Drone, and the Trump Administration responds with a cyber attack. But iran has a Cyber Strategy of its own. How they are attacking u. S. Banks online. First, to our top story, the continued back and forth between beijing and washington has put tech squarely in the crosshairs of the trade war, impacting Companies Like apple, huawei, and many more. A new article in Bloomberg Businessweek details how chinas tech sector is mostly insulated from exposure to the u. S. On many fronts, but there is one area where it is still dependent semiconductors. Over the last decade plus, china has seen a surge in chip imports. Now more than 300 billion. For more on the trade wars ongoing impact on tech in both countries, we spoke to Bloomberg Bloomberg techs ian king and our Global Executive editor brad stone. Ian esoteric parts like broadcoms switch chip, more common parts like an intel microprocessor or an amd graphics chip, china really cant replicate those yet. They have been trying for years and it just has not come close. Emily why not . Ian it is difficult. When you are arranging tens of billions of transistors on something the size of a postage stamp, you kind of have to know what you are doing. And making them just costs so much money. They have just never been able to develop that skill set. Emily which companies in particular in china are the most vulnerable . Ian you name it. It is the biggest pc market. It is also home to some of the largest pc makers like lenovo. They need these products. Huawei, it goes without saying. You cut huawei off, they wouldnt be able to make their core routers. Without american technology. They need memory chips, all kinds of things. Things that we dont know about that are absolutely essential. Emily meantime, brad, you have a piece out about how u. S. Tech giants, even though they may be complaining about the trade war, are actually in the best position to weather it. Brad of course, big Companies Like apple, they have the cash and negotiating power. Apple supplier foxconn has already talked about moving production to other companies in countries in southeast asia. India, malaysia, thailand, taiwan. Of course, the Trump Administration would like to see it here in the u. S. That is unlikely to happen. But i do think they are worried. We saw a bunch of letters go to the u. S. Trade representative last week. Apple sent a letter saying these tariffs are going to hit iphones, ipads, macbooks, air pods. They are saying it is going to hurt apples global competitiveness. Emily this was right after a meeting between tim cook and President Trump. As you mentioned, they do have the negotiating power and we dont know yet if that negotiating power will pay off. Brad it has worked in the past. Some of these product categories were on previous lists of tariffs as early as last year. They got off the list at the last second. I think the Tech Companies are hoping for that kind of reprieve. Of course, we will see what happens at the g20 early next week. Emily meantime, ian, huawei, you mentioned they are dependent on u. S. Chips somewhat. They do also make two thirds of their own chips, right . Ian for smartphones. The key component of the smartphone is the nickel processor. They have been arguably the most Successful Company outside of apple in weaning themselves off qualcomms technology, so they they caneir own, so supply themselves in that particular market very, very strongly. Emily brad, there is a line in your piece that i loved where you say laptops, phones, my drone have these people no compassion at all . [laughter] brad they are coming for our drones. Emily how would you break apple versus amazon, for example . Amazon, fo is shutting down its entire china marketplace next month. Brad that is interesting, right. You would think amazon might not be that exposed. Actually, they have a huge business there among the small thirdparty sellers that sell on the amazon marketplace. Our colleagues have a great story out today. These companies have no negotiating power, they are one or twopeople shops, they sell everything on the amazon marketplace. Really, it is the uncertainty that is impacting them. They have no idea what is going to happen. They have to get their holiday orders in now. It is not that easy for them to go look for another factory in india. Emily right, so what is their plan b . Brad i think their plan b is to cut orders and raise prices. That will have an interesting impact on amazons holiday quarters this year. If selection is going down, and prices are going up, it is another way the u. S. Consumer is going to be hurt by the trade war. Emily ian, if prices rise, how does that ripple back and impact china . Because china also depends on a lot of these companies in china. For jobs in china. Ian apple is an example of that. Yes, we by not need that many iphones, maybe we can go buy them from xiaomi or somebody else, but so many people are employed directly as a result of the manufacturing chain. That cannot help but impact the economy. You have all these relatively high paid jobs, all of that tax revenue, if that starts to go away, that fundamentally undermines the chinese economy. Emily so what is their plan b . Ian their plan b, what we try to show in the story to an extent is that a lot of people dont realize just how powerful they are. When sanctions have been used in the past against countries like korea or countries like japan, they are relatively small domestic economies. We use this statistic all the time. China mobile has more subscribers than the u. S. Has people. To an extent, they are their own center of gravity. There are people who have never looked at Google Search because they never needed to. There are people who are not using apps supplied in the u. S. Because they are never needed, because there is enough in that gravitated market on its own terms. Emily we dont know if the tariffs will go into effect at all. We are still waiting for this meeting to happen between president s trump and xi at the g20, but you wonder, even if these new tariffs did not go into effect, if the uncertainty this sort of uncertainty has been so intense for these companies that they are already started moving to plan b and , realizing how vulnerable they are, and start making new arrangements for the future . Brad everything we have heard from our own reporting and that in asia and others, big Companies Like apple are looking at other sources of manufacturing outside china. It makes a lot of sense. The one thing i would say is if you look at the market lately, i get the sense that maybe the market thinks there will be a resolution to this. Because otherwise, we would see a lot more volatility in the stock prices than we have seen. Emily are your sources optimistic or scared . Ian it depends whether you are talking about the market or whether you are talking about the companies. If you talk to executives, they are not keen to go on the record talking about this topic, but they are saying look, this is the wrong way to go about things. We have so much to lose here. We want a resolution. Emily bloombergs brad stone and ian king. Coming up, the already competitive video streaming market is getting another player. Meg whitman tells us why her mobileonly platform quibi will stand out from the rest. And if you like bloomberg news, check us out on the radio. Listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Emily former hp and ebay Ceo Meg Whitman has taken her expertise to hollywood as the ceo of quibi, a new short form video platform startup. Founded by jeffrey katzenberg, quibi will launch a mobile only Subscription Service in april of next year, promising hbo quality episodes that run under 10 minutes. The company has already raised 1 billion from tech Companies Like alibaba and major studios like disney, sony, warner media, lionsgate, and more, and plans to raise another half a billion dollars soon. We spoke at a tech conference on thursday. Meg first was to explain what we are doing and attract talent. The talent was like, we dont know what it is. How do you know this is going to work . Harder to attract talent. Now we have our own space, it is much more accepted and understood. The second was we have done things differently from hollywood typically doing them, in terms of the deals and how long we have to make content. It is a different cadence so we have been able to get that done. That was harder. Emily right. I definitely heard folks say april 6, 2020 . That is like a lifetime from now. Meg yes, but in hollywood but whf this content, remember we are the first ott streaming service where you dont buy a library. There is no library to buy. You cant take an hour show and just chop it into six 10 minute segments. It has to be written and shot for mobile and for this format. Emily because of that, you have told me in the past that disney and netflix are not really competition. You are trying to do something different, but you are fighting for mind share whether it is them, youtube, instagram, snapchat. Do you think that turmoil social media is facing right now, is it is good for you . Viewers will want to turn away . Meg i dont know about that. What we are doing is creating a nap that is designed to give you app that is designed to give you alternatives in those in between moments, commute, waiting for coffee, in a doctors office. What we want to do is give you something that is fantastic in that 10 minute time slot. You know, our target audience, 25 to 35yearolds, spend five hours a day on their phone and the average session length is 6. 5 minutes. So i think we have an opportunity to give them alternatives that they dont have today. Emily what about kids content . Youtube, for example, has been under the gun, criticized for exposing children to horrible things. What do you think they are doing wrong . Meg we are not doing any kids,. Kids are not going to really be on quibi. This is 18 and up and we are going to make it very clear this is an adult app. Maybe over time when we do something later, but right now , this is adult, 18 to 44, with the target of millennials. Emily what about in general . Clearly, you have to think about how healthy your content is. Who the audience is. Do you think that youtube is making some mistakes there . Meg listen, it is hard to argue with youtubes success, the most democratized platform in the world. Frankly, we would not be here without youtube. They are doing the best job they can in enormous uploading of video. And i remember from ebay, listings were happening at 100,000 a second. So you have to have all kinds of things, and i am certain they are taking responsibility to and trying to make it great. Emily you raised 1 billion. Meg yes. Emily there were reports for you were going to raise another 1 billion, but you denied those. Maybe closer to half a billion. Dollars. How far along are you and those conversations . Meg we have not started yet. We think we will probably go raise in the fall, early part of next year, but 500 million is what we think we need. We dont need it before we launch, but i do think it is wise when you can raise money and the markets are good, and we should do that. Ultimately, we will need that money to break even. We will start in the fall and look for an anchor investor to price this around. And then i think a lot of our existing investors will want to keep their pro rata share. Emily have you sensed any uncertainty or discomfort from investors given the Political Uncertainty . The trade war and what is happening geopolitically . Meg not so much for the investors in quibi but the Business Community in general is somewhat unsettled. You can see it reflected in the stock market and bond deals, and these kinds of things. There is no question there is an unsettled element around the world today. What Business Leaders like more than anything else is predictability and certainty. That is not our world today. In today. D we live emily if you were still ceo of hp right now, how worried would you be . Meg i would be worried about a trade war with china. These companies that make things, much of the supply chain is in china. That quarter of trade is between china and the u. S. Is incredibly important, and the ability to be competitive selling to other countries depends on being able to manufacture in lowcost locations, like china. Emily how vulnerable you think these companies are right now . Meg what i know is that Tech Companies, they adapt, and you can see people trying to figure out what they will do in terms of a trade war. Listen. Everyone always adapts, but it is easier if there is more predictability. I can tell you that. Emily you have got a lot of chinese investors, partnerships with folks in china. Do you have any concern that it could affect you should things continue to go south . Meg yeah, so our joint venture partner in china is alibaba, and they are an investor in the global platform. Weve got a great relationship with alibaba. We dont think that is going to affect us. Remember, a company like ours cannot go to china without a china partner. And alibaba, we think, is one of the best that we can be with. We are not worried about that at the moment but we will see what happens. You never know how this could escalate, but weve got a lot of confidence in alibaba. Emily traditional Tech Companies have struggled to break in to china. They have been shut out of china. Facebook, twitter, google left china. Ebay, as you know well. [laughter] emily do you think entertainment could be a new way into china for u. S. Business and u. S. Industry . Meg american entertainment exists in china today. There are quotas on how much foreign content can be imported. Emily censorship. Is censorship, but there is no question that i think the chinese Entertainment Industry is coming of age and growing. And i think there will be more opportunity for worldwide content into china over time. Maybe not in the next couple of years, but listen. The China Economy is growing, there is a whole middleclass that is emerging in a very major way, and we know that they like entertainment. Emily that was quibi Ceo Meg Whitman. Coming up, facebook is building its own socalled Supreme Court for content moderation. But will that solve all its problems . Well discuss facebooks plan for an oversight board, next. And a reminder, the boston pops fire spectacular is the countrys largest and oldest fourth of july event. Here is a taste of what to expect. [bombastic orchestral music] best day of the year 3, 2, [music crescendos] [applause] emily do not miss the boston pops fireworks spectacular, live july 4, 8 00 p. M. Eastern time, only on bloomberg television. Emily facebook is looking to create a new content oversight board. The social media giant is hosting a series of simulations across the globe as it plans an independent board to review controversial content moderation decisions. The board will provide a final ruling on posts that have been appealed for removal or that may have been removed in error. This as Companies Continue to criticize the companys control of global speech. Zuckerberg has mentioned the idea for independent appeals process almost like a Supreme Court. Monday, we spoke to our guests about how it would operate. Kurt they want to be an independent group but we , dont know exactly who will be picked for this court, even how big it will be. They say it will be around 40 people, at least that is the idea for now, and then they would break up into small groups of three to five to review individual cases. But how do you pick a group of 40 people that accurately reflects a 2. 4 billion Person Community . That is one of the Biggest Challenges they have to deal with. Emily how do you do that if , especially if facebook is doing the picking . Shira yeah, it is going to be very hard, and obviously, facebook is paying for this board so independence will be to be theys going question. That is inevitable in the situation. The point that kurt made is a good one, that facebook is now a global platform. They have many users in places like india, indonesia, other and other places that have different values than facebook in the United States that was founded largely by american executives. And the question is, will the board draw from people from those countries that are now basically facebooks future . Emily so, kurt, talk to us about these simulations that facebook is conducting. A controversial decision comes to this group of people and then they debate. Kurt correct. I actually sat in on one that was at facebooks headquarters here in california. And it was interesting, about 30 employees. They presented them with a post that was controversial. Someone had listed 70 different academics and accused them, kind of, without any proof, of being sexual harassers. They left the list up and said , add more names to the list if you know someone else who is a sexual harasser. Obviously, that is a very dramatic and severe claim to make. So facebook wanted its employees the employees in the simulation to discuss, is this the kind of post that should be left up or is this the kind of thing that should be taken down . It was two hours long and they went through all of the different questions. And what they are really trying to do is to get at how do people think about this stuff, what kind of questions do they ask so that when the real board has to make a decision like this, facebook wants to be prepared for how it is going to operate. Actually operate. Emily and many of these decisions are cultural. Kurt totally. Emily who are these people . Are these all englishspeaking people . How will they understand the nuances of the situation with the rohingya in myanmar . Shira yeah, i think that is going to be really difficult. What facebook has said as they have talked about this out loud, and to their credit, they have sought input on this oversight board. And i think what they have said is that this board would kind of tap outside experts. So if they are dealing with an issue that