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tv   Bloomberg Technology  Bloomberg  July 12, 2019 11:00pm-12:01am EDT

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emily: i'm emily chang, this is "bloomberg technology." the ftc approves a record privacy settlement against facebook, fining the company $5 billion in connection with the cambridge analytica data scandal. does it change facebook's future? act like a bank, be a bank, that's what president trump wants facebook to do if it launches its new digital currency. why the president seems to have
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little love for libra. and how amazon plans to take on its new high-end echo speaker. we begin with that fresh facebook news. the ftc has approved a privacy settlement with the social media giant, fining facebook about $5 billion. this marks the most significant axiom yet against facebook over a series -- and send the company reeling from one crisis to another. i want to bring in kurt waggoner, who covers facebook for us. he joins us on the phone. in washington we have naomi, who covers corporate influence. we know about the amount of the fine, tell us more about any other additional details that will be coming along in the settlement? >> that is the key. facebook had said i believed it was in april they set aside $3 billion for this very purpose and the fine could be up to 5 billion. this was something the company
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was prepared to handle. they also made 56 billion in revenue. the additional will be the details on whether or not any agreement includes something that could limit the data collection the company has or any of the targeting capabilities. the repose -- that would pose a longer problem for facebook. >> there was speculation there could be personal penalties for mark zuckerberg in particular. >> that has been a point of contention through this whole discussion through conversations i had with people. the facebook poll -- facebook folks don't want mark zuckerberg to be personally implicated for anything and don't believe there is a precedent for that with these kinds of settlements. the ftc, there are members of
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the group that really want to hold mark zuckerberg plus feet to the fire. that has been a bit of a point of contention route a lot of these conversations to date. >> by far the biggest fine from the ftc to date. you have to go back to 2012 when they find google $22.5 million. my inbox filling up with opposition group saying this isn't enough, for facebook this is a slap on the wrist. it's a drop in the bucket. what is the general take on the action that the ftc had actually taken here? >> just like you said, privacy groups have already come out and said a significant fine is an important tool for the ftc to use in this case. what's more appropriate is that agency take -- make structural changes. they are saying this is appropriate, but it's not
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enough. we would like to see a real meaningful action and penalties imposed on facebook. in terms of the way it handles privacy users. >> we are going to be waiting for more details. i know you will be trying to get them for us, whether or not there are any structural penalties facebook faces. naomi, please stay with us. speaking of big tech in washington, josh holly is going to war with silicon valley. the lawmaker introduced a bill that was stripped tech companies of the immunity they received from legal liability for user content. his idea to make big tech companies prove their political
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neutrality to maintain you maintain neutrality failed to be taken seriously. trump praised the bill before a group of lawmakers. this is a -- this as the company continues to face criticism for conservative voices. what do you make of the ascension of josh holly. >> he has made the splash in washington in the tech policy world before introducing that bill, which got a lot of skepticism from conservatives who said that giving the government too much power. the tech companies were very wary of what josh holly has done so far. they cherish that immunity. it's how they operate, it's how they get protected from lawsuits.
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he has definitely become controversial very quickly. >> josh holly at the social media summits with the president yesterday had some very strong words. they got these special deals from the government, a special giveaway. if they want to keep their special deal here is the bargain, they have to quit discriminating against conservatives. this is a familiar argument we have been hearing for some time. does having the president backing holly taking on this particular issue mean that anything might actually change? >> i don't think so. republican lawmakers and president donald trump have
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repeatedly talked and complained about bias by tech companies. we have to see meaningful light dish meaningful legislation get a lot of traction. what we are seeing is a political dynamic where they are going to complain about alleged biases from tech companies, but not necessarily do much policy wise to address that issue. >> naomi makes for us in washington. senator holly is not the only one with a bone to pick, the social media senator also attended trump our social media summit on thursday. among a litany of issues regarding tech regulation, blackburn is calling on snap in particular to take steps to protect younger users. she called the disappearing videos hr predator's dream and says the company fails to provide parents with adequate warnings of adult content. i sat down with senator blackburn to discuss the antitrust debate and talk about biggest concerns over snap.
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>> there are cases where present -- where predators, pedophiles have been arrested, convicted, they abused snap to coerce and and snare children, threatening to put their mood -- their video on social media. 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. the other thing is the snap map, application that is there. these children can be identified and their feed can be identified with their location. the third thing is the discover section. i am horrified when i look at some of the information children can get into through that feed.
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and with one click or one tap, what these children could be exposed to is awful. >> what kind of legislation specifically do you consider proposing or do you think you can accomplish to fix some of these specific issues? >> yes, and yesterday we talked a bit about this. and that social media outlets are going to work with us on this. privacy legislation is a big one here. may concern that individuals have the right to allow the social media platform to access the data. and needs to be explicit and the
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social media platforms ought not to be able to disallow use of their service. they have made billions of dollars off your data. data is a valuable resource. as we work through this issue, i'm working -- i'm looking forward to working with them to be certain that we addressed the issue of privacy and data security, responsible usage, antitrust censorship, competition, all that needs to be reviewed so we are ready to move forward as we see five phoebe and kerr marshall isaiah in. >> he also met with a very early. facebook employee who argued facebook should be broken up.
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you said the meeting was refreshing. he said this guy knows a thing or two about what is coming next for big attack. we can't just move fast and break things. given he has argued to break up facebook, we have senator elizabeth warren arguing to break up several big tech companies. do you think big tech companies need to be broken up? >> i think what we need to do is have a good discussion about what it is going to look like, what the marketplace is going to look like. in the next 10 years, 20 years, what we are suffering from his congress has not taken an action to put any guard we are -- guard rails in place. light touch regulation is going to be best, and it's best to do it a step at a time.
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let's look at privacy, where they change what we have access to and see how that changes their business model. let's exercise some preemption on data security and breach notification. put in place and enforcement. have that one regulator, the federal trade commission, which is in charge of regulating privacy. let's see where we get as we take these steps. i think doing these one at a time so we are working in conjunction to be certain that we keep the marketplace robust, that we encourage innovation, that we do not stifle innovation. i think it's responsible of us as legislators to do that. >> senator marsha blackburn of tennessee. the president has a favorite currency and it is not bitcoin. why the markets don't seem to mind that the president plays favorites there.
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this is bloomberg. ♪
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emily: president trump has kept up the offensive, lashing out at facebook cryptocurrency plan libra, the president taking aim at the libra proposal on twitter, writing, i am not a fan of bitcoin or cryptocurrencies, whose value is highly volatile and based on thin air, facebook's currency will have little dependability. we only have one currency in the
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usa, it's called the united states dollar. i want to welcome back the chief commercial officer with your reaction to the president passwords. >> i think it's interesting we hear the president talking about bitcoin the last couple of years. it's a global currency. libra coin, bitcoin. the u.s. dollar is strong, so when people want to percent of their assets encrypt out -- but if you are in thailand, indonesia or argentina, you want 5%, 10 percent, 20%, you need global commerce to spend money around the world. he is partially correct about that. from a global perspective, libra and bitcoin serve a real value. >> other lawmakers are incredibly skeptical.
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they have skewered facebook's plan. is this going to be an issue? >> i think they are upset at facebook for other issues. they are going to have to explain next week when they go to capitol hill. facebook needs explaining to them. one option is to start in asia or outside of europe or america. >> bloomberg spoke with morgan stanley earlier about this issue of cryptocurrency. take a listen what she has to say question -- has to say. >> the regulators will require any new entrant into the payment system to operate under the rules that exist for all the banks today. you cannot have an offramp that
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enables you to circumvent these rules. especially when you were talking about reserve currency. >> facebook trying to get around something. >> money transmissions, licensing america. all that is going to take time. facebook has the work cut out. there is no work circumventing this stuff. >> there are folks out the industry itself, saying this could -- this could destabilize the blockchain. do you agree? >> i think it brings credibility
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to the whole industry. this will make regular more clear to the existing coin blockchain companies. it makes more people accessible. the ability to quickly and easily and securely secure a purchase -- >> i'm sure we will have you back. we are going to be covering the facebook libra hearings next week. david marcus, the cocreator of libra, testifies before congress next week. coming up, who watches the watchmen? if the u.s. government has its way it won't be chinese made surveillance cameras. racing to ban them. this is bloomberg. ♪
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emily: it's not just huawei equipment u.s. government has problem's with, it's racing to remove chinese security cameras from its own agencies and office. u.s. agencies have five weeks to rip out chinese made surveillance cameras. they have to do so to comply with the ban imposed by congress last year that tying to the threat of spying from beijing. let's head to washington to speak with the vice president of government affairs from the cybersecurity firm. are these cameras much of a threat? >> congress thinks they are. there have been several measures that would -- that would seek to ban these. and also recipients of federal grant money.
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>> how can the government meet this deadline? >> one of the things for scout has found, we work for a lot of the federal agencies. one of the things we do is automated detection of also -- all assets on their networks. and so increasingly, agencies are reaching out for tools like ours to help them do that in an automated manner. the key is all agencies have not implement it a tool like this. despite the agencies that don't have this automated detection tool, they are probably going to
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have the hardest time finding and removing them. it's going to be relegated largely to a paper-based drill. it's not very efficient and not very secure. >> there is this question whether chinese surveillance really is as dangerous as the trump administration and the u.s. government currently seems to believe it is. >> i would say in particular, cameras like these mentioned, they are mentioned by manufacturer. they sit in a privileged place. they perform a desk perform an important function to these agencies. there is a big concern if there are no known vulnerabilities associated with those devices. the threat of that data being brought back to an adversary would be extremely serious. >> how quickly do you expect this to happen? given the challenges you have
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laid out? >> there is ambiguity in the legislation as to whether the agencies are procuring the equipment or to remove it. certainly given other statements by the u.s. congress, it is their intention that the agencies would remove these completely. the challenge is that it is very difficult for any organization to detect these nontraditional, these noncomputer devices in the network. computers can run software that allow them to be scanned and monitored. the internet of things devices and operational technology, network equipment, they can't run that software. one of the inherent problems is they are difficult. their concern is for the agencies that don't know it is
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there. they don't know if they are going to be compliant with the ban. >> thank you so much for joining us. we are going to talk about amazon and alexa, getting ready to bring the noise. amazon plans for a hi-fi smart speaker that could have users turning it up. we are going to dig more into the ftc settlement, a record $5 billion fine. this as facebook faces multiple investigations from other agencies, including the doj, fcc, and an antitrust investigation from the ftc as well. this is bloomberg. ♪
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emily: i'm emily chang and this is "bloomberg technology." hey, alexa. crank it up. that is what amazon is hoping you will be telling alexa to do. the e-commerce giant is planning to introduce a high-end speaker to fend off rivals. as you can see, echo still has 54% of the u.s. market share. that number is expected to drop this year and next. to tell us more, mark gurman. what do we know about the new high-end echo? mark: this is something they have been working on for quite some time. it is designed to fend off
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competition from products like google. the thing to know is the homepod, sonos one, and google home max have not been that successful on their own. this is amazon saying we need a device that has as good audio quality as these ones to stay on top of the game right now as they are according to your chart. emily: can amazon create something as good as audio quality as sonos? mark: for sure. everyone else has done it. google, apple. all those smart speakers. they all pretty much sound the same. i'd be shocked to see if amazon could not pull it off. it will be a little wider, maybe taller. they need that because one of the key components to all of these sounds, the woofer and tweeters, the actual circular speakers. they need a bigger woofer that creates more space and the
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additional tweeters. right now, the amazon echo has one tweeter. this one will have four or five tweeters which should be comparable to the homepod. emily: let's talk about sonos. do we know anything about -- they have made high-end speakers for a long time. certainly, many people have had sonos speakers in their home. i think we have lost mark gurman. all right, mark gurman is no longer with us. you can check out that story at what we are going to talk about now more is facebook and the record fine from the ftc -- $5 billion. we don't know more about it but alistair barr is likely with me on the set. tell us the nuts and bolts, what we know. all we know is the $5 billion number. alistair: we know the ftc commissioners voted 3-2 on that,
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with two democratic commissioners voting against it. we have been having a debate. $5 billion for sure and a split commission which is not ideal. they like to have 5-0 on these types of things. emily: there was some dissent. alistair: totally. it could mean we will have a debate of what happens on monday because if it is just a $5 billion fine and nothing else, facebook shares will go up a lot because it will be a huge relief and they have $45 billion in cash. emily: and the critics saying that is a slap on the wrist. alistair: it could be because it is two democratic members of the ftc, that suggest to me it is probably just a fine and nothing else. what it could be is things like, you cannot collect this kind of data.
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when you do, you have to tell people about it. that will really change facebook's business model. if it is just $5 billion, it will continue making money. emily: we forget the open investigations into facebook. the doj and the fcc have investigations into facebook having to do also with the cambridge analytica scandal. the washington, d.c. attorney general is looking into facebook data and privacy issues. the ftc has been assigned facebook as a potential target for its antitrust investigation. are the hits going to keep coming? alistair: i think this one was a really big hit. i think the risk, there could be a really big risk on the doj side because they have a lot more power than the ftc to take action. in that case, the doj is likely looking into what facebook set about cambridge analytica and whether it committed fraud or
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made some other sort of mistake that could take it from a civil fine into some other type of realm. not saying they did anything like that, we don't know. that is the type of thing the doj does look into and we don't know anything about how that investigation is going. that would be a bigger risk. state attorney general suing the company for similar things the ftc has settled for would be less of a risk. emily: talk to us about how we expect this to play out because aside from the fine, there is possible speculation this could impact mark zuckerberg specifically. how he actually leads the company, right? alistair: we read about that before today where they were having a debate whether to somehow censor mark zuckerberg in some way. there was debate between the commissioners about that. i suspect that is partly why the
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two democratic commissioners voted against this settlement. we're not sure what that might be. facebook has already responded to some of that, where they have proposed this kind of independent board that will review certain decisions that facebook makes. still, he's in charge and has all of the stocks. emily: this is the biggest fine from the ftc over anything in history, $5 billion. 2012 is the next biggest fine, google, $22.5 million. 2006, choice point for $10 million. is this indicative of a new ftc or a new approach by the u.s. government in general under the trump administration that it is far more aggressive on big tech? alistair: i think it says more about how much of these big tech companies make.
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in 2012, google made quite a lot of money but nowhere near what it makes now. facebook did not make much. emily: it was not a public company until may of 2012. alistair: it has to do more with the fact that there is no way they could fine facebook $50 million for something like that. they would be laughed at if they did. they actually have to have some kind of impact on facebook, even though it will be relatively small at $5 billion. i think it says a lot about the criticisms being lobbed against the ftc in particular on how it might be as forceful. the members did not follow through on antitrust investigation on google. it did have some limits on how it could fine companies, but yeah, it has been criticized for being a bit toothless. emily: a tough week for facebook with the hearings on capitol
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hill having to do with facebook libra and a house antitrust hearing, as we have discussed. alistair barr, thank you. we will dig deeper into cisco and its recent purchase of acacia communications. a multibillion dollar purchase. we will hear from the cisco executives about what's next in the future. this is bloomberg. ♪
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emily: earlier this week, we brought you the news that cisco is buying acacia communications in a $2.6 billion deal that is expected to close in cisco's year. guy diedrich, vice president and global innovation officer, discussed the merits of the deal on "bloomberg daybreak" from hong kong. guy: the internet is exploding. we're starting to see connections around the world we have never seen before. we're currently connected to 25 billion things. by the end of 2030, we are going to be connected to 500 billion connected things. the requirement is going to be for data density.
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being able to capture and analyze that data. it is going to be around speed. getting an ability to very quickly dispersed that data. it will be around low power consumption. all three of those boxes are ticked by acacia. paul: a technological sense, sounds like a very good marriage. how about the business sense? a lot of acacia's existing customers are customers of cisco. can you identify any difficulties there? guy: no, that isn't the rationale behind the acquisition. we're a global company. we operate in 120 countries around the world. i run a program called country
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digital acceleration that works with 30 countries and their leaders to help them digitize faster. the acacia acquisition will help us serve them better. shery: will it also help you to sell two big giants like amazon and google? guy: we certainly believe so, absolutely. it is a bit of a game changer for us from the standpoint that it gives us a relevance. it gives us a technological advantage moving forward to meet the needs of our customers as we see this massive explosion in the digital age. shery: just before we had you on, we were talking about all these concerns over surveillance cameras made by china. we have ongoing tensions when it comes to huawei, between the u.s. and china. have any of these issues have any impact on your business, especially when it comes to the deployment of 5g networks? guy: no, and the reason is because we are in the infancy of 5g.
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people keep referring to it as a race. we take exception with that. it's really not a race. it is a sprint. there is going to be one winner and it is going to happen quickly. in fact, we are in the infancy of 5g technology and evolution. it's going to be much more like a marathon. emily: cisco vice president and global innovation officer guy diedrich. let's turn to travel. a hong kong-based firm is helping travelers. klook has invested in goldman sachs, softbank, and says it aims to attract more users in the united states and europe while maintaining growth in asia. eric gnock fah, the cofounder and coo, spoke with "bloomberg daybreak: asia" in hong kong. eric: we have seen some impact from the long-haul travel. the good thing for a travel company for having a global
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network is we see travelers shifting their behavior. for example, china, we are seeing them go into southeast asia, especially thailand a lot more. the korea and japan shift, it is becoming more popular. the good thing is we see them moving towards the southeast asia region. for hong kong, we have not seen much of an impact. i think it has been well received in southeast asia and broadly. we're seeing travelers are still coming. shery: that is really interesting. are you seeing any decrease or impact in the number of travelers, if not the flow itself? eric: not exactly. i think travelers are still very keen to go out and explore. partly because asia is still an emerging market. southeast asia is still really scratching the surface when it comes to outbound travel. over 135 million have gone out last year. we are seeing strong momentum,
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but it is being concentrated more in the regional travel. paul: how about klook's presence internationally? are you looking to expand into more countries? eric: absolutely. we started with in hong kong and the asia-pacific. since last year, we have extended into europe and the u.s. we are seeing strong momentum. now, in the tokyo olympics in 2020, we will see more people traveling from the west coming to apac, especially japan. paul: you have raised more than half a billion in five financing rounds. do you have plans for more? eric: i think it is fundraising as we go, especially as we grow into a global player. it is about growing the users and our services. we have the backing of softbank
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and plan to double down in apac, especially in japan with the tokyo olympics coming up. there is so much more we can do. at the same time, we see a great opportunity in the global markets including europe and the u.s. we already have a team of about 50 people and plan to expand to 100 people by the end of the year. shery: do your plans include acquisitions? eric: i would say we are opportunistic. both from an upstream and traffic perspective. for the time being, i will say that we are seeing strong momentum continued in the organic regional expansion. we put more within our own team. by now, we have about 1200 people stationed across the world in over 20 offices, mostly in apac but now expanding to the u.s. and europe emily: eric gnock fah, the klook
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ceo and cofounder. ford and vw joining forces on electric cars. how the two automakers are prepping for tougher international emission standards, next. this is bloomberg. ♪
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emily: politics crossing into the tech world again with amazon. protesters inside the company's web service summit in new york played the recordings of children being separated by their parents at a u.s. customs and border protection facility. it came as the cto werner vogels was giving his keynote speech. the protesters want the company to cut ties with ice. a spokesperson says companies and government organizations should use technology responsibly and lawfully.
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volkswagen and ford teaming up on electric and self-driving cars, expanding upon an established alliance that will invest $2.6 billion in argo a.i., in a deal that values the operation at more than $7 billion. this after the two auto companies announced that they would join forces. david westin sat down with vw ceo herbert diess and ford ceo jim hackett to discuss. herbert: we are in close relationships with some of our chinese partners. we are big enough. what is to come to the automotive industry is big investments into electric vehicles. it just makes sense for big companies to share some of the effort. faster and more efficient. david: how does this fit with
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your restructuring in europe? jim: it helps the renaissance. in fact, this came -- this idea came in parallel while working with the autonomous problem last year. i was having to watch one of my favorite football games at halftime. i pick up the phone and call herbert and said as we are working through this technology, it occurs the both of us that there is opportunity to expand the nature of this. he said, you've got to take a look at this architecture. quite humble, but really extraordinary engineering. so, it just started to fit together. because these teams were having these early discussions, it was easy to throw that into the mix and say try to rationalize that. when we made the first announcement in january, we were in the middle of that. we had a lot of work to do. i'm not worried that here we are
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in july announcing these two facets of the alliance because it will be just in time for when we need it. david: we did not do so well in that game if i recall. talk about the timing of all of this. is this fast enough because in europe and china, the governments are pushing forward emissions free technology. will this be in time to help volkswagen, for example? herbert: we think we are right in time. when emissions really start to get tough in 2021, we will have all this new technology, driven by our ventures in china. we have a high market share in china, 18%. we need about 25 million vehicles per year. we are investing heavily in china. very competitive in europe. ford will make us more competitive.
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it will accelerate. david: the platform volkswagen has here gives you flexibility on what kind of vehicles you will build. initially, will it be passenger vehicles, suv's? jim: it is initially passenger vehicles but we are not limited. i want to add, ford intentionally is complying in europe and will be in addition with the meb. it is just a faster way for us to make this conversion. david: what about latin america? you are cooperating on some things. jim: as i came into the industry two years ago, i learned ford and vw had in latin america which did very well. it stopped. i think the difference this time is the nature of the products we are working on and the kind of issues we are addressing happen
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to be ford investments. that is the better kind of challenge because it causes a win-win for both sides and a higher engagement because we are on deadlines to try to meet targets. so, i have more optimism with this phase of what has been a good relationship between vw and ford over the years. david: joint ventures offer certain opportunities but also offer some challenges. a total integration. how did you take two fierce competitors in volkswagen and ford and have them cooperate some of the time and compete some of the time? herbert: we have a good track record. in america and europe, we shared some plants and technologies. i think we share some values. we have a quite synchronized view and what is going to happen in our industry. we are really complementary. ford is very strong in the u.s.
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we are strong in china and in europe. in latin america, we are fully complementary. we can help each other a lot. we do this project by project. what we have decided to do so far is very promising. emily: vw ceo herbert diess along with ford ceo jim hackett. that does it for this edition of "bloomberg technology." next week, we will be all over the hearings on capitol hill. facebook called to testify about its libra cryptocurrency project. we will be covering that as well as facebook and google going before the house to talk about antitrust. ♪ we're the slowskys.
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