Continues to pose risks. But first, our top story. Mark zuckerberg will get a firsthand look at the growing opposition to facebooks plan to create a cryptocurrency. He will testify october 23. The hearing will examine facebooks impact on the financial and housing industries. My first question is, how significant that it is zuckerberg . It is very significant. Anytime the ceo testifies, it is a big deal. I was there in april of 2018 when he last testified and it was a total zoo. Everyone wants to see him and asking questions. I imagine this will be the same. I know they had been trying to get sheryl sandberg. We wrote about that a couple of weeks ago. It looks like they got someone even better which is her boss. Taylor what do we know about the content of the hearing . Kurt this committee focuses on financial services. They also do housing staff. Stuff. Accused withbeen issues around its advertising businesses. People are being discriminated for housing related issues. I imagine that will come up. Once you get an executive in front of the committee, pretty much anything goes. With Mark Zuckerberg being there, i imagine we will hear questions that span the entire gamut. Taylor i think i asked you this before and i continue to be perplexed, does facebook realize the amount of opposition that would be coming their way about cryptocurrency . Kurt its hard to imagine they would have seen this level of pushback. If they had, i would hope that they would have gone out and before. E of this work it is a tough situation. If they went out and had all of these conversations, it wouldve leaked. People would have said, what is facebook doing . Did they anticipate that Mark Zuckerberg would be testifying before congress four months after this was announced . I have a hard time believing that. Taylor you mentioned the other times that he and the members of facebook have gone to testify. When you look at the share price reaction during those days, facebook actually rises. You see how this testimony goes and antitrust is not a big deal as we thought. It looks like regulators do not have a bigger understanding of how facebook works. Do we assume the same . Kurt i dont know what the stock is going to do but what usually happens is that politicians who spend weeks if not months saying really inflammatory things in the press , all of a sudden they have to ask real questions to these executives. Oftentimes they either have a real answer, which is not all that exciting, or they avoid the question altogether. They have gotten really good at not saying things they shouldnt say. Facebook survived that and Mark Zuckerberg looked good while doing it. Taylor while we keep our eyes on october 23, thank you for joining us. A talk of tech. Shares of roku traded higher. The competition is real and the Playing Field is big. The company occupies a great spot within the sector. Shares of netflix closed lower wednesday. There was unprecedented competition from apple and walt disney. Lowered. Target was netflix is expected to miss expectations for subscriber growth in the fourth quarter. Shares of slack dropped after the price target was lowered. It kept a neutral rating. Analysts say the company is increasingly facing competition from microsoft. Those are your top tech calls. Still ahead, lung injury associated with the or prompting one company to tweak its Life Insurance policy and the prices. Treating vapors like smokers. We have the details. Check us out on the radio. You can listen on the bloomberg app, our website, or on sirius xm. Taylor prudential says it will tweak its Life Insurance policy to classify vapors as smokers. This comes amid a nationwide health scare. Does this come down to tweaking those actuarial assumptions at basically the math that goes into these Life Insurance claims . Every Insurance Company handles it a bit differently. Rates. Have had higher prudential is changing its policy to include vapors and smokers. To life insurer wants analyze how long they expect people to live. , i thinkhealth scare. T raises these questions taylor does it seem that they are being reactive . Before federal agencies were highlighting the concerns about vaping . That is an interesting point. You dont see Life Insurance companies in particular be very reactive. Very quickly reactive. I think the fact that prudential is taking this into consideration, looking at what regulators are saying is definitely interesting. That my understanding every Life Insurance company treats it a little differently. Some may classify it as smoking. It is interesting that provincial is saying we have looked at our policy and we are going to change ours. Taylor do you just assume that prudential is the first of many . Katherine i think some have already tweeted. I dont know if it will be a huge tidal wave. But it shows that Big Companies are looking at the policies they have and could essentially change them. Taylor thank you. Public safety is the reason behind an unprecedented decision to cut power to a half million customers in wide swaths of northern california. The move is to prevent wildfires and prevent protect the public. Never before have the utilities cut power to so many people. San francisco and Silicon Valley are excluded. This is seen as a good thing . These preventative measures that pg e are taking . Good depends on your perspective. It has the potential to limit wildfires and less death. But if you are a customer who has lost power for a week, i dont think you are viewing it as a good thing at the moment. Taylor what are some of the other solutions for pg e . Are there other technological upgrades . What did they do in this situation . Easy ore there is no cheap solution to this problem. There is a range of things they can do and they will probably have to do some of all of them. They could start under grounding parts of their transmission systems. That would be very expensive and take a long time to do. Subsidies tofer customers to employ backup power systems. That is something they are already doing. About 10,000 californians have batteries in their homes. They could start developing microgrids in certain communities. Or they could develop utility locations. If they know they are going to cut off power in advance. These are all options that will take time to implement. Taylor at the beginning of our conversation, you said it was good depending on your perspective. . Ho benefits from this fors you couldnt come up a better Marketing Campaign for buying a better battery. The Company Selling those like solar, Companies Selling backup systems and generators are pretty happy with the situation. It is a major opportunity for them to sell more products to customers. We have heard news that places like home depot are running out of backup generators. Clearly customers are responding to this and try to prepare themselves for these events. Taylor you mentioned tesla. How do electric vehicles benefit from this . They are no different. If it is a backup, it affects them. If youre planning on going on a long journey and your car is not charged, that is a problem. Some of the companies are pushing the ideas of vehicle to home or vehicle to grid. The idea of using the battery in your car as a power source to power your home. That is quite niche. With events like this becoming more common, it might be a little bit more interesting. Taylor any sense of what Tech Companies in the region might be affected by this . James at the moment we have seen backups happening in rural communities. There have been some and Silicon Valley. A lot of Companies Across the california economy are going to be feeling the tension here. Taylor thank you. Up, behind teslas big bet on its autopilot feature. To customers benefit from the technology or does the company have a long ride ahead . Bloomberg technology is livestreaming on twitter. To follow our global breaking news network at tictoc on twitter. This is bloomberg. Taylor theres increasing scrutiny on unprofitable private companies. Investor of an sequoia capital. I asked them about quality topline growth at the expense of profits and the competitive software space. It is redefining data management. We have great customers. The u. S. Air force. Northern trust. We did our first 10 plus Million Dollar deal. The problem that we are trying to solve is that data is very siloed in any enterprise. It brings together data on one platform that spans the. Atacenter and the cloud the firstppens to be one. The movers of tomorrow will be decided by how much value they can extract out of that. Nterprise data taylor what is the biggest change you have seen in the company . Is what hehave seen just articulated. And what they announced so they announced today and their recent. Erformance metrics is unusual to see a company that is been in the market for only about three years and software. 10 million they are refining data management. That is highly unusual for a company at this stage. It is not one customer, it is many customers. We have seen growth in transactions. It is the fortune 100 companies of the world that are employing this. One change we have accomplished in the last year is our shift to software. Our revenues are completely and software. We no longer book hardware on our books. That gives a lot of flexibility to our customers. They no longer worry about buying one piece of hardware. They have a choice of many different platforms. We have become a software company. Addhe thing i was going to that is very impressive is the ity istem in which cohes building around them. Cloud look at the biggest partners, they have deep partnerships with them. As well as the data centers like cisco. They have done a amazing job building a robust ecosystem. See that happening at a company of this stage. Taylor as you take a look at cohesity and some of the other companies you are involved in, what is the pressure in the last six months to be more involved on a daily basis . To make sure you are curbing excess spending. To make sure that growth at any cost is not happen under your watch . We pride ourselves on being Business Partners with all of the companies that we invest in. We are making sure that they are growing because growth is a key metric that everybody looks at. But we want to make sure we are doing it. It is not always profitable on day one but we have a path toward properly profitability. You see hyper scale growth and some of the numbers we were just talking about. We are also trying to do it in a way where we are mining our expenses. Do look atnt, people profitability of startups. While they may not be profitable today, there is a path toward profitability. That is what we see here at cohesity. We have a path toward profitability. That is what we are focused on is partners. We are very fiscally responsible. We have a clear path to profitability. Eventually it is all about Unit Economics. Our Unit Economics are great. The growthore on side because we know that eventually it will move toward profitability. Tesla tends to dominate the global auto market by building its first selfdriving car. Customers adore autopilot. They have logged more than 1. 5 billion miles. Often pushing the limits of the software. The Technology Still has far to go, given that there have been casualties using the future. What was it like to ride in a tesla on autopilot . The word i would use is creepy, in the sense that it feels weird to have the car turned the wheel, accelerate, with no input from you at all. T is very humanlike it really does require supervision. Taylor you hinted on detention, which is this great technology. But casualties are also coming. Is that the internal tension that tesla is facing right now . Zachary their strategy on getting to and antons vehicle is really different from the other players in the space. Or general google motors are being very cautious and careful and trying to get to a fully autonomous, functional vehicle before they release it. Taking their semi autonomous product and trying to put it on the road as fast as they can and sell it to as many people as they can. With that strategy comes risk. People would be out there misusing it. And in some cases dying. But tesla believes they can get to full autonomy quicker that way by having this fleet of cars that have the technology installed. Taylor where is the regulation around this . To regulators, autopilot right now is simply an advanced driver assistance feature. It is like cruise control. As long as the humans are supposed to be supervising all of the time, regulators are not really, it does not have to pass any special regulatory hurdles. Full autonomy is going to be a big regulatory hurdle in most u. S. States. You have to have a license to drive a car. How do you give a computer that license . Tesla has a way to get something quasiautonomous on the road now without having to meet that regulatory hurdle. Taylor except that tesla has said they want full autonomy by 2020. Then what . Zachary elon musk has said that this year, autopilot will be featured completely. You can turn it on on any kind of road condition. By next year, he expects it to be so good that you wont have to supervise it anymore. That is an incredibly ambitious, bold timeline considering w eymo has been working on this on 10 years and they are not anywhere close to having a fully Autonomous Car and theyre not making promises. Elon musk know that does make bold, grand predictions. Why does he think he can beat out the competition . Zachary the theory is this huge will essentially give them the competitive advantage that they can take data and use all of those cars to train their algorithm to get smarter. The data advantage full actually use them to get to autonomy better. Taylor creepy is the word i will take away from that interview. Thank you for joining us. Coming up, whistleblower is the word du jour in washington. Before ukraine, there was Cambridge Analytical. Someone spilled the secrets of the data mining company. This is bloomberg. Taylor this is bloomberg technology. Facebook is appealing a ruling that says users can sue the social network over the Cambridge Analytica data scandal, saying the Court Decision does not line up with other verdicts by other courts including the u. S. Supreme court. Plaintiffs argue facebook improperly share data with third parties without permission. More than 80 million User Accounts were involved in the scandal. Who better to talk about Cambridge Analytica than the man who blew the whistle on the company . He is also the author of the new book that details the whole series of events. He joins me from new york. Also with me, Bloomberg Businessweek columnist max chafkin. Sit herender as you and reflect, what has your experience been like . It has been intense. Im not going to lie. Writing a book actually helped me really reflect on everything that happened. I talk about my journey from getting recruited at a military ontractor to working modeling and data work that helps identify people who are paranoid ideation and extremism with the idea of trying to mitigate that problem to having that work completely an outrighter billionaire named steve bannon acquired our company to in effect the same thing in america, targeting people who are more prone to radicalization, but in this case, for the altright. Max coming forward the way you did, blowing the whistle on facebook, which as we have set on this program many times, and incredibly powerful Media Company, maybe the most powerful Media Company in history, what was that like . Did you get any pushback, any threats . As you moved to publish the book and tell the story in full, have you heard from them at all . Oh, girl, where do i begin . I had the story emerged, been working with Law Enforcement and regulatory agencies months and months before the story broke. When facebook found out that, you know, the story was emerging , something they knew you know, they knew about Cambridge Analytica well before any of this was published. The first thing they do is threaten the journalists of the guardian with in my view, a serious accusation. It turned out it was true. In my case, they banned me from facebook and for some reason, instagram. After that point, working day in and day out with regulatory authorities in the eu, the u. K. , the United States, all over the world, one of the things i really thought is just the power this company has to hide, too obvious get their work, and things that one of the things i came to understand is that, you know, when you go and blow the whistle, you see something that is wrong, and you report that to an authority, you think there will be some guy somewhere in some federal Agency Building that knows what to do. One of the things i realized is that there is not that guy. That guy does not exist. I have talked to governments, regulators, congress, parliament. People do not know how to handle this problem. Thate, the real concern is we have a completely unregulated companiesndscape that like facebook take advantage of. Even though Companies Like Cambridge Analytical now have dissolved and no longer exist, the capabilities are still there. One of the reasons i wrote the book was to serve as a warning. Even if this company no longer exists, what happens if china becomes the next Cambridge Analytica . What happens if north korea becomes the next camp agenda litter ca Cambridge Analytica . Currently, there are no rules. We are entrusting our data to private companies, and i dont think that is a good idea. Taylor i wonder if you think the current regulation and current lawmakers are doing a good enough job handling the problem that you described. One of the things going to congress i realized was the power of lobbyists, particularly to define narratives. One of the questions i would always get at congress is can the law ever keep up with technology . I would say we regulate Nuclear Power plants. We regulate airplanes. We regulate medicine safety standards. Theres all kinds of technologies we regulate in the name of consumer safety. Just because somebody uses software or is on the internet does not mean that we cannot create rules that require companies to consider if the products they are putting out into the public will be safe for people to use. The United States is one of the only oecd countries i think the only oecd country that does not have a National Privacy law. When you look at, you know, the language and the way a lot of Silicon Valley companies talk about themselves they say were a service, this opt in, terms and conditions, all this stuff, get when you look at the types of people who work at the company, right, they are called an engineer or architect, right . They build ecosystems and environments. These are things people are going into. These are architecture. When you look at how we regulate physical architecture or engineering, where if you build a building without fire access and say its ok because people opted into my building, they walked in and there was a book of terms and conditions over there, and if it burns down, that was their choice people would not stand for that. Things i hope the people, particularly lawmakers if they read the book, one of the takeaways is we need to really understand what is social media . What are these platforms . Have obviously 2020 elections coming up. The data that was at issue with the Cambridge Analytical scandal that we have been talking about for years is that data still around . Is it possible or conceivable it could actually come into play again for years later . I guess in a larger sense, how worried should we be about foreign interference Going Forward . I dont know. I dont know what happens with that information. I dont know what happened with that data. A lot of the same people who worked at Cambridge Analytical now work on the trump campaign. This is a company that had regular contact with russian officials. The ceo shared vodka with the Russian Ambassador. Its clients regularly meeting with the Russian Ambassador during 2016 and also going and meeting with the trump campaign. People exist, the capabilities exist. If the data still exists, i dont know. Facebook presumably has tried to contain the problem. When i dealt with them, they did not really do much, but that is exactly why i think we do need to take a step back and go, should there be some kind of consumer safety watchdog when it comes to digital platforms . Watching, one is these are the things that can happen. In this case, you know, we had people come forward and talk to the media, but what about the cases where that does not happen . Taylor i think we have talked a lot about the 2016 election, and i wonder, is it inevitable that it begins again with 2020 . Ofyeah, i think we are sort this is a new norm. One of the things i talk about in the book is how does Information Warfare work, particularly online. We have created an open door to the minds of every single voter in the United States. Currently, we are trusting a people fromrotect interference. We talk a lot about pressure, but my real concern is what about the other countries that have now watched what you are able to do . Na, iran, you name it these are countries that have strategic motives to interfere in the election, and currently, no one is protecting it. We are literally entrusting Mark Zuckerberg to do the right thing. Max the candidate who is i think closest to where youre talking is Elizabeth Warren. She has talked a lot about regulating or even breaking up facebook. Have you been in touch with anyone at the Warren Campaign or any other president ial campaigns and terms of advising them on policy . No, i have not, but im definitely open to chatting with people. Any opportunity, i will talk to people who are in decisionmaking positions, but i think, you know, what Elizabeth Warren is doing is great because if you love or hate her, she is mainstreaming a conversation that we all need to have, if you are democrat or republican, we need to talk about the impact of the internet on our political process, and this is something that everybody is a stakeholder in. She makes isints we are literally relegating the privatereferee to a company. Just today they are saying, you know, we are not going to take down provably false information if it is political advertising. Its like why does a company get to decide that . Something so vital and so important for how an election runs . She isartened that talking about it. Other people are talking about it also. Andrew yang, for example. Of thepy that it is part conversation. Taylor we are pushing forward their two the 2020 elections, says christopher wiley, the man who blew the lid off cambridge and bloombergs max chafkin. Next, we look into what went down. This is bloomberg. Taylor top trade negotiators are set to resume talks with china thursday in washington and Vice President mike pence says the u. S. Will demand beijing open markets. Speaking to reporters in iowa wednesday, pens that the Trump Administration will demand a china deal with intellectual property and forced tech transfers. Highspeedworld for internet and underwater to boot, there are competing projects trying to accomplish this engineering feat, but one in particular stood out. Alaska with a cable nearly 9500 miles long promising to be faster and shorter than rivals. But there is a catch it was a scam, and a billiondollar one of that. The writer of an article all about it in Bloomberg Businessweek joints me now. Austin this is the big story and theirtilian founder who spent the last couple of years selling the world on this vision of building a Northwest Passage for the internet. It would speed up the web for much of the planet and close the digital divide. She raised hundreds of millions of dollars from investors and convinced state and government officials, she convinced population of alaska, a bunch of telecoms that this would change the game for the internet as well as for the telecom space. As was revealed in recent years, it turns out she forged one billion dollars in sales contracts from customers and just went to jail for that last week. This is really unraveling. This is the story of how she committed that fraud and what the future is for this network in the arctic. Taylor how did she do it . How did she get away with it for so long . And a lot of people describe it as coming down to her tenacity. This is someone who not only is just ferocious about her project like any Silicon Valley entrepreneur would be, but she was also incredibly defensive. Whenever people looked into the project or provided scrutiny, she would always push back that she kept her sales contracts in a google clout account only she had access to. She kept direct contact with her sales partners just oneonone. She was very secretive about the whole project, but at the same time, you could only sell investors on these largescale Services Contracts until the bills start going out to customers. Thats when a lot of red flags kept going up in alaska. Taylor what happens now in alaska with fiberoptic cable . Austin i spent a lot of time up. Here they eventually built this alaska pipeline. Its pretty magical when you see it. If you think about how difficult with all the ice of their to build Something Like this in the arctic, they have actually built it around the coast, but they have not yet connected it to asia and europe, which is the goal. A lot of analysts believe that could lower latency and speed up the web, which would have huge applications for highfrequency traders and cloud players. For joiningk you me. Still ahead, a sneak preview of wednesday nights studio 1. 0. This is bloomberg. Taylor in the latest episode of bloombergs studio 1. 0, millie chang sits down to discuss some of the biggest projects to come out of the x lab including google glass, waymo, and project loon. Take a listen. It was certainly an experiment. There were aspects of it that were absolutely a failure. I want to be fair to glass having learned a lot of lessons, some of them may be more painfully than we needed to, glass is still very much an ongoing business and quite successful. It is just not much in the public eye. Family thats right, glass is back. Glass never left. It turns out the right place for this for now in society are the parts of society that are less fashion conscious and that have real, practical needs. These are doctors and nurses, people who work in manufacturing oilronments, who work on rigs, who are maintaining airplanes. Of theny is this is one technologies from Silicon Valley that the digerati said no thank you too, but the heartland of america is super happy to have. Family family emily do you think glass will ever be back in this form . I think it definitely will be. Emily when . Three to five years . Harder. Rked as we get out into the world, we are not putting it anywhere that is not safe, but we are not pretending we are done when we are not done. Have sort of created a culture of failure or a culture where it is ok to fail in the hopes that you will succeed. Tell me about that. The secret is i hate failing, the longt to win in run. I want us to win in the long run. We have to create a culture if we want you to be honest, if we want you to fearlessly run the right experiments and be honest about the outcomes that says we embrace the quality of the experiment, not the outcome. Are some of the epic failures . I would love to hear how this works in practice. We built a system that could turn seawater into methanol using clean energy. That is real, save the world itd of stuff, and we got working, and it turned out the cheapest we believed we could get it was a 15 gallon of gas equivalent, and this is one of these honesty moments where we said we want to save the world. We are incredibly proud we built this machine, but if the cheapest we are going to get this any time soon is 15 gallon of gas equivalent, thats not going to save the world. No one is going to buy that. We published the business failure and published the science learnings we had in the International Journal of Greenhouse Gas control and said, heres what we learned. Can anyone build on this . Talk about the projects youre working on that have potential. Wanted the ones that i think has a lot of potential, the selfdriving car business. One of the ones that i think has a lot of potential. Waymo has helped everyone around the world get serious about this particular space. Waymo has done a great job making cars drive safely. Waymo is already charging people as a Transportation Service in arizona, so that is going exceptionally well, and we are really proud of waymo. X. Ly waymo has spun out of it is in a unit under alphabet. Morgan stanley says it is worth 175 Million Dollars, but skeptics are asking when they will see a selfdriving car, its taking too long. Who is right . Going tothings are take time. You can see one of those if you just walk outside our building, if you go to arizona. There are no many hundreds of cars on the road. It hit the does mainstream . It isulatory reasons, th going to take a while. The world has also already paid for a lot of cars. As those are retired, more self driving cars will be pulled into the mainstream. Loon is doing well. There was recently an emergency in peru, and we got to jump in and help connect people who had lost internet people there. This is the third time we have been able to do that. That one is making good progress. Like each of these things, it is a long process, but we have increasing faith that loon is actually the right way to bring conductivity to several billion people in the world who do not have it today. Emily where are you focusing currently . Automation, farming, agriculture . Yes, we have all of those. Every single thing you just named we have at least one exploration in, but theres some im feeling particularly good about right now. Agriculture is an example. Humanitys ability to produce enough food to feed everyone in the world and to do that in a sustainable way, we are topping out, and its pretty scary. We now have several things here at x that are looking at Food Production from several different avenues and we are excited about those things, so i feel really good about that. Emily health care. What about health care . This is an early thing we are exploring, but there are spaces in which the innovation went like this because theres a simulator for the thing people are innovating on. Cellu could go into biology, for example and simulate how a cell works, you could run experiments at thousands, maybe even millions of times the rate that humans can run those experiments in the lab, and that would cause an enormous explosion in the innovation in the life sciences. Cell able to simulate a accurately in a computer who knows if we can do that . That is an example where we have some interesting progress. Taylor that does it for this edition of bloomberg technology. Bloomberg technology is livestreaming on twitter. Check us out and be sure to follow our global breaking news network at tictoc on twitter. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Paul welcome to daybreak australia. Sidney inn and sydney. Sophie im Sophie Kamaruddin in hong kong. We are counting down to asias major market opens. Paul here are the top stories we are covering in the next hour. Trade talks returned under a cloud. Negotiators will meet under a shadow of a travel ban and tech black listings. China may accept a partial deal. 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