And, antitrust allegations. An online merchant accuses amazon of using expensive the just six to move good, a tactic that could be driving up consumer prices, but first to our top story. One of teslas detractors just got twitter burned by elon musk. After he lashed out, the tesla chief offered him to take a tour on the companys facilities. Discuss, dana hull joins us. A little of the backstory. This has been a longrunning battle. Out anuarter he puts investor letter and e line loves this, looks for this and sent a tweet expressing sympathies. Tear,las stock is on a 40 over the last month. They have to explain to investors how they got the thirdquarter wrong. Tesla stunned everybody with a profit. Remembering something that happened earlier, signofft Elon Musk Twitter . It is important to know that einhorn claps back. He responded and said i will take your offer of a tour of facilities. Lets start in buffalo. Buffalo is where tesla builds its solar panels. The state of new york wrote down the value of the investment the last month. Happen . Ikely is that to buffalo,uld all go to but i think it is just like testosterone fueled. Elon musk vice to enjoy harassing the shorts . I think he enjoys it when he can burn them. They have the ability to shape perception, you talk about burning the shorts, he is offering to send them again. This is sport for him. Basically said we will see. Website thata seems to be chronicling elis exaggerations. Who gets the last word . Tesla had this amazing quarter. What does the Fourth Quarter look like . How are sales in the u. S. . Thank you for joining us. A coalition that includes and cable titans, is going to crack down on password sharing. We are joined by bloombergs lucas shaw. A great article by your colleague gerry smith about this topic. Sharingus about account and how big of a hit is it for netflix and Cable Companies . It costs the tv business somewhere between 5 billion in 10 billion. If you think about netflix, there are estimates that at least 10 of users are using someones password. And you areath looking at billions of dollars. N just netflix alone the challenge here is fixing this in a way that is consumer friendly so youre not asking customers to enter in their passwords every day or every week. What are the techniques available to these companies were they dont end up harassing people . A couple of the techniques are making you change your password pretty regularly to make sure friends cannot just store the password. I have a password to someone elses service that ive had for years and it has not changed. Regularly,nged it they may not be able to access anymore. A also talked about two factor authentication where you get a text message to your phone which makes it only the person with that account can use it. There are more extreme measures like having to use your fingerprint. Season account they think is violating, they will send an email saying is this really your account . Ago remember a couple years Reed Hastings said password sharing is something they have to live with because there are so much legitimate sharing. Has netflix changed its tune . Been fairly consistent in that they dont [no audio]to come backople will and eventually someone sharing will sign on, but netflix has reached a point in certain markets, especially like the u. S. Whether where their growth is slowing and they can squeeze out extra growth if they go after people who are sharing will stop sharing. Will this pushnt people to using illegal methods . I think its a big risk in other countries and to some extent of the u. S. You haveyou have seen it drop is where netflix is possible. You are getting a good service with lots of different tv shows whereas piracy remains very high. Extreme, i think you could see it spiked because if there is a new popular show what people feel like they cant access it without cable, they will more than likely find in the legal way to watch it. The lucas access to shaw netflix account . Friends. Other than my i will confess my mother is on my netflix account. Thank you for joining us. Withg up, we catch up wired chief editor nick thompson. Us, check us out on bloomberg radio. This is bloomberg. Facebook employees repeatedly shape what they viewed as unethical practices by the company. Those concerns voiced in 2012 and 2013 were overruled by senior managers including Mark Zuckerberg who argued the survival of the social network was more important. Were joined by wired editorinchief nick thompson. Thank you for joining us. Glad to be here. So much to discuss and you have written some Great Teachers about facebook over the last year years. Lets start with political advertising and the companys position that private companies should not be policing public speech. He agree do you agree and do you think it will sustain . There so many layers to that question and my opinion is complicated on that. I think in general political advertising on social platforms is a net good and it creates the opportunity for upstart campaigns to challenge incumbents, so i think you should start with the principle that it is a good idea. Policy whichooks is that politicians can lie, but citizens cannot is very weird. Why would you give politicians more of these rights and citizens . I think it is backwards and strange. Do, i think facebook should they should allow political advertisements, but check them just like they do organic content. Public dorsey was very in disallowing political ads on twitter, making the argument prepared for the ways that politicians and their campaigns are abusing free speech. Did twitter take it too far in your opinion . If theres anything that our political discourse is not prepared to handle this twitter, not the advertisements. The biggest challenge for dorsey is making sure we clean up and figure out how to solve the problems on twitter. On the question of advertising, i understand the position and respect the position. It is a clean position. I dont think it is entirely the right decision. Thepeaking of facebook, company is rolling out a new tab. Cap do you think that will make a difference in the way people consume news on facebook . I dont think it will make a huge difference. What we have seen with those tabs features, people will continue to read in the Central Place they read. In general, i think the news to tab is a good thing for users. Unless it becomes an excuse for removing news from the main feed, i think the overall net positive, but a small net positive. Bloomberg is part of the news tab. [indiscernible] do you think this is a game changer or needle changer for the News Business . It is neither a game changer or needle mover. Earlier, i referenced another asset of facebook which is that a trove of internal communications were leaked and they show the executives disagreeing back in 2012 and 2013 over the extent of which facebook would allow competitors, at that point it included whatsapp to advertise on the social network and Mark Zuckerberg was saying no, why would we allow our competitors to do that, but some of his top lieutenants disagreed that it looks bad. Have . Mpact does this i think of this point we are immune to old facebook documents shocking us. I think they dont paint facebook and the most attractive light. Zuckerbergs position that the platform should not be a tool for competitors is something that some engineers will disagree with, but i dont think his position is a terrible one. We holdll be where lieutenants and they wills poll lieutenants and then it will disappear. What i think it shows you about the thing that stuck out the most for me is they were quite cynical about privacy. What we have seen is facebook saying lets make a decision that is in our business interest and justify it by saying it is in the user interest and that wears me out. Weirds me out. You are celebrating the magazines 25th anniversary. Anaw you asked patrick interesting question on stage. You asked him if he was still optimistic on technology and i want to put that question to you because wired has typically been optimistic. Are you optimistic . I am optimistic. I think one of the things power tog today is the actually make things better, but i think there is a fundamental difference between the way i see wired and the way our early founders saw wired. I dont think the role of the magazines to celebrate and promote the industry because the position in society has changed and the role is to investigate. Say that moment with , the fastest talker and one of the smartest people we will ever converse with. I think he caused. It was a wonderful moment. Give us one more highly afternoonay this or tomorrow. I am talking to the ceo of slack. They are an Interesting Company because the whole philosophy is to make organizations more agile and so one of the things im looking forward to asking him is doing have any evidence of that working . Or is it just another way to organize workplaces . Also tomorrow morning, a run with marathoner nick thompson. I give my regrets on that, but i wish you luck on that. It is not just me. In olympian will be there and olympian an olympian will be there too. [no audio] late friday, lawyers from the filedent said they will papers with the u. S. Supreme court to take up the issue. They will fire paperwork by november 25. Coming up, Sun Microsystems cofounder says people should accept that they have no data privacy. That is next. This is bloomberg. Further is considering cuts to subsidies for allegedly ago purchases. Regulators have been discussing the proposal, but holding off until they can look at sales data the next few months. It could deal another blow to a worlds a once burgeoning industry that is dealing with a slump. Sun microsystems cofounder is concerned about how congress is approaching regulation of the tech sector. He discusses his views earlier today with david westin. Government here to help, i cringe. I have watched the federal billion torom 70 4. 7 trillion next year. Onhink we need to cut back regulation. I think Congress Moves at the speed of congress and not the speed of the internet. I dont want to see private companies being managed and free so i haveng managed, not been a favorite of breaking of facebook. That is not the issue. I said a long time ago you have some you have no privacy, get over it. I dont believe if youre getting a free product like you should have an expert edition that your data will be free. I said anything that gets digital digitally is a tattoo and very hard to erase. The only people who have been able to erase anything are the clinton 30,000 emails. Breaking it up is not going to be the problem and trying to regulate, i always get frustrated with the phrase hate crime. I think all crimes are hate crimes. Crimes. We need to get the political discourse off off of social and i have suggested we need to forte an equivalent of npr that political conversation. We are talking to the cofounder of Sun Microsystems. Lets put aside that and talk about innovation will stop one of the things that has been expressed is if you get too big [indiscernible] if you go back to standard oil, that was the concern. Are you seeing a curtailing of innovation and success . That is a great question and hernych question because really, what does facebook keep me from doing in my life . There are lots of ways to take a picture of my dinner and ensure that so i dont feel like im having loss of choice. I have lots of ways to communicating with people and the people that might be upset our advertisers because digital itertising, three fourths of is google and facebook and they are gaining share so they might have a beef, but the consumer, you dont have to use facebook, you dont have to use twitter or google products. Innovation is stopped in biotech or Autonomous Vehicles or anything because of those vehicles because of those. That was scott mcnealy. Coming up, the week in tech. Lockup. Estors fleeing that is next. This is bloomberg. Brad this is bloomberg technology. Im brad stone. Now to our weekly look at the top stories in tech. A terrible week for softbank. Their investment down to wework and uber triggered a 6. 5 billion loss, but ceo Masayoshi Son is sounding hopeful about the office space provider. Time will solve the wework problem. We will make money once the weworks building portfolio is allowed to ripen. How . Stop the new Building Development and profitability will improve and we will expect a cost to go down by half or more. It is that simple. Brad part of a plan to profitability for wework is to sell off the noncore businesses. The plan was confirmed friday. Joining us from new york, author techont be evil how big betrayed the founding principles in all of us. Thank you for joining us. Guest thank you for having me. Brad Masayoshi Son sounding embarrassed, saying he made mistakes with wework. But then you see a cfo doing interviews, saying nothing will change with the vision fund. What is happening at softbank and what kind of lessons have they learned . Rana it feels like 1999 to me. It feels very frosty. I think the fact a fund as big and bloated as softbank exists in its current form is kind of a marker of where we are in the Technology Sector at the moment. There is so much debt out there in the books. Softbank, a lot of people think this maybe should have been bigger. I dont think just saying we are going to cut some costs and wework is suddenly going to become profitable is really realistic. Its interesting because wework is actually taking Collateral Damage where the real estate was located. You are seeing property prices in london and parts of new york being affected by this. I see this really as a Tipping Point for the sector in general. Part andt is parto parcel of company staying private for a long time, having their valuations bid up and up by larger venture capitalists. It is amazing to me these large funds are still being raised. I think at this point, investors are looking around and saying we kind of like the idea of profit. This whole idea of grabbing market share and worrying about profits later is over. Brad lets talk about another company that has been affected. Uber. Shares after the lockup period expired are at an alltime low. What is happening to uber . Is it fundamentally the same story or does th is it the struggle of dara and the Management Team to move this company to profitability . Rana uber has had governance issues specific to that company, no doubt, but i think it is a fundamental Business Model question. I think the Business Model for a lot of big tech unicorns has been to go in, grab as much marketshare as possible, get data as much as possible and worry about the profit model later. Once you go public, that logic does not really work anymore. What worries me is i think that Business Model has distorted the entire tech sector. I think not only is it raising questions of regulators in terms of antitrust issues what you are hearing more and more about from the right and left, but it is really killing innovation. It is really hard when you are coming up against a firm like uber or wework or any of the big players that have eaten there sector to compete. It is a real problem for innovation. It has taken the valley away from where it started out. Brad another highlight or lowlight of the week are those communiques from facebook executives, just battling over whether rivals, whatsapp at the time and others, should be allowed to advertise on facebook. What does it tell us about the relationship between the Big Tech Companies and their employees . Rana i think that is a fascinating question. Two thoughts. One, this is not unique. There have been people in Big Tech Companies from google to facebook raising alarms about Different Things for some time now. They often have not been listened to. But, i think we are reaching a a Tipping Point where there is almost a civil war in these companies and that will ultimately affect valuations. Where does their value come from . It comes from data, intellectual property and human capital. Their talent, their engineers if you start to feel that people dont want to work at facebook or google because they are concerned about how the company is being run, that will have a big impact on their bottom line. I have seen some letters from Institutional Investors that have been raising concerns capitalow, how is human within these companies being managed . Brad i want to make sure we talk about your book. I was such a fan of your last book, which argued that wall street and the financials asian of the American Economy was really biased against mainstream. Here, you turn your eye to silicon valley. Talk about what brought you to this new book and silicons valleys responsibility for the social ills we have seen today. Rana i always like to follow the money. I noticed there was a big wealth transfer the last 10 years from the Financial Sector to the Technology Sector which led the markets up over the last decade may lead them down, i think. You see tech growing incredibly wealthy. A lot of that money has been offshored. Share buybacks. A lot of the things that a lot of people feel have not really benefited main street but created a lot of inequality, a lot of debt. A financialized growth but not the real deal. At the same time, you have these big stories around election manipulation, the cognitive effects of social media and platform technology. What i wanted to do in my book is chart the 20 year history of how the valley went from utopia to dystopia and connect those dots between economics, politics and brain science. Kind of shed some light on where we should maybe go. I think a couple of things we really need to consider is a should this industry still have the opt out clauses for liability that were carved out in the mid1990s . I would say no. Do we new need new thinking about antitrust . Absolutely. In an age where data is the new oil and transactions are happening in barter, i think the whole antitrust thinking should be thrown out of the window and we to think about new definitions of political power, particular that the valley is the number one lobbying force in washington. Brad one last quick question about that. What is your hope and expectation for antitrust action . Is there really a practical possibility, particularly where washington is now, where we might see regulation or enforcement against big tech of any . Rana i think we will. We will see Something Like we saw with the 20th century railroads where the regulators said you can on the network, but you cannot own all the commerce on the network. That is patently anticompetitive. You are seeing the house antitrust subcommittee talking along those lines. I think that is one easy fix that will be made soon. Whether or not we have a bigger conversation about power in the political economy kind of depends on who wins in 2020. Brad rana foroohar, author of dont be evil. Thank you for joining. An online merchant has accused amazon of forcing him and other sellers to use the companys expense of the gestic services. He says this causes them to raise prices for consumers. In a letter to congress, the merchant lays out an antitrust case which involves amazon tight its marketplace and Logistics Services together. Joining us to discuss is Spencer Soper in seattle who wrote the story. Thank you for joining us. The crux of this argument seems to be from the merchant that is either amazons way or the highway. If you dont use fulfillment by amazon, you get penalized. What is he saying that penalty looks like . Spencer basically saying if you want to sell something online, you have to be on amazons marketplace. It attracts 200 million people, unique visitors a month. If you choose to do that and not use amazons Logistics Services, fulfillment by amazon, amazon does not force you to do that, but if you dont, you will be less visible on the site and search results. And also, be penalized for any delivery missteps, up to and including suspension of the platform. Rrot forreally the ca use to use amazons fulfillment services. Better visibility on the platform. The stick would be if you dont use it and deliver things yourself, you could be suspended for any mishap. The merchant is arguing amazon frequently has delivery mishaps itself so that makes it an unfair system. Brad i see. Antitrust regulators are kind of hyper focused, or they have been historically, on price. Increasing prices for customers. Does the merchant make any sort of argument that it is more expensive than doing it yourself . That this behavior is not only anticompetitive, but it hurts customers . Spencer that is precisely what the merchant is saying and that is precisely why this is so significant, if these allegations are substantiated. Because just like your previous do we said, we need new antitrust laws, this merchant is saying yes, here is evidence of consumer harm. Because amazon is forcing me into its Logistics Services, i have to drive up prices on Consumer Shopping on amazon. He is drawing a direct line between amazons Business Practices and higher prices, saying if i had freedom to choose the Delivery Services i wanted to use, i could actually offer lower prices. Brad what does amazon say about this . Spencer amazon is disputing a lot of the merchants accounts. The primary thing is merchants can easily find reliable, lessig spent his services. Their Research Shows that it is 50 to 80 less than comparable services. They kind of get finicky about, well, not forcing anybody to do anything. They have other options, but that is where it gets muddy. It is not an exquisite push by amazon making you do these things, but the policies are designed in a way that merchants do not have any other way. Brad last and quick question. You have Judiciary Committees on the house, senate, ftc, doj, states looking at amazons conduct. How is this likely to play and will it have any impact . Spencer this particular letter and these allegations are interesting in one point. If this is happening so widespread, why isnt anybody doing anything about it . The merchant is saying because all merchants sign up on amazon, they agree to binding arbitration, and that is preventing any of these folks from pursuing a case on their home. This merchant is hoping that either the Judiciary Committee will read this and see enough meat to investigate amazon or another possibility is another Logistics Provider like fedex or possibly some smaller warehousing and ecommerce Order Fulfillment company could make a case against amazon arguing this practice is costing them business. Brad that is the always fashionable bloombergs Spencer Soper. Thank you for joining us. Coming up, hey, big spender. We look at how much President Trump and his rivals are spending on social media to win your vote. Thats next. This is bloomberg. Brad in a little under a year, americans will take to the polls to decide their next president. Much like 2016, facebook is under extreme scrutiny on how it handles misinformation and politicians lying on its platform. Sheryl sandberg defended the social network at bloombergs the year ahead conference in new york on thursday. This is a major test for us and we are building on some success. 2018, the midterms were very focused. From everything we know today, they went very well. Eu parliamentary elections we have had a lot of elections since then but we know this is a big one. This is the highest priority for the next year. You have not been afraid of youaps for what mark and have said passionately about, ensuring that discord is there for those to be able to discuss. Talk to us about political ads and why you have chosen not to take them off facebook, but ashley still allow them to run even if they may not be completely correct . Sheryl this is a really complicated issue. It is hard and there are a lot of strong positions. We are trying to be very thoughtful on this. In the debate, there are facts getting lost. One of them, i think there are a bunch of people that believe things like the biden ad everyone was upset about is only running on facebook. That is not true. These ads are running on google, youtube, across the networks. People think we are doing this for the money. We expect this to be a half percent of our revenue in 2020. Half a percent. And, i think this is important some of the voices most concerned about this are coming from a place that they are worried that President Trump is going to use this in a way no one else can, and that he is massively outspending everyone else. That is not true. The dems are outspending President Trump by a considerable margin. We believe political ads are really important. They are part of political discourse. There particular important in local elections, smaller elections. This is important for people who are challenging incumbents. Elise stefanik was elected to congress, youngest fema member of congress at the time. She posted in the last week and said, i was able to challenge an incumbent because of facebook ads. Thats why we are being thoughtful here and really trying to make sure we allow the dialogue to continue. Brad that was facebooks coo Sheryl Sandberg at bloombergs the year ahead conference in new york. Joining us now is david goldstein, ceo of togo labs. Prior to that, he was president Barack Obamas lead pollster. Thank you for joining us. Lets unpack what we heard from cheryl. First, she said the democrats are outspending President Trump on social media. I felt like that is a little misleading because there is a competitive democratic primary going on now. But is there any kind of advantage at this point that is meaningful that we can talk about in terms of social Media Advertising . David if we wanted to discuss the inborn advantage the trump team has gained, we can talk about the 27 million they have spent on facebook since the 2018 election and how many of those ads have any of the rest of us been able to see and vet. Facebook has a lab library but it is difficult to penetrate and look. You dont know how those ads are being targeted and who they are being served up. I think you make an excellent point, how incredibly misleading it is to say, well, the democrats are spending all of his money compared to trump. The democrats are spending all this money because there are so Many Democrats within the race, and honestly, we are all fighting each other. The trump team is building a permanent competitive advantage using facebooks ecosystem that they will continue to have likely well into the election. Because of facebooks actions, we do not know how much of this is predicated upon misinformation, nor do we know how much of it is predicated upon the Cambridge Analytica theft we know took place several years ago which there has been no investigation of in order to determine if that data, if the targeting based upon that data is still being used to a devastating effect. I think of facebook honestly wanted to address these issues, they would work with the investigators, with people to find out precisely what the impact was an address it, rather than say it is political ads in general. It is not. It is the disinflation disinformation ads, coordinated attacks against democracy that we are scared to death of. To be frank, facebook is doing nothing about. Brad sheryl is defending it on a personal. She says these ads can be great tools for challengers to attack incumbents in smaller markets. You have been doing this kind of advertising for a while. Does she have a point, that it could be powerful . David absolutely, but that is a problem. As far as facebook is concerned, there is nothing different between abuse of a system and legitimate communications with voters, introducing new candidates and their policies to potential constituents. Everybody supports that. I support that, sheryl supports that. The problem is when it comes to malicious actors using the platform to spread misinformation and spread lies that we know are dangerous and devastating to the basic democratic principles, facebook does not lift a finger. Even when the art independent government bodies looking into these allegations and findings, facebook still refuses to participate within this investigations and often try to cover their tracks. Brad really quickly, what is the solution . Twitter banned political ads. Nick thompson early in the program said that facebook should kind of monitor ads and take out misinformation. What do you do if you are facebook . David if you are facebook, use the same incredibly powerful algorithms that they used to sell us any number of things to improve our engagement, all the rest of it, to identify misinformation. To punish those who utilize their platform in this way, and to make sure it is clear to everybody that what they expect out of their advertisers and their users is a commitment to the basic things we need to be able to function as a democratic society. We are certainly not doing that. At this point, i am not sure they ever will without heavy Government Intervention and possibly Movement Among consumers as well. Brad david goldstein, we have to leave it there. Thank you for joining us. More coming. This is bloomberg. Brad hundreds of millions of dollars in investment and a valuation of 4. 2 billion. Ceo jason kelly told bloomberg what he finds most exciting about biotech. Jason biology is this thing we completely take for granted. You grow up with it, all around you, gardens and pets. Think about a plant. You plant a seed, you add air, water and sunlight, and this thing manufactures itself. It has solar panels. What is going on . If you have seen that in any other context, if we didnt have trees and apple said i invented this seed, we would be like this is alien technology. We all look at it, whatever. As ance you think of it technology you can program to do new things and you look at what it is already capable of, it is clear to me that we will use biology to manufacture all physical goods in the future. Everything. Can you say that again . Jason all physical things, everything. Where are we capable of going here . Jason the irony is people think it will start with, like you already seeing applications and lowcost areas like food. If you have had an impossible burger, you bite into that thing it is like an impossible whopper and it bleeds. Where does the blood come from a veggie burger . They have taken yeast that you brew beer. They programmed it to include the gene for hemoglobin. Brew it up, produce the hemoglobin, add it to the burger and lo and behold, it smells right and cooks right. You need that stuff to have a veggie burger not taste like cardboard. You are seeing some early applications there. People are excited about the trillion dollar market for ground beef, i get that. Is that a real number . Jason; fo for beef. The real exciting thing from my standpoint is sophisticated things. When you look inside, like an apple and look at what is going inside the cells of that fruit, there is a level of nanotechnology and complexity that is much greater than your apple computer, right . If you think about it, that is where biology excels. It makes that thing from nothing. We dont have any way to make highly molecular complex nanotechnology on the cheap except biology. I think the first technologies will be advanced materials. The stuff that will surprise you will all be the advanced manufacturing stuff, in addition to making food more efficiently and things like that. But it will be everything. Brad that is it for this edition of bloomberg technology. This is bloomberg. David in the last recession, your firm performed extremely well. Are you anticipating a recession now . Ray in 2007, it was pretty easy to calculate that there were these debts that came due. When i go through those calculations, it is not the same. David water would not be said to be an easy place to work. Ray people love it or hate it. David in high school were you interested in academics . Were you a good student . Ray i would cut classes to go surfing. Would you fix your tie please