Digital affairs. Fcc for greater access, the latest attempt to fight sanctions, but does that have legs . Our top story. Back to amazon. Bloomberg has learned investigators are looking into its massive Cloud Computing business. Sources say the agency has been asking Software Companies about practices around aws. The unit is one of the backbones of the internet and has a Cloud Computing market share of 50 . Rival microsoft is 16 . Anning us to discuss is analyst from rbc capital markets, and in washington, the person who helped to write the story. Regulatorsprised seem to be looking at almost every portion of amazons business . I think this is as surprise. Complaints about amazons Retail Business are well known. Independent sellers have been talking about ways they think the company is not treating them fairly on this platform, but complaints about age of u. S. Have been quieter, so the fact they have seized this as an area of concern is significant, especially because aws is such a large part of the overall business. Taylor respond to what naomi was saying, the concerns highlighted here. What about that Cloud Computing business . Is it still anticompetitive . Cloud computing is a multitrillion dollar business. I was at the conference that is still going on, and the ceo that aws is cloud penetration is still 3 . Is 97 , of the are huge. The market share he called out is something publicly released, that is infrastructure as a service market. But the overall market, it is still a several trillion dollar opportunity that aws is a small portion of. The attorneyaying assistant attorney general at the department of justice for antitrust at the conference, he said that being big is not bad, so big acting badly is bad, i will talk about it a little bit more, but that was a fascinating statement. That makes sense why they are looking at a of u. S. Taylor when you look at the cloud space from what i can hear on earnings calls, it seems like a competitive business. Trailing themsoft a but we hear it is a competitive business. Does that raise the bar . Absolutely. It is becoming increasingly competitive. We talk about the Third Quarter results where the growth rate decelerated, primarily because aws is seeing pressure from microsoft. A headil now has had start of seven years, but now that is an increasingly competitive market. About naomi, you talk how early interviews have gone on with clients, customers, competitors. What are investigators hoping to glean from those interviews . We dont know exactly the area of focus, but they will be looking at whether there are specific mark tip amazon is taking that could be deemed anticompetitive, whether amazon might be unfairly excluding its isals, whether amazon treating independent Software Service providers differently if they also use other cloud providers like microsoft or google. Those are the market practices the ftc will be looking into, and we will see if they find anything. How amazon sense on has been responding to this . Amazon has not publicly commented, but we do see him talking more publicly about their cloud business. They have shown no signs that they are worried about this at all. It seems to be at least publicly business as usual for amazon. This have anany of impact on the fundamentals of business . How are these headlines impacting earnings or the share price . Risk at thisust point is priced into amazon shares, which have pulled back here today compared to the overall market. Retail performance yeartodate, amazon has not done as well, and it is because it is the overhang from antitrust. Price,s of the stock there is an overhang on the stock, but the overall it isions, i dont think material to the overall business. Thank you both for joining us. Scrutiny,titrust senator warren is acting on a president ial Campaign Promise to check the power of big tech and other sectors. Her own big reviewed by bloomberg who restrict megamergers. Declined totative comment. To discuss the law she proposes, im going to bring in joshua from new york. This seems like a wideranging proposal. How much of this could be focused on big tex specifically . Was Elizabeth Warren talks about antitrust, she is using big tech as example number one. Has been critical of acquisitions facebook has made. She has big tech in mind with a bill like this. Taylor walk me through the proposals we are looking at. You highlight how it would expand antitrust law beyond what it is now. What is this approach . Is themain threat consumer welfare standard has been the underpinning of antitrust law for the last couple of decades. That says mergers will be assessed on whether or not they cause harm to consumers and higher prices or reduce quality of goods. Would add other factors into account, such as the effect on innovation, workers, and privacy, so it would be a significant expansion of how the government looks at large deals are other antitrust. Lot meanspanding the you have to go and change it. What are the odds this becomes law . This bill is early. A bill introduced in this form is not a sure thing. Once a got into congress, congress has not been passing anything of significance recently. If it was introduced at the beginning of an electionyear, its prospects would not seem great. Other highprofile names appear to want to go along with it in its early version . A representative who is leading the house judiciary into alsorust and tech issues seems to be involved in this. Obvious candidate to introduce new antitrust legislation. He said he wont do anything until that wraps up early 2020. Taylor the law was also looking no compete agreements. What could be the potential ripple effects if that were passed . There are provisions in this bill, it will be interesting to see if they stay in. There was the language about noncompete, no poaching, also to guarantee the rights of gi economy workers to organize. If those stayed in, that would significant. Oflor those are a bunch different issues thrown into one, is there one that appears to be the bigger issue, anticompetitive behavior or protecting workers rights . You look at antitrust legislation, the target is acquisitions made by the largest companies. This bill would pretty much prohibit them. This law would ban mergers if a company has annual revenue north of 40 billion, or two companies have a combined revenue. Basically this affects all the big Tech Companies. How much trouble are they in . Again, this is a proposal, but if this became law, that would preclude the Large Tech Companies from something they use as a way to get new services and grow. Taylor thank you for joining us. With aup, we sit down former Google Ventures partner, his new firm, and how he plans to bring diversity to Venture Capital. If you like bloomberg news, you can listen on the bloomberg gap, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor Venture Capital is coming to terms with its lack of diversity. A former Google Ventures partner founded his own firm with a mission to invest in early stage funds led by women in underrepresented minorities. It announced today it raised 42. 5 million for its debut fun. The ceo joins us now from new york. Congratulations. What are you using the money for . Thanks for having me. Invest use that money to in venture funds led by a woman or person of color, then invest directly in companies that will source from the portfolios where we made investments. Taylor what sectors do you like now . Enterprise and consumer. Vcs aly we go after little bit more towards enterprise. Taylor i want to talk about how you identify these opportunities. Often there is a great idea and a good leader. What matters to you more . Sure thee to make Market Opportunity can support the venture scale return. Ability to the execute, hire the right employees, have the vision, then raise the capital and execute against that. Taylor i want to talk about how you decide whether you invest money directly or go through a fund. Fundsk you have backed 19 so far, and other times you choose to go direct. How do you decide . We look for Venture Capital firms we feel will be the next franchises investing in the next companies coming out of the ecosystems globally. What we do is when we find those great Venture Capital firms, we make an investment in work to identify fantastic opportunities in their portfolio we would like to invest into direct lee. We also have a great group of others where they also make investments, so we continue to source deals for those firms through our network as well. , why doi have to ask you think Silicon Valley in particular has been so behind in coming to terms with diversity . It is a challenge that needs to be addressed. We feel our model is providing that leverage to increase the opportunity within the ecosystem for diversity and inclusion. Our thesis is women and people of color have a nontraditional path into the gy Venture Capital and end up with Different Networks and a lens to identify Market Opportunities where there is not a lot of data, as well as evaluate entrepreneurs differently. Taylor you mentioned nontraditional background or someone who does not look like a typical entrepreneur. How much in your interview process to look at somebodys background . Wed like to spend 10 hours with each of the principles we invest into, understand their judgment. Do they have the ability to exercise good judgment when an opportunity presents itself . Also, spend a lot of time understanding their network to source deals. Deals,y source those then can they add value to those companies in the portfolio after they have written a check. Taylor i want to look broadly at the market as someone who has capital to invest. I hear so much time that there is so much cash chasing too few opportunities, leading to heightened valuations. Where do you see us in terms of the scale of a bubble and overvaluation . Tell andhard to timetomarket. Great opportunities tend to present themselves across market acles, so we like to be in position to deploy capital across the spectrum whether the economy is up or down. Obviously in the market we are in right now, the pendulum has swung a little more in favor of the entrepreneur, but it might swing in the other direction and valuations might come down a bit, but we continue to see great opportunities present themselves no matter what the economy is doing. Innovation does not know what the stock market is doing. Taylor what matters to you more, strong Corporate Governance or a path of profitability . We like both. What were looking for on the front end is to make sure there is a venture scale opportunity to provide the type of return we need given the structure of our soel and the risk we incur our lps can have the performance theyre looking for in this asset class. It is important to invest into entrepreneurs who have integrity and want to assemble investors and Board Members who will provide them with the guidance of the Corporate Governance as they scale and look to exit or become a public company. Taylor quickly can you name one of your top picks for 2020 you are invested in . Children. Ike having you never want to say which is your favorite. One opportunity we do like is a Media Company focused on millennials of color in los angeles. We source to that deal from one of our Venture Capital firms in our network, and Google Ventures came on to fund that company. Another company i like is a company that is providing infrastructure for thesport space. For esports taylor esports is all the rage. Thank you. Up, what her traditional Food Retailers doing to overcome amazons hightech and increasing dominance . We will find out next. Bloombergs livestreaming on twitter. Be sure to follow our global breaking news network on twitter. This is bloomberg. Algorithms, robotic warehouses, amazon has become a threat to traditional grocers. Rushed to out innovate the ecommerce giant. Is our us to discuss guest in new york. What are other traditional retailers doing to keep up with amazon . A whole host of things. It is not easy. Grocery stores are traditionally riskaverse. Onyre not going to spend technologies unless they are proven, but because of the threat of amazon and other chains, Discount Chain stealing market share, they have to act now. They are investing in different technologies, everything from the instore robots at your local Grocery Store to stuff you dont see behind the scenes, small warehouses that pack online orders for shoppers. Has been the most quickly adopted technology . Is itashierless cashierless technologies . Every store we go to has self checkout, but that has glitches. The is working for them are shelf skimming robots. Every time you go to a store and cant find something you are looking for and it is out of t sale, sot is a los if theyre able to figure out what they are out of stock of quicker, if you have the robot doing it, those are sales you are quickly grabbing back and that translates to profits. That is what they are looking to. Taylor are they just trying to keep up with amazon or with the times . If i remember conversations you and i have had, target and walmart have been better in the grocery space. Are doingand walmart well. Other chains are doing well, but it is the traditional mainstream grocers that have struggled. It is the main street Grocery Stores that need to up their game. Walmart is everywhere. Theyre doing a great job in grocery. The traditional Grocery Stores need to up their game. Taylor how much is it costing them on the bottom line . They are not saying much yet. They are only in a couple of stores, so it is not causing him a lot of the yet, but if they want to deploy it at scale, it will cost them a lot of money. They have to make decisions, this or that. It will be tough decisions that determine the winners and losers going forward. Taylor you know the grocery business is already a lowmargin competitive business. Are they hoping the investments in the technology could boost those margins even by a bit . Exactly. Look at out of stock products. Retailersod and drug 325 billion a year. If they can gain half of that back, that goes to the bottomline. There are things that can happen that will be great for him if they can make it work, but they are still testing it and figuring out what is the return on investment, but they have to act quicker because they are losing share. Taylor thank you for joining us. Back, huaweitting suing the trump administration. We have details on their attempt to break through the band. That is next. This is bloomberg. Taylor this is bloomberg technology. We joined bloomberg daybreak australia to bring you the latest in global tech news. Ahn in new york and paul allen in sydney. Paul google isnt just facing antitrust probes in the u. S. , the uks investigating its 2. 6 billion takeover of data sciences. A ceaseanddesist was issued to prevent the companies from integrating services. The agency wants relevant information from the companies before december 20 as it decides whether or not to launch a formal prop. The u. S. Is bringing charges and people court. Nst the u. S. Justice Department Said the Hacking Group is behind some of the worst computer hacking in the past decade. Two russians are charged and the u. S. Treasury department accuses the russian government of things to people court. Corp. L you might not be want you might not want to be caught taking a selfie, thats what Boris Johnson was guilty of on a Morning Program a day after he said at the nato summit that his country could follow in the footsteps of its allies trying to ban the Chinese Telecom from its networks. The those are the global tech stores were watching at the moment. Shery now on a more serious note regarding huawei the choque giant wants to overturn a decision that will hurt its business with american clients. Their Legal Counsel told reporters the fcc is outside of here. Diction the fcc is a communications agency, not a National Security agency. Has no expertise in National Security, nor does it have authority to make National Security judgment. That authority lies with the president of the United States of america, not an independent agency. Joining us from hong kong is stephen engle. What exactly is huawei fighting here . Is trying toei preserve the last vestiges of its business in the United States. The large character carriers are no longer selling huawei phones are using its equipment. The smaller rural characters have relied on the more ubiquitous Huawei Network gear that they can afford. Basically what the fcc did is ban the use of federal subsidies for these rural carriers to buy huawei equipment and huawei has now filed this lawsuit in the pit Circuit Court of appeals trying to overturn that. Basically, huawei is fighting back. Theyre not taking this blacklist they got from the white house in may as well as the fcc ruling and other efforts to remove huawei in the United States, they are not taking it lying down. They are finding it in the andts of the United States there being accused of some pretty high crimes like espionage and using backdoors to allow the Chinese Government to allegedly spy. Taylor how does the court decide what is or is not a National Security threat, as we heard from the lead counsel who said its up to the president only . Right, this is the legal point they are trying to make, and of course courts will make these decisions. Thats the good thing about the United States. I cannot imagine the same thing happening in the chinese judicial system if the roles were reversed. This is again just a chapter in combat theforts to perception at least in western countries that they are providing an opportunity for the Chinese Government to potentially spy on western economies and nations, which of course, huawei has denied vigorously. They have made a number of different legal actions, in paris they filed a Defamation Court case for comments that were made on tv allegedly tying huawei to the Chinese Government. Made other court action in texas earlier this of coursei believe the most highprofile case is that of the chief Financial Officer of huawei who was detained in canada. She has filed a case of unlawful detention in canadian courts. Take a listen to what was said. We cant take a risk and hope for the best. We need to get it right, especially with something as transformative as 5g. Thats why when we rolled out the proposal we made it clear dont want federal funds coming from the fcc to be spent on on trusted vendors, whoever they might be and wherever they might be located. Swhen it comes to huawei business, they dont seem to mind that much. Stephen it is significant, because keep in mind, theyre not able to use in their future phones and the current ones coming out, the google suite of products on the android platform. So they are coming up with their own harmony os system and the new phones do not have google applications on their phones. So there are some limitations and they will keep on fighting this. Taylor stephen engle, thank you for joining us. Plenty more global stories ahead. This is bloomberg. Taylor tensions between the u. S. And france are heightened over the issue of a digital tax and titfortat have ensued. In july, france passed a bill to techde a 3 tax on Global Companies with at least 845 million in worldwide revenue and Digital Sales totaling 25 Million Euros in france. On tuesday, the u. S. Retaliated with a threat to hit about 2. 4 billion of french products with tariffs. France responded that day saying the eu as a whole would act if the u. S. Follows through. For more, were joined by a bridge minister of digital affairs. Thank you for joining us. You are out in Silicon Valley visiting all these Tech Companies. What are you telling them about why you did that digital tax . I think there is global concern both within the u. S. And also in europe on how do we set up a new Regulatory Framework that is adapted to the new digital age . , we the Biggest Companies need a new level playing field. The real question is, what is the set up of that new double playing field, and thats why were favoring an informational solution. The main issue we are fighting for is to find a solution and theres a lot of discussion. Taylor do you view your tax as a steppingstone to a broader, multilateral agreement . President trump and president macron have agreed last summer that we need to find an International Solution. Bethe meantime, france will reducing its own tax, but there is a difference in the amount of money the company would be would refund them if the International Taxes lower. You want an , the oeconal solution appears to want more of a multilateral deal. Those are in conflict with each other. Has that her your talks and your progress . Cedric so far it hasnt, because there was a deal mentioned in december between President Trump and president macron. We would rather favor and International Solution but if they were to be some differences there was an announcement from the u. S. , but the main issue where we can find a common solution, this is what is at stake. The technical details, france has been making of many steps forward toward a solution and that was the question raised to the u. S. Administration. Taylor what do you want that broad framework to look like . Cedric in the suggestion that was made, one part is minimum taxation. To second pillar is we have look at how we assess the value, not based on physical things but a digital footprint in some countries. We have to reassess the way we assess the footprint of the companies. We think now in the International World you dont need to rely only on the physical presence in one country. Taylor how does this deal with data privacy and antitrust . Cedric those are totally different issues. There is a broader concern about the footprint of our economies and our democracy. Theres a whole set of social things you had to address. Privacy is one of them. Also, andis something taxation, regulation and things like this. We have to rethink the whole framework to adapt to the new world. Taylor the french president has said easier a unilateral do with the u. S. Will go through or he will look for a multilateral deal. Which do you think is more likely to go forward at this point . Think its on the u. S. Side so far. I think the u. S. Is ready to but the the solution first thing is that we find something more on a national wave. That is the first question. Taylor so if the u. S. Doesnt go ahead with some of the oecd proposals and instead retaliated in taxes onllion french products, are you prepared, are those countries prepared for these retaliatory tariffs . Cedric i think that would not be a good solution for the u. S. Or for france or the companies at stake. Europe has always said that it solution. R the oecd europe would take the initiative at its own level. If there is some retaliation from the u. S. , europe has said it would be backing up france. We still hope there is some room for discussion and that we can find a solution. He said that europe has been backing up france and wants a global solution, but friendly, you guys are not the only ones going through with the unilateral tax. Cedric other countries have been [indiscernible] all right austria has already passed a law. It wants attacks on Digital Companies. A tax on Digital Companies and is favoring the oecd solution. We need to create that level , the best is on an international level. Taylor you really feel that europe is behind you . Cedric i think that was voiced by the European Commission on. Rade back in france it would favor and International Solution. At the end of the day if we have to go with that discussion, then europe would be backing france. Taylor i want to go back to the retaliatory tariffs we were talking about on 2. 4 billion of goods. Cedric it could be not as broad as 2. 4 billion. We dont know the set up of the would be retaliation. Taylor if it is that amount, have you spoken to companies that can france and are they prepared for that . The european level is prepared for new taxation. The tax will exist, if we can decide within the weational agreement have room to take the tax. If it is the decision to take sanctions, then we will see what will be done by europe or france. , its not a good solution for europe or france. Taylor how have american Tech Companies responded . You had meetings with google. How have they responded . They are pushing for an International Solution because its easier for them to handle only one system than to handle 27 or 28 systems or even 15 systems all around the world. They are really in favor of an International Solution. Update of the text framework all around the world is something that might be needed. Taylor thank you for joining , the french minister of digital affairs. Smartphones may have changed the way you live, but some say it has come at a big cost to the planet. There are concerns of Precious Metals and they are hard to recycle and difficult to repair. One company in europe is trying to change the smartphone completely. We have this report from berlin. It may look like your regular smart, but it really isnt. Its made from ethically sourced minerals, using recycled plastics. The Company Behind it pays the assemblyline workers in china an extra bonus for every phone sold. Be compared tot the latest iphone or samsung device, but the key difference comes actually in the box. Its a small screwdriver that owners of the phone can use to open the back cover of the phone and replace seven components in the phone, from the camera to the battery to the display. That is a key difference from what other phones have to offer. The previous phones soldiers 175,000 times. Its getting a major push from vodafone that is selling the device in five of its biggest european markets. That is good news for an industry that really is still lagging behind when it comes to sustainability. Last year alone, electronics were discarded with a combined weight of all commercial jets ever built. That is a massive amount of electronic waste, and if this phone can help to cut that down, that is good news. Still ahead, recent departures of Technology Chiefs weaves scene, one person thinks its a good sign. That is next. This is bloomberg. Taylor lets look at todays top tech calls. ,pples target was raised forecasting strong results in the companys holiday quarter. The analyst said pricing strategies and recent demand trends are factors that will christmas quarter than last year. And morning that facebook could be on a collision course with regulators. A growing number policy makers and regulators are determined to take Decisive Action against facebook and its potential equivalent to 40 of the stocks of the stocks current valuation. Stocks rose thursday evening after guidance disappointed. The forecast comes amid a boosted outlook for full your revenue could potentially rule the day and keep a lid on the stock. A 14 price target. Thats a look at the top tech calls. Shakeup said the big tech firms with the most recent departure of the google founders. And the Worlds Largest educational retention fun has pushed for government changes. Officerf executive spoke with scarlet fu earlier. Take a listen. Thats what we think has to change, that dual class structure. The inspiration of a founder and what they bring to a company is huge, but at some point, a Company Grows to be so mature, he needs to be run by professionals. Thats a different spirit and a different structure than what some of these entrepreneurs are used to. Thats when they really do need to step away, bring in more management and more complex structure. They need to back away from the dual class structure. Weve seen over time that that does not work. Be sunsetteduld after about seven years. How do you force that change, when you have a company like facebook which is still generating pretty good returns for investors . How do you put that pressure on a company like that to say this is better for you, to have a structure thats a little more equitable for the rankandfile investors . We never go away. Thats how you put pressure on. Glacier, a a constant grind, constant push. When the stock is doing well, we dont get other peoples attention. You are right, we wont listen to you, the stock has done well, we are happy. The minute the stock does poorly, you have to look at the structural flaws of the company. The fact that we have been there all the time with this message, that a better governance structure, Holding Management accountable is a better way to operate a company. You are consistently there, so it makes sense. What about bringing other shareholders with you . How easy is it to convince the other investors to get on board with this idea . I would tell you that the vast majority of longterm investors absolutely agree with this. Whether its here in japan, my friends in the Nordic Region with the dutch and norwegian funds, which have larger exposure in the u. S. Than even we do, they absolutely agree with us on this. Sometimes you want to sing a solo sometimes you want to sing as a chorus. An issue where we will be loud and vocal, but we will bring in teams. How much of your Asset Allocation is global tech . We are mostly passive, even. Utside of the usa tech has been huge, its the largest sector by far in our portfolio. That does it for this edition of bloomberg technology. We are livestreaming on twitter. Check us out and be sure to follow are global, breaking news network on twitter. This is bloomberg. Paul good morning, im paul allen in sydney. We are under an hour away from the market open in japan and south korea. To bloomberge daybreak asia. Paul our top stories this friday, aramco raises 25 billion and is valued at 1. 7 trillion dollars. Ipo pricing comes as opec agrees to formalize output restrictions