♪ caroline: i'm caroline hyde in new york, in for emily chang. this is "bloomberg technology." coming up in the next hour, calls to break up big tech getting louder, but can congress really force change on google and facebook? we hear from u.s. senator mark warner. and uber files its ipo, disclosing that market share is falling in the u.s. and global bookings reached $50 billion in

2018. and a new bloomberg scoop, be careful what you tell your amazon alexa device, because thousands of amazon workers might be listening. but first, big tech companies have increasingly come under scrutiny from american lawmakers. from calls to make sure that they secure user data to antitrust laws on their business models, it seems some sort of legislation is coming. senators have introduced a bipartisan bill to stop what they say is manipulative designs or dark patterns that are featured on websites with over 100 million active users. virginia senator mark warner wrote that for years, social media platforms have relied on tricks and tools to get users to hand over personal data without really understanding what they are consenting to. he joins us from capitol hill now. senator warner, thank you very much for joining us. what do you hope will be brought into force with your bill?

sen. warner: well, this is the first of a series of bills i'll be introducing to try to put some ground rules around social media. this bill is focused on something that, for many users, may just appear to be a nuisance or annoyance, whereby you have agreements you can't really understand, you might have flashing arrows trying to urge you to always agree, where you can never find the unsubscribe component on a particular site. but what experts have shown, there's actually a great deal of manipulative behavior, both for adults and the bill also focuses on children. we thought this was a great starting point. what we've decided to do is set up an industry-driven standard-setting body that would be quick enough and nimble enough to move with, as you mentioned, larger users, 100 million users a month, at the break line.

and then we would have the ftc as fallback regulator. from a financial standpoint, a little like the securities, and this industry standpoint group would be towards those dark patterns. and i think it's a good place to start. i've got other ideas around transparency, content, privacy, where there will be more legislation. caroline: we'll dig into those in a moment. but first, this bill is bipartisan in nature. do you think it'll get the committees behind it needed to pass such a bill? at the moment it doesn't seem to have that backing. sen. warner: this is an area where i think many of my colleagues, my background was in technology, so i hope i bring a little knowledge to the floor. i actually believe all the approaches are going to take are bipartisan. i think they're less about liberal-conservative and more about future-past, and there's a growing recognition that the kind of wild, wild west days of social media platforms is coming

to an end, and i actually think we're, a lot of the commerce committee where this will be referred, deb fischer is my partner on that committee, there's already work around the privacy domain following some of the european models. my hope is that i add these other pillars that they may be ultimately wrapped into a larger piece of legislation. caroline: let's talk about privacy. that seems to be where more consensus is building. would it be based upon something like the general data protection rules, gdpr rules in europe? sen. warner: i think there are members in both parties, working bipartisan, looking at gdpr. there's certain areas gdpr got right, and certain areas that are a little clunky, but privacy alone i think it won't address the issues we need. i think there are issues around for example rights that we ought to have, knowing when we're

being contacted by a human being versus a bot, for example. at least we'll have an indication about where the true post originates. and identity validation. i worry about how we grapple with hate speech. one way to look at this, having some level of identity validation. estonia already does that as the price of entry onto their internet. there a series of other ideas aroundot, as well, transparency. one thing we need to make sure users realize, that these platforms aren't free. if we knew how much data they were collecting on us and the value of that data, i think we frankly there would be new operators coming to the market. caroline: does it frustrate you in terms of how limited the u.s. has been in terms of getting any legislation through? the e.u., having just made facebook be once again more transparent about terms and

conditions so people know their data is being used. i think the u.k., in brexit turmoil, has managed to put through some issues about hate speech. when do you think the u.s. will be able to play catch up? will they, should they? sen. warner: caroline, that's a good point. most of the technology innovation rules of the road over the last 50 years have been set generally by the americans, and i think we're defaulting that leadership. not only did the europeans on gdpr, or a much more bifurcated approach with california taking some of the european models and trying to do them at the state level. i think america acting is frankly, in the best interest of some of these tech companies as well, or they'll end up with a hodgepodge of regulations all over. just recently, australia put in place extraordinarily challenging rules and regulations around content. so these are all issues that'll be touched, and if our government can actually step up

to the task and, i do think the good news is, most of these issues do not fall on a partisan basis. as long as we can get focused, there are a number of members who candidly don't fully understand how all these platforms work, so there has been a bit of an education process as well going on. caroline: in some ways, the ceo's of the companies, mark zuckerberg has been out there talking about regulating the company, talking about regulating privacy, harmful content, election integrity, data portability, saying we need a global consensus, as well. do you think companies such as google, facebook, twitter are now more amenable to regulation, and are you discussing with them? sen. warner: we're discussing this with senior-level folks at facebook. they're saying the right words, but the devil is always in the details. i think the great find would be

their endorsement of our bill putting these restraints on these dark patterns and manipulative processes. they say take a look at that. i'd love to see them actually endorsed the legislation, as well as others. i think they realize the wild west days are over, but whether they really realize that some of their basic, underlying business propositions in some of this may have to be re-examined. caroline: how do you make sure regulation doesn't go too far? sen. warner: i think that's always been the question, and one of the reasons why for example with these dark patterns, i'm not setting up a regulatory body to be a government entity, but first saying, can there be an industry driven standards organization that would be more nimble, with a government backstop and the ftc? that has always been the rub. the point i pushed back is if you have an australian set of rules, a european set of rules, in india a different set of

rules around data localization, if you end up with a hodgepodge, these companies are not going to be able to provide worldwide service. so i actually believe the value of having regulation come from the united states, hopefully with a light touch, will allow innovation to take place but also set standards on a global basis. caroline: you're a senator with expertise in technology, and you also sit on the intelligence committee. i want to get your perspective, we have to tackle the mueller investigation. your thoughts, please, on the confidence you have in the attorney general and his role in the mueller investigation? sen. warner: i've been very disappointed by the attorney general. mr. barr has a great reputation as somebody who is an independent thinker, and unfortunately i haven't seen that. i don't think he's approached the mueller report, i'm reserving judgment.

i supported the mueller investigation and will accept its conclusions once i actually read the documents. and his testimony recently where he basically impugned the integrity of the fbi and the department of justice by saying he wanted to check whether there was "spying" going on, that sounded like a white house or right-wing talking point. when he should know better. the united states government discovered that russia through tools like wikileaks, attacked election security in over 20 states. if the fbi and department justice had not started a counterintelligence investigation, they would've been extraordinarily negligent. and now, after the fact, when there's no question in terms of the consensus from the intelligence committee that russia acted, and acted frankly on behalf of trump against clinton, is pretty disingenuous. caroline: a man who's calling

for transparency when it comes to the mueller report and also when it comes to technology. thank you for joining us, senator mark warner. meanwhile, two wall street strategists downgraded technology stocks, saying the rally has stretched values to extremes. and it's likely to last. jeffries lowered their view on the industry to modestly bearish. meanwhile, sumner bernstein reduced their rate, saying the market is unjustifiably rich. coming up, uber has finally released its ipo filing. what this means for ride-hailing rival lyft and other unicorns heading for public market this year. and if you like bloomberg news, check us out on the radio. you can listen to us on bloomberg.com and in the u.s. on sirius xm. this is bloomberg. ♪

caroline: uber, it has officially filed for ipo, making its s-1 public on thursday to give a look at crucial information in the business. the company generated net income of $997 million, on revenue of $11 billion, but $3 billion of operating losses. uber's offering is expected to be the largest ipo this year in the u.s., and among the 10th largest of all time. joining us is mitchell green in santa barbara, and here in new york olivia and eric newcomer. all things over. we said there, eric, that we had almost $1 billion net income, but because they sold a lot of stuff. this company is losing significant cash.

eric: yeah, it's almost like uber is having a laugh at gap financials. because of assets they sold in asia, they accounted for operating losses. if you added up, it's been $4 billion last year, $3 billion this year, $10 billion in operating losses over three years, so this is a massively money-losing company. caroline: which we're not surprised about. and olivia, you watched lyft significantly, another lossmaking company, that's been hammered in anticipation of numbers coming out. how much are investors worried about lossmaking companies now, when it comes to these unicorns? olivia: it appears not worried at first. lyft came out at $72, went up and saw a drop several days later, down 1% today when uber's filing came out. caroline: let's get the investor's take here because mitchell, i'm fascinated by the fact that these companies can grow so big on such quantities of private capital, and then

be able to come to the public market with such furor. anything in the filing give you pause here? mitchell: first, we are investors in the company. i just wanted to disclose that. i have not gone through it in detail. obviously we're existent investors, so we know the business well. they did breakout uber eats, which is a good thing. the core business is still growing 40% plus a year. here's the reality, public market investors, and we do public market investment as well, are crazed for growth, they're dying to have companies growing really fast that they can invest into. look today at the software company that just went public, 23 times revenues, growing 46% a year, this company on the road, zoom communications, is one of the hottest software ipo's in the last decade, probably

trading at extremely rich valuation. but investors are just dying for growth. but three months ago, if we all sat here and said lyft would be a $21 billion company a couple weeks after the ipo, i think all of us would consider that a wild success. caroline: i want to dig in to what you mentioned, you talked about uber eats growing crazy fast. i'm surprised how tiny it still is, $165 million of revenue, and the bulk of the $2.5 billion in the last quarter was sheerly ride-hailing business. is that not a shock or a surprise? mitchell: i haven't gone through all the numbers in detail. it was filed one hour ago. but i noticed in q4 of 2018, the uber eats from a gmv or volume

perspective was about $2.6 billion of gnp. i only know that because i knew that before and i know it was disclosed in the s-1. caroline: eric, i was surprised by how dominant ride-hailing is for uber when it's so many other parts of the business. eric: uber wants to sell this platform vision. its users numbers have platform in the name. their focus is the suite of services. if any of you dig into uber eats , it's very small relative to the ridesharing business. it's growing on a gross bookings basis, but if you dig into net revenue, it almost looks like it reverses because of the subsidies around growing that business. if you're grubhub right now, you sort of got to have a little laugh for the time being. uber is able to operate the food delivery business sort of unsustainably while trying to grow market share, but it looks small relative to the ridesharing business overall.

caroline: but this is a company, as you were saying, mitchell, focused on growth and growth potential, and also spending about $1 billion on driverless cars. can you paint the picture of the future of driverless and how important it is to uber overall profitability? at the moment they say they may never be profitable. mitchell: every company that's not making money says they are not going to be profitable. some economists say autonomous is two years away. i have a hard time believing i'll get into a uber or lyft drop me off in palo alto with no one in the car into to three years. i think it's a lot longer away than people think. i think there's another important thing in terms of the ability to make money. uber is one of these companies, lyft would be one, amazon would

be one and alibaba would be one where they have upward-sloping cohort curves, where customers spend more and more money over time on the products. think about it really quick. think about everybody who joins uber or alibaba or amazon in , like, january of 2015. over time, those people spend a lot more money over time, and why that's so important is that they don't have to reacquire you as a consumer. so every time we get into an uber or lyft, my guess is they're profitable, because they don't have to reacquire us. i think one of the most interesting stance in the s-1 -- somebody just texted to me before i got on. over 50%, around 50% of people who use uber eats, it's actually their first time being on the platform, so i think the ridesharing business still has a long runway. they've never used the

ridesharing. caroline: wow, so they're able to grow off of that user base continually. i'll get your perspective, olivia. we're hearing from mitchell about what this says about the other companies coming forward that are, i think zoom is making profit to a certain extent. how much oxygen is going to be sucked up from what uber is going to bring to the table? olivia: it's a stampede of unicorns crossing to the public market, and the appetite is insatiable. zoom, pinterest next week, then slack. postmates if they don't end up selling. caroline: i want to ask you, eric, and then get mitchell's opinion, about international

growth. did any numbers surprise you? u.s. and canada dominant. i was surprised how big latin america is versus europe. eric: one amusing thing is the contrast uber draws between market share and category position. in market share, it says it's very small because it sees a huge amount of growth opportunity for ridesharing, but category position relative to competitors, it says in a lot of regions we have over 65%, whether that's the united states and canada, latin america, europe, uber is both saying we have a dominant position around the world in which we operate. and yet, we think we represent a small share of what's possible, and that's certainly the messaging coming out of uber. being able to confidently say they either have a strong position in the countries they operate in or they own a stake in sort of major players in those regions is a compelling international position. caroline: mitchell, briefly on international growth? mitchell: i think international is very strong. you know, one, i think dara is a master chess player.

he understands it from expedia, which had done some interesting international stuff. they've had some big investments in southeast asia, russia, china, exciting businesses. latin america. the deal with kareem will give them a monopoly in the middle east. australia's very profitable for them. back of the envelope, lyft is worth $21 billion, meaning uber's business in the u.s. is worth $40 billion. caroline: we're going to have to leave it there. great to get your perspective on the growth to come. lead edge capital partner and of course investor in uber, mitchell green. olivia and eric newcomer with the details. coming up, the man behind wikileaks has been formally charged for hacking in the u.s.

detailing what's next for julian assange, just ahead. this is bloomberg. ♪

caroline: julian assange's lawyer says the wikileaks founder will fight extradition to the united states. assange was arrested at the ecuadorian embassy, where he took asylum. assange faces a sentence of up to 12 months for bail convictions in the u.k., and serious charges in the u.s., where the justice department charges him. denying a dutch newspaper report that a semiconductor company was a victim of espionage. he was based workers with direct links to china allegedly sold documents to europe. saysompany also reported asml reported this and says they

can still do business in china. coming up, alexa, the ai in your smart speaker is listening to your commands, but is somebody else listening to alexa? we'll discuss next. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

caroline: this is "bloomberg technology." i'm caroline hyde in new york. now, it's estimated approximately 74 million americans will use a smart speaker at some point by the end of 2019. those people asking the digital assistant to do something, whether it's play their favorite song or look up a recipe, nearly 47 million will do so using amazon's alexa, but while amazon is listening to them, it asks -- begs the question, who is listening to alexa? it turns out thousands of amazon employees are in an effort to improve alexa's ai. what does that mean for that

technology, and more importantly, your privacy? thethe answer, we've got ceo of an ai venture working to improve machine learning language joins us. seven years ago, he sold a voice recognition technology company to amazon. matt, phenomenal piece of work. talk about who is listening, how they're listening, why they're listening. matt: sure, they're sent a batch of audiophiles, a small, small fraction of things people say to a alexa and their role is to transcribe in some cases the data, annotate, pick out what people are saying within it, and feed that big pile of stuff into the system in an effort to make us smarter and better respond to commands going forward. caroline: igor, many have

wondered, perhaps thought, joked, then concerned alexa is listening when it shouldn't be. when someone is building a business like this, how integral is it you listen to humans to be able to build ai? igor: great question. so, the business that we're building is focused on enterprise applications and data. as a result, there's different checks and balances that come into play because many of these environments and industries are highly regulated. by their very nature, there's different safeguards associated with business applications than there would be for consumer applications. caroline: i see, so the business you're doing has different standards. but how important is it you're able to take clips of humans speaking to be able to improve and adapt on the ai so they learn and enterprise turn of phrase in different languages?

igor: so, in the industry, we talk about two different ways of doing that. one is supervised training and the other is unsupervised training. unsupervised is when all of it's a completely automated learning process and there are no humans in the loop to make those corrections, as you previously detailed. in the last company, we were betting ourselves on doing it as automated as possible and completely unsupervised because of the issues relating to people's privacy, as are well documented now. caroline: matt, how different is what amazon is doing compared to google? they've got google home. they've got siri. have they been listening to perhaps parts of your conversation you'd rather wish they didn't? matt: they have google and apple, the other major fielders in smart speakers also have programs where humans review some portion of the transcripts. we don't have quite as much detail on exactly what they're up to, but those companies say they strip that voice data of personally identifiable

information so transcriber can't go in and say find that person. that's something amazon has said , as well. caroline: meanwhile, amazon has responded to your story, saying they take the security and privacy of customers' personal information seriously. we only annotate an extremely small sample in order to improve customer experience in a have strict technical and operational safeguards and have zero tolerance policy for the abuse of our system. igor, when you're building a business such as this, how much do you need to win hearts and minds? how much does there need to be more transparency about what did it is being used so everybody feels safe with that? ht, so i think it gets to the fundamental genesis of the business itself. as i stated before, we bet our company on privacy last time, whereas several other ai providers at the time were using humans to correct transcripts before they would return voicemails or phone calls back to you.

and it's just something that you make an early decision on when you form these companies as to what style of training you're going to be doing, what style of architecture you're going to be doing. and it's a point of differentiation, where i think the market will correct itself towards providers that have that as one of their core architectural decisions. caroline: are you upset that this is perhaps happening at amazon to the company you brought forth? think one of the things i'd have preferred that they did a better job is the question of opting in versus opting out. it's one thing to state that you can get early access to features or certain enhanced capabilities if you opt in to helping improve the service. it's another to make it a default selection. caroline: yeah, matt, paint us a

picture of how easy is is or hard it is to realize someone might be listening to an argument or us singing in the shower, as you mentioned someone had had on one transcript. matt: amazon isn't specific at all about humans being in the loop. they kind of mentioned it in language familiar to folks in the technology industry, so that's something i think privacy advocates have suggested they could definitely do a better job of. caroline: igor, i want to get your sense of where this technology can go. clearly, in many ways, the consumer out there hasn't really cared about the rumors and the speculation and now the evidence given by matt that this is actually happening because the usefulness of the case in point is so much there that we'll still buy google home or amazon alexa or echo, and indeed the apple products, as well. how can this help when it continues to grow the enterprise? igor: i think from that sense, we have to start before even asking that question.

in some cases, the eu has delivered judgments against technology companies because their privacy policies weren't even understandable, let alone what they were actually doing. we have to start where people have a very clear sense of what's happening behind the scenes, and at the same time, as i mentioned, people have different capabilities they're expecting us checks and balances in the enterprise, but i firmly believe that the market will correct for this because it's something people are now very aware of. caroline: and how big can this type of technology become? how dominant a force will he be in our work and our play? igor: you'll have more conversations with these technologies than your own friends and family members. that's how dominant and prevalent it'll be, and it'll be driving trillions of dollars of productivity. as we describe it, more so augmented intelligence where it

becomes practically a doppelganger to represent your interest in your personal life and in your professional life. caroline: great perspective. thank you for joining us. matt, i'm pleased to say you'll be sticking around to discuss our next story. we're sticking with the theme of amazon and jeff bezos has a dare for his company' rivals, like match our walmart, to employee benefits and $15 minimum wage. do it. it's the kind of competition that will benefit everyone. so matt, will it benefit everyone? everyone's worried about gross margins to a certain extent. are you surprised by the challenge, given that it took him some time to meet the $15 requirement? matt: certainly, and the $15 in wage less year was only after they were criticized for years and years for working conditions in the warehouse and treatment

the bottom oft amazon's ladder. it's interesting that amazon can make a policy of not talking too much about competitors. they've preached that night and day, and here's jeff bezos openly challenging the rivals. see if you can do better. caroline: and also throwing the challenge in a way, rather more guardedly, down to potential regulation coming his way. he seemed to respond in particular to elizabeth warren's perspective trying to show that amazon is helping third-party vendors. can you break down what he said? matt: he opened his shareholder letter, which is closely followed, with and explain should have the growth of amazon's third-party marketplace where retailers and independent sellers can essentially rent space on the company's website and sell their own goods. that's been growing steadily a up thedily and now makes majority of the company's sales.

this is seen by folks as a response to the criticism that amazon is harming folks on its marketplace. it can compete against them and sell again for with white label goods or sort of force them to take out ads to compete effectively. it goes to the antitrust critique of amazon recently and jeff bezos came out swinging saying no, we're good for marketplace sellers. caroline: there was a great piece out today. it's potentially we're seeing a scaling back of growth desires to a certain extent, with jeff bezos admitting growth will slow at some point. matt: amazon has been on a tremendous run. i can't remember how many straight quarters of 20%-plus revenue growth for years, so you kind of run into a problem of large numbers. they're very well known and have great market penetration in the core markets in the united states and some european countries and gains are getting harder for them and the core businesses. and also, once you're at the

scale of amazon, it's hard to keep up that pace may be. caroline: sometimes you get almost too big. matt day with a wonderful scoop. on the amazon possibly listening to you. so well red across the bloomberg and online. we thank you for breaking it down for us. coming up, 15 companies raised more than $5 billion in ipo's on the u.s. exchanges in the past three weeks alone. we will discuss how the pipeline is turning red hot. that's next. this is bloomberg. ♪

caroline: now if you thought the past few weeks were a busy time for initial public offerings, just wait. partial government shutdown slowed the start of the year, companies have rushed to join the markets. bringing into perspective the sheer flood of unicorns, the stampede, or even companies smaller than that coming to the public markets. >> yeah, as you mentioned, we did have a slow start to the year due to the government shutdown. we did welcome 20 new listings in the u.s. public markets in the first quarter, 19 of those on nasdaq. we had a couple large offerings to kick off right at the end of q1. looking forward to a busy q2. caroline: let's talk about lyft. because of course, on their first day of trading was a great success. share price popped. since then, the share price has been under pressure from various

forces. is that a concern for you in terms of tempting more companies to list on the nasdaq? jeff: you know, we look at the performance of all ipo's. so since 2018, we've seen u.s. ipos of over 10%, so that attracts a lot of new investors. one thing we talk to every company about is how the ipo is just a moment in time and the start of an endless series of quarters, and it's all about delivering on your promises to investors over the long-term. caroline: okay, and what about what you're feeling in terms of corner? around the are we rushing because we're worried about volatility? jeff: you know, nobody can really predict where the downturn comes. one thing to do from a number of companies as they look would love to get out this year in advance of the 2020 presidential election, which will obviously take up a lot of airwaves and may produce additional volatility.

caroline: i want to get your perspective. of course we just had uber choose the nyse, but lyft chose the nasdaq. lyft had a lot of control remaining with the founders. uber no longer run by the founder and now it's one share, one vote. when you talk to corporate or potential clients, how much are they worried about this sort of shareholder control? jeff: well, we at nasdaq are big supporters of dual offerings. we're very supportive that companies choose the share structure that's right for them. when founders are the reason investors are investing in those companies, we think it's appropriate for them to be able to offer multiclass share structures. while investors may beg to differ, we think that it's about giving companies the choice so they can come to market with a structure that works for them. caroline: these companies are old, jeff. when you think about the certain turn of phrase that was coined back in 2013 of unicorns, one of

those companies was uber, and now we see it list six years later. does it frustrate you that companies are waiting so long, getting so much venture capital or private capital coming their way that apps don't list earlier in their lifespan? jeff: i think you hit the nail on the head, that companies today have unprecedented access to private capital. one of the reasons we launched nasdaq private market five years ago was to help these companies provide liquidity to shareholders on the long march to being public. last year, we executed 79 different secondary transactions representing $12 billion in value, versus in the u.s. public markets, we welcomed 186 new companies that raised when a $7 -- raised $27 billion in capital. the private market is now getting to the scale where it rivals the public market offerings. caroline: is the private market driving up valuations too high? in many ways, we worry about the fact that the likes of certain companies don't actually meet

their recent round of private funding. i'm thinking of pinterest coming to the market at a valuation lower than what it raised in 2017. jeff: well, i think any time you have liquidity in the market, it helps define that proper evaluation. and i think as you pointed out, these companies are waiting up to 10 years to go public. that's a real impact on these companies' employee shareholders. we see over 2/3 employees participating are current employees and companies are looking to incentivize so they can attract and maintain talent. caroline: jeff, how difficult is it to compete against the nyse in terms of listings? you were always the go to for technology. we know the story of what happened with facebook and how you've had to win back hearts and minds to a certain extent. you've got a lot of the key unicorns this particular year coming toward you. how much do you have to fight for your territory?

jeff: well, i think competition is always great in every market. last year, we were pleased to welcome 72% of all ipo's and the public market. as i mentioned in q1, we had a 91% win rate. while we compete vigorously for every deal, we think ultimately, that serves the companies best to have a couple different options in the u.s. market. caroline: jeff, we look forward to seeing how the battle continues to unfold and how new companies continue to come to the nasdaq. we thank you very much, jeff thomas with the nasdaq. still ahead, will humans merge with machines? elon musk may be close to developing the technology to do so. we'll discuss that next. this is bloomberg. ♪

caroline: softbank is

increasing its bet on insurance, leading to a funding round. a company which uses ai to speed up claims to process rent from homeowners based $175 million from softbank and others. the firm says it plans to use the money to expand globally and offer new products. it could give a valuation of over $2 billion. meanwhile, santos may have come one step closer to connecting your brain to computers. academics, according to this particular paper, says a team with links to elon musk have outlined a system that plugs electrical wiring into the brains of rats. each of the officers are involved with numeral link, a mergee he says plans to the human brain with ai. joining us to explain more, sarah mcbride in san francisco. so sarah, talk to us about this amazing discovery.

sarah: well, what these scientists say that they've done is invented something called a neural sewing machine. that means a needle which can go inside your brain rapid fire just like a sewing machine needle and plant lots of electrodes even to your brain, one every few seconds. they've done this on rats so far. doing it on humans is still a long way off, but still it's exciting. caroline: who are these scientists? because we just said that they were in some way associated with neurolink. sarah: when he started it, elon musk hired a way a lot of top intellectuals from universities. a couple of them worked directly for him and were hired out of places like the university of francisco, and others perhaps worked in a lab. it's a small community and they all work together in some way. caroline: the sort of picture of a sewing machine is a strong one when they talk about the brain.

what exactly is the process that they claim this piece of academic writing suggests is accomplishable? saraah: right, right. did is somewhat incredible. they did these little tiny craniotomies -- in other words, brain surgery -- on these rats. obviously, they put the rats under so they couldn't feel pain . but they made these incisions in their skulls, put the electrodes in their brains, attached little tiny circuit boards to the back of their heads, and every time the neurons near those electrons fired, those pulses were recorded. so they have a good picture of what's going on on the individual neuro level. carolyn: to be honest, it sounds like something out of "silence

of the lambs" to some extent what's the positive here? what does it do we couldn't do before? sarah: the idea is this will be able to help us with brain-related illnesses like dementia and parkinson's disease. and then long-term, it may be able to help humans merge with computers, which sounds like a very scary technology that elon musk argues we're already almost there, that our smartphones are already part of ourselves and why not take it a step further? caroline: this sort of cyborg theory that he holds. sarah: right. he says computers are getting so smart, we have three choices. one of them good. the other not so good. the good choice is to create a symbiosis with artificial intelligence. and the less good choice is we'll either become irrelevant . is we'llird choice

just be destroyed by artificial. -- artificial intelligence. he tweeted about this saying we run the risk of becoming like house cats or worse. caroline: on that happy note, we're going to leave it there. it's a wonderful piece. i urge those viewing to go and read it. thank you very much. that does it for this edition of "bloomberg technology." and we're livestreaming on twitter. be sure to follow our breaking news network at tictoc on twitter. we will be continuing our coverage with all things over and ipo across the channel. this is bloomberg. ♪ want more from your entertainment experience?

just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.

>> the following is a paid program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates or its employees. >> the following is a paid program for crepe erase. announcer 1: america's number one system for crepey skin just got even better. announcer 2: new crepe erase advanced gives faster results and is clinically proven to give you smoother, firmer, younger looking skin. announcer 1: on your neck. announcer 2: chest. announcer 1: arms. announcer 2: legs. announcer 1: and hands.