♪ ♪ i'm taylor riggs in san francisco. this is "bloomberg technology." oming up in the next hour, black listed. stocks fall after china retaliates to u.s.a. export baby. we have the latest on chinese tech caught in the middle of the trade fight. facebook in trouble. attorneys general met with ederal agencies tuesday adding pressure to probes and advertising and competition. tech?s it fitness or

after peloton's 20% drop since another we look at company with its eyes on connected fitness. c.e.o. of mirror joins the program. but first, to our top story. t's all about the continuing escalation of the u.s.-china trade war. u.s. markets closed lower on tuesday, this is as bloomberg learned that the trump administration is discussing restrictions on port polio flows into china. that includes a particular focus on investments made by u.s. government retirement funds. joining me to discuss bloomberg's stocks editor dave wilson in new york. dave, start with just talking to that we saw selloff a little bit today. how much did china play a role in this? dave: well, they certainly played a role to the extent that if you look at chinese companies here in the form of american deposits and receipts, they took a hit. i mean we're talking about retailer alibaba holding

down 4%. j.d.com down 4%. the other search engine 2% and we started to see how the back and forth between up u.s. and china is showing in terms of individual companies and industries. i say that because three biggest eclines in the s&p 500 today were lab equipment companies, they were all down more than 6%. a had this dutch company, competitor of theirs come out and say their third-quarter up s growth didn't measure to their own forecast because of weakness in china. so that's one piece of it. another piece, the chip maker may be best known as a supplier go pro, one of the biggest customers is china's hick vision put on the ed to be u.s. black list yesterday. you saw those shares take a hit as well. 9.5% today. taylor: dave, i like that you talked about the black list. along with another story that we were following about the u.s. talking about restricting some of the flows

china. i'm showing a chart here on my terminal. the foreign t direct investment into china and i wonder if this comes as you a lot of seen investors go in, if the u.s. stopped buying chinese they really be hurt? dave: they would be hurt to the sort that you would lose of an investor base. bear in mind, according to reporting, they're talking about u.s. government pension funds specifically, not necessarily state funds or private funds or wider range of investors that put ofir money into the a.v.r.'s chinese companies. it's looking relatively limited at this point. suggest if to nothing else that the trade issues going back and forth etween the u.s. and china, maybe more of a challenge to get those settled when you know have financial flows as part of the mix.

taylor: you have been covering want to show you another chart here in my terminal, it's all about the companies with exposure to china a lot of their revenue from china. they have been underperforming as well. continue to see this trend, dave, where if you have xposure to china you can just assume underperformance? dave: well, we have seen kyagen asseen it with example, third-quarter earnings are coming up in a couple of weeks. we'll have a pretty good idea by the time you get results, about a company like caterpillar or boeing, the atomakers, perhaps, there are lot of companies that do a substantial amount of business n china that are laying out their results. you have to think there will be kiagen and es like more reactions like in the u.s. lab equipment stocks, it's a time. of taylor: bloomberg's dave wilson, thanks for joining me. scholars are calling for more cooperation with china. hat follows washington's

decision to black list some chinese tech companies over involvement in alleged human abuses. daniel rosen, he is the founder there will oup says be collateral damage to other companies. with mike mcgee at a conference in denver. >> this is affecting those companies, the ability to their financing, their relationships, their place in supply chains. there are hundreds and hundreds companies that have similar profiles one way or the other, thisre also thinking about could spill over to them. there is a fairly hefty chunk of high-tech activity here that's been implicated by this move and a hink it's going to take little while for people to sort it out, but it's going to create ome collateral damage i think here. like one major drone manufacturer that was interestingly left off the list, the most part it's covering most of the names people thought might be pulled

into this. mike: how does that affect u.s. companies, do we see a spillover replace the hey business? i understand that also they can se overseas subsidiaries to go around the sanctions? daniel: folks have been doing right, the trade space, for the past several years already. can inking about how you legally appropriately skirt some using your ks by overseas operations as a buffer new st the injection of policy regimes that are frankly untested and so part of the risk nobody rtainty that knows how this these things are exactly going to be enforced, what is an adequate compliance, kind of expectations are going to be from the bureau of or whoever, curity the commerce department is esponsible to oversee these sorts of things, but there is going to be an effect both on who american companies

and let'sas suppliers not forget, there is almost certain to be some kind of retaliation against american firms from the chinese side. retaliation nd of do we expect? daniel: interestingly, we also ad another story this week you want to talk about having to do with finance flows, right, and e have seen china already threatening to retaliate against money investors putting into u.s. government-related finance vehicles, but likewise, unreliable entities list that is sort of analogous list that ties washington is maintaining hreatening to put american technology companies on to that list on the grounds that they influenced by american political consideration, not just market considerations. can china really live without those firms? we'll see. probably an open question and a

lot of those chinese companies to figure o scramble out what it means for them. i don't think anyone really knows off the top of their heads. the story you mentioned that bloomberg was reporting that the administration, the trump administration is still about capital controls of one form or another on china. can that work? know, you guys have done a great job on this story for about three weeks now since to cook up.rted this ere is an aspect of which was to be expected and if think it's important to have he degree of disengagement or decoupling in trade terms that myselfed and made a part of the discussion, it's natural to at least do an kind of of what financial flows there are between the official sectors, china and u.s. into china into the u.s., right. that doesn't mean there is necessarily going to be action. people need to do a careful stock taking and do the

think about hey what the policy options might be. some folks here are outside of the white house that have wanted to jam this into the part ffice and make this of a conversation before the president, before the white ready to really put this at the center of the table. certainly there are some hawkish inside the white house that would like nothing but to to the tional elements disengagement party that's been years, n the past couple finance, additional sanctions actions having to do with whether it's iran stuff or north what have you, there is plenty of more things that can be thrown into the mix. there are definitely people on to inside that would like see that happen. mike: for people watching the whole trade dispute between the china, one of the frustrations has been to figure donald trump at wants. from the chinese side, what is xi's motivation now? daniel: well, the answer used to

stability, right. he wants stability, time for to consolidate its economic transformation, ability to the party control and manage risks at home and to hold at bay any kind of of the hat are outside ability of the government and the party to manager and control. at a oblem is we're now point where stability is no longer an option. that was daniel rosen, ormer of the rhodium group speaking with mike mckee. samsung posted quarterly beat estimates. there was strong demand for the south korean's company smartphone. samsung was helped by the debut of the new iphone 111 pro. samsung's uses digital display screen. u.s. states , probing facebook over advertise and competition met with top on j. antitrust officials monday. we have the story next. and if you like bloomberg news,

radio.s out on the you can listen on the bloomberg app, bloomberg.com and in the sirius x.m. this is bloomberg. ♪

taylor: we have some news crossing the bloomberg terminal is that the white house is that president trump will not participate in impeachment probes. again the white house saying president trump will not participate in impeachment probes. we will bring you more headlines come.ey now on monday, new york attorney the top etisha james, antitrust officials in

ashington to discuss a multistate antitrust probe into facebook. they raced the prospect that the the federal join investigations similar to the way states collaborated with the .s. antitrust case against microsoft in the 1990's. to discuss and joined by reporter ben and with me here in san francisco is wagner.rg's kurt do we know what was discussed in these meetings today? emphasis that the attorneys general who participated put out was that especially talking about consumer data which has been a huge problem of theirs as the antitrust case generally about social media. it doesn't give us a ton of into what they're looking at, it is interesting that it sort of straddles a serious of interests. the d.o.j. is particularly interested we believe in the spects of consumer data that play into antitrust whereas the f.t.c. is looking into digital advertising and mobile apps. seems like they were all

discussing their probes and what exactly they're going to do in terms of teaming up is sort of we're watching from here. taylor: and, kurt, hard to an ine that this litigation these probes are not the biggest business risk facing facebook right now. to hear about the data stuff and the advertising, they're one and the same. bread and ebook's butter. they make 99% of their revenue from advertising. looking into facebook from a data collection standpoint or from a targeted standpoint, it's one and the same. i don't know how these agencies to break this up. maybe ben knows more than i do. i just feel like this is going muddy really quickly. taylor: good segue. ben talk about the different you have state, federal probes, some are privacy, some are antitrust. on they all working together one probe or are these all segmented? right now, we can tell they're fairly segmented. it's common for all of these well as the states

to be having conversations even if they're not officially working together. it's entirely possible, we believe we could see one f.t.c. probe which isj. a particular interest of attorney general william barr all of these states, we believe there is a couple dozen of them right now, more than the at t that we were looking before, they could all be moving along separate tacks and all come together. they could come together in different combinations. usually if they do, the federal but right uld lead, now we think it's pretty interesting d.o.j. and f.t.c. literally been talking about turf battles and squabbles pretty publicly especially on facebook. it's possible that facebook will have to deal with an array of in some ways more difficult than one of them. taylor: how much of a game changer is it if they do all and it's a r targeted, i'm thinking 1990's.ft, circa ben: right, well, in some way, the power of microsoft in the actually that the states and the federal agencies

were able to come together for a ime and do their document review, pursue their theory of harm, litigate in court, but they were also able to split at some point and the states were able to say, hey, we than this nt more when the d.o.j. eventually pulled out under the george bush administration. is that sometimes they can come together and combine forces, but sometimes they're to split and attack from multiple different sides. that's a real danger for facebook here. kurt, we talk about this this every day, have we heard yet facebook's response to this? kurt: yeah, it's been pretty consistent for some time now which is that, you know, big is good for facebook and it's good for tech because they are able to, you fight off all these issues that people keep bringing up. election interference, hate that., stuff like so from a should we be broken up standpoint, that has been their party line. hen you start talking about advertising or data collection, bunch k has rolled out a of different things since the

2016 election around what they collecting and how they let know what they're collecting. i think from an advertising standpoint, their argument is an ad o be, rerun auction. we let advertisers bid on how each hey want to spend on ad and as a result, how can we e inflating prices if their bidding against each other. taylor: great segue, you talk about ads, you're one of the and st working people here come out with a story about twitter saying that they have sed phone numbers for added targeting. so far twitter stayed out of all of this regulatory scrutiny. does this now put twitter? karl: it's not great. complicated.e bit when people upload private information for security reasons, for example, you have authentication to protect your account, you might give twitter a phone number or email. is that that is except strictly for security. what we found out today is that using thoseactually emails and phone numbers to target people with ads. they were using the security make money.to

and they admitted that today in a blog post. it came out right before we sat new., it's still pretty it's the thing that facebook was doing and one of the many things that the f.t.c. said you had to when they settled their $5 billion privacy exempt this summer. here will be regulators asking questions about this i'm sure. taylor: wonderful. so many other questions that get to another time. that was bloomberg's ben brodie and kurt wagner, thank you both me. joining coming up, real and urgent. that's what five republican are calling the threat from huawei. handle ss how to relationships with huawei next. and "bloomberg technology" is on twitter.ng check us out on technology. breaking news al network on tictoc on twitter. this is bloomberg. ♪

taylor: we need to update you on an headline i mentioned earlier. eight-page letter laying out the white house's concerns about the impeachment inquire ricks the white house counsel will not dent trump participate in an impeachment probe. writing house counsel you have designed and implemented your inquiry in a fundamentalviolates fairness and constitutionally mandated due process, but simply overtush the results of the 2016 election and deprive the american people of the have freely y chosen. now, switching to another story following, five republican senators told microsoft that the threat from huawei is quote real and urgent. one of es after microsoft top executives complained that the government u.s.ot been open about why companies should not do business with the black listed chinese

telecommunications firms. discussion, i bring in "bloomberg technology's" garrett divine. what does real and urgent mean? urgent, the l and senators on the hawkish side, he u.s. government sort of officially, the u.s. security kind of establishment has looked at huawei as a company that they don't want to be doing business with, they would rather their allies around the world business with. that's of course because this company is very closely connected to the chinese government, many of its founders, executives are former chinese military personnel so this sort of view that is, that huawei is very closely onnected to the chinese government and could otentially, you know, spy on other countries through huawei technology. that's the view of the u.s. government. taylor: gerrit, we got our hands on the letter, if you read were the , what specific allegations? >> i don't think anything in the specific letter were brand-new

the senators actually refer to a lot of information that they said was already public and something , this is that has been going on for a while. in the original incident that letter wasmpted this microsoft's brad smith, one of technology spent executives out there, we respect the government's position, we don't understand specifically the top secret things that really referring to. this letter doesn't refer to those top secret things. stuff that s the brad smith already knew about when he made the complaint in the first place. has r: you know, microsoft complained that the u.s. government officials weren't open enough. ow that they have this letter and they have the specific claims, what can microsoft do? business can't do with huawei, how does this help them? >> i think that this letter is sort of on the political side of things. he senators are always sort of positioning themselves as very strict proponents of u.s. nterests and they want u.s. technology companies to kind of fall in line. there has also been criticism of

google of having an a.i. research lab in china saying do to support the future a.i..s. a.i. or chinese we're global and we want to work around the world. the political view of the u.s. and these senators in particular is a little bit more hawkish than the technology with ies are comfortable or would want to be and in an ideal world, they want to sell a in china, they want to work closely with china, very, very important and rising country. so they're sort of at odds at the end of the day with the u.s. government, so far, they're follow the oing to law. they are based in the u.s. and they're going to follow what the u.s. government tells them to do. taylor: while and with this letter, you could claim that the u.s. government officials are oing their part in attempting to be more open and transparent, does this satisfy the likes of other tech d companies who wanted to work with china and chinese companies like huawei, at least for the time being? >> yeah, they haven't really it. anything about

i don't think microsoft is going to say much more about this. think that it's particularly satisfying. i think the companies at this point after months and months of this fight with huawei are realizing that, look, to aren't going to be able deal with this company. they have to curtail their efforts to work deeper and hold out o china and in hope that the next u.s. government is actually more open going back to working closely with china. we'll have to kind of wait and see. f course, there is an election coming up. donald trump could win again and it's unlikely that his position after ften on china even that election. taylor: "bloomberg technology's" gerrit, thank you for joining me. and coming up, back to the black list. the u.s. claims china's a.i. companies are human rights banned with being doing business with u.s. companies will do to them at home. that's next, this is bloomberg. ♪

taylor: this is bloomberg technology. i'm taylor riggs. now back to our top story. it is all about the latest in the u.s.-china trade war. a they after the trump administration blacklisted eight chinese companies over alleged human rights violations, china is signaling it will hit back. a spokesman for china said "we urge the usi to immediately correct its mistake and stop interfering in china's internal affairs. china will continue to take firm and forceful measures to resolutely safeguard national sovereignty, security and development interests."

joining me to discuss, sarah mcgregor, and in studio, shelley, who covers china tech for us. sarah, let me start with you. is this part of a broader trade strategy? sarah: it definitely begs the question whether it is part of the trump administrations trade strategy to increase the leverage, ratchet up the leverage. a similar blacklisting to companies like huawei, they are not part of the official trade discussions, they always end up in the mix and it seems like trump holds them out as a bit of a carrot to say i can go easier on huawei. i can allow these businesses to start doing business again on some level if you give us this and that. i think it comes at a curious time with these trade talks resuming for the first time since july between high-level officials in washington on thursday and friday, but it might backfire. it could actually serve, i think, to anger the chinese, to

sour the mood ahead of the talks. taylor: shelley, if anything has been a carrot dangling, it has been the tech sector. why target the chinese tech sector? shelley: ai is an area that both the u.s. and china are both competitive. these companies are the leaders recognition,ial resignatio hikvision. these companies present a competitive threat to the u.s.. so, the u.s. administration is saying we have leverage that we can do something about it. taylor: sarah, you heard shelly mention ai. is it more of an ai issue or human rights issue? sarah: that is also what is interesting. previous companies from china have been added to this blacklist which restricts u.s. companies from doing business unless they have a special

access from the commerce ministry. so, previously, it has been about national security concerns. perhaps that these companies might have close ties, according to the u.s., with the people's liberation army. or have done things where they could be open to espionage in the u.s. in this case, with the restrictions yesterday, it is about human rights the concerns. mass detentions of these muslim minority in china. i think national security, the u.s. saying it is doing something in its own interest is one thing, but to criticize china on the human rights record, that opens up a new can of worms. taylor: a colleague over at bloomberg opinion wrote a column on this, saying all of these eight specific companies, two he is focused on, since time

grew because they target ai. what do we know about these specific companies? shelly: these are the leaders in ai and facial recognition. one is the world's biggest ai startup. filing preliminary papers to file an ipo. they are clearly the leaders in china but also globally. definitely sent worries across the u.s., could these companies rival u.s. technology companies in the u.s.? could they be collecting data from people in china, people around the world that could become a threat to the u.s. going forward? taylor: how does china respond to this? shelly: both companies have come out and said we are doing nothing wrong. heey have said we are not in t region of china which is what the u.s. authorities are saying, where human rights atrocities

have occurred. they're trying to say we don't know why we are on this entities list. we don't belong here. china, what has riled up saying this is clearly a bigger issue, a political issue. you are starting to infringe on our sovereignty and we don't want the u.s. meddling in our own business. taylor: sarah, this is eerily reminiscent of the huawei ban. any thought as you look as how huawei's ban has unfolded? any takeaways from this situation here? sarah: the huawei case shows us there are no guarantees. trump did say months ago he was going to allow on a case-by-case basis where there were no national security concerns for u.s. companies start doing business again with huawei. these companies are still waiting and they are still begging the trump administration, saying in the meantime, huawei is still doing

business with our competitors in europe or other places where they don't have restrictions and we are losing ground. we are not making money we need for investment in research and that itself is a national security risk. what lesson these companies that deal with the new chinese firms that have input on the list, don't hold your breath. you think there might be some loosening of restrictions at any point in the near future, you might want to think twice because the trump administration seems to really be serious about this campaign for blacklisting these chinese companies. taylor: shelly, as the trump administration has shown it is really serious about this, you would think chinese tech stocks get hit harder. i'm taking a look at a chart we have pulled up in the terminal and it is the chinese tech etf minus the u.s. tech etf. it shows major underperformance in the periods of trade tensions and volatility. as you have been covering the tech sector, you will assume the

underperformance will continue. shelly: they are definitely facing a lot. there is weakness at home, consumer weakness in china. but also a bigger picture which is what is the future for some of these companies? list, the latest on this they are not publicly traded. but, they both have aspirations for an ipo. if they are going to be on this blacklist in the u.s., it cordons off an entire huge market, you have to wonder what investors will want to continue putting money into them or buy their stock if they go public or whether or not they can do an ipo. taylor: we will have to wait and see. shelly banjo joining me in san francisco and sarah mcgregor, thank you. international companies have found themselves embroiled in the middle of the controversy surrounding free speech in china. the latest gaming company, activision blizzard, banned a player and rescinded money for supporting protests in hong kong.

for more on how these companies are finding themselves involved in international politics, isaa c stone fish. thank you for joining me. to get us started, what are your thoughts on companies punishing employees for speaking out? isaac: i think it is wrong. i think that american companies have long been criticized for only aligning their values with maximizing shareholder profit or in trying to find a way to best serve the investors. and, really not paying attention to the employees of their own organization. i think the other problem with it is that american companies do not need to yield to the communist party's way of doing things to succeed in beijing. i think we are seeing, hopefully, the beginning of a value shift on how american companies deal with their chinese partners. taylor: talk to me more about

why you think they don't have to yield to beijing. because it feels to me they are caving to pressure simply because they need to operate in china because that is where future growth is for the top and bottom line. isaac: there is huge opportunities in the chinese market for a lot of american companies. the issue is that what has happened in the past is most american companies have done this, they have caved. i have not seen any appreciable difference between the american companies that have caved and the american companies that have not. there are plenty of examples. most of them are quiet and they will not go into them publicly. of the american companies that say i am sticking with my values, sticking to my guns, and for their business in china to not recede. i think the other thing we will see is more coronation -- coordination among american companies about how they can

protect freedom of speech of their employees together. we have seen that with universities who have faced pressure from beijing. we saw it with the university of california system where one of their institutions invited the dalai lama to come speak and beijing tried to punish them. all of the uc schools stood together. it mostly worked out for the uc system. taylor: if we don't get that type of cooperation, what is the potential american backlash as seen as imposing on free speech? isaac: that is a good point. i think the other importance of doing this is so that -- as anyone who has curled through twitter in the last few days has seen the backlash against the nba and blizzard. and, news just broke about espn also trying to suppress views that are in a way critical to the communist party. the backlash is really huge and

significant. that will have real financial implications for american businesses in america as well. i think the other piece of this is these companies need to have a foot in the american market when they are thinking about what they are doing in china. the nba did something a little cute over the weekend by putting out two different statements. a statement in english was far more mild and the statement in chinese was far more conciliatory towards beijing. people can read both languages and those things will get translated and get viral on the u.s. side. taylor: a lot of lessons still to be learned. that is isaac stone fish of the asia society, thank you for joining me. coming up, looking in the mirror. how one tech startup wants to get you fit in your living room. we speak to the ceo and founder of mirror, next. this is bloomberg. ♪

taylor: it is a battle of the exercise bikes. peloton is seeing competitor echelon fitness. it accuses the market of flooding the market with cheap copycat products. no response yet from echelon. peloton went public last month. speaking of the boutique studio fitness market, another startup in the spaces making news today. mirror, the interactive mirror that lets users stream live workout classes at home. it launched a new feature on tuesday. it will allow customers to take classes with a personal trainer. joining me to discuss new york is the founder and ceo of

mirror, brynn putnam. great to have you. talk to me first. given it is such a competitive space in the fitness market, is personal training really the way you want to stand out? brynn: absolutely. we are interested in ways we can add increased values for our member base and the ability to give our member base personal training on-demand in their home at a fraction of the cost of a regular personal training session they would have in a gym is a compelling offer. taylor: the $1500 price tag for the mirror caught my attention because it does undercut peloton's bike that starts around $2000. is that also the goal? brynn: we are interested in bringing top-quality fitness the people at a price point that is affordable. we offer financing for as low as $42 a month. personal training sessions are $40 per session, a fraction of what you would pay at a gym. taylor: talk to me about that

reoccurring revenue. the monthly subscription. $1500 mirror, $40 training session is probably not enough to satisfy investors. what is the reoccurring subscription? brynn: members pay $1500 for the mirror and then $39 a month for up to six member. s. you, your partner, your children can enjoy classes for $39. taylor: we have learned a lot of lessons from peloton. they said we are a tech company and they came to market. because since the ipo the market said you are a fitness company. are you tech or fitness? brynn: i think the peloton fluctuations in price are really showing us that the market does not like uncertainty. it really is challenging to put peloton into a single business category. are they an e-commerce company that sells bikes? a media company?

this is something we are really acutely aware of which is why we are focusing on ways to add value to our baseline of subscription through additional premium content starting with personal training. that enables us to not only add increased value for our current member base but to reach new segments. with this addition, we have the ability to add on new types of content to our baseline offering. in the not-too-distant future, you will be using your mirror not just for fitness and personal training, but also fashion and telemedicine. taylor: have you felt increasing pressure in the last few months to be profitable? brynn: i think both public and private markets value both strong growth, as well as strong gross margins. i think we are acutely aware in order to be sustainable business, we need to have both growth, both growth and strong economics. taylor: talk to me about concerns over corporate governance. companies like wework are really scrutinized.

have you felt pressure on your corporate governance practices? brynn: there is a lot of capital available in the market. i think there are also a lot of ceo's interested in giving companies the right amount of capital at the right amount of time. i think it is our obligation as founders to ensure we are not over capitalized and being fiscally responsible. for us, it is something we are acutely aware of and interested in building the business for the long haul. taylor: you talk about companies being valued with strong future growth opportunities. where could we see you next? just a mirror other products? brynn: we are focused on building a dedicated channel into the home as well as original content. for us, mirror is our flagship product and we grow by adding new and exciting types of content onto our platform. in the not-too-distant future, you will be able to use your mirror to meditate and look for other non-fitness vertical launching. taylor: mirror ceo brynn putnam, thank you for joining me.

and, still ahead, we continue our conversation on the u.s.-china trade tensions heating up. e on whys t to til manufacturing its product in china is becoming a problem. that's next. this is bloomberg. ♪

taylor: microsoft upgrade to a by ed jeffries with a target of $150 a share. topicsft is one of the and believes there is a clear line of sight in double-digit revenue growth given its large and diversified size. to build a more secure and reliable internet has not been enough. technology analysts issued remarks tuesday as the post-ipo quiet period ended but weak support for the stock as targets implied limited upside.

susquehanna derivative strategists say to buy ebay call options ahead of fourth quarter catalysts, specifically the review around potential asset separation. the long haul strategy is warranted given the risk-reward profile. back to theo get main theme of the hour and that is continue trade tensions between the u.s. and china. one company feeling what many u.s.-based companies are, tile. it creates devices connected to a mobile app, helping users locate their personal items. tile manufactures a signature that -- a significant portion of its product in china and continues to maximize its opportunities. to discuss, i am joined by ceo c.j. prober. the question of the day is how the trade fights are impacting you. contextybe a little for why this is so relevant today. we launched for new devices today.

it is our best line-up ever. it is headlined by a new sticker product that really addresses a much broader set of use cases that our customers have been asking us to address for them. because we manufacture a product, we do a lot of that in china, the trade wars and the policies there are impacting us. so, we are subject to tariffs which went into effect on september 1. we do support the policy, but one of the challenging things for companies like ours is we didn't have a lot of notice that tariffs were going into place. i think we have four weeks notice. while we support the policy when you think about building product, we didn't have a chance to react. taylor: one of the things we heard from companies is they need two quarters to move manufacturing. what is your leeway, legroom? c.j.: it does take time to shift the supply chain. if you think of a businesslike

tile, we have started in the u.s. now we are a global business. we are selling and well over 40 countries. we have our community expanding throughout the world. we are in 40,000 retail stores. we are growing like crazy in japan. last quarter, 160% growth. you need a supply-chain that meets the needs of both. we have a big direct business as well. selling into those direct customers. so, there's a lot of complexity into making moves. it takes time. taylor: have you started moving manufacturing in those places? c.j.: no, we are basically viewing this as an opportunity. we support the policy. now, we are taking the chance to reshape our supply chain in a way that serves our customers best. both, again, direct customers and retail customers. taylor: talk to me about the new hardware launch, which is great,

but also a software component. you are here a year ago and you said sometimes you don't need the hardware because the software is bluetooth enabled and in connected devices like google home and amazon alexa. how is that integration between hardware and software? c.j.: great question. a few things that are not super well-known about tile. one is we have a community find platform. it is basically the largest lost and found network in the world. if you leave your tiled item at a starbucks or on the train, it gets found by the community. we have a network of users that are helping you locate your things. the second thing is our big focus is around embedding the tile capability into third-party products. orve announced about six seven different audio headset partners. we have launched products with companies like bose and skull candy. we are looking at new big

verticals like laptops and cameras and wearables. anything with a bluetooth device. there are 30 billion of those shipping over the next five years. it could be a tile with a software update. taylor: how do you respond to some reports that apple could be coming out with a competitor product? do you see apple as a colleague or competitor? what do you do if that is the case? c.j.: apple has been a great partner for tile. the way we think about the rumors around the competitive product is that it is really validation. we have been building this category for six years. it basically illustrates this is a real pinpoint. of those 30 billion devices that are shipping over the next five years with bluetooth, only 4% of those will be apple devices so it is a big opportunity for the rest of the market. taylor: c.j. prober, thank you for joining me. that does it for this edition of bloomberg technology. bloomberg technology is livestreaming on twitter. check us out. follow our global breaking news

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