>> i'm taylor riggs in san francisco and this is bloomberg technology. coming up, a record-breaking season. shows gainsperiod for online retailer amazon as the company says billions of items were ordered by customers. netflix, we've got gene munster with us to talk 2020 predictions. and, facebook's cryptocurrency

libre is set to debut next year. we will hear how the head of libre and the facebook coo touted this big promise. but first our top story. record-breaking sales for amazon. posted itsrce giant largest advance on thursday. amazon didn't release specific sales figures, but they say it backs up broader reports that online shopping picked up this year. i want to bring in spencer and darren baker. spenser, talk to me about what we learned from amazon this holiday season. >> in terms of their statement, we didn't learn much. every year is another record for amazon. what we did see was that this was the first year, one that they rolled out their one-day shipping pledge on millions of

items, and that they handled so much of their own delivery on their own. i think a little bit of the boost is that amazon got through christmas without any disasters. everyone was wondering how they would do this year. and darren, every year is a record year. is amazon just riding the wave of e-commerce or are they doing something special? >> a little bit of both. e-commerce was up 17% year-over-year. that period that we call cyber five in between thanksgiving and cyber monday was up 20% year-over-year and amazon is dominating the holiday season. onlines more purchases than the second biggest competitor, walmart. they are dominating the season. taylor: i think what was interesting, and if you look at the chart inside my terminal, is

really in the last quarter, it was trading around that 200 day moving average. a lot of this concern from analysts was that heavy investment in same-day shipping -- was day shipping yesterday the clarity analysts needed that that is paying off? spencer: we know investment is bringing in the revenue. we don't know how quickly the revenue is going out the door. we will find out. we know that they had another good holiday quarter. they sold a lot of things. choppers went to amazon for their products. we don't know how much it cost amazon to deliver those things. that is the million dollar question now. we know amazon brought in a lot of. how much did it shove write out the door to pay for delivery? taylor: what is your take on the battleground that is same-day,

one-day shipping? it was only a few years ago when two-day shipping was a big deal. deren: i don't think amazon really cares whether it is driving margin long-term. they cared about a year ago when they sell results that showed e-commerce was highly profitable. they invested in one day shipping because they know the next battleground is the things you need every day. groceries, stuff you buy at the pharmacy. those are the products that one-day shipping really satisfies. ,ith a and other retailers investing in buy online, pick up in-store, amazon had to match that. they had to have something that trumps even pick up in the store by offering one-day shipping. the more products they offer that on, the more of the wallet of the consumer they are likely to get. taylor: you mentioned other retailers. we seen a divergence with target and walmart leading amazon when

it comes to the grocery business. other retailers, macy's, really struggling. where do you see amazon being a leader versus a lag or? deren: i think there's a couple areas. the two you pointed out are the biggest risk. where they are becoming a leader is offering other products, advertising, and basically other ways to monetize all that traffic coming to amazon. they are driving billions of dollars per quarter through their advertising business. if they can figure out how to hook that into more of a whole foods experience, one-day delivery, then they've got a really good shot. taylor: spencer, you talked about the reduced dependence on fedex and focusing more on amazon's own delivery services. what do we know now about how much more they are reducing their reliance on some of the

shipments externally? spencer: i think we are going to see more of it. doing to thelly is logistics industry what happened to retail over the past several decades. amazon wanted to have its delivery operation constantly at work, just like a factory. they want to use that capital. they want to use their delivery machine constantly. logistics has been more of a batch system. things coming to a distribution center. waves of trucks leaving. amazon is sending multiple trucks to the same neighborhood. it is breaking a lot of rules in logistics. sunday delivery was a good example. things are dormant on sunday for most carriers. we are going to see them doing more and more because they have to. the best way for them to lead is by doing it themselves and doing

things other carriers are not willing to do. taylor: you were writing that it is not only about amazon, but some of the downstream effects. some brands are being very successful getting their brand out on amazon. others like nike have said, we are good on our own. what brands are doing well on their own? deren: there's a million ways to quantify amazon's dominance in the e-commerce category. how are brands going to navigate this? made a stark decision to pull everything off of amazon. there are only a handful of brands that can do that. we looked at other brands like lego, which is a really interesting story. amazon doesn't sell private-label toy products, but they sell a lot of toys. lego generated over 2 million unique visitors and shoppers. place moste first

parents think of going. half of the people ended up buying their product on amazon. if you are a brand like lego, you need to have your own website and you need to perform well for the consumer to want the lego product. you have to do everything you can to be at the top of the amazon shelf. of just retail, as you look at amazon in 2020, what would be the biggest battleground for them? beyond e-commerce, you have cloud computing. more between them and microsoft and google. big horse race is to keep trying to gobble and amazon has an early lead in that. maintain thatg to early mover advantage. taylor: we are also getting some

deliverooamazon's deal is being scrutinized in the u.k. is there a real threat there or is this more antitrust chatter? spencer: i don't know that you can just dismiss it as antitrust chatter. the antitrust chatter keeps building and building. the question is, where is this needle going to get red hot and prevent amazon from doing some things it wants to do? it is hard to dismiss it as just noise given all of the attention on amazon. the other thing i know is that the folks paying attention to amazon are getting smarter and learning more about its business. previously, i think a lot of them didn't understand it. how do you regulate something you don't understand? the greater scrutiny is definitely a threat. taylor: for all things amazon and the holiday shopping season, and spencer.deren

coming up, we go through 2020 predictions with gene munster. what he has to say about apple and tesla in the new year, that is next. and if you like bloomberg news, check us out on the radio, the bloomberg gap, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

taylor: apple is likely to continue outperforming its peers next year. gene munster wrote that the iphone maker could chase its 80%

rally in 2019 with another gain in 2020. to discuss this and all the other predictions, gene joins us from minneapolis. i want to take a look at a chart here inside my terminal. you know this better than anyone else. the share price which is having a massive run-up, which actually hasn't caught up to the shares. $350 on the stock. why is 350 your fair value? gene: i think fair value is somewhere between 350 and 400. i wanted to have a target that i felt comfortable putting out there as a prediction. it also is representative of a consumer staples company. think of coca-cola or procter & gamble. suggests a multiple similar to facebook.

typically apple hasn't gotten that multiple because it is a hardware company. investors have been concerned about hardware companies. when we think about what the proper multiple is, i think this view that a hardware company is a great business, defined by what is impressive cash flow -- if you look at apple, they generate as much cash as them combined. if we use that as the goal stick here, the cash flow should drive the multiple. i think it is a fair assessment to give apple a fair value similar to what facebook would be. that yields a $400 target. question, 350 is based on consumer staples. 400 is based on a multiple similar to facebook. they becomender, as less dependent on iphone sales, do you start to look at this software,re as a

services, wearables business? what is your take on that? gene: it is not just hardware. it is hardware, software, and services. hardware is 75% of apples business next year. but i think if you look at how the hardware is performing, it is performing more like a services business. every three years, people upgrade their phones. now we are starting to introduce the wearables. that is starting to take on characteristics similar to the iphone. think about what happened with air pods. younswer your question, need to look at this holistically and how the products operate and how they impact consumer buying trends. when we look at it through that lens, this is a hardware

services and software company that performs like a services company. they took a large step back last year with the dip in the iphone business. importantly, this should rebound and stabilize in low to mid-single digit growth. taylor: you mentioned the cash flow that this company generates. i want to fold that into some other income statement and balance sheet analysis. cash, thending net cash minus the debt, $100 billion. what is the best use of cash for this company? gene: best use is to continue to give it back to investors that think the stock is undervalued. the company has so much resources to make big

acquisitions. they've talked about this. net cashl is to be neutral. the cap returnof policy they've announced. challenge when you are generating $50 billion a year. timetable't given a of when they are going to hit that target. my sense is we are probably two or three years away. is best use for apple cash to be net cash neutral. i think it will reward investors. if they use the majority of their cash, that stockpile we were talking about, to buy back stock, that should generate about 7% upside. taylor: i want to flip to another stock, tesla.

bears have come to the same conclusion, that tesla is dependent on china in 2020. is tesla really set up in china appropriately for 2020? gene: i would disagree with that. important, 11%s of sales today. having a china factory there is going to lower the cost of buying a tesla for chinese citizens probably by somewhere ofween 15% and 25% because the way the tariffs are structured. but this is important. not the whole story. , wewhole story around tesla don't have a specific price target, we think it is worth much more than the $77 billion market cap, but as we think about how the story progresses,

there is undeniable truth that tesla plays into. to reach that undeniable truth or escape velocity, the stock would suggest that we are moving in that direction but we are not there yet. to reach that, i think there are still some bumps in the road. athink china is going to be positive factor, but ultimately the company has a much bigger ambition beyond china. essentially capitalizing on the 90 million vehicles sold every year. taylor: one of your other predictions for 2020 is the rise of the direct listing. if i don't have to raise new money, do u.s. and that we direct list instead of ipo? gene: yes. that is the simple answer. if you don't need to raise money and the late stage markets are flush with capital now, i think there's an opportunity for free direct listings in 2020. there was one or two in 2019.

the theme of direct listings is for real. talk of other methods or companies to come public. i think this will live up to some of the hype. the way direct listings are structured is the companies cannot raise money themselves. they can't sell primary shares. they can't bring money into the company to help investment through the process of the direct listing. that likely will change in the next couple years. some of those rules will be relaxed. i think you are going to see a material shift to direct listings. taylor: gene munster, always wish we had more time. thank you for joining us. .oming up, mounting pressure what lies ahead in 2020 for

youtube? that is our conversation next. ♪

taylor: increasingly impossible tasks for youtube. with each task, youtube gave people more reason to pack its freewheeling user generated business model. joining us to discuss the challenges ahead is bloomberg technology's mark bergen. mark, when you look back at 2019, did they do a good enough job policing the content, working on data privacy, as much as both regulators and investors wanted? mark: i think the pickle they are in is that regulators and investors want different things.

you are seeing regulators putting unprecedented pressure and forcing youtube to change how it moderates its entire site with kids. no more targeted advertisements for kids. investors are looking at google and alphabet. you want youtube to be as hands-off as possible. it is valuable in the streaming wars. youtube as an advertising business is pretty phenomenal but has a major liability if the laws change. they want you to continue to be an open platform. taylor: talk to me about that liability. do you see a time in the coming years when youtube becomes liable for the content on their site? mark: what is happening in europe and now in the senate in the u.s., talk about changing copyright rules, that would mean that youtube would be liable for a music video or a video posted

that violates the copyright holder. that would be something that would have huge technical and legal challenges. there is a bipartisan push now to repeal section 230, which is an issue for youtube as well as twitter and facebook. 2020,: and as we look at do we think it is privacy issues or content moderation that will be a bigger issue for the company? mark: i think the biggest issue for youtube is around kids privacy and how they are going to solve that. creators, some of the children's creators might lose a majority of their revenue. it is going to fundamentally change how youtube operates. it may change a lot of the content on youtube. going forward, creators are going to be liable, but it is

certainly something that regulators are looking at more closely. taylor: you and i talked about taking over alphabet and having more responsibilities than just google. any sense that he has a unique view on this, or will take a bigger role than before? mark: youtube, google cited it as the second fastest growth. it is fast-growing. they have talked about responsibility, about content moderation, and about fixing their problem around kids issues. inxpect it to be a big focus 2020. taylor: bloomberg's mark bergen, thank you for joining us. coming up, we will bring you the best of 2019, which includes endless facebook coverage, our interviews with the head of libra, and facebook coo, sheryl sandberg.

that is next. this is bloomberg. ♪

>> this is bloomberg technology. i'm taylor riggs in san francisco. remaining 21 to sign on the dotted line in october. bloomberg spoke to the official from facebook, david marcus. was athe last week there lot of pressure mounting and i respect the fact that those businesses and leaders have a responsibility to their shareholders and employees and stakeholders.

these companies will still have the ability to build. that they don't want to do the heavy lifting by our side at this moment in time and that is ok. we will have more members going forward in the next two quarters and we will go -- work really to address the questions raised by legitimate stakeholders around the world. >> a lot of the companies that did leave late last week are financial services companies. they are theoretically familiar with the road ahead. are you worried that they have seen something that you are unaware of? >> no, and i want to strongly state a don't believe we are unaware of anything. i believe when you're core coreess -- when your

business is in this space, and you receive a lot of pressure not to press on, at some point you have to make a decision on this high risk project, it's an idea that we believe will see the light of day, but there are a lot of hurdles that we need to clear. coreave to put your business and your own business interests first, versus a project like this that is high beta. given that they are in the space, i understand that they would receive a lot of pressure and want to prioritize their own business. letter that a few democratic senators sent to these companies urging them not to join the association. ways like aany threat. did you take it that way? >> what did it sound like to you? >> it did sound threatening.

if you join, you will have a tougher road ahead. have you been surprised by the pushback you have received? are would say that there two tracks. there is the engagement on the regulatory front where we have conversations. there are legitimate questions. we need to bring the right answers to those questions. now we have the ability to do so. we have a governance model and an association that was fully formed. now the association can take this on and really make progress on all of these questions. for these types of letters to be circulated for a thing that is an idea or a project, and telling people they should not explore innovation at a time where, not only in this country but around the world, the core

of our financial system hasn't evolved much in 30 years and consumers around the world are paying the price. whetherd ask ourselves this is the right approach if we want to lower costs and lower the barriers of access for financial services. head ofwas david marcus calibra and facebook. like 2016, facebook is under extreme scrutiny about how it handles misinformation and politicians lying on its platform. coo sheryl sandberg spoke to bloomberg at the year ahead conference in november. >> this is a major test. we are building on some success. the 2018 midterms were very focused. had new parliamentary elections. a big one.t this is

this is the highest priority for the next year. caroline: you haven't been afraid of dancing with controversy. about being mom and ensuring that the discourse is there. talk to is about allowing them to run even if they may not be complete the correct. >> this is a really complicated issue. it is hard and there are strong opinions on all sides. debate, there are facts that are getting lost. one of them is that there are a bunch of people who believe that things like the biden add that everyone was upset about for only running on facebook -- that's not true. these ads are running on google and youtube across the networks. i think people think we are doing this for the money.

said that we expect this to be 0.5% of our revenue for 2020. voices that some of the that are most concerned are coming from a place that they are worried president trump will use it in a way no one else can and he is massively outspending everyone else. that's not true. the dems are outspending president trump by a considerable margin. adselieve that political are important and are part of political discourse. they are particularly important in local elections. this is important for people who are challenging incumbent. york, thean from new youngest female member of congress at the time, she posted in the last week and said i was able to challenge an incumbent because of facebook ads. i couldn't afford tv ads.

that's why we are being thoughtful and really trying to make sure that we allow this dialogue to continue. was sheryl sandberg, facebook ask a chief operating officer. bitcoin makes strides in 2019. we will hear from galaxy digital next. this is bloomberg. ♪

>> bitcoin has fallen more than 30% since it's peak in july. around the same time a battle over bitcoin erupted on twitter. salamatgs rishaad caught up with both in taipei. >> it's been around for 10

years. killer apps in this space? there are none. rishaad: what's going on here? he was questioning your finances and you got very heated. >> he is a hater. he's a no-coiner. some but who doesn't have any bitcoin and has watched the price rocket in their face. rishaad: that's a bit harsh? >> i think so, but it's true. >> the price slid after a brief gain. >> facebook is working on creating a stable coin, something to use for payment. needs to be stable. currency i spend a

if i thought it would be worth more in three months? you need more stability for a payment currency. it's difficult to change the rules around bitcoin so it becomes like a digital gold. people don't own enough of it and i see the price going significantly higher over the next couple years. >> use say the price would go higher. do you have a call? >> i think if we can get to the old high over the next year, every bitcoiner will be happy. when? i think about bitcoin it probably has a $160 million market cap. bitcoin has a long way to go

before it replaces cold. gold has a limited supply. you can take all of the gold that has ever been mined in the history of the world and fill it in three lip excised swimming pools. mind --d to get your three olympic-sized swing pools. it's hard to get your mind around. think of bitcoin as digital gold. grants --hael nova that was michael novogratz. first digital technology to come out of the blockchain for excellence program. there is still skepticism around the world about blockchain and cryptocurrency. monicak it down further, clinton sat down with me. >> we are still in that phase right now where nobody is sure

is to gocorrect way for my blockchain starting at zero to become a true decentralized network. us witht is helping matt. we are doing a sale with coin list so people all over the world can get access. >> how has it changed the regulatory scrutiny? it has brought more energy and people that before thought it was so fringe into the limelight in a way that has been great for us because people have started thinking critically about, if facebook thinks this could be real, maybe it's not just a made up technology, maybe it has technology -- potential. we've been in the

corner that it can be used to create resilient applications and sent data in a secure way. you can track supply chains and interactions between companies. we are working on a partnership with a company doing medical device tracking. hasbook entering the arena brought more regulatory scrutiny , but more coverage from regulators that are forced to take this seriously may mean we might get clarity. heels?is on their is it china? >> i would have said before last week that china was not a big player because they are anti-cryptocurrency. the president of china came out last week and said that he thinks blockchain innovation is important. we might see china being more open to cryptocurrency in a way they weren't before. the united states needs to get their ducks in a row.

>> that was the head of research and networks. and a whistleblower speaks. one of the people at the center of the facebook came grandma linda -- cambridge analytic's scandal spoke with me. this is bloomberg. ♪

octoberook lost an ruling that says its users consume social network over the 2018 cambridge analytic a data scandal. pay more thand to $600,000 to end the u.k. probe. who better to talk about cambridge analytic of than the man who blew the whistle on the company. christopher wiley. he's the author on a book -- of a book that details the whole series of events.

i spoke to both in october from new york. >> before the story emerged, i have been working with law enforcement and regulatory agencies months before the story broke. when facebook found out that the story was emerging, they knew about cambridge analytic a well before any of this was published. the first thing that they do is threaten the journalist at the guardian with, and my view, a spurious libel accusation. it turned out everything was true. in my case, they banned me. off of facebook and instagram. after that point, working, day in and day out with regulatory authorities in the eu, the u.k, the united states, one thing that i saw was the power this company has two up you skate t

fuscate their work. when you blow the whistle, you see something that is wrong, when you report that to an authority, you think there will be some guy somewhere in a federal agency building that knows what to do. one of the things i realized is there is in fact guy. exist.y doesn't i've talked to governments, regulators, congress, parliaments. people don't know how to handle this problem. for me, the real concern is that we have a completely unregulated digital landscape that companies like facebook take advantage of. even companies like cambridge analytic to have dissolved and no longer exist. the capabilities are still there. one of the reasons i wrote the book was to serve as a warning. even if this company no longer

exists, what happens if china becomes the next cambridge analytic up? there are no rules. we are trusting our democratic process to a private company and i question whether that's a good idea. >> i wonder if you think that the current regulations and lawmakers are doing a good enough job handling the problem. >> one of the things i realized was the power of lobbyists, particularly the lobbyists who defined the narrative. one of the questions i would always get it congress is can the law keep up with technology. regulate nuclear power plants, airplanes, medicine safety. there is all kind of technology that we regulate in the name of super -- of consumer safety. just because something is on the internet doesn't mean we can't create rules that require companies to consider whether

the product that they are putting into the public will be safe for people to use. the united states is the only oecd company that doesn't have a national privacy law. when you look at the language in the way that a lot of silicon valley company's talk about themselves, there are terms and conditions, and opt-in, and all this stuff. if you look at the people who work for the company, they are called an engineer or an architect. they build ecosystems or environments. when you look at how we regulate physical architecture or engineering -- if you are an architect and you build a building without fire exits, you say, it's okay, they optetd into the building. there's a book of terms and conditions and if it burns down,

that was their choice. people wouldn't stand for that. hope ofthe things that i lawmakers is we need to understand what is social media? they are platforms and they need safety standards. >> that was the man who blew the lid off the cambridge analytic a scandal. another whistleblower, brittany kaiser, as a new accusation. we caught up with her in october in new york. >> since becoming a whistleblower, i have sought to explain to people how important their data is. it's the most valuable asset on planet earth. on a daily basis, things are being taken from you by companies all around the world that are making a multitrillion dollar industry off of your information. that sounds gloom and doom when people think they can't get

privacy back, but people have agency. there is a lot they can do on a day-to-day basis to protect ourselves. there are fantastic laws that have been introduced to u.s. congress that not only protects us ahead of the next election but could make sure that we live another more ethical digital life. >> so we have seen california passing a few laws, wyoming. gdpr is something that facebook has pointed toward in europe. where do you think the legislation is leading the way? >> i think that gdpr is the most important part of it. your data is your property, you have the right to know who is collecting data and what are they using it for? you need to opt in to that. i'm excited that the state of california has implemented a virgin -- a version of gdpr.

governor gavin newsom in the state of california has introduced a new law. not only do companies need to tell you what they hold on you but how much money they are making off of your data and to give you a cut of that. there is national legislation by senator markeith. it's the opposite in europe, you are pre-opted out and you have to consent. senator mark warner has an entire package of legislation that demands everything from transparency and consent to how your data is collected, to banning the negative use cases of your data and using negative algorithms that puts -- at the top of your newsfeed. caroline: we are also seeing the companies themselves react.

they're having more third-party fact checking. they are checking the amount they are spending on security. we see google moving -- with youtube kids. what about the steps being taken by the companies themselves? the investment that facebook is making into stopping foreign intervention is incredibly important and needed. unfortunately we didn't have those protections in 2016. what facebook is not recognizing is that the greatest threat to micro c is domestic -- to democracy is domestic. politicians being able to say whatever they want. massive threat and will continue the problems that we saw in 2016 where everything from incitement to violence, racial hatred, sexism, and voter

suppression tactics were used by the trump campaign and the trump super pac and aided by facebook. >> some employees have written a letter about this. do you think that might force some change? >> i expect that demanding changes the only way we will get withere, whether it's facebook employees are regular citizens. i tell people every to call your legislature. i meet with them every day and they say they have never heard from a constituent that they care about gay rights or protections. if we ask in droves, they are legally required to do something about it. >> that was pretty -- brittany kaiser, the former cambridge analytic a director. that does it for this edition of bloomberg technology. it is livestreaming on twitter. be sure to follow our global news network on twitter.

[ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion 3 million light years in the making. woohoo! -yeah!

♪ hank: i see this climate risk as the single biggest and most certain and formidable risk that mankind faces. david: had you had an interest in business? hank: the easiest place to get into was harvard business school. david: lehman was on the verge of going bankrupt, but was there anything you could have gone differently in respect to lehman? hank: i tell you, i don't think there was. >> will you fix your tie please? david: people would not recognize me if my tie was fixed, but ok. leave it this way? all right.