♪ judgment that we have reached the best possible solution. this government cannot be these benches will not be rebuked. we will not give into this agreement, which we believe does damage to our part of the united kingdom. >> i am moving this amendment to be secure that the u.k. will request an extension. >> standing here, i have a distinct sense of deja vu. [laughter] aye's to the right, 322,

's, 226. >> the prime minister must comply with the law. he can no longer used the threat of a no deal crash out to black male members to support his sellout deal. >> i will not negotiate a delay with the eu. and neither does the law compel me to do so. welcome to bloomberg television from the city of london. we have been bringing you updates regarding the u.k. political scene after the latest brexit headlines have come out. saturday, the u.k. parliament held a special session. boris's newly minted deal did not make it to a vote. that's why we are gearing up for a critical week and brexit and we could see the vote as soon as

tomorrow. let's look at how the fx market is trading after this, the pound 129ing softer than friday, .84 on friday's close. it seems like traders need to start pricing in uncertainty regarding brexit. on the longer-term basis, analysts are bullish. drop may be a's buying opportunity. long-term, everyone seems bullish. they think the eu will allow for the extension. what we need to watch in the coming days, especially this , elevated volatility across asset, especially in the u.k.. we could see a recalibration. sterling has moved off of every headline. two 129., 121

the biggest six-day change since 1989. and of course, watch the mid-cap stocks, now might be a time to hit the pause button. we will have another update in half an hour's time. this is bloomberg. ♪ 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 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 analyst i spoke to said that sentiment was awful.

instead 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 their 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 had set as the bottom. he projected 60 million or 90 million in the u.s., this was a while ago, but let's 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. macquarie said, "in some ways, netflix defies the naysayers."

emarketer analyst eric haggstrom joined me with his analysis after the report. eric: 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 because half of all households 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 on my terminal, it is the classic negative free cash flow that we see from the company. the 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 fell nearly 4% in 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 talked with mark mahaney of rbc on thursday. mark: they are going to add 2.5 million subscribers this year, just in the u.s. the last five years, 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 -- netflix did post a price

increase this year and it is the biggest they have ever implemented. 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 than what disney offers. 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. could they 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 a 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 switzerland, 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 one is whatsapp. 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: 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. 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 app, bloomberg.com, and, in the 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 to bloomberg technology's kurt wagner. kurt: you have a ceo currently

dealing 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 "new yorker" staff writer andrew marantz. 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 reminds 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 will 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 us 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 bring us 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: wework's future remains a bit foggy, but softbank is a said to plan a $5 billion rescue financing for the co-working company. wework was also believed to be considering a jpmorgan rescue plan. i got more details on the scoop from ellen huet wednesday. ellen: 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. they are scrambling to figure out how to keep the company going, when, as we have reported in the past, 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 from softbank to invest something around $5 billion in the company. that would give them a much larger stake in the company. although, as we reported, not a majority stake. taylor: now do we know if this is in lieu of the jpmorgan deal or instead of? ellen: it seems like these are both on the table. they are pretty different, so one of the major decisions that the board is going to 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? so the jpm deal is around the same amount of money, around $5 billion, but in a somewhat complicated debt package. so they are trying to pick. taylor: with the softbank deal, do they get control of the company? ellen: they do not. as far as we understand it, they do not get majority control. you have to remember, adam neumann, though he is no longer ceo, he is still a board member. he still owns a lot of stock. obviously in a transaction like this, ownership could change.

he still has super voting shares. softbank could be looking to get nonvoting shares or some combination of different shares. so they will be taking on more of a stake in the company and the control is not necessarily guaranteed. taylor: so what would be the new valuation? ellen: that is a remaining question. it definitely will be lower than the $47 billion high water line that came up earlier this year. it seems like the ranges are all over the place, but it could maybe be as low as under 20 or under 10. who knows. taylor: we talked a few days ago 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? ellen: i think it could, if it ends up going poorly, it could really be seen as good money chasing bad. they have already invested, as we have already talked about, more than $10 billion in this company. they are obviously attached to the outcome of what comes out of wework. although, this plan makes it,

then it is almost like wework becomes a softbank company. it would be something where they would probably have a great say in installing a new ceo to replace these co-ceos who came from wework. it could end up being something when they feel very responsible, and the narrative suggests that softbank then becomes responsible for whether wework ever makes it out. taylor: that was bloomberg technology's ellen huet. coming up, we hear from facebook's head of libra david marcus next. bloomberg technology is live streaming on twitter. check us out at @technology and follow our global breaking news network tictoc on twitter. this is bloomberg. ♪ here, it all starts with a simple...

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updatesing you throughout the evening regarding brexit. boris johnson the prime minister was dealt a defeat saturday. he is gearing up to bring his deal to the floor as early as monday morning u.k. time. let's see how cable has traded regarding the brexit developments. we are shyer than we were on friday's close. regarding newdrop uncertainties in the drama.

-- it is is, you status quo until we get meaningful moves. a lot of strategists are very bullish. cable target of 136. colewest has 135 and adam said this is a buying opportunity. long-term there is a lot of bullishness. we could potentially see weakness especially given the uncertainties. what else do you need to know ahead of trading? talking about elevated volatility. we have seen this time and time again surrounding meaningful votes. sterling has been moving off of every headline, a knee-jerk reaction and the rates atalibration, that is moving that opening in :00 monday morning. a lot of money going into the u.k. domestic stocks like homebuilders and u.k. local

banks, high street names where money will come out. many think it will hit pause. we will have more for you in just a half hour. this is bloomberg. ♪ taylor: welcome back to "best of bloomberg technology." i am taylor riggs. despite losing at least seven partners for its libra cryptocurrency project, facebook got the remaining 21 to sign on the dotted line monday. bloomberg's kurt wagner had this interview with david marcus. facebook's head of libra tuesday. david: yesterday, we had our inaugural council meeting in geneva and it was a really awesome moment where 21 companies came together, not only companies, social impact partners. 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 really looking forward to working with. and 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. you know, one of five board members. really looking forward to the next stages here. it was great to feel the passion and the energy in the room and the commitment from all of these parties that are now really going to work on trying to change the status quo for people all around the world when it comes to access and cost of financial services. kurt: when you first thought of this meeting, there were other companies you thought might be

there. visa, mastercard. stripe. a lot of these companies announced late last week they were leaving the association. tell me what was happening behind the scenes as these announcements came out around the same time on friday? david: look first, i have to , say, and i said this publicly, i want to thank these companies 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. i think 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, to their 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 that they don't

want to do the heavy lifting by our side at this moment in time, and that's ok. you know, 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 can move forward. kurt: you know a lot of the , companies that did leave late last week, they are payments companies, they are financial services companies. theoretically those are 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 still 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 that they 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 that a few democratic senators sent to the companies, basically 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. it was, if you don't -- if you join, you will have a tougher road ahead. i am curious, have you been surprised i guess by the pushback you have received from regulators?

david: again, i say there are two tracks here. i say that 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 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 not only here in this country, the world, the core 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 so much better in the world. >> when you guys announced the formal association yesterday, he -- you said there were as 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 might be joining you guys? david: these other the types of things that i cannot talk about anymore from calibra, because this is now in the hands of the libra association. what i understand from the process of the 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: that was bloomberg's kurt wagner, with david marcus, facebook head of calibra. the digital currency revolution

is in play this week as the g7 release broad guidelines for regulating digital money. also up for discussion is whether central banks should be issuing their own. already sweden and china are studying that topic, and canada has launched a formal research project that has partnered with other monetary authorities. i got insight on wednesday from the president of peterson institute for international economics, adam posen. adam: first they have got to regulate regulatory arbitrage which would exploit average people or 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. but third, they should not be getting involved just because it is digital just to save people money. they should not be gettingpeople able to drive down negative

rates. as governor brainard said at a speech earlier today at peterson, 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 that the fed is moving too slowly on this? adam: i don't think so. i think it is a fair question. you mentioned both the people's bank of china and the swedish bank which are definitely leaders in this space. sweden having a high income economy with a sophisticated economy and population is in position that it can afford to experiment a bit, but also because the swedish 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 a bit cautious, i don't think there are any big losses. this is not like a private-sector race. whoever gets there first wins. taylor: you mentioned kaplan at -- and brainard, who have come

out with comments saying the fed is looking at issues on digital currencies. and then governor brainard saying a currency solution is not a solution to a zero lower bound. walk me through that. adam: yeah that is what i made earlier herto , remarks, which i agree with. one argument that theoretically minded economists have made is that if you have a digital currency, then it is easy for the government or central bank to erode the value of that currency, to inflate it away once it is totally under the government's 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. but i think governor brainard makes the argument, and i would make the argument, that it is probably 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. so that particular piece of the argument i think should be killed and killed soon. taylor: does the issue of digital currency need to be a central bank issue a department , of the treasury issue, or a congressional regulation issue? adam: that is a really astute question. it is astute 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 frankly should not be up to the fed to decide. and second, because right now we don't really have an appropriate regulator or supervisor in the u.s. system. the fed can regulate interbank payments in a limited way, but there is nobody -- in theory, the financial oversight committee could take in, if they decided this was systemic. so i think this is not so much the treasury. i think it is a legislative

issue. i would like to see congress talk about and then legislate what goals they think digital money should serve 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 did say that the government is sort of holding back regulation. david: for these types of letters to be circulated for a thing that is an idea and telling people you should not explore innovation and a project 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 you know, 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 so much better in the world.

taylor: what do you make of those comments? adam: somebody is talking their book. you know, it is very nice to make an appeal to lowering costs and to financial inclusion. financial inclusion can be much better served by various legal changes to make it so. 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 to do financial inclusion, and that is just in the u.s. let alone around the world. the key thing is to get people to know your customer id's. that was the great leap forward in india and we have also seen stories 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 id's for people and giving value to those id's and not abusing the information that goes with those id's. all of those i would not be willing to trust with some profit centered self-oriented,

, privacy ignoring company as opposed to a government that is well-regulated. even then the government would have to be watched. 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 you want to move to digital currency is to create other places in the economy to prevent people from getting circuited and getting their privacy and finances ripped off. taylor: that was adam posen, president of the peterson institute for international economics. still ahead european automaker volvo announces a new all electric vehicle. we get the details from the ceo. this is bloomberg. ♪

taylor: the trump administration has made no secret of its not

liking huawei's investment into 5g. placing restrictions on sale of its equipment into united states -- into the united states and on sales of components to it by u.s. companies. from the perspective from huawei's side, bloomberg sat down with peter scanlon, the chief technology officer of the huawei carrier business group. >> we working 172 countries globally. 170 of those administrations we talked to. it would be nice to have this type of discussion with this current administration here in the u.s. to understand the rules. what would you like us to do? to describe how we can do business together? if you set the rules and the standards we follow the law. , huawei technologies in the u.s. is a legal entity. it won't do anything against the law. our board has said that, the group ceo said that. we comply with the law in every country. there is no way we won't comply with a law from china which says

what we must do here in another country. 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, how the company is structured there is nothing , secret about huawei. this person is not a secretive person. he travels to every country in the world. we don't do anything that is secret or different. what we do is invest heavily in our entity. if you don't have your own products, you are just a reseller. where is your core value? why we spend so much on r&d, because we have learned, even his offer of 5g to u.s. companies to say, take a snapshot of our product today and but in the -- and let it grow and develop. we have done this before in 2003. it's nothing new and mysterious. it is an honest attempt to say, if you tell us what the rule is, then maybe huawei can understand how to play the way the u.s.

would like. >> look -- let me just raise this possibility. that the problem the administration has or other people is not with huawei. it is not saying huawei is a bad company or does bad things. it may be the reverse, you are so successful that you have become more dominant or have a larger market share. the concern is with beijing. you can't control what beijing may do to you or get you to do. that's the concerns. doesn't that make your position somewhat more difficult? paul: 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 annual conference, 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 market share what will happen? , there will be no competition.

especially with western companies. there is no innovation. the reason this industry is so exciting, the reason 5g holds so much promise is because of the opportunities that it can do especially to industry and that is where it can transform thanks. could you imagine if everything was connected, the advances we could make it we will be able to like cancer. we could fix things like different types of diseases. it could be good for humanity. mr. wren has 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. with american suppliers of components and other software. we would continue to do that if the u.s. would allow us to be a part of the global supply chain. that is what we are. david: one last quick question. turn it around the other way. what is the u.s. risking falling behind in 5g? is there a competitive danger?

paul: you know what the u.s. -- we already build a lot of 4g networks out in rural areas in america. we don't talk about it enough or promote it enough. i don't know why that is. some of the regions in rural u.s., we can deliver, just using 4g, about 650 megabits per second. we have been doing that. those sorts of things are available. the u.s. moving down the line of deploying 5g of a millimeter wave is necessary because of spectrum. companies like at&t and verizon, by trying 5g technology, even trying with our competitors, you start to learn where the opportunities are. we can see by 2025, somewhere around almost $300 billion in gdp improvement globally. now what the u.s. is good at, even if it was all connected, what the u.s. is good at is pulling that data. look at what google and amazon and the others do.

and applying leading ai. why not let huawei come in here and provide the best technology for connectivity and work together with the administration and improve society? taylor: that was bloomberg's david westin with peter scanlon, chief technology officer of the huawei carrier business group. coming up volvo cars isn't just , electrifying its lineup to cut carbon emissions. the swedish automaker says it will take customers to make sure they plug in. we will hear from the ceo, next. this is bloomberg. ♪ berg. ♪

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

bloomberg's shery ahn and amanda lang. >> from day one, it will be profitable in 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 a bit more midterm, and we believe an ev car will have a higher value for the consumer and long term is absolutely the right thing to do. >> so 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. that is, we will promote the sales of the so-called plug in hybrid which you could call a part-time electric car. that is of course very important that you not just fill in gas and drive it as a conventional car. we follow this very closely.

we are monitoring it and right now it is around 40% of customers using electric car -- we want really to incentivize customers to really charge 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 recharge car from volvo. >> where will these cars be made? will they be affected by tariffs? >> they are made really they are , made in charleston. some of the others are made 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 that some cars will be in one location and trade. high-volume cars will be made locally. if we would have trade

restriction and are forced to build all cars locally, there would of course be additional cost for our consumers, so we hope that will not be the case. shery: so we have seen also the chinese government reduce those subsidies for new energy vehicles. are you at all concerned about ev demand within china? yes, i mean 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, it has to be sold to customers who are ready to pay for it. it has to be attractive products competitive on the free market. otherwise you have to have temporary subsidies. it will not help. that's why we are so sure about that. if we want to participate in a better climate, we need to do it with attractive products for the

free market. do mover point, as you beyond those subsidies, you want to get to volume. is china the market for you? will there be mass purchases of these kinds of vehicles there? >> i think all markets, here on the west coast of the u.s., for example, is a big market for electric cars. also in europe. there is an appetite for electric cars. 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. but it is also based on that you have somewhere to charge the car overnight. it is difficult to park the car on a street in a big city. i think those customers will be the last one going electric. taylor: that was the 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.

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haidi: i am haidi stroud-watts. kathleen: i am kathleen hays. sophie: i am sophie kamaruddin. we are counting down to asia's major market open. ♪ haidi: here are the top stories we are covering. boris johnson prepares for a fresh attempt to deliver on an october 31 brexit and he may not have the numbers.