>> i'm selina wang in san francisco in for emily wang. hour, up in the next after a tumultuous year, tesla named two new board members to keep elon musk in check. will it work? plus, the future of social credit. and. looking back to the biggest stories of 2018, we will bring you highlights from tack.

first to the top story, tesla announced kathleen william thompson joined its board. they added two new independent directors. this is part of a series of steps to keep a volatile ceo in check after problems with his social media presence and a string of scandals. here to discuss, we are joined by crayton harrison in new york. add theserequired to two new directors. what we know about the process, vetting, to choose these two political people. crayton: this has been going on ever since the sec settlement. andas been intense secretive. we don't know who didn't make the cut. result is youd get a mixed bag. you get someone very similar spiritually to elon musk, a .indred spirit in larry ellison then, you get somebody like

kathleen wilson thompson who is a career corporate executive, many years at kellogg before she went to walgreens. she oversees thousands and thousands of employees who will bring rigor and discipline to the organization. emily: tesla's board has been criticized for having poor governance. now, larry ellison a close relationship with moscow. he has been building up a personal stake in the company. does he bring the independence the board needs? crayton: that's a great question. technically, larry ellison is independent, but he has a stake in the company. we have been talking to experts today that questioned the spirit of this pic because he is somebody who has praised musk publicly. he is a huge fan not only of and thet of spacex

whole must empire. is he really somebody that's will be in board meetings questioning and criticizing him when necessary? it's a legitimate question. thata: you said it earlier he is spiritually similar to elon musk and this larger than life tech figure, but he has had his fair share of tech scandals. what exactly do you think he brings to the board? crayton: i think despite his t, he has run a successful software company over the past three decades in silicon valley through a lot of changes in technology in the industry. he knows what it is like to be disrupted and to disrupt. that will be helpful at tesla. and he is an experienced for number as he was on the apple board. that's the plus side of the equation. selina: musk has been vocal

about being critical of the sec and said they will rein him in and changes twitter habits. are these changes to keep them in check? crayton: the other thing tesla announced was the process that get threeoing to board members who will review the company periodically and make sure they are handling them in the appropriate waste -- appropriate way. they will have to speak for times and musk goes off kilter. selina: thanks for working hard over the holidays. crayton: thanks. selina: tech stocks are continuing to suffer after a bruising december, at 2019 will bring new challenges for silicon valley as lawmakers around the world voice new concerns over privacy policies and antitrust concerns. kevin cirilli joins us from washington for more. tex has been under

the microscope for many years with tech execs being hold multiple times over. when will we see meaningful legislation? if 2019 the year? kevin: there are calls for inflation. whether the bipartisanship will be able to find a crossroad remains to be seen. washington continued to take a bite out of the faang stocks earlier this year. that impacted the big three ceos from the tech companies like -- markkerberg zuckerberg, jack dorsey, and son and google's ceo. we think 2019 will be a year of greater regulation in particular on those two companies. google will be in a great position longer-term and we will power through. we think facebook's best days are behind it. not just because of the privacy fees, but the world is not a

better place because of facebook. when people use it, they don't feel better. --in: that's democrats democrats and republicans alike are questioning silicon valley whether it's conservative bias or big data. expect that to continue. take a look at the headline risk for several of these companies. looking at the terminal, we were able to see any these companies testify, we saw impacts in the market. performed 6% lower for stock, which was also on a day with the s&p tech stocks were down 1.5%. facebook is getting a lot of bruising. back in april, it's matched market performance. yellow performer was the s&p. -- the outperform or was the s&p. selina: with privacy concerns, allegations of bias, what is the priority for lawmakers in washington? kevin: all of those things. the hearings will continue, but

it does not appear to be concrete legislation as of now that would have a path to the president's desk that he get behind. sources ono our capitol hill about areas of compromise that lawmakers might get through, talk about pharmaceuticals, infrastructure, but not so much any type of new legislation pertaining to silicon valley. selina: we will be catching up in the new year. kevin cirilli, thank you for joining. mark zuckerberg says the company has fundamentally altered its dna. on friday, zuckerberg noted the giant is focusing on preventing harm in all of its services. he called it his personal challenge to make sure people have control of their information. he said facebook spends billions of dollars on security each year and has 30,000 people working on safety. imagine having your behavior and purchases monitored by the it have a, and having

major impact on your life and finances. we take a look at the emerging social credit core system -- credit score system in china. 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. ♪

selina: china has a radical plan to influence behavior of its 1.3 billion citizens. it wants to grade them based on aspects of their lives to reflect on how good or bad a civilian they are. this will make for a more

considerate and civilized law-abiding says id -- law-abiding society. critics call it intrusive. this social credit system has garnered a huge amount of attention since it was announced a few years ago. how does it work and what is the rollout timeline? >> the first thing to understand is that a fica score is your personal credit history. this doesn't exist in china for most consumers. a lot of the private technology companies like alibaba, tencent, and others that sit on transactional data with their laws and commerce platforms saw an opportunity to build a credit score or trust system for their consumers. this encompasses far more than your personal credit history but also your riches history, level of education, and for the consumers, you can do more with it than what a credit score would be able to allow you to.

selina: alibaba has its own credit scoring platform for buyers and sellers. the chinese government is trying to create their own system. there has been a lot of confusion between the two. is the government going to incorporate private sector data in this national plan? >> they may, but a lot of those claims have been overblown. the government has not done much but say they have considered doing one. a lot of these private companies are building one with their own current platforms. sesame credit is the widely used one because it has a tight integration with the most use mobile claimant platform -- used mobile payment platform. if you have a high enough credit score, you can unlock a bike bike if your-- credit scores high enough. for this national

system, what are the metrics that determine if you are trustworthy or not? >> i think that's where the controversy is. a lot of these metrics taken into account are where you went to school, do you have a criminal record, have you repaid your loans. a lot of data points in the u.s. are considered as personal privacy issues. we have to understand that if you don't have a credit history, there's no other way to assess trustworthiness. selina: what about how it is played out so far? there are reports that people are being banned from air travel travelne travel -- air and others. >> a.c.l. was recently banned -- making certain purchases a ceo was recently banned for making certain purchases because his company was bankrupt. in china, i believe they are starting to try to build this trust system. selina: this has garnered a lot

of attention. has.are the dangers this does the government have any sort of recourse if they are falsely accused. >> in the u.s., credit card penetration is around 80%. in china, it is 12%. in the u.s., we have people outside of the purview of fica scores. we have 30 million americans with no credit history. in china, because you are able to build a credit score system from the ground up, it is building lots more inclusive of a credit system is everyone can have access to its based on certain behaviors. selina: you make a great point that there was no pre-existing credit system. how would you compare in c -- compare and contrast it to the system in the u.s.? >> certainly a lot of cause of

but if with data points, executed correctly, it could be a learning point for u.s. companies. data points that if i go did not take into account, we can serve a much broader pool of consumers. when we started doing personal loans and student refinanced mortgages, we took data points that banks didn't like where you went to school, where you worked, and we can serve a population that usual banks could have served. selina: if this goes over well in china, how do you see private companies and governments learning from it. >> there are a lot of learning points and companies all over the world. in the u.s., there are a lot of people who don't have access to products we would deem as basic because we have no way to underwrite those people. i'm not suggesting this, but if you could take into account that someone has paid their parking

tickets, whether someone has made good purchasing decisions, and offer them products, i think you can build a much more inclusive ecosystem. selina: are we seeing tech companies doing this now? facebook has a patent allowing lenders to reject your loan based on the credit worthiness of your friends. >> i don't think they have done anything with it. companies file for patents on the time and don't do anything with it. we're certainly seeing tech companies early and late stage using nontraditional ways of underwriting. so five is one example -- sofi is one example. i certainly think a lot of u.s. companies are taking note of what is happening in china. given the recent trade tensions and the huawei cfo

arrest, are you seeing the appetite of u.s. startups to expand into china diminishing? >> i don't think they are diminishing, but there are a lot of obstacles in place. google recently put their project dragonfly on hold, and a lot of the upstream equity investors are tightening up. that is affecting us. investing in the u.s., we are not seeing too many affects. a lot of the regulations and scrutiny associated with that, we are being more careful with our investments. selina: what are your priorities for next year given the changing landscape, geopolitical tensions? we invest in china, u.s., japan, and korea. we will continue to do that. opportunities, and we will continue to look elsewhere and other growing areas like latin america and the

middle east. selina: thank you so much for your time, david. staying on asia, bloomberg intelligence analysts take a look at the biggest scenes dominating the markets in 2018. >> we see the outlook will be challenging after many years in the industry. it will be driven by a combination of sectors. the first one is the macroeconomy slowdown affecting some of the sectors like advertising for example. >> the biggest concern is growth driver. it will be very challenging. [indiscernible] tencent is still the biggest internet company in china. it is a well loved by all retail investments. it's online game segment will be probably under challenges and 2019, but we see online games

approval potentially re-stopping in china, but the regulatory sense on online games could be tough. >> softbank is one of the largest ipos in recent years. with that, that leaves investors interest, especially investors looking at focusing more time into the sector because of the dividend yields. >> companies better positioned for 2019 are those still operating under platforms like -- for example. these companies could be better positioned for 2019. coming up, will the smartphone companies that led the way in 2018 remain on top and 2019? we will discuss that landscape, next. this is bloomberg. ♪

selina: netflix is giving cheap -- chief content officer a 50% increase in pay and 2019. some 18 million dollars in base compensation. another $13.5 million in stock options. this decade is one of the most powerful figures hollywood, presiding over a budget of as much as $8 billion to produce or acquire exclusive programming for the video streaming giant. the global smartphone market is expected to become more saturated in 2019 as hardware enhancements and new software features drive gains. will apple and samsung hold onto customers? our next guest joins us from new york. given the saturated

market, hyper competitiveness, what can we expect to drive growth in 2019? john: we have a couple of things coming that i think will really drive sales in 2019. one of them is coming from samsung which, hopefully earlier in the year, will introduce a smart phone with a foldable screen. that's can a device open up almost like a book and present you with a screen that is twice the size of say your standard smartphone today. that's number one. i also think number two is that we will see the initial introduction and advent of 5g smartphones. it should be an interesting year. selina: you mention the full double smartphones, 5g phones, and upgraded augmented reality features. which innovation will be game changing next year? john: the one that will quietly change the game will be augmented reality. for those that don't know what

it is, is the overlay of digital images onto an image of the real world. you essentially look at reality through your smart phone camera, but can then begin to pull in digital icons into the field. it has brought utility -- broad utility. it's beginning to creep into our lives ever so slowly. amazon is using it as a selling tool. if you're looking at a couch, for example, you can import an image of the couch onto your smart phone screen looking onto your living room -- out into your living room. one small example of really where we are headed with augmented reality. selina: john, your research for bloomberg intelligence says the previous smartphone market has been outperforming the mid and low tier market. what is driving that? john: number one, you have had a

big change in formfactor with he iphone x. --s a whole different phone with the iphone x. it's a whole different phone for apple. it's a much better device with facial recognition, but they have been able to really get a larger screen onto less real estate than the older devices. i think those two things have really struck a cord. apple has done well. frankly, all of the chinese vendors whether it be while way uwei or others, they are coming out with good phones that are quite good devices. game,ne is upping their and consumers are responding by paying up for the phones. selina: that's a good trend for apple, but what you make of the recent announcement that they are no longer reporting unit sales and the escalating trade war with china that may impact unit sales in china. john: i was shocked to hear it.

i think it's a huge mistake trom a stock managemen standpoint. i'm them pulling back in thing we will no longer support the metrics,- report the tells me we are in for softer sales with the iphone would be my guess. selina: thanks to john butler with bloomberg intelligence. coming up, tech's gender cap stuber -- venture cap caps to uber. "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. ♪

selina: this is "bloomberg inhnology." i'm selina wang san francisco. for the past 18 years, linda gates had led -- has led philanthropic ventures. on investment in women and minorities. emily chang sat down with bloomberg studio 1.0 -- 1.0. >> we don't have enough women founder ceos getting funding.

-- 2% go to percent women and less that 1% ago two women of color. in this space, i think about what is the best way to use capital to move things for women? that's when i started to say any to move some money into venture capital spaces, and do it smartly. the first goal is to make money. i wanted to go behind funds like aspect ventures by jennifer fun stat. people who are looking at these thesis -- people are looking at these and have thesis. you care aboutd returns. you're not doing this to have an impact or not a handout. said -- have said all we care about our returns. they may not be the best people, but they have the best returns.

what you have to say to those people? >> you need to look at what trends are coming and how you will address them. are 85% of consumer dollars spent. women control 70% of financial house, so ifthe you are not investing in products going toward females or women led companies, you're missing an opportunity. i would say the same thing about underrepresented minorities. countryout 2044, this when we think about minorities today, they will be the majority. you are leaving money on the table. good luck 10 years from now. an impact canve lps have and should help ease have in galvanizing change? >> i think we definitely need lps to make those investments. they not only need to make the investments, but they need the network.

under representated people of color. >> i interviewed the cofounder of twitter for my book and i asked do you think online harassment and trolling can be a positive -- problem today if women had been present at the beginning of the company. he said i don't think it would be such a problem. we weren't thinking about how our product could be used to send rate or death threats. we were thinking about amazing things that could be done with twitter. how different do you think the world or internet might be if women had been present when some of these early platforms were created? >> if there was a woman there at the table, and it would take several who had a real voice in real power, they would say, have we thought about this? have we thought about the rape scenario. if you look at the number of women who faced violence, even in the u.s., it is huge. it's hard to me that there are

women at the table who have power. >> do you worry the me too movement could backfire? >> i think there are places where they have already backfired. we have to be careful. if men in the women's group decide to separate in terms of when they have meetings or men will take a meeting along with a woman because they are afraid of been accused of something, that is not good. we have to have the real dialogue about what could create change. what i'm seeing with the me too movement is that we are still at a point of reckoning. there is still more to come out. you're seeing industry by industry. that's reckoning has to happen and then i think we will start to get the "what do we do about it." we are still in the reckoning of recognizing phase and solutions. >> so you think there will be more stories? >> undoubtedly. >> you are seeing it. it is playing out industry by industry. when i see something like times

up, i'm incredibly optimistic. whether you are a far more farm or other industry, you have a place to go to get help. not just that you can happen to a close friend, but you can go to legal help. >> how do you root out bad behavior that is not your coney and? >> i don't think there's one solution that could fit all. i think we put a lot on the sole woman to make change. it is too much. it's too much. it needs to be part of management and part of the board-level conversation. to be part of the conversation, how we are doing on these factors, and that is the only way you will get change. >> that was melinda gates, cochair of the bill and melinda gates foundation. trying to rebuild

its reputation after a tumultuous year led to the ousting of several key executives. a new ceo has taken over. uber'sat down with regional manager to discuss what has changed. >> i have been extraordinarily lucky and have had a remarkable experience at uber. since the day i came on board, i and working for an incredible woman who was leading our east coast organization at the time. a board that was 50/50 men and women that was really supportive of people of different backgrounds and, frankly, different styles, and i felt like i could drive and encourage those around me to drive, and to be at a place where i knew i could come to work every day and fight for what is right. i think the disturbing thing we have all realized over the course of our past year is not everyone in our organization can

say the same thing. it has been invigorating in a is oursay that this mission. i've been deeply involved in ensuring that our culture and norms and business practices going forward are ones we can all be proud of. the exciting thing is that we have teams in the company who have shown that we can grow and scale in a way that we feel proud of, and now, it's up to us to ensure that every single team across the company can say the same thing. i'm really excited about the progress we have seen to date. emily: curious how your work and mandate has changed under a new ceo and if you have seen an actual change in the culture. >> there has been a distinct change in our company, in the in the from the top, and

direction we are going, even strategically. i think we have acknowledged that we need to articulate and hold our teams accountable to doing the right thing every time, even if it is something that is going to cost us a bit the shortcially in term. emily: where is the balance of power between growth and profitability. talk to us about where the pendulum is and what you have been told about company priorities. >> we need both growth and profitability. any company does. especially if it is optimizing for the long-term. we need to ensure that we are continuing to invest in long-term growth, but ensuring we are doing so in a sustainable way. i think the challenge is to hold those things in top of mind at helping navigate through those trade-offs so we

are consistently putting the long-term interest of the company first and ensuring we are setting ourselves up for long-term sustainable success. emily: the competitive landscape has also changed. there's some data to show that lyft gained writers as uber -- riders as uber was going through this cultural transition. are you at all concerned about the threat of lyft? and driversiders always have a choice about using .ber or not they can use another ridesharing platform or choose to walk or public transit or some other alternative. we provide the opportunity at the end of the day for people to leave keys at home or not by that second car, never by the first car to begin with and consider using options that are more sustainable for cities at large. when we do that, we will need

fewer land in our cities allocated to parking. we'll have safest -- safer roads because we do not have people getting behind the wheel drunk, and we will have greater opportunities for people who need it. as we think about some of the lessons we've learned over the past 12 months, it is to ensure we are consistently delivering on the promise to riders and drivers so they have a better option than anything else out there and they are consistently coming back, they have a high-quality, safe, affordable copilot theys is a can rely on on the driver side. i think we are making strides in that direction and will must stop until we are really getting it right every time. na: that was emily chang with uber's regional manager, megan joyce -- meghan joyce.

tech bring down the cost of tuition? forellen pao is calling people to be fired for real change to happen. this is bloomberg. ♪

july, harvard university's president stepped aboard arder to join goldman sachs. emily chang interviewed her just before her departure about the and higherdraising education. >> this is such an important question and one we all struggle with because we compete based on

the experience we can offer students, the resources we can offer faculty for their research and teaching. we do not compete on cost. the way higher education is organized financially, there is not that sense of pressure to bring down costs. byhave brought down price funding financial aid so anyificantly so that student who comes from a family that makes less than $65,000 a has to offer no family/parental contribution to tuition, room and board. in terms of the cost of what we do, that is something we need to get under control and addressed more fully. more fully. technology is going to help with that. what can we do online to

supplement or replace certain parts of instruction so we can leave to people the parts we absolutely need people for and streamline some of the other we will seehink some of that coming forward, but constraining cost is going to be a real challenge for all higher education. emily: there are a lot of companies trying to disrupt higher education and saying that a harvard degree will not matter by the time my children go to college. >> we have to make sure we attract the best talent. that is why affordability is so important. i also believe that the experience -- and you have had this experience so maybe you can testify to it -- the experience of being in that community, living in that community with other students from whom you probably as much as you learn in any class you take -- that is the core of what a

harvard education really is. of residential dimensions harvard education are a central to the full experience of what it can be, and that is not going to be disrupted by a simply online experience. you can learn a lot from an online experience, but what you are learning is about the subject matter of the online experience. you're not bumping into somebody in a court order and -- corridor and finding that they challenge you in ways you never expected or funding that they expand your understanding of the world. that is such an important part of what happens both inside and outside our classrooms. emily: there is a sense from the heart of silicon valley that stanford has surpassed harvard, especially when it comes to technology and becoming a feeder for the biggest and most world.l companies in the

is that a fair assessment? >> of course not. our different -- we are different institutions, and i think that is a great strength of american higher education .ystems have at want to sit and stanford/harvard competition in front of you and say "oh, we are so good at this." we have a great presence in technology and students concentrating and engineering have tripled in the last few years, so that is an area we are paying more attention than we did a decade or two decades ago, but we also have such deep-seated strengths in life sciences and the humanities and the arts, and such a commitment social sciences, and the endeavors that are not simply involved in technology. very successfully with stanford for students and

for faculty, and so we are very pleased to be harvard, and we expect to remain harvard. emily: what is harvard doing differently to train the worker for tomorrow? do you think harvard needs to do anything differently to arm workers with the skills necessary to succeed in a modern economy? >> or have been changes in how we approach education over the past decade to respond in part to what you are saying, which is we find our curriculum much more oriented and our students much more eager for hands-on experience in a variety of ways. engineering is obviously a discipline that has a lot of hands-on dimensions. students are also very and theed in the arts creativity and innovation that are part of making things, and, as you learn. we also seek students much more involved in wanting to solve

problems, to have an effect on the world, so there tends to be many more internships or public service opportunities tied into curricular offerings, doing and thinking are intertwined much more closely. it used to be you thought in college and you did when you left. now those things interact with one another, and that seems to me and extraordinarily important part of readying students to take on the challenges that they are so eager to embrace. selena: that was former harvard president true faust. much more ahead. this is bloomberg. ♪

selena: the former ceo of credit the firstwas one of women to speak up about sexual harassment in the tech industry. she became one of the first women in tech bringing a lawsuit against her former employer.

emily chang sat down with her to discuss. >> more of this backlash against change, and it tries to fix problems that have taken place the last several decades in tech where we have created systems that favor homogeneity. ow do we change it? it requires taking down those systems and how we try to catch up and transform how you do things, and that is uncomfortable for people who it requiresemily: you have sugge need to be fired in order forsu. real change to happen. who should be fired? >> people who do not believe that women and people of color andpeople who are older immigrants are equal employees who are able to do the same work

and have these innate biases against them should be fired. if you cannot treat your coworker equitably and fairly, you really have no place in the world. emily: how do we know who those people are? is this a matter of if you have not gotten results or if you have not tried, or if you have made an untoward comment? how do we identify the people who are not doing enough? >> i don't know that it is the full who are not doing enough. i think there are people who are saying terrible things about their coworkers, sharing private information about their coworkers so their coworkers get attacked by outsiders. those people should be fired. there's no place for enabling attacks on your coworkers in the workplace. you want people who believe in your culture and if they do not believe in the culture and they show that, they do not belong. they are not promoting your workplace ideals. they are not on the same page. redditwho were ceo of for some time -- you were.

one of the questions i ask in my book is how might the internet be different if more women were involved in creating and designing these systems in the first place? do you think trolling would be orh a problem at reddit facebook or twitter? >> it is unfortunate that they were mostly started by white men and run by white men for so long and most of the engineering teams were white men. nobody experienced it in the way werepeople of color or who women or non-binary experienced it. if you don't experience it, it's hard for you to address it, and there was not anybody calling attention to these problems. you see it on other platforms, too. nextdoor and airbnb are trying a fix problems that came from homogeneous workforce, and now

they are trying to bring in changes to make sure their platforms are more open and more inclusive and do not reflect the early that their employees did not experience. emily: let's talk about this book. what do you think can be done to fix these issues at facebook? theyreally think that if brought people into their leadership team, on to their board, who were actually part of werexecutive team, who underrepresented, people of color, that it would be transformative. if they had more diversity at the executive level, it would make a huge difference in how people understand issues because it is coming up at every major decision point, versus after-the-fact bubbling up through the organization and being quashed at various points. i don't know exactly how facebook works, obviously, but from what i've seen having this wereat reddit where people

experiencing harassment, people who were deep in the product and were able to share their experiences, that really helped us make change. shouldally understood we start small, focus on one issue at a time, and these are the issues and this is the order we will go in and do things very methodically. i don't know that there is somebody who understands these issues of harassment and the toxicity on their platform the , especiallyebody like a woman of color, would understand. selena: that was emily chang with ellen pao. that does it for this edition of "bloomberg technology." we will return with new shows in the new year. global to follow our breaking news network at tictoc on twitter. this is bloomberg. ♪

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♪ david: when you were a young boy, did you say, i want to be chairman of the federal reserve board? alan: [laughter] david: you were called by many the maestro for being such a great maestro of the economy? alan: i always got too much of the credit. david: you made your key decisions in the bathtub in the morning? alan: i was writing speeches in the bathtub. david: were you surprised by the amount of criticism you received at that point? alan: nobody forecast the 2008 crisis. david: do you see any movement to solve the deficit and debt problem? alan: i see a lot of talk. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ daviddo