The crackdown of students in the andaman square. They have checked extensively and there are no technical problems on inside. Ford showing off a new fusion lightweight car. The result is a midsized sedan of the fuel just an see of a small car. It is made with aluminum, magnesium, and carbon fiber. No word on when it will hit the market. To our lead story. Many apple users go outside the Apple Ecosystem to edit files. Apple is hoping to change all that and take aim at competitors. There is a photo editing feature, a new calling feature like microsofts skype, and it features the take on dropbox. They are trying to make it easier for developers to develop on their platform introducing the Swift Program language. They are making a big portion of health and home arenas. What is that mean for other companies . We are talking to john, creator of newco and a longtime apple follower. You have watched this company forever. What are your thoughts on this particular wwdc . I thought that apple failed to be apple. It succeeded at being the apple we all knew before expectations were inflated that apple had change the world every time they had one. This use to be a conference for the Tiny Community in the world of computing that was david against goliath. Everyone got super excited when they changed an sdk for their photo app. That was exciting because you could do new things. Now everyone expects apple to unveil a worldchanging thing every time they hit the stage. This felt more like the ones of old where they were fixing a lot of things they should have fixed, addressing opportunities that people felt they had not addressed and taking on competitors who might have been more nimble in the last 510 years. I remember when youre writing an system six was this disaster when the macintosh se was there. The notion of instagram has to exist at all suggest that microsoft did not get their photo stuff quite right. Messaging issues have been a problem. Everything that made big news were things that apple really needed to address. They cant watch a competitor like dropbox runaway. They cant watch google come up to the side and have google drive that works better than their icloud solution. They certainly cant lose music and photo. They may have lost music already. We will see. Streaming kind of ran away with it. This to me felt like an apple conference of old, where a lot of people got super excited, but i think people who are not techies are scratching their head and asking what is the big deal . You think there is something about apple . I was struck by the cloud. I remember it back to the failures of mobile me, but icloud, of. Mac. There were so many cloud failures that it is hard for me to take seriously that they will fix it now. I think there is a big lets wait and see because apple has not been good at consumer software. It redefined that back in the early itunes era. You had this idea when music was turned into software was a big deal when apple was winning. But then all the startups in the valley and around the world started to outinnovate apple. I think they are laying a foundation, but it is a wait and see. Is a necessary thing for a company the size, now Biggest Tech Company in the world in terms of market cap, for them to lay groundwork in a way that they did not have to before . Worse is apple sticking to their original plan . A bit of both. They have got to lay down groundwork and continued to be the number one place for Smart Developers want to develop. They also have to start recognizing that some of the things that the internet has brought us are worth embracing, that they need to open up. It is a small thing but they are allowing thirdparty keyboards. Apple was very persnickety about controlling things like input keyboards. Now there are saying maybe there are better ways to do it. I wonder if i have been seeing a lot about your company and how you address a very different world of innovation than apple historically has done. I wonder if you see connections. Conferences tend to be vertical. This is a tech conference. It is about one vertical segment. What we realized in the conference new co. That we do is that technology is horizontal and it is affecting all businesses. All these kinds of new businesses can be new technology businesses. Apple realizes its market is broadening and they need to be in all different areas and not just have this wow, tech thing that comes out. Even when apple has been at its most screwed up, john scully was its ceo and that was not the worst. One could argue. Scully was so focused on getting pcs into businesses instead of letting it grow in education and places where they were doing well. Now it is not pcs, but the internet probably. We are seeing Innovation Across Industries in the internet. Almost every business is an Internet Business even if it is not about being a startup in the internet space. Apple needs to embrace that innovation and extend what they are about by being more open. Is that is why newco is so focused on going to the companies in the different cities . Getting inside the companies, sharing information, collaborating. That happens when people connect in small settings like inside offices instead of big ballrooms where everything is a bit overly produced. This may not bode well for apple, but we will see. John battelle, great to have you. Chief creative officer and founder of newco. Malware west develop to steal millions of dollars but how did this guy stay under the radar . The future of cyber seeds next on bloomberg west. Welcome back to bloomberg west. Federal agents have busted a Hacking Network that may have cost more than 100 million in losses in the u. S. The network is known as game over bot net. The network spread malware which hackers use to control files and demand a ransom from consumers. The Justice Department has charged a 30 year old russian as the mastermind. He remains at large. It raises the issue, how do hackers stay under the radar for so long and what does it tell us about other hacking groups that could be hiding . David walt joins us right now. Fire eye in the Cyber Security business. You found the target hack, infamously. Has the target changed a lot in the last year . It has. If you look at the last couple of years, the types of attackers out there, much like the zoos take down, we are seeing sophistication from russia. A lot of the business organizations and mafia in that market are very aggressive. Highvolume, low credit card type of activities. We are seeing attacks on debit cards, much like the target examples. A lot of changes happening. I have had the theory for the last year that one of the reasons we see so much hacking out of Eastern Europe is because during the soviet unions existence, the bloc of sending the best of computers over there, the computer has to be better. Michael lewis makes the case that computer time was so limited, software writers had to be good because there was very little time on computers. Why do you think we see so much out of the eastern bloc . I think you hit on it. The talent is amazing. If you look at what is coming out of the russian market, the specificity, they are very stealthy. This is different from the chinese market. It is noisy, easily discovered, with a letter finger prints on what they are. Russians are very stealthy, typically. You see a 30yearold hacker, very bright and talented. I think you hit on someone that is important. It is hard to arrest these individuals because they are sometimes protected in these markets around the world. The indictments to the Chinese Military will probably not have an outcome or official arrest. We dont want to send guys over there will to arrest him showing badges. For your company, do you have to have different types of protection for your clients when you are looking at the risks of chinese hackers as opposed to Eastern European . You really do. The russian market is focused for crime. A lot of fordollar type of attacks. The chinese has been for espionage. If i were a network administrator, how do those look different . Is a concept called advanced persistent threat. It has evolved at the china markets because it is there for persistency over a long. Of time with the idea of stealing intellectual property. We see a different type of attack are focused in on what we call spearfishing, find an individual, get a persistent threat in place, and steal information out of it. Different than the russian markets. It similar result. They are having success. It is very expensive. I am not one to predict that the stock price tells us. It tells more than i know or even care that it has declined a bit recently. When you look at the deal, does technology or because it is a consulting business that will get you into places . It is three things. You hit on one of them. The people are amazing. The individuals are the best responders in the world. Navy cyber seals if you will. Those personnel are very unique and talented. Very consulting like. The other pieces are technology. They advance the model into automation so they can respond and the third is intelligence. Mandiants reports that have been put out are very powerful and good at understanding the attackers and the combination was a hell of a deal for our shareholders. And yet the losses persist and get even bigger over time. The margin structure looks like it is really rough. Do you feel like you have got to build the company up to be a onestop shop, semantic, mcafee, to handle all threats or are there specific areas that the business will focus . Opportunity is massive in the cyberspace. I wonder how you try to figure out which problems to solve your company. We will find out why, next. Welcome back to bloomberg west. Google services from gmail to Google Translate in china appear to be disrupted ahead of the 25th anniversary of the Tiananmen Square crackdown. Gmail traffic was cut in half over the weekend. In a statement to bloomberg west, google says we have checked extensively. There are note technical problems on our side. Joining us is shaun rein, managing marker of Chinese Research group. This suggest that it is google getting shut down more, but it is our shutdown as it is. When you see google getting shut down, it is par for the course in china and businesses and people expect it. When you are getting to an anniversary of a politically sessile time or have the government have a political spat, google is the First Company whose Technical Services are inaccessible in china. For the last 10 days, my company has had a lot of problems using google services. Our email services run on google Small Business and we have not been able to get access to email. We have had to use other email servers. Increasingly as google is woven into the fabric of the web in things like authentication, do these sorts of heightened security efforts start to her Chinese Business . Absolutely. I think the government needs to do a rethink on some of their internet policies because youre seeing lack of internet access, instability is hurting not just foreign businesses in china but domestic Chinese Companies as they go abroad. We have talked about it before. You see Companies Like xaoimi, tencent. It has eclipsed facebook as the largest social media site in indonesia. When they cant get access to google services, it really stifles their ability to become true Global Players and make money for chinese shareholders. Im going to play a game where i oversimplify and you can call me a moron. Let me oversimplify and saying that this is the old guard thinking they can keep the world out and this is the new guard opening up to the commerce in new ways losing the battle . That is one of the best questions i have heard in a long time. Actually, the answer is no. From me . From you. When president xi became president last year, they thought it would be a reformer and what you are not seeing. Xi is a major reformer but is in strengthening the communist party. He has had a farreaching crackdown on corruption which is created support among the chinese people. He has reformed Political Security as well as military apparatus. He is firmly in charge of the country right now in a way that i dont think we have seen since mao zedong. He is very concerned about the technical side. I dont think he will liberalize that because he is very worried, perhaps rightly so, about infiltration from the americans. There is a lot of distrust in china for the americans right now which is why you have seen a crackdown on ibm, mckinsey, the consulting firm, and other western companies that are getting too close of state secrets of stateowned enterprise. We are also seeing cisco the ceo told me that sales of certain products in china are down significantly as a result of the revelations of the nsa and the concern that nsa hardware hacking has happened with cisco products and will hurt their sales. If you are an American Hardware company, i would be very concerned about the next several quarters in china. In the state media, a lot of people are saying, lets buy chinese brands. Lets get rid of the security threat. The government has directed the stateowned banks not to use ibm servers, while you see the chinese Server Companies are having soaring sales. It will be a rough time and investors need to know this for a lot of american tech companies. I think European Companies will do better over the next several weeks because the Chinese Government likes to take away from america and get to europe or take away from europe and give to america. A balance of power issue. Shaun rein, managing director of the China Market Research group. Thank you very much. Fidelity looking to lead ubers latest round of funding at a massive 17 billion by tuition. You can watch us from your tablet, phone, and bloomberg. Com. Time for on the markets. I am jonathan ferro. Look for the stake of accuracy stocks lower by literally nothing coming off record highs. This week it is set to get busier. A role is friday. You have a busy week ahead of you. The price right now is actually subdued. You are watching bloomberg west, where we cover innovation, technology, and the future. I am cory johnson. Fidelity wants to lead ubers funding round at a 17 billion valuation. That will give this app a higher valuation than Companies Like best buy and hertz. Is that nuts . Sarah joins me. Im not a valuation guy and uber is a fascinating business, but that is a big number. It is huge. You have to look at them in context. Air bnp is a startup that was raised at 10 billion in valuation. There has been more Venture Capital financing in the First Quarter this year since 2001. We are close to bubble levels with that. I think uber wants to stake its claim as the ceo put it as a recordbreaking valuation company. You said context. I think the true context is a yield curve and where people can find a true return on their investment. That said, let me offer context of companies in the s p 500 that have similar market caps, like alcoa, con edison, chipotle. Were talking about businesses that have long histories of Free Cash Flow generation and rewarding investors, even dividends, god for bid. Are we in a notion were the private rounds will be bigger than a round one goes public . It gets into dangerous territory. Can hoover be as big as those companies you just mentioned . Can they be bigger . If they are getting the site wishon on the private market, they are expecting that uber can make multiples on the public market. On the flipside, we talk about all the markets, we have seen a lot of tech stocks get hit this year. It seems as though this frothy valuation in the private markets are kind of lagging the public sentiment. I have also said that they will not do when ipo anytime soon. Is there something going on with some of the companies that decide they do not want to be public yet . It is unclear, but i think that from the glamour of an ipo is not as great as the glamour of really highly valued private market valuation right now. Vox is delaying their ipo. They think that right now was not the right time on the market. We have seen other private Companies Announce that they were raising half 1 billion valuation just a few months after raising at a 45 million valuation. It is getting frothy. I guess we will see over time if the fidelity money is smart money, getting in at such a high price. Sarah frier, thank you very much. Uber far from alone in the highvaluation club. A new announcement by Andreessen Horowitz expects to increase this year. Automatic payroll, health benefits, and the ceo parker joins us right now. I sort of dont care about by tuition but i am interested about when you were raising money. What did your potential investors want to know . I think what they wanted to look at was road, but more importantly it was a big valuation. We are going after a big problem. All of these companies have all these disconnected systems related to hr. As a result, there is all that paperwork and administrative hassle. What this does is it ties all of this together. It saves someone a ton of time and best of all, we do it all for free. Free is a great model. You can sell a lot of things if you dont charge anything. It is like selling candy to a seven years old. We get revenue from various providers on our system. One of the big ones is Insurance Companies. We act as an Insurance Broker for a lot of our clients and get commissions on the policies that we have. The important thing is that it does not increase their costs. You listing ratio for these companies . But we cant take over existing policies as well and service them on behalf of the client and insurance company. We do not have to write a new policy for us to make revenue. Few