tv Bloomberg Technology Bloomberg July 24, 2019 11:00pm-12:00am EDT
emily: i am emily chang in san francisco. this is "bloomberg technology." coming up in the next hour -- >> this is a watershed moment in privacy governance. and privacy enforcement. emily: u.s. federal trade commissioner noah phillips joins us to discuss facebook's record $5 billion penalty to put privacy violations behind it. facebook has announced it is being formally investigated by the ftc on antitrust.
plus, facebook marching forward with at least one ftc settlement in its rearview mirror. the company posted second-quarter results, shares are up more than 50% this year as most of wall street says fundamentals remain strong. tesla resorts second-quarter results, the ev maker misses on cutting losses and wall street reacts. we will break down what went wrong and right. our top story, facebook out with second-quarter earnings, proving the company can grow advertising and users while feeling the heat from regulators worldwide. hours after facebook announced a settlement with the u.s. federal trade commission to end a probe into the privacy policies, the company confirmed it is being investigated by the ftc on antitrust as well. facebook was alerted to the investigation in june but is just now sharing the news with investors. this as growth in revenue and daily active users beat estimates but with its reputation continually under assault, how?
to discuss, we are joined by the marketers. david, first of all, what is your take on this new antitrust investigation official by the ftc? david: it doesn't really surprise me. we have multiple parts of the government investigating facebook for many things. one of the most salient things about the settlement and the $5 billion fine is facebook did not admit they did anything wrong. i think we really haven't seen them show a lot of introspection about why all this happened and i think that is telling. unfortunately, the reason it happened is because they have had poor governance and it had bled out into all kinds of areas of their business and it is causing them long-term ongoing harm. emily: we are going to talk to one of the commissioners about the details of the settlement and how it will change facebook going forward in a moment.
speaking about the numbers, with all of these controversies, all of these scandals, how does facebook seem to keep beating the odds? deborah: it is a tough company. it really is. every quarter i say the same thing. they have been able to grow revenue, grow user base, despite mounting challenges. this quarter, more of the same. it is really incredible that facebook has been able to do this quarter after quarter. emily: david, i am going to push back a little. they beat on daily active users, on users, they came light on monthly active users, but do you think this is not going to impact the company's long-term reputation and ability to grow? david: it's reputation is -- the company's reputation is seriously impaired already. the ability to grow is a complicated question, because,
as deborah pointed out, they just keep raking in the dough. they are a brilliantly well-designed advertising platform, especially for smaller businesses. there is not really another place to go with similar results. that is great for this company, but long-term, is it going to affect them? it is absolutely going to affect them. there is no question about that. debra: i would love to jump in. i 100% agree with david on that part. i think that teflon part of it is their ability to grow revenue and user base quarter after quarter. i do believe there is plenty of consumer sentiment issues with facebook. there are plenty of growing issues with regard to how advertisers feel about facebook, but the thing is, there is still spending there and people are still using facebook, despite those concerns.
emily: earlier today, zuckerberg gave a town hall at the company. here is what he had to say about the settlement. take a listen. mark zuckerberg: i believe that companies should be held accountable on privacy. this is what accountability looks like. as part of this settlement, we have to pay a major fine and there are now very clear rules about how we need to operate on this. i believe that this is going to help us serve our community better. emily: the ftc could have sued facebook but that didn't happen. they could have sued zuckerberg, that didn't happen. they could have curtailed zuckerberg's professional responsibilities as well. that happened to a very small extent. do you think the settlement goes far enough to provoke the introspection that you believe is needed as the company continues to grow? david: i would probably have to say no, because i do not see enough introspection.
if it takes a $5 billion fine to make a company finally start doing what it should have been doing all along with privacy and governance, that is a very bad sign about the culture of the company. i do see gradual reform and changing behavior, i am not going to deny the company is any other place than it has been in the past. the fundamental reasons why this happened have not been addressed and i think they allowed a culture to emerge which showed very little concern for some basic interests of their users, because they were so thrilled at the amount of money they were making. emily: this is really a family of companies now. facebook, messenger, whatsapp, instagram, how do you see growth in these different divisions changing in the future? instagram continues to be a better story.
we suspect that facebook proper users are getting older, growth is starting to slow. what do you see? debra: instagram remains a very strong growth engine, no question. no question. that said, according to our forecast, instagram is still well under one third of facebook's total revenue and will continue to be that way in the next few years. it is not like growth at instagram is going to suddenly balloon this company to be bigger than it already is. the main part of revenue, the main driving force of revenue remains that big blue app. there is no revenue going into whatsapp, limited revenue going into messenger. it is really all about the blue app and about instagram, with most of the focus on the blue app. emily: we will continue to follow the headlines. facebook's earnings call is
underway. thank you both as always. in other earnings news, test the shares fell in late training after the company reported -- tesla shares fell in late training after the company reported second-quarter results. the carmaker posted a worse than expected loss. tesla said it is going to focus on delivering more cars, expanding capacity and generating cash going forward. we will break down tesla's earnings later this hour. coming up, back to facebook's record settlement with the ftc. >> this is a watershed moment in privacy enforcement and privacy governance. emily: we will hear from ftc commissioner noah phillips on how he thinks the facebook fine of $5 billion will change how your data is protected and ask about the newly revealed antitrust investigation. that is next. this is bloomberg. ♪
>> this settlement is the result of an exhausting -- exhaustive investigation which concluded that facebook betrayed the trust of its users and deceived them about their ability to control their personal information. emily: that was federal trade commission chair announcing what we all knew was coming. a $5 billion settlement between the ftc and facebook. four years of privacy violations by the social network. some terms of the deal increased responsibility by the board to protect user data, but little impact to facebook's lucrative advertising business. the agreement was approved by the ftc with a vote along party lines. i want to bring in one of the officials who voted in favor. minutes ago, facebook announced it is being investigated on antitrust by the ftc, one day after the department of justice said it has opened an antitrust probe into big tech. ftc commissioner noah phillips
joins us from washington. thank you so much for joining us. we just learned about the ftc antitrust investigation into facebook. on top of this settlement news that we heard today, how advanced is this antitrust investigation and can you tell anything about what you are exploring? noah: thanks for having me. the details of what we do in terms of investigations and even the existence of those investigations is confidential and we don't reveal it. in this case, because facebook has publicly announced that they are the subject of a probe, i can confirm that there is a probe. emily: so, it is widely known that, for example, facebook used data that it tracked from its own users to decide whether or not to buy instagram, to understand that instagram was becoming popular. do you think you will use some of the details that you learned as a result of the privacy investigation in the antitrust investigation?
noah: unfortunately, because it is an ongoing investigation, other than confirming its existence, there is nothing that i can say. emily: all right, so let's talk about the ftc settlement, which i said earlier, the vote was along party lines. it was not along party lines. however, can you tell us how the ftc came to the decision? came to the terms of the settlement we heard today? noah: in 2012, facebook committed to us and to the american people that it would take certain steps in regard to privacy. in particular, that it would not misrepresent the kinds of sharing going on with app developers and the control facebook users had over data they gave to facebook. it also committed to having a reasonable privacy program, but facebook broke those promises. it also broke a few other promises. we are here today because we looked at what facebook had done and we wanted to send an important message about
adherence to ftc orders and commitment to privacy. noty: mark zuckerberg will have to personally certify that facebook is complying with its new privacy policies. how would you like to see his management of the company change? noah: i think, above all, what we would like to see is a greater focus at facebook on privacy. that includes mr. zuckerberg and under the terms of the order, he is going to have to focus more on privacy, but it is not just about mark zuckerberg. what this order requires beyond the $5 billion fine is attention to privacy at every level of the company. engineers who are working on projects are going to have to think about the privacy impact of what they do and if they choose not to protect privacy, they will have to explain why. this goes all the way to the board of directors. the board is going to have a new privacy committee which will have ultimate authority to oversee privacy. emily: why not find zuckerberg
directly or do more to limit his personal authority? noah: as i said, this case is not just about mark zuckerberg. this case is about facebook in general. mark zuckerberg is a very important person at that company, but he is by no means the only one. we want people up and down the line to be focused on privacy. emily: there are a lot of critics who say a $5 billion fine is not enough and that the structural changes required here are also not enough. one of your colleagues who voted against the settlement says it imposes no meaningful changes to the company structure or financial incentives which led to these violations. instead, the order allows facebook to decide how much information it can harvest from users and what it can do with that information. what is your response? noah: to me, there are two really important points here.
the first is this. what we do at the ftc is law enforcement. so what we look at is what the facts show, what are the obligations, and did the company break the law and we try to remediate the violation of the law? we don't come in and tell the company what to do about everything. there are a lot of people in america who have real concern about how facebook conducts itself. that is a conversation that goes on all the time in homes across the country and right now in congress, which is thinking about privacy legislation. what facebook was doing in terms ad practices is not what this case was about. this was about the misrepresentation to users about privacy and several of those things we talked about, and critically, that is what we are aiming to remedy. emily: another colleague who voted against this says the ftc would have done better by suing
facebook and zuckerberg himself. why not do that? noah: i don't think that is an accurate characterization of the state of play. the revenues we have achieved are both financial and injunctive, meaning the changes we are making to facebook, are very unlikely to have been achieved through a court process. in a normal litigation, you are weighing the certainty of less against the chance of more. in this case, what we were facing is a decision between the certainty more and the uncertainty of getting even less. emily: now, privacy advocates have advocated for bigger changes to how facebook attracts -- tracks its users and fundamental changes to the advertising revenue business. do you really think that the changes made here are going to be enough to change facebook's perpetuity going
forward if it is not, aside from , a $5 billion fine, hitting the bottom line? noah: that conversation is a really important one. it is part of the conversation going on nationally and in congress about what ought to be allowed and what isn't allowed. that is not what this case is about. this case is about the commitments that facebook made and its violation of those commitments. that is what we are focused on here. emily: let's talk about going forward. are you in favor of a national privacy law? noah: that is something i have urged congress to consider. i think they are looking at a a lot of business practices at facebook and elsewhere in the economy. i do think congress ought to take a careful look at this case, look at the underlying practices, and if they think that they don't like what facebook did and should have changed every thing about their business, that is a fair thing for congress to think about and
that should inform the conversation over national privacy legislation. emily: let's talk about the conversation happening between the commissioners. the chair of the ftc has said he doesn't want or believe the government should have broad rule-making authority, rather targeted rule-making authority. is a national privacy law going to be better for users and consumers in the future? noah: i certainly hope, if we adopt any law, that it is better for consumers. in terms of rule-making authority, my view is that the fundamental decisions in privacy involve real trade-offs between competition and privacy. those are the kind of trade-offs congress is best able to make. emily: what kind of a law, what details, what fine print would you support? noah: i think we have to see what congress comes up with. i am very excited to see them come out with a bill and consider it.
emily: let's talk bigger picture. i understand that you cannot comment on the specifics of the antitrust investigation into facebook, but in your opinion, do you believe there is a case to be made that facebook, given that it owns whatsapp, instagram, messenger, is too big? noah: the old saw in antitrust law is that big is not necessarily bad. but it is also true that where a company has a dominant market position in an antitrust defined a series ofe are legal obligations that go along with that. i am not going to comment directly about facebook, because, as you noted, the of confirmed the existence of the antitrust probe. emily: more broadly, senator elizabeth warren has called for the breakup of big tech. she has gotten support from both sides of the aisle.
does she have a point? noah: i gave a speech about this a while ago and what i said was, in antitrust, as elsewhere in law enforcement, what you want to do is figure out what is the wrong and how does the remedy address the wrong? that is a really important conversation to have. my view is that simply saying the same remedy for a wide variety of companies that have very different practices is neither the right answer, not getting to the right outcome, and is certainly not true to antitrust law. emily: speaking of ongoing investigations, i do have to ask, because it has been reported that the ftc has reached a settlement with youtube over violations of the children's online privacy protection act. can you tell us the status of your discussions? noah: as i said, as a general matter, we don't even comment on the existence of our investigations, much less the substance. emily: more broadly, can you
comment on your level of confidence that big tech companies, whether it is facebook or alphabet or youtube, which is a google company, are they living up to the law? are they doing what is right by consumers, by children? noah: let me say the following -- the law details what their obligations are and when they break the law, we are going to be there and that is why we are sitting here today. emily: noah phillips, commissioner at the federal trade commission. thank you so much for joining us on a big day. thank you. good to have you. coming up, the year of big tech ipos continues. wework could be hitting the public market at the end of the year. we will have that story next. this is bloomberg. ♪
-- looking to september in what could be the second largest ipo of the year. they are targeting a sale of about $3.5 billion. softbank is their biggest investor. it values the business, which is still unprofitable, at $47 billion. another setback for the self-driving car company. -- industry. the general motors unit is backing off plans to deploy robo taxis by the end of the year. the performance will not be able to be examined in time. coming up, tesla sputters. shares of the electric carmaker fall in after hours trading after the company reports a worse than expected second-quarter loss and backtracks on a profit forecast. facebook's earnings call still underway. take a listen to mark zuckerberg telling investors about the $5 billion fine his company will be paying the ftc. >> i want to talk about the recent news that we reached a settlement with the ftc over privacy concerns. as part of this, we have agreed
to pay a $5 billion fine, but even more importantly, we are making major changes to how we build our services and run this company. this will require investing a significant amount of engineering resources and building tools to review our products. it will also significantly increase our accountability by bringing the process for automating privacy controls more -- auditing privacy controls more in line with how financial controls work at public companies. ♪ hey! i'm bill slowsky jr.,
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emily: this is "bloomberg technology." i am emily chang in san francisco. tesla posted a worse than expected loss, cash and delivery emerging as the biggest challenges to growth. i have guests joining me now. n, you have got an outperform. what's your take on these headline numbers? >> i think the $5 billion on the balance sheet is a great number. i think margin is probably why the stock is down.
if you go through the numbers in detail, i think margin is better than expected. of gaapfor guidance positive on the income is also good as well. it's kind of an overreaction to downside, in my opinion. emily: if it is an overreaction, it is a big overreaction. shares are down 10% right now. there is a disappointment on profit. the company turned profitable at the end of last year. that reversed at the beginning of this year. elon musk said the company would become profitable again later this year. it looks like that's not going to happen. >> they are still trying for it. and so it should be said that there are sort of two things going on with tesla. one is that they have been pushing like crazy for volume. they want to be a large volume car manufacturer, one of the biggest car manufacturers in the world long-term. this car that they are selling , the model three, does not have great margins, it seems. they pushed so hard to get the price down to that magic $35,000
base price, got there. it has come up just a tiny bit. but the margins are supertight on those low-end cars, and as people buy the cheaper model three, they are moving away from tesla's more expensive cars, the , so there is pressure on profit that at the least is a near-term problem, and critics are going to say this is a long-term problem. this is a company that will have a hard time getting to profitability. emily: ben, is it a near or long-term problem? >> it is true. the model three actually had better margin quarter over it's not true they are making improvements on the gross margin, so i'm not sure what that statement is. emily: max? >> yeah, the company is not profitable right now. they would obviously like to get profitable.
i think in the long run they want to be more efficient in the factory, be more efficient in their operations. that's the message we've been hearing from elon musk basically for the last year, and then they want to get these new cars out, the model y, which could be a huge boon for the company. that's the category of car that most americans are buying, and also getting to china -- emily: it is a cheaper suv. what is the status of it? >> they are working on it. emily: is it going to be here next year? inquiring minds want to know. >> i don't have any inside information. i think it is certainly the big effort that tesla is doing right now, on top of building a giga factory in china, which would be chinese markethe is the biggest market in the world for electric vehicles. emily: what is your take on how much china can change the tesla story as they continue to try to get new models to the market? >> so we don't have any
production in our numbers from china this year. i think what is most underestimated about everything here is the brand in china and how it has kind of become a wildfire and how many cars it can sell, and i think that is upside. just back to the cash flow they generate during the quarter, it is a couple hundred million dollars, so this idea that they don't make money is completely wrong and the headline needs to change. there's $5 billion on the balance sheet. they are not going out of business. you have other oem's that have really hard problems, restructuring problems, and it is not tesla. manufacturersan that are launching by tesla. is a point there, max, and that if you talk to
people who own teslas, they love tesla. they love their cars. they are not focused on the ins and outs of if the company is making money, what deliveries they are making, what production looks like, so how much does that matter? >> it's huge. making a good car, if you are a car company, is definitely the most important thing. it is more important than anything else. i think to vence point, one thing about the conversation about tesla that has changed over the last year, about a year ago, there were people saying the company is doomed, they will never get to volume production, and now, the debate between the bears and bulls is a different debate. is tesla a niche manufacturer? that would be the bear case. the bull case is this is a company that is going to be bigger than toyota, daimler, and so on, and if you are elon musk, that is a good shift in the conversation. you don't have as many people , as many sane people, going around talking about this thing collapsing any day.
which was happening a year ago. emily: talk about a shift in the conversation. he has been a little bit more restrained on twitter, let's say, since his settlement with the sec over how he is communicating with the public on social media. n, what is your evaluation of musk's leadership, given some of the hiccups over the last year? >> so i think people want to invest with musk. i think that him being more restrained or quiet is helpful. i think that being cash flow positive is helpful and having 5 billion bucks on the balance sheet is helpful for the growth managers that haven't been ownng attention or can't this or are avoiding it, to come back and buy it at a lower price than, whatever, a year ago when they were not where they were.
we areall right, going to continue to watch the and listen in on the tesla call and bring you any headlines as we have them. now, a story we will continue to follow. uber has announced board member arianna huffington is resigning. "today i toldeted my fellow uber board members that given the growth, i will no longer be able to give my board duties the attention they deserve, so i will be stepping down. i look forward to watching uber go from strength to strength. she joined the board when former ceo travis kalanick was still on the chair and was instrumental in getting a new ceo to get the company back on track with some of its cultural issues. coming up, facebook's new era. that is what mark zuckerberg says is in store for the company after its record $5 billion settlement with the sec to settle privacy violations, but will that be enough to keep lawmakers and investors happy? we'll discuss next.
and as we head to break, zuckerberg participates on the post earnings call, providing details about the new privacy board involved in the settlement with the ftc. >> we will now also have a new privacy committee of our board that will oversee our privacy program and work with an independent privacy auditor that will report to this new committee and to the ftc. we are asking one of our most experienced leaders in the product to take on the role of chief privacy officer for product, reporting to me and managing our privacy program. we will also be more rigorous in monitoring developers who access data through our platform. ♪
mark zuckerberg told employees at a town hall that the company's $5 billion settlement with the ftc has changed the game. >> this is a new chapter for the company. privacy is more central than ever to our vision for the future, and we are going to change the way we operate across the company, from leadership down and the ground up. we are going to change how we build products. and if we don't, then we are going to be held accountable for it, and this is what accountability looks like. emily: but has it changed the game? to discuss, we are joined by ben brody, who covers tech's corporate influence in the capital. in the studio, we have the former cto of the ftc and the associate director of research at the electronic frontier foundation. what is your reaction to the settlement? asidereaction is that from the monetary figure, which is notable for the ftc, although not really notable for facebook,
the fact that they essentially won on all the other counts. facebook won. there is four attributes, one is monetary, the second amount is the amount of personal liability on the ceo, which other than the board reporting, there is very little. injunctions or remedies on bad behavior, which are often essentially more of the same. ultimately the scope of what they are indemnified for is incredibly broad, right? thise settlement included very kind of noteworthy provision that said all matters in front of the ftc prior to the settlement date, they are indemnified for, which is pretty unique. i have not seen that in any other ftc settlement. you typically see that after the case has gone to trial, but they
got that in the order. zuckerberg was not even himself deposed, even though he appeared routinely in the documents that the ftc looked at and is cited in the complaint. emily: you think that they should have talked to him directly? >> absolutely. emily: where do you think the gaps are? >> one of this over linings is the ftc has mandated facebook can no longer use two factor authentication phone numbers for targeted advertising. problem withs the two factor authentication? for example if you forget your password or you are trying to verify yourself on a new device, facebook will ask you for your phone number, right? >> there is a couple of different ways they use your phone number for security. one is two factor authentication, so in addition to putting in a password, you put in a code you get on your phone, often through a text message. or you are right, if you forget your password, facebook sends you a code via your phone number. if there is a strange log in, you will get an alert. emily: it is used by many, many, many companies.
>> absolutely. two factor authentication broadly is a security best practice, a critical thing to use. emily: what happened here is somehow advertisers got hold of these phone numbers that facebook was getting from users for security purposes and then targeted users based on their phone numbers, correct? >> exactly. and that confirmed the worst fears of a lot of users who need the protection of two factor authentication the most, who are also concerned with their privacy, privacy concerns like most of us do. in my own work training high risk people and trying to get them to trust two-factor authentication, this news that facebook was using those phone numbers for invasive advertising really undermined those efforts to get people more comfortable with and trusting this kind of measure. the good news is that the settlement said facebook can no longer do that, but it left some holes as far as other phone number abuse that facebook was doing. it didn't say anything about shadow contact information,
which is when your friends upload your phone number and that becomes associated with you, a phone number you never gave facebook directly. it also didn't say anything about ways that two-factor authentication factor can be exposed to reverse lookups. if i upload my contacts that include the phone number, it can be linked to a facebook account that uses that number, but maybe i didn't know that person had that account. there are holes, so it was kind of an incomplete win. emily: what has been the reaction to this in washington? >> i think a lot of folks -- i would describe it as tepid to deeply skeptical. there's a group of folks, some of them in the mainstream privacy community, some of them are lawmakers, who have said this figure was pretty high, they are changing the board. let's look and see if maybe this is enough, but we want to keep on top of the ftc about this and we want to keep pushing privacy legislation. then you had democrats and privacy hawks who just were firing off all the color they could, all the metaphors. you call it a pinprick, slap on
the wrist, a fig leaf settlement, call it whatever you want. the common thread was -- and this was true even of the commissioners, saying it really is beyond time to pass privacy legislation. that isn't necessarily going that well on the hill, but if we are able to do that, we could have given the ftc some of those powers that i think even republicans on the commission were lamenting they did not have. emily: we heard from a number of the commissioners today, including noah phillips, who we spoke to earlier. take a listen at what commissioner christine wilson had to say about the actions against mark zuckerberg in particular. >> we do not have the legal authority to remove mr. zuckerberg from the driver's seat, but we have imposed a robust system of checks and balances that extinguishes his ability unilaterally to chart the path for consumer privacy at facebook. we have required that privacy risks be taken into account at each fork in the road, and we have mandated heightened
protections for certain categories of products and services, including those directed at minors. emily: do you think zuckerberg's power has been limited enough? he's talking about this being a new chapter for facebook, and it is hard, given how many times facebook has violated user trust , to believe that they are really going to change their ways, or change their approach to privacy, even as they appoint a new privacy officer. ,> who was not a privacy expert just a product percent. i think the challenge is that the order and stipulations in the order do not necessarily require facebook to prioritize privacy over all else. it simply requires the company be truthful, or not be deceptive again in the ways it collects and uses consumer information. to your point, they could actually request phone numbers,
the same phone numbers they use for two-factor authentication, and use it for targeting, they just cannot use it under the guise of solely collecting for two-factor authentication. the section five authority says that companies can't be deceptive about their practices, but nothing prevents them from being transparent and going ahead and doing so. emily: there are other things coming down the pipe that facebook has already said it is going to do, like merge the back end whatsapp messenger and instagram. jenny, i know you believe this is deeply problematic. what other major privacy issues do you see down the road that have already been basically teed up? >> one huge one with whatsapp and instagram messenger merging is the issue of merging those identities. your whatsapp number, your facebook name, and your instagram handle. facebook has promised that will be opt-in when it rolls out, but facebook has a history of reneging on privacy commitments. i think looking at their privacy
policy over the past 10 years is a study in bait and switch. we would like to see some kind of limitation that facebook will stick to its word, that if it says it will be opt-in it will remain that way and users will not be surprised by new privacy measures in two or three years. emily: what do we know about the ftc antitrust investigation? -- investigation into facebook that facebook just announced and commissioner phillips just confirmed? >> we don't know a lot about it. i sense commissioner phillips may not know a lot about it either. it's early days, but when the ftc starts an investigation, they have a credible reason to believe that there may be a violation of antitrust laws, that there may be consumer harm that they need to look into. that is basically what that investigation means. that is about all we know right now. we also know that ftc talks to european regulators, so they may be taking some cues there, but often they want to go their own
way, so it really remains to be seen what will happen. emily: as someone who worked at the ftc for many years, what is happening right now? >> it is quite likely that commissioners do not yet know if it is at the staff level. they were probably briefed on it but they probably don't know the details, and that's by design. you are supposed to keep a wall between the investigation. i do know the practice you just described in antitrust terms would be bundling. requiring that one account be forced to use a different product, so if you have a whatsapp account, you would be forced to use a facebook account. that would be bundling. there are a number of things the ftc could be looking at with regard to the antitrust investigation. i think the most critical piece, the one you asked the commissioner hit south -- commissioner himself, is to what degree -- the ftc has the bureau of consumer protection and the bureau of competition and their bureau of economics.
the bureaus operate independently, right? the question would be to what degree are they overlapping and sharing information from the consumer protection investigation with the competition investigation. emily: interesting. fodder for the next few months, maybe years. ashkan soltani, former cto of the ftc, and our own ben brody in washington. thank you all. still ahead, ebay is making another effort to compete with amazon, this time pushing limits on delivery speed and cost. our conversation with the ebay ceo, next. this is bloomberg. ♪
they are also feeling pressure from an internet sales tax recognized in 19 states. bloomberg talked to the ceo and asked about the impact. >> there's no doubt we have seen a headwind from the rollout of internet sales tax. that will continue as more and more states roll it out until we fully implement it and work our way out of that next year. at the beginning of the year, no states had an internet sales tax. right now there are nine that have implemented, there are 30 have declared. i think it is a terrible policy. i think it is a regressive tax on small business. we've been advocating on behalf of small business for quite a wild. it's the only tax i know of where states effectively are taxing people out of state that can't vote for their politicians. so i think it is a bad policy, but at the end of the day, it is what it is. we comply with the laws of states, and if they implement a tax, we will collect it on behalf of sellers. i think practically, what it means for our business is there will be a u.s. headwind after these taxes roll out.
most states are between 5% and 10% at checkout. that, along with tariffs, is another headwind on the american consumer. it will be in effect until we lap it at some point next year. emily: i wanted to get some information on the trade war and how it is impacting business both for sellers and buyers on ebay and whether you are seeing a departure of some stores. >> it has not impacted us directly because most of the goods we sell have not been tariffed. i think friction in commerce is not a good thing. when i come to a conference like this, what i see is an engine of u.s. job growth. i'm here with thousands of small u.s. merchants who use ebay as a platform, and they are hiring, they are growing faster than other businesses. they are hiring, and that's the engine of growth.
95% of the sellers that i will be with over the next two days cross-border, most of them to over 25 countries on our platform, so when we put friction on that, it is not ebay that suffers. it is a small business in the midwest that is trying to hire and trying to sell around the world, using e-commerce platforms like our own. so we are advocates of free and fair trade. we are advocates of low friction because i think that when we see low friction in trade, the u.s. economy wins and particularly, small u.s. businesses win. emily: that was the ebay ceo devin wenig. to clarify, the internet sales tax policy is currently in nine states. that does it for this edition of "bloomberg technology." we are livestreaming on twitter and follow our global breaking news network tictoc on twitter. this is bloomberg. ♪
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