♪ taylor: i am taylor riggs in san francisco. this is "bloomberg technology." coming up in the next bumpy hour, ride. pellet gun makes its public debut in the stock opens below its ipo price. we hear from the ceo john foley, who cited some disappointment. plus, chipmaker micron reports shares fall after hours after gross margin and profit outlook miss estimates. we will have details.

an antitrust probe overload. the u.s. justice department launches its own facebook probe . this, as the social network is already the focus of a federal trade commission investigation. but first to our top story, pellet gun falling as much as 9.5% after raising more than $1 billion in its u.s. initial public offering. it is the latest unprofitable startup to struggle in its trading debut, but the ceo john foley remains upbeat about peloton's future. 's jason with bloomberg kelly at the nasdaq. john: we are playing the long game. we see this as building millions and millions of subscribers around the globe in the coming years. now we have the money to do that. we are fully funded after today's primary, so we are feeling confident. jason: when you think about the last couple of days and weeks, you mentioned the market.

it is a tricky ipo market, to say the least. do you have a sense of where the miscalculation was? or if there was one? my eights is fundraiser for appellate on. it is a funny thing where people either see it or they don't. there are believers or nonbelievers. those who believed in the and invested in appellate on for eight years now have been very happy, and we will continue to rely on capital partners who invest in us. jason: you mention fully funded. what will you do with that money? what does expansion look like? john: we are building a $50 million streaming television studio in new york city, another $50 million studio in london, where we will hire foreign language instructor. german instructors are streaming toward german market, which we open in 50 days, so investing in new content, new verticals, the

treadmill markets, we have canada, the u.k., germany. we are in investment mode. someone earlier today was saying you are losing money. no, it is semantics. we are investing money and feel good about what we are doing. jason: how do you feel about the consumer market? you sell a very high-end product. there is some volatility we are experiencing. what do you hear back from your customers and maybe more importantly your potential customers about their willingness to write a big check or charge something pretty big on the credit card? john: one of the most important things we think about at peloton is affordability. it is insane value vis-a-vis anything else. interestingly i know you wrote the book on this, so you know this, but fitness has been a recession proof category for the last 15 years. more dollars went into fitness in 2008 and 2009, so there has been secular growth for the last

15 years. we think if we create the best value in fitness -- if you ride your bike -- on average our bikes are ridden 12 to 14 times a month, divided by 39, a couple of dollars for a workout, it is obviously better than going to the boutique fitness world. and we will show over time it is an even better value than going to the gym. jason: you have described the company in the s1 and the roadshow as all sorts of things, the media company that does a lot more. where will you be primarily spending money? is this a content push that is coming? i would say that at our core we cannot hire software engineers fast enough. we are a software company, tech company at our core. now we have 13 emmy award-winning producers. we just hired this new fantastic officer in jevon carter. she will build one of the most special media divisions in any category. but to your question, the

investment will go into technology. we were open retail stores, logistics, more markets, but which starts to show how multifaceted palatine is, but certainly software engineering is at our core. taylor: that was the peloton ceo john foley. to discuss the company's first day of trading, i am joined by our guests. crystal, let me start with you. down 11% today, what was the biggest concern from investors, why it closed so much lower than where it priced yesterday? >> during the roadshow, it has been a pretty binary story. you other have a bunch of people who believe that pellet gun will change the entire fitness -- ton will change the entire fitness landscape and how people work out and think about workout, or you have people who think it is a business model they cannot sustain, that that has been a story in the investors mind. you either believe it or you don't. that has made for interesting dynamics in the pricing, because

you have a bipolar set of feedback from investors, so that is probably why we are seeing that the deal is struggling this morning. and we were seeing the price fluctuate in the morning and at the open at the end of the day closing below. but more of the criticism has been the profitability of the company. it is still unprofitable. investors want to see an end to that. taylor: natalie, was valuation a concern today? >> it certainly was. you had a valuation that was double the last private funding round, and yet he wants to make it into a content company. the $29 a share left it at more than $8 billion, which is more than that flexed if you do it at a price to sales basis in 20 sales. so it was quite expensive. by the way, my valuation professor believes it should have been $23 a share.

it was a little more expensive than people were thinking. with that said, i've got to say that peloton, like smile direct club, are not a traditional tech company, so they have a harder time selling themselves as technology companies. taylor: crystal, the ceo touted the health of the balance sheet, citing cash, saying we are fully funded. after today, are there concerns about the health of the balance sheet? crystal: i also spoke to the cfo of the company just now. she was saying this really is a funding event for them. where the stock price ended today, it doesn't really matter. they have happily raised $1 billion. they will deploy the capital into content. software content is the valuation they are talking about. we haven't actually seen that much of a selloff in a market yet, but in terms of where they deploy their content, they

mentioned international expansion, content, tapping the existing base, and potentially rolling out new hardware. taylor: you heard crystal luncheon hardware. which is more important, a $2000 bike, a $4000 treadmill, or $40 subscription revenue that investors can hang their hat on? >> the subscription revenue is still something that is recurring. it is as much a percentage as it was the last couple of years, so they have not seen that grow super significantly. people are going to want to see more of that. not to mention the hardware. we have been talking about all these costs. hundreds of dollars in marketing, but also international expansion. but the hardware is also expensive. there are hundreds of mains of dollars poured into there. so the cost base has been rising quite a bit, and that is not

something we are able to put a clamp on. for investors to bite on the story will be a challenge without that current revenue. taylor: thank you both for joining me. tesla saw their shares spike in -- spike the most in three months on thursday, after elon musk told his staff that the carmaker has a chance to top the vehicle delivery record set in the second quarter. in an email to staff, musk says tesla has a shot at achieving the first 100,000 vehicle delivery quarter. tesla reported deliveries of more than 95,000 vehicles in the second quarter. and coming up, the clock is ticking for wework to raise billions. we look at the struggles ahead for its new leadership team, next. if you like bloomberg news to -- if you like bloomberg news, check us out on the radio, the app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

taylor: it seems the hits keep coming for wework. thursday, the chief product officer is set to depart the company. this comes days after the cofounder said he would step down in order to salvage that ipo. the company has seen a rash of departures of other executives as well in recent weeks, then this comes amid a dash for cash. wework is in talks with goldman sachs and jp morgan about a new $3 billion loan. but there is a catch. it would still mean returning to its biggest investor, softbank. joining us is dan morgan and ellen hewitt, who has been

tirelessly covering we work. walk me through this new loan. $3 billion. who gets that new money? ellen: that will come likely from a consortium of banks, and is contingent on equity from a different funder, most likely softbank. the whole thing is this plan that is really being developed as we speak, because there have been so many changes for the company in the last four days. the ceo has stepped down. his wife has also left the company. she was cofounder and ceo of the education arm. there has been a lot of intrigue around other executives and employees at wework close to him. it seems like the new co-ceos are interested in cleaning house. taylor: talk to me then about 's.se new co-ceo who are they? what do you know about him? if they are cleaning house, who

would they turn to? ellen: these are both executives at wework who notably have experience with public companies outside of wework. sebastian is from amazon, marty was cfo at time warner cable. they have some ties to wework, but not too many. there were a lot of people who had been there many years, especially people who had been close to the newman's. there were a lot of people who were personal friends of adam from his childhood, or relatives. as we reported recently, the person leaving the company is adam's brother-in-law. there are lots of connections there. i think the new ceo is interested in trying to strike a sense that this is a different era. taylor: dan, let me bring you in here. thank you for joining me. as you look at wework and the and the fact that if they don't ipo, they need more money soon, as -- is that still

the biggest concern, the financials of this company? dan: you are right, taylor. they need the ipo to secure $6 billion in financing. they are currently burning about $2.4 billion in terms of cash flow. they were hoping to get $3 billion in cash on the balance sheet from this deal. that is the real driving force for them right now, getting the money from the ipo so they don't have to rely on softbank to fuel their growth for the remainder of the year. that is the driving force going forward, to push this ipo and get it done more than anything else. taylor: you talk about raising leftand the revenue, the side of the balance sheet. on the right side are the expenses. a lot of it has to be perhaps cutting back on some of the fat. we had the co-ceo's write in email to employees that we

anticipate fiscal decisions ahead. what would you like to see from this company, more layoffs? how do they cut excess expenses? dan: you are right, taylor. if you look at their model, their biggest expense is the cost of the leases they have to take on. based on the last data in the s1 filing that averaged between 80% to 85% of their total revenues. what we would like to see in this third quarter, which they will have results here in the next couple weeks, are steps from these new ceo's showing we are cutting costs, because right trying to drive these down to profitability because right now, as you know, it is 1.7. for every dollar they make, they lose money at a very fast pace. just trying to show some discipline and trying to show they are trying to get to the end of the tunnel in terms of driving some profitability would be huge. but right now with the model, it is difficult. taylor: when we talk about

wework, you can't mention wework without mentioning softbank. have they been enablers here? ellen: that is a great question, and one people will be examining for the next months, if not longer, this idea that money came so easily to wework. they had to sell equity, but they had no shortage of venture funding available to them. i remember interviewing adam in april. he talked about softbank is amazing to me. they have given me $10 billion. the way they thought about it is clear that they had given him the cash to build this incredible company, and now we are seeing how many ventures wework had that was outside their regular business of renting out office space, those are the things that are seemingly on the chopping block as we go forward, including the elementary school they run. they have two residential dorm buildings. they are going to have changes in these things, and i think -- as we reported, i think job cuts are part of that as well.

those will be likely outside the wework core business. taylor: dan, talk to me a little bit about softbank's role. have they changed the vc investing landscape, given the dominant force they are? have they changed the way the private investing market works? dan: i think so. the fact they have so much money, and like i said, the willingness to lend it out, not only to wework, but all these unicorn deals. they are connected, and just the fact that there was so much money being put into their various funds that they have to distribute out to all these deals. so now you get this point like, wait a minute, what is going on? we have lyft, we have uber, we have these other companies, stocks turning below the ipo prices. some of these other ones, now people are starting to think, well, can this model continue for softbank? can they keep giving this money away?

the end result will be everybody is happy and everybody gets their money back. the market right now is saying no. taylor: the public market seemed to be in charge. thank you for joining me. dan morgan, you will be sticking with me. because coming up, the global microchip market is not yet in the clear. how global trade tensions are impacting micron's future. that is next. and "bloomberg technology" is livestreaming on twitter. check us out @technology. be sure to follow our global breaking news network tictoc on twitter. this is bloomberg. ♪

taylor: there is word now that endeavor group is set to pull its ipo. earlier thursday, endeavor, which has a stake in another r operator, lowered its price range from the previous range. it cut the offering size to 15 million shares from 19.4 million.

and shares of micron falling in after hours trading, after the company gave a disappointing profit forecast suggesting the memory chip industry slump is not over yet. the chipmaker guidance -- the chipmaker's guidance means it sales are on course to decline 20% year on year for a fourth straight quarter. there with me to discuss the forecast and micron's fourth-quarter earnings in atlanta, dan morgan. you know better than me. i don't care about the current quarter because it's over. i care about the future forecast. and that was a disappointment. do you agree that forecast was disappointing? was taylor, everybody looking to this quarter, which is there fourth-quarter 2019. they have a different fiscal calendar, to be the low point in the valley. and that guidance going into their upcoming first quarter for 2020, which shows some improvement. now they did revenue of a little more than $4.8 billion on the

fourth quarter, they guided for $5 billion, plus or minus 200 million dollars. that puts you on the high range from that perspective. but the real thing to focus and with this micron report was cap gross margin came in at 28%, and they guided 24% to 27% gross margin going into the first quarter 2020, so it leads to the conclusion, like you were saying that everybody was looking for this to be the bottom of the valley, then we will start going back up the store case -- going up the staircase starting the first quarter and unfortunately 2020. based on the guidance and a it looks like it's going to be somewhat flat or about the same, or even slightly down with regards to gross margins. so i think that disappointed people in terms of the headline news out of micron. taylor: i want to show a chart i'm showing to our bloomberg audience inside the terminal i have here at gtv . interestingly enough, we talked about memory chip prices, and this is why analysts were so

this is why analysts were so bullish coming into the quarter, because we thought these prices were bottoming out. does the micron earnings suggest that call was too early? dan: you know, taylor, i think it might be, because, as you mentioned, we have seen dram prices in the last quarter were down about 9%. that is total dram revenue, and as you mentioned, ticking down from the last four or five quarters, and the expectation in terms of analysts was it would start to pick up again. at least based on the remarks that we have coming out from micron that they had from their results, it is not showing the type of improvement that we were hoping for. it is showing a continuation of a lot of the same, a lot of uncertainty around tariffs and huawei. so because of that, you could make the case analysts were a little ahead of themselves in terms of predicting that inflection point and things will

start ticking back off again. taylor: what is the bottom-line impact from trade and tariffs? dan: well, taylor, in the release, they talked about the relationship with huawei in regards to concerns about getting approval from the commerce department to delve into that company. you have to realize micron's technology, of all the semiconductor stocks, drives 50% of their revenues out of china, so they are very, very heavily entrenched in that debate, so because of that, that is a huge headwind for them in regards to being able to recover, along with the fact we had a mature cycle in smartphones and pcs, and we have a little bit of indigestion going on in the infrastructure of service cloud space. so you have all these things coming against them, but obviously china tariffs are big part of those headlines. taylor: dan, we sound pretty negative on the company, but when we look at the general

chip industry, i'm shocked at the relative resilience. if we take a look at another chart i'm showing here on my bloomberg terminal, it shows the fact that dram prices have been bottoming out. the broader gauge has continued to climb. are you surprised at the relative resilience of the sector? dan: what is amazing, taylor, and you have the numbers in front of you. the stocks are up, i believe, 36%, year-to-date, correct? if you look at the overall technology sector, it is up about 28%. both those numbers are double the s&p 500 and the dow jones in terms of performance year-to-date, so you are right. there is just a tremendous anticipation that things have bottomed and will start improving, so you have this huge run-up in the stocks, and believe it or not, it is higher than it was before we hit the peak, then we dropped down as of last summer when we had this pullback from china and everything else.

so, it is interesting that enthusiasm for the sector. taylor: dan morgan, thank you. dan: thank you, taylor. taylor: coming up, we continue our discussion on all things about peloton's bumpy first trading day. that is next. this is bloomberg. ♪ devices are like doorways

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♪ taylor: this is "bloomberg technology." i'm taylor riggs in san francisco. back to our top story of the day, it was a bumpy ride for peloton. after initially setting the ipo price at $29 a share, the price fluctuated for setting on an opening of $27. the opening was the third worst for a mega ipo since 2008. the process of picking an opening price took a little bit less than three hours. remember, peloton, of course, still unprofitable. ceo john foley told bloomberg that the concern peloton is losing money is "semantics." to discuss, i'm here with techonomy's founder.

and here with me in san francisco, our guest. are here, let me start with you. what happened today with peloton? joe: i think what you are seeing is a restructuring change in the way the ipo market works, and peloton is as good an example is any of the ipo's we have seen over the last six months in that what we are seeing is a story about demand and access and how that has changed recently as a result of an active late stage private security market, which is happening in peloton's case 13 months earlier when you saw entities like wellington and fidelity and geithner global -- and tiger global, two of the biggest hedge funds in the world, two of the biggest mutual funds in the world, they bought peloton for $14.50 a share. peloton raised $500 million 13 months ago. as a result of that, four entities that were historically

big buyers of ipo's -- not only have they already bought what they wanted to buy, they might even be sellers at this point. and as a result, the ipo's -- and you can look at peloton and walk all the way back over the last six months -- that is a new dynamic. taylor: what are your thoughts on valuation? david: the question of what is and is not a tech company gets more and more interesting by the day for me. i heard your interview with the ceo of peloton earlier, and he was saying software is their biggest investment. he basically wants us to think of them as a tech company, but in reality, you could increasingly say the same thing about cbs or disney or so many companies -- walmart. just because a company uses a lot of software and has an app or has a screen, it does not mean that they are a tech company. this is basically a company that sells exercise equipment that is being given an $8 billion

valuation. i think that is illogical. taylor: gene munster spoke with me earlier this week and said he was really reassured by the fact that the ipo and the filing, peloton was so transparent in their numbers, relative to a nother company like wework, which has been put on the back burner for now, which was not as forthcoming with numbers. are you relieved at the amount of financial transparency we got with peloton? joe: sure. to take a step back, it's more like a $9.5 billion valuation at today's price if you take into account the 60 million shares that are options. it is actually, i would say, a bearin -- a very nice valuation. and i do think the market is ascribing a certain level of value to the subscription nature of the business, which is a very high margin business. if we want to call it technology, then we can.

we almost have to call anything today a technology component, but what does it mean with respect to the transparency? if you want to buy peloton, you want to make a bet that they are going to grow their user base, that they are going to have very low churn, and generate a lot of cash flow, that is an assessment the investor has to make, but that is a very different question of are they a tech company or are they not a tech company? it is truly a matter of how much money they make in the future. taylor: david, as we talk about financial transparency, i have to bring up wework. what is the biggest concern -- the financials or the valuation at this point? david: they are sort of inextricably connected. because if the financials were better, we would not be so concerned about the valuation. i am going to be impressed if they pull off an ipo before the end of the year at all. it does not seem likely. it is unclear what these new

actually intend at this point. i think wework is a shaky proposition as a business. if i could just go back to what joe was saying about peloton, if is ather or not peloton tech company -- and of course, revenue from subscriptions is all fine and good -- but it also has an element of faddishness. of course you make some investment in this equipment, but these things come and go as substitutes arise in the market place. so again, a $9.5 billion valuation. i was wrong. i thought $8 billion was too much. but it is $9.5 billion. it really makes me question the rationale for an investor to buy at this price. let's see whether they can actually make a real business out of it before we start throwing our money at these people. taylor: david, you mentioned you would be surprised if there was an ipo this year. we have heard that if they do not, they do need to start looking for cash. david: i know. taylor: where do they turn next

for cash? david: there was a fascinating article in "the wall street journal" about jamie dimon's relationship with adam neumann. clearly, they got a lot of support over there. i really don't know. maybe they will get it directly from mbs and the saudis. it seems like at the moment, the reputation of wework is so poor, it's going to be a rare capital holding institution that is willing to give them very much. taylor: joe, your reaction? joe: i would just say that i think despite the salacious headlines about wework, they do have some assets, and i think the same "wall street journal" article referred to what some of them could be. it strikes me that there are some parts of this business that people would be interested in. i cannot say much more than that, just that i think that while we can focus on salacious headlines, there's actually some

aspects of that business that are doing quite well. taylor: i learned a lot from this roundtable from both sides. voboril, thank you for joining me. david kirkpatrick, you will be sticking with me. maybe jamie dimon should quit his job. he pitched disney chief bob iger on a movie centered around a single woman who leads an all-female board of directors to help her pick her husband. they told the tale wednesday at the bloomberg global business forum in new york. >> it was about marriage. it was a marriage counseling thing. [laughter] >> it was about a woman who could not pick men very well, so she would have a board of directors of women who would be testing men for her and picking her husband. [laughter] >> there might be some other movie executives in the room that would be glad to consider this. >> i said bette midler should be part of the cast. taylor: iger jokingly called the pitch gutsy and gave the pitch a c.

and coming up, facebook is headed to capitol hill yet again. this time, they are sending coo sheryl sandberg. what she is likely to face questions about this time, next. this is bloomberg. ♪

taylor: facebook is negotiating with a key congressional committee for chief operating officer sheryl sandberg to testify as soon as next month. this comes as questions stir about the media giant's plans for digital currency called libra. sandberg's appearance would follow july hearings with facebook executives and libra co-founder. the discussions take place as the social media giant faces questions, as we have said, about its market power, and i really want to talk about libra. to discuss, i'm joined by kurt wegner, who covers the company

, and a still with me in new york, techonomy founder david kirkpatrick. kurt: maxine waters has been one of the staunchest opponents of libra. she has basically said, facebook, stop doing this, has a lot of questions. it will not be exclusively about that, but that will definitely be part of it, from what we are hearing. i imagine sheryl sandberg will have to brush up. the libra stuff does not actually roll up to her at facebook, so it will be interesting to know how much she is able to even answer, if she goes. david, your thoughts on libra cryptocurrency as a new venture for facebook. david: libra is an interesting idea. i think it is one of the few major initiatives facebook has proposed in the last couple of years that really makes sense from a standpoint of an actual market need. and interestingly, it seems like the central bankers of the world have sort of recognized that we

actually do need some kind of transnational transactional methodology that we don't have, and libra has put that on the table now in a way that is quite healthy. but is libra itself likely to succeed in any near-term timeframe? absolutely not. i mean, they have said clearly they will not launch without regulatory approval. they are not going to get it in any geography that i have heard about. the european union has made it quite clear they are not interested any time soon. i don't think there is really any interest in the u.s. the fed is very anxious about this idea. facebook's market power and scale combined with its privacy errors that have been so legion and other errors just make it a nonstarter, even though it is ironically a good idea. taylor: so kurt, you heard david talking about the regulatory pressure that the company is facing. this of course comes as we have headlines they are now looking

-- the doj looks like they are launching another investigation. how is it different from the ftc, which has a parallel investigation? kurt: and the state attorneys general have an investigation. and there is a house committee that is investigating. there are, i believe, four separate distinct antitrust investigations into facebook, including the one bloomberg reported on yesterday that the doj will get in. it was a bit surprising because a few months ago, there was a lot of discussion that the ftc and doj had divvied up the tech industry, and each of them taking two of the big tech giants as potential antitrust reasons so that they were not duplicate efforts. and the ftc got facebook. the doj, it sounds like, kind of felt like they were being may be left out of the fun a little bit, and now they are getting in on this. so it will be interesting to see what they each kind of look into and if they will be looking into different parts of facebook's business or if they will be stepping on each other's toes. taylor: david, should and how should facebook be broken up,

given these 4, 5, 6 investigations? david: i'm not so sure breaking up the company is the answer. finding a good answer is hard. i don't necessarily think they should be allowed to knit it together even more tightly, which is what they are currently doing. but when it comes to regulation, i think the company has erred in its strategy in that it sort of signaled that the only way it will be responsive to the public needs is if it is pressured by regulators. an example of that just occurred the other day when just as the massachusetts state lawsuit against the company was about to unseal a bunch of documents about a whole bunch of applications that facebook had barred because of their misuse of private data, facebook preemptively released an announcement about that, like, right before hand. they are constantly being pushed to do what they should have done

already only by regulation, so it is easy to understand why all the regulators want to get at them. but i really do not understand, frankly, why the ftc and doj both should be investigating them, except that now the president is seemingly upset with them, too. as he mentioned at the united nations. maybe they are just being responsive to him. taylor: interestingly enough, despite this, facebook is just brushing it off, going ahead and launching another new product with their oculus. walk me through how this makes -- how this fits into their strategy. you and i talked about how hardware is not what you think of when you think of facebook. kurt: no, it is not. this is not what they are known for. they had an oculus event yesterday where they announced a virtual world they want to build where you might literally hang out with strangers as an avatar. when the doj announcement came out -- not announcement, but when this story broke, i started thinking about all the things facebook has pushed into in the last 18 months. they launched a dating service. they bought this neuroscience

company. and obviously, they are getting the hardware as well with home portal stuff. taylor: business as usual. thank you both for joining me. and still ahead, amazon looking to write the law when it comes to regulating facial recognition. why this proposal is not sitting well with the company's critics. that's next. this is bloomberg. ♪

taylor: bitcoin extended its five-day decline, dropping below $8000 for the first time since june. bloomberg sat down earlier with the cofounder and president of coinlist in new york. company raise money through ipo's. >> it just points to the fact these are larger sellers going in and dumping to the market, not smaller sellers. there's a lot of data points that are interesting. the december futures went from a

3% premium to the spot market down to 2% backwardation, so a 2% discount to the spot market. again, these are people selling futures instruments, so the run is being caused by these larger institutional or at least large holder selloffs rather than the retail selling of the market. that is interesting. >> it is interesting, too, because i think when bitcoin peaked in december 2017, it basically, like, peaked to the day the first true futures launched. the ice the week of exchange, the first bitcoin deliverable futures, which is a weird contradiction. nonetheless, it is kind of notable that we get these sort of intense turning points right at the times when supposedly a new vehicle will end up for money to come into the market. >> that's right. i think the back launch certainly contributes to the narrative. i'm not sure how much it contributes to the actual practicality of the situation. there volumes increased over the week, but it is still fairly small compared to what has

traded on the other exchanges. it certainly affects the narrative, though. what that signals to me is the increase in comforting institutions entering the space. maybe a little bit of a contradiction in terms. we will start to see that kind of octopus of the financial industry reach its tentacles in more into the space, and i think back to the big indicator of that. >> why have we not seen the sec get more comfortable with it? it seems like we have been waiting for quite some time for them to sort of embrace this. >> i'm glad you use the word waiting. there's a lot of fear about the bad stuff the u.s. government has done. that's not really true. there has not been an assault on the space. it is really just a waiting game and a lot of gray areas. i was in d.c. earlier this week talking to regulators and legislators, and i found that it is just a game of patience. they want to make sure they

really understand the space before doing anything and there is so much of acuity at this point that it is challenging. on top of that, the markets are not quarterly. it is hard to tell who the good players are so it's tough to regulate a market like that. joe: bitcoin fell a lot this week, but a lot of the other coins -- there's a euphemism i cannot say on air for them -- were getting much worse. is there still too much garbage in this space for it to be taken seriously? just stuff that is still too frothy, too many projects that need to go so people can focus on what actually matters? >> there's a lot of garbage in the space, but what i think i do to happen there -- not think the garbage will disappear by his health. what needs to happen is other good assets in the space need to develop their own narrative and usage and have the signal outperform the noise. i do not think the noise will disappear by itself. you need to have more use cases, more adoption, and that is what will drive attention toward good products. joe: it is really rare to see anything not just rising and falling with the market. this still is not a market where good coins go up and bad coins go down. it's basically everything tends to move in the same direction. >> i think that is right.

the biggest example is that bitcoin is increasingly uncorrelated with the rest of the market, but the other assets tend to move pretty much in tandem with each other. absent freak events that affect a single asset. romaine: does it still sort of serve a purpose as a, i guess, haven asset? we saw it behave that way earlier in the year. did not necessarily behave that way over the recent bout of market volatility. andy: i think that is fair. i do think bitcoin is developing as a safe haven asset, and every event happening making people scared about existing assets is a boon to it, if you talk about china trade wars, impeachment talks, recent news of iran, that is all affecting bitcoin. people are buying into the narrative, and over time the safe haven argument will become stronger and stronger. taylor: that was andy bromberg. another story we are following, amazon facing plenty of scrutiny over the use of its facial recognition software and its

potential to be abused. ceo jeff bezos says the e-commerce giant is working with u.s. policymakers to draft regulation on the software. bezos surprise reported that -- at amazon's hardware unveiling wednesday, saying it is a perfect example of something that has really positive uses. at the same time, there's lots of potential for abuses with that kind of technology, so you do want regulation. joining me from seattle to discuss, bloomberg technology's day, who covers amazon. i want to discuss the scrutiny that brought amazon to this point where they now have to work on regulation. matt: this has been a bit of a firestorm the last year. the last few years, really. technology that matches an image or video of a face up to any sort of set of images in a collection. it has gotten to the point where it is pretty good and is commercially available for the first time, so amazon is not the only one with a product on the market, but they are one of the more high-profile cases.

civil liberties groups have gone after them pretty hard in the last year, contending that just the existence of these products risk to civil liberties. taylor: generally, what do we know about the draft legislation that is in the works? matt: we don't know a whole lot. bezos was not specific. he was rushed away by aides. he had more stuff to do right after he made his comments last evening. we do know amazon came out with a set of principles it was going -- he was going to recommend in case of potential regulation, things like government should be transparent if they are using facial recognition technologies in spaces where that technology is active. people should know that it is happening. but amazon, of course, stopped short of endorsing any sort of ban on the sale of certain recognition tools. they want to keep the market going on its own. taylor: do you assume or agree this is in jeff bezos' interest? oris the one writing

proposing legislation, he controls the narrative. matt: i think that is why companies like amazon have decided to speak up about this a little more, just the pressure that if something is going to be done, they might as well have a seat at the table. i think that is what you have seen from amazon in the last positionhange from a of, we don't really want to talk about this because the technology is fine and i'm not really interested in further conversations, to a blog post outlining where they would stand and these potential discussions about potential regulation and being a party to those talks. taylor: what are critics and aclu, in particular, saying in response? matt: a lot of critics want a broader pause and reevaluation of this. they say we should slow down. this stuff should not be available in such wide circulation, that we are not really thinking through the impacts of new technology. they bring up historic cases of new technology or surveillances being used to hurt marginalized groups. and i think they push more for a total pause on this in the way that purveyors of this tech

like amazon and microsoft and friends would not support. taylor: but there has not been a total pause yet. how is amazon working with current law enforcement and still using this technology? matt: we are not sure how many adopters it has. this really came to light because amazon talked about a couple of use cases, experiments out in the wild. there was a sheriff's office in the state of oregon, and it was the city of orlando piloting the tech. a lot of the user face duringtion went quiet this firestorm, so we are not sure how widespread it is. there has been sort of widespread speculation, particularly on the part of critics, that this product on the market from amazon is likely to be used by the u.s. government, and particularly by ice. taylor: thank you to bloomberg's matt day in seattle. that does it for this edition of "bloomberg technology," which is livestreaming on twitter. check us out @technology. be sure to follow our global

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