Struck with farc rebels last year. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Alisa Parenti. This is bloomberg. Bloomberg technology is next. Carolineemily im emily chang. This is bloomberg technology. Coming up, the tech entrepreneur with big plans to be marylands governor. Alex ross joins us to discuss the growing divide between tech and politics. Plus, our conversation with Hiroshi Lockheimer, the mind between behind the most popular operating system on the planet. Mapping the road ahead for android. And our extensive interview with famed Venture Capitalist fred wilson. He tells us where he is placing his bets and why he is still bullish on jack dorsey. First, u. S. Stocks turning their worst performance this year turned in their worst performance this year. President trump asked james comey to drop the investigation into former National Security advisor Michael Flynn. The crisis threatens to derail the policy agenda that helped push equities to recent highs. Techres were not shares were not immune to the selloff. For more, we are joined by our Bloomberg News stock reporter, abigail doolittle. Abigail what a selloff, as you mentioned, the worst selloff since september of last year, the worst of the year on this shift in sentiment. Youtive to the nasdaq, as mentioned, underperforming, both the dow and the s p 500, by about 80 basis points, down on the day. Some of the biggest drags are the biggest tech names, including apple, microsoft, facebook. Apple down more than 3 , its worst day in more than a year. Thats the magnitude of the sentiment shift here. Microsoft down in a big way. Its worst since june of last year, since the time of the brexit. A big turn in sentiment. The reason it matters is tech has been the best sector of the year. Will it hold up . We can see that todays decline shows in that chart. That goes right to the heart of whats happening today and questions askedis a shift in faith whether or not President Trump will be able to put through some sort of tax reform. Have a verye could difficult time and may not repatriate that huge cash pile. Apple is the biggest member waiting in both the s p 500 and the nasdaq. Weighting ining the dow. Emily what about the chipmakers . Their losses even bigger. Abigail being dragged down by lots of the usual suspects. Texas instruments, broadcom. Valuation concerns. This has been a highflying sector, so investors taking a bite out of that today on this day. Isk big riskoff the vix is up more than 40 . Weve been talking about the complacency. Its starting to reverse. Plunging in the aftermarket, down more than 7 after they issued a very disappointing Sales Guidance for the fourth quarter. Its going to be interesting to see whether this selloff continues into tomorrow or if its a oneday blip. Emily we will talk more about cisco later this hour. Abigail doolittle, thanks so much for that update. The volatility in the markets triggered by volatility in the white house. President trump faces the deepest crisis of his presidency on reports that now former fbi director james comey wrote in a memo that the president asked him to stop investigating his first National Security advisor, Michael Flynn. For more now, we are by alex ross in new york, a bestselling author, former advisor to secretary Hillary Clinton at the state department, who has Just Announced he is running for governor in maryland on the democratic ticket. Thanks for joining us. Lets get right to it. Do you think what trump has done, allegedly, is grounds for impeachment . Alex i do. If he is seeking to shut down an Ongoing Investigation by the fbi, its a demonstration of his lack of fitness for the office. He has are the proven incapable of basically the executive functions of the presidency and, now, clearly and not surprisingly to a lot of us, he lacks the moral and ethical backbone necessary to be president. It would not surprise me if before 2020, we have a president pence. Emily so, what could next steps be an independent commission, a special prosecutor . How can this Republican Congress get behind it . Alex appoint a special counsel. There are a few republican members of congress who are suggesting this. Unfortunately, too many of these folks are licking their finger, holding it up to see which way the wind is blowing, and they are afraid of their approach trump their protrump base. A lot of them, i think, have forgotten why they came to washington in the first place. They are focused on their reelection, their popularity. We will see how many dignified men and women do come forward from both parties and insist on a special counsel. Emily trump is the reason you decided to run. Why . Alex talent is everywhere and opportunity is not. The simple fact of the matter is, in places like coal country, where i grew up, people overwhelmingly voted for donald trump as they felt so disconnected from our politics and from our politicians. So, the reason im running for governor of maryland is to try to respond to the legitimate needs of struggling people in the workingclasses and try to figure out how this innovationbased economy can work for more people. Emily talk to me about your accomplishments, alex. What have you done that you want voters to know . Alec we need entrepreneurs, people who have been successful in business getting in and doing the hard work of government. As we transition from an industrialbased economy into an informationbased, technologyrich economy, we need folks like me, who have worked in that world, to understand what the really tricky policy challenges are, so we can figure out how people in our stagnating middle and working classes can go from an industrialbased economy to a technologybased economy. Thats what i done the last 23 years and its what i hope to do as a public servant. Emily tech has been proposed as the solution to everything. I know that you think an increasing computer education will lead to economic betterment. Is learning how to code all its going to take . Alec absolutely not. Computer code is the alphabet that much of the future is going to be written in, and its important for todays kids to be literate in that language. Right now in the United States of america, there are 500,000 unfilled jobs that require Computer Science skills. The on employment and underemployment we have, there are half a million jobs just begging for people who have very basic computer coding skills to take them. 20,000 in my home state of maryland. I do think, while making sure that every kid from kindergarten through 12th grade is computer literate, its not going to solve all the problems, but what it is going to do is help make sure the kids from every zip code can help fill those half a million empty jobs. Emily speculation has swirled that mark zuckerberg, the founder of facebook, is considering a president ial run. There was a report that sam altman of why, nader of ycom binator may be considering a run for california governor. What do you make of these reports . Alec its the same thing that threw me into the run for governor. A lot of us care deeply about the rise of the rest. Those of us who have worked in the innovation economy and do believe that it can help more people you can do a lot in the private sector. You can build your workforce. But there are some things that only government can do, like run our public schools. When i im encouraged hear about people like mark and sam i dont know if theyre going to run or not. But i think its good for people who have been in a little bit of a bubble, who have been successful, to say, you know what, im going to go out and try to solve problems behind just macs beyond just maximizing shareholder value. Emily as long as they are not President Trump . He was a businessman, too. Alec he was a terrible businessman. He inherited a couple hundred Million Dollars from his daddy. If he had just put that in an index fund, he would be richer than he is today. Nobody with that many bankruptcies im going to call successful. Emily thanks so much for joining us. Alec thanks for having me. Emily the patent battle between qualcomm and apple is heating up. The chip company has sued assemblers of the iphone for allegedly not paying patent royalties. Among those qualcomm has sued, foxconn and pegatron. Foxconn pays contractors to make its phones. Part of that money is used to cover royalties. Coming up, the annual google io conference kicks off in mountain view, california. We will hear from the man behind the companys android operations, the row she lock timer. Hiroshi lockheimer. This is bloomberg. Conferencegoogle i o is taking off in mountain view, california. Among the new developments, a new supercomputer chip. Google is making its digital assistant available on the iphone to compete with apples siri. Google also unveiled updates to android, the most dominant operating system in the world. We spoke to Hiroshi Lockheimer about some of the most exciting announcements. Hiroshi we announced a lot today at i o. There are now 2 billion monthly active devices in the World Running android. Thats a huge number. Its hard to even comprehend, but we are really excited about that. We also announced the beta for android o, our next release of android. Also a new configuration of android, android go, which is aimed at devices in emerging markets, devices that have one gigabyte of ram or less, and making that experience great for those users. Those are some of the examples of a lot of things that we announced today. Emily what progress you think you have made over the last year with android n . Nroshi we announced android last year and launched in the fall. Many devices are now upgrading to android n. Theres a lot of good stuff in there and the rollout continues,. Emily with android o, what sort of new security features are you integrating . What are you doing to combat fragmentation . Around fragmentation, there is a lot that we are doing. Its something we have been working with the industry on for many years now. Specifically, this year, we announced what we call project treble. A project a bige industry, its deal. We have completely redesigned the bottom part of android that deals with the hardware to make it really easy for manufacturers and operators, the people who sell android devices, to update these devices and have a quicker turnaround time. Emily and what about security . What new security precautions have you introduced . The world is weathering another global cyber attack. Hiroshi around security, we have been doing a lot for many years now. One of the things we realized was, a lot of what we have been doing has been behind the scenes. Theres a lot of protections we put in place. The architecture of android to begin with, but also protections put into place through google play. We scan all of your apps all the time. We realized no user of android was aware that we were doing this. We have now put these systems front and center for the users so they can see what we are doing, so that they can have a sense of security that actually reflects the real state of the world. We call that google play protect. That is something we will be rolling out soon. Emily last year, you released something called instant apps. What kind of progress have you made there . Hiroshi weve been in beta with some with instant apps since the last i o. We have been improving the infrastructure for that. Starting this week, we are expanding that so that anyone, not just the beta, any developer can develop instant apps, which facilitates making it easier for users to get their apps, without having to go through the installation process. Emily pixels, the new phones that google has been making, reportedly havent sold very well. How has that impacted android . Hiroshi the pixel is an Android Phone developed by the Hardware Team within google. On the platform side, i work with everyone, all the youfacturers, lg, samsung, name them. We dont really comment on any particular device. We are just happy to have more Device Manufacturers targeting their user segment. Thats what makes android great. It is a scaled ecosystem across multiple partners. Emily you have announced new auto dashboard systems with volvo and audi. What is androids strategy in the car . Hiroshi we have a number of products available for the car. The first one we call projected mode, which enables a customer to take their Android Phone, plug it into their car, and have the phone power the cars infotainment system. Thats been available for a while now. Volvo announced is actually running android itself in the car directly, so that you dont need a phone anymore. Its kind of a behind the scenes thing. Its how the Car Manufacturers are making their cars. Using android,be which makes it possible for Android Developers to bring their apps and services easier into the car environment. Emily the redesign of the iphone from apple later this year. How dohead of android, you brace yourself for the iphone revamp . Hiroshi its an exciting time to be a consumer, because there is so much going on, so many manufacturers working on interesting innovations. I think its a good thing. It keeps the android manufacturers on their toes. It makes them work harder. It makes us work harder. I think its great. Caroline are you wearing an android smart watch . Whats holding android back in wearables . Hiroshi i am wearing an android smart watch now. Our platform available to anyone to build products with. Thats our strength. We have a lot of partners now in the fashion industry, as well as Consumer Electronics industry, building android wearbased wat ches. Emily Hiroshi Lockheimer there. We will have more coverage from google i o later in the hour. We will speak with googles Vice President of engineering. Coming up, shifting from hardware to software. A disappointing fourthquarter sales forecast. We will break down the numbers, next. This is bloomberg. Emily cisco shares plunging over 8 posttrading after posting thirdquarter earnings. Shares down 8. 37 after hours. This, after a disappointing sales forecast. Revenue was relatively in line with analyst expectations, while profit per share was slightly higher. The Company Giving that disappointing forecast, highlighting the challenges facing its multibilliondollar hardware business as the industry shifts toward siebert cheaper softwarebased networking products. Joining us, our Research Analyst who covers the company. What do you make of the progress or lack thereof on the transition from hardware to software . Its a long process. Its going to take a while. I think maybe some investors are getting impatient with the transition. Core networking business is on a slight decline. Theres a lot of headwinds in that business. Moving into the software space, i think cisco is meeting some Good Progress there, but its going to take a while to offset that huge amount of revenue in the networking space. Cisco is normally thought of as a bellwether for the tech industry. With all of the uncertainty, cisco could conceivably benefit concede benefit from because they have so much cash overseas, but with trumps future in question, what does that mean for cisco . Glenn i wont comment on the political landscape. Should that tax holiday come through, it will be a real boon for cisco shareholders. An enormous amount of cash overseas, as do other tech companies, like apple and microsoft. If they can bring that back, they are going to use some of it for expansion through m a, but a lot of that is going back to the shareholders. I think we will see that across the tech industry. Emily what sort of m a are you expecting . Glenn more software. The ceo has made it pretty clear going to turn this company into a software company, hishis most recent and most recent acquisitions are indicative of that. It will be more software assets, for sure. Potentially some storage, but there has been a lot of debate about that. Emily cisco did make a small acquisition called mind meld, meaning they are entering a very big battlefield of ai. What is the potential for cisco when it comes to Artificial Intelligence . Glenn every tech vendor on the planet wants to get in on the ai game, and for good reason. The algorithms and the technology that goes into these various things that people like to call Artificial Intelligence future,ings are the because it gives you the ability to make sense out of enormous amounts of data. We are swimming in data. We have to try to make heads or tails out of the needles in the haystack. And, you know, it gives the tech company some stickiness, in the sense that, for most of this technology, it is pretty easy to reverse engineer it and to compete with a product that is like the one that you are copying. And there is a constant game of leapfrog that just keeps going on. Stickyd analytics is because it is hard to reverse engineer. You can hide a lot of the magic under the covers. If youre going to buy technology in this field, you are probably going to keep buying it for a while. That makes for good longterm revenue and profits for the Company Selling it. Emily glenn, were still feeling the ripple effects of the rent somewhere the ransom ware hack attack. Clearly, there are renewed concerns around security. What does that mean for cisco . Glenn cisco and other vendors thesecurity Space Companies are all benefiting from the mass hysteria and justified paranoia around this. But where we see the real future for security is Building Security into these technologies. Cisco has done a lot to build security into the networks. Emily ok. Glenn and thats great, but we have to expand that baked insecurity across the board. Baked in security across the board. Emily thanks so much for joining us. Be sure to catch our interview thursday,isco ceo 9 40 a. M. Eastern on bloomberg daybreak americas. This is bloomberg. Im Alisa Parenti in washington and you are watching bloomberg technology. Democratsutin blasted today for what he called anti russian sentiment. He said in u. S. Politicians are either dumb or dangerous for upsetting they political client. Rances a manual acheron anual macron announced his ministers today. Finance minister, and foreign minister. Merkel says a future cap on immigration for european citizens to britain would come at a price for u. K. Relations with the eu. That is after theresa may britain must lead. The u. N. Stresses working together on the refugee crisis. The u. N. Rests on europe. Irish Prime Minister retires effective at midnight here he says he will continue as party leader in an acting capacity until a successor is elected. Expeditethe party to the process and have it concluded by friday june 2. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Alisa Parenti. This is bloomberg. It is just after 5 30 here in washington. We are joined by paul allen. Paul good morning. Futures, you wont be surprised to learn our turning down and on u. S. Turmoil. We also have jobless figures out of australia, and always notoriously unreliable number, but is estimated to remain steady at 5. 9 . Japanese futures are also low this morning. We are awaiting gdp numbers out of japan expecting growth building on growth we saw in the prior quarter. Ofning in hong kong, revenue 7. 2 billion there on record sales and profit. More from bloomberg technology. Next. This is bloomberg technology. Was thescussed, it worst day for stocks so far this year. Tumbled the most is in september. The vix skyrocketed more than 30 , its biggest jump since brexit last year. The Corporate Finance system is a broken. That is what fred wilson had to say about early stage investing at the tech operates on wednesday. They say users should have access to investing in companies before they go public, not just extremely wealthy investors. Have invested in a number of starters. We caught up with him at the conference and asked is the pc market oversaturated . For me to to me know, because i dont know the demand side. It is clear to me that there is probably an order of magnitude been a year ago, so that would suggest we could manage an order of magnitude more capital. But obviously beats things go up obviously these things go up and down and cycle. I think we are in an upward slope on both. It is hard to say. Emily if there is more supply than demand, what are the implications . I think that means prices go up, returns are down, and then capital leads the sector, and then there is more demand than supply. That is the ebb and flow of the Capital Markets and Venture Capital of business. Emily i know you watch the barometer that tracks the Health Business environment, it is down from the peak in 2015. What are the negative signs you see this year, and what are the positive signs you see this year . I think there is a lot of a number of sectors that have been very frothy in the past, but we have new sectors that are now brought the. Now frothy they will have to go through their own hype cycle, if you will. Emily one of your investments, they have Just Announced how likely is it that twitter can really accelerate user growth and sustain that over the long term so that twitter is significantly bigger than it is today . Twitter. Ry bullish on i should disclose i own a lot of twitter stock. I want viewers out there to know that. I think twitter is a unique company. The content you can get on twitter is unlike anywhere else on the internet, and that is coming more and more the case, realtime breaking news. Anyone who wants to consume a realtime breaking news, there is no place better to do it. I love that the band is coming back together. When jack came back, i think that was the beginning of a lot of good things. When i saw the news yesterday, i had no idea it was happening. It made me smile. Im so happy. Emily nasdaq plunged after its first earnings report, facebook has been copying snapchats features. What is your prognosis . What is the prognosis for facebook . Here ito original ideas tries to put innovative businesses out of business by copying them. Emily does that mean you are optimistic about snapchat futures . Know. I think it is very depressing that facebook can come up with any innovations on its own. Emily what about uber . What went wrong there . Uberthink the issue with was they believed they could run the table on the ridesharing market and told a strategy around doing that, and i think what has turned out to be the media, unlike social ecommerce, ridesharing doesnt look like a winner take all market. They are struggling with the aalization that they are in highly competitive market. I think a lot of things happening to them are happening because of that. I think theyve they have become a lot more desperate. I think it is tough times there. I think when things happen, use the companies, unglued a little bit. Emily how much does it come down to the leadership . Leaders are the ones who made the strategy and executed the strategy. If they had the wrong strategy, they are accountable. Emily what is your reaction to the latest revelation that President Trump reportedly asked james comey to drop the investigation into Michael Flynn . I dont really follow this stuff. When trump got elected, i following anything to do with trump. I mute the term on twitter. Im not really interested in the president and i am not following this. I am paying attention to things that matter to me. Trump remains as in office, how does it impact startup . Is a Political Climate changing anything you are doing . No. Not at all. Emily you clearly care about social issues. You are blogging about immigration, diversity is a huge topic right now, diversity in d. C. , especially. When you plan to hire your first female partner . As soon as we possibly can. Emily how important do you think that is . Very. Emily you have also blogged about generally small shifts in d. C. How long do you plan to stay in the game . Will have as the game me. We will see how long that is. It is a great business to bn in. I love working with entrepreneurs and with important companies. I couldnt imagine doing anything other than this in one way or another. Emily that was Union Square Ventures cold founder cofounder fred wilson. Online spending keeps defying a slowdown in the economy. Theres a 50 surge. Blockbusters gaming content coming up,ion laptops are banned on flights from the middle east and africa. Now they are worried about laptops from europe. We will explain why, coming up. This is bloomberg. Emily in todays funding board, crowd strike has raised 100 million. It is led by xl and values the company at more than 1 billion. It is a Global Ransomware hack computerst affected and more than 150 companies. During the u. S. President ial campaign, another attack was linked to russia. Officialsterrorism met in brussels with their european counterparts to discuss the exposed expansion of a laptop ban on airlines. Caroline hyde joins us live from london. Caroline great to be joining you, as ever. And we are joined by mark weatherford. He is a man who knows all of these key stories of very well. Going back to the hack attacks, wannacry it was a dubbed, how would you rate the Global Response . I dont think the Global Response had time to evolve, because it stopped relatively quickly. But over the weekend, it continued on where more people found they had been infected. The Global Response i think is more just an awareness of right now. The response to the event itself is still unfolding. Caroline where does this evolution take us, because at the moment there is much consideration about who might be behind this. North korea comes to mind and has been talked about, whether it is a group of terrorists or hackers, or indeed a group of kids. Can you eliminate eliminate what your world is thinking . Yes. The social media inside the Cybersecurity Community has been lit up over the past four days. I have seen every wild imagination you can possibly think of as to who is responsible. We have heard something about north korea, perhaps. I dont think we really know, but i also believe that certain government organizations are putting a lot of effort into figuring it out, and they will know at some point. Caroline im sure. Do you lay blame on microsoft, for example, not letting companies patch, do you blame the nsa and the u. S. Letting it get into the hands of the wrong people . Vendors are in a tough spot microsoft being the vendor in this case. They have a strategy for new eliminating then support for older products. Unfortunately, in this case, many of those older products are vulnerable. It truly is an economic issue for microsoft. How long do they continue to support old products . Bitso, i feel a little sorry for the vendor, but at the thattime, this is an issue has long been a security concern for most of us. And that is the ability of companies and consumers to be able to patch their system. Back to your point, should we blame nsa . Maybe they did serve deserve a little bit of blame, but microsoft released the bad code that had the vulnerability. You can make the case of that if it wasnt for nsa, it could have easily been someone else who discovered it. About lets talk more tech being a weapon, because the u. S. Clearly has some intelligence that laptops should not be carried on planes by. Eople they are banning them from the middle east and are looking to extend it to europe. Is that a legitimate concern . What good would it be to put it in the bottom of the plane rather than where the people are traveling . Obviously there is something driving this, station that we may not know. There is some intelligence somewhere that has highlighted the potential vulnerability of having laptops and Electronic Devices in the cabin of a plane. Again, i dont understand it, because to me i am just as concerned as having something in the cargo hold as i am in the cabin, but perhaps there is a vulnerability that uses a manual intervention. Emily lastly, i want to ask you, as a man who 2011 to 2013 the political turnings of capitol hill and the white house before president obama. As a time at a time such as this, where we see in unraveling because of concerns about Donald Trumps of theirs, how hard is it to do your job . Do you think the leading team is going to be distracted . That was one of the bright spots in the incident this weekend. On saturday,ned and i read they worked all weekend. I knew that we had to do that a couple of times, and you bring in experts from all of the different agencies to get together and figure out what should be the response. I think one of the biggest factors, perhaps not in the white house, but within some of the other agencies is, they have not appointed all of the people that are leading the organizations especially around cybersecurity. Emily we wish you well. That was mark weatherford. Emily, im going to send things back to you. Emily all right. Thank you very much. Still ahead, it is all about Artificial Intelligence. We will talk about the new Artificial Intelligence supercomputer chip next. This is bloomberg. Emily lets get back to the google i Os Development conference in california. With a spotlight on hardware this year, a new Artificial Intelligence supercomputer chip looking to transform the company o a real cloud can computing contender. Are really excited to be able to have the Computing Power to be able to really harness all of the newer Machine Learning out the rhythms. One of the things of that is exciting about these new algorithms is that they are hly parallelize double parallelizeable. You can do lots of computing at the same time. The new chips are designed to do that. Home sales are still dwarfed by amazon echo. How is the Google Assistant different from syria, alexa, or cortana . One thing we are really excited about with Google Assistant is the ability to go across all of the different contexts in your life. You can go from your house, to your car, to your commute throughout your day. We want the assistant to be able to help you in all of those different places. Today we were excited to deploy that out to all of the iphones, make that available to iphone users. We also make it available to android users, really making that assistant always available to you to matter what you are doing. It going to take her Voice Technology to actually improve . I have used all of these devices, and in my experience, it is still rather crude. Are making a lot of progress, but one of the things we talked about today is a really using a broad scale data and neural algorithms to improve the technology. We have been pretty significantly overhauling all of our algorithms under the hood every couple of years to take advantage of the new Computing Power that we have and new, larger amounts of data. Every time we do that, we see a pretty big jump in improvement. One of the things we did in bringing google home to the market is because google home at a distance, i might be standing far away, there is a lot more noise in the microphone signal. And so, by adding artificial noise in our training data, we were able to have our Neural Network recognize things at a far distance away. These kinds of algorithms are very powerful for shaping recognition and different environments. Where is a one plays in eusebius is in going it hasnt gone yet . Voice we are enabling a function into a great functionality that users are doing sort of the obvious things on devices, but i dont think we any kind ofd having conversation you want, having it be understood, and having the assistant tap into all of the services. I think we have a long way to go. One example that we showed some innings of the day that we call showed the beginning of today, is google lens. See, andbout what we with googles advances in Computer Vision and image understanding, the assistant is actually going to begin to have that capability over the next few months. I will be able to open my camera and began to talk to the assistant about what i see. We are really excited about that. Emily Scott Hoffman there, googles Vice President of engineering. That doesnt for this edition of bloomberg technology. We will have full coverage and analysis. This is bloomberg. From our studios in new york city, this is charlie rose. Charlie we begin this evening with politics. The New York Times reports this evening that President Trump asked former fbi director james in february to terminate the investigation of Michael Flynn. The white house has denied any wrongdoing. The president technologist and defended the position as his absolute right in a series of tweets early tuesday