crazy in 2018. so we are going after in the new t-mobile. in order to do that, we need a tv service that frees customers from wires forever, from any

particular cable box, and allows them to experience high definition in a way they never could before. in a way that has met their phone, social media life, and has it all integrated in a contemporary package. we are busy building that, the journey starts later this year and will continue over the next couple of years as we build more and more. selina: could we see an offering to customers by early next year? mike: it's already out there under its former brand, layer three tv. you'll see it re-crafted later with new features and some new news later this year, and then into next year you will see it transformed into a mobile capability with a different take on the market than we have seen before. we are not interested in just replicating what everybody else has done in this space. selina: t-mobile announced that 5g would be rolling out to dozens of cities. when will we see the first phone supported by 5g at t-mobile? mike: around the middle of next year is when that will be supported for all the carriers. everyone will get them around

the same time, and later in the year you will see it supporting a particular strategy that is completely different than anything at&t or verizon are doing. our 600 megahertz low band spectrum will be supported in phones for' 5g. the other guys are doing 5g in certain parts of certain cities. our view is that 5g is so transformational, it ought to be for literally everyone nationwide. only t-mobile is pursuing a strategy of true nationwide live 5g with the low band spectrum and we will be national by 2020. so it is coming faster than most people think. selina: what's the latest on this proposed regulatory review for the merger with sprint? there were reports that the new york attorney general's office is stepping up its probe and it -- over concerns it could lead to price hikes on the cheaper, prepaid phones. mike: that is entirely expected. our view is it is going really well. we expected both the federal and state governments to take a

close look at this, and they need to. the closer they look at it, the better it is for us. because we have submitted 25 million pages of documents and 1000 pages of econometrics. supporting a pretty simple proposition, that the synergies of this merger are so profound that they will allow us to create an unprecedented network with capacity on a level americans have never seen before, and prices and competition are a function of capacity. more capacity means lower prices. the more the state or federal government dig into the details, the better it is for our case, so were gratified that they're taking a close, fact-based look and we are respectfully participating in the process. selina: i want to dig a little deeper into what you just said. how exactly will mobile prices not go up if the number of carriers shrinks to three? walk us through how that works. mike: in a typical situation when you see mergers in an industry, what drives up prices

is the elimination of capacity in the industry. eliminating a competitor means eliminating all their factors of production. this merger is the exact opposite. what's going to happen is the two combined companies will have a capacity that is eight times higher than the combination of standalone sprint and t-mobile. it's an explosion of network capacity. that gives us every economic incentive to use that capacity to bring more competition and lower prices, to take customers from at&t and verizon. every american will benefit here. postpaid and prepaid. and whether or not they are with the new pre-mobile. customers at at&t and verizon will benefit because with what we are bringing, they will have to respond. selina: mike, thanks for joining us. questions from analysts have begun on the facebook call with ceo mark zuckerberg saying our journey into video has been a little muddy.

ofple want to watch a lot video but video watching is displacing social interaction, essentially saying they don't want to be youtube. withhey are up again, shares getting whiplash after hours. this is bloomberg.

selina: back to our top story, facebook third-quarter earnings results reporting revenue roughly in line with expectations. profit beat analyst forecasts. coo sheryl sandberg is answering questions right now on the earnings call, saying instagram shopping is seeing nice growth. earlier ceo mark zuckerberg discussed investment opportunities and how the company will need to look at cost. joining us now from bloomberg intelligence, and still with us our guest host of the hour, david kirkpatrick. i want to start with some things that were mentioned on the call. it sounds like investments will continue to increase. what did we learn about how successful their massive investments have been in terms

of hiring human content moderators and in terms of fake news and news manipulation? >> they claim to have made a lot of progress, but they are not out of the woods yet. you have to remember that going into the quarter, the expectations were very low. we seen stock reaction over the last two months, the volatility you saw, the worries about how much growth is going to slow and expenses will grow, and if you look at the guidance they gave, it was a little better than expected. that's what you saw the whiplash happening, but facebook is going through a transition. they are transitioning from news feed to live stories, and video better monetization of video in terms of pricing and things like that. the transition is what will cause the expense and growth uncertainty in 2019. so 2019 will be an uncertain year. selina: let's listen to what zuckerberg said about the expense issue. >> i want you to know that

looking out beyond 2019, i know that we need to make sure our cost and revenue are better matched over time. that's something i'm focused on as well. selina: david, it seems like facebook will be forever caught between wall street and society. has it shown that it can properly grow revenues while properly dealing with the societal issues of undermining real news and the discussion of democracy in society? david: it absolutely has not shown that. i think there is no evidence they are directly addressing that. i don't even know what it means that our revenue and profits, revenue and expenses ought to be more matched going forward. that is a weirdly opaque sort of formulation. i think we're just beginning to see outsiders, all the different ways that facebook can undermine social dialogue. facebook itself doesn't seem to be discovering any of these things on its own and telling us about it. they are extremely reactive.

they are making progress, they are spending a lot of money, but i think were just at the beginning of an incredibly painful, long journey of trying to remediate the problems this service is bringing on society, even as they are raking in the dough. through stories and all these things they are doing. more power to them on the money side, but they had better solve these social problems or they are in big social trouble. selina: what is the biggest test for facebook next? is it the next earnings call, or the upcoming midterm election? david: the midterms are important, but there are elections all over the world. whatsapp was a major factor in the election of this altra right wing new leader in brazil, bolsonaro. his son was kicked off of whatsapp for abuse. it's a new force globally. americans tend to focus too much on the u.s. election, although it is hugely important. and increasingly it looks like facebook manipulation by the russians may have been the thing

that put trump over the top. but anyway, there's innumerable issues. we have to see what happens next week. we also to keep our eye out globally. i wish facebook could do it for us because it is their service. they did this to us, and they are not remediating. i know i sound harsh, but i feel harsh. selina: david kirkpatrick, thank you for your candid thoughts, as always. thank you also. that does it for this edition of "bloomberg technology." this is bloomberg. ♪ ♪

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