Wework. Biggest bets, a drop in ad sales and what that means for streaming. First, our top story, the challenge to tmobiles sprint merger in a courtroom on monday. States and the district of columbia suing to stop the deal. But the latest, jennifer read, who was in the courtroom. Takeaway what is your big take away . Jennifer it started with a surprise because the judge said, we are not going to have opening statements. I read to the pretrial memoranda , lets go straight to the witnesses. The judges really intent on getting this done in two weeks. This was part of that, getting things moving quickly. We cut right into the first witness, basically got through 2. 5 for the day. Overall, the witnesses were pretty good. Documents some bad introduced with the first witness. Ands only two witnesses part of the third but overall, i think the day was pretty good for the companies. Taylor we got a headline that sprints chief marketing officer said in 2016 that he thought this merger would raise prices by about five dollars on average for a subscriber. Is it too early to tell if that helps or hurts . Jennifer i think that was the worst of the day for the companies for this deal. Roger, the chief marketing officer, did suggest two other executives at sprint that may be what they could use as part of their negotiating package with tmobile to get a better price was that the deal would mean an increase of five dollars on average per subscriber and that tmobile was not taking that into account. He did do a decent job of trying to play this down. It is a damaging document in terms of the companys case. He said, this is just a hypothetical. I didnt do any real studies. I was just guessing. I am a marketing guy and this is the way that marketers think. I would say that was probably the most damaging part of the trial today for the company. Taylor bloombergs jennifer rie, thank you for joining us. With more on the case and what is at stake for the industry, a law professor at nyu in new york. First, are you surprised this is going to trial . Well, no, given the way the case is set up. In general, this is a very unusual case to go to trial by the state and not the federal government. Taylor i was reading one of your documents on this case and thewere writing about Justice Departments proposed final judgment why is that critical . Harry states will have to prove that this merger actually will or might lessen competition, particularly by reason price. The testimony referred to earlier is a critical aspect. The second is that the Justice Department, in a second filing, has agreed that this merger will raise prices by millions of dollars, but it has come up with a remedy. If the remedy is sufficient to reduce the competitive effect or make it not anticompetitive, that could be and presumably will be a Strong Defense by the parties. Plaintiff states will certainly argue that even if that remedy goes into effect, that is not enough to reduce the anticompetitive effect, going from a market with four major competitors to three. Taylor are they able to say that if the merger goes through, they are still only number two . Does that help them . Harry not a bid. Less competition. The fact that there is some competition, you can say that is nice. The antitrust laws dont say we wait until we get a monopoly and stop. Congress as we stopped before m, stop mergers that wont necessarily create a monopoly but will hurt competition. Taylor i want to look at a chart that i am showing to my audience. What we are showing is basically , since the proposed merger was announced, tmobile shares are off to highs and sprint shares have reacted poorly. This is leading a lot of analysts speculate that we could see a settlement, given that the states have a relatively good case. Could you see a settlement and what would that look like . Harry that is always the problem in these cases, a settlement. A settlement is supposed to restore competition. If there were a settlement like that available, maybe the Justice Department would have proposed it. This goes back to what we talked about earlier, that the settlement that was taken, from a states point of view, is inadequate. Given the arguments about why this reduces competition, it is hard to see what a settlement would look like. I expect the states to litigate this to the end. You can always be surprised. I think what the states are saying, just say no. This merger is anticompetitive and cant be cured. We cant create another sprint. We have one. Taylor does this case have broader implications for trumps antitrust policy . Harry i think in some ways this is a test of how the trump ministration is proceeding with antitrust policies. Views ofme different the Justice Department. Been e four ways there have always been differences among the various forces among the state. This Justice Department has been particularly vigorous in intervening in cases in which other forces have different views. It is not just the states. That is why i say this unusual to have the states litigating while the Justice Department is settling. The Justice Department has intervened with the federal trade commission in a case about qualcomm. It has been very aggressive in this way, wanting to control what antitrust is look like antitrust has looked like. We have the states going one way, particularly new york and california, and the federal government going another way. Taylor thank you to harry first, law professor at nyu. Coming up, xerox dressed to sell its plan to tries to sell its plan to hewlettpackard. Taylor this is bloomberg. Xerox dangling carrots front of hp shareholders. How are you getting 1. 5 billion of future Revenue Growth . Xerox is saying in its presentation to hp investors that, on a pro forma basis, the combined revenue would be about 66. 8 billion, with hp contributing 58 billion of that total. They are also saying that there are certain products of hp that can be sold through xerox and certain efficiencies that could be made, and they could unlock 1. 5 billion of additional revenue. The problem is, with a company that large, is 1. 5 billion enough to convince those skeptical of a deal . And it also did not answer the question of whether revenue increases over the midterm or longterm would be possible in a declining industry . Taylor Revenue Growth, synergy sounds great. Is it realistic . Nico xerox would say yes, it is realistic. They have been crunching the math and they have found the right now hp is selling a lot of its computers and printers through either direct sales to large customers or through indirect channels, which means basically resellers. Xerox has a whole team of folks who sell to small and midsize businesses. They say, we can sell your pcs to our existing customers. We can have your products sold through as a service or subscription offering, and we can also have manufacturing efficiencies, supply chain efficiencies. Basically fire a lot of people. They are really making an argument that it is rational. Right now, the question is, will it be enough for hp shareholders to convince the company or force the company to do something . Taylor some of these are companyspecific issues. A lot of this is structural change in the market where they are seeing declining in the printing business. Are they prepared to take on the structural change underway . Xerox has been sort of managing declines for a long time. These are both businesses that know that markets are shrinking, particularly in printing. Hp got into a lot of trouble this year with investors because inc. Supplies started to fall and contract. The problem, some would say, in this deal, is that this would make a combined entity more subject to the whims of the printing industry, which is compacting which is contracting much more than the pc industry. I think what you would see is that, if the entities combined, revenue would shrink at some point. But xerox is arguing that it is better to take control in this kind of situation because the first movers that consolidate will have more power than the other Companies Left over. Taylor thank you to bloombergs nico grant. Now to the continuing saga of wework. Goldman sachs playing their part in keeping the Embattled Company afloat. A pledge first step in put together of 5 billion for wework as part of the bailout. Softbank will be listed as the borrower and wework will be the cobuyer coborrower. 1. 8 in the scheme of the saga of wework . It will be meaningful to wework, a company that lost 1. 3 billion in the third quarter. Credit financing, it is definitely a line that wework needs. Receiveany is going to 3. 3 billion in additional secured notes, the second stage. Taylor what are they hoping to do with a of credit . A new line of credit . They look to continue expanding in 12 key markets including new york and london, and they will continue to take on leases. In other cities, it is clear they will turn to a Management Agreement type structure which reduces liability. Right now, they need the cash to meet their ongoing burden. Taylor i want to show a chart which Shows Improvement picture. In turquoise, the bonds of we work maturing in 2025. Yielding 12. 8 or so. Are investors pleased with the small turnaround, tweaks, changes we have been seeing from the company . Gillian yes. Today, just the story that goldman is involved in the new financing sent the bond up four cents on the dollar, i think. Creeping out of distressed level a little bit. Bondholders are feeling a little more comfortable that the company is salvageable. Package isn rescue coming together. A 1. 5 softbank has had billion equity injection. When that is done, softbanks stake in wework will rise to about 80 . 1. 75edit financing of billion, that will kind of shore up the company for the need for for the near future. Taylor does this give you any indication that softbank is looking to share the burden . Muchan it is not so sharing the burden, it is putting its name behind the company that it will be the major owner. By signing honesty borrower and oning wework by signing as the borrower and having wework as the coborrower, it takes some of the risks. Softbank stepping up behind them saying, we are here, we are the fallback. Taylor it is notable to me that it was Goldman Sachs coming through with a potential line of credit. A couple of months ago, it was also looking at a deal with jp morgan. Any thoughts of why goldman versus jp morgan . Bankan the jp diamondled is known to be close to adam neumann. Neumann is out now. Gillianbloombergs tan, thank you. , founder andework former ceo adam neumann is looking to sell some new york residences. He is looking to sell two units that he combined into one. Coming up, jedi mind tricks. Prizedsays that a government contract that microsoft won is because jeff bezos is viewed as Donald Trumps enemy. Blumer technology is streaming Bloomberg Technology is streaming live on twitter. This is bloomberg. Taylor apple is returning to the actually, i want to start with another company. Lower,of data dog are provisions allowed it insiders and early investors to sell shares. The remaining locked up shares are eligible to be sold next march. Apple is returning to the annual ces tech conference for the first time in decades, this time with Consumer Privacy on the agenda. The Company Director of privacy will take the stage with facebook and a commissioner from the fcc. They will discuss regulation, consumer demand, and how companies build privacy at scale. Apple has not attended ces in an official capacity since 1992. Fight overazons microsofts jedi win continues. Amazon web services seeks to reopen the 10 billion cloud deal in the lawsuit. Joining us to discuss, bloombergs naomi nix in washington, d. C. What do we know about the he said, she said . Naomi they are saying that not only did the pentagon err in evaluating the bid, but those errors were made because President Trump meddled. It is not clear how much the pentagon took trumps comments into consideration when they gave the award to microsoft, but it is definitely clear that those comments are out there and the pentagon could not have ignored them. We know that trump has made critical comments about amazon and the jedi cloud contract. The question is whether those comments influenced the pentagons decisionmaking. Taylor is there a chance that this gets overturned or reopened . Naomi these kind of cases are tough to prove. Only has it shown that trump has been very critical of amazon and bezos in particular with his ownership of the washington post, but they will not only have to prove that trump has a long time animosity with amazon and jeff bezos, but they will have to prove that they were comments into consideration rather than establishing a winner based on the merits. Taylor as you have been covering this, any precedent that has been set to pave the way for this case . Naomi this is an unusual case. It is not common that a sitting president would be on record openly questioning whether a bid was fair. In july, trump really surprised the industry and procurement world saying, i have been hearing reports from oracle, microsoft, ibm about whether this deal was fair. I will bes said, taking another look at this procurement. This is another case that this procurement has gotten controversial. Normally, these things are not done in public in such a controversial matter. Taylor bloombergs naomi nix, thank you. Coming up, World Leaders are looking to tax big tech. Will the u. S. Stand in the way of a Global Digital tax plan coming online . This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. This is Bloomberg Technology global link where we join bloomberg daybreak australia to bring you the latest in global tech news. Im taylor riggs with shery ahn in new york and paul allen in sydney. Lets take a look at the top global tech stories of the day. Paul thanks. The worlds fourth largest smartphone maker is making his move in japan. Shall me is entering the japanese market with a budget friendly smartphone and fitness tracker. The company is making the phone available for media preorder with shipment starting december 16. Xiamoi will face a tough challenge in japan where the market is shrinking and dominated by apple. Speaking of apple, what was once a routine corporate espionage case now involves surfacetoair missiles. The u. S. An engineer is accused of stealing trade secrets from a chinese start of and files for the ma Patriot Missile program. The documents which belong to raytheon are not permitted to be taken outside of the department of defense secure locations. Takingnese government is steps to remove Foreign Technology from state agencies and other organizations. Beijing will likely replace as many as 20 Million Computers over the next three years. That is according to a report from china securities. The move for this increased technological independence comes amid the escalating trade tensions with the u. S. Those are the top global tech stories we are watching. Shery thank you. Now to a story we have been following. The Global Digital tax debate. The organization for Economic Cooperation and development has outlined a plan to overhaul global tax, but the u. S. Has reservations. The u. S. Wants companies to have a choice to fully opt in or out of the plan which is driven by concerns that Big Tech Companies are not paying enough in taxes or in the right countries. Lets go to capitol hill in washington with our Corporate Tax reporter Laura Davison is standing by. Explain to us this safe harbor proposal suggested by secretary mnuchin. What is the u. S. Concerned about here . Laura what the plan would do is to say instead of with the Current System where the company pay tax where the early incomes if they earn it in the u. S. , they pay the income there they are saying they will pay taxes where the users are which is different from where the ir organizations are. The u. S. Says this is fine but we want to make it optional. The reason is they believe that if companies have a choice, they might be paying more taxes in the u. S. Versus other countries. This is a play to keep the u. S. Tax base within arms of the irs. Taylor big tech sort of wanted a cohesive plan because it is easier to follow with business planning. Does this even solve the problem, because it is sort of an opt in, opt iout . Could create confusion for companies to see which is the better deal. It opens up opportunities for companies to run the numbers, come up with different case scenarios. Does a lot of work for tax lawyers and accountants, but not good for people auditing this and the countries to figure out what it looks like. Shery we know the french do not like the u. S. Proposal. Could other countries like it . Laura that is possible. You look at the countries where they have a lot of consumers, maybe not a lot of operations. India, china. France is also one of these countries where they say we have an opportunity to get more tax revenue and we want to stick with that. We dont want to give people an opportunity to opt out. This is really a key Sticking Point going forward. One of the first roadblocks we have seen in these negotiations. There are 130 countries total. That is going to be an issue that they are going to face as they had into the next year. They are hoping to come up with a deal by this time next year. Taylor you and shery are smartly bringing up france as they seem to be leading the way. I want you to react to a soundbite. I spoke to the Digital Affairs over in france. Take a listen. Adapting to the new framework. U. S. Fav