♪ ♪ emily: i am emily chang in san francisco, and this is "bloomberg technology." trade show down, the simmering dispute between the world's two largest economies taking a toll on markets and the global supply chain. has a "tech cold war" already begun? tesla continues to get pummeled by bears, one of them calling it a code red. can the company whether the storm?

and facebook reveals it removed over 2 billion accounts at the start of the year. why are the numbers of fake accounts rising? we speak exclusively to the person heading up this issue, facebook vice president monika bickert. our top story, stocks slumped globally thursday as the world's two largest economies hardened with trade war stances, chip stocks hit the hardest. we are joined by sarah mcgregor in washington, sarah ponczek in new york. i have the world indices up on bloomberg. all of them in the red. tell us where the most damage was. sarah p.: where we continue -- sarah m.: we continue to see a large selloff in energy stocks. we saw oil being killed today, down about 5%, taking energy stocks with it. within the tech space, we continue to see the damaged

focused on hardware and semiconductor stocks. technically, a bright spot has been software stocks interestingly enough. because if you backtrack and look how stocks have performed since the weekend president trump put out the initial tweets tech isgher tariffs, the worst performing sector, down 7%. but look at semiconductors down closer to 15%, and tech hardware down close to 11%, and software stocks are only down 2%. it all boils down to of course exposure to china. software and hardware stocks, hardware stocks are much more exposed. so if you want to stay in tech, software might be where to go to weather the storm. emily: so sarah mcgregor, how are the trade discussions or lack thereof evolving? sarah m.: we heard from donald trump right now. he introduced the idea huawei might be part of the trade talks.

that was a question, when huawei was put on a blacklist where american companies need a special license to export to them because they are deemed a security risk. people questioned, is trump doing this to gain leverage in trade talks? he didn't give any details, but said today that they could be part of a trade deal, at the same time saying they are very dangerous. we know there's no more talks planned right now officially at a high level. the next thing we look for, the end of june when trump and chinese president xi jinping might meet at the group of 20 meetings in japan. there might be talks scheduled in between then, but as of now it looks like they are at impasse. hpely: sarah ponczek, the executives on the earnings call right now saying trade tensions are creating uncertainty for the company. we spoke to the ceo last week, and he said the same thing basically. ae trump administration in

new development now is focusing not only on imports but exports. what is happening there? sarah p.: when we think about what's happening now, we heard about the huawei blacklist and we have heard that president trump as well is potentially talking about blacklisting other surveillance companies out of china, and what this is keeping them from doing is using u.s. suppliers, so talking about exports over to china from the united states. that's another way you have to think about this. because yes, we did hear that the trump administration will give a reprieve to some suppliers to huawei and let them figure out the supply chain issues. but this isn't just going to hurt some of the chinese companies. a a lot of companies in the u.s. do a lot of business with chinese companies, particularly huawei, and are getting hurt here. think of the likes of qualcomm, salesgets 66% of from china. same with micron, 57% of sales

from china. so chopping some of that off, the companies have to think about where else they will do business and make up for this. emily: we will continue to follow the story. sarah ponczek, sarah mcgregor, thank you so much for those updates. meantime, we continue to see the fallout of the u.s. government blacklisting huawei, as sarah mentioned. microsoft has removed the chinese tech giants from one of its websites offering cloud gear. qualcomm and broadcom have told employees they won't supply huawei until further notice, and google will not provide crucial software to future huawei smartphones. for more, i want to go to our guest, in boston. would you say that a tech cold war is already happening? roger: we are certainly in the opening stages here where the battle lines are being drawn. emily: well, have the battle lines already been drawn? you could argue in china for example, facebook was blocked

long ago, twitter was blocked long ago, google was sort of forced out of the country long ago. so hasn't their position been hardened for a while? made: certainly, china has it very difficult for american companies to do business there. we have accepted that for a long time, especially also the conditions on intellectual property transfer to china. so with the trump administration, we are entering a new phase, and the u.s. is now fighting back. emily: so how do you think this issue with huawei, the blacklisting issue, potentially blacklisting other chinese companies as well, how will that impact the trade talks? it certainly complicates the trade talks and raises the stakes. is antioned before, huawei major buyer of semiconductor equipment. last year, $11 billion.

that's 23% of american semiconductor exports. and add on other chinese companies. we have to remember that china is the manufacturing center of stopworld, and if you exports to china, it comes to a grinding halt. what do you believe will be the most dramatic consequences of the latest state of play on both sides? roger: well, the most dramatic consequences are in the short run that for example google has topped working with huawei. selli's ability to smartphones is affected, and they are the second largest

smartphone manufacturer in the world. the decision by arm to not sell equipment to huawei, and potentially other chinese companies, stops it in the longer run because you no longer 's, thecess to the cpu processing capabilities on these devices. so you're devices are rapidly aging and are becoming uncompetitive. even worse -- emily: all this hurts u.s. companies, the buyers. we mentioned qualcomm, broadcom. in your view, who will take the brunt of this, the u.s. or china? who will the blacklisting hurt more? roger: the blacklisting will certainly hurt china more. u.s., it is

concentrated on a relatively small percentage of the economy. a very high-profile, fast-growing one. but for china, it is the underpinning of their economy. only: so, what is your take play out inl pa supply chain? could cutting china off isolate china more and lead to a strengthening of its technology industry? roger: well, china has the "made in china 2025" plan to make china independent of foreign imports and foreign technology. that plan, unfortunately for wena and fortunately for us, are now in 2019 and they are nowhere ready for that, still

critically dependent on american technology. but we should not be surprised if china takes these opening salvos here very seriously and tries to replicate our technological advances. we can see from huawei, a company that only 10 years ago was copying western technology, is now at the forefront of innovation, so it is certainly possible. emily: we are following every twist and turn. roger entner of recon analytics, thanks so much for joining. tesla shares tumbled this month, but rallied after and email from ceo elon musk. we speak to wedbush's dan ives, who still warns the company's problems are piling up. you can listen to bloomberg on at bloomberg gaapp,

bloomberg.com and in the u.s. on sirius xm. this is bloomberg. ♪

emily: it has been a wild week for tesla. shares are at their lowest level in two years on renewed concerns voiced by analysts, but rallied today after an optimistic email from ceo elon musk. the company is still down 12%. an ives says tesla faces kilimanjaro-like climb to profitability goals.

ives,t to bring in dan wedbush managing director in new york. so, this tesla slump, you're the one who called it a code red, and elon musk has sent in emailed to employees saying tesla has a "good chance" of exceeding record deliveries in the fourth quarter, 97,000 cars, saying it would be the most deliveries in tesla history. what is your take? does that change your mind at all? dan: no. ultimately, given what you are seeing, the level of panic on the street, i continue to view that there's better chances of me playing in the nba than them hitting those numbers this quarter. [laughter] fundamentally, the problem goes down to what we see in the u.s. in terms of demand, and especially in europe and china. take away the china piece, and to numbers for the year, 3560

400, it looks like an uphill battle. that is why the shorts are starting to feel that there is blood in the water and you see this with the stock. emily: now, not everybody completely believes you. we spoke to gene munster earlier today, and listen to his take on tesla. >> i am a believer on tesla. i think they will turn the corner and capture a juicy growth curve around the electrification of vehicles, which is currently 1% to 2% globally and will be 100%, but 2019 will be a difficult year. the demand question is critical. emily: do you believe tesla will capture a "juicy growth curve?" dan: they need to get through the next six to 12 months. there's no doubt that there is a transformational opportunity when you look out, but the problem and the focus of the street here is that the next 12 months, if they aren't profitable, they have to raise $1 billion to $2 billion more of capital. so i agree with the opportunity in the long-term, but the

problem with the stock continues to be profitability ramp in the second half of the year given what we see in terms of ultimate demand here and the expense structure. that's the issue that investors are having with the stock, and even with the email., they need to get on the others of this hurricane-like headwinds. emily: so hard far out is the long-term in your view, before things start to look better for tesla? dan: the next six to nine months are going to be extremely difficult. taxuse it is not just e.v. credits getting cut in half, but u.s. demand. you don't see the pick up the decent midrange. asp's, the average revenue they are getting, coming down significant the from the s model and x model to the model 3, coming down 15%. you need to sell that many more

cars in terms of total revenue. in terms of where they are, i don't think we get on the others until 1q, 2q 2020 which is why the next three to four quarters, they will be some of the most defining times for musk to get tesla through this period, especially with the $10 billion debt load. emily: looking at a chart in the bloomberg here that shows a forecast for deliveries for the year. white, forecast is in yours is in blue. why do you think tesla will not meet its own forecasts for delivery? dan: i would say right now, what investors are thinking is closer to 330, 340 in terms of what they will do for the year. what is sort of happening, there needs to be a hockey stick-like ramp. chinaed to see europe and

coming through. you need a rebound in the u.s., especially in the second half of the year, to hit those numbers. 2q is key. talking about 90,000, 75,000 to 80,000 is where most people expect them to come through. but they need to see that second-half ramp in the u.s.. if you don't see that, it will be extremely difficult to hit those numbers. and if you get to the 310-330 number, because even some competitors think 310, you are not profitable in the second half at that level. that continues to be the issue for investors in terms of the key word, profitability. emily: as tesla fights this battle, puts out the fires or tries to, do you think the competition will catch up? we know new electric offerings are coming from various different automakers, which he has have been slow to hit the market, and have allowed tesla to have a massive head start,

but do you think the competition can actually catch up? dan: well, they are well ahead of competition. i think the gap will start to narrow in the next 12-18 months, but right now they have a clear lead. that's part of the conundrum for them. because they are trying to double down on growth. roadster, but you are seeing competition emerging in the u.s. as well as europe. they have a bull's-eye on their back in terms of competition, which is why it is so important here that they navigate through this period, get to a profitable, sustainable, profitable model, and from there on they can manage investments. but right now, aside from competition, it comes down to what is happening in giga and fremont, and all while the company tries to build giga 3 in

shanghai. emily: asking about elon's leadership in particular. the email he sent to the company -- nobody is perfect, but it had typos, missing words. what is your latest take on elon's leadership and ability to meet the ambitious goals he has set? dan: he has personally taken steps in the right direction. in terms of the expense structure, where he talked about all hands on deck for expenses, as well as the cfo, making sure expenses are kept tight. rallyre, he's trying to the troops and keep communication up. that's what he needs to do here, considering the challenges. because they need a leader, and ultimately musk realizes he's a leader for tesla to navigate this period. forget all the noise on the street. i think the doomsday scenarios are a little overdone in terms

of some of the other calls. nobody can deny what the company is and where they are going, but he needs to get them through this white knuckle period over the next 6-9 months, and i think he knows that. emily: all right. dan ives at wedbush. always good to have you. thank you for stopping by. still ahead, youtube has the go tonew ai with cleanup -- goal to cleanup its platform. we will tell you all about it. this is bloomberg. ♪

emily: one of the biggest issues for google remains controlling content on youtube, in the midst of ad boycotts as misinformation, conspiracy theories and hate continue to fester on the platform. is the comfy making headway? mark gurman is reporting tools, internally called the trashy video classifier? >> they have been testing it

since 2016, and it was rolled out a lot more after some of the issues with kids content. essentially a clickbait filter. they had this major issue, drawing attention to the youtube homepage, trying to make it kind of like instagram, a go to destination people want to use. it worked fairly well, with billions of users and a lot of them returning to the youtube app rather than different channels. this effectively keeps out some of the most vile, one example i heard about, videos of people fighting. they are entertaining, people click on them, and they aren't really great for youtube publicity or the advertisers. emily: is that a video they would take down? mark: there's videos where they have said, if you are misleading or you are just putting up the video to get people to click, those of the videos they will suppress from the homepage. emily: so using this ai since

2016 and they still have all the problems. is the ai really working? mark: they would say yes. a coupleed a statistic weeks ago, telling marketers that the watch time, overall numbers of hours watched on the homepage has increased 10 times the last three years, a phenomenal number. seeingainly they are not a slowdown in traffic. the advertising boycotts we saw a couple years ago have more or less subsided. emily: how are advertisers feeling at this moment? mark: i think generally pretty positive. you know, there's the overall issue, they want things cleaned up.youtube has taken steps . but there is no competition. facebook's video products have more or less flopped. they looking at hulu, potentially netflix getting into advertising. but at this point when they want to reach a younger audience, youtube is the go to place for ad dollars.

emily: you talked to a lot of youtube employees. how is the morale as they battle these issues? mark: there are certain people who see this as, from an engineering mindset this is a hard problem, and looking at whether it is building ai to filter out billions of hours of footage uploaded every minute or address kids content, this is one of the most difficult engineering challenges imaginable. so there are types who are like that. and there are people who are sort of like, we aren't being hurt as badly in the public mind as facebook, and they are bracing for a moment when youtube will be synonymous with facebook and a lot of the negative coverage or negative perceptions about the brand. emily: thanks for your continued performing, we have the latest on what is happening on the inside. our very own mark bergen, thank you you as always. coming up, facebook said it removes a whopping 2.2 billion fake accounts in the last quarter alone, but spotting them

will only get harder in the future. we will speak to facebook's head of policy right here coming up. this is bloomberg. ♪

itsacebook has just bought biggest battle with bad actors on the platform, removing billions of town's -- of accounts in the last quarter. they said they removed the accounts within minutes of being created. call, mark zuckerberg said a shift to privacy and makes it harder. recognize we will be

.ighting the battle it is not clear if we will be able to do as good of a job as we can today with that tool. >> joining us today, monika bickert. what is driving the fake accounts, where they coming from? >> some are coming from new tools people are using to create large amounts of accounts. over the last quarter we have seen those efforts pay off. >> are they from any particular country or group? any other have

information to share on that. when we build our systems, we cap that in a global way. this shift erase some of the progress you are making -- would this shift the race some of the progress you are making? for more than a decade, i was . federal criminal prosecutor i have seen law-enforcement be able to access content using shirts warrants -- search warrant's, so we are mindful of that. that is one of the reasons we look to find the best privacy model and focused on what do we need to keep that community space? what will the new oversight

board look like and when will that happen? >> it is a new initiative that we are trying to launch and basically what this will be is a group of people acting independently through a spoke, people with relative expertise who can look at specific decisions we have made around the content, so if someone have we takeomething, another look at it and say we will keep this off our site. they can go to the board and ask them to take a look at it. whatever they -- decisions they make will be binding. we have seen elections in india, very challenging, you had to moderate content in 10 different languages. one of the learnings you will then take forward? >> we are focused on making sure we are doing our part to keep elections free and fair and part of that, we have built a team that is talking to election

commissions around the world and understanding what the unique challenges are in different areas. >> what are some of those challenges and in india in particular, what did you learn that could help you in other countries? >> in all the elections, we are learning different things and we have put out some posts where we have addressed the different butons, including in india, how it's a we learned people will try to use fake accounts and a number of different ways including to spread spam and share misinformation. is notch of that relative to elections, it certainly could be. how to keepk about elections free and fair, one weng we are investing -- remove more than one million accounts a day at the time of upload. >> we have a presidential election coming up in less than

18 months. how well-prepared do you think facebook will be by that point to avoid what happened two years ago? >> we are preparing now, working very hard and we have measures in place in doing our part. call, you spoke about the challenges of moderating and puttingntent certain balls into place and how content is moderated in their particular country which will likely differ country to country. how you deal with different roles in different countries when there are 200 different countries? >> it is a real challenge and this is not a new challenge for us. meaningcies are global, the rules we have in france are .he same in south africa

when we look at different laws in different countries, the issue gets more and more complicated. we help to make sure the regulation we do hope to be in place is responsible. >> by users, facebook is bigger than any country, even the number of fake accounts you took down in a single quarter is more than the operation of any country. you ever think facebook might be too big for its own good and that maybe there is something to the argument to breaking up the company? >> when i hear people asking questions on whether we are too big to my think a lot of them come from concerns about whether we are doing our part of the responsible, responsible about safety and privacy. that is why we are doing things to show we are. it includes efforts like today, releasing the transference of war, also what mark is calling

for more regulation and we are engaging with regulators and it's around the world and why we are working with companies big and small. >> what about the breakup argument. we hear new people making that argument every day, including people who have been close to facebook. do you think they have a point? when people ask these questions, it is important to find out why they are asking them and in my spirits, people are asking them what they are doing to be responsible. notbig effort for us is only working with regulators, but also telling what you are doing. when we put out today's report, it wasn't the most the most thorough report and that is our goal. our goal is to be open and increase that. in future of sports -- feature

reports, you can expect to see more more data. >> where you see the most room for improvement? is there one area where you would like to see improvement? >> across the board, it is important for us to work together not only on writing the right policy, but the way we use people and technology to enforce these lines. if you listened to the call today, there were some of from the product team, operations and me joining because that is you cannot effectively enforce these policies without investing in all of these areas. when i joined the company six years ago, we had hundreds of people. now we have thousands of people around the globe reviewing content to try to get it right , theesponding to reports vast majority within 24 hours, so we have made a lot of

improvement, but it will continue to be challenging. are using facebook's response to shootings, plane crashes, where the difference between good and evil is clear. how is facebook's response to the gray areas, where there is less of an obvious answer to what is right, what is wrong, what should come down? how does facebook respond to those things changing? >> it gets very difficult at the edges, particularly around things like hate speech and harassment. often, you need someone who has contextual knowledge on what exactly is going on all stop sometimes it is context we don't have, what we can get from safety groups that will understand these issues and that is why we work with hundreds of organizations in the crafting of

our policies to make sure we have the latest information on ort is the latest self harm what are some of these letters that might be used to attack people based on their race in other countries. that is something we are constantly improving on. we are waiting for a ruling on the ftc on privacy issues. ruling waiting for this as well. how could that ruling, if there are any privacy oversight changes, how could that change the way you do your job and make these decisions? >> i honestly can't comment on that. what i can tell you is we are really focus on making sure not only are we doing all we can on safety, but we are keeping information private and respecting what people expect when they come the facebook. when you heard mark call for

regulation, he did not just call for regulation in the area of safety, but also privacy. these are conversations we are having with regulators in want to continue. noah-- >> thank you for taking time of your day to join us. coming up, the potential impact --the u.s.-china trade o trade war on the investor community. this is bloomberg. ♪

>> -- he currently serves as chief operating officer. it comes at a time when fashion chains are wrestling the growth of online shopping. for more now, the trump and menstruation has been broadening china.on companies in it could also have an impact on startup communities and existing investments into southeast asia. , you spent a lot

of time in asia and a lot of time investing across asia. what do you think the impact is going to be on the start of community? >> they're exactly going to be an impact, but anyone who has interacted with the ecosystem, it should not come as a surprise. this was definitely part of the plan for long time and china has been methodically preparing for this moment and transitioning from a willingness to club rate and a determination to compete, so i don't think it is a big surprise to anyone in the region, but it certainly looks like a big moment. somewhat argue that china has a tech war on the united states for very long time. do you think there is anything to that argument? from thetely all stop

decision to block the companies in 2009, 2010, all the way up to .hen i was there when i was there, there was a very deliberate tragedy on investors to make investments outside of china and the purpose of that was to learn about how other ecosystems work so they could replicate it domestically. >> how will this impact the venture community in china and in the united states? >> noah for the u.s. and china,e will be a separation of affairs. over the past year or two, a

majority have stop investing in the u.s. they have shut down their u.s. operations and have turned to domestic investments, as well as southeast asia. >> d.c. investments shifting to southeast asia? -- do you see investments shifting to southeast asia? >> there are certainly some. while a lot has flowed into china they last five or 10 years because of the explosive growth, that has only really been possible because the ecosystem there is incredibly centralized. china has a domestic population and they have been in control of the strategy. southeast asia has a very big population and there is still a lack of infrastructure on education and a technological perspective.

we are still way earlier in the cycle than we ever were with china. >> how is this effecting your firm and investment strategy? it is an interesting question. help a lot of companies think about international strategy. investing onwas businesses, so that was really interesting to watch as a result of some of these in the past year. you advising gore how are youow -- advising gore portfolios now considering the trade war -- how are you advising your portfolios? [no audio] >> whether they are from the

u.s. or elsewhere, take a hard look at what their values, their long-term strategy. we assess questions. permit business perspective, the political volatility is having a huge impact on their ability to make a pretty serious operational decisions, particular round manufacturing and hiring. right now, because there's so much uncertainty, it is a matter of getting on the issues, staying on top of them and bringing trusted buys her's. -- bringing trust advisors. >> good to see you. coming up, amazon's ecco has been a hit for the company. new wearables in the works. we will have all the details next. ♪

claimingonce a lawsuit it for customers on some of the iphone thrown out. it is not account for notches in the screen and apple denies it deceives customers and se stop t to get a fisheye view of the -- the suit has no merit. want to get a fisheye view? [no audio] >> it will allow customers to , a ride,bmarine ride snorkeling and the tour of the reef.

is pushing the boundaries of what technology is capable of. they are working on a voice can breakwatch that down human emotions. what can you tell us about this, how does it work? >> we are not exactly sure, but we have a decent idea. some think with all the data, that they can tag that would indicators on how someone is feeling, what the pitches like and somehow after putting that through their auger them, they can figure out the motion and use that to offer products, the sky's the limit from there. >> my next question is, how well is this working? doing a how much progress they are making on this?

>> we don't. they have been at it for quite some time. work on this continued last year and has been going on recently, sort of a trial to make sure the software can actually detect emotions. there were some skepticism from folks who do this for a living, concerns that it would not be accurate when they were fully rolled out, but we don't know how far along this is. been working hard to get alexa on the move, beyond my kitchenrom counter to whether it is headphones or other wearables. a much progress are they actually making? >> it is unclear. they don't have the install base of google or android.

you mentioned the car device we reported on, in earbuds featuring alexa. they really want to make alexa anywhere and so far, that strategy does not include a smartphone, but absent that, they seem to be trying. with all the concerns about privacy and how tech companies are handling that data, how would amazon handle emotional data, categorize it? >> that is a great question and given this might be commercial availability -- far off commercial availability, other than to say we take privacy seriously. they are reporting recently on the folks who listen and audit voice recording.

people should be aware that this is another source of data that tech companies will hold on to r&d with it. once you have given up the technology, it is sort of theirs to do with under their policies. >> i realize there are a lot of unknowns, but how soon might and alexa wearable hit the market? >> that is a great question. >>they have in recent years announced new products towards the end of the year and i would not be surprised if there is another device event coming up here late summer. >> great scoop from you. thank you. that does it for this edition of bloomberg technology. network.o follow our this is bloomberg. ♪

>> welcome to daybreak australia. world -- bloomberg's world headquarters in new york. >> i'm in hong kong where we are counting down the major asian market opens. >> here are the top stories we are covering in the next hour. president trump turns up the atade war -- trade war he with china. stocks fall as investors seek saty