>> i'm selina wang in for emily chang, this is the best of bloomberg technology coming up, another big week for big tech earnings apple and facebook reported. plus, big blue's, big deal, ibm looks to the cloud. plus, a hotly debated about issue here in texas go, funding for homeless services has had tech and the city divided. we speak with one of the most

outspoken advocate. this week, we had a slew of earnings out of big tech. these numbers provided the first real insight into the extent of the company's new iphones the real focus was on apple's fiscal first-quarter forecast covering the first holiday season when the 10 next is suspected to be a popular gift. we caught up with an analyst right after the numbers were announced. >> a great third-quarter. but we are a little disappointed on the guidance here. it looks to be indicating market slowdowns, and frankly, considering the product mix they had, the flat forecast with zero

growth in the iphone. >> a big change of focus is less on the number of iphones sold, the average selling price which has continued to increase, but how much further can we juice the price from consumers? >> so far, there do not seem to be limits if we look at their opportunities, they either find more customers, and most of the growth is coming out of markets like indonesia, nigeria, and india, where the percentage of a population is high. you could increase revenue or you can sell more products. while the wearables and other devices are doing well, there is no other it product like a smartphone the consumers have to have. selina: horace, these numbers only show about two weeks of the nearest iphone sales. what do we know about how those forms are so far? -- have performed so far?

horace: the signals are good it -- as far as what we are seeing, but the problem is we do not know if there will be some kind of structural issue in china. as far as the pricing is concerned, yes, it has gone up, but there is quite a bit of mix out there. the iphone -- the newest 10r has not really shown us a lot of data. that will be the driver and it is a little bit of a puzzle why we are not seeing this enthusiasm. selina: most of the faang stocks are down and apple was the last report. the hope was that it might lift the tech sector. what do you think now? we are seeing stocks down and investors seem underwhelmed. will this change later in the day?

horace: it is hard to say on the whole market. through looking at apple alone, we are seeing a little less enthusiasm. we just have come up two days ago, new products, meat and potatoes products, the middle of the market. new air is a little pricier and it is certainly getting a nice boost in terms of functionality, not to see that reflected in guidance is disappointing. selina: tim cook gave an interview earlier with reuters citing weakness in emerging markets. in china, the trade tensions could be leading to a dampening consumer sentiment. are we seeing that at all in the numbers as they are concerned about this? julie: i think when you look at apple and their target audience which tends to be more fluid, even in markets like china and india, which are some of the larger markets, i think even over the past 10-15 years,

luxury goods have done well. i would not expect to see much of an impact their, especially when you target an audience as fluid as those are. does not tend to have much of an impact. selina: cook just now on the call citing how strong the year was spared -- how strong the year was. best quarter. overall the quarter had the biggest quarterly growth spurt since 2018. -- 2016. i want to talk about the 10r. there seems to be a lot of investor sentiment about this. why all of the excitement when it could be potentially cannibalizing its products? horace: it is still a $750 minimum price. it is a significant rise over the 600-700 dollars price in the past. we are seeing an uplift in the overall asp. the product has also not necessarily cannibalized. it is interestingly positioned as a middle product in terms of screen size which is what most

people respond to. it is a solid product. that is what surprises me a little bit. i'm saying there is a little disappointment, but let's not forget we are talking about projecting 78 million units sold at an average of $800. this will still be a great quarter, it is just not the growth that we saw in the top line. we see a flat top line going forward. again, i'm actually penciling in growth on the ipad, a little growth on the mac as well. low single digits, but the big growth is services and other in the 30-20% range doing well and are continuing to do well, but those are based off an installed base which is based off of 1.3 billion devices out there. that is where the services growth is coming from. there is a question whether the 10r would be a home run or not.

selina: julie, what is your take on that? will people upgrade for this cheaper-ish phone? julie: a lot of consumers still may have a six or seven or eight and have been waiting to upgrade to something more affordable to them. i think that is some of the target market they see chasing. selina: i just want to point out, tim cook talking about the new iphones being the most advanced ever. they have seven nanometer chips and are ahead of technology. they are quoting reviews on how good some folks think they are. you were talking about services earlier and they came in under expectations. what is your take on that? is service not growing as much as expected? horace: it is doing pretty well, actually. my expectations were in line with what we saw and we saw about 10 billion quarter.

they are ahead of schedule in terms of hitting their long-term targets at $50 billion per year run rate. that is going to be reached probably next year ahead of schedule. that is not a bad story at all. there were some one off revenues that were not present this year. overall, i do not think there is anything i could see negative about services right now. forecast is looking at 18% growth. less than what we saw on the past. selina: this week, we some more at snap. they have lost their vice president of sales after being promoted to chief is officer, but then the ceo changed his mind. we've been told that they went as far as referring the direct promotion, two days later, rescinded the offer.

now, the latest executive to leave the platform is telling colleagues that she is leaving you to changes in team structure. coming up, facebook's user growth is its slowest since 2011. we dive into fourth-quarter results. check us out on the radio. this is bloomberg. ♪

selina: the other big tech earning of the week is facebook. the social network reporter revenue that missed expectations, suggesting that problems continue to take its toll on the company. yet mark zuckerberg still seems confident, sitting quote our community and businesses grow quickly and now more than 2

billion people use one of our services every day. we are building the best services for messaging and stories and there are huge opportunities ahead. we dug into their earnings report with our guests. >> 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. 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 but as david mentioned, profits are better than expected. can you break down the numbers? what were key highlights? >> for me, although the revenue

was a miss, it was not a large miss. 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. it's a mixed bag. it is as good as you have -- you could have expected for a company under turmoil this year. selina: you were talking about the user growth and you flat -- being plentiful at -- growth being pretty flat. what is the significance to this? is this reassuring to investors that things are not trading?

-- 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. again, they managed to eke that out quarter after quarter. if that number starts to decline, that is a bigger red flag. overall, this is about as good a quarter as you could expect for the position facebook is in. >> 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 last year. what does this mean? are they still spending on the content management issues? 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 of fact it is having on elections and social dialogue, which is still manifesting in all caps a voice -- all kinds of ways in our country and the united states and brazil and around the world, i do not think we will 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 confronted. 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. an important and growing part and advertisers are enamored with facebook and instagram. selina: still ahead, ibm's ceo is taking her legacy on a red has to deal. we hear from the ceos. and later, brazil's hard-hit. the former armor captains commanding victory soared.

we look at the role technology plays in the poll. this is bloomberg. ♪

selina: the playstation 4 is like the beauty and character who cannot be defeated five years after its debut, sony's console is enjoying one of the strongest product cycles in the business. this is thanks to a steady stream of popular game products. they shipped twice as many ps-4's as x-box ones. that puts them in good place to -- position to counter the consul industry's next challenge, games delivered via the web. after years of predictions the cloud-based gaming would make hardware obsolete, the technology finally appears close to ready. ibm has thrown its hat into the cloud computing ring. they announced they would be buying red hat and one of the biggest technology deals ever. both ceos spoke bloomberg after the announcement. >> we have been working with i.b.m. for many, many years. and really over the course of this entire year we started to do more together. we made some big announcements in may at our summit of more work we are doing together. we started speaking more seriously back in april, and so it has been something that has kind of continued to evolve, and

it became a natural next step. in terms of why we see so much value for red hat is we do see tremendous opportunity for open source in the enterprise, and as the leader there, we see a large market and a growing market in front of also. what we have lacked is scale in our go to market. we have lacked a depth of customer relationships because we are a newer player coming up. we have lacked deep industry vertical expertise, and we lack the overall level of investment we need to meet our full potential. i.b.m. brings all that. together we can dramatically accelerate the red hat business and grow i.b.m.'s business as well. >> what about from your point of view? a lot of people said i.b.m. needs to make a move. this is a big move. this is one of your biggest during your tenure as c.e.o. why did you decide this would be an important part of your legacy?

>> we have been reshaping i.b.m. for this moment. this has been about resetting the entire cloud landscape, and this is the inflection point to do it. chapter one of the cloud is over. they have moved the first 20%. that is done. but the 80% ahead that is a $1 trillion market, and this is the moment. and to go after it, they need a hybrid cloud. they need what jim and i do tomorrow, on prim, a private cloud, many public clouds. they need it based on open standards. they said they are tired of the lock-in. we are the true open source, the portable answer for them. we need to manage multiple clouds, and they have data spread everywhere that we can securely pull all together. this next chapter is the $1 trillion market. 80% of their work loads are going to move. we talked about our expertise and services and ability to that.

we catapult ourselves into number one. you have to remember, jim lennox, i.b.m., open source, we are the biggest contributor to the open source community. we have a long history of that. lennox is the starting point for the cloud and it is a destination. when i say phase two, we own starting point and the end point now. that is a great move for i.b.m. and it is why it is so really accelerating all of i.b.m. and good for our high-value model. >> i.b.m. chairman and c.e.o. and red hat's ceo speaking with daybreak america. let's take a deeper dive with the managing director of equity research and bloomberg's tech editor. you member the days when i

covered this company from 2013 to 2015. she is saying now is the inflection point to cloud. some may argue that inflection point has already happened. what do you take of them making this admission that they can't build it in house. >> they should have done an acquisition when we were talking in those days. they didn't do it. they were hanging their hat on watson, that has not done much. but this, in principle, can reshape a lot of the things they do. can reshape software practice and their global services practice where they have lacked to companies like accenture, and others. >> and that global services practices is still a majority of revenue, dan. when you think about how this business does get integrated, jenny made her name on that

service side in consulting back in the day. how much pressure is on her to have a seamless integrate with red hot into the broader culture and products fit? >> there is a lot of heat in the kitchen to integrate this successfully. there is risk and opportunity as she talked about. right now for cloud, they needed to make a big strategic bet. if you look at it, there is v.m. wear, red hat and a handful of others. if they were going to do it, they needed to do it now. definitely a few years too late, but integrate is going to be the key to the street. how does this affect microsoft and amazon, a two-horseracing cloud. can i.b.m. become the number three player? that is the key here. >> who is shaking most in their boots, seeing as acquisition? is it amazon, the number one, or who is most fearful? >> amazon and microsoft are drinking cappuccinos right now. it is their world. i think you are seeing a lot of consolidation. cloud air at work. you are going to see a lot more m&a in cloud. this is just the tip of the iceberg.

the scale, that is really going to be the issue about these two players coming together. >> and that did seem to be what those two executives talked about. red has the growth and the small size, and i.b.m. has the scale. but revenues have fallen by a quarter since she took over in 2012. do you look at i.b.m. as a growth story? they are reigning in buy backs and not giving out as much cash? does this change the narrative? >> we talked about the six or seven years ago that they should be buying more companies like this. this gives them a lot of good products to sell to the market. it could benefit somebody lying an amazon, microsoft or google, because you about shift more work loads to the cloud. the question for me is are they going to be really open in terms of working with these red hat products to move some of the product to other cloud and not just say hey, why don't you move this to i.b.m.'s cloud? that really is a big thing,

because if they are not open, that could be an issue. >> red hat is already working with amazon and microsoft. is that a cultural shift for i.b.m. to say look, our products have to be cloud agnostic. do they have to change their d.n.a. to make that work? >> they have to. there is no way out. we have seen with microsoft that is the only way to show people that you are agnostic to whoever and -- the end party is. you try to stick your own technology in between, they will be in for a surprise. selina: that was dan ives and bloomberg's armor not run -- arunag rana. coming up, we hear about san francisco's homeless problem. and bloomberg technology is live streaming on twitter, check us out on technology and follow our global breaking news network on twitter. ♪

selina: welcome back. just days until the midterms, in san francisco, there's another issue on the ballot. on november 6, voters will decide to boost funding for the homeless with a special tax, but it only applies to companies with revenue of a certain amount. they say it would generate millions of your matches -- earmarked for tackling homelessness, but it has split the city's biggest tech names. we spoke with a proponent of the initiative. >> we have a very serious

homeless crisis in san francisco and it is getting much much worse. we have 7500 homeless individuals on the streets, 1200 homeless families each with two kids. and how are we going to get them off the streets? it is getting worse, it's a problem, that's why i'm voting. selina: what about the unfairness that other companies are cited -- citing? you have jack dorsey saying that there is an unfairness as i see in my ceo of square which would be taxed at a significantly larger total contribution. do you see the unfairness? >> what i see is a crisis of inequality in san francisco. we have 70 billionaires in our city. we have companies that you report on with hundreds of billions of dollars in market capital. we are the largest employer in san francisco. not just tech, largest employer. we have a hundred billion dollar

market cap. you just talked about a few companies. square worth 30 million, twitter with 20 billion, strike, 20 million. the amazing thing is, these companies can afford it. for us, it's a $10 million tax, these are immaterial amounts to us. $10 million doesn't mean anything. that is less than the private plane and the jack dorsey flies on. you know that. and i tell you right now it is the money that we need to make a difference here in san francisco. >> jack dorsey says it becomes unsustainable and they will not be able to stay in the city. which, in his words, would be heartbreaking. what do you say to that? >> that is what i see with the homeless. they are not getting the treatment they need. that is, they need shelter and mental health treatment. kids who are on the street, these kids have to get into homes, and we have a plan, we know how to do it. we have been running a very successful programs here for the

homeless four years. i have been involved, i have personally funded tens of millions of dollars for homeless programs and in what i have found is we know how to do it, but we need more funding. i was just on the phone 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 politicos supporting this, nancy pelosi supports it so does dianne feinstein. not just me, chuck robbins who is the ceo of cisco, we are all supporting it. you have the region's two largest tech employers right here, a quarter million -- trillion dollars of market cap, we are both supporting it. we think this is right for business, because homelessness has been so tough.

>> 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? >> of course this was created 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. our top homeless ngos are putting this together. and really, the experts who have worked with other cities have put it 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's just our top 50 businesses in san francisco that are going to have to pay a very small tax. but it is to deal with our number one issue, that is why i am supporting prop c. >> you to raise money for this

-- tried to raise money for this privately. you have tried to raise issues for -- money for many issues privately. how much of this comes from your frustration that other leaders are not doing their part? >> thank you for opening that door. we are constantly raising money here in san francisco. you help me out quite a bit, so thank you for everything you and mike bloomberg are doing. mike bloomberg is probably one of the most generous people in the whole country, given over $6 billion of his fortune away. we'll here, we have our own philanthropic needs. we raised $40 million for the fires last year. when people were complaining about this, they didn't give us money for that. we have just raised 40 million to get children off the streets, and we have now got hundreds of families off the streets and san francisco with this program. they didn't give us any money for that. and we had our sf gift program with tipping point, where we raised tens of millions of dollars to help those most in need. so the only thing these guys are giving money to is the opposition to this proposition, that is the first time they've ever given any money to san

francisco. >> the country cannot seem to catch its breath ahead of the midterms. you have got the pipe bombs, the this oral -- visceral debate on social media. shootings. what do you think can be done? would you like to see twitter go back to real names? >> i would like for people to open their hearts when they walk down the streets. you see homeless adults with children on the street, saying there through the grace of god go i. one of the things i love about san francisco was we are built on the patron saint, st. francis. he had a great phrase, he said in giving it is that we receive. in giving how we receive, that is how i look at proposition c. the see -- c is for compassion. it is for charities. 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. that is the best way to let people know that we care about them. >> you have taken a hard line on other companies. in the past, he said this has caused you some troubles in your friendships. i wonder if this has done the same. how are your relationships being affected by this? >> hopefully, our relationship is all right. i feel like i need to speak my truth. sometimes, that means speaking truth to power. 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. others are trying to get you to use it in ways you do not even understand. that is worse -- true and in ways i did not even understand. that is a tough conversation. this is a tough conversation where i say business is the greatest platform for change. we can fix the homeless situation in san francisco right now. all we have to do is vote for

proposition c. an immaterial to our business right now, but homelessness is material to my business. selina: that was salesforce ceo marc benioff. still ahead, sweeping to power in brazil's election. we discussed the role social media played and what countries should take from it. plus, tech companies recoil. the debate over free speech is on the internet once again and is front and center. that is next. this is bloomberg. ♪

selina: bolsonaro marked a hard pivot the right by winning an election in brazil. he campaigned on a right-wing platform privatization, liberal gun laws, and security. his rise to power is notable, in that like president trump, it benefited greatly from social media. what's at -- whatsapp is one of the main tools used. increasingly it is also a part of politics. it was also used to spread rumors of false news. let's head to rio de janeiro. cris co-authored a report. bloomberg reporter david miller also joins us from the bureau. >> what we see is a big, big amount of misinformation going back and forth on the system. we have analyzed about 50 images, for example, and out of those 50 images we got actually to analyze, we only found that four of them were totally true. that is like a very little

amount of good information being around in brazil. that is very low amount of good information. >> four out of 50? that is very low. when it comes to where we have been concerned about disinformation, a lot of focus has been put on facebook and twitter, but it seems like these more private conversations is where it is at. cris, how concerning is this, that these are a little more out of the public eye, not on a message board. >> when we have noticed here in brazil, we just finished the election, is we have spent about two years analyzing and trying to figure out how to fight misinformation on facebook, twitter and google, the social media that we usually read every day. now we have this whole new world being opened up. how do we fight misinformation on encrypted platforms?

that is something that we in brazil didn't figure out very much and someone else may need to figure out. >> david, puts this in terms of -- put this in context in terms of the election. bolsonaro was not necessarily in the public eye before this candidate cycle. how much did this kind of ground swell of social media actually change his assent to power? -- ascent to power? >> it is tough to know for sure. whatsapp, it is not so popular in the u.s., but it is encrypted from end to end, so you really don't know what the impact is. he built a very big social media following both on facebook and twitter, and a lot of the stuff goes through the app, but you really don't know how much. certainly, there was much more concern about the use of it and how it influenced in the first round. cris could probably speak better to that, but it seems as though

it came down a bit in the second round after the courts began reacting to this. it was a big bombshell report saying a company or companies were financing mass what's app messaging to people, the brazilian electorate, and that really had a big impact on the first round, but we don't know how much. we won't know how much. it doesn't seem. >> what we do know is that tough talking does make for viral content, david. in terms of what he is kind of pushing out there in terms of the messages, how much is it tough talk, and how much is there actually policy behind some of the ideas around security, gun laws and privatization that he has been really pushing? >> well, i would say that is an issue not just regarding bolsonaro, but a lot of the

candidates in this race entirely. it wasn't about policy proposals. this wasn't a race where everyone is saying i am going to do x, y and z and he was the only one with bluster. there was that on all sides. i think that he has made clear where he stands in terms of traditional family values, and liberalizing gun ownership, policies like that. others say he has always been fixated on the idea of leveraging brazil's economic growth by mining the amazon. that is something you didn't see much of during this campaign but is nevertheless one of his big policy focuses, as well as privatization as we mentioned earlier. that is something we didn't see as much in the race, but is a cornerstone of the economic model they are going forward with. selina: meantime, gap.com is now under scrutiny in the u.s.. gap -- it is a two-year-old network that billed itself as a

free speech alternative. it has been a haven for neo nazis, nationalists and others. now it has been linked to the synagogue shooter. robert bowers has been charged with a federal hate crime for the murder of 11 people. before he barged in and opened fire, he posted one last message on gab. -- one last anti-semitic message on gab. many tech companies have withdrawn their services, but the gab home page currently has a statement, part of which states we are most censored, smeared and no platform start up in history, which means we are a threat to the media and to the silicon valley oligarchy. gab isn't going anywhere. we had a panel to discuss it on monday. our reporter josh, and david kirkpatrick, found of techtromony. >> there is no question that we have seen some of the most hateful dialogue moving to these more specialized platforms.

as you are saying, what's at, facebook messengers, telegram, these are all new platforms for political distortion your -- distortion. there is no easy answer to what we do. i think we need facebook, twitter, youtube and other major sites to continue their efforts to essentially ensure that hate speech is kept off, particularly threats of violence. one of the things i worry about is a site like gab with no resources, which attracts people with fringe views, it doesn't have the financial capability to really do the moderation if they were to, for example, say you cannot make threats of violence here. they clearly haven't been doing that, and that is why this got through. >> i can't help but ask myself if this is what gab would be like if -- what facebook would be like if there was no moderation, if they would look like a gab. facebook has dragged its feet on calling itself a media company and slow to the moderate content

-- the content moderation game. is this fuel for them to take a closer look at what is going on, on the site and use the resources to keep an eye on things? >> i think all of the larger social media platforms are really trying to say the right things about this. over the last year or two, they have increasingly owned up to it, at least rhetorically, saying we are going to do something different. they are not quite sure what to do. that is why you are seeing it be difficult. meanwhile, with gab, you are seeing how these companies talked before they realized they were important. hey, people are going to say what they are going to say and we are a conduit. >> the idea of being a haven fee speech seems like a noble statement for gab. how are folks in the world, users reading, supposed to parse through what is real and what is not? >> i think with gab in

particular it is worthwhile to point out that they have two sort of conflicting messages they will make. the first is they will say we are a free speech platform. how can you possibly be against that? at the same time, their c.e.o. andrew torba is very familiar with the standard, angry right wing rhetoric. he is very comfortable in those worlds. so he will sort of say those things while getting distance from those things, saying you can put anything you want on gab, so you can't really hold me accountable. selina: that was david kirkpatrick and josh burstein. still ahead, europe wants in on the crowded clad space. up next to this is bloomberg. ♪

selina: number of has learned that india's second biggest while this -- wireless carrier

is delaying its ipo due to turmoil in stocks. the company was originally aiming to list in london by march. it has now pushed back the shares fell by half a year and plans to seek an enterprise value of $8 billion. that is according to people familiar with the matter. while u.s. tech giants like amazon and microsoft jostle for market share, europe's largest tech company is gaining speed. known for its enterprise software and managing relations, they are pivoting towards a cloud suite. they have seen new club bookings rise 37%, saying it that generates more revenue from that business than products now, they hoped his take on salesforce and oracle, raising its substantial revenue forecast for the current quarter to $6 billion. i sat down with their ceo, bill mcdermott, to discuss. >> you have a major move to the cloud.

if legacy companies have not fully vested themselves in the cloud, or they've converted their revenue streams more to cloud of man -- than on premise, i think you will see them make bold moves to get cloud ready. selina: now, oracle recently launched its autonomous database. it does not need human administrators. do you see a lot of competition? are you developing something similar? >> we obviously have taken over the enterprise database market with,. -- with hana. so, hana has many of the characteristics that you mention but moreover it can take data from any source. so, everything that is either structured or unstructured and data from any source in the enterprise it's running the biggest enterprises with more than 25,000 customers at mass scale. so we like our database very much. selina: sticking with the

competition, i want to talk about salesforce. what is the plan to catch up with them in the customer relationship management cloud market? >> we see a fourth-generation of crm where we'll go beyond the current market participants. basically, they focused on sales marketing campaigns, things that essentially take money out of the customer's pocket. what we want to do is focus on an omni channel, e-commerce world where we connect the demand chain, because that customer is real mobile, and they are on the run, they shop in every channel, direct to consumer, wholesale and retail. and we want to connect that chain. so you have an end-to-end business. why is this so important? we are not just talking about crm. we are talking about customer experience, the way ceo's think about their brand, their products, the human capital, their customers. all the people inside a company have to be completely committed to the customers outside the company. this is what we call fourth

generation crm, all about the customer experience. selina: you have met with president trump. wall street was quick to cite the tax reform as a way of the -- of the future profit growth, but now has changed to tariffs. what is your assessment of his performance and what you hearing from clients? >> the most important thing is we get paid to run businesses and work in an environment where we let government do what government does. and all government leaders have to do what is best for their country and best for their constituents. and these tariffs are a serious situation. you have the two largest economies in the world, $30 trillion in combined economic firepower and are at oz each other. it is good. and then you saw today's tweet when it was stated at the g-20 president xi and president trump will talk. that is very encouraging to the markets. markets like certainty. so, certainly, we'd like to see the u.s. and china cooperate. it's good for supply chains and business.

selina: china is a very important market to sap. how are the tensions affecting the business? it is a german company. >> in a sense, you could say that. german engineering is highly regarded in china, as it is in the united states and around the world, but we do particularly well in china. china is our fastest-growing market. we think that china is easily regarded as sap's second home in terms of the market receptivity, the ecosystem growth in china, and our long-term prospects. we think china will end up being the biggest market in the world, soon. selina: what is your approach to servicing customers there, given the data privacy concerns? >> well, we have, as you know, or probably do know, the most sophisticated data privacy technology in the world. we acquired a company called giggia, where we have billions and billions of customer records.

we protect your privacy. we do not let customers actually engage you unless you agree you want to opt in on their -- various offerings from our customers and how they serve their customers. so we follow the same reference architecture, high security standards and cloud standards in china that we do in europe as well as the united states and every other theater in the world. we are very confident in china in the way enterprises can serve their customers in china with high security standards. we recently announced a very important partnership with alibaba. that is a cloud partnership that will not only impact our growth in china, but also the aussie on region, -- asean region, one of the most important in the world. selina: that does it for this edition of "the best of bloomberg: technology". we are live streaming on twitter, check us out and follow our global news network on tictoc and twitter.

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♪ >> ladies and gentlemen, the winner of the riba stirling prize for architecture 2018 is the bloomberg tilting. [applause] g building. [applause] caroline: on the one-year anniversary, we look at -- therg's london office wave of the future. welcome to this program about bloomberg's