We speak to the cofounder of apple, Steve Wozniak. He discusses everything from trade to services to his strong concerns on privacy on facebook. To our top story federal officials charming former uber engineer Anthony Levandowski with stealing Driverless Technology from the waymo unit. This is one of the most intriguing recent legal battles in Silicon Valley and a top priority for the fbi. Tolerate thell not theft of trade secrets. Let me be clear these are the crown jewels of companies. Taylor joining me to discuss is bloombergs eric newcomer. What a long saga it has been. What have we learned today . Eric this was a total surprise. Uber and google settled this and while ago. There had been a private arbitration. But the idea that there would be criminal charges is something i think people had largely given up on. It has just taken so much time. This is a big deal for Silicon Valley. Taylor talk to me about the difference between the two trials. They settled one, arbitration. But this seems to be a criminal probe. What does that tell you . Eric stealing trade secrets involves theft. It is not just about the harm to google, this is about fundamental laws and whether you can take things from your employer and use them for your own or someone elses benefit. That is what the case is about. Taylor one headline that caught my eye is that they said that the case is ongoing, which led me to think there could be more people at risk. Who else do we think might be involved . Eric there are not a lot of details in the indictment. There are a lot of details in the civil cases, so we will be interesting to see what they found. Obvious question is that Travis Kalanick sort of recruited personally Anthony Levandowski to come to uber. The question, is there anything untoward about what they agreed upon or talked about . Kalanick would be the higherlevel person here. Other than that, levandowski has been the central figure here. There is no reason to believe kalanick is under investigation, but he was a central character in the civil litigation. Taylor remind me what is at stake. Who are these characters . For people who havent been following this, what are we really looking at . Eric Anthony Levandowski is a key figure in selfdriving car research. He was after Googles Waymo for a couple years, and basically became in patient impatient they werent making enough progress. He created his own startup, went to uber, a huge blow up. He went on to keep working with self driving cars. He has gone so far as to claim that he is working on a religion around artificial intelligence. This is a true believer in the most ridiculous sums of selfdriving cars who is ridiculous sense of selfdriving cars who is at the center of this. Taylor any other big deadline we expect . Eric we are hoping to get much more information about the case and what is different from last time. Taylor wonderful. Thank you for joining me. Another big story, it is all also Global Tobacco giants Phillip Morris and altria. They are in talks to reunite after splitting up more than a decade ago. The deal could have big implications for San Francisco ichig start of juul, wh altria has a stake in, and it could have implications for the global industry. Joining me to discuss is bloombergs intelligence senior tobacco analyst. And from washington, Bloomberg NewsHealth Regulation reporter. Let me quickly start with you. Altria we know is a pretty attractive target for Phillip Morris, in part because of juul. Is that part of what was driving this merger . It is certainly one of the big factors. I think there are three pants. Three paths. One is u. S. Smokers who could convert to their platform, it could be juul, and it could be the cannabis opportunity, likely all three are what is driving this potential recombination. Taylor from your side of things over in washington, what is the regulatory pressure as you saw this news break . Is this deal likely to go through . Anna the first thing i thought of was that the fda they were pretty friendly to regulation of ecigarettes for a while. When altria took a stake in juul, things started to change a little bit. Certainly there was concern with children and teens vaping. Once altria took a stake, the concern grew because of the big tobacco interests and some of the comparisons. I first thought that there was a possibility that the fda thought could decide they might want to come down even harder than they had been considering. Anna i want some ofi want to hit on the comparisons in the market. We know that Philip Morris has a stake in a heat, not burn. How does that compare to altrias stake in juul . What is your take in terms of the overlap and the future growth of both of these markets . Ken those are good questions. Altria stake in juul, they paid about when it comes to the heat 12. 8 billion. Not burn product, it is the exclusive market distributor in the u. S. A lot of people have been wondering what is the commonality . They are both vapor noncombustible products. That said, they do target separate niches. Juul tends to be a younger adult, some even minors unfortunately, as the fda would point out. The other product, because it uses finely ground tobacco as opposed to flavored liquid nicotine, it targets an older looks toic who really the oldfashioned tobacco, almost like a pipe experience, as opposed to a nicotine hit. I think that is the key difference between those two products. Taylor i think broadly speaking, talk to me about Regulatory Environment as it comes to how people think about ecigs. I have heard on one hand that it is a gateway drug. Others are wondering if the fda thinks it is more of a replacement. Does that debate have a place as we look at Philip Morris and altria, some of the regulatory pressure that you see . Anna i think it does have a place in this debate. There has been this balancing act that the government has been trying to keep up with. Maybe these ecigarettes can help smokers quit. At the same time, they are seeing teens use them more and more. Which they dont want, because the centers for Disease Control and prevention has said that nicotine can have harmful effects on a developing brain. Next year, there will be a deadline in may where these Companies Like juul will have to submit applications to the fda to get approval for their product. They have a really big milestone coming up that they will have to meet. Taylor wonderful analysis. Thank you. Bloomberg News Reporter anna edney and Bloomberg Intelligence analyst ken shea. Coming up, we sit down with a Silicon Valley legend. Steve wozniak shares his thoughts on the trade war, facebook, and of course the company he cofounded, apple. That is next. If you like Bloomberg News, check us out on the radio, the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor we are getting some late news on tuesday. Peloton has filed for its ipo. The company will seek a mastec listing under the nasdaq listing. The bank it filed with various banks including Goldman Sachs and jp morgan. The Company Posted a 2019 revenue of 915 million, looking at a net loss of around 196 million. The loss is an increase from roughly 48 million in 2018. Companies are hereby ordered to start getting out of china. That is what President Trump tweeted on friday after china retaliated to his escalation of the trade war. Regardless of whether the president can actually force companies out of china, his trade war has highlighted just how important that country is to many tech Companies Like apple. We iphone maker has been the iphone maker has been a gauge of timent and i welcome one of the iconic inventors from Silicon Valley, the man who cofounded apple over 40 years ago, that would be Steve Wozniak. That introduction barely does you justice, but for the sake of time, we will leave it there. It is great to have you. When you think about where we are in terms of trade, tariffs, tweets, given your multi decades of experience, how do tensions in trade feel now compared to previous years . Steve my experience is not in political areas or economics or finance. It is in engineering. I have opinions. Two different people might come to different conclusions. Our tariffs are a good idea, bad idea. Both people would go down a line of thinking that is logical and connected. That just means all parties are good no matter which side they believe on the cusp we dont have a mathematics that prove one thing is better than the other. We just have opinions. I myself will fall into the camp that i dont want many tariffs, i dont want subsidies very much. I want the free market to rule. It comes from my own background. My background was very compatible, growing up in Silicon Valley, where more than half the people speak nonenglish. We accept all types of people, work with them. I am more into cooperation for the competition. I put on a huge festival and sold a million tickets in 1982. We put out a whole policy, programs in schools in all 50 states, things like john nash, who the movie Beautiful Mind was about, and he wrote papers about cooperation can lead to better results than competition. I am into working with others. What is our country called . The United States of america. And states meant countries. We were going to have 13, now 50 little countries, each with their own rule of laws. Differences in culture, for example slavery in some and not in others that is how the constitution was made. I dont care. If wood is manufactured more efficiently in oregon, i will buy my wood from oregon. We never think there is anything bad about that. Why do we establish borders for countries . Politicians just want their domain to be important. I am more of a sharing, be open in business and to the world, try to find ways to cooperate and Reach Agreement that way. It is going to have an advantage in balance of trade. Taylor you mentioned competition. And Reach Agreement that way. That word has come up two or three times. That leads me to wonder if competition is more fierce this time around or that is driving some of the tensions. Are you worried about competition from a samsung, huawei, perhaps encroaching on apple and some of the big market shares . Steve i have thought about that and the ways it can influence apple negatively, but i dont say that there is one logical rule that comes to one answer for all. I just happen to be more against competition. We are taught from the time we go to school, my school, right or wrong, my team right or wrong. It works her way up to your way up to my country, right or wrong. I am more into thinking. Also, why do you have to be, i am going to hurt you, throw my balance of force against you. That doesnt make friends. We should try to be friends with all the countries of the world that are important. China is one of them. As far as how it could influence apple, a lot of people know a lot of the tech products, the manufacturing shifted very much to china, the shenzhen region. A lot of in the world. So what . Not let us make products for a lower cost and people who buys the iphone pays less. Why do we have to say, oh my god, the balance of trade is going in their direction . That is very common, especially levelmpanies at chinas and being a major force in the world economy. Look where they come from. Taylor you talk about all being friends and we know tim cook has had direct dialogue with the president. If you are still involved with apple, or tim cook for that example, what sort of conversations would you be having with the president . Steve i probably wouldnt because with this president , i dont think it would be productive. I would never raise a child to be like that, i am number one in the world, i am always right. I am not that way and i would not raise somebody. I would just ignore it. I wouldnt say anything bad about the president , i would not be nasty to him. I dont think you can direct him. I think tim cook though, being a very important Economic Force in the United States, i think tim cook actually gets the president s ear a little bit and can warn him, this might be bad. If we suffered in a balance of trade with more expensive products, none might weaken the balance of trade. That is an important thing to think about. That would be scary if we lost sales just because of that. Taylor Steve Wozniak, you will be sticking with me because when we come back, we will take a look at the transformation of the company you cofounded, apple. That is next. This is bloomberg. Taylor an update to a story we discussed earlier. Former uber engineer Anthony Levandowski has pleaded not guilty to charges of stealing driverless Vehicle Technology from alphabets waymo unit. The indictment adds a new criminal chapter to the saga surrounding waymos civil claim. The imac, the iphone adjustment the products that became household names thanks to apple. But are things changing as apple shifts more money into the Services Sector like credit cards and apple tv plus . Analyst dan eyes ives sure things to think so. Dan we think this is key to the business and we think the key is 100 million more consumers in the next three to four years. That is the golden goose for cook and others. Right now, in the services, that is key to the growth. Taylor who better to ask about apple than the man who cofounded it, Steve Wozniak . What is your take on how apple has transitioned from a Hardware Company into now more services . Steve i am proud of apple as a company because we have been able to transition. We started out as the name apple computer. When we moved into products that were more personal in nature like ipods and iphones, we dropped the computer from our name. Being flexible and able to shift with the different domains of the market is very important for a modern ongoing company. Moving into services, if that is where a lot of the business is. Apple is a huge company. So apple can only move in directions that will be very large in dollar volume potentially. We have looked into other products like watches. That is about my favorite piece of technology in the world. When apple pay came along, apple took a lot of steps leading the industry. Then allke touch id, of the other smartphones had to copy it. We took the touch id and moved it into apple pay. Protects your identity and credit card purchases everywhere. It is also so unbelievably easy, especially if you have a watch. That is important. Making life easy is what we were known for in computers. These were computers that you did not have to be an expert to use. Now, apple pay, the upper credit apple credit card is even more secure. The looks of it fits apples branding. Apples branding is to have a lot of secrecy about what they are doing, but also styling and beauty. This is the most beautiful card i have had in my life. I dont judge beauty not much. But it is. It doesnt even have a number written on the card. There is no camera that can peak at you and somewhat see what your credit card number is. There is no way people in a retail store ever get your credit card number. It continues that thing of protecting your privacy everywhere you go. What you go and where you buy it shouldnt be tracked that closely in my mind. I dont want it to. Oh, we see that you bought a milkshake two hours ago. I dont want someone coming up to me and saying that. Taylor you are giving us free advertising because you keep flashing your iwatch around. If i heard you correctly, you said it was one of your favorite piece of technology. The iwatch, when it came out, lets call it mediocre. Since then, he has really grown. Is apple doing the right thing with the apple watch in incorporating the Health Services . Steve i am not a biggie in Health Services, but yes. Everywhere i go, people are using it for Health Services and information. The apple watch makes it so comfortable for me. I can walk my dogs and not having to carry a phone, not having to use a phone even. We have the iwatch on cellular, i can text my wife, walking the dog. Apple pay is the best. I put my movie tickets on the watch, my boarding passes for flights on the watch. I do email and get notifications all the time. Hotelrom my computer in a or at home. My computer to keep up with email and news around the world, and i pretty much skip the phone. I do not want to be like an addict. Make jobs and i wanted to blind and cited people more equal. Everywhere you go, look on the sidewalk or in front of you in the street, there are people walking along and not seeing anything except their phone. I dont want to be in that addictive type area. I pretty much skip the phone for most things, except for occasionally checking in. Taylor quickly, with 200 billion of cash on the balance sheet, what should apple do with it . Steve i never even think about that. I do not want to think about money, large amounts of, where to put it. Apple has been doing a very fine job. Apple makes a certain amount of money, profit return on investment. You have to look for investments that will keep that return level high. That is what the apple brand is partly based on. Businessman that know a lot more about business than i do are inside apple. Taylor when we come back, we will hear more from Steve Wozniak