♪ emily: hello, i am emily chang and this is "best of bloomberg technology." apple up, ample does loses its grip. over apple.ok plus, facebook battles accusations of racism. about a memosively about being black at the social

network. and it was the biggest shopping weekend of the year. we will unpack what this extravaganza abroad and for amazon. apple's stronghold on the world most valuable publicly traded company is no more. tooksoft's market capital the first spot for the first time in eight years. point $1 trillion. the share price has been shaved in the broader tech selloff. bloomberg's text best bloomberg text mark gurman joins us. mark: it is pretty unbelievable. or two ago someone said that microsoft would pass apple into years no one would believe that especially in the current technology climate where a lot of people think that apple has an endless runway of growth. if you look at the past two months, there have been so many concerns and so many issues with

apple in terms of iphone sales, concerns about the prices of the .igh-end iphones concerns about long-term initiatives. if the company missed on andious big things like tv voice where it is not all too surprising. the question is will it turn around and when? emily: i have a chart showing the rise of apple as well as the fall in apple and the rise in microsoft. aside from what apple might be doing badly, what is microsoft doing well? has really turned the company around after taking over from steve ballmer i feeders ago. the company has transitioned from a software company to a software and services company where there are trying to get clear applications on as many systems as possible. if you bought an android device

or a microsoft -- even, you can not fill it up with apple services. that is the difference between the two companies. microsoft works on every whereas or google does apple is glued to its own hardware. microsoft is winning for itself on that approach. is room for both but that is wide microsoft has been so successful lately. the infrastructure around services and surface -- and service. and amazon are not far behind them. do we see these companies trading as a group? will it be unclear who has the title going forward? will we see the shifts going over and over again? mark: i think we will see these in the next several months or years. these four companies will buy for the top spot. for the top spot.

emily: apple also facing an antitrust case in the supreme court which could have wide reaching implications for the entire tech industry. the suit accuses apple for a monopoly. u.s. supreme court justices on monday appeared to allow the case to continue. i want to bring in greg stohr along with mark gurman. what did the supreme court justices signal about their position on this apple case? greg: the general sense was that they were going to let the lawsuit against apple going forward. roberts is onjohn apple side while as many as seven justices might be inclined to allow the lawsuit to go forward. that would be bad news for apple. and it is a source of pressure

on them to reduce the 30% commissions that they charged to app store developers. emily: walk us through the argument. apple takes a cut from the app store. 30%. it has been in contention before. what makes this particular lawsuit significant? mark: right now, apple is pivoting towards wanting investors to focus on its services revenue. revenue, the majority of it comes from the 30% cut. if apple takes any cut on the 30% because of the lawsuit, the services revenue will take a significant impact. that is why the lawsuit has so much at stake for apple. ,mily: greg, you were saying talk to us more about what is behind this particular case. greg: this is a consumer lawsuit suing saying that we are paying too much for apps at the app

store. the focus is the commission. what apple argues is that the to this supreme court is whether consumers can sue? there is a supreme court saying thatump 1947 only the direct purchasers of something can claim they were overcharged. emily: greg stohr in d.c. and mark gurman from los angeles. apple shares took another beating tuesday after president trump hinted that he might include iphones in the next round of terrorists with check -- tariffs with china. the trip provided an opportunity for extensive conversation with the daughter the president just before donald trump was to hold a key meeting with the chinese president in when osiris -- in argentina. >> you have to assume that

everything out of china will be tariffed. if you look at apple and take for example the least expensive it ishone, the 10tr 7.5% more expensive then the eight. >> let us put the potential impact aside, does the president mean it? >> absolutely. to date you have had multiple rounds of tariffs. 10% to a 25%from a tariff on january 1. you have to make the assumption that they are real and there are more to come and as far as what more can be tariffed, --

will that make an impact spending time with a ivanka trump? does tim have the currency with the administration to make an impact? mark: that is a great question. i think they do. in early september, apple said that two of their most valuable products would be impacted by the tariffs. on the first $200 billion worth of goods. a couple of days later, the trump administration out and said we are not going to allow terrorists -- tariffs. and now, they are spending the day with the daughter the president. this will be a topic on the agenda besides the schools

they're visiting. i think they had that sway power with the administration. discuss whyey will this will be bad for apple. tom, let us say that tim is not successful today making his case to the daughter of the president and we do see a tariff . you talked a little bit about how apple could potentially mitigate the impact with the 10r, what about the 10s. it is not doing as well as apple had hoped. >> investors are underestimating the ability of companies like apple to mitigate the risk of terrorists. -- tariffs. currencydevaluing its which will take some of the sting out. chineseome instances,

-- the china government is subsidizing. and the supply chain is already moving out of china. the big winner from the waronged china-u.s. trade is vietnam as many manufacturers are making products in vietnam rather than china. i do think apple and other companies that are heavily reliant on china for the supply chain have a lot of opportunities to mitigate risk from tariffs. as it pertains particularly to 10s, the good news is that they do not have to sell as many units to bear the fruits from a financial standpoint. emily: tom forte, and mark gurman with brad stone. coming up, how one big tech investor is navigating big volatility for microsoft, apple, and tesla. if you like bloomberg news, check us out on the radio. this is bloomberg.

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emily: it has been a volatile time for tech spots. underok's top executives scrutiny for the handling of russian meddling and apple is in limbo. ceo kathy would talked about her outlook. analystspple, because are focused on units and average selling prices, very simplistically, i think it has really reached a. reached a period of undervaluation. i think they have pushed the pricing envelope a little too much but i think their services business is becoming very interesting not just the app store but the way they are getting involved in health care and augmented reality. i think this will become more of a services model which is a higher multiple or it will reach

a higher valuation at the end of the day. emily: there is still uncertainty about trade. today: before i heard that peter navarro was back on the invite list to go to argentina with president trump, i was much more up -- i was much more optimistic. rattler.aber radler -- at that they were going to leave him out and let like kaiser and larry kudlow do the work behind the scenes. i think we are seeing movement from china. their own economy is slowing down so they are cutting taxes internally and import duties. at the end of the day, i think we will see at the conclusion of negotiations, perhaps not this weekend, lower tariffs throughout the world which i think will be a positive result long-term. , a tradeder navarro

visor for president trump, what about microsoft? do you see it going on a longer bowl run -- bull run? cathie: i think it has done a lot of things right in the cloud and gaming and i think it has earned its way back into the good graces of investors even though it's based business, windows and so forth, that we see as having more technical problems. -- inot think longer-term do think apple will continue to lead the charge. ofis going through a period uncertainty because of short-term thinking about prices -- pricing and units. billion upwards of a users of our iphones and other apple products around the world and that is only growing year by year. we are excited about the long-term prospects for apple.

emily: what about amazon? faceds a company that has verbal and twitter assaults from the president. now under fire from german regulators which we will talk about later in the show. do you think tariffs will have a big impact on amazon given the company's reliance on third parties? cathie: i don't think so. amazon is of the day, all about customer first. delighting the customer. it is awfully hard for politicians to fight. when there electorate's love a product. orates love a elect product. , iwe get temporary tariffs do believe they will be just that. these are products that delight the consumer. emily: the wall street journal is reporting that the trump administration has set up a roundtable with tech executives

including the ceos of microsoft, and google who is scheduled to testify on capitol hill next week. can anything promising, out of a meeting like this that would impact an investment strategy? cathie: i think it is good that they are talking. better that than arguing in the media. and i think that at the end of the day, president trump wants our innovative leaders to .ontinue to dominate out there we do see that china has on its set of priorities being number one in artificial intelligence and all kinds of technology and i think president trump is responding to that. i think we will be in a "how do we work together" mode versus an adversarial mode. emily: meantime, facebook is in the middle of a pr nightmare.

mark zuckerberg and sheryl sandberg and how they handled russian election meddling, fake news. will this continue to punish the stock given that we have not yet that thisete evidence is impacting engagement among users? cathie: we got the first signs in the last quarterly report that it has impacted engagement slightly. we are also seeing that in terms of top brands, facebook is losing its status. when that happens, we usually do have a period of underperformance by the business and the stocks. thank goodness they have messenger whatsapp and other properties to monetize because we do think they will continue to lower the ad loads on facebook proper and trying to

write to the ship. a have work to do. emily: ark investment ceo, cathie wood. our conversation with antonio neary. game or get into the wait it out on the sidelines? and later, we hear from the former employee that claims facebook has a racist problem. it does not just impact workers but lacked users of the social ofwork -- but black users the social network as well. this is bloomberg. ♪

emily: two hbe's big bet on the so-called intelligence edge and antonio 6-8 -- commitment to make more data more useful to companies. this comes along with developing more tech with security and ai and machine learning. i caught up with him in madrid

to ask about when he expected to see a return on the big investment. take a listen. >> we believe the intelligent frontier and at massive opportunity for as a massive opportunity for us. and that is why i made the announcement in las vegas that we would invest $4 billion over the next few years. we will see a return in the next two years. this is a business growing fast. double digits. platformake the core and add the incremental capabilities needed to move to the intelligent edge. the connectivity will be expanded. analytics. and security. and now, we are announcing the the audio reality aspect of the platform. so that we can move from billions of things between people and places to trillions

of things. that is the skill needed. emily: a prime example is a biotech company that is using hbe computer power to essentially powered genetic testing at scale. what does your speed make possible there that would otherwise not be? to worke really proud with them. a startup in position medicine. partnership2030, a with a world economic forum. we announced a partnership with purdue university to improve culture, crops, and quantity of crops. we have a fantastic use skill here with crops. and we are focused on position medicine. it is all about improving the on disease and the

imitation of that disease. improvementg a 250% in the use of data to understand the disease. 250%: what do you mean by improvement on the understanding of the data? >> it used to take days to get information from the data and now they can do it in seconds. that is remarkable. they want to make sure that they focus on the right to aspect of their research so they can pass the research to people who can provide the cure us. today, it is all about value -- time to value. for us, it is bringing the technology to do good because we want to advance the way that we live and work. we have seen a lot more consolidation in enterprise software this year but it seems

like tech hardware players are staying on the sidelines. m&a?is your appetite for the right to assets with the right complementary ip -- talent, we would m and a m&a it. we want to stay true to the core of what we are designing and add significantly to the platform. customers like what we are doing. we are really hope this done accelerating the denomination to ip and talent acquisition. emily: will we see more deals in general in tech hardware? >> valuations are high. that is my point of view. we think there will be more consolidation over time. but i think now that the last case has been set. what customers are looking for

our ip solutions in blocks where they can accelerate time to value through data. more and more come of infrastructure has to become more optimized for the specific workers. where they all come together to deliver a specific outcome. that is why we have this unique vision called composability. cloud is not a destination but an experience. all of the answers have to come together in a way that they can deliver the solutions with the speed and agility that customers are looking for. emily: what do you think of a publicly -- what do you think of a newly public dell? >> it opens the opportunities. accelerating at this time so speed matters. and control points and intellectual property matters. depending on what is happening in the market, we may see an

acceleration of that. valuation has to make sense. at this point in time, i think valuations are a little bit high and that is why we see some correction going on in the market. at this point, our focus is really on execution. and i think this year we have done a really good job, i'm really proud of our execution front. emily: my exclusive conversation with antonio neary -- neri. at a time when facebook is in the spotlight for leadership raises a former employee concerns. bloomberg tech is live on twitter. he sure to follow our global breaking network, tictoc on twitter. this is bloomberg. ♪

emily: welcome back to the "best of bloomberg technology." facebook is battling criticism on all fronts and now from a former worker that says the company has a racist issue. mark luckie wrote an internal memo about how difficult it is to be black and employed at the social company. racial this commission at facebook is real. he says he expected some sort of reply but instead he got a private message from one of the employeesvel black

at facebook. joined use exclusively from atlanta to discuss. mark: to be black at facebook is finding your community because you do not see a lot of people that look like you. when you see other black employees, it you look for -- you look to them for support. emily: now, you write in the memo that not only did you feel marginalized but you would walk by employees and at least two or three times a day, employees would hold their wallets or put their hands into their pockets. why did you decide to go public with these feelings? mark: there are so many employees going through the same thing. prior to the post going internal, i would have a conversation with a black employee every week at least saying i am going through this

or having a tough time with diversity on my team. did if every black employee not experience everything listed in the post, chances are they experienced at least a little bit of a. it was tough to walk through the facebook campus knowing this is a company that promotes inclusion and diversity though it was not reflected in my day-to-day experiences there. emily: facebook executives have had a lot to say about some of the other criticisms they have been getting recently about a delay, deny, deflect with respect to russian election meddling and leadership issues and more but they did not say anything to you? mark: they did not and that is uncharacteristic. usually, there is some comment from mark or cheryl or somebody from that team to say, we are thinking about it at least. but a lot of black employees felt even more marginalized

because they did not get the same treatment that other issues may have received. emily: you did get a response from one of the highest ranking black employees at facebook that said to you -- i guess i am confused and hurt because i and wasr your hire inspired by you and that post seemed out of character. a team leader tweeted that many have diverse experiences but your experience may not reflect that of others. what do you make of that? mark: about a week before i handed in my resignation, an employee told me that the only black employee that was not their authentic self was him. between theisparity employees close to mark and his team and those on the ground level. i think it is disingenuous to say that this is just my experience and im out there

putting out information about a company that is not true. because i was so visible is why i decided to put this out. i did not want to be just another black employee that left the company and did not say anything. the day i put up a post in turn late, several employees came up to me saying they had handed their resignation in for the same reason. emily: facebook did respond. we got this -- we have been working diligently to increase the range of perspectives. different many options across the country -- the company. it is a key driver to our ability to succeed. you point out that this is not just the experience at facebook, thebelieve this extends to experience of black users on facebook as well. how so? mark: there is a lack of

cultural competency. they do not think about the black experience which is a shame because black users are over performing on the platform. and aa missed opportunity miss financial opportunity for facebook to not engage with those users in a meaningful way and to make their experience on the platform much more difficult through it taking action and its in action. emily: this had me recall the incident in 2016 where there slogansck live matter on a wall at facebook which employees had crossed out writing "all lives matter. mark zuckerberg condemned that. you also worked at twitter. how did your experiences compare? is it more deep-seated then perhaps mark zuckerberg realizes? emily: -- mark: there are posters all

through their headquarters many of which claim that black lives matter. they may matter but you are not seeing them as frequently inside of facebook headquarters. the biggest difference between twitter and facebook is the scale. made a lot of changes in the last few years. a lot of improvements. employee resource group is active and engaged in the community. leave thised me if i was only a problem at facebook and i answered no. but for facebook to claim that they are supporting these groups is wrong. emily: what is your response to the general leadership issue -- both mark zuckerberg and cheryl are under fire for how they are handling the russian investigation --the you think they should continue to lead the company? mark: i think what is happening

in tech is the leaders inside our thinking the best possible use cases for their technology and not thinking about the worst. that is where you see issues like the russian hacking and the fake news issues and the issue about the black people on its platform. it would be who've tech companies -- behoove tech companies to think of how it could get into the hands of the wrong people. emily: as i understand it, you have quit tech and moved to atlanta and you are done with silicon valley for good. is that correct? mark: that is correct, unfortunately. emily: why? can't an employee iq help silicon valley change? much i tried to affect as change is possible. i had a great time at twitter.

determined was very to stay there as long as possible and i was going through issues with living in a mostly white neighborhood. issues with having my work curbed at every level. id so i said to myself, cannot give up my social life and personal life, my health and security to work for a company that is not supporting me and also not supporting a lot of people that work in diversity. of these a lot people but their efforts are being curtailed left and right. emily: mark luckie. pressure is rising on sheryl sandberg for her particular role. bloomberg spoke to eight current and former employees from her side of the organization. some now blame her for facebook's woes. they say it is time for her to prioritize her section.

bright tweezer, senior analyst at pivotal research and brad stone joined us monday to discuss. that the to say nuances were really useful. anyone that has not read the article showed. the bigger point around sandberg said that it does occur to me if has been so constrained in her role because she does not have absolute control over facebook if she has any control over her own self. that is what you focus on if you are never going to have complete autonomy over the whole company. whilew out two things -- there is elevated criticism around sandberg right now, there was appropriately some elevated concern about her last year. facebook had a

-- that is a problem. when they are advertising products that are actively misleading their customers, that is a problem. when they are consistently having metrics issues, again, these are all under sandberg's responsibility. it is not clear where the responsibility ends with her versus zuckerberg and frankly, the bigger problem is maybe more foundational inside the whole company. from the ground up. emily: on that note, here is cnn aboutrberg told his partnership with sandberg and his intention to continue to work with her for many years. >> sheryl is an important part of the company and is leading a lot of the efforts to address the biggest issues we have. and she has been an important partner for me for 10 years. and i really proud of the work

that we have done together. and i hope that we work together for decades more to come. emily: what do you make of that? point --n interesting if you cannot control a lot of the company, the one thing you can control is yourself. >> it was a sign of support that he was making for her. he does not want to throw her under the bus. but i think that point is correct, she might be constrained and that merck and -- mark and cheryl need to work on their partnership. emily: would you like to see facebook bring in a third person? there is reporting that mark zuckerberg had been working for thirdd -- looking for a person to handle the policy issues but ultimately decided not to do so. >> the idea that the person would report through sheryl sandberg.

out, theld throw this big issue is a board level issue. no back to the days of yahoo! and marissa mayer. thatll of the criticism she rightfully deserved, after about two years, this was no longer her faults. what the board's fault. that clear, the problem facebook had been pretty obvious. if they are obvious to the president of the united states in 2016 who told zuckerberg that you have problems, they have had over two years at least of problems that have been systemic. the board has to have been aware for quite a while. then the question becomes what do the independent directors do? in the best ones position to get to the root is a problem and figure out what is best of the company. is fact is, if the company entirely dependent on mark zuckerberg, that is not a company but a sole proprietorship. emily: many of the board members

predate sheryl sandberg and her joining the board as well. alluding to another story about the u.k. parliament seeing the internal facebook documents as part of the cambridge analytical scandal which is kind of huge that we are seeing on another government take such extreme action. walk us through what happened. >> go back four years when a company sued facebook saying it was favoring some app developers over others and that it was being inauthentic and how it communicated. -- in how a communicated. that lawsuit was here in california. obtained internal facebook communications. fast forward to last week when the british parliament was very upset over merck works failure to testify in the u.k. so that the testimony was

disingenuous. wasthis app company influenced to turn over those documents. it could be internal communications among executives about how facebook obtains information from who and whether they are being disingenuous in terms of privacy control and how it manages that information. it could be very damaging. emily: coming up, we had to bloomberg's conference when we speak to samsung's next president. what he has to say about the global market. and the biggest shopping day. which category performed best? topwhat were the site's sellers? this is bloomberg. ♪

hady: bloombergs the year i

a wednesday brought together global ceos to tackle topics facing every executive in the coming year. including the future of technology. bloomberg tech's selina wang sat down with samsung's next president to talk about the coming year and she started talking about the transition from a hardware company to a software company. >> there are designations that we all used to label companies. are they hardware companies or software companies? i believe in the future, we will not use these designations because companies will be successful or not and products will work or not the was successful products will most likely have a software integration with the hardware and software but the challenge is if you think about hardware or media even, when you launch a product and you bring it to the marketplace, it has to be perfect. once you sell it in the store,

once the tv show is on air, you cannot change it. and the opposite is true of software. the model that most software companies live by is to launch a early and iterate. you rely on your consumers to provide feedback. you can improve the product. comehallenge is if you from a hardware background is understanding how you can be more agile and use your customers for feedback to create products and experiences that work and on the software side, you may launch but you have to cross a certain threshold of quality so it works. bothis why companies from sides historically have not always been able to work together effectively. it is improving now. within this hardware company, we are trying to bring in people that have software and services expertise to inject that dna into the bloodstream so we can have the best of both. >> the software market is

slowing and samsung and other companies are trying to revitalize it. howhief innovation officer, are you looking at the smartphone business in the future for samsung? what is your plan to reinvigorate growth there? >> one of the things about samsung is that while we have a very successful mobile business and we sell two tv's a second, we sell in any given year, 500 million displays of one type or another and for us, that is not separate businesses but a huge opportunity to connect the devices so they can create complementary experiences. as we think about iot and connected homes, as we think about the proliferation of ai, we about these displays as touch points where we can gather information and provide experiences that are chained together. people, for many

many people come of the biggest investment they will make is in their home. and yet, when you leave your home, you have no idea what is tong on, no ability communicate with it as an entity. not just our company but other companies are now giving consumers an opportunity to have a relationship or a dialogue with their homes and this is supported and will be sort of fortified by having cameras and sensors and everything from climate control and energy usage to lighting all connected. and so, when you talk about a specific device like a smart just or a tv, they cannot the scene as standalone devices but seen as a part of a portfolio of things that can give consumers a better experience. so when i am away from my home, i might be able to send a

message to my family and it shows up on the display of the refrigerator. or when i walk in front of the tv, the photos that i took over thanksgiving break can be easily shown on my tv or the tv of someone i care to share it with. as we think about the future of our businesses, it is not just a pure hardware business but we think about how we can create great experiences which is what i call the integration of software and hardware. >> how is samsung navigating the current trade tensions between the u.s. and china? >> i am not in the hardware business. -- our belief is that while tillich and valley is a fantastic source of innovation, for me it is almost more of a mentality, a way of thinking. innovation can be found everywhere. we have set up offices and done deals all over the globe and we

will continue to do that. we want to be wherever the entrepreneurs are. emily: that was the samsung president. up next, amazon claims it was a record-breaking cyber monday for the online retailer. we will unpack the numbers. this is bloomberg. ♪

anly: cyber monday sales hit all-time high this year and amazon was no exception to the record-breaking. tuesday, it said it had its biggest day ever with the most products ordered worldwide than any other day. customers purchased millions more products this thanksgiving through cyber monday compared to the same period last year. 18 million toys and 13 million fashion items on black friday and cyber monday combined. you can comfortably ignore

everything that amazon says about holiday shopping trends this year and every year. used it record amazon seven times in its news release this morning about holiday sales over the thanksgiving weekend. but of course, as is amazon's habit, there was no specific -- specificityh -- around the numbers. is 18 million toys a record? a record cyber monday across the industry according to everyone. >> e-commerce is growing, it will naturally be a record but there was some stuff in here -- 20% sales more from small and medium-sized business. does that not count for anything? >> it is directionally useful. it is interesting to see what people are purchasing. it is interesting to note that

they sold a lot of instant pots and echoes but it is not as revelatory as amazon suggest. >> i am always interested to see how amazon uses these moments to promote the things they care about. the four-star stores. the ring devices for your home. the echo devices. these are the things that amazon wants to highlight and have people pay attention to during the holiday season. at how muchuck amazon was promoting its own products. a lot of deep discounts on echo devices and the ring, the home security company that amazon now owns. and as you said, there were promotions for things like prime video releases and amazon's digital musical service and the four-star stores. it uses the holidays to promote itself. perhaps no big surprise. >> serving you a softball,

amazon has coined a phrase -- the turkey five. what is that and what do you make of it? eitherd not heard of it so apparently turkey five refers to the five days between thanksgiving and cyber monday. i guess a frenzy of thanksgiving related deals and shopping. i have seen it somewhat catch on in the analyst community much to my chagrin. if you could see my eyes rolling this morning when i read "turkey five" it would be quite a sight. that does it for this edition of the "best of bloomberg technology." the -- on thehad hill. we are livestreaming on twitter. you can check us out at technology. and be sure to follow tictoc on

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>> ray dalio founded bridgewater associates in 1975. since then, the firm has grown to a $160 billion powerhouse. book, principles for navigating great debt crises dalio writes about the history , of financial crisis. ray: the history has shown that in places where there is a big disparity in conditions, at the same time as you have an economic downturn, there are greater levels of conflict. barry: what makes the current conditions similar to those in the past? ray: it is very much like the late 1930's. barry: and the future of this firm. ray: it does not have to come from me.