♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, lift off. lyft kicks off the public race with a public filing. amazon is planning to open dozens of grocery stores in the united states. how does this fit into the tech giant's overall retail strategy? where no man has gone before, spacex is on the brink of what

could be its biggest milestone and most crucial launch to date. first, to the top story. canada's department of justice said it issued an order to formally start the extradition process for the huawei cfo. it's alleged she lied to banks and violated iran trade sanctions. i want to get to josh in ottawa who has been following this case. how will the process proceed from here? josh: this is a significant step and a procedural one the most expected. now we go to the hearing process which has the twists and turns to it and opportunities for appeal. these things can take years in canada. after that, if that leads to a next edition order, the final call goes to trudeau's federal minister of justice to say yes or no.

many steps remain on this one, but that does not dampen the significance of moving forward. the chinese government is speaking out saying trudeau is politicizing this or caving to the u.s. emily: the chinese embassy in canada says they are utterly dissatisfied with this decision. this is a political, persecution against the high-tech enterprise. of coarse, there are broader forces at play here. we are in the middle of a trade war with china. how will the trade war tensions impact this process and vice versa? josh: it has been hanging over everything, particularly when trump said he might order the case to be ended if he got a trade deal he likes. that took the legs out of -- out from under trudeau who said the justice system is handling this and we cannot interfere.

this is going forth. canada looks to be caught in the middle between these two trade giants jockeying for position. china also seized two canadians and sentenced a third to death on drug smuggling charges. a lot of analysts think that is direct or indirect retaliation for the rest of the cfo who is free on bail ending this whole process. there's a lot of moving -- pending this whole process. there's a lot of moving pieces here. emily: indeed. josh wingrove, thank you so much for that update. lyft has filed for a u.s. initial public offering, giving the public a first look at crucial new financial information about the company. from the filing, we learned lyft's revenue is growing significantly. it doubled the number from the year before, but losses are a

problem, totaling over $911 million. i want to bring in olivia zaleski and tim sullivan. lyft is losing have as much money as it is making, olivia. what are the takeaways from the s-1? olivia: they nearly double the revenue, but with that came significant losses. we're looking at 911 million, which is a growth of 77% over the year before. investors seemed excited about lyft, but also questions about the losses. this is nothing new. most technology companies when they go public are losing money. emily: tim, now we know a little more about how lyft's business compares to uber and uber's revenues were $11.4 billion.

tim: i think uber is not growing and lyft is. year-over-year growth of 2x on revenues, their losses are acceptable. they are on paths to complete the division thereafter. i don't think the s-1 was that surprising. we knew what we were expecting. the biggest surprise for us was how much of an impact lyft is having and communities. 34% of lyft drivers are spending more money. 47% are exploring their communities more. that's a massive impact i don't think we expected. back to the numbers, the 45.5% contribution is something that is amazing. emily: i want to go back on your comparison to uber. if you look at the full year, lyft growing 100%. if you look at the fourth quarter of last year, lyft grew

58% and uber grew 30% as far as bookings. tim: uber's only growth driver is uber eats, which i would argue is not necessarily going to have a positive impact on communities, relationships, and things that grow our society. olivia: i thought we cared about money here, but ok. i was surprised. we were expecting the s-1 to have something about food. we thought maybe lyft would mention they are exploring that, but they stayed focus on transportation. that's the key theme here. lyft is selling itself is a focused transportation provider. uber will come out and it will be all things, all people.

emily: tim, when you look at the risk factors, expenses will continue to rise, it might not be able to achieve or maintain profitability. tim: i think that is boilerplate. every s-1 i've read has the exact same risk factors. emily: talk to us about the risk factors and how investors responded when they saw this today. olivia: i spoke with several investors today and the risk factors in the s-1 make it clear uber is a huge risk factor for them. people mentioned that. it seems like there is room for both and lyft's market share is gaining in the u.s. they have 39% of the u.s. market and used to have 22% in 2016. other risk factors are the founders, which is interesting. they have outside voting rights, 20 votes per share. that is putting a lot of trust in these two founders. if something changes, if

something happens to one of them, that would change the company significantly. emily: we don't know what those votes would mean in terms of control. it's not unlike other tech companies were founders have outside control. what about international growth? lyft is focused on the united states and experimenting in canada. uber is a much more global business. they have experienced their share of challenges. uber is buying their middle east competitor. does it concern you that lyft's vision, at this point, is not as big? tim: not at all. lyft says the phrase laser focus and its laser focus has allowed it to execute in ways uber has not. if you look at any company that has chosen the spray and pray methodology and and spread itself so thin, they have had a hard time being successful. lyft is not going to face those

challenges. uber has 10% of their assets overseas in inefficient investments. investors who are looking for a return on uber versus lyft, i see an upside in lyft. uber, i'm not sure. we will have to wait for the numbers. emily: where does the process go from here? olivia: we are expecting to see them in mid to late they will go on their roadshow. emily: so it could be in a couple of weeks? olivia: that is the plan. olivia zaleski and tim sullivan of oceanic partners, thank you. coming up, food fight. amazon will reportedly be opening a new line of grocery stores. what this could mean for its brick-and-mortar rivals and its whole foods business. that is next. if you like bloomberg news,

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♪ emily: amazon has said to be planning to expand its grocery stores outside of its whole foods chain. the new stores will open starting in l.a. as early as the end of this year, with plans to expand to other cities, this is according to the wall street journal. shares of some of amazon's brick-and-mortar rivals dropped. to discuss, we have spencer who covers amazon and tom forte, who has a buy rating on amazon. spencer, what is your take on

this story. >> not a huge surprise they want to expand their brick-and-mortar presence in grocery. that's the reason they bought whole foods to begin with. remember, for every one whole foods, there are 10 walmarts. walmart is the grocery leader. we knew they would expand. the only potential surprise is that they would expand without the whole foods brand. that's not a surprise, because there is not direct overlap between what a typical amazon customer wants and what whole food shoppers are accustomed to getting when you think of the social things cooked into the whole foods buying experience that are not cooked into amazon. emily: tom, do you think this is a good bet for amazon? tom: sure. spencer makes a lot of great points. if you look at walmart, one of the areas they are doing well in

his their online grocery delivery effort, in particular where they are able to buy products online and take them up in their parking lots. a few things for amazon, they are closely monitoring that. they see in grocery, having physical locations, is still very important. i would argue, doing it this way, outside of the whole foods brand, gives amazon a lot of leeway to sell more traditional consumer packaged goods products like coke, pepsi, and things of that nature. this gives amazon freedom it doesn't have by doing it on the whole foods banner. emily: spencer, clarify this for us. amazon has whole foods, the amazon go convenience store, is this something in between? spencer: that's what we're not so sure of. we reported over the summer about a major expansion plan on amazon go, and you think of all of amazon's experiments in

brick-and-mortar, the cashier store this -- cashierless store, they have books dale -- bookstores, amazon four star, and amazon go is the most differentiated. if there was something for them to expand that would break from the norm, it would be amazon go. we are trying to figure out if this will include some of that cashierless grab and go technology or not. emily: what if this is just amazon go stores? are you as excited then, tom? tom: yes. i would argue maybe it's a large-format amazon go store. if they continue to move forward in the whole foods transformation, there would be a time where the amazon technology will be leveraged in whole foods. i would still be excited if this was a larger format amazon go store that maybe had a lot more

perishables like what you see in some of the amazon go locations in seattle or chicago. emily: spencer, i want to get an update on what is happening with image on hq two or not. the governor of the location has been talking to jeff bezos. is there any chance of amazon reconsidering? spencer: no idea. this could conceivably be something that they simply want everyone else to think they are reconsidering for negotiation power. who knows. it makes sense for cuomo to give it one more college try. emily: speaking with some of the

local lawmakers who pushed back hard against this when amazon -- when the news first broke amazon was considering pulling out of new york. they said this is a negotiating tactic, another kind of extortion. tom, how relevant to this process, what is happening with hq2, to the business? tom: first off, when the news came out, the publisher report called amazon's bluff. we said we do believe amazon is trying to extend its influence here. what they are looking for is the support of the local government. i think that is very important. i am of the belief that having a headquarters in new york advances a lot of their initiatives when you think about not only the access to talent but in media and advertising. about ready to throw in the towel. the story is still going on here. emily: spencer, have any of the

new york lawmakers against this, are they changing the tunes? spencer: not that i have seen, but i will throw out one other possibility. amazon could be in new york city negotiating a lease deal for office space without any government involvement. that's another possibility. they decide the fanfare around hq2's tax breaks are not worth it and they already have operations in new york and have reasons to be there and higher media personnel or even finance types. they can grow there organically without the give-and-take. emily: ebay has entering into a hedge fund with elliott management coutts and -- to

-- this is bloomberg. ♪

♪ emily: ebay has entering into a hedge fund with elliott management to conduct a strategic view of its portfolio. to double joined the board as a hedge fund pushes the company to improve profitability. ebay will add a third new independent director this year. the company will review assets including stub up and announce the findings this fall. shares of enterprise software vmware rose thursday after posting third-quarter results that beat government's -- estimates. the company continues to carve out its role in its markets are

amazon web services. we have pat gelsinger here. thank you for stopping by. shares rose almost 4% and the company is continuing to grow, despite water political and economic headwinds. what is driving this growth? pat: always great to be a michelle with you. we saw very broad strengths in our business, and clearly across the gos. this great execution on our team, but this idea of the hybrid cloud, being able to combine the best of the private and public cloud together, and the momentum with the amazon partnership and our cloud on amazon, that has been these strategic inflection point that customers say i got it. we announced a very large deal, a $20 million deal.

the customer said it was like manna from heaven. i could move to the cloud without changing my application. that's momentum is benefiting across the business in a great q4 and great year. emily: tell us more about this partnership with aws, what is happening, and how you are building on it. pat: we have been in this two years with them. at three and end, and he jesse -- andy and i were on stage together and we have seen what is called the third chapter of our relationship. first, the cloud on aws, and the second was rds, bringing databases on premise. amazon hardware is coming on premise so now the relationship is strategic.

the thing that really started to benefit us in q4 was the vmware cloud, the first chapter, is getting momentum. we've seen large deals landing across all three gos. customers are seeing the benefit of this unique integration of public and private. the number one public cloud with amazon and private cloud with the m where and integrated into the -- vmware and integrated into the system. emily: you are also developing a partnership with microsoft where you would bring more software to microsoft as your cloud. what can we expect from this partnership? pat: we would look to our long-term relationship with microsoft as having a range of areas. we don't comment on speculation, and this was speculation. there's nothing more to describe with respects to microsoft.

emily: but what a partnership with microsoft get in the way with your partnership with aws given aws is an asus rival? pat: we have another program that we run, and as part of that, we have people like ibm and alibaba as well as 4000 other partners. we have a broad program that we are enabling other cloud partners to participate in late -- leverage the vmware software into the marketplace. that program is something we do look to continue to expand over time. the vmware cloud and aws is a unique partnership. they are our preferred partnership. this number one coming together with number one is a valuable proposition in the industry. emily: dell went public in december. how has things changed for you since then? pat: it has been really exciting times. we did our major dividend, $11

million dividends. i have never written a check that was that big before, so that was fun. that enabled this public offering from dell, the elimination of the tracking stock, and you have juggernaut hardware company -- a juggernaut hardware company in dell and will partner with vmware. the two of us are making incredible progress in the marketplace. he saw our business with them grow substantially. we have achieved our synergy targets with them. maybe most importantly, we see we are creating unique value. one of them is the integration of hardware and software, a data center in the box, and deliver

that as a uniquely engineered solution. together, we are innovating as well as being successful in our go to market programs with them. a great relationship. emily: pat, thank you so much. coming up, we continue our coverage of lyft's ipo. we hear from one of the largest -- startup's shareholders. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." i'm emily chang. let's return to the top story -- lyft filing for a u.s. ipo. we spoke with mickey mikitani, the japanese conglomerate. rakuten is one of the biggest lyft shareholders with a 13% stake. we discussed his investment at lyft, competition with uber and the chinese government challenges to bring the business to japan. mickey: we invested in the ridesharing company to understand what this means to our strategy in the future. also, we would like to know where the sharing economy will

go. we have very deep understanding of the sharing economy with rideshares. we started a business in japan. we are talking to lyft in japan. emily: lyft has not done much international yet so that would be a big deal. mickey: i don't know. the are lots of issues still. emily: what would have to happen? the japanese market is tough to crack. mickey: here, ridesharing is still easy-going in japan. i think we need to be very smart. emily: are you talking to the japanese government? mickey: i'm talking with the japanese government on many

issues. this one -- i have not been pushing it too hard because reaction is so strong. i just want to be really careful. learning about what is going on, what can happen in the future, and also, expanding our ecosystem. the lyft is now on the ebay platform. we do many businesses, new technology of our portfolio companies. our visual company. we use that technology for shopping. some ended up just pure investment. we are trying to do investment which makes sense for us because we're a corporate fund. we invested to the companies that have something to do, or we think will have something to do with us in the future. emily: yeah. mickey: way better than any other v.c. emily: what are your returns?

mickey: like 28.5%. emily: wow. softbank is an investor in uber and lyft. do you find that odd? mickey: they are not really active. emily: their uber investment is much bigger. mickey: sure. uber is much more ambitious company then lyft, for sure. but, i cannot tell you the percentage, but when john logan came to my house, they were kind of desperate because travis was -- also a good friend of mine -- was trying to crash lyft. and, i gave them $300 million. emily: what was their plea? what were they asking you for? mickey: the bank account -- the burn rate was so high. they needed help. i did my homework and i

researched through my data team and i found out 50% of young people, in san francisco, use lyft, not uber. this is encouraging news. people were rising up even though the entire market share is very small. i thought, ok, this company has the potential to reach 20% market share, focusing on younger people. they did it. they did so well. they partnered with us for marketing. now their market share is way above where we intended. emily: where do you think the uber versus lyft competition plays out?

mickey: i spoke to travis a long time ago investing in lyft. you need players for this totally new services, which are going to place a huge surge. we are talking about converting car ownership to a service. this is big. i don't think only one company can do it. there needs to be at least two or even three companies who do it competitively. otherwise, they will face many difficulties. the trust, pushback from the drivers. i think it is healthy to have two companies competing with

each other. emily: mickey mikitani, rakuten founder and ceo. eric newcomer joins us from new york with more on lyft's global plans. what was your take on mikitani's description as the founders as desperate? eric: i think he is being honest. he was able to get such a huge position for rakuten. they were the biggest holder and then general motors. it is because lyft really needed them. the founders diluted their possession to get outside investors. neither of them reached the 5% threshold of shares. they really needed to sell down their stake to keep the company alive to fight with uber. rakuten helped them stay in the game. it was an investment that has paid off well for rakuten. emily: explain some of the international dynamics. softbank is a smaller investor in rakuten as well but a much

bigger investor in lyft. i still don't get that. eric: softbank is a major uber shareholder with ride-hailing investments all over the world. there have been firms like tiger also who have peppered ride-hailing with a bunch of investments. to some degree, it is almost like a public investor that sees a space is going to be huge to invest in. only one microsoft or google. or you say tech is doing well and we are going to own both. a lot of investors, even in the private markets, wants uber to free them up to make multiple bets across all of these international players. emily: now that we know what lyft's financials are, what you think about how they stack up to uber's? eric: revenue for lyft doubled in 2017, 2018.

we are talking $2.2 billion revenue. the growth that lyft is able to do into the ipo is going to be much more exciting than uber which is a story of slower growth because uber is already so big. uber's revenue is $11.4 billion. q3 to q4 for uber was like 2% growth. really slowing down, while lyft has that exciting growth. on the other hand, lyft's losses are pretty jarring. $991 million for the year. we have this dual situation where lyft has exciting growth. it was able to put itself into a market where there was a question on whether they would make it. they continue to burn through a lot of money to build that position against uber.

emily: losing almost as much money as it is making. you will be charting the roads for ipo for us. thank you. tim cook stood before his company's investors for the first time to the iphone maker cut its forecast at its annual shareholder meeting this friday. mark gurman was at apple headquarters in cupertino, california and filed this report. mark: the apple 2019 meeting for shareholders, ceo tim cook talked up the company's in-house efforts, iphone/ipad sales, and ambition for the wearables space, providing color for the teacher products. cook was asked if the company would be more bold and take more risks in its products. cook says the company is willing to dice in planting seeds across different areas, but the company will not disclose what they are working out well in advance because the only want to talk about products youcertain that will ship.

the company has also indicated all of its board members, which includes cook, bob iger and al gore, have been reelected along with approval for executive compensation. two shareholder proposals that apple said should be rejected were in fact rejected in large numbers by company shareholders, including ones for apple to disclose the ideological or political leanings of its board members, and another one that would give shareholders a larger opportunity to have proxy access or nominate people to the board of directors. cook said he was optimistic about the company's future and the company of today. he indicated a strong future product portfolio. the company is working on new products for this year and next, including an a.r. headset. i'm mark gurman for bloomberg news. emily: thank you. coming up, tesla came through with a surprise launch of a new model 3 this week, but those are

not the only changes elon musk surprised investors with. we will discuss. later, nasa wants to start sending american astronaut into space without the help of russia, so it is turning to spacex. we will discuss this weekend's big test launch. this is bloomberg. ♪

♪ emily: hulu is nearing two million subscribers while youtube has eclipsed one million subscribers to online tv services. the company has created live services known as skinny bundles to compete with similar packages from conventional distributors like dish.

tesla ceo elon musk delivered a big promise, introducing and $35,000 shorter-range model 3, but the big reveal also came with less exciting news for investors. with a call with reporters, tesla probably will not post a profit in the first quarter. he announced more jobs would be cut as tesla closes most stores worldwide, shifting sales online. joining us to discuss is max chafkin and sandy munro, the ceo of munro and associates. why are investors so disheartened after tesla had this amazing milestone? max: you have to separate the tech story which is by any measure an amazing achievement by tesla. selling this electric car that is a very good car by most people's accounting for $35,000, a reasonable price.

the issue here is as part of this announcement, elon musk also said they would have to close a bunch of stores, most of their stores in order to make a profit, which is concerning on a couple of levels if you are an investor. one makes you wonder how profitable can they be selling these cars at this price? also, it is a dramatic shift for a company that until recently was talking about expanding the number of stores. it kind of makes you feel like ok, maybe they are not fully in control and ethnic investors are reacting to that uncertainty. emily: let's focus on the tech part of this story. elon musk himself yesterday said it is excruciatingly difficult to make this car at this price so what is your outlook on a $35,000 model 3? sandy: so, i believe what is going to happen is that he will have the growing pains he had last time. estimations on how things will run usually do not kick off the

way he was hoping for. consequently, what's going to happen is he is going to see if you things he will have to change as time goes on. the same thing happened with the more expensive versions. they had to de-content here and there and change the way they did things like putting in robots. i believe that is what is going to happen. emily: let's talk a little bit about how tesla will sell these cars. on the one hand, you can look at this as he is getting rid of a costly and perhaps wasteful part of the auto industry. will people actually buy the cars online? our investors seeing it? max: not well based on the stock's performance today. it is an interesting bet because of elon musk is right, if tesla can sell hundreds of thousands of cars a year on the internet.

having people just buy it based on his reputational or maybe they had driven in a friend's car, that would dramatically remake the auto industry which is dependent on these dealer networks. everybody test drives their car. it is a huge part of the marketing and how business is done. on the other hand, it adds this additional layer of complexity. we have seen elon musk do this basically throughout his career. when they were launching the model 3, they did it with the robots. you can look at this as either a grant bet or another case where tesla is over complicating things or increasing the level of difficulty in a way that will make certain investors a little scared. emily: $35,000 is still a lot of money for a lot of people. if you look at any add-on, you can get up to $60,000 plus. are people going to buy tesla just because it is a tesla?

sandy: i believe they are. the one thing i have learned about that car and elon musk is this is not a car company, it is a cult. quite frankly, elon musk attracts people in a way that no one -- in fact, all you have to do is think which car executive would anyone on the street know except for him? certainly, he's got that going for him. quite frankly, he's got hidden plans, just like he did when he turned the seat heaters on on the back of the car or modify the braking when consumer reports gave him some static. he will pull some rabbits out of his sleeve. i don't think anybody is going to buy a $35,000 car because they will want autopilot and a few other things that brought extra charges.

we know he can probably get down to that point, but he has left some new things inside the car like 8s and whatnot. if you want it, all you have to do is send him an email. he will turn it back on and you just pay the $6,000 and away you go. you has a totally different business plan. emily: what does that mean for demand and supply? max: we don't know and that is what is scary. it is true that tesla has an amazing following. the company has rewritten the rules of selling cars of the high-end. what you don't know is how big this cult is. that is if you are an investor, that is what is a little bit scary. a cult is great as a marketing thing, but if you are an investor, a cult also implies stability, unpredictability, and all of those things could work out well.

but, we just don't know. the fact there is not a great track record of people buying cars this way or middle-class people spending these amounts of money for cars -- we're in uncharted territory. it to go one of two ways. that is why you see this polarizing response to elon musk where people think he is a genius and other people are totally freaked out by him. emily: max chafkin, never mincing words, and sandy munro, thank you both. we will see how things shake out. still ahead, could spacex be the future ride for u.s. astronauts to reach the international space station? this weekend's test launch could go a long way towards answering that very question. that is next. this is bloomberg. ♪

♪ emily: spacex is gearing up for an unmanned launch this saturday. while there would not be any humans on board, nasa's associated administrator is calling this an absolutely critical first step to get american astronauts into space. nasa does not want to revive the u.s.'s ability getting to the space station without buying seats on russian councils. to discuss, we have justin bachman with us. what do we know about how this launch will proceed? justin: it is going to be done at a very typical spacex launch which they have done plenty of times. the difference is going to be the high-profile nature because in this case, pretty much everything major has to work because there is a lot riding on the u.s.'s ability getting back

to the space station without russian taxi rides. it will be similar to what you see in spacex launch but the stakes are higher. emily: tell us what success means and if this does not come off, what failure means. justin: success is important and failure is even more of a problem here. it is hard to overstate how important this is to nasa and everything riding on it, as well as spacex. you are really talking about a point of national pride, a point of pride for the agency. a major stepping stone for commercial spaceflight in the fact that this is not a nasa vehicle. this is a private commercial launch and nasa is putting their own people on something nasa did not built. it is really important and it is hard to overstate that things need to go right for spacex. emily: what is the potential for

non-nasa folks to fly? justin: really interesting question because neither side has said too much about it recently, but there is an opportunity down the line once this becomes a little bit more routine for both spacex and boeing, you could see some people with means flying to the space station potentially. i think that is something all the parties here are somewhat interested in in exploring further. emily: boeing is a competitor here. they are also another provider for nasa in this program. justin: they are. they have a completely separate vehicle which is undergoing testing. it will fly without crew as well, expected this summer. it is called the starliner. a different design but same objective, same safety parameters. but, nasa very specifically went

with two different companies here for access to the space station and they did that in a deliberate way because they want to make this both a competitive and u.s.-built ferry service that they no longer have to ride on the soyuz craft. emily: justin bachman, thank you for that update. we will be following that launch if it happens on saturday. that does it for this edition of "bloomberg technology." next week, we are live from new york city. we have a great lineup including cathie wood, eric hippeau, and chieh huang, the ceo of boxed. we are live streaming on twitter @technology. follow our global breaking news network tictoc on twitter. this is bloomberg. ♪

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