The white house released details of President Trumps position on sanctions for north korea. Chooseal firms must between the u. S. And he targets the trade network, an 180 ban on vessels that have visited north korea. Russia is warning the u. S. It will retaliate against fighters in syria. It accuses them of firing alongside assads army. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Bloomberg technology is next. Emily im emily chang. This is Bloomberg Technology. Zuckerbergs politicking. Why the facebook chief is handing over information to congress on political ads bought by russians ahead of the u. S. President ial election. Plus, google bets bigger on hardware. A deal to buy top engineering talent from former smartphone giant htc. We break down the reasoning and the timing behind the billion dollar venture. And nest refreshes its product line with a focus on the Home Security market. Our exclusive conversation with the ceo about their mission to make homes smarter and safer. Facebook says it will cooperate with congress and handover information on the political ads that were paid for by russians ahead of the u. S. President ial election last year. Mark zuckerberg took the Facebook Live to address the companys next step to protect the integrity of the democratic process. Mark we will bring facebook to a higher standard of transparency. Not only will you have to disclose which page paid for an ad, but we will also make it so you can visit an advertisers page and see the ads they are currently running to any audience on facebook. Emily this week, several democrats called for facebook and other social networks to face new advertising disclosure requirements. Facebook is expected to be called before the Senate Intelligence committee for a public hearing in october with Panel Leaders demanding a full accounting. Joining us, our editor at large cory johnson and our bloomberg tech reporter, sarah frier. Whats happening . Sara zuckerberg is trying to take this and move it in a direction that is positive for facebook. They have been under so much pressure. Congressional leaders have said we demand more transparency, more cooperation. Now facebook is saying, yes, we will quiet operate with you, but we will also do more for transparency in political advertising on our site and work with governments around the world. He mentioned germany. To make sure this doesnt happen in the future. They are trying to build that trust with the government so that they are not under so much fire anymore. Emily its fascinating that political ads online are not subject to the same disclosures that Television Ads are. What do you make of facebook attempting to take a proactive approach . Cory there are two reasons that Television Ads are monitored by the government. One is concerned about political spending in the u. S. There is in a big back and forth about that. This notion that its good for our democracy to know who is spending money to try to push their issues are candidates, the notion of nazis and racists and antisemites pushes that to another level of political discourse. The other history relates to the difference in technology. When radio or television were first invented, the biggest signal always won. The federal government came in, they establish the fcc and said, here is a slice, here is a slice. We will let you use these slices if you abide by these rules. It created some order in the chaotic world of broadcast. With those rules came the requirement to disclose certain things. That is been the basis for fcc law ever since. The internet is the wild west. There are an unlimited amount of channels. As a result, its not been legislated. But we see the effects of this. What we dont know is the role of russian money and russian hacking on the u. S. Election. What we also saw was that facebook was willing to give over a lot of information with a search warrant to robert mueller, but giving a lot less to congress. Facebook is suggesting they are sharing the same amount now but , we dont know. Emily facebook is suggesting that congress decide how much the public should know. Who knows what, and what do they know . Sarah facebook wants to be the one saying, listen, we did a very stringent review of our privacy policies, our legal rights. We are going to give this information to congress in a way that we feel will honor that. They dont want to give it to the public because they dont want to set any precedent for having to make peoples private stuff public in the future. Of course, there are always investigations where people are asking for cooperation from facebook and whatsapp and instagram, and the Company Pushes Back on those pretty hard. Whats interesting here is the company is trying to figure out how to present itself is even more transparent than tv in the future. Our colleague pointed out to me, even if you could do what zuckerberg says, ok, all these ads are paid for by cory johnson or by russia, how do we know its not a bot . How do we know who this is . Cory its possible they dont know how much russia or others are involved. Sarah it is just an automated system. These facebook ads are not sold through salespeople. They are being sold through this selfserve advertising system on the platform. Emily to be clear, they found connection between these ads and russia, but they dont know who in russia, whether it is tied to the government. Sarah and they are continuing to look into this. They are looking into other state actors and other potential russian groups. This story may not be over yet. Cory sorry to interrupt. They were caught in this bind where they want to say, we did not have that much effect, it was only 100,000. But we will give you 3000 ads. As if the number wasnt 2999 or 30,000. They put a big number out there. They put a small number out there. They are trying to play both sides of this. Emily you are out with a new story about Mark Zuckerbergs political aspirations, of which he tells you there are none. Hes not running for office, even though it looks like he is. What is your takeaway . Sarah whether or not he is running for president , because only he knows, there are a host of political issues and societal issues and issues with facebooks power around the world that he has to deal with. He is doing this also to educate himself, but mostly to present this vision of the future of facebook as this nonthreatening, very helpful for the future of society he wants to paint a picture of this company as something that is going to be a force for good. Its kind of good timing. As he is doing this, all of these things are coming out, the russian ads. We talked earlier this week about the targeting against racists on facebook ads. This is all coming out as zuckerberg is doing this Charm Offensive around the country. Its all very curated. Its a very complicated face for zuckerberg right now. He certainly doesnt want us to think that its at all strategic, at all curated, beyond what he envisions for the future of facebook. Emily sarah frier, who covers facebook for us. Cory johnson, our editor at large. Thank you. Be sure to read this weeks cover story on Mark Zuckerberg in the new issue of bloomberg businessweek. Amazon is set to open a large new office in new york city and create 2000 highpaying jobs. The ecommerce giant has already got several locations across the city, but will expand its presence. The new office will employ people across finance, sales marketing, and information , Technology Earning an average , of 100,000 annually. Amazon will invest 55 million in the building project. In lower manhattans financial district. New york is bidding to be the location for amazons second headquarters. Coming up, google is making a big push to beef up their pixel line of phones and products. How is it doing . Htc talent. This is bloomberg. Emily google is making a push to get more control of phone hardware and software by agreeing to buy a piece of htcs engineering and design teams. Deal billion means means google will have more control over the design and production of the pixel as well as other devices. Joining me to discuss, aydin senkut, one of googles earliest employees. And a product manager. Also with me from new york, bloombergs mark bergen, who covers all things google. Explain how this deal is going to work. Mark it is sort of third time is the charm. Google has done hardware before. They bought motorola. They made a big purchase for nest. This one is a little smaller, a little like a talent acquisition. They have 2000 engineers who were working on the google pixel device from htc, who will now be working primarily on google hardware, not just the pixel device, but their speakers, their vr devices, whatever is in the portfolio they are planning to put out. Emily some people are worried that this is deja vu. Google spent 12. 5 billion on motorola mobility, then sold it to lenovo. Whats your take . Aydin i agree with some of the points markets made. I think its a big competitive battle right now around consumer devices, especially phones. 2000 experienced engineers is not going to be that easy for them to get. I think its a great move. I think its interesting that it shows they have learned from the motorola experience that they are actually getting the 2000 engineers. This is not an allout acquisition of htc itself and the manufacturing facility. Google is much larger now. From a risk perspective, im not sure its quite in the same profile as the motorola move was for them. Given how important vr has become until important this nextgeneration mobile phones, i ar will beand integrated, i can see why this is strategic for them, not to mention other consumers devices, given the importance of google home. Emily we will talk to the ceo of nest a little later in the show. What does this deal signal about googles commitment to hardware and phones in general . The relationship between this Hardware Division and nest and other parts of the company . Mark i will play double that the kit. Google has signaled a lot of commitment of things, then changed their mind. They signaled a big commitment to hardware with motorola, then to google fiber and broadband. They pulled back on both of those. I think this is google looking out maybe two to five years in the future and being terribly paranoid, seeing the world in which some of the bigger, chinese handset makers the , really successful ones, dont need google as much anymore. Samsung is moving with its digital assistant to its own software services, sort of away from google. That terrifies them. When they are competing with apple. Emily is it a defensive move . Aydin i am the sure i would see it as a defensive move. Google has really great economics. I think its a strategic move. There are only a few companies in the world that have this kind this scale of engineers. Google has always been a software company. For them to have more knowledge inside the company with respect to hardware, i think its a good move in the sense that i can see the influence of we want the engineers, but we dont want the cost of hardware and facilities and all the things. I think its going to be an important area and could be a could be applicable to different things, phones, ar, vr, google home. I think its a strategic move. In terms of whats coming up from china, i think software has been the driver. Google has the monetization engine. I do think those are key assets. Thats why i feel like google has some great strengths to rely on. Emily you were one of the first super angels coming out of google. I am curious the industry has , changed a lot. There are a lot more people angel investing. How would you describe the Competitive Landscape today . Aydin its so different. When i left google, angel didnt exist. Y combinator was just starting up. A lot of these organizations in terms of fostering the growth of startups and the funding, there were maybe a handful of really wellknown angels. Maybe 40 to 50 angel investors. Today, fastforward, not only are there thousands of angel investors, but there are hundreds of c funds. On the one hand, its really great. It bodes well for entrepreneurship, but it also means the number of startups has increased by a factor of 10, 1 hundred. It is harder in the bay area to hire people because they have to compete with so many companies, not to mention facebook and google. On the other hand, its interesting times. We had a conversation years back, mostly around consumer internet, technology booming. Now we have areas that we are making investments anywhere from satellite to liquid biopsy to curing cancer and enterprise customers, not to mention thin not to mention fintech. What is exciting, so much is happening in so many more verticals and markets. Very exciting times. Emily we have about 30 seconds. You just made your biggest investment to date in a Company Called guideline which helps Small Businesses offer retirement plans, 401k plans. Why are you so bullish on this market . Aydin i think this is a 1 trillion market. This company is trying to take advantage of the fact that this is a key benefit. Retirement is really important, yet only one out of three employees are using it. We found that its a great opportunity to get involved in a company that can make a fundamental difference here in a market where we have not seen as much innovation. We are very excited to be involved. Emily thanks. Its been too long. We will have to have you sooner than the next five years. Mark bergen of Bloomberg Technology in new york, thank you as well. Coming up, the e. U. Wants to make sure its citizens private data is protected when stored on u. S. Soil. The face of the Privacy Shield, next. This is bloomberg. Emily now to the e. U. U. S. Privacy shield, which is up for its first annual review. Its first annual review. The Privacy Shield is a joint framework to protect the data of e. U. Citizens that is stored on u. S. Servers. There was uncertainty over the shields continued existence when President Trump signed an executive order. That would exclude nonu. S. Citizens from having Sensitive Data rejected. Whats going to happen . I spoke with the e. U. Commissioner for justice, who spent the week in the u. S. To speak with commerce secretary wilbur ross and Tech Companies, about the status of the shield. I met mr. Ross for the second time. I came with a little bit of concern that we need to clarify and make sure that we understand the protection of privacy in the same way. I came with my team to do the review. We had a lot of detailed legal technical questions. I must say that all the work was ongoing in a very good working atmosphere. Mr. Ross, personally, assured me he has a very strong commitment for promoting the shield and keeping it running. Emily what are the main points of contention or differences of opinion . Vera we have to make sure that the american state authorities have Privacy Shield under full control, that they monitor the monitor whether the companies which transfer the data from the e. U. To the United States, and are fully compliant with the conditions, and also that there is no mass surveillance collection of data from security authorities. This needs to be checked. Privacy shield is a trust and check exercise. We trust, but we need to check. Emily what happens to the Privacy Shield, if the Trump Administration changes its stance . Vera that would be very bad news and a bad message for businesses on both sides of the atlantic, because its important not only for the american companies, but also for a number of european companies. It would be a bad message for europeans because they rely on Privacy Shield to protect their privacy and their private data. If there is a radical change of the stance, i never hide that i am ready to propose a suspension of the system, but we are not there. I am cautiously optimistic that we will keep Privacy Shield running. Emily youve been meeting with Tech Companies here in Silicon Valley this week. You met with Sheryl Sandberg at facebook. What are their main concerns . Vera Privacy Shield, because most of the companies i spoke to are under the shield and they appreciate it as a good, legal way of transferring data. The second topic was the Data Protection reform in the European Union. This is a big change. We emphasized very strongly the need to protect privacy of people. The third topic was how to tackle the problem of illegal content on digital platforms, because this is of high importance for us as europeans. We want to have this fully in place. Emily you are coming out with a paper that covers how Tech Companies deal with illegal content online, how it is dealt with in the United States versus europe. Whats your main takeaway . Vera i spoke to google and facebook, out of the four companies which are under our code of conduct. Facebook, google, twitter, and microsoft they have committed themselves last year to delete within 24 hours hate speech which has been notified to them. We agreed on the need to continue this. I also committed myself to invite more companies to do the same thing, because we want in the European Union to have internet which will be hate free and which will not open the space a highway for hatred and for inciting violence. Emily are they acting on that commitment . Have you seen them act more quickly in terms of getting the content down . Vera im a very strong promoter of enhancing their social responsibility. Emily do you think the u. S. Needs to handle this more strictly, like you do in europe . Vera its a big issue here. We discussed it a lot. The first element of the amendment of the constitut