>> from the heart of where innovation, money, and power collide in silicon valley and beyond. this is "bloomberg technology" with emily chang. emily: elon musk in court. the tesla ceo trying to defend the $2.6 billion purchase of solarcity in response to a solar

lawsuit. we will bring you his contentious testimony from the stand. plus, beijing' azteca crackdown, focusing on ride-hailer didi which just went public in the u.s.. what will it mean for u.s.-china relations and financial relations? coming down to earth. we will look at virgin galactic shares after that triumphant trip to space by billionaire richard branson. it turns out the company needs additional funds. investors respond. first, u.s. stocks hitting records ahead of earnings. katie grayfield has more in new york. katie: both the s&p 500 index and nasdaq 100 and and at record highs. it probably helps that it was a pretty quiet day in the bond market. 10 year bond yields and it about a basis point higher.

dramatic drop in rates. the nasdaq's golden dragon index fell about 0.1% in u.s. trading. it brings the total drop from the mid february peak all the way from 35%. china has been cracking down on international listings and that has been weighing on chinese tech shares in particular. this sector has not been able to get off the ground. we have got to end with tesla. ceo elon musk in a delaware courtroom today, defending that purchase of solar city all the way back to 2016. he made the case today that this was not a bailout. tesla shares had a strong day come up over 4%. that brings three-day gains up to 6% and makes the back to back losses last week a thing of the past. tesla shares are still well below their high watermark of

about eight hundred $83. emily: -- of about $883. emily: elon musk, day one of his trial in wilmington, delaware. he told the court that is $2 billion acquisition of solarcity in 2016 was not a bailout. shareholders have sued tesla over the deal, saying solarcity was a failing company. musk was chair of solarcity and its biggest shareholder at the time. let's bring in went bush director dan ives. this was settled and yet musk decided to take it to court anyway. dan: this continues to be something musk feels passionate about, that this was the right acquisition. but i think investors disagree. this has been, i will call it a dark chapter if i look at tesla's history. not an acquisition investors

assign value to. it is hard to put this is what i would view as a smart acquisition. it continues to be a black eye, one of the few if you look at tesla in the last 5, 6 years. emily: as i understand, he may have to pay upwards of $2 billion if he loses? what is the extent of the damage? dan: i think the damage is more what comes out in future acquisitions. given this acquisition, it could be somewhat successful. it really come a write off in terms of the view of investors, a painful one. at a time that investors wanted a focus, in terms of their initiatives. i think this is something that musk feels passionate about. i think investors right now want

to see how this comes out because i think it is more reputational. emily: certainly comedy optics are bad. he was the company's biggest shareholder. everyone raised their eyebrows but elon musk is pretty used to that. what makes that's different in terms of the bold and daring moves that he has made? dan: he has made many that worked out, and more. i think this is one that they underestimated just how complex the solar industry was, how competitive it was. it was really out of their core competency. i think you have seen that play out here. it has been frustrating for investors to watch, negative to no value, and it is one that musk still believes. he is not one who will ultimately stop. but this is one, with many

highlights over the last decade, this is definitely a lowlight. emily: how does this play into is future ambitions? solar roofs, batteries, a much more sustainable future? do you see solarcity as a huge drag? does it mean they will not be able to accomplish those goals as fast as we thought? dan: i think maybe eventually they could sell off part of that solar business if they are able to ramp it. the problem right now, in terms of electric vehicles, with this arms race, the last thing investors want to see is any dollar go toward non-ev's. especially with competition from all angles, you want to see them focused on ev. it is all about delivery. especially with everything going on in china as well. you don't want to see any

distractions from musk or the management team focused on solar acquisitions. emily: obviously, taking a look at tesla more broadly, there are lots of things going on, things happening in china. what are your sort of overriding views right now as we are now in the second half of the year? >> they have been through a category five storm in terms of the chip issues, the negative pr issues. i think that shows that they will be on trajectory for potentially 900,000 units, more profitability on the horizon. i think they navigated this mi ni-crisis. i believe that q2 is a turning point in their story. i think we will look back at this as one that is a fork in the road situation and they

navigated it positively, not just on china but on overall ev in terms of deliveries and chip shortage, which has started to moderate and the second half of the year. emily: netflix kicking it off for tech next tuesday. what are you looking for, especially when it comes to the companies you cover when we come out of a pandemic and life returns and habits presumably return to normal? dan: our view is that we will have a massive beat and raise across the board in tech. software, cybersecurity. i think microsoft is just going to be an unbelievable quarter. it is our view that tech goes up another 10, 12% the rest of the year. i believe, we go back three months ago, no matter what these companies reported, they just dismissed it, a covert almost

pull forward. now you are starting to see digital transformation tech take a step higher. i think q2 is going to be just the start of what i've view as the next part of this cycle. emily: and yet, there is this regulatory screwed coming from all sides. certainly now, u.s. congress. how big a deal is that especially for big tech? dan: i think it is a big deal. we talk about 5%, 7% overhang because of this. all different angles within the beltway. we have seen the biden initiative, other parts regardless of which side of the aisle you are on. i think it starts to become a threat specifically with m&a. i think the winner here is microsoft because they have a lot more flexibility to do deals. a lot of these other tech solar

-- are in the spotlight. emily: all right, we will keep our eye on microsoft. dan ives, thank you. bloomberg has learned that microsoft agreed to buy security software maker risk iq. the price, more than $500 million in cash. risk iq makes cloud software that helps clients understand where and how they can be attacked. microsoft spent the last eight months grappling with damaging and widespread cyberattacks. coming up, after rate successful launch into space, richard branson and his crew, shares in virgin galactic take a nosedive. we'll find out why, next. this is bloomberg. ♪

>> 3, 2, 1. release, release. clean release. ignition. good rocket motor burn. emily: that was the moment virgin galactic founder sir richard branson made history, becoming the first ever owner of a private space company to launch into space aboard his own craft. our very on ed ludlow caught up with branson on the ground soon

after he returned to earth. richard: i have been practicing some words to say to kids down on earth for some time. once i have done those words, just being able to unbuckle and just take off and look out these massive windows, then the spaceship was upside down, take in the earth from space. it is something i have dreamt of since i was a kid. it was completely and utterly awesome. one of those dreams come true. i still think i am going to wake up any minute. ed: you are here, you did touch back down. you said the feeling of weightlessness is indescribable but will you have an attempt for me? richard: it wasn't just -- but looking at the other three

beneath me, floating as well, and looking out through these gigantic windows back at this stunningly beautiful earth. pristine sky, the strength of the blues and blacks. and i think we were in space. i have never -- i have always sort of pictured what it would be like, like the ride up there, the ride back. i never realized the whole experience would be so vivid. ed: beyond the satisfaction of your own goals being achieved, what does this today symbolize for the company and also all those children who were present earlier? richard: for the children, we have just got to get as many spaceships as we can as fast as we can so one day those kids will have a chance to have a similar experience to what i

had. we also launched a global raffle today so that two kids, $10 for a pair of tickets, if they win the raffle, they can go up. that money will enable them to go up. emily: virgin galactic founder richard branson. speechless as he talk about -- as he talked about that trip. shares of virgin galactic tumbling the day after this big event. the company disclosing the potential sale of up to $500 million in sales, suggesting it needs funds as it prepares for its debut. they spoke about how the math works out for virgin if they plan to charge passengers $250,000. >> i think the financial model

will be very robust. i think this is the supply constrained market. it does cost a decent amount. but our ships are reusable. the vast majority of what we build is reusable. that will allow us to have good flow-through. >> is it really software company level margins that you are open for? -- you are hoping for? >> i think you will see healthy margins out of this because we will lead with value. i think what you saw today, there is no comparison in the world. i think the economics will come out of that. you are focused on your guests, you're consumer, your future astronauts. as we bring them into being astronauts, i think they will be thrilled. >> i wanted to ask you about that -- about beth. she will be responsible for training these future astronauts.

she seems really committed. can you tell me how important a role she will play going forward? >> beth is amazing. if you ever were going to pick someone to get you prepared to go to space, it is beth moses. her role is crucial. when people arrive, there will be a moment of, oh, my goodness, this is real now. am i ready? with the crew today, they were really ready. you could see from some of the smiles on their faces. emily: virgin galactic ceo right there. we will have a lot more about the future of space travel over the next couple of weeks and later in the show. of course, we have bezos's launch coming up as well. coming up, we have covid cases surging in the u.s., and a new

side effect tied to the johnson & johnson vaccine. disney's latest release " black widow" scored the highest debut for a film since the onset of the pandemic. $80 million in north american theater ticket sales and more than $60 million globally from fans paying to watch at home. this is bloomberg. ♪

>> there are parts of america that are 40% vaccinated, and those are the parts that are now seeing not only an increase in cases but an increase in hospitalizations. it is like, here we go again. it is really important to be vaccinated but more generally, it reflects a big problem we are having, having people ready for the vaccine. people are vaccinated right now are pretty protected, but what about people who have conditions that the vaccine does not work very well for them? they are immunocompromised, for example, or children.

particularly over it -- particularly older adults, are they a risk to people if they are vaccinated? emily: that was the vice dean for public health practice at johns hopkins bloomberg school of public health. as covid cases surge in the u.s., health officials are monitoring reports of a rare immune system disorder and some people receive the johnson & johnson vaccine. more on this big potential setback. true, it certainly sounds scary. what do we know. drew: we know there has been about 100 reports or so on this immune system side effect, guillain-barre syndrome. right now, 95 people i believe hospitalized. there has been one death associated with the condition. the bigger issue here i think is that johnson & johnson vaccine has had a handful of these safety setbacks. the stroke risk, now this.

they have had some manufacturing issues. none of this is great for a vaccine that has kind of been the third-place vaccine already. only about 12.5 million doses administered, about a 10th of what pfizer and moderna have had done. it is a continued challenge for the shot. in particular, u.s. and health officials had hoped to use this to reach some harder to reach populations. emily: what are the chances this vaccine gets taken off the market? dan: -- drew: i think that is unlikely. this is a rare side effect that appears to be associated with the vaccine. i think we need to emphasize, there has not been a causal link yet. it is not good. in an era that we have vaccine choice in the united states, which is a lucky thing to have, it probably does not bode well for the future of the j&j shot.

emily: what is interesting is it is an immune system disorder and you are more vulnerable to covid if you have an immune system disorder. if you are someone who can only get the jmg vaccine given the threat of covid, do you get the vaccine rather than risking a rare but scary side effect? drew: one of the things to keep in mind, yes, this is an immune system related reaction. it is very complicated. i don't want to -- i want to caution anybody from over interpreting. vaccination is essentially that you are activating the immune system to make it think you have covid. when i got my doses of moderna, i took a long map afterwards. this is something that is very different. it is also incredibly rare. i do think we need to emphasize

that. you are talking 100 cases out of more than 12 million doses. this is a rare potential side effect related may to these vaccines. emily: we are hearing cases continue to surge, mostly among the unvaccinated. what is the path to getting more people vaccinated in the united states now that most of the people who were going to run out of the door have done so already? drew: i think it is a real challenge. first vaccinations in the united states are really got a long, thin tail. the people of all remaining, some of these pockets of non-vaccination that you have especially in the south and central parts of the country, it has been a challenge to try to reach these people. right now, we have not seen an uptick in the numbers of new vaccinations happening in the u.s. emily: your team, amazing. drew armstrong, thanks so much

for that update. coming up, the reason behind beijing's crackdown on big tech in china seems to be expanding. one focused on monopolies has now evolved to personal data. we will have more on what is at stake. this is bloomberg. ♪ so... i know you and george were struggling with the

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emily: welcome back to bloomberg technology. i'm emily chang in san francisco. day one on elon musk's trail in delaware has come to a close. he said the acquisition of solarcity was not a bailout and vowed to retaliate against anyone -- we are continuing to follow that case and i want to check back in with tesla shares in the market. what do you see?

katie: tesla had a strong day, rallying 4%, outpacing the broader market. this is after reports the company was in talks to acquire sas institute. however, you did have charter communications getting downgraded and that weighed on the stock. virgin galactic came back to earth and then some, falling almost 18% after the share sale after richard branson's successful test flight over the weekend. but we have to talk about bd because the hits keep on coming. the company fell another 7% after the company said it removed another the five apps from online stores to comply with the chinese order and warned of adverse impacts from that removal. finally, let's check in on the meme stocks. they did not do so hot today.

gamestop and amc down 8% as movie stocks probably slid but, meanwhile, s go to is your new kid on the block. it grew over 100% today. used to be a knee stock but no longer. reddit stock was lit up today, and meme mania is alive and well. emily: investors have a new kid in town. when china yanked the financials , it seemed focused on monopolistic practices as a bid to protect consumer rights and maintain stability. at the recent crackdown on didi seems to focus on sensitive data and national security. here to break it down, we have a new american cybersecurity

fellow. this is the latest in a series of moonves -- moves by xi jinping's government. at this seems targeted toward a company that lifted publicly in the united states. what is your take? >> the government is looking to assert its control over the powerful tech platform. but let's drill down a little deeper. what makes these companies so powerful is the best troves of data base it on. it's valuable for commercial and political reasons. it is interesting -- the tools that they use are cybersecurity review, a review of acerbic -- of security practices as well as their management of personal data on the mobile app. this is the number one regulatory risk for domestic and foreign companies -- data security. emily: what do you make of the timing happening within days of its public listing?

interestingly, they went public in the middle of the celebration of the anniversary of the communist party. they did not do any media interviews that we typically do during the listing process. doesn't the timing seem interesting? samm: the timing is interesting. i think there are two separate stories colliding here. one is that it's very likely didi was undergoing a cybersecurity review of its practices in secret and that's not typically a transparent process. they may have rushed forward with the ipo before getting the blessing from regulators that they were in the clear coming in compliance with domestic data security practices. that is number one. number two, i inc. there were officials not happy with the overseas listing and there is a broader effort where they are rethinking their stance on sending tech darlings to list on

overseas markets. emily: to put this into context, china and the chinese government has gone to great lengths to put a dish u.s. tech out of china and the conventional narrative is that has helped bolster chinese technology companies. i wonder are the chinese government's latest moves coming at the expense of chinese companies and why would they do that? samm: i think there's a tendency to look at moves by the chinese government as coordinated in order to act in the best interest of chinese companies going global. that is not necessarily what's happening. even though the xi jinping government has said we want to have globally successful chinese brands that can operate outside of china's closed and protected system, often times they left hand is not talking to the right and you have security objectives of the government that are undermining the efforts of those

same companies to go out and compete successfully in global markets and that's what's happening here. emily: what do you see longer term in terms of u.s.-china relations? do you see a financial decoupling of the u.s. and china? there are several chinese companies list it in the united states. do you see perhaps a financial decoupling? samm: this move is a shortcut to financial sector decoupling and these companies are caught between washington and beijing. beijing wants them to come back and list best to clean and on the washington side, they put forward a more rigorous auditing process, requiring chinese companies to open up their audit books or be forced to delist. that is also what was driving this, the kind of data that would be exposed in that audit process in the u.s. is not

something the chinese government has any interest is closing to foreign regulators. certainly on the financial side, a decoupling and a number of tools will determine how far that goes. emily: what is your outlook for a company like didi or bytedance that was planning to go public and now that's on hold? samm: the idea of wholesale decoupling is somewhat of a red herring. we are going to see ad hoc in some areas where these are companies that will be under increased pressure to shift their global ambitions, and focus more on china's domestic market. for bytedance, we saw this for a while way and now we are seeing it for didi. i think there will be an inward focus as they look to line up with domestic regulation on the security side and now on the data security site. emily: always good to have you here. thanks so much for taking the

time to break that all down. now an update on another story -- verizon and huawei have come to an agreement in the middle of a jury trial in texas. while wake claimed verizon was using his patented network technology without a license. it was the first of two trials involving alleged breaches. representatives from both companies said they were pleased with the settlement. the terms of the agreement are confidential. coming up, ibm has a plan to use artificial intelligence to spot and curb bias in online advertising. we will speak to bob lord, next. this is bloomberg. ♪

emily: sub cart has raised new funding -- the company's main owner, walmart, joined investors including softbank, putting an additional $3.6 billion. walmart has been working toward an ipo for the business. ibm is looking to the future, exploring how artificial intelligence could improve online advertising. big blue researching how they can spot and cut bias in the process. joining us now is bob lord, senior vice president of blockchain. there are issues around online advertising, targeting people on equitably and racism integrating into that process. how does this work? bob: great to see you again and

thank you for having me on the show. bias has been prevalent throughout the history of advertising. the industry has a long overdue obligation to address this. i have learned ai can help figure out whether or not your advertising is biased toward one community or another and help to address that going further. so we launched this research study to get on the solution and take a scientific approach to attacking bias in advertising and, in my mind help the brand communicate better with its consumers than it ever has before. emily: what exactly can ai do for a company like facebook which has been criticized for targeting certain kinds of people? bob: let's take a brand. if you are advertising toward a

particular consumer to attract a mortgage applicant or for them to buy a cup of coffee. you start out with bias already. what ai can do is look at those results and see whether you are biased in the results you're getting and not addressing the community you should be going after. it's looking at the data and looking at it systematically and rooting out whether or not you are being biased. we've used this many times in many businesses to root out biases and mortgage applications and things like that. we are just applying it to the advertising industry going forward. emily: it has been an interesting tool that can shakeup the advertising industry. how is it changing how people work and how they approach their work? bob: there has been a lot of noise in the marketplace about

how apple and google are going to use cookies and identifiers going forward. we believe there is a better way. we believe there is no longer the need for these walled gardens. we need predictive technologies that will protect consumer privacy as well as give brand the best way of communicating with their consumer. we believe we can get there. i have seen these tools in action and other kinds of businesses and what we are doing through watson advertising is to take those tools and apply them to the advertising industry. think about this -- optimization real-time versus looking backward at cookies trying to put it future. where we have applied these tools, we've seen a better result of these media dollars.

emily: interesting to hear about the work you are doing. bob lord, thank you so much for stalking my -- for us by. a battle of the billionaires as the space race rockets into full gear. how the ambitions of branson and bezos stack up, next. and broadcom is in talks to acquire zap institute. the deal would value them at $20 million. broadcom shares up more than 10% year-to-date. this is bloomberg. ♪

emily: after the successful launch and return of richard

ranson aboard his virgin galactic spacecraft, the countdown is on for jeff bezos and blue origin. july 20, the world's richest man will blastoff for a screaming 11 minute mission that will take him even further into space than branson. the billionaires claimed they are not competing against each other, but it's clear they both have big space ambitions. take a look at how their trips compare. >> to billionaires, two trips to space, nine days apart. they are ushering in a new era of private commercial space travel. here's how the two trips compare. this was virgin galactic's fourth trip to space while blue origin is heading up for the first time with humans board. virgin galactic gets dropped off

in the air by a larger craft and then released. >> release, release, release -- clean release. ignition. >> while the origin rocket is launched from the ground. virgin galactic reached an altitude of 53 miles. blue origin will reach 56 miles. >> richard branson is going to be going into space. we can debate where the line of space is. >> it's an attempt to mark the end of the earths atmosphere. not everyone considers branson's definition of space. >> we are the only private company taking private citizens up into space, and been recognized by the u.s. government as private astronauts, so we are taking you into space. >> virgin galactic's flight

lasted about 90 minutes. blue origin's flight is expected to last about 11 minutes. >> the moon off the nose. >> passengers will experience three minutes or so of weightlessness, during which time they can enjoy the view. virgin galactic's airplane glides to a landing on a runway, similar to nasa's space shuttle. blue horizon will parachute to the desert floor. both companies plan to take paying customers to space. virgin galactic plans to offer flights to well-heeled customers in 2022. version has also said it's technology could be adapted anywhere on the planet to just four or five hours. blue origin has its own plans for days on the moon. virgin galactic envisions people

living and working in space. rockets that can be used like airplane is the first pass. emily: in 2006, my guest became the first female private space explorer and is the ceo of the x prize foundation. thank you for joining us. a lot of people may not know the history behind the history behind the x prize in virgin galactic, but it was the x prize that identified the very model of the space plane virgin galactic then bought or licensed and is what richard branson was writing in. this states back to the mid-90's. what was it like for you to see that space plane succeed? guest: it brought back such great memories and was fulfilling to watch that come full circle. my dream came true in 2000,

going to space, but my first step was funding the x prize, the $10 million competition. one was composite funded by paul allen. that was the winning design, spaceshipone, which virgin galactic licensed and created a larger version with spaceshiptwo and we saw take flight on sunday. it was wonderful to see this exciting step we took in democratizing space and making it successful ended up opening a hold a chapter in the commercialization of space. now we can show it's possible for more people to experience, maybe a glimpse, to experience what i experienced on the space station and going to space and

being able to have the overview effect, which is that life-changing experience. emily: what is so innovative about the design of this spacecraft is that it changes shape in-flight, in space for a safe reentry and is very different than the traditional up and down rocket technology that blue origin is using. how would you compare the two? guest: as you said, the virgin design is very different. it is two-stage with the rocket playing a role when you are to the thickest part of the atmosphere. the first part feels like a plane ride and then the rocket hits and you go up very rapidly to about close to 60 kilometers and the landing is also very different because it's like the shuttle where you have a glider

coming in landing on the runway like an airplane. with new shepherd, you have a parachute landing and the rocket is taking off from the ground through the thickest part of the atmosphere. it is more similar to what i did on my so use mission where the rocket launched and the parachute landing. the parachute landing can be a little more uncomfortable. landing like an airplane is a lot more comfortable for passengers. another big different -- big differences the virgin plight -- virgin flight has two pilots on board versus the new shepherd flight which is all automated. everyone on board our passengers on -- and on the virgin galactic site, you have for passengers in two pilots. emily: it is theoretically a little more terrifying to go up

without a pilot at all. as someone who has gone up into space and been a private space explorer yourself and experience that, who offers a better experience? is it virgin galactic or blue origin for just regular humans who have never done this before but cannot afford to pay up? guest: it's hard for me to judge since i have not flown either. the only thing i have is my own experience and what i can come up with based on that experience. mentally, i don't know if having pilots on board helps and landing on virgin seems work comfortable but i have two wait for blue origins flight for sure. but the price point, there is no price point for the tickets on blue origin and the auction brought in $28 million which is

a lot of money for an 11 minute flight. virgin, ticket prices were about $200,000, still both very high prices but $200,000 is much more affordable at least to a larger portion of the population. ultimately, the prices have to and will come down as more flights take place and initial supply-demand issues get solved in the early days of aviation. but that is ultimately the case. emily: it is absolutely fascinating and it must have been such a thrill to see the design you identified 25 years ago make it happen. the ceo of the x prize foundation. thank you for joining us. that does it for this edition of bloomberg technology.

tomorrow, we will be joined by arianna huffington to talk about her companies latest funding round. the cofounder and partner at revolution. i'm emily chang in san francisco. this is bloomberg. ♪

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haidi: good morning. this is a break australia. sophie: -- kathleen: and from bloomberg's world headquarters in new york, i'm kathleen hays. u.s. stocks hit a record high as invest