>> i'm emily chang in san francisco. this is bloomberg technology. in the next hour apples fall from the highest branch the smartphone maker loses its stronghold over the title of world's most valuable company after microsoft overtakes it in monday trade. sand bagging sandberg the facebook c.e.o. now in the spotlight after multiple crises at the media giant. mark zuckerberg says he has her back. we'll discuss if that's enough. counting the cyber monday cash.

the annual shopping extravaganza is expected to be the biggest yet. we will crunch the numbers. emily: apple's title of world's most valuable publicly traded company is no more. during monday trading microsoft's market cap overtook apple for the first time in eight years. just last month the iphone maker's value topped $1.1 trillion but since then the share price has been shaved in the broader tech sell-off amid concerns about weak demand for the flagship iphone. let's bring in our bloomberg tech from l.a. not amazon but microsoft surpassing apple's market cap. what do you make of it? >> pretty unbelievable. maybe a year or two ago if someone said do you think microsoft will pass apple in market cap in two years nobody would really believe that especially in the current technology climate where a lot of people think that apple has endless runway of growth. but if you look at what's happened over the past two months here there have been so many concerns and so many issues with apple in terms of

iphone sales, concerns about the prices of the high end iphones, 10 r, 10 s, 10 s max. concerns about long-term initiatives. if the company missed on previous big things like tv and voice where it is not all too surprising. the question is will it turn around and when? emily: i have a chart here in my tv library showing the rise of apple as well as the fall in apple and the rise in microsoft. you know, aside from what apple might be doing badly what is microsoft doing well? >> you know, the company has really been turned around since taking over from steve baltimorer a few years ago. the company has transitioned from a software company to a software and services company where they are trying to get their applications on as many devices as possible. you can buy an ipad now and fully looled it with microsoft apps. buy an android phone now and fully load it with microsoft apps whereas if you bought an

android device or microsoft surface even you cannot fill it out with apple services and apple apps. that is the big difference between the two companies. microsoft works on every platform. google for its part works on every platform. whereas apple is very much glued to its own hardware and microsoft is clearly winning for itself on that approach whereas apple for the last few years has been winning on its approach too. i think there is room for both. that's why microsoft has been so successful lately in addition to their infrastructure around services and servers. emily: alphabet and amazon not far behind them. do we really see these four companies trading at a group closer to the top and will it not be clear who has the title and you know going forward will we see these shift over and over again? mark: i think we'll see this happening for the next several months or even a couple years where it is the big four companies all vying for the top spot. i mean, some days when we're talking about this it could be amazon and other days apple and

other days like today could be microsoft. emily: hang on a sec. apple also facing an antitrust case in the supreme court which could have wide ranging implications for the entire tech industry. the class action suit accuses apple of maintaining a monopoly over app distribution on iphones and jacking up prices. u.s. supreme court justices monday appeared inclined to allow the lawsuit to continue. i'll bring in bloomberg's supreme court reporter in d.c. along with mark gurman. certainly this wasn't good gnaws for the stock either, greg. what did the supreme court justices signal about their osition on the apple case? greg: the general sense was they would let the lawsuit against apple go forward. only one real vote on apple's side, chief justice roberts and at least seven justices might be inclined to vote to let the lawsuit go forward. if so that is bad news for apple obviously. it adds a source of pressure on

them to reduce the 30% commissions they charge to app store developers. emily: mark, walk us through the arguments here. apple takes a huge cut from the app store. we know that. 30%. it's been in contention before. but what makes this particular lawsuit significant? mark: so right now apple is really pivoting toward wanting investors to focus on its services revenue. right? and basically the services revenue the majority of it comes from that 30% cut. if apple takes any hit on the 30% because of this lawsuit their services revenue is going to take a very significant impact and that is why this lawsuit has put so much at stake for apple. emily: so, greg, you were saying, talk to us a little more about what is behind this particular case. greg: yes, so this is a consumer lawsuit, suing, saying we're paying too much for apps at the app store. a focus of the lawsuit are the

commissions that mark was talking about there. and what apple argues and what the issue is at the supreme court is whether consumers can sue over commissions that were actually charged to the developers and not directly to the consumers. there is a supreme court precedent from 1977 that says only direct purchasers of something can sue claiming that they were over charged. emily: so, mark, how could this impact the broader industry? obviously there are other stakeholders here. there is the android operating stem which is so much bigger than apple. how could a ruling hear ripple beyond this particular case? >> there are two reasons why. the most obvious reason is because of the precedent it would set at this point to create issues for other app store makers like google with google play. do they change the way they work with developers and will it spark lawsuits on the other

end as well. what is it going to mean for amazon and microsoft and other companies that operate these stores? what is it going to mean for any tech company that operates some sort of on line market place where royalties go to the company for hosting. any music service functions very similarly whafment does it mean for apple's other properties like the i-book store which had its own e! price fixing situation. it is different. the other thing here does this mean apple is going to start allowing other app stores on its platform such as, you know, allowing third party developers to create an app store competitor? is that one solution, one way of settling this lawsuit? there are a few ways this could have broader impact than just apple's app store. emily: could this trig ear massive change in how we -- trigger a massive change in how we buy apps? >> it could. the core of the lawsuit is focused on apple's control over the app store. apple essentially plakes it such that -- makes it such that

consumers can't buy apps anywhere else and the consumers say that is the source of the problem. apple has a monopoly and is abusing the monopoly to raise prices of the apps. so at the ultimate end of the day what we could be seeing is a world in which you can buy apps from more than one place not just the apple app store. emily: any precedents, greg, we should be looking at in terms of how the core has ruled on other cases involving big tech companies? greg: it's kind of hard to generalize in terms of tech companies. the core -- this is a generally pro business court. usually businesses do win here. often times the anti-trust cases, as happened in the american express case last term divide the court along ideological lines. ultimately it is possible that the court could divide say 5-4 with the five conservatives siding with apple but that wasn't the sense i was getting in the courtroom. it seemed like you may have a

bigger consensus willing to let this suit at least go forward. emily: all right. greg stohr who covers the supreme court for us in d.c. thanks so much as well as mark gurman in l.a. always, thank you both. coming up, facebook c.e.o. sheryl sandberg's leadership being questioned but is she being thrown under the bus? we'll discuss, next. if you like bloomberg news check us out on the radio and on the bloomberg app. this is bloomberg. ♪ rg. ♪

emily: bitcoin dipped well below before recovering some of the loss and it has now declined some 80% since last december's record high of almost $20,000. investors have been concerned about increased regulations and problems with exchanges. multiple crises at facebook this year have put immense pressure on chief operating officer sheryl sandberg. bloomberg spoke to eight employees from her side of the operation and some blame her for facebook's woes. they say at times sandberg prioritized her own brand over facebook's and say she didn't address problems quickly enough or treated them only as

perception issues. here to discuss the senior analyst at pivotal research and bloomberg's senior tech brad stone. there is an extensive piece out on sandberg in particular and we've seen a lot of scrutiny of mark zetterberg that he simply didn't believe -- mark zucker berg just didn't seem to believe facebook could do bad and always believed it could do good but do you think this will cause long-term damage? >> i think it is unclear. this is not the last chapter in sheryl sandberg's leadership at facebook. she got a lot of credit for building a business with $50 billion in sales, for helping mark zuckerberg take facebook to 2 billion users. she is also the head of the legal and policy teams at facebook and on friday took responsibility for some of the recent revelations, abuse and some of the relationships with these outside p.r. firms. she has to answer for some of facebook's recent mistakes, for

a lot of the bad publicity. that's what leaders do. they take responsibility. that's what she has done. we'll see how quickly and carefully facebook can respond to some of these things. yes, if they can't right the ship i do think her legacy will be hurt. emily: some of the more specific details in the report that she not only prioritized her own brand over facebook but focused on messaging around the challenges rather than getting to the root of the challenges as she was focused on growth. for example sarah reports on sandberg going to d.c. in 2017 to try to smooth things over around some of these issues and the trip actually back fired because she didn't have enough concrete points to respond to some of the queries of lawmakers. what is your take? >> i think there is a lot that is not surprising in the report though i have to say the nuances were really useful and anyone who hasn't read the article absolutely should. the bigger point around sandberg is that it does occur

to me i wonder if she is actually after reading it if she has been so constrained in her role because she doesn't have absolute control over facebook, if she has any control it is over her own self. maybe that's what you focus on if you're never going to have complete autonomy over the whole company. you know, i throw out two things. i think that while there is elevated criticism around sandberg right now, appropriately there was certainly by some, myself perhaps included, elevated concern about sandberg last year. i think when -- certainly when facebook had a policy to actively mislead the british parliament back in february that's a problem. when their advertising products are actively misleading customers, that's a problem. when they're consistently having metrics issues, again, also under sandberg's responsibility. so i think there are a lot of things she's appropriately going to be criticized for but it is not clear where the

responsibility ends with her vs. zuckerberg. and frankly the bigger problem is maybe more foundational inside of the whole company. from the ground up. emily: on that note here is what zuckerberg told cnn about his partnership with sandberg and intention to continue to work with her for many, many years. take a listen. >> sheryl as really important part this of company and is leading a lot of efforts to address a lot of the biggest issues that we've had. she has been an important partner for me for 10 years. you know, i'm really proud of the work we've done together and i hope that we work together for decades more to come. emily: what do you make of that? i think brian's point is an interesting one that maybe if you can't control a lot at the company the one thing you can control is yourself. >> it was a sign of support mark was making for sheryl. clearly, he doesn't want to throw her under the bus. that relationship will

continue. i think brian's point is right that sheryl might be constrained and that mark and sheryl probably need to work a little bit on their partnership, you know, to make sure they're not addressing the messaging aspects of these crises but getting to the underlying problem. emily: would you like to see facebook bring in a third person? there is reporting that mark zuckerberg had been looking for a third person to handle some of these policy issues but ultimately decided not to do so. brian: i think that that person would report through sheryl sandberg if i understood it correctly. but i would throw this out. the big issue is a board level issue. let's go back to the days of yahoo. for all of the criticism that meyer rightfully deserved, after about two years, this was no longer meyer's fault. it was the board's fault. to be clear, the problems at facebook have been pretty obvious. if they were obvious to the

president of the united states of america in 2016 who told zuckerberg you got problems they've had over two years at least of problems that have been pretty systemic. the board has to have been aware for quite a while and so then the question is what do the independent directors do? all they can do -- they're the ones who are best positioned to get to the root of the problem to figure out what is best for the company. the fact is that if the company is in fact entirely dependent on mark zuckerberg that's not a company but a sole proprietorship. they have bigger problems. emily: many of the board members predate sandberg and her joining the board as well. brian is alluding to, brad, another story about uk parliament seizing internal facebook documents as part of their investigation into the came bridge analytica scandal which is kind of huge that we're seeing another government take such extreme action. walk us through what happened here.

brad: it's complicated. you have to go back four years when a small app company called six four three sued facebook saying that it was favoring some app developers over another, saying it was being inauthentic in how it communicated privacy controls and what information it collected. so that lawsuit was here in california. the company was able to obtain through discovery some internal facebook communications. fast forward to last week when the british parliament, very upset over mark zuckerberg's fail yaur to testify in the u.k. -- failure to testify in the u.k., the testimony brian alluded to earlier being disingenuous went and got the founder of this app company six four three and got him to turn over the internal correspondences they had obtained thraw the court process. what do they say? it could be internal communication between the executives including zuckerberg about how facebook obtains information, from who, and whether they're being disingenuous in terms of privacy controls and how they manage that information. it could be very damaging to

facebook. emily: so how concerned are you about this concern from other governments? brian: well, it's not that i'm concerned. i think more investors should be concerned. i mean, the stock is -- should not be up on this. i realize there is a market level issue going on. but i think that a better way to characterize it is this can't be good. it can only be bad. if you want to bet on facebook versus governments of the world unless you think facebook is going to take its cap x budget and bet on nuclear weapons i bet on governments of the world. the power will be immense if and when they choose to exercise it. and the british government is. emily: there you go. a quote for your next story. always good to have you here. thank you both. still ahead, airbnb just hired a long-time amazon executive to fill the c.f.o. seat. does it mean the home sharing company is one step closer to its highly anticipated ipo? we'll have all the details

next. and the bloomberg tech live streaming on twitter. check tictoc on twitter. this is bloomberg. ♪

emily: airbnb has hired a long-time amazon executive to lead operations for a long anticipated ohio. the financial officer job has been vacant most of this year. stevenson has been vice president and c.f.o. of the amazon unit responsible for all global website sales. joining us for more bloomberg tech, who is dave stephenson? >> we don't know a ton other than he has been at amazon for 17 years. he's been very successful at amazon. he is a perfect choice for airbnb. the c.e.o. and founder of airbnb has been hiring several

amazon executives recently and just brought in greg greeley to run his homes business. it makes a lot of sense because i think he is trying to build an empire or structure similar to amazon in that you have these separate businesses. they would have travel, trips, experiences, and homes. emily: so talk to us about how he is different than the last c.f.o. who was effectively pushed out. from my understanding wanted more power or more control than he was prepared to give. >> he is a big personality, a veteran of wall street, a big name. he brought a lot of luster and tention to airbnb and people attribute airbnb's success to him but some people think he got a little too powerful and wanted even more power. he would sometimes butt heads and was definitely pushing for an ipo sooner. one that would happen this year. he says the company will be ready to inning june but could go as late as late 2020.

emily: did the business suffer at all not having someone in that post? >> you know, it is hard to tell. airbnb of course says it is growing faster than ever. it said it had its best quarter in kwe with over a billion in -- in q3 with over a billion in revenue but a report from morgan stanley came out recently saying growth is slowing for the company in key markets in the u.s. and in europe. emily: so where then is the growth going to come from? >> we're seeing a lot of growth in asia and china specifically. a lot of millennials are excited about airbnb especially for outbound travel. we're seeing growth coming in these other pockets of the business. experiences is a big one. we're also seeing the luxury market growing for airbnb doing a lot with luxury homes. emily: is the experience market going well? we've reported on challenges there. they haven't been able to really crack the nut. olivia: of course airbnb says it is going great and you just

have to give it more time. we understand they did burn a lot of cash to build that business. there are people who really do look to airbnb for the whole package, you know, when they go on a trip they go to airbnb for accommodations and also to find out what restaurant to visit and where to spend the day. what tourist experiences they should have. emily: what are you going to be looking for next in terms of timing for this ipo? >> i think with airbnb we are very interested in growth and understand have they sort of tapped out this millennial market? are they over saturated? they also have a huge valuation, $31 billion is the second highest valued company in sill convalley at the moment. can they live up to that valuation as they march toward ipo? you know, earlier we were questioning did they have the right executive laneup? do they have the right people in charge? it seems they do now. emily: all right. olivia zaleski who covers airbnb, thanks so much for stopping by. well, this black friday cyber monday stretch is expected to be the biggest yet but

otherwise how is it different from last year? we'll discuss. this is bloomberg. ♪ [ phone rings ] what?!

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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. emily: this is bloomberg technology. i am emily chang in san francisco. cyber monday is upon us and this year's shopping extravaganza is predicted to be the biggest in u.s. history. the biggest online shopping day is expected to generate sales up more than 18% since last year and that comes even as shoppers increasingly spread their shopping over the holiday weekend. according to research by sales force retailers launch their best deals well in advance of black friday this year with onlane purchases on thanksgiving day itself totaling $3.7 billion. black friday's online sales hit $6.22 billion continuing through the weekend with a hefty percentage of orders

coming in via mobile devices. here to discuss we have the sales force vice president of industry and strategy insights in new york and in seattle the president of the online retail giant zulily. i'll start with you. as far as you've been able to tell, how has this black friday/cyber monday been different from last year? >> thank you, emily. excited to be here and appreciate the opportunity to talk to you and your viewers on cyber monday. we had a record-breaking weekend. in terms of zulily i think i need to give a little context. we make sure we have great product, scour our buyers look all over the world for product to offer to customers at unbelievable prices. those deals we literally have cyber monday every day of the year but for us this past weekend we truly hit record

numbers, driven mostly from mobile. emily: that is an interesting point. there are deals on the internet all the time so what, rob, actually makes this weekend different from any other weekend online? rob: there is a lot of demand and we're seeing that as jeff indicated through mobile. we're seeing through the whole holiday week about 70% on average traffic via mobile and then about, it spiked on thanksgiving, 54% of orders via mobile. so consumers are reaching their retailers and favorite brands thraw mobile and in turn retailers are enticing them earlier and earlier with deals, with discounts, with promotions. emily: the deals, rob, are so voluminous and so steep that i just wonder are retailers actually making money over this weekend? rob: that is the intent. we're seeing a strong growth especially, seeing strong double digit growth throughout

the holiday weekend. and a lot of that is being as i mentioned driven by mobile. and also retailers are finding that social has become a very, very important attraction vehicle to get to the consumers particularly on that mobile device. emily: jeff, with all these deals is this a money making weekend for you? jeff: yes it definitely is. i want to build on what rob was saying from a social perspective. the question is how do we get in front of customers in a scaleable way? how do you build one-on-one relationships? we found social a very powerful vehicle to do this. from our lens when we start thinking about how retail is going to evolve over the next several years we see social being a powerful element but also video. from our perspective, for instance, on thanksgiving, all of the push notifications we sent to customers we literally had 300% year over year increase in the clicks and engagement from a social mobile type experience. emily: jeff, i have to get more

specifics from you. walk me through the economics of how all of these deals over so many days actually make sense for a company like zulily and for the companies that are selling their products on your site. john: i appreciate it -- jeff: i appreciate it. i think every retailer has to find their right business model to serve their customers. what we are proud of at zulily is to offer unbeatable prices, truly the best out there. as soon as the customer adds a second item to the cart then all of a sudden we are highly confident all of our internal udies say it is incredibly profitable. unlike other retailers that are more focused on two-day shipping we on the other hand have set up an infrastructure network to allow us to serve customers a little bit slower but with a better value and more unique product. that trade-off, every customer may not be willing to make but our customers certainly do. it's why we're able to do this profitabley and sustainabley.

emily: rob, what are the hot products and retailers standing out this year? rob: sure weefment scoured the internet via our social platform and we are seeing a lot of chatter about consumer electronics as you would expect this time of the year. but connected devices are raising up to the top. and we're also seeing vintage products as well. we're seeing through separate research that consumers are really attracted to brands that have purpose, that are authentic. and vintage or nostalgic products are rarely raising up real high in terms of attracting consumers and gaining loyalty. we're also seeing again in the consumer electronic space gaming consoles are really big this year particularly with millennials. emily: on that note i'm wondering if some of the brands you're talking about, some of the more authentic, mission driven brands, a lot of the brands don't have deals on this weekend. it almost is as if there is like a sort of pushback to, you

know, this everything is on sale all the time. you know, is that an increasing trend you're seeing? rob: that is part of it. again, particularly with the younger generation they are look forgue purpose driven retailers but we are seeing the promotions. what we're seeing is they're less spiked. i was just having an executive dinner with several retailers a couple weeks ago talking about the holiday. what they talked about is it is not just black friday or cyber monday anymore but a smoothing of demand through the entire week. we're seeing a steady drum beat of promotions. in fact, over black friday we saw 20% increase in e-mails that were sent and 30%, nearly 30% increase of push notifications. what that is telling us is retailers are recognizing it is not about just hammering consume ornse those two days but creating a relationship with them through the entire holiday and beyond. emily: now, jeff, zulily is a

company that went public, got bought, has been in the midst of a turn-around. how do you turn around an online retailer in the age of amazon, in the age when some of the more niche, mission driven brands are winning sort of mind share? jeff: i think each of us have our own promises to customers but for us it is really about this third way to shop. there once was brick and mortar. then there was transactional e-commerce which is where amazon does really, really well. they have a great business model. for us what we're trying to do is offer newer, personalized deals for each customer in a fun and engaging way. once they add the second item to the cart they should be confident they're getting the best deal. for zulily we're seeing tremendous success. year-to-date growth has been incredibly strong. today we have one million more active customers shopping in our store than a year ago. so for us it is literally

working backwards from what that customer wants and it may be different than other customers who are going to transactional re type of purchase. emily: i know you got a busy day ahead still as well as rob, thank you both so much for joining us. coming up an interview with hp's c.e.o. and what he has to say about the continued consolidation in enterprise software that we've seen this year. that is next. plus, elon musk reveals just how close tesla has come to collapse. how the electric car maker is continuing to survive in the midst of this year's controversy. this is bloomberg.

emily: now to h.p.e.'s big bet on the so-called intelligent et. the c.e.o.'s commitment to spend $4 billion over the next four years to make more data more useful to companies. that means developing more tech in security, automation, a.i., machine learning. i caught up with her at hpe's discover conference and asked about the investment and when they expect a return on it. >> we believe the edge, intelligence edge is the next frontier and a massive opportunity for all of us. that's why i made the announcement that we will invest $4 billion over the next four years. we will see the return of that investment over the next two years. this is a business that is

really growing fast. we are moving double digits. now we move from the edge to the intelligent edge. we expand connectivity with sd-1. we added analytics, security, and now here at hpe discover we are announcing the aspect of the infrastructure and the platform which is a software defined platform so we can move from billions of things between people and places to trillions of things and that is the scale needed to empower the new intelligent edge. emily: one example is the biotech company jung lowe which is using -- jungalow. what does your speed make possible there that would otherwise not be? >> we are really proud to partner with one of the start-ups in the precision

medicine. this is part of a broader initiative. we call it tech impact 2030 which is a partnership with the world economic forum. in september we announced a partnership to improve agriculture, the quality of crops, and the quantity of crops. in fact, we have fantastic use case here with live crops. so we can show how we do that with them. with jungla we are focused on the position medicine and all about improving research on the disease and using our memory driven compute actually saw 250% improvement in performance on the large pool of data they use to really understand the mutation of that disease. emily: what due mean by too% improvement on the understanding of the data? >> think about it. if it used to take days to extract that now they can do it

within seconds. that is remarkable. obviously they want to make sure they focus on the right aspect of the research so eventually they can pass that research to people who can provide the cures. today is all about time to value and that would include time to cure over a long period of time. for us it is bringing the technology to do good because our purpose is to advance the way we live and work. it is perfectly aligned to what we are focused on. emily: we've seen a lot more consolidation in enterprise software this year but it seems like tech hardware players have been staying on the sidelines. acquisitive. te what is your appetite for m & a at hpe? anthony: if there is the right assets and right complementary -- the right talent we will. we like to think about the acquisitions because we want to stay true to the core of what we are designing and add the capabilities to our platform

because customers really like what we are doing versus trying to constantly do that type of approach. we are focused on accelerating it. emily: do you think we'll see more deals in general in tech hardware in 2019? anthony: hard to say. valuations are really high at this point. that is my point of view. obviously we think there will be more consideration over time but i think the landscape has been set. what customers are looking for are i.t. solutions in blocks where basically they can accelerate time to value through the data. so more and more that infrastructure has to become more optimized for the specific work loads for compute, storage, networking, memory, all come together to deliver a specific outcome. at's why we have this unique vision. we think cloud is not a destination but an experience

and we need to compose that cloud to the specific work loads. ultimately all aspects have to come together in a way to deliver the solutions with the speed and agility customers are looking for. emily: what due think a potentially newly public bell would mean for the broader tech landscape h.p.e. aside? anthony: i think it opens the opportunities, right? we live in a time where disruption is accelerating so speed matters. and then control points and intellectual property matters. so i think depending on what is happening in market we may see an acceleration of that. but again, valuation has to make sense. at this point i believe valuations are a little bit high. and that's why we see a little bit of correction going on in the market. at this point in time our focus is really an execution. on execution. i think this year we have done a really good job, really proud on our execution front. emily: you have embarked on a

pretty ambitious plan to reduce h.p.e.'s expenses. you pulled out of 74 countries. you cut manufacturing locations from 17 to 7. will we see more reductions globally? anthony: yeah. what you are referring to is called h.p.e. next our initiative to reorganize the company within, focus on our customers and partners. this year we made remarkable progress. if you recall the biggest change at the beginning of the year was going to market where we remove layers between myself have 11 ountries so we that allow me to get the pulse of what is going on in market and empower people close tower customers to execute our strategy. we also simplify the number of processes. we are embarked on an i.t. transformation to modernize not just the process of i.t. systems and have made great progress. remember this is a three-year journey that i laid out in 2017 so we have two more years to go.

and the core of this is simplify everything we do. to improve our culture of the company and then obviously reduce costs to make us more and more competitive. emily: the belief is companies will continue to buy service to data services as well as cloud services. amazon, microsoft are growing incredibly rapidly. so what does that mean for the server market? does it stagnate? does it plateau like the p.c. market? anthony: so we believe the world will be hybrid. we stated that many years ago. and today it is a reality. the fact of the matter is that customers will have application and data both on premises and off premises. and i believe both markets, both on premises and off premises, will continue to grow. emily: my conversation there antonio .'s c.e.o. neri. a startling admission from elon

musk saying tesla was teetering on the brink of collapse because of model 3 delays. we'll discuss. this is bloomberg. ♪

emily: tesla's cash problem this past year has been no secret but even in the midst of model three production problems and sec investigation few expected the company to crash and burn completely. in an interview on hbo sunday c.e.o. elon musk revealed just how close the company was to collapse. he said tesla was within single digit weeks of failure. take a listen. >> i mean, tesla really faced a threat of death. essentially the company is bleeding money like crazy fan we didn't solve the problems in a very short period of time we

would die. emily: joining us now bloomberg's business week's, max chapman. elon musk talked about how difficult, how insanely difficult it's been to run this company. what do you make of him putting it quite that way? >> it is interesting. back in april there was an ril fool's gag where elock took a picture of himself looking as if he were homeless and said tesla is bankrupt. and we're learning that wasn't as much of a joke as i think everybody thought it was at the time. this was kind of out in the open. if you were reading his tweets and looking at the frantic nature of the messages out of tesla as well as reporting from bloomberg and others you knew things were bad. that they were really pulling out everything, every stop they could to get cars out the door and really struggling with it. emily: so here is a question, though.

they avoided collapse for now but is that going to be the sort of state of being for tesla for the foreseeable future where they're always, you know, a few weeks away from some potential disaster? >> i think assuming they are able to keep the production numbers where they are now assuming that the company, this is real, that they're really ble to produce, the company is in a dramatically better position than it was say this summer. i think if you look at what's happened with the stock market, the stock is up significantly. or sort of back where it was i think investors are starting to recognize that. as you said it is not clear that production is totally sustainable and we still don't know exactly what the margins are. other car makers are coming. you know, there was news today that g.m. is laying people off trying to refocus things like

electric vehicles, lots of electric cars out of germany. the competition is going to increase and while i think people see that people are starting to think of this summer as a bottom for tesla in terms of elon musk's mental state and motivation and everything but also for the marx, it is -- the future success is not totally assured. emily: let's talk about the other car makers. as you mentioned g.m. laying off 14,000 salaried staff and factory workers, also closing several factory locations. part of that is because they are investing more in electric cars, more in their self-driving unit, you know. what did that mean for tesla? >> it means that there's competition. these big car makers like g.m., you know, they have not -- though actually g.m. has done a lot better than others in terms of hybrids and electric and things like that but they have not been able to kind of tap

consumer demand in the way tesla has. they are really good at doing large scale production so i think the fare would be if you were a tesla investor the fear would be that once the big car companies really start to figure it out they'll be able to undercut tesla in price. they have these amazing network to marketing and car dealerships and enormous ad budgets. tesla doesn't have any of those things. they'll sort of take over the electric car market. the counter argument would be tesla has spent years and years establishing itself as the name in electric cars and maybe consumers now recognize that and if they're going to buy an electric car they want to buy an electric car from elon musk rather than from g.m. emily: this is interesting because most talked about in general how hard it is to be a car maker tesla or not. it seems like no car maker is comfortable. are there any car makers that are resting on their laurels right now because they've

invested in new technology and the future looks bright? if the future is going to be challenging for tesla as it is for g.m. is anybody doing well? >> this is the argument that the big believers in tesla, people who are still, you know, people excited about the funding secure tweet their basic point is the entire auto industry is facing disruption of car ownership, where self-driving cars come along, people aren't going to buy electric cars and tesla as a company ahead of the game has a chance. you know, i don't think it's clear how much of that thesis is going to bear out. a lot of times people have gotten excited about driverless cars and companies have not yet hit the really important milestone so i don't think it's clear how quickly that is going to happen. it may be a case where people continue buying gas powered s.u.v.'s for a long time which would not be great for tesla. emily: the road ahead bumpy but

still the road ahead, bloomberg's business week's max chafkin thanks for stopping by. that does it for this edition of bloomberg technology. follow our breaking gnaws network tictoc on twitter. that's all for today. this is bloomberg. ♪ ♪ there's no place like home ♪

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