Roger ailes, has died. It is said he died from bleeding on the brain caused by a fault or he was 77. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Emily coming up, donald trump saying and fbi director could be named soon. And is it the end of the internet . The first moved to roll back neutrality. Alibaba profit takes a hit. Andill head to hong kong put the fourth gambles under the microscope. A message to big tech with a 122 million fine for facebook. How theyre are pushing for tighter web security by clamping down on social medias biggest players. President trump insists her have been no collusion with russia. Speaking at a News Conference with the president of cocoa pod of colombia, he said the accusations were ridiculous. Announceaid he will the new fbi director very soon. The legislative agenda hangs in the balance, including on issues like Net Neutrality. On thursday, the fcc voted to start to unwind Net Neutrality rules. You have Internet Service providers now barred from creating socalled internet fast lanes. On the other side, you have tech giants like facebook, google, and netflix that could be heard if the government asserts interfering with the internet. Chairman has been pushing the proposal. We have our guest host for the hour, david kirkpatrick. And our guest larry is joining us. Larry, what does this mean in terms of what happened today. Matters happened that matters at all in terms of the short term. It will be several months before the fcc votes. When they vote, all they are talking about now is undoing what was done in 2015, the reclassification of broadband as a public utility. They are looking for alternative authority under which they can keep it. Does it matter that the fcc keeps reversing itself . It does. It is like groundhog day. Solutionng term, the is for congress to act, passed a law, make clear what the rules are, make clear the fccs authority, and get us out of this mess. Emily david, how do you think the uncertainty is impacting Tech Companies like facebook, google, netflix . Do not likethey flipflopping, uncertainty, but i do not they get has hurt them much. These companies have so much money that they can span a few more dollars on lobbying if need be. Honestly, i think the basic point of view i have on the extreme rhetoric surrounding this discussion is that it is really overheated and not appropriate. There has never been any real sign of fundamental impropriety evene part of carriers, other certainly could be. We have not actually seen any. I see a sort of anticorporate mindset among many people that leads them to play and suspect that at t, verizon, and others are going to be nasty players, so they should have rules to prevent them from possibly doing things down the road. You can make the same argument about facebook and google, which are the ones supposedly celebrating the fact that the rules are being changed or complaining about the fact that the worlds are being changed, sorry. Emily larry, are we ever going to be able to consider the issue settled if the rules keep changing . There was legislation proposed in 2015 before the fcc tickets last action here. It was seven pages. It gave the fcc authority. It was introduced by republicans, and democrats expected they would hold on to the fcc with the clinton presidency, were not interested in conversations about it. Now maybe with this action, we might see movement on the hill. Emily is there anything approaching a compromise . The debate is so polarized. The rhetoricays, is completely overheated and really off the charts, as it was every other time we have been through this. I was testifying a couple weeks ago for the senate. Commerceman of the committee and the Ranking Member agreed that legislation is the solution. They just do not think the amateur and washington is really appropriate now for those kind of discussions. Maybe that will change with todays actions. Emily we know that you are one side of this debate. Explain why. Beside i am on is the site against public utility, not against Net Neutrality rules. Public utility treatment is really inappropriate. It will hurt investment and will slow down the way in which we do new innovations, new network investments. There has up an much time for that to take effect yet. We are one fcc chairman away. And the next democratic fcc chairman will undo what this one did. We could Start Talking about things like rate regulation on bundlings them all the things that will really kill investment. Emily david, on the other side are the technology companies. How would they respond to that . I think everybody would like to see clearer rules of the road. In fact, even a facebook and google and others have sort of supported the overheated rhetoric, criticizing the fccs decision, i think it would be positive for all players of Congress Actually focused in methodically more on the reality that the internet is one of the fundamental drivers of the american economy. As a result, we need to really think methodically and a puzzling at a policy level about how to make it grow in every respect. I think that is something republicans and democrats, and do some extent right and left, activist, nonactivist, all more or less agree on. It is healthy we are having a debate that is forcing congress to think about it. In general, they have not thought about this stuff nearly enough. Emily how long is this going to take, larry . It has been 12 years so far, so happy anniversary. We will keep talking about it until congress acts. Emily when is that going to happen . Saying ismocrats are the climate in washington in general is completely toxic. The fcc could vote in three months, four months on this proposal, and it that time, i think we have an opportunity. There is pressure now, and we will hear so much more rhetoric. You cannot even imagine. Us the opportunity over the next three or four months to get some the gun and congress. I am cautiously optimistic. Emily larry downes from the Georgetown Center for business and public policy. David kirkpatrick is sticking with us. Tesla may be at record highs, but jim chanos is not sold. Erik schatzker caught up with the hedge fund heavyweight at the salt conference. Teslas stock is not worth a lot. It will be depending on the model 3. Day, thed of the company is not worth what it is trading at today on its current business. If you do not believe me, look at what elon musk was quoted in the papers today saying. He said the stock is not worth 50 billion. Emily coming up, salesforce at with its firstquarter earnings. Profits and revenue topping estimates. We break down the numbers, next. Later, we will hear from jenny lee, who has bit over 15 years investing in chinese startups. This is bloomberg. Getting aesforce is boost, upping the annual forecast as it continues to attract more customers with a broader line of products. It reported firstquarter revenue of about 2. 3 billion, up 25 percent from a year earlier. Still with us is david cook hat david kirkpatrick. And cory johnson is with me. Cory continued growth of selfs first. The numbers are kind of big ten. Kind of baked in. His may bent to see deferred revenues will start to grow faster than revenues grew, suggesting things will get better. It is growing at about the same pace, growing about 24 on a yearoveryear basis, which is really good but slower than it has been in years past. Emily so can they sustain it . Cory and what are they doing to sustain it . It is growing fantastically. The company lost money in the quarter, actually a lot of money in the quarter. But it is important to look at the fact that they have done billions of dollars and acquisitions. Yet growth is coming slower, my duet a fantastic pace for a very big company, but much slower than it used to be, even though they spent billions of dollars to aid in that growth. Emily david, we have to talk about the threat from microsoft increasingly stepping on salesforces turf. How wellpositioned are they to defend himself . Microsoft is a formidable competitor anyone. But i do not think i think salesforce has plenty of her them to grow, room to further consolidate their position in the market, even as microsoft has room to expand its position in this space. The reality is every Company Needs of these kinds of tools. The idea of Cloudbased Software for running your Enterprise Well beyond the sales function, which is what salesforce is focused on and microsoft, too, that is the way the business is going to be run as we go forward. What impresses me about salesforce is that they have really kind of captured the imagination of wall street and the larger world in a way no other Enterprise Company has done. It is for a lot of reasons, including marc benioff. They really do they were the first with a fundamentally new approach to running Enterprise Software in the cloud, and they are still getting the benefits. Emily we are getting headlines from the earnings call. Marc benioff, the ceo, saying they expect to grow nearly 30,000 employees this fiscal year. What do you think of that . Huge. They build things cory that they do not own. They build the tallest building west of chicago in the u. S. It is known as the edifice complex, holding a big building with her name on it, and the stock tends to fall. Not the case for salesforce. They do not own the building but they put their name on it. It is quite a sight to see in the city. Let me show you how the market reacts to salesforce. The function might look complicated, but what it shows you is how much the company surprises by beating sales by 1. 57 . And it shows the stock market reaction. Price change of the stock tends 11 . 3 , 3 , 5 , 4 , 4 , the market tends to react. When they beat slightly, the stock tends to have 3 , an average of 7 . This is kind of a muted response. I think the market is used to it. I think they will start to see the slowing growth rate, which matters. Theavorite thing is em, earnings majotrix. It shows you the numbers from every quarter in a quick matrix and then the percentage change. It shows whether it is accelerating or decelerating in terms of growth. Of revenueceleration growth. It was growing at 35 , 33 , 32 , 24 . This quarter is less than what we have seen and prior years. Emily if they do grow to 30,000 employees, that is about twice the size of facebook, half the size of google. Room is obviously a lot of for them. Cory it is a capital intensive business. Emily thank you for that update. David, youre sticking with me. Sticking with earnings, shares of cisco fell the most in two puppeteers after a disappointing her cast just forecast. Revenue may fall as much as 6 from a year ago. The company says it is cutting another 1100 jobs. They face challenges towards a shift towards cheaper networking. Chuck robbins, the ceo, was asked about the transition so far. The subscription transition, we have more than doubled the amount of dollars on our Balance Sheets from the last eight quarters, and it was up 57 last quarter and hit 4. 4 billion am a so that transition is moving. Emily coming up, members of the u. K. Government proposing is reaping new security lock while also taxing tech giants. The egg tech news out of europe, next. This is bloomberg. Alisa parent u. K. , primee minister Theresa Theresa may is proposing a new text beloved on tech khameneis divide web related issues, like hate speech and cybersecurity. Caroline hyde joins us from london. Still with us is david kirkpatrick. Caroline, what is the purpose of this new tax, and what companies will be mostly affected . Caroline fascinating. It is coming up in the socalled manifesto of the conservative party. We are running up to the general election, which the conservative party are due to win. They have come out today with part of this manifesto proposing a law to allow the government to on social media and Communication Service providers. They do not Name Companies are say how big the taxes could be, but they notably say that it will support the word is and preventative action to counter internet harm to basically saying, look, some people say the government should not regulate on this, but we disagree. The government should be regulating these sorts of technology movements in the internet. This is on the heels of the wannacry ran somewhere Ransomware Attack in the u. K. This is something the public wants to hear. They want to see some sort of fight back and protection for those who use the internet, particularly children, particularly against hate speech and fake news. Emily could this set a precedent for other countries . Airline top yes. This is something we are seeing euwide. We saw france levy fines this week. They said they will be hitting a maximum privacy fine to facebook. We have germany bringing itself towards its own election in september. Merkels party are also considering what would be the strictest laws ever imposed against social media giants, such as facebook, considering fines of 50 million per pop if ever you saw facebook refusing to take down certain content or not being able to hear or see options to complain for those who use the likes of facebook and other social media giants. This is happening across the eu. And we just got facebook being fined 110 Million Euros by the eu today. Why . You give us say factually incorrect data in 2014 when you are looking to buy whatsapp, saying you cannot merge the data, and you did. Emily they did to say it would not have changed approval of the deal, so i wonder if it is more of a slap on the wrist. Eu has taken an aggressive stance towards these technology companies. Is the law the best way to handle big issues like hate speech and privacy . Such a big question. I think and formed lawenforcement would be very it official in the era of the internet. But we have to be careful given the degree to which these companies are defining the inure economy and beloved, many respects, by the citizens of every country. If they get impaired, the citizens are not going to be happy, which is why governments want to show that they are concerned about privacy. When profits this year will be somewhere in the vicinity of 12 billion for facebook, it will not hurt them to badly. Caroline is right, this could very well be the beginning of an by 1000 cuts as governments feel they have to show that they recognize the weight these companies have acquired in society, and they feel like they have to do something. But i am not sure governments generally know what to do, because they do not understand how these systems work and their re are not good alternatives. Caroline i am fascinated by eur opinion as to what the is doing about some of these tech giants. As you say, they are such giant companies. Applesillion issued in direction. And google with three investigations. Does the tech immunity in the u. S. See this as heavyhanded from the European Union or think game on . Definitely it is seen in the u. S. By me and the industry is quite heavyhanded. But there is a flip side. In my opinion, at least in the eu we have had a consistent pattern for the last couple years of the government, the eu government and its many tech savvy areas, trying to understand like i said before, the problem is these businesses have a weight know companies have ever had. They have numbers of clients and customers that no company has ever had on the global scale. That iseal with problematic. In the u. S. , we have had an incredibly laissezfaire avenue. Fining them think for privacy things will accomplish anything. Hatcher d kirk david kirkpatrick, youre sticking with me. Caroline hyde, thank you for that report from london. Sticking with facebook, the company went public five years 2012. Day, going back to investors were doubting if facebook and make money, especially on mobile. Mark zuckerberg was could decide criticized for buying instagram for 1 billion. Start,as that rocky trading below the ipo price for the first 14 months as a Public Company. We know how it has turned out. Facebook is now one of the largest Tech Companies with a market cap of 425 billion. Shares have jumped more than 280 since may 2012. Coming up, alibaba shares fell after the chinese ecommerce giants quarterly profits missed estimates. Ceoill discuss how the plans to boost revenue, coming up. This is bloomberg. Alisa you are watching Bloomberg Technology. A check of first word news. Iran strike back against st. The u. S. Sanctions opposed with sanctions of its own, penalizing seven entities and two individuals. Iran votes on a new president tomorrow. The incumbent moderate helped or destroyed the nuclear deal with world powers. France convened its cabinet for the first time, a calibrated theyll its 22 figures from the left and right. There are concerns president macrons office wants to control the press. Some reporters set officials called the organizations to try to designate journalists to cover the visit to somalia tomorrow. In the u. K. , Prime Minister theresa may committed her conservative party to a hard right fit. She promises british voters she will deliver a clean break from the eu and warns again that no deal is better than a bad one. U. S. Health and Human Services secretary tom price visited liberia. The west african country where 4800 killed more than people, touring a community hit hard by the virus in 2014, praising library for its remarkable cooperation on health care issues. Russias foreign minister laughed off reports suggesting President Trump shared sensitive intelligence with him. He says he did not understand what the secret was since the u. S. Revealed the potential for a laptop terror attack when it banned them on airlines from some mideast countries. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti, and this is bloomberg. Just after 5 30 p. M. In washington, already 7 30 friday morning in sydney. Look at theas a markets. A little bit of a comeback today in the u. S. Good morning to you. Paul yes, we might see some of that flow through to australia. Futures off just a shade. Fairfax media had a good day yesterday against a falling market, up 6. 5 , this on news that a bidding war for the newspaper giant seems to be emerging. A bid around 1. 20 per share. Futures looking positive, and it may have cracked 20,000 points on thursday were not for the drama around the donald trump presidency. Other things to watch for. China earnings, First Quarter gdp out of malaysia. More from Bloomberg Technology , next. Fallinghares of alibaba despite strong quarterly Revenue Growth and plans for a 6 billion share buyback. Investors focused on their quarterly profit, which missed estimates due to a large tax bill and investments in Cloud Computing and digital entertainment. Joining us from new york is selina wang, our Bloomberg News reporter. Start with what surprised investors the most. Huge drop inw a the share price largely because of the earningspershare miss. A big reason for that was because of a big tax hit, the effective tax rate went up quite significantly. The lossesared back in the share price. I do not think the concerns over this tax hike or two serious. It was because of an investment and a tax break expired. An area of potential concern is pressure on the margins. The core ecommerce business is still growing quickly, but they are rapidly expanding into areas like cloud and entertainment, putting pressures on margins. There was a lot of hope and a lot of bright spots in terms of revenue coret ecommerce retail numbers, showing they are able to squeeze more dollars from these brands by getting that are content and targeting users better. Emily what kind of progress are we seeing in these new areas like loud and media . See triple digit growth in these areas and also very large losses. In the cloud business, there were some losses even though investors were hoping for breakeven. Is there isreason strong competition in the cloudfrom amazon web services, from 10 cent. They cut prices to gain market share. The entertainment business is a cutthroat space. 10 cent has been acquiring content, as has baidu. It is a hot market right now, and hopefully prices will come down over time as this market starts to neutralize, but theyre having to spend rapidly for content. Emily what are the macro drivers helping . Elina alibaba is able to benefit from the growing chinese class. Chinese consumption has stayed very strong. Alibaba has been able to capitalize on the rural population, which is still a very untapped part of the chinese market. In rural areas, there is not get access to Offline Retail, so Online Retail is an important pass way to get a lot of goods and services that were not available before. Alibaba has made Big Investments and Offline Retail and that shift to mobile, trying to bridge the difference between online and Offline Retail. Emily selina wang, things for that update. I want to focus on the broader investing climate in china. Capital, jennygv lee has helped put the firm on the map in china, investing in companies. While climbing the ranks as one of the most recognized investors in the world, she is based in a but is in San Francisco this week. We got to speak about what has changed in china over her long career. I have been in china for 12 years now. For the last 16 years, since 2001. The significant change is the quality of entrepreneurs. 16 years ago, it was a firsttime entrepreneur. Ore sophisticated now. And the internet market is a lot bigger and more mature, and there is a larger user base. Emily you launched the china operations in 2005, and the landscape has changed dramatically. China changes every day, let alone every year. What has surprised you most . Yeah, i think the size of the market has always been the most interesting aspect of china. It is not just a tier one city. Threealso tier two and where people are talking about innovation, saying we do not have to work for the government now. The entrepreneurial spirit is something we have seen change over the last 15 years. Emily there are several phases of technological change when it comes to china, and you can point to alibaba and baidu and mobile. What is the next big technological shift that will happen in china . It is something i have been spending a lot of time on. It is one where were looking at Car Technology technology, new products, changing the vertical space. It is exciting. I have been looking at cool products and services. Emily you also look at something called beyond silicon in terms of ai. Areas,e are three big the first one about his petition. Anyone the first one is about transportation. There is still a lot of room for change with transportation in china, whether it is a land transportation or sea transportation. Were looking at the ecosystem around a taunus driving. Autonomous driving. The all girl them and Software Part comes in the algorithm and Software Part comes in. And there is the area of robotics automation, and were looking at home robotics, talking about industrial, using robotics for industries. , there is cool area this robot that flies. Runs intos Technology Regulatory issues in the united states. What is that landscape like in china . The government is supportive in this area. They outline specific areas, areas that have been highlighted where the government will invest and encourage development of the industry by promoting r d, giving grants thomas supporting the schools to educate more students in this area. In the Machine Learning and ai area, the third big area coming up. They will spend over 15 billion in the next two years in this area. I think government is supportive in terms of policies and tangible dollars to promote the industry. Emily u. S. Tech have any sub consistently had problems entering china. Facebook and twitter still shut down. Google is out. Airbnb is trying. Will airbnb have any success . At the end of the day, if you have a good service, but that service has to be vocalized for the local consumer. Then i think they will be successful. Emily so that is why facebook i mean, they were in chinese. Being an chinese is not enough. It is the behavior and consumer interaction. It is the baseline that the Chinese Consumer when measure any competing product with, scioscia kid pete so to compete and china, you have to be able to address the local consumer needs. Emily do you think facebook will ever be unblocked in china or will google get back in . If they do, they need to come to the market with a new product, something very different. Emily that was jenny lee from ggv. Kkr has been investing in Tech Startups for decades but has stepped up its game. We will confirm explore where the firm can make a splash, next. Check out tv. You can watch as live and go back to interviews, send messages, as questions, play along with the charts on air. It is for bloomberg subscribers only. This is bloomberg. Emily honeywell is starting a 100 Million Dollar venture fund for a technology comedy, and the opposite will be located at ground zero for Silicon Valley venture capital. Honeywell plans to take stakes and 50 to 70 startups. Kkr is also launching a new fund, putting more than 700 million to work in the fields of tech, media, and telecommunication. Here to discuss the fund and potential deals is our ipo reporter, who is with the kkr Growth Equity director for tech, media, and telecom in new york. Thehen you think about investment strategy, i compare that to venture capital, which is not an is is early thinking about the exits like a private equity fund would. With this new Growth Equity fund , what are you all thinking about that is different given your focus on the exit . A great question. One of the things that is interesting now is companies are staying private a lot longer than they have historically. If you look back, companies tend to stay private for six or seven years, and to they that number is 11 years and today the number is 11 years. They need a different type of investor to guide them through the process. What we have built up as a firm can really help these Companies Get to a size and skill of maturity where they can either become a viable ipo candidate or become a valuable asset for a strategical player. Lyft is the smaller of the two u. S. Based rideshare companies. Why not uber . Great question. Lyft is a business we have known for a long time. We respect john and logan, the two founders, incredibly. They have an amazing team and have built a great company. Every time we checked in with them, we were impressed with the progress they made, but there was something that kept is from investing, like regulatory risks are questions about ridesharing being adopted on a mass basis. Later, questions around candidates and cash burn. 2016john called us in late and said they were contemplating a capital raise, because we built a relationship and knew the company so well, we knew what to look for. We liked what we saw. Think of bunnies like uber and error do you uber andpanies like airbnb are making a mistake by waiting so long to go public . Snap came out quickly and seemed to have gone fine. Should the other Companies Think about going through the door . Great question. It is public specific. Being a Public Company exposes you to the market overall and helps you become disciplined and understand where you need to focus. One of the things about being private is you can be a little bit more loose and some of the ways that you look at your business. You may not get feedback directly on how the business is performing. On the public market, you get feedback every single day and how you are doing. They can be valuable for the right company, that type of feedback. Millionave this 700 plus of new dry powder here. Where are you looking within the tech space to put that to work . Thematic to be very and how we invest. Our team focused on a handful of areas for investments come including things run enterprise. T. Tware, cybersecurity, i automation and application development. We are spending a lot of time on Digital Media and then consumer internet, consumer marketplaces. Lyft is it an example of that. Kkr has a great team and we have seen them help take up committees. Do we see lyft publicly traded one day . We have different maturity levels of any portfolio. When their candidates and can think about a public offering, having a markets team with an alignment of interest with the company is a valuable resource. Lyft is at an interesting stage where it can start contemplating the advantages to being in the public market, both for the company and for the industry overall. Ipo one we see a lyft day with the help of kkr markets. With the kkras director. Coming up, the vc trying to put chicago on the tech map. This is bloomberg. Emily walmart gained momentum in its fight against amazon, reporting firstquarter results on thursday. Online sales growing at the fastest clip in at least five years. The ecommerce giant saw gross merchandise volume soaring in the First Quarter. Investors cheered the news, shares of walmart climbing to the highest level in nearly two years and the session. We took a deep dive into the tech scene in boston, massachusetts, and now we are focusing on chicago. We spoke with a founder and managing runner of modern ventures, which is based in the city and recently closed on a 33 million earlystage venture fund. Companies inn tech sectors like real estate, home service markets. We discussed how the tech landscape looks in chicago and how it is different from Silicon Valley. The tech scene has picked up in a lot of ways over a number of years. Community here, a lot of great Tech Startups around here. As an investor, if you are willing to go outside of Silicon Valley and willing to go outside of the coast, you can find some really good deals. It is a great place to start a business, because it is about onethird of the cost of living in chicago than some of the other cities, new york and San Francisco. Meanwhile, great talent and a good vc community. For moderne, we love investing in chicago companies, but we have investments across the country. What we are really unique on is some of the sector focus that we have. Companiesn technology that are at the intersection of real estate, finance, insurance, and home services. We look at Companies Often outside of those industries and bring them inside the industry. While we love investing in chicago companies, we go all over. One of the things that is unique about us is that as a venture firm, were focused on helping to bring customers to our companies. Probably no other firm like that. We have created a network of about 400 is so executives within these industries that we understandeople who that technology and innovation is something they need to focus on to create their own competitive advantages. There is a fund called the moderne passport that creates a bridge, an Industry Immersion Program to connect those companies with executives. Valleywhat does silicon have to learn from chicago . There is plenty of Interesting Companies that exist. Coming from the focus that we come from, more traditional industries, looking at technologies disrupting them, you can look at things like the smart home example that i gave. If you are starting to look at how that affects insurance, being smart about data, you can start to have Companies Like hippeau insurance, companies that are changing how a homeowner can interact and prices can come down. You can get insurance in minutes, not hours. , the things that Silicon Valley has to from chicago is that there are plenty of other companies out there. What i said earlier is that when you come down to fundamentals, thinking about how a company is approaching these different industries, there is a lot outside of Silicon Valley that is doing really well. Founder of is moderne ventures from chicago. Saysd on tmobile, the cfo their most logical partner for a tie up is sprint. He spoke in new york sing both companies could more cheaply ploy airwaves in a future 5g network to better compete. Tmobile is gearing up for consolidation and figures to be a key player. That does it for this edition of Bloomberg Technology. On friday show, and member of elevation partners. And where Live Streaming on twitter. 5 00 p. M. Ut weekdays in new york, 2 00 p. M. In San Francisco. This is bloomberg. From our studios in new york city, this is charlie rose. Than a week after the firing of james comey, the white house careened into further damage control today following reporting that is event trump comey to end an investigation into Michael Flynns ties to russia. Meanwhile, the president faces increasing questions about classified information he shared with russian diplomat last week in the oval office