i am emily chang in san francisco. coming up in the next hour, a look into facebook's future. will investors get on board or is it a gamble on videos and stories? a hotly debated ballot issue in san francisco, funding for the homeless, has the tech community and city divided. we will speak with one of the most outspoken advocates for new ballot measure. and apple's hardware overhaul

right before its earnings report. could this be the answer to the future success -- their future success or are there product launches losing their luster? facebook reported third-quarter results tuesday and one thing was clear, mark zuckerberg is betting on the company's future and that is video and disappearing stories, not facebook's famous newsfeed. while investors are buying and now, who is to say facebook videos will catch up to youtube, and that facebook stories will succeed the way instagram's has. both features are lagging behind. zuckerberg made note of that. the ceo brought up the social media giant's competitors by the rivaloutube and for facebook messenger. >> the biggest competitor so far is imessage.

in countries where there is more competition between ios and android, like europe, people tend to prefer our services. emily: joining us to talk about the future of facebook is richard greenfield who has a buy rating on the company. also with us is sarah frier who covers facebook for us. what you make of mark zuckerberg squarely putting the target on has hitre as tim cook back at facebook about how it handles data and how it handles privacy? richard: i think it is less about this war between apple and facebook. you are looking at the youtube versus facebook and the reality is, facebook is one of the dominic companies in terms of mobile time spent. feareality is, despite the that people are abandoning facebook, the reality is there is 1.5 billion people using facebook everyday. facebook, not the other applications but facebook

itself. there is 800 million people using marketplace. to me, i have never used the market place to have. i don't know anyone who uses the marketplace to have. they say there is 800 people -- 800 million people using that. they highlight cars. there is somebody things facebook is doing better not always obvious to someone in the u.s.. i think there are places in the world like indonesia where facebook marketplace is the default way in which goods are bought and sold. there are really differences globally and i think you mentioned one of them, looking versus facebook overseas. not all of that is apparent to an investor. as you look broadly over the next few years, facebook has a lot of different initiatives that are very early stages of monetization. they are just scratching the surface of messenger and whatsapp.

very early stages. what you do see is tremendous engagement across the facebook apps and the family of apps i should say creating a big long-term opportunity. that is what the street is excited about is that they are beginning to give hints of monetization for a lot of these things -- all of these things beyond the newsfeed. emily: we talk about different often don't we discuss and he talked about how apple is storing i messages on iphones in service in china. tact and tonerent from mark zuckerberg. much more direct than prior years. what you think the strategy is? sarah: i think he is painting a picture of how difficult it will be, but he is excited about the future. he says facebook's stories in the whole stories product a crossed their apps is a bigger sharing feature overtime.

eventually, more people will be using that. i think he was trying to give a sense of how big these things could be that watch could be eventually as big as youtubehi r like imessage. he's trying to give people a picture of how to think about the future of the company. emily: you played up a good argument on why we should still believe in facebook, but what about all of the skepticism and what about all of the mistakes they have made? what about some of the lackluster engagement with their core product which is now the newsfeed? richard: i would echo sarah's comment. instagram is a huge business, huge. i look at instagram and go "this is the modern day cure for boredom." mark gurman used to talk about tv was the cure for boredom.

the cure for boredom in 2018 is instagram. people use it anywhere they go to kill a moment in time. this is the dominant cure for boredom for people all around the world. it is going to grow from one billion to 2 billion users. time spent is growing and it is the mall where everybody finds goods and services that they are interested in. products, you the can make a reasonable argument that over the next five years, maybe seven years, that instagram will be a bigger business in court facebook. maybe-- core facebook. maybe they get facebook stories to work, but i believe the growth potential of instagram over the next five to seven years, as they get things like stories, monetization, to kick in -- they already have the users, they just have to get the monetary should -- monetization to kick in. instagram seems echo beast that

really will create tremendous value for facebook shareholders. there has definitely been mistakes and challenges in cleaning up the newsfeed and making it a safer place. it is the internet, there is lots of challenges without. google has those challenges and everyone has those. there's lots of companies having those challenges, but when you look at the long-term, three to five-year opportunities racing facebook, there is a great -- facing facebook, there's a great opportunity. emily: midterm elections are coming up and facebook and whatsapp did not do so well in the brazilian elections. what are we expecting to see the next week? sarah: i think facebook is still working it out. every day they find new ways to platform is being taken the vantage of. they are we -- taken advantage of.

we get to the midterms next week and they have their war room and the attention is on this, that it will be a process of whack-a-mole as they figure this out. their system is based on content going viral, content that gets shared. this is still the stuff people are clicking on, still what makes facebook money so it will be very difficult for them to really make a meaningful change. in the meantime, it will be very reactive. year, rich, over the last we have seen the founders of whatsapp, instagram, oculus, leave the company. we have seen a broader protest from users about privacy, about how facebook handles their data and there seems to be this question over whether users will buy that in the future. by this idea that facebook can y this ideadata -- bu that facebook can rent their data. sarah: i want to correct two

things -- richard: i want to correct to bring things that you said. they do not sell the data to third parties and they never have. i think that is an ongoing talking point that is not factually true. when we talk about users leaving, overall of these issues, -- over all of these users continue to grow on a sequential basis. i'm not talking from moving from facebook to instagram, but actual facebook users continue to grow. even in the u.s., they were --ttening for a chance i think there is a perception that people are fleeing facebook but they are not. the fall off where this change in consumer behavior is a little bit misleading. the reality is, companies that get bought, there is a natural

transition. i do not believe that instagram would be what it is today if it had not been bought by facebook. mark zuckerberg's vision for what this could become, instagram stories would not have existed if this company was not part of facebook. emily: i just want to take a point about it, -- richard: i just want to take a point of it is that facebook does not sell that data but they e people.ss to thos that is where the data collection is coming from. they love to say we don't sell their information, but that does not take away the concerns of facebook having all of this data. is totally fair. the only thing i would respond to that is when you look at the retargeting, click on any google link and see how you are retargeted.

data to target advertising is something that has been growing on the internet for years and years. i would argue where it becomes a problem is when it is done poorly. when it is done well, if you look at the ads on instagram, they feel like content where you want to buy the products and services. that nec things you actually want to buy and it is driving real businesses. where they deliver bad ads or the consumer can get upset, i worry more about the use of data from where it is used poorly. when i gone snapchat, i see a ads.f i see hunting ads, dating app ads, ads completely targeted to the wrong person. that is where i feel like the lack of use of the data, where it is not becoming a good experience, is hurting the service. if the data makes the service better, almost every consumer i have talked to would prefer that and like that experience. emily: we will see would users

decide. richard greenfield, always great to have you on the show as well as sarah frier, thank you both. benioffis hour, marc will be joining us. for taxing to raise funds for the homeless. this is bloomberg. ♪

emily: earlier this month, the regulations for what steve mnuchin said could be a $100 billion investment. proposal details how taxpayers can qualify for special breaks by investing in low income areas. a hitting clause could deter venture capitalists.

the rule requires businesses generate at least half of their gross income in the zone they operate. for startups, this could pose a problem. here to discuss is our next guest from seattle. walk us through why investors might be for or against this. >> as you said in the intro, the treasury is trying to walk a fine line. they want good investments that are going to help spur job creation and keep people from what this system, but one small clause in the says is that the company has to get most of its gross income from a small area where the company has been. some of these zones are rather small. in some cases they are a few square blocks. is that a lot of high-growth businesses,

especially ones selling stuff over the internet or a service over the internet, will struggle to meet that task. let's take the case of steve case who is for this. noah: he has been trying to get investment in areas outside of traditional areas. he has seated a bunch of companies in silicon valley and he was a big proponent of these tax incentives. basicallyld me was this growth income requirement was really going to be a for starting the sorts of high-growth businesses that he would like to see in the managed area. emily: how final are the rules? noah: that is an important thing to note. these are proposed rules. the treasury is taking feedback through almost the end of the year. we will see final rules

hopefully at some point early next year. emily: what is this mean for startups more specifically? noah: i think what it means is were seen asxes something that could be especially useful if you are taking more winnings from a pre-ipo company you were invested in and wanted to make more of an impact investment and trying to find a startup in an area that may be has not seen startups recently. it is not to say you cannot start -- do a startup in newark jersey, but if you are hoping to use these tax incentives tell drive that investment, it is going to be much more of a challenge. emily: so is steve case an outlier? what are the majority of investors saying? noah: the majority of investors are really getting acquainted with these tax incentives. seve -- steve case has been outspoken on them for a while so

he was aware of these regulations it i spoke with a couple of venture firms that are interested in this area and these incentives and they share a similar concern. all right, noah for bloomberg in seattle. thank you so much. speaking of tax policy, stay right here because marc benioff will be joining us on his support of homeless in san francisco. a very controversy ballot measure -- controversial ballot measure. driverlessegins tests. what this means for the future of waymo and driverless tech in the future. this is bloomberg. ♪

emily: it is a big win for waymo. they have been granted a permit to test self driverless cars. the state is allowing waymo to

be the first to feel cars without a safety driver behind the wheel. this comes at an important time for automakers and the self driving tech companies. there's a narrow window to pass a measure and house democrats are thinking about next steps for after the elections. newcomer.ic what is the significant of getting this? insisted they wanted to build the technology but do not require the driver so they would be the first company to get a permit to do that. that is fitting. it has made them go really slowly. they have been reluctant to have these pilot programs with the driver in the front seat. we will see if their theory of the world, if you need a fully all-time in this vehicle i can work without a driver, will pay off. emily: i was one of the first ones to get into a google self driving car in 2011. it has been years. about the importance

of having federal legislation here. >> there is nothing in federal law that prohibits a company from fielding a fully autonomous vehicle. where the legislation that is being debated is important is that it would allow companies to exempt fromore cars federal safety standards that requires things like a steering wheel, for battles. if waymo is really going to go all the way towards his vision, on having a truly driverless car, it does not need normal driver focused elements of vehicle design and could deploy it at scale. they will need these exemptions. that is one of the big reasons companies have been backing this legislation. emily: the founder of the self driving car ran google x for a long time. he told me he has driven to tahoe with his family and kids

in the car in this car but there are still questions. are they safe and can it be done? there are articles all the time about the mistakes these cars are making. >> fundamentally, the problem with a self driving car is how do you know what you know you cannot solve. there are all of these cases as the tech people like to talk about. emily: every day there are edge cases. >> there are problems that they cannot solve yet but they hope to solve soon. the industry has been bad on predicting how long that will take. those problems continue to exist and it is hard for anyone to give assurances that everything will be solved. i think there is cynicism waiting to hammer out what do you do if someone is waving a car off but you have a fully autonomous vehicle. emily: ryan, certain states have had more issues than others. there have been accidents, deaths with some of these experiments, how does what we are seeing at the federal level differ from what the states are

doing when it comes to legislating? ryan: i think you bring up a really important thing and that is what we have seen earlier and inar in arizona california, you are starting to see signs that to that is starting to have an impact in effect the way federal regulators are giving this technology. that evento see signs the trump administration is starting to look at this new technology with more skepticism. it is also embolden in and -- advocates whofety are saying this is this artificial rush to pass legislation at the federal level , it does not need to go this fast. eric, on that's not, someone on the board for uber for a very long time said self driving cars will take 20 to 30 years and that is one thing

he disagreed with. travis wanted to forge ahead with self driving technology. they continued that, but the strategy has changed. eric:eric: i think one of the most fascinating questions as uber prepares for the ipo is whether the company tries to set up a separate vehicle for self driving cars. if you are a self driving bull you can invest in that and if you are ia self driving bear you can get exposure to it. i'm sure when they file, we will see huge research and development costs they will attribute to self driving cars. they will have to decide with the cfo if they could be more valuable with this as part of the company or this is majority owned by the company with outside investors. they are also behind these flying taxis. eric: on the record, he said

they get a lot of pitches from bankers and they are considering a lot of different things. i think he has shown an openness to maximize whatever makes the most financial sense for uber, but he is not shown his hand on whether they would spit it out or get some big outside investor in like that. emily: eric newcomer and ryan being, thank you so much. coming up, could apple's hardware overhaul be what it needs before the holiday season. we will talk about that and what to expect for the fourth quarter results, that is next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪ ctoc, on twitter. this is bloomberg. ♪

this is bloomberg technology, i'm emily chang. apple unveiled -- unveiled a lineup. shares did not react to the announcement. stock is up 28% year to date. that is after their market cap hit $1 trillion. can they continue an upward path? our guests are here to discuss. announcementgh the

and how you expect that to impact the holiday quarter. what we saw is basically part two of apple's new strategy for its results. they started this last year. they realized iphone sales were not growing. they raise prices. the new mac mini is three her dollars more than the previous model. the new macbook air is $200 more. around toey stick equal unit sales, their revenues will rise. we will see that play out tomorrow because they are expected to report revenue growth. iphone 8 unit sales growth will be stagnant from last year. we are going to get the report from this quarter.

get the forecast for the holiday quarter. what are you expecting? asp.'re expecting higher we are looking for four things. iphone asp, china, services, and guidance. isp, apple is raising prices significantly. that seems like a source of upside for the quarter. china is a different story. they have had 20% revenue growth. in the september quarter with in aollar appreciating 5%, situation where you have price increases, how does a demand shape up? for services, that is how we want to earn -- this stock.

guidance will be very important. conservative on iphone units but we will look for $94 billion in revenue. they have been criticized for their business model. hit back on the earnings call talking about how i message is facebook messenger's biggest competitor. also playing up whatsapp being encrypted. fore stores i messages chinese users on servers. what did you make of that? >> zuckerberg is right. the other told stories of apple is how hypocritical it is that they are storing their data in china. they have not been clear about where that is being stored. it isare indications that

from companies that are state-owned. this point.ear at good point about i message and how sticky that is the mostare sales area fascinating thing i am looking for is services topping $10 million for the first time in a quarter. keep in mind how impressive that is. happens when they start doing new things. does the threat of whatsapp or facebook drawing a line in between high message and its own messaging service concern you? >> services is the reason you on this stock. we are not concerned about whatsapp. music, you at apple

compare that to spotify it took them 12 years. it underscores the power of distributing services inside of apple's ecosystem. as apple rolls out more services over time, we think services and ultimately account for 22% of revenue. is these are internet software services. the business than it shifts towards those businesses and away from the hardware business. we think investors could be rewarded. you are talking about a services business that could be worth $177 per share. >> we will be all over apple earnings tomorrow. thank you so much. coming up, the ceo of salesforce

joins us. supporting the controversial prop c. this is bloomberg. ♪

it's less than a week until the midterms. in san francisco there is another issue on the ballot. voters will decide whether to boost funding for homeless services. it will apply to companies. generate $300 million in additional tax revenue per year. the proposal has split opinions among san francisco's tech names.

you split with them some of your tech peers. why are you so out front on this? >> walked outside the door. we have a very serious homeless crisis in infants scope. it is getting much worse. we have 1200 homeless families each with two children. how are we going to get them off the streets? that is why i am voting for prophecy. >> what about the unfairness? there is ansays unfairness i see as my role at square. they would be taxed at a significantly larger total contribution. what i see is a crisis of

inequality in san francisco. in our 70 billionaires city. we have companies with hundreds of billions of dollars in market capital. we are the largest employer in san francisco. you just talked about a few companies. strike.twitter, is, theseg thing companies can afford it. these are immaterial amounts to us. $10 million doesn't mean anything. than the private plane and the jack dorsey flies on. it is the money that we need to make a difference here in san francisco. says it becomes unsustainable and they will not be able to stay in the city.

what do you say to that? >> that is what i see with the homeless. they are not getting the treatment they need. a need shelter and mental health treatment. children who are on the street, that is the most touching part. we know how to do it. we have been running successful programs here for the homeless for many years. we know how to do it. we need more funding and now. with the mayor. she needs emergency funding to get a shelter open in the tenderloin because she is out of money. if you look at other supporters, nancy pelosi supports it so does dianne feinstein. robbins who chuck is the ceo of cisco, we are all

supporting it. largest tech employers right here, we are both supporting prop c. we think it is right for business because homelessness has been set up on our business. >> the mayor has made this one of her big issues and she is not supporting it. she thinks there should be a regional structured solution. shouldn't she have a say? createdurse this was before she became our mayor. this was put together by our city's homeless advocates. the people on her staff have been involved in putting this together. experts in other cities have put together. i have a lot of confidence in the program. i think it is the right thing

for our city. consumers don't pay on this. it is just the top of the is this is who will have to pay a very small tax. to deal with our number one issue, that is why i am supporting prop c. >> you to raise money for this privately. how much of this comes from your frustration that other leaders are not doing their part? >> we are constantly raising money here in san francisco. thank you for everything you are doing and thank you for what michael bloomberg is doing. over $6 billion of his fortune away. here in san francisco, we have our own philanthropic needs. we raised $40 million for the fires last year.

we now have hundreds of families off the streets with this program. they did not give us any money for that. help thoseney to most in need in san francisco. areonly thing these guys giving money to is the opposition to the proposition. >> the country cannot seem to catch its breath ahead of the midterms. the pipe bombs, the debate on social media. shootings. what do you think can be done? would you like to see twitter go back? >> i would like for people to open their hearts when they walk down the streets. when you see people on the street, just san francisco was built on the patron saint, st. francis.

he said in giving it is that we receive. that is how i look at proposition c. the city is for compassion. this is the heart of what we do in the city. if you want to make the world better, it is time to start giving. you have taken a hard line on other companies. this hurt your friendships? hopefully our relationship is ok. i feel like i need to speak my truth. i have had a lot of tough phone calls from executives to get very unhappy when i say something like facebook is the new cigarettes, it's not good for you, it's addictive. it is being manipulated.

that is a tough conversation. tough conversation where i say business is the greatest platform for change. we can fix the homeless situation in san francisco right now. just vote for proper it -- proposition c. homelessness is material to my business. over --ook has taken taken on facebook and google. mark zuckerberg hit back at that. who will be on the right side of history on this? cook is on the right side for sure. he and i have called for national privacy law here in the u.s. we have gdp in europe that is

doing a fantastic job to protect citizens. we need that here in the u.s.. the privacy debates we are , we wouldn't city be having them if we were in paris or london or munich. we need a national privacy law here. we need our senators and congresspeople to say we will write this law and get it done. that will help us to get through it because right now, our data is being misused in ways we don't understand. all that needs to come into the light. companies need to address their core values. what is the most important thing to facebook or salesforce? for us, it is trust. nothing is more important than the trust we have with our stakeholders. customers,es our

shareholders, and of the homeless. >> now that you are a co-ceo, will we see you taking on more of these issues? >> i have been taking on issues like this, that is part of what i do and what salesforce does. we fight for the quality of every home in -- human being. we believe that when one of our key stakeholders is defeated by a law or a company that we have to step in. that is why i am supporting proposition c. i strongly feel that our key -- eholders

i was on the air with another journalist and that journalist was assaulted in a walgreens involving a homeless person. you know that should be something i should be involved in. i see customers coming from all over the world who say what is happening in your city? storiesou have your own and experiences. . we are all hearing the same thing. san francisco needs to change now. it has hit a tipping point that is why i am supporting proposition c. >> i want to ask you about google under fire for sexual allegations and how they handle them. where to google go wrong? >> every company should look square in the lens.

gender equality, when will we start to treat men and women equally in business? ,hat is about equal advancement opportunity, and equal pay. that is a tone that has to start at the top. >> you have fired some good people because of improper behavior. tone frome to set the the top. what do you care about? equality is important to us. as part of a quality you have gender equality. when we look at the women in our company, we are trying to give them the support they can have to actualize themselves in the workforce. issue, youes to this have to have zero tolerance. you have to see these huge settlements, they set the wrong town. i can see why employees are walking out of the business.

they are not just walking out of google. you see them walk out of facebook. you see them walk out of other companies. i have said that on other shows. i think you will see more than that. keynote that employees are more empowered than ever to take action. on key issues like this and others, good for them. i listened to those employees as well. office of ethical and humane use at salesforce. talk to our employees whenever they have a question about our ethical tone and tempo. are we doing the right thing? we will have to adjust. we have made a lot of adjustments over the years. my friends who are ceos, we just had a meeting, this was a part of the discussion.

a panel on gender equality. this is very important. salesforce issay offering new ways to collect data on users. you arepocritical that talking about privacy. were you draw the line? >> the most important thing to us is trust. more important than the trust we have with our employees, customers, partners, city, community. can i look you straight in the eye and say we are doing everything we can to have the most trusted relationships? if things come up with , then we have to address those things. we will try to be a best practice and on the right side of history. the salesforce ceo. he mentioned mike bloomberg.

we should mention that he is the founder and majority owner of bloomberg. coming up, how employees are responding to another allegation. this is bloomberg. ♪

executive at apple that

has left the company after it was reported he was accused of sexual harassment. at the labrector ask. bloomberg has learned he left the company tuesday without severance. the departure comes as google grapples with a new york times report that it gave executives payouts despite allegations of sexual misconduct. employees are planning a walk out to protest the company's handling of executive misconduct. property guru will take full control of a vietnamese real estate site. property guru represents a series of deals. that does it for bloomberg

technology. i'm emily chang. this is bloomberg. show me movies a grinch would love.

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asia'scounting down to major market open. here are the top stories. u.s. stocks rallied a second day to close out a rough month. the dollar added to a 16 month high. tech helped with the nasdaq.