emily: i'm emily chang in san francisco and this is "bloomberg next hour," and the top silicon valley executives meet with trump trade team at the white house. will text concerns about trade tensions and ip protection be heard? we are live from washington. plus, a story full of international intrigue. ceo arrested -- cfo arrested.

facebook expose. u.k. lawmakers release a cash of internal emails from the social network revealing a take no prisoners approach by mark zuckerberg himself. will lawmakers be just as ruthless? executives tech across a look and valley have gathered at the white house for a closed-door meeting with president trump stopped trade traders -- trumps top advisors. the ongoing trade war with china is expected to be front and center as well. the roundtable was hosted by the president's daughter and robert lighthizer. the ceos of microsoft, google, oracle, ibm, and qualcomm were all in attendance. it is unknown a president trump attended the meeting. joining us with the latest from washington is alex wayne who leads our coverage from the white house. what you think this meeting will accomplish? alex: it had a lot to do with

trade in less to do with future of technology, the industries of the future, the purported purpose of the meeting. know whethered to the white house has a plan to resolve this trade war with gets in a way that truly at the alleged theft of intellectual property from china. emily: robert lighthizer was there. he's a longtime hardliner on china. what does that signify? alex: it shows that trade probably was the true agenda item the white house was expecting these ceos to come with russians on trade. it was not something the white house ticket will he planned to bring up, but they were prepared. emily: it has been a confusing week, a volatile week, do you imagine that the white house will listen to the concerns that

these ceos might have about the trade issues? it feels like the white house is looking for a way out of this trade war. regardless of the tax ceo's ch.cerns -- te ceo' is concerns. . they are staring at mountains of soybeans in iowa and wondering whether this trade dispute is not working out in america's favor. i think the concerns that the ceos raise will be added to the pile of other indicators that the trade war is not particularly great for anyone. emily: this is not the first meeting that the white house has had with tech ceos. put it into context for us. a productive with the meetings previously and how much do you expect will come out of this one? alex: we don't have any readouts of the meeting from the white house or from any of the ceos.

we don't know for a fact anything that was discussed. i expect very little to come of this meeting. the president has done several of these as you mentioned and there has not been any particularly policy -- particular policy or announcements that the white house has proposed as a result of any of this stuff. i think the white house likes to stay in touch with the most important people in the u.s. industries emily: alex wayne force reporting in washington. i want to talk more about this meeting at the white house. while the official agenda looked , it took a back drop on the simmering trade tensions between the u.s. and china. to talk about that, we have david kirkpatrick with me in washington and we have joshua out thisas a report

week arguing the united states needs a national ai strategy to boost u.s. economic competitiveness and support u.s. defense capabilities. is not optimistic that anything will come out of this meeting, but what you believe the white house needs to understand about the events -- advance of ai and other countries around the country and what can be done about it here in the u.s. >> an important thing to keep in mind is that while we have enjoyed an early lead because of andtechnology sector regulatory environment, a lot of other countries are very aggressively pursuing leadership in the space. there are signs that our lead is slipping. china in particular is in the best position to overtake the u.s.. their artificial intelligence strategy in 2017 and are detailing massive amounts of funding and investment with the goal of being the world leader in ai by

2030. will not betates able to compete with china. emily: at the same time, we see if you will coming from the president. he has been hard on google, amazon, facebook. how does that play out given the need for progress on some of these broader issues? david: there are different parts of tech. keep that in mind. google does not have much participation in the chinese market. a number of companies in the white house today do have very assets in china. i think the president says one thing and does the other often. that is worth keeping in mind. i also think this issue has to -- this meeting has to do a trade but goes beyond trade because there are genuine,

long-term issues of u.s. competitiveness that have to be addressed. not only is china moving forward with ai and other technologies, we have led this historically. are literally the only major have anthat does not explicit government policy of supporting our ai and other technology development. the trump administration has been moving very steadily towards a more explicit set of supporting policies for tech in the united states as a competitive weapon. i think this discussion is connected to that. even though there are short-term issues about ip theft -- i t theft. is stilllicon valley innovating so what are the drawbacks of the u.s. not having a comrade the policy like perhaps china does? alex: it is true that the u.s. is the world leaders in ai for thatbut there are signs

the leader slipping. china in two dozen 15, surpassed the united states in the number of patents for ai that they filed. in 2017, they published six times as many patents as the united states. there are serious education concerns that we might not be producing enough workers with the ai skills necessary to develop this technology. we are not meeting that the net -- that demand today and it will only get worst. public sector r&d investments are at a half-century low. r&d and ai is crucial for developing the foundational research the private sector can later innovate and develop products 10, 15 -- 10-15 years down the line. david, i have to ask you. we have seen so much negative news about facebook in particular, and i mentioned this are notechlash which we

just seeing from users across the media but from lawmakers as well. do you think this will continue and impact policies? david: it will continue and impact policies. had a call with new york times saying regulating facebook will be one of the top policy items for 2019. that is the case. almost every recent issue surrounding them has been about their defensiveness as opposed to their cooperativeness. i think that is it antagonizing regulators all over the world. that's one of the reasons why the british regulator, big bridges parliamentarian, believes these documents which are questionable and possibly inappropriate, but they feel that facebook has been taking an unnecessarily confrontational approach with them. they are trying to fight back in any way they can.

it will be regulated. emily: these documents are fascinating. we will talk more later in the show with a former facebook executive to join us. asid, thank you as well joshua new in washington. of theup, the arrest huawei ceo -- cfo. what it could mean for the broader trade deal for big tech -- ten already tents se. 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. ♪ u.s., sirius xm. this is bloomberg. ♪

emily: on the very same day that president trump and the chinese president xi jinping struck a milesin argentina, 7000 away, canadian authorities made an arrest that threatens to make the u.s. china conflict worse. cfo was arrested over the company's use of the bank to violate u.s. sanctions on iran. china reacted with outrage after the news broke her mending countries move to free her. it is hard to overstate the significance in beijing of her arrest. she is the daughter of the founder of hauwei, at the toina's move try to be self-sufficient.

justin trudeau said canada was under no political influence with this arrest you read here to discuss, we have our next guest and mark gurman. sam, what you make of this. >> this is seen as a dramatic escalation from beijing. even though this is not directly linked to the trade war, it comes at a time of tremendous political tension between the u.s. and china. it certainly can make ongoing talks contentious. emily: this statement from arresting a chinese citizen not violating an american or canadian law. they want the u.s. and canada to correct this wrongdoing, restore her personal freedom. mark, put this into context because hauwei is by far the most global of china's tech

companies. alibaba and tencent are huge but they are relatively confined to the chinese and asian markets. has two mainuwei businesses we care about. with the phone business. the phone business has become one of the biggest in the entire world eclipsing apple according to some estimates as some of the most popular phones on the market. that is not what we care about. we care about the telecommunications equipment. all the talk is about 5g. usings that hauwei is some of the telecommunications equipment to spy on citizens in other countries. america, the u.k., australia. theses what all conspiracies originated from a few years ago when people looked into hauwei. that brings us to a doj investigation from the u.s. that started around april as we reported on bloomberg at the time. this arrest appears to be part of that.

samm, it is impossible to not view this in the context of president trump meeting which he thinking. we'll know if the president knew about this arrest, but what you make of the broader signal that the fed -- signal that the sense to china? samm: this comes at a time when the u.s. is taking a multipronged approach to taking down hauwei. gone.s. government has around talking with our allies and partners across asia and europe and said hauwei should not be a part of the 5g network. the u.k. government is showing signs that they will be reviewing hauwei in their networks. i see this as part of a much broader effort by the u.s. government to take on china's technological dominance as they see it. using hauwei maybe as a whipping post for that. emily: how advanced, mark, are hauwei's technologies compared

to u.s. networking companies, compared to u.s. smartphone makers? mark: hauwei is regarded as one of the top players in the 5g networking. their equipment that allows those networks to connect and operate through smartphones. their network is intended to work globally and it is an overall purpose of their business in china. this is not a good thing for the company's bottom line. that is why see stock trades and futures having such an impact globally right now. in terms of their smartphones, they are regarded as some of the best. we have already seen them shut out of some places. we are seen carriers including verizon and at&t dropping deals to carry hauwei's devices in january, february, earlier in 2018. we see the pentagon no longer allowing their employees to buy hauwei advices -- devices.

best buy has shut down hauwei and they are one of the biggest retailers in the entire world. we see a lot of companies working with the u.s. government to shut out hauwei. emily: had you imagine the chinese government could retaliate here or react, samm? samm: there are a number of ways they could retaliate. they could take measures against u.s. tech companies in china. i think it is an environment where all bets are off. they could use standard, market access tools, and i think this could be a chip that could be used as a bargaining tool in ongoing negotiations in the 90 day period following the dinner from trump and xi jinping. the says we are in a new environment in the u.s.-china environment. we don't know how this will play out. emily: what is the likelihood this ends zte where president trump steps in and plays the hero. finended up paying a big

and whirl out to go back to the usual operations. anm: this brings up important question. in theory, the kind of investigation of zte and hauwei should be independent from any political negotiation over trade, but we saw that was not the case with zte. it is possible that this could be used in the negotiation. the te is different from hauwei in that zte was brought to its knees when the u.s. threatened to cut it off for u.s. components. hauwei is not as dependent as zte is, but telecom carriers in the u.s. and globally, many use hauwei. it will have tremendous impact from that angle. sacks and mark gurman, thank you. is puttinglyft the pedal to the metal when it comes to going public. details behind their quiet ipo ipongs

filings next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪ tictoc, on twitter. this is bloomberg. ♪

emily: lyft is hitting the gas and has filed to go public. they submitted early stage documents for its ipo. lyft is working with jpmorgan, credit suisse to lead the offering in the first have a next year. violations range from 18 to $30 billion. here to discuss is elizabeth who covers ipos for us. the filing is confidential -- confidential but what we know? >> very little at this point. companies have been able to do these confidential filings. the give the information to sec but we don't get to see anything and the investors don't get to see anything.

this does tell us lift once to know that it has done this. it did not have to put out a statement but it is like firing a starting on this process. says they are getting ready to go. emily: the headline should probably be lyft beats uber to filing for its ipo. we sort of expected lyft might come first, but what does it mean for uber if lyft gets to public markets before uber does? elizabeth: i think it is a psychological thing at this point. what it does mean is that if lyft gets there first, it has the investors first. there is no doubt there is a lot of appetite for this and people will be buying into both. this has a chance to have a couple of extra months to build value there and having investors get to judge its valuations in the public market. emily: 18 to $30 billion is a

broad range. what valuation is lyft likely to target? elizabeth: that is not unusual to have such broad valuation. banks are going in and pitching the numbers and giving those white numbers. billion valued at $15.1 in its last private valuation. the number we are honing in on it somewhere around 25. if you think about the gap between the last private valuation and this public valuation, it is big but not near the chunk uber might make when it moves from public to private -- private to public. emily: is there enough appetite for lyft and uber in the context of other big ipo's we can see next year like potentially airbnb? elizabeth: i think there is a lot of appetite. lyft might get an early jump on this by having a couple of months for investors to settle into the stock, decide how it is valued, and that can go either way. they will test the markets. that could be good for uber as

well. its performing publicly and taking that into see what it might mean for them. in terms of investor appetite, this year has been good for ipo's. next year could be on track for the biggest that we've seen for a long time. behave,as markets investor appetite should be strong. or notthe banks lifted listed. our the banks positioning themselves around these ipo's? elizabeth: as much as there is unlimited investor doubt, the banks can't do that. they have to position themselves on either side. this is jpmorgan, credit suisse, and jeffries. the ones see associated a lot with these big tech ipos out to the west coast. we can expect to see them self positioning themselves around other names next year. it is a real divide where you

see people aligned themselves with lyft or uber. , thankelizabeth fournier you for joining us. coming up, exposing facebook. u.s. lawmakers seized internal facebook documents and made them available for all to see. what it tells us about how facebook and mark zuckerberg does business -- do business. that's next. this is bloomberg. ♪ is is bloomberg. ♪

emily: this is "bloomberg technology." u.s. stocks slumped as concerns intensified. walk us through the moves you believe are directly tied to news of this very intriguing arrest. >> where we can see movement that would be tied to it is in companies that do have exposure to huawei. , these are suppliers some of the semiconductor names that do have more exposure than some of the others and we have

seen outside pressure, but it's interesting because if you look at market action, yes, the nasdaq was lower, but it was outperforming the dow and the s&p 500, and you saw the likes amazonbook, netflix, outperforming. this was not a situation where it was not just tech hit across the board. we did see other tech stocks get a bounce. i spoke with a lot of traders and asked what was going on. many people said they got just as many buy as sell orders and it looks like people are trying to position themselves in 2019, so maybe people relieve some of these large tech names have gotten to the point where they are cheap enough to step in because we have seen a lot of those popular faang names rebound today, and that's helping lift the nasdaq higher. emily: what is the prevailing

view on how long tech volatility continues? lot ofe is still a worries. no one is saying this is out the window, especially in the wake of the news we got concerning .uawei as it relates to companies that have exposure to china, that is going to persist, so we should expect volatility to continue within the tech sector, and if you look at the fix for the nasdaq 100, it did increase today, but not quite as much as the vix that tracks the entire s&p 500 market, but i would say the real takeaway is you should not expect this to go away any time soon. emily: keep us posted. thank you so much. now turning to -- what else but facebook? go for it -- those are the words from mark zuckerberg that have

critics saying he helped usher in the end of twitter video platform -- platform vine. this is being viewed as a new target for the regulatory armory that is being amassed by european regulators against facebook. the social network responded to the statement saying the set of documents tells only one side of omits important context. unfortunately, select quotes have been released to suggest things that are false. i want to bring in a contributing author of "wired." in new york, we have our opinion columnist. these emails indicate facebook cut off access -- cut off apps that would compete with facebook.

is that an ok business practice? >> i think it is par for the course. for anyone who has worked with facebook, this would not come as news. as i say in my memoir of my time there, facebook does not actually have partners. they have companies they find temporarily convenient and when they are less convenient than they should be, they get cut off quickly. emily: you are saying mark zuckerberg has always been this ruthless? >> correct. >> what is the implication? you have an amazing piece out today comparing mark zuckerberg to the godfather. not the markis zuckerberg who sweats through his hoodie when he is nervous, this is mark zuckerberg as vito corleone.

>> there have been these competing narratives about mark zuckerberg. one of the narratives is he is this socially awkward guy who created facebook in his dorm room and did not anticipate the explosive and powerful force it would be in the world. as other narrative is, antonio said, he is a ruthless, savvy tactician, and i think the documents, even though their selection of a much bigger document trove, they do reveal just kind of mark zuckerberg being very involved in facebook's business, not leaving it to lieutenants to deal with the messy business of generating revenue and profits, that he was shown being very savvy thinking about facebook's relationship with developers and how that could help facebook grow and help facebook generate profits and become an essential part of the internet. he was shown, as you pointed out

, cutting off competitors at the knees, personally taking responsibility for those decisions. i think this ends the narrative of mark zuckerberg as this kind of babe in the woods who left the details to others. emily: was he ever a babe in the woods? meeting anyone in a with mark zuckerberg would never confuse him for a babe in the woods. these are companies whose business model is turning data into money. when they do deals, guess what they haggle over? access to data and money. this is how the sausage is made. emily: a columbia law professor was on earlier talking about exclusionary conduct, that the acquisition of whatsapp was illegal. take a listen. >> we have shied away from breakups. there's been 10 years of consent decrees, and i think firms do not really listen. they do not care.

they have failed in a lot of instances. we've invested to heavily in the idea that you can have an agreement and a filing cabinet somewhere and that will restrain behavior. i'm calling to return to the breakup in a. emily: do you think facebook should be broken up? >> this will sound heretical, but i don't think it's crazy that facebook and instagram and whatsapp should be independent entities. emily: why? >> it's not clear a lot of value accrues to the user in having them must together. at some point, facebook lost the ability to create new toeriences facebook found -- create new experiences users found compelling. play a zuckerberg monopoly buying every square on the board that every user has to go to and charging rent for them to be there and i don't know that that is ideal behavior the corporate landscape.

emily: what is your reaction? >> there is a legal argument, and i cannot make that argument, but it would be true that if facebook were independent companies -- facebook, instagram, whatsapp splitting apart, that would seriously power bothcebook's over users and, maybe more importantly, over advertisers because that is the compelling proposition financially for facebook, that you come to facebook as an advertiser and with one check, you can reach people on instagram and soon on whatsapp and facebook and all these other places where people land and facebook will figure out how to find your audience across those different properties. annalee: meantime, facebook general counsel sent a letter on :ehalf of the board -- emily meantime, facebook general counsel sent a letter on behalf of the board questioning if .eorge soros was shorting stock

we should mention sheryl sandberg is on facebook's board. what do you make of this? talked about this. george soros made a name for himself going up against the bank of england taking down large companies and institutions. while he has reformed himself, someone likes if george soros starts sniffing around her company, you as senior management for that company get very, very wary and asking the question of what george soros is doing with facebook stock is not unreasonable. emily: what about the delay, deny, deflect that has been tied directly to sheryl sandberg and mark zuckerberg and how they perhaps failed to lead through these various crises over the last couple of years? is that fair? >> i think that is fair. that has been the company pr

policy since i was therefore a five years ago. as a hangover from an era in which facebook had way less scrutiny and tech journalists did not understand a specific model. i think we are past that era and facebook has to engage with you and other journalists a lot more than it actually does. emily: we would certainly like that. thanks for being here. plans to start production in china in the second half of next year according to the city of shanghai. the city's mayor visited the site of the electric car company factory and urged tesla to speed up construction. it is tesla's first plant overseas. coming up, tech is increasingly disrupting the financial industry. which disruptors are likely to make a dent in the coming year? 's slump, bitcoin continues to accelerate, but could 2019 see a change in direction?

we talked to one ceo about why he is hopeful. this is bloomberg. ♪

emily: it is time now for our feature on the future of money way we look at how the digital world will affect money. private equity firms have invested an unprecedented amount of money into financial technology and 2018 has been no exception. the global syntax sector surpassed 2017's annual record total and as investment banks the goldman sachs and to

area, deals are on track to hit a record high, but will be outlook be as rosy in 2019? linzie davis.s, where has this money been put? towards what kind of financial technology? >> thank you for having us. 2018 was a banner year for fin tech globally. we saw a record level of roundsent and of mega going to a range of categories and digital banking, payments, in emergingompanies markets and in frontier markets. disrupting is financial transactions and trends across the board, but what technologies are actually taking off? >> taking off a little bit more, areanies like robin hood making free trade very popular. you've seen places like jpmorgan

start to offer that as well. other places a little more advanced are like robo advisors where of you seen vanguard, charles schwab, copy what they are doing, and another is challenger banks, these online only banks, and you had a really good report on challenger banks earlier this year. most people have never heard of them, so explain exactly what they are. >> 2018 saw a renaissance of digital challenger banks open up access via mobile applications to this new class of consumers to access free if not lower charged bank accounts. they are growing in the millions , and they have been expanding globally. emily: what does it mean for jobs? earlier this week, we talked about ai completely disrupting the sector, making decisions more quickly that humans cannot. does that mean there will be less human jobs in the financial

sector in the future? >> that is a difficult question, but we see this as opening the market for opportunities not only for fin tech investments but also for banks to create new opportunities for jobs, and it's really growing the market. at on one thing we look days like today, days like yesterday when the market is atremely volatile, is as company cofounder or founder, i don't know that i would want my company to enter a market, thisially and an area like where others injured a few years ago and are down more than 50% since their ipo. do they do that in 2019 or wait until a little bit after that? >> ipo's have taken a slower public and weing think we will continue to see that in 2019.

companies are well capitalized to write out that volatility, but they are well positioned to ride that out. karma expanded into mortgages in the u.s. it also expanding their global footprint in the u.k. an ipo might not be something in the imminent future. emily: do you think the pace of investment will continue? saw mega around investments boosting funding this last year going into established categories, and while that might look a little bit saturated, we could continue to see some of that investment flowing to 2019. as these companies really look to iterate on product and expanding global markets. what about the opportunity for some of these larger banks to start buying some of these? for every credit karma, there's a slew of other companies that have gained traction but have .ot raised valuations

do we see more of that next year? >> 2018 was a surprising year because banks started to make fin tech acquisitions, which was something they had not done in the past. goldman is a great example. they could look to do if they want to scale their products, but tax have roughly been investing in their fin tech strategies, making investments in the category as well as looking to get digital internally and told some solutions in-house. emily: got it. like i mentioned earlier, a lot of bigger and company -- bigger incumbent companies have copied .he startups how did they make sure they continue to have that advantage and scale enough? >> staying laser focused on the customer and continuing to build product is how they will continue to grow and keep their customers loyal. , and that big thing

is why they have not only been able to keep and attract talent and customers but retain it as well. .mily: lots to watch in 2019 thank you both. still ahead, bitcoin has taken a turn for the worse in 2018. will 2019 be better? why he islls us confident next. this is bloomberg. ♪

emily: the cryptocurrency slump continues with bitcoin trading around its lowest levels since 2017, down some 80% since the end of last year and dragging down other coins almost as much. while many worry about the slump, the ceo of a change

operator says the market is near a turnaround. he discussed his confidence with bloomberg. take a listen. >> economies work where if inors going outm of business, equilibrium is near. when you look at how markets overshoot up and down, you could probably say it is close to the bottom. >> where does you see prices in the short term going? it's difficult to tell. initially i thought toward end of the year, they were always a run up. you can see that last year and a year ago, but a lot of people predicted it would go back again later this year starting in november and december. november came and passed, one of the worst months for bitcoin. december, right now, there's no catalyst that will potentially shoot it up, so i look at a kind

of flat, and starting from new year, that's what i think the new sentiment will come back. >> what is going to be the catalyst? in 2018, you had a number of high-profile hacks. you had an exposed ponzi scheme and a number of different issues and potentially new regulation coming down the pipe. >> one thing in japan is that japanese regulators are starting is that japanese regulators are starting to open up again, so they are starting to approve new exchanges. they are also going to approve new listings. all of these things will start with the new year. the fsa recently gave oversight and regulatory oversight to the operators themselves. how is that going to change the industry? >> on most every exchange registered and licensed in japan received an improvement order from governance, compliance, securities, and these are all to protect the injury tale consumer, and all of these changes are almost complete with

their improvement order, so starting in the new year, it will be a new beginning. >> how does it work with the fsa giving you more regulatory oversight? does that close the door on new entrants? >> yes and no. a lot of the exchanges, people who start from a garage or startup, that is very difficult to do. ce is extremely difficult. at the same time, you need to keep up with what is happening key.lly, and industry is things, innovation need toolution that you continue on, and you need to have need to continue on, and you need to have that right balance. >> is the fsa as well looking at innovation? >>

innovation? >> japan was the first global economic powerhouse to regulate cryptocurrencies. now they are looking into security token offerings and they will probably be the first nation to specifically look at security token offerings. >> what particular trends are you looking at from your client and customers? are you seeing more increase in institutional purchase a patient the side shot to that question would be the implementation of high-frequency trading. open to casual traders, sophisticated well,utional investors as but our sweet spot are these professional traders. these are api-based high-frequency traders, as in any financial product from and the, fixed income, global trend is to accommodate these high-frequency traders, and, obviously, we provide full api's for that. our main custom-made -- our main

customer base are these traders. >> does bitcoin have a chance of getting back to record levels of 19500 and change? >> i think it will surpass it. >> when? >> it's very difficult, but i would say by end of next year, i think it will surpass the all-time high. emily: or soft is calling for new legislation to govern facial recognition software -- microsoft is calling for new legislation to govern facial recognition software, advocating for human review and oversight of the technology, adding that sellers must recognize they are not exalted there obligation to comply with law prohibiting discrimination against individual consumers are groups of consumers. microsoft is also asking for laws that require companies that use facial recognition in public

areas to make customers and passersby aware. that does it for "bloomberg that does it for "bloomberg

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paul: good morning. us trillion markets have just opened for trade. >> good evening from bloomberg global headquarters in new york. >> welcome to daybreak asia. >> our top stories this friday, asia faces mixed starts. futures edge higher in japan and china but point lower in hong kong. .arkets remain volatile