♪ emily: i'm emily chang in san francisco, and this is "bloomberg technology." next hour,n the slack could be very hot of the usual ipo route by opting for direct. while the company might follow in spotify's footsteps. plus alphabet's board is being sued for claims of sexual misconduct. among the names, googles other.der and circui one

we look at the missions to come in the new year. first to our top story. 2019 is supposed to be the year of big tech hitting the public market. but a u.s. government shutdown has caused some ipo talks for companies like uber and lyft. the messaging platform slack is taking time to weigh options. the company is looking to sell shares directly to bidders on the stock market, choosing a direct listing over ipl. if it goes ahead with this unusual route, slack will follow spotlight which began trading in new york in april also via direct. for more, i want to bring in a us.t who covers ipo's for what do you make of this potential strategy? >> this is something we know they happen considering for a while.they have not filed anything yet . the shutdown has been a big problem, but it looks like they will go down this route and go for the direct listing. what is interesting about that,

it is the second big tech company to make this move. after spotify, people thought there might be a big rush of people but it has taken a while for someone else to take the plunge. it means they will still have banks working on this, but you avoid the big underwriting fees that come with things like that and put yourself at the mercy of the market. spotify,en it comes to is there a perception the direct listing was a success, that it was the work all? elizabeth: in terms of how it went, how the day went in april, everything was very smooth. it quietly starts trading. the company is not looking for the last publicity you make it. but everything went very well at the time. since then, shares have slipped. whether companies look at that attribute that to the direct listing decision or the business. emily: what are the potential disadvantages of choosing this route, which uber and lyft thus far are doing it the traditional

way? elizabeth: the company does not raise any money this way. it is something unique, so they do not need that. slack has the brand recognition of one of the social media companies. in terms of stable revenue, it was like a mature business software company. they are not looking to raise money. what this allows them to do without doing that is provides a liquidity to investors and employees. emily: what i'm looking at for a potential valuation here? elizabeth: about $7.1 billion back in the middle of last year. i think they will not be aiming higher than that. financials which we should get in the next couple of months before they go to market, that will help investors decide how they want to value the company after the ipo. emily: what about timing? we talked about the impact of government shutdown on ipo talks.

we have seen slight delays in the talks that uber and lyft are having. could slack going direct allow them to avoid the hiccups? elizabeth: if anything, the opposite. this is unusual to read the sec does a lot for small companies but not big large technology companies. they need to have more interaction with the regulator in more discussions. definitely the shutdown can cause a delay for that. emily: interesting. i know you will keep us posted. now turning to apple, remember when the iphone maker in an effort to boost sales offered trade in sales for people buying the new iphone? two major chinese retailers are slashing prices. they may have misjudged the chinese appetite for its flagship product. for more, i want to get to mark in los angeles.

how unprecedented is it for them to cut prices like this? mark: it is fairly unprecedented. we have seen the trade-i deals from apple and promotions from companies like best buy, perhaps a u.s. equivalent to the chinese retailers you mentioned. but this is in no way insignificant. this is a big move for apple. it means they are slashing the price i that they are using to sell to the retailer to sell at higher prices. imagine what the retailers are paying in order to sell those lower price points. it is not unheard of given the current climate with the response to the 10 r. it is a big move for apple and the retailers. emily: sales going to be something chinese consumers come to expect? mark: right. the main problem with the iphone, if you want to consider it a problem, is that it is much higher in price compared to very similar devices.

even almost double the price in some cases. you are not really getting a lot more for your money in these specific cases. by lowering the price, it matches them more closely with other chinese phone makers. so it could help.in that case , apple is really fighting with their features and services and hardware offerings versus people just going pretty cheap alternatives. emily: now we know that apple is working on its new phones for this year. there are reports they will be offering three new phones, just as they did last time. in your reporting, what you're hearing from sources, are you hearing anything to cash in apple will change its strategy in 2019? mark: no, and he reportedly is not really news. they have had three new models for the last several years this is basically a continuation. of the same strategy. the news would be if they are doing more models. we

have been expecting these camera improvements. in terms of changing the strategy, it appears apple realized they had a problem on the hands in terms of slow iphone sales between november 1 and december 31, so the two month period. these things get locked in at a high level. teachers can change but the high-level plans get locked in a year-and-a-half before release. this only started happening a month or two ago. too late for them to change their plans. the whole plan for 2019 was to not a significant iphone update but the 5g upgrade. what you arerious seeing in terms of market share at a micro level and what new data we have. we have seen stocks slide. several analysts citing competition from huawei. are some doing well and others

not doing well in china? we are reallywhat going to see here is apple and samsung having problems in china for the next few quarters. certainly saw it last quarter. it is interesting because samsung is fading away as an apple competitor in some respects. obviously, they are still the biggest rival. hua think huaqie is -- wei is creeping up in that sense. since i was going to be announcing its new devices february 20. these are going to be hot new products with lots of new features. they will announce the folding screen, the edge design on the new s10 and the s10 plus. they will have a floor model. tons of new technology. the landscape right now in china is going to be huawei versus apple and other chinese lawmakers.

but samsung in other parts of the world, europe and u.s., really going to be a challenger in the second half of the year. emily: interesting. i know you will bring us all the details on the new models when you have them. mark for us in los angeles today. board of, out of it's directors -- alphabet's board of directors being sued for their handling of sexual misconduct claims, but lawyers are hoping to make changes that go beyond google. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

in november, thousands of google employees walked out in protest at the company's approach to sexual misconduct. now, shareholders are going after the board. on thursday, a group of investors sued alphabet directors for approving a $90 million exit payment to andy rubin, father of android, while covering up his alleged sexual misconduct. the suit filed represents the first legal action against the board directly, targeting top executives, including cofounder larry page and sergey brin. google did not respond to bloomberg's request for commen. so you obtained the board minutes, which were in the complaint filed, but we got. wha-- redacted.

what can you tell us about what is in them? >> unfortunately we cannot tell you wha the details in their we . we have five pages of allegations but because google has demanded they continue to remain sealed, they will be sealed until the judge rules on that, which can be in the next couple months. emily: you would not have filed the suit if the minutes did not back up your case. right? frankl: that's right. -- frank: that's right. yes, we would not have sued the board if after reviewing them we determined there was no liability on their part. emily: so all the nine directors you say in the complaint were informed that these allegations against andy rubin were credible. do the minutes show that anyone raised objections to the payout? i don't know if we can speak specifically to that. but our concerns are that the

board acted in a way that was inconsistent with any of the knowledge that we believe existed. emily: just hold out a couple of lines from the complaint. you say he was allowed to quietly resign after intel investigation found the allegations of sexual harassment by rubin to be credible. he was elected to engage in human sex trafficking, and hundreds of thousands of dollars to women to be owned by him. we have a statement from andy rubin's lawyer. she told us this lawsuit mischaracterizes his departure from google and sensationalize his claims made about him by his ex-wife. he let google voluntarily and allies any misconduct, and we look forward to telling his story. he is coming out swinging. but why do you think you have such a good case? frank: what is different about our case is we got the nonpublic

documents. no one has obtained those before. and we reviewed those to determine whether the board itself was liable. that has been our confusion. the committee at google that approved this compensation was comprised of some permanent people up there. john doerr was the chair of the committee and approved this. has was ram shery ahn. and paul otellini, who is now deceased. we reviewed what they did with respect to mr. rubin and hasrmined that the board direct liability for breaching their fiduciary duties. right? ann: absolutely. emily: alphabet did not respond to our request for comment. we reached out to john doerr and other representatives of google who declined to comment, and a

couple other board members did not respond to our request for comment either. do you believe that these are isolated incidents? what happened with andy rubin? do you think this is a broader problem? ann: there is no question it is problem and we are hoping to get more information once this reason start about what has gone on at once -- once discoveries start about what has gone on. there has been a massive impropriety, not clearly sexual harassment, because some of them seem to be consensual, but they the with people including the others who were having sexual

relationships under wing of theirs. and in one case, mr. trump and, who -- mr. drummond, the general counsel, had a relationship with a woman who had his baby. she is married. emily: she no longer works there. ann: she know longer works at google because she was demoted initially from her work in the general counsel's office. and then after that, she was pushed out. emily: so you claim that the board paid rubin for fear that he would make the details of sexual harassment by a senior executive public. what evidence do you have of that? frank: wall that is as connecting the dots. there was no reason for google to pay him $90 million. all of the equity that rubin had when he left in october 2014 was unvested. it was about $177 million. they did not have any obligation to pay him that equity, so you have to raise a question of why they would pay him $90 million to leave when he did not have any of the equity vested? that is the only question we can discern from that type of obtainment, especially in terms of the light of the fact that,

and you have to remember, before they fire been they did an extensive investigation at google and determined the allegation of sexual harassment were credible. so he should have been fired for cause, in which he would have gotten zero dollars. lunationrationalized is the board paid him to stay quiet because if they fire him, he would have sued them for wrongful termination and said, hold on, you are saying i did something wrong? all the senior executives and even the cofounders of the company are doing similar thing.happen you fire me ? emily: is it true any monetary damages would just go back to alphabet? so then why go this route? what does this accomplish? ann: because we are asking for changes. not just at google and their governing structure as well as their approach to sexual harassment, investigations, their approach to equality of

how women are treated in those investigations. is manywhat we know people have been dismissed from google. lower-level employees. emily: googled it -say that 48- say that 48 people have been fired for sexual misconduct issues in the past two years. ann: and then they received a payout. it is very clear what happened with the high-level employees for whatever reason, they are treated differently. they get a pass. when that happens and the employees know it, it creates an intimidating environment in the workplace. and we also think this is probably true in other companies in silicon valley. emily: i wonder, what about addressing an environment that who have thesele kind of allegations against them? let's talk about changing that. ann: precisely.

and there are a number of things, and it is not specifically stated in the complaint, but there are some things in the board governance that the complaint has asked for. but also, in my view, they need more women on the board because people would respond differently if there were some women on the board. emily: you are preaching to the choir on that. you also want them to change the voting structure and the share ownership so that larry and sergey don't have as much power. frank: right. we wanted to go to a one-to-one structure. there should only be one vote for each share. the only reason they control the company is not ownership of stock but the voting rights. they can effectuate whatever they wantthey can effectuate whr they want through their voting control, and we feel that is a big the problem. they were involved with wrongdoing so if you change it to one vote per shareholder, as

the case with many publicly traded companies, you will allow the public shareholders to have greater input into these issues. emily: all right. we will be following this every step of the way.appreciate you coming by here to share the case you are trying to make. ann, who filed the suit against alphabet. frank: thank you. emily: spacex launched and landed it was rookie of the year.what to expect from the company for the rest of 2019. ♪

emily: space acts has successfully launched its first mission of what is expected to be a busy 2019. on friday, the company launched the falcon nine rocket carrying 10 satellites into orbit. these are the first of 75 satellites that replaced their existing commercial satellite network. a fairly routine launch

from the market went up, satellites deployed, they landed on the drone ship. this is showing that spacex has gotten pretty good at launching rockets. it was just a couple years ago when landing was a big challenge.now they do it pretty routinely and they are expecting to do roughly 18 to 20 launches again this year. last year was a record 21 launches. it is going to be a big year for them. emily: how does that compare to what the competition is up to now? dana: they are working the competition by far. ula had eight launches in 2018. spacex plays in the launch market. they have the government, and have to and a commercial satellite operators -- n. emily: what a potential challenges this year, potential breakthroughs? dana: the big thing is the potential crew program with nasa. elon musk wants to settle on mars. , weng astronauts to the iss

will see the first demonstration frida flight. that as well, they can be flying astronauts this year. emily: this year they could be playing astronauts? dana: they could. we will see. nasa is a conservative agency permit the goal is to fly safely as opposed to sticking to a schedule. right now, the united states is dependent on russia and a rocket to get astronauts to the iss. a big push to return that ability. emily: where is nasa in all of this? dana: because of the government know.wn, we don't emails and phone calls to announce that be returned right now because the press officers are on furlough. they said they are eyeing no earlier than february for the first demonstration flight. emily: all right. thanks so much. dana: thank you. emily: coming up, gm is betting big on cars and making catalog its leader. our conversation with gm ceo mary barra is next.

this is bloomberg. ♪

place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today.

this is bloomberg technology. i'm emily chang. while companies like uber and lyft are trying to get to an ipo, slack is trying to get to the public market differently. it could potentially choose a direct listing over a traditional ipo. you remember spotify taking this route in 2018. are we going to see more of this from tech companies in 2019? the government shutdown is

happening in your town. ipo's forome of the uber and lyft. slack could forgo it all and go to markets directly. that might be a more difficult route for them. what is your take on this potential good decision? >> i think for some companies, like spotify, it is an opportunity. they have brand recognition. that is one of the things that companies look for when they have an ipo. this gives us an opportunity for a subset of companies to make it to the public market. >> is the shutdown impacting work in silicon valley? is it impacting any of your companies? >> i don't think so. not yet. ishink the biggest impact the sec regulators who are required to send companies public are not at work. downturn at the

end of last year. anyone who was planning to go out first of january is probably delaying plans anyway. a lot of the companies who are havep for ipo's this year a strong fundamentals. january is nott going to affect them. if you are a company that needs cash, you are probably watching the ipo window. this is definitely a new existential risk that they did not account for. >> another problem is the broader economic slowdown. we saw a record amount of venture capital raised last year. $129 billion which was 33% more than the year before and the only -- the record was set in 2000 which is a little bit foreboding given what happened

after 2000. how concerned are you about a broader macroeconomic downturn? >> there is a lot of relationship between private and public markets. people in the venture capital industry watching closely. venture capitalists are very resilient. they are used to risk and uncertainty. year iny invested last portfolio companies is great for our country to make sure the next generation of new companies are able to grow. the last several years, we had 55 billion raised by venture firms that will start to be invested over the next several years coupled with what they had over the strong fundraising over the last four or five years. to me, they are prepared and they are ready. if there are market corrections, you will see the best and savviest investors being able to support the entrepreneurs that

need it. >> are you concerned that if the volatility continues, that funds could dry up? billion, --ter $29 $129 billion, down is the only way to go. termswas a peak year in of money going into companies. we know a lot of this money went into later stage deals. you don't need time to market. you can wait to build strong fundamentals. we have seen that over the past few years and i don't think that will change. there has been a lot of money from the capital markets at the early stages as well as the later stages. the market seems strong all around. there may be a time of slower growth we don't think there will be any significant change in the

ability to raise capital or funds to raise capital. >> how about the willingness of companies to raise capital? there was a provocative headline in the new york times, more startups have an unfamiliar message for venture capitalists. get lost. talk about a movement to not some of these entrepreneurs might think this is not the best way and we should go more strict slowly. is that a larger movement that you are seeing? >> i don't think we have seen evidence that that is a large movement. when you look at the data and you see that companies are still north of 10 years between founding and exit opportunity, are suggests that companies

staying in the long term and that is good news to them. >> is going to be an exciting year. you both. gm is betting big on the electric car market putting pressure on the competition. they confirmed that they will use the cadillac as the lead electric brand going forward. >> cadillac is our technology brand. , ite look at the technology is appropriate the cadillac is our leader brand in electronic vehicles and we will fill out the portfolio that makes sense. it is an important part of rebuilding cadillac and demonstrating that cadillac is a true luxury brand. delighting customers with the

technology and the electric experience. how does autonomous vehicles fit with electric vehicles? >> we believe that all autonomous vehicles should be electric vehicles. that is a leveraging of the technology and the platform as well. we are working on the rate of iteration that we are demonstrating and we just posted a cool video yesterday. to demonstrate how we continue to learn new operations in an urban environment of san francisco. we will be gated by safety. we will make decisions to make sure our vehicles are safe as we demonstrated. as we canng as fast and we believe that we can take in a constrained environment and demonstrate our

electric vehicle capability. >> you also have announced a new architecture will be for china and brazil and mexico. tell us about why you are doing that. >> looking at being customer driven. the customers in those markets want the latest technology. they want performance from safety and conductivity. often those markets are served by older architecture. we said that with the scale and a significant share we have in china and strength in south america and mexico, let's do a new architecture where we can really deliver something special to the customer. the feedback we have gotten, we will share some of those vehicles today. it will be very significant. we start that rollout later this year in china than it will slow to south america and mexico and other 40 countries. many you look at how people are acquiring electric

vehicles, it is not that high of a number. >> i believe the customer is rational. if you look at china, because of the regulatory environment, it will grow more quickly there. we are focused on having a desirable, profitable appropriate range so we don't have range anxiety. we can start to create demand. we are working on the electric vehicle technology and the werning from the vault -- are also working on the infrastructure. theelieve we will have largest charging infrastructure to our customers. we think that is going to allow the growth to occur. we ared we be where today if it was not for tesla? when i look at electric vehicles, we have been in it

since the beginning. we knew that technology was important. there have been many important players that have helped from an electric vehicle. there are more coming out which is why we have to be quick. gm was there. more coming up. the future of retail is next. also facebook security problems ahead. as bloomberg. -- this is bloomberg. ♪

a series of lackluster sales reports from today selloff in retail stocks. for walmart, investment in technology is key. as part of our retail transformed series, walmarts chief technology officer told us the robots are coming but they are still hiring humans. >> the biggest thing we have done in the last year or two, we have a robot that scans the shelves and goes around the store to make sure items are in oftentimes, this is a human and machine combination. the robot can spot an item that is out of stock or misplaced. then, assign a human to deal with the situation. it is really the combination of man and machine that is making

us more efficient. imagine they would have preferred human and human in the past. jobs heobots are doing scan and i'll and you are looking at a row of a thousand soup cans, how do you determine which ones are in the right place? is lessmust mean there work for store associates to do. >> what customers want to see is more humans in the aisles answering questions and helping out. process to that allow customers to be on the floor talking to employees. that's what employees will -- customers want to see. in some cases we are actually adding employees. -- jobs just joys for grocery pickup.

see jobs not going to going down like at amazon removing humans altogether? , but we aresting talking about a huge scale. you are talking about a walmart supercenter, it will be sometime before it can go completely cashierless. foralmart gets credit up -- the scale of its investment. investors are frustrated that investment might be hedging profitability. are there things that she would like to do but you cannot because you -- investors want to see margin improvement? >> walmart has invested in technology since the 70's. we have always had a good balance between profitability and investment in tax. we are growing our technology team dramatically. we have added 1700 people last year and we will hire another

2000 this year all around the globe. >> you are not feeling any cost pressures in the technology team? >> right now, it is all about how fast we can grow. but wet a blank check want to be smart and invest smartly. it is about how i can get the fast balance between how can you grow and be efficient with the organization. the best part about the cto job is looking at new technology. the worst part is budget meetings. >> last summer you partnered with microsoft on a five year cloud computing deal. how much was that decision driven with not wanting to partner with amazon? >> microsoft is a great partner. couple of years, we have talked about cloud

computing for more than five years. only in the last 18 months has it been cost competitive. we are building our own data centers and we have a strong network and infrastructure team. only now has been cost competitive for the cloud service competitors to compete with a company of our size. we have been working with microsoft on their cloud infrastructure. we started implementing iot and other platforms. >> i'm sure not giving data to a competitor when it comes to grocery and retail must be part of that decision. >> absolutely. most retailers are in that boat. microsoft is a better partner for them. 2019, isg forward to there anything you would like to announce or let us know you are working on? hiring2000 people we are

are focused on the robotics platform and also using walmarts data to our competitive advantage. we have a massive amount of data when it comes to customers and also some chain and merchandising and pricing. in ourinvesting heavily machine learning platform and folks that understand the data space. >> that was the cto of walmart. coming up, fewer eyes on cyber threats. we will discuss that next. this is bloomberg. ♪

we are three weeks into the partial shutdown. we have heard several stories of natural -- national parks strewn with garbage. field thatother could have potential impact, cybersecurity. 30% ofve a furloughed employees in a unit countering cyber threats. -- the institute of standards and technology provides guidelines. is cybersecurity -- national cybersecurity at risk? >> it is one of the most important things to keep people in this country safe.

it is something that could be at risk if the government shutdown continues. in theoyees cybersecurity units are not working. there is a lot of work that private companies are doing as well for privacy and security of people around the world. lot of the largest companies in this country are still focused on security for the legacy era. or you have antivirus and your computer. not enough effort is going into mobile security which is where most of users are spending most of their time. >> what do you imagine is not getting done at the government level? >> i don't know enough about the about the what details of what is happening or not happening at the government level. i am looking at the world from the level of what is happening

for end-users on their devices. being a company that provides the largest security platform in the world or the largest mobile security platform for end-users, we are looking at how do we protect people on their mobile devices? date haven people to turned to us to enable that protection and security and privacy. >> we have an potential threats. we also have internal threats. you can look like -- look at a company like facebook and the and how with user data foreign and domestic actors are exploiting facebook. a resume from facebook engineers who want to leave. what are you seeing? >> they are saying i could be spending my youth energy in time in helping facebook exploit user

data or i could join a company that is helping to protect user data. >> how many more resumes are you getting from facebook employees than you normally do? >> a year ago, it was hard to recruit people out of facebook. they were led to believe that they were helping people connect with friends. they were actually helping facebook make money off of our data. people realize that what is sayally going on and they you want to go work for companies that have a real mission and soul and purpose. before, the first three companies to reach a billion people online were google, yahoo!, and facebook read all three are in the business of exploiting user data. >> apple has come out strongly and put itself on the opposite of these consumer data

companies saying what happens on an iphone stays on an iphone. hired someonet who used to work on privacy at facebook and has become a local critic of facebook. what do you make of that? have a lot of respect for what apple is doing. >> are they really on the right side of history. >> my thinking is that apple is trying to do the right thing. excited, therey is one very large tech company that wants to protect user data. we have been talking about security for millions of users for a number of years. we always felt like we were alone. everyone wanted to exploit user data. it is great to have apple come out and say we are in the same

boat and we want to protect user data. >> you think apple could single-handedly work these companies? fort -- ? >> they are trying to do the right thing to put three users first. sure --tty of moneyised a lot last year. what is on tap for you this year? >> the things we have been talking about here. security is not innovation and

all the biggest security companies are still helping security pc. we are looking to build the largest suite of products for mobile users. to talkll have you back more about this. happy friday everyone. that does it for this edition of bloomberg technology. ♪ amazon prime video is now on xfinity x1.

so when you say words like... show me best of prime video into this... you'll see awesome stuff like this. discover prime originals like the emmy-winning the marvelous mrs. maisel... tom clancy's jack ryan... and the man in the high castle. all in the same place as your live tv. its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome.

david: when you have problems with whether, do you ever communicate directly with god? pm netanyahu: all the time. we used to say it is a local call, but the internet changed all that. david: what is the pleasure of being prime minister? pm netanyahu: oh, investigation. [laughter] david: the israeli economy is doing quite well. pm netanyahu: if you're not investing in israel, anyone here not investing in israel? invest in israel. >> would you fix your tie, please? >> people wouldn't recognize me if my tie was fixed but ok. just lit