emily: i'm emily chang, this is "best of bloomberg technology," where we bring you the top interviews on tech. jay powell says he has concerns about facebook's proposed cryptocurrency. ibm closes with red hat. our conversation with the ceos on the second largest tech deal ever. you will hear from the social networks global chief diversity

officer. how they plan to double the number of female employees locally over the next five years and why they are setting targets in the middle of a media firestorm. libra is not getting love from lawmakers. add jerome powell to the list. sponsorsthe project public benefits including financial access for consumers, libra raises serious concerns involving privacy, money laundering and financial stability. these should be publicly addressed. facebook has a couple billion plus users so for the first time you have the possibility of a broad adoption. if there were problems associated with money laundering, terrorist financing,

many things, they would immediately, they would rise to systemically important levels because of the size of the network. it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all those things. the number of concerns i listed at the beginning, data protection, consumer privacy, or need to be addressed thoroughly and carefully in a deliberate process that will not be implementation. futurewe discussed the of the currency. skepticism gets to the general skepticism about crypto, which you heard jay powell's two cents on that, plus the fact that facebook has so much power. that is something we have been reckoning with over the last couple years. huge user base, they can push new products.

if they aggressively tried to push people into this currency, that could create issues. emily: powell is talking about libra posing a threat to the global financial system and at the scale of facebook size any problems would be magnified. is he right? joel: listening to him, i was struck by -- this is something that is on his mind. lawmakers asking him. in the past, when it comes to blockchain, cryptocurrency, other endeavors like this, you get the impression they are like, this is something we are watching. this is more than that. there are a lot of efforts to understand what they are doing. there are reasons for them to be concerned, beyond the systemic nature of it, it raises questions of, you know, if this

is going to be a much more efficient way to transfer money from person-to-person around the world, how can you really do consistent with banking and payment regulations in all these countries? there are legitimate reasons to go slow to make sure this isn't some sort of regulatory arbitrage to get around existing rules of payment. emily: even though jay powell and the fed are taking their time in examining facebook's plan and cryptocurrency in general, it seems not all lawmakers understood exactly what they were asking about. this was an exchange between david scott and the fed chair. >> this libra business is really disturbing. i think we all know, libra is the london interbank offered rate. very critical.

it is apparent libra was going to leave us, or being removed, the potential ramifications of the end of libra, as the schedule nears. >> you said it well. there are $300 trillion plus well representing libor. laughing at himself a little bit. can we trust lawmakers understand what they are supposed to be regulating? this came up during mark zuckerberg's testimony. supercuts and out of left field questions. facebook will try to use that and say, d.c. doesn't know what they are doing. the fact that people are confused by this and yet it affects billions of people

suggests we should all be educating ourselves more closely. emily: your reaction? joe: it was a funny moment. the question about libor and the replacement is interesting. i have sympathy. how many people have you interviewed who are in tech or maybe even describe themselves in blockchain or crypto or bitcoin that cannot articulate what makes the tech compelling? it should be worrisome. it is a case for slowing down. think they'reies going to reinvent the financial system while lawmakers are still struggling to wrap their heads around what is, these kinds of exchanges, say, slow down. regulating,ing of who has the authority to regulate cryptocurrency? the fed?

u.s. regulators? there is a real morass in the u.s. the fed will have a role. libra will interface with banking. governmentbe yielding bonds held in regulated financial institutions that back libra so the fed will have a role. if it is going to be global currency, they will have to deal with regulators in every country at some level in which they want to up rate which is why part of the appeal may be regulatory arbitrage. wonder if the crypto approach is a shortcut around banks. it is a good reason to be concerned. up, the president holds a social media summit, only it was missing the social

media companies. marsha blackburn attended. if you like bloomberg news, check us out on the radio, the bloomberg app and sirius xm. this is bloomberg. ♪

emily: federal appeals court said tuesday president cannot block his credits -- critics on twitter. this upholds an earlier ruling. trump wasn't the only politician affected by the ruling. oc was suederdict, a by people she blocked on twitter . the trump administration hosted a closed door social media summit at the white house on thursday. led as a gathering, but here's the catch.

google, facebook and twitter were not invited. it was a group of internet personalities and conservatives, echoing president trump's complaints that social media silences conservative voices. >> my biggest take away from the meeting is, you have a lot of people who utilize social media to get their message out and communicate their stories and what they are tired of is seeing social media pick and choose what they want to promote, what they want to prioritize. they feel like there should be a neutral platform. they are forward to having congress do more work on this. they're looking forward to the white house turning more attention to the issue of big tech and fairness in these platforms. emily: facebook, twitter,

companies were not invited. how can you have a productive meeting without the companies? >> actually they will be included later. what the president did today was to hear from people who utilize social media. one of the things that is so important now is that individuals do not sit down every day and watch the news at 6:00 and 10:00. what they do is to build their own network of different sources and channels, sometimes streaming, sometimes cable, sometimes notifications and alerts on their mobile device, and they have built their own network. what they want is fairness. they don't want one of the search engines going in and prioritizing everything in that feed. they want to have access to fair news.

they don't want opinion journalism. they want facts. when you have individuals creating that content, it is important to hear from them. i understand and as the president said today, he is going to invite these social media companies to come in and have a meeting and that is something that is taking place in the next few weeks. white house will have the date soon, i am sure. they will have the opportunity to talk about what they are doing. one of the things of concern to us is how some of these companies manipulate algorithms. that pushes forward certain content, then diminishes others and is the exercise of a form of bias. that the you think pressing of conservative views,

which is what you and other lawmakers have been complaining about, do you think that is deliberate or inadvertent? >> when mark zuckerberg was before us, when i was in the house, one year ago, i asked him the question, do you subjectively manipulate your algorithms? his response was, contain the information. people live in northern california that work with us and they bring their worldview to work. ai ands we move toward machine learning, the bias of these algorithms is something of concern to us. not only when you're talking when younions but also are looking at how machine learning will be self replicating. emily: some of the folks in that

room have been accused of posting racist remarks, anti-semitic remarks, spinning consider these theories on social media -- spinning conspiracy theories on social media -- do you think that should be left up on social media? >> of course not. there is no place in civil society for that conduct. just as, there is no place in a civil society for some of the postings that take place that are offensive or suggestive or harmful to children. all of these components for social media, is speaking specifically to the reason why we need to put guardrails in place for social media. emily: you have been calling on snap to take action to prevent, as you wrote in a letter to them, more children from being exposed to sexual predators and explicit adult content while

using snapchat. messages on snapchat disappear -- it is a child predators dream, is the way you put it. what your main concerns about them in particular? >> number one. ratings. 12-year-olds,r what is taking place on snap, where the auto delete feature on those videos, there are cases where predators, child predators, pedophiles, have been arrested, convicted. they have used snap to coerce and ensnare children, threatening to put their video on social media unless they send more videos. this is something parents need to have the tool to turn this off. there needs to be explicit instructions for parents how to handle this. emily: that was tennessee

senator marsha blackburn. closes its $34 billion deal with red hat. our conversation with the ceos of both companies on the second largest tech deal ever. facebook attempting to drastically increase minority representation in its workforce. how the social media company is tackling its diversity problem. this is bloomberg. ♪

emily: ibm has closed its purchase of red hat, finalizing the second largest tech deal ever. one synonymous with mainframe computing, it has been struggling to adapt. the company is playing catch up to amazon and microsoft in offering software and services over the internet. david westin spoke with the ceos on tuesday. >> it is important to our clients.

it is the destination for the cloud. people think everything will move to one public cloud. that is not what we see clients need, want and are targeted to. it is the idea of existing estate, i will modernize and i have five to 15 private clouds already and if i modernize an app, i will put it where i want and i have to manage and secure it. that is the destination. for the next generation, we now give them a platform between red hat and ibm that runs on any public cloud, private, traditional, they can write an ,pp once, run it anywhere secure and manage it. that is the hybrid cloud. that makes us the leader. others talk. they may have just a connection between public and private cloud. this now allows us to be multi-cloud everywhere. david: you have other

competitors in the cloud. people like amazon and google. is the goal to catch up to them? component,red hat our goal is to be a better partner with clouds. they are great partners. our software runs on premise, ibm, those clouds. they will continue to be great partners for us. as we are capable of moving many more workloads onto our software platform, that is more workloads those clouds can address and run. my conversations with the major clouds have been positive. this is an opportunity to get more workloads out of datacenter running on cloud. that is an important reason to do this. our clients want to run a platform anywhere. up ibmyou have ramped

percentage of revenue from the cloud dramatically, 4% to 25% in a short time. what is the goal? ginni: there is not an ultimate goal. 80% of work will move to the hybrid cloud. this will continue. when we look at revenues, it transcends everything from public, private clouds, now these platforms will be on other clouds included and services revenue. the goal is to move with the same journey our clients need it to move with. david: what about moving with the overall size of the cloud expanding? how much will be taking market share from other providers? ginni: look. -- 200 basis points of revenue growth over a five-year period. ibmimportant part is, the public cloud and the private cloud together should be the

very best for mission-critical work. we also want our platform running everywhere else. growth anywhere is going to be good for ibm. jim: this is all about helping clients provide more value to customers. builds a new application, website, mobile application, opportunities for us to participate in building the app, integrate it with data, run on the platform, run on the ibm cloud, any of those components are areas of incremental value we can participate in as customers create more value for their customers. we continued our discussion of the megadeal with olivia on tuesday. >> think about ibm. 108-year-old american icon that

has largely been known for the mainframe cycles. in the last couple years they have in trying to reinvent. this acquisition is ibm trying to reenter the cloud space as a different company. it is trying to transform what it has been providing so far. change the game. call this ad ginni game changer for ibm. it is important to think about why this is going to be so significant. not only ibm but for the wider cloud space and also for other providers like amazon, microsoft and google, who will now be seen as partners to ibm rather than rivals. emily: interesting. what are the risks to the new strategy? what could go wrong? olivia: one of the biggest risks is whether or not red hat will be able to fold into ibm. this company is known to have a

staunch and old-school corporate work culture. will this open source lenox providing company called red hat, being known to be a renegade and revolutionary in the space, really be able to come into the ibm family? we heard ginni and jim talking about how within the acquisition, red hat will remain independent, a distinct unit, within ibm. it will have its own consulting services, sales, terms and conditions. red hat leadership team including jim, will remain within red hat. they will be able to talk to their own clients rather than through ibm. they are hoping that in order to maintain red hat's independence, the integration will really work seamlessly. usey: we have heard ginni the words hybrid cloud before, in fact talking about it for the last several years as they have tried to navigate the

transition. froms this different microsoft, amazon? providethey all different public cloud networks that have particular strengths. amazon strength is infrastructure services or salesforce, cloud strengths, customer relations management platform. you see companies that are buying into the services and using clouds for different reasons. what ibm is attempting to do is to become the glue that will stick together or connect all those different clouds onto one platform. you may be a company that needs to use salesforce for a particular reason and amazon for another reason. that means you may end up with up to 15 different cloud providers, all operating independently in different silos. you have no way to bring them together.

ibm is hoping it will be able to become the connective tissue that aligns all the different clouds under one platform. this idea, this strategic move, to become partners with some of these former competitors, like amazon, microsoft, google, is what ibm actually did in the 1990's regarding the global business services platform. it partnered up with software providers and said, we will allow you to run your applications smoothly on our hardware. we will partner with you rather than compete. that is what saved the company. they are trying to do the same thing again. emily: coming up, facebook has ambitious plans to improve diversity. are they realistic? the global chief diversity officer tells us how they are planning to boost numbers, next.

this is bloomberg. ♪

emily: welcome back to "best of bloomberg technology," i'm emily chang. facebook set to boost diversity. the company announced plans to double the number of female employees globally over the next five years, as well as the number of black and hispanic employees in the u.s. the company wants half of the u.s. workforce to be from underrepresented groups by 2024. we sat down with their global chief diversity officer, maxine williams. maxine: there has been research done by credible institutions that having goals is one of the

ways you have change. goals makes a difference. it is one of the five things you should be doing. we want to do what is best practice. we have been building for the last six years, the muscle, strategies. some things have worked, some have not. we are in a place now where we have that muscle to release these goals on top of it and boost further. emily: you are looking to change numbers. 50-50. do you have secret innovative plans that we do not know about? maxine: i wish. i wish. i would never work again! we do not have a secret plan. it is not magic. that is hard work. consistent attention. every day deliberate. it doesn't come about through some organic weird thing.

we are designing deliberate interventions. it is getting better. hope -- itgoals, we is going to be hard. those goals are stretch goals. thatnot saying we will hit but everywhere in business reset goals. we will push on this to get as far as we can. emily: facebook numbers are average compared to tech. i get asked, even with sheryl sandberg's leadership, a leader on women's issues in the world, why can't even facebook to better? better? maxine: there is a lot of stuff we own and we double down to adjust that. is there bias in the workplace? how do you evaluate people? is there fairness? how do you consider promotion? emily: there is unfairness?

maxine: everywhere. humility is important for every company, every group of people. we are not special. there is no fairy dust we sprinkle on people. they are those same people. you address that. everyone has bias. on the other hand, having a leader that wants to move, helps tremendously. you can't be what you don't see. seeing a woman who represents what we hope for -- leadership, influence, success -- has been useful. emily: you report the number of women and minorities in technical roles because those are important prime decision-making roles, decisions about the product that is used by 2 billion people around the world who come from all backgrounds. women hold only 23% of those roles. blacks and hispanics, 5%.

could another goal be getting to 50-50 in those roles? maxine: there is stuff we control and stuff we don't. we are 100% focused on our environment, opportunities. we have expanded internships by many factors in order to get more. when you are pushing a situation where only 18% of the people graduating with a computer science degree in the u.s. are women, how do you get to 50? emily: that sounds like a highflying problem which many people say is a myth. maxine: there is stuff we own. we need to make sure we deal with the stuff we own. fair promotions, creating opportunities, reading bias -- but when you say, can you get to 50%? we increase from 15% five years ago to 23% women in technical roles.

how much more can you do? could you get to 50%? to have a50%, we need lot of comprehensive work and we do some of that with investing long-term as well to get more people from underrepresented backgrounds doing technical subjects, studying computer science and computer engineering, data structures, rhythms. we work with universities, we build tools, tech prep. you put in your zip code and see where you can get training in your neighborhood. emily: i have made the argument that digital privacy is a women's issue. it is not a women's only issue but it is like health care. women are more likely to keep profiles private, perceive more risk online then men. it is obvious most of the product decisions at facebook were made by mostly men.

do you think facebook would have issues around privacy if there had been more women at the table from the beginning? maxine: you don't know what you don't know. always our key thing is have more diverse perspectives, cognitive diversity on every team will produce better results. we have seen examples, now that we are increasing diversity of workforce, of how decisions are changing and how products are improving because we have different people. baseline? yes. everything will be better if we have more diversity. emily: we interviewed a former facebook employee last year who said that facebook has a black people problem. it doesn't just affect black employees, it affects black users. the naacp called for a boycott when it was discovered russians used facebook to target african-american specifically in the 2016 election. there: my response is,

will be a distribution of experiences and responses to everything. in people issues there will always be a complexity issue. what is required of you as a company is to constantly be trying to improve and take responsibility for the things you can change. many people have an amazing experience of facebook. there is a range. for is are responsible getting to consistent execution to have the best we can get. that is what we need to deliver. emily: will you admit this impacts the product and the decisions? maxine: absolutely. that is why we are doing this. it because it absolutely impacts every decision. when you are trying to solve complex decisions, the more diversity you have, the better solutions you will develop.

if you think of the scale we operate at and the meeting it has four people's lives -- the meaning it has for other people's lives, we want that to be the best they can be. emily: another target on facebook back -- just today the youchair criticizing libra, have fake news misinformation issues, hate speech, you're dealing with pending fines, pending antitrust -- why put another target on facebook back when, 50-50, you don't? maxine: i want to succeed. i don't know you achieve much if you risk nothing. if there is criticism to come, i will be proud to take that, if it was in the interest of us getting to excellence. emily: that was maxine williams. coming up, shooting for the stars. conversation with richard

branson. to list emerging galactic on the public market. what it means for the race to space, next. this is bloomberg. ♪

emily: houston, we have a listing. virgin galactic will become the first space tourism venture to hit public markets after receiving an $800 million investment from a publicly traded shell company initially set up to merge with a private company in order to take it public, an alternative to traditional listing. joined and chamath bloomberg tuesday. >> when we could not go ahead, i decided i would find galactic to profitability myself through the virgin group, and

then i got a call. he was keen to have a look. he went to see our space people, spent some months looking into it. why don't you carry on? chamath: i sort of admire the business from afar. we had mutual friends who were early customers. i was wondering what was under the hood. i was floored by what they had built in the quality of the business it had become. took us nine months but we got here. richard, did you talk with other funds, look for other backers in asia or the middle east? no.ard: we had the deal from the saudi's that that was not possible. if we were to actually take this public ourselves, it would take a long time.

seemed to work well. guy: my understanding is the fun would have had to return investment money in september. nine months in gestation, you are cutting it fine? chamath: i don't think so. we met more than 200 companies over many countries in the last two years. it took us nine months to do diligence required to get under the hood and understand what they built and to feel comfortable across all aspects. could we have done another one? sure. could we have invested in something else? yes. i think we found the best companies. frankly, something that will capture and a norma's amount of consumer interest, giving the average person a chance to own a bit of space. -- an enormous amount of

consumer interest. guy: when will the first flight be? public, now that we are i will be circumspect. what is happening at the moment is we are moving the operation to new mexico. that is where the space force is. we are moving our rockets. we are moving our spaceships, our motherships. then we will do a few final test flights from new mexico and the up situation and i will go and the public will go up. i will not give a specific date. i am told i am not allowed. we have had successful flights into space recently. we have made five astronauts made in america since 2009. weer 14 years of hard work,

feel we are on the verge of something very special. vonnie: you specialize in suborbital flights, slightly different from jeff bezos and elon musk, looking at other segments of space. 56 miles above the earth and three times the speed of sound, which you have hit. you said you will go up in 2019? richard: if pilots are ready to say they have not tested the craft through and through, i will go up when they tell me to. whether it is by the end of the year or next year, we will see. vonnie: how many customers have paid? out lookingclosed people five years ago because we had 600 customers. $80 million on deposit. since the test flight, we have had 2000 more people saying they

want to come in. there isrch indicates a large number of people. chamath: incredibly capacity constrained market, the customers we have will take 2.5 years, once you convert the 2500 people, the first three years of operation, already mostly spoken for. emily: richard branson and chamath. we continued our look at the interstellar plans. >> social capital raised money from investors to basically acquire a private company and in doing so take it public. the pitch we heard from chamath was basically this would be a more efficient way to go public. he was saying, when he started talking about this a couple years ago it was the process is broken and it takes too long and

there is too much regulatory oversight so this is something he could offer. it makes sense. you are talking extremely high potential, this could revolutionize air travel, it could be the new disney world. on the other hand, it is speculative. it is the kind of thing that is hard to value. you can see why it might make sense to go public. emily: on the other hand, they could never happen or happen in 100 years. a space company, never taking a person into space, will very soon be a publicly traded company. max: when they started talking about this 15 years ago and have the first test flight in 2004, the idea that private space was going to be a big industry was a joke. elon musk was just at the beginning of spacex. it was going on but it was niche. having this happen, a privately

held space company go public, is a big deal. virgin galactic has had test pilots in space. they have had humans there which is different from jeff bezos and elon musk. the kind of travel we are talking about is not like going to the moon. it is like going to space for a few minutes. just to the edge of space, experiencing weightlessness and coming down. it is in between a trip on the soyuz and the idea where you take a 747 and divebomb. emily: for the tower of terror at disneyland. how does this give them advantage over blue origin or spacex? more flexibility, more visibility? max: i don't think especially.

it is somewhere around $30 billion, they have billions of dollars in government contracts cex. spaet blue origin has the world's richest man. branson is a wonderful marketer. being public and having that additional outlet for his, sort of doing his thing, will probably help the company. emily: a sky full of satellites. launches plan to thousands more satellites to bring internet to everyone. how will they clean up after them? that is next. this is bloomberg. ♪

emily: you think in today's day and age, everyone would be

online but that is not the case. billiong to the u.n., 4 people worldwide lack access. amazon and spacex are trying to remedy that by launching low orbiting satellites to try to get everyone on line. as astronomers see it, it is not all clear skies. wait,rlight, starbright is that even a star i see tonight? objects in a train like formation trail the night sky. satellites. you can expect more like this. scratching asead the race heats up with more launch is on the horizon. link planning to propel 12,000 into orbit. jeff bezos has asked to approve 3200.

month wants to launch 30 by september. the goal is to bring broadband access to 4 billion people on earth who do not have internet access. >> going forward, access to broadband is going to be close to being a fundamental human need. >> the goal may seem noble but satellites are designed to fly lower, leaving astronomers concerned they will interfere with the observation of distant galaxies. the first string of satellites cost $1 million each to produce, they cost $60 million to launch 60 satellites into orbit. investors are rocketing forward . $1.7 billion was invested in space companies in this year alone. that is double the amount deployed a quarter earlier. with satellites, the space economy, so to speak, appears ready for takeoff.

look withcontinue our one of the companies you just heard about. $3.5 billionised to date, backed by softbank, airbus and the virgin group. >> we are launching satellites starting in december, 30 a month. 34 per month, sometimes 36. we will have our first phase system giving global coverage by the third quarter of 2021, getting service in some places in 2020. low latency service and global coverage, one of the things that happens with satellites now is that people get clunky service because of high latency. it is physics. geo satellites are 36,000 kilometers away, hours are 1200

kilometers. everyone in the world deserves the best internet service whether you are in the middle of africa, asia, latin america or the heartland of the u.s. emily: what about the cost? it has been difficult to calculate. now toh does it cost launch a single satellite and how much will that cost come down in the future? adrian: one of the things that has been exciting recently is launch cost has come way down. launches an our 22 couple years ago and we know that from then to now, launch cost have come down 30%. rockets are getting bigger. that means they can carry more satellites. there were secure, they are more secure. we are looking for that trend to continue enabling more satellites to be launched. cubesats are going up.

hours are the size of refrigerators. size. is 220 people focus on a satellite. it is not a unit of measure. it can be bigger or smaller with more or less capabilities. you have to be remembering, it used to be satellites cost $200 million. what we have done is take advantage of all the advances in electronics from smartphones, immunization and applied industrial approach. we are doing this on assembly line. we have factories opening in cape canaveral, july 22. coming down to $1 million per satellite is a big deal. said, elon musk has people see the satellite 0% of the time.

what about concerns about space pollution? adrian: the most important thing is collisions and be responsible. our satellites are at a higher altitude, 1200 kilometers versus theirs, 550. hours are not visible. the other thing you have to pay attention to -- ours are not visible. we want to make sure the satellite disintegrates when it comes back into the atmosphere so you do not harm anyone. if we get into a collision on the street with our car, we walk away from that. if you get satellites colliding up there, they will fragment and pollute the area. it is very important to be responsible in space. that does it for this edition of "best of bloomberg technology," we will bring you

the latest in tech throughout the week. tune in every day. we are livestreaming on twitter. check us out and follow our global breaking news network on twitter. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide, i'm jonathan ferro. bloomberg "real yield" starts right now. ♪ coming up, chairman powell heading toward july 31, teeing up rate cuts. the data from the u.s. looks resilient and europe showing signs of life, fueling a bit of a backup in government bond markets. let's begin with the big issue. are there cracks appearing in the everything rally? >> we have seen a strong rally. >> the entire market rally so far has been discounting with --