emily: i am emily chang coming to you from seattle. the midtermis hour, elections are hour, but the security risks remain. we talk about the cyber threats that hang over a coming elections worldwide and why despite the outcry, facebook and google are the big winners of the night. plus, reid hoffman speaks out on facebook's handling of the elections and shares his prescription for regulations

going forward. the boring company comes to san francisco, maybe. have a twitter exchange just might bring the transportation fix the bay area needs, if it is all not just a billionaire's dream. first to our top story to read facebook and its handling of the u.s. midterm elections. facebook got a tip from u.s. authorities about accounts that may be tied to russia's internet research agency. this is the same agency accused in february of trying to interfere in the 2016 election. facebook said it removed accounts with content that falsely county democrats and republicans were supposed to go on different days. now that midterm elections are over, we want to take stock of a threat as it stands. burning is now -- joining us now is sarah frier's. i want to start with you, lawrence. assess the integrity of the elections over the last 24 hours.

how did we do? lawrence: there are two things we should be talking about. 2016, there are at least two avenues where we have seen interference in our elections. andis with infrastructure when it comes to the mechanics of the elections, things for most people looked pretty good yesterday. there were some notable glitches, but it looks like a normal election and i didn't see of e-votingterms machines, they reporting on election night that it looks like there was interference. emily: there were reports of electronic putting machines breaking down across the country and as a result, long lines. we can expect some people probably just went home or to work because they could stand in those long lines. what is the extent of that and why did it happen? lawrence: sadly, that happened more than it should and where be

did see it, in most cases, i think we can tie it to how old our recruitment is. we have got in the states that really saw problems, georgia is ,n example, south carolina philadelphia. we heard of examples of machines sometimes flipping votes. we heard that in early voting and on election day, where it was not registering the vote that the voter intended to rid machines breaking down -- that the voter intended. down, thateaking comes down to a lack of investment. we have old machines that need to be replaced. i haven't seen any evidence that the that -- any evidence that that was the result of foul play. the flip side of reliability is security and if we continue to use those systems, we leave in 2020, honorable particularly for machines that

don't have paper backups as undersecretary of the department of homeland security said, 2020 is the big game. we need to be prepared. emily: let's talk about potential pharrell play -- potential foul play. we got notification from facebook that they took down events -- they took done accounts in the middle of election day. >> facebook got a warning from federal authorities that it may have accounts that were linked to the ira, which was related to the 2016 election interference. facebook has been trying to invest in fighting these things. their latest tip comes from the federal government. they take them down, then the ira or someone claimed to be them put out a post listing the accounts, taking credit for what they have done. facebook removed a few more. then able to after polls closed, they came out and said, linking these accounts more directly to the ira.

they are still not definitively saying this is coming from russia. we have found other election interference campaigns using fake accounts in the last few months that are from iran, from domestic actors. so far, we think this is russia, but we are not sure yet. emily: so far, we have been inside the election war room, where they have a chain of people working across all these potential threats. the familiar refrain is that the biggest threat, the most activity they saw was in the united states, not from outside the united states. despite this revelation of ,ccounts connected to the ira how dangerous is that, how much of a threat is that? all, i shouldt of say there is additional information about the ira. found a attorney

conspiracy about one month ago saying there was a conspiracy with a $10 million per year budget to post on social media, to buy ads that were meant to interfere in the elections. that is ongoing and i would say the concern is what it might thatl for the future and is, well it wasn't nearly what it was in 2018 compared to 2016, my concern would be that they are going to come back in a big way ahead of 2020 when the stakes are much bigger. this other area of election infrastructure, while we didn't see a lot of activity in this election, we have to be worried that they will come back in a we had to in 2020 and take the necessary steps to protect from that. emily: sarah, you have a new piece out the talks about how even before the election, facebook and google really --

were the ad winners. spending is up across the board with the excitement and energy from both sides trying to figure out how this election will affect us, given the divisive political climate right now. political spending is up. there has been no fallback in spending related to the problems we have seen. one thing i would point out is the transparency efforts from the companies to make that spending a little more accountable to their users to make it clear who is paying for ds, there haveat a been reports that that is easy to falsify so they secure that system. there were reporters who buy ads in the name of mitch mcconnell,

in the name of isis, mike pence, it is very easy to say the ad is paid for by someone who is not paid for by. emily: that is just so fascinating. larry, there's a chance of runoffs in georgia in particular. wereis a place where there reports of voter flipping, long lines, failed machines. what could they fix in a matter of weeks? lawrence: a big thing and we saw a problem with this yesterday is, they need to have backups if machines go down. we have reports in georgia of lines for hours when machines went down, running out of paper ballots. they should have emergency paper ballots there. 2-3 hours worth, so if something goes down, people can continue to vote and it obviously didn't that had longes lines. some people are saying 4.5

hours. emily: what is the status of the postelection war room at this point? what are the upcoming elections around this world that they might be monitoring? sarah: they are monitoring all sorts of elections. one thing i heard from sources in facebook are people are incredibly focused on the 2020 election. that is the future here. that is what this is preparing for. the war room is testing all of the systems to see if they are willing to update and fix them and maybe even introduce new secure measures ahead of 2020 to make sure that these systems get stronger. i think that really is the ultimate goal, but in between now and then, there are plenty of elections around the world, where the facebook war room will be operating. they haven't said anything about the long-term usage of that room. this is kind of a test.

hopefully, we'll hear more from them on that and more on the russian accounts. hopefully, we will get to see what these accounts are posting and how long they were active four. emily: security experts have said the u.s. midterm elections may not be as vulnerable as a big presidential election, because for foreign actors, it is confusing and difficult to know whether certain local issues are good for that actor or not. 2020.lly is about there has been bipartisan election security legislation that hasn't made it through congress. with a democratic house, does that legislation stand a chance? lawrence: the democrats have said that this will be a priority for them, so i think they will push this harder than it was pushed in the last couple years. i do think there is a chance. there was a lot of bipartisan support and didn't get out of committee, but i would expect

there will be more focus on this in congress and that may push things through. that is on the infrastructure side. on the social media side, everything that facebook and google are doing right now is voluntary, unlike tv and radio and print. they are not subject to the same laws and regulations so we may see a push their for them to have to follow some federal regulations. emily: we will of course be covering potential runoffs and all eyes on 2020. thanks so much. coming up, softbank making moves for a potential ipo of its mobilephone unit. why the company wants to raise $18 billion from japanese investors next. this is bloomberg. ♪

emily: welcome back to bloomberg technology to from seattle. i am emily chang. softbank once to raise $18 billion from investors for the ipo of its mobilephone unit. the company is charging people who normally get no interest on their savings. for more, i want to bring in selina wang. what does all this mean? that they were trying to raise about ¥3 trillion, but now we are learning they want to allocate 2 trillion yen for to investors. the amount that is allocated to investors varies country by country, but the amount they want to allocate is that they are expecting very strong demand

from individual investors in japan. when we spoke to analysts, they told bloomberg that, given the strong brand presence of softbank and the fact that they plan to give high dividends to their investors, there will be strong demand from individuals. what do we know about how big this ipo will be? leigh: selina: 3 trillion -- selina: ¥3 trillion and the size they are selling to retailers, if that comes to fruition, that would be a record sale of shares to the retail investors. that is a big deal. stepping back and below that, the spin off of this mobile unit is a big deal because he is trying to shift his attention to the tech conglomerate that is investing in startups from uber to we work and now he is able to focus his time on that conglomerate and when we spoke to him the other month, he said he is dedicating 97% of his time

to investing and 3% to the mobile telecoms unit. this will make that official. emily: is this unit further protected from the controversy surrounding soft rank -- surrounding soft banks -- softbank's ties to saudi money? the unithat part of doesn't rely on saudi money and the others do. he did mention that he met with the crown prince. the issue andt pressed him for more information but the quote was, is a terrible tragedy that should not have occurred the we have accepted in investment and it is a an together investment economy away from relying on oil . we cannot turn our backs on the saudi people. another piece of news shifting back to the mobile unit, is that

they plan to cut a significant percentage of the workforce to increase profits. the plan to get there through automation. this is just another step in the overall remaking of softbank. ultimately, what does softbank look like, what remains? selina: what will be there will be this tech conglomerate. the vision fund that we saw. he wants to be driving the future of artificial intelligence and he thinks that by investing in these companies he can propel them to be dominic conditions in every industry because he thinks artificial intelligence will drastically change companies around the globe. this means that he can focus on these grand ambitions. he will not be thinking about the day-to-day operations of this mobile telecoms unit that has been mired in for most of his career. now he can buckle down on investing. we have yet to z of the controversy will have an impact

on the fund. as we reported before, it seems like it will be difficult for him to find tens of millions of dollars from any other single entity. emily: we will continue to follow. thanks so much. coming up, policing tech. linkedin cofounder's prescription for regulation. this is bloomberg. ♪

emily: reid hoffman has an eye for tech success stories. he founded linkedin, invested in airbnb early. today, several tech giants that he helped get off the ground are at the forefront of transparency issues. bloomberg's david westin sat down with him on the latest episode of big decision. take a listen to what he had to say. reid: i think the thing with the tech industry is that learning has been, we are not just the challenges, we are now becoming part of the infrastructure.

the social and logistics infrastructure. as we become part of that infrastructure and we get to the scale of it, our responsibilities change. we can't just say, trust us, we will build new products. we have to be transparent. we have to be in dialogue with society and be more careful about which risk we take, because we have a greater impact. david: does technology have a brand problem? we love whatever social media we are on but at the same time, there are real questions being raised now. can we trust these people with our information or not? is there a branding problem here? reid: there is definitely a brand challenge at the moment but it is more like teenage years, as you grow. it is recoverable. if you ask a lot of people, do they love their iphone, do they love their technology service, the answer is generally yes. but they now need -- we as the tech industry need to say, people also want to feel safe.

they don't feel safe because of a lot of things about cyber hacking. higher levelve a of standard of safety there and that needs to be added into the way we communicate. david: you spend a lot of times with the leaders of tech in silicon valley and elsewhere. do they get it? reid: i think they are learning. if you said to have at 100% right now, not yet, but i think they're on a learning curve that is moving fast. i think they will get there. david: what is the role of government regulation? let's talk about u.s. government regulation. is a going to be regulation and should there be? reid: it is possible that some regulation could be good. it is a lot easier to do a lot of damage to the tech industry, to our position in the world, to the lead in the industry that we have than to help. we should be very careful. i think with the dialogue should be right now is not as much should we regulate, as much as what should the target be.

what do we want out of the social infrastructure of social media companies? what do we want on the handling of data? new do we want on the evolution of these technological platforms, ai and so forth and what are some of the guidelines? you guys aswe want companies telling you about these issues, reporting on them and we want you to be more transparent about them so we can see how we need to push you. whether it is a dialogue, and inquiry cory regulation. that is where the conversation needs to be. david: if there were a regulation, would be on the subject of meaningful disclosure? reid: i think the question would be to figure out, what kind of transparency do we think would be most helpful and most meaningful. i do think the first thing would .e, tell us about this stuff if you are not being discloses enough, we will make regulations to make you disclose.

is it for example data security, is it inability to have control so your understanding how your data is being used? , but how do you do that in the right, simple way that leads to a lot of the ability to innovate for the future? david: as you talk to sheryl sandberg, mark zuckerberg, what is the discussion about how you get front of this, instead of the appearance of the appearance that your being dragged kicking and screaming? reid: the key thing is to show that you are -- to be transparent and is clos -- and disclosive about the things people care about. there are investing in election technology, data security. not just to say it, but to do it. to say i hear what your worries re: and we're working on them. it may take us a few iterations

to learned exactly, but we care about it and we are talking about it. they are on the path to exactly those conversations. reid hoffman, cofounder of linkedin. coming up, what the midterms mean for the future of tech policy in a newly democratic house. theill talk about amazon, new headquarters on the east coast. how amazon is trying to reinvent itself on the other side of the country and what it means for the price of surrounding areas. that's next. this is bloomberg. ♪

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see the grinch in theaters by saying... "get grinch tickets" into your xfinity x1 voice remote. [ laughing ] uh oh. something in my throat. this is bloomberg technology coming to you from the bloomberg bureau in seattle. we are talking about the midterms. the democratic party taking control of the u.s. house. it is a victory that could mean changes in policy for big tech. how democrats are likely to push for a data privacy law and could look to reinstate net neutrality roles when they take control of the chamber next year.

i want to start with a high level here. butasn't quite a blue wave democrats taking control of the house is huge. look at that mean for some of the big tech policy issues? i am looking to privacy primarily. net neutrality has been a hot ticket item in the past. privacy is where republicans have signaled they are willing to make a deal. they have extended their lead in the senate. donald trump is a republican. he said he might be willing to work with democrats to regulate tech companies. to me, i heard privacy. i am watching how the parties are going to fight it out. then, we can turn to broadband

infrastructure, net neutrality and other issues. >> i want to take a look at what he said about social media companies. long heated press conference with the president. take a look at what he had to say. >> i like free speech. i am a big believer when you start regulating, a lot of bad things can happen. >> the president and some of his associates have come down hard on facebook and twitter in google for bias. the president has also singled out amazon. what is he saying about tech regulation? >> when it comes to tech, the area of social media is the one that will be most in focus. republicans and democrats will

come at this from different issues. issues pertaining to harassment, a lunch interference and misinformation. you will probably be able to find consensus on these. who knows what it is going to look like or how easy it will be to institute from a technical perspective. a lot of these companies have been grappling with these issues already. when anys to be seen of this will take affect. what the regulation will look like and what they will be required to do that they are not already trying to do right now. this is one area where we have democrats and republicans willing to work together. >> some of these tech companies are very active when it comes to lobbying. millions of dollars invested. google,e facebook and what kind of causes have been

pushing for? >> they are spending millions. that is something they have wrapped up in the last year. just a few years ago, they were doing less than a quarter of what they are doing now. i think one thing they are watching closely is antitrust scrutiny. it is important to say that we do not know of any antitrust case out there but it is something that scares them. they are willing to monitor it from afar. i have seen a lot of net neutrality and i expect to see a lot on the trade groups that i have worked with. i think that will be a big part of that discussion going forward. not least of all because they are looking at europe and california and seeing that the policy landscape is already set here. can they make inroads in

washington to get something more congenial? higherare taking a much -- harder line on tech companies. we don't know what president trump means when he talks about regulation. amazon is another company that he has honed in on. especially because jeff bezos owns the washington post. we now have amazon moving its headquarters potentially into northern virginia. that's proximity into washington dc. there is ashink much regulatory risk to amazon as there is two other names. president trump talked about changing postage rates. things that have not been accurate and there doesn't seem to be a ton of appetite within

the legislature to make changes. .mazon remains popular probably the worst case scenario would be some kind of breakup plan. i cannot imagine that would gain less traction in either house of congress. president trump and his campaign manager are tweeting about a spoke and twitter and bias all the time. how do you imagine those issues might play out? >> he said he loves free speech and he is worried about regulating it. that is a challenge he would face. washington, just because you talk about something doesn't mean you need to get it done. if he and/or his campaign manager decided it is useful to -- biasut i.s. online

online. one amazing thing he did yesterday was to keep low propensity voters who came out seemingly once for him to come out again yesterday. >> several tech step -- tech stocks rallied after the close. what is behind that? >> facebook is down one third. google, but all ones on the group issues. they have been under pressure. such acause there is major market bellwether, they will participate if not lead it. you are seeing more weakness in social media names. part of that is social media group.

not the same issues that are impacting facebook and twitter but that is out there too. >> thank you. we will continue to follow these issues. also amazon's big new move coming up. this is bloomberg. ♪

chang.ly amazon is nearing the end of the year-long quest to find a second headquarters. splitre now expected to the headquarters between two locations.

no official announcements have been made, the cities are gearing up for the impact. amazon's potential long island up potentialramps for real estate. intent onrings is filling office spaces once filled by government tenants. a real estateun tech company but you are based in seattle and you have seen the impact of amazon's headquarters in seattle. what is your reaction to these two cities on the east coast? not a single city big enough for amazon's ambitions. it realized how many people at decided itloy and could not put all of its eggs into baskets, it had to have three areas the real estate

market is going to change in seattle as a result and it will change in virginia and new york. we are talking about two established metropolitan areas. what does this mean for long island city and the surrounding areas? we will see more pressure on housing. the government has to agree to create more inventory. finally have more density than ever in seattle but seattle and was -- limited amazon's growth because it was so hard to house all of the people. you will see a building frenzy in new york and virginia and there is room to grow in both places. they went to the edge of large cities so there was some room for people to commute to work and find housing. amazon made some good choices here. if they are worried about being able to grow in these two cities

already. >> what would you say to the residents of these areas? the governments are excited. the people who live in the area may not be. blessing butxed still a blessing when a company comes to town that is going to create high-paying jobs. everyone should be excited about that. you just have to plan for the growth. you put your head in the sand, you are going to have a spike in housing prices and traffic congestion. to usesay we are going this money to create the infrastructure for a real middle-class, you could have a real better situation than we have had before. you have to plan for the growth. everyone should want the money. about a potential real estate slowdown across the

country. the question has been how long will this be? will this be a sustained slowdown? we certainly see a slowing real estate market in the fourth quarter. people are stepping back from making offers on homes. one of the crazy things about real estate, when you have a sale everyone runs out of the store. everyone is trying to figure out if prices are going to drop further and rates will go up more. they are trying to figure out how to pay for houses. that is going to be a real challenge for the overall economy next year. the question is whether real estate will drag the economy down or the rest of the economy will stay strong can bring real estate -- up. that goingchance into 2019, we will look back at this fourth quarter and say i

could've had a ba. -- b eight. be a longer downturn. if i had the answer, i would not be on this tv show. i would be buying or selling houses in earnest. what does it mean going for the tech economy like seattle and san francisco were the market has been booming? to those markets stay up go flat or do you see a pronounced dip? >> those are the markets that are most volatile. some of it is influence by the stock market. there has been a correction there. people in san francisco and seattle are using their stock to pay for a house. you cannot do it just with your salary. the fact that those markets are starting to cool is probably

good news for tech employers. we have worried we would have to open an office in virginia or man montana or who knows where to be able to pay the rent. so our employees could have a good life and start a family. fact that some of these coastal cities are cooling in the real estate prices is good news for all of the businesses who are based in those cities. it is a long needed correction. >> i have to ask you about proposition c. they are instituting a new business tax. at the revenue would go toward fighting homelessness. you have people like salesforce ceo who are all for it. who areike jack dorsey against it. his argument was they need better more structured legislation and this would tax square unfairly.

what is your take? lawsthink you get these when the government cannot work with city leaders to do something more reasonable. ballot box ande they see an initiative that will do something about homelessness. it is better than nothing. it shows the difference that marc benioff can make. there was another tax like that in seattle that did not pass because no one had the charisma and the force. and the fact freak that he got behind this made such a difference. me, we will have to have this conversation over and over again. it is in other cities. tech wealth has come to the rest of the country and we don't know what to do with it. we will have to take some of those gains and invested in social services for other people. and we do that, we will feel

better about living in san francisco and making money in seattle and building rate businesses that affect the rest of the world. >> he came on our show to promote prop c. do you think it is a dingbat law? i feel weird taking a position on it. to pay the tax. our company is too small. says a lame thing for us to everybody else should pay it. that whene noticed is voters get frustrated that the government isn't doing anything, they do a tax that is not the ideal tax. it could have been better structured, funneled to different programs. there are other ways we could have done this. but, when the government can't figure anything out, the voters will take measures into their own hands. hehe makes the argument that

knows a lot of billionaires who andt give away enough money it has certainly frustrated him privately. perhaps some of his frustration there was taken out in the promotion of prop c. do you think he has a good argument? that billionaires could be doing a lot more? what if amazon had been more involved and given back a bit more? i don't know a lot of billionaires. to judge how much they are giving? i have not looked at their balance sheets. i don't think philanthropy is the solution.

the argument that jeff bezos should give more or less money, to me seems beside the point. we should get together as a society and decide how we are going to pay for this stuff and everybody will have to pay a little bit. more moneywho have will have to pay more. that seems fair to me. the argument that i didn't see you at last week's charity is a drop in the bucket. is not the way democracies solve problems. i don't think they should do it with initiatives. theink we should take people who are elected to do the job and make them do their job. when they come up with something annoying and hurts us a little bit, get behind it. you shoot down an ok bill, what you get next is a crazy one. thank you so much.

coming up, we will talk about marc benioff a little bit more. elon musk's company. how the two companies could be working together. this is bloomberg. ♪

i'm emily chang. this is bloomberg technology. before san francisco prop c past, the number one backer marc benioff have moved on to the next city issue. after elon musk tweeted out, benioff called on him to bring the technology to san francisco. tweeting elon musk, can you help us in san francisco. we need rapid transportation from downtown.

can you do it? elon musk responded saying sure we can do it. the l.a. tunnel is a test. in hopes of reducing traffic. conversation?is >> not that real. is justnstration tunnel a few miles long. these things require massive investment and permitting. elon musk has made big investments by twitter before. we saw a solar project get agreed to in a similar exchange. we can't totally discounted. i would see this as a sign of two moguls feeling confident. benioff because he just had a big win with pop c. of tesla.because

know more about what the boring company is working on. we are talking about a pod vehicle that can only see 16 people. impact would a transportation system like this actually have? probably not huge because it would be pretty small. is thatn musk has said he is envisioning massive systems. these pods would be part of a much larger system that would include hyperloop trains and lots of pods and a slave to put your cars on. i don't think he has any delusions about scale. the idea would be if this became a real thing, then there would be bigger pot and popped more of

them. imagineuch time do you he is spending on the boring company versus tesla and spacex? if you were a tesla investor you would hope it is low. guy who is known for multitasking. he is running tesla and spacex and has been successful as a part-time ceo. who knows. i'm sure tesla investors if this were to become a lot more real might start to get anxious. thank you, max. for bloomberg technology from seattle. thank you for joining us.

i'm emily chang. this is bloomberg. ♪

welcome to daybreak asia. this thursday, asia-pacific markets are set for strong gains. roughch shrugged off a