modest gains after reports of iphone production in cut. let's go to new york where julie is standing by. every day is different, how do

'apple and the iphone. that will have an impact on what analysts, traders, and everyone else expects moving forward. emily: and worries about facebook as well. julie verhage, thanks so much for bringing us up to date. mark zuckerberg is once again speaking out for his coo. here's what he had to say on cnn. >> sheryl sandberg is an important part of this company and is leading the efforts to

address the biggest issues we have. she has been an important partner for me for 10 years. i'm really proud of the work we have done together. i hope we work together for decades more to come. emily: to talk more about the continued issues with facebook, we have sarah frier. the interview on cnn, zuckerberg really did not go much further than what he has already said. what was your big takeaway? sarah: i think the big takeaway here is that sheryl, for the first time, is being hit a lee from this article. in the past few months, you and i have discussed where has she been in the public conversation, is she doing more behind the scenes work, where does sheryl fit into all of this. we have heard a lot of calls for mark zuckerberg to step down but it has not hit sheryl and i think the new york times report

specifically focused on her decisions that affected the outcome for the company. i think we see a lot more direct focus on her and zuckerberg needs to come out and say directly he supports her and would work with her for decades to come. who expects decades to come, but certainly he does. emily: as you said, a lot of the reporting has focused on sheryl sandberg's decision in particular. we had an argument made on the show earlier this week by an investor who had a counterintuitive take saying she believes sheryl sandberg is being thrown under the bus and what really needs to be looked at is the decisions of the board over the last several years getting up to this point. >> i only feel like she is being thrown under the bus because i think this stuff has been going on longer and has been a bigger problem that is related to technology at the company and the way algorithms are used in the way they are used for other purposes. that is why, mark zuckerberg

obviously doesn't get the impact that his company has on society. emily: sarah, there is a lot of blame to go around, but what about this board which is filled with experienced tech investors and ceos? sarah: the board is pretty defanged because zuckerberg holds all of the voting control in this company. not all of it but the majority. he is basically on fireball and is the chairman of the board. if you look and how facebook is organized and run over the last few years, zuckerberg is in charge of some of those problems without rhythms and the overall vision and sandberg has been more directly involved with legal operations, scaling the business, and also handling those relationships of governments around the world.

making sure facebook's message is consistent and proactive. those are some of the issues we see come up with how facebook has denied things coming up, deflecting blame, and those problems certainly sit with sheryl. i think there is a lot of blame to go around here, but i think there is a reason focus has turned and why zuckerberg had to answer directly about her leadership on the interview yesterday. emily: sheryl is responsible for building the business. will this be the straw that breaks the camel's back? will this get users to turn away from facebook because we have not seen dramatic decline in user engagement or dramatic decline in ad sales. >> the issue here is that if we look at their valuation

multiples, that is the lowest they have ever been. compare that to the expectations. that tells you investors don't really have a lot of faith in the long-term story at the moment. there's a lot of visibility issue with facebook. one of the things they can do if a board cannot be reshuffled is they could look at google and how they came up with the alphabet structure to make sure they get the flexibility in terms of diversifying revenues, because right now the sum of the parts is greater than the individual. emily: facebook has a lot of valuable parts, would they be better separate them together? sarah: i think the opposite is happening. he used to be facebook had operated a lot of its apps separately. now, they are bringing them together. they are creating a family of apps being run or directly by

chris cox who is the chief product officer. they are doing a lot more sharing of resources among those different apps and trying to make sure the strategy and the collection is consistent across them. i think that would make it harder to break them up or split them up. the move this year is to do the opposite. emily: is this for users, going to change behavior? i wonder at this scale, does the pattern change or does this blow over? jitendra: the user growth story

will not change. we are seeing continued movement toward instagram, whatsapp engagement, and exec that remain strong. it's difficult to see the trajectory changing. facebook growth user numbers would come down, but if you look at what advertisers and users are doing, that story is not doing. you have to think about more longer-term. where the growth story here hinges on taking advantage of whatsapp and messenger monetization which is not easy. they would need partnerships, acquisitions in the future to even diversify beyond advertising. i feel like the current set up holds back growth from the other properties they can take advantage of. they are valuable properties. emily: sarah, i have to ask you about this memo obtained by techcrunch in which the former head of communications for facebook on his way out took responsibility for hiring the controversial pr firm.

what do you think about that? sarah: he is already leaving the company so it does not hurt for him to say that it is his fault. one part of the memo that i found interesting was that sandberg has said she did not -- or that zuckerberg told us sandberg did not know about the definer's relationship, this firm that has been doing opposition research. in this memo, she said to employees that it may have been mentioned. that provides cover for her that if in the future if they say you didn't know about that and she did, there's a little admission that she did. emily: there's also a

controversial hire who has a lot to do. thank you both for joining us today. coming up, it has been almost a year since bitcoin's valuation and now it is piercing the $4000 mark. what is behind the plunge? we will discuss, next. this is bloomberg. ♪

emily: that cousin who paddled bitcoin to you over thanksgiving will have explaining to do. we see it though to 19,511 dollars just before the christmas season. this year, the story is quite different. bitcoin pushed as low as $4061 and is not seem like there will be a turnaround soon.

here to discuss is a chief commercial officer. sunny, not to say you would be that uncle, but what would you say to the thanksgiving dinner table this year? >> i would say bitcoin has become mainstream adoption around the world, has great brand recognition, and we should not look at the price so much but it is what is happening behind the scenes. things like philadelphia be back launching their product or in can hear you square launching -- launching their product or square launching the product, until those come out, i do not think there is much market catalyst moving either way. emily: what jamie dimon has said about bitcoin has gotten a lot of play. take a listen. >> it will blow up and china just kick them out. don't ask me to short it. it could be 20,000 before this happens, but it will eventually

blow up. it is a fraud. emily: he later said he regretted saying that, but i want the right now if it looks like he is being vindicated. sonny: i disagree with him on the front comment. price can go up and down and anything up that fast will come down. the fraud thing i completly disagree. i imagine if he sees fidelity, his bank will also release a product. if you see companies doing ipos, a lot of bitcoin miners, jpmorgan will try to get coinbase to underwrite. it might be q1 or q2 because big companies take a long time to launch their products. emily: do you think we should be starting to look at cryptocurrencies as different currencies? do you think some of the other currencies will break away from bitcoin or are they all basically the same? sonny: i think there is a big

night and day difference between bitcoin and everything else. bitcoin is an 800 pound gorilla and the one that has the mass network affect. the other ones, i do not know what will happen to them. the ico's are being ruled by the fcc. i think the ico market is dead and maybe a couple will survive but none of them will survive unless bitcoin survives first. emily: what is uncle sonny say next thinks giving -- say next thanksgiving. sonny: i think it should be an exciting time. around the world, you are seeing adoption by bitcoin so bitpay will process over $1 billion this year. people are using bitcoin as a way of payment transaction, and

year? sonny: i would say you would see price may be around 15,000. that depends on when these comments are product and they moves slow because nothing moves fast in vindex. emily: all right, we will see you next year. coming up, ever wonder where your smart watch or smartphone comes from? there is a mega-city in china churning them out. we will take a visit, next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪

emily: it has been dubbed china's silicon valley. if you own a smart foreign or computer, odds are, parts of it came from there.

in 30 years they grew into a , mega-city of over 12 million people. welcome to shenzhen. the manifestation of china's economic miracle. angus bennett reports. >> this is the chinese mega-city of shenzhen, a monument to china's economic miracle. in 1980, it was a town with around 60,000 residents. now it is china's technological hub with a population of over 12 million. entrepreneurs, highflying tech graduates, and international companies flock here to join the tech revolution. welcome to shenzhen.

shenzhen sits north of hong kong in river delta, one of the most densely urbanized regions in the world. the area has an estimated 120 million people population. in 1980, shenzhen dedicated a free economic zone and experimented on capitalism in communist china. the effects were explosive. the population skyrocketed in over 30 years. the city has a massive migrant workforce. over 4 million residents stay during the week and return home on the weekend. it is tech hardware that put the city on the map. if silicon valley drains it up, this is where it is made. this is the market. arguably the largest economic market in the world.

here's a sneaky peek. the neon lit core doors stretch across multiple buildings and many floors. the stores sell everything from the latest gadgets to the tiniest screws and many items have ripoffs. if you wanted to, you could buy all you need to build your own smartphone for $100,000. because shenzhen draws and workers, it's routine is just as varied as its population. if you're looking for the full banquet experience, shang palace has you covered. their lunch as a feast for the eyes and mouth. a showcase of authentic cantonese cuisine. or try something a little more casual such as chinese hot pot.

a simmering pot of soup stock is kept on your table and you put your ingredients in. one of the most famous perry rations is flavored with sichuan pepper. watch out, it packs a spicy punch. when you get the bill, you'll notice qr codes. it is used by locals to pay for everything. scan the code in the money is transferred. sounds great, but there is a hitch. you can't use them unless you have a chinese bank account. technology to make life easier only works if you are a local. finally, enjoy some sport shenzhen style. this is a competition put on by local companies. student teams from around the world compete using a variety of self-made robots to shoot each other and destroy the opposition's base.

competition aims to keep shenzhen at the forefront of the tech revolution. emily: that was angus bennett on china's tech city. the holiday shopping season is drawing to a start. as shoppers move away from the black friday lines and go online, will retailers like walmart and target be able to hold their own against amazon? this is bloomberg. ♪

emily: this is "bloomberg technology," i'm emily chang in san francisco. the holiday shopping season is upon us. more and more people are taking their holiday shopping online. with e-commerce giants like amazon in the mix, the stakes are higher than ever for retailers like target and walmart. brands may face greater competition from amazon. here to discuss is the boomerang commerce ceo. let's talk about the threat to third-party retailers that are also amazon's bread and butter.

>> it started on retail where amazon was starting to show their muscle on retail, but now, the battlefront is going to shift to brands. if you do a search on amazon for amazon's own brands, there are more than 10,000 unique products. amazon is essentially going after traditional consumer brands, public companies like black & decker. they are going after all of them in a big way. emily: it's not just batteries and baby wipes anymore. its microwaves. what products do you think we will see the most competition from? >> understand the amazon playbook. amazon is not a traditional

merchant. they are not making decisions on understanding the mechanics of the industry. they are looking at consumer purchase patterns of behavior of consumers who shop on amazon. what are they using? how much are they buying? what description do i need to put on it? what title? all of this creates decisions amazon is able to make through its automation engine. products go through the manufacturer. can i call the manufacturer that is producing goods for black & decker and directly work with them? amazon has started a program where manufacturers can directly work with amazon to cut the middle brand and sell items under a different brand name, which is amazon's brand name.

products like paper towels, diapers, microwaves, things like that, and eventually getting into more fashion brands and things like that which might be a little harder for amazon to penetrate. emily: there's no question that amazon has an advantage. how do you see the competition with target, walmart, and other retailers playing out? who wins and who loses? >> at this point, amazon is already starting to dominate in terms of pricing and selection, even much more than a year ago. currently with the holiday guides, we saw amazon -- 93% of items that overlapped, amazon is cheaper than target. for walmart, it was about 85%. the battlefront has become

fierce. retailers, it was armageddon this year for retailers. the ones that remain, the battlefront has just become compete. emily: where does walmart have an edge? where does target have an edge? >> they have to strategically think about where to put their stores. if you just go to battle with amazon on their battlefront with price and selection, you're going to lose. but if there is a convenience or discounts from coming into the store, things like that. emily: what about more niche

retailers and specific brands? we talk about how we have seen many of them not survive the rise of amazon but i also wonder if some are stronger than ever because they can offer something amazon does not. >> there are very big brand names that can ride on the brand name and the cachet of that. that may be a reason for consumers to go into the store and shop. but whether you are a consumer brand or a commodity retailer, you have to really win the online battle and try to understand, how do you use automation and artificial intelligence. amazon is pitting a robot against a human being, and in most cases, if not all, a robot is going to win because what it can bring is exponentially

higher than what a human can do. emily: i do all my shopping online. we will keep all of your thoughts in mind. thank you. coming up, foxconn is adding to the gloom around global economics, and how this news isn't just contained to apple. plus the alphabet chair says he is not confident about the company's plan for a search -- censored search engine. this is bloomberg. ♪

emily: the gloom of around the global electronics industry is getting gloomier, this time with foxconn.

they are set to cut $6.9 billion from expenses next year setting a difficult year ahead in an internal memo. the iphone will also need to reduce expenses by almost $900 million and they plan to eliminate about 10% of non-technical staff. it follows a bad week for apple after suppliers cut their revenue estimates because of weak iphone demand. we discussed. >> 50% of foxconn's revenue does come from apple. they are the number one supplier. they are very important to foxconn. but in fact, six of the $20 billion in cuts is in the division that assembles iphones. it's a lot more than other divisions. what that tells us is this is not an iphone only problem.

it is broader. the catalog of clients includes hp, sony, nintendo, cisco, dell, a long list of international names. they are all impacted. they all feed into the wider issue we are seeing in the electronics industry and foxconn gets hit by all of it. emily: what is the wider issue, that people are not buying hardware anymore, or is the market even growing as much as it had been? >> it's all of those things. we had macro economic headwinds. a lot of people got caught up in trade tensions, u.s.-china tensions. it is actually deeper. we know apple itself is trying harder and harder to get more users. they said they are not even going to tell you how much they ship anymore, just focus on revenue. the smart phone market overall has reached its peak in terms of growth numbers. sure, more and more people will

continue to buy iphones, but not at the same level. we are looking at other areas of hardware, iot products. the apple watch. a lot of the devices that have been made have been sold. they serve up netflix videos, spotify music. we never see the hardware, but it is there. in the internet era, if any of those folks show slowdown, we could see the impact wider and wider. foxconn is a company that has its finger in all of these companies. it does something for almost everybody. emily: you spent many years in taipei covering the supply chain.

every year we get feedback of how suppliers are faring. there is one outlet that says early indicators are not good indicators and it is still a good quarter for apple. would you say this quarter is different? >> it feels different. we won't know until the end of the quarter if it really is different. looking at things like inventory, back in august, the supply chain was at the highest level since the financial crisis a decade ago. we are not seeing sales that strong. we are seeing sales slow down. they are not as strong as they used to be. something's got to give. it feels like it's worse because there are so many warning signs across the board, not just apple, but other companies in

the technology industry, and especially hardware, it feels like it could be worse. emily: tim culpan in taipei. last week when we talked about iphone production cuts you said early indicators were not good indicators for what the quarter ultimately shows, but now we have even more bad news of production cuts across apple, iphones, and foxconn. does that make you more concerned? >> yes, but not to the point where we think there is anything wrong with the quarter. i think it is an art to try to read these data points. typically, when you hear these data points, there is a tendency to think we have landed

somewhere that is not right with apple for the quarter. i am of the camp that nothing has changed in the business for the last three weeks when they gave guidance. there is a process here for data points, just to put a finer point on it. we hear these things mid december, then we start to realize there is a problem. when you asked the question to tim, don't we see these drips and drabs every year, the answer is we do. it really is the magnitude and the timing that is the most important. simply put, i don't think we are at a point right now where there is any sort of risk to apple's quarter. emily: i want to turn to an another subject, a personal experiment you ran on yourself

to try to take technology out of your life. you wrote a piece saying future humans would use less technology, not more. tell me the results of your discovery. >> this is an important topic. one of the managing partners at luke ventures has done a lot of research and gone through phases over the last month where we have tried for slimmed-down versions of the phone. what we found is that all of us, most of us struggle with some form of tech addiction. just like some people struggle with alcohol and they can manage it, there are people for whom it's more extreme. the simple take away is this. we have become content consuming machines. the way these phones are geared

-- it's not a hardware problem -- the way facebook and youtube gear their recommendations, it can become a trap of mindless activity. what we are really trying to do is find ways to minimize it. today, google came out with some new tools similar to the tools apple has to use software to manage your tech addiction. that's like putting a lock on someone's alcohol cabinet that might have a drinking problem. that simply won't work. there is an opportunity here to create new ways to delete facebook, delete instagram, delete youtube. i challenge your viewers, if you do that, you will feel more alive and more human. emily: i don't doubt that, but here is my question. what about the expectations of society, the expectations of

your employers? don't all those things have to change if our behavior is also going to change? >> we think everyone should have a phone. we are not going back. we have multiple devices. we are huge believers in tech. we think they can coexist. but kids, for example, just to be quote normal," you probably need to be on instagram to communicate with your friends, or be on snapchat. but the issue we have isn't with tech. it's when it becomes more consuming. you know when you are slipping into that. you quickly spend this teen minutes in mindless activity. -- 15 minutes in mindless activity. that is what we are trying to zero in on. emily: always great to have you on the show. have a great thanksgiving.

you are superhuman as well. still ahead, a response to google's handling of sexual misconduct claims. what he has to say. this is bloomberg. ♪

emily: acclaimed computer scientist and former stanford professor john hennessy was named chair of alphabets before a very tough year. alphabet ceo larry page has censored google china and more. we asked him for his reaction to google activism.

>> you expect students, certainly, to be engaged in this kind of activity. it's less common among employees. i think google encourages people to speak out and to really participate in helping shape a great work environment. >> what can you do in this kind of situation, other than just listen to them? >> listen. that's the first thing. that's one of the things i learned at stanford along the way. just listen. sometimes, where there is smoke, there is fire. if you see it early enough, you keep it a small fire rather than letting it get out of control. >> there were recent news reports of alleged coverups and payoffs. sundar wrote a note to the company saying these were hard reports to read. what did you make of those reports and is alphabet a different company than it was three years ago?

>> i can't comment on the individual details of the report, but i can tell you there is a very different policy in place that is viewed by the board, and the board gets periodic reports on actions and taken under that policy. we have concluded, as sundar said in his letter, there have been a number of cases prosecuted under that, and people have left the company, including high-level management. >> how did you feel reading that? those were some of the decisions around, for example, android creator andy ruben is someone you were involved with at the time. >> at the time, it was a very different situation. not everybody was aware of things. i cannot comment on the exact he tales of what happened. -- details of what happened. but i think we realized that the policy needed strengthening, and that is the goal, to get a stronger, more aggressive policy.

my position has always been that these things are powerful. if you create a workplace that is hostile to women or others, you are going to have a weaker workplace. >> what do you say to them? >> we have to do better as a company. >> china. what is your view on the opportunity and the risk that you might be compromising some of the company values? >> anybody who does business in china compromises some of their core values. every single company in china because the laws are quite different. the question that comes to my mind and that i struggle with is are we better off giving chinese citizens a decent search engine, a capable search engine, even if it is restricted and censored in some cases, than a search

engine that is not very good. and that improves the quality of their lives. that's the struggle. >> you can do more good by being there even compromised. >> i don't know the answer to that. >> you are there seven or eight years ago. >> i think it's a legitimate question in asking how can you do it and still live within the context of the regulations. >> what does it tell you about the political climate these days that even when the search engine was in a prototype form, the news got out and people were wringing their hands. >> it's as hard inside google as it is everywhere in our country right now. there's divisiveness in our country and that divisiveness has fed more concern about how these technologies get used. >> if google were to use cloud

tools in china, the company would have to store data in the country. is that something you should be doing? >> if you rewind, there was a lot going on, not just censorship, but surveillance, hacking attempts, things like that, and those all add together. it's a different time now. but if you store data in the country, it can be gotten at by the chinese. >> does that make you feel uncomfortable? >> i worry. at a minimum, you should make sure users understand that. >> we seem to be in a trade war with china. what are the applications for silicon valley? >> i think in general trade wars are not productive. they're not economically

productive. we should try to remind people of that and move forward. emily: that was alphabet chair and former president of stanford university john hennessy. you can catch the full episode tonight at 9:30 p.m. eastern, p.m. pacific. 6:30 that is it for this edition of "bloomberg technology." have a wonderful thanksgiving holiday to all those celebrating. we will see you back here on monday. we are live streaming on twitter. check us out. this is bloomberg. ♪

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