♪ carol: what to bloomberg businessweek. i'm carol massar. jason: that's according to economists, plus, did foxconn con wisconsin? the magazine investigates what happened to president trump's of $.5 billion deal. jason: we begin with the international cover story. a report that sheds new light on chinese tech giant huawei, and

the allegations the company has been trying to steal u.s. trade secrets. weber is here with us for more on that. this they story that reminds us of why u.s. officials have so many problems with them. it is a special story because it provides a rare glimpse of something that no one has really understood. huawei islways claims a bad actor. and yet get there has been no tangible proof to show for that. erik schatzker really pulls off an incredible story with this one. the moment that he came to us with it, we said, stop talking and start writing. jason: go wherever you need to go and it takes them to vegas, there's a sorbet stand? he is undercover. joel: where this really began was an american company, called ocon, which is a glass that they thinks it will make better smartphone glass. united glass always shatters. he thinks he has the technology.

andays a sample to huawei, he comes back broken, which is not supposed to happen. carol: i have to say, sitting down with eric, he tells the story so well. thank you so much. edgar joel weber. we got more from our reporter erik schatzker on this story. an investigation underway involving a small start up outside of chicago that was in the advanced materials industry. they are trying to develop a diamond coating that would go on top of your smart phone display, making it harder, more scratch resistant and ideally, a great appeal to the likes of apple, samsung, lg, htc, the world's major smartphone manufacturers. including while way. the reason -- huawei. the reason this was happening was because of their interactions with huawei. they had been sending samples of their diamond glass product to a different -- a bunch of different smartphone makers.

carol: that is typically what a supplier will do. eric: it standard in the industry. eric:you develop the eight technology, go through iterations, and once you have something ready to send to -- customers, you send and they perform test. carol: there are rules around that correct? yes. the rules were you are able to have the sample for 60 days and the tests your perform have to be nondestructive. this company, acon semiconductor, sent two rounds of samples to huawei, and we can assume they did the same thing with other companies, and after the second round of samples went and the 60 days past sample did not come back. they demanded that the sample be returned immediately as you would. the first thing they got back from while weight was an email with a picture in it. the picture was under magnification of the sample and it had a big scratch through it.

we talk about this diamond glass as being scratch resistant or unbreakable. it is up to a certain point. it is very thin. it is not a chunk of diamond which a be a lot harder to scratch. its finalo not in form. it was a prototype. they saw the scratch and a thought, my goodness, they have violated the terms of our agreement. they have damaged the sample. again, they persisted in asking for the sample back. it was finally returned last august. officer chief operating at this little start up outside chicago opened up the cardboard box. tons of safety packaging, right? eric: yes. it's a delicate piece of agreement. he realized the sample was not just damaged, it had been broken into two pieces and three shards

of this diamond glass were missing. point, that he and the ceo and founder of this company, realize, that something very bad was happening. this is not what companies do when they are engaging in good faith business. huawei destroyed the sample for reasons they did not understand. they could surmise it. they feared the worst. jason: the worst being that their intellectual property was being stolen. eric:eric:

worst possible outcomes. absolutely. huawei had damaged the sample in an effort to reverse engineer the proprietary promises and -- processes and figure out how to put the diamond coating on the glass themselves and get to market that much faster and in doing so, destroys the commercial opportunity for the company. also, what else might they want diamond film technology for? a kahn semiconductor did not get into this business to manufactured diamond glass. the got into the diamond coating business because in theory, there are a lot of potential applications. electronics, and also defense. if you want to get into the business of laser weaponry, either on an offense of basis or a defensive basis, you need diamond. i won't go into the details of it, but diamond is a great heat dissipating material. particular use in defense applications as opposed to aphids of applications -- as opposed to offense of applications. they worried that it wasn't just huawei tried to get a job, it was the chinese military tried to get a jump on the u.s. army. carol: enter the fbi. eric: they brought the fbi in. of,weeks later, the ceo this gentleman named carl, was

added fbi seminar. field office was holding seminars on corporate espionage for local area executives area had been going to these. he went to another one that happen to be two weeks later. and it was dark with its, a special agent at the fbi field office was delivering a seminar espionage and the case study was something that is now become more famous, while ways attempt to steal -- huawei's attempt to steal technology from outside seattle in 2012. the coincidence was too powerful. he decided right then and there, without approval, that he had to talk to the fbi. he approached her during a break and prefer on what had happened. that the fbi took an immediate interest and things bn to move quickly. jason: that's an important thing to point out.

any of us in the normal course of our business, if we approached the fbi, we think the fbi is going to proverbially had us on our heads and say we're going to get back to us. it will stick in a file. eric: that's not what happened. we have been led to believe that the fbi has been dragged through the mud politically over the recent outs, but in this post -- this case, they were on it. carol: up next we will hear from the ceo of akhan semiconductor. plus, eric will give us a play-by-play of the sting operation in las vegas last month. carol: it's fascinating. this is bloomberg: businessweek. ♪

carol: welcome back to bloomberg: businessweek. jason kelly.

join us on the radio from two-5 p.m. eastern time. you can get our podcast on icloud, -- on soundcloud, itunes and on her website. -- our website. we will stay on this international cover story about huawei. bloombergs erik schatzker followed an fbi investigation into their dealings with the chicago area startup. ceo expense to eric why he thinks they were going after his technology in what he expects to happen next. >> the worst case scenario, we have been publicly discussing some of the work we are doing on the defense and aerospace side. it could potentially put them in the right direction in terms of what to optimize. that is the worst case from a weaponry standpoint. the best case on the context of simplyte espionage is wanting to differentiate from against the same sites, apples and samsung's of the world, giving them a leading advantage. they are setting up to bring

something out to to their investigation. akhan is looking to file said no -- civil litigation concurrent with it. our main purpose is making sure that the fbi get their investigation right. there's a national security portion of it. there's a corporate espionage portion of it. there's a market value portion that akhan would seek to remedy in terms of damages. get to some of my para parts of the story. we talked to eric about the lead up to the fbi sting operation against huawei. it happened at the ces show in las vegas. to keep thein order investigation running, did not want them to break off contact with huawei. they asked them to reinitiate contact with huawei so the fbi can listen to a conference call, effectively bug the conference call and have these akhan askutives as cut --

questions. in the course of this call, they learned that the sample had gone to china. that is a very important part to make, because diamond coating, with its applicability to military applications, is on a restricted list. it is not allowed to leave the country. it is regulated by a regime called the international traffic in arms regulations. if it i got to china and they had reason to believe it did, that would have been breaking american law. take us now to the consumer electronics show in vegas. it was aened the echo -- what happened to? eric: that evolved out of that conference call. then admitted that the simple have got to china. she had indicated that huawei wanted to continue conversations. it was hard to figure out who is playing who. we're trying to lead huawei, we as in akhan, we're tried to lead them down the garden path so the fbi can gather more information. it seems huawei is trying to

play akhan in order to get further along and learn more about the processes. set up this meeting at the consumer electronics show. that is where i happened to be. they wired up the chief operating officer with a bunch of recording devices, covert surveillance devices, and initially, they were going to have this meeting in a room at the consumer electronics show. an hour before the meeting was supposed to happen, the executives of huawei change the meeting to the forecourt at the venetian casino -- food court at the venetian casino. i watched the two groups meet. the akhan executives with the huawei executives. i watch them walked toward the food court. they walked into a fast casual restaurant called prime burger and that is where the sting went down. i was about 100 feet away,

trying to walk -- try to look inconspicuous. carol: what happened? the fbi, thanks to the surveillance equipment, recorded both audio and video of this interaction. there were discussions about where the sample had been. the huawei revisited its who were there claimed endurance about the damage -- ignorance about the damage and how it can to china. they kept pressing for more detail about akhan's operations, trying to get further along up the value chain and understanding how they are able to engineer the film. not even a couple weeks later, that was on january, as a matter fact, about 20 days later, that was generated night, and on january the 28th, the fbi conducted a raid, executed a search word on huawei operations in san diego, which is where the sample had originally gone from akhan to huawei in san diego.

they gathered further evidence and now we are waiting to find out what the government does. jason: one of the trickle things they arewei is that privately held and we don't have much information. that is what we have taylor riggs to help us understand this tech market. closely held within the chinese government, that we don't have a lot of information. we have an etf that follows the tech sector in china. it does give us a good gauge on where we all stand. it looks like they track pretty closely together. except, what caught my eye, was at the end here. we're looking at the forward p/e ratio. the u.s. tech sector in blue has had a run-up in price because some are saying with the 5g rollout. we've heard from earning season that a lot of analysts and investors are starting 5g to boost the u.s. tech sector area huawei and 5 -- tech sector.

we know there been issues with huawei and 5g. carol: interesting to see the gap between the two. thank you so much. up next, the strange and similar case of dr. gallant and chairman j. this is bloomberg businessweek "blo -- ♪

jason: "bloomberg businessweek welcome back to "bloomberg toinessweek -- welcome back "bloomberg businessweek," on jason kelly. carol: i'm carol massar. you can listen to us on the

radar -- radio. jason: in london, on dab digital and on the bloomberg business at area in the finance section, fed chairman jay powell and his predecessor, janet yellen, they turned out to be remarkably similar policymakers. carol: we spoke with federal reserve reporter jeanna smialek about what could be the end result of the yellen-powell era. >> he is very much doing exactly what janet yellen did in the sense that he is still pursuing a very patient, gradual rate pass that is really aimed at allowing the labor market to make as much progress as possible, while still restraining inflation. we've heard him signal at the federal open market committee meeting on february 30 that

approach. i think it's a real story of continuity so far. jason: let's remind folks that back in december, if we were having this conversation three weeks ago, it could be very different because the markets, the president, everybody was a low bit grubby with jay powell. carol: they were impatient with him. jeanna: absolutely. one of the things i think is so interesting about looking at legacies, janet yellen's legacy and the jay powell's legacy and can hiring them, is that at the end of the day, they followed a call, iilar, what they walk, speak, reaction function. they both -- they boost trades up when the economy is looking stronger. when inflation was heading up and inflation was heading lower. the deposit is what it looked like there are risks on the horizon, or immediate signs that global growth was showing some cracks. what is really adjusting about that is janet yellen repeatedly took fire from every side because she was going to slow on rate hikes and there was a real concerned that she was going to let inflation get away from her.

jay powell to criticism for the exact opposite reason, there was the idea that he was going to hike rates into the recession and that the fed with the be the cause of the next recession. now that he is positive a it is funny because he is taking heat for capitulating to the markets. you can't win. he's been consistent. carol: it's a tricky time. it's get into that. away,e are, a few months five months away from being the longest u.s. expansion on record. we keep talking, over the last couple of years about a goldilocks economy, not too hot, we saw a job growth. it is a tricky time for jay powell in terms of what he does next. jeanna: yeah. absolutely. i thinkis is the moment when his legacy diverges from janet paladin -- janet yellen. when he will have to do with his colleagues over the next couple of years is create some sort of a playbook for the next recession. we have already seen him decide what is going to happen with the

balance sheet. the fed decided in their january meeting that they will stick with their current operating framework on the ballot sheet. a slightly bigger balance sheet that they had had in the past. he is bigger decisions down the road. with a want to -- they want to talk about if inflation is the right target to aim for. what you do a world where interest rates are permanently lower. you have less in -- ammunition if there's an economic crisis, because the primary tool to that fund rate, it is the most potent piece of ammunition in their toolkit. there are real questions that are not resolved. jay powell be the person in charge of the committee would have to think through those questions and come up with some answers that could be politically difficult. the financein section this week, what happens when hedge funds are built around one great manager gecko jason: and what happens when a great manager leaves? carol: we profiled andrew fredman, who was the brains behind for tree. jason: until he walked out the

door. was founded by men and jeff tannenbaum. he founded it in 1994. it didn't start taking off until he tapped one of his former classmates from tulane, this guy named andrew fredman, to come and build it. takeses along in 2000 and this firm from being $300 million to $13 billion. carol: that's huge. >> it's really big. he is a really good investor. we were checking his returns versus the s&p or other relative value firms, or hedge funds at large, and he did beat them. he annualized 7.5% over his tenure. that is including some bad months when he wasn't there. we tried to take a full picture. he builds it, but he is not really the personality that you see often in investing. he stays in miami, florida. even though the headquarters are

here in new york. this child of the 60's personality. he is obsessed with every trade that is put on. he is on the run the clock. he is styling up his analysts. he is involved in the culture in a very important way. even though jeff tannenbaum was the founder, and your frydman is the heart and soul of the firm. fredman steps away in his prime. you don't see that. 53 years old. he has a lottery ticket and he throws it away. he still got very rich. carol: he was done. >> he was done. he was burned out and he was over it. we rarely see that. it shocked everyone. aen though fir tree had succession plan in place, they had a top lieutenant of his, a natural successor, he took over.

they had this whole group of managing directors that would support the successor. things still fell apart. that is what is still interesting about this story. plan, but toa execute and to see how it actually comes together when you have to -- when the time comes, that is what is interesting carol:. that is the underlying theme of your story. you talk about him being the heart and soul, the core of the firm. when i goes away, it all comes undone. >> you don't appreciate how someone is the glue until they are gone. you can try hard to stick to your plan, but at the end of the day, the firm has lost $8 billion since he left. the performance has not gone well. it has been bad year after year. last year they lost 8.2%. they are mired in a lot of bad startingat came about

when he stepped back. carol: one of the things that -- jason: one of the things that you point out, you mentioned private equity funds, that money is locked up for longer amounts of time. with a hedge fund, it starts to spiral downward. performance gets to a certain point, and people start to pull their money out. it spirals downward very quickly. hasdra: >> -- >> fir tree their capital locked up for two years because they have positions that are more private equity style. investors'patience is wearing thin. it has been five years of mediocre performance. isabel the capital is locked up, you can see that reductions are happening. carol: money talks. if money is coming in, investors are pleased. jason: still ahead, a potential lifeline for the music industry. carol: what would be a $4.5 billion nothing burger for wisconsin.

jason: this is "bloomberg businessweek." ♪ this isn't just any moving day.

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>> welcome back to "bloomberg businessweek." i'm jason kelly. >> and i'm carol massar. this week'sin issue, building a better economy using ideas from across the and ideological spectrum. >> plus, what's special about tunisia? democracy the only left from the 2011 era of uprisings. >> we start, however, with the u.s. cover story. >> it takes us inside wisconsin's disastrous 4.5 billion deal with foxconn.

>> they were supposed to create paradise.uring but reality ask a different -- is a different story. this really is a story about versus reality. >> yeah. $4.5 billion tax break that was to create a manufacturing paradise, 13,000 manufacturing jobs in wisconsin. it's already looking like a total bust. >> and it wasn't so long ago trump was there with some of the most senior members of his administration. state of wisconsin, where scott walker really put his political reputation on the line with this. very important people in business. we were reminded going into this biggestoxconn, it's the contractor in the world. >> exactly. this is really a story about job creation. that will do anything to kind of, you know, jump-start its economy. one is holding anyone accountable anymore. that's really where this gets a little tragic. there's been a lot of headlines lcd's gonna be made here,

not gonna be made here. talked to actually people with boots on the ground. >> and got into some of the underlying all of it. really an amazing, amazing piece of reporting. carr. more from austin >> there was this big deal, $4.5 tolion promised in subsidies this manufacturer, foxconn. they were supposed to create 13,000 forecast jobs. supposed to be transformative for the state. based onast so far, our months of reporting, dozens of sources involved, things are thegoing so well where facility is based in mount pleasant, wisconsin. back to sort of the scene where you have president trump -- i mean, you of bigst a plethora political names. president trump, his chief of from wisconsin, paul ryan, former speaker of the house, also from wisconsin. governor, scott walker, wilbur ross. >> steve mnuchin. who are there.

and this seemed to embody a lot of the trump trump campaign. >> trump said this is going to return america's industrial might. he said this is central to his trade war with china, because it blueoing to bring those collar jobs back to places like wisconsin, the rust belt, sort revive what we've lost in the past couple of decades to mexico and places like asia. a lot of the sources that we have, that were watching day, ite audience that couldn't have been further from the truth. trump was talking about how going to be made in the u.s.a. but it turns out the tv's, lcd's, they were only assembled. a lot of the parts were imported mexico. indeed the tv displays, a lot of said made in mexico. turns out, a lot of the production workers were just temps, hourlies, interns,

hour.g paid $14 on they weren't getting benefits. they just felt like a lot of these jobs were pretty underwelling. >> when i started reading the story, i said, remember like a year ago, we kept having the president ot different at different companies around the countries, saying i'm bringing back manufacturing jobs? what's interesting, it was just shortly after that, that i think internships, people were realizing, wait, i'm not going to have my job anymore. things started to come undone. >> just a couple weeks after the visited mount pleasant, wisconsin, a foxconn group of abouta 15 interns and told them they're thosely not going to hire people full-time because there wasn't enough work for them to be doing. those sources in that room were called, the manager saying that there was external changing the wisconsin

project, which seemed pretty cryptic, but foreshadowing what we've seen more recently. >> so 30, 40 workers that are maybe let go out of 13,000 wouldn't bother me. were there ever 13,000 jobs created? >> no, no. longer-term projections. the company is committed to create up to 13,000 as early as 2022. they've already missed their they year of hiring -- were supposed to have about 1,040 workers. was their maximum target this year. 82%.missed it by about >> and a broader focus on the u.s. economy, something very close to the headlines this week union.e state of the >> we all are going to learn something here. a wide rangeiles of ideas into how to breed new capitalism.erican >> it is basically a way to pay for things. the idea is that countries that, you know, have their own greater control over their debt, if they're

lending -- i'm sorry -- if they're borrowing in their >> if you look at our recent experience, like the aftermath of the financial crisis, we were able to spend big on rescue programs that were a priority at that time. and, you know, we haven't exactly fallen off a cliff, right? >> we're still here. >> so mmt is basically the way that people who endorse this idea are thinking about paying for something like, you know, new green deal. green new deal. >> let's talk about tariffs, because i feel like -- >> because we talk about terrifies. >> we talk about them all the time. and the conventional wisdom is like, tariffs are bad. yet you have these people who are like, well, hold on a right? >> so there is a camp that's on

the fringe of economics, because a consensus that tariffs are bad, that, you know, back to the way alexandria hamilton's research manufacturing, to look at what the -- how tariffs can be applied in a way that economy.the and looking at trump's tariffs, i think exceed something like $300 billion soon of goods and may expand. they say that it's actually up manufacturing. they claim that they've created jobs fromlike 280,000 them. >> some people are skeptical of those numbers. are.s, they but i mean, the idea being that created --t of they've improved business confidence in certain sectors. allowing companies to invest more. shielded fromng

competition, that is going to embolden you probably to invest more, in theory. ha ha! guess yourn is, i belief of how long those barriers would stay in place, because as soon as they come down -- we could see that some would evaporate, whether they're real or not, that they might evaporate as barriers come down. >> up next, american workers finding new ways to organize. able to how tunisia is forge ahead with democracy while so many of its neighbors are struggling. >> this is "bloomberg businessweek." ♪

>> welcome back to "bloomberg businessweek." i'm jason kelly. >> and i'm carol massar. join us for "bloomberg day on thek" every radio from 2 to 5 p.m., wall street time. also cam catch up on our daily show. us online at businessweek.com and on our

mobile app. week, as. remarks this contrarian take on the view that american workers have less employersith their these days. >> reporters told us how workers are finding new ways to get exactly what they want. >> when i set out to write this to know what was going on. how come, if the american labor dead, why all of a sudden did we have workers speaking up and getting what they were asking for? did you find out? >> so there's a lot going on. tight, whichket is i think gives workers a little they mightxy than otherwise have in a bad economic time to feel a limits more secure. social media gives workers a way to find each other, for example, a platform like coworker.org or deep in the of reddit so they can talk to one another, share information, maybe in a way that they wouldn't have been able to before. and it also allows them to make

whichcase to the public, companies have become increasingly sensitive to. >> one of the really interesting things about this is, you talk about essentially kind of different generations having approaches, but ultimately very similar approaches to i just want a fair workplace. you know, increasingly, it's younger people who are sort of maying this, people who have grown up in labor union families or may not have. finding a voice. >> that's right. and i think one of the things interesting to me, as i talked to a young woman who was at huff post,ion which as you know, recently went layoffs, big round of right around the same time that buzzfeed did as well. this woman is 29. an immigrant. she said she grew up with a lot precariousness in her financial situation. huff post unionized,

that to her made a lot of sense, ways, in anwanted unstable industry as we all know, to kind of shore up her financial situation. and then we really saw the difference between what happened huff post had those layoffs and when buzzfeed did, because a nonunions workplace. you really saw a lot of those former, current and now on twitter, advocating that they should be paid for vacation days accrued. had >> one of the things that you point out near the top of the it wasn't expected to be this way, especially given saidthe supreme court has about labor unions of late. >> yes. overstatet want to what is happening here, because activity historically is just way, way, way down. the supreme court resolution have been -- supreme court rulings have been really the protections of workers who are speaking up.

>> remind us about those rulings. >> so there were two. one made it harder for unions tol sector fund themselves. and the other made it harder for actions.o bring class the legal challenges are real. and there's not a -- and the protections for workers have really been eroded. companies have a lot of legal power. >> right. >> but sometimes power isn't a legalistic way. >> in the international remarks, tunisia is the only democracy from the 2011 uprising. what lessonsout tunisia holds for the rest of the region. >> i went back to tunisia. covered it during the arab spring. i remember, particularly one woman, calledg lena, who was an activist blogger. the one who brought thernational attention to protests that were taking place

in a small town in tunisia, which eventually exploded to become the arab spring. i remember meeting her then. was optimistic about the future of her country. wanted to go back and find out where she was. i also took the opportunity to meet a new class of people in tunisia. free politicians, people who are parliament, in free and fair elections. this does not exist in tunisia years ago. this does not exist almost anywhere in the arab world. somewhere us one of two threes the arab world where that is absolutely true. to takewas a chance soundings of people i already knew and a whole new category of understandry and where democracy is, in the one country that somehow survived the arab spring with its democracy intact. with a new democracy. that was the purpose of my trip. >> well, and it's such an interesting point too, because i like, as you say, tunisia

really kicked all of this off in a lot of ways, you know, when is really written in a demonstrative way. began.where it all and yet so many things, especially i think here in the egyptpeople think about and other places as much more dramatic examples. yet, as you say, democracy has really taken root. and not elsewhere? >> well, several different reasons. that perhaps because the tunisians went first, they had verytutions that worked hard to protect the democracy, 2015, ay had it, in burning of civil service -- a service groups were given the nobel peace prize for doing exactly that. thelargest labor union in country, a bunch of other civil groups got together to protect dictatorracy after the was thrown out. that did not happen in some of these other countries. a very largehad middle class population, very

high education standards. a quite robust tourism industry to international, particularly european, affairs. all of these things helped very much. perfectly honest, it also helped that tunisia is so small. say, look, we're so small, foreign countries didn't feel like they had to interfere. managed to escape under the radar a little bit. whatever the reasons, it's working. it's messy. it's cluttered. it's confusing. tunisians even understand this thing that they've got in their hands. they arevalue it and glad to see it. and they would not have it any other way. what facebook's data collection practices are like. is in "in real life." this is "bloomberg businessweek." ♪

>> welcome back to "bloomberg businessweek." i'm carol massar. >> and i'm jason kelly. you can also listen to us on the radio on sirius xm channel 119, am 1130 new york. >> am 960 in the bay area. the bloomberg, on business app. facebook has increased limits on data.e use of its >> but the company is ratcheting up its own data collection practices. >> interesting story. here's sarah with more. >> for the past year, we've heard this over and over, this argument from facebook that they do not sell your data. and they've come out and said, well, technically you do. semantic argument. you collect this data, but then you rent the targeting of us to advertisers. then we get into this debate

about whether facebook should be doing that or not. that is what i'm arguing is not the real privacy debate when it comes to facebook. the real debate is, how much data are we giving them, and how transparent are they being about the collection of that data? and i think some instances over the past >> they've started to talk about maybe consolidating some of the back end at least of their most popular applications, that they're really counting on to grow the business. help us understand how that comes into play. >> so you have facebook, which

knows who everyone is, right? if you log in for facebook, you have to use your real name. you use what's app or instagram, you don't have to use your real name. instagram, you don't have to use your real name. what facebook says it's doing is combining the back end of those can send so that you messages to yourself on a different service. somethingt really that people have been asking for. but it's something that facebook we will want. this ability to send a message whatsapp if you're using facebook marketplace or through instagram and vice versa. what that is going to do for facebook, and what they have not is it will allow them to know who you are on those platforms. connect that identity to the data that facebook has about your real identity. just another way that facebook has been connecting the this -- theirt arguments about that combination and why that's so important is , so that you can send encrypted messages.

doing it in the name of privacy. but they're actually going to get more data out of it. i think we're going to see that, facebook saying they're doing something for privacy that ends them a lot more information. >> in the business section, carol, sales of streaming music are surging. this chart shows us what's going on. the purple you see, that's the the c.d.'s, the lp's, the cassettes. that's been going down, we all that. streaming has been languishing for a while. >> right. for many years, jason, and this in the magazine, for many years, streaming kind of going nowhere. a look at the last few years. streaminge that revenue has really taken off. i think this really goes to the those musicntent at labelinglabels is king. explains why it could be -- >> a lot of people looking at own, luca.ding our >> the initial decline in music,

you had opinion piracy and itunes. had streaming sort of flipped the equation there where all of a sudden, people could pay $10 a month or in some cases a limits bit less, and that is exactly, you know, a better deal for record labels than they were in some cases in the c.d. era. there is still a lot of tension between these big internet companies and the music companies. it's ever present. like tord companies now claim that they are responsible for the success of spotify, little bitd to be a ridiculous. but there is no question that these streaming services are all over the world. and you see the opportunity that a lot of these companies see and universal is probably going to try to tell investors, is in the u.s.seeing and europe is going to start playing out all over the world. going to see streaming services develop in india, china, maybe even indonesia and

saudi arabia. if that happens, there's a chance that the music business can get back to the size it was before, because even though it's growing again and that's what has people all excited about universaltake in music, that the music business is still a fraction of the size 1999 and 2000, especially when you start to account for inflation. that i want to talk about potential sale. but before we get there, remind us of the economics of streaming, how everybody gets paid along the way. because it's a little different going outthan just and buying a record or a c.d., right? >> yeah. so -- and it also varies based on the service, based on the country. but for the biggest services, is spotify collects their price from you every month. then they split that amongst the different holders, based on their share of streaming. so if you're universal music, if you're warner, you're getting a based onery customer,

how much your artists get streamed. incentivized, then, to do a really good job signing and developing new oldsts and holding on to cacatalog. this has really boosted the copyright,l music because the more you have, the more you get paid. >> what i love about your story, into they kind of dig value of music content. that is growing. and it kind of plays into this whole idea of what -- thinking about a partial sale of the industry kind of growing again. >> yeah. music always is able to trade, because it's a sexy industry. you know, even in 2011, when the industry was near its bottom, warner music group got sold for billion to ukrainian billionaire. helarge part because probably just wanted to be close to the music business. he likes being at the parties w the different celebrities. but now it's seen by investors and by financial institutions as

real potential for opportunity, because -- or a real opportunity, because you atv, a music, publishing asset, that a of investors bought at a low value in 2011-12, just six years later and got a killing of a return. >> "bloomberg businessweek" is newsstands now. >> and also online at businessweek.com and on our mobile app. you must read. the story about foxconn. i think it's so timely, considering the state of the hearing aboutre president trump, reminding us of his initiative. he said this was supposed to thousands of manufacturing jobs and the reality is that it really kind of hasn't lived up to that. story.vorite >> mine is the international cover. oft a tour deforce reporting. really taking you inside. it's huawei, which has been so headlines, but from a very different angle. gotta read it! find morese, you can stories on businessweek.com over the weekend.

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