♪ emily: i am emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, checking out of marriott. shares plunged as the hotel chain closes one of the biggest security breaches in corporate history. personal data from hundreds of millions of guests left address. president trump and xi are set to meet for dinner at the g20. will they find a new deal? sandberg versus soros. why facebook's defense keeps changing. the details of more than half a

billion hotel guests may have been stolen in a year-long hack that could be the biggest breach of its kind in corporate history. marriott, the largest hotel chain in the world, had passport numbers, and more left vulnerable. the hack started just before the company bought starwood in 2016 and can impact all of the original starwood brands. marriott has reported the incident to law enforcement and the investigation begins. joining us to discuss is the cofounder and coo of shake security. in new york, we have patrick clark who has been following this story. what is the latest we know?

>> since 2014, there has been unauthorized access data from the starwood restoration system including all of the hotel brands you mentioned, up to 500 million records is what they have said, 327 million people have potentially had loyalty account numbers, passports, and reservation history. potentially, where you have stayed when you have been on the road if you have been a travelor loyal. emily: this seems to be bigger than target because hotels have so much information on us. how significant is this? >> it is almost unprecedented there are a few hacks bigger by volume but those were limited to a mill address and password some particular systems. that is a big deal but this depth of data from authentication to everything

about your use of starwood, is bigger than anything we have seen before. emily: saudi sorensen said we fell short of what our guests deserve and we can to support our guests and using lesson learned to be better moving forward. what went wrong? this has been going on for a long time and nobody knew about it. sumit: that's a great question. i think what is happening is the large enterprises are becoming severely targeted by incredibly sophisticated attackers. everything we have done is falling short. i don't think they are alone in having fallen prey to something like this. the severity, sophistication of attackers in encouraging the data they take out, i don't know how anybody can get ahead of this. the length of the attack, back to 2014, is surprising. emily: patrick, you spoke to a sub a security expert that said

they were hotel hacks at trump hotels, intercontinental, but the fact that they never discover this until now meant nobody was looking. patrick: it could mean that. they have not yet said why it took them so long. they are not said why they were able to discover it's now either. marriott has been integrating this starwood royalty -- loyalty system with the previous system. that process started in august. i asked marriott specifically did this, because you were combining the two bank systems. they said no -- two systems. they said no. was going on over these four years that has remained unnoticed, it is unclear. was this a vulnerability created four years ago and asked asked periodically -- accessed

periodically? i don't think marriott has told us everything we want to know about. emily: the first thing you told me when you set down today is that there is probably a lot more here. for lots of customers, whenever you hear data was exposed, it is not necessarily your data was stolen and used in this way. what do you think was actually done with the stolen data or could have been done? sumit: that is the biggest problem. we have never seen so much detailed information on individuals including passport numbers. think about how difficult it is to change your passport number. this will cause problems were consumers. credit cards will be opened, lines of credit will be opened. i think that is really what the future holds. emily: patrick, you made an interesting point in your story where when could card

information or credit cards are stolen, the companies are obligated to make the customers whole, that is if the same with a loyalty program -- what is it the same with a loyalty program if hackers come in and -- but is it the same with a loyalty program if hackers come in and abuse the system. patrick: i know we will find out i suppose if the breach does lead to people's loyalty points or loyalty accounts being accessed. there is tremendous amount of value in there. i wish i looked it up before i came on, but the monetary of all of the points earned and sitting in customer accounts is pretty vast. i don't know that we know how that will play out. first of all, it is possible this breach could lead to people having points stolen, but i don't know of first-hand accounts of that actually happening.

i don't know how marriott would handle it if it did happen. it adds another dimension to this. emily: you worked in the obama administration, what you imagine is going on the high the scenes right now in terms of this investigation, sumit? sumit: i think we have rbc calls for does there need to be more legislation, how do we need to do notification disclosures? i think the governments around the world are reeling. the gdp regulations in europe are swinging into action. had we incentivize companies to do a better job of this is a big question everybody is struggling with. emily: there's another issue that this hotel chain has data on very prominent people, where they traveled and when. that information could be exposed as well. sumit: as economic automation to sign up or something new and a customer's name and the national intelligence angle. if you know where a prominent

person has stayed, there is a lot of value to that. it reminds me a lot about the came original articl -- cambridge analytica scandal. full transaction history is a frightening thing to lose control over. . emily: with the big breaches, the question always comes to mind, this is just what we know about. if this is happening -- is this happening everywhere and we just don't know? sumit: it is the tip of the iceberg. it is happening elsewhere. over a dozen breaches in hotels over the last 12 months, we're seeing more than one breach a month on average. even those only represent a fraction of what is going on behind the scenes. technology and defensive measures are not keeping up with the value of the systems. emily: have the breaches you have discovered been disclosed? sumit: all of the ones that we have discovered have been disclosed before or after we

discovered them. companies are getting better about disclosing the things quickly. we need to do better than that to not be breached in the first place. emily: marriott has set up a number for customers to deal with questions. i'm sure they are getting a lot of calls. patrick and sumit, thank you. coming up, george soros has been taking on big tech. the criticism of facebook has people asking was it financially motivated. that is next. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪

♪ emily: now to the story we have been following all week. facebook versus george soros. sheryl sandberg had employees look into the billionaire's holdings of the company. the reasoning was that sandberg wanted to determine whether soros who had criticized the network at the economic forum, had a financial reason to do so. this is the latest revelation calling into question facebook's leadership and actions during this time of crisis. in washington, we have sarah miller, the deputy director of the open markets institution and the spokesperson for freedom of facebook and anti-facebook

coalition. in the studio we have sarah frier of course. what is the real problem here? is it that sheryl sandberg asked employees to do ch on the financial connections or financial interests of george soros as a pertains to facebook, or that facebook's explanation of what happened and who knew what when keeps shifting. sarah f.: it is the latter. anyone who runs the company wants to know the criticism that there company has an this is an instance where sandberg initially decide -- denied knowing anything about the research firm that ultimately linked soros to the freedom of facebook protesters. a few days later she changed her story and now we know -- we hear she was at the beginning of asking her employees to look into soros. it goes to show how they are not

keeping their stories straight and are still trying to deal with this as a perception problem instead of being transparent. emily: this is a statement we got from facebook. mr. soros is a prominent investor and that research was already underway. sheryl never directed research on freedom of facebook but i she said before, takes full responsibility for any activity that happened on her watch. sarah miller, you are the spokesperson for this, what is your reaction to the statement? sarah m.: what we think is that if you take the stop -- take this up at a higher level, facebook cannot be trusted. they have been trafficking on the position that you can trust us as we fix our problems, we

want to bring people together. i think with the latest revelation shows that facebook will do what it takes to protect their reputation and profits. if that includes light to the public or lying to members of congress to do that, so be it. facebook is like any other monopoly willing to go to great lengths to protect that status. emily: you're gone so far to say the ftc should break facebook up. i think it's important that we clarify the relationship between your organization and george soros. it is an offshoot of the open markets institute which i understand that soros did fund. sarah m.: we do receive a small amount of funding for a different type of funding for the open market institute that that is not related to freedom from facebook. sarah f.: how could it not be at all related if there is money coming in to the organization that is the upper low organization?

i have heard a lot of confusion from people about how this works. sarah m.: it is pretty simple. it is a separate initiative. the market institute believes facebook should be broken up, but the activities of our coalition are a separate initiative that is not explicitly supported by the other foundation. emily: i want to talk more about the latest revelation that sheryl sandberg ordered or ask employees to do research on george soros. antonio garcia martinez is a former facebook employee and thinks that the new york times has been on the story of the headline was misleading. they did not look into his finances and they looked into whether he shorted facebook's stock after signing the company -- slamming the company. sarah frier, isn't this something most companies would do?

look into the financial interests of people making negative statements about them? sarah f.: yes. i think facebook has been especially concerned about what their motivations of critics might be because they have so many high-profile critics in the last couple of years. i heard a lot of concern about why is this former employee speaking out. this is not the only instance where facebook has tried to figure out if their critics have an ax to grind. that does not been facebook is not worth critiquing and that even if they have something going on financially that there is not a reason still to speak out. it just means they spoke once to know what is going on. most companies would. emily: sarah miller, there are many different problems and reasons why facebook is being critiqued here. what you think is the biggest problem? if facebook is doing what most companies would do to protect themselves, what is the problem with facebook doing it too?

sarah m.: it does not match with the image they are wanting to promote and it does not match with what they are telling numbers of congress and others that they will do which is fix the problems themselves. they are saying trust us, we can fix this and we know we are breaking democracy and we know we have problems on our platform with information, but we will fix it in good faith. what we have seen is that you cannot fix facebook in good faith. they are out to protect the reputation and bottom line, and they will not cooperate necessarily on things that are not good for those two things. emily: we will follow every tourist -- twist and turn. sarah miller and sarah frier, thank you both. coming up, a g20 dinner date. will president trump and xi jinping make headway in brenna -- buenos ares? this is bloomberg. ♪

♪ emily: leaders from the top 20 economies are meeting and when the saris -- bueno aries. with two names dominating the conversation. >> president trump. >> president xi. >> president trump. >> president xi. >> i am optimistic they will keep on talking. i'm not sure we will see much more than that. >> we will probably get some cease-fire deal. >> both sides need good news. >> i think you'll see catalyst for shares to rebound. >> it is very much a wildcard watching donald trump go into a meeting like this. emily: president trump has already imposed tariffs on an additional $250 billion worth of chinese goods this year. china responded with tariffs of its own. this week, the president floated further tariffs that could impact apple products including

the iphone. eric is on the ground covering this meeting. eric, what are the real expectations for any progress between the u.s. and china as a result of this meeting between the two presidents. eric: it's difficult to say what the realistic expectations are because we are getting different signals. trump has needled the chinese, talked about currency manipulators and the signing ceremony for the u.s. embassy, the replacement deal for nafta, and that was a not-so-subtle reference to china and sarah sanders talks about or told reporters about trump in his breakfast meeting with the argentine present -- argentine president. we had a question -- conversation with the u.s. trade representative where he said he would be surprised of a dinner was a success.

he said they had a great report and each man had a respected admiration for the other and that he thought there was reason to be optimistic and he would not go so far as to say a deal was a certainty or even a probability. he said that was above his pay grade. that is why i say it is hard to describe their being a concrete expectation because we are being led in different directions. one optimistic, maybe the other not so much. emily: the president himself continues to shift. he said i think we are close to doing something with china but i do not know if we want to do something. today he said this. >> we're working very hard. if we can make a deal, that would be good. i think they want to and we would like to. we will see. we're meeting with the president in a little while. in the meantime, people are

working, a lot of very talented people working, larry kudlow's representatives are dealing with them on a constant basis. some good science so we will see what happens. emily: he wants to, he does not want to, he maybe doesn't want to, he maybe wants to, how far away are the two countries in terms of an agreement? eric: it depends on what, at the very least, what the white house wants to see in a deal. let's establish one thing, whatever happens a saturday night will not be a deal. there will not be any checks and it is not like the chinese and americans have worked up a draft agreement that trump and xi will sign at dinner. what they might agree to is something in principle and that is the big question. what specifically if you will is on the table for discussion? it is possible there will be

some kind of cease firing for that term. the imposition of -- term through the imposition of tariffs alone. that would depend on the chinese offering some kind of indication they are willing to make concessions not just on trade but on a number of different things important to the white house, and massively important to american industry and american technology. which is to say technology transfer, the theft of intellectual properties, cyber espionage. we know those are priorities for the white house and for trump's entire negotiating team. that would be a breakthrough. if we get to the end of saturday night or perhaps sunday, and we get a readout from that meeting or some kind of sign from the americans or chinese that trump and xi have come to an agreement or framework in principle around those ideas, that would be enormous. the reality is that it is

probably not so likely. they haven't seen each other in 12 months. emily: last question, quick question, give us color from the ground. you have 20 countries meeting, president trump canceling his meeting with putin last-minute and these issues surrounding the mueller investigation. what is the dominant narrative on the ground? eric: there is not much of a narrative because these agreements do not tend to produce much in and of itself. what happens on the sideline is far more important. leaders are struggling to come up with a joint communique that reflects consensus. that more than anything gives you an idea of what the meeting itself produces. they are much more valuable at times of crisis. this is not a crisis at the moment. emily: eric on the ground for us

in buenos aries. november has been quite a volatile month for attack. we will break it down. this is bloomberg. ♪ ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

♪ emily: this is bloomberg technology. i'm emily chang in san francisco. president trump's meeting with chinese president xi jinping may not mean a reprieve from big tex volatility. the president says he's considering slapping tariffs on the iphone but apple has other problems. apple lost the crown as the world's most valuable company to microsoft. both companies have been flip-flopping. join me is john, shira -- what does apple really have to worry about right now? shira: so many things. the main problem is anxiety about demand for iphones. there have been repeated reports from apple suppliers, news out

of the supply chain in asia that apple is maybe cutting production lower than expected on the new iphones. those supply-chain reports are not always accurate. they worked last year with the iphone x. it just feeds this anxiety as we already seen, that sales of iphones and other smartphones are basically tailing off. easy growth in that market is gone and that is reflected in apple losing the market cap, the number one position to microsoft. emily: a lot of optimism about microsoft, and we have talked about what microsoft is doing so well. i think we might have thought amazon would be the one to take this crown. >> amazon did touch one trillion for a nanosecond. weakness resulted in this trade-off. microsoft is in a bit of a sweet spot right now. it is consumer facing companies

like apple that are getting hit right now. they have been the darling of the tech industry in the market for years. now people are wondering if the consumer is as strong as had been the case before. some of these companies that cater mostly to business like microsoft has failed miserably in a consumer but now it is working to its advantage. emily: we will know more in the holiday season when apple reports for the current quarter and how well iphone sales -- how well the iphone performs. tom: and is the strategy paying off? we will hope that people go for when they buy a phone, they are now buying them as often.

but we hope they go to the higher-end devices. and we hope that they will pay for services. apple wants you to believe that it is a services company. and they have shown signs of progress in that direction. emily: there is lots to talk about when it comes to amazon as well. shira, this is a company that has touched $1 trillion. what happened? shira: part of the issue is that the rate of revenue growth at amazon is showing cracks. it is too early to know if it is really a trend or if what we're seeing is amazon shifting sales from the goods that itself sells, for the goods that the merchant partner sells. that may be reflected in this revenue. but you have amazon, a stock valued entirely on this preposterous rate of growth. and now there are questions about how sustainable that growth rate is. and you see that, as tom said, in that decline.

emily: facebook has seen the most dramatic decline, shares down 35% since july. it is a new facebook story every day. criticisms of how to have rustled -- handled russian meddling, fake news, and more. is facebook going to get out of this? tom: people worry about questions of trust. can they control the spread of disinformation? can they control the spread of bullying and fake news on the site? at what point will that filtered through to advertiser mistrust. consumers just getting facebook off their phones. people just don't trust facebook as much. can they monetize instagram? those are concerns that investors have.

there is a management issue. there are questions about how aggressively they have fought critics and try to discredit their critics. and how truthful are they being about the steps they have taken right now? emily: all of these companies have different issues, but are we entering a new normal for big tech where there is more scrutiny as the valuations are lower, and perhaps for good reason? shira: i think we are. we saw that last year and it has intensified this year. it is a strange time where these big tech platforms are both so powerful and big that they are being questioned by regulators that could crimp their power going forward. there are also showing these folder abilities in revenue growth or usage that may also crimp their future potential.

so they are in this terrible position where they are so big, they are getting attention from regulators and politicians, and so vulnerable that investors are getting anxious about whether they are going to be as profitable and as richest source of growth in the future. emily: legend on a slightly higher note. that bitcoin is back-ish. shares have ticked up but they are down today. tom: are we still talking about bitcoin? emily: we are. tom: it is a vehicle that people find very interesting. people do see some sense of -- as a trading vehicle, it draws a lot of interest. i do think that the long-term credibility of some of these cryptocurrencies, it has really been called into question. emily: is bitcoin an indicator of anything broader in the tech space?

or is cryptocurrency really in a category of its own? shira: i think it is in a category of its own. i have bitcoin blindness where if i see the word or hear people talk about it, i just tune it out. there is real technology potential there but because it has become this plaything, bitcoin right now is just not real. it is just this height vehicle -- hype vehicle. emily: tech in 2019, what will you be watching? shira: more of the same. candice huge companies overcome the problems we have seen in the last couple of years that included misinformation on facebook. these user trust issues in places like youtube and facebook as well.

i think amazon is under this legislative spotlight in a way that it hasn't been before. a lot of the questions are more of the same, about the sustainability of what looks like rocksolid business models for a long time. and now i'm not so sure. emily: putz to cover -- lots to cover. we will be all over it. thank's are confident in their ability to gauge demand for the japanese telecom business ipo. for the first time ever, a stock will debut without a price range. instead, softbank has a single preliminary figure. shares will be trading december 19. coming up, games like fortnight and read that are coming under fire first during gaming addiction and millions of players. can developers do more to protect the health of their users? trade tensions between the u.s. and china can escalate. china may place restrictions on u.s. tourism. how companies are preparing for impact. this is bloomberg. ♪

♪ emily: earlier this week, epic games announced that its popular videogame fortnight -- fortnite has a 60% increase player count from june alone. while it is a success for epic, not everyone is celebrating the growth. parents are expressing growing frustration with the games addictive and distracting nature. some describing it like heroin. and with compulsive play, sleep loss, and neglect for everything else, many desperate parents are seeking rehab as a solution. videogame addiction is not

relegated to fortnight. the world health organization indicated gaming disorder is a disease for the first time in june. there are 2.6 billion players globally and annual revenue is expected to grow to $180 billion. here to discuss is jim stier and the executive director of the game developers association. how concerned are you about the rise of fortnight in particular -- fortnite in particular? jim: it is a phenomenon, a hugely successful game. our video games addictive? absolutely. the whole point is that you have this incredibly phenomenal, successful game. but it raises deep concerns for parents. it is the biggest pain point when it comes to technology. emily: the world health organization's definition is a disorder and you say it is discriminatory against gamers. why? jen: because there is no evidence that video games are

addicted. if you look at what the american psychiatric association has to say, they say that the evidence to support creating an addiction category for video games doesn't exist. there was a study in the american journal of psychiatry that showed that players that showed characteristics that you would associate with the world health organization's definition do not have any difference in their physical health, mental health, or emotional health. the science isn't there. emily: your organization does a lot of studies. jim: it is not correct. here is the deal. we can get into a long scientific discussion, but that would be boring. anybody that has kids were deals with other platforms knows that they can be addictive and we see compulsive behavior. that is why parents are concerned. we're not anti-fortnite. the point is to find balance and set clear limits, but let's not

kid ourselves and bury our heads in the sand. we are in an arms race for attention when it comes to technology platforms. whether they are video games, snapchat, instagram where kids also spend a ton of time. let's find a good balance. don't hide behind some study from an association. this is a public health issue but there are good things here to stay. let's just do it in the right way. emily: i have to let you respond to that. jen: not deferring to the expertise of the american psychiatric association is a ridiculous. at the end of the day, i am a parent and i have a 13-year-old. the thing that parents need to know is there is no substitute for good parenting. it is on the parents to be engaged and monitor what their kids are playing and use the esrb ratings to decide what content is appropriate for your kid.

and to play games with your kids. at the end of the day, they are an amazing and fun way for parents to work together. emily: gaming advocates would say that games can be better than watching television. jim: agreed. emily: if you are a parent, you put your kid in front of the tv or do you let them -- how do we make these decisions? jim: i agree. jen made good points there. but there is a reason why we don't let the videogame association regulated health. -- regulate itself. if we let every industry do that, everything won't be ok. my 14-year-old loves fortnite. so do tens of millions of kids out there. the point is valid. but we need a lot more responsibility in general.

this is a story about the arms race for attention, not just for video games. but netflix, youtube, instagram, snapchat. there is intentional design to addict you and me, adults, as well as kids. we have find the right balance. these gains and platforms are not going away but we need a much healthier discussion about this. since bloomberg has a big business audience, we need business leaders to step up and do the right thing. emily: they say sleep is their biggest competition. the time between netflix episodes is half a second. you keep watching. jim: that is the point. a similar thing goes on with video games. games and netflix and youtube are designed to give you there. that is the business. emily: what is the gaming industry doing to combat addiction? are they living up to their

responsibility? telling you how much time you spent on your screen and giving you these do not disturb options. some people say that's not enough. but has the gaming industry stepped up enough? jen: the gaming industry has shown that it does do a good job of self-regulation by working with the esrb. we provide very clear content descriptors because we believe parents should be engaged in the media that their kids consume. make it easy for parents to know not only if there is violence in again, but whether or not games use in at purchases -- in-app purchases. we treat kids as special consumers. we want to make sure that we're helping parents and their children build healthy habits and all of their media consumptions. criticizing game because i believe they are the most engaging and exciting form you out there, it is not reasonable or fair.

emily: this is a loaded question. the chinese government has led this massive crackdown on games and gaming addiction. should we have something to learn? jim: i'm not sure we need to crack down the way that the chinese have. they also have rehab camps in korea for kids who are addicted. the answer is, this is something that ought to be looked at the highest level. and there are smart regulations around television and cable. bloomberg is regulated by the fcc and the broader streaming platforms. the bottom line is, we've entered a new era. we're not going to let the videogame industry, with all due respect to jen and her colleagues can't tell us how to raise our kids and find the right balance because their business is making money and getting as many people to buy

and play these games as possible. a lot of the suggestions that she makes are good. but parents has a big role, companies have a role. companies like microsoft have to come out and build in -- it is easy for me to limit the amount of time kids play. this is an ongoing discussion. the industry is responsible. that is why the apple example of screen time is so important because they took the lead. but the game companies need to do that. 10 years ago, we had to pass laws to prevent them from selling ultraviolent and sexual video games to minors. everybody has a role to play and at the and of the day, kids are the most important natural asset we have. emily: we could continue this for hours, but we will have to leave it there. thank you both so much for stopping by ahead of the big holiday season which i am sure is good for games as well. still ahead, the u.s. and china tourist industry hoping to escape the shadows of escalating trade tensions.

a travel company is positioning itself in preparation. that is next. this is bloomberg. ♪

♪ emily: as trade tensions between the u.s. and china continue to escalate, tourism may become china's biggest weapon. china may restrict the number of tourists in these united states. this could cost the u.s. millions in annual revenue. one of the world's biggest travel booking companies weighed in on the tourism impact in guangzhou, china. >> it accounts for 50% of our business.

no matter what happens, they have to fly all over the world. and we also target high-end customers. and so instead of going to the usa, or europe, they may cut down the budget. instead of going to asia, and china to travel. prepare for the worst but hope for the best. i think there are macro environmental issues including industry related. if you look at the macro environment, all the chinese. the condition rate this year, it

will contribute a little bit. anytime there is a slowdown, with always grasp it as an opportunity. we are very well prepared when everyone else slows down. we will advance more rapidly in this field. >> what are your priorities for 2019? >> our priority is to achieve more efficiency over the domestic target. second, they can be utilized and explore a little bit more and -- new markets. everywhere, i think, should be watching.

it the collaborations between two major nations are good for everybody. and not only is it good for china and the u.s., it is good for europe, the u.k., everyone. i hope leaders will focus on the commonality and the results. >> with the u.s. talks about their concerns, are they misreading the realities on the ground? today have a point to some degree? -- on the ground? or do they have a point to some degree? jane: it is an analogy. when he is 10 years old, he is already very tall so the world expects him to behave -- but he is a teenager. china has the second largest economy, yet it only grew in the last 40 years. how we deal with the rest of the world, how we develop a good

global strategy is something that you need to learn. the u.s. is a young country but the economy is 200 years old. give china sometime, and china will be open-minded to the rest of the world. the worst thing is to shut down the borders and go back to the old days. it is not good for anybody. i am very hopeful to bring people in the world through international troubles, to promote global peace. emily: that does it for this

edition of bloomberg tech. we will see you back here on monday. this is bloomberg. ♪

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