A vote could be held next week. Global news 24 hours a day. I am Alisa Parenti. This is bloomberg. Bloomberg technology is next. Emily i am emily chang and this is Bloomberg Technology. China fortifies its firewall in the latest move to tighten online censorship. We dig into the new crackdown. Teslas model 3 production goes into overdrive. Twotime nba champion and emerging investor i do iguodala making a iguodala is big play for Silicon Valley. Bloomberg scoop china is cracking down on what its citizens can find on the web. It has ordered the three major carriers to block individual access to Virtual Private Networks by february 1. It essentially shuts down a major window to the global internet. Thousands of websites are currently blocked in china including facebook, twitter, and some google sites including youtube. Is normally based in tokyo but joins us from new york today. What do we know . China has been playing this game of cat and mouse with Virtual Private Networks for years. For a while, people used a certain vpn and it works to get access to facebook, twitter, and other websites normally locked. The Chinese Government cracked down. We are seeing a more comprehensive approach where the government is going to the three Major Companies and asking them to block all vpn services accessing the outside world for individuals. That is a pretty big step for them to try to tighten up on the censorship around their internet and try to block people from getting outside of china and access these websites that they want to be blocked. China,having lived in you use a vpn for a while and it stops working so you use another. In practice, how is this different from the status quo . Conventional wisdom has been china is not going to be able to keep this up, that eventually china will have to open its internet. Other people will be able to get access and Chinese People will get access to websites outside the country. What we are seeing now is a serious tightening of that. Use it all the time to get access to facebook or google maps. It is other people who want to get access to information blocked on these websites, including the New York Times and bloomberg. Com. We are seeing a more serious crackdown. The president has talked about cyber sovereignty and how he wants to maintain control over chinas internet. It looks like he is determined to keep that control. That opens up tons of opportunities for chinese companies. American Internet Companies are not able to operate in the country. Emily what does it mean for Multinational Companies that operate in china . They have been operating in this legal gray area as well. They can use vpns but only internally. With this new rule affect them . It is important to that restrictions will be individuals who use vpns, not the corporate use of vpns. Youerms of individuals, will see many individuals in china who have been using Services Like facebook are not going to be able to access the sites, so they will lose thousands of users on many of these websites. That is significant. It is not clear what opportunities those companies will have beyond this. Emily what could this mean for the companies that have been blocked all this time . The conversation has been for the last several years, will they ever be unblocked . Now this seems to be a massive step in the opposite direction. These Companies Including facebook have been determined to get into china in some way. Google was in china and decided to pull out because it did not want to comply with the censorship. It would put more pressure on them to find new ways around this. I am sure people at facebook and twitter are looking for alternatives. The creativity of people in china to get around this great firewall has been amazing over the years. This is a serious step in tightening this up, but there may be alternative ways they will discover to get around the firewall. Emily what would it mean for a company like airbnb which has hired a chinabased c. E. O. To focus on expanding in china where other companies have tried and failed . Airbnb runs a different business. It is not information or a media business. It may not face the same restrictions. The market has been open to western companies in a certain respect. Chinese Technology Companies have been very strong. Airbnb is competing with local players who are very powerful. We may see a repeat of the efforts for American Companies to compete with alibaba where alibaba ended up winning and taking the market. It will be a casebycase basis. In new york elstrom today, thanks so much for that update. China, they out of struck a deal to allow online merchants that use the Payment Processing technology to receive money from users of these two massive chinese apps. Each post about half a billion the spacedominate in china. We will have more details later in the show. Software, a bitcoin battle is brewing that could send shockwaves through the market. We will bring you the details next. Bloomberg technology is Live Streaming on twitter. Check us out weekdays at 5 00 in new york, 2 00 in San Francisco. This is bloomberg. Trump saidident twitter on fire over the weekend when he proposed a partnership with russia on cybersecurity. After considerable backlash, including from his own party, trump went on to tweet he did not think such a thing could happen. The tweets come after his meeting with Vladimir Putin in germany after months of controversy over russian meddling in the 2016 u. S. Election and the latest net with ahis son russian lawyer in the hopes of receiving information about hillary clinton. Brewing in theis bitcoin market. After two years of largely behindthescenes bickering, rivals are poised to adopt two competing Software Updates at the end of the month. This is raised the possibility thatin will split in two, would send shockwaves through the 40 billion market. Camila russo joins us from new york. Bloomberg news has a headline referring to this as a possible civil war in the bitcoin market. Could this actually happen . Could the currency split in two . It is a real risk. It is one of the major events in the cryptocurrency world this year. Everyone should be really watching it because it could mean bitcoin splits in two. Are two rival camps. Right now, there seems to be some consensus forming on one of the proposals to have bitcoin scale. But the risk is still there. Emily how did we get here . Bitcoinsly, it is fault we are here. The increasing popularity of bitcoin meant that there is withasing transactions increased fees and transaction times. That has different camps planning on how to help bitcoin scale with lower transaction. Imes and fees are the minors and the developers. The miners proposed to increase the block size. The developers wanted to have some of the blockchain functionality separated from the actual transaction processing. Right now, there was a that was the developers proposal. That agree to increase the block size further down the line with the miners wanted. Emily a fascinating story. I know you will keep us updated. Camila russo, thanks so much. Coming up, the rubber has it the road for teslas new model 3. The outlook for the offering and ambitious production plans, next. You can listen on the Bloomberg Radio app and in the u. S. On sirius xm. This is bloomberg. Tesla is ramping up production of the model 3 after the first car rolled off the line last week. The automaker already has happened billion dollars in deposits for the 35,000 electric car. If tesla achieves elon musks targets, it will build more batterypowered cars next year than all the carmakers combined in 2016. I spoke with Caroline Hyde out of london and started by asking about the outlook for tesla filling all the orders. Take a listen. Caroline key question. Half a billion means everyone pay 1000. Car is do not about this the ramp up is enormous. Carr, elon musk has his that rolled off this weekend. Huge edition is ambition is huge. They have to deliver 30 in july for a special party on july 28. They want to be hitting numbers such as 20,000 20,000 cars by december. The amount of cars they want to make an 2018 will be more than were made in terms of electric vehicles worldwide by any automaker in 2016. The key is, can they deliver . Because there certainly demand. Emily elon musk has said and set an aggressive production schedule. Is he setting the bar too high . Caroline i think this is why we are seeing a tumbling in the market capitalization. We are seeing queries from analysts whether they can achieve the ramp up at this pace. They will be creating more electric vehicles and 2018 than the entire globe in 2016. Bloomberg intelligence does think tesla can be the winner with rapid demand for electric vehicles. G. M. Managed to jump over which currently holds the title as the biggest maker of electric vehicles. They think they can surpass them by 2021. These are lofty aims. Elon musk does set his bar high. He will get them out thick and fast. The market cap rose 8 billion alone in the last week. Effective competition from volvo the fact you have competition coming from volvo in europe and volkswagen in germany, it really does need to start showing it can make these massmarket vehicles quickly and without reducing quality. Emily on the other hand, he has downplayed some features of the model 3. What do you make of it . Caroline i think it is interesting and trying to set it apart from the more luxurious versions. That has been this worry perhaps they are plateauing. He did not want people to think the model 3 are as good as these luxurious models. He was them to realize the model 3 reflects the 35,000 price point. He is trying to make his life easier. He does not want to see the same problems they had with the model when that rolled off and you had problems with misaligned body panels, the wing doors opening like a bird. All of these things did mean model x did not get the best writeup even though now it is the fourth biggest selling s. U. V. In the United States. They want to make it kind of simple so they can make themselves reach key targets. Emily we have to talk about demand in china. Bloomberg intelligence pointed out when hong kong scrapped a tax break on electric cars new registration went down to zero. What is happening with that . Caroline unbelievable. Todid see a rampup prior the tax credit coming away and we did see orders come thick and fast. This is notable considering china has the biggest demand globally for electric vehicles, well ahead of the United States. They are even in front of europe which is another key player when it comes to demand for electric vehicles. The this one tax break alone meant a complete erosion of demand does say something. Therefore, it is notable when revenue, 7 billion of about 15 is predicated on china. It does not bode well for other countries that offer tax breaks. The United States does. Many countries have these sort of tax incentives. It is worth noting hong kong had been one of the most generous. Whether or not this is a warning signal for other countries as to when they can take away their subsidies or if this is a oneoff and we will start to see demand pick up again from hong kong, time will tell. Emily that was bloombergs Caroline Hyde. A stock we continue to watch. Snap shares falling below the just before the New York Stock Exchange closed monday. This comes as investors continue to question the companys ability to grow as fast as expected and after decline in tech stocks worldwide. How can the company regain value . We are joined by alex barinka. What is behind the pressure on the stock . People are not buying into this story. It promised growth. It promised Innovative Products with the disappearing photo app, but it did not tell investors exactly what it intended to roll out. You have seen incremental moves to add mapping skills. They minted deals with time warner spending 100 million on ads and for Video Production for the next three years. But investors have not been convinced. The things i continue to go back to is this constant fight between what snap has to offer and what facebook and instagram have to offer. When you look at the numbers, in June Instagram said their stories product which is similar to Snapchat Stories has 250 million daily active users. Snapchat as a whole has just 106 the 6 million daily active users 166 million daily active users. When you think about where the growth is coming from, if the changes are not enough to convince investors, you have to win on user growth and snap has not been winning the battle there either. Emily what about International Growth where snap is seriously lacking . They are. A lot of that has to do with the fact a lot of International Smartphone users are on the android platform. They say they are rolling out changes in those areas but it is another front with a seem to be losing out to the competition. Costly fighting for where to share your videos and now you have a big competitor like facebook and instagram on your heels basically matching snap step for step, investors are not convinced it while wants a valuation upwards of 20 valuation warrants a upwards of 20 billion. Closed today just under the 17 price. Emily has it had a Chilling Effect for other ipos . Other Tech Companies are thinking about their proper evaluation when they get out the door. Weather snap or blue apron which has fallen below its ipo price, these are two now that if you are a company and Management Team and approaching the go public point, you are talking closely with your investors to decide how to price the deal. Are we worth as much were valued in the private market . And what do we consider pushing out to the Public MarketsGoing Forward . What are the companies in the pipeline for the second half of the year . It is fairly quiet when it comes to the tech pipeline. We saw a lot of that get cleared after a slow year last year. We saw some smaller Enterprise Companies come out the door. Im hearing from sources it is a lot of small Enterprise Companies. That is what we will be keeping an eye on for the rest of 2017. Emily alex barinka, thanks so much. Coming up, it is prime time. Amazons cargo planes are it. Ing ready to support we will bring you to the companys home of seattle next. This is bloomberg. Alisa i am Alisa Parenti and you are watching Bloomberg Technology. Andtback for theresa may britains conservative party. To Prime Minister was forced suspend one of her own lawmakers after she used offensive and racist language to describe the possibility of a nogo brexit. She says her comments were unintentional and has apologized. Residents of mosul are taking to the streets after iraqi forces declared victory over islamic state. A few hundred militants remain in a small part of the city. 900,000 people were displaced from their homes during the battle to retake iraqs secondlargest city. It launched in october. Blocked the streets of the capital city in called toafter they stop people traffic. Sunday marked 100 days since the deadly protests started. Secretary of state Rex Tillerson is visiting kuwait, qatar, and saudi arabia testing ways to break an impasse that has persisted despite mediation after talks begin late today. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I am Alisa Parenti and this is bloomberg. It is just after 5 30 p. M. On monday in new york, already 7 30 choosing morning in sydney. We are joined by paul allen with a look at the markets. Good morning. Good morning. Futures looking flat now, off by a single point. In japan, futures are mixed. A lot of disruption delayed the open to the afternoon with trading version. Indonesia had problems as well about 30 minutes after opening on monday. It was set down for almost half an hour before trade resumed. China auto sales releasing numbers for june and the first half. That is expected to see a reverse in recent declines in sales with s. U. V. s leading the way. In australia, we will have home loans data from a, expected to show a 1. 5 rise reversing threemonth of decline. We also have Business Confidence numbers for june out of australia. In singapore, the state Investment Firm is likely to see a jump in assets on a stock rally and more private deals as well. I am paul allen in sydney. More from Bloomberg Technology next. Emily this is Bloomberg Technology. I am emily chang. Amazon is gearing up for its third annual prime day where products will go on sale for 85 million prime members. To get the packages delivered, amazon has its own fleet of lanes to help with what is expected to be its biggest sales they ever. Cory johnson sat down with david clark, amazon Senior Vice President of worldwide operations, and asked how we should understand amazons global fulfillment space. Around the world, we have over 150 million feet of space. When a customer places an order, we decide which Fulfillment Center it will come from. We try to ship as close as we can to the customer. E have a vast selection with many, there are only one or two. With a today promise in the u. S. , if you are in new york and need a product in california, this is how you get it, through one of the cargo planes or one of our partners. We think of these as largely customdesigned with our engineering processes and needs for transportation in mind. It is whichever financial vehicle we choose as the best way to move forward with the asset. Cory how many have the fancy paint job . We have 24 planes now heading to 40 and 2018. I think there are eight right now that do not say amazon. They got in service quickly and we did not put the design on. All of the plane since have it. What is the advantage . We get to stand in front of it and it looks really cool. If you have cool toys, you need to put your name on it. Cory i would imagine it helps to promote the brand. It is amazing how many people find an amazon plane on the tarmac. It is cool for customers and employees to see them flying around. Cory we are on cargo road. ,he other air Cargo Companies you have options. I think if you go to those places, you will see a lot of amazon boxes. We have a great group of partners around the world. I expect that to continue. This is about innovating for customers and supplementing available capacity. We have great partners and expect to continue to do so. Centerow much center to movement is there . Some of it is direct package transport meaning instead of having to go through a hub, we know we have a large volume going from the west coast to east coast. We can fly directly and take a step out of the process. On a today order twoday order, you might have 12 hours. We can go directly from point to point. Ohio ande being in needing to get to phoenix. Particularu have one style you need and only one of them we have and it is in new york and needs to come to you in San Francisco. We will put that on a plane. Instead of having to fight to cincinnati and connect and go to San Francisco, we can put it on our plane from the east coast directly to the San Francisco hub and get it to you. You have much longer to order it. Cory in terms of percentage of domestic capacity, when you get to 40 planes, how much will you be moving . We are not stating what our breakdown is by different carriers. We think of it as more on what is customer demand. We start everything with the customer and work backwards. What portion of customer demand is best suited to go through the arcs we create . We work backwards from that. Cory those discussions like we could use a route that goes from point b to d . We have strategic harder ships with all of our carriers. In order to make the holiday work and our growth rate work, is very important we have a great relationship with them. We partner in almost every aspect of how the operations work with them to ensure it works. Cory the Plane Business is complicated. It involves leasing. You have been involved in leasing and financing. Are there things on the amazon Balance Sheet that give you advantages other Companies Might not have . Our focus from the beginning has been about customer experience. It has been all about enabling faster delivery and additional capacity for customers. Our approach to structuring the arrangement, there are a lot of moving parts in the airline business. We found a couple of great partners. We worked with them to come up with a great path forward that fits the company needs, works great for them, for the supplier, and provides a fantastic service to customers. Cory is this a typical amazon project that started off with a memo about what if we tried this . Somebody came to us and realizedut we had not we had this much scale in air. When we looked at it, we realized we could. Then it went to what you said. We wrote a sixpage document working backwards for what a prime air product would look like, what would make it special for customers, what would enable lower prices and faster delivery for customers, and ended up with this. Cory is there a metric on that scale . That we continue to grow, growth provides us options to do new things perhaps we could not do in the past. It could be Something Like prime now, our onehour delivery service. We had to reach a scale where logistics and Technology Enabled the oneour service. The same thing here. We need enough volume where moving coasttocoast made utilization and Financial Sense to provide this service to customers. Cory one last thing. Is the change to local tax the thing that propelled this, to get physically closer to the customer . We have always had the same approach. We follow all laws and continue to spread across the u. S. I dont think anything particular to tax had anything to do with it. This is really all about customers. Emily david clark with our own cory johnson. Sticking with amazon, the giant is playing catchup with best buy on one front. Over the last few months, amazon has been assembling what will be a competitor to best buys geek squad. It allows for experts to offer free consultations and installations for a fee inside homes. Best buy plunged as much as 8. 2 , of biggest intraday decline in more than a year. He is an, is an mba nba champion and one of the best connected players to Silicon Valley. We are talking to Andre Iguodala next. This is bloomberg. Emily a stock we are watching, shares of nvidia rallied more than 4 in the monday trade. The price target was raised to 200 which said the deal with toyota will generate meaningful revenue over the next 24 months. It sees the deal generating as much as 1. 7 billion in sales. Golden state warriors Andre Iguodala is a twotime nba champion, former nba finals m. V. P. , and an avid tech investor. In his four years with the warriors, he has become one of the most tech savvy and wellconnected players in the game. He has built a reputation as a sharp Silicon Valley investor, got in early on facebook, netflix, and tesla. Of the c. E. O. s account for billions sitting courtside at every game. We caught up with the superstar and asked if the tech aspect of Silicon Valley had an effect on him choosing to play for the warriors. People ask me how important Silicon Valley was in my decision to come to the bay. I would say it had a big influence, but the team was right on the cusp of some success i dont think anyone else could see. Vision,having that tech and like i said before, seeing what lies ahead and trying to read five years down the road kind of came into part as well. Knowing the team was right there and i could be that key figure. A press go into conference after your signing and say the goal is to win championships, that is kind of a cliche thing to say. But i always try to be honest. Sometimes, i am too honest. That was a key factor, knowing we had opportunities to compete for championships. And we have been to the finals three years in a row. Three out of four years we have been to the finals and won two of them. I guess the tech disruption thought process has worked out for me in basketball terms. Valleyow has silicon affected the way you play ball or the way the team plays . When it comes to investing, you are basically betting on the future and what will happen in the future. When you bet on a company, you size in a triple in certain amount of time. You look at growth projection. You think about financials. That is what you are betting on. It was the same decision i made when it came to the basketball side of things. Cory indeed. I think of investing, it is an intriguing idea. It is curious to me it is a Silicon Valley idea. Talk about that idea and high you see it as a Silicon Valley idea itself. Is interesting how Tristan Walker came up with the idea. Being african american, we both know how tough it is to get certain products in the regular pharmacy or convenience store, the small section of skin care products. You look at the financial side of that and how much the urban community spends on health and skin care products, it is double all the other categories combined. We are underserved. So the idea was basically there. You just put those metrics together. We all talk about analytics. It is everywhere, not just basketball. That is how you come up with this company. That is where the vision comes from. You can try to scale those to be global brands. I think both are trending towards that. Some we may ask you about of the things you in steph curry are doing with bloomberg. Who are you trying to school . What do you think you might learn from the experience . We are trying to school both sides. We will have some business moguls as well. Will have talked athletes we will have top athletes. We did Something Different similar last year with nba players. We saw the reach nba players number one sport globally. China has had a huge influence on that as well. I think players brands and endorsements are changing. You have to change the template agencies have been doing for so long. It is becoming outdated. reach are players exceeding some of the companie reach. Some guys have 10 million followers on social networks. You see some companies who do not have half of that. Cory maybe it is not all about the next sneaker deal. Right. You talk about ownership, equity, how you scale a players reach. There is a lot of conversation to be had on both sides. Players can learn from Tech Companies and the companies can learn from the players. You get us all in a room with , andop from both sides there is so much that can be learned and turned into something that has never been seen before as far as how we maximize the reach of the sides combined. It is kind of like how you talk about analytics in the field of el ofame and the fe the game. It is similar to that. Emily Andre Iguodala with cory johnson. Strike just inked a deal with two Major Players in china. What it means for its ambitious Expansion Efforts on the next. You can watch us live. If you miss an interview, you can go back to it. You can send our producers a message. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Emily facebook is flashing the price of its vr headsets for the second time this year. It will be priced at 200, a car cry from the Introductory Price target of 600 a year ago. The move is a sign of continued competition in virtual reality. Analysts estimate it has sold about 240,000 units through the beginning of february, well behind Sales Estimates for the playstation vr. Stripe is betting big on china. The payment enabler unveiled a deal with two of chinas biggest payment services. They dominate the market with a combined 90 share. He gives the start of access to hundreds of millions of chinese customers. Joining us to discuss, selina wang from new york. How much new business does this mean for strike . What this is a big deal setting the global footprint. Wechat and alipay completely dominate the Chinese Market for mobile payment. They have more than 90 of the market. Tos is a way for stripe reach consumers that were previously hard to get. They can access the thousands of businesses that transact through stripe. More business for its merchants means more revenue for them since they get revenue by taking a cut of transactions on their platform. Emily stripe has made inroads into china before. What is different now . They had a deal with alipay that was more surface level, just for merchants in the u. S. This expense the total market this expands the total market and deepens the partnership with alipay and wechat pay as well. They have made other inroads into asia before. They set up a hub in singapore and japan. They have rolled out in hong kong offering their services to local hong kong businesses. This is part of a much broader asia and emergingmarket expansion strategy. Emily what does this mean for ant financial as well as tencent which owns wechat . This fits into everything they have been doing. They have been doubling down on their north american strategy. At financial is in the works to acquire moneygram. A deal recently inked with first data that allows Chinese Consumers to access millions of small businesses. Theyre trying to reach the Chinese Consumer wherever they for foreignonline merchants or offline traveling abroad. Tencent also has a similar strategy wanting to follow the Chinese Consumer online and offline. Emily we talked about tencents global an ambitions and whether wechat could be a step in that direction. I think this continues along the path of broadening it or the Chinese Consumer. This is not tencent trying to reach the u. S. Consumer. Betterrying to make life and more value for the people already on its platform. People can book movie tickets as well as shopping. By getting at players like stripe and all of their merchants on a platform, it makes it more valuable for tencent users to stay in the wechat platform. We chat and alipay have intense competition now in china so they are both trying to do everything they can to make their platform more valuable. Youy selina wang, thank for joining us. That does it for this edition of Bloomberg Technology. Our special coverage of the focus on tech week continues tuesday. Bloomberg tech is Live Streaming on twitter. Check us out weekdays. That is all for now. This is bloomberg. From our studios in new york city, this is charlie rose. Evening, i am just glory filling in for charlie rose who is traveling. Reportingproduct of by journalist Nick Schifrin and zach bannon. They recently traveled to a dozen russian cities in an attempt to better understand the country. It will explore everything from the relationship to the u. S. , to propaganda, and the fate of putins enemies