♪ >> i'm emily chang in san francisco. coming up in the next hour, markets caught off guard by president trump's escalation of tariffs on chinese goods. it led to a dismal day on wall street. we hone in on the tech sector for signs of life. plus shares plummet after square sells its delivery with doordash. we will hear from the survey monkey ceo.

first to our top story, job numbers came out friday while overall payroll gains were up in july along with a rise in hourly earnings. that wasn't enough to keep stocks out of the red, the worst week of 2019. this as president trump decided to ratchet up the trade war with china, announcing a slew of new tariffs for the start of september, and don't forget the fed cutting interest rates for the first time since 2008. a move chairman powell describes as a midcycle adjustment to keep the economy expanding. we have tom thibodeau, the ceo -- and our editor mike regan. why were markets caught off guard by the president's escalation of the trade war, when really there has been no

end in sight. >> if you look back to the g20 meeting last month, there seems to be, if not progress, at least 80 escalation of tensions. when we started the week, president trump was tweeting on monday about china, criticizing them. at that point it didn't seem like he was ready to escalate things with fu catching people offguard in the hopes -- because they were hoping that the status quo was going to continue. it's obvious the trade delegation to china this week,

robert and steven mnuchin went on on behalf of president trump -- it's clear they made no progress there. trump is going back to that. to really ratchet up pressure with this threat of new tariffs. >> china vowed to retaliate. how is this impacting jobs? >> we see strong job growth across the board, really from entry-level to expert. we continue to see a lot of job openings and a lot of hiring. the telecom sector is shedding their non-technical staff. we continue to see strong results. also for some of the new emerging areas. >> typically a dovish fed sent

stocks soaring. why did it work this time? >> he did cut rates. investors were hoping he would not just signal one or two cuts, but that the fed was embarking on an aggressive campaign, considerably lower rates for the foreseeable future. there are reasons chairman powell wouldn't want to do that, wouldn't want to tip his hand if

he was planning that aggressive approach. that's what the futures and bond market were pricing in. to have him push back against that notion really caused people to push back against what they ought -- pushback that what they thought will happen will happen. >> where are the most jobs being added? >> a massive expansion in cybersecurity jobs in particular, and that is not just the people who are down in the basement at nsa. working at the front lines, doing tech support, doing network administration. we have a deficit, maybe a 30% shortfall in terms of numbers we then you see emerging fields. 50,000 total in the u.s. edging towards the 100,000 by this time next year. we are starting to see some of these new technology domains. artificial intelligence, they are having an impact on the job market. >> as you take a look here in

the bloomberg, this means president trump will be slapping tariffs on literally every single thing imported from china. some products have been spared. this is how the white house has been spinning at. >> our experience and our modeling suggests the consumer impact is very small and the biggest burden is falling on china. >> this means the cost of an iphone could be raised. how much does that have to do with it? collect semiconductor stocks were among the weakest groups. that sector of the stock market

-- that was in large part because of bad earnings. they did a side of these macro issues as part of the reason why it's cut it's 2020 outlook. i think the whole supply chain of tech hardware is in place -- >> must to continue to follow. we will see what next week brings. alphabet's google says it will require rivals to bid to become listed as alternative search providers on android phones. consumers will choose between google and three other companies as their default search engine.

the european commission find google for 4.8 billion dollars over antitrust concerns. square slowing down. wall street thinks dumping caviar could be the right move. and if you like bloomberg news, check us out on the radio. this is bloomberg. ♪

shares a square taking a hit. the biggest slide since november 2017 for the event tech company. shares closed ultimately above that.

this is gross payment by them has been on a steady decline since late 2014. joining us to discuss, senior research analyst at moffitt who has a neutral recommendation on square. is the drop warranted? >> i think this one is the buying opportunity. today's reaction was overdone, definitely. the topline news of the day was that square was selling caviar to door -- for 410 million. that was a positive move. we have been waiting for square to do this. caviar is under intense pressure from players like uber eats and grubhub. it is not a core business for square. we estimate this running at a 50 million rate.

it will be a cash generating transaction for square. >> one square bought caviar, i remember thinking this doesn't make sense to me. i never understood what they intend to do. >> any high growth is that high technology company is going to experiment -- high-growth technology companies going to experiment in different areas. they had this full-service integrated solution for restaurants. restaurants are over 25% of their volume, so they thought of caviar as an extension. they bought this business five or six years ago. the entire competitive environment in food delivery has changed since then. i don't fault them for buying caviar in the first place.

they are getting it over to door dash. they will still have some skin in the game. >> an entirely different competitive landscape. >> in addition to the caviar sale, for the first times square disclosed the revenue run rate for their cash out business, which is the consumer business. this is the app that generates most of its revenues from debit cards, consumers using debit cards from consumers transferring funds around. that literally in the last three years has gone from less in one million to and revenue to a

quarterly run rate of 530 million. they are refocusing on their two core ecosystems, consumer and seller. and the one taking off with the steep trajectory is consumer. by selling off caviar they are able to balance their investment between the consumer ecosystem and also their traditional core seller business, which is the pos system. >> talk about square cash. it has been a closet hit. what is the importance of that business? >> as a standalone business, it is an interesting attractive example of these banking models that is an alternative to a checking account, instead of these consumers that use a mobile-enabled digital banking model. where it can be exciting for square is it gives square a two-sided ecosystem.

both consumers and merchants, which enable it to create these network effects that are so powerful, where they can do things like, for example, they offer a rewards program through the cash app. they can market that to the sellers as a differentiator of their offering. that truly is the holy grail of payments to have 80 -- have a two-sided ecosystem and square has developed one of those in the last couple of years. >> you have investors who don't agree with you. i appreciate you sharing your perspective. thank you so much for joining us. apple and barclays have ended their rewards card program at the head of this month's launch of apple's new credit card, a

move apple hopes will have its customers paying for a plethora of new services. joining us to discuss is mark in l.a. >> it was something that was very popular a few years ago. i know fewer people have been using it. i remember 10 years ago if you wanted to buy a mac from an apple store, they would promote this thing. it's become less popular. this relationship is powerful for barclays. it was a big point for them. woman sacks is knocking on the door with their apple car and that's rings the room for berkeley to play with apple here. my colleague and i discovered that indeed is going away.

>> you have reported it will happen this month. what are we expecting when this program debuts? >> the program will launch this month. you will be able to sign up. to be able to still get the credit card. what this is going to do is they are going to get consumers away a single credit card. apple has a lot of people making apple purchases, as well as subscription service transactions through itunes, the app store. for goldman sachs, this is going to make them more of a consumer

name. up-to-date it has been business focused high network individuals. this is something that is going to be mainstream. >> some controversy around siri. apple suspending the program whereby human employees actually listen to some of our queries to siri to supposedly improve how she or here performs. this after a story by the guardian exposing some of these internal practices. apple has made privacy a cornerstone of its marketing strategy and the way that it designs its products. tell us about this. >> ?apple likes to say what happens on your iphone stays on your iphone. this was their promo tagline on a big billboard they posted in vegas in january. it appears that is only the case unless you are talking to siri. you may have some contractors listening to that. apple says fewer than 1% of utterances to siri are reviewed, which would be a low number

given the hundreds of millions of people who do you siri when it works. now google has been reviewing their internal program. apple is doing the same. and when they do bring it back into the full, users will be able to opt out from having their utterances spoken to siri for review. they should have made that an opt in option months ago. >> thank you so much for joining us. we will have an exclusive interview with a chief security officer. this is bloomberg. ♪

>> as president trump escalates his trade war with china, one company continues to be caught in the middle. huawei has seen a dramatic slowdown in sales growth.

shery ahn spoke with huawei's chief officer and asked how huawei is addressing vulnerability in its products. >> we have been actively involved in independent evaluation of our products around the world. most recently, the oversight award in the united kingdom. we sell on all the carriers, not the core networks which would be the sensitive networks, but the radio access networks. they have identified vulnerabilities in our software. and they have brought to our attention important lessons we can learn, so we are committed as a global company to spend $2 billion over the next five years to improve our engineering process. to make sure we are more consistent so there won't be as many vulnerabilities that are there. and to make our code more readily adaptable for new

technologies with artificial intelligence. we think our competitors would value from similar evaluations to make their products more secure as well. >> we are going from a 4g into a 5g world. the ecosystem is becoming more complex. the 5g architectures are becoming more complex. when that happens carriers might not have much control over the edge of the network. >> the coalition of companies globally that has been developing their impressive standards to address these specific threat environments we see, it will be in involving thing because different use cases will roll out. they've identified those threats and come up with new standards greater security and assurance and transparency for everybody's products. this distinguish between the core of the network -- it has access to the most sensitive

data. there is a security interface between the core and the radio access. there's a security interface between that and the customers. the beauty of what we are seeing is the modeling vision -- it helps manage the risk and helps make sure that there is diversity so you have more resilience if there is a shutdown. the core is physically going to move closer to the edge, the separation is going to be maintained with the security enhanced as 5g rolls out. >> do you see any progress with your meetings in australia? >> the australian government spoke out that they are not making a change in the policy. i think we have to remember there is a geopolitical environment with the u.s. china talks. the u.s. or poorly encourage the australian government a year ago to block huaway from the 5g

network. there's no chance -- or in reports like that -- we would be shocked if they said anything different than what they said. >> there seems to be an image problem with huaway. we are seeing allegations and violations. we have seen several accusations from different companies about huawei fueling trade secrets. how do you convince the people that you can trust huawei? >> the kinds of measures we are talking about, measures that provide assurance and transparency regarding the products and conduct of employees is one way to do it. when you look at the global campaign taking place for 18 months, it's astounding when you

look at the number of countries, even close allies, that have pushed back. they have been given no evidence of major cybersecurity wrongdoing. they are going to continue to pursue a risk mitigation approach that would be applied to all vendors. block huaway if you must, but take the measures necessary to make the commute occasions networks more secure. >> that was an exquisite interview with huawei's chief security officer. how tech stocks are faring amid earnings and escalating trade tensions. ♪

emily: this is "bloomberg technology." i'm emily chang in san francisco. it was another big week for tech earnings. apple projected fourth-quarter earnings that toppled analyst estimates, signaling optimism around iphones. qualcomm shares tumbled thursday after the company gave a disappointing forecast driven by weak smartphone demand. trump threatened to impose more tariffs on chinese imports. that continued into friday. joining us to discuss in salt lake city, jason ware. in san francisco, mobile expert joe madden. thank you for joining us. let's start with the trade war. what did you think -- how is it impacting big tech now and how is it going to impact big tech company's over the next six months given there is a resolution and still a lot of uncertainty?

joe: there was a lot of drama going on in the chip world with companies not being able to ship to their customers. in a long-term strategy, some chip companies buy into the idea that the u.s. needs to push back to protect ip. it is a short-term versus long-term tug-of-war right now. emily: jason, we have had generally positive results from tech companies, including apple this week. yet, they are still feeling the pain. jason: yeah, we take a little bit of a bigger picture view. we have had some strong tech reports this week but if you go back starting with ibm on july 17, we have seen a lot of companies in the technology space report good earnings. whether it is intel, microsoft. they are saying the growth stories are still intact. while the trade war is an issue given the international foreign revenue these tech companies

have, i still think they have a tail wind at their back. emily: joe, you have done a lot of research on huawei specifically in the whole trade war has illuminated how interconnected u.s. and chinese companies are. you have to companies that supply technology to huawei suffering because they can no longer supply that technology because of the white house blacklist. huawei trying to develop its own operating system because it cannot get an operating system from google. do you think this will permanently or more deeply sever ties between the u.s. and china that have existed for a long time? is that good or bad? joe: i think there will be a lasting impact that the chinese ecosystem will develop more fully. we are forcing that to happen. huawei is really in a bad position and no one sees it yet. the reason is that huawei really knew this was coming, they started stockpiling components

roughly the first of the year. they started buying ahead on things like fpga components, modems, rf components and things like this. they are actually still producing base stations and some phones using american components they have stockpiled. they have not run out of inventory yet. huawei announced some excellent earnings that surprised people. it did not surprise people in the chip world because they knew they were shipping ahead of demand and building up inventory. as we have gone through our analysis, we see huawei is likely to run out three to four months from now. at that point, we think the pressure will increase. we will see more progress in the trade talks. emily: so, jason, what does it mean for companies like qualcomm, like apple, like intel? jason: so, it is multifaceted. qualcomm is saying, for example, not only is the trade war and the relationship with huawei a

headwind, but if you look at what is happening with 5g, an extra layer on this, there is a lot of inventory in the channel for 4g and technologies that proceed 5g that will be flushed out. it will create a doughnut hole for companies like qualcomm. if you look at apple, there is an argument to be made this will be a tailwind for apple in the second half of 2020 for their iphone device lineup if 5g hits at that time. we can get a bit of a pickup in apple's business. apple has the services store going for it in spades and the wearable category looks pretty good. it is a tale of two different narratives. emily: all of this is happening as countries around the world race to 5g and apple has been a company that has been slow to adopt 5g. yet, it seems like everybody is having trouble getting 5g out into the wild. we have samsung might have it out earlier. we have not seen that.

what does that mean given that huawei is a leader in 5g? joe: if you look at samsung, back to the 2g, 3g, 4g cycles, we had networks before we had phones. in this cycle, we have phones and networks simultaneously. i will not say anybody is behind yet. emily: even though apple does not have 5g yet. joe: korea has a big network because they move quickly. china is just starting. u.s. is in early days for 5g. i don't think anybody is behind. emily: is the u.s. behind on a 5g network? joe: i think the u.s. has spectrum issues. the u.s. could be behind because they don't have the spectrum that other countries have in the c-band area that would be the best spectrum to use. i think that t-mobile and sprint merger will come a long way towards freeing up spectrum and capital to get great nationwide 5g network. the other carriers don't have the same spectrum options to go after it.

emily: joe, where do these tech stocks go through the rest of the year given that -- jason, given that there is no end in sight? this trade war could drag on to the next election. jason: that is the big question. our view is if the trade war were to see some type of resolution or truce like after g20, that allows the technology stocks to trade on their merits. they look really good. there are winners and losers in the sector but a large cap tech stocks look good, whether it is google, visa, microsoft, etc. they have really strong core fundamentals that are pushing their businesses further. if we can get some good news on the trade front that these stocks can trade based on their merits and things look good -- however, if trade goes sideways, that is likely to be the dominating narrative for the next six months. that could impact their valuations over the near-term.

the other big risk we have not talked about is regulation. we will see how things flush out in the u.s. over the next few quarters on that as well. emily: we are waiting for september 1 when the new tariffs supposedly go into effect. jason ware and joe madden, thank you both. texas attorney general kim paxton joined another dozen state ag's to block t-mobile's acquisition of sprint. it comes after the doj agreed. ed hammond sat down with former fcc commissioner robert mcdowell to talk about this new hurdle. mcdowell serves as outside counsel to t-mobile. robert: you will have a couple of layers of enforcement here. the department of justice takes their conditions to u.s. district court in washington, d.c.

a federal judge will review the deal. that will take a few weeks that will be done this fall. the doj can always go back to court to enforce any aspect of the deal. similar with the ftc, we have not seen a draft order yet but that should be coming in a few weeks. the fcc will have, i am sure, stiff fines and penalties for the companies if they aren't living up to their end of the bargain. that is two prongs of attack on behalf of consumer protection should all these companies not it's belts and suspenders in terms of protection for consumers and the marketplace. ed: in terms of the regulatory theatrics in the media, we do have this situation where you have the fcc coming up independently. now you have -- we don't have all the states on board. some states still going against

justice. why are we seeing this, this lack of cohesion? robert: there is cohesion among the federal regulators. keep in mind, there are about 18 states and the public utility commissions who have approved the deal. team telecom approvals as well as the federal levels. if you look at the great weights at who approved the deal, it outweighs the state attorneys general who may have political reasons, exposure, etc. are involved in a fool's errand. ed: so, the company will obviously want to get this settled. they don't want this to drag on. what can they do? robert: the ones who are litigating? so, hopefully, the states will give up and understand the settlement with doj really is in

their favor. it undercuts the complaint they have filed in new york. and, there are no damages, no risks to begin with, but if there was any doubt about that, that was removed last friday when the doj blessed this deal. as the states really understand and look at what is happening and what has happened and follow this approval act in washington, d.c. by the federal judge, they will realize they have a loser of the case. it's tremendously persuasive to the court in new york to have the department of justice antitrust division go to such great lengths to make this deal work and to cure any alleged defects in it, which i don't think there were any. this removes all doubt. so, they have the burden and it is going to be tough. emily: ed hammond with former

fcc commissioner robert mcdowell. president trump is still in need of a top intelligence chief, as the president withdrew congressman john ratcliffe from consideration for director of national intelligence. ratcliffe turned out to be a very controversial pick on both sides. the president planned to nominate the texas lawmaker to replace dan coats who announced he was leaving the post last week. coming up, data breach after data breach. this time, capital one compromising the data of over 100 million customers. we will talk about the cybersecurity implications, next. ♪

emily: wework setting up $6 billion in financing to fund its global ambition but there is an unusual catch. first, it must succeed in its ipo next month. they will have to make good on their commitments if the office space renter raises $3 billion when it goes public. earlier this week, capital one revealed a massive data breach exposed personal information of over 100 million u.s. customers. this including sensitive information related to credit card applications, names, addresses, social security numbers dating back to 2005. this after receiving a tip, authorities arrested and charged a former amazon web services employee who boasted about the hack on twitter. you are watching the surveillance video of the law enforcement raid on the suspect's home. capital one said it was unlikely the information was used for fraud or disseminated by the individual. since the news broke, the dow jones -- around the same time of

the capital one hack. we are joined by nicole eagan, darktrace ceo. does this undermine the cloud? nicole: there are so many benefits that i don't see a potential swing on data centers. what i do think it means is people will give a hard look at cloud security. emily: this was related to a flaw in a capital one firewall, not amazon web services issue. that said, is amazon web services vulnerable? which is the biggest player in the cloud market. nicole: this attack was a result of a vulnerability known as a configuration error in the web application firewall that was specific to capital one. what it doesn't show his these configuration errors are really

very commonplace. they are commonplace in data centers and in cloud. this case, you had somebody with a pretty good level of sophistication that was leveraging that vulnerability. emily: somebody who used to work at amazon web services. should amazon be training its customers better if they are nicole: i think this highlights a few things. knowledge. it also highlights the supply chain level security. at the end of the day, it says when you have something of this scale, why not use some artificial intelligence or something that could have spotted this? because actually what was done was pretty blatant. it was 30 gigabytes of data moving to unusual locations. there are a lot of ways some thing like an a.i. system could have detected this but also prevented it. emily: normally when this

happens, it is a state actor going on the dark web. we don't necessarily know who has done it immediately. that is what makes this case so unique. how common are these kinds of attacks as opposed to the other kinds you are normally on the show talking about? nicole: in many cases -- configuration cases are usually a human error. somebody somewhere made a human error mistake. we have to expect that humans are fallible and we will see these types of errors. what is so strange about this one is how public the exposure was by the attacker, on twitter and other places. i think that is what made it so unusual. it also meant the investigation moved very quickly. it seems like there has been quite a bit of transparency. emily: what are the trends you are seeing right now in terms of threats, in terms of attacks given the ratcheting up of the trade war and that foreign

actors are often behind these attacks, even though not necessarily this one? nicole: interesting timing because we are actually going into blackhat in devcon which is often known as summer camp for hackers. emily: the cybersecurity conferences. nicole: exactly. there will be tens of thousands of people in las vegas next week. i think all of this will change the conversation. we will see a lot about cloud security, 5g security. i think about encryption, encrypted data. and also, of course, the evolution towards ai-based attacks. emily: as we approach another high-profile u.s. election, do you expect the threat to ratchet up? we just learned the russians managed to hack every single state's election system. nicole: what is interesting is that our people want to kind of say, well, let's make sure we prevent the kind of attacks we saw in 2016.

in reality, the attackers keep moving on, they keep changing threat sectors. i think we will see plenty of threats for 2020, but they may not look like 2016. emily: darktrace ceo, nicole eagan, always telling us what is happening out there. thank you so much for stopping by. still ahead, surveymonkey topped estimates with stronger than expected second-quarter results. we will break it down with zander lurie, next. this is bloomberg. ♪

emily: surveymonkey surged 17% after the company reported second-quarter earnings that beat estimates. $75 million, up 20% from a year earlier, and boosted revenue guidance to $306 million. the company continues to zero in on enterprise sales with integration with microsoft's salesforce. joining us to discuss, surveymonkey ceo zander lurie. good to have you back on the show. tell us where the new paying customers are coming from mostly. zander: we have paying customers that sit inside hundreds of thousands of organizations. paying users, 692,000. we are increasingly moving people onto our annual plan with our team to subscriptions and enterprise sale. let's deliver more valuable solutions for our customers, deepen the monetization and

spend time in the salesforce and microsoft system selling to those customers. emily: you have been integrating more ai into your products. how does that change the game? zander: ai is critical because we have the largest data set in the world. over 50 billion answers have been put into our platform through 20 million questions being answered every day. if you want to send a survey to understand the employee engagement in your company, the voice of your customers, we can help you build better surveys. we can help you shorten it to increase response time. put the right questions in. we launched build it for me. you are asking questions in a survey form that others have asked before, so we use ai to help you guide through a better survey process. emily: medallia, one of your pseudo-competitors just went public. what does that mean for you? zander: it is a huge category. with medallia going public, people are waking up to millions of organizations around the world need enterprise survey software to listen to their customers, employees.

if you are going to have a new media campaign, change employee benefits, you have to ask the people. to do that, you need software. medallia is a different part of the market. we have this massive footprint brand and moving up into the enterprise. i think we can all thrive. emily: you have a massive super competitive election season coming up. surveymonkey does not specialize in politics specifically, but what does that mean for the business? zander: i think we are all interested in this electoral process. 2.5 to 3 million people are answering questions on the platform every day. we have a product called audience that financial services, cpg companies, pollsters can use. if you want to ask questions of a certain electorate in the world, male, female, zip code, hobbies, interests -- you can slice and dice a population and ask questions, whether it is

what electric car you are interested in? will you try a plant burger? or what candidate will you vote for? emily: can you tell us who will win? zander: if we learned anything from 2016, you are a fool if you think you can pick the winner now. biden is the leader now, but we have seen through the debates and the shifting demographics, it is really early period to be calling this. emily: i know you like to think big picture about the tech industry at large. last time you were on, we talked about the backlash on silicon valley, but now you are seeing it on capitol hill. what do you think of the antitrust scrutiny of big tech companies piling onto lawmakers scrutiny and a loss of public trust? zander: there are a couple of different dynamics. i think americans should be proud that some of the world's best companies, biggest companies have been built in america and some of our greatest i.p., human talent works in these companies every day.

amazon, facebook, google, etc. there is a lot to be proud of. with the size of these platforms, we have introduced new dynamics that are very difficult to manage. if you look at the size of social media or the power of ai, there has to be a lot of investment. people time, management capabilities are put into how we secure these platforms. we are spending a lot of time on data privacy security. we just hired a new cio. super important. antitrust legislation -- capitol hill will go to super interesting stuff. if this brings interest from lawmakers to look at, but i hope these companies figure it out before capitol hill tries to. emily: we could do another hour with you on this topic. zander lurie, thank you as always for stopping by. that does it for this edition of "bloomberg technology." we are livestreaming on twitter. check us out there @technology. follow our global breaking news network, tictoc.

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