Making the return of merchandise a more customer friendly experience. That is the goal of this organization and we speak to its ceo. Four potential competitors are demanding mark give uprg be forced to control of facebook. In a lawsuit, they get use facebook of anticompetitive behavior. They also want it to sell whatsapp. Facebook says the claims are without merit. Partner in we have a and a cocounsel in the case. Great to have you with us. I wanted you to talk about the lawsuit wanting Mark Zuckerberg to be forced to give up control of facebook. Is this possible and why . As of now, he has incontestable control over the company. His class of shares overpowers the class a shares. He has Carte Blanche to do what he wants with the company. Hehe board. If you look at the details of our lawsuit, the anticompetitive scheme was hashed and commanded straight from him and there is no reason to believe that if you facebook key assets, that you would ever fix the systemic problem. There is great distortion of the market. Taylor i want to talk about some of those distortions. One of which is where the lawsuit alleges that they want instagram and whatsapp to be sold off from facebook. What is happening now according to a lot of major news sources including zuckerberg on his blog is they are rapidly ,ntegrating whatsapp, instagram and the core facebook products. And the reason we have moved very quickly to bring this suit is that once that integration is over, it will be impossible to break this up. It will be impossible to take the giant amalgamation of data that integration will create and put the genie back into the bottle. It is not just the data. The real issue is that right now, the markets are somewhat segmented. Whatsapp has a global presence. Facebook and other products are more u. S. Heavy. Integrated, these products can communicate with one another and essentially, you will have 2 billion people and one giant social network. At that point, we do not think a normal remedy will fix rings. Taylor how did this even get approved when all of these deals were going through in the first place . What is interesting is how regulators think of competition. Sometimes, it can be formalistic. At the time, they did not think of an applet, a thirdparty mobile apps as a competitor to a social network. In reality, what they are competing for is the social engagement and the user data that comes from it and that is why a messenger app is direct a direct threat to facebook. You can then target content and sell advertising. That is what they are all fighting for. What regulators will do is that these are two very Different Things than they are not in competition. Now we know and we know from facebooks own documents that apps andfind messaging dating apps in direct competition with them. So when a regulator looked at this, they did not have the view of the market that would tell wadingat they are into incredibly concentrated markets. Taylor how do you make this seem that it is not just four smaller competitors angry at the bigger guys market share bigger guys market share . You will always have a monopolist. More chat programs and messaging programs in competition with facebook, there was a dating apps and now we know tinder is a massive success. We dont know what wouldve chosend if facebook had sides. A lot of what we are alleging is that when facebook pulled core apis out of its platform and it decided this in 2011 it let Developers Think that the platform was stable for three aars before they even made move to pull it. While they did that, they targeted those they wanted to win and they asked them for their most sensitive data. The distortions occurred at the time my clients were competing. They never had a chance. And so, the size i would not positive. We are proceeding as a class because facebook looked to, checked and found that 40,000 apps were affected by this decision and 1000 of the top 80 of0 of them them would be affected by the decision. We can establish liability for at least four, we are establishing them for everyone that is hurt. If anyone thousand is hurt, they should participate. Taylor thank you so much to our guest. We appreciate your time. I want to bring you facebooks statement we are getting. Facebook responding saying we operate in a competitive environment where advertisers and people have many choices. ,n the current environment claims like this are not unexpected but they are without merit. We will bring you more on the case. On this point, i want to bring in kurt wagner and our representative from bloomberg intelligence. Perspective,book what appears to be the bigger threat . That people want Mark Zuckerberg to lose some of his controlling stake or the threat of this anticompetitive behavior . One andare a little bit the same in that Mark Zuckerbergs control has led to the problems with these products. It seems unlikely to make that they would be able to take away his control considering he is the guy with all of the votes. They bigger risk is that actually were to split up facebook. I dont think this will happen but it would be a devastating thing for the business. Instagram is a huge part of facebooks current revenue and the Whatsapp Messenger is considered potential revenue. Into your world of fundamental analysis, do investors care . There are a lot of these smaller lawsuits coming their way. We solve that over the last year. When you look at the valuation of the company come in you look at the expectations for 2020, they came down. Earnings came down a lot more. Valuation and expectation metrics were reflecting regulatory issues. As far as a breakup scenario is concerned, our antitrust analyst oftinues to see low odds that happening but even if it does happen at some point, we have to think of how it impacts investors. Look at these Companies Standing alone their value standalone would be higher than what is represented at the moment. Taylor looking at the pe ratio. We have heard this from mike levine. Is lowerook revenue than some of the other competitors given the news. With some of stand these antitrust cases . Does it present a headwind on the stock . If you look at the expense side, expenses winning big on the valuation last year. Wasguidance they gave 42020 really aggressive. You are preempting some of these worries. What is important for this year for facebook from a fundamental standpoint is that the expectations are reasonable. In line with what the marketers that we have talked to are expecting. It is on the top of the list in terms of increasing ad budgets. The other players out there. And the future of facebook is increasingly looking beyond advertising. Ecommerce. Not talking about libra specifically. You saw them walking back from thewhatsapp as well opening door for Business Services and payments. Diversification versus advertising is not really capturing expectations. Year isare seeing this they are coming out and showing progress on many of these fronts. That could change the narrative. Taylor we have been talking about whatsapp as a way to get into some other business opportunities. This has been the discussion around facebook for a number of years. Can they figure out a different business line from ads . Advertising has worked well for them but ecommerce and instagram, payments with whatsapp and possibly messenger these are big opportunities. One thing whatsapp is doing or businesses is serving as the dont for businesses that have a website or another kind of Software System to send a receipt via email. You could send a receipt via whatsapp and charge the business for that. This is what facebook envisions in terms of diversification. But again, they have been talking about this for years and they have not hit on anything to date. That is why they are still an advertising heavy business. Taylor most analysts believe they are still poised to benefit from that going into 2020. Kurt wagner will stick with us for the next segment because dorseyup, twitters talks to elon musk. What will one of its most controversial users due to fix the platform . This is bloomberg. Taylor twitter Ceo Jack Dorsey wants to know how he could improve the social network. Who did he go to for advice . Elon musk. On thursday, dorsey spoke to elon musk in a video call in front of thousands of twitter employees. He asked elon musk to give some direct feedback. Here to discuss is kurt wagner. How does this all, part where you have elon musk on a video screen live in front of twitter employees . Offside is at an offsite, a global offsite. He faced times elon musk. They have some issues getting the audio to work and eventually, voila they are talking and elon musks face is on this big screen. Taylor what is the advice . You should do a better job of identifying real people on twitter versus bots or fake users on twitter. He says it can be really hard to get real feedback. Are people who are complaining actual customers . People who have issues with tesla cars are they bots or competitors . And you cannot tell a bot versus a real person on the network. Taylor i feel a lot of hate mail we get, the negative trolling comes on twitter. I dont get as much of that on instagram or facebook. How has twitter not been able to control that as much as some of the other social Media Companies . It comes back to real identities. In order to create a profile, you have to use your real name and a real photo and if they believe you are not your real self, they will ask you to send in a drivers license. Twitter does not have that which is one of the things that makes it fun. You can have these anonymous accounts. But it also creates a real opportunity for people that want to be hurtful and negative because they can hide behind any email or username that they can get their hands on. It is hard to police that way. Taylor i wanted to ask you for your thoughts twitter in 2020 versus facebook for the advertising market. There is really no comparison. Facebook and google are way up here. I dont see them coming much closer in 2020. Unfortunately for twitter. Taylor always a good and flexible conversation with kurt wagner. Why verizon decided it was time to stop its bundles and contracts. ,. Will hear from the ceo this is bloomberg. Ceo, will hear from the next. This is bloomberg. Taylor in the streaming era, Cable Companies struggle to adapt to the new normal of watching content. Verizon believes it has found a way. Kellymassar and jason spoke to Hans Vestberg to find out how the company is still relevant. We sat down and talked about what do our customers want to have . Remember, we are the best network. We have a fantastic rand. We have a fantastic brand that is what we come to the table with. The toptier customers will get access. Are there more partnerships coming . You get it free from the beginning. Cost. E a lower we now know how many of our customers we would be turning around because we have such a good understanding of our Customer Base. It might be more but i would do an exclusive. I would only do it with a brand that is up to our values. Jason talk about the amazon deal. We talk so much about the cloud and amazon services. What does that enable you to do . S we spent almost a year and a half with amazon to do this. We are bringing the Cloud Service out to the edge together us access give a norm to applications. This is the first time in the. Orld where we are seeing this amazon could not have done it by themselves because they do not have wireless 5g. Ricin could not have done it by ourselves because we do not have cloud software. This is something transformative. As a developer, you can click on our website and start developing an application for 5g with enormous throughput. It is transformative. May be thousands of them. We can then give 5g experiences with low latency. Autonomous callers, realtime arvr. All of that can be at the edge. We are just seeing the start. That is why we are so excited about this partnership that we launched on the third of december last year. Ceo,r that was verizons Hans Vestberg. And now, 5g. It is also the focus of senator marco warner from virginia. He joined bloomberg earlier today with chief washington correspondent kevin cirilli. Wei5g and the issue of hua has been a bipartisan issue. There are a lot of us in agreement with the administration. Fromve to prevent huawei dominating the 5g marketplace. If we all allow the market to play out, they will end up with 60 or 70 . What we have not been able to offer our allies or small telcos is even if you are convinced that huawei is a national threat, china has put up 100 billion to back huawei. It offers enormously attractive financial plans. The we have to do is over next five years, we have to get to the next generation in what is called open radio access network. Legislation, would put up over a billion dollars to support that kind of development and that kind of International Effort to finance and go headtohead with huawei. Where with the money come from . From the auction of certain spectrum that should be allocated to 5g. There is a series of said like carriers that have the spectrum. That legislation is moving forward. Wouldoceeds, some of them go to build the broadband. Toe of it would go developing a western, not just eierican, alternative to huaw in the next five years. In the meantime, we have to shore up the competitors for huawei. I am struck by this. Germany has a tough decision to make. China is trying to make inroads into the german market. They are pushing huawei hard. Not only germany but our closest allies, the brits are also making this decision. They have huawei equipment. It is not a good, longterm solution according to their security network. In particular a supplier like close that has such ties to the communist party. What you have to say is what is the alternative . Will it be able to compete in terms of not just five g but also six g and nextgeneration technology . And can we move this away from a single provider to a more open based software driven system . That is where the west can compete. And the fact that our government with this legislation would make that kind of down payment that i hope but also spur other development from other western nations who dont want to rely on china. Kind sense is this is the of legislation that needs to pass sooner rather than later. Until we have a plan, not just coming out of america, but for the west writ large, huawei will continue to win. Country, because they dont feel there is a viable western alternative, it is going to then turn to huawei. If we can put together and organized plan, i think the westwood signup and we could stop what would be a Major National security issue. Taylor that was senator mark warner from virginia. Coming up, we look at what phase one of the u. S. China deal means for the bottom line. And the peacock streaming service. And amazon is receiving a less than warm welcome in india. All of that is up next. This is bloomberg. This is Bloomberg Technology. I am taylor riggs in san francisco. The u. S. And china have signed a phase one of the trade deal. President trump and chinese vice premier put pen to paper for a deal the president claims will have a Significant Impact on the tech world. To talk about phase ones completion and all of the top tech stories of the week, we are. Oined by two guests what changed on wednesday with assigning a phase one . To keep theough Technology Industry interested. A lot of stuff that has been most vexing for the Technology Industry remains in place. Tariffs, restructuring on trade with huawei which have proven very problematic for many in the Technology Industry, they are still in place. Have left us and in suspense for many months. Said, there were changes in ip, with limits around that. There was progress made and that is something that the Technology Industry can take encouragement from. Taylor your thoughts on whether we have enough concessions on the likes of ip theft. Dan it is a reasonable starts, but there is a long way to go. If we sit back and just think about what is going on here, this century is really going to be marked by enormous change and the Technology Arena which really has ramifications across economies, societies, so part of what is going on here in my view is that both the u. S. China and other nations realize the importance here. From a company and investing standpoint, we continue to focus on company abilities to innovate and deliver value to their customers. If they are able to do that even in the face of continued tension between two countries, i think there is room to create a lot of value. Taylor you mentioned huawei earlier. Steve mnuchin said it will not be a test piece in the larger trade fight. If the Technology Sector happy that huawei being treated as a separate issue and not being folded up in the trade fight . Have in question people the Technology Industry is how much of a National Security threat huawei really is. And are they on board with the administration stance. A lot of Technology Companies that want to still sell to huawei are finding ways around the limitations. A lot of companies that want to buy from huawei also are saying, we think that the technology that huawei is making is low cost and the most reliable. It is what we need, it is what we want for our 5g networks. I do not think there is widespread consensus across the Technology Industry that huawei represents a significant enough security threat. I do not think that they are buying the argument as forthrightly as the u. S. Administration wants to put it across. Taylor i want to switch to another big story we were watching this weekend that was comcast and peacock, entering the very crowded streaming space. In the midst of the crowd, how do they stand up stand out . Peacock is a good offering and we will see how they get traction in the months ahead. It speaks to the change in the video landscape in terms of the bundles, traditional bundles going away and really consumers are getting a lot more choice and that is good. In terms of comcast, disney, netfl