♪ emily: i'm emily chang, and this is the "best of bloomberg technology," where we bring you all of our top interviews from the week. earnings from big tech -- amazon, alphabet and facebook all release second-quarter report cards, we break down the results. and facebook results were overshadowed by a new antitrust investigation opened into the companies social-media, add and mobile business. this after facebook paid a record $5 billion fine to settle

privacy concerns. and come at a claimed arrogant silicon valley -- ripples ceo has called facebook's libra pitch to lawmakers somewhat presumptuous. we asked how it is impacting the broader crypto market. by first to our top story, it is big tech's turn. facebook, tesla, alphabet, all reporting second-quarter earnings this week. amazon and alphabet reported thursday. for alphabet, it was all about sales and regulation. the founders weighed in. >> if you look at the way google gets revenue 85% of revenue in , google is from the ad business. i think given the competition they will be facing, you don't want to be in a spot where you have north of 80% of revenue coming from advertising. so i think they will place a bigger emphasis on the cloud business going forward.

how much successful they have? it will be hard to say. they are facing massive competition against microsoft and amazon, who have had a lot of success and put significant dollars behind the business. so i think it will be something that will be hard to get out of, that third spot, but it is still a significant part of their business that they will be focusing on going forward. they did by another company earlier this year, and i asked if acquisitions in cloud would make sense. she said, they were open to acquisitions, but she also had the organic business is doing well. certainly interesting, given the antitrust scrutiny that google might hesitate to do more acquisitions certainly in the near future. is that what you expect?

>> i think the cloud business is important strategically. look at what microsoft just did with open a.i., investing a billion dollars in two a nonprofit. i think google will look at the ir cloud business in a similar fashion, where the technologies of the future will be skilled out. -- will be scaled out in a similar fashion. the technologies of the future that will be scaled out, obviously, the cloud business will be important. it is a platform for this new businesses. so while amazon will continue to push that business to the bottom line, it is incredibly important for the stock price. for google, i see it even more strategic than it would be for amazon. emily: that was estimize founder and forrester

analyst collin. most advised clients to buy in, expecting strong revenue growth and operating income. i got insight from an analyst after the e-commerce giant ordered. story here. bigger decline. theould be the canary in coal mine. it could also be a one quarter blip. but that is something that may be more concerning to investors as it go forward. emily: it is interesting singling out aws given how we were talking about google's cloud business and how it is still in third place. so as the cloud business continues to grow, it is certainly not a zero's game. what do you think the slowdown or the disappointing numbers

have to do with? is it because of competition or because of amazon-specific issues? >> i don't think it is specific issues to amazon, so much as it is the competition. microsoft's cloud business is up over 60%, so we know that business is on fire. i think the stalking horse here is google. we don't have a lot of visibility into those numbers but you do hear that under new leadership, there are some signs of life here. withamazon is computing the two giant, and absolutely, that could eat into the top line. emily: the cfo said the company did spend more than what they said they would on the same day delivery, and that it have a more difficult to execute than expected. i can echo that as a customer. when i say one day delivery on amazon, it often doesn't work out. ?hat are you watching there andrew: topline growth is driven

by the commerce business. i was expecting investment to pay off in q3 and q4. so if you already being an acceleration in q2, we could be looking ahead to an explosive q4 for amazon, because consumers have to develop the habit. and they are not really feeling the impact of that one day delivery especially as it continues rolling out. those habits will get ingrained in q3 and then cement themselves. i think that is where we will see the upside. emily: let's talk about the rest of the year, going into the holiday quarter. lots of acceleration is going to be happening. you have got cyber monday, black friday. all this competition ratcheted up. how do you expect amazon to perform, relative to the competition, in the e-commerce unit in particular? andrew: i think there are a few things that really advantage amazon in you for, particularly in light of the one-day shipping initiative. i don't know if folks are

thinking about this just yet, but we get into a really compressed holiday season. last year, we had 32 days between thanksgiving and christmas, this year, 27 days. that really advantages someone like amazon. we always see amazon increase their share later in the season as consumers don't have the same confidence in getting their deliveries on-time with other retailers as they do with amazon. that season will really be to amazon's advantage. that is one upside to q4. an,ly: that was andrew lipsm analyst for emarket. coming up, we invite some of the biggest tech companies to talk about the fallout from the trade war and the ban on huawei. and if you like bloomberg, check us out online, on sirius xm. this is bloomberg. ♪

emily: white house officials said they would send a delegation to china next week led by robert , lighthizer. this is after a high-level meeting with the trump administration and ceos from google, brought come, cisco -- brough broadcom, cisco, intel, and qualcomm. it was geared towards easing a sales ban on huawei. i spoke to a representative from arizona's seventh district. >> while huawei is not an independent actor, it is an arm of the chinese government. you cannot trust about us

empowering and doing business with huawei will not have negative consequences. you just read on "washington post" this last weekend huawei , was working with a shell company in north korea, supplying them with technology that was explicitly banned through our sanctions regime. this is why we have joined with a bipartisan manner, with congressman gallagher from wisconsin to make sure we actually enforce the huawei and zte sanctions regime that we think is being effective. the president should not do a one-off trades for farm goods for something that could significantly impact the future of both our country as well as our allies. emily: there are some in the business community, including many high-level tech ceos who will tell you privately they see no evidence that huawei uses this equipment to spy. what would you say to that? >> [laughter] i hope they would just read the panda shell corporation that was set up in north korea, the allowed huawei to do business,

so clearly, this company is not operating on the up and up. number two, it is well known that among chinese companies, it is mandated that they must make any assets available to the chinese government. while i respect a lot of these companies, their goal is to have the highest profit margins for their corporate shareholders. as a member of congress, the most important thing for me is national security. and this sends a bad message to our allies overseas, who we are trying to convince also not to incorporate huawei into the national security apparatus. it makes it very difficult for us to share information with them. emily: you referenced a report in the "washington post" but huawei has partnered with a chinese state-connected company , panda, to improve things in north korea like the wireless infrastructure. and have been partnered with this company, according to "the washington post," for eight

years. when the president was asked, he said it did not seem particularly alarming. how does this new potential revelation about huawei and -- while it has denied any work in north korea -- how does that change your level of objection? >> i object even harder. i think other corporations and members of congress should be worried about this. the fact that the president does not seem to understand the problem or scope tells you that we should question his judgment when it comes to his decisions on this very key and important security issue. again, i think the president does not understand the full scope of what is happening or what could happen should huawei have access to our information technology markets as well as our allies, and is essentially trying to play one trade war against another. we should not be trading access

to the 5g market for us to go back to what we had pre-trade war, which was basically us being able to sell farm products to china. this should be separate from the trade, because it will have longer effects to our national security than this temporary trade war that would have. emily: that is my next question. the leaders of these u.s. companies will say the blacklisting of huawei has significantly hurt their bottom line. some of these companies provide supplies, provide chips to , laptops andhones consumer products that they say do not have much of a threat to national security. what would you say to those ceos? >> well, they are wrong. it is the determination, and has been the determination of the u.s. intelligence community, as is congress, that they are dangerous operators. we have the right as a nation to stop corporations from engaging with other countries and

entities that potentially put our national security apparatus in danger as well as that of our interest. i don't see these companies complaining about us having a sanctions regime against iran or other bad actors around the world. they do not have a right to corporate profit at the sake of u.s. national security. that is just how it is. hopefully we in congress get our way and we are it would to stop that u.s. administration and these ceos from getting their way. emily: what would you like to see the trump administration do? and what do you think congress should do? >> i think the trump administration should continue with the sanctions regime they have now and enforce them stronger. hopefully, that stays. if the president does not do that, the house and senate in a bipartisan manner, should pass a new sanctions regime or continuous sanctions regime on huawei and zte, to make sure we are continuing the protect our national security interests. emily: since i have you, i have

to ask about iran. the president defends withdrawing from the iran nuclear deal. meantime, iran has used a british-flagged oil tanker. tensions seem to be escalating, so what do you think the u.s. should do about the iran situation? >> i think we have to respond to iran, but in a measured manner, with assistance and concurrence with our allies, especially britain and european allies. i think at the same time, we have to recognize that us leaving the j.c.p.o.a. without any plan, more as a knee-jerk obamanismto anti- politics that this president has, has created this situation. iran says they will comply, even though they are not receiving any of the economic benefits. but there are still other areas we have to keep. the last thing we can afford and the last thing we need is a war in the middle east. it is not even in our national

security interests for us to engage in this war. we have a lot of other tools of the toolbox to both keep iran in check, and at the same time, de-escalate the situation through diplomatic means. emily: speaking of tension at home, the president is under fire for now multiple days, for what some have called racist or racially charged language about four democratic congresswoman of color. do you believe the president's s remarks have been racist, and that he is stoking racial ?ension especially given his response, or lack thereof, to supporters rallies chanting "send her back?" >> yes, of course. this is not the first time the president has used race as a way to engage and enraged his base. lesser member of this present started off his political career accusing president obama of being born in africa. then he accuses a

mexican-american judge that was born in indiana of having dual loyalties. surprising that he describes four american women is not being -- as essentially not being american and loving this country. these women are of color. nancys not describe pelosi or any other women who are white of not loving the country. he is clearly trying to drum up the base of his support that is racist and does believe in these racist theories. emily: that was congressman ruben gallego of arizona's seventh district. coming up, tesla shares fell in after-hours trading after the company pulled back on profit promises and the second quarter we break it down. and later, we talked to ftc commissioner know if phillips about facebook's record fine. part of its settlements to put its privacy violations behind it. this is bloomberg. ♪

emily: tesla posted losses and backtracked from profit forecasts as part of the second-quarter report. cash and deliveries of emerged as the biggest challenges to growth. the company announced the longtime technology officer is stepping down. i covered the challenges with max chafkin the bloomberg businessweek and a tech analyst. >> i think the 5 billion on the balance sheet is a great number. i think margin is probably why the stock is down. but i think if you go to the numbers in detail, margin is that are than expected. i think forward guidance of being gap-positive on that income is good as well. it's kind of an overreaction to the downside in my opinion. emily: if it is an overreaction, it is a big overreaction.

i mean, shares are down 10% right now. max, there is a disappointment here on profit. the company turned profitable at the end of last year. that reversed at the beginning of this year. elon musk said the company would become profitable again later this year. it looks like that's not going to happen. max: they are still trying for it. there are two things going on with tesla. one is that they've been pushing like crazy for volume. they want to be a large-volume car manufacturer, one of the biggest in the world long-term. this car that they are selling, the model 3, does not have great margins, it seems. they pushed so hard to get the magic $35,000that base price, got there. it has come up a tiny bit, but the margins are supertight on those low-end cars. as people buy the cheaper model 3, they are moving away from tesla's more expensive cars, so

.he model x and the model y so there is a pressure on profit that is at the very least, it near-term problem, and critics are going to say this is a long-term problem. they will say this is a company that will have a hard time getting to profitability. emily: is it a near or long-term problem? ben: it's not true. the model three they actually had better margins quarter over quarter, x credits, which is what everyone wants to look at. so it's not true. they are making improvements on the gross margin, so i'm not sure what that statement is. emily: max? max: the company is not profitable right now. they obviously like to get profitable. i think in the long run, they want to be more efficient in the factory, be more efficient in their operations. that's the message we've been hearing from elon musk basically for the last year, and then they want to get these new cars out, the model y, which could be a huge boom for the company.

that is a category of car that most americans are buying. emily: it is a cheaper suv. what is the status of it? is it going to be here next year? inquiring minds want to know. [laughter] max: i don't have any is tied information. -- inside information. certainly the big effort tesla is doing right now on top of building a giga factory in china, which would be huge because the chinese market is the biggest market in the world for electric vehicles. emily: what is your take on how much china can change the tesla story as they continue to try to get new models to the market? ben: so, we don't have any production in our numbers from china this year. i think what is most underestimated about everything here is the brand in china and how it has kind of become a wildfire there and how many cars it can sell, and i think that is

upside. just back to the cash flow they generate during the quarter, it is a couple hundred million dollars. so this idea that they don't make money is completely wrong, and the headline needs to change. there's $5 billion on the balance sheet. they are not going out of business. you have other oem's that have really hard problems, restructuring problems, and it's not tesla. it's xyz, german manufacturers. they are getting their lunch eaten by tesla. emily: there is a point there, max, that if you talk to people who own teslas, they love their cars. they love their cars. they are not focused on the ins and outs of if the company is making money, how many delivers they are making, what production is looking like. so how much does that matter? max: it is huge. making a good car if you are a car company is definitely the

most important thing more than , anything else. and to ben's point, one thing about the conversation that has changed about tesla over the last year is -- a year ago, people were saying that the company is doomed, they will never get to volume production, and now, the debate between the bulls is ahe different debate. is tesla a niche manufacturer? that would be the bear case. the bull case is this is a company that is going to be bigger than toyota, daimler, and so on. if you are elon musk, that is a good shift in the conversation. you don't have as many people going around talking about this thing collapsing any day. which was happening a year ago. emily: talk about a shift in the conversation. he has been a little more restrained on twitter, let's say, since his settlement with the sec over how he is communicating with the public on social media. ben, what is your evaluation of musk's leadership, given some of the hiccups over the last year?

ben: i think people want to invest with musk. i think him being more restrained or quiet is helpful. i think that being cash flow -positive is helpful and having 5 billion bucks on the balance sheet is helpful for the growth managers that have not been paying attention or cannot own this or are of avoiding it to come back and buy it at a lower price than whatever, a year ago, where they were. emily: that was bloomberg businessweek's max chafkin, and tesla analyst ben kallo. coming up, facebook marches forward with an ftc settlement in its rearview mirror, and a new investigation underway. facebook posted second-quarter up more and shares are

than 50% this year, as most of wall street says the fundamentals are still strong. bloomberg tech is lifestreaming on twitter, check us out and follow our breaking global news network, tic-toc on twitter. this is bloomberg. ♪

♪ emily: welcome back to the "best of bloomberg technology." i am emily chang. facebook second-quarter results were out wednesday, proving again that the company can grow, while still feeling the heat from regulators worldwide. just hours after facebook announced a settlement with the u.s. federal trade commission to end a probe in its privacy practices, the social media giant confirmed it is now also being investigated by the ftc on antitrust over its social media ads and mobile apps. revenue and growth of daily active users beat estimates, but with its repetition under

assault, how? we got more from my two guest. >> we have multiple parts of the government investigating facebook for multiple things. i think one of the most salient things about the settlement is that facebook did not really admit they did anything wrong. we really have not seen them show a lot of introspection about why all this happened. and i think that is telling. unfortunately, the reason it happened is because they have had poor governance and it had bled out into all kinds of areas of their business and it is causing them long-term ongoing harm. emily: we are going to talk to one of the commissioners about the details of the settlement and how it will change facebook going forward in a moment. speaking about the numbers, with all of these controversies, all of these scandals, how does facebook seem to keep beating the odds? >> you know what, it is a teflon

company. it really is. every quarter i say the same thing. they have been able to grow revenue, grow user base, despite mounting challenges. this quarter, more of the same. it is really, really incredible that facebook has been able to do this quarter after quarter. emily: david, i am going to push back a little. they beat on daily active users, on users, they came light on monthly active users, but do you think this is not going to impact the company's long-term reputation and ability to grow? david: the company's reputation is seriously impaired already. the ability to grow is a complicated question, because, as debra pointed out, they just keep raking in the dough. they are a brilliantly designed advertising platform.

and especially for smaller businesses, there really isn't another place to go where results can be achieved that are similar. that is a great thing for this company. and especially for smaller businesses, there reallybut lono affect them? it is absolutely going to affect them. there is no question about that. 100% agreesolutely with david on that part of it. i think that teflon part of it is their ability to grow their revenue and their user base quarter after quarter. i believe there is plenty of consumer sentiment issues with facebook. ande is plenty o growing issues with regard to how advertisers feel about facebook, but the thing is, there is still spending there and people are still using facebook, despite those concerns. emily: earlier today, zuckerberg did give a town hall at the company. here is what he had to say about the settlement. >> i believe that companies should be held accountable on privacy. this is what accountability looks like.

as part of this settlement, we have to pay a major fine and there are now very clear rules around how we need to operate on this. i believe that this is going to help us serve our community better. emily: the ftc could have sued facebook, but that didn't happen. they could have sued zuckerberg personally, but that didn't happen. they could have curtailed zuckerberg's professional responsibilities as well. that happened to a very small extent. david, do you think the settlement goes far enough to provoke the introspection that you believe is needed as the company continues to grow? david: i would probably have to say no, because i do not see enough introspection. i mean, if it takes a $5 billion fine to make a company finally start doing what it should have been doing all along with privacy and governance, that is a very bad sign about the culture of the company.

now, i didn't see many signs of gradual reform and consciousness-raising, and changing behavior. i am not going to deny the company is any other place than bash company is in another place behaviorally than it has been in the past. the fundamental reasons why this happened have not been addressed, and i think they had allowed a culture to emerge which showed very little concern for some basic interests of their users, because they were so thrilled at the amount of money they were making. that is my simple analysis. emily: this is really a family of companies now. facebook, messenger, whatsapp, instagram, how do you see growth at all of these different divisions changing in the future? we know that instagram continues to be a better story. we suspect that facebook proper users are getting older, growth is starting to slow. what do you see? debra: absolutely, instagram

remains a very strong growth in june for facebook, no question. that said, according to our forecast, instagram is still well under one third of facebook's total revenue and will continue to be that way in the next few years. it's not like growth at instagram is going to suddenly balloon this company to be even bigger than it already is. force for revenue for facebook remains about big blue app. there is still no revenue going into whatsapp, limited revenue going into messenger at this point. so really, it is all about the blue app and about instagram, with most of the focus on the blue app. emily: that was e williamson, and david kirkpatrick. coming up, facebook faces a new antitrust investigation by the federal trade commission after it agrees to pay a record penalty for years of privacy

violations. we talked to ft see commissioner noah phillips next. this is bloomberg. ♪

emily: the federal trade chair commission had announced what we knew what was coming, the $5 billion settlement between the ftc and the facebook for years of privacy violations by the social network. >> this settlement is the result

of an exhaustive investigation which concluded that facebook betrayed the trust of its users and deceived them about their ability to control their personal information. emily: some terms of the deal, -- increased responsibility by the board to protect user data, but little impact on facebook's ad business. the settlement was made public. however, facebook also announced it is being investigated by the ftc on antitrust violations. i spoke to the ftc commissioner who voted in favor of the settlement from washington. >> in 2012, facebook committed to us and to the american people that it would take certain steps with respect to privacy, in particular that it would not misrepresent the kinds of sharing going on without app developers, and the kind of control facebook users had over data that they

gave to facebook. it also committed to having a reasonable privacy program. but facebook broke those promises and a few other promises. we are here today because we looked at what facebook had done and we wanted to send an important message about ftc orders and commitments to privacy. emily: so, mark zuckerberg will now have to personally certify that facebook is complying with his new privacy policies. how would you like to see his management of the company change? noah: i think, above all, what we would like to see is a greater focus at facebook on privacy. that includes mr. zuckerberg and under the terms of the order, he is going to have to focus more on privacy, but it is not just about mark zuckerberg. what this quarter requires, beyond the $5 billion fine, is attention to privacy at every level of the company. engineers who are working on projects are going to have to think about the privacy impact of what they do.

and if they choose not to protect privacy, they will have to explain why. this goes all the way to the board of directors. the board is going to have a new privacy committee which will have ultimate authority to oversee privacy at facebook. emily: why not fine zuckerberg directly or do more to limit his personal authority? noah: as i said, this case is not just about mark zuckerberg. this case is about facebook in general. mark zuckerberg is a very important person at that company, but he is by no means the only one. we want people up and down the line to be focused on privacy. emily: there are a lot of critics who say a $5 billion fine is not enough, secondly, that the structural changes required here are also not enough. one of your colleagues who voted against the settlement decide it -- says about it poses no meaningful changes to the company structure or financial incentives which led to these violations. instead, the order allows

facebook to decide for itself how much information it can harvest from users and what it can do with that information. as long as it creates a paper trail. what is your response to that. noah: to me, there are two really important points here. the first is this: what we do at is law enforcement. so, what we look at in any case is what the facts show and what do the legal obligations and did the company break the law and we try to remediate the violation s of the law. we don't come in and simply tell the company what to do about everything. there are a lot of people in america who have real concern about how face book conducts itself. that is a fair conversation. that is a conversation that goes on all the time in homes across the country and right now in congress, which is thinking about privacy legislation. but what facebook was doing, in terms of the ad practices is not what this case was about. this case is about the misrepresentation that it made to users about privacy and

several other things that we have talked about, and critically, that is what we are aiming to remedy. emily: another colleague who , rebeccainst this kerley, says the ftc would have done better by suing facebook and suing zuckerberg himself. why not do that? noah: i don't think that is an accurate characterization of the state of play. the remedies we have achieved , both financial and injunctive meaning, the changes we are making to facebook are very unlikely to have been achieved through a court process. in a normal litigation, you are weighing the certainty of less against the chance of more. in this case, what we were facing is a decision between the certainty of more and the uncertainty of getting even less. emily: now, privacy advocates have advocated for bigger changes to how facebook tracks its users and fundamental changes to the advertising revenue business.

do you really think that the changes made here are going to be enough to change facebook's practices in perpetuity going forward, if it is really not -- aside from a $5 billion fine -- hitting the bottom line? noah: that conversation is really important, and it is part of the conversation that is going on nationally and in congress about what ought to be allowed and what is not allowed. but that is not what this case is about. this case is about the commitments that facebook made and it's violation of those commitments, and that is what we are focused on here. emily: that was part of my conversation with ftc commissioner, noah phillips. as you can imagine, there was no shortage of opinions on theftc and facebook settlement, as well as the new antitrust probe. i got insight from former cto cto,, and also the director of research at the electronic frontier foundation. >> i think the challenges that

the order and the stipulations in the order, don't necessarily require facebook to prioritize above all else, it simply requires that the company be truthful or not be deceptive again in the ways that it collects and uses is her information. so, to your point, they could actually request the same phone number they use for two-factor authentication and use it for targeting. they just cannot use it under the guise of collecting for two-factor authentication. this is basically companies cannot be deceptive about it, but it does not prevent them from being transparent about their practices and going ahead and doing so. emily: there are other things facebook has said it will do, like merge the back end whatsapp messenger and instagram. believe know that you that this is the problematic. what other privacy issues do you

see down the road that have been basically teed up? >> one huge issue is the issue whatsapp, instagram and messenger merging, is that your whatsapp number, your facebook authentic name, and your instagram pseudonym handle. facebook has promised that that will be opt-in when it rolls out, but facebook has a history of reneging on privacy commitments. we would like to see some kind of limitation that facebook will stick to its word, but if it says it's going to opt in, it's going to remain that way. that it is not going to be the case that in two or three years users are not surprised by some new privacy policy that says you have to merge these identities to continue using services. emily: what do we know about the ftc antitrust investigation? that commissioner phillips just confirmed? jan: we don't know a lot about it, and i sense that commissioner phillips may not

know a lot about it either. it is early days, but they basically have a credible reason to believe that there may be a violation of antitrust laws, that there may be consumer harm that they need to look into. so that is what this investigation and facebook has proposed and the ftse has now confirmed. that is basically what that means. that is about all we know right now. we also know that ftc talks to european regulators, so they may be taking cues there, but often they want to grow their own way, so it really remains to be seen what will happen. emily: what is happening right now? ashkan: it is quite likely that commissioners don't yet know at the staff level. they were probably briefed on it, but do not know all the details, and that is probably by design. they are supposed to keep a wall between the investigation. i do know the practice you just described, in antitrust terms, that would be bundling, requiring that one account be forced to use a different product. so if you have a whatsapp account, you would be forced to use a facebook account, so that would be bundling.

so there are a number of factors att the ftc to be looking with regard to the antitrust investigation. the most critical piece is that when you asked the commissioner himself, to what degree are they different? so the ftc has the bureau of consumer protection and the bureau of competition, and the bureau of economics. the consumer protection competition bureau's operate independently, right? the question would be, to what degree are they overlapping and sharing information from the coast were protection investigation with the competition investigation? emily: coming up, facebook's libra got little love from lawmakers on capitol hill last week. but will be cryptocurrency community welcomed the digital money? we will ask the ripple ceo.

this is bloomberg. ♪

emily: the capitol hill hearings on a libra last week continued to roil the crypto market, as almost all cryptocurrencies were down except for ripple. u.s. lawmakers spent two days grilling the cocreator of the proposed coin. libra to get , iight how libra could shape spoke with the ceo of ripple and bloomberg tech's kurt wagner. >> i think they have taken a very bold, ambitious effort, which is part of what makes silicon valley great. we have these incredible entrepreneurs who think outside the box. i think there is a little bit may be more than just ambitious, maybe arrogant. the white paper articulates it is a new currency. i think the u.s. dollar works pretty well. one of the things i tweeted last week was that i agree with the president on this. we don't need a new fiat

currency. he dollar, the pound, the yen, there may be smaller markets, the argentinian peso, that might make sense. the way they rolled it out, a lot of headwinds, turbulence. it will be interesting to see how that plays out. emily: we talked about the level of skepticism and ire. one lawmaker comparing it to 9/11 and the level of danger. what is happening now? another the hearing has happened, what is next? >> that is to facebook to figure out. they have announced, we have this group of 28 partners that will be part of the libra association that actually overseas this currency, but right now, there is no charter for that organization. no payments have been made. so at this point, it is just kind of a continue to talk about regulation. on facebook's side, they need to get their team together to get this move right now, it is an idea but not something that is tangible.

emily: do you think the regulators will let libra happen in the u.s.? brad: facebook had conversations with regulators before they announced the white paper. some of those regulators had expressed concerns. i don't think facebook did enough to mitigate that and make them feel comfortable. it is very important to both the u.s. government and governments around the world that financial regulation matters. know your customer, and anti-money laundering, antiterrorist financing, these are important financial pieces of our system. we need to make sure that future constructs keep those in mind. the only danger happening right now is that legitimate projects working on taking advantage of crypto to solve real problems get caught in the crossfire. you are seeing, even the president came out and tweeted, i don't like cryptocurrencies. that is a little like saying, i don't like an internet company in 1997. there's lots of different shapes and sizes. what ripple is doing is with banks and regulators, it is the antithesis of how libra is approaching the effort. emily: some have said that if

libra succeeded, that would not be good for ripple. that would reduce ripple's opportunity. is there truth for that? brad: no. facebook is a consumer company. when they think about the problem they are solving, it is very much a consumer oriented problem. what ripple is doing is at the institutional level. we are connecting banks. we had one of the best weeks in our history the week libra was announced. because it is a call to action for banks. david marcus him out and said, this is the end of western union. well, that is an assault on the financial sector. we have taken the opposite approach, and said, let's work with the system. regulations work at that point. we cannot paint with one broad brush especially at the federal level. where you have cryptocurrencies that are controlled by miners. emily: you work with a lot of banks. what did they think of the libra association? would you ever work with the libra association? brad: a lot of people signed up, the 28 members signed up, it was just an moi, no money changing hands, no hard commitment they

wanted to have a seat at the table. they wanted to hear what was going on. i would be interested to see if the 28 who signed up continue to participate. it is too early to tell. i thought it was very noteworthy that there weren't any banks or financial institutions as part of those 28. it is an assault on that system, it is ambitious to say the least. emily: there been reports that there has been skepticism among the partners that have signed on to this project. what are we hearing about that? kurt: they are not saying anything publicly. one of the biggest concerns, quite frankly, is that facebook is out here taking the beating by itself, for a project they claim that they are a cofounder with many other companies. if i am facebook, i'm saying, hey, are you guys in or not, you could use a little support out there. with the banks, bloomberg has reported that facebook and others in the association are out talking to banks right now. they want them to be part of those members, because i think

it as a level of legitimacy to this whole effort if they can have the banking partners on board. right now, if you're facebook, the biggest challenge is getting those people to actually say something publicly, so they can their name behind what they are doing. emily: on another topic, there bank of america, there have been reports that bank of america has taken out a patent that it would ledger for transactions. can you comment on that? >> i saw that. [laughter] emily: can you confirm or kill the speculation? brad: i can neither confirm nor kill. we are, i think, widely known to be working with a lot of banks around the world. some of the largest banks in the world are customers of ours today. we will continue working with big banks around the world. i too was surprised by that patent application because we have not announced anything. emily: that does it for this edition of the "best of bloomberg technology." we will be on air throughout the week. tune in every day. 5:00 p.m. in new york, 2:00 p.m. in san francisco, and live

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♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. we're here at bloomberg headquarters in new york. carol: this week, elizabeth warren. an in-depth look at a candidate with a plan to beat trump at his own game. jason: and the brexit campaign. boris johnson is now then you british prime minister. he vowed that the u.k. will leave the