♪ taylor: i'm taylor riggs. this is the "best of bloomberg technology," where we bring you all of our top interviews from this week in tech. coming up, tech earnings. -- earnings launch. netflix delivers a wall street surprise. we have details, plus a preview of all the rest on deck. plus, another week of head scratching over wework. investors wonder whether it will be jpmorgan or softbank will rescue the co-working space

company. we will have the latest. and cryptocurrency crusader. facebook's david marcus sits down with us to talk about the embattled libra digital currency project as well as regulatory hurdles. tech earnings started in earnest this week with netflix being one of the most highly anticipated. the streaming giant impressed wall street amidst stiffer competition. international growth contributed to a positive report despite new u.s. subscribers falling short of estimate. revenue climbed 31% to $5.2 billion. i dug into the details with bloomberg's lucas shaw. lucas: i think the story is that investors were clearly worried that netflix would have another bad quarter. they disappointed in the second. they added a few million customers fewer than expected, and investors expected another bad one.

one i spoke to said that sentiment was awful. yet they come in right around expectations. they missed in the u.s., but they were above internationally, and that is where netflix has been telling people for years where future is. it's a sign of where netflix is going. that while they will have one of their worst years in the u.s. this year, they will have one of their best years internationally. that's because they have shows that are clearly resonating in europe, latin america, and asia. and again, in a sign of confidence, netflix, in the upcoming quarter, is going to start breaking out its subscribers by region, which suggests they now feel confident enough in the numbers and some of those areas to talk about it, which they have not previously. taylor: lucas, talk to me about the domestic number. they are reversing a decline. is it enough? lucas: you know, i don't know. i don't know how concerned people are. netflix has cleared the $60 million subscriber threshold. which is what ceo reed hastings headset as the bottom. he projected 60 million or 90 million in the u.s., this was a while, but they keep using it.

they are going to clear 60 million but will only add about 2.7 million this year. they have historically been adding about 5 million per year. they say it's because of a price hike and maybe next year they are up to 3 million or 4 million. but they also will be facing a lot more competition from disney, apple, at&t, and comcast. i think we are setting into something of a new reality for netflix in the u.s. where, after years of growing at 5 million a year, maybe it adds three or 4 million per year. if they can keep that going, it will be ok, because they will get to 70 million or 80 million in the u.s., which is a pretty good number provided they are growing overseas. and the thing to keep in mind is that they are now generating more money from each of these customers. the revenue per customer is up. and the margin on those customers is up because the price increases have worked without costing them too much. taylor: that was bloomberg's lucas shaw. analysts had no shortage of reactions to netflix. macquarrie said, "in some ways,

netflix denies the naysayers." an e-marketer analyst joined me with his analysis after the report. >> the biggest take away is that ultimately subscriber growth is slowing in the u.s. they missed very slightly on their previous guidance. and this is after a negative q2. what this means going into q4 as well as 2020 is that they are not growing as much as they had in the past that is partially householdsf of all in the u.s. subscribe to netflix at the moment. and this is really concerning moving into the new reality of competition with disney, at&t, apple. previously, companies like disney and at&t provided a lot of content for netflix. and they were partners in a lot of ways. now, they are turning to competitors. and this is becoming very difficult -- this is a difficult problem for netflix to solve, moving forward. taylor: ok, so you bring up the competition. let's go there. all we heard from the company is that next quarter will bring some modest headwinds to the company, given the competition.

how much can they withstand? the fact, in the fourth quarter, you are getting companies like apple tv+, you name it, disney coming, how strong is that competition? eric: there is a lot of excitement, around disney in particular. but the thing to realize as well is that a lot of these other services, disney, apple, as well as old competitors like amazon that are still very, very strong, they don't necessarily have to turn a profit on streaming video on itself. apple is really using their service to sell more iphones. amazon is using the service to sell more of everything. and disney is using their service to draw people into their entertainment ecosystem. what this means for netflix is that they have to be more careful on price moving forward. when, for example, apple is giving out their apple tv+ service for free with a new device purchase, what this means is that netflix is going to have to be more careful moving forward raising prices, especially if they want to keep

their current subscribers. taylor: although the price hikes are trying to offset the negative free cash flow, this is the story we know about the company. if you come take a look at a chart i'm showing you my terminal, it is the classic negative free cash flow that we see from the company. that current quarter has yet to be pulled into that. but again, it is a negative number. that's pretty much all we need to know. what are you hearing from the company about potentially flatlining to eventually a positive free cash flow scenario? eric: well, they raise prices to ultimately improve their profitability as well as their cash flow. but again, subscriber is the base of their business. when they want to -- when we start talking about profitability, cash flow, it all starts at that subscriber. and if they start losing subscribers in the largest market, the u.s., that is going to be very difficult for them, moving forward. i don't think that they will lose, but it's going to be difficult for them to grow. taylor: that was eric haggstrom of emarketer.

ibm also reported earnings wednesday. the company reported revenue that missed the lowest analyst estimates. it was a fifth period of decline. total revenue was $18 billion. in july, ibm completed the purchase of the open source software company red hat for $34 billion. analysts had looked for signs that the megadeal would drive growth. as for what next week holds, we will get results from big tech companies like amazon and twitter. for more on what to expect, i spoke with mark mahaney of ibc on thursday. >> they are going to add 2.5 million subscribers this year, just in the u.s. netflix has added about 5 million subs a year. so when the growth slows down, it tells you that you are far along the s-curve, in terms of penetration. now you have to caveat that with one thing, netflix did not post a price increase, and it is the biggest they have ever implement.

because it took their low price from $7.99 to $8.99. i think that is the issue for netflix. i think they overstated or overthought or overestimated how much pricing power they had. it will take them a couple of quarters to work through that. i think they are still deep along the s-curve in the u.s., but plenty of growth opportunities overseas. taylor: they did talk about how some of that price increase was pressuring them a little bit in terms of new subscribers. does it make sense for them to adopt a low-price ad-supported model, for example? mark: possibly. one, i don't think they are going to do it, having asked them that question about a dozen times over the last few years. i do not think they are interested in it. maybe they will change their mind in the future. possibly, they could introduce a lower price subscription plan, but i don't think they will do that. they have a lot of confidence, and maybe it is arrogance, that the content, the quality and the amount -- the quantity and quality of content they have is enough to justify the $7.99. frankly, i think it probably is. it is a dollar more -- their base price is one dollar more than disney, but you get a lot

more content been disney. i think it is actually justified. would it help them to go to a lower price point? probably, but i don't think they will do it. taylor: would it make sense to buy a hollywood studio? they are one of the few competitors that are not in a blockbuster movie theater. the said their content would not be out there. with a be able to just buy a hollywood studio and be able to get distribution that way? mark: possibly. i don't think so. i thought you were going to go the other way and talk about if they would get more into the production side rather than the distribution side. i could see them vertically integrating into production, not so much into distribution. i think they are pretty happy with home distribution. yeah, i think that is kind of where the growth is. look, this revolution we are living in is not going to be televised. it's going to be streamed. everybody is going to streaming. disney, apple, time warner, comcast. i think netflix is in the right business. the question is do they keep executing well and develop good enough content to justify the price points they offer? taylor: you have brought up all of the competitors. mark: yes. taylor: of those competitors, who is best positioned to take on a company like netflix? mark: only disney. i don't think apple is, really, unless they want to put a lot of money into content, which i don't know that they do. and they also have to come up

with a more compelling service. you cannot just throw money against this problem and assume you get it right. netflix has been doing this long time. netflix has five times as many subscribers as anybody else. it does give them a scale advantage. and i want to get one thing really clear. the battle here is in international markets. next year, netflix is going to roll out 130 new local language series in international markets. i am talking about the philippines, turkey, nigeria -- i mean everywhere around the world. that's where the sub growth is. and i think netflix is way ahead of the curve on this. that's their big advantage right now. a lot of problems near-term, but that is their big advantage long-term. taylor: you also cover roku. mark: yes. taylor: is international growth key to roku's expansion? mark: there are two things that are key to roku. one is that it is a great play in the streaming wars. all of these new streaming services, in order to get subs, they are going to have to advertise somewhere. they are going to have to advertise on roku because roku already has 30 million streaming subscriptions. secondly, if you start your subscription on roku, you will have to share some of that with roku going forwards.

and third, anything that leads to the diversification of content is beneficial for a kind of fitterling, which roku is. international is part of the growth strategy, but they have barely scratched it, so, yes, if they knock the cover off the ball in international markets as they've done in the u.s., the stock could triple from here. taylor: i want to switch gears a little bit and talk about facebook. mark: ok. taylor: there's been a lot of rumors this week and talks about libra, if the cryptocurrency works, if it doesn't. is facebook doing the right strategy by going out on these new ventures, or do you think they should just stick to their core business? mark: i don't know. you are asking a good question. libra -- look, they have these wonderful assets. one is facebook messenger and is whatsapp. one these are the two most popular messaging applications in the world, and right now, they generate about zero in revenue for the company. so could they monetize it through advertising? they are pretty good at doing that, so they should probably try that first. could they create a wallet around it? yes. does it have to be a crypto-financed wallet? i don't know. that was always the question in my mind. why do we have to go libra?

but i think it's too early to call whether that was the right move or not. that they think about monetizing it through a wallet, i think it is a very good idea. taylor: as you assess the earnings landscape, what is your top pick this season? mark: what i think right now it is facebook, only on the earnings. and facebook is the most interesting because -- i know we just discussed about the libra issue. the rest of the business i think is humming. this company is going to do north of 30% revenue growth this year. i know there's a lot of overhangs on it. but this stock trades at a -- i know you are going to ask about regulation. but this stock trades at a discount to its growth rate. you rarely see companies sustainably trade at a discount to growth rate. there are 18 times cap earnings for a 27% earnings. there will be an arbitrage there, and the multiples are likely to go up. when it does, it's hard to know. sometime in the next 12 months to 18 months, i think there is a material, re-rating in the stock. taylor: that was rbc's mark mahaney. coming up, facebook ceo mark zuckerberg defends free speech on the internet in georgetown university on thursday. we will have more on his

appearance, plus reaction. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg , and in therg.com , u.s., on sirius xm. this is bloomberg. ♪

taylor: facebook ceo mark zuckerberg made an appearance at georgetown university thursday. there, he defended free speech on the internet and staked out the social network's position on the matter. mark: we don't do this to help politicians but because we think people should be able to see for themselves what politicians are saying. for the same reason, if content is newsworthy, we won't take it down, even if it would otherwise conflict with some of our standards. now, i know many people disagree with us. but, in general, i don't think it is right for a private company to censor politicians or the news in a democracy. taylor: for more on the appearance and message, i talked kurtoomberg technology's

wagner. kurt: you have a ceo currently talking with four antitrust organizations talking about decentralized power and how his platform is actually good for people. he talked about the power of being able to reach the masses, kind of this power of scale as being the fifth estate, actually, is what he was talking about today. and so, you know, overall, there were a lot of talking points from facebook that we had heard before, but i think some of the keys were, "we are actually doing a good thing by giving people a voice." we are supporting politicians by not pulling down their ads and being worried about the accuracy of political ads. and then he also kind of brought up this threat of china, which is something he has done before, and really just said if we don't do this, china might come in and take over, and they don't have the same beliefs we do, and that is a real threat. taylor: before we get to china, i want to hit on the first point that you made about sort of facebook not wanting to be in the fact checking business. what is their defense for not wanting to do that?

kurt: yeah, so you kind of heard him talk about it there. he said that no one really wants to have a tech company be deciding what should be true and what should be false and what should be allowed on the internet and what should not. and this has been the debate around facebook for a long time -- what is the company's role in dictating what exists online? and so part of his argument there was that if we are the ones who are fact checking political ads or if we get rid of political ads altogether, which is actually something i wrote about this week i think facebook should consider doing, he says that that is actually going to benefit the incumbents, because suddenly, the people who already have a platform, who already have attention from the media, those are the only people who are going to get talked about, not the people who are willing to pay to kind of make their way onto the scenes. so those are a couple of his arguments for why he thinks not only political ads should stay on facebook but why he thinks they should not be meddling with them. taylor: that was bloomberg technology's kurt wagner.

now someone who has been following free speech on the internet is a "new yorker" staff writer. he is the author of the book called "antisocial: online extremists, techno-utopians, and the hijacking of the american conversation." i got reaction to zuckerberg's georgetown appearance thursday. andrew: i think this is a perfect encapsulation of how misleading a lot of these talking points are when it comes from the people who build these systems. because, you know, he wants to make it seem like this is just a neutral public square and that he is just someone who wants to let freedom of expression reign and not be a gatekeeper. that's fine, but he is a gatekeeper. facebook makes decisions about how their algorithms work every day. they make decisions about what you see in your feed and what you don't. so it's just disingenuous to suggest that this thing he built is not already putting a finger on the scale. you know, it reminds me of someone who built a big highway system and then says, well, we like freedom of enterprise, we like cars, we don't want to deal with the fact that pollution is killing our environment. well, sorry, you built the

system. it is having consequences. you have to clean it up. taylor: if that is the case, why there is an increasing calls for facebook to be treated like a publisher or even a utility company, with more regulation. andrew: yes. something has to be done. it remind me of starting a warehouse party. this is an example i use in the book, an analogy. you know, you start a big party, you hope everybody will have fun and just get along, but if you don't build in a sprinkler system and people start setting things on fire, you do not have any way of policing things or controlling things when things get out of control. you know, you can't just hope and pray that progress keep going and there will be some arc of history that will deliver us to a better result. facebook has been used to spark genocide in various countries. it has been used to spread autocracy throughout the world. so it's nice to rest on the abstractions of free speech, but abstractions are not going to get is very far. it's too late for that. taylor: we heard from marc benioff as well this week making calls for facebook to be broken up, but does that actually solve the problem? andrew: no, it does not solve the problem. i think the problem is deeper than that. the reason i wrote a book called

"antisocial" is not because it is just anti-social media, it is because that there is this feeling all of the internet would be prosocial in the sense that it would get together and make the world a better place. that was the first 10 years. it was all about what would be prosocial about social media. there was always an antisocial side. there were always people inciting violence. there was always harassment. there was always bigotry. we just did not want to think about that. we do not want to look at it. we wanted to think about the arab spring and democracy and all the fun stuff about the internet. but if we don't look at the harm that can be caused, we are just kidding ourselves. we are just leaving out half the story. taylor: so you brought up the book. you were on the road, conducting dozens of interviews. what was the biggest thing you learned? andrew: in addition to interviews, i was just a fly on the wall as these people -- trolls, propagandists, misogynists, bigots -- as their masks would slip. i was in a room with a guy in

orange county, california who was just an average married guy in his 40's, not some teenage troll in his mother's basement. a married guy with kids and a dog. he would wake up in the morning and say i want to create a subliminal association between a political candidate i don't like and disease and disgust. and even though he did not have evidence to do that, he would just do it. i would watch him just open periscope, rally a bunch of his followers, get a periscope hashtag, get that hashtag trending on twitter, and then, from there, it would just enter the national discourse to the point i would wake up the next morning and read the newspaper, and this guy's fingerprints would be all over the news. and trust me, this is not a guy that we want with our fingerprints all over the national news. taylor: so you fold this into what you have observed into action. not only did you write a book, but you had an op-ed recently which said one thing they could do is replace sheryl sandberg with a human rights lawyer or someone who can teach us how speech can lead to violence. why sheryl sandberg? andrew: i think that, from all we have heard, she seems to be the person who is most promoting profit at all costs in that company. most of the reporting that has

come out of there has said that she was the one who set up the advertising model. she's the one who has been really uncompromising about kind of full steam ahead with anything that gets in the way a profit being sort of eliminated. and some things that get in the way of profit are just necessary for our survival, like making sure that these platforms don't spark genocides, making sure they don't spark violence, making sure people don't get killed because of these platforms. taylor: that was "new yorker" staff writer andrew marantz. coming up, wework gets a lifeline. softbank is said to be readying a $5 billion rescue plan for the co-working space. we will have details. and later, our conversation with the man leading facebook's foray into cryptocurrencies. we speak with david marcus. this is bloomberg. ♪

taylor: bloomberg reported that softbank is set to put in a $5 million rescue financing for

wework. there were also said to be considering a jp morgan rescue plan. >> this is one of two plans that >> this is one of two plans that are maybe in the works that are the subject of a lot of discussions going on this week with the wework board. will they are scrambling to figure out how they can keep this in out how they can keep this company going when wework is set to run out of money as soon as next month. as you mentioned, there is a new deal for a potential proposal to invest something around $5 billion in the company. not a majority stake though. taylor: do we know if this is in lieu of the jpmorgan deal or instead of? >> it seems like they are both on the table. they are pretty different. one of the major decisions that

the board will have to deal with this week and into next depending on how long it takes them to make this decision is which one is better for the company? which one will provide them a better path forward? the jpm deal is around the same amount of money. it's in a somewhat complicated debt package. they are trying to pick. taylor: with the softbank deal, do they get control of the company? >> they do not. they do not get majority control. adam neumann, even though he is no longer ceo, he is still a board member. he still owns a lot of stock. in a transition like this, the ownership could change. he still has super voting shares. softbank could be looking to get nonvoting shares or some combination of different shares. they will be looking to take on more of his stake in the company. control is not necessarily guaranteed. taylor: what would be the new valuation? >> definitely lower than the high water line that came up earlier this year. it seems like the ranges are all over the place but it could be as low as under 20 or maybe under 10.

taylor: we talked about the reputation of softbank by putting up this money. what that says about the whole deal that all fell through. what is this downside for softbank in this? >> it could really be seen as good money chasing bad. they have already invested more than $10 billion in this company. they are obviously attached to what comes out of wework. this plan -- then it's like wework becomes a softbank company. they could maybe install a new ceo to replace these co-ceos from wework. they could feel very responsible and the narratives suggest that softbank becomes responsible for whether wework makes it out. taylor: that was ellen huet. coming up, libra's pitch man. we will hear from the head of libra, next.

check us out at @technology. follow our breaking news network at tictoc on twitter. this is bloomberg. ♪

taylor: welcome back to "best of bloomberg technology." i am taylor riggs. despite losing at least seven partners for its cryptocurrency project, facebook got the remaining 21 to sign on the dotted line monday. kurt wagner had this interview with david marcus. david: yesterday, we had our inaugural council meeting in geneva and it was an awesome moment. 21 companies came together and started working on not only establishing a governance model for the

association, but also distributed different roles. a board was elected. i was lucky enough to be elected to the board with four other amazing individuals that i am looking forward to working with. the big change is that fundamentally, yesterday, this project moved from being facebook led to being led by this association of which we are one of 21 members -- and in the future, one of 100. really looking forward to the next stage. it is here and it was great to feel the passion and the energy in the room and the commitment from all of these parties that are now going to work on trying to change the status quo for people around the world when it comes to cost of financial services. kurt: when you first thought of this meeting, there were other companies you thought might be there.

visa, mastercard. a lot of these companies announced late last week they were leaving the association. what was happening behind the scenes as these announcements came out around the same time on friday? david: first, i have to say, i said this publicly, i want to thank these companies were -- for coming along on the journey. when you are in the payments space, wanting to really explore something that could potentially be disruptive and wanting to lean in like this is really remarkable. it is to be commended. towards the end of last week, there was a lot of pressure mounting. i totally respect the fact those businesses and those leaders have a responsibility to their shareholders, employees and stakeholders. given that you don't need to be a member of the association to build on top of the libra network, all of these companies will still have the ability to build on top of libra. i understand they don't want to do the heavy lifting by our side at this moment in time, and

that's ok. we are going to move forward. we are going to add more members going forward in the next two quarters. we're going to work really hard together to address all of the legitimate concerns that were raised by regulators and stakeholders around the world before this moves forward. kurt: a lot of the companies that did leave late last week, they are payments companies, financial services companies. theoretically, companies familiar with the road ahead. are you worried they maybe know something that you are unaware of here? david: no. i want to strongly state that. i don't believe we are unaware of anything. i just believe when your core business is in this space and you probably receive a lot of pressure not to press on, then at some point, you have to make a decision on this high-risk project -- because it is a

project, an idea right now that we believe will see the light of day, but there is a lot of hurdles we need to clear. and your core business -- again, you have to put your core business and your own business interests first versus a project like this that is high beta. i understand that. given we are in this space, that they would receive a lot of pressure and want to prioritize their own business. kurt: i want to talk about some of that pressure. there was a letter a few democratic senators sent to the companies urging them not to join the association. it read in many ways kind of like a threat. i am curious, did you take it that way when you read the letter? david: i don't know. what did it sound like to you? kurt: it did sound a little bit threatening. if you join, you will have a tougher road ahead. i am curious, have you been surprised by the pushback you have received from regulators? david: again, i say there are two tracks here.

there is the engagement on the regulatory front where we have had very constructive conversations. there are questions, those are legitimate questions. we need to bring the right answers to those questions. now we have the ability to do so. since yesterday, we finally have a governance model, an association that was fully formed. it is hard for us to speak on behalf of of all of these prospective members before they became members. now the association can take this on and really make progress on these questions. i'd say that for these types of letters to be circulated for a thing that is an idea, a project, and telling people you should not explore innovation and a project at a time where natalie here in this country, -- not only here in this country, but around the world, the color of our financial system has not evolved much. consumers around the world are paying the price for it. i think we should ask ourselves

whether this is the right approach if we want to lower costs and lower the barriers of access for financial services for all the people who deserve better in the world. >> when you guys announced the formal association yesterday. he said there is many as 1500 others that were interested in joining. can you give us a sense of how soon you will be expanding the association and who will join? david: these other the types of things i cannot talk about anymore from calibra, because this is now in the hands of the libra association. what i understand from the process the libra association is running is that they will work towards welcoming more members in the next two quarters. my guess is they will share more about new members as they join. taylor: there was david marcus, facebook head of caliber. -- head of calibra. the digital currency revolution is in play this week as g7

release broad guidelines for regular in digital money. also up for discussion is whether central banks should be issuing their own. sweden and china are studying their topic and canada has launched a formal research project that has partnered with other monetary authorities. i got inside on wednesday from the president of peterson institute for international economics, adam posen. >> first, they have to regulate and keep away regulatory arbitrage that would exploit the average people are small businesses if you have private currencies that are not regulated. second, central banks should be involved because they can provide efficiencies and safety that make private currencies irrelevant. third, they should not be getting involved just because it is digital just as a people money. -- just to save people money.

they should not be getting people involved to try to drive down negative rates. as governor brainard said at a speech earlier today, those are not motivations you want to have, and i agree with her. taylor: i want to get to the fed because a lot of international central banks have started to weigh in. is there a risk the fed is moving too slowly on this? adam: i don't think so. i think it is a fair question. you mentioned the people's bank of china and the swedish bank, which are leaders in this space. sweden having a sophisticated economy and population is in position that it can afford to experiment a bit, but also because the bank has a lot of credibility and they are able to keep ahead of the private sector. for the u.s., if the u.s. is slower and the federal reserve is understandably cautious, i don't think there are any big losses. this is not like a private-sector race. taylor: you mentioned kaplan at brainard, who have come out with comments saying the fed is looking at issues on digital

currencies. governor brainard saying a currencies solution is not a solution to a zero lower bound. walk me through that. >> that is what i made reference to, her remarks, which i agree with. one argument that theoretically minded economists have made is that if you have a digital currency, it is easy for the government or central bank to erode the value of that currency, to inflate it away once it is under government control. the advantage of doing that is not to rip people off, in theory. it is to allow you to go as negative on interest rates as you need to be without having to go through the banking system without having other problems. i think governor brainard makes the argument, and i would make the argument, that it is destabilizing to the financial system. it causes people to want to move their money out. it may cause runs on various institutions, if not the currency, and ultimately there

are other ways of achieving your monetary goals than trying to go negative with rates. that particular piece of the argument should be killed. taylor: does the issue of digital currency need to be a syndrome back issue, a -- a central bank issue, a department of the treasury issue, or a congressional regulation issue? >> that is a really astute question for two reasons. first is because it is a public interest to determine what is the value you are trying to serve by putting this in place, and that should not be up to the fed to decide. second, because right now we don't have an appropriate regulator or supervisor in the the u.s. system. the fed can regulate interbank payments in a limited way, but in theory, the financial oversight committee could take in, if they decided this was systemic. i think this is not so much the treasury, this is a legislative issue. i would like to see congress talk about and legislate what

goals they think digital money should serve for the rest public. -- for the u.s. public. taylor: one individual who has an opinion on that is david marcus, who heads up facebook's libra cryptocurrency. we spoke with him yesterday. he said the government is holding back regulation. david: for these types of letters to be circulated for anything that is an idea and telling people you should not explore innovation at a time when not only here in this country, but around the world the core of our financial system has not evolved much in the last 50 years and consumers around the world are paying the price for it. i think we should ask ourselves whether this is the right approach if we want to lower costs and lower the barriers of access for financial services for all the people who deserve better in the world. taylor: what do you make of those comments?

adam: somebody is talking their book. it is very nice to make an appeal to lowering costs and financial inclusion. financial inclusion can be better served by various legal changes. for example, we have treasury direct, direct deposit for government payments, a number of ways we can restrict check cashing fees and other fees. there are a number of things we can do for financial inclusion, and that is just in the u.s. the key thing is to get people to know your customer ids. that was the great leap forward in india and when that is done badly, people get cut out. this is serious, but has nothing to do with libra. it has to do with a public commitment to having ids for people and giving value to those at not abusing the information that goes with those ids. all of those i would not be willing to trust with some profit center, self oriented, privacy ignoring company as opposed to a government that is

well-regulated. the government would have to be watched even then. finally, it is not just about driving down costs. poor people are exploited in the u.s. because of their lack of access to banking and the payment system. there are ways to fix that. the main reason to move to digital currency is to create other places in the economy to prevent people from getting their privacy and finances ripped off. taylor: adam pozen, president of the peterson institute for international economics. volvo announces a new all electric vehicle. we get the details from the ceo. this is bloomberg. ♪ taylor: the trump

taylor: the trump administration has had no secret of not liking huawei's investment into 5g.

placing restrictions on sale of its equipment into united states and on sales of components to it by u.s. companies. from the perspective from huawei's side, we sat with peter scanlon, the chief technology officer of the huawei carrier business group. >> we working 172 countries globally. we talk to most of those demonstrations. it would be nice to have this type of discussion with this administration. to understand the rules. to describe how we can do business together. we follow the law. huawei technologies in the u.s. is a legal entity. it won't do anything against the law. people say that. we comply with the law in every country. we won't do anything outside the law. that's not what huawei does.

we would never do those things. if we could have constructive discussion with the u.s. to explain how and why we do things, there is nothing secret about huawei. we don't do anything that is secret or different. we invest every in our entity. if you don't have your own products, you are just a reseller. where is your core value? we are offering 5g to other companies to say, take a snapshot of it today, and let the u.s. grow and develop. we have done this before in 2003. it's nothing new and mysterious. it's an attempt to say, if you tell us what the rule is, then maybe we can understand how to play the way the u.s. would like. >> wet me just raise this

-- let me raise this possibility. the problem that the initiation has or some other people's not with huawei. it's certainly not with the success of huawei. if anything, it may be the reverse, you are so successful that you have become so dominant. the concern is with beijing. you cannot control what they may do to you or get you to do. that's the concerns. doesn't that make your position difficult? >> i don't agree. i have been in the company 11 years. i don't agree. what i will say is, is our job, any time the board members, any time at our conferences, they are clear, let's talk about market share and competition. he has stated many times, you can't have too much market share. if you take too much, what will happen? there will be no competition.

there is no innovation. the reason this industry is so exciting and the reason 5g holds so much promise is because of the opportunities. it can transform things. could you imagine if everyone was connected, the advances we could make it we will be able to fix things like cancer. or diseases. they've always said you can't take too much market share. number two, you must provide a healthy ecosystem. last year we spent more than 11 billion u.s. dollars with american suppliers of components and other software. we would continue to do that the u.s. would allow us to be a part of the global supply chain. >> one last quick question. what is the u.s. risking falling behind in 5gr? is there a competitve danger?

>> we already build a lot of 4g networks in rural areas in america. some of the regions in rural u.s., we can deliver, just using 4g, 650 megabits per second. the u.s. is deploying 5g of a millimeter wave. companies like at&t and verizon, by trying 5g technology, even with our competitors, you start to learn where the opportunities are. we can see by 2025, somewhere around 300 billion in gdp improvement globally. what the u.s. is good at, even if it was all connected, the u.s. is good at point data. -- good at is pulling that data.

look at what google and amazon and the others do. apply leading ai. when i let huawei come in here and provide the -- best technology for connectivity and work together with the administration and improve society? taylor: that was peter scanlon, chief technology officer of the huawei carrier business group. volvo cars isn't just electrifying and slanted to cut lineup tofying its cut carbon emissions. we will hear from the ceo, next. this is bloomberg. ♪

taylor: volvo is entering a new space, unveiling plans for its first all electric vehicle. its goal is to cut the carbon footprint on each car by 40% by 2025. the volvo ceo spoke with shery ahn and amanda lang. >> from day one, it will be

profitable, but with the very low volumes, you have to understand the cost will be higher, so it might be a lower profit margin initially. i think what counts is more midterm, and we believe an ev car will have a higher value for the consumer and long term is the right thing to do. >> when you talk about subsidizing the charging cost, how did you come to that as a decision to help push this car? >> it is really not related to the all electric cars. we will promote the sales of the so-called plug in hybrid, a part-time electric car. that is important that you not just fill in gas and drive it as a conventional car. we follow this very closely. right now, consumers are using

electric 40% of the time and we want to incentivize consumers to use it even more. that's why we say first-year electricity is included in the price of the car when you buy a plug-in hybrid from volvo. >> where will these cars be made? will they be affected by tariffs? >> they are made in charleston, some in tucson. there is no connection to tariffs. tariffs is really a problem for us for electric cars, plug-in, or conventional. our global production system is based on us being in one location. high-volume cars will be made locally. if we have trade restriction and are forced to build all cars

locally, there will be additional cost for our consumers, so we hope that will not be the case. >> we have seen the chinese government reduce subsidies for new energy vehicles. are you concerned about ev demand within china? >> yes, the subsidies have gone down, and it is always helpful with government to support introducing a new technology. on the other hand, we believe if electric cars are going to fly long-term, they have to be sold to customers who are ready to pay for it. it has to be competitive on the free market. otherwise you have to have temporary subsidies. that's why we are so sure about that. we need to participate with attractive products for the free market.

>> as you move beyond those subsidies, you want to get to volume. is china the market for you? will there be mass purchases of these vehicles there? >> i think all markets, on the west coast of the u.s., for example, is a big market for electric cars. also in europe. i think so far the interest in china has been too large to be based on the incentives, but i think china's market will pick up and see the beauty of the electric car. it is also based on having somewhere to charge the car overnight. it is difficult to park the car on the street in a big city. i think those customers will be the last one going electric. taylor: that was volvo ceo. that does it for this edition of "bloomberg technology." we bring all the latest in tech throughout the week. tune in each day at 5:00 p.m. new york, 2:00 p.m. and cisco.

in san francisco. bloomberg technology is livestreaming on twitter. check us out @technology. this is bloomberg. ♪

♪ francine: christine lagarde has shattered the glass ceiling multiple times over. becoming france's economy minister, she made history as the first woman to serve as the finance chief of a g-7 nation. she was the first woman to lead the international monetary fund. and she is now the first woman to lead the european central bank. last year, forbes ranked her as one of the three most powerful women on the planet. i sat down with christine lagarde in new york a mont