Missions. California vows to fight it with one official calling it the fight of a lifetime. Corporate ventures Data AnalyticsCompany Enters the vc world. We will talk to their ceo. First our top story. Facebook has confirmed it will resume collecting and transcribing some user audio clips from its inhome video device portal. President their vice at the launch of a new generation of portable devices. Devicesees hardware and and facebook. Lets listen. We are so excited about our new products. They are oriented towards connecting people with what they love the most. These are designed to look like picture frames. They can fit into anyones home is easily and naturally as if it was a picture frame. It will even show pictures when it is not in use. Another cool thing you are launching is the tv portal. Yes that takes advantage of what is the biggest screen in most peoples homes, the tv. It turns it into an immersive video calling device. One thing that stuck out to me was a price the price point. It feels like youre really trying to push into what is already a competitive space. Roku, apple tv, how do you stand out . We think the most important thing that people do is connect with each other. Until now, all these devices were not really focused on that. If they were focused on connecting you with content which is great and they are useful that when it comes to connecting with people you care the most about, that was missing. With portal, you can use facebook, messenger, whatsapp to connect with the people you care most about in a rich immersive way. Cameras that follow you around the room and your hands free and you and your kids can connect with your friends or grandparents without holding the phone and your arm getting tired and fitting everyone in the shot. You mentioned cameras. I have to bring up the button that where you can turn the camera off. Privacy has been a huge concern. Was that the focal point of making sure it was easy to make sure i can turn the camera on and off . Yes people have never experienced anything like portal before. It has a camera and microphone and we wanted to make sure everyone felt come comfortable and in control of that experience. Her are just camera and microphone controls, there are shutters that you can use so you can see that the phone or device is not seeing you. Also opt to leave the microphone on so you can use a service like alexa. If i use Something Like hey portal, and my being recorded . That information goes up to the servers to return an answer to you. We may use those to improve our quality over time but you can disable that. Privacy has been a beautiful point of facebook. Is now the right time to launch new products where there is a camera and a microphone and so much scrutiny and arguably the least amount of trust and facebook . Now is the best time to launch a product like this. Connecting with those you care about is the essence of what facebook does reedit thats what these devices are centered around. Every precaution we can to make sure people feel comfortable with the devices in their homes and the control they have in those devices. Ofn they have experience connecting someone they care about who doesnt live nearby, they will experience Something Special for them. It comes at a time when antitrust scrutiny is highest. When you think of facebook, people think about the app and software. Its now the time to expand your technicals technicals . The smartest category is so new. This is only been on the market for two or three years now. Its really early and Everyone Wants to experiment and see what kind of value we can create. Its not very big yet but it is growing yearoveryear. If people decide they are excited about video calling for the home and we think they will be, i think portal will be a good fit for them. Its something that is not fitting for the marketplace than we will try different things. Joining me now to discuss this further is our Bloomberg Technology reporter. I want to talk about the privacy issues that are going on and the opt out button. Enough to quell our concerns about privacy . The big issue we have seen with these transcription happenings that have been a big issue with tech is that people didnt know about it. People arent aware that the audio they were giving these companies is being transcribed at all. Least, facebook is talking about it and they made the opt out think part of their presentation with the press yesterday. While it is not necessary they say privacy is very important and you might think they would make that the default. Now, at least they are acknowledgment. What do you make of them launching in your living room cameras and microphones when trust in the company is really at an alltime low . I asked than this yesterday as well. The timing for facebook to be adding not only a device to your home but one that has a camera and a microphone on it, it doesnt feel like the right time reedit at the same time, when will be the right time . Im not sure if a year ago would have been any better. I understand why they are pushing forward because you dont really know when is going to be the right time. Certainly, more than almost any other company they have been dealing with the privacy issue and there is a trust issue also. Someonesto get into living room when people dont trust you. Woman talk about timing, this is a very competitive space. You had comcast make an announcement, facebook, coming but roku. Erie itvery competitive how does facebook stands to differentiate themselves . They were very clear about this yesterday. The differentiator is the video calls. They think people are going to use it to do what looks like a facetime call but through their hardware. Also through your tv set. They think that that differentiates them from all the others. We asked what about the idea of having netflix or hbo apps on these devices. They said theres a ton of places you can already go to do that stuff. Our differentiator is the video camera. I think it would make sense if they had both. That is what they are leaning into. Speaking of other hardware, its interesting that they have amazons alexa supported on their platform. When would we see facebook come out with a version of amazon alexa or google home . You can talk to this one. You can talk through alexa or you can say hey portal. That will make it up for basic commands or request. They are collecting that information and starting to transcribed. When will they have their own assistant . The software that will actually give you a bunch of different options versus basic commands, right now they dont have any plans to remove alexa and build their own thing. Clearly with the software they are Getting Started on that. I would expect, i dont want a timeline on it but maybe sometime in the future this is a goal for them to have an assistant that really works much more expensively than what they have now. We have jumped a little bit, users,he monthly active daily active users, its hard to talk about hardware because it feels relatively new. Its not a big part of their overall strategy. Where does hardware that into their revenue . It doesnt at all right now. They dont talk about how many portals they have sold or oculus or other types of hardware that they build. Businessan advertising for the most part. For the dominic barton. They see this as a longterm bet. Someday perhaps in a few years or a decade, you might not use your telephone and a way you use it now. You might use another type of device. I think they are trying to figure out what the device is going to be. Will it be at a home thing like a portal . Will it be a our glasses . Think when they figure the next wave of hardware comes around, they dont want to be in that dependency, they want to build it themselves. Bloomberg technologys kurt wagner. Thank you for joining me. In a memo sent to his staff, a cfo said after 16 years at apple, i decided the time is right for me to step away from our remarkable company. Will takeing chief over in the interim. This comes right after apple hosted its annual event in cupertino last week. Other announcements at apple have come following about other executives. Coming up, continued fallout for wework after delaying its ipo. We discussed job cuts and building plans in london. This is bloomberg. Hours after announcing plans to delay an ipo, sources say wework made a small round of job cuts in a new york city unit. It affects fewer than 10 loyees and the fallout deals for two london buildings leased to the startup are on the ropes. It is unclear if it has anything to do with the delay of the ipo. Joining me to discuss is an ourutive director analyst that has been covering wework. Is definitely as mall small job cuts. We happened to get some sourcing on this and you could look at it as an indication of ways in which in the next month as the trek to go public again, wework to be showing investors ways that they are able to cut back on cost. This is basically a small unit that ran it is not close to the main concept. People are nevertheless watching everything they do closely right now. Is this the type of expense tightening belttightening that you would want to see from the company . This is a drop in a very vast ocean. Companyaid, this employs 12,000 employees. Less than 10 is not going to cut it. The Company Needs to show is a year from now, wet with the cash burden to look like . The company is burning 200 million per month. They have a lot of liabilities. These are big numbers. The Company Needs a lot of cash. 10 employees is not going to cut it. Cash burn or the hyper valuation . Cash burn is the issue. They have 3 billion in cash. A billion and change in debt. Leastill probably need at three or four years of runway. 200 Million Dollars a year, three or four years of runway, this Company Needs about 10 billion in cash sitting on the balance sheet. Talk to me about the timing of that. I spoke to an analyst yesterday who said he wanted to see wework hold off until First Quarter of next year. Does that fit within your timeline of when you look at the company and talk to the analysts and perhaps not trying to do the offer the rest of the year. We will have to see how they approach this. There are certain aspects of the Credit Facility they are hoping to get that as i as mies i understand they are limited to being available only if they do it in 2019. There is a deadline that is waiting in the current set up a habit which is that they could get the 6 billion in credit but only if an ipo is in the next calendar year. If they end up pushing the ipo into 2020, the going to have to start the process back on him but further. Talk to banks again to renegotiate this opportunity to get credit. Talk to me about the environment. You mentioned any cash soon. There is a contingency that billion cash 3 through the ipo, you get 6 billion in debt and this has to happen closed by the end of this year. There is a deadline they are working against. Their work backwards. If you were to raise 3 billion in cash, we can settle so many and buy some out of ownership dilution. It is up to the existing investors how much dilution are we willing to accept . If any to do this careful method of getting two 9 billion in cap cash by the end of this year. To be fair to them, we should note that they cannot respond. A different story and the want to be careful not to directly relate them was the two in london this seem to be two buildings in london that seemed to be on the ropes. Who is backing out . Is seemingly the potential buyers for these two buildings in london are starting to get cold feet. Again, we dont know but we dont want to apply causality. Who is in a deal with wework right now is looking carefully at the financials of the company, a plan for the ipo and making those considerations. One of the buildings is wework waterloo and it is a big campus with a skate park. Even that i think is hitting a little bit of bumps along the way. We are not sure why. We will have to read it there. Thank you both for joining me. Coming up, more of our exclusive interview with the ceo of ibm. Washing banks blockchain is all about trust. Why she thinks what chain is all about trust. This is bloomberg. Announced today ibm it will on a Quantum Computation center in order to further realize the business potential of the next generation technology. The realworld application of quantum and blockchain is something that our analyst covered when she sat down with the ceo of ibm. When i look at the future of technology, were all about applying it to business but we built some of the worlds leading technologies. Cloud and ai, everyone talks about that today. We will park those for a minute. The next two, blockchain and quantum. Case with newe technologies, people overestimate in the beginning than underestimate in the long term. Whatsain, if you said one word you would associate with blockchain i would say trust. That is a use. You dont even have to use the right kind of blockchain. Thinghain missable what blockchain should do it would put trust between parties who dont even know each other. It would make trusted transactions and do with the internet did for communication between what the parties. Can on example if i trust and blockchain, what it allows you to do is you and i can share a transaction together and i dont have to see anything you want me to see. Once the transaction is completed, it cannot be erased. Think about a ledger. Owndo we each keep our checking accounts and do we trust what the bank says . In the old days we would each want our checkbooks. It is the same idea with blockchain. Isig application right now food safety. One out of 10 people get sick. Its a big problem. It costs a lot of money. You have seen it where they have been recalls on spinach and the like. We started something called food trust. Think about this. These are competitors out of the world all being willing to join on. , unilever, driscoll. They are saying we will put our data on here about which row in the farm this came from. From farm to fork. So if there is an issue and in my business we have done millions of transactions already through this, i can pinpoint where the bad spinach is versus hauling it all back. The third of the food in this world is wasted. To me, that is a big use. Lets jump over to quantum. Quantum, it will so problems that traditional computers no matter how fast they are cannot solve. Its because traditional computers are zeros and ones. Quantum bits have infinite states. They are for the kinds of problems that today even if you have the best super computer, you really cannot model it would run ever read i exaggerate a little but to show you that, its an approximation. Why do they still do they cant get an exact simulation done. What quantum will do is things like drug discovery. Material sciences, risk management, logistics, these are incredibly if you were to a moleculeruly model of caffeine, you would need a computer 110 size of this planet. If you want to the actual simulation. With our quantum system, we have made commercial ones available through a cloud. Things like you have daimler working on new materials like batteries in cars. Jpmorgan is working on how to price different options. How to look at risks differently or it drug discovery. We have a huge network of clients and now is the time to start to get used to it. Now you say the word trust. There is one dark side. Break traditional encryption. We announced new systems last night that to prepare for quantum already, our security in them to secure whats inside our systems to run the missioncritical systems, they are quantum safe. We have been equally building something called lattice quick to cryptography. That is something that quantum cannot break. If im going to build a to will that is that powerful, i o into society to be sure if it has a downside that i also address that. We want to prevent that thing from being that powerful. That was part of our exclusive interview with the ceo of ibm. Coming up, lets talk Sustainable Investing and hear how the worlds second richest man is helping those hit hardest. Thats bill gates. This is bloomberg. Taylor this is Bloomberg Technology. The Trump Administration has scrapped californias authority to set tougher auto admissions standards than the federal government. President trump tweeted the move will allow the production of cars that are both cheaper and safer. Revoking the california standards will have a major impact on 13 other states representing about 1 3 of the u. S. Auto market. Im joined by the bloomberg reporter who has been reporting on the story. You know what cap my attention in between . Cheaper and safer. Is that the case . You know what caught my attention in the tweet . Automakers, as a lot of people know, operate on pluto pretty long term planning cycles. Even as standards change, most companies have their plans locked in for those years. Where you will start to see changes in the types of vehicles and mix of vehicles sold is in the outer years starting around 2024, 2020 five, especially considering it will probably take several years of litigation theort of resolve administrations challenge to californias authority. how does this affect gm, when i have diverging views of federal law, state law how much of that uncertainty affects their business . Ryan it is important to keep in mind the Auto Industry is a very global industry. While there are very few global cars cars are different in the United States than they are in europe or asia a lot of the components is pretty consistent. Gm who wants like to sell more electric vehicles in the coming years, if there is not a strong regulatory or demandbased lever to help support sales in the United States, it makes it harder to pencil out the Business Case for those electric vehicles globally and puts a lot more emphasis on markets like china. Theor when we talk about electric vehicle market, outside of tesla, who would win or lose from the mandate . Ryan if the electric vehicle mandate were to go away, as the trumpet ministry and has proposed, it would make it a lot harder for companies or a lot more difficult for companies to offer the variety of electric vehicles that they are doing right now. Californias regulatory mandate, which was followed by around 10 other states, has been a big reason why you have seen more companies introduce electrified plugin hybrids as well as electric vehicles. Without that lever, demand is still very limited. Roughly 1 of the market has a plug in it right now. Lever, it will be harder to potentially offer a wide variety of models. Taylor