Survive. First i want to get to the Google Developers conference. The keynote is underway right now. Highlights include a preview of the next version of android, one, a l, and android phones. To design what is going on there . Levelyou hear the noise one of the key things we have seen in the first hour of what google has been showing to the world is there is this need to continue to make the software as thence as important hardware experience. They have been talking about the next generation of android. We know that while there is arguably dominance for google, Something Like 80 of the market in the first quarter, there is this need to stay relevant. Lot about that, and you can expect they will continue to talk more about all the places that android can touch. A discussion about android on television, android tv we will see if more details emerge there. The focus of Wearable Technology and having android where, software that can go along with watches, and google executives presenting today have had watches on their wrists. Sounds like a hell of a band there. [laughter] i want to turn back to the aereo story. The Supreme Court ruling that aereos business violates broadcasters copyright. Is the court really taking a stand against innovation in paytv . Paid tv . I want to move on. We have the general partner of benchmark and Paul Kedrosky here. I want to talk to you about this aereo thing. What do you make of this ruling . From the very beginning, this was going to end up in the court system. It was designed for that. It really is. The bottom line is whether you are looking at big media that is based out of hollywood, or any type of telecommunication threat whatsoever. Have two very well prepared, large institutional masses that know how to litigate, know how to lobby, and knowhow to win those types of battles. If you go headstrong into either one of those trying to disrupt, you will end up in the courts. You have this Big Investments in uber. Uber, surely you guys have thought about the fact you probably thought from the beginning, this will run into issues. Something very different about municipal regulation than federal regulation. In municipal regulation, its very easy for a mayor, a city council to stand up and say, those laws may be outdated, maybe we should revisit them, maybe we should rewrite them. That has happened in d. C. , chicago, new york, california, and colorado. That is much harder on a federal level. We tend to have these laws that thened for 200 years and the Supreme Court tries to retrofit them for what is going on today, and they make a ruling, and that becomes a piece of the puzzle of how those things are viewed. Big question, whether there is ever a moment where a federal government can stand up and say, maybe we ought to start from scratch on something. The courts majority opinion tossed it back to congress. Raised a really interesting issue in their arguments for the court. It is not just about aereo, its about cloud computing. Dissenting opinion took up issue with that or said that the implications were ominous. It majority opinion saying could be different, the dissenting opinion saying this will be used against the cloud anyway. I think its really important for broader technology. I hate to say this. I agree with Justice Scalia on this one. The majority tried to define its way out of the problem and say this is a limited decision to what is happening here and should not be seen as having direct implications for broader innovation with respect to cloud services. Thisce scalia pointed out is the majority arguing that if it looks like cable tv, we have rules about that very do it must be cable tv. Results driven approach. The Courts Technology has changed. It is antiinnovation. If something looks enough like the thing that came before, it must be regulated like that. That is inherently antithetical to innovation. We look to provide the same thing at lower cost or much faster or something else. Its not like we are trying to do a completely different thing. Innovation is about doing the same old things in new ways. That is the part of the decision that really worried me. The notion that this could go not just beyond aereo, but even beyond that. Its not something im worried about great a lot of the cloud applications would be ones that were caching media that you own. No one owns media, anyway. They stream it. So the issues of having an itunes song on multiple servers will not be an issue . Seem to be with the use cases that are going on today. The aereo team brought that argument to the table to try to increase the weight of the decision rather than that being an issue that people were particularly worried about. I wonder what the implications are for enterprise software, where there are copyright issues. Charge extra,t to and this Court Decision might get closer to that. Lets hope every single startup does not find themselves needing lobbyists. That would be a horrible outcome for Silicon Valley. Onstephanie ruhle asked me an earlier show if this was Northern California fighting southern california. It was a notion that it was Silicon Valley versus l. A. It is very much that kind of case. Bill talked about the difference between municipal and federal law. Monolithic providers of services who believe that we only need three or four Large Media Companies and the rest of a should pat ourselves on the head and expect this content to come thisg at us, as opposed to idea we are breaking down, aggregating the providers of media and cashers and streamers and all these bits and pieces. These are two very different views of how the world should look over the next year, five years and 10 years. Northern california represents that upstart view. Southern california represents the federal view of copyright and license holders. A small group of people providing the content to everyone else. That model is breaking down. It is unfortunate that you have to work through the monolithic federal system as opposed to dealing with a problem one municipality at a time. If a startup where to come to you today and say i have this really great idea, a new way to present Television Shows or , netflixlike or something, does that make it a less interesting investment to you . I would not call it the ruling today. I would call it the powers in effect in that market which paul just referred to. Take any of our most regulated industries, finance, health care, telecom, media. We are getting to the point where there are three large providers. Which wasddfrank, supposed to help the consumer. Worseatures have gotten since. Frank. Free checking has gone away. I happen to think this is a bigger topic. The mock receipt and capitalism corrupt one another democracy and capitalism corrupt one another if they spent enough time together. These heavily regulated industries are minefields for startups because Market Forces are not at play. Interesting stuff. With me. Osky will stay we are talking about the impact of the Supreme Courts decision on aereo. You can also watch a streaming on your tablet, your phone, and at bloomberg. Com. Im cory johnson. This is bloomberg west. The Supreme Court ruling today that aereos business violates copyright. Jon erlichman there at the google i. O. Event. You have been covering this aereo story quite a bit. What do you make of todays ruling . The broadcasters are pleased with this decision. You guys talk about this already. People want toe consume video and content, tv and movies in a whole bunch of new ways. I do think that at the end of the day the broadcasters feel like beyond all the subjects surrounding the cloud and Cloud Technology and what this says about the limit, perhaps more Cloud Technology going forward, ais was always a story about signal that others are paying for and getting paid yourself for it. Potentialink there is to play out in a lower court. We will see what happens. The question of whether or not there could be some kind of compromise between aereo and the broadcasters, certainly that would involve money. The company was always clear there was no plan b, they did not set up a business whereby ultimately they would be paying these fees that broadcasters get. It is something to watch for sure. Me there isseem to great opportunity in this places where theres a lot of regulation. That businesses are more rife for innovation, because they have been protected from it for so long. Some of them get really good at protecting themselves. Yourne if you look at senior teams top talent and you say, what are our competitive advantages . You take a company like comcast and you look at the policy group. These are some of the leading executors in the company. For many of these companies, their ability to lobby and control regulation is their core competitive advantage. Call the Marketing Department or product apartment and say, we need to hustle, what feature should be release . They call their policy and legal department. Oni feel like you and i were conference a while ago. Asked a question about bluetooth and he did not know it was. Someoned amazing that running a Telecommunications Company it occurred to me that he probably knew everything about the Union Contract absolutely. Silicon valley is not completely faultless. Everyone here likes to believe if you can build something with technology, you should be able to. There is also the libertarian thing. If i can build a technology that will steal all the content that people legitimately paid money to create, that should be ok. I still was impressed by the responsibility that the broadcasters have because they were given these licenses with a promise to provide free stuff on ent given these licenses with a promise to provide free stuff on the air. Why did these licenses exist in the first place . Because of scarcities that dont exist now. We are acting partially in defense of people try to usurp legislation largely in service of scarcities that dont financing. Ok at the billion plus financing. That have been so intensely regulated in the past that now look so ripe for innovation, we will see these very concentrated, very legal theseattles now as heavily protected incumbents try and prevent similar things from happening to them, even if its not just prankish nests on p rankishness of Silicon Valley. Why in the world do i have to go through this nonsense of process trying to figure out who the nearest doctor available is . 2014, butsurd in these things exist in part because of regulatory capture and all this nonsense. Paul kedrosky, bloomberg contributing editor, thank you very much. Stay with me for a bit. Coming up next, we will talk about the Supreme Courts landmark ruling and what it can mean for the future of the cloud. Welcome back to bloomberg west. The Supreme Courts landmark we willnst aereo talk next with jon erlichman. I want to start with Paul Kedrosky. Can you think of any company that might be impacted by this directly . Not specifically, but on the other hand its hard to see how you specifically exempt them either. The court try to carve out this exemption and say it does not apply to cloud computing. If you read further on, they say, that is in part because we have not seen a case yet that specifically addresses the copyright act. It is sort of an invitation for someone to say, i see that dropbox is storing all kinds of content. They can email to their friends. Maybe this is copyrighted content. Performance is the other loaded word in the decision. All of this opens a gigantic trapdoor through which all sorts of legal nonsense will start to flow. You can still find just about any copyrighted song you can imagine somewhere on youtube. Are there implications about this that are different than old copyright law . It is worth pointing out that youtube [indiscernible] had differences for years. That speaks to the reality that Technology Pushes ahead, whether the content creators are ready for it or not. Sometimes you have to go through the court system to get all these things resolved. In terms of who this affects and how it affects them, there are some other players. There were some before aereo, and some now who will continue to watch, pushing into similar territory. I find myself curious about all of the inhouse technology being developed or that continues to be developed by the paid tv distributors. As we watched the story unfold, some wondered, if aereo is victorious, what does that mean for the directvs and comcasts and dishes . Could they have their own workaround technology they will put out . Since their consumers are interested in that kind of technology, what do they do . Do they leave it on the floor, or are there ways to put it to use . You are so involved in uber. Im curious about what the approach has been. Has it been a surprise . As you put it, municipal objections . Not at all. Asi said earlier, as long you let corporations work inside of government, you get this corruption type stuff that starts to happen known as regulatory capture. In the local municipality regulatory capture . Yes. In the municipality, the only person really under threat from uber is the taxi owner. The taxi drivers can switch to liberated byy are this. Theres only two or three people that are harmed in each city. Because the taxi ownership is so concentrated . Concentrated because it is regulated. You can make the argument in places like new york, where there are individuals who pay upwards of a Million Dollars and the fact that the medallion is worth so much implies you are not at market equilibrium. You are buying the right into some oligopoly that is protected. At the municipal level, its really easy to see, the citizens can have their voices heard. That is originally what happened in washington, d. C. With over uber. That is harder on a national level. Customers that love aereo cannot really get their voice heard in a quick way against congress or the senate. Thank you very much. Paul kedrosky, i do listen to you. [laughter] thank you very much. I know. Coming up, new smart watches, all kinds of stuff. Report from google i o coming up next. Is 26 minutes after the hour. Bloomberg tv is on the markets. Im julie hyman. Take a look at where stocks are trading today. We see a little bit of a rally overall for markets today. A look at some individual stocks as well. General mills is one. The results still missed analystss demise. The company said it started a review of its north American Manufacturing and distribution. We will have more on the markets in the next hour. You are watching bloomberg west. Im cory johnson, in for emily chang. I want to get to google. The new version of Android Software for smart phones, other devices being discussed in san francisco. Wherelichman is live google i o is taking place. The ceo of ever note and Paul Kedrosky still with us. What is the biggest thing you have seen come out of the conference today. It is still ongoing. The improvements to android are very exciting. There is a ton of capabilities that we want to take advantage of. Exciting in what way . I believe you, but prove it. We have been huge fans of wearables. Googles announcement that the new watches are coming out is fantastic. We noticed all the executives wearing these big watches onstage. We have been building for smart watches for a while and plan to have an app out on google wear as soon as it is available. Theres a lot of things going on there that will fundamentally transform the way we deal with technology. Like google and apple are doing interesting things. The announcement a few weeks ago, apple made a big push to become more developer friendly, more extensions, which. New language. Google is talking about making things more beautiful. It feels like both companies are trying to play in the others sandbox. Paul, what did you see out of this show so far . I will echo phil. This backandforth, that apple is forcing google to be better. Google was forcing apple to be better and more open. That is a wonderful change. In the past, i thought some of the android products were pathetically low some loathsome. There are sandbox problems with respect with not allowing apps to talk to each other directly. , andis hugely welcome augurs well in terms of the next generation of apps we will see that will work better on both platforms in terms of allowing process communications. Its hugely important. It was sorely missing from apple in the past. The aesthetics on the android site will help drive adoption around the world. It was one of the points, they showed penetration of smartphones around the world. It is remarkable how low the penetration is in some places in the world. Jon, you are on geek patrol for us today. What are the developers jazzed about as they made that announcement today . Paul use that word market. It is an important one. Almost with a one two three four you get a sense of the markets where google is focusing on. They spend a huge amount of time talking about this new version of android, highlighting the security built into it. That seems like a call to the enterprise, and im sure phil has some comments on that. As more businesses adopt phones that are using the android, and this android related push in cars, obviously with the Tv Initiative they talk about over the last hour and having software that can fuel a variety of tvs, and getting back to the wearables theyre looking at all these new markets. Spending more time on all of that stuff and maybe less time on smart phones and tablets which are already the established markets. Phils closer to this than i am. I will defer to his expertise. Im still baffled by the wearables size of things. Evernotenow what plans has on the wearables side. So far, nothing has been very exciting. Phil, wearables . Wearables will change the world, and much faster than people think. All of the current generation stuff is very much companies trying to figure out exactly what wearables will be. [indiscernible] all of the bracelets, watches, glasses, cli