♪ emily: i am emily chang in san francisco and this is "bloomberg technology." pres. trump: somebody had to take china off. china has been ripping countries off. emily: plus, more frustration for facebook. eu regulators are already probing the libra digital

currency on top of scrutiny here at home in the name of antitrust. several states voiced concerns over the security of their electronic voting systems ahead of 2020. we will talk to the man who successfully showed the world that voting machines could be hacked 15 years ago. our top story, president trump defending his china trade stance by saying that, while u.s. is not ready to make a deal yet, somebody had to take them on. pres. trump: when you look at china, china has had the worst year they have had in 27 years. they want to make a deal with us. i'm not ready to make a deal. i am doing this whether it is good or bad for your statement about, will we fall into a recession for two months? somebody has to take china on. i like doing it because i have to do it. donnanfor more, shawn

from washington is with us. the president made several comments about china today. do you see the messaging start to change? shawn: there is a subtle change, maybe acknowledgment that their short-term economic pain and the president saying, i'm willing to do it for this greater cause of taking on china after decades of cheating on trade. he has, in the past, insisted that these trade wars are doing no damage to the u.s. economy and that china is paying the cost of these tariffs. it is a subtle change in almost looks like a frustrated change. we are hearing there is frustration at what has been happening in the markets, all this talk about recessions, the likelihood of a recession, which still is fairly slim but rising with about one third of economists saying they expect

some sort of recession. election year, that is not the message the president likes to hear. impact thedoes this talks that are supposed to start in september? of course, we don't know what will happen in the next hour, two hours, or days, let alone weeks. shawn: these talks started it 2017 mar-a-lago and have been on again, off again ever since. we are hoping and hearing -- the white house is certainly helping it can get some kind of negotiation back on track. the principal negotiators, treasury secretary steve nugent, robert lighthizer. they spoke with their chinese counterparts last week. again indue to talk the coming week or two. acaverything lines up, we

chinese delegation come to washington in september. there are a lot of things effecting these talks, including the situation with hong kong. included what is happening with huawei. we have seen the u.s. extended arrow exemption for some asinesses who -- extent narrow exception from some businesses who do business with huawei. emily: and make it or break it moment for the company. you have the hong kong protests, as you mentioned. these are all potentially wrinkles that perhaps were not planned on by the administration. how does that impact how this plays out? shawn: i think the big question here is not just donald trump asians situation, but she -- but xi jinping. he is unlikely to do anything

too radical in these trade talks before october. we are here for some -- we have been hearing for sometime this growing view out of china that maybe they can wait things out and be more patient. ancertainly doesn't have election coming up next year like trump does. emily: you have tim cook meeting with the president on friday, making the plea that these tari ffs don't hurt a company like samsung as much as apple. here the president saying it is for the greater good. ofyou think that the pleas some of these companies will be heard? shawn: it is clear that the president heard loud and clear tim cook's plea that if he was facing a tariff and his rivals at samsung were not, that would put them at a competitive

disadvantage. his businessman instincts. , again the same time raising the auto tariffs on imported cars from the european union. the big thing we need to watches the economic data going forward and what we see for u.s. gross domestic product. we will get a second read of the figures coming next week on august 29. the direction of the economy will determine a lot more of what we see coming out of the white house in the weeks and months to come. emily: shawn donnan covering all the back and forth. euitrust regulators in the are already looking into

facebook's digital currency libra. n't even launched but has eun scrutinized by u.s. and regulators alike. there are concerns of anticompetitive behavior here, concerns that they could squeeze out rivals. we are joined by bloomberg tech's sarah frier and alastair mitchell, an investor in a number of early-stage tech companies. the euexplain to us what is looking at. sarah: they are concerned, and doubly so, that if the company controls this currency that could rival the u.s. dollar, that is way too much power to have. they have said, this is a

project with all these partners, there's a distributed network of people who will help on this. emily: some of those partners have kind of backed away. refused to raise their hand. facebook has all the recognition to be innovative and creating this. there is a little bit of tension behind the scenes. alastair: i think the first 's point offacebook view, in a productivity world, this is a very ambitious move and the second thing is that it stable: alternative -- stable coin alternative currencies are here to stay. to deal do they have

with the concerns of governments, but also their own central banks. that they are going up against technology companies coming up with their own version. we have invested in one called token x. it is going to be a very crowded world despite the size of facebook's user community. emily: you already have the doj investigating big tex for antitrust. you have state attorneys general looking into the attack -- looking into big tech as well, and facebook decides to unveil libra. do you think they made a miscalculation in doing this now? alastair: i think they have to do it. didn't do it now, somebody else would do it. some of the device manufacturers and browsers have done to

control, and some of the legislative things in europe and now in the u.s. and california, they have to. i think we are seeing a shift from the tradition of the last 10 years, selling access to people for ads. if they don't move into this area, the revenue streams will go away. emily: when the eu says they are concerned about anticompetitive behavior in regards to cryptocurrency, what are they really worried about since it doesn't exist? sarah: facebook gang this massive -- facebook being this massive global power. billions of people using this. from alleen scrutiny angles and we will continue to because facebook is still growing.

regulatorst now that understand that power, it is going to come down on them on angle,vacy, the election the propaganda angle. thing do will be subject to investigation -- everything they do will be subject to investigations, hearings. emily: alternatives to libra, explain what the competition is? a -- we: basically, in will alternatives, the way we transfer money. that starts with foreign currencies. already having companies come out and make it easier to ship. something where the

countries get very concerned because you manage your own currency. it is a stable coin. then you have banks coming out to make their own version and then you have the central banks themselves worry about it. a future which will be much more fragmented. that is not just things like libra but also things like open banking in europe. a huge change. critic our companies are petrified -- credit card companies are petrified what that will do if i can just move money bank to bank. they: how do you compare regulatory approach to europe? europe was on the leading edge, than the u.s. followed, now you see europe following the u.s. on cryptocurrency. alastair: europe had a reputation for being anti-tech or anticompetitive.

i think they have been more able to intervene in areas with concerns about consumers. data was the first part. the u.s. brushed it off but then and that is led to a change in technology. apple took that even further. they have actually stopped people being able to advertise and attract users the way they used to with cookies. that has been devastated for facebook and google. the needle is really swamped. it has been -- the needle has really swung. it has been interesting to watch. it has moved into the big tech companies and they are fighting amongst themselves. that is what we advise our companies first of all, to work hand-in-hand with the regulators and much more close contact rather than just to take them on. there were times that central bodies were not as educated as

they are now. the second thing, we are interested in looking for opportunities for new companies to come in. what is the alternative when we adst use google pay for anymore. we have new companies in the data and advertising world, transforming it. this is a huge market opportunity. emily: sarah, what our next steps in the eu? sarah: the eu is on the leading dataof antitrust data had and screw -- antitrust data and scrutiny. there is still a question of whether they will take action that will actually hurt facebook in those areas. we have heard interesting arguments about data as a form of currency really. facebook has been able to join up the data from all his

properties into one organism. the sec chair just came out and said -- the ftc chair just came out and said that would be harder for them to get broken up. are they going to ask facebook to not make that change, or are they already? alastair: and are they going to stop something like libra? emily: so much more to follow and discuss. thank you both. coming up, streaming strategy. details on apple's new tv and movie subscription service are trickling out. how the tech giant plans to compete in the already crowded space. this is bloomberg. ♪

into aapple's transition

services company continues. they launched a credit card with goldman sachs in the united states. people can apply for the applecart by using the wallet app. this comes a day after they plan to roll out a subscription streaming service by november. we are joined by bloomberg tech's mark gurman. what are your reporting? mark: apple is ramping up its work on this new service, a key part in their initiative to launch a lot of services to augment slow sales of hardware products. andnch between october november. one of the price points they have been considering internally is $9.99 a month. i think it is going to come in quite below that in the end, given that they don't have the content library like netflix and

disney have. emily: disney is starting out low as well. mark: they would be square in the middle. i think it will come in lower, there will be discounts, trials, bundles. apple's service at least right now is not up to par with the likes of amazon and disney. $6ly: apple is setting aside billion to spend on original content. two seasons of "the morning show" the much-anticipated show, that is $300 million alone. mark: as of a couple of years ago, apple set aside at least a billion dollars to do this. what they found out, needing the top talent from oprah, steven spielberg, jennifer aniston, reese witherspoon, that cost a lot of money. getting to $6 billion should not be so difficult.

i have seen a few people skeptical about that number. there is a reason apple what i want that number out there is because it sets high expectations. emily: dan ives on the phone. what do you make of these new details? price,g a possible unveiling of the service, and apple spending $6 billion. you could say this is just an experiment still or a side business while that is netflix's bread and butter. dan: no doubt. right now, apple needed to significantly step up content. this is all about a drum roll into the major release later this year. this is key to the services business and we think the opportunity is 100 million consumers in the next 3, 4 years. the golden goose

for cook and cupertino. services is the growth. this is really fuel in the engine for apple going forward. emily: apple card now available. i know some folks who have already signed up say it is a simple, straightforward process. maybe that is only if you have good credit. mark: should i get my apple card out? emily: you have yours. how has the rollout been? mark: the cash back today, it was an interesting announcement, 3% cashback on uber. if they do more of these deals, that would mean this is a great card. emily: how optimistic are you about apple card? dan: apple card will be a bit of an uphill battle for them to get significant opportunity. right now, as retailers come on,

what the incentives are, that is what i see as more in the background. right now, the focus is on the tv and distribution service. i do think you will see more of a focus on the finance and banking side. i think this is just the tip of the iceberg. pay, for example, started out as a very small business and has very slowly but surely gained a lot more traction. it has almost been like a sneak attack. could apple card be the same? mark: i think a lot of people who use apple services will use the apple card to pay for those. i think it will be the default card for apple pay. i think it goes as far as apple pay goes and vice versa. emily: thanks so much.

lots more to continue to follow as we get closer to november and that apple tv plus launch. uber heading to court yet again. why one of the oldest taxi operators in san francisco is calling over a monopoly. she is calling -- is calling uber monopoly. this is bloomberg. ♪

emily: the founder of chinese telecom giant huawei's warning that the company is at a live or die moment. he urged employees to form a so-called commando squad to explore new projects. he said workers who fail will have their salaries cut and may even lose their jobs. the uncertainty caused by u.s. 'snctions has hammered huawei smartphone business. challenge onnother its business model in a california court, while it has other claims in massachusetts.

a monopolization lawsuit against the ridesharing giant. they accuse uber of dominating the san francisco market by relying on their venture capital war chest to whether losses while they undercut traditional taxis. fortnight has appeared to hit a speed bump. the shooting game is actually slowing down. revenue fell 38% in may. gameste's publisher, epic , hopes it has the solution. it is sponsoring more competitions after last month's world cup. coming up, we will talk to one cyber expert who has broken into voting systems himself. find out what he thinks can be done to stop that from happening again. this is bloomberg. ♪ from the couldn't be prouders

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emily: this is bloomberg technology. i'm emily chang. rise,ware attacks on the this time in the state of texas. 23 small towns have fallen victim to hackers. officials at declined to name all of the towns where official computer systems were hijacked, hit.o towns were this follows similar attacks took place in baltimore and atlanta that saw systems like credit cards and email servers go dark. to discuss this trend and much hitehats harry, a w hacker and the founding partner of nordic innovation labs.

you may remember him from the award-winning hbo documentary, where he actually demonstrated that election results could be changed. he joins us from new york. thank you for joining us. let's start today with texas. what is your take on what is happening in texas and the rise of ransomware attacks in states in general? ack thatlmost every attr happens has an element of phishing. these are all sophisticated in human attacking. it is about the lack of human firewall. metrics of triggering our human instincts to dictate how we behave against our best interests. it is all about how you trigger the humans to do your dirty bidding. really, we have been trying to do a technology called barriers,

but in the area of humans and how we protect humans, we have a long way to go. as long as we don't figure out that, these incidents will be growing. they are growing rapidly now. we look at the number of breaches over the time of the first six months of this year, almost 50% up. ransomware, that is going to become much more sinister as time goes by. emily: what do you mean by more sinister? what are these sort of worst-case or even realistic scenario? harri: we humans are always worried about what is stolen. everything that is reported today is about how many records were compromised or stolen. but we are not looking at the other alternative which is something left behind. what if there is data being inserted? you could cause a lot of havoc with that. loss of confidence, misinformation, ruined lives. that is the question here.

if you start from stealing, blackmailing people, holding their data as ransom, blackmailing them with something they don't want to be put in the public, and instead you insert data and start compromising that way, that is an avenue for people in that crimeware business to compromise people and get them to pay. emily: 15 years ago, you personally showed voting machines could be hacked and the results of the vote itself could actually be changed. how easy is it to hack voting machines today? certainly, technology has improved, but so has the ability of a hacker. harri: unfortunately, that technology has not really improved much. the same machines that i and 2007, hacked in 2005, those same machines are still in use. there was a lawsuit in georgia

that they did not patch a vulnerable version that was still in use. that improvement has not been as great as it should be. there has been a lot of improvements in the area of security, introducing paper ballots, audits. we have a long way to go in the area of security of infrastructure. we have introduced new technology in the area. we don't have even a real standard established. there is a new technology which opens new doors. emily: state election administration officials have said they are concerned. they say they are not getting enough money. how vulnerable would you say the u.s. presidential election is currently to hack attacks and what are the biggest threats? mind, ideang your that you have an electriion

office and it has an i.t. department. you should have one that happens to run the elections. a very strong security team. a lot of offices do not have a single full-time i.t. person. elections are massively under resourced and underfunded. , becauseery unfair they need to get one thing where they can get an and the defender has to get all the doors closed. see the most , it is being pitched all the time. the current number is 3.2 billion records compromised, you can see how unfair the game is. thelocal jurisdictions, states need a lot more resources and money is one way of creating those resources. that being said, a large part of

the problems we see today was created by money. in 2002, there was a rush and a lot of the machines were put in place in a hurry and they were not standards and documented best practices. time, wetime -- this have to make sure the security standards are existing and enforced. emily: what would your message be to the white house and to congress? the president has expressed his own opinions about whether or not the russians actually hacked our election. and congress holds the purse strings and has the ability to give more money to the states and the states say that money is not coming. harri: more resources. some of the resources goes to technology. some of the resources needs to be in developing and training and getting human resources in place. it is obvious more funding is needed.

also, bear in mind most of the infrastructure, a large chunk of the infrastructure was bought in 2002-2003, those machines are old and tired. machines, they are at the end of life. there must be a time when a reinvestment is happening and the whole infrastructure gets modernized, step-by-step or one goal. there is no way around it because the natural lifetime of these machines are coming to an end. toly: all right, lots examine as we get closer to 2020. thank you for sharing your perspective with us. fascinating. ok, meantime, youtube is finalizing plans to end targeting ads on videos erected at kids. the move comes as the u.s. federal trade commission investigates whether the video giant breached the children's online privacy act which bars companies from tracking kids

online. the agency reached a settlement but did not release a term. the change could immediately impact youtube's ad sales and google's bottom line. joining us to discuss, mark bergen. as i read your story, i thought whoever thought it was a good idea to collect data on children and target ads to them in the first place? mark: according to google and youtube, they are not collecting data on children and targeting ads. they have this massive caught a log and library -- catalog and library. every time you and i watch a baby shark video, which i have seen a lot. emily: still watching baby shark videos? mark: we will probably see a targeted ad based on the websites i have visited, the loads of data google has collected on me. those are more effective ads and they are higher priced. that is what google has been doing for years. they built up this massive

ecosystem where they have thousands of people that make these youtube videos. basedillions of dollars on this advertising. emily: what is the ftc looking at with the ads to children? mark: for google shareholders, it is probably the best outcome. there is a report that complainants said youtube should move everything to the kids app, designed for kids under 13. the ftc commissioner said what if we just don't run ads on youtube videos aimed at kids? it seems like they are able to run ads, but not targeted, not using consumer digital data. emily: how much could that dent youtube? mark: we don't know. an analyst said, he estimated about 10% of youtube's kids arguably0 million,

less than 10% of overall youtube sales. there are other estimates that say the kids media is a much bigger slice of pie. emily: bloombergs mark bergen. we still don't know where that ftc settlement actually landed, right? mark: the expectation is a record fine. probably north of $100 million. probably something google could shake off. emily: thank you so much. coming up, as global trade tensions escalate, some investors have found shelter in cryptocurrency, but is bitcoin really the safe haven advocates claim it to be? we will discuss the latest in crypto, next. this is bloomberg. ♪

amid global trade tensions and economic slowdown, crypto enthusiasts have pointed at bitcoin as a safe haven. but the cryptocurrency is quickly losing the title. after rallying while u.s. stocks plunged this month, bitcoin lost 15%. volatility continued into this week. cryptocurrency is now 45% below its high in 2017. joining us to discuss, blockchain capital general partners spencer bogart in new york. mike mcglone covers cryptocurrencies. mike, walk us through the ups and downs for bitcoin over the last seven to 10 days. mike: consolidation.

i think it is filling in this gauge. pulled4,000, and just back to about 9000. it is basically retracing the bear market from 2018 but it went too far, too fast. the broader market, like the crypto index is only up 60%. it is bitcoin breaking away from the pack. emily: is it a safe haven or is it like any other asset? spencer: longer-term, bitcoin will absolutely be a safe haven. as it grows, bitcoin devolves as it goes. right now, it is in this intermediate state right now where you have to think about what are the risks and how severe are the? i think when you have looming risks of monetary devaluation, bitcoin looks very attractive and i think that was a large driver of the recent run-up in price. when you think about really severe crises taking place, a liquidity crunch, global

financial crisis, i think bitcoin will struggle to do well from a price perspective. i think it will work well from utility perspective and bitcoin can withstand bank closures, etc. it can continue to function well. longer-term, thinkable continue to evolve. emily: don't buy bitcoin now? spencer: i think bitcoin will be a -- worth a lot more in two to three years now than today. the exact trajectory is t.b.d. i am not convinced we have a full economic crises on the horizon now. emily: meantime, we have the eu scrutinizing facebook's libra. we have competitors emerging. binance trying to create a competitor to libra. what do we know about those plans? mike: anytime i hear about a new stable coin like the latest from binance, it creates a greater disparity in bitcoin for the rest of the market. it makes bitcoin become more

like digital gold because it is so unique. no one else's liability edit separates from the pack. the other stable currencies are what is needed because most of the other cryptocurrencies do not do what they are supposed to do. they are not going to be used for day-to-day transactions. bitcoin is more like old. gold. as far as scrutiny, it helps bitcoin increase the pushback in some of the -- the term i have been using is the gaggle of 2400 other crypto's. like gold is unique among commodities. emily: how is this whole libra situation impacting the broader market? spencer: i think a lot of libra's partners and other large financial institutions, tech companies have been taking a wait and see approach towards cryptocurrency and bitcoin in particular. libra has kick started things. we need to start being proactive because if we are not, someone else will be. we are seeing a lot of large

financial institutions and tech companies working on initiatives behind the scenes to either offer access to bitcoin are other ways. emily: what is your over under with which libra is ever launched? spencer: the concerns are so disparate in terms it is not private enough, too open, not open enough. it will be difficult for them to thread the needle of the regulatory concerns. this goes back to the burden of asking for permission instead of asking for forgiveness. a space that can get out there and went over users and ask for forgiveness later once the utility it's demonstrated. i think facebook is in a tough situation. emily: is facebook really the company to be asking for forgiveness later? spencer: not right now. emily: mike, talk to us about the dynamic as this libra stuff plays out. a lot of volatility in the market. the whole china trade situation.

what are you watching for some sort of signals as to how the crypto market in general is going to perform? mike: volatility is a key thing. volatility in bitcoin is guaranteed to reach new lows. you look at the 180 date volatility, about 40% from october of 2015. that marks the bottom of the market and it took off. with more and more vehicles coming on space, all of the ways people getting involved with bitcoin, the volatility is guaranteed to get suppressed which i think it is doing right now. good support around 8000. they could be stuck in that range in the sleep which should put volatility low which makes it much more like gold. the key thing i watch is transactions. those things that really signal the bear market last year, bullish this year and really curtailed. we are in extended hibernation in the price of bitcoin.

emily: where is the crypto market a year from now? spencer: we will see a lot more users of bitcoin. more miners processing transactions. the important thing between now and then is that we have a new issuance of bitcoin created. that will create a little bit of a change in the stock to flow ratio and will drive the price a little higher. emily: spencer bogart, blockchain capital gp, thank you so much. as well as mike mcglone. thank you. still ahead, wework lasted. why one analyst is taking the company to last and issuing a warning about the ipo. that is next. this is bloomberg. ♪

emily: strong words about wework's ipo filing. an analyst called a masterpiece of ups be patient. he says wework must've put in great effort to conceal the underlying economics of the company. wework label some compensation as investments. the company is not commenting. let's take a listen to what he had to say earlier. ork is thing about wew it is a business like google.

we rent big office space from landlords and we have glass, ping-pong and beer. we rented out for a different price and we have money left over when it is done. the thing that is a challenge about this document, 133 pages later, i found myself more confused about what the actual economics are. the only reason this is a particular shoe for this company is the burden of proof. if you lose $1.6 billion on the bottom line, you would think you would be motivated to make it easy why investors should understand they should had more money to you but they decided they don't have to do that. >> you talk about the top and bottom line. i want to run down that income statement because you talked about one of the issues of cfa. one of the issues you said was the reclassification. operating expenses two years later even though technically that expense fundamentally has not changed. is that a margin story or why

that reclassification? why does that concern you? rett: it is not an obscure patient story -- they could make it easier to understand this. the basic proposition is super simple. to take, to recategorize and expect at the unit level into a different cost bucket even though they have hundreds and hundreds of units and they don't break them out so you cannot tell. is that expense really hot, really low? we don't know the vacancy rates over time. how much work? we don't know. the other thing we don't know is they talk about their memberships over time as if no one ever left. people leave wework all the time. none of that is clear and the filing. i think it means if somebody is taking about what are the long-term cash flow characteristics of this business, it makes it harder to understand. it is murky. the money so far in this company comes from softbank, fidelity,

benchmark -- these are smart guys. they have seen numbers that make them comfortable handing over lots of money. the only question the document phrases for us is why can't we see what those guys have seen because clearly this story is not a slamdunk. rare it isnot that not always the clearest in the ipo prospectus. the fact you have an index to rate individual ipo's -- rett: it is the most correlated of all the pieces of index. >> generally, the stat is if you do well, your shares do well. if you meet your indexes, your shares tend to outperform. who has done badly? who does not tend to do well in the ipo's we have seen? rett: negative correlations -- obfuscation is good for the stock going down. fame and buzz is another index. fuzzy stocks tend to be

overpriced. the other thing is fancy investors. that tends to be correlated. >> too fancy. rett: on the one hand, the lowest would be like uncle bob, and the lowest would be warren buffett. it could mean you are overpriced. in the interesting case of wework, they seem to be signaling they will ask for a price that is lower than their uber public price, which ended up doing. let's not talk about $47 billion, let's go for some other number. emily: that was rett wallace. the justice department has gone to court to block sabre's $360 million of behr logic on antitrust grounds. it is the largest booking services provider in the u.s. it would allow sabre 2-wood limited a disruptive competitor that introduce new technology to the travel industry.

that does it for this edition of bloomberg technology. we are livestreaming on twitter. check us out there. follow our global breaking news network, tictoc, on twitter. this is bloomberg. ♪

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paul: welcome to daybreak australia. i am paul allen. shery: i'm shery ahn. sophie: i'm sophie kamaruddin. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering in the next hour. president trump raises pressure on the fed days before the repeated call for a big interest rate. hong kong protesters reject the olive branch, deemed