♪ emily: i'm emily chang in san francisco, and this is "bloomberg technology." america's push against against huawei and 5g escalates tensions between the u.s. and china. chinese state media shows signs of a lack of interest in talks. markets are still on edge after two weeks of twists and turns. hp, a supercomputer maker with a deal of $1.3 billion -- we speak with the president and ceo of hewlett packard, antonio

neri. they have stockpiled chips and components to keep the business running for at least three months as the u.s. curtails the access to america technology. president trump signed an executive order that is expected to restrict huawei and zte from buying essential chips and other equipment from u.s. companies. for reaction, i'm bringing in camille, the vice president of cybersecurity in washington. he was the chief counsel and senior advisor for the relations committee and senior counsel to the house intelligence committee. camille, a lot of u.s. companies are falling on this news, we are talking about companies like qualcomm and micron, debt

supply, these telecom companies with chips and networking gear. is this the right call by the trump administration? >> i think it is. the authority the president provided in his emergency declaration is a broad authority, but can be taken apart with a scalpel. they are at the ntia, and they will use the tool very carefully. -- emily: what is the threat that they really pose? they say there is no evidence, they are anchored by this decision. are they wrong? >> i think so. the national security institute, which i run, put out a report by the intelligence community that demonstrates threats companies like huawei and zte pose. the reality is that they spend a lot of time -- on the back of no interest loans, so they are not really competing in the economic

marketplace, either. that is a real problem, also. emily: what is the evidence that huawei could be involved in espionage and be a threat to national security? of course, we know the case by the justice department about the violating sanctions on iran. that is a different story. what is the evidence that huawei is a threat to national security? >> on that front, having close ties to the chinese government, that refuses to talk about its relationship, what it will and won't do, and the fact that it can run an entire communication network, but to ride the heart of these networks. it is not necessarily what they might do today, but in the future. it is true that the u.k. -- that they are meeting some of that,

but every day, the systems are re-updated constantly in the background, and any flaw -- it's not unusual. it's concerning. if you're going to look at what runs your core networks, do you want to be a u.s. company our western company for a chinese company? right now, the u.s. says it is more important to keep huawei out. emily: take a listen to reaction we got on this topic from lawmakers in europe, business leaders in europe, starting with the french president emmanuel macron. >> it is not to block huawei, in a company, it is to improve european sovereignty and

national security. it is not the best way. >> the u.k. needs to make its own decisions about the security of the infrastructure. what has to happen already before this decision is for a properly based review on telecom supply-chain. of course, in the 5g world, security is more important. part of it is equipment. part of it is security solutions. emily: let's talk about the cascading implications of the u.s. taking this position in the middle of a trade war and wilbur ross on bloomberg television yesterday trying to make it clear that what is happening

with huawei has nothing to do with the trade war. but it is very difficult to separate the two. how could this impact the ongoing negotiations or lack thereof between the u.s. and china? >> certainly, it raises the stakes, no question about that. wilbur ross is absolutely correct to say this does not have to do with the trade war. the u.s. government talked about huawei and the threats from huawei in 2012. they considered action, and the trump administration long considered action and only just took it recently. they haven't yet acted directly on huawei, which means this has not been used yet. the question is, how do you use it and leverage the tools up-and-down depending on what is going on with the trade situation, but also the national security situation? it also will be used for national security for sure, and that won't go away regardless of how the trade situation is resolved. emily: they ask, when will it stop? where do we draw the line? could we someday see the united states keeping certain people

from entering the country or studying in the country because they have ties to china? do you have a sense or an opinion on where this should end? >> that is a great question. nobody is talking about restricting travel by anybody. we are talking about transactions of specific technologies and a tool that can be used in a variety of ways. i think they will do a good job. that being said, i think it is also important to point out that there are huge amounts of people in the u.s. every year who get their pc's here. there something wrong with our own immigration policy if we are letting people in, training them in our best schools, and then telling them to go back home. we should be keeping those people here and encouraging development. it is a challenge for this

administration, also. emily: lots of issues. we are going to continue to follow new developments. amazon is ramping up drive into the european student grocery business. the world's largest online retailer, leading investment in delivery. london is one of the most competitive markets for the industry of for meal delivery. deliveroo has raised $1.5 million to date. we break down the latest acquisition and company's direction, next. listen on the bloomberg application and on sirius xm. this is bloomberg. ♪

♪ emily: hpe is pushing into high-end computing. their deal with cray is valued at about $1.3 billion. the acquisition is hpe's largest and four years to strengthen their position against ibm. joining us on the phone to discuss hpe is the ceo, antonio neri. thank you so much for calling in. what was the driving force and how does it add to what you are

trying to do at hpe? >> super excited about the announcement today. the main reason why we decided to pursue this acquisition is because the sector is exploding. the data has value and it is pushing us to go. the need for high performance computing is one element. the combination of great technologies with hewlett-packard enterprise portfolio, it gives us a unique set of capabilities with that data. machine learning, ai, etc. emily: is there anything in particular that is attractive about the government contracts? >> the government side, the commercial side, one third from the government said. the government has already requested to cray to build excess scale computing. this is what we call the interconnected fabric. for us, that level of innovation is important to scale our portfolio and continue to enter new markets like the oil and

gas, many, as well as academia. emily: the former hp, before it broke up, was famous for making not-so-smart acquisitions. cray's gross profit has fallen over the past couple years and they forecast a suspected net loss. how does that affect hpe's bottom line? >> we have had an incredible discipline based on return and capital. where we have intellectual property as well as talent and innovation. each of them has been very successful, including aruba networks and what i call limbo storage. they have been all very successful. for us, i think about the business. that is because it takes time to build systems with capex upfront, and then acceptance. also limit the capex investment, because it will have significant capabilities. emily: there is fear that trade talks between the u.s. and china have stalled. that we are going to be plunged into a cold war with china.

the markets have been broiled by this. how concerned are you, and what about the potential impact on hpe? >> we obviously want an open market where everybody can participate. obviously, the situation with global trade is a concern, because it creates uncertainty and it could slow down the economy. now, we believe the sooner we solve that problem -- there is demand driven by the need to process data, the need for a bunch of what we call the way people live and work, but obviously solving this problem is fundamental for stability and

confidence both on the customer side and business side. emily: clearly, there is still a lot of uncertainty here. are you mapping out internally

different strategies? let's say, a deal doesn't happen, we go into a cold war, are you mapping out next steps? on the other hand, let's say president trump and president xi jinping come to an agreement. how are you balancing the decisions internally? >> obviously, we continue to make sure we have the right markets. i don't know if you recall, we had the survey that we participated with our partners, we have significant value in china. obviously, it is what it takes. looking at where we build our products, are components, the entire supply-chain, for cost, for scalability, for protection, and for the ability to serve our customers. obviously, we have plans

depending on how this is going to go. right now, we have contingency plans in place. emily: the hpe ceo, antonio neri, thank you for your insight on the broader markets. chrysler has determined it's not just about having a good engine under the hood. with a touchscreen in the center console, it passed the chevy silverado into second place in

the u.s. market. coming up, the fastest man alive is turning in his cleats for a scooter? how he is investing in mobility. that is next. this is bloomberg. ♪

♪ emily: usain bolt, the fastest man who ever lived, could have a different competition on his desk. he is the cofounder of bolt mobility. the company started deploying shared electric scooters in the french capital this week. bloomberg caught up with usain bolt and asked why the gold medalist is not interested in speed this time around. >> the problem is everyone is trying to get into the market and not thinking about

consumers, about how they develop their products. they are just trying to get into the market. we took our time and develop a product that we are promoting. we talk about storage for water, coffee, for ladies, handbags, storage areas. we also think about the phone. you don't want to have your phone in your hand. we are thinking about everything, because we are thinking about the consumer and not thinking about making a quick buck. it is something we are working on and is out there. if you have the best product, people will use it. >> investing in tech, you are an investor, do you want to invest another tech as well? >> this is my first big investment. i am the cofounder. for me, i think of the future for sure. we will move forward. for right now, the company is moving forward, thinking of the future.

>> also in paris, there has been new regulation because this is considered quite dangerous. you can be fined for writing them on the sidewalks. more than 100 euros, because it is pretty dangerous. are you not worried about this? >> we are focused on trying to work with officials, we want regulations, so we know what the people want and what the government wants us to do. i feel like the scooters that we have are in our dna, that is the commitment we want. emily: that was world champion

turned e-scooter investor, usain bolt. gillian tans, the ceo of booking.com, spoke to bloomberg about how france's digital tax will affect business and the impact they are seeing from the u.s. trade with china. >> yes, i think if you think about trade wars or brexit, there are many elements that have an impact even on travel. for me, it is important we think about this and work together. technology requires people to come together. >> are you having any impact on booking? >> there are many elements that have been in the world that have an impact on travel. fortunately, people do keep traveling and people make different choices. booking is such a global business.

for this summer, there are many people that are booking their trips or the upcoming summer. i think we are growing. >> you attended the tech summit with the french president, emmanuel macron, last night in paris. what is your take on macron's approach on tech and making tech better? >> i really admire him, because he brings people together. he has big convictions for technology and also topics like diversity and diversity in technology, which i work on a lot as well. i really admire him. i want to give a critical note that i think working together

also counts for political leaders. they need to make sure that they work together to have unified rules and regulations for the tech industry as well, because that makes it easier for companies to operate incontinence like europe. >> a 3% tax on income giants -- how much of that is going to impact? are you concerned about all the countries, u.k. imposing a 2% tax on giants? >> booking follows a traditional effect model that has been out there for retailers in europe for a long time. we are not against -- we are actively helping to make sure they put a different situation for the future in individual countries taking action. double taxation will make it complicated for companies like booking in the future. >> it is having an impact on booking.com and people on the u.k.? >> we do see that overall, with brexit, people still travel to the u.k..

british people keep traveling. we do see that they might travel more within the country, but luckily, people still keep traveling. very important that we keep open borders and people can keep traveling because travel have such an influence on the world. emily: that was the booking.com ceo, gillian tans, in paris. every business sector is trying to navigate the ups and downs of a trade war. so much uncertainty. we talk about what is the best way forward. you can check us out at technology on twitter and follow us on tictoc on twitter. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." i'm emily chang in san francisco. geopolitical turmoil was the order of the week, led off by breakdown in u.s.-china trade talks. the markets taking the brunt of it with the s&p 500 falling for the second week in a row. here's what cisco ceo chuck robbins had to say about it this week. chuck: we knew there was a risk of this 25%. our teams kept working on mitigation. when this hit last week, our team had done an amazing job of working on our supply chain which led to a very minimal set of price increases we made over the weekend. everything we need to do on this front is behind us.

emily: i want to bring in brian keare, the cio of incorta, where he advises companies on strategies. earlier, a company has some business in china and talked about the different scenarios they are working through. a lot of companies making some tough decisions over the last couple of weeks. what kind of decisions are they making? brian: companies are making a ton of decisions right now. we have experienced a roller coaster over the last year. and companies today are focused on this -- china goods that are supposed to be imposed 25% as soon as june. we have about 3795 different categories of goods that companies need to go through and understand where they fit in

their global supply chain so that they can reoptimize their supply chain and figure out whether or not china is a good place to get their goods or somewhere else. emily: so, what should u.s. companies be doing? what is your advice? brian: they have to reoptimize the supply chain. i think the real question here is that if the last week has taught us anything is that the roller coaster over the last year is not going to end. we are going to experience a bunch of volatility and uncertainty in a complex environment going forward. and companies need to take that into account if they reoptimize their supply chain. i think that companies are going to be looking at their cost structure in china and going to see a 25% uptick and weigh against their other options. emily: let's say we plunge into a cold war with china. what are the implications of that? what will the impact of these companies be? brian: the companies will have to reoptimize the supply chain

and probably will have to do what chuck robbins did at cisco, how do we deemphasize china in the global supply chain? how do we repatriate our supply chain to the u.s.? they might be making bets that this is a short-term situation and that it is going to pass. that think they have a bunch of factors they need to take into account. the real question is how quickly can they respond to a constantly changing environment on the ground? emily: now, let's say things go back to the way they were. will any of these companies be worse off if they have already made some sort of critical decisions and the other direction? brian: companies, if they go back to the way they were, cisco for example -- cisco is going to be faced with the situation that maybe they have foregone opportunities to have a low cost

structure and supply chain in china because they have gone to other places. companies need to take that into account, but the real question here is that we have a complex environment and companies are going to have to constantly be processing a changing environment. i don't think we will get back to stability anytime soon. i think people who bet on that strategy have been relying on hope and have not been doing the hard-nosed analysis that companies like cisco have had to reoptimize their supply chain in the face of this trade war. emily: you are betting on the worst case scenario then? brian: i think companies need to prepare for the worst case

scenario. they need to really look at their supply chain which is ever more complex and they need to take into account all kinds of different scenarios. they need to have the people, the processes, the system, the data at their fingertips. they need to have real-time operational intelligence to make quick decisions on what to do. where their goods are on the ocean. where they are in terms of in production channels. if i am looking at what the u.s. trade representative is doing for next month, for example, i'm thinking do i expedite my production in china and try to beat expedite the products into the u.s. and beat the tariffs? we will have a bunch of categories potentially imposed with a 25% tariff. i'm probably fast tracking those goods back into the united states. emily: there is another group of companies that is facing sort of the reverse issue. u.s. chip companies, networking companies that supply goods to chinese companies, huawei and zte. the u.s. is poised to cut off that supply to prevent huawei and zte from getting u.s. parts which impacts these u.s. businesses. what should they be doing? brian: those companies need to

take this into account as well. i think those companies are going to end up facing really tough set of months here and they will have to weigh their options. i think they might have their business model be called into question as well because the margins on some of those businesses are going to be dramatically affected by a 25% tariff. as that happens, they are going to have to look closely at product lines, customer profitability, all sorts of different scenarios and maybe rethinking their businesses and business models. emily: brian keare with incorta. we will continue to follow every headline as they come in. meantime, l'oreal ceo jean-paul agon says he does not expect to see any slowdown in china. he expects chinese sales to grow 30% again this year. he spoke to bloomberg in paris. jean-paul: i think it is not a good thing, definitely.

i wish that eventually they will find an agreement. as you said, it will have minimal impact for l'oreal. we usually produce locally, in the u.s. and china. we will see. >> you're seeing marginal impact in the u.s.? jean-paul: the u.s. market is flat today which is surprising. unemployment is very low. consumption is not very dynamic. i don't know if it is related to this, i don't think so, but it is true today that we are seeing a flat market in the u.s. >> u.s. consumption has been flat. that was the case last year, that was the case in the third quarter.

the situation is improving over the last couple of months. jean-paul: naturally, surprisingly again because we thought with a good economy, the u.s. market would be a positive market this year and it is not happening yet. you never know with the u.s. markets. sometimes it is a bit unexpected. i'm still confident that eventually things will go right. >> so, you don't think we will see any improvements, especially with these new trade uncertainties? jean-paul: i don't think so. but we are completely global. asia has become this year for the first time in the history of the company the number one region for business. we are doing extremely well in

asia. we're the number one company in asia but also growing a lot not only in china, everywhere. indonesia, india, malaysia. definitely this year, asia is going to become the engine of growth. >> china especially. of course, china on the other side of the trade war and also retaliating in this trade war. are you seeing any impact on the luxury cosmetics in china? jean-paul: no, not at all. we don't see any slow down in our business. it is still very dynamic, very positive. customer sentiment is strong. so far, so good for us. the chinese market is very dynamic. >> what kind of growth should we see? jean-paul: strong. we did last year plus 30% for our business. why not the same? we are pretty bullish. we also are doing what it takes to build this growth.

we are really investing in terms of media, digital, content, recruitment. recruitment of millennials. we are also fueling the growth that we are enjoying. emily: jean-paul agon there, ceo of l'oreal paris. coming up, lead out capital has attracted some of tech's biggest names including melinda gates and reid hoffman. we will tell you where they are putting their money. this is bloomberg. ♪

♪ emily: former facebook executive allison rosenthal is one of many company alums looking to invest. unlike some of her colleagues,

she says she is focusing on nonobvious founders. she is launching lead out capital, a fund that will invest in early stage startup tooth founders are from or cater to underserved communities. the fund has been backed by melinda gates and reid hoffman. joining us to discuss is ali rosenthal. thank you for joining us. what do you mean by nonobvious? ali: these are founders were often overlooked by traditional venture investors. often times, they are women, underrepresented people. diversity comes in 32 flavors and traditional venture has celebrated pattern recognition in many ways and we think that has caused a gap in the marketplace, one i feel well-positioned to serve. emily: you have made investments for women. tell us about these companies.

ali: we have made five bets and four of them are led by women. two of them are a woman cto and a woman ceo. one of them is from puerto rico. another is out of barcelona. all of these technology solutions are serving markets or opportunities that have been either overlooked or underserved by technologies. emily: you worked at facebook and as has others at the fund. how was that informing what you are placing your bets? any pieces behind social networking? ali: we are a founder market fit. ours is one of network discovery. one thing i learned at facebook is a large part of the success is focused on this with endlessly execution. we value people who value execution. we look for founders who value inclusivity and company building and look to build teams that are diverse.

we think our networks as founders and a broader group of lps, several of my early colleagues from facebook really lend themselves to helping these teams build not only skills and networks, but people who think and process information differently. emily: facebook is having a lot of problems as you may have noticed. it seems like scandal after scandal. now privacy issues, dealing with what goes up and what goes down on facebook. having worked at facebook for a long time, you also joined a messaging company that tried to compete with facebook, what do you think is the driving force of some of these issues? ali: as you mentioned, i have not been at facebook for quite some time. as someone who consumes news, i have certainly noticed some of the issues. i have a tremendous amount of faith in the management team. i think they do so in a really thoughtful and diverse way of thinking and approaching the

issues they are facing. facebook was very young when i was there. we were thinking a lot about scaling and driving growth. now it is a very powerful company with a broad reach. yeah, they've got some problems they've got to face but i have a lot of faith in their ability. emily: the cofounder of facebook wrote a much talked about op-ed where he argues that facebook should be broken up. he also sort of says the opposite of what you say about the management team. he says mark's influence is staggering. he's surrounded himself with a team that reinforces his beliefs and of challenging them. mark's power is unprecedented and un-american and it is time to break up facebook. what is your reaction? ali: i was aware of it but i did not spend a lot of time thinking about it. i am also not an expert in antitrust.

i think there is an interesting debate going on and it is probably good it is being debated. emily: you do have experience trying to disrupt social networking and messaging. do you think that facebook can be disrupted? do you think a startup out there can be the next social networking platform or the next messaging platform given your experience trying to do the work you did? ali: two examples of companies we have invested in. posh scale focuses on pet owner communities. as well as another company that focuses on readers and people who love books. i think people will leverage technology to connect. they may do so in a more vertical way. it is a bet i'm making. i am hopeful we will be disruptive in some ways to facebook and other big social media platforms.

emily: signs companies are making different choices about privacy. perhaps facebook and other companies made in the early days. ali: facebook and some of our brethren back in the day were defining what social media was. now we have a better sense of a community of what social media is. i think nowadays with other privacy policy abroad and here, the companies we will be investing in have to think about it in a different way than facebook and twitter did when they were getting going. emily: in running your fund, i'm sure you could have joined a number of venture capital funds. you decided to start your own instead. with things like all raise, backstage capital, investing in women, black and gay founders, why do you think there is still an opening? what are they not addressing that you are going to address? ali: bloomberg did a great piece

the other day about the numbers. one of the things that drew me to melinda gates was her leadership on the single-digit percentages of women and underrepresented people who own these businesses. we have a long way to go. we are not a quota driven fund, but as a woman-led fund and a group of people who represent a different set of networks. one of a small number of new entrants in the marketplace. i was really focused on change. if you think about how systems change, it is a matter of coverage of what is wrong with the systems. the incumbents doing something incremental. hiring more diverse decision-makers. i felt importantly that i wanted to be a new entrant and push the system to where i want to see it go. i don't know some of these other

folks, but my sense is they have a similar mission and there is a lot of work to be done, as you well know, before we are in a place where the best entrepreneurs are getting the looks they deserve from capital. emily: thank you so much for sharing your ideas with us. ali rosenthal. still ahead, more cities wrestling with the ethical fallout of facial recognition technology. we will tell you why the tech is advancing much faster than you think. this is bloomberg. ♪

♪ emily: san francisco is the first american city to ban facial recognition software used by police and other agencies. bloomberg explains why the tech advance is so alarming to regulators, to the public and

even to the people developing it. >> in a tweet threat exchange with jetblue, writer mackenzie fagan had a few questions about the new boarding procedure. no boarding pass, no i.d. instead, a camera and screen verified her identity against the u.s. customs and border patrol database and then let her on the plane. some passengers might view it convenient and some i think it is orwellian but it is already everywhere. the question is how far will it go? it turns out, even some of those developing the technology are scared of what the answer might be. this is your bloomberg quick take on facial recognition. in may, san francisco became the first american city to block police and other agencies are using facial recognition software. >> the biggest concerns are around civil liberties and whether you essentially enable a totalitarian theme with this technology.

>> how did we get here? like other artificial intelligence applications, facial recognition began slowly in the 1960's. with the help of newly available high definition cameras, machine learning and giant databases of photos, it advanced in a hurry. >> facial recognition is technology that takes it from video cameras and tries to identify faces of people in those images. it does so by taking key points in the face usually and doing measurements of the distance between all those points. >> in december 2018, london police made their first arrest based on facial recognition after cross-checking photos of pedestrians against a database of known criminals. in new delhi, a police trial report of the identified 3000 missing children in four days. if it involves catching criminals and finding missing children, why would anyone be against it? for that, one might look at the most developed facial recognition technology in the

world -- china. >> it is used to create this vast surveillance apparatus. that can be applied against certain ethnic minority groups. even in western democracies, there is concern about police using the technology to find suspects or even people who might be involved in legitimate protests so they can be tracked. >> and those are just concerns about the technology when it works as intended. a study from the m.i.t. media lab found that white men were correctly identified 99% of the time, while error rates of up to 35% when it came to darker skinned women. >> microsoft came out last year, the first major tech company to say they really feel uncomfortable with deploying this technology until there is clear regulation. they were joined by amazon which seconded those calls. it seems like other companies are plowing ahead without such

qualms. >> to stake out guidelines, the algorithmic justice center and georgetown university law center unveiled a pledge which asks companies not to provide facial a.i. for autonomous weapons or to sell law enforcement unless explicit laws are debated and passed. neither microsoft or amazon has signed on. what is preventing your image from saying a lot more about you than it used to? face it, not much. emily: you can watch more videos from the bloomberg team at bloomberg.com. that does it for this edition of "bloomberg technology." we are livestreaming on twitter, @technology, and follow our global breaking news network, tictoc, on twitter. this is bloomberg. ♪

>> the following is a paid program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. >> heather: on today's show, we are talking about circulation. if you suffer from pain in your neck, shoulders, or lower back, pains in your hips, knees, or ankles, or pain from arthritis or sports injuries, we will speak to dr. michael ho, inventor of a device that relaxes tense muscles and