Vision fund. Oh, snap. Bullish bets payoff. Four more users per day than percted far more users day than expected but can growth keep up . Department of justice is set to open a broad antitrust review into big tech. They are looking specifically into whether u. S. Tech companies hurto big that they competition. Joining us to discuss, tom got gurman, and, mark ben rhody in washington. Ben we dont know a whole lot. We are looking at here is a sort of complement to a task force that the federal trade commission announced. Doj share antitrust oversight. What is especially interesting that theye believed had split up the companies, the doj would only be looking at google and apple. Now it looks like they could be looking at something more highlevel. They could be doing criminal referrals to other parts of the agency. These companies could be facing scrutiny from both agencies. Emily the doj had taken oversight over alphabet and apple. The ftc was going to be looking at facebook and amazon. Now this means that both agencies could be looking at these companies . A very broad it is giving itself a lot of leeway to take a broad look at these industries to find out whether further action is needed. This is basically them sending the signal that we are casting a wide net, we are not going to limit ourselves. All this talk about us getting this and the ftc getting that, we are not going to be bound by that. How therest about a lot of people who believe that antitrust regulation in the u. S. Which dates back more than 100 years needs to be updated for the 21st century to account for social networking, retail platforms that have taken over the internet and are killing the retail industry, need to be updated for search and all of the services being provided digitally from the apples, soogles, amazons, and facebook of the world. This seems to be what the doj is doing. Do we need to look at these industries in a . Light . Nin a new emily all of these companies appeared on the hill for a hearing with congress people. Talk specifically about what this means for app . Senator Elizabeth Warren made the case that apple should be broken up. They shouldnt be running the app store and choosing the apps that are on it. Apple doesnt have majority market share when you look at almost anything. Mark it is an interesting case for apple because they are not the dominant player in any of their markets. The iphone is not the biggest player. You could say they have a hold on the smartwatch and tablet market. Productivity software, apps well behind google, microsoft, and others in china in usage. The crux of the issue is that tole charges a 30 fee thirdparty developers. Apple music compared spotify. Apple isnt paying a 30 share of what it is getting whereas spotify is paying 30 to apple. They feel apple has the competitive advantage because they are on the same platform. There are also arguments on the others as well. Ben following emily following the antitrust hearing last week, they sent some followup questions to the company and made this statement, i was deeply troubled by the misleading answers and statements made. It is unclear if these responses stem from the lack of preparation, purposeful evasion, or the inability of the companies to bring appropriate witnesses for the hearing. Now with the attorney general opening this investigation. What you get when you have this level of pressure that goes across washington is that you make it easier to eventually do something to the companies. You have pressure on them, distracted them, and in many cases you have made them less popular in public. If you are going to regulate them on the hill, it makes it harder to do that. He said that he believed that amazon may have lied about its relationship with thirdparty sellers and about how it competes against them or allows them to sell on its platform. He sent us this really interesting series of letters. No,sks a series, yes or basically repeating the question. They cant issue a lengthy explanation. If they answer yes, he has already said that he doesnt believe what they said. If he answers no, they have to demand more documents. You can see how these requests can ramp up incrementally. They are caught between a rock and a hard place. Whatever they do, they will be more demand of them. That is the level of scrutiny and it will only get higher. Emily we have learned a little bit about the settlement that facebook, Howth Facebook handled user phone numbers. Now we believe and bloomberg has reported that it is in the area of 5 billion. What more do we know now . Tom it is hard to say exactly how much more than the 5 billion. If it is the 5 billion, premuch just a slap on the wrist for the company. If they do something that will hands, that is when investors will be looking closely. The doj looking at the same time as the ftc just speaks to the number of levers that policymakers have access to. Maybe there are criminal actions, is there a fine . We have said many times, fines are no big deal to these companies that are swimming in dollars. Can you bring criminal proceedings . Can you also force them to change their behavior . That is what sends fear down the spine of Silicon Valley. Not only is it across agencies, this is also bipartisan. It is not going to go away. The democratic party, which traditionally has been seen as someone more sympathetic to Silicon Valley, some of these Democratic Candidates are coming out with the most aggressive stances and potential policy moves, breaking up big tech. It is bipartisan, multiagency, and it is not going to go away. This is going to be a central issue through the 2020 campaign. Emily we will continue to cover those headlines. Executive editor, tom giles, you are staying with me. As well as you, mark. Ben brody, thanks. Negotiatorrumps top Robert Lighthizer heads to china. Asking for a favor to waive tariffs on parts of the max pro. If you like bloomberg news, check us out on the radio. This is bloomberg. Emily bloomberg has learned that president trumps top trade negotiator will lead a delegation of officials to china. Robert lighthizer and his team on monday had facetoface talks with chinese officials. This is after a company asked them to exclude parts of the max pros to the import tariffs. To discuss more, our bloomberg trade reporter in washington. Still with us, mark gurman. In studio, bloomberg tech executive editor tom giles. What do we know about the meeting between the u. S. And china . we finally have the dates of the first facetoface meeting. We have had two phone conversations between Robert Lighthizer and Steven Mnuchin and their chinese counterparts. We know they are going over to shanghai for a really quiktrip. They are leaving on monday, they will be back on tuesday. They will be really picking up the pieces from when the talks fell apart in may. They have to feel each other out to see where they restart the talks. Thehe Draft Agreement that two disagreed over. Theres not really time for any breakthrough or anything like that. Valley has a lot at stake here with tariffs being threatened on 300 billion worth of goods. Now it is asking the government for a favor not to put tariffs ,n supplies for the new mac pro which is ironic given that they are also moving production from the u. S. To china. Mark the indicated about a month ago that the new mac pro, 6,000 machine, is going to move from texas to china when it comes out this fall. Now we have apple asking for exemptions on the tariffs, manufacturing in china and importing to the u. S. They want to have their cake and eat it, too. It is not a good look for apple. It is interesting that they want the benefits while manufacturing in china. Emily of course, Chip Companies watching closely. Texas instruments just out with results. Are we seeing the impact of the geopolitical issues on the numbers . Got somewhat positive news from texas instruments. The concern was that their customers were going to like not borders. Texas instruments were going to lighten up orders. Texas instruments is a little bit of a bellwether. When there is a problem in the global economy, it really shows up for texas instruments. They came up with numbers that were a little bit better than expected. Things are not bad as we feared is the message. Their stock is up in after hours trading. It is giving some investors encouragement that things arent going to be as bad as previously feared as a result of the trade war. Emily meantime, we have gotten some detail on the meeting that a number of different Tech Companies had with the white house yesterday. Many of them were Chip Companies , talking about the blacklisting of huawei, how that impacts them. Advisor larry kudlow had to say. With respect to the additional light instances additional licenses where there are no National Security implications, they have applied, and all they ask is we speed up the application process, and of course we agreed. Emily do we know any more about how that meeting went, the meeting between the white house and Tech Companies . Know is that the president showed up. It was just go it was just supposed to be larry kudlow and Steven Mnuchin, and the president dropped in, talked to the executives, heard the case they have made to wilbur ross before. He agreed to speed up the process. We heard today from wilbur ross that it is not a piece of cake to go through a bunch of exclusion requests or license requests and hand them out. He was kind of walking back a little bit the optimism we heard coming out of the meeting from larry kudlow and yesterday, the white house spokesman. It is not that easy. The readout is that it was a positive meeting. It was not just about huawei, but the huawei issue clearly was discussed and executives came away on a positive note thinking they could maybe thread the needle and figure out a way to keep selling their products to huawei that do not impact u. S. National security. Emily meantime, we did speak to commerce secretary wilbur ross earlier today. Take a listen. Ross in some cases, the applications have just been filed. A few of them have said they havent gotten their applications in yet. We will deal with them properly promptly. Within the next couple of weeks, we expect to have verdicts. Emily does this mean that the white house is listening . Tom it is definitely paying attention. How quick is quick . And what constitutes a National Security threat . That is the question i have. Does my product give huawei an advantage and unable Huawei Huawei to circumvent some rules. I think we will get more clarity once they start filtering through these applications which, as kudlow said, are more voluminous than expected. Emily major moves in the chip industry. Mark, you have been reporting on apples interest to purchase a ship unit from intel. News is applest is in discussions with intel to acquire its modem team. Modem are the chips inside of phones that connected to the data, so you can use it not on wifi. It is arguably the most important part of any phone, many tablets, smart watch. Havewould require apple to would allow apple to have more engineers which would jumpstart their efforts to build a modem for new iphones and basically cut qualcomm and other suppliers out of the equation for that really key device. , tom giles,gurman jenny leonard, thank you all. Snapchats growth accelerated in the second quarter. Details on the latest earnings report, next. This is bloomberg. Emily robin hood markets has posed a new round of funding that values the company at seven 6 billion. Robin hood became popular with millennials for allowing people to trade stocks for free. After reporting secondquarter earnings, it looks like the social Media Company is in recovery mode. Disastrous redesign last year, it came out with a new version of its android mobile app. To 207rs, from 205 million in the quarter. Daily active users coming in quite above estimates. Is it all because of android . Snap it is also because has made some very popular augmented reality filters that changepeoples faces, the way buildings look. Swapfun ones like a gender filter you may have seen. It speaks a little bit to the risk of the strategy that snap is betting it can be as creative as that every quarter. The android redesign is important because it allows the app to be more usable in markets where it hasnt caught on as much as the u. S. Emily ill admit, we have played around with some of these filters at home. But are they enough . It is sort of like a gimmick. Is that enough to sustain growth over quarters or years . Sarah it is a hard bet because you want to make sure those 13 million new users who came in this quarter keep coming in every quarter. Snap has decided for its strategy all the other big social Media Companies have relied on building bigger networks. Snap has relied on creating something fun. It is really about always delivering something new and interesting, whether that is content, games, interesting lenses. They have spent so much on research and development to get there. It is hard to be consistently creative. Isly this as the doj entering an antitrust review into big tech. Facebook is probably on the list, with all the controversy. Do you think the fact that facebook is mired in all of these other issues could be a distraction for facebook and give snap an advantage in the nearterm . Sarah i think snap is definitely taking on some of that user distrust of facebook. Those network affect are really powerful. An analyst told me earlier today that there is really no other game in town compared to facebook for the kind of return on investment that advertisers can get from their ads. You can look at it as snap having a long way to grow, or you can see facebook as a dominant force. Even if the ftc comes down with punishment, if the doj start looking into it, they are so big and so good at doing what they do that they are very difficult to compete with. Emily all right, we will let you get back to covering those headlines. Coming up, the u. K. Is getting a new Prime Minister. We will talk about what Boris Johnson means for the tech industry, next. Check us out on twitter and follow tictoc. This is bloomberg. This is bloomberg technology. Im emily chang. Boris johnson, the public face of the brexit campaign, was elected tuesday as the next british Prime Minister. With a lines landslide win. He promises to take the u. K. Out of the European Union by the october 31 deadline, but how will tech be impacted by the leadership change . Alex wood ebix planes. Boris johnson is the uks new Prime Minister after defeating jeremy hunt in a vote of conservative members today. What did it mean for tech . Well, one of Boris Johnsons most ambitious targets is the desire to bring highspeed broadband to every household in the country by 2025. The existing target was 2033. A goal that johnson called laughingly unambitious. He doubled down on that target today, even though a lot of people said no real detail on how we will achieve it and how he will get there. There is a suspicion that one of the reasons he set such a target was his core constituency would have been in the regions in the countryside, people who dont have good broadband right now. It was a real carrot to get their votes going his way. The classic Boris Johnson ambition without any real sense of what is realistically achievable. There was concern about the implications for the target for brexit, for example. There is likely to be some acceleration under his leadership if he is really going to push these targets but it seems very much overly ambitious to reach that goal. Alex webb, for Bloomberg Opinion in london. Emily back to our top story. Shares of apple, amazon, facebook and alphabet down on after hours trading as the u. S. Justice Department Says it is investigating whether tech giants are harming competition. Head of the antitrust division let out the companys reasoning saying without the discipline of reasonable competition, digital platforms may act in ways that are not responsive to consumer demands. And added the departments antitrust will explore. We have the Vice President of policy for the center of democracy and technology. With us in the studio, the managing partner of o hippo. What is your take on the rising pressure at the highest levels of big tech . Reversal ofa major the lack of enforcement we have seen in previous administrations. Five of the Top Five Companies in america are Tech Companies, and they are subject to antitrust activity. Emily used the word lax, implying that have not been doing enough . Eric i think they would like to on the privacy issue for sure and we are seeing the f tc will find facebook 5 billion. That is separate from antitrust. I find antitrust laws are going enforcery difficult to because antitrust laws really look at the harm to the consumer, mostly in the rise of prices. Most of the services are for free so it is going to be very difficult to demonstrate that they are harming consumers in that respect. They are going to have to use, if they are going to after these companies, they have to use all the rules. Emily chris, you wonder with pressure coming from multiple federal agencies, the president himself and lawmakers on both sides of the aisle, is there enough will to to make an antitrust case when it comes to these four companies . Chris i think there is. That is not to say that is going to happen but i was honestly not as surprised by this news. I mean, we know the antitrust division is considering competition issues in this space. They have been signaling it for a while. The ftc has been doing the same thing. Honestly, doj is always looking at these companies. Whether they will be able to decide to bring a case is a separate issue but until we hear more, i think it is more of a wait and see. Emily the question i have been asked over and over again are regulators doing enough . Would you say that now are regulators are doing enough . Chris there are so many issues coming to tech today. We talked a little bit about privacy. There is competition. Concerns about anticonservative bias. It is enough in what area. I would say we need more in privacy. We need baseline privacy rules in the United States. That goes without saying. Whether we are doing enough in competition, i think that remains to be seen. Competition laws are very flexible and they may get to this kind of conduct. Emily eric, of the big four, which do you think prevents the best presents the best case for a breakup . Eric for a breakup . Ok. The obvious one is facebook because of its acquisition of whatsapp and instagram. Many years ago, when the government did nothing they were a threat as a monopoly, today, particularly since facebook has announced they will integrate these three messaging platforms, that would perhaps go for a breakup. These things take forever. If you remember, the case against microsoft of years and years and really did not do much to hurt microsoft. I think there is quite a bit of political posturing in all of this. I dont know it will lead to anything. Emily chris, we have this pending fine from the ftc on facebook as a result of a settlement, possibly some more punitive actions on top of that. We dont know what yet. But, do you think that is actually going to have an impact . Chris yeah, i definitely do. 5 billion is a big number. Especially when you consider previous fines in this space are in the tens of millions of dollars. This is astronomically more than that. When you look at it as balanced against the need for, for example, better security and more privacy, i think companies are willing to take on those costs in order to avert these kinds of fiens. Nes. The message for me on this is the ftc is always going to be somewhat limited in what it is going to do. Congress needs to create more baseline authority for the ftc and other entities to be able to enforce privacy laws so we can get stronger privacy across the board. Emily eric, is all this pressure on big tech good for startups, good for Venture Capitalists . Because you are investing in companies that are trying to disrupt these companies. It is very hard to disrupt anything. Eric maybe to some degree we will see new openings for companies but it is hard to see how you will take on as a start up, how you will take on amazon or apple or facebook. I dont foresee anything happening in the near future that will make any difference. Emily meantime, weve got the attorney general signaling that the companies time to comply on various encryption issues is running out. Take a listen to what we heard from the attorney general earlier today. Im suggesting that it is well past time for some in the Tech Community to abandon the posture that a technical solution is not worth exploring, and instead turned their considerable talent to developing products that would recognize reconcile good cybersecurity to the imperative of Public Safety and National Security. Governmentchris, the and the doj specifically has been pressuring Technology Companies to give Law Enforcement access to encrypted communication. What is your take on this on top of all of these other issues . Chris well, i mean, it does sort of look like doj is piling on. There is not a lot of new stuff here. It is the same old tired argument. We want you to build this backdoor into your communications, but dont worry, only the good guys, only Law Enforcement can walk through that door. Even doj acknowledges this creates huge cybersecurity issues. They would like tech to somehow fix them. It is hard not to see it as exploiting the existing Political Climate given that the department of justice has not actually proposed any technical solution to help us get there. Rather, it is tech, you are really smart, figure it out. Emily lots more to continue to follow. Chris calabrese, thanks so much. Eric hippeau, you are sticking with us. Coming up, 2018 was a record year for Venture Capital, but how does 2019 compare . We will talk about the Global Funding climate, next. This is bloomberg. Emily according to facebook, u. S. Venture Capital Investment reached 130 billion in 2018, surpassing an alltime high. Despite trade tension and a Global Economic slowdown, in 2019 shipping up to be another big year. The first half of the year, u. S. Investments were 66 billion come on track to reach record levels. Still here to discuss is eric hippeau. An early Stage Venture Capital Fund based in new york. How does this year compared to last . Eric so far, so good. It is on pace, maybe a little better than on taste. The Venture Capital industry in the u. S. Is booming. Lots of Great Companies to invest in. Emily what are you most excited about . What sectors are you most excited about . Eric we are doing quite a lot these days and digital health. Finally perhaps the Health Care System will open up to innovation. The reason for this is because in the Health Care System, everyone is very guarded about their data. The big providers keep that data. That data is going to leak out. People are going to give access to that data so if you think of building services, communications, tracking patients and all of these things , access to the data is key to a lot of innovation in this area. Emily how do you compare the state of funding in the United States compared to what is happening globally in the midst of these Macro Economic issues . The trade war with china and the broader economic slowdown . Eric it seems like other parts of the world are going very well. Europe in particular has seen a lot of investments. Latin america has seen new funds. I think china might be slowing down because american vcs are more cautious as to where the future is going to be. I think globally, you are seeing record investments. Emily given the acceleration of the ipo market, are you trying to convince more of your companies to pull the trigger . Eric i have always thought being a Public Company is a great thing, despite all the hassles. I think to have your own currency, to be in charge of your own destiny, to be able to ward your employees with Stock Options is a fantastic thing. We are seeing a very healthy ipo market this year. What we are hoping is the public investors are going to get a little bit more encouraged, take a little bit more risk and want our companies to go public sooner so they can benefit. Emily will we continue to see more Tech Companies going public second half of this year and next year . Eric there is a long list of companies that have filed. Emily what companies are you most excited about in particular . Eric well, in my portfolio, we have a lot of companies. I will mention khealth. This is a company that does a. I. , artificial intelligencebased diagnostics which is the trend of the future. When you speak to your health care provider, youre first going to go through a diagnostics, a. I. Based diagnostics. Khealth signed a major deal with anthem and anthem will report to all of their patients. Emily given the acceleration of the ipo landscape, what about m a . Are more companies thinking we can go it alone, take ourselves public . Or perhaps selling is better . Eric not everybody can go public. You have to have a certain size, a certain forecast. The m a market is quite healthy at the moment. For this year so far, a better year in terms of last year. Those companies that have a choice and can go public, my view is it should. Emily how concerned are you about the trade issues and the growing sort of sense of isolationism in the u. S. And other countries . We are seeing in the u. K. , poised to pull out of the European Union. China as well. What does that mean . Eric it is worrisome because it is an aboutface in terms of the politics we have had in the past 20 years of globalization, open markets, freedom of ideas, freedom of people moving to be able to develop their ideas wherever they want. This goes hand in glove with the antiimmigration movements. All of that is not good for innovation, not good for us. Emily what does it mean for innovation . Eric it means you are going to see silence again. People in china will not collaborate with people in the United States. It is going to slow it down. On the other hand, i dont think this is a sustainable longterm policy. I think globalization is here to stay. This is a course correction that maybe was needed, particularly in the case of china. But, it is in their best interest in our best interest to continue with open markets. Emily eric hippeau, good to see you here on the set. Thanks for coming. Still had, looks like softbanks fund will not be a one hit wonder. We have details on how hep lans to regulate the 100 billion plan. This is bloomberg. Emily alibaba has announced it will allow u. S. Merchants to sell on alibaba. Com. The chinese ecommerce giant sells to 10 Million Companies around the world, one third in the u. S. Previously, u. S. Companies can only buy items. The initiative could generate new income and goodwill for alibaba in the United States as trade tensions with china continue. Alix steel and david westin sat down with alibabas north america vp to discuss. John today is a great day for u. S. Small businesses. Manufacturers and wholesalers can join alibaba. Com today to sell to the world. The platform is open to enable those businesses to reach the 190 countries, four corners of the globe where we have 10 million business buyers on the platform. David how big is that business in the u. S. Going to be . John 23. 9 trillion. It is six times larger than the b to c market. David i did not realize that. It is many times larger than b to c. John alibaba. Com is the largest b to c market on the planet. We have tools for global businesses to have a storefront, market to customers and reach deep into the globe to sell their goods. David despite being hurt on bloomberg, how do i know that that i can now sell onto alibaba. Com . John today is the big announcement, but one third of the demand are here in the u. S. Those folks we have been doing business with for 20 years since jack founded the company. We are telling them you have been sourcing on the platform, now you can sell to the world. David any plans to go b to c . John we are entirely focused on the b2b market. Alibaba. Com is purposed built to help businesses sell to the world so we are focused on helping digitized Small Businesses around the globe. Interesting to thi statistic 70 of u. S. Small businesses do not sell online today. This market is not yet digitized. We created simple to use tools to help Small Businesses get online. Alix it is hard to say the world cup edition and alibaba in the same sentence but how do you compete wit in other areas. . John the value chain for Small Businesses, for b2b is so complex that no one has thanized end to end rather alibaba. Com. We created a platform for Small Businesses to negotiate, pay, handle the logistics. I think we are in a class by ourselves. David how does this read again some of the u. S. China trade tensions . John our business has seen triple digit growth. This plan has been in the works for many years. I joint alibaba. Com in 2017. The transportation transformation of our business from yellow page business to end to end procurement platform is now adding the globalized supplied to the platform. Emily that was alibaba. Com head of north america b2b john capl an, and alix steel and david westin. Softbank is close to announcing the launch of a Second TechnologyInvestment Fund model. For all the details, we are joined by alan hewitt. What do we know . We know some things and we dont know others. We know our reporting has shown softbank is getting ready to announce a Second Vision Fund that could come as soon as this week or early next. What we dont know is the official size of the fund or to exact leave the investors are going to be. There has been reporting done that it will be quite large, similar to 100 billion first vision fund which was an eyebrow raising, record review recordbreaking in Silicon Valley. It seems like the reporting suggests some of the biggest investors in the first vision fund will be coming back and investing again in the new vision fund. That includes sovereign wealth funds of saudi arabia and abu dhabi. Emily when the plan was unveiled, there was a question of will there be enough places to put this money . We have seen softbank drive massive rounds into rising tech startups, giving them essentially a lifeline for potentially years. How successful have the first vision fund been . He was talking about some of the successes of the first vision fund. Said they had a sickly 2 62 return on the funds invested already, 64 billion. That included enormous checks to big names in Silicon Valley like uber, wework. Softbank corporate has but about 10 billion into wework. We can see through that and other checks of hundreds of millions of dollars into some of these other companies in the valley that softbank has made quite an impact on funding the last couple years. They have been big investors in slack, another company that went public. They have not deployed all the capital. It does look like, if this plan goes forward, they are using that momentum from early successes of the first vision fund to raise a second one. Emily i wonder how much of those early successes was uber alone. Uber was public and softbank was the last investor to get in at a valuation that was below the valuation it is trading at now. There was greater optimism that uber would soar past the 100 billion valuation which it did not. Softbank got in essentially below the ipo price. Ellen this is the testament to the optimism of masayoshi son. He sees great opportunities in this growing area of the tech sector, and just looking forward to trying to replicate the second fund. With wework alone, we have seen the valuation change in subsequent rounds of funding as softbank alone is the only new investor. They see opportunities to reinvest and Companies Even if they are not being followed i other investors willing to write the same size checks. Emily we will keep following. Ellen huet, thank you so much for that report. That does it for this edition of bloomberg technology. We are livestreaming on twitter. Find us there. Follow our global breaking news network, tictoc, on twitter. This is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. 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Paul the top stories we are covering in the next hour. Trade talks resume next week with facetoface meetings in shanghai. The first of negotiation since may. Again, cuts forecasts warning of policy missteps on