Investors wonder if jpmorgan or softbank will rescue the company. And cryptocurrency crusader. Facebooks david marcus sits down with us to talk about the embattled libra Digital Currency project as well as regulatory hurdles. Tech earnings started in earnest this week with netflix being one of the most highly anticipated. The streaming giant impressed wall street amidst stiffer competition. Growth contributed to a positive report despite u. S. Subscribers falling short. Revenue climbed 31 to 5. 2 billion. I dug into the details with bloombergs lucas shaw. I think this story is that investors were clearly worried netflix would have another bad quarter. They disappointed in the second, they added a few million customers fewer than expected, and investors expected another bad one. One i spoke to said that sentiment was awful. Yet they come in right around expectations. They missed in the u. S. , but they were above internationally and that is where they have been telling people for years their future is. Its a sign of where netflix is going. While they will have one of their worst years in the u. S. This year, they will have one of their best internationally. Thats because they have shows resonating in europe, latin america, and asia. And again, in a sign of confidence, netflix is going to start breaking out its subscribers by region, which suggests they now feel confident enough in the numbers to talk about it, which they have not previously. Taylor lucas, talk to me about the domestic number. They are reversing a decline. Is it enough . Lucas you know, i dont know. I dont know how concerned people are. Netflix has cleared the 60 Million Subscriber threshold. That is what Ceo Reed Hastings had set. He projected 60 million or 90 million in the u. S. , this was a while, but they keep using it. They are going to clear 60, but will add about 2. 7 million this year. They have historically been adding about 5 million per year. They say its because of a price hike and maybe next year they are up to 3 million or 4 million. They will be facing a lot more competition from disney, apple, at t, and comcast. I think we are setting into something of a new reality for netflix in the u. S. Where after years of growing at 5 million, so maybe it adds three or 4 million per year. If they can keep that going, it will be ok because they will get to 70 million or 80 million in the u. S. And thats a good number provided they are growing overseas. And they are generating more money from each of these customers. The margin on those customers is up because the price increases have worked without costing them too much. Taylor that was bloombergs lucas shaw. Analysts had no shortage of reactions to netflix. Macquarrie said netflix denies the naysayers. And one analyst joined me with his analysis after the report. The biggest take away is that subscriber growth is slowing in the u. S. They missed slightly on previous guidance and this is after negative q2. What this means going into q4 as well as 2020 is that they are not growing as much as they had in the past, partially because half of all households subscribe to netflix at the moment. And this is really concerning moving into the new reality of competition with disney, at t, apple. Previously, Companies Like disney and at t provided a lot of content for netflix. They were partners in a lot of ways. Now they are turning to competitors. This is a difficult problem for netflix to solve moving forward. Taylor ok, so you bring up the competition. Lets go there. All we heard from the company is that next quarter will bring some modest headwinds to the Company Given the competition. How much can they withstand . The fact in the Fourth Quarter you are getting Companies Like apple tv plus, disney, how strong is that competition . There is a lot of excitement around disney in particular. But the thing to realize as well is that a lot of these other services, disney, apple, as well as old competitors like amazon that are still very, very strong, they dont necessarily have to turn a profit on streaming video on itself. Apple is really using their service to sell more iphones. Amazon is using the service to sell more of everything and disney is using their service to draw people into their entertainment ecosystem. What this means for netflix is they have to be more careful on price moving forward. When, for example, apple is giving out the apple tv plus service for free with a new device purchase. What this means is that netflix is going to have to be more careful moving forward raising prices, especially if they want to keep their current subscribers. Taylor although the price hikes are trying to offset the negative Free Cash Flow, this is the story we know about the company. If you come take a look at a chart im showing you my terminal, it is the classic negative Free Cash Flow that we see from the company. That Current Quarter has yet to be pulled into that. But again, it is a negative number. Thats pretty much all we need to know. What are you hearing from the company about potentially flatlining to eventually a positive Free Cash Flow scenario . Well, they raise prices to ultimately improve profitability as well as their cash flow. Again, subscriber is the base of their business. When they want to come wind we Start Talking about profitability, cash flow, it all starts at that subscriber. If they start losing subscribers in the largest market, the u. S. , that is going to be difficult for them moving forward. I dont think they will lose but its going to be difficult for them to grow. Taylor ibm also reported earnings wednesday. The Company Reported revenue that missed the lowest analyst estimates. Total revenue was 18 billion. In july, ibm completed the purchase of the open Source Company red hat for 34 billion. Analysts had look for signs of the megadeal would drive growth. As for what next week holds, we will get results from big tech Companies Like amazon and twitter. For more, we spoke with an analyst on thursday. They are going to add 2. 5 Million Subscribers this year, just in the u. S. Netflix has added about 5 million subs a year so when the growth slows down, it tells you you are far along the scurve. Now you have to caveat that with one thing, netflix did not post a price increase and it is the biggest they have ever implement. Because it took their low price from 7. 99 to 8. 99. I think that is the issue for netflix. I think they overstated or over thought or overestimated how much Pricing Power they had. It would take a couple of quarters to work through that. I think they are still deep along the scurve and plenty of Growth Opportunities overseas. Taylor they did talk about how some of that price increase was pressuring them a little bit in terms of new subscribers. Does it make sense for them to adopt a lowprice adsupported model . Possibly. I dont think they are going to do it, having asked them that question about a dozen times over the last few years. Maybe they will change their mind in the future. Possibly, they could introduce a lower price subscription plan, but i dont think they will do that. They have a lot of confidence, and maybe it is arrogance, that the quantity and quality of content they have is enough to justify the 7. 99. I think it is. It is one dollar more than the base price for disney, but you get a lot more content been disney. I think it is actually justified. Would it help them to go to a lower price point . Probably, but i dont think they will do it. Taylor would it make sense to buy a Hollywood Studio . They are one of the few competitors not in a blockbuster movie theater. They have said would they just buy a studio and be able to get distribution that way . Possibly. I dont thing so. I thought you were going to go the other way and talk about if they would get more into the production side rather than the distribution side. I could see them vertically integrating into production, not so much into distribution. I think they are pretty happy with home distribution. Yeah, i think that is kind of where the growth is. Look, this revolution we are living in is not going to be televised. Its going to be streamed. Everybody is going to streaming. Disney, apple, time warner, comcast. I think netflix is in the right business. The question is, do they keep executing well enough to justify the price points they offer . Taylor you have brought up all of the competitors. Yes. Taylor of those competitors, who is best positioned to take on a company like netflix . Only disney. I dont think apple is, really, unless they want to put a lot of money into content, which i dont know that they do. And they also have to come up with a more compelling service. You cant just throw money at this and assume you get it right. Netflix has been doing this long time. Netflix has five times as many subscribers as anyone else. It does give them a scale advantage. I want to make one thing really clear, the battle here is in International Markets. Next year, netflix is going to roll out 130 new local language series in International Markets. Im talking the philippines, turkey, nigeria everywhere around the world. Thats where the sub growth is. And i think netflix is way ahead of the curve on this. Thats their big advantage right now. A lot of problems nearterm, but that is their advantage longterm. Taylor you also cover roku. Yes. Taylor is International Growth key to their expansion . There are two things that are key to roku. One is that is a great play in the streaming wars. They are going to have to advertise because roku already has 30 million streaming subscriptions. Secondly, if you start your subscription on roku, you will have to share some of that with roku Going Forwards. And third, anything that leads to the diversification of content is beneficial. International is part of the growth strategy, but they have barely scratched it, so, yes, if they knock the cover off the ball in International Markets as theyve done in the u. S. , the stock could triple from here. Taylor i want to switch gears a little bit and talk about facebook. Ok. Taylor theres been a lot of rumors this week and talks about libra, if the cryptocurrency works, if it doesnt. Is facebook doing the right strategy by going out on these new ventures or should they stick to the core business . I dont know. You are asking a good question. Libra, look, they have these wonderful assets. One is Facebook Messenger and the other is whatsapp. These are the two most popular messaging applications in the world, and right now they generate about zero in revenue for the company. Could they monetize it through advertising . They are pretty good at doing that, so they should probably try that first. Could they create a wallet around it . Yes. Does it have to be a cryptofinanced wallet . I dont know. That was always the question in my mind. Why do we have to go libra, but i think its too early to call whether that was the right move or not. If they think about monetizing it through a wallet, i think it is a very good idea. Taylor as you assess the earnings landscape, what is your top picks this season . Facebook is the most interesting because i know we just discussed about the libra issue. The rest of the business i think is humming. This company is going to do north of 30 Revenue Growth this year. I know theres a lot of overhangs on it. I know you are going to ask about regulation, but this stock trades at a discount to its growth rate. You rarely see companies sustainably trade at a discount to growth rate. There will be an arbitrage there and the multiples are likely to go up. When it does, its hard to know. Sometime in the next 12 to 18 months, i think there is a material, rerating in the stock. Taylor that was rbcs mark mahaney. Coming up, Mark Zuckerberg defends free speech on the internet in Georgetown University on thursday. We have more on his appearance plus reaction. And if you like bloomberg news, check us out on the radio, on the bloomberg app, and in the u. S. On sirius xm. This is bloomberg. Taylor facebook ceo Mark Zuckerberg made an appearance at Georgetown University thursday. There he defended free speech on the internet and staked out facebooks position on the matter. We dont do this to help politicians, but because people should be able to see for themselves what politicians are saying. For the same reason, if content is newsworthy, we wont take it down even if it otherwise conflicts with some of our standards. Now, i know many people disagree with us. But in general, i dont think it is right for a private company to censor politicians or the news in a democracy. Taylor for more on the appearance and message i spoke to kurt wagner. You have a ceo currently dealing with four antitrust organizations talking about decentralized power and how his platform is actually good for people. He talked about the power of being able to reach the masses, kind of this power of scale as being the fifth estate, actually, is what he was talking about today. And so, you know, overall, there were a lot of talking points from facebook that we had heard before, but i think some of the keys were, we are actually doing a good thing by giving people a voice. We are supporting politicians by not pulling down their ads and being worried about the accuracy of political ads. And then he also kinda brought up this threat of china, which is something he has done before, and said if we dont do this, china might come in and take over and they dont have the same beliefs we do and that is a real threat. Taylor before we get to china, i want to hit on the first point you made about facebook not wanting to be in the Fact Checking business. What is their defense for not wanting to do that . Kurt so you kind of heard him talk about it there. He said no one really wants to have a tech company be deciding what should be true and what should be false and what should be allowed on the internet and what should it, and this has been the debate around facebook for a long time, what is the companys role in dictating what exists online . Part of his argument was that if we are the ones who are Fact Checking political ads or if we get rid of political ads altogether, which is actually something i wrote about this week i think facebook should consider doing, he says that will benefit the incumbents because suddenly, the people who already have a platform, who already have attention from the media, those are the only people who are going to get talked about, not the people who are willing to pay to kind of make their way on the scenes. Those are a couple of his arguments for why he thinks not only political ads should stay on facebook but why he thinks they should not be meddling with them. Taylor that was bloomberg technologys kurt wagner. Someone who has been following free speech on the internet is a new york staff writer. He is the author of the book called antisocial online extremists, technoutopias, and the hijacking of the american conversation. I got his reaction to zuckerbergs georgetown appearance thursday. I think this is a perfect encapsulation of how misleading a lot of these talking points are when it comes from the people who build these systems. He wants to make it seem like this is just a neutral Public Square and that he is just someone who wants to let freedom of expression reign and not be a gatekeeper. Thats fine, but he is a gatekeeper. Facebook makes decisions about how their algorithms work every day. They make decisions about what you see in your feet and what you dont, so its disingenuous to suggest that this thing he built is not already putting a finger on the scale. You know it reminds me of someone who built a big highway system and then says we like freedom of enterprise, we like cars, we dont want to deal with the fact that pollution is killing our environment. Well, sorry, you build the system. It is having consequences. You have to clean it up. Taylor if that is the case, why there is an increasing calls for facebook to be treated like a publisher. Or even a Utility Company with more regulation. Yes, something has to be done. It remind me of starting a warehouse party. This is an example i use in the book, an analogy. You start a big party, you hope everyone will have fun and just get along, but if you dont build in a Sprinkler System and people start setting things on fire, you do not have any way of policing things or controlling things when things get out of control. You cant just hope and pray that progress keep going and there will be some arc of history that will deliver us to a better result. Facebook has been used to spark genocide in various countries. It has been used to spread autocracy throughout the world. So its nice to rest on the abstractions of free speech, but abstractions are not going to get us far. Its too late for that. Taylor we heard from marc benioff as well this week making calls for facebook to be broken up, but does that actually solve the problem . No, it does not solve the problem. I think the problem is deeper than that. The reason i wrote a book called antisocial is not just because it is antisocial media, it is that there is this feeling all of the internet would be prosocial and bring us together. That was the first 10 years. It was all about what would be prosocial. There was always an antisocial side. There were always people inciting violence. There was always harassment. There was always bigotry. We just did not want to think about that. We do not want to look at it. We wanted to think about the arab spring and democracy and all the fun stuff about the internet, but if we dont look at the harm that can be caused, we are just kidding ourselves. We are just leaving out half the story. Taylor so you brought up the book. You were on the road conducting dozens of interviews. What was the biggest thing you learn . In addition to interviews, i was just a fly on the wall as these people, trolls, propagandists, misogynists, as their masks would slip. I was with the guy in a room in a room in orange county, california who was just an average married guy in his 40s, not some teenage troll in his mothers basement. A married guy with kids and a dog. He would wake up in the morning and say i want to create a subliminal association between a political candidate i dont like and disease and disgust. And even though he did not have evidence to do that, he would just do it. I would watch him just open periscope, rally a bunch of his followers, get a periscope hashtag, get that trending on twitter, and from there, it would just enter the National Discourse to the point i would wake up the next morning and read the newspaper and this guys fingerprints would be all over the news. And trust me, this is not a guy we want with our fingerprints all over the national news. Taylor you fold this into what you have observed. Not only did you write a book, but you had an oped recently which said one thing they could do is replace Sheryl Sandberg with a human rights lawyer or someone who can teach us how speech can lead to violence. Why Sheryl Sandberg . I think that, from all we have heard, she seems to be the person who is most promoting profit at all costs in that company. Most of the reporting that has come out of there has as she was the one who set up the advertising model. Shes the one who has been really uncompromising about full steam ahead with anything that gets in the way a profit being eliminated. And some things that get in the way of profit are just necessary for our survival, like making sure that these platforms dont spark genocide, making sure they dont spark violence, making sure people dont get killed because of these platforms. Taylor that was new yorker staff writer andrew marantz. Softbank is said to be readying a 5 billion rescue plan for wework. We will have details. And later, our conversation with the man leading facebooks foray into cryptocurrencies. We speak with david marcus. This is bloomberg. Taylor weworks future remains a bit foggy, but softbank is a said to plan a 5 billion rescue financing for the coworking company. Wework was also believed to be considering a jpmorgan rescue plan. I got more details on the scoop from ellen huet wednesday. This is one of two plans that are maybe in the works that are the subject of a lot of discussions going on this week with the wework board. They are scrambling to keep the company going, when, as we have reported in the past, wework is set to run out of money as soon as next month. As you mentioned, there is a new deal for a potential proposal from softbank to invest something around 5 billion in the company. That would give them a much larger stake in the company. Although, as we reported, not a majority stake. Taylor now do we know if this is in lieu of the jpmorgan deal or instead of . It seems like these are both on the table. They are pretty different, so one of the major decisions that the board is going to have to deal with this week and into next, depending on how long it takes them to make this decision, is which one is better for the company . Which one will provide them a better path forward . So the jpm deal is around the same amount of money, around 5 billion, but in a somewhat complicated debt package. So they are trying to pick. Taylor with the softbank deal, do they get control of the company . They do not. As far as we understand it, they do not get majority control. You have turned member, adam neumann, though he is no longer ceo, he is still a board member. He still owns a lot of stock. Obviously in a transaction like this, ownership could change. Softbank could be looking to get nonvoting shares or some combination of different shares. So they will be taking on more of a stake in the company and the control is not necessarily guaranteed. Taylor so what would be the new valuation . That is a remaining question. It definitely will be lower than the high water line that came up earlier this year. It seems like the ranges are all over the place, but it could maybe be as low as under 20 or under 10. Who knows. Taylor we talked a few days ago about the reputation of softbank by putting up this money. What that says about the whole deal that all fell through. What is this downside for softbank in this . I think it could, if it ends up going poorly, it could really be seen as good money chasing bad. They have already invested, as we have already talked about, more than 10 billion in this company. They are obviously attached to the outcome of what comes out of wework. Although, this plan makes it, then it is almost like wework becomes a softbank company. That would have a great say in installing a new ceo to replace these coceos who came from wework. It could end up being something when they feel very responsible, and the narrative suggests that softbank then becomes responsible for whether wework ever makes it out. Taylor that was bloomberg technologys ellen huet. Coming up, we hear from facebooks head of Libra David Marcus next. Bloomberg technology is Live Streaming on twitter. Check us out at technology and follow our global breaking news network tictoc on twitter. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Welcome back. The remaining 21 to sign on the dotted line on monday. We spoke with the head of libra on tuesday. Despiteur not losing at least seven partners for its cryptocurrency project, facebook got the remaining 21 to sign on the dotted line monday. Kurt wagner had this interview with david marcus. David yesterday, we had our inaugural Council Meeting in geneva and it was an awesome moment. 21 companies came together and started working on not only establishing a governance model for the association, but also distributed different roles. A board was elected. I was lucky enough to be elected to the board with four other amazing individuals that i am looking forward to working with. The big change is that fundamentally, yesterday, this project moved from being facebook led to being led by this association of which we are one of 21 members and in the future, one of 100. Really looking forward to the next stage. It is here and it was great to feel the passion and the energy in the room and the commitment from all of these parties that are now going to work on trying to change the status quo for people around the world when it comes to cost of Financial Services. Kurt when you first thought of this meeting, there were other companies you thought might be there. Visa, mastercard. A lot of these Companies Announced late last week they were leaving the association. What was happening behind the scenes as these announcements came out around the same time on friday . David first, i have to say, i said this publicly, i want to thank these companies for coming along on the journey. When you are in the payments space, wanting to really explore something that could potentially be disruptive and wanting to lean in like this is really remarkable. It is to be commended. Towards the end of last week, there was a lot of pressure mounting. I totally respect the fact those businesses and those leaders have a responsibility to their shareholders, employees and stakeholders. Given that you dont need to be a member of the association to build on top of the libra network, all of these companies will still have the ability to build on top of libra. I understand they dont want to do the heavy lifting by our side at this moment in time, and thats ok. We are going to move forward. We are going to add more members Going Forward in the next two quarters. Were going to work really hard together to address all of the legitimate concerns that were raised by regulators and stakeholders around the world before this moves forward. Kurt a lot of the companies that did leave late last week, they are payments companies, Financial Services companies. Theoretically, companies familiar with the road ahead. Are you worried they maybe know something that you are unaware of here . David no. I want to strongly state that. I dont believe we are unaware of anything. I just believe when your core business is in this space and you probably receive a lot of pressure not to press on, then at some point, you have to make a decision on this highrisk project because it is a project, an idea right now that we believe will see the light of day, but there is a lot of hurdles we need to clear. And your core business again, you have to put your core business and your own business interests first versus a project like this that is high beta. I understand that. Given we are in this space, that they would receive a lot of pressure and want to prioritize their own business. Kurt i want to talk about some of that pressure. There was a letter a few Democratic Senators sent to the companies urging them not to join the association. It read in many ways kind of like a threat. I am curious, did you take it that way when you read the letter . David i dont know. What did it sound like to you . Kurt it did sound a little bit threatening. If you join, you will have a tougher road ahead. I am curious, have you been surprised by the pushback you have received from regulators . David again, i say there are two tracks here. There is the engagement on the regulatory front where we have had very constructive conversations. There are questions, those are legitimate questions. We need to bring the right answers to those questions. Now we have the ability to do so. Since yesterday, we finally have a governance model, an association that was fully formed. It is hard for us to speak on behalf of of all of these prospective members before they became members. Now the association can take this on and really make progress on these questions. Id say that for these types of letters to be circulated for a thing that is an idea, a project, and telling people you should not explore innovation and a project at a time where not only here in this country, but around the world, the color of our Financial System has not evolved much. Consumers around the world are paying the price for it. I think we should ask ourselves whether this is the right approach if we want to lower costs and lower the barriers of access for Financial Services for all the people who deserve better in the world. When you guys announced the formal association yesterday. He said there is many as 1500 others that were interested in joining. Can you give us a sense of how soon you will be expanding the association and who will join . David these other the types of things i cannot talk about anymore from calibra, because this is now in the hands of the Libra Association. What i understand from the process the Libra Association is running is that they will work towards welcoming more members in the next two quarters. My guess is they will share more about new members as they join. Taylor there was david marcus, facebook head of calibra. The Digital Currency revolution is in play this week as g7 release broad guidelines for regular in digital money. Also up for discussion is whether Central Banks should be issuing their own. Sweden and china are studying that topic and canada has launched a formal Research Project that has partnered with other monetary authorities. I got insight on wednesday from the president of Peterson Institute for international economics, adam posen. First, they have to regulate and keep away regulatory arbitrage that would exploit the average people or Small Businesses if you have private currencies that are not regulated. Second, Central Banks should be involved because they can provide efficiencies and safety that make private currencies irrelevant. Third, they should not be getting involved just because it is digital, just to save people money. They should not be getting people involved to try to drive down negative rates. As governor brainard said at a speech earlier today, those are not motivations you want to have, and i agree with her. Taylor i want to get to the fed because a lot of international Central Banks have started to weigh in. Is there a risk the fed is moving too slowly on this . Adam i dont think so. I think it is a fair question. You mentioned the peoples bank of china and the swedish bank, which are leaders in this space. Sweden having a sophisticated Financial System and population is in position that it can afford to experiment a bit, but also because the bank has a lot of credibility and they are able to keep ahead of the private sector. For the u. S. , if the u. S. Is slower and the Federal Reserve is understandably cautious, i dont think there are any big losses. This is not like a privatesector race. Taylor you mentioned kaplan at brainard, who have come out with comments saying the fed is looking at issues on digital currencies. Governor brainard saying a currencie solution is not a solution to a zero lower bound. Walk me through that. That is what i made reference to, her remarks, which i agree with. One argument that theoretically minded economists have made is that if you have a Digital Currency, it is easy for the government or central bank to erode the value of that currency, to inflate it away once it is under government control. The advantage of doing that is not to rip people off, in theory. It is to allow you to go as negative on Interest Rates as you need to be without having to go through the Banking System without having other problems. I think governor brainard makes the argument, and i would make the argument, that it is destabilizing to the Financial System. It causes people to want to move their money out. It may cause runs on various institutions, if not the currency, and ultimately there are other ways of achieving your monetary goals than trying to go negative with rates. That particular piece of the argument should be killed. Taylor does the issue of Digital Currency need to be a central bank issue, a department of the treasury issue, or a congressional regulation issue . That is a really astute question for two reasons. First is because it is a Public Interest to determine what is the value you are trying to serve by putting this in place, and that should not be up to the fed to decide. Second, because right now we dont have an appropriate regulator or supervisor in the the u. S. System. The fed can regulate interbank payments in a limited way, but theres nobody, in theory, the Financial Oversight Committee could take in, if they decided this was systemic. I think this is not so much the treasury, this is a legislative issue. I would like to see Congress Talk about and legislate what goals they think digital money should serve for the u. S. Public. Taylor one individual who has an opinion on that is david marcus, who heads up Facebooks Libra cryptocurrency. We spoke with him yesterday. He said the government is holding back regulation. David for these types of letters to be circulated for anything that is an idea and telling people you should not explore innovation at a time where, not only here in this country, but around the world the core of our Financial System has not evolved much in the last 50 years and consumers around the world are paying the price for it. I think we should ask ourselves whether this is the right approach if we want to lower costs and lower the barriers of access for Financial Services for all the people who deserve so much better in the world. Taylor what do you make of those comments . Adam somebody is talking their book. It is very nice to make an appeal to lowering costs and financial inclusion. Financial inclusion can be better served by various legal changes. For example, we have treasury direct, direct deposit for government payments, a number of ways we can restrict Check Cashing fees and other fees. There are a number of things we can do for financial inclusion, and that is just in the u. S. The key thing is to get people to know your customer ids. That was the great leap forward in india and when that is done badly, people get cut out. This is serious, but has nothing to do with libra. It has to do with a public commitment to having ids for people and giving value to those at not abusing the information that goes with those ids. All of those i would not be willing to trust with some profitcentered, selforiented, privacyignoring company as opposed to a government that is wellregulated. The government would have to be watched even then. Finally, it is not just about driving down costs. Poor people are exploited in the u. S. Because of their lack of access to banking and the payment system. There are ways to fix that. The main reason to move to Digital Currency is to create other places in the economy to prevent people from getting their privacy and finances ripped off. Taylor adam pozen, president of the Peterson Institute for international economics. Still ahead, volvo announces a new all electric vehicle. We get the details from the ceo. This is bloomberg. Taylor the Trump Administration has had no secret of not liking huaweis investment into 5g. Placing restrictions on sale of its equipment into United States and on sales of components to it by u. S. Companies. From the perspective from huaweis side, we sat with paul scanlon, the chief Technology Officer of the huawei carrier business group. We working 172 countries globally. It would be lovely to have this with theiscussion administration in the u. S. To understand the rules. To describe how we can do business together. If you set the rules and the standards, we follow the law. Huawei technologies in the u. S. Is a legal entity. It wont do anything against the law. We comply with the law in every country. There is no way we will comply with a law in china that we must not do here in this country. Thats not what huawei does. We would never do those things. If we could have constructive discussion with the u. S. To explain how and why we do things, there is nothing secret about huawei. We dont do anything that is secret or different. What we do differently is we invest heavily in our and the in r d. If you dont have your own products, you are just a reseller. Where is your core value . We are offering 5g to other companies to say, take a snapshot of it today, and let the u. S. Grow and develop. Great idea. We have done this before in 2003. Its not something new and mysterious. Its an attempt to say, if you tell us what the rule is, then maybe we can understand how to play the way the u. S. Would like. Let me raise this possibility. The problem that the administration has or some other huawei. Ave is not with its certainly not with the success of huawei. If anything, it may be the reverse, you are so successful that you have become more dominant. The concern is with beijing. You cannot control what they may do to you or get you to do. That is the concerns. Doesnt that make your position difficult . I dont agree. I have been in the company 11 years. I dont agree. What i will say is, is our job, our focus, anytime i meet the board members, any time at our conferences, they are clear, lets talk about market share and competition. He has stated many times, you cant have too much market share. If you take too much, what will happen . There will be no competition. There is no innovation. The reason this industry is so exciting and the reason 5g holds so much promise is because of the opportunities. Especially to industry, and thats where it can transform things. Could you imagine if everyone was connected, the advances we could make it we will be able to could make. We will be able to fix things like cancer. Or diseases. Theyve always said you cant take too much market share. Number two, you must provide a healthy ecosystem. Last year we spent more than 11 billion u. S. Dollars with american suppliers of components and other parts. We would continue to do that the u. S. Would allow us to be a part of the Global Supply chain. One last quick question. Is the u. S. Nt risking falling behind in 5g . Is there a competitve danger . We already built a lot of 4g networks in rural areas in america. Some of the regions in rural u. S. , we can deliver just using 4g, 650 megabits per second. The u. S. Moving down the line of deploying 5g of a millimeter wave. Companies like at t and verizon, by trying 5g technology, even with our competitors, you start to learn where the opportunities are. We can see by 2025, somewhere around 300 billion in gdp improvement globally. What the u. S. Is good at, even if it was all connected, the data. S good at pulling look at what google and amazon and the others do. Apply leading ai. When i let huawei come in here and provide the best technology for connectivity and Work Together with the administration and improve society . Taylor that was paul scanlon, chief Technology Officer of the huawei carrier business group. Volvo cars isnt just electrifying its lineup to cut carbon emissions. We will hear from the ceo, next. This is bloomberg. Taylor volvo is entering a new space, unveiling plans for its first all electric vehicle. Its goal is to cut the Carbon Footprint on each car by 40 by 2025. The volvo ceo spoke with shery ahn and amanda lang. From day one, it will be profitable, but with the very low volumes, you have to understand the cost will be higher, so it might be a lower profit margin initially. I think what counts is more midterm, and we believe an ev car will have a higher value for the consumer and long term is the right thing to do. When you talk about subsidizing the charging cost, how did you come to that as a decision to help push this car . It is really not related to the all electric cars. We will promote the sales of the socalled plug in hybrid, a parttime electric car. That is important that you not just fill in gas and drive it as a conventional car. We follow this very closely. Right now, consumers are using electric 40 of the time and we want to incentivize consumers to use it even more. Thats why we say firstyear electricity is included in the price of the car when you buy a plugin hybrid from volvo. Where will these cars be made . Will they be affected by tariffs . They are made in charleston, some in tucson. There is no connection to tariffs. Tariffs is really a problem for us for electric cars, plugin, or conventional. Our Global Production system is based on us being in one location. Highvolume cars will be made locally. If we have trade restriction and are forced to build all cars locally, there will be additional cost for our consumers, so we hope that will not be the case. We have seen the Chinese Government reduce subsidies for new energy vehicles. Are you concerned about ev demand within china . Yes, the subsidies have gone down, and it is always helpful with government to support introducing a new technology. On the other hand, we believe if electric cars are going to fly longterm, they have to be sold to customers who are ready to pay for it. It has to be competitive on the free market. Otherwise you have to have temporary subsidies. Thats why we are so sure about that. We need to participate with attractive products for the free market. As you move beyond those subsidies, you want to get to volume. Is china the market for you . Will there be mass purchases of these vehicles there . I think all markets, on the west coast of the u. S. , for example, is a big market for electric cars. Also in europe. I think so far the interest in china has been too large to be based on the incentives, but i think chinas market will pick up and see the beauty of the electric car. It is also based on having somewhere to charge the car overnight. It is difficult to park the car on the street in a big city. I think those customers will be the last one going electric. Taylor that was volvo ceo. That does it for this edition of bloomberg technology. We bring all the latest in tech throughout the week. Tune in each day at 5 00 p. M. New york, 2 00 p. M. In san francisco. Bloomberg technology is livestreaming on twitter. Check us out technology. This is bloomberg. . Francine Christine Lagarde has shattered the Glass Ceiling multiple times over. In becoming frances economy minister, she made history as the first woman to serve as the finance chief of a g7 nation. Shes also the first woman to lead the International Monetary fund. And is now the first woman to lead the European Central bank. Last year, forbes ranked her as one of the three most powerful women on the planet. I sat down with christine