Years. The cavaliers won the seventh game after falling 31 against the golden state warriors, the first time that has ever been done in nba history. Emily welcome to bloomberg west. Acebook holds muchanticipated shareholder meeting. India. He bumpy road to there could be an opening for the tech giant in asia. A countdown to the biggest deal a history. Dell continues to trim the fat. Facebook holders have approved the creation of a third class of shares to give Mark Zuckerberg the controlling share of the company for the for seeable future. Future. Eable the board was approved, including peter thiel. Not all shareholders are pleased. She expressed opposition and said that it would be implausible for outside shareholders to have input on the shareholder decisions and we are concerned about the governance risks. Research the senior analyst. I will start with you, since you are at the meeting today. Where was the action . Arounde was excitement the proposal and everybody knew it would pass. Manyomments were some that feel strongly about and zuckerberg has majority control and he can build this. Even down the line, if he gives this a way to charitable causes and he diversifies, he will still maintain control of the company and that is how it would always be. Knew anyone who bought in that one share was one vote. Investors may never have an opportunity to impact the facebook business decisions. Is there a point . Thenvestors will not get opportunity to have governance over facebook, unless Mark Zuckerberg did that up. Gives that up. Is young and has established himself as a visionary, doing an incredible job. A majority of investors are ok with this, because he has been a responsible leader and the expectations are that he will continue to be. Of how he ceases ownership going down, giving away 40 billion to charity. He has good motives for putting this in place. To ask forakes sense this, as long as facebook is doing well and they are beating earnings again and again. Mark announced he would ask for this and there were some who said there are some risks. Do you see risks down the line . What if facebook starts to not do so well . There are risks and you need to give zuckerberg credit. Obviously, people can make mistakes and the trends can be missed. I dont forsee that. That is a risk. There is a mechanism to get some change in the leadership. I think it is unlikely that it ends up being a problem. But, that is a risk. Asked if Mark Zuckerberg would leave facebook to pursue the philanthropic efforts. He said he would stay involved and the thing to note about the structure is that it is only if zuckerberg maintains the leadership. Decides to leave and do philanthropic initiatives fulltime, this voting structure is kaput. Emily there was a question about china. Lets take a listen to what she had to say. We are having trouble with the soundbite. She said the mission was to connect everyone in the Chinese Market and to see what happens. Is the Facebook Status in china going to change . I dont think so. I think it is unlikely. Values there are core that the current government of china will not support and it is hard to operate in a world that by theated ib government. They may try to have changes and be advocates for change. We are not holding our breath for anything take in china anything big in china. Thank you so much. Apple is closer to Opening Doors in india. They are still reeling from a setback in china. Bezos blasts beyond. Details of the weekend launch. Emily this is bloomberg west. Tim cook is holding a fundraiser next week for paul ryan. This is according to republican aides. Some will go to the Congressional Committee to benefit other candidates. Boostok looks to establishment republican. He will not sponsor the Convention Next month. A number of companies have scaled back or dropped their support of the convention. The apple asia ambitions are being put to the test. The government clears away to open up shop with foreign in china, apple is reeling from a setback. Of techging editor coverage is joining us now from new york. You. , i will start with how big are the changes in india for apple . It is a step a step in the right direction for apple. There are local sourcing rules 30 ofquire you to get your inputs from a country to open your own retail store. Apple has been trying to get around these. Was that theeard government would hold apple responsible for meeting local sourcing rules to open its own retail sources. , india has overhauled a bunch of regulations to get more foreign investment. They think there will be a grace period for apple. There could be a threeyear g up retaild to open stores. Emily you said there were barriers to india being bigger. The barriers removed . Do you see some of the barriers removed . At the headlines and there are more people in india in the next 10 years than china. At quick glance, the opportunities are parallel. Person in india is 1 5 of china. News does make it easier for apple to open up the stores and to build brands. There are still economic hurdles that they will need to get over to capitalize on that opportunity. Emily we know that tim cook visited india recently. The rules finally being relaxed now and what took so long . They want to show themselves as being more open to business and it is not just about apple. The smart phone market is the fastestgrowing in the world and there will be many more phones sold their, than in china, for example. Retail is a critical pitch to consumers and they would like to open up those Retail Stores as flagships, so that the people can see what they look like. They are a small player in india, for the exact reasons laid out. They only have 2 of the market, because their phones are priced higher than what people typically pay. There is a challenge on the price side. There is also an opportunity. Make of thedo you ruling that apple must stop selling the iphone 6 and iphone . S apple has appealed this how serious appealed this. How serious will this be . By this time by the time this plays out, they will be on the iphone seven. Iphone 7. For the investors that i talked to, they are less concerned about the nearterm impact and they want to feel better about china and apple working together. I think that the huge opportunity is in china and you have to deal with the bumps in the roads. Do you see this ruling as being politically motivated . They are getting comfortable about exercising their ip rights and samsunguawei with patent violations. Lawsuiteard about a against apple in beijing. It is exceptional to see these companies exerting the patent rights in a way that we have not seen them do before. The government, in this particular case, is trying to make a judgment about the facts in front of them and the question is, will this have broader repercussions . Beijing, thein iphones are on sale and apple has appealed this ruling and they will continue to be on sale , until the ruling is decided. Emily all right. The managing editor for technology, thank you for joining us. Thank you for stopping by today. Speaking of the smartphone wars in asia, a handset maker in the is advertising bigtime here. Finals, ched the nba we asked how they plan to set themselves apart from huawei. This is designed in california and we have local calln centers, local centers, distribution, sales, and marketing. We are very close to our customers. Where do you see the growth . In china, the smart phone market has come to a halt. Will that rebound . What will kickstart that. There is a lot of competition believe that zte will rebound in china. Te is one of the first handsets enabled for the google platform. Parts of things in the future. Flagshipamed our because we believe the vision in future will be the smartphone is the center of everything. The manye part of things you could do with the smartphone and the connections around you. Emily apple is working on better ai and voice features. What does that mean . In 2007, steve jobs change the industry. He was able to get the computers to where they want in a touch. Accessth the broadband coming, we are going to smart 2. 0. We will have Voice Control as an important factor. In 2014,er of fact, [indiscernible] we did a lot of effort in that to create a Healthy System and we get a lot of studies. Prefer ane users function. We have found that 41 of chinese customers like smartphone with a Voice Control. Highend brand and quality. Emily do you make anything beside smartphones . In the villages in china, we gradually grew to worldwide. We have infrastructure behind the smartphone for the wireless and broadband and price solutions. We have many devices. Would have the smartphone and the smart projectors and the connected devices. Our conversation with zte s u. S. Ceo. Coming up, the venture in china. The details of the local production plan is next. Emily turning to tesla. The musk announced that company was shopping for a chinese production partner. Bloomberg reports that shanghai is the first in line for the proposed base. Ouring us now for more is managing editor for tech coverage in asia. What do we know about the partnership . To be clear, this was not announced i either company, at this point. Familiar, they said that, among the cities competing, shanghai is the number one contender. That is not a big surprise. Zone is a free economic that would be good for tesla. There is motivation to build a plant in china avoid the levees that you would get, trying to build outside of the cou ntry. Emily this deal, is it a big deal . It would be. There is speculation about what the percentage of preorders from china are. For tesla to have a second factory or a Second Assembly plant would be a big deal. Emily tell us more about the company that tesla will be working with. It is not a particularly high profile company, at this point. Are closelike there ties to the government and they would help facilitate the production, if teflon decided to move ahead. Andagreement is nonbinding it sounds like there are negotiations to get through and this is the direction that they are heading. Why is it important for the Production Cut in china. You haveexpensive and to ship to china. It is a lot of travel time and they do not like to have to wait. Have they, they ability to make the facilities elsewhere. I think this is a steady relationship and it has not been a huge market for them, historically. They are offering the electric vehicle to help with some of the pollution problems in the country and there are domestic competitors who would compete with their own electric vehicles. I think that tesla has an enormous opportunity. Emily talk to me about the domestic competition. We have spoken with a chinese electric car company that has some basis in the United States. How formidable are the competitors and who are they . It is not clear. There is one that has plans for the electric vehicle and they. Re behind tesla you will see competition. There are local competitors who have set up joint ventures with western manufacturing partners and there are some domestic partners that are emerging strong. Emily interesting. What will you be watching . You see the center of power in beijing and shanghai is the economic center. And a lot of tesla customers are wealthy customers in the southern part of the country. What are they building . Is this a second factory . Emily we will keep following this. Thanks for stopping by. Up, more deals out of Silicon Valley and we will take you through the latest dell sales as they run up on the merger. Stay tuned. Mark c. im mark crumpton. You are watching bloomberg west. Moscovici pierre says a vote by the u. K. To leave he day after be, t would not be a good day if there were a grexit, neither for the u. K. Or the eu. U. S. Defense secretary Ash Carter Says the Islamic State is relentless in its efforts to plot or inspire attacks on americans, with a strike on u. S. Soil a major objective. Secretary carter said the orlando, florida, mass shooting is a reminder that the militant group not only terrorizes the populations where it launched in iraq and syria, but it also wants to spread its ideology. The fbi has arrested three highranking new York City Police officers in a bribery corruption investigation. Another suspect was also arrested. Today, we alleged two separate criminal schemes involving the officers who were sworn to uphold the rule of law. Mark c. a businessman who contributed to mayor bill de blasio has already pleaded guilty. United nations says more than 65 nationsunited says more than 65 Million People were displaced last year, a postwar record. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. From bloomberg world headquarters, im mark crumpton. Its just after 6 30 p. M. In new york. My colleague, paul allen, has a look at the markets. Good morning. Lead from wall street not leading into markets in new zealand. Currently looking pretty flat although we are expecting some gains on the nikkei and the a sx when they open the asx when they open in just over an hour. The minutes will be out from the bank of japan and the reserve bank of australia. The reserve bank of australia kept the cash rate at 1. 75 as expected at the last meeting. We are on language watch. Many economists believe there is another cut in store potentially in july. The aussie dollar has been gaining well, particularly yesterday, after concerns of the possible brexit began to ease. The feeling is the aussie could increase even more if the remain camp wins. Im paul allen for bloomberg tv in sydney, australia. Moore deal activity in tech more deal activity in tech. On monday, twitter Ceo Jack Dorsey explained he was buying a company so that twitter can continue to be the best place to see whats happening and why it matters. This move comes as competitors have been boasting rapid growth in video consumption on their platforms. Twitter shares rose 1. 9 on the news but are down 30. 9 this year. Dell looking to buy out Francisco Partners management as well as the newly established ever coast evergreen coast capital. The sale is part of dell its cyberout Security Unit in april in a 100 million ipo, one of the only tech listings of the year. A month before that, they sold the business to japan to a company in japan. Some analysts say this could trigger a flurry of deal activity in the tech sector. Thank you so much for joining us. Involved in this. You see private equity getting more involved in this . Certainly. We saw Equity Partners acquired you are seeing a flurry of these deals happening with both Large Companies and private equity investors. Its a reflection of a couple things. One is that prices are stabilizing a little bit. Thats great. There is a fair amount of cash floating around with the Large Companies and the private equity investors. Is aoint that people miss must if you look at the end customers, that people miss is, if you look at the end customers, there is a market for Security Products and count products. Thats going up. We heard last week that there is a lot more m a in the pipeline, more nearterm than weve seen in the last four years. Would you agree . Zia i would agree. The ipo market is softening a little bit. Theres a lot of money that has gone into these players. You have pentup demand. You talked about the twitter deal. You have Machine Learning and artificial intelligence, a very big deal at this point. You have the internet of things. You have the cloud players and security. All of that is being driven by these end customers that are demanding these products in a stronger way to never. Way than ever. Emily who are the buyers going to be . Who is going to get bought . Zia you saw the linkedin announcement. There may be others emily like twitter . Zia potentially, and others. You have security companies. You may have a spike on the Security Side as well. And the buyers will be the big tech companies. But i wouldnt be surprised if an Industrial Company or a Retail Company or a nontraditional buyer comes in. These companies are strengthening their software capability. That may surprise us at some point. Emily weve been talking a little bit about microsoft buying linkedin. I want to bring in our bloomberg editor at large, cory johnson, who has been taking a look at whether linkedin may bring about to microsofts earnings sooner than forecast. Cory using the bloomberg we can drill down quickly into this by getting into the terminal a little bit. We get microsoft. You can see the acquisition of linkedin there. Drilling down a little lower into linkedin, you can see the detail, the dates of the deal, when it was effective, when it was announced. We want to get into the numbers. The mrgc function shows us how the merger would work. Assuming they are going to use all debt, that cost of debt, assumed to be 3. 147 , thats a trailing cost of debt for them. Right now, Interest Rates are so unusually low that they have an ability to borrow at lower cost. Ans is what you want to keep eye on. It is expected to be diluted. If we use the current cost of capital, not the average cost of capital, but the current cost, that is 2. 375 . All of a sudden, we see this goes from being dilutive in the first year and second year to being accretive. That means the deal could add to earnings for microsoft in its second year once the cost of capital is lowered to the realistic number. Thats one way for microsoft to keep their numbers low and let microsoft beat expectations, by lowering expectations. Its probably not realistic. Microsoft is getting a better deal than they may be letting on. Emily whats your reaction to that . Zia im not going to get into the economics. That sounds like a great analysis. Linkedin is part of a strong professional network. Youve got the business capabilities and the sophomore Platform Software platform. Those two things seem to fit together. And you see such other combinations, enterprise and users will become an important combination. Emily was this a good bye form buy for microsoft . Will they see results sooner than other deals . Cory microsofts history says they will screw it up. Thats the ultimate question can they make this merger work . Can they make linkedin what it has been, which is a company that has been successful, or are they going to screw it up like so many other acquisitions, nokia, and Technology Ad technology . What do they do with this thing . Satyagen at ella is nadellas microsoft any better at acquisitions . Emily sometimes m a is a hail mary. Sometimes you are buying something really valuable. How much of the m a that we are going to see is going to be new companies that are truly adding value and new companies that are just trying to figure out how to exit . Zia i think the magic on tware m a happens you have to hold onto the people and the technology. There are some companies that are better at it than others. Different deals have different dynamics. I understand linkedin, from public reports, will remain as an independent company with the support of microsoft. Cory if you believe that. That stretches credibility. Maybe it will. Zia companies, if you are spending that much money, you have to Pay Attention to the postmerger integration and the dynamics of the team that is there, and i think these companies will do that. Emily do you think of brexit would impact tech m a, and, if so, how . Zia its too early to tell. You have a market where there is an increasing amount of startup activity happening. Those Companies May have difficulty expanding into europe if some of those rules and regulations change that may impact valuation, but i think its too early to tell. Emily zia, thank you so much for joining us. Cory johnson, our editor at large, thank you very much for that deep dive as well. Another story were watching, well marked hoping to Walmart Business reshape its in china. These companies will link up supply chain. Walmart has struggled in china. Stressed thathas the Company Needs to succeed in china, where it has thought is thought 25 of the worlds retail growth will come in the next five years. 13th exchange. Emily after months of delays, ies group has approved have gained approval to be the 13th u. S. Stock exchange. The newly minted Investors Exchange hopes to st eal a significant chunk of business from its newfound competitors, the nyse, the nasdaq, and earlier, we spoke exclusively with the ceo of iex and asked why he applied become an exchange in the first place. Part of it is scale. There are limits to how big dark pools can grow. We no longer have a limit to how large we can grow. The other parties competing at the absolute highest level. For us, too, we are focused on serving multiple constituents, so we look at, right now, i think our best relationships are with the broke it the brokers and Asset Managers, but there have been a number of public Trading Companies who have expressed interest in working with iex. Becoming an exchange is the next step of us doing that. Erik you account for about 2 of all equity trading in the United States right now. If this is successful, where that or that number be in a year . Its hard to predict. We dont offer the same incentives. We are not paying people to send us orders. We have earn those orders a different way. Part of it is about people understanding the execution quality on iex. This comment process has been very helpful. A lot of large Asset Managers have expressed better execution quality on iex. I think it takes time for that message to sink in. It will take some time, but we are pretty confident we can become one of the largest markets. Erik your critics are vocal, powerful, and deeppocketed. How do you expect them to respond now . Brad i think weve seen a lot of the strategy, and the strategy was to aggressively oppose. We are very thankful for the support we got from investors publicly, because i think that forced the opposition to be very public about why they didnt support iex, despite is being backed by some of the larger investors. So, i think that part of it is about misinformation. That read a lot of things simply werent true. We expect that to continue. The good news is that it did not influence the outcome, which is iex getting approval to become an exchange. Hopefully in a way, the facts prevailed at the end of the day. Erik nasdaq and potentially others that i may not be aware of how threatened to file a lawsuit challenging this decision by the sec sec. Is that something you think will happen . Are you preparing . Brad from our standpoint, its kind of ironic that nasdaq is a company that actively pitches the fact that they are a technology company, they pitch disruptors in Silicon Valley. This is their response to facing disruption themselves, a lawsuit. We would be surprised if it took that half. At the end of the day that path. Erik you think it is an empty threat, in other words . Brad i think its an interesting response. Emily our colleague Erik Schatzker with iex c. E. O. Brad katsuyama. Spaceezos private Company Launched a rocket into suborbital space and landed it in the span of eight minutes. The fourth successful landing. These tests have all been unmanned. Rigin is hoping to carry tourists into suborbital space by this could one day cut the cost of each launch by millions of dollars. Staying with space, a Russian Court is russian soyuz back rightt back three astronauts, all in good health after 186 days in space. Peake has become an International Celebrity as the first british astronaut to visit the iss. Coming up, the faa is gearing up to release new regulations for commercial drones. Will the new rules encourage innovation . We will discuss. Emily one story we are geeking out about, china dominates the latest ranking of the worlds fastest supercomputers. For the seventh time in a row, china has the fastest machine. For the first time, it uses a chinesemade chip, instead of one made by intel. Evidence that the Technology Gap between china and the u. S. Is closing. The faa is expected to issue regulations for commercial drones as early as this week. Reports of the government summary have been posted online. The rules are expected to restrict a pilots age, require pilots to speak right and understand english, and place a maximum cap on altitude. These rules will spark broader demands for even more restrictions. Thank you so much for joining us. We have seen this leaked report of what the government is supposed to approve. Whats your first reaction to what youve seen so far . I think its very positive. The industry has really been excited about this. This is something we have been building for since 2014. What we saw leaked was similar to what was proposed a year ago, when the faa part put out some of these rules for comment. It is similar to what we were expecting, as far as the operators. It is pretty well in line with what the industry has been expecting. Emily do these rules go far enough . Jesse i think so. You are flying a small drone within a somewhat contained environment. This ensures that operators are safe, that they understand the rules of the road. There are ways to find out exactly where they are flying, who is flying what aircraft. There is a trail to go back and understand, if there is an issue, who is responsible. Emily do you think the restriction should be loosened . Are there other changes you would like to see, like flying at night, for example . Jesse beyond line of sight is one that is critical for some companies, to fly long range over there powerlines their powerlines. He does not make sense to stop every mile or two it does not make sense to stop every mile or two to catch up with the aircraft. Emily you guys have been doing most of your testing abroad, right . Jesse weve been working commercially here in the United States. You can fly under a section 333 exemption, which lets you do similar types of operations. We work with a lot of faa designated test sites. That lets us fly in neighborhoods and look at rooftops, those types of things. We were able to do quite a bit in the United States. Emily how will these new rules change your business at all . Jesse we are still going to be able to do a lot of the work we are doing. Its going to make it easier for our customers to operate on their own. It is a barrier to entry for a Large Corporation that may have been waiting for some of these rules to come out. Now they can start operating. Its clear what the rules are. It is clear what they are going to have to do to get up and flying. Emily a couple weeks ago, i was out with my family. There was a drone hovering above us. No idea who was operating it. It was fine. It moved off. It came down just fine. A consumer, as a person out there in the environment, should i be worried about this . My kids are sitting under this drone, and i dont know whos controlling it, and i dont know if they actually have control. Jesse this is a Safe Technology that has been used by the model and hobby industry for decades. You are saying nothing could go wrong with the drone . What if the power shut off or the person got knocked over . Would that drone just safely land without hitting anyone . Jesse it depends on the type. A lot of the commercial types have things engineered into them to account for a variety of things that could go wrong. The faa now requires registration. There will be a Registration Number on the aircraft. If they are noncompliant with that, they could be subjected to enforcement actions. Emily what about accidents . Jesse there are a lot of things that come out in the case of r d. In the commercial industry, these are peoples livelihoods and industries at stake. When we put something out in front of a customer, it is critical to ensure that it is something that can be flown over over over and over again safely. It is paramount that things are safe. Emily thank you so much for joining us. Its time now to find out who is having the best day ever. Todays winner is disneys abc. Game seven of the nba finals was the mostwatched sporting event on abc and espn since 2006. It is the mostwatched nba finals matchup since the days of michael jordan. The Cleveland Cavaliers took home the title, beating the war warriors, much to the disappointment of people in my house. This is the first major sports title for cleveland since 1964, when the browns won the nfl championship. That doesnt. Dont miss our special coverage of brexit tomorrow. Announcer from our studios in new york city, this is charlie rose. Charlie we begin with the conflict in syria. Mid to high level state officials signed an internal memo protesting u. S. Policy in syria. It calls for targeted military strikes against the assad regime. It says that a strategy of diplomacy cannot proceed to secretary john kerry has advocated a more aggressive approach to syria. President obama has resisted wa