All thanks to what else . Bitcoin. They explain why they took a chance on cryptocurrency. First, to our lead. Net neutrality is no more. The fcc voted to repeal the obama era internet protections designed to keep broadband providers from favoring content. The republican Member Commission voted 32 to end the protections known as Net Neutrality. The vote came amid intense protests online and in person from defenders of the rules, who say this will create haves band havenots when it comes to accessing content. But fcc chair ajit pai heralded the return to what he calls a freespeech market approach, saying it is time to restart thats restore internet freedom. We are restoring the light touch framework that has governed the internet for most of its existence. Joining us now, one of the people who voted to repeal it, fcc commissioner brendan carr, who was nominated by president trump. Commissioner carr, thank you so much for joining us. You said today is a great day, many people say this is an awful day. What dont they understand . Thank you for the question. It really is a great day for consumers, innovation and freedom. There is a lot of apocryphal rhetoric out there. Here is the reality. We are voting to go back to the 2015 regulatory framework, the title i framework that the commission had in place for the 20 years before 2015. This is not moving toward some mad max version of the internet where isps will have complete free reign to dictate your online experience. The 2015 framework had strong Legal Protections for consumers. Consumers will benefit from that without the harms we are seeing from title ii. Emily that said, a number of organizations say they plan to sue the fcc, an activist group called free press saying they will sue on the basis of broken process, flawed legal reasoning, willful rejection of evidence and absolute disregard for public input. The attorney generals of washington and new york intend to sue. Attorney general Eric Schneiderman is saying this is not just an attack on our internet, but an attack on all new yorkers and the integrity of every americans voice in government. We will fight back. What is your reaction to these comments . Commissioner carr anytime the fcc takes an action in the space of internet regulation, there are lawsuits over the decision we make. Here is the reality. The Supreme Court in 2005 took up the fccs authority to classify Broadband InternetAccess Service as a title i authority, and they found that the fcc did have the authority and that is the only classification the Supreme Court has ever found. The decision here both as a , procedural matter and a substantive legal matter is on a is on extremely sound legal footing. Im confident in where we go from here. Emily we spoke with the former fcc chair tom wheeler, who oversaw Net Neutrality and look at what he told us. Tom wheeler for the First Time Since 1934, with this decision, the fcc is washing its hands, walking away from that congressionally mandated responsibility, and they are only doing it for the most Important Network that will define the rest of the 21st century. It is an inconceivable kind of action. Emily what do you make of this accusation that the fcc is absolving itself of responsibility, rather than taking responsibility . Commissioner carr that is simply not the case. Again we are going back to the , same framework that was in place in 2015. I think your listeners and viewers can remember the internet of 2015. It was not a freeforall, there were protections. Those protections will be back in place. Again, the federal trade commission is going to be fully empowered for the first time in two years to police isps conduct with respect to consumers. The fccs 2015 decision struck stripped the federal trade commission of 100 of authority to protect consumers from isps. Another piece of that is Online Privacy protections, which consumers care deeply about. The ftc is the nations premier premier Consumer Protection agency and has been prohibited for two years from taking action because of the title ii decision. The consumer is gaining protections. This is not a situation where there are no rules in place. Emily comcast has said they wont invoke paid prioritization, but lets say they do. What would happen . Brendan what happens here is there is a misconception about what title ii did. Right now, title ii is not stopping providers from blocking websites, creating fast lanes, paid prioritization. There are reasons why that stuff is not taking place today. It is Market Forces regulating the conduct and after our decision, those forces stay in place. I know there are a lot of people who believe in Market Forces and that is fine, there are actual positive laws we are putting in place as well. There is federal antitrust law that prevents isps from entering agreements that unfairly block, throttle or create anticompetitive pay prioritization. There will be rules out there that will be able to police any of this conduct that people are talking about. Emily what about the fake comments in the Public Comment section . Doesnt that give you any pause . That one million comments were written, potentially by a robot, to counter the vast majority of comments that were against this repeal . Commissioner carr it doesnt give me pause, and here is why. We have run an open and transparent process. The administrative procedure act is very clear about how it agency like us runs rulemaking and our record. We have an open record. Anybody that wants to file a comment can file a comment. We dont require identification on the front end because that would discourage robust conversation. We had over 24 million filings in our proceedings. I think that shows the passion people have in the issue. Our decision is based on the substantial record evidence that we developed. Emily but the vast majority of those comments were against this repeal. Commissioner carr there was a wide range of views expressed and the question we have to confront is a threshold legal matter for the fcc. Did congress, when they set up title i of the Communications Act and title ii of the Communications Act, did they intend the internet to be in one or the other . When you look at that legal determination we have to make as commissioners at the agency, it is clear to me this is a title i information service. Emily when will we see lawmakers actually enact this into law . Commissioner carr our decision today goes into effect as soon as the omb and other Government Agencies review the transparency rule we adopted, and it will take effect shortly after. That is the timeline we are looking at. Emily how do you see the internet lets say the internet five years from now, being different . Already, it seems like so much power is consolidated in the hands of a few powerful companies, many of those were against this repeal but how does the internet look different to you in five years . Commissioner carr a good question. That is why this is such a great decision. Title ii is a monopoly style regulation, a heavyhanded regime. A lot of the debate has been about at t, comcast, verizon, the big isps. I think they have been negatively impacted, as our record shows, but they also have an army of regulatory lawyers that can wade through the title ii requirements. When i talk to consumers, they want more competition and that is where title two heads in the wrong direction. There are thousands of small isps that are trying to provide service to consumers for the first time or provide competition to larger providers. Those are the ones who have been hurt worse by this decision. I look forward when we repeal this title ii rule, those providers will have an easier time competing, getting money and consumers will benefit as a result of the increased competition from repealing title ii. Emily that was fcc commissioner brendan carr. Tesla is getting its biggest known truck order yet from pepsi. The preorder is for 100 vehicles, worth an estimated walmart and anheuserbusch have 2 million. Placed orders. Production is scheduled to start in 2019. Analysts at consumer edge forecasts the tesla truck could 3. 5 billionuch as in annual revenue for the company. Coming up, disney is about to become an even bigger force in hollywood after reaching a deal to take over fox assets. What does it mean for the future of moviemaking . And if you like bloomberg news, check us out on the radio. You can listen on the Bloomberg Radio app, bloomberg. Com and on sirius xm. This is bloomberg. Emily this week marks 37 years since apple became a public company. Founder steve jobs was 25 at the time and held the chairman title. The company sold 4. 6 million shares at 22 apiece and since that first day of trading in shares of apples are up more 1980 than 49,000 with a market cap of more than 800 billion. A megamedia deal has been reached after weeks of speculation. Disney is snapping up a large chunk of 21st century fox assets in a deal valued at more than 54 billion. The biggest acquisition at disney today. We caught up with bob iger in l. A. , and he explained how the deal came about. Bob iger a year ago, i didnt see this one coming either. Nor did i see it coming six months ago. Rupert and i have known each other a long time, have a lot of respect for one another and occasionally get together to muse about the business. In a get together this summer where we were talking about the Disruptive Forces we were seeing and the relative position of our companies. I left thinking there might be an opportunity for us to do something with him. I thought about it for a few weeks, called him thereafter and suggested maybe we should get together and talk about it, and we get. Spent some time analyzing whether there was something to be done and what the Value Proposition might be for shareholders of both companies and ultimately, rolled our sleeves up, got into a negotiation and here we are today. I think what we are doing is creating not only a Great Company, but a great global opportunity for consumers to not only consume great content made by both entities, but to consume it under circumstances that are innovative and compelling and much more userfriendly. That is what the consumer today demands. Jonathan we learned about your future now, stepping down in 2021 versus 2019 previously, what is the future for James Murdoch . Bob we have talked a lot about potential role for him. He will be integral to the planning of the integration process and we will continue to talk about where there is a role for him at this company. We have had a Good Relationship and he has been extremely helpful in this process. I look forward to talking to him more about it. Jonathan a lot of people are thinking about a Succession Plan at the Walt Disney Company and thinking James Murdoch could be a part of that. Is that something you could see happening . Bob i am now extended through 2021 and the board of the company will have ample time to consider its options in terms of my succession and reengage in a planning process for that. It is premature to speculate on that. Ultimately it will be a board decision. Emily here to discuss everything we need to know about the deal, we are joined by bloombergs Chris Palmeri in l. A. First, august 3. Walk us through. Iger said he didnt see this deal happening and there was speculation about it for some time. Walk us through the nuts and bolts of the deal and what it means. Chris basically, the bulk of what we know of fox is that most of its entertainment assets are going to disney. The fox video, the fx cable channel the National Geographic , channel, a lot of international assets, the companys stake in sky, a big satellitetv provider in europe, star of india, a tv provider there. It is a massive chunk of fox now merging with disney. Emily what do you think of this idea that James Murdoch could be igers successor, even if it is years from now . Chris there was a lot about this going into the announcement that he would be named as some sort of senior role at disney. Kind of a surprise today was that nothing happened. Neither side ruled it out, and bob iger said he expects him to have an advisory role in integrating the two companies, but nothing clear yet. And bob saying now he will stick around for four more years. It is hard to say at this point that James Murdoch has any real clear path to the ceo of disney. Emily this is disneys biggest acquisition ever. How does it fit into the context of their prior m a . Chris previously, it was about content. You know, they made Smaller Technology deals, but it was basically about bringing all these wonderful characters, whether it is pixar, marvel, or lucasfilm, star wars, into the Film Division and here, it is a much broader play. It is really a doubling down on the film and tv business at this very Pivotal Moment where things are changing so rapidly. We will see a lot of exciting things out of disney from a technology standpoint. Bob iger sketched out a multipronged strategy. He will have an online version of espn launching next year, a disney branded channel in 2019 with all this marvel and star wars content. And hulu, which they will now control a 60 stake, will be the adult version of what they are trying to do and that is where fox really comes into play with some of its programming. They are trying to create an online choice for everybody. Emily that was bloombergs entertainment reporter Chris Palmeri. Coming up, tmobiles big plan for the small screen. We will hear from the Telecom Giant as it prepares to take on tv. Plus, apples roughly 400 million bet on facial recognition technology. We will break down the investment. This is bloomberg. Emily tmobile u. S. Has announced plans for a disruptive new tv service set to launch in 2018 and signed a pact to acquire layer three tv to build out the strategy. We caught up with mike siebert, tmobile chief mobile officer in denver, and discussed the motivation behind the deal. Mike siebert this is a market that is filled with pain points. If you think about it, it is the most hated industry in america. 8 of the top 10 companies with the Worst Customer Service ratings in america are paid tv companies. With our brand as the uncarrier and our history of solving customer pain points in wireless, we are poised to make a big difference in this 100 billion paid tv market. Emily at t and verizon have been exploring the online video market as well, a step beyond the slowing wireless business. How is this different than what they are doing . Mark what you see from at t is more of the same. You see i mean, their way of getting into this was to buy directv, a traditional satellitetv company, and create bundles that people dont want. I mean, in order to get a decent deal on at t wireless service, you have to drill a satellite dish into the side of your house and be fed linear, oneway, uncontrolled tv services from outer space. It is no wonder people are leaving this industry in droves. There is negative growth of 2. 5 in this industry, but that doesnt tell the whole story. Millennials and gen z customers are leaving at rates of 25 a 30 a year. They are abandoning old fashioned, linear tv like satellitetv. At ts strategy is wrong. What we are offering to do is bring together the best of mobile video and home tv and create something that is totally disruptive in a market that needs disruption really badly. Emily john ledger your ceo is , saying he expects a deal to close in a matter of weeks. What are your regulatory concerns given the dojs opposition to at t and time warner . Mike we dont expect any. We will close it after the new year. This is really exciting for us. I am coming to you from denver where we just met with the team at layer three tv, who will be a key ingredient of this new tmobile strategy. What Incredible Technology and what an incredible team, because we are going to build a service that people have never seen before. Think about the services that we are forced to live with todays linear tv. You get this Program Guide and a little vpad remote control. That pales in comparison to the engagement of social mediafed mobile video that our customers have come to love. So we are going to bring together these worlds and make tv not an island of its own anymore and really change things up. Emily the possibility of a sprint tmobile tie up has been simmering for years. It still has not happened yet. What is the status of that and what are the chances of it happening still in this Regulatory Environment . Mark as you know, we looked long and hard at it. It is a shame it didnt come through because there are benefits to a merger like that. We were looking at layer three tv and the launch of tmobile into the tv experience with or without that deal. It made sense if we did that deal and it makes sense by itself. There is a reason. This marketplace is a market that is moving way too slowly and it is not serving customer needs. It is a 100 billion market that we are in an incredible position to disrupt as standalone tmobile. Emily you are saying a sprint tmobile merger is completely off the table, will never happen . Mike im not saying that. im saying we looked hard at it and it didnt happen. We are doing now as a team is we are doing what you would expect us to do. We are focusing on running this Great Company, and boy, it is a Great Company in a great space. We are the only ones with Service Revenue growth. We just finished 18 quarters of acquiring more than one million subscribers a quarter. The main thing people need to know is as you look at tmobile as a standalone company, all these worlds are converging. We like to say that all content and communications are landing on the internet and the internet is transitioning to mobile. Here we are, leading and the only growing mobile internet company. So we are in a great spot. Emily that was tmobiles coo mike sievert. Apples appetite for deals grows. The tech giant investing nearly 400 million in finisar, a maker of Laser Technology that is critical for new iphone x features like facial recognition. This coming just days after apple confirmed it bought shazam for an undisclosed amount. We got all the details from bloomberg tech reporter mark gurman. Mark this deal is part of apples billiondollar pledge to invest in manufacturing in america. This has come on the heels of president trumps proclamation about everything needing to be manufactured in the u. S. They are investing about 300 million in a Texas Company called finisar. They make lasers they can put in air pods to little black circles in air pods, those are lasers shooting into your ears. They know if they are in your years. If you take them out of your ears, they stop laying. You put them back, they continue playing. Its also used for id so we can recognize your face. It is an extremely important component for apples latest string of products. Emily it is currently in the iphone x . Mark they are using sensors like they make in the iphone x, now they are investing it and will put a chokehold on that market of sensors so they can use them in products down the road. Emily how many jobs are they creating here . Mark lots of jobs. Once happening here is a have that 390 million, finisar will be up to reopen in texas that had previously shut down and will be able to rehire a bunch of people to work at that facility. Emily will this alleviate supply chain problems . Mark that 390 million will ensure money is invested in the components apple will need. They will be able to work on that. Emily right now, this tech is being used in the animoji tech. Explain that. Mark the technology replicates with an emoji. X, it canve an iphone scan your face, knows it is you, then the lasers can be used for animojis. It knows if you are smiling, shaking your head, it is also used for the air pods as well. So there is broad application for the tech. Emily gene munster says it gives apple a Competitive Edge when it comes to ar. Would you agree . Mark absolutely. Apple has been ahead of the pack in terms of ar. They are one of the First Companies to recognize the importance of ar over vr for smartphones and glasses and such. You are seeing apple investing more deeply in this technology, more than you have seen other Companies Like samsung or google do in recent history. Emily you reported earlier this week on apple buying shazam. How does this new news give us more insight into their m a strategy . Are they on a spree . Mark that is a good question because you see two different paths happening right now. You are seeing apple doing more investments, technological investments in order to prepare for its future, but also bigtime acquisitions like we saw with shazam. They bought the whole company, the technology, resources, the people, and they want to integrate the company. That is one arm of their m a strategy. The other arm are these big investments. Not full on acquisitions, but giving Companies Money to have enough resources to build components apple needs down the road. Emily and you think we will see more of this . Mark i think we will see more on both paths. Emily coming up, the winklevoss twins may have missed out on becoming facebook billionaires, but now bitcoin has them joining the club. Thats next. A reminder, all episodes of Bloomberg Technology are livestreaming on twitter. Check us out technology at 5 00 in new york, 2 00 p. M. In San Francisco. This is bloomberg. Emily welcome back to the best of Bloomberg Technology. Im emily chang. Bitcoins massive rally is helping lift up some of its overshadowed competitors. Ethereum and litecoin the , fourthlargest cryptocurrency, search this week to an alltime high. This on optimism bitcoin will attract institutions to the fledgling market. Two people riding high are cameron and that winklevoss twins, cofounders of the exchange gemini, thought to be among the biggest holders of bitcoin. They spoke to bloomberg about why they made such a big bet. We think bitcoin is like gold 2. 0, so whatever your reasons for investing gold scarce durability, portability, fungibility, we think bitcoin matches or beats gold across the board in all those categories. It is not scarce, it is fixed. You can send it around like you send an email. It is harder to do that with bars of gold. The market cap of bitcoin is 300 billion, the market cap of gold is 6 trillion. We think bitcoin disrupts gold. We have been saying this sense the market cap was 1 billion. We are 300 times more correct today. We think there is a chance it will be 20 times more correct here on out. Is there any reason people are selling gold and buying bitcoin . That is very possible for sure. Anybody who likes the characteristic of gold in their portfolio definitely will be attracted to gold. Bitcoin, excuse me. I like that you mentioned that because we had a note talking about that, and from his research, he has not seen that yet because they have not seen outflows of gold. They look at a different kind of supply and demand dynamic and what bitcoin will be. Julie you said you could be 20 times more correct than you are now. In other words, we could see 20 or even 30 fold increase in the price of bitcoin. How do you get there . Because even people who are positive on bitcoin, many say we could see a sharp correction. Then it might go back up, but it could be a rocky road to get there. Part of that is trading creating access to it. We built gemini. Com. It is a licensed exchange custodian, a new york trust company. We launched two years ago. We are onshore headquartered in , new york. So it makes it easier for hedge funds to get involved. We have some of the worlds most sophisticated Market Makers and prop trading firms on gemini. Phase is creating a futures two contract. Which we have done. A Bitcoin Futures contract is cash settled which allows institutions already trading in chicago exchanges to get exposure to bitcoin with cash and settle out in cash. They do not have to touch or feel bitcoin and they get the exposure to it. I think the next phase of that would be Something Like an edt, etf product. Which you guys had introduced. You had a filing with the sec, it was pushed back, like it has with all the etf filings. Are you planning to refile . What is the next step in the process . We are in process, we do not have to refile because we are on appeal. We are just waiting to be heard by the commissioners. What is the next step with the cme . We have the cbo up and running, what about the cme. It would be be based differently. The price is not from gemini, which you cofounded, but taken from a combination of different exchanges. Thats right. Our contract settles to the gemini auction. We really love our product because we think it is simple and easy to understand and arbitrate between the future price and the current spot. We certainly welcome them to the party. They are settled on a blended index so it is a different flavor. But we welcome more products and more price discovery in this market. When contracts are being launched, one of the issues is that daily auction values can be volumes can be very light on gemini. That can be difficult for the exchange. What have you done to address that . Auction mechanisms are tried and true. They are used around the world and are used in active markets like equities. We think the mechanism we chose is straightforward and simple, and it will naturally, organically grow as this contract grows. So we are not really concerned. We run auctions every day, even holidays and weekends. Those might be more thinly traded, but on weekdays, that is where you want to focus. Where the contracts are going to settle. It is the Largest Global liquidity event in the entire bitcoin market. It may be small. 1. 3 million average. That is the key. If you look at 4 00 and the constituents of another blended index, and at 4 00 in time, 1 million, 2 million, a 3 million print is quite large. It is elevated liquidity and increased price discovery. And a lot of these auctions are selffulfilling. All of a sudden you have a contract priced into it so it builds the reason or relevancy of it. So it is sort of unfair to take a snapshot in time before there actually something tied to that price. You guys are one exchange. Ao many times you see the emergent prices on these different exchanges, which can make it difficult to trade bitcoin and certainly more difficult to transact in bitcoin. What do you think causes more price stability . And does bitcoin need to be transactional at some point more than it is right now . It depends on what exchanges you are talking about. Not all exchanges are created equal. We are in new york trust company. We are the most regulated Bitcoin Exchange and custodian in the world. When you look at the prices across the u. S. Exchanges, they are regulated. It is a very small deviation. They very much track each other. If youre talking about unregulated, offshore exchanges in different jurisdictions that are highly risky, there is going to be risk premiums. Sometimes people cannot get their fiat currency in or out. We are talking about coinbase , and its price is the different from the other exchanges. It is all about getting more sophisticated players in the ecosystem. The Bitcoin Futures product will be the first ever Bitcoin Futures product will create for the first time an easy way to short bitcoin. There will be a twosided market which will reduce volatility in the long run, increase price discovery and increase liquidity. Emily that was tyler and cameron winklevoss, cofounders of gemini. Who else is riding high on the cryptocurrency spike . Metcalfe covers billionaires and wealth for bloomberg. Lets start off with the winklevoss twins. How did they amass such a stake, and how big is it . Tom you can trace it back to facebook and mark zuckerberg. In that, they each got about 20 million in cash and about 45 million in facebook stock. They used that to go into various investments, and one was in 2013 they bought 11 million worth of bitcoin. We have been tracking the price of that, and in december, that 11 million has reached a market cap of about 1 billion. After the last week, it has risen to 1. 7 billion, which has effectively made them both billionaires. As long as you can liquidate that Bitcoin Holding. Emily is it true the vast majority of bitcoin wealth is held by a very small number of people . There is some very interesting reporting out of bloomberg. There are dozens of whales who own 40 of the currency. That for me is probably the most interesting point of contention here. If someone wants to sell out, a big 100 million Bitcoin Holding how will it affect the market . , a number of big players, their sales will influence it, in terms of other equity markets, much more limited volume and trading. Emily do those whales hold an oversized amount of influence in this uncertain and rapidly developing new market . Tom definitely. you can see that in these big fluctuations. It is very hard to call, nobody knows when they are coming. To be honest nobody knows why and how. When you see big sales come through prices take a massive hit. Similarly, what is driving the current price right here is buddy of Retail Investors coming in, but it is the big boys who cause most of the movements. Emily you have been tracking a littleknown business that is called cryptocompany that is on an even wilder ride than bitcoin. Explain. Tom it is basically the First Publicly Traded Company that says it will invest in bitcoin. It is called cryptocompany. Its market cap is incredible. When i took a look, it was in the hundreds of millions, and in this week it suddenly ballooned to 12 billion. Today it has fallen to 4. 5 billion. It is a stock traded overthecounter. These numbers are not as authentic as a bitcoin price. But on paper, the founders who set this up in june or Something Like that have built a 1 billion stock position, but only on paper, really. It is an overthecounter stock. The volatility is based on very, very thin volumes of 1 million or 2 million. Emily another interesting story in the bloomberg terminal about the involvement of women in the cryptocurrency market, which was initially as most things are dominated by men, but the subhead is that bitcoin is welcoming to anyone who drinks the koolaid. Tom exactly. it is really that is the whole nature of it. It is a totally open opportunity. Anyone has the chance to change the future of finance. Emily coming up, california governor jerry brown explains why the state is leading the charge on climate change, and how Silicon Valley is joining the effort. Plus, goodbye ireland. Under pressure from tax authorities facebook declares , they will no longer funnel taxes through its irish subsidiary. This is bloomberg. Emily this week, Emmanuel Macron hosted the one world summit in paris. California governor jerry brown was among the attendees. David westin caught up with him and asked about californias role in combating global warming. Take a listen. Gov. Brown were not going to convert donald trump or mitch mcconnell, the Koch Brothers or mr. Ryan. They are in a cabal of denial. Destructive of science, pulling back on research, trying to prevent california and other places that want to go on a renewable pathway. They want to resurrect coal, which is dying. That is true. But a convocation such as this does mobilize commitment that does not exist before they come here. There are real Financial Statements that are going to be reflective of real commitment to dollars. I heard this morning from west africa, for indonesia, and for other countries. So these are real things. We are doing stuff. We are converting people. But we have to do it one company, one state, one nation at a time. Yes, this is not perfect. Yes, there are a lot of people talking, and what have you, but damn it, the world is going on the wrong direction. It is going to hell, not to heaven. We have to wake people up. Just because the cynical complacency of the powerful of obscures the truth is no theon why people such as secretarygeneral of the yuan, the president of france and many others from denmark and sweden, romania, so many other countries , the vice premier of china. There are a lot of people and there are more all the time. More than there was two years ago. It is a real battle. I am going to do everything i can while i am in a 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 do not understand Climate Science are rather stupidly moving the world toward. So yes, we are making progress. Is it enough . No. Is the world on the right track yet . No. But we are taking steps, and next september in San Francisco we will have a similar conference and we will do it as long as we can, and eventually i believe we are going to win. People on the side of truth, sustainability, and the science as we now all understand it. David governor, i have to you about edwin lee. We just received word a few hours ago that edwin lee, the mayor of San Francisco, passed away in an untimely way. I do not know any of the details. Give us your thoughts about edwin lee. Gov. Brown ed lee was a really good guy. I knew him. I did not know him for a long time. But he was really a politician i think who spoke the language of the people. He was down to earth. He was real genuine and had , integrity. He was working hard in a very difficult city that is divided along many different lines. He will be missed. He was a good guy. He represented california and the city. Untimely, you know . These things happen. We never know the time nor the hour when our time comes up. I would just say we are going to miss ed lee quite a lot. Emily that was governor jerry brown of california. As david and the governor were just discussing, San Francisco mayor ed lee has died. Lee had a close relationship working with tech in the city, working to lure startups and keep major tech firms in San Francisco through various proposals involving taxes and housing. He also trumpeted San Francisco as a sanctuary city for undocumented immigrants and opposed president trumps executive order aimed at stripping such cities of federal funding. Mayor lee was 65 years old and was a guest on our show several times. He will be missed. Emily facebook is changing its tax structure. The social network will start to pay taxes in countries where sales are made rather than funneling everything through its irish subsidiary. You will recall facebook has , come under pressure from the u. S. And europe for its tax practices, specifically routing u. K. Based sales through island ireland and here in the states is locked in a battle with the Internal Revenue service that may cost it more than 5 billion, plus penalties and interest related to the irish operation. Sarah frier joined us with more. Sarah these companies exist on the internet, so they have been able to be creative about where they decide to book that revenue. Most of the selfService Revenue is still going to be routed through ireland, beyond that it is a big win for individual countries, for italy, germany, france, places that will collect taxes from facebook. Emily give us some of the numbers. In many cases the actual tax rate in one case they paid 6,000 in taxes. It is infuriating. ; it does seem infuriating and. They are not alone in this. You have facebook, google, apple trying the best they can to manage their tax issues. Of course, there is talk of repatriation of cash for the United States will get harder for them. In terms of numbers, this move does not mean that facebooks overall taxes will go up. Emily why not . Sara it could be the same rate for them. It is just going to be very complicated to implement. The ft report today that broke the news, they said it might not actually be fully operational until the end of 2019. So this change is a long ways away. Facebook is letting us know now. Emily what do you think of the timing of this . Obviously, facebook is under pressure for fake news. Many other things as well in this moment in time. Sara this is a critical moment for the company where they have to make sure they are on the good side of the governments they are working with. These jurisdictions there are elections where they come under pressure for the way information is spread on their platform. They are told to tackle isis accounts spreading in europe. The company is working with governments and regulators on those issues, and also these. Also, they were not going to be able to use the same tack tactics in ireland for much longer. Emily you have an excellent story about fake news, where it gets propagated, and where someone has created this partisan and inflammatory news. You talk about how facebook is fighting on that front. Meanwhile, selina wang is here to talk about an interesting piece in buzzfeed about how steve bannon and breitbart tried to exploit and manipulate the weaknesses in twitters policies. All of this does somewhat tied together. Selena, what was the gist of this article and how did bannon and breitbart manipulate twitter . Selena the crux of that story that were bannon and breitbart were trying to seek retribution to twitter. It seemed like the platform was silencing conservative voices. Especially the writers of breitbart. So bannon went on this hunt for a legal editorial wave to damage twitters reputation and devalue them. They wanted to sue them and get shortsellers galvanized about this company. I think at the pinpoint of this it shows that philosophical conundrum twitter has been since its conception. How do they maintain this open platform without letting this abuse run rampant on the site . Emily to a certain extent, they succeeded. Selena no matter what they do there will be people who have backlash against them. From the very beginning, they wanted to be the free speech wing of the free speech party. They dont want to be the arbiter of what is appropriate information, and neither does facebook. That puts them in murky territory. They just want to be an open town hall for people to say what they want to say, whether that is good or bad and they are handsoff. Emily in a way that has been the bane of their existence. Sarah the man i profiled basically saw this call to action, that facebook was neutral. They would allow content that was viral. How do you make the best viral content . Well, it is outrageous, it is something that will spark a emotion, it is partisan. He was building a website that went further than fox news and terms of conservative leanings and often veered into fake news. From what we were talking about with twitter, facebook had to make the same decisions. How much of this content do we limit . What ways do we limit it . Do we absolutely ban it . Do we remove ranking in the newsfeed algorithm, which is similar to twitters verification check. These past measures companies have done. Basically this year, his popular very conservative website does get crushed by facebooks news fake news efforts in their change of the algorithm ranking. It is just not profitable. Emily it is the same thing but it will not be viral . Is that what you are saying . Sarah exactly. Emily it will be allowed on facebook . Sarah it still will be allowed. The thing with facebook, they are trying to dampen this stuff from going viral. But they do not want to be an arbiter of truth. Just like twitter does not want to be vr ritter of truth. The arbiter of truth. They do not want to explicitly 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. They do not want to be seen as censoring anyone or appearing biased. Emily which brings us to the controversy we talk about again and again about the president being on twitter and using it to what many people believe inflame, harass, and people have questioned whether twitter should allow him on the platform at all . Seliana they have spoken to a member of their own trust and safety council, who thinks trump users think the cyber bullying, if it were a regular user, twitter would kick them off. However, twitter tries to weigh the newsworthiness of tweets of a user and looks at that against the disparagement and the content of the tweets. In the case of trump, we have heard from the executive chairman that they like that trump is using their platform. They like that Global Leaders are turning to twitter for their first mode of communication. I mean, it is good for their new user numbers, engagement, and keeping them in the news, overall awareness for their brand and in the zeitgeist. Theyre willing to put that over these concerns of users that trump is not a healthy addition to twitter. Emily meantime, really fascinating comments from a former facebook executive, now a venture capitalist we have interviewed many times on this show speaking at a conference at Stanford Business school last month. He said, i feel tremendous guilt. It literally is at a point now where we have created tools that are ripping apart the social fabric of how society works. He never said facebook by name, but many people think he is talking about facebook. Facebook has now come out and really hit back on his comments. A very unusual move, to talk about a specific persons comments there. What do you make of this situation . Sarah the company usually stay silent in these circumstances. What he said must have 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 Growth Team back in the day. This is a moment for him to come out and speak, within facebook they are probably worried he is using it a little opportunistically. Emily now for something out of this world. Astronauts on the space station normally have to wait for movies and the enters on earth. But they are getting one notable exception. Disney has arranged a special screening of star wars the last jedi at the same time it premieres in theaters. That does it for this version of the best of Bloomberg Technology. You can tune in each day. 5 00 p. M. In new york, 2 00 p. M. In San Francisco. And remember, all episodes of Bloomberg Technology are livestreaming on twitter. Check us out. technology. That is all for now. This is bloomberg. Announcer brilliant ideas, powered by hyundai motor. Narrator from enchanting miniature sculptures to largescale models, Takahiro Iwasaki is a masterful japanese artist whose defining style is subverting traditional forms of architecture