Diversity officer. She tells us how facebook plans to double the number of female employees globally over the next five years, and why the company is setting such an ambitious target in the middle of a media firestorm. First to our top story. Facebooks plans to create its own Cryptocurrency Libra is not , getting love from lawmakers. And you can add fed chair Jerome Powell to the list. Take a listen to what he told the House Financial Services committee. While the project sponsors Public Benefits including improved Financial Access for consumers, libra raises serious concerns regarding privacy, money laundering, Consumer Protection and financial stability. These are concerns that should be thoroughly and publicly addressed. Facebook has a couple billion for thers so you have first time the possibility of a very broad adoption. If there were problems associated with money laundering, terrorist financing, any of the things we are all focused on, including the company, they would rise to systemically important levels just because of the mere size of the network. It cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all of those things. The number of concerns i listed at the beginning data protection, consumer privacy, or all those things will need to be addressed very thoroughly and carefully in a deliberate process that will not be a sprint to implementation. Emily we discussed the future of the currency with joe weisenthal, the bloomberg cohost of whatd you miss . Skepticism gets to the general skepticism about crypto, which you heard jay powells two cents on that, plus the fact that facebook has so much power. That is something we have been reckoning with over the last basically couple of years, where they have this huge user base, they are able to push new projects, and you can imagine that if they try to rush people to this new cryptocurrency, that could create issues. Emily joe, powell is talking about libra posing a threat to the Global Financial system and at the scale of facebook size any problems would be magnified. Is he right to be concerned . Joel listening to him, i was struck by this is something that is on his mind a lot. A lot of the lawmakers asking him about it. I think in the past, when it comes to cryptocurrencies or blockchain, or other endeavors like this, you get the impression that this was something they were watching. This is more than that. There are a lot of efforts to fed to really the understand what they are doing is the if it passes muster. I think it are reasons for them to be legitimately concerned. Beyond the systemic nature of this, it does raise questions of, if this will be a much more efficient way to transfer money from person a to person b anywhere in the world, how can you really do that, and also remain consistent with banking and payment regulations in all these countries . There are legitimate reasons to want to take a go slow approach to make sure this isnt some sort of regulatory arbitrage to get around existing rules of payment. Emily even though jay powell and the fed are taking their time in examining facebooks plan and cryptocurrency in general, it seems not all lawmakers understood exactly what they were asking about. This was an exchange between congressman david scott and the fed chair. Take a listen. Rep. Scott this libra business is really disturbing. I think we all know, libra is the london interbank offered rate. Very critical. Isis apparent that libra going to leave us, or be removed. The potential ramifications of the end of libra, as the end nears. Powell you said it well. i think there are 300 trillion bor ineferencing li different currencies. Emily laughing at himself a little bit. Can we trust lawmakers understand what they are supposed to be regulating here . Joe this came up during Mark Zuckerbergs testimony. You had supercuts and out of left field questions. I think facebook is going to try to use that and said, d. C. Doesnt know what they are doing. The fact that people are confused by this and yet it and it does affect potentially millions of people, suggests we should all be educating ourselves more closely. Emily your reaction . Joe it was a funny moment. The question about libor and the replacement is interesting. But you know, i have a lot of. Ympathy for the politicians think about it, how many people have you and i interviewed who are in tech or maybe even describe themselves in crypto, or in in bitcoin that cannot articulate what makes the tech compelling . It should be worrisome. I do think it is a case for slowing down. Again, is Tech Companies think theyre going to reinvent the Financial System while lawmakers are still struggling to wrap their heads around what is, it is, these kinds of exchanges say, you know, slow down. Emily speaking of regulating, who actually does have the authority to regulate cryptocurrency . To regulate what facebook is trying to do and launch this thing in the next year . Is it the the fed . U. S. Regulators . Joe there is a real morass in terms of crypto regulation in the u. S. The fed will definitely have a role in this because libra will interface with the banking system. Unlike cryptocurrencies, there will be fiat money and government yielding bonds held in regulated Financial Institutions that back libra so the fed will have a role. To your point, if it is going to be a global currency, at some level, they will have to deal with regulators in every country in which they want to operate, which is why i think part of the appeal may be regulatory arbitrage. You have to wonder if the crypto approach is sort of a shortcut around that, and if so, it is a good reason for people to be concerned. Emily coming up, the president holds what he calls the social media summit, only it was missing the social Media Companies. But tennessee senator Marsha Blackburn did attend. We will hear from her next. If you like bloomberg news, check us out on the radio, the Bloomberg App and sirius xm. This is bloomberg. Emily a federal Appeals Court said tuesday that President Trump cannot block his critics on twitter. It said he blocked the First Amendment when he blocked users who were critical of his policies. This upholds an earlier ruling. Trump wasnt the only politician affected by the ruling. Congresswomanict, Alexandria Ocasio Cortez was sued by people she blocked on two twitter. The Trump Administration hosted a closed door social media summit at the white house on thursday. Billed as a gathering to bring together leaders to work on opportunities and challenges in todays social environment, but heres the catch. Google, facebook and twitter were not invited. It was a group of internet conservative and lawmakers, many of whom are called trumps complaints about social media sinuses conservative voices. We discussed the event with one of its attendees, senator Marsha Blackburn of tennessee. Sen. Blackburn my biggest take away from the meeting is, you have a lot of people who utilize social media to get their message out and to communicate their stories. What they are tired of his seeing social media take and choose what they want to promote, what they want to prioritize. They feel like they should be unusual platform and they are looking forward to have congress do some more work on this. And they are also looking forward to the white house turned more attention to the issue of big tech in the fairness on these platforms. Emily facebook, twitter, social Media Companies were not invited. How can you have a productive meeting without the companies . Actually, they are going to be included later. What the president did today was to hear from people who utilize social media. Emily, one of the things i think is so important right now is that individuals do not sit down every day and watch the news at 6 00 and 10 00. What they do is to build their own network of different sources and channels, sometimes they are streaming it, sometimes they are watching cable, sometimes they are getting notifications and alerts on their mobile device, and they have built their own network. What they want is fairness. They dont want one of the Search Engines going in and prioritizing everything in that feed. They want to have access to fair news. They dont want opinion journalism. They want facts. When you have individuals who are creating that content, it is important to hear from them. Now, i do understand, and as the president said today, he is going to invite these social Media Companies to come in and and that isng, something that is taking place in the next few weeks. White house will have the date out soon, i am sure. And they will have the opportunity to talk about what they are doing. One of the things that has been of concern to us is how some of these companies manipulate their algorithms. That pushes forward certain content, then diminishes others and is the exercise of a form of bias. Emily so, do you think that the conservativesing of views, which is what you and other lawmakers have been complaining about, do you think that is deliberate or inadvertent . Sen. Blackburn when Mark Zuckerberg was before us, when i was in the house just about a year ago, i asked him the question, do you subjectively manipulate your algorithms . Me containedts to the information well, people live in Northern California that work with us and they bring their worldview to work. As we move toward a. I. And Machine Learning, the bias of these algorithms is something of not on they were talking about opinions, but also when you are looking at how Machine Learning will be self replicating. Emily some of the folks in that room have been accused of posting racist remarks, antisemitic remarks, spinning up conspiracy theories on social media. Is that the kind of thing you think should be left up on social media . Sen. Blackburn of course not. There is no place in Civil Society for that conduct. Just as, there is no place in a Civil Society for some of the postings that take place that are offensive or suggestive or harmful to children. All of these components for social media, is speaking specifically to the reason why we need to put some guardrails in place for social media. Emily speaking of that, you have been calling on snap to take action to prevent, as you wrote in a letter to them, more children from being exposed to sexual predators and explicit adult content while using snapchat. Saying the fact that messages on snapchat does the year actually is a child predators dream, is the way you put it. What your main concerns about snapchat in particular . Sen. Blackburn number one is their ratings, being there for the auto delete feature on those videos. There are cases where child predators, pedophiles, have been arrested, convicted. They have used snap to coerce and ensnare children, threatening to put their video on social media unless they send more videos. This is something parents need to have the tool to turn this off. There need to be explicit instructions for parents how to handle this. Emily that was tennessee senator Marsha Blackburn. Coming up, ibm closes its 34 billion deal with red hat. Our conversation with the ceos of both companies on the second largest tech deal ever. And later in the show, facebook is attempting to drastically increase minority representation in its workforce. How the social Media Company is tackling its diversity problem. This is bloomberg. Emily ibm has closed its purchase of red hat, finalizing 34 billion the worlds secondlargest tech deal ever. Ibm was synonymous with mainframe computing, but it has been struggling to adapt. The company is playing catch up to amazon and microsoft in Offering Software and services over the internet. Bloombergs david westin spoke with the ceos of both ibm and red hat on it is important to tuesday. Our clients. It is the destination for the cloud. I think a lot of times people think everything will move to public cloud. One that is not what we see clients need, want and are even targeted to. It is this idea that, i have got an existing estate, i am going to modernize it, and i have private clouds already and if i 515 modernize an app, i will put it where i want and i have to manage and secure all that. That is the destination. For the next generation, we now give them a platform between red hat and ibm that runs on any public cloud, private, traditional, and they can write an app once, run it anywhere, secure it and manage it. That is a distinct and unique capability. The is what i mean by hybrid cloud, and it makes us a leader in that. Others talk. They may have just a connection between public and private cloud. This now allows us to be multicloud everywhere. David jim, you have other competitors out there in the cloud that are pretty big, like amazon and google. How is this going to help you catch up to them . Or is that even the goal . Jim i will start for the red hat component, our goal is to be a better partner with clouds. They are great partners. Our Software Runs on those clouds, it runs on premise, ibm, those clouds. So they will continue to be great partners frost. As we are capable of moving many more workloads onto our software platform, that is more workloads that those clouds can actually go and address and run. My conversations with the major clouds have been very positive because of these the this is an opportunity to get more workloads out of datacenter running on cloud. Ginni that is an important reason to do this. Our clients want us to be a wooded take our platform and run it anywhere. We cooperate with our partners and we are in competition on the other side. David you have ramped up ibm percentage of revenue from the cloud dramatically, 4 to 25 in a reasonably short period of time. What is the ultimate goal . Ginni there is not an ultimate goal. As you think about the clients moving their work 80 of work , will move to the hybrid cloud. When we look at our revenues, it transcends everything from our public cloud, and now these platforms will be on other clouds included in the services revenue. The goal is to move with the same journey our clients need it to move with. David what about moving with the overall size of the cloud expanding . How much of this will just be riding with the cloud up and have much of it be taking market share from other providers . Ginni look. For ibm is 200 basis points of Revenue Growth over a fiveyear period. This is what jim just said a minute ago, the important out of it is to think of our own cloud, should be the best for critical work. Should be the very best for missioncritical work. We also want our platform running everywhere else. Growth anywhere is going to be good for ibm. Jim this is all about helping clients provide more value to customers. When a client builds a new application, website, mobile application, opportunities for us to participate in building the application, helping them integrate that with data, helping them run it on our platform, run it on the ibm cloud, any of these components are areas of incremental value we can participate in as our customers create more value for their customers. Emily that was the ceo of red hat and the ceo of ibm. We continued our discussion of the mega deal with bloombergs Olivia Cargill on think about tuesday. Ibm. 108yearold American Icon that has largely been known for the mainframe cycles. In the last couple years they have been trying to reinvent themselves. This acquisition is essentially ibm trying to reenter the cloud space as a totally different company. It is trying to transform what it has been providing so far. Change the game. We have heard ginni call this a game changer for ibm. It is important to think about why this is going to be so significant not only for ibm but also for the wider cloud space and also for the other cloud providers like amazon, microsoft and google, who will now be seen as partners to ibm rather than rivals. Emily interesting. What are some of the risks to this new strategy, and what can go wrong . Olivia one of the biggest risks here is whether or not red hat will really be able to fold into ibm. This company is known to have a staunch and oldschool corporate work culture. Will this opensource linux providing Company Called red hat, being known to be a renegade and revolutionary in the space, really be able to come into the ibm family . Ibm andheard the ceo of the ceo of red hat talking about how within the acquisition red , hat will remain independent, a distinct unit, within ibm. It will have its own consulting services, its own sales, its own terms and conditions. The red hat Leadership Team including the ceo will remain within red hat and it will be able to talk to their own clients rather than through ibm. They are hoping that in order to maintain red hats independence, that this integration will be a motoric seamlessly. Romettye heard ginni use the words cloud before the words hybrid cloud for, in fact talking about it for the last several years as they have tried to navigate the transition. How is this different from microsoft, amazon . Olivia they all provide different Public Cloud Networks that have particular strengths. Like amazons strength for example is infrastructure services. Streams as a cloud Customer Relations and management platform. You see companies that are buying into these services and using these clouds for different types of reasons. What ibm is attempting to do is to become the glue that will stick together or connect all those different clouds onto one platform. So you may be a company that nee