♪ caroline: i'm caroline hyde in new york, in for emily chang. this is "bloomberg technology." apple's bet on services seems to be paying off. plus, facebook puts its best foot forward at its developers conference. the social network shifts its emphasis to private communication. we will speak to the vice president of facebook messenger. alphabet turns in its worst performance in terms of share prices in seven years on fears advertisers are shifting from spending away from

the search giant. first, to our top story. apple shares rising in after-hours trading, up nearly 5% on the company's second-quarter earnings report and the iphone maker is continuing its transition to a services company. revenue reached a high of $11.5 billion. remember apple is launching a plethora of new services, like streaming video, video games, improved news subscription. still, its biggest revenue driver remains the iphone, which saw demand stabilize. that is still a drop and disappointed in the holiday quarter. for more on these results, i want to bring in from cambridge, massachusetts an analyst. , julie, i'm so interested by these numbers. share price is big movement after hours. it was a beat. we remember yesterday at beating on the revenues. these are still falling revenues

falling earnings per , share, falling iphone sales. julie: it sounds like another boring quarter for apple. i think it is the same news every quarter. more seriously, the things you can look to that are very strong, their installed base continues to grow. service revenue continues to grow. it's still a strong story for apple, despite all that. caroline: talk to us about the real strengths. is it all about the fact that services really is starting to grow? they call it a record quarter in terms of the services number, $11.5 billion. julie: we expect to continue to see record quarters. i think also while the hard-core business is still -- the hardware business is still the core of apple, a lot of the growth has to come from services. whether it's smart watch or home pod or something else that i have to have, they rely on the smartphone and smartphone

upgrades, but a lot of the growth will come from services. that's where you will see more revenue per consumer as we look forward. caroline: they are talking about their installed base being 1.4 billion users. is this enough? do we worry that base might erode when we have such competition in the high-end device area, such as samsung, such as google pixel, such as huawei? does services do the heavy lifting? julie: i believe apple tends to have a very loyal base of consumers. what's difficult here is you can't parse out that 1.4 billion. as julie, how many devices do i own versus how many new customers are they bringing into the apple ecosystem? the values of the services and the devices goes up the more devices i own. both numbers need to continue to grow for apple. caroline: so many interesting results tied to china.

they blame all their problems on china, particularly the falling iphone sales. china is down about 22% in terms of year-over-year sales. how much of a worry is it that china seems to be not quite the growth focus it has been? julie: so, i think it's always-- it's somewhat of a concern because it's the largest market in the world. there is a strong competition from the local players in the chinese market. bigger picture, when we look at where new smart phone sales are coming from, they are going to come from economies like china and india, indonesia and nigeria. it will be harder for apple to compete at their price point versus some of the local players and those in the android market. it's always going to be a tough road there. caroline: as much as it is not fundamentals at play here, we do look at them giving more cash back to the investor base, doing more share buybacks, bigger dividends, but they still have

an enormous cash pile. how do they put that to work? julie: not being a financial advisor or analyst i probably am , not the right person on how they should put that to work. if they have better product ideas -- the next thing would be the services. there's only so much money you can put at services, because there's a lot of dependency both on developers to create services on top of the platform. there's a lot of runway for developers to go. also, they are very dependent upon their ecosystem partners, signing up more partners within the payment ecosystem,k getting more content. it's not that they can throw money at services and magically make that number grow. they are still dependent on partners to do that. unless they make different decisions on content. caroline: you're right. we are hearing from tim cook on the call at the moment. our bloomberg offering shows the latest news coming from the call.

they called the ipad quarter a blockbuster saying the company's , culture is that of flexibility adaptability, , creativity, and long-term thinking. is apple at its core adaptable enough to decide its own services company over and above the hardware company? julie: given the track record to date, i would say yes. there are other large hardware manufacturers. if you compare some of their largest competitors, we argue they are further ahead in the services space for a company still generating the vast majority of their revenue from hardware. caroline: great. we thank you very much. she will have more for us on apple later in the program. coming up, facebook wants to be your go to place for messaging. the social network unveils what they are trying to make a reality at its annual conference.

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facebook is doubling down on a successful but controversial part of its namesake app, messaging. on tuesday, they unveiled a redesigned focus on its group feature. another sign that facebook is moving toward more private communication. here is mark zuckerberg discussing one of the newest additions. mark: we need to make sure that the service is available everywhere that you are. for a modern messaging experience, that means having a great desktop experience. we've built a great new desktop app.

you will be able to chat and video chat. in the native app, not just the browser. we are launching this on both mac and windows. this is one of our top most requested features. caroline: for more, i'm pleased to bring in stan, vp of facebook messenger. he joins us now from san jose. we spoke all the way back years ago. wonderful to speak to you again. talk to me about what really excited you about the messenger announcement today. >> well, there are a couple things. a desktop app, you just played the clip. the ability to watch videos while you are in video chat with friends of yours. we're also going to be rolling out a service where all your close communications with friends and family will go to.

you'll have stories, all of that there. this is going to continue going forward. one thing also to say about the privacy part of that, we're looking forward to being even more private than ever before with end-to-end encryption and working with stakeholders all over the world. throwing it out, eventually, to our users worldwide. we will be able to send messages from whatsapp to messenger and back and forth. caroline: when will that be a reality, do you think? stan: could you repeat the question? caroline: when you think the interoperability between whatsapp and messenger will be a reality?

stan: that's actually going to be years. the reason why is just because it's going to take us a long time to figure out the way to do it right. we do not have all the answers right now. when we do, we will be able to create a timeline. caroline: years for that particular merging. what about what is available right here, right now, in terms of business and the person? you talk about how messenger is being used within families, within friendship groups. you are focusing squarely on enterprise as well. how do you make money off of that? stan: we are definitely very excited about our business that is emerging around messenger. today, we have 20 billion messages being sent between people and businesses every month. what excites me is not the

number, but the trajectory. a couple years ago, our first number was 2 billion, then 4 billion. then just six months ago, i was six. in new york, and we had 10 billion. today we are at 20 billion. the growth is very [indiscernible] the civil fact is that people want to message businesses -- the simple fact is that people want to message businesses. they want to communicate with friends. they don't necessarily call anymore. they don't prefer email. they prefer messaging. if we are continuing -- go ahead. caroline: will you charge businesses for this? stan: could you repeat the question? sorry. caroline: would you charge businesses for this? would this cost them any money? stan: the way we will charge is through -- one of the fastest-growing products at facebook is

click-thru messenger ads. it's a simple ad, but the call to action for people is message. it opens up a thread between people, between person and the business, then business can have the channel of communication to their customers. for that, you definitely have to pay, because you are buying an ad. that's how we are making money today. caroline: interesting. would you look to make money in different ways going forward from messenger? what are the ways that you can make the most of things that are integrated between the customer and the enterprise? stan: the way we are thinking about it is the focus for now is more on two things. one, building products that people really love and enjoy using. second, building the business ecosystem where we enable people to talk to businesses and continue to grow the ecosystem. once we figure these two things out and do this very well, we have to figure out ways to make money. facebook was always about

building products for people first, before going deeper. caroline: talking about building products, a few years ago, the big talking point was bots, how that was going to be integrated within messenger, how they were going to help. how are bots helping today? are they being rolled out in the way that was originally envisaged? stan: we are excited about automation. and what we are experiencing right now is experiences where people are sort of combining automated messages that are enabled by bots and human messages enabled by real people. the most powerful experiences on messenger today are those combinations, where you start the conversation with the bot, but once bot runs to the end of its depth, then the person picks

up the conversation and can handle it even better than bots ever could. those are experiences that are enabling growth of the platform today. we are excited about them into the future as well. caroline: when we spoke before, you were over at paypal. paypal and facebook have a strong relationship when it comes to integration within marketplace, when it comes to how instagram purchases are being used. how do you see that developing, in terms of payments, particularly when we look forward to the way in which we will see messenger being used to purchase various things, enterprise, business relationships? will it be paypal, or will facebook build their own mechanism for payments? stan: we are going to work with everybody out there who will enable our users to be able to transact seamlessly with merchants of their choice. we want to have as many partners as possible.

paypal has been a great partner for us, but it doesn't mean that it's going to be exclusive. caroline: always great to get your time. we thank you very much. stan, facebook messenger vp, thank you for joining us. coming up, huawei exposed. could vodafone have found the evidence the u.s. wants to get its allies to ban the manufacturer? we take a look next. this is bloomberg. ♪

caroline: could opponents of huawei finally have the smoking gun that they need to ban the telecom company from future five dutch -- telecom company from future 5g networks? bloomberg has learned that vodafone has found vulnerabilities in huawei equipment going back as far as 2009. this may have given them unauthorized access to vodafone. to discuss, we bring in joshua. your take here? it feels new, because huawei has

always said there is no evidence to the fact that we are in any way able to spy, use backdoors and the like. joshua: absolutely. as the controversy over huawei's role in potential chinese espionage has grown over the last couple of months, the company has consistently said this is all implication, there is nothing you can point to, where there is an actual vulnerability. what we have here is evidence of an actual vulnerability that was discovered and persisted even after it had been brought up to huawei for some time. caroline: it seems particularly in the italian part of vodafone. this is what the real worry is. they said we found these vulnerabilities please, can you , fix them? their response was not immediately that helpful. joshua: this is the part that is most potentially damaging. vodafone said to huawei, there are these vulnerabilities here, can you please fix them.

huawei said, we will fix them, then tests were carried out and they were still there. huawei at another time said, oh, these are required for some sort of manufacturing reason. it seemed like an unsatisfactory back and forth. caroline: just to remind us what so-called backdoors allow and how sometimes companies need them or accidentally on purpose have them. joshua: a backdoor is a way to access the system. there are reasons you would want them. say if you want to do maintenance or something. once you create one, other people can access them. in some cases, the application the implication is that they were set up specifically for that purpose. caroline: what is interesting is vodafone's response. we've had huawei's response, where they say there was no truth to the suggestion that huawei concealed backdoors in its equipment. but vodafone having found these weaknesses, having to ask repeatedly huawei to fix them -- they are still using huawei.

they are still integrated in their 4g and they are still not asking for them to be banned. why? joshua: this is an interesting part about the politics of huawei. vodafone knew about this and continues to work with huawei, is not pushing for huawei to be banned. the fact is that huawei provides products at a cheaper price point. even if you do not want to buy from huawei, it allows you to get a cheaper price from another company. the carriers are really kind of -- they're torn about how they feel about huawei. caroline: when they have to build out the 5g infrastructure, having to tear up your 4g, that would be very difficult. great to get your expertise on this story. joshua, thank you. alphabet has tumbled the most in seven years in its share price after first quarter revenue missed analyst estimates. the earnings report also sparked fears that advertisers are

shifting some spending to digital rivals away from google. here to discuss -- what a move in the share price. >> the most since 2012, a pretty significant drop. to be clear google is up , still this year, up about 13% but investors are pretty upset,. -- upset. caroline: they are worried because there seems to be a lack of clarity. we heard the blaming about why revenue was down. when asked repeatedly by analyst on the call, it seemed as though the cfo didn't have enough transparency. gerrit: there have always been issues with transparency when it comes to alphabet. of course people want youtube broken out, cloud revenue broken out. the company has ignored those calls for years now. they're alphabet. they can do that. that compounded some of the revenue growth problems for the company. people wanted a reason. they wanted a story to go to their clients and say, ok, this is why you shouldn't sell the stock. because there was none of that, people pulled out of the stock.

caroline: i think it's also a concern when, clearly in this quarter, facebook did well compared to rivals. , gerrit: the market itself is kind of static. when one does well, where is that money coming from? amazon is growing its ad business. it is still quite small when it compares to facebook and alphabet, but it is growing quickly. caroline: what are the key concerns, related to you too given the backlash? , gerrit: i think that's one of the leading theories. it's difficult to say, because, on the one hand, there are some serious advertisers that have positive spending. just speaking with an ad agency executive, he said he is afraid that is making a bigger impact than some people are saying. google could come out and say that and say that's a short-term loss because we are trying to make our platform better. they were not that clear. caroline: it's interesting. we've had some announcements after the bell from alphabet, not just apple. alphabet changing up its board

somewhat. talk to us about the departure of eric schmidt. gerrit: eric schmidt is now officially off the board. he was the coo for a long time. he was involved with the company the last 15, 20 years. lately, he really hasn't been. he hasn't been front and center. he might have been doing some kind of back channel, helping google deal with the government. but he was definitely not playing a public role for some years now. i think this formalizeds that. i would not read too much into the announcement. eric schmidt is also interested in not necessarily running himself, but getting more vocal about politics. with the presidential election coming up, that might be one theory why he wants to distance himself from alphabet. caroline: great to get your take. now, coming up, we continue our coverage of apple's results. the earnings call is underway. ceo tim cook said november and december were the most challenging months for iphone.

later, we will talk about 3m's uphill battle. the stock got multiple down ratings friday after a grim earnings report. highlights from our exclusive interview with their ceo. this is bloomberg. ♪ alright boys, time for bed.

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now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. >> i'm caroline hyde in new york. this is "bloomberg technology." apple's bet on services seems to this rebirth as a services company. this is the second quarter of 2018. we got to the company is making gains. also with its wearables. the ipad is doing pretty well. now, they were of course some concessions that they were global headwinds in this. >> we experienced a revenue decline in emerging markets. we feel positive about our trajectory. our year-over-year revenue

relative to the december quarter, we have seen very positive customer response to the pricing actions we have taken in that market. is ryanre to discuss reese. also in boston is julia. i will start with you, ryan. china is improving, but sales are down 22% instead of 27%. it is not pretty. at what point do you think china might stabilize? >> overall, it is not pretty and i think we have got tough times ahead. we're looking at 2020 as the beginning of the real recovery for the market and that is around the device markets that apple plays in, as well as services. growing to the center of attention quickly beyond iphone and other things. caroline: beyond is where they could potentially put some cash to work.

we talked about its cash power previously. getting clarity on the call from the cfo saying that apple had $225 billion in cash at the end of the quarter. they can invest confidently. where would you want them to invest? >> that is a very hard question. if i knew the answer to that, i would have a very senior position at apple. seriously, what is hard here is you can't just throw money at the challenges ahead of them. there is not that next "it" device. they can drive developers to get to the next it device, but they are so dependent on ecosystem partners. growth there is scalable, but hard. caroline: talking of "it" devices, a stealth device has been the air pods. i am a google pixel phone owner by use air pods and clearly we are hearing on the call that

wearables had a strong performance. air pods, the interest was off the charts. you will the charts. they are working to catch up with demand. they can stomach it work on hardware when they want to. >> absolutely. you would be a full to roll apple out of any of these businesses. in terms of hardware. there is no question, they are dominating the wearable market, whether that is air pods, apple watch, they are owning a majority market share of those categories. let's not overlook that. they are highlighting that. as julia mentioned, going into the service business, they talk about this because this is a shift for the company, but it is not an easy play. they will have different competitors, people investing in areas they have not as significantly. they have challenges ahead, but it is not to say that anyone should rule them out.

caroline: talking about her news, it seems as though the apple card has been terrific thus far, is what tim cook has been saying. apple pay is expected to top $10 billion by 2019. how much of a fin tech angle has apple overlooked for a future area of growth? >> it appears to be a strong area of growth. the open question is, how much revenue will continue to generate for them? i believe that some of the early deals they signed may have expired. they need to continue to grow their ecosystem and if it is going to replace something like it cash or credit card, i have to be able to use it everywhere and other places where i want to spend money. there is this recurring payment, but i don't want to get out a credit card so there is a lot of runway for apple but it is hard work. caroline: it definitely is. in terms of hard work, it is hard work to create a juggernaut in hardware and become a services business. do think they are succeeding in their reorientation?

will they ever become predominantly a services company? >> to the last part of the question, i don't know exact it when in a think that is the million-dollar question, or we could say trillion dollar question. realistically, these guys are not done with hardware. we haven't even talked about iphone, which is the first earnings -- one of these briefings i've been on where we haven't dug into that. that is a product that is not done by any means. it is still holding 50% market share of the entire segment. it will make some revolutionary gains, but they have challenges ahead and it is changing times on both aspects. caroline: to that end, the iphone isn't done, but how do you see the price point maturing?

we are seeing samsung offering an even more expensive phone, like the foldable one, which has been a bust in its launching onto the market, but on the downside, we're seeing the likes of huawei and samsung eroding their market share. how much do you think they need to go down the price point value chain or is never a good idea for apple? >> they are not going to go down to the areas where huawei and samsung and these others -- they are playing to support their market share. apple is never going to go that low. this is a speculation, i would not be surprised if we see another go at it with a lower-cost iphone, but that will probably be in next year. this is still the cash cow. they are looking at all the market dynamics, but as you said, they can't go down to the bottom, but i think there is a market need for a $500 to 600 iphone, who knows what the price

point is, but something lower than the $1000 price point we're seeing from traditional funds. -- phones. caroline: to that end, we are apple deploy a different kind of topic -- tactic. tim cook has been saying iphone trade-ins are four times up year-over-year. is that the way they are going to do it, but offering certain clever ways to cut prices? >> i think yes, on one hand, they can throw money at this by doing buybacks, lowering prices,

but the other road is the road that i see apple preferring, to actually create value on top of that platform. there are still other areas we haven't talked about like ar and vr and i message and other groundwork they are playing that will allow third parties to build services that makes the iphone even more compelling or some of the devices in their ecosystem more compelling to consumers. i would expect, while the money might be in the near term, the longer-term play is going to be to create platforms to allow third parties to create value on top of those platforms and give the perception that it is worth even more money in the hardware space. caroline: shares up 5% after hours. great to get both of your expertise. coming up, uber is attempting to put its best foot forward, but is the tech ipo pipeline getting too hot? this is bloomberg. ♪ caroline: amazon aims for a $4

billion additional export for india. the company says total shipments have reached $1 billion since the company started its global seller program in 2015. it is now in a pitched battle with walmart for the edge in india after the retailer spent $16 billion last summer to buy control of the local e-commerce app. let's talk uber, because it just kicked off its ipo roadshow and says it has demand for all its shares in the planned public offering. the ride-hailing giant will continue meeting potential buyers in new york and san francisco as it seeks to raise as much as $9 billion. bloomberg has been high on the heels of the roadshow. yesterday in london, today in new york. they are going to sell all of the millions, but what price will they be able to get? >> this is the kind of story where we would be upset if it

wasn't the case. if they couldn't get within their own range, that would be troubling. the question is, at what price within that range and do they have to push it up because of it? this is a good step, still early in the roadshow, to say there is certainly be demand to fill out this $8 billion $10 billion range we are planning. that is a lot of money. we can roll our eyes and say to uber has always been able to raise money, but it is still a ton of money at high valuation. it is a step in this process of getting the money together. caroline: the step they are currently on is wining and dining or copying -- coffeeing and watering. >> they had sandwiches and pasta. beautiful hotels, not the fanciest of lunches. hundreds of investors meeting with executives to get a first-hand pitch from their perspective. caroline:? who are these investors -- who are these investors? >> uber has a some meetings with bigger investors and this is the range -- you can imagine everything from pension funds -- all sort of potential investors

in new york. anyone who might have money to buy in at a big enough check size. caroline: it's interesting -- i had a guest on in previous shows talking about the excitement around the ipo pipeline. the fact we seen pinterest on a great terror until today. some of these -- a great tear until today. some of these ipos are very exciting. how much are they sucking the oxygen out of the room? how much are we getting the feeling that this is a mad dash? >> we were joking that they were making it clear that they were going public to save money for their eventual ipo. there was some concern about, what about my ipo and the allocations? these companies have seen this coming and they thought maybe they would have come earlier and then waited so long to catch up to valuations. it still feels like this moment where everyone wants to get out at the same time. it feels like things are still working. lyft was not as well executed as people would have liked, but the ipos are still doing pretty well, so all these unicorns want to get out the door at the same time. caroline: pretty amazing when the s&p 500 is at another record. no wonder.

>> they saw it coming. this is a good moment, we need to get out. now, everyone is stampeding to go public. caroline: you are going to be day by day watching them tear through. covering all things start up. let's talk about 3m, which is already on the public market and fighting a disappointing start to the year. on friday, the company offered

its worst stock in three years. 3m ceo told bloomberg that the company is taking aggressive action to turn things around. >> q1 was a disappointing start to the year. we were impacted by several markets that we have been talking about as we exited 2018. we saw soft demand in those and markets. that decline accelerated to the quarter, even those who care about -- even as we came out in march. we were not able to compensate for the decline we saw and we just delivered soft growth relative to expectations. disappointing earnings in the quarter. >> were you surprised? didn't raise any questions in your mind, do i have the mechanisms in place to monitor what is going on? >> we didn't take enough action in the first quarter. we are taking aggressive actions now. we know how to do this.

we will lead into challenges like this and lead out of them as well. our team is on it and we are taking actions as we came out of the quarter and really aggressive a corrections into second quarter. >> what are some of the aggressive actions? people are saying the fact that you brought back more than $700 million of shares in the first quarter, perhaps i could have been deployed elsewhere. >> we have a long strategy to share your purchases and we are continually -- to share repurchases and we are continually in the market. giving us a chance to adjust to the demand softness we saw. the actions are taking down costs and how we operate the businesses that are challenged, and then looking at manufacturing. we are vertically integrated. we're got to adjust production plans, be more aggressive, make sure we are managing our cash as we go through slowdowns, and we're announcing restructuring

to better of run us -- to better align us. >> where was the biggest misalignment? china, automotive, electronics? >> the soft and markets are the three key and markets. china, automotive, electronics. that is 30% of our revenue. we saw decline accelerate through february into march. as you see soft and markets like that, the distribution channels you work with react and take inventory, so it gets multiplied to the quarter. that tends to get back in line the channels i just quickly, but as we go into the second quarter, it becomes a story about what is and market going

to do in those areas? clear positioning ourselves to be ready to lead back out. >> are you changing supply chains? >> we have global supply chains. we have a strategy to because her to customers around the world. we have been in markets like china for more than 35 years and this is part of our strategy. we adjust as needed, but we have a lot of flexibility to make the changes i am talking about and be in line with end market demand. >> as you take cost out and become more efficient, have you make sure you don't undermine your ability to deliver? >> that is the big challenge in adjusting to these kinds of situations. it is not simple across the board crosscutting. you have to be focus. you have got to be aggressive, because you have got to get in line. have got to deliver. one of our hallmarks is we're able to make these adjustments and be in a position to lead back out. he had to focused on what you know will take you forward and the key for us is making that right balance across the board. caroline: 3m ceo. still ahead, more on facebook's redesign for the go to messaging

app. will users buy into it after all of the set so network -- after all of the social network's privacy concerns? >> i get that a lot of people are not sure we are serious about this. i know that we don't exactly have the strongest reputation on privacy, to put it lightly. ♪ caroline: tesla will

reportedly/prices -- will reportedly slash prices. according to the new york times, tesla will announce equipment for up to 30% off. electric car company says it will show that tesla has not neglected its solar business. let's get back to the conference. facebook wants to make sure users know it is serious about privacy.

the goal is for users to easily message one another and share news with members of private groups. facebook is working to integrate and encrypt facebook messenger. i want to bring in deborah of the marketer. your key takeaway so far? >> mark zuckerberg said it over and over again. the future is private. the question i have is whether the future of facebook is private and i think that is the question on everybody's mind. caroline: what did they try to speak to in terms of making things private? groups is clearly a key focus. how are they in visage and -- envisaging people are more willing to share with a smaller demographic been with the whole world?

>> they are recognizing that times have changed. people are not spending as much time posting check ins and updates on what they are doing day-to-day with a wide group of people. they are doing that in small groups, private messaging, these are things that facebook has seen happening over the past few years and is now trying to put it to take it vantage of that. if you're talking with friends in private groups, we still want that to happen on facebook. we don't want that to happen on some other platform. a lot of what facebook has focused on today is the idea that messaging is important to facebook. they want to reassure their users that there is a place for them if they want to have

private communications. caroline: i find it if -- i find it interesting as a geographical point in the u k, most of my conversation is conducted with whatsapp. they own whatsapp as most of their platform. what about the integration of whatsapp with messenger, with instagram for example? this is a key area of encryption. i am speaking to a key bp and messaging earlier -- a key vp in messaging earlier and he said this is going to take years. >> mark zuckerberg said this will take a long time. this is not happening overnight. he has just started to make steps in this direction. he wants people to be able to use messenger to communicate privately with people on instagram or whatsapp or vice versa. he is trying to make it interoperable and encrypt it so people can communicate easily across these platforms. that is the important message that he got across today. caroline: is that good for the broader community, for the investor base? i can understand that it will make people want to use the platform more if there is

privacy, but how in smaller groups will they be able to advertise to you without putting you off? >> absolutely. i apologize, it is noisy here, so i am holding my earpiece in. that is the big question. he did not address advertisers today. he did not talk about how advertising would fit in to his new vision of private messaging. that is something we will be seeing at a later point. it is open to a lot of speculation. advertisers are very focused on advertising on facebook, the more public, open part. that is whether advertising revenues are going. in order for facebook to continue to grow at revenues, it is going to have to develop at product that make sense in this more private environment. we have seen a few of them, but there's got to be a lot more for advertisers to continue their support of facebook. caroline: what about instagram?

this is part of the business the investor community is most excited about. did you hear anything excited in terms of instagram? >> two interesting takeaways from instagram where the idea of the fact that they are testing this idea of private likes or private follower counts, where it is not as public. this plays into the idea that social networks maybe shouldn't have focused so heavily on the idea that you have lots of followers, lots of fans, that you should really just focus on who you are and not post just to be the person who has millions of likes. that shouldn't be a goal. another thing that instagram announced today was the idea of shopping for creators. this is an easy way for people to shop through the creator, all in one spot. caroline: a great analysis of the day. thank you for joining us from a noisy f8. that does it for "bloomberg technology."

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