emily: i'm emily chang and this is the "best of bloomberg: technology." where we bring you all our top and your views from this -- interviews from this week in tech. coming up, big tech reports results, apple says the sales are stabilizing and the bet on services seems to be paying off. plus, alphabet falls the most in seven years after revenue missed analyst estimates, sparking fears that advertising are shifting spending to google's rival. and facebook puts its best foot

forward at its developers conference, as the social network works to pivot to private communication. we hear from the vice president of facebook messenger. but first, to our top story, apple reports service results, revenue hitting a high of $11.5 billion. this after unveiling a plethora includingvices, streaming video, video games, and a revamped video streaming service. still, its biggest revenue driver remains the iphone, where demand has stabilized. the iphone bringing in $31 billion after a disappointing holiday quarter. bloomberg's caroline hyde caught up the vp of global device trackers and forrester principal sck about the o results. >> overall, not pretty, and we have got some tough times ahead. we are looking at 2020 as sort of the beginning of the real recovery for the overall market, and that is pretty much around

all of the device markets apple plays in, as well as the services, which is growing to be the center of attention quickly, beyond iphone and other things. >> beyond the iphone and other things, which is where they could put some cash to work. we are getting clarity on the call, saying apple had $225 billion in cash at the end of the quarter. they can invest confidently. where would you want them to invest confidently? >> that is a very hard question. if i knew the answer to that, i would have a very senior position at apple. [laughter] no, more seriously, what is hard here is that you cannot just throw money at the challenges ahead of them. there is in that next "it" device. that next "it" device. they can spend money on marketing to create demand and create more services to get to that next device, but it is hard

in the services market because they are so dependent on ecosystem partners. while the growth is scalable, it is also very hard-won. "it" vices,bout sort of a stealth "it" device has been air pods. i am a google pixel user, but we are a strong performance. apparently, the interest was off the charts of their working to -- the charts, according to the cfo, and they are working to catch up with demand. they can still make it work on hardware when they want to. >> absolutely they can. you would be a fool to rule apple out of any of these businesses, right? in terms of hardware. so no pressure, they are dominating the wearable market whether that is air pods or apple watch. they are owning basically the majority market share in both of those categories. so let's not overlook that and clearly they are highlighting that. as julie mentioned in the last segment, going into the service business, we talk about this because it is a shift for the company, but it is not an easy play.

they will have different competitors, people investing in different areas they have not as significantly. so they have challenges ahead, but it is not to say that anybody should rule them out by any means. >> in other news, it seems as though the apple card has been terrific, thus far. that is what tim cook has been saying on the call. and apple pay transactions as well, expected to top $10 billion by 2019. julie, how much is this fin tech angle of apple overlooked as a future area of growth? >> it appears to be a strong area of growth. the open question here is how much revenue will it continue to generate for them? i do believe some of the early deals they signed may have expired. they need to continue to grow the ecosystem, and if it is going to replace something like toh or a credit card, i have be able to use it everywhere, and that includes transportation systems and other places where i want to spend money, but --

there is a reoccurring payment, but i don't want to have to get a separate credit card pass. there is a lot of runway for apple, but it is also hard work. >> it is. ryan, it is also hard work to re-create a juggernaut in the hardware space to become a services business. are so fark they succeeding in their reorientation, and at any point will they ever become predominantly a services company? >> to the last part of the question, i don't know know -- i don't know exactly when. that is the million-dollar question, or we could say trillion dollar question. [laughter] realistically, these guys are not done with hardware by any means. we have not talked about iphone, which is i think the first earnings briefing we have been on where we have not dug into that. this is a product that is not done, still holding 15% market share of the entire segment. it is going to still make some revolutionary gains, but they have their challenges ahead and

there are changing times on both aspects, the services and hardware side. >> ryan, to that point, the iphone is not done, but how do you see the price point maturing? we are seeing, interestingly, samsung offering even more expensive phones with the foldable one, which has been a slight disaster launching in the market. but on the downside, we're seeing the likes of huawei and samsung eroding their market share. how much do we need to go down point, or is that never a good idea with apple? >> they will not go down to areas where huawei, samsung, xiaomi, they are playing to support their market share. apple is never going to go that low in terms of price point. i would not be surprised -- and this is just some speculation -- if we see another go at it with another lower cost iphone. but that will probably be into next year. keep in mind, again, this is still the cash cow, they will not give up on this.

they are looking at all the market dynamics, but as you said, they cannot go down to the bottom, but they are realizing there is a market need for, whether it is a $500 to $600 iphone, who knows. but something lower than the $1000 plus stuff we are seeing from apple, and samsung is getting into the $2000 plus, and who are way -- huawei will follow soon. emily: julie from forrester and ryan from idc. up next, how will tech shape and the into 2019 presidential election? we talked to senator marsha blackburn about her view on big tech from capitol hill. and if you like bloomberg news, check us out on the bloomberg on the radio and in the u.s. on sirius xm. this is bloomberg. ♪

emily: big tech platforms like google and facebook are facing the prospect of more regulation from lawmakers in the u.s. and amid accusations of

spreading fake news, hate, misinformation, and allowing themselves to be weaponize device treatments. we spoke to u.s. senator marsha blackburn from tennessee about the intersection of tech and politics. sen. blackburn: when you are getting right is that they provide a service, and information service that people enjoy. and they have changed the way we conduct our lot of our transactional life. many people will say that is for the better. however, when you look at their lack of privacy enforcement, and now, emily, people are beginning to figure out oh, they are data mining me, tracking, following. oh, they are sending my information out and they are big ad companies and i don't like that, i want them to only access information that i give them to explicit permission to see. i don't want them following me, and how is it they can monetize

my information, anonymize it, send it back to their address, which is their virtual you, and then sell that information to retailers. so people have a lot of questions about this business model, and it is why they are saying it is time for congress to do something about privacy and data security in the virtual space. emily: so, what should congress do? sen. blackburn: you know, the browser act is my legislation, that is kind of the benchmark, if you will, that people talk from and say let's say to or -- let's add to or take from, the browser act. this would require an individual to give explicit permission, opt in for sensitive data sharing, opt out for nonsensitive information. it would be one set of privacy rules for the entire internet ecosystem and one regulator, the ftc, which is our nation's privacy regulator, both in the virtual and physical space.

emily: do you think europe and the gdpr is a good model? sen. blackburn: i think it reaches a little bit too far, it is a little bit too restrictive. and my preference is to see the internet remain a place where innovators can pop on and innovate. we have to bear in mind that the internet from 1995, no one ever thought about apps, mobility, in the sense that we have mobility now. they never thought about the convergence of voice, video, and data. and now you see that, and it is all on a handheld vice. -- handheldwith you device. you take it with you everywhere you go. and we need to make certain that individuals that are going to use that spectrum as their backbone, that they have the ability to innovate, and we should not have laws that are restrictive that are going to limit new entrants into the marketplace.

been: now, there have growing concerns from conservatives about social media suppressing conservative views. president trump just met with jack dorsey. isyou think social media repressing conservative views, deliberately or on deliberately deliberately? sen. blackburn: we have had hearings, of course they will say no, we do not. here is where we get into what many people think of as suppression. it is the way they built the algorithms that are doing the data mining. the question should be to facebook and twitter and these entities, do you subjectively manipulate your algorithm? and what we have to realize is in silicon valley, a lot of people have a more liberal bent. that is their preference, they bring that to work, they are engineering and building these algorithms. and then they probably tilt left, instead of being down the

middle, and we know they don't tilt right. emily: you actually had a pro-life ad in that was taken 2017 down by twitter. they said it was inflammatory, you apologize, they reinstated it. what have your conversations been like with the executives of these companies? they are active, they are lobbying on capitol hill, and they want your support. sen. blackburn: and when we did a hearing a couple weeks ago, twitter publicly apologized to me. but the question is how to we get to a point where pro-life language is considered inflammatory? that is the underlying question. why did they make a decision to block that and then took them a while, through conversation, to put it back up? and for all of our edge providers, this is the question that needs to be there. people want to know that if this is the new public square, they are going to be able to express their opinions, and that the

public square is going to be appropriately monitored and regulated. keep out violence, keep out terrorism, those things which do not serve the public conversation well. emily: let's talk about that. there was just another shooting at a synagogue in california. and some would argue that these platforms have done a lot to combat terrorism, combat isis, but have not done enough to combat white supremacy. what do you think? sen. blackburn: you know, emily, there is no place for hate speech, hatefulness. this kind of action on any of these platforms. and they are going to have to be diligent in making certain they deal with those things. likewise, many of us have spent a lot of time working on human trafficking and sex trafficking. working to shut down entities like backpage, to make certain that we tamp down any of the

other entities that grow up. stopnvestigator told me we backpage, then you have the mom and pops that come up. and this does not have a place. we want to make certain that everyone and their information is safe online. and we definitely want to make certain that our children are safe online. emily: elizabeth warren has been calling for a breakup of big tech companies and she has gotten support on both sides of the aisle. do you think big tech companies -- facebook, google, amazon, apple -- do they need to be broken up? sen. blackburn: what we need to do is make sure they are responsible to americans using their platform. and also that they are not acting in a way that is not going to serve our -- their consumers well. we don't want an individual's

private information to be made public. we want to make certain data security provisions and breach notification provisions are in place. we want to make certain that individuals have the toolbox and -- toolbox they need to protect their virtual you. uply: would you say breaking the companies or antitrust regulation is a step too far? sen. blackburn: it is something we are going to look at. something we will say here are the privacy rules of the road, because right now we don't have those. and say, this is the regulator you will be responsible to. as somebody who is a light touch regulator, i think we need to do that first and foremost. then we can move on and do some other things. we definitely have to look at the censorship issue. we have to work with these companies on that issue, and if they are going to consider themselves a news source, maybe they should hire a news

director. emily: you have called net neutrality socialistic. what you mean by that? sen. blackburn: when you would put the government at the head of the pipe, if you will. broadband-, -- broadband pipe, and putting them in the first spot, that we don't want to do. the internet is not broken, it does not need the federal government to fix it, if you will. so what we would like to do is make certain that we preserve an open internet. we are all against blocking, all against throttling. what we want to make certain is that before we make a decision on prioritization, that we are talking with innovators. when you talk with people that are working in ai or av or in health care technology, they will say, let's be, let's move

very slowly when we talk about prioritization. because we do not know what the next innovation is going to be and how we are going to utilize those technologies as 5g comes into the marketplace. emily: now, you have been a staunch supporter of president trump. we know that senator biden has just declared he is running and he has kicked off by talking about charlottesville. you know, there continues to be the contention that president trump did not handle that situation well. do you have any concerns about biden or any other democratic opponent? sen. blackburn: they are going to have their primary, they will go through that primary, they will choose a nominee, then we will have that race once they have chosen their nominee. emily: you are the first woman senator from tennessee. sen. blackburn: yes. emily: you supported the kavanaugh nomination. that mobilize a number of your

voters. how much progress has the #metoo movement made and how much still needs to be made? sen. blackburn: my hope is that the #metoo movement has helped this to be a conversation that moms and daughters and employers have. and i think it is a good thing that our children and grandchildren are not going to be fearful to bring it up when they have had someone act inappropriately. i think that is a good, healthy thing. emily: senator marsha blackburn there of tennessee. coming up, he is the man in charge of microsoft's most lucrative business. we will speak with scott guthrie, executive president of microsoft's cloud and ai. and later, the world's tallest building also boasts the world's first minister for artificial intelligence. we ask him about his ambitious plan to make the united arab emirates the world's ai leader. this is bloomberg. ♪

emily: outside of ceo socgen the nadella,ceo satylaa scott guthrie is arguably the most important person as microsoft. ps helped the tech giant claim a top spot in the cloud, just behind amazon. i caught up with scott guthrie and talked with him about what lies ahead. scott: i have been fortunate to work with him for a long time. we worked on azure in the cloud business. the day before he became ceo, i took on what was his role. emily: what did he say? scott: well, we worked so closely together, so it was a pretty quick conversation. the company as a whole has been going through this cloud transformation, it has been incredibly fun to be a part of. more importantly, helping our customers through it, it has been a great ride. emily: in the break, we're

talking 7-8 years ago, it did not really exist. it is a new business, but it has grown really fast, and you made a decision to focus on cloud and and workers to this area making millions from areas making billions. you are an engineer by training, how did you make that decision? what informed that? scott: in technology, things move fast. the most important thing is trying to understand where the hockey puck is going. how do you skate to it? the company -- we had missed a couple of trends, which is why we know. we saw cloud and said this is a trend we are not going to miss. and more than just a technology shift, we see every customer out there is looking to do digital transformation and cloud is integral. and i think we were able to execute very well. it aligns well with what customers are looking for and is great to see the success of their businesses, and in turn with ours. emily: how do you compete with amazon when they got a four year

head start? scott: the thing we focused on is how do we focused on -- focus on the enterprise markets and companies that target the enterprise market? that is something we did early on, where amazon focused more on consumer startups. it has allowed us to play to our strengths around hybrid, a key have versusion we other cloud competitors, and it also allows us to look at the overall microsoft cloud portfolio and bring a unique set of offerings to bear that amazon and other cloud vendors don't have. emily: are you taking business from them? are you attracting customers they have to your platform or are you mostly winning new customers that are new to the cloud entirely? scott: we've seen both. i think we have a very large number of large customers that

have switched to our cloud, with azure. the market has been growing, and we are taking a disproportionate share of the growth, that has cloudriving our overall momentum. the market is still fairly new, not anywhere near over in terms of its growth phase, so the things we get energized around are just the tremendous opportunity that is ahead. not just to grow our business, but more importantly, grow our usiness as we enable them to do more. emily: do you see the pie getting bigger, and if so, how much more will you have in the future come in terms of a percentage? if amazon is many times bigger now, what does that look like in three to five years? scott: amazon is not many times bigger than us now, maybe seven years ago they were. but if you look at the enterprise market, most people have us pretty darn close in terms of overall cloud share for businesses.

again, we see the opportunity ahead as enormous. because everything is moving to cloud over time. not just the traditional i.t. workloads, but cars, facilities, manufacturing, a bunch of technology we never had any participation in in terms of the core business is now being cloud-enabled. i think it enables an enormous market out there. emily: i know is not a game, but is this a market where you feel there will be one clear leader many? there be scott: i do not think there will be one, there will definitely be several. again, it is probably a trillion dollar market, so it is a very big market. and the thing we are unique he focused on -- uniquely focused on is how do we have this unique value proposition that makes our customers successful? emily: coming up, alphabet first-quarter revenue misses estimates as growth in ads

slows. but the company points to strength in mobile search and the cloud. we break down the results. and bloomberg tech is livestreaming on twitter, check us out and follow our breaking news network tictoc on twitter. this is bloomberg. ♪ so with xfinity mobile

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emily: welcome back to the "best of bloomberg: technology." i am emily chang. alphabet shares sliding after the first quarter results, revenue missing analyst estimates, sparking concern that advertisers are shifting some spending to digital rivals. sales came in at $29.5 billion, excluding payments to distribution partners. wall street was looking for $30 billion. google is usually the first place people go when searching for new products, but that has changed with increasing competition from amazon. guests gave us their reaction. >> 17% growth is not horrible. let's just put that out there

first. next is that the search ad market is maturing. this is something google has been after for 20 plus years now. so this is something at a point where there are just lots of advertisers who are hitting a point of saturation, of diminishing marginal returns. the other thing that is happening here, as we mentioned, is now -- is amazon is now a bigger part of the digital advertising ecosystem. there is greater competition than ever before. if you are looking at this as an optimist, you are saying to yourself hey, google is doing pretty well now that there is more competition, stiffer competition than ever before. if you are a pessimist, you say amazon is dominating product search. it is the number one place consumers go to research products, whether on or off amazon. and amazon is capturing a greater share of the search ad dollars from consumer goods or retailers that are selling on any of these marketplaces.

whether it is amazon or walmart. so to me, that is a bit of a warning sign. and amazon is just getting going with their ad business. they did not have the greatest quarter with their ad business, growing 30% year on year when we are used to 90% plus, but they are really just getting going where most of the money is coming from search advertising, and they have a lot of runway to go. emily: they have been reigning ing ingning in -- rein some of their spending. we saw go down last year. and what happens with margins, you can see margins getting slimmer over the last three quarters. i did speak to the health of that cfo -- the alphabet cfo before the call got started, speaking about the revenue miss. she blamed it on fx, saying it reflects fx headwind. she said the year-over-year growth rate also affects our

strong 2018, so a comparison office wrong base -- comparison on a strong base. in response to the amazon question, is amazon becoming a bigger threat because consumers are starting their searches directly on amazon? she said we see people using search robustly across a wide variety of use cases, including shopping. she also talked about how much ad budgets are off-line, and how much of commerce is still off-line. what do you think of those arguments? >> if you actually look at this quarter, you mentioned currency, comparisons, they say there are product changes that affected last quarter, and that tailwind is tapering. i mean, if we look at the revenue growth over the last three years, they had changes for the product on mobile search and youtube and the growth growth accelerated. now we are seeing a deceleration , especially in the paid out growth.

in? ompetition kicked we do not think so yet, but it is a warning sign for this year. we think it is more of a function of the tailwind of all the changes done in mobile search and youtube fading, so the expectations need to reflect that. emily: colin colburn of forrester research and -- and bloomberg intelligence. well, the united arab emirates is a country that prides itself on building big and being first, and that extends to the tech sector with the country's appointment of the world's first minister for artificial intelligence. behind the minister's creation fty ambitiontes' lo to be a global leader in ai, and to boost the gdp by 35% by 2031. bloomberg's manus cranny spoke with his excellency from the first ai everything conference in dubai about the nation's ai strategy and how it has changed the economy. >> let's talk about what is proven.

so some of our most successful ventures so far are an artificial intelligence company, $1.32 billion. another was acquired by amazon, [inaudible] these probably are the proof that our leadership in we have been working on this for years. we have attracted the right talent. manus: do you think those businesses act as an inspiration for the next generation in ai? to get -- give it a go themselves and abroad? >> it proves there is something, we are not doing ai for the sake of ai, we are doing ai because it has value, and there are returns that make it tangible. manus: from an economic and employment aspect, there is also

the expectation that ai will reduce employment opportunities. how do you manage that? >> everything is technological innovation. everything in advancement has cost jobs, whether it is one job or 100,000 jobs. the job of government is to help people who lose their jobs. and ensure that people are doing jobs that are not going to be lost. this is what we are doing. we are going to round of these people who have lost jobs and give them other jobs, because we know jobs are going to be lost. manus: we have a smart city, dubai is known around the world. how will ai and your ministry play into the smart city evolution? >> the idea is we want to become a smart city through ai and make sure decision-making is done in a very efficient manner, a timely manner, and the right decisions are being made. because [inaudible]

so that is the first thing. the second, we want the government here to be proactive in delivering services. manus: is the government prepared to be experimental with ai in the delivery? >> we already are. lab where we are able to work for six months. it is a controlled environment, and if it is good we expand that. it is coming from around the world and we are implementing it in the uae. emily: that was the minister of state for the artificial intelligence in the uae. coming up, facebook wants to be your go to place for messaging. network unveiled

to make it a reality at their conference, next. this is bloomberg. ♪

emily: facebook is doubling down on a successful but controversial part of its namesake cap -- messaging. the redesign focuses on a group feature, and moving toward more private and intimate communication. here is mark zuckerberg discussing one of the newest additions to messaging. mark: we need to make sure the service is available everywhere that you are. for a modern messaging experience, that means having a great desktop experience. so we built a great new desktop app, siri built a chat and video chat in a native app, not just a browser. we are launching this on both mac and windows. and this is one of our topmost requested features. emily: bloomberg's caroline hyde caught up with the vp of

facebook messenger at the conference in san francisco. >> you can watch videos while in the video chat with friends of yours. we also another thing that we will be rolling out later this year called friend stop, were all of your close communications with friends and family will go to, and you can have stories, all of them will be right there. busy the pastn year designing our office. we are going to be busy as we continue to go forward. one thing also to say about the privacy part of that, we are looking forward to being even more private than ever before. we are working with stakeholders all over the world to figure out the right ways of doing it, and throwing it out to our users worldwide. as well as interact

ibility, you will be able to send messages from whatsapp to messenger and back and forth. >> when will that be a reality? when you think the inter-operability between whatsapp and messenger will be a reality? >> it is going to be years, and the reason why it is going to be years is because it will take us a long time to figure out how to do it right. we need to figure out a way to do it right. that will require us to consult with many different constituents out there. safety advocates, privacy advocates, governments, policymakers. it is going to take time to get it right. we don't have all the answers right now, but once we do, we will be able to have the timeline. >> ok, so years for that particular merging. what about what is available now in terms of business and the person? you talk a lot about how messenger is being used within

families and friendship groups, but it looks as though you are focusing squarely on the enterprise as well. how are you looking to make money off of that? >> so we are definitely very excited about our business system that is emerging around messenger. today, we have 20 billion messages that are being sent between people and businesses every month. what excites me personally is actually not the number, but the trajectory. a couple of years ago when we announced our first number, it was 2 billion, and then 4 billion, and 6 billion six -- 6 billion. ago in december, i was in new york and we had 10 billion. today we are at 20 billion. it is the simple fact that people want to message to businesses. they want to communicate with businesses the same way they are communicating with other friends. so they do not call necessarily anymore, they do not prefer emails, they prefer messaging.

we can be certain if we are continuing -- go ahead. >> will you charge businesses for this? would you charge them? how will this earn you money? >> oh, yes. the way we will charge is through ads. we are an ad business, and one of the fastest-growing products today at facebook is click to messenger ads. the way that works, it is a simple ad, but the call to action for people is message. once you cap it, it opens up a thread between the person and the business, and then the business can have that channel of communication with their customers. for that, you definitely have to pay because you are buying an ad, and that is how we make money today. >> interesting. would you look to make money in different ways going forward from messenger? what are the ways in which you can really make the most being

so integrated between the customer and the enterprise? >> the way we are thinking about it is that we need to focus for now more on two things, building products people really love and enjoy using, and building the business ecosystem where people can talk to businesses and continue to grow the ecosystem. once we figured these two things out and do it very well, we think there will be plenty of ways for us to make money. but facebook is about building products for people first before going deeper, and that is what we are going to do. >> talk about building products, 8, the bigs ago at s talking point was bots, how it will be integrated with messenger and help. how are bots helping today? are they being rolled out in the way that was originally envisaged? >> we are very excited about automation. what we are experiencing right

now are experiences where people are combining automated messages that are enabled by bots, and human messages enabled by real people. and the most powerful experience in messenger today are those combinations, where you start a conversation with a bot, and once the bot sort of ran the end of its depth, then the person picks up the conversation and can handle it better than a bot could. so they are really enabling the growth of the platform today, and we are excited about them growing into the future as well. emily: that is facebook messenger vp. coming up, we are joined to discuss the scholarship rolling out with facebook to expand education for deep learning, and ai specifically tied to privacy. this is bloomberg. ♪

emily: for years, udacity has been helping students learn the skills needed in the next wave of tech disciplines, including ai, deep learning, and vr. and as demand for privacy and security tools grows, there is an opportunity for new talent. udacity is now partnering with facebook for a new scholarship on privacy and encryption. sebastian-founder thrun joined us wednesday to discuss. sebastian: there is a new program for people who care about privacy and security in the ai space. it is interesting, when you do machine learning you get all this data in, and there is a chance that it gets compromised somehow, and a machine can learn. it sounds magical but it adds

massive amounts of security to any machine learning approach. emily: it is interesting you are announcing this partnership with facebook. facebook is backing 5000? and facebook is notoriously not focused on privacy. newthis is part of their mission. why facebook? sebastian: we work with facebook, google, amazon, anybody in this field. privacy is a universal concern. it does not mean we always get it right in silicon valley, but everybody cares. emily: how would you describe the pool of talent who can focus on who has the expertise on privacy and security related issues? is there just not enough people to satisfy that? udacity -- sebastian: it is almost nobody, it is a new topic. but with the level of cyberattacks going up every week, every month by state actors and so on, the sophistication of the defense has to go up as well. very few companies are good at this. what we do at udacity is train people. we train people with the latest

skills. it is funded by facebook's scholarships to really build the latest and best so any person on the planet can now become a privacy expert. emily: should we be worried about our privacy and how well we are being protected at this moment by the new generation of technology? sebastian: we are learning about it every day, problems that googles and governments have. as technology progresses, there are good uses and bad uses. we have to learn how to focus on the good uses. emily: you announced this at facebook's mobile development , andrence, as -- s8 it works well with mark zuckerberg's new strategy going forward to be more privacy focus. he made a joke yesterday that fell a little flat. let's take a look. mark: i get that a lot of people are not sure that we are serious. i know we do not exactly have the strongest reputation on

privacy right now, to put it lightly. emily: so there was a slightly awkward pause there. because well, that is an understatement. do you think this strategy can really get facebook back on track or improve its reputation? sebastian: i do believe in silicon valley at large. not any single company. we need to take this issue super seriously, and it starts with training, it starts with people getting the right skills to bring this to the workforce. i would say being a technologist myself, it is amazing what has happened the last 10 years. the genie out of the bottle, we do something and we reach a billion people. what is lacking is the responsible, ethical technical training that makes this secure. emily: is it just the technical expertise missing, or the values? because it almost seems like values have not caught up with what people now want. sebastian: we have to have a

very broad discussion across the nation about what we want and what we stand for as americans. i say that for myself as well, now being an american, and we have to have a dialogue that goes to washington and everybody to see what is right for us. that dialogue is beginning. i see udacity playing a big role in this, because we teach people. we have 75,000 graduates. we have students. we teach people all across the nation, and we can bring those values to anybody in the tech field. emily: so give us an update on manyatest at udacity, how nano-degrees have you awarded, and tell us about all the disciplines. i know there has been some restructuring and organization. soastian: we have 86,000 or nano-degrees, and most find places like facebook or google for jobs, many, many companies. i think we are now beginning to

invent a new degree. none of the degrees are becoming what we call the fourth degree. it is an industry accepted credential from top companies as a way to recruit and certify people who want to be life longer -- lifelong learners, who are not done learning after college but want to keep brushing up their tech skills. we can really transform the entire american workforce where people continue to learn, get these new skills, get job opportunities, make more money, and have a better life. r a lot of, you wea hats, you are also the ceo of kitty hawk, the self flying car company, or just flying car company. give us the latest on where kitty hawk is. ien can i ride it? sebastian: think you're the first person to ride in a self driving car, and it looked like a crazy idea. the same way a flying car looks crazy. we have done in the order of 22,000 test flights.

and we are still in the development phase. it is not safe enough yet to really unleash to the people, but we have this vision. we believe we can get you in downtown san francisco to berkeley in three minutes. or from san francisco to palo alto in 15. emily: how does your vision incorporate what is already out there? uber is ridesharing, working on flying taxis. there are many different theories about what the roads and skies will look like. what is yours? sebastian: i worked on cars for a long time, so i started a long history. yes, you are the inventor of the self driving car, literally. we always have to get your perspective on that in every interview. sebastian: for a long time i believe the self driving car will be the thing that solves traffic problems. we kill 1.2 million people every year in traffic accidents around the world. i realized if you go a few hundred feet up, there is almost

nothing to hit. there is no kids running around, no bicycles, no curbs -- whatever you care about doesn't exist. now to a new problem, how to manage traffic up there, you can build engines so quiet you will not notice them. so as a futurist, a visionary, i believe it is inevitable at some point our daily commute, we will go up in the air and then that will be the end of traffic. emily: when? when does that happen? sebastian: that is the $10,000 question. not today but i hope something in the next three to four years. emily: so you went on to found googlex. google is working on self uber, socars, so is is tesla. who owns this market? will it always be many different players? will one or two. table ahead? -- will one or two pull ahead?

sebastian: the market is still very open. we have to remind ourselves, the most successful is tesla. they have rolled out an autopilot with self driving features. i believe on the ground there will be one or two companies who own the market, and by that same logic ridesharing is owned by two companies, you get a network effect. the more cars you operate, the shorter time it takes to get one, and the better the user experience. emily: which two companies? [laughter] sebastian: if i invested today, i would invest in waymo, and the second one, i think, for a long time. not tesla. i am impressed by what tesla is doing, and i love the autopilot feature, but i think it is a long shot from autopilot to city driving without a driver inside. i believe waymo right now has the leading edge. emily: that does it for this edition of the "best of

bloomberg technology." we will bring you the latest tech throughout the week. tune in every day, and for livestreaming on twitter, check us out at technology. follow our global breaking news network tictoc on twitter. this is bloomberg. ♪ alright boys, time for bed.

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♪ emily: like a shot of adrenaline spiking an extreme athlete's heart rate, gopro shares soared when it went public in 2014. founder and ceo nick woodman became the highest-paid ceo in america. gopro dominated the action sports camera market, branched out into media and content and even launched a drone, but events,ctacular turn of gopro's drones started literally falling out of the sky. the stock fell too, and the media strategy sputtered. there were layoffs, and gopro