Hes charged with providing Material Support to terrorists. Global news 24 hours a day powered by more than 2700 journalists and and analysts in more than 120 countries. This is bloomberg. Emily im emily chang and this is Bloomberg Technology. Emily im emily chang and this is Bloomberg Technology. Coming up, goodbye, ireland. Declares it would no longer final taxes to its irish subsidiaries. Walt disney and 20 three fox still in talks 21st century fox still in talks. What it means for bob iger. Of twins joined the ranks billionaires thanks to bitcoin. Toshiba and Western Digital have agreed in principle to settle their legal dispute over the sale of toshibas flash memory business. Toshiba agreed to sell that business for 18 billion. We will have more for you on that story later in the show. We will continue to bring you all of the details. First, i want to bring in matt larson for more. As we understand it, we knew they were reaching a settlement but the terms of that settlement we know. Walk us through the turns. Erms. Mark i have had not a chance to look at the terms. Western digital sandisk was disputing that toshiba has the adequate rights to sell interest in a joint venture between Western Digital and toshiba. May have been in litigation in california state court, arbitration proceedings that were set to conclude in the First Quarter of next year right around the same time as the sale needed to be completed. It was in both Companies Best interest to bring this lawsuit to a close. It looks like they were able to reach a deal. The details of that deal are being released now. It has been rumored that the companies were getting close to some kind of agreement. It looks like the agreement was approved. Lawyers have been able to draft up legal documents. Both companies will be better off in putting this dispute behind them. Emily what is the significance of this in the context of a rapidly consolidating chip business to potential big takeovers brodcoadcom and qualcomm. Is the relationship . Matt there is consolidation. And a lot of companies are looking at where they are going to secure supply. How those supply chain relationships are going to be are going to be consolidated, whether they are going to be secured. For Western Digital, this is certainly a big deal in securing their chip supply into the 2020s. Western digital and toshiba have been collaborating on a number outputerent paths to memory chips. You are seeing a lot of jockeying and companies trying to figure out where the next generation of chips will be manufactured. Whose technology is going into the chips. Most apparently, who is actually manufacturing the semi conductor. Emily we will be listening in that call 30 minutes from now. Matt larson for us in the newsroom. Thanks for breaking it down. Facebook is changing its tax structure. The company will start to pay taxes in the countries where sales are made rather than funneling through the irish subsidiary. Facebook has come under pressure for its tax practices, specifically routing u. K. Based sales through ireland. In the states, it is locked in a battle with the irs which may cost them more than 5 billion, plus interest and penalties related to the irish operations. Joining us now is sarah frier who covers facebook. It seems like it would make sense they would pay taxes on which the sales are generated, right . Sarah it does make sense but these companies exist on the internet. They have been able to be very decidee about where they book that revenue. Most of the advertising revenue will still be book that revenue. Most of the advertising revenue will still be routed through ireland, but this is a big win for the individual countries, for italy, germany, france places that will collect taxes from facebook. Cases, the actual tax rate for facebook in one case a paid 6,000 in taxes in a year it is move does not necessarily mean that facebooks overall taxes will go up. Emily why not . Sarah it could end up being the same rate for them, it is just going to be very complicated to implement. In the report today that broke the news, they said it might not be fully operational until the end of 2019. This change is a long ways away. Facebook is just letting us know now. Emily what do you make of the timing of this . Facebook is under pressure for fake news and many other things. Sarah this is a very critical moment for the company, where they have to make sure they are on the good side of the governments they are working with. In some of these jurisdictions, there are elections were they have come under pressure for the way information is spread on their platform. That have been asked to tackle isis accounts spreading in europe. The company is working with government and regulators on those issues. Also, they were not going to be able to use the same tax rates in ireland for much longer. Emily you have an excellent news, whereout fake it gets propagated. Where you interviewed someone who has created very partisan and in the limitary news. You talk about how facebook is fighting that battle. Selina news, where it gets propagated. Wang who covers twitter for us, here to talk about an buzzfeed onpiece in how steve bannon and breitbart tried to manipulate the steve bannon and breitbart tried to manipulate the weaknesses in twitters policy. Selina, i will start with you. What was the just of this article gist of this article and how did bannon and breitbart manipulate twitter . Selina the real crux of that story was bannon an breitbart were trying to seek retribution. Annon went on this hunt for legal and editorial wave to damage twitters reputation and devalue them. To get shortsellers really galvanized about this company. I think at the pinpoint of this shows the philosophical conundrum twitter has been under how do they maintain this open platform, while not allowing abuse to run ramp pent . There is always going to be people seeking intense backlash. Pent . There is always going to be people seeking intense backlash. They wanted to be the free speech wing of the free speech party. They dont want to be the arbiter of information and neither does facebook. They just want to be an open townthey just want to be an open town hall people to say whatever they want and say if it is good or bad and they are handsoff. Emily in which has been a bane of their existence. Sarah the profile saw this call of action, the fact that facebook was neutral. They would allow content that is viral. How do you make the best viral content . It is outrageous. It is something that will spark emotion, partisan. He was building a website that went even further than fox news in terms of conservative leanings which often veered into fake news. Front what we were talking about with twitter, facebook has had to make the same decision. Of this content to we limit it . Do we ban it . Do we removed rankings in the newsfeed algorithm which is similar to twitters verification check mark. Veryally this year, his popular conservativ website does get crushed i facebooks fake news efforts in their change of the algorithm rankings. Emily producing the same thing but it will not be viral. Will it be allowed in facebook . Sarah the thing with facebook, they are trying to dampen this stuff from going viral, but they dont want to be the arbiter of truth just like twitter does not want to be. They dont want to exclusively say this cannot go on our platform. That brings up free speech concerns even though facebook and twitter are not governmental bodies. They understand their power over global conversation. That want to be seen as censoring anyones ideology. Emily which brings us to the controversy we talk about about the president being on twitter and using it to what many people nflame, harass and many question whether twitter should allow him on the platform. Selina there are members of the own Safety Council who dont want President Trump on the platform because Cyber Bullying if it were a regular user, the police of twitter would kick him off. Theter tries to weigh newsworthiness against the tww eets. In the case of donald trump, we heard from the executive chairman that they like that trump is using the platform. That Global Leaders are turning to twitter as their first mode a few can indication because that is good for twitters user engagement, keeping news overall awareness for their brand. And twitter as an overall zeitgeist. They were able to get this over the concern of users that trump is not a healthy addition to twitter. Twitter. Emily comments from a former facebook executive, news overall awareness for their brand. Speaking at a conference at Stanford Business school last month, he said i feel tremendous guilt. It literally is at a point where we have created tools that are ripping apart the social fabric on how society works. He never said facebook by name but many people believe he was talking about facebook. Facebook has now come out and really hit back on his comments in a very unusual move to talk about a specific persons comments. What do you make of this whole situation . Sarah i think the most unusual thing is facebook pushing back. We have seen people comment on facebook and how facebook is destroying society forever. This year, we heard it from shaun parker. There was a big book last year from a former facebook employees that really skewered the company. The company usually stays quiet in these circumstances. What he said mustve really angered someone at the top. He is basically using this moment to cement how he wants people to think about him and his contributions to this legacy. He was big on the Facebook Team back in the day. This is a moment for him to come out and speak within facebook, theyre probably worried they are using it opportunistically. Emily do you think within facebook at the moment they are questioning this issue . Oh, no, what did we create . Selina absolutely. This is essential to Mark Zuckerbergs evolution. Over the course of the year, he change the companys mission statement. Instead of connecting the world connecting the world is not necessarily get you to be in good for the world. In he wants to create bonds the community, do something good for the world. He has done a lot oof stuff on the side. This company is thinking about what kind of role they can have in the world longterm. That said, these are all very difficult decisions. Do you take down the fake news page . Do you let it up and derank it . Do you flag it as disputed . These are very hard questions they would have to consider. Not just take news, but harassment. Fake accounts. These are all things maybe even having bigger impact in other countries than they are in the u. S. And look great has gotten us here. Emily very wide spectrum. Thank you both. The story of 2018 perhaps. Coming up, talks continue in a possible the of between 20th century fox and walt disney. How this plays into disneys business in streaming content. Bloomberg technology is Live Streaming on twitter. Check us out 5 p. M. In new york and 2 p. M. In San Francisco. This is bloomberg. Emily we continue to watch the deal talks between 21st century fox and disney unfold. It is walking away with a financial asset sale. Who gains the upper hand in the megamedia deal and what does it signify about the landscape about the major Hollywood Studio . Stan meyers joins us on the phone. He currently has an overweight reading in disney. Joining us also is cory johnson. Stan, what do you think of the opportunity here for disney . Stan thanks for having me to discuss this mega deal. At the core of the deal is about disneys ambition to reshape its future. It wants to broaden its competitive mode. It wants to improve its Companies Growth profile. Obviously, the rt assets internationally it is looking at assetse are key internationally it is looking at with fox. All the content that will come with it. Ipiously, fox has a lot of that disney can develop and ip that disney can develop and monetize a lot better than most. Emily cory, what are the risks of this deal . Cory there are a lot. You really have to look at the different parts of the business. Obviously, the risk always in hollywood is the ability to deliver hits. It is a hit driven business. It is true fox and a lot of same assets disney to create content, even marvel superhero content, but has not done a good job. That core performance could continue to follow fox into the arms of disney and is truly the greatest risk. I think another existential risk of this deal no company should know better about the problems of Cable Television right now. The move from fat bundles to skinny bundles and unbundled content, going over the top, pulls away from espn, disneys cash cow. Now you have been paying a lot of money to acquire fx, part of national geographic, other cable assets, even as we see people wanting skinnier bundles or no bundles at all. Doubling down on something that is not working is often a badase wanting and seems to be the most existential bet for disney right now. Emily im curious what this means for hulu. Disney happens, thi would become the majority owner with hulu. , with competitors like comcast among the minority owners. Do you see the Ownership Structure changing even more if this happens . Mean, i think comcast will likely pull out its stake out of hulu. I dont think it wants to be a minority partner with disney. Disney would have to chart its own course with hulu. Primarily, the focus here is to continue to build a directs the o Consumer Product that could compete and reshape the future of tv. Emily what do you think the International Implications would be here, because it could significantly impact the International Footprint given the sky assets . Cory the india assets might be the crown jewel of all of this. It is the one thing everywhere else, studios, Cable Networks not even doubling down, just adding more of what they got. Who knows if they keep the actual fox physical studios that they have, some pretty valuable real estate in central city in los angeles. Interesting looking at what they are looking at in terms of india and their ability to broadcast in europe, with the partial ownership of sky interet what they are looking at in terms of that could come with this deal. And their ability to get that all done. That is part of the story they want to tell analysts. Knows so well, analyst day for disney is thursday. Disney would love todisney wouls announcement the moment the markets close on thursday and say we have a whole new set of ideas for you. Isnt it great . Lets tell you why. Emily lets tell you why. Emily speaking of timing, this deal would come towards the end of bbob igers tenure. Stan, what would this mean for his legacy . Stan again, hes charting his course. He has been trying to retire for some time. I think he wants this transformational deal to remain his legacy, to become his legacy, combined with all the other deals he has done over time with lucasfilm and pixar in the past, and espn that he helped build. I think what is important is to chaperone, take this deal and make sure the integration goes smoothly and disney comes out on top at the end. Emily stan meyers, analyst at piper jaffray. Cory johnson. We will continue to chart the drumbeat to a potential deal in the matter of days. We will be watching and bring you all the latest headlines. Coming up, tesla just scored another big order for its semi trucks. We will bring you the details, and how much money it could bring in for the company. This is bloomberg. Emily tesla is getting its biggest no truck order yet. From patsy. It is worth an estimated 2 million. Anheuserbusch has ordered as well. Production is set for 2019. The tesla trucks could generate as much as 3. 5 billion in annual revenue for the company. Comcast spent years fighting the obama era internet regulations known as Net Neutrality that kept it from charging Web Companies to boost their contents fee. Now the Cable Company says it will not do that if the fcc repeals the rules later this week. In an email, a spokesperson said any reporting of privatization is inaccurate and false. Apple became a Public Company 37 years ago in 1980. Steve jobs was 25 at the time. The company sold 4. 6 million shares at 22 apiece. Since that first day ofapple be7 years trading, 49,000 re up more than thana market cap of more 800 billion. Coming up, the winklevoss twins may have missed out on becoming facebook billionaires but now bitcoin has been joining the than 800 billion. Coming up, theclub. Who elses in the ranks . That is next. Check us out on the Bloomberg Radio app, bloomberg. Com and sirisusxm. This is bloomberg. Check us out on the Bloomberg Radio i am alisa parenti. You are watching Bloomberg Technology. Huckabee sanders defended President Trumps tweets attacking Kirsten Gillibrand senatorter the new york demanded he step down over allegations of sexual misconduct. About the wayng our system functions as it is, politicians beg for money. That is nothing new. That comment is nothing new. Pass comments the this president has made, he has used that same terminology many times with relation to men. There is no way this comment is sexist at all. S imply that he is making a crude reference. Elizabeth warren tweeted the following. Agreed to lower the top tax rate for individuals to 37 . Also say negotiators agreed to set the Corporate Tax rate of 21 as part of lastminute negotiations. Lawmakers are working to deliver the sweeping tax overhaul to President Trump by christmas. The french president is hosting 160 four World Leaders and Business Leaders and prominent figures fighting Global Warming together. Commitmentst said to the climate agreement was the only way to win the battle against Global Warming. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. It is just after 5 30 p. M. In washington, six 30 wednesday morning in hong kong. We are joined for a look at the markets by david ingles. New record highs. We will not get there today. We are 30 minutes away from the open of markets in sydney. A muted start. T futures at the moment, may be. 25 higher in japan, but fairly negative across most of the benchmark so far at the moment. The hang seng in hong kong after the drop pieces, japans in machine orders, jobless rate out of south korea, but we are watching India Following the recent surge in inflation and the bond rout expected to continue in mumbai. More from Bloomberg Technology next. This is the Bloomberg Technology. I am emily chang. Back to our top story. Toshiba and Western Digital have announced an end to a legal spat that threaten derail the 18 billion sale of toshibas memory business and cut the company all from a future supply of vital products. Western digital is dropping arbitration claims in the u. S. That was aimed at stopping the sale to a Consortium Led by bain capital. To Conference Call is said be underway shortly and we will bring you the latest as it develops. Bitcoins massive rally is helping to lift its overshadowed competitors. The second and fourth largest cryptocurrencies are searching to highs on optimism Bitcoin Futures will attract institutions to the fleshly market. Two people writing high are the winkle voss twins, thought to be among the biggest holders of bitcoin. Spoke to bloomberg about why they made such a big bet on an uncertain asset. Gold think bitcoin is like 2. 0, so whatever your reasons bitcoinsting, we think matches or beats gold across the board in all of those categories. It is not scarce. It is fixed. You can send it around like you send any mail. It is harder to do that with bars of gold. The market cap for bitcoin is 300 billion some of the market cap for gold is 6 trillion. We think bitcoin disrupts gold. We are three hundred times more correct today and think there is a chance we will be 20 times more correct from here on out. Is there any reason why people are selling gold and buying that point . That is possible. Anybody who likes the characteristic of gold in their portfolio definitely will be attracted to gold bitcoin come excuse me. There was a note talking about that. Etfssearch is have not seen outflows and theyre looking at different supplydemand dynamics than bitcoin. You said you could be 20 times more correct, another told price inprice bitcoin. A sharp we could see correction, then go back up, but could be a rocky road to get there. Part of that is creating access to it. Gemini. Com, a licensed exchange custodian. We launched two years ago. Inare onshore headquartered new york, so it makes it easier for hedge funds to get involved. Worlds mostof the sophisticated Market Makers trading firms on gemini. Phase two is creating a futures contract that we have done with the cboe that is cash settled that allows institutions trading in chicago exchanges to get exposure to bitcoin with cash and then settle out in cash, so they dont have to touch or feel bitcoin and they get the exposure to it, and the next phase of that would be an etf product. Which eu guys had introduced. You had a filing with the sec and the sec has pushed it back like all the filings. Are you planning to refile, what is the next step . We are in process. We dont have to refile because we are on appeal. We are just waiting to be heard by the commissioners. What is the next what is the next step with the cme . Not with gemini, but actually from a combination of different exchanges. Thats right. Through the settles gemini auction. We love our product because we think it is simple and easy to understand between the futures price and the underlying spot. We welcome more products and more price discovery in this market. Were being contracts launched, daily auction binds can be light on gemini and you dont always wind up producing a price and a can be difficult for the exchange. What have you done to address that . Auction mechanisms are triedandtrue and used to price assets in all kinds of markets, so we think the mechanism is straightforward and simple and will naturally, organically grow as this contract grows them is so we are not concerned. We run auctions every day, even holidays and weekends. Those might be more thinly traded, but weekdays or where you want to focus on the contracts that are settled. It is the Largest Global liquidity event in the entire bitcoin market. 1. 3 million average that is the key. If you look at four clock and the constituents of another blended index at four clock 4 00, it is very elevated liquidity and price discovery. A lot of these auctions are selffulfilling. You have a contract pricing to it so it builds the reason or like acy of it, so it is snapshot in time before there is something tied to that price. You guys are one exchange. Times you see do verging prices on these different exchanges, which can make it more difficult to trade bitcoin and transact in bitcoin. What do you think causes more price stability . Does bitcoin need to be transactional more than it is right now . It depends on which exchanges you are talking about. We are a new york trust company, the most regulated Bitcoin Exchange and custodian in the world. When you look at the prices across u. S. Exchanges as regulated, it is a small deviation and they very much track each other. About unregulated offshore exchanges in different ors are highly risky, of course there will be risk premiums. Sometimes you cant get fiat currency in and out. Is u. S. Based and its price has been different from other exchanges. It is about getting sophisticated players into the ecosystem. The futures product we have building and that is live right bitcoin first ever futures product with the cboe will create a way to short bitcoin, so there will be a twosided market reducing volatility come increasing prices country and liquidity. Winklevoss that was tyler and cameron winklevoss, cofounders of gemini. Who else is writing high the spike . Our reporter joins us now. I want to start off with the winklevoss twins. How did they a message a stake and how big is it . E it back torac the dispute with facebook. They have use that to go into various investments come and one of them in 2013 is they bought 11 million worth of bitcoin. We have been tracking the price of that. Worth 1er that was billion, and now after the bitcoin pricing, it is 1. 7 billion, which has made them both billionaires. As long as you can liquidate that bitcoin holding. Emily is it true that the vast majority of it coin wealth is held by a very small number of people . There is some interesting reporting out of bloomberg of dozens oft whales who own 40 of the is they, and that to me most interesting point of contention here. If someone wants to sell out, a big 100 million bitcoin holding, how will it affect the market . Willf their sales influence the market, at least in terms of other equity markets where you have more limited volume and trade. Hales holdthose w an oversized amount of influence in this uncertain and rapidly developing market . Definitely. You can see that in these big fluctuations. Nobody really knows when they are coming, but when you have sales, the price has taken a massive hit. There are plenty of Retail Investors coming in, but it is the big boys out there causing most of the movements. Emily youve also been tracking crypto company, explain. Basically the First Publicly Traded Company that says it will invest in bitcoin. Its market cap, its incredible. It was first in the hundreds of millions, then this week it is 12 billion. Billion them4. 5 basically as stock traded overthecounter. Authentic,rs are not but on paper the founders who at this up in june have built 1 billion stock position only on paper. It is an overthecounter stock, so volatility is based on very 1n volumes of on million or 2 million. Emily there is a story on the bloomberg about women involved document,ptocurrency which is dominated by men, but the subhead of this story is that bitcoin is welcoming to anyone who drinks the koolaid. Exactly. It is the nature of this, a totally open opportunity. Anyone has the chance to change the future of finance. , and whenajor figures you look at finance traditionally, it has been maledenominated, and while the coin has been male heavy, it is going to change. Emily thank you so much. California governor jerry brown explains why the states leading the charge on Climate Change and how Silicon Valley is joining the effort, next. This is bloomberg. Macron issident hosting the summit in paris to review progress set out in the recent agreements. California governor jerry brown is among the attendees. Bloomberg caught up with the governor and asked about californias role in combating global warnin warming. Were not going to convert donald trump, mitch mcconnell, or mr. Ryan. They are in denial. They are pulling back on research and trying to prevent california and other places that want to go on a renewable pathway and resurrect coal, which is dying. That is all true. Such as this,ions we mobilize commitment. There are real financials statements that will be reflective of real commitments in dollars. I heard this morning from west africa, indonesia, and for other countries that are named, its of these are real things. We are doing stuff. We are converting people, but we have to do it one company, state, nation at a time. And this is not perfect there are a lot of people talking and what have you, but the world is going in the wrong direction. And notng to hell heaven and we have to wait people up. Because the cynical complacency of the powerful obscures the theh there is no reason why president of france and many others, denmark, sweden, romania, so many other countries, china, so there are a lot of people and there are more all the time. There are more than there were two years ago. Look, it is a real battle. I will do everything i can well i have any position of power and responsibility to move the world toward a future that is sustainable and will not be the destructive path that the cynics and those who dont understand stupidlycience are moving the world towards. We are making progress. Is the world on the right track yet, no, but we are taking steps and next year and San Francisco we will have a similar conference and will keep going as long as we can and eventually , theieve we will win people who are on the site of truth, sustainability, and the science as we now all understand it. I have to ask you about edwin lee. The mayor of San Francisco passed away in an untimely way. Give us your thoughts about edwin lee. Lee was a really good guy. I knew him. Him for a long time, but i think he was a politician who spoke the language of the people, down to earth, real, genuine, had integrity, worked in a city that is divided along many different lines, so he will be missed. He was a good guy. He represented california and the city. These things happen. We never know the time or our when our time comes up, and we will miss ed lee quite a lot. Emily governor jerry brown of california speaking with david westin as they were discussing their San Francisco mayor ed lee had died. Working to lower startups and major firms to San Francisco. He also trumpeted San Francisco as a sanctuary city for undocumented immigrants and opposed President Trumps executive order aimed at stripping subsidies of federal funding. He was 65 years old and many people in San Francisco will miss him. This is bloomberg. Indonesias first one billion dollars startup is facing competition and challenges with rapid growth. Band of itsest is a Food Delivery Service to a local Jakarta School and the opposition that followed. Tell us exactly what happened here. This is a lighthearted reminder of some of the issues these startups face as they go into in trenched industries. Dozens of drivers delivering food to school kids at lunch, and kids were enjoying it. Upre were dozens lining every single day and the school said this is not good for us. It is diverting revenue from our School Cafeteria and delivering unhealthy food and creating waste with all the delivery bags and cartons. Why are the kids at the school so upset . These kids want what they want to eat. If you have the option of Cafeteria Food or dozens and thousands of restaurants around jakarta and you get that option taken away from you, it is the same thing happening everywhere. What they want, get used to it, and then get upset if that is taken away. Emily bloomberg recently spoke jek and ceo of go he had this to say about the competition. We have to hyper innovate to adapt. Indonesiat on top in as a result of that competition, and the urgent hunger to innovate. Emily this is indonesias first unicorn straddling this role as deliver here, food it had easy this evolving given the pushback . Deliverer. How do you see this evolving given the pushback . You have airbnb focusing on lodging and experiences, but gojek are in 17 different things. You can wake up in the morning goglam, blowout with get a ride to work, or do your lunch, get a massage, the rich goes on, cleaner, doctor, so many industries. They are saying we have this platform and people, lets see how Many Services we can give them. You are obviously run into Traditional Industries that are saying what about our business and why are you taking away our business . A fascinating company to watch. Thank you for bringing us that story. That does it for this edition of Bloomberg Technology. That does it for this edition of Bloomberg Technology. We are Live Streaming on twitter. Check us out weekdays at 5 00 p. M. In new york, 2 00 p. M. In San Francisco. This is bloomberg. This is bloomberg. This is bloomberg. This is bloomberg. 7 00 a. M. In hong kong. We are live from bloombergs asian headquarters. I am yvonne man. Ends itsin dispute. Not a fan. Bloombergs global headquarters, i am betty liu in new york just past 6 00 p. M. On this tuesday evening, Republican Leaders hammering out a compromise, the bill could be announce