♪ anchor: this is bloomberg technology. betweenp, a new report zuckerberg and sandberg. ago bitcoin a year 50 $20,000 mark. now, it is down to 4900. has its best days come and gone? resinsis relying on it

-- presence. we will discuss their earnings later this hour. but first, we saw the biggest socks in tech resume monday. investors continuing to fret that the one-time market darling faces a darker outlook for growth. sarah in neww to york for the full picture. let's start with apple. ,s apple leading these declines given the new reports about production cuts? reporter: they actually -- they absolutely are leading. today, for the report saying that apple has cut production over the past couple of weeks. they may have hinted that from some of the suppliers last week, but it is by no means investing with an apple. you look at tech hardware companies, you look at software

companies, all seem very heavy decline today. throughout the trading day, we saw every single one of the numbers -- the members were in the red. starting with apple and spiraling from their. there, anchor: wal. anchor: walk us through some of the other concerns. slowing: you have the demand of smartphones, the trade war of doing -- trade war between china and the u.s. mike pence came out and said that the u.s. is not rushing through this. they want concessions from china and they are not going to stop until they get them, so of course as we have been hearing, ,echnology is an area

especially some might conductors that are heavily related. at the same time, we are dealing with rising interest rates that people might not want to be positions in higher -- positioned in higher growth. a lot of hedge funds were getting out of these and a lot of people talked about the fact that if they lead up, they will lead down. let's talk about the volatility and the potential trade war. sayeep hearing investors bit by bit, but where are the buyers? anchor: that is what is so interesting. everyone kept saying we will probably see a little bit of a relief rally. itgot it for a day and then seems like declines cap coming -- kept coming. will see assume if you

a santa claus rally, tech socks would lead. it seems very clear that a lot of people are concerned about this. many people keep talking about the fact that although we have seen declines, it looks like we will go down a bit further before people want to step in. anchor: apple is one of the companies that usually has a huge holiday quarter, but we don't know if they are production -- if they are cutting production on the latest three iphones. now to another major story we have been following, continuing fallout over a spokesman is crisis. a report continues to emerge about a facebook divided after allegations over handling of their crisis including russian

meddling. have someoness, we who has been following this. we're going to talk about how zuckerberg declared it is wartime. some of the executives have left. when there are real whorls -- real wars going on, what you think? -- what you think -- what do you think? religious drumbeat of questions about whether facebook has made the right decisions and ultimately, facebook is mark zuckerberg. is, there have been questions about leadership and decision-making about whether he

is the right person to lead. it is a question i cannot imagine being asked a year ago. i can understand why he is asserting more control, but you can see it is causing friction and it does not in the questions about whether he is doing the right thing to -- the right thing. anchor: there are reports that he is leading these raucous -- wegs and employees have reported that more out this morale ise row -- low. >> there are these two threads that is happening inside facebook. many employees feel they have

been unfairly tarnished by the media coverage and tension from regulators around the world and washington. thes possible that some of tension has gotten carried away, and to crises are real deflect hard choices over many years, those are having recriminations now and it does feel inescapable. on the other hand, you have this issue over the stock price 35% from a peak this year. a lot of that is because of business questions, in addition to the regulatory questions and again, if you are a facebook employee and you get paid in equity, i can understand why your morale would be low. anchor: in the last year, the whatsapp, oculus,

instagram have all left. there is concern about the tension between them, now we are starting to see more context behind some of these departures and connecting this to a more aggressive zuckerberg. how concerning is that? >> i think it is concerning because of the tensions between facebook and instagram. the same is true over with the whatsapp founders and mark zuckerberg and sheryl sandberg. the facebook leadership team wants to make money much more quickly and they need to because you have seen revenue growth slow. inevitable that you get this tension between founders who want to preserve the identity of the products that they founded and built and on the other hand, mark

zuckerberg and sheryl sandberg realize more and more they need to make money sooner than they thought from these younger assets that facebook has acquired. anchor: you have taken a closer look at where facebook is spending money to fight some of these concerns and the company is continuing to fall back on look at all the money we are investing in ai and new staff to combat security issues. how much is facebook actually andsting in this mission how much of it -- facebook continues to grow bigger? >> mark zuckerberg says they are spending so much on facebook and profitabilitythe of the company will be seriously hurt. it is true that a spokes says it is spending billions of dollars to protect itself from election interference, hate speech and things like that, but also

spending money on everything else. the cost of being facebook is going up. you saw the employee base grow 45% in the last year. it is spending more money on computer data centers, web video are, -- vr. the the cost is going up as revenue growth is going down. continuing to cover this story, thank you for weighing in . we will talk about facebook later in the show with one investor who has been fighting for a power structure change of northstar asset management coming up. year it has been almost a since bitcoin was at $20,000,

now it is under $5,000. what is under this plunge, we will discuss next. this is bloomberg. ♪

anchor: cryptocurrencies was in their slump sunday the -- by following -- falling below $5,000 for the first time since october 2017. volatility has returned,

shedding billions of cash last week. is a venturemore capital firm investing in technology companies. the overalled about fund earlier. how much does this have to do in general and how much has to do with bitcoin. a tough call.s i think about the relationship between cryptocurrencies and traditional capital. i have never settled on a complete answer, except i will say that if people thought crypto or bitcoin or token were going to be some uncorrelated asset class that people will jump to india event of a selloff, obviously that has not proven the case. panic, but iten a

has not been the guy diversifier -- been the diversifier people wanted. how would you weigh in on the question i just asked joe? 75% and --is down over the past year and of 4% going tolast -- is not hold. it will become more correlated as it becomes more institutionalized. indicatorst other can we look at it volatility does not? -- does not hold up? reporter: there might be something to the idea that what we saw in 2017 and the first half of 2018 with tech in general, it was a function of financial conditions, optimism and with all this stuff and

whether it is go -- whether it is oneto, what you see might the story is fantastic, shinesdenly a new light and suddenly it looks ugly. think about the narratives that we saw. this new way of organizing and now we are realizing that a lot of the supply is not easy to circumvent the old rules, so there are similarities, but suddenly, a new meredith -- new narrative emerging. we are also seeing the fastest decline for bitcoin ever. how can you continue back this whole industry given the

negativity around it question mark -- around the? are in a bearwe market. we are coming off one of the biggest bull markets in all of history, so bear markets do bear things. positivead a ton of news and markets continue to trickle down strictly saw the opposite last year, but the opportunity is still dynamic. anchor: so, what are you watching? >> one thing i would be careful about is conflating all of the tokens and ico's for bitcoin itself. within the in the city, it is very different. bitcoin is attacking this idea of programmable money. i think over time, people will do things they can do otherwise. anchor: obviously, there are very specific stories.

it is hard not to look at the asset class as a whole. goodthink spencer makes a point that the bitcoin argument is really different than a lot of the tokens. there is a difference between money versus people holding some sort of token to use. said, there does not seem to be any discrimination on the part of traders between good products and bad projects, money versus token, verse acolyte. everything falls and rises on the same day. if you look at a day like today, everything is down. it is true that within the broader crypto landscape, there are a lot of different ideas and we will see which ones drive and which ones don't and probably

the programmable money is the strongest, but it is hard to see in the market any sort of traders or investors investing the same view. spencer, where are you putting your money? and where do you think there is overhype? >> i go back to bitcoin. at -- they want to find out what is the next bitcoin. again, money is a network effect. bitcoin has the largest established network effect. it is excelling at the programmable values. we are going to continue to follow this.

thank you both for weighing in. coming in, apple introduced a slew of new iphones a couple of months ago. now, the company is slashing orders for all of them. will the holidays be enough to get them back on track? this is bloomberg. ♪

anchor: apple is dragging down the larger market once again after announcing it cut orders on its latest iphones. they slashed production orders due to lower than expected demand. they speculate the higher prices may g -- maybe driving customers to older models. defended taking google, of dollars from

calling it search engine the best. drops, butear these now we hear that all three are being cut. how alarming is this? >> it is very alarming. this happened a year ago when the iphone x came out. the results turned out to be pretty good when they reported it in april. the difference now is that when apple recently reported and said they were going to stop reporting unit sales and that has made investors a lot more concerned. orders forimes cuts specific reasons. this time, there seems to be a lot more suppliers and with the idea they are not reporting sales, investors are more nervous. these reports are all

investors will be able to rely on. he says he thinks investors are missing the story and they are successfully making a transition to be more of a services company. the info is kind of important that apple has gone out of its way to make a wide range of iphones available. you can buy new ones under $500. in the relatively cheap u.s. i think they are making a conscious effort to say you can one -- buy ancy fancy one for $1000 or 14 $500. apple has never really done that. they want to get to a point where they have the most devices try tore and then they

sell services. the key question is whether these services will be better than all the other ones. like will the video one be better than netflix? next year will be a huge test for that. anchor: all eyes will be on that revenue. i want to talk to you about the interview that tim cook did. he has been criticizing companies like google and facebook for the way that they handle user data and profit off of it. he is defending the fact that is on the iphone as the default search engine. he says it is the best. he says it is not a perfect thing, but it goes a long way to helping. point to he has made a criticize others. what you think of his argument as to why they continue to make

google the default search engine? aboutgoes to a point google search. datave been talking about privacy and things like that. they are a good service and we information for that. facebook is an example. google search is a lot different. you are out and about and you type it in and you get a good result. cannot sell an iphone -- tim cook cannot sell a goodiphone without a search engine. if you're going to put google on your phone, you may as well take billions of dollars from them. anchor: we will continue to cover this one.

coming up next, will those who hold the power at facebook ever change? next.l discuss this is bloomberg.

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gtsdz this see bloog this is bloomberg technology. i'm emily chang. facebook in crisis. the critics are out in full force following recent reports of high level mismanagement at the social network. the board still has c.e.o. mark zuckerberg and cheryl sandbergs' backs. in a public statement last week the board said to suggest they knew about the russian interference or tried to prevent investigations into what happened is grossly unfair. in the last 18 months facebook with the full support of its board has invested heavily in more people and better technology to prevent misuse of its services including during election. we should note zuckerberg and

sanders are members of the same board standing behind them. my next guest has long been sounding an alarm for a change n the structure at facebook. for years, julie, you've been clamoring for a change in the share structure given the power that zuckerberg himself holds. what do you think now? julie: well, i think they should have changed the share structure in 2015 when we first filed the shareholder resolution. you know, this is the problem with corporate governance when you have an insider board and really mark zuckerberg has the power to fire any one of his board members at any time whafment that does is, as you probably understand, it takes away sort of the sense of autonomy that other board members have. if they're at all concerned about maintaining their relationship with the company. i think it is problematic.

emily: do you sense an opportunity now to reagitate for this and do you have any plans to do so? julie: we've got the same shareholder resolution filed. just so folks know, and probably everyone listening to this does but mark zuckerberg has primarily class b shares which give him 10 times the voting power. and so what that means is he controls 51% of the vote but he only owns 30% of the stock. so that's a problem for other shareholders. for example, in the shareholder resolution we filed last year, asking for there to be one vote per share so to only have one class structure, class a, what ended up happening was we only got overall 21% of the vote. but if you looked at all of the other shareholders who voted in favor of our resolution that were not insiders, we actually received 81% of the class a share vote. which is really high.

emily: you've got other investors out there calling for an actual board shakeup, calling for mark zuckerberg for example to step down as chair. take a listen to this. >> it needs to be somebody really genuinely independent, somebody that has gravitas and can speak with authority and with the confidence of the rest of the members of the board. i think it needs to be somebody that has a broad diversity of experience. clearly tech experience but also there could be some real merit in having somebody from the traditional media, the newspaper industry, that has a deep understanding of the role of media in society. somebody with some time on their hands because i think by all accounts this is going to be a long few years ahead of the company. emily: julie, zuckerberg responded saying this is not part of the plan as of now. but would you like to see him step aside as chair? julie: you know, actually the person i would like to see step aside is peter kiel and i would

like to see the vote structure changed. i actually think it might not be great for him to completely step aside although i would certainly vote in favor of that , you know, we would support him on that resolution. the issue for me is that when you take a founder like zuckerberg and you have them step aside it means something very scary for all of the hareholders right? what he needs is better corporate governance. let go of the insider shares and go back to a one vote per share structure. even when the times through, tried to throw cheryl sandberg under the bus, these guys are responding to issues that occurred in the course of doing business over several years. what's scary about it is that they didn't anticipate that

these kinds of things could happen. that's the scary thing. where you look at somebody like peter who in fact was very instrumental in supplying, you know, cambridge analytica through the other company he is the c.e.o. of with ways to sort of access this information, and to get sort of infiltrate the facebook system and, you know, he is the one that could have really said, hey. guys, we want to be careful about our governance here. i think it points --. matt: hang on. i want to dig a little deeper nah your thought here on peter tiel who is very controversial on the facebook board for a number of reasons not the least of which is his support for president trump. mark zuckerberg has come out and said he supports thiel remaining on the barred because he adds to a diverse set of views they would like to see represented on the board. i believe you are talking about his association where he is the co-founder not the c.e.o.

talk with me a little bit more about why you want to see peter thiel of all of these board members, many of whom have presided on the board over these many years, to step down. julie: i think because when he came out with his outrageous support, i mean, hugely public support really of donald trump, you know, he holds -- ends upholding himself high as a representative of facebook. now, of course, it wasn't facebook that came out with that but basically what's happened over the last several years is facebook by virtue of the way it started to change the way it did business and rather than taking regular old advertising for people, you know, people who were looking for pairs of shoes or computer equipment or something like that, they started really taking money for political ads. and, you know, that is very similar to the way that peter thiel sort of came out publicly

about his support of a political candidate. i really don't think, and this is of course all since citizens united but i really don't think it's appropriate. in fact, it is illegal for facebook to have taken ads from a foreign power to support or in any way have a say on any sort of elections in the united states of america. it's not -- it's not legal to do that. so i don't know if they need like a corporate governance guy on there who can really, or a government affairs person, who really understands how securities laws work, if they need somebody to think about, ok. are they making so much money from running political ads that they need to keep, you know, running political ads for people and running commentary that's from paid sources around political matters? i don't really think that's how facebook imagined itself. all ure that's not how

the, what are now middle aged people who are still looking on facebook and still using it, i really don't think that's why they go on facebook. you know, it is one thing to report the news. it's another thing to create the gnaws. emily: julie, i want to zero in on something you said about cheryl sandberg. there's ban lot of reporting about how cheryl sandberg in particular who is in charge of communications and policy as the c.o.o. has handled this situation. the former head of security wrote an op-ed in "the washington post" where he said, yep. cheryl sandberg yelled at me. i had no confidence we'd found out everything the russians were up to and was quite possible that things would get worse before we built teams and invented the technology necessary to stop it. cheryl as reported in this past week's "new york times" investigation felt blindsided by this. he later apologized.

you feel she is getting thrown under the bus. julie: i think it's been going on a lot longer and is related to technology at the company and the way algorithms are used and for other purposes. that's why i, you know, mark zuckerberg, you know, obviously doesn't get sort of the impact that his company has on society. he doesn't have the people skills. peter thiel completely understands what was going on. palantier was hired by the federal government for several agencies to uncover different kinds of problems in all of their record keeping and he completely understands how to -- what can be used. how you can use this technology for evil essentially. he was the one on the board who should have said, hey, in

2013-2014 we really need to take a look at this. emily: what about regulation? we're hearing increasingly from lawmakers that facebook faces a risk of additional regulation. what would you like to see the government do as opposed to the company? julie: you know, that's a tricky thing, because this is a whole new, a brave new world. this is a whole new area. i don't even know that the government is equipped to understand what kind of regulations need to be put in place. right? so again, it's the people with the technological expertise that would actually be best equipped to be able to protect consumers. and the people at large. so i'm not -- i think that something needs to happen but i don't -- in this case i don't really blame the government for not having appropriate are regulation because all of this stuff is new and it's evolving every day. so the question is, you know, who at these companies is going to put the brakes on?

and when are they going to do it? if they're going to be doing what these guys are dagunduro, which is shoveling -- are doing, which is shoveling sand or claiming out of a hole what are they going to think they'll be able to pull off? now they're just dealing with one problem after another after another when some foresight, some thinking about what it would mean to be in the political sphere, some thinking about what it would mean to take ads from candidates, would have been a really smart place to start. emily: julie goodridge northstar asset management c.e.o. not mincing words. julie, thank you so much for stopping by. julie: thank you. emily: coming up airbnb is one of the most anticipated ipos in twintse or possibly 2020. could a crackdown on illegal renting across the country stand in the way of its public debut? we'll discuss. this is bloomberg. ♪

emily: 2019 is expected to be a big year for yopse from uber to possibly airbnb. in a public memo friday the home sharing startup called it the strongest quarter to date since 2008 and the company has become one of the most valuable start-ups in the united states with the current valuation of $31 billion and listings in 191 countries. here to discuss airbnb's global head of policy and public affairs. chris, i want to start by talking about fires because i tn's been disruptive to your business and you are doing things to help. we can see the air quality here still terrible in the bay area but nothing compared to what these families are going through. >> obviously northern and southern california, just devastating. obviously we've seen tremendous

heroism from first responders and every day people. we've just been honored bay our host, we've had over 2500 hosts open up their homes to over 1800 people displaced by the fires. that is not really airbnb. that's our hosts. we are grateful for that. i think they are appealing to the higher angels that are in all of us and it is awesome to see amidst all of this catastrophe so thank you for asking. obviously we see the air here and we feel it here in san francisco but nothing like what people are going through on the ground. emily: our hearts go out to all of them. i do want to talk about growth. you're going into the holiday season. typically a very big season for airbnb. you say you have record bookings over thanksgiving weekend. how long can you sustain that kind of growth? >> well, as we released on friday, significantly over a billion dollars in revenue. in q 3 our single biggest quarter ever we are blessed

ultimately by this significant and robust growth but ultimately it is tracking to the community model that exists in airbnb. hosts do well. guests do well if communities are benefiting. that does create a network effect globally. you can see that under the growth numbers. 91% growth in beijing. over 70% growth in places like mexico city or even birmingham and england. just to pick out some from round the world. people are looking for this type of travel, more are look tog do people to people travel tomorrow than today. this is not new. abraham lifpblg and gandhi did home sharing but in particular this is what consumers are looking for, 75 plus% of all consumers going forward this is how they like to travel. emily: give me an estimate on beijing. you had a head of china that resigned over a me too issue. i know one of the founders went

last year. but you mentioned 91% growth. you're starting from a fairly low bar because the business was small to begin with. how do you expect that to expand? >> looking at the global numbers what we are seeing in china really does reflect what we're seeing globally. we are blessed with this growth driven by the network effect. they exist locally. what we're seeing in china is interesting. the same dynamic and trends we saw earlier which is when airbnb was first launched the majority of the users were millennials. if you look at the china market right now about 85% of our consumers are millennials. keeping in mind there are going to be 400 million millennials n china right? people going from china abroad. what is happening is they come back and they begin to travel domestically and airbnb begins to grow as a result of that.

so the type of growth in beijing is actually replicated, similar numbers depending where you are looking throughout the country. china is a place you have to get up every day and work incredibly hard. we have a president of the business from china based on the ground there, an incredible team made up of chinese folks in beijing and other offices around the country. feel good about where we are but know we have to keep working at it. emily: you quietly removed some listings in the jewish west bank settlement. this is something the pro philippine groups have been pushing for for a long time but why now? >> i'm not the first one to say this obviously. an incredibly complex part of the world. incredibly difficult issue. this first came up early in 2016 when we were really first confronted with questions about 150 to 200 listings that exist in the west bank occupied territory. since then we've spent a lot of time trying to understand the issues talking about experts and put in place a framework to help us reach a decision here

in -- and that helped us understand every situation is case by case. talking with the experts, our stakeholders, taking a look at the degree of human suffering and what is contributing and looking at the safety issues and ultimately whether our product, our business, our listings are contributing to the core issues and using that frame work ultimately made the decision we knead to remove those listings. we say that knowing it is controversial. we're not necessarily going to make anyone happy here. i've traveled to israel. it is an incredible part of the world with incredible people. this is a really hard choice we struggled with. we are not a government or the experts on this. but because we are in homes we often get put into these situations and ultimately believe, at a time a lot of people are talking, are tech companies and platforms going to take responsibility that we wanted to act as opposed to necessarily react and used that frame work to help drive that decision. emily: you've been looking for a c.e.o. still haven't hired one. why is it taking so long? >> are you interested?

we've had, not surprisingly, given the historic nature of the company some of the issues we have talked about that there is incredible interest in this particular role. we have incredible folks we've had conversations with. i'll be sure to let you know wh we've reached a decision but we want to be ipo ready by 2019. we haven't announced if and when we would take the next step beyond that. but ultimately we are going to be looking for someone who really does appreciate that community model. that we are looking to be a 21st century company. we get growth in the following ways. do we deliver for our host, and deliver for those guests. those guests deliver to the community. what is interesting about the airbnb model and why we've gotten so much interest and why this is going to be an interesting role is ultimately if we drive a social value proposition that actually drives our growth. that comes back to the early question.

how do we continue this growth? by delivering the community model. emily: right. you ended forced arbitration not just for sexual harassment but for discrimination which is very progressive. we haven't seen other companies do that yet. how do you plan to hand this will between hosts and guests? chris: a great question. all right? our model is a little different than some of the other sharing companies. we have a really aggressive policy called we accept which broadly deals with discrimination types of issues those have to agree to standards before you can come on the platform. i think it is another example of how we're trying to build that community model. i come out of as you know democratic politics originally in the u.s. i did a lot of labor politics. i was working in democratic politics. for me it's just personally incredibly interesting and i actually think really exciting to see that companies

understand the value of their -- i es and communities think it's great. he companies understand they only succeed if they are able to attract and recruit great candidates. it is a cool thing to see that develop and hopefully a good indicator of where we're going as a society. emily: you mentioned your time at the white house which is a perfect segue for me. you were known as the master of disaster. how would you master facebook's disaster right now? what are they doing wrong? chris: i will be very careful here because i obviously don't work at facebook and want to be really respectful. without talking about facebook specifically but as a general approach i do think ultimately people have to be comfortable with what their mission is and their principles and their values. and really do their best to

proactively execute against those. we talked earlier about being proactive or reactive. not talking specifically facebook but in the context of how people should think about these things. at the end of the day you have northstar, your mission, your principles. ose only really are true and viable if you're actually executing against them. that has to be when you have the hard decisions. it is really easy to say all those things when it's an easy decision. it is when you have the hard decisions you get tested. i remember working in politics. politicians were always tested. not on the easy stuff. but in the calderon of a crisis because that's where your character really gets exposed and you have to make some decisions. i know some of the folks at facebook at the top and throughout the company are good people and ultimately they will be doing those. they have tried to do those and at some level have done roductive stuff. i don't know exactly what is

going on there and i am not in a position --. emily: chris lehane, always great to have you on the show. thank you very much. chris: thank you. have a great thanksgiving with your family. emily: thank you. coming up china's second largest smartphone maker fighting a stock slump with shares down about 20% since the july listing. things could be looking up. it's out with pretty impressive earnings results. we'll break down the numbers next. this is bloomberg. ♪

emily: third quarter revenue. the chinese smartphone maker relied on its presence in emerging noorkts offset sputtering demand for mobile devices. shipments rose 21% while the global smartphone market shrank 6%. if you own a fit bit, life insurers may want your business. john hancock recently expanded an optimal program for healthy habits. participants can gain points and they can be used for

shopping or saving money on premiums. insurers see health conscious customers as good risks. that's it for this edition of bloomberg technology. we'll see you back here tomorrow. ♪ xxx

>> good morning. australian markets have just opened for trade. >> good evening. from bloomberg's global headquarters in new york. >> i'm in hong kong. elcome to daybreak asia. our top story this tuesday big tech week sending u.s. equities tumbling the nasdaq falling to its lowest since april on fears new regulations are on the way. apple suppliers are under pressure again under reports it