♪ ♪ taylor: i am taylor riggs in san francisco. this is "bloomberg technology." coming up in the next half-hour, listening in. mark zuckerberg. why the network ceo is ready to go to the mat against the u.s. government. plus, back in brazil, uber is reentering brazil's slums. they say this time around, they will look at the opportunity

that awaits. executives andv. -- executives and v.c.'s will meet to discuss whether the system for ipo's is working. could there be an easier solution? but first, to our top story. facebook ceo mark zuckerberg is willing to take on the government if elizabeth warren wins the presidency. about a july verge meeting with employees. toif elizabeth warren wants break up the company, i expect we will win the legal challenge, does that suck for us? yes, i do not want the have a

major lawsuit against our own government. that is not the position you want to be in. we care about our country and went to work with our government and do good things, but at the end of the day, if someone is going to try to threaten something like that, you go to the mat and fight. taylor: zuckerberg also spoke on other topics, including their cryptocurrency, libra, and the competition with the chinese social app tiktok. and there is a lobbying group that represents big tech companies like facebook and google, a guest, and with me is sarah frier, who covers facebook for us. so first, sarah, give us your take on what zuckerberg is saying, that they are ready to fight. >> if you look at the way they are going, they had a fine from

the ftc this year, which was a slap on the wrist in many respects. he has had a pretty good track record of coming up against the u.s. government and winning, so it is not surprising to me that he thinks it would totally also," in his words, but a little surprising to be declaring victory so soon before it happens. taylor: yes. let me bring you in here. from your perspective, how concerned are you about companies like facebook and big tech when they think about someone like elizabeth warren getting the presidency. >> thank you for having me. what you are seeing is mark zuckerberg being very transparent at excited about what is going on. there are a lot of businesses, not just in the tech sector but across the spectrum that are worried about the notion of just being broken up because they are big, and what you are seeing here today is mark zuckerberg talking about the rule of law and the fact that under the existing rule of law, the government just does not have a

case to bring against facebook. carl, how prepared or not prepared are these companies to take on what could be a serious legal challenge? carl: i think all of these businesses have looked back over the past decade and have seen what has gone on, what has transpired, and they are fired up, ready for enforcement action against them, and they have got great legal standing and great attorneys, and more importantly, they have the rule of law on their side. taylor: sarah, it is really broughting that carl this up. what about being transparent on facebook, saying this is the whole thing and posting it on facebook? he has no choice. zuckerberg has had a lot of gas over the past years and has been asked to testify by many governments and has said no. he testified in the u.s. and

europe, but there have been a lot of questions about whether he will come to the u.k., whether he will go again to togress, and this is a way say, "look, this is the way i am when i am raw, when i am not being turned into memes, in front of the camera, in front of congressional testimony." this is how he is, and you can tell he is much more natural this way. he does it every week. they sent it to all of the employees. they could watch it over the weekend. it is a tradition there. it is very interesting to see him in his element. sort of ad is this rally of the troops, if you will, or does this hurt morale? a weeklygs that are on basis are exposed? sarah: this is the first time i can remember that a full audio transcript has been released, so it does speak to the tension

within the employee ranks, that a lot of employees are not sure if they are working for a company that is on the right side of history, and they are questioning him. you see in the transcript that they ask him about his voting power several times, and some challenges authority at the top of facebook, and he responds by saying, by referring to something that happened in 2006, as the reason why he has authority, the fact that he turned down a $1 billion acquisition offer from yahoo!, so it is very interesting to see how he goes up against those questions over and over. to be fair, iarl, want to bring in a tweet from senator elizabeth warren, and it is that it is a corrupt system that allows facebook to engage in corrupt practices and to protect -- what do you think of elizabeth warren's response?

carl: there is a lot to unpack in that question. whether it is anti-competitive, it is hard to say there is no competition when you see mark zuckerberg expressing internally that they are worried about new market entrants, like tiktok. then they had the settlement with the ftc, and as i said before, they were lucky to even get that out of them, and in respect to protecting our democracy, we are here on bloomberg tv. i do not think michael bloomberg is going to use this network to change the outcome of the election any more than i think mark zuckerberg would use facebook, so i just think that senator warren is throwing stuff at facebook, and maybe that helps her in the polls. taylor: carl, i want to bring up another update that the verge obtained. take a listen. amazon -- a google or

it does not make election interference less likely. it makes it more likely. your reaction to zuckerberg saying that breaking up big tech, whether it be amazon, facebook, or google, does not solve the problem, which makes it harder to regulate, because instead of one big company, it is 20 companies. is not about regulating 20 companies. there are many agencies that have oversight over the tech industry, but it is also the notion of having a centralized place where platforms can figure out what content is spam, what content are bots, what content is coming from overseas, and then in a more comprehensive fashion address those problems, so that is what i think mark is talking about here. since facebook is large, they do have the financial backing and ability to see many different

routes of attack so they can protect american interests and american democracy. sarah, talk about facebook's argument forget i have heard this from experts. a buzzfeedsebook argument. i have heard this from experts. sarah: i have heard this over and over. i just do not buy it. certainly, you can say if you're finding this problem on instagram, you might find it on messenger, too, and you might find it on whatsapp, but there are collaborations they have done with companies outside of facebook. they take down terrorist content, and they share this among themselves. they do the same thing with child exploitation content. all of the companies can take it down it once, so if the companies are broken up, you could easily have that same kind

of arrangement, where they all share information broadly. quickly, toh, competition, because carl very smartly brought it competition, and facebook talking about tiktok, and facebook is responding to the competition by developing, i believe, lasso. did we learn anything more about that product? sarah: it is really interesting that zuckerberg wants to push tokt in countries where tik is not that big and also that he as instagram explore means instagram stories, and that he will try to shift instagram in that direction. he has tried that many times over the years, copying products, trying to push them out to a similar user base, but we really have not seen that really take hold except for with instagram stories, so it is

always a shot in the dark. we will see if it works, but it is very interesting that tiktok is the new existential threat for facebook. taylor: carl and sarah, thank you both for joining me. now, sony has cut the price of its playstation now price in half, and this now a flex the increasing competition online. sony also said -- and this now demonstrate the increasing competition online. sony is the industry leader in video games. and coming up, a favorite of 21 facings, forever bankruptcy. we discussed, next. this is bloomberg. ♪

millennial mainstay forever 21 has filed for bankruptcy, saying it obtained millions in financing to help it stay afloat, but the bankruptcy shows another sign of the punishing pressures of the broader retail a pop looks -- retail apocalypse facing brick and mortar chains. a colonist joins me from washington. when you take a look at -- a columnist joins me from washington. when you look at this and their online retail presence -- >> that is certainly a part of what happened here. they said e-commerce comprised 16% of their sales in the court filing, and that would be a lower penetration than we see for the apparel business

overall, and you just do not have to look that far to see the companies that are sort of eating forever 21's lunch in this space. i think fashion nova is a good one. they were an early pioneer that was building a brand that was tailored from instagram from the start, and i think that forever 21 has suffered at the hands of brands like that. taylor: you mentioned instagram. talk to me. how has this changed the way these fashion retailers can or cannot survive? sarah: a lot of these retailers have had to partner with influencers, and they have gotten with the huge names like sell theirer to products, and instagram is also rolling out features like shop a bowl posts, where all of the brands have to figure out -- ts, were all of the

brands have to figure out how to do it. -- where all of the brands have to figure out how to do it. it is really important. taylor: we know the story of forever 21, a 15 percent penetration rate online in this day and age does not cut it, and you have the e-commerce subscription models. the list goes on, really disrupting this market. aat is the difference with subscription-based model? what are they doing to disrupt the market? sarah: one of them is really a date at play, trying to amass all of the data on their -- really a data play, trying to amass all of the data. they are not thinking of merchandising as an art but as a real science, so thinking of everything from the measurement of a sleeve to the aesthetic of a particular garment. all of that is based on feedback they are getting from customers,

so the theory is they are going to be able to manage their inventory in a smarter way and just create a more pleasing experience for customers over the long haul. -- fastshion has fashion has been going with letting 1000 flowers bloom type of a model. some of these are going to be hits, and some are going to be mrs., so -- are going to be misses, so they are bringing new things to the game. theme, is this a general that you have to be, like you said, more science-based, more data based, in order to succeed in this market? forever 21 over expanded their stores too quickly. they had stores that were huge, 35,000 square feet, and maybe they only needed to be 10,000 square feet, so there are some things specific to the decisions they made, but there is no doubt

that data is going to play a huge role on merchandising decisions and more in your stores and website, and we are still at this place right now where retailers have a lot of data, and they do not know how to harness it, and the ones who figure out how to use it and make it actionable, those are going to be the ones that win. science,ata and finally entering the retail world. sarah, thank you for joining me. coming up, uber has been missing from brazil's favelas for years. ridersy keep drivers and safe? next. this is bloomberg. ♪

in brazil, sao paulo is

market, but for years, they have avoided the biggest region, the favelas, for the safety of riders and passengers, but now it is making another attempt to bring rideshare back there, and they have a new program to keep people safe. to tell me about it down in são paulo, our reporter is standing by. she wrote about this in the latest issue of "bloomberg businessweek." thank you for joining me, and for the classic bloomberg size and scope, tell me of the importance of brazil and são paulo to uber? reporter: actually, são paulo is brazil's largest market, and they also told me that two other large cities, mexico city and rio de janeiro, are among their

top five, so it is a very significant market for uber. taylor: fabiola, this is not uber's first attempt to go into the favelas. tell me about the difference with years ago. in 2014, they were very aggressive, expanding all over the city, and a couple of years later, a wave of violence against their drivers led to at uber does uber does not confirm those numbers. they are pretty scary, right? and this time around, they decided to partner with local entities that foster development inside the poor neighborhoods, and assess the whole region, and design pickup points to make sure drivers and riders are safer around the favelas and not

necessarily getting into sidestreets, areas that are poorly lighted. taylor: is that strategy working? do drivers and riders feel safe? to the ones iding spoke to, yes, they feel safer, including those inside these communities, and there are large communities in brazil. at least 10 million people live in the favelas, and they circle around these communities, $20 billion a year, taylor, to have an idea, so it is an important market, and it is growing pretty fast. last week, just last week, there was a renewed wave of violence against uber drivers, not just well, soother apps as they have to decide if this is

the right approach or not, but it seems to be working well. taylor: one of the other approaches you were discussing was working with development authorities that are local and other people on the ground. is that how they were accepted back in the favelas? is that the right strategy this time? they were much more careful this time, talking to the residents, and there is a theyfic favela, and sponsored soccer matches and events. they were in depth in the community to understand their needs, and they also had a fair to help get more drivers from inside this community, so the community is pretty happy. i spoke to a person who has a stand at the pickup point that uber installed, and it is a physical pickup spot with wi-fi

and benches, something i have not seen in other areas in são paulo, and he said his business is doing pretty well. his pickup point. riders told me it is much easier to get an uber in a favela. the groundzing on reporting. moura, joining me from são paulo. shares of apple closed on tuesday within striking distance of record levels, with the new iphone models seeing strong demand. ceo tim cook said sales of the very strongw a start, and he could not be happier with the launch. recordclosed below the from one year ago. ad there was an upgrade of trio of semi conductor stocks, with demand.

and microchip technology and a semiconductor company were raised to sector overweight. it is said that for the first time in several quarters, we are not seeing demand trends getting worse. analysts have raised the price target of snap from $11 a share to $14 a share, talking about strong trends in the quarter. that while said there has been concerned about a recent spike in users, there is the viral success of their filters would not be sustained, but it does appear that snap has maintained a firm grasp on the users and has grown its base even further. and coming up, a tough year. toicon investors are meeting look at redesigning the whole process. this is bloomberg. ♪

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this is bloomberg technology. i'm taylor riggs. silicon valley is looking to disrupt the ipo business. areenture capitalists an meeting tuesday to discuss whether the system for public offering is still working, after a year of many of the biggest deals slumped. to discuss, i am joined by olivia carville. let me start with you, what are we looking at during the tech ipo summit going on today? >> there's a lot going on with

the direct listing model in particular. we have had two very big ones, spotify last year and then slack this year. slack went smoothly and airbnb is reporting one as well. this is a model becoming much more commonplace so who do we have at the event today? not only venture capitalists but hundreds of privately held companies and executives invited to consider this model. lawyers as well as market makers , president of the new york stock exchange, a lot of people able to make this happen. taylor: what is the issue at stake because i cannot wrap my head around it? overvaluation, the fact a lot of the ipos have gotten well? what are they still concerned about? sonali: the venture capital community for a very long time have not liked the fact there is an ipo pot, which means there is money left in the table. this is not the same for everybody. if you are a major investor and invited to the ipo, you like

that you were brought in early. the venture capitalists like the direct listing model because presumably it is smoother into the ipo. the market sets the price rather than investors. right now if we think about what ritterening, we have jay that did a lot of research about what they call a systematic mispricing of the ipo model. morgan0% on average, stanley and jp morgan. taylor: olivia, talk to me about the differences between the ipo market and direct listing. if you are a company that needs to raise new money, you probably need an ipo because a direct listing does not give you new cash, right? olivia: correct. the difference with a company like airbnb, a private valuation of $41 billion. last quarter, more than $1 billion. they don't actually need to raise any additional capital.

that is one of the points of difference between a point of listing and ipo. you don't raise any additional capital. for airbnb, it could be a benefit to go down this road because not only do they have to not deal with raising additional capital, that don't have to deal with traditional ipowith tradit. and it can be seen as a more streamlined or simple process to access the public market. taylor: olivia, with airbnb, we are hearing rumors perhaps they might or are considering a direct listing. specifically with airbnb, why direct list? olivia: there are a few things we could talk about with airbnb. one of the benefits is the fact that only to raise additional capital, as always saying. another issue with the company at the moment is they have employees or longtime employees who are keen on cashing out. they want access to that money. in order to do so, the company needs to go public.

with direct listing, you are listing shares directly on a stock exchange without going through the traditional ipo roadshow. the company will be able to sidestep wall street and avoid some of the underwriting fees. but they are also allowing those insiders to cash out. taylor: sonali, what is a key takewaway? does direct listing take away the proportion? sonali: the ipo market is a big market. international firms, private equity firms, that is the way the exit as well. the ipo model works for a lot of firms and a lot of firms need to raise that money. so, lo and behold, there were still a greater demand for direct listings than there were in the past. it is something in the direct listing process, it cuts out a lot of the banks involved and usually there are only a couple that matter. some banks are still very important in the process and get a lot of fees from these

listings but it is a smaller amount of firms. you have market makers that are playing a larger role as well. taylor: sonali basek and olivia carville, thank you both. i want to stick with his general theme of ipo's. we have been watching wework hit the possible and on the ipo on monday. the company said it is exploring the sale of the minority stake into a female focused co-working startup. it is both a we work competitor which involves one of its investments, known for its mission of women empowerment. to discuss, i am joined by ellen huet. what is really interesting is the cofounder, we want to get back to basics, focus on the core business. is that part of that strategy? ellen: it is a puzzling question because when wework invested in wing, $32 million investment in 2017. of all the investments wework

made, this one made a lot of sense. i different co-working model. a slightly more targeted demographic for its customers, but it is co-working, close to wework's core business. the business has invested in a wave pool company, all sorts of stuff that usually leaves company scratching their heads. taylor: not only co-working, which is aligned with the business model, but it is supposed to be empowering a female working environment of which wework has been criticized for having an all-male board and not doing enough to be more inclusive. odds withnot go at that mission as well? ellen: i am reading the tea leaves. it seems odd that this would be one of the first investments they want to the vest from. maybe this is something that is going to be just part of a pattern with wework where they

are really cutting back, and maybe investments in wing that seems to make sense on the surface are not going to be aligned, not going to be something to keep going forward. taylor: we have heard other rumors, selling off a private jet they have. that could make more sense from the pure headline perspective, let's say. do we know how much money all of these investments are expected to raise? ellen: i think that is also a big question mark. a lot of the investments were mixes on stock and cash. talking about acquisitions as well as investments. wing was an investment two years ago. some of these other things selling off were acquisitions, companies that were purchased by wework that are maybe being sold now. it is unclear what sort of return they are getting. has beenll tone questioning whether it is worth it for wework to go through

selling these companies. they were not huge acquisitions to begin with so it is unclear how much they recoup. taylor: any indication of what those companies' reaction has been like? another investment wework, what they have been saying? ellen: for wing, it has been a question of is wework more of a helper or investor, or they would end up being too close in becoming competitors on a higher level? i know the women who run wing are very ambitious and have a lot of plans for making it a huge network, not just of members part of the co-working spaces, but a network of professional women. it is possible that may the relationship was one where both sides were ok with the idea of divesting. currently, there is a wework executive on the wing board. the copresident and also hold

titles like the general counsel. taylor: wework is looking to gain cash by selling off investments. where do they stand in terms of cash on hand? ellen: cash on hand is running out. this is part of the pressure on getting this new loan we reported. instead of the $6 billion loan available to them, now it seems like they are in talks about a different $3 billion loan. they need cash to keep going. taylor: new talks, new terms. ellen, thank you for joining me. coming up, do you know what the world's most use digital currency is? the answer may surprise you. we take a look at that next. this is bloomberg. ♪

taylor: now back to our top story. the audio of mark zuckerberg from a company meeting obtained. during that employee gathering, the facebook cl was her defending the company's controversial cryptocurrency libre. a. >> the public tends to be more dramatic, but the bigger thing is engagement with regulators around the world. and less dramatic. those meetings are not being placed on camera, but that is where a lot of discussions and details get hashed out. taylor: to discuss, i would like to welcome spencer bogart's, general partner at blockchain capital partners. libra and all these cryptocurrencies, what is the general tone when it comes to working with regulators right now? spencer: in the case of something like bitcoin, there is

no one to work with the regulator and that is part of the point. it highlights differences in design that something like libra has. do i think libra could be an interesting project? absolutely. do they have their work cut out for them? most definitely. taylor: urinalysis, which struck me, you actually increased polarization. why? spencer: when you look at the underlying basket, they published what they looked like. if you think a lot of the holders of this might be people outside the u.s., particularly -- the purpose is to help unbank populations. all of a sudden, they would have access to usd where they previously would not. congressle in testified, many of the senators were concerned, whether it would infringe on the dollars and the currency's status. it would probably help cement the status. away is your tecake

regardless what happens to libra is the general theme is not going away. there will be some kind of crypto coin or currency that investors or people are looking to use instead of the dollar, right? spencer: i think in the case of libra, it is still backed by these currencies and i think we will still see more efforts. we see it from the large crypto exchanges as a competing effort. i think we will see more shots on goal as people trying to roll out an effort like this and maybe from someone less contentious than libra. i think libra has a good chance. taylor: another story we looked at was tether, by trading volume, more than bitcoin even though bitcoin is still more popular. why? spencer: two things to be helpful is nuance. one would be to design cryptocurrency. tether is a digital asset perhaps, but because it is backed by usd it is different than something like bitcoin, right? the second thing, the use.

tether's main purpose is a liquidity tool on top of exchanges and facilitates transfer funds. in that respect, the trading volume is a good flexion of its actual usage. in the case of bitcoin, trading volume is not indicative of its actual usage. i am using bitcoin today but i have not traded it. taylor: has the volatility of bitcoin pushed people into more of these stable coins? spencer: i think the occupy do two different realms. i think people interested investing in bitcoin, something that is stable would preclude the point of investment in the first place. but something like tether is useful considering a lot of traders in the space are dollar-denominated investors. if the alternative is they are trading crypto assets against bitcoin, that is not work as well if you are trying to denominate all your returns in usd. something like tether that is stable and where they can

denominate the returns in usd has value. taylor: where are we with libra, bitcoin, tether -- the differences between all of them and the regulations? spencer: bitcoin is at the safest end. regulators have been clear this is not a security. it is much closer to a commodity. its regulatory status is in the clear. something like tether is somewhat uncertain at this point. it is regulated by certain currencies book not necessarily by the u.s. something like libra, it is very uncertain at this point. we are waiting for final design specs and waiting to see what happens with regulators. taylor: spencer bogart of blockchain capital, thank you for joining me. on tuesday, ups announced a milestone in this development of drones used for delivery. david westin spoke earlier with the chairman and ceo of united

parcel service and asked about the approval by the sec and why it is so important. >> it's high-value but time of is of the essence. some of these big hospital campuses, it could take you 30 minutes to go from one end to the other because you have to go around the buildings, red lights, and busy streets. oft this allows is a matter two or three or four minutes, we hospital -- to the lab in three or four minutes and that saves so much time. they could take just hours previously. that is why we started out here. let me give you a life to death example that could happen. aswill use wake me hospitald an example. they have multiple clinics around the raleigh area first

snake bite venom, antivenom. have one does because it is so expensive, it is not used frequently and it expires. now they can have the one dose new matter where the patient comes in. we can deliver it to the facility the patient is at in the matter of minutes. that could be an actual life or death situation so we are excited about that. david w.: this is beyond line of sight. th between campuses, i know some are vast, but can you go between campuses? david: yes, we will be able to go between campuses. that is one of the very interesting parts of this. the, as the faa finishes rights, we will see different applications, including at some

point, we will see at home deliveries especially in rural and suburban areas. so, we are excited about where we are. we are way ahead of anyone else but there is much more to come and ups is going to lead the way. david w.: give us a peek into that. health, high-value product and some urgency. what is the next area that make sense for ups? david: first, when it comes to health care, we expect to be -- we are in wake med. we expect to be in dozens and over 100 sites. there is a lot of expansion in health in different products. then, we will look at other campus like environments. whether it is education or other large corporate office type situations where you can have that same value proposition. somehen, we believe at

point and when the rights are written, we can take a ups package car and as the driver is delivering their route, have a drone docking station at the top of the car and the drone just continues to meet the package car and maybe delivering it at the same time we are delivering. there are all kinds of potential weaken can enable our drivers with. taylor: that was ups ceo david abney with david westin. still ahead, shares of the biggest online brokerages plunged today after charles schwab announced plans to get rid of commission for online trade. we have the story next. this is bloomberg. ♪

taylor: shares of the biggest online brokerages plunged on

tuesday after market leader charles schwab announced plans to get rid of commission for u.s. stocks, etf's and options. the latest shop in an escalating price war. rivals will be pressured to make their own cuts. to discuss, i am joined by john gittelsohn in los angeles. we have been talking about this for ages. his charles schwab playing catch-up or are they leading the industry on this? john: they are saying they are feeling pressure from newcomers to the neighborhood. companies like betterment, are offering services so charles schwab is saying this is happening anyway so let's get ahead of it. why wait was the word from the chief financial officer of charles schwab. taylor: how long can all of these companies survive if i am not paying to use them?

john: that is a really good question. we will see. i think there will be a lot of consolidation in the industry. the ones that cannot figure out a model to survive, they won't survive. we don't know. e*trade has talked about being a target for acquisition for a long time. schwab has other sources of revenue. it mainly operates like a bank and gets the majority of its income from net interest margins. in other words, a lot of the account holders have cash accounts and it makes money on the interest spread. taylor: consolidation and net interest margin, as you mentioned, what other sources of revenue can we see given the rates? john: a lot of the asset managers want their funds listed on schwab so they charge fees for that. there are other services they can charge fees for like advice, although that is getting very competitive to with the robo advisors out there. and then there are different

security,like lending margin trading options. there are more advanced types of securities. if you short shares, people pay to borrow shares to short them. there are other ways these firms can make money. but everything is getting squeezed. taylor: you have been covering asset managers for years and years. how does this whole thing begin? was it the move to passive, the rise of etf's? how did we get to the place where consolidation and other sources of revenue were the only way for some of these companies to survive? john: it dates back even further. charlesk to the 1970's, schwab itself started off as a discount broker. when the sec said there are no limits on commissions, a lot of wall street firms said let's raise commissions in that case. schwab said no, let's cut commissions. that is how they started getting business to begin with.

their whole history has been cutting fees. they have what is called the virtuous cycle where they say we cut fees, cut expenses for consumers. we get more consumers using our services and we are able to increase our overall revenue by having a bigger pie. that rewards are shareholders -- our shareholders. so far, it has been paying off. taylor: quickly, the consumers win. who loses? john: the people who lose are the people in the advice asset management, and stock brokerage industries. those guys who many of our viewers are out there making their money off securities. they better consider the future of my career. taylor: john gittelsohn, thank you for joining me. that does it for this addition of bloomberg technology. bloomberg technology is livestreaming on twitter. check us out. follower global breaking news

network, tictoc, on twitter. this is bloomberg. ♪

paul: welcome to daybreak australia. i am paul allen. shery: i am sherry ahn. we are counting down to asia's major market open. ♪ paul: the top stories we are covering in the next hour -- the world economy sounds the alarm as new data shows manufacturing, exports and sentiment stuck in a slump. auto sales stalling in the u.s. toyota sees declines. and the unrest in hong