♪ emily: i'm emily chang, and this is "the best of bloomberg technology." where we bring you all of our top interviews from this week in tech. coming up, a criminal probe into facebook now includes a grand jury and an escalation of the its datation into sharing practices. we cover the growing list of controversies surrounding the social network. and both sides of the aisle are taking up the issue of breaking up big tech, but breaking up is hard to do.

we'll talk about washington's new agenda. and our exclusive and wide-ranging conversation with former u.k. prime minister tony blair on the global tech landscape. first, to our top story. the u.s. justice department has broadened its investigation into facebook to include a grand jury, signaling an escalation into the ongoing federal probes into the company's data sharing practices. plus, sudden departures of top facebook executives. mark zuckerberg has announced that the chief product officer chris cox is leaving the company. zuckerberg made the statement, which he shared with employees. "for a few years, chris has been discussing with me a desire to do something else. he is one of the most out to people i know, and he has the potential to do anything he wants. but after 2016, we both realized we had too much important work to do to improve our product and society, and he stayed to help us work through these issues. at this point, we have made real progress." zuckerberg also announced chris

daniels is leaving as well. this is not the only issue they are facing. from noon wednesday into thursday, users were unable to access the social network and its related services globally, including instagram and messenger and whatsapp in what turned out to be a massive outage as federal investors launch a probe into the social network's data sharing practices. thursday, we discussed all things facebook with techonomy founder david kirkpatrick and sarah frier. sarah: you may not have heard his name as much as zuckerberg or sheryl sandberg, but he is like the soul of facebook. he does the orientation for new employees every monday. he is in charge of all of the products. even more than that, he created the newsfeed. he is the guy who is really the face of this product internally. so it is a big, jarring change for facebook employees. emily: in his own statement, chris cox said that i have been

sharing the message mark and i believe -- social media history is not yet written and its tracks are not neutral. it is tied up in the richness and complexity of social life, and as its builders, we must take up the work of of bending it toward the positive. so he is clearly alluding to the big, existential issues facebook is facing now, but why do you think he is really leaving? is he leaving because he fixed a lot of things or because he couldn't fix a lot of things? sarah: also in that post is another line that says they are entering this new era of product development that is going to be focused more on encryption and apps that are connected and the messages are so private that not even facebook can see it. he says facebook deserves executives to take facebook into that era who are excited about that change. so he is hinting he is not excited about that change. emily: let's talk about chris daniels, head of whatsapp, leaving. zuckerberg said he is not filling chris cox's position, but he is sort of elevating the

heads of each of these products, whatsapp, facebook, messenger, and instagram. tell us about chris daniels. he is leaving too. sarah: chris daniels was formerly head of internet.org, which was facebook's -- zuckerberg's personal project to try to get more people on the internet. it's sort of connected to whatsapp in that it was very international, but running a messaging product is a very different ordeal. we don't know exactly why he left, but it is a very difficult time for whatsapp right now. because they're facing all of this scrutiny from governments around the world. there have been whatsapp lynchings in india, all of this misinformation that has spread on whatsapp that is encrypted, so facebook cannot do much about it except change its rules. that would be a very difficult job to do. emily: david kirkpatrick is joining us now from new york. david, you wrote the book on facebook. i'm sure you interviewed chris

cox several times in that process. what do you make that he is now leaving? david: i agree with everything sarah has said about his centrality of the company. he has, in my mind, been, in many ways, the person closest to zuckerberg from a product standpoint. which is why zuckerberg gave him oversight over facebook, instagram, and whatsapp. basically, he has been running all the products. i also think it is interesting that he should be leaving and daniels, who runs whatsapp, leaving just a few days after zuckerberg declares, essentially, that whatsapp is the center of the new facebook. to me, it bespeaks some degree of conflict and disagreement. how much is hard to say. but clearly -- someone like chris cox would not be leaving now, with facebook so under fire, just because he is tired after 13 years. that is not what would happen.

emily: which reminds me that, when zuckerberg released that memo about privacy last week, he actually talked about getting new leaders on board and the challenges of getting new leaders on board which would be in line with this mission. perhaps that was an allusion to them knowing that cox and perhaps daniels would be leaving. david: one way to interpret this -- so many people have questioned the sincerity of that memo from last week, or the week before last, whenever it was -- my time is missing. but this actually suggests that, really, zuckerberg is making a dramatic change and making it fairly fast. that is another possibility. and as sarah was saying, maybe, it really could be that it is not in chris cox's wheelhouse. and he wants to leave. because of that. it is very shocking to me. to see those two guys leaving at the same time. daniels, too, is on the inner

circle. emily: this is on the same day of this massive facebook global outage, which is believed to be the biggest outage that facebook has have ever had, which affected all of its services, and perhaps, is evidence of the power of facebook all being concentrated in one place, but also the difficulties of managing that. sarah: and especially when you have these different services get more and more integrated. right? you have whatsapp, oculus, messenger, instagram, facebook itself -- yesterday, they were all down, not to mention the ad managers. this service for serving ads on facebook. advertisers were telling me that they could not see their campaigns and how they were running. it gave them a sense of is there really an alternative? emily: right. we were just showing a map of the outage there as of noon today, and facebook has said it has resolved the issues. there are a few hundred reports still of people without service, but if you look at that map yesterday, it was red all over.

this is a heat map. david, do you think mark zuckerberg is planning to merge the infrastructure behind whatsapp, instagram, and facebook messenger? do you think this is just an isolated incident or is it a symptom of a larger issue at play? david: facebook has said so little about what actually happened. we are left guessing. one of the strangest things was that it was not just the blue facebook, it was also instagram, parts of whatsapp, even oculus. that is extremely surprising to me, that they should have an architecture that, at the moment, would allow them to all somehow be so connected enough that they could all be simultaneously impaired. and it does underscore the risks of making it all one, big integrated system, which clearly is happening. emily: coming up, our exclusive and wide-ranging conversation with former u.k. prime minister tony blair, discussing the role

of big tech on the global stage. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg app, bloomberg.com, and, in the u.s., on sirius xm. this is bloomberg. ♪

emily: this week, i caught up with former u.k. prime minister tony blair about the role of tech in government as he wrapped up a tour of silicon valley. i started by asking him about an op-ed he wrote where he said, "populists of both left and right have risen to prominence. and in their search for scapegoats to escape success, tech is now firmly in their firing line." take a listen as to why this concerns them. tony: politicians exploit excited about the pace of change, the accelerated pace of change, these companies, people who run them, and they target the companies and they target the technology as something that

is going to disrupt and change our lives in ways we cannot control and it is basically a bad thing. my view is that this tech revolution is a fact, but in any event, it is essentially a good thing. we have to deal with its consequences. but if it is handled in the right way, that could change our lives in good ways and can offer enormous opportunities. and it is up to politics to address how we access those opportunities and mitigate the risks, because it will also, for example, displace jobs. emily: he also said the first politicians to master the tech revolution will decide the future. how so? tony: if i am right in saying this revolution is the 21st century equivalent of the 19th century industrial revolution, if i'm right in saying that, then you look back on what the 19th century industrial revolution did. it changed the way people lived and worked, it changed the relationship between the countryside and the city. it changed the laws changed politics, it changed everything. this will be the same. the first politicians to come

along, understand it, master it, make sense of it, and show how this can form a narrative of the future that is essentially optimistic, those are the ones that will succeed politically. emily: democratic senator elizabeth warren has just proposed breaking up the biggest tech companies. google, facebook, apple, amazon. i assume you don't agree with her proposal, but what do you think? tony: i don't agree with her proposals, but i think it is a really interesting speech. to be fair to her, i think it is a speech with an intellectual coherence to it. and i think what it shows is where i think the democratic platform may well go. and exactly the same issues are going on in the u.k. and europe. personally, i think a better way of dealing with it is to regulate them. directly having a regulator for these large tech companies. because i think if you try to break them up, i'm not sure that really works. if you try to slice them up, you

will find enormous difficulty in doing that. it's important to understand that one of the reasons these companies are so large is because they are offering a service people want. so, yes, there are huge questions that arise out of their dominance and their power, but i think there is a better way to regulate this, in a way that has the public interest put into the mix when we look at these companies, in a sort of structured way, than think that actually if you cut them in three you will create greater competition. emily: so what does that regulation look like to you? and should the u.s. take the lead of the e.u., which has been pretty tough on big tech? tony: it is less about being tough or not tough, it is about working out the right thing to do. one of the other things we suggested is that it would be sensible, particularly given the huge competitive power of china, in a.i. particularly, it would be sensible if europe and america worked together. emily: how so?

tony: if you created a more level playing field between europe and asia, you give people the opportunity to develop technology of the future. it would allow these companies -- not big companies, which are big enough already -- but other companies to grow. i think it would be very sensible to have a transatlantic alliance on regulation of tech for the future. the purpose of it should not be to hit them or be tough on them. the purpose should be to the purpose should be to represent the public interest. obviously, there are public interest issues that come with us. the sensible thing rather than trying to break them up -- because i'm not even sure that would destroy the monopoly power. if you broke them up, you might you have created three monopolies, not one. emily: are they a monopoly? tony: well, they are powerful. if you take facebook, google, amazon, they are incredibly powerful and will likely become more powerful. but a better way to do it is

look at it in terms of how to we have the public interest in this? where i think elizabeth warren is right is that they are like utilities. they are utility platforms. the same way, when electricity and the water industry and other things were created in the 19th century, they were created first in the private sector. in time, people said these are utilities everyone depends on, so they will have to be publicly regulated. in some cases, people even wanted them publicly owned. the point is, if they have got that amount of power, there will be a demand from the public that the public interest is taken into account. so i think a better way of doing that is to have regulators that work with those companies rather than break them up. emily: so, facebook, for example -- multiple scandals, compromised the data of millions of millions of people. many apologies. mark zuckerberg, the ceo, has now said we will focus on privacy. we will focus on private communications. is that enough?

tony: i understand why he wants to do that, privacy is an issue, but the essential question for these tech companies is their power. they are powerful. if you look at their dominant positioning in advertising, or if you look at the role facebook inevitably will play in politics today -- what i think is, in a way, absurd to say to them is you have got to be responsible for everything that is happening. the truth is it is a joint responsibility. we have a public interest in making sure that they exercise their position responsibly, but we are also going to have to work with them to share the responsibility from the public policy point of view. because many of these questions, whether it is hate speech or radicalization, or child pornography, whatever it is, these are things where there is a public interest in sorting out, but that requires not just companies to behave responsibly, but government to be alongside the process of that and making sure that it is done in the most

effective way. emily: so how can we trust the companies to understand and live up to their responsibilities? and similarly, how can we trust government to not be mired in this political process, as we see in both of the u.k. and the u.s., and actually do something? tony: this is a challenge, but in the end, the challenge is best addressed by the concept of public interest regulation. and whether you do that for each individual company, you might, because there are different issues that arise. for example, obligations that arise in relation to facebook, amazon, and google, different problems arise. but this is the world we are living in. there is a bigger question for them. for example, if you take driverless cars, the next generation of cars are likely to be electric and, in time, driverless. this will change employment. it will change transport. it is probably going to change insurance. it has got a massive series of implications. emily: that was my exclusive

interview with former u.k. prime minister tony blair. coming up, by 2025, india is set to be the world's third-largest economy. and venture capital firms are anxious to get in on that growth. what trends investors are seeing in the country's rising tech scene, next. plus, google's power struggle. new court documents show larry page was worried that he would lose control of the company in 2011 and delivered what one director called a veiled threat to quit. this is bloomberg. ♪

emily: on monday, nvidia agreed to buy chipmaker mellanox in its largest purchase ever. the deal for the israeli manufacturer is worth just under $7 billion, and, despite the size of the deal, it is still smaller than the top four semiconductor deals of all time. the movies expected to help nvidia push into a market for data center components and meet

the need for greater processing power. elizabeth fournier give us their reactions. ian: to hear it from nvidia, data centers in the future will be not just a group of computers, they will be all one big computer. so the interconnects between those components become even more important. emily: and you spoke to the ceo last night? ian: right. and that is why -- and mellanox does all the connections. that is what it is important for nvidia. emily: there's a broader movement we are seeing in the chip sector. there was a wave of semiconductor stalling. elizabeth: that is right. three or four years ago, semi conductors used to be the hottest name in m&a. companies tried to do some of the things last year -- i'm sure you remember. qualcomm and the nxp deal that fell apart. what has happened is people have tried to do big deals, and they have really been pushed back by regulatory concerns.

so what we are seeing now is a shift to some of these smaller deals. as you said, it is a big number, but it does not rank in those top five deals. emily: ian, is this deal going to be subjected to regulatory scrutiny? ian: if you look at the share price today, mellanox is up, but it did not go up to the share price. there is a sign that people are concerned, particularly in china, that it will face that regulatory scrutiny, which will take a while. emily: elizabeth, in terms of what else could be in the pipeline, would you say we should be looking at deals but smaller deals? elizabeth: this is a competitive process. there were other bidders until the end. we can assume they are looking for similar things. ian is the expert in this area, but we know there is a sort of $1 billion to $5 billion companies out there that are potential targets. emily: ian, what kind of chatter are you hearing about? what could be coming next? ian: the logic has not changed. there are still a number of

companies out there that frankly are just not big enough. the cost have gone up, but they are not big enough to stay competitive long-term. one analyst said today that cry computers is in a similar business. maybe they are the to become a target here. there are a lot of companies that are subscale. emily: nvidia beat out intel -- what does that signify? ian: that signifies they wanted it more than intel did. it was not just intel. according to our reports, a number of other countries were interested, which may have prompted the deal to be announced when it was, regardless of whether it will be an easy process in approval or not. emily: what else could be in the pipeline that you are watching? elizabeth: in terms of tech, the big thing we have got our eye on is ipos, and a lot of those can go down the m&a route. but in semi conductors, intel was a name that lost out. maybe we look for them to do something different as an alternative.

emily: bloomberg's ian king and elizabeth fournier. well, india is coming online at exponential rate, growing from 200 million to 500 million users in just three years. and investors are jumping at the opportunity to be part of that growth. lightspeed india partners has raised two new funds, and with six partners across its offices, it has become one of the largest beast -- vc teams in india. a partner at lightspeed india joined us tuesday to talk about growth there. >> we started investing in india as lightspeed about 12 years ago. then as the opportunity opened up, we decided we would start dedicated funds for the region. as we saw mobile growth really exploding and leading to the internet growth you spoke about. emily: the growth in india has been astounding. 20 million people in 2009, that may be 700 million people online

in 2020. how do you begin to assess the opportunities? are they just exploding or is it pretty obvious where you should be putting your money? bejul: no. it feels like it. at the same time you have internet growth exploding, you now have a recycle of repeat entrepreneurs in the market for more of the scale companies, and you have more and more risk capital available. so you have the intersection of multiple different things happening. macro tailwinds are a strong peer that is leading to opportunity. and i think what we are beginning to see and are excited by is that technology is making its way into every industry. so it could be commerce and retail, hospitality -- one of our companies is doing a great job there -- logistics, ridesharing, transportation, media. so a lot of the things we've seen in other parts of the world, in other digital economies, is beginning to happen in india. emily: big u.s. e-commerce companies like amazon and

walmart have taken an interest in india. amazon has invested billions. walmart bought flipkart in a big coup. those companies combine e-commerce. how has their arrival impacted your job? bejul: it is a net positive thing. for us as early investors, we want to build companies that ultimately will get public or have some form of exit. so the idea that there is downstream capital or strategic investors or buyers for these is a good thing. one of the things i often say about india is that it is an open market. so it is the world's next big digital economy. it is open, and that means capital and interest is coming in from all over the world. it could be the u.s. and u.s. strategics, chinese strategics, folks like naspers. there is capital flowing in from all parts of the world. i think that is good, provided it is ultimately used in the right way. emily: lightspeed india partners' bejul somaia. coming up, senator elizabeth

warren continues to target big tech. why she thinks breaking up tech giants could sustain competition, next. and "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global breaking news network, @tictoc, on twitter. this is bloomberg. ♪ this isn't just any moving day.

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♪ emily: welcome back to the "best of bloomberg technology." i am emily chang. democratic presidential hopeful senator elizabeth warren is going after big tech. after laying out her proposal to break up big tech on media last week, warren took her arguments to the annual sxsw festival in austin, texas. she told an audience of many tech entrepreneurs that breaking up companies like amazon and google would keep the marketplace competitive. sen. warren: that opportunity to do what you do best, to come up with a great idea, to work your heart out to make it happen, to be able to compete on a level playing field is taken away by these platform giants. so my view is break those things

apart, and we will have a more competitive, robust market. emily: bloomberg's executive editor tom giles as well as bloomberg tech's susan warren joined us on monday to discuss. tom: she put a lot of thought and time into this. there are a couple of different prongs, one of them very straightforward -- break up big tech. break up some of these mergers. for example, facebook bought whatsapp. facebook bought instagram. she talked about amazon and zappos. she has a list of deals that she would take a closer look at. and she is invoking at&t back in the 1980's, some of the big trust busting cases in u.s. history. but there is also a more nuanced argument, and that is where, when these companies start to operate like a platform, like utility, and they are also competing as part of that platform or with those platform

participants, that is where she also is looking for some kind of way to separate out those businesses. so, for example, amazon. amazon is the case that she keeps coming back to time and time again. amazon has created this huge marketplace for millions of sellers to peddle their wares, but amazon is also a competitor in there. and she cited a story -- emily: right, amazon at selling its own batteries, its own baby wipes. tom: exactly. and i noticed she cited our colleague spencer. a story he wrote about a couple years ago. once amazon sees your product is starting to gain traction on its platform, its gaining popularity, amazon has a way of creating its own white label version of that and creates this competitive atmosphere for its marketplace participants. emily: on stage, she talked about amazon, facebook, google, and in an interview with the bird, she added apple to this category. she said apple has to break apart from the app store. it has to be one or the other. either they run the platform or

they play in the store, they do not get to do both at the same time. it is the same notion. tom: and you can imagine -- there has got to be an interim step, where maybe these proposals start to gain traction. and maybe, instead of a full breakup, you see a company like apple potentially maybe getting out of some of the businesses where it is allegedly competing with app store participants. i mean, that could be an interim step. another interim step, for example, would be, you know, paying closer attention to the ways that facebook, for example, operates and spreads information, and maybe, you know, forcing them to be a bit more transparent about who is funding a particular advertisement, who is behind a particular piece of information that is being circulated around facebook. people have talked about knid of treating facebook and google, for example, more like traditional media companies. so there are interim steps. emily: meantime, senator amy

klobuchar who also announced she is running for president said she wanted to see an investigation if breaking up tech companies is the best option. susan, how were the other candidates received at sxsw by this tech savvy crowd? susan: i think everyone was -- all the candidates that i heard speak were very interested in seeing more regulation over the tech companies. none of them went as far as elizabeth warren in proposing a break up, but they were open to just studying this question, looking at what needed to be done, closer scrutiny at the mergers, maybe even a little bit of retrospective regulation of mergers was proposed. and just, overall, solving this problem that nobody anticipated having 30 years ago. emily: tom, have we heard a reaction from any of these tech company so far on this? tom: they are not saying a lot. emily: we know they are lobbying in washington. [laughter] tom: they have good reason to lay low on this one.

look -- the fact that these proposals have come out this early in the campaign shows that this issue is not going away. emily: bloomberg's tom giles and susan warren there. meantime, ads for warren's campaign making her case got taken down from facebook and then quickly restored. in response, warren tweeted, "curious why i think facebook has too much power? let's start with their ability to shut down a debate over whether facebook has too much power. thanks for restoring my posts. but i want a social media marketplace that isn't dominated by a single censor." she got an unlikely supporter in senator ted cruz, who retweeted warren, saying, "first time i've ever retweeted elizabeth warren, but she's right. big tech has way too much power to silence free speech. they shouldn't be censoring warren or anybody else. a serious threat to our democracy." so what would a big tech breakup look like? roger mcnamee, elevation partners co-founder and the

author of "zucked," joined us to weigh in. roger: i really like what elizabeth warren is doing. to be clear, she first reached out to tristan harris and me in the summer of 2017 with her early thoughts relative to what was going on in technology. and i was incredibly impressed by the insights that she had in comparing what was wrong in tech to what she had seen go wrong in the banking business, where, essentially, you had markets in which one side had vastly superior information and was able to control the information available to the other side and where people who made markets were also participating in them. so when this thing came out, i have studied it very closely. and i believe antitrust is essential in two different ways. first is the big tech companies -- really, i am talking about google, facebook, amazon -- are blocking competition from startups in their immediate area. they are basically causing innovation to come to a stall in

and around the core internet. and they have been amazingly successful at this. and i just think that is a terrible idea. i want to end that. warren is very much on that issue. and antitrust, it is a super progrowth way of doing that. historically in tech, starting in 1956 with the at&t consent degree through ibm, that second at&t breakup case, microsoft -- you have seen massive new industries created by using antitrust to stop the incumbent from dominating new spaces. so i like that. i also like preventing companies that operate markets from also participating. google and facebook do this in advertising. amazon does this in its marketplace. and i think that should stop. i think the cross subsidies and cross sharing of data are also really, really bad. and i believe warren's proposal is a first step down that, and i am very supportive.

i recognize the people who point out that the history of tech was misinterpreted in some of the statements that came out. i really couldn't care less. and the reason i couldn't care less is because i think the issues in tech, the power situation, the dominance of the public square, the manipulative technology that people are using, the surveillance that is now pervasive in our lives, that is just bad for society, and we should not allow that. new tech companies are a little bit like -- they are kind of like companies in the early 20th century, the robber barons, so standard oil and jpmorgan and all. emily: i should point out that there is no real break up threat under today's laws and under antitrust precedence. so a law of lawmakers would have to get onside. do you see a better argument to break up facebook or google or amazon or apple? which one of those four companies do you think presents the best case that serves elizabeth warren's arguments?

roger: let us be clear, right? this is a position. there is no guarantee we finish there. but you want to start with a position that says we are going to do something really dramatic. we may be open to finishing somewhere else. and this is where i agree with both senator warren and senator klobuchar. and i think both of these two really understand this issue. whether you break them up or not is less important to me than you prevent them from operating in ways that stall the economy. which is what we have going on right now. i think you can achieve some of this without breaking them up, but the threat of egging them up is the way you get them to the table -- but the threat of breaking them up is the way to get them to the table to have the conversation that we need to have. i want to be super clear about something. excited about the stripes we are seeing -- strides we are seeing in the trump administration, particularly in

the federal trade commission and the antitrust in the justice department. in my conversations with them, these are people that understand there is something really wrong with what is going on in tech now, and antitrust is the most progrowth way of dealing with that. and they are the antitrust tools in the regulatory toolbox, and both of them are doing things right now that are a big change from what we have seen in antitrust under the obama administration and, before them, the bush administration. so i look at this and -- i do not think this is going to be partisan. i think this is a right versus wrong issue, not a right versus left issue. emily: that said, facebook, amazon, apple, google, these are four different companies. yes, they are all tech companies with some overlapping businesses. but is any one of these more a culprit than another? roger: google is by far the most effective at this. they had this insight in 2002 that, when they were trying to improve search, they would gather all this data, and they discovered they only needed 1% or 2% of it to improve search. so they went looking for what they could do with the other 98%. and they discovered they could use it to predict behavior. so then they go in and do gmail,

because they want to find out who these people are. gmail is set up so they can machine read all the emails, which would tell them what people's behavior would be, because people would tell you in email. then they wanted to know where people are, so they created google maps. and then they started doing things like street view. they would take pictures of everybody's private spaces. then they do the satellite version of that. google glass. and now you have google home, so you are putting audio into everybody's houses. and they are basically taking away all of our privacy, where privacy is defined as our ability to make choices without fear and without being exposed by others. but they are also taking away our pricing power. because they manage our access to information just as they manage the access of anybody who has something to sell, they manage their access to consumers. and, essentially, they are centralizing the whole economy in the hands of google, number one, then facebook, amazon, microsoft, and verizon. they are the five guys at the core of that strategy.

and let's face it. it is a brilliant strategy. i just think we need to have a conversation as a country. why is it legal for corporations to own and trade our most private data? why are they allowed to buy and sell and trade our credit card transaction data, which they get from experian and equifax and trans union. why are cellular companies allowed to sell our location? why are health and wellness apps allowed to sell data that, if it were a hospital, they would not be allowed to sell? why are any internet companies allowed to sell our search history online? emily: does apple stand out to you from the rest? because of their stance on traversing? roger: apple is not perfect. a lot of what they do in china, i object to. but what they are doing in this area, they are fantastic. so the reason i have mixed

feelings -- i am kind of hoping there is a way for them to avoid the antitrust problem. is because i think apple is trying to be a good guy, and they have really succeeded. emily: roger mcnamee, cofounder of elevation partners and author of "zucked." coming up, larry page's quest for power. we look at how he has fought to make sure he does not lose control of google, next. and later, nasa wants to return astronauts to the moon, but it will need the private sector to get there. we will discuss the role of startups in the agency's moon to mars program, next. this is bloomberg. ♪

emily: nearly 21 years ago, larry page and sergey brin founded a small search engine that we all now know as the behemoth google. it has become one of the largest tech companies in the world. it has a market value worth more billion --dred $30 $830 billion. and with any company becoming

public comes the threat of founders losing control, something a board member described as a "real concern" to page. in fact, according to confidential emails and other documents recently unsealed in a court case, we know how badly page wanted to keep his grip on his creation. "why should i sacrifice and work so hard if i might not be in control?" that is what page allegedly told a former google director. cunningham, george washington university professor of law and bloomberg tech's mark bergen weighed in. mark: in these court documents, we do not have larry speaking at all. but there is a deposition from sergey, but at this time larry had just returned as ceo. so he was ceo in the beginning and then the board brought in eric schmidt. he goes back, he went to steve jobs, asked him "what does it take to be a good ceo?" he said, "read all the books about being a good ceo." sergey is going into google x, the beginning of self-driving cars, the early days of google glass. we talked to people involved then who said there was always

tension between the two, but it was always a healthy tension. what these documents show is, at times, maybe it wasn't. and larry was concerned that sergey or eric would sell their shares, perhaps leave the company, and then an outside group would have control. emily: eric, eric schmidt. so what the founders wanted was the creation of a new class of shares, nonvoting shares. they are ready have these class b shares. 10 votes per share. which larry, sergey, and eric had. and then votes for regular shareholders, shares for regular shareholders had one vote. mark: in the initial plan, around christmas, they said, we will get it done in three weeks. and the board pushed back and there was a push back and forth. and this lawsuit actually demonstrated there was a much bigger push back then what people knew. emily: the board ultimately created a committee to look into whether these shares should be granted. larry, what do you make of how google's board handled this situation?

larry: i am impressed with how the board handled this situation. pushing back against stockholders who have a controlling stake due to the dual class structure is not easy. i was impressed that they pushed, and larry explained what he was up to. after all, if he was merely concerned about ordinary delusion, they could avoid issuing stock, use cash for acquisitions, or purchase stock back. they pushed hard against him. he essentially admitted that his main concerns seemed to be if sergey brin were to sell his stock, then larry would lose the joint majority control. and he was very concerned about that. issuing the c, nova, stock would solve that problem. if he could trade his c to sergey for the b, he could retain control. so i think the board uncovered that and did a good job. emily: the board still decided to start this new class of no voting shares. why, despite these concerns?

mark: john doerr is a good example. legendary vc in silicon valley. he was against this for a long time. he originally was against the proposal. one deposition said he changed his mind and was convinced this is the best way to recruit talent. this has been a huge concern. google has been historically by recruiting the best talent and engineers. emily: so keeping brin and page engaged would keep the talent? mark: yeah. this is the year they make the big $12.5 billion acquisition of motorola. page had these big plans that he had come to see to fruition, of alphabet, cars, biotech, health care -- -- all the stuff that was not in google in 2011. and now these much grander moon shots and areas and moving into different fields that arguably could not have happened if the founders did not have such tight control of the company. emily: meantime, when you give founders this much power, there is always the risk of them making not great decisions.

larry, we have been covering another story out of google where page himself personally approved a $150 million payout package for andy rubin, the creator of android, who was accused of sexual harassment, and permitted him to leave quietly and invested into his new company. he also paid another executive $45 million, also accused of sexual misconduct. where was the board then? larry: if true, both of these examples show the downside to dual class. the proponents of dual class argued that the founders' vision and long-term outlook warrant that control. but the downside is you sacrifice some accountability to shareholders. if it is true -- and i think it is disputed by the company and by the executive who was leaving -- that the ceo or the founding shareholder is able, unilaterally to make that kind of decision, that is a downside to dual class. i mean, i cannot say that the

board has a lot of power in a situation like that, but it points out some of the negatives and some problems with managerial accountability with the dual class stock. and to the extent that sergey was just thinking about selling anyway, and larry has sort of faded a little into the background, running the company, it is not so obvious what their vision and their sense of the long-term interest of google and other stockholders is that warrants having the disproportionate control. emily: bloomberg's mark bergen and george washington university's lawrence cunningham. still ahead, nasa is aiming to put astronauts back on the moon by 2024. how trump's 2020 budget requests supports its lunar mission, next. this is bloomberg. ♪

emily: nasa is speeding up its moon exploration. president trump delivered his 2020 budget proposal to congress monday, requesting $21 million for the agency to fund nasa's moon to mars program. the agency looks to transport humans back to the moon and eventually mars. and the private sector will be an important part of this exploration. space angels' ceo chad anderson joined us to give us his perspective on the space race. space angels is a network of investors focus exclusively on early stage commercial space ventures. chad: the budget is out, and it really emphasizes the moon over everything else. i think that the administrator said really clearly this is a stepping stone. the moon is seen as a staging area. it is a place for us to test out the technology that we need to go to mars. that is still the horizon goal, but the moon is much closer. it allows some big wins early on and allows us to develop the

technology we'll need to go to mars eventually. emily: is there anything in particular we will learn from the moon itself that we do not know, as opposed to deep space exploration? which, arguably, there is more to know. chad: it allows us to test the technology that we are going to use to go to mars. so, as investors in this space economy, it is really important that nasa is going to be partnering with the private sector in a much bigger way. that was the highlight of the announcement today. and so there is a number of companies that are working to put a lunar gateway in the orbit of the moon that is going to allow us to do a number of different things. one, it is going to help develop the launch sector that is going to go out further beyond just lower earth orbit. it will allow us to develop the landing technology to go from orbit to the surface. in addition, there are a number of companies that are already working on technology that is being funded by clips, the commercial lunar payload services program that is $2.5

billion over the next 10 years. that is funding a number of small and medium-sized landers that are going to go directly to the lunar surface. so what this allows us to do is really check out the landing technology and the technology to -- that we need to sustain a presence around another planetary body. in addition, the moon acts as a fantastic launch point to go to deeper space missions. the gravity environment on the moon is much less, so to be able to launch from the moon to deep space is much easier. emily: we have not focused on spacex, which is working towards getting a human into space for the first time since nasa paused the space program. but what are the other, smaller companies that are playing a critical role here, that we need to know about? chad: so there was $300 million set aside for the larger human landers.

that is a type of thing that spacex and jeff bezos' blue origin are developing these landers to take humans. but to get started, this $2.5 billion that i mentioned earlier for the clips program, that's going to smaller companies. so astrobotic, which is showing on your screen, is privately funded and has been working with nasa and developing a relationship over a number of years, and is a key player in this clips program that will allow them to -- allow nasa to deliver a payload to the moon for the first time in a very long time. and what this is going to be is to test the capability and also lay the infrastructure that will allow us to lay a habitat on the surface of the moon, which looks very similar to, let's say, the space station as it is today, with a rotating crew of people that are there on a sustained basis, and we have a continuous human presence there. emily: space angels' ceo chad anderson. that does it for this edition of the "best of bloomberg technology."

we bring you the latest in tech every week. tune in every day. and "bloomberg tech" is live streaming on twitter. check us out, @technology. and follow our global news network, @tictoc on twitter. this is bloomberg. ♪

carol: welcome to "bloomberg businessweek." i'm carol massar. we are inside the magazine's headquarters in new york. in this week's issue, what feels like facebook's never-ending crisis, one year since the cambridge analytica scandal. and was elon musk really, really fixated on destroying a whistleblower at tesla's gigafactory? we will tell you about the allegations and how the company is responding. first up, our global cover sto