Officials are now looking into the worlds Biggest Social Network collecting information from its users. Teslas model 30 must ready to hit the road. Will this car in the perfecting the Auto Industry . Now to our lead. It was a global rally monday in equities. You do have to take into account low Trading Volume in the u. S. The trend is still clear with tech stocks failing to join this risk on mood. June sold the nasdaq and tech benchmark snap a sevenmonth winning streak. Is this a shortterm or longterm trend for tech. Lets ask our guests today. Wonderful to have you both with me. I want to start with james in new york. Doubt at a record today. Nasdaq is lower. Volatility is low. Im going to quickly show you a chart i have on the bloomberg, btv 859, volatility has continue to elevate itself within the stock market. James, what does this mean . I wher . Will we continue to see volatility . James it is interesting that tech is up 16 this year versus the Broader Group of 8 . This is a situation where replicating the performance in the second half looks difficult, but at the same time, you can break it down into smaller components, tech continues to be was in terms of historical highvalue. The times during bubbles is also lower. You can make a fundamental argument that the next move is up. Our clients continue to remain long and strong. I do think you have to think about the operating in this new paradigm of the digital world. With the antitrust risks and things of that nature and what is happening in europe. Are these Companies Getting too big . That does add another element of scrutiny. , from a Public Market analyst to a private investor, it is a good time to invest in the market when you see evaluations coming down . One thing that is always been the case with technology is you have markets insulated from the Public Markets. That is one Reason Companies like uber and the like have stayed private as long as they have. You can be insulated from what is happening in the Public Markets. At least from what i do, in the early stages of investing, and other seed stage investors, were largely insulated from what is happening. What we care about our him in a about our m a opportunities and how much cash these companies have to acquire Smaller Companies coming through the pipeline. Caroline does that bode well . Eileen yes it does. Look at how much cash outside of the United States for investors in london and europe, outside the United States. A lot of cash has not been repatriated yet that should be used for m a. Caroline james, what about the outlook and what isnt happening and what is coming out of the market is the hope for tax changes to be happening anytime soon . The hopes and believes that the new administration would bring in have been slow. Has that been affecting things . James absolutely. When you think about the regulatory progress we were had expected to see up to this point, it wouldve been a lot more than what we have seen. Yes, trump has signed 39 bills or something to that effect. But at the end of the day, the big agenda items have not passed , including health care and tax reform. He talked about the potential repatriation if that will happen, a lot of question marks, but it does open up the opportunity for a lot of m a. They could put the money to work. Will they be allowed to . I think we will learn a lot here from amazon whole foods as we ftc is goingow the to be approaching these megadeals and putting the cash to work. Caroline that is interesting. James is talking about u. S. Companies buying u. S. Companies. The competition issues that come in there, but if we are seeing money coming to europe, we saw Payment Service provider eating being bought out by a u. S. Private equity. Will that be affected in europe . Eileen the european regulators are taking a more active dan stance regardless of where companies are based. I dont think that will give us or Smaller Companies outside the United States any greater protection. I think we are seeing a lot more activity and productivity from regulators across the board. Sector choices at times like this when we have valuations potentially not spilling into the private market. What is hot for you . Has that changed in the 2017 period . Eileen what people are starting to avoid are capital intensive businesses where Customer Acquisition is very expensive, so ecommerce. There has been a slowdown in the very early stages for ecommerce finance businesses, and the ones financing have taken off and are in later stages. Youre seeing more dollars going into delivery companies. It is all a cycle. Now we are seeing money go into deeper tech, research and development, Artificial Intelligence, machine learning, even Autonomous Vehicles to the extent that there is underlying ip, which for a while we were not sing quite as much of. Caroline james, that is where the seed money is going and actually that is where a lot of the Big Companies that you analyze are focusing on at the moment as well. Ai. E, facebook, i know you cover facebook, and amazon is always deep within ai as well. Where are the Companies Like ebay . Where are your clients particularly worried about . James our clients are not that worried. The thing you have to think about is network effects, because as these Companies Get bigger, the services get better. The in user expenses get better and better. The bigger the company, the better it is for you and me in terms of the services. Just think about amazon. Caroline the regulators do not always think that though. James that is why i really focus on the regulatory angle. You look at europe, regulations there are about how do i promote competition . That might not align with the end user. In the u. S. It is all about the enduser. If this company gets bigger, that means better for me and you. I think the rules have to change. That is why i am so interested to see how the ftc reacts to amazon. Viewpoint, theur strengths continuing for facebook, apple, the u. S. Juggernauts because they might be putting money to work for the European Companies that we are seeing come through the ranks and starting to get m a . Eileen i broadly agree with what james is saying to the extent that these companies are trying to build their services, they are trying to improve enduser experience. That is a good thing. The regulator has a genuine interest in promoting regulation. They believe competing services , someone who can compete with amazon, will force it to offer better services. So it is intense, but it may not be practically true today, but that is the goal. To what youre saying, there are a couple things. We would like to see continued m a activity, but we would like to see these companies go all the way through and take it home and start to list and become behemoths on their own. We would like to expand the acronym a bit and build. One company was acquired by google early on, but it already had 2040 engineers. They are a leading Artificial Intelligence center in london and the world at the time. If we could see Something Like that continue to progress, i do think it is probably a better force for everybody. It probably does improve o. Rvices for all consumers to caroline we will be digging much more into the ipo landscape later on. You are both sticking with me i am pleased to say for the entire hour. Now a story we are watching. According to multiple reports, Technology Funds is in talks to acquire a stake in a u. K. Delivery start up. The investment would come as it launches a new funding round. That is less than a year after it raised 210 million pounds. That catapulted it to unicorn territory. It is thought to be valued at more than a billion dollars. The 93 billion Softbank Vision Fund has backers like apple, qualcomm, and Saudi Arabian sovereign wealth fund. Coming up, facebooks fine print may be next target for european regulators. What is next for u. S. Tech companies as the eu continues to put on the pressure . Bloomberg technology is Live Streaming on twitter. Check us out weekdays at 5 00 p. M. In new york. This is bloomberg. Caroline the parent of google says a European Commission antitrust fine will cut secondquarter profit by 2. 7 billion dollars. Alphabet cannot the top the fine from its taxes, so it will charge off the full net income. They were fined last week for using their market dominance and shopping results. Facebook could be the next target for european antitrust watchdogs. Germany is examining whether facebook takes advantage of its popularity by pushing users into agreeing to terms and conditions that they might not quite understand. Joining us for you new york, james, who covers facebook. Eileen from passion capital london. Alastair, lets pick up things with you. Facebook, germany looking into them saying they are more bullying when it comes to certain things. Alastair this takes the google charge from last week to a whole New Territory in europe. Privacy is a lot more important in europe, especially to regulators. There are a lot more rules and regulations in that region than in the u. S. , but this really combines antitrust and privacy in the one charge. Basically they are saying if you want to get on a social network, facebook is your only choice in the western world. So that dominance over data is basically forcing anyone who wants to do that to sign up to all of these terms and conditions. Caroline, james, here the debate commences. Sometimes scale and size is good for the consumer. Sometimes here it seems as though the german antitrust authorities are feeling it is a bit too pushy. This investigation was announced back in march. Does it mean anything to the company from your perspective . James at this point what is happening over there, i think anything can go right now. The biggest ever fine levied on google. Who is to say they wont crackdown on facebook . At the same time you are hearing her encourage other companies to sue google. Anything can happen with facebook as well. It is interesting to go after the privacy angle. , it isean, right now tough to say. It is a wildcard out there. Caroline eileen, when youre looking at it from here in london, this is a German Antitrust Authority looking at facebook. Yes, we had the European Commission looking at google and now saying, maybe it is time for others to start suing it. Does it need to . Does it affect facebook . The fines do not matter, but do they change their way of doing business . Eileen im not sure that the monetary values of these finds fines make a difference for the companies themselves, but the one goal of the regulator is to signal. It signals to the rest of the market that there is a watchdog, somebody that is paying attention, that theres somebody trying to preserve competition and trying to preserve user privacy and benefits for consumers. A lot of it is signaling, and a lot of it is perception. The numbers, whether it is 2 billion, 3 billion, 20 billion, what will really make a dent in for make a company care is arbitrary. The point is that the industry and the sector knows that Small Companies trying to come up, dont give up, dont think that you cant compete, dont think that there is not a level Playing Field or that it can be relevel even later. Caroline alastair, talk to us about how the tech giants are are interpreting the European Commission and the german antitrust authorities working on facebook at the moment. Do they understand that this is about increasing competition . Alastair they feel like they are being targeted. The facebook case in particular is a real in the u. S. , some people consider it to be a real overstretch, taking an antitrust argument, which understandably in europe is different, taking that and applying it to privacy specifically is quite a large leap. On the google side, there is an air of resignation with the company. They have been fighting this for about seven years. They do say they are considering an appeal. The comments they put out this time versus a year ago were a lot less combative. Ofi think there is an air resignation, but when it comes to more pure antitrust cases like the one about google shopping. Caroline james, i want to get your thought as someone there looking at potential value cases for these companies. You have followed the facebook antitrust investigation, does it make you worry about your price target for these companies . James last week we put a note out on google saying this is overreach. I agree with that, privacy even more so with facebook. I always joke around, saying if you dont like the privacy rules, dont accept them, but then you cant use the services. That is what we do here all the time. Ultimately, what i am most interested in is i will worry we n from theinactio United States. If we are in a position where we see a pattern of going after and trying to change the way these companies do business and there is no recourse for response from the United States government for that come at that point, i will start to caroline you think that the european regulators are completely overstepping the market here . You dont think there isnt any reason why they should be trying to level the sorts of accusations that facebook and google . James i think they are picking the wrong battles. You can make the case that all these companies have done something wrong at some point or another. I think the battles they are citing and what theyre trying to win with the vertical search, with google, google has done a lot worse when they scraped yelp content and used it as their own. That is a lot worse than it is what the eu regulators are going after. What i would like to see what the u. S. Responses, and based on that, it would affect my ratings and targets, but as of now, i agree with eileen, it is more a signal than anything else. Caroline always about picking your battles. Alistair, thank you for joining us from san francisco. As of course james, joining us in new york. And eileen partner at passion capital joining me in the , studio. Coming up, teslas model three will start production after it passed regulatory requirements ahead of schedule. Can the automaker keep up with its ambitious manufacturing plans through the year. This is bloomberg. Caroline spacex scraps its latest lunch. On sunday, lift off of the falcon nine rocket was killed with less than 10 seconds to go before blast off. The computer automatically stopped because something in the Guidance System was out of limits. The private Space Company has been ramping up its launch schedule. This wouldve been the third rocket the Company Launched in less than two weeks. From spacex to tesla, we are sticking with elon musk. He announced the highly anticipated model three will officially begin production on friday after passing requirements two weeks ahead of schedule. The beginning of the rapid ramp up, with tesla expected to make 500,000 vehicles in 2018 and one million in 2020 as it pushes into the mainstream. We are now joined by dana hull, a Bloomberg News reporter who covers tesla. First of all, talk to us about this announcement. How crucial is it . We knew model threes were meant to be rolling off by july, is this sooner than we thought . Dana slightly sooner. What elon musk said is that the very first vehicle should be rolling off the production line this friday, and that there will be a handover event on july 28 to the 30 customers. Good news for customers, investors, and fans eagerly awaiting details of what july would hold. Caroline im looking at the bloomberg chart. Quite amazing how much we continue to see a ramp up in Market Capitalization of tesla versus the likes of gm and ford who had their numbers out today for june sales. We are now pretty much at 57 billion in terms of Market Capitalization. Can they live up to this when a hefty ramp such up in production being built into this view . Dana it will be interesting. Tesla is supposed to release secondquarter sales today. That number could hit at any moment. I will be curious to see how their sales are. A lot of the Market Capital of tesla is based on the future of this company as it hits the mainstream and expands beyond cars to solar roofs and Energy Storage devices. And really makes good on its promise to accelerate the transition to sustainable energy. Caroline im going to focus in on this chart again. Lets look at this chart again. It is btv 6161. You will see the white line is how much higher we are starting to see teslas market cap, ford inm in yellow and blue. I want to get eileens take as an investor. Do you have the belief system to think this is a company that can achieve that . Eileen if i was investor, yes, absolutely, and i would be rejoicing. To me, this chart makes more sense to me than uber, which also surpassed the market cap of ford does not have any asset value. Ford sold close to 70 million vehicles last year. Uber does not own any vehicles and does not have any production, anything tangible in terms of assets. I can see where tesla, the future value of Energy Conservation and what we are going to see with efficiency, i can see that that makes sense. People like the design. People like the efficiency and the