Transcripts For BLOOMBERG Bloomberg Technology 20170225 : vi

Authorities have cleared the last holdout from the protest camp in north dakota. There is tons of debris to be cleared. A highway bridge remains closed and a court battle hundreds of protesters remain in the area. Democrats invited immigrants to president trumps first address to congress in an effort to put a face on people potentially hurt by the administrations policies. They include an iraqi american doctor who discovered elevated levels of lead in children and a pakistaniborn doctor that delivers critical care. Global news 24 hours a day. Powered by more than 2600 journalists and analysts. This is bloomberg. Cory i am cory johnson and this is Bloomberg Technology. Ubers bad week takes an ugly turn. The company accused of stealing intellectual property from google. It all unraveled with an email. We will tell you that story. Peter rawlinson has a next act, inventing a new electric car. Youve got to see this cool ride. Amazon goes where no other streaming service has been before. An oscar nomination. But first, to the lead. We began with one p. R. Crisis for uber that got worse. Board members were unhappy with the investigation. Waymo filed a lawsuit against uber claiming it stole designs discovered when waymo was accidentally ccd in an email. Eric newcomer joins me. Tell me what happened. Eric as google tells it, a supplier sent them an email. They opened it up and see this Circuit Board that looks similar to their own system except it is labeled ubers. I think that is where they begin to get tangible evidence. Cory i will call it google. A lot of brand confusion. Cory google gets this Circuit Board in an email and it is the wrong file meant to be sent to uber. Google also knows the guide was uber. One of the important developers quit and started his own company which was quickly acquired by uber. Eric right. Anthony is now the man of the hour. We learn a lot from this lawsuit. He talked to uber before he started auto. As google points out, his selfdriving trucking startup has taken over all of ubers autonomous team. They are in charge of the self driving cars in pittsburgh that were kicked out of San Francisco and all of that. Cory lets go into more detail about what came out of the lawsuit. They talk about this was not a case of documents being backed up or they were on a usb drive. This is weirder than that. Eric the picture they pay is much more intentional. This is anthony going in and downloading 14,000 files onto his hard drive and then taking those with him. And then changing the operating system to effectively reformat the drive. Cory he has a company laptop. He brings in an external drive. He pulls a bunch of stuff onto the external drive, disconnects the drive, and downloads a new operating system on the laptop to erase all traces because if there is any company in the world you can fool about technology, it is google . Eric he stopped using that laptop and moves on to other ones. That is the case. These designs, google spent many thousands of manhours putting together these different designs. I love that they talk about the unused designs, the ones where they went down the wrong path. Cory lets talk about lidar. It is not relating to a polygraph machine. It is akin to radar, radar using lasers. Eric these are the lasers the selfdriving cars send out to get a picture of the world. Google did some work to figure out its own way to sense where everything was an position the tree, the dog running across the street, so they would have an advantage over other selfdriving car makers. Cory lots of companies are using lidar. We will have a company on later using it in their easier to drive car with all sorts of tools. These were particular designs the company was trying to own over all of the competitors in space. Eric these are their trade secrets. This is how they are supposed to have an edge in turn this into a business. Im not a lidar expert. Where is it positioned to get the most information efficiently . And then theres the matter of price. Efficiently . We have not talked about the supply chain part of this. You have to acquire the pieces used to manufacture this and figuring out the proper supply chain gives an advantage over another company to have to spend months figuring out the supplier network. Cory i was born in michigan. When i was a little kid, cars were everything. Everybody else was in that business. There are all of these little companies. There was room to start up companies to create the windshield wiper or the light on the mirror. It was a different company. Now you have got not just google and uber and tesla. But you have delphi, ford, g. M. And they are all hiring in Silicon Valley going after the same talent. Eric it is hard for a small selfdriving car company to stay independent for long. What is interesting is we dont think of uber as a small startup anymore. If this were a tradition of case, people would be more disturbed google was going after uber for trying to make moves. What is crazy here is it is a true trade secret case, an employee stealing what google alleges are trade secrets. Cory doesnt google have an investment in uber . Uber uses google maps. Eric uber is still reliant on googles maps. They are trying to move away from them. Sort of frenemies turned into pure enemies at this point. Cory place that rewards performance over fairness, the suggestion is it has run amok. You have a woman being harassed by her boss and she is told the employer is a high performer. The suggestion is the ends justify the means. None of that is fair. But that is what this looks like. Eric they are two very different cases. Uber is owning it and investigating it tried to figure out what is going on and how culpable they are. Eric holder is insisting he is independent and has full prerogative to question everything in the company. On the selfdriving car part, uber is defending itself and saying they did not do anything wrong. This is a crazy lawsuit, we will fight in court. I think the responses in situation are very different in the cases. Cory uber is a big swinging company. They go after things in a very different way. Im grateful for their service and the entertainment value they provide me. Thanks for keeping us straight on all things related to uber and beyond. Lyft is capitalizing on u. S. Expansion. It announced an aggressive push to 54 new cities including birmingham, alabama. That puts it in nearly 300 cities nationwide. Coming up, peter thiels 20 billion Data Mining Company is spreading its tentacles across europe. All episodes of Bloomberg Technology are now Live Streaming on twitter right now. Check it out. Every weekday, 5 00 on wall street, 2 00 on west coast. This is bloomberg. Cory the fcc put strict rules on Charter Communications in its time warner acquisition. Hes looking to ease the requirements which might be disconcerting to people that thought they were necessary. They had demanded charter build broadband connections to 2 million new locations including 1 million and places already serviced by competing providers. According to fcc official, they dropped part of the requirement the Company Already agreed to. The move shows they may seek to revise or eliminate other conditions on charter as well. The Data Mining Company known for being rich and secretive, not unlike its founder. The other cofounder joined us on what they are up to. This is a fascinating company. We dont know a lot about it. Maybe because the first customer was the c. I. A. Or n. S. A. Alex it was the c. I. A. Part of the reason we dont know much about it is it is not an app on your phone. This is a geeky Data Mining Company. It pulls lots of disparate sets of data from all over the place and mines it for meaning. The net result depends on who is using it and for what purposes. They have government customers and a bunch of commercial ones were recently. Cory the story the Company Tells about itself is meant to sound the oracle. Oracles first customer was the c. I. A. It went on to sell to Corporate America and become the backbone of every company from c. I. A. To bloomberg that use oracle. It seems this is a secondary notion of that. Now you have all of this data. Palantir can figure out what it means. Lizette a little different in that what it sells is not so much the database. It is about connecting all of oracle to other peoples databases and silos left over from the 1980s and 1970s for the government and connecting it together and mining it for patterns where humans might overlook it. For example, lets take its use in the special ops division in afghanistan. It pulls together information about a terrorist, for example. Drone footage, information gathered about individuals suspected of being terrorists dating back decades, as well as weather conditions, and on the ground footage as well taken live from cellphones. Cory cellphone data, drone imagery, video data, old textual stuff. It can take all the stuff and create order where there is not any. Lizette exactly. It can do the same thing for hersheys, figuring out who is buying it, how much, what the weather is like when sales are great. How that tracks with marketing and advertising. Cory lets look at europe. Lizette they have been growing like gangbusters. They had tripled their business there every year for the past three years. In large part because of that growth, they are on track to be profitable this year. Cory is this real . I have not used it. We hear about these things. I wonder how the stuff gets used. I cannot think of any Great Technology i have heard about and reported on until i use the thing. You cannot actually find data in this spreadsheet or whatever. Lizette that is a good point. That is one of the reasons they keep engineers on site for the setup because theres a huge amount of customization that comes into play. It is not just a set it and forget it software program. It does not work unless the data is flowing into their platform and people are using it properly to ask the right questions in the proper way to pull out information they want. Because of that, they have have had a high burn rate because theyve had to employ all of these humans. Cory is it going to be easy to use like a Microsoft Powerpoint or will it be like crm that was so hard to get up and running that customers spent millions of dollars before they could turn it on . Lizette that depends on the customers as expertise as well as how well the training goes and the like. Cory we shall see. It is a fascinating notion. It could be an interesting company. We appreciate you coming. Two companies are deepening ties. They are doing a joint investment venture. 54. 5 stake in one of the existing subsidiaries and spending 609 to do it as both groups step up investments in the Technology Sector and consider expansion in the united states. The deal reportedly expected to take effect on march 1. The stock we are watching, hewlettpackard enterprise. The biggest share plunge since october of 2015. The same time the company officially announced a split. Hpe cutting the fullyear forecast. The c. E. O. Meg whitman pushing executives too hard. The Company Looks to free itself from crummy businesses and looks for better businesses to grow in. We will explain. This is bloomberg. Cory fintech is on track for big growth this year. Banks are worrying the rules are being written and startups are using the advantage of an unregulated area. Joining us is bill harris, a longtime guy, i called you. I have been a guy for a long time, too. Interesting times where you have Companies Like j. P. Morgan talking about using consumer data they get from their customers to offer new financial products. And some concerns from authorities about how personal information is being used. What do you make of this . Bill i think it is fascinating to watch. If it was not so harmful, it would be kind of funny. We are seeing a texas twostep. The big banks and brokers are doing two things. Number one, they have descended on washington and are trying to repeal or delay the fiduciary rule, something that has been worked on for six years which is very simple. It says if you are selling a retirement account like a 401 k or Something Like that, you need to do so with the best interest of the customer in mind rather than just lining your own pockets. Cory imagine. Bill imagine. That is number one. Number two, they say the consumer should be able to figure it out themselves. Let me just say the second piece is they are trying to restrict the access customers have to their own Financial Data at these banks and brokers so how can the consumer figure it out on their own . It is to protect substandard products and high fees. Cory it is interesting. It is the worst you worry about. The obvious, you should not sell your customer something that will hurt them. You would think that. Some people work in the industry look at a new rule as going to empower more lawsuits. It is not really protection, it is a regulation. Bill yes, it probably will empower more lawsuits. But when it does, it is probably a good thing. Fidelity which is by far the biggest provider of 401 k s in the world were sued by their own employees over the fees within their own 401 k plan. You know . We need to change the attitude of banks and brokers towards being something to where we are trying to work for the best interest of the client. Cory tell us about what personal capital is. Bill it is not a roboadvisor. We are not a roboadvisor. We get linked into that category. It is an Investment Service that you can buy online and it is all done with algorithms. We have software algorithms. We are digital. We marry that with human advisors. It is the way to go. It is the magic formula. I think it defines what delivery of Financial Services will look like 10 years from now. Cory it does take the notion that people want advice and do not want us to go online. Our friends take the opposite approach. They say the millennial customer does not want someone to talk to. They find they get in the way. They want to go online and get their money safely invested with low fees. Bill i think for a lot of people, that is right. In fact, i think roboadvisors are Good Services for people who have relatively simple finances. Once you have complicated finances, once you are building your family, you are thinking about owning a house and retirement in putting the kids through college, when you are in that situation, you really need something far more sophisticated. Cory just 30 seconds left. Do you think when we have low fee structures possibilities like personal capital, like vanguard, like roboadvisors, do you think eventually the jamie dimons of the world will run up against it because they are running fundamentally higher fees . Bill the whole world will have to adopt to the new realities of the fact we are in a digital age. Cory bill harris, always good to see you. Glad you are still around, guy. It has raised 500 million more. The Company Plans to use the money to expand internationally. The new funding brings the total investment in the business to under 2 billion. Coming up, the engineer shows us his latest electric vehicle. The company is called air like the sneaker but it is bigger and faster. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. You are watching Bloomberg Technology. Lets start with a check of your first word news. Ohio Governor John Kasich says there is no animosity between him and president trump, his rival during the g. O. P. Primary. The governor says he shared his ideas on potential changes to former president obamas Health Care Law at a meeting today. Ohio was among 31 states that expanded medicaid under the law. President trump says there will be no more big multinational trade deals in a speech to conservative activists, the president promised to take a tougher line on trade. President trump we are going to make trade deals but do it oneonone. If they misbehave, we terminate the deal and they come back and we make a better deal. None of these big quagmire deals that are a disaster. Just take a look at nafta, one of the worst deals ever made by the deal and they come back and any country having to do with economic development. President trump also blasted the news media for using unnamed sources and promised to Start Building a wall between the u. S. And mexico soon. The french financial Prosecutors Office has decided to open a judicial inquiry into parliamentary aid given to family. The former frontrunner admits he hired his wife and children but says the jobs were real and the practice was legal at the time. Marine le pen is refusing to be questioned by police over a fake jobs scandal. She has rejected a nonbinding summons from investigators. They are investigating her use of european parliamentary money to pay for party work. The International Olympics committee is suggesting further adjustments are needed in the way olympic hosts are chosen saying the process produces too many losers. The changes could result in the 2024 and 2028 summer games being awarded in september. Los angeles and paris are the remaining candidates on a list that began with five cities. In what could be a major break for bill cosby, a judge ruled today that just one of the several accusers can testify at his trial. The 79yearold tv star is set to go on trial in june, accused of sexually assaulting a former Temple University employee in 2004. In asia, malaysia says a chemical weapon used to kill the exiled halfbrother of north korean dictator kim jongun according to a preliminary report the vx nerve agent was found on his face and eyes. He was killed in kuala lumpur last week. Diplomats, colleagues, and relatives gathered in moscow today to attend Funeral Services for russias longtime ambassador to the united nations. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti. This is bloomberg. Cory this is Bloomberg Technology. I am cory johnson. We have been discussing a rough week uber with a Sexual Harassment claim and waymo alleging the theft of trade secrets. It does seem like google is sort of kicking uber while it is down. They have had a terrible week. The email exposed anthony who left in january to start waymo cory he was profiled in the new yorker and the embodiment of Silicon Valley trying to do impossible things. Very brash, very ambitious. He started this at the university of berkeley. He started 510 and was working on it on the side with some of the same Technology Waymo is accusing him of stealing and taking to uber. Cory lidar is like radar with lasers. Is fairly expensive. Costs are coming down dramatically. I think google was paying upwards of twice as much, 64,000 for some of the original models. The timeline for Autonomous Vehicles is far away because to make them commercial, the equipment is expensive. The costs are going down. That might be ubers have to say we would ditch the stuff google says was stolen and build our own lidar from scratch. Cory google said you cannot take our guy and our files. It took years to develop it and it took you a matter of months. What is fascinating about this is if the allegations are proven true, he downloaded 14,000 documents. He did a search that tripped him up. He attached this external server to the computer. This is google you are working for. They know how to track what you do on the computer. They know what you are doing online. You might have wanted to be more discreet about it. If these are true, these are allegations at this point, but an incredible digital paper trail left behind by this guy. Cory tesla stocks fall. The company is going through 1 billion in cash and a quarter. They have announced plans to spend another 2. 5 billion before the year is out, before july. And even then, they only have 3 million left in the bank. That is not a great time for the stock to get crushed. It is not looking like people are that concerned about the cash pile so much as the product roadmap. They have these ambitious production rules. Are those overly ambitious . There are still questions about the solarcity deal. Cory that is tom giles and mark rogan. What do you do after you create the tesla model s . If you are the former lead engineer, you start your own car company and call it lucid motors. The first lucid car is the air. It is electric. 1000 horsepower. Slated for full production in one year. He brought it to our studios. I asked him about taking his experience with tesla to start his own company. The goal was to prove the viability of the electric car and show the benefits of going electric to prove it was not just possible, but an electric car could be superior to its existing internal Combustion Engine counterparts. Superior in so many ways. Instant torque, comfort, so many dimensions which have not been perceived possible. Cory torque alone, that initial speed from the tesla model s and roadster, fantastic pickup. The roadster proved that. It was transformative. It exploded the myth that an electric vehicle was like a golf cart. Cory yet the issue of reliability, distance, also started to loom large. Range anxiety has been around for many years. Cory you take road learning and create this. What am i seeing . This is a beautiful car. This is the next generation electric car. This is taking it to a new level. Cory what do i see . What is special about it . So many things. Look at the lighting system. It is revolutionary, developed inhouse. This is a macro lens array. We are taking inspiration from insect eyes. Each module has 487 individual lenses. We have nearly 10,000 microlenses powering the lighting system. This gives us significant advantages in terms of safety and efficiency. It also transforms the look of the car. Cory it is really cool. The glass goes high. I talked to elon musk about the difficulty of designing this to give you a better view but more light in the face. The windshield wipers are an issue. It can reduce the infrared transmitted and the ultraviolet down to about 1. 5 . We also have this. I think this gives the best of both worlds and an airy feeling synonymous with the name of the car. Cory where are you in terms of production . What is the schedule like . This is a prototype made to look production representative. It will go to production in 2019. Our first year, we anticipate making maybe 8000 cars. We will not be demand constrained. We will be constrained by our ability to mass produce a quality product. We can gradually ramp up production and maintain excellent quality. Cory from a design standpoint, the model s looks the same three years into production. I dont mean to be critical of tesla, but after three years it needs refreshing. What is your approach . You can tell me i am wrong. It is an interesting point. The model s is quite traditional in its design from the getgo. It was styled as a traditional type of design. Here we are taking what is possible in electrification. We have this long car and we have a new proportion and a new look to the car altogether. Cory agreed. Is this going to have to change every two or three years . I really believe a great design is timeless and can endure the years. Cory corvette was cool but there were changes. That is a possibility in the future. We are going to make them in the state of arizona just south of phoenix, north of tucson. Cory what are the advantages of making it there . It is closer to our base in california and a great location. It has all the infrastructure. It is close to the interstate network. It has a railhead. Cory im intrigued by the fact cory im intrigued by the fact that not just tesla, google, apple, ford, delphi, g. M. , they are all hiring Silicon Valley. They are at electrification of cars and semiautonomous cars. It is harder to hire the best people. Exactly. It is a hot spot for talent internationally know. Everyone is racing to Silicon Valley. There is an explosive impact because we are seeing deflation of the electric car and the emergence of ridesharing autonomous driving. It does make a challenge greater because we have to think ahead to this new era of luxury mobility. We believe this car fits the bill ideally. Cory i rode in the car. The coolest thing is the glass goes on the way from the back to the front making it pretty hot, so they will have to work on it. It is still a work in progress. The rear seats in the back, im 65 and i was able to tilt all the way back. It is an adjusting vehicle. They have some work to do. It is a competitor to tesla. Interesting development from the c. T. O. Of lucid motors. Next, we take to the skies. We talk to the head of a Drone Company that has won the backing of other companies. This weekend, we will bring you our best interviews of the week including the cisco chairman joining the board of a Company Fighting phone fraud. Tune in saturday for the best of Bloomberg Technology. You can hear me say things Like Fighting phone fraud. This is bloomberg. Cory it is so pretty here. We are waiting in San Francisco and everywhere else for next week. China rapid finance looking to raise 100 million in a new ipo. In november, it was valued in 1 billion. It is one of chinas largest players in domestic online lending. Now for an indepth look at the drone industry. Get a drone, skyhigh, air map for drones. 26 million in funding was led by microsoft, qualcomm as well. C. E. O. Ben marcus with us from l. A. And alan levin joins us from d. C. What are you going to do with the new money . How is your business going to change . Ben we are helping millions of drones navigate today. As it goes to a more consumer focused business, we need more autonomy in the vehicles. We will help more drones operate more autonomously and extend our services around the world. Cory give me some context for this business. I know ben can do it but you have a different view of where they sit in the space, if you will. Alan right now, i think it is fair to say we are all waiting on new regulations that will allow this to happen. F. A. A. Has opened the door. There are tens of thousands of people now in this commercial space. But it is very limited. You cannot fly over people. You cannot do that kind of autonomous flight we are talking about. It is still kind of a work in progress. Cory i was on vacation recently and there were a bunch of tech geeks around. There were so many drones and so many different kinds. It strikes me whether the regulations will be there or not. There are millions of drones operating today. Most are around Aerial Photography and videography taking photos of friends and family and now moving to the enterprise, industrial inspection. There are myriad use cases already underway legally and safely. Cory i wonder if you see there are going to be successful businesses making drones. This seems the making of drones is a commodity business. On the other hand, the company had a snap drone that was cool and seemed to be head and shoulders above a lot of competitors in terms of things like safety and ability to reassemble when it crashes. Ben a lot of people say the hardware business is a commodity. I think building a drone is a very complex, integrated device. You have to be good at areas, Flight Control systems, motors and propellers, controlling links, video links. It is a complex, integrated vice. There are not Many Companies that can do it well. Cory are they still stuck on the stuff they started talking about two years ago . Are new issues coming up . I think we are well along from where we were two years ago. At that time, the industry was frustrated at the slow pace. In the last two years, we have seen the explosion of new rules expanding uses. What the industry really wants to do is fly long distances to allow robotic or autonomous flights and then to fly over people. The drone you mentioned is a good step on how to get there if you can create a drone that breaks apart if it hits the ground or a person and does not hurt them. That is the sort of technology they are looking for to try to expand this. Cory you have seen this snap drone . Alan i have heard it described. Cory do you have one, a drone . Alan i do not. In d. C. , they are not permitted because of security concerns. Cory our drone reporter does not have a drone . Alan i am ashamed. Sorry. Cory i did not mean to call you out in public. That speaks to it. That is the problem you are trying to solve, the management of multiple drones when they seem unmanageable. Ben i think there are Practical Solutions to a lot of these problems. One of the issues identified in trying to get drones to flyover people is the Law Enforcement community was concerned they may not be able to identify the operator of the drone remotely. There are relatively Simple Solutions to that. They are available in different chunks depending on the type of operation. I think when the industry can get around standards for those solutions and persuade regulators this is a safe way to operate, we will be there. Im expecting this rule will be evolved in the summertime and we will see more flights over people. Cory besides the fact that you are awesome and the air map is awesome, what does it mean that microsoft and qualcomm are invested with you . Ben microsoft is a leading Technology Company around cloud computing, enterprise services, qualcomm is looking at extending its mobile phone into the autonomous drone. We are excited to work with these Technology Partners to bring about the future of Unmanned Aircraft in everybodys daily life. Cory it is cool stuff. Thank you. Coming up, one tech titan is up. Two tech titans are up for Academy Awards, six in fact. We will talk about that next. This is bloomberg. Cory a big weekend ahead for hollywood, the Academy Awards on sunday. Some familiar names. Meryl streep, ryan gosling. There is a new player grabbing attention. Reporter the biggest winner at the Academy Awards show might be a tech company. For the first time, an Online Video Service is up for six oscars. Including the top prize, best picture. Youre probably wondering who. The answer, amazon. Last year, the tech giant acquired manchester by the sea at the film festival. The price, 10 million. The film grossed 61 million worldwide. What we are really about in films movies you are going to care about, movies that you will talk about, and movies you will remember. We are looking for visionary films by visionary filmmakers, stories that are smart and interesting, set apart from the crowd. Reporter it is amazons hollywood approach that has the makers intrigued. For this project, amazon partnered with Roadside Attractions to distribute the film to cinemas keeping it off its amazon prime Video Service for a theaterfirst strategy. A win could give amazon a leg up on the other streaming giant, netflix. Netflix is no stranger to the Academy Awards. It earned its first oscar nomination in 2014 with a feature documentary. All of the streaming nominations have been in the documentary feature category. Netflix says it is not interested in offering a theatrical run and would rather push content first directly to subscribers. But amazons strategy may have an advantage for the long haul. Since it owns both the movie and streaming platform, it can offer its prime subscribers access to manchester by the sea globally and indefinitely. Cory that does it for this edition of Bloomberg Technology. Monday, we will be broadcasting from the mobile world conference in barcelona. Technology. Monday, we will be broadcasting talking to the c. E. O. s. That is it for now. This is bloomberg. Announcer the following is a paid advertisement for time lifes music collection. Chances are that i wear a silly grin the moment announcer there are artists we will always remember. Mona Lisa Mona Lisa men have named you announcer there are beautiful songs, words, and memories that will always touch our hearts. Its impossible