♪ ♪ ♪ taylor: i'm taylor riggs in san francisco. this is "bloomberg technology." coming up in the next hour, diagnostics. how exactly did the hacking of amazon ceo jeff bezos's phone go down? we will explore the mystery of malware. plus, day in court. the first round of hearings for huawei's cfo wraps up in canada. the appetite for ipos. we hear from the heads of the

new york stock exchange and nasdaq on market sentiment for tech firms going public. first, to our top story. researchers are not sure exactly what infected amazon ceo jeff bezos's phone after rows of -- revelations it was hacked. with bagnis a suspected -- with investigating forensic experts detected a massive spike in data being siphoned from it. hours after bezos received a whatsapp message from a saudi royal. the malware behind mac remains a mystery. to discuss in washington, marcus fowler, director of strategic threat at dark trace. and in studio is our reporter. let me start with you. we have had a few days to digest all of this. what do we know about the malware that was implanted in that video message via whatsapp? >> we have not learned a lot other than the chronology of how jeff bezos's phone was attacked.

he met with the saudi crown prince in 2018, they exchanged numbers. that day he received this message that presumably included that correctede his phone. forensics analysis has followed and shown there was this massive spike in the data being transmitted out of his phone. up to millions of times what it would be ordinarily. the question remains, exactly what does the malware look like? and what will be the way forward to protect against similar attacks. what we don't know is the malware was embedded to a downloader that was encrypted on whatsapp, the analysis looking cannot look inside of that and the researchers need to break into his phone, and that is what is next. taylor: marcus, let me bring you in. your note points out that this is not a jeff bezos problem, this is potentially a global leader problem and you think about all of the people that

potentially could be at risk. what do you make of this being a bigger issue that we are thinking about? marcus: absolutely. very sophisticated attack. and our relationship with chat applications like whatsapp is very advanced. it is the next generation of the hing.ic spearphisgi we know the vulnerabilities via email in these areas are greatest when it comes from our contacts and they take advantage of our communications. our relationships with these apps is different. we use them more often and the speed with which we read and move on, email, you might evaluate it. you get a chat, you move through it quickly. the usage of this is prolific across any number of industries and senior leadership. taylor: marcus, a follow-up here, you seem to note this type of attack from people that are in our inner circle are on the rise. why? just because it is easier? marcus: sure. when we think about a spearphishing attack or a

cyberattack, you think of it coming right at you. but the actual vulnerability, especially if you are a senior official or individual with a high security posture, you are more likely to be targeted indirectly. friends, family, close associates. your vulnerability is greater and the security posture lowers and you are more likely to click on something that appears that it comes from a trusted confidant, one of your children. this is another way to attack and go after their primary target. taylor: this seems to be a differing type. the last time you and i spoke, we were talking about iran. massive cyber warfare on a power grid. how has the type of spyware evolved over time where this is a bigger threat? kartikay: what is interesting is that it is unclear exactly how this malware has evolved. but the industry and the space behind spyware has certainly changed in the last decade or so. in the past, we saw spyware as part of a cyber toolkit that might be throwaway tools used by

a hacker, downloaded on the dark web. now, fast forward 10 years later, you have sophisticated companies with valuations worth hundreds of millions of dollars doing business with nationstates willing to play millions for these tools. at the same time, you have the apps we use every day in the operating systems getting smarter about defending against attacks, which makes any vulnerabilities and the ability to hack into these vulnerabilities more valuable. hackers might save these exploits for a rainy day or when they have a valuable low hanging fruit target as was the case with mr. bezos. taylor: how do you see ai helping to enhance the defense? let's say i trust someone and i'm a human so i can't read the malicious form of communication. do you see ai playing an important role there? marcus: absolutely. you hit on it in the beginning.

we talked about the spike in activity after the download. it is that anomaly detection and visibility that artificial intelligence can play an increasing role. we have seen it be successful at the corporate space, whether it is iot or industrial in these other areas. we have seen artificial intelligence being able to provide us that anomaly detection. what we talk about here that happened on jeff bezos's phone following the download, it was a dramatic change. so not only seeing those changes, but more granularity into hundreds of different attributes, you have created a lot of insight into what is happening. what should be and should not be happening. no matter what that threat or attack looks like, you are protected or you are aware of what is happening within your device, within your digital enterprise, across your network. that is going to be keep moving -- that will be key moving forward. taylor: i can't have you here without talking about any implications this may have on the 2020 elections, if you think about hacking into someone's

individual phone like a presidential candidate for instance. is a concern. nationstates want to know what is in the minds or in the devices of influential decision-makers in the u.s. be it a presidential candidate, and member of congress, a state lawmaker who is relevant. so certainly, the ability to exploit this kind of vulnerability and do so presumably without the user actually having to even click on it. if that was the case here, it would be a very dangerous flaw to presumably execute in the election. taylor: marcus fowler and mehrotra, thank you both for joining. shares of intel jumping thursday and after trading. they gave full revenue forecasts

suggesting personal computer demand remained strong and data center purchases are surging back. the company says sales in 2020 are forecasted to be $73.5 billion, beating estimates of about $72 billion. coming up, what facebook is doing to avoid making the same mistakes in the 2016 election. we will hear from the company's emea vice president next. 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 remains under fire after the cambridge analytica scandal, which came to light in 2018. it was revealed the firm had

harvested the personal data of millions of people's facebook profiles without their consent and used it for political advertising purposes. as you can imagine, it remains a sensitive topic going into the 2020 election. facebook emea vice president nicola mendelsohn assured leaders that the scandal was the thing of the past. she spoke to francine lacqua in davos. nicola: i think the mood is different this year. i think the reason it is different is because there is a more thoughtful conversation going on around how globally business, governments can be working together with the tech companies. i also think there is an acknowledgment of the investment that facebook has been making across many different areas, that we have had a lot of scrutiny. sometimes in the past, that scrutiny has been deserved. i think it has been good. there has also been a lot around the economic impact. what is the economic impact of the tech company? actually, there has been a lot of welcome positive reception to that.

there was a research survey that came out, a report by copenhagen economics, looking at facebook. something th we coission. it talked about h the ft how in europe, we can see through all businesses, the small 25 million businesses out there utilizing our platforms, that it has been responsible for generating over 200 billion sales in the last year. which on the economic, you look at that, that is over 3 million jobs being created. francine: when you speak to the ministers, do they ask you about regulation? how you use the data? what your purpose is? if you are a force for good? nicola: we have a lot of conversations about regulation. that is something mark zuckerberg has been calling for, how we can work with governments around the world as we have been doing with a number of different governments around the world looking at the areas of regulation. to be clear, we already have regulation. francine: gdpr. how has that changed facebook?

nicola: it has changed us a lot. we put in a whole new process in terms of making sure that people were aware of the information that was being collected from them, who they were sharing it with. giving them options as to what they wanted to do. that is something we are continuing to evolve with. and we didn't just do it in europe where it was regulated. we thought it was a useful way of thinking about things so we rolled it around the world as well. francine: we are in a political election year in the u.s. has facebook changed the way that some of these things get pushed through? nicola: definitely. i think we have changed fundamentally in the way we approach elections. thinking back to the 2016 election, the threats were different to what we understand could have been imagined back then. not just us, governments around the world missed it, intelligence agencies around the world missed it. what we have done is the investments we have made, we have had units, probably over 100 different elections around

the world. every time we are increasing the scrutiny we place on safety, so come this 2020 election, it will feel different. the reason being it is a thing we have introduced. we have introduced the fact that political parties have to be checked with, authorized with us. the fact when ads run for political parties that says is is paid for -- that it is paid for by that party. and those ads go sit on an ads library and you can go and have a look, anybody can look and you can see the different messages that the different parties are putting out. francine: how can we be so sure that there is no manipulation interference from another side that we have not figured out? nicola: one of the other things we're looking at, we are not just waiting for elections anymore, we are looking at patterns of inauthentic behavior coming from big networks. in 2016, we took down none. in the last year, we have taken down 50. we report all the time when we see these different networks out

there. we stay vigilant, we know it is a race to make sure that when we feel we have got better control, that there are other things i could happen. we are very alert to the risks that could be there. francine: what is the potential for ads on whatsapp? nicola: that is not something we are progressing at the moment. it is early days. we are making sure that the way that people are using the platform, that is a most important thing. it has grown nicely from that side. francine: what will make you decide? do you worry people will be put off it? what are you trying to figure out? what time frame? nicola: we are just looking at the moment in a different way. we do test all the time. one of the things you will see is across all of our different platforms, we are always looking at different ways to evolve. we also do it carefully and an -- in a way that works for the businesses and the people who use the platforms. taylor: that was facebook emea vice president nicola mendelsohn. for more, we are joined by sarah frier, who covers facebook.

at the end they got into a conversation about ads on whats app, and we are talking about hats app in a very different context, the hacking saudif bezos's phone by a prince according to the u.n. what role does whatsapp play in that? it is supposed to be encrypted messages. sarah: that is what makes it complicated for the hacking situation and advertising operation. facebook cannot see what people are sending to each other on whatsapp. there is no way for them to know necessarily what is in a video. there is no way for an advertiser to know what people are sending, and therefore target them with relevant ads. facebook would have to do some triangulation between whatsapp, facebook, instagram and messenger to come up with information to target people in whatsapp. so very complicated. with the hacking a particular, we are talking about something that they don't have the keys to de-encrypt. all they can say is there was a video.

whatsapp has a default setting where videos get auto downloaded before people start looking at them. it is meant to improve the experience and get it much more quickly viewable. especially because whatsapp is used in so many places that have low connectivity. that could have made it more dangerous on jeff bezos's phone to get a piece of material with malware in it. taylor: in a few days after this incident and in your conversations with facebook, have they said anything about their changing role in how they would look at things differently from that auto download? sarah: they did speak actually in the fall to the threat with the mp4 files. they have spoken about the threat from one security group on whatsapp. with this particular hacking, they have not weighed in. but nicola, in a separate part of her talk, did mention that this is akin to if you are open say an email with

a link that was malicious, that was going to cause a virus to be downloaded onto your computer, they are thinking of whatsapp in a similar way. where it is a means of sending messages and the messages themselves, whether it is a risk to your device is up to the maker of the operating system. in this case, apple. taylor: in that conversation, she said 2020 is different from 2016 because this time we are making investments and having a thoughtful conversation about the ways in which facebook can be used for misinformation. then you have a story out that george soros is coming out and saying facebook is conspiring to reelect trump, that they have not done anything to prevent the dissemination of misinformation. your reaction? sarah: this is a situation where facebook is treading carefully because they don't want to upset anyone on either side. they don't want to limit misinformation on facebook because then they would have to decide what is true and false. they would have to be the

arbiters of that. zuckerberg says they don't want to have that power. what she was talking about with the transparency with political ad archives, that is useful only to an extent. if people are scrolling through facebook and looking at ads, how many of those people do you think are going to the political ad archives to try to check what those messages are compared to other candidates, who is paying for them? they are not going to. it is a passive experience when you are browsing facebook. you are susceptible to getting information that is not true. taylor: a great conversation on whatsapp, facebook. that was bloomberg technology's sarah frier. thank you for joining us. coming up, google and facebook are at odds again. this time it is about the same issue, privacy. we will have more details next. this is bloomberg. ♪

taylor: another clash between

two tech giants, google and apple. google claims the anti-tracking tool on apple's web browser safari is flawed and creates more problems than it solves. chrome and safari are the two most popular browsers, and this is not the first time that google and apple have had a dispute over privacy. what exactly are the google engineers saying in this report? garrett: it is interesting. google has this group of engineers that are essentially white hat hackers. so hackers for good that try to find vulnerabilities in google software and also software made by other tech companies, and warn those companies about them and eventually release the information to the public so that everyone can fix the software and make sure malicious actors don't take advantage of it. what happened here is google found what it says the problem in this tool that apple released a couple years ago. the very purpose of the tool is to block tracking for advertisers to track you when

you are using safari browser. but it turns out the specific way the tool works makes it possible for hackers if they wanted to, and there is no known cases of this happening yet, but if the hackers wanted to and figured this out themselves, they could track you themselves using the anti-tracking tool. taylor: what is apple saying? the first time this is brought to their attention, they thanked google, said they fixed the problem. gerrit: it has evolved into a bit of a fight between the companies. google told apple about this last year. they did it quietly, they did not release it to the public, to give apple time to deal with it. apple said they went and did that. they put out this cryptic blog post in december saying they fixed some problems, did not exactly detail it and thanked google in that. and yesterday, when this finally was released to the public, some google engineers on twitter said that apple actually did not solve all the problems, they only papered over a few of them.

apple has not directly responded to that yet. it is kind of a mystery exactly whether this is now something that is out there that hackers who maybe had not known about it before can now potentially take advantage, or if apple has really fixed all the problems. taylor: explain this to me, if the two web browsers are competitors, is google trying to help apple point out the flaws? what is the purpose of this? gerrit: my understanding of how these kind of google hackers work, is they do not necessarily get told by google executives to go out and make our competitors look bad or embarrass them by pointing out their flaws. you can say on the one hand it is embarrassing but on the other hand, useful down the road for apple to know about it. it is better to be embarrassed in the short-term by a competitor than have a hacker or a foreign nation state take advantage of this and cause you much bigger problems. the way this google team works to my understanding, is they kind of choose the problems they are most interested in. what they think is biggest and

they go after it. sometimes it happens to be an internal google software that makes them -- helps them figure that out and embarrasses them. or it is a competitor. taylor: another interesting segment in all of this is not google last week decided to block cookies. originally they had not. apple was seen as more of a leader when it came to the privacy issues. how does this put them as we take a look at may the race between the two when it comes to cookies and web browsers? gerrit: what is the irony of the situation apple's safari browser , was seen not just by apple but by privacy advocates as being much better for consumers who are concerned about their privacy. it actively tries to stop people finding you and retargeting you with ads. google's worldview is targeted ads are good because they help keep the web open, free and accessible. they sort of acquiesced last week to say eventually we will get rid of cookies which are the most popular way of tracking people around the web.

now it looks as if this apple tool that in the very first place was supposed to stop tracking, actually could facilitate it. taylor: bloomberg's gerrit de vynck, thank you for joining us. new roles are coming soon that will put more limits on american companies supplying huawei technologies. commerce secretary wilbur ross tells bloomberg that some companies have worked around the rules to continue sending crucial electronic components to china's telecommunications giant. huawei was blacklisted last year as a security threat by the trump administration. still ahead, we continue with huawei with the latest in the extradition hearing of its cfo , underway now in vancouver. that report next. this is bloomberg. ♪ sometimes your small screen is your big screen.

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taylor: this is "bloomberg technology." we are joining bloomberg daybreak australia to bring you the latest in global tech news. i'm taylor riggs in san francisco with shery ahn in new york and haidi stroud-watts in sydney. let's take a look at the top tech stories of the day. shery: intel reported earnings with bullish revenue forecasts suggesting personal computer demand remains strong in purchasing data it will be about 73.5 billion dollars.

the company said late thursday in a statement that the estimate of 72 billion. xerox is escalating its paper fight for hp. the company plans to nominate 11 directors to be -- to replace hp's board after the personal computer maker refused to engage in merger talks earlier this month. xerox said it arranged a $24 billion loan to finance the deal. at&t's directv says the satellite it operates is in danger of exploding and needs to be moved away from an orbital zone occupied by a communications satellite. the warning came from a filing with the u.s. federal communications commission and cites battery cells as the potential culprit. the satellite provides backup coverage for tv viewers in alaska. those are the top global tech stories we are watching. taylor: the first round of extradition hearings for huawei's cfo opt up in canada thursday. the u.s. is seeking extradition of meng wanzhou, arrested in december of 2018 during a flag flight stopover in vancouver.

let's go there now for an update from bloomberg's natalie pearson. can you remind us again how we got to this point, what the case is about, what the trial hinges on? natalie: this is the first round of extradition hearings for meng wanzhou since she was arrested 14 months ago. this initial set of hearings was focused on a core principle of canadian extradition law called double criminality. essentially asking, can the alleged crime she committed also be considered a crime in canada? the pillar of her defense has been that no, it doesn't meet that test because the alleged conduct rests upon a violation of u.s. sanctions. canada doesn't have sanctions on iran. so therefore, they are saying she should be freed. the prosecution has argued that no, her case is about fraud, that she lied to hsbc bank, tricking it into conducting transactions that violated

sanctions and so therefore, she should be extradited. the judge reserved the decision today as expected and that will come in a written form later. we don't have a timeline for that. it could take a couple weeks, it could take a couple months. haidi: in fact we know the next rounds of the trial, if it does impact and go to those proceedings, would not be until april 27. it could be a drawn out process? natalie: that's right. one thing to keep in mind is that however slim this is actually her first shot at release. if the judge were to come back and say her case does not meet the double criminality test, then she would be discharged and in theory, she would be able to get on a plane back to china. canada and the u.s. would likely try to appeal the decision. they would have 30 days to do so. but by that point she could be long gone. that said, the chances of that discharge are very slim in canada.

if you look at the historical data, out of nearly 800 u.s. extradition requests to canada in the last decade, only eight have been discharged or turned down. that is about a 1% chance. taylor: like your piece says, the shot is about one and 100 and 100 for beating this extradition law. what can we expect next from her, let's say, if this doesn't work? you said this was her first chance at a shot of being free. natalie: that's right. in a later hearing scheduled for this year, she is expected to introduce evidence to buttress a parallel argument that she has going that her rights were abused when she was arrested at vancouver airport last year. the strategy there is to show that if they bungled her arrest and violated her constitutional rights, than they would have to let her go. the other track that her defense is pursuing is a politicization of the case. if you recall, u.s. president donald trump at one point had

indicated he might be willing to intervene on her case if it would help them get a trade deal with china. her defense has jumped on those comments to show that this is a highly politicized case and that canada should not extradite her. taylor: and a developing story. thank you to natalie pearson. there is much more ahead. stay with us. this is bloomberg. ♪

taylor: amazon is proving persistent in its challenge against the pentagon's decision to award microsoft the jedi contract. the commerce giant has asked the a court to temporarily block microsoft from working on the $10 billion cloud deal until the lawsuit is resolved. i asked microsoft president brad smith last week what he thinks of the lawsuit.

brad: i think there is an interesting lesson for all of us, certainly in the world of business. maybe just life more broadly. first of all, never assume that you are so far ahead that you can't lose. never conclude that you are so far behind that you can't catch up. every day, we focus not just on catching up, but leading. taylor: for more, i want to bring in naomi nix from washington, d.c. from your perspective down there in d.c., your thoughts on this? do they pause work on the cloud, is this relatively routine? where are we in the fight here? naomi: look, it is a relatively routine decision for a contractor who is protesting a contract like this to file a motion like this. amazon is essentially asking the courts to force the pentagon to stop working with microsoft on this cloud deal. the pentagon has said they have

persisted and started to work on the contract. they have already held meetings with microsoft and started to identify programs to use in this project. i think it is a significant deal for the pentagon but a routine decision for amazon to make. taylor: what is the hurdle, the for amazon to get this injunction, if you will, to stop the work on the cloud? naomi: that will be up to the judge to decide. usually, contract -- significant work on contracts are paused while court proceedings like this are going on. but i think there is a larger uphill battle here for amazon which is amazon's filing a lawsuit, trying to get the pentagon to reverse their contract decision, perhaps either award it to amazon or to restart the bidding process. that is really the true obstacle

that awaits amazon. there is a high bar legally for amazon to make that kind of case. and whether amazon will be able to get enough evidence and make the right legal arguments to win that is certainly difficult. taylor: you said this is a big deal for the pentagon and the department of defense contract. how are you seeing d.c. and the trump administration preparing for the next stages of this lawsuit? naomi: well, the pentagon has said look, our war fighters, our soldiers in the battle, they need cloud computing now. right now, the defense department has hundreds of different cloud projects. what they are trying to do with this jedi project is to consolidate many of those projects into one single cloud. they consider that a national security issue. the department of defense has told congress look, we don't want to be slowed down by a lawsuit. we would like to proceed.

meanwhile, amazon is saying look, the trump administration, we think, interfered. the department of defense misjudged our application for this contract. so it is actually important that a judge take a look at this and see whether the defense department made the right decision. and amazon agrees that certainly the defense department needs to move to the cloud. taylor: bloomberg's naomi nix, thank you for the update. now another conflict between apple and the european union. the tech giant is pushing back against an initiative that would standardize chargers for all types of smartphones and devices. efforts is part of e.u. to cut back electronic waste. i'm joined by mark gurman in los angeles. you kind of wonder about if this comes down to money because as you know, every time you get a new phone, you have to get three new chargers to match your devices because the old ones no

longer work. is this coming down to apple trying to protect one of their moneymaking machines here? mark: you know, i don't think so particularly. i think this is pretty cut and dry. this is the rare case where i do not think apple did anything wrong. apple just has the proprietary lightning port. last change was in 2012. they have come out with their own connector because they say it works best with their ecosystem. i don't think there is a problem with that. there is no reason for apple to or another usb just because samsung or huawei use it. taylor: it was interesting , because apple was saying that this regulation on a simple things such as a charger could stifle innovation instead of help it. what is the case for that? mark: yeah, i completely agree with that. when apple moved to the lightning connector in 2012,

their argument for doing so was the previous 30 pin connector which was quite a bit wider, also very proprietary, they had to use that for over a decade prior to the switch, but was too big for the smaller devices that they wanted to make. their will become another time in this process of technology where they will have to change the connector again. i think the next wave is no connector. you will see a time where apple is removing the connector and there will be some sort of proprietary mechanism to get the to the phone for troubleshooting. there's no way that apple will be able to move to a standard there inventing new technology to make it wireless. i think apple's argument is actually pretty sound on this one. taylor: talk to me more about that. these chargers, the e.u. says they want to produce electronic waste, but it appears to be obsolete because we will be charging our devices wirelessly in i imagine the next five to 10 years. is this a goose chase, if you will, going to be obsolete anyways if we will not have

chargers? mark: you know, i think so. i think it is going to be for some devices where there will be not be charging points. there will be other devices where they will need chargers because they can't be on battery power constantly. i will give you an example, i don't see a future where our laptops are going to be wirelessly charged. this is going to be for iphone specifically. in terms of other proprietary chargers, the apple watches on a completely proprietary mechanism. the one criticism i have with apple at this point is that within their own company they don't have a uniform charging or connector strategy. the iphone uses different connectors from the apple watch, the apple watch and iphone are different but the ipad is also different. the ipad and mac laptops use the same charger about the iphone uses a different one. some ipads use a different charger than other ipads. if you have the ipad pro, if you

usb-c, if you have the regular ipad, that is lightning. apple needs to worry about itself on this one. i think the response is ok. taylor: the european commission says of course, they are considering legislation. how serious of a threat, how serious are they along in those plans to make this real legislation? mark: this isn't new. they have been talking about this for several years. this was the third time that this has been in the news over the last three or four years. nothing has happened last year or the year before or the year before that. i would be very surprised if there is some sort of legislation. these news stories where governments are trying to get apple to change in terms of hardware functionality, they crop up from time to time. i have yet to see it actually happen in practice. stuff around services and changes to maps in russia and other things like that, that is a different story. taylor: thank you for keeping us honest. that is bloomberg's mark gurman. still ahead, the appetite for ipo's. we hear from the heads of the new york stock exchange and nasdaq on market sentiment for tech firms going public.

stick with us. this is bloomberg. ♪

taylor: the tech appeal market has seen its fair shares of highs and lows over the last year, drawing skepticism from companies considering going public. listings the new ipo? bloomberg spoke to nasdaq ceo adina friedman on the health of the public market. take a listen. >> i do think the underpinning of the economy in the united states continues to be strong. when you look at the opportunities that exist, the companies looking to tap the public markets, it feels like a healthy environment right now. >> speaking of companies going public, we have so much fewer of them. what are the longer term ramifications of that? >> in terms of the last couple of years, we had 187 ipo's come to nasdaq and a 70% win rate. we had 186 the year before. you are right. if you compare that which felt healthy to even 20 years ago, or

25 years ago, we used it to have 300, 400 on a regular basis. the number of companies are fewer and we do have concerns about making sure that every person has an opportunity to tap the growth potential of great companies coming out. companies are waiting longer to go public or choosing to stay private forever, it chokes off the opportunity to majority of the population. >> do you believe as some people do believe that this is causing some sort of wealth inequality because people don't have access to these privately held companies that are skyrocketing in valuation? adena: i do actually agree that when we look at -- over half of the population in the u.s. has access to public equities either through their pensions or direct investment. when you look at private equity, private equity funds, shares, they are only available to the most wealthy individuals. and through pensions. there is a whole ecosystem of

individuals that do not have an opportunity to invest in those growth companies. our view is it is not so much that you want to limit the opportunities for companies to be private. but instead you might want to consider, how do you give more individuals access to private equity funds and make the public markets more inviting for companies to tap the public markets so more come in and become accessible? >> what's the risk here? as the sec looks at rules on who is investing in these private companies, what could go wrong? adena: i think you have to be careful in distinguishing between private equity fund investment and direct investment of private company shares. if you think about the u.s., we are what we call a disclosure regime. when a company chooses to go public, they have to disclose information about themselves so that the average retail investor has the same access to information as a professional investor. that is the whole point of an f1, quarterly disclosures. it is an underpinning of our

system. private companies don't have that obligation. if you are going to make them accessible to more retail investors, you need to change the disclosure regime for private companies or a better thought in our opinion is to give retail investors better access to private equity funds that are professionally managed. most retail investors invest through mutual funds or 401(k)s that are professionally managed. private equity funds are also professionally managed. and why is it that someone, a really savvy person who happens to have chosen great public service who is not wealthy but really understands investments, why are they not allowed to invest in it? only the wealthy are. our view is to open that access. one component of that is you have to make those funds more liquid. the nasdaq through the nasdaq private market has launched a liquidity service to allow for private equity funds to have periodic auctions. we are the only company that has received approval. we are excited about that. >> speaking of going public,

directly stings have been a hot topic. it is perceived that the new york stock exchange is ahead with spotify and slack. how are you catching up? adena: i think both exchanges offer a good solution for companies who choose to have a direct listing. we have offered direct listings for a while and i think more companies are considering that path. >> how many? adena: it is a niche offering. to those companies that are not looking to raise capital and have really great brand recognition out and among retail investors or have a business model that is easy to understand and predictable. taylor: that was nasdaq ceo adena friedman speaking with our reporter in davos. bloomberg also sat down with the president of the new york stock exchange, stacy cunningham, to get her opinion on the advantages of going public for both companies and investors. she spoke to tom keene and

jonathan ferro in davos. stacy: there are a lot of conversations of why they are staying private longer. about capital, regulation, all of these things. the fact that they are staying private means there's less of discipline in governance there , less clarity around valuation. are these companies worth what the private markets are saying? or do you need the wisdom and disclosures and transparency to determine that? jonathan: let's talk about pressure. we have the likes of blackrock talking about a leaning on the active management world to lean out of some companies, let's say in coal. the pressure really is going to put on the index providers to say to them, you need to get these companies out of the index. that is going to make the most difference. the pressure will also be on the exchanges. stacey: i thing it is important to make sure that investors have access to opportunities and the

right to choose. by putting them on exchanges and giving them information about their disclosures, it is helpful so they can make informed decisions. i think it is important to recognize -- the conversations i have been having are for many ceos who are saying we have been doing the work around esg already. it is important to our employees and customers that we take a stand on these issues. even more so than their investors. jonathan: let me ask you this, which has come up multiple times over the last few months. you have minimum standards to be listed on the new york stock exchange. minimum market cap, shareholders as well. why not have esg as part of that? stacey: our standards are focused on investor protections. the conversations we are having are connected. if we put so many standards around requirements for companies to be public, they have alternatives. it is a different dynamic than it was years ago when you had to come to the public markets to get money. because there is money available in the private market space, we don't want investors to be denied those opportunities entirely.

tom: this is not your remit, what i want your opinion on this. it's important. ferro has responded from the shock of losing money on -- jonathan: don't listen to him. tom: how do you respond when on your floor, they do the song and dance of an ipo or even the initial public offerings and they come out and they do the whole modern media dance and the thing goes down x percent. that is not good for the brand, is it? a largekeep in mind, in ipo like that, they sold $8 billion of stock. over time, investors were reacting to the valuation of companies. tom: your job is to get it open in the early minutes. stacey: and make sure investors have the information. tom: did they have the information? stacey: yes. it is a great example of private valuations versus public valuations. we need to make sure companies get out. the shift, because they do not need capital, is why the direct listing was an innovation we

delivered this year. it is not about raising money. it is -- tom: there is a private valuation, they go public and selected stocks tank. whose responsibility is that? it's not you. who is responsible for pricing? stacey: i think investors are asking questions i have not asked for before and i think we will see that in 2020. tom: i agree. we are learning. stacey: when you have limited people participating in the private space you are losing access to opportunity and limiting access to information. taylor: that was stacy cunningham, president of the new york stock exchange, speaking with tom and jonathan ferro in davos. that does it for this edition of "bloomberg technology." bloomberg technology is live streaming on twitter. check us out @technology. follow our global breaking news network at quick take on twitter. this is bloomberg. ♪ ♪

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