emily: i'm emily chang in san francisco and this is "bloomberg technology." shots have been fired between the u.s. and china in the global trade war. the tech sector caught in the crossfire. who is going to win and lose? "anbook is putting together almost supreme court."

we will take you inside the group that makes decisions. is the latest bitcoin bump here to stay or just another bubble? the clock is ticking on president trump's next round of china tariffs. a proposed new wave of tariffs set to go into effect as early as next month end half of those $300 million of targeted goods are tech related. a new article details how china's tech industry is mostly insulated but there is one area where it is still dependent, very dependent. the semiconductor chip. chinahe last decade-plus, has seen a surge of semiconductor import. we have bloomberg tech's ian king, who covers the chip industry and the co-offer of the

-- the co-author of the fermented article. and we have brad stone. ian: a satiric parts like broadcom's switch chip, more common parts like an intel microprocessor, china really can't replicate those yet. emily: why not? ian: it is difficult. when you are arranging tens of billions of transistors on something the size of a postage stamp, you have to kind of know what you are doing. emily: which companies in particular in china are the most vulnerable? ian: it is the biggest pc market. it is also home to some of the largest pc makers like lenovo. huawei, it goes without saying. they wouldn't be able to make their core routers.

they need things we don't know about are absolutely essential. emily: brad, you have a piece out about how u.s. tech giants, even though they may be complaining about the trade war, are in the best position to whether it. brad: foxconn has already talked about moving production to other companies in southeast asia. india, malaysia, thailand, taiwan. of course, the trump administration would like to see it here in the u.s. letters go to the u.s. trade representative last week. looks, air pods. they are seeing it -- they are saying it is going to hurt apple's global competitiveness. emily: as you mentioned, they do have the negotiating power and we don't know if that will pay

off. brad: it has worked in the past. some of these product categories were on tariffs over the last year. i think the tech companies are hoping for that kind of reprieve. we will see what happens at the g20. emily: huawei, they are dependent on u.s. chips somewhat. they also make two thirds of their own chips, right? ian: smartphone. the key component of the smartphone is the nickel processor. they can supply themselves in that particular market very strongly. laptops, smartphones, toy drones. brad: they are coming for our drones. emily: how would you break apple versus amazon, for example?

amazon is shutting down its entire china marketplace next month. would think amazon might not be that exposed. story out today. these stories, they have no negotiating power, they are one or two people shops, they sell everything on the amazon marketplace. really it is the uncertain that is impacting them. they have to get their holiday orders in now. think their plan b is to cut orders and raise prices. if selection is going down, prices are going down, it is another way the u.s. consumer is going to be hurt by the trade war. on a: china also depends

lot of these companies in china. ian: apple is an example of that. yes, maybe we don't need that many iphones, but so many people are employed directly as a result of manufacturing chain. you have all these relatively high paid jobs, tax revenue, that fundamentally undermines the chinese economy. emily: what is their plan b? ian: a lot of people don't wreck guys just how powerful they are -- don't recognize just how powerful they are. when sanctions have been used in the past, they are relatively small domestic economies. the mobile company has more subscribers than the u.s. has people. there are people who have never looked at google search because they never needed to. they are not using apps supplied

in the u.s. because there are enough. emily: we are still waiting for this meeting to happen between president trump and xi. you wonder, even if these new tariffs do not go into effect, if this uncertainty has been so intense for this company that they are already moving to plan b and start making arrangements for the future? brad: what we have heard from our reporting is that big companies like apple are looking at other sources of manufacturing outside china. if you look at the market lately, i get the sense that maybe this market thinks there will be a resolution to this. otherwise, we would see a lot more volatility in the stock markets than we have seen. ian: it depends whether you are talking about the market or the companies.

the companies are not keen to go .n the record emily: what is next? brad: i think all eyes are on the g20. i think the tech market has proven their case that this will be difficult for them and bad for the american customer. if the trump administration takes that into account, i think we see some form of resolution, maybe short-term relief to some of these product categories. emily: thank you both. amazon web services says it has fixed an issue that impacted conductivity between some customer networks and multiple regions. external with an provider outside of its networks monday. it says conductivity to other providers was not impacted.

coming up, facebook is building its own so-called supreme court but will that solve all of its problems? we will discuss facebook's plan for an oversight board. if you like bloomberg news, check us out on the radio, the bloomberg app, bloomberg.com, and in the u.s., on sirius xm. this is bloomberg. ♪

facebook is emily:

looking to create a new content oversight board. they are creating a series of simulations across the globe as they plan an independent board to review content moderation decisions. the board will decide on appeals for content that may have been removed. zuckerberg has mentioned the idea for independent appeals process is almost like a supreme court, quote unquote, his words. the supreme court is nominated by presidents and confirmed by congress. how would this be put together? ,> that is the biggest question that they want it to be an independent group but we don't know exactly who is going to be picked, how big it will be. they say it will be around 40 people and then they break up

into small groups of 3-5 to review individual cases. you pick a group of 40 people that actually -- that accurately reflects a billion people? emily: how do you do that if facebook is doing the picking? andt will be very hard obviously facebook is paying for this board so independence will be the question. the point that kurt made is a good one, that facebook is now a global platform. they have many users in places like india, indonesia, other places that have different values than facebook in the united states that was founded largely by american executives. will the board draw from people from those countries that are now basically facebook's future? emily: talk to us about these simulations that facebook is conducting. a controversial decision comes

to this group of people and then they debate. kurt: i sat in on one that was at facebook's headquarters in california. it was about 30 employees. they presented them with a post that was controversial. a person had listed different academics and accused them without proof of being sexual harassers. they left the list up and said to add more names to the list if you know someone else who is a sexual harasser. that is a dramatic and severe claim to make. facebook wanted its employees to discuss, is this the kind of post that should be left up for up or taken-- left down? the kind of questions they ask so that when the real board has to make decisions like this, they are prepared. emily: some of these decisions are cultural.

are these all english-speaking people? how will they understand the nuances of the situation with the rohingya in myanmar? shira: facebook has said -- to their credit, they have solid input on this over -- have sought input on this oversight board. they are dealing with an issue that is culturally substantive -- culturally specific to germany or india, that they would seek experts in those areas. the vast majority of content decisions, judgment calls about what is ok to leave up on facebook, are made by this kind of low-wage contract workforce. emily: there has been more reporting on this from the verge recently about the often horrifying situations that these content moderators have to go

through day in and day out. kurt: it is a really terrible job. think about policing the internet from the most violent and graphic stuff and seeing that consistently. the board would not replace that .ob let's review it and see if we aree with it now that we have little more time to look at the fact or discussing the group. does it violate the policy, yes or no, and make a decision. emily: there's a question whether facebook should be doing this at all. facebook has made the argument that perhaps this should be a government decision. new chief ofheir

policy, spoke to the bbc and said he doesn't think it is right for them to set the rules for the road as far as how tech serves society. you wonder, would they be better off having governments make these decisions? is that even plausible now? shira: it doesn't really feel plausible, does it? i understand the position facebook is in. they created these platforms where many billions of people congregate every day. a turns out that facebook is reflection amplification of the best and worst in humanity. now that the genie is out of the bottle, they want to basically turn over a little bit of responsibility. i think what facebook wants, give us a formulaic solution. z.x and y happen, we do i don't think we will ever be in

a position where that is feasible given that the internet reflects people and they can be reduced to formulas. emily: how comfortable is facebook and facebook insiders with this formula? proposed formula. kurt: i think they want this. mark zuckerberg does not want to be the one at the top of this foodchain saying, this is taken down, this stays up, ultimately that is my call. we know he doesn't want that responsibility because he has said so repeatedly. i think they see this as a very clean option for solving those problems that no longer puts it at their feet. emily: when might this be put together? kurt: the goal is, by the end of the year, the first version of the board. if it still works, we still could be talking about it decades from now. emily: we will see.

thank you both. toing up, spotify downgraded underperform. we will speak to an analyst who says the music streaming company could have issues down the road to profits. check us out on twitter @ technology. this is bloomberg. ♪

companies extended losses after amazon announced it launched a beauty store. as 4.5% for much its biggest intraday, -- intraday decline since may 31.

taking a stand on the music service spotify. they have downgraded the stock fromderperform to $110 125. an analyst wrote that he simply doesn't see a path by which spotify can generate a level of gross profit demanded by the street. kevin, walk us through your argument. i guess the argument comes down to the question, is there a path for the level of gross profitability that current street estimates are calling for? if you look through kind of what the stock has done recently, the move from hundred $20 to 150 -- that has150, we think to do with content costs and the ability to drive high revenue ancillary market streams. we think they will disappoint

investors in a way that will lead shares lower over the near term. longer-term term, we remain concerned as well over the degree of competition and spotify's leverage over the labels that control many of their costs. emily: which competitors specifically? it is really apple music right now, right? kevin: in the united states, it is really apple music. market by market, it is a whole host of competitors. india, indonesia, turkey, brazil, there is usually a close second or leading competitor that doesn't get reflected when you look at the global averages. the market is far more competitive than indicated by those numbers. contenthat kind of that's are you most skeptical of? they have doubled down on

podcasts. kevin: podcasts could drive growth. it is a question of scale. podcasts as a share of listening has gone from 2% to 4%. we are really not at the point where that kind of growth at that limited scale is going to move the needle for shares or the financials. that is where we are struggling. it is a good opportunity but not probably big enough to satisfy the demands of investors over the medium term. emily: we have been talking a lot about direct listings, especially with the direct listing of slack last week. spotify is fairly flat from where they started trading on day. of course, they got to capture all of the gains from the reference price and the opening price. that said, in reality, shares are flat. you think the direct listing was

a good call? kevin: is a good question, one that companies probably need to consider. we have seen slack do it, seen spotify do it. i would not say there is a blanket statement as to whether one is better than the other. it is probably more for individual companies and boards to decide. emily: what do you think spotify's path to profit is? is there one, with apple having a deep cash pile and the benefit of being on the iphone? kevin: that is the question. our big concern is that spotify will ultimately prove to be a pure play on a loss leader category. when we look at the deep deep-pocketed competitors, apple, amazon, google, broader ecosystems and not having to generate profit

from streaming music on a standalone basis. we struggle to see a way in which the industry-level profit will be attractive. spot is a pure play on that industry. it is a key question of what the key driver is. the management team and bulls will turn to a two-cited marketplace, high leverage promoted revenue. that is worth exploring but is unproven. we are skeptical but obviously there's room for debate. emily: kevin, thanks so much for sharing. forng up, a notable year tech on public. what happens after? we will discuss, next. this is bloomberg. ♪

"bloomberg technology." about .5% of work closed on opening day and is not just slight that might be in the midst of a correction. over the last three market sessions, others have been lagging behind the s&p. our next guest is a board and has in the company invested in stripe, medium, and other things. good to have you.

invested at about eight $1 billion valuation and you are now 15 or 20 times that, not bad. how does it feel getting to this moment when there was a point when stuart butterfield wanted to give all his money back to investors. >> it's been a wild ride with slack. it's been almost five years since we invested in the company and that was the early days of what slack actually is now. wet pivoted into the product now know. it's been a while ride over relatively short time to get the company out there is a public company. but it has been a great ride. emily: me the people who use slack love it. how does it continue to tell that story to corporate america, to traditional companies that may not understand slack. >> the story has basically been the same from the get-go go.

everyone understands the opportunity within the office space to facilitate better communication. everyone has used email since the dawn of internet time at the very least. when there is new technology coming into play, it's a compelling opportunity for different companies to figure out ways to utilize that. that is the prime example were seen across the board. they have been spearheading the way. is a hugeere opportunity beyond what they have done so far in terms of market penetration. emily: why did they choose a direct listing? why was at the right call? >> you don't need to raise money from the public markets. raise a lot ofan money in the private markets. >> they have done a good job utilizing that money and being able to spend it in a prudent manner and get to the point they

are out without needing to go to the public markets for the fundraising events and just using it for other opportunities as a mature company that is ready to go. we were talking earlier while it has, continued to do relatively fine, they haven't taken off or dived. slack lost that momentum by choosing this route rather than the traditional one? >> without speaking to the go forward plan first site directly, i think there remains an immense opportunity that the company had for years and years. when you look at just one week in the events in the lifecycle of the company, there is a broader picture you have to zoom out to look into. this was an important milestone for the company to get to this

point. now that they are beyond it, there is a whole bunch of different paths to go down. emily: tell us about the other bets you have made on media and content, for example. >> with media in general, we look at it not so much from an overall perspective of trying to replace what has been out there. granuleat it at a more -- granular level. medium which is trying to reinvent the business model for media as it has been subscription, on with no add base revenue. emily: you are a former journalist. the content investments are fun and interesting, but are they really going to pay off? enterprise software can be more rewarding.

>> going back to the level of more granular bets within the media, i think people are looking for more and more, just being able to drill down into topics. at a fundamental level, everyone needs information and they will need a way to get to that information. you are seeing more and more that people want deep dives into certain types of information, not necessarily a publication that does everything but really focuses. emily: what do you think about apple news? there has been criticism that they are taking a large cut. the resourcesave to make something look nice on apple news. >> it's interesting from the perspective of how many apple devices there are out there. when you have a preinstalled application and access to a billion potential devices, that is compelling. they have the business model to figure that out.

they've moved into the apple news plus arena and they are trying to sell these magazine subscriptions. it's interesting to focus on the magazines but they will have to make it more interesting value proposition. emily: is he going to be the death of journalism? >> i don't think it's the death of journalism. i think we are in an interesting time in that consumers in general are getting more used to paying for content online, which has not always been the case. we are seeing pay walls go up. it's a natural inclination to move against the advertising-based models but it is still tbd. are we going to be inundated with subscriptions? we pay for netflix and spotify. or we going to pay for five different kinds of content? emily: you have to go through your bills and figure out what

you're are paying for and trim the fat. one of your partners went to be me. coo of lin how bullish are you on the scooter market? think the micro mobility movement is a real thing. there is real demand in the market for. abouts a lot of questions how you roll it out going forward. it doesn't follow the same playbook as uber and lyft. peopleeat to have working on that implementation. emily: what is the next uber or slack? where are you placing your bets? consumer.ly focus on i've been sitting on the sidelines waiting for the next giant consumer opportunity.

i think that what is up happening in a macro sense is, of a concert of computing that happens. it's not just about one device that replaces the iphone or something like that. using a watch, air pots, different devices you always have on you. basically you can use them throughout the day and you don't have to worry about which device you're using, it is which service you're using and having them be ubiquitous across all of them. emily: thank you for stopping by. inomberg is an investor slack. verizon realigned its strategy around b2b advertising subscriptions and transactions recently and we to revive revenue growth by 2021.

the ceo spoke exclusively with bloomberg about how they plan to capture those opportunities. deeper into the strategy across our media ecosystem. knew,ink about god who sports, finance, entertainment. we have a more shallow experience. we started building trusted content around that and we have more than eight studios now globally to start producing a deeper content experience. there are two that i talked about earlier that are diversifying our revenue privet were going from purely ad revenue to subscription transactions. that's the vision i've laid out across team to diversify three pieces. we are focused on going deeper and expanding our revenue base. >> are planning to get revenue

from subscriptions by 2021. tell us a little bit about your strategy there. >> if you've seen recently we have launched a lot of member centric products. yahoo! finance premium starting in the u.s. right now, we've done the same thing with sports. there is a premium version of the product. is deeper, exclusive content for members. that's one way we are expanding the revenue base. the other part of the membership we have done in asia, hong kong, and taiwan, you see of member ,ewards program for consumers you get points across the ecosystem and in return you get more member benefits. about 5g, when you think verizon being the leader on 5g,

it enables the media business quite a bit across the verticals. >> tell us a little more about the opportunities you see in 5g. >> we talk normally about 5g , inng eight currencies terms of battery power, a lot of the first segment that takes advantage is the media business. from a consumer standpoint, what you saw experience with 4g, now you will have deeper experiential content. 5g ar lab infirst l.a. and we are expanding that across the market. when i start talking about trusted content, a lot of that is around 5g and building a deeper immersive experience for consumers, interacting with the video they are seeing or

creating virtual characters that we've talked about in taipei and hong kong. content experiences go much deeper. then there will be a transition to commerce as well. one thing we see across our portfolio, 70% of our content has commercial intent, but we always monetize that to our business model. >> verizon did give a reorganization update to analyst last week but there was not a lot of mention of verizon media. do you find that a challenge at the moment in terms of low expectations? line on a below the lot of issues in the last year to 18 months in terms of integration. that got done when i took over as ceo. one of the issues were versing decline, a lot of desktop

traditional traffic and transitioning that to mobile where we are seeing a lot of growth. to there about getting place we are at now. in terms of our organization, we did most of the work through last year already. a majority of work happened on the organizational side from the consumer and the business group. we had already done a lot of those changes through the end of december. so there was not a lot of mention around that. we are keeping our heads down on execution and playing off it right now. emily: coming up, brick-and-mortar may be dying a slow death, thanks to online shopping. will online shopping remain king, or something else? we will discuss, next. this is bloomberg. ♪

emily: mobile commerce is a sector that continues to grow. platform button just raised billions to power sales. by funding round was led icon ventures with participation from others. joining us to discuss is the button ceo, michael, thank you for joining us. talk to us about where you are in payment stack. you worked with companies from walmart to uber. we hear about paypal and stripe

working with you as well. michael: the button platform sits above that stack. where we citizen the place where publishers interact with button to connect their consumers to the next step. we're trying build an internet that will be better and built on action. it connects them to the place of intent that their users may ultimately want to go, whether it's mapping out going to uber at asos.g sales emily: for many retailers, mobile shopping can be a fairly lacking experience. i find i make mistakes if i'm trying to shop on my phone, where if i'm focusing most sitting on my laptop, i have a

much better experience. is that changing? michael: a lot of changes happening, and buttons trying to invest in that to make it easier . you are seeing the checkout process the more seamless. if we could build a method that would make consumers have a delightful experience from the moment of intent to the moment of fulfillment, saying i want a ride or to book a reservation with as few taps as possible, we would win in the companies building on our platform would win. you're seeing innovation happen with credentials being passed more easily between experiences. apple pay and the google checkout experience, and paypal is making it easier. strides are being made, but there is still a long way to go. like you said, it's still a lot easier to purchase on your pc. emily: where are you seeing the

most growth? it is moving slowly. michael: an interesting point. in our judgment, we think the instagram effort is one we predicted for a long time. i was in the most popular guy in the pitch room saying the world is moving to commerce. because they said advertising makes a much money. in reality, what i think facebook is doing is very smart. they are trying to habituate consumers around driving transactions from their platform and everyone is looking at amazon with a little bit of fear and a little bit of jealousy. amazon'slooking at power as being a habituated source of transactions and saying look at how amazon is growing its business. the fastest growing channel in terms of revenue growth has been the advertising business for the past eight quarters in a row. every company wants to grow and be part of that puzzle or that story.

that is the thing we are seeing grow was quickly, for the future all types ofwhen advertising are under fire. the way you can make money and build durability is to give consumers what they want. we are trying to get that power to every publisher, to every company that has intent. emily: we will cover that story and the rise of mobile payments. still ahead, bitcoin again on the move amid new details around facebook's crypto plans. is the recent run sustainable? all things crypto, next. this is bloomberg. ♪

fory: it was a good weekend

bitcoin, it soared to its highest level in over 15 months. the cryptocurrency saw one week gains climbing 24% before prices scaled back slightly monday. analysts attribute the rally to renewed crypto optimism from last week. what is driving this bump? is it all facebook? >> think part of it is definitely facebook's libra announcement. it coin was rising before the announcement. there are a lot of reasons for that fundamentally and also sentiment. heartdefinitely had a big in education, media, civilian users on facebook having an on-ramp to learning about

crypto. that is a big part of it. how often can it help or bring the industry into the mainstream? >> i think what they announced was a centralized version of a stable coin and is backed by a basket of government bonds and currencies. it is really more of a payment mechanism to compete with paypal to wen my or similar chat. the purists will say it's not really a cryptocurrency, so to speak because it is not decentralized and has other characteristics, not crypto characteristics. i think it will raise awareness. i consider libra the aol moment.

if you think back to when we all on boarded onto the internet and we were in aol chat rooms wondering what else we can do on the internet, i think this is that moment and it is a watershed moment. >> the house financial services panel planning to hold a hearing next month. maxine waters has already called for facebook to stop working on libra immediately. are you concerned about the blowback and that the bitcoin bump could be another viable? >> i really think it is different this time and this is not a bitcoin bubble, for a number of reasons. the unique characteristic of bitcoin as a store value and also a payment mechanism, that narrative is emerging. 100,000 merchants accept bitcoin including expedia, microsoft, and whole foods. there are tons of applications being built on top of it. about what istalk

being done in remittances overseas, in africa. the unique characteristics of bitcoin as well as the institutional buildup that has occurred since the last bubble in terms of custody, settlements clearing and also futures and making this more of a sustainable rally than anything else. we will watch to see if you are right. thank you so much for joining us. that doesn't for this edition of "bloomberg technology." andk us out on twitter follow our global breaking news network tictoc on twitter. this is bloomberg. ♪

paul: welcome to daybreak australia. sophie: we are counting down to asia's major market open. paul: here other top stories we are covering for the next hour. u.s. stocks edge away from record levels as businesses way the cost effective stimulus against concerns about the global economy. more dark clouds are building