Government be allowed to prevent anyone on a terrorist watch list from buying a gun. Republicans disagree. They said a court should have to sign off on nobuy order. From bloomberg World Headquarters in new york, im mark crumpton. This is bloomberg west. Apple facing the threat of a sale freeze. How serious are the allegations . Were break them down. Bill gates sits down exclusively and hear his views on the linked in deal. In ollywood dips its toes Virtual Reality and why the gaming industry is still sitting on the sidelines. Apple hit with a patent dispute in china. The beijing intellectual Property Office has found that he iphone 6 and 6 plus are too imilar to the chinese baili. Dback. Ickly fire are gearing out to roll out the next model. R. B. C. Joined j. P. Morgan for the stock. So how big a deal is this . Really. Research president bob odonnell joins us from fran and with me for the hour. Bloomberg news executive editor tom giles. First off, tom, thank you for joining us. I never heard of baili. I lived in hong kong for four years right across from shen jen. Tell me about this. Tom well, theyre a tiny company. Tarted by a former executive technology. But this whole story really makes you wonder about whats going on. You look at those phones as you look on the screen. They dont look the same. There are plenty of other phones that look very, very similar. Withh, by the way, werent the 6s and 6plus included . Theres a lot of questions marks about whats going on. There could be some back door political cron yism happening here. And thats the big question here. It begs the question is this a real patent dispute or is this a load of bull that beijing is trying to pull here. What do you think . Tom i think its more the latter. Ill be honest with you. It reflects the challenges that a lot of western Companies Face when they go to china particularly as somebody as big as apple. Look, the Chinese Government knows how important the china market is to apple. Weve seen a number of these things. Weve seen itunes and the story being blocked. Weve seen a number of challenges there. We saw the invest dwhrament they did in didi. Theres a lot of back door happening that we dont know about. But im sure some of this stuff is at play. Bottom line, i dont think it will impact their sales. How much does a legal precedent set . This is a company that is still putting in place policies that govern how they deal with patents. How much could this affect rulings in the future . Bob if it plays out, it could have an impact. There have been smaller cases like this that have been overturned. This is a bigger player with apple and it may be that they want to make a statement. And that is a bit of a concern. But i have hard time believing that anyone would really take this to an extreme level. Again, as it is, its interesting that they focused only the 6 and not 6s line. That suggestses to me that it may not be that big of a an issue. Big y wanted to make a issue they would big issue they would have to go after both of them because they look identical. We had a conference in San Francisco. And we had the opportunity to interview michelle lee who heads the u. S. Patent and trademark office. She talked about how much time and energy she and her staff have been putting china to rewrite and reform their patent and their i. P. Protection. Id like to listen to some of the things that she said briefly for a moment. Keep in mind that countries cross the world view the intellectual property system as a tool. Theyre undergoing changes to their trade sequence law and there are no other areas of law in intellectual property. They want input wanting a system more like ours. Theyre establishing courts much like ours. So the combination of laws on the books, Court Systems that are less prudential, subject to favoritism and a real desire by upper level management. And it will take time. Its a huge society with lots of Different Levels but at the highest level theres an intention to move in a direction ats more respectful of copy rights. Not because trading partners are asking them to do it. So michelle talks about the need for there to be reform. She talks about there being political will. But do events like show how far we have to go to prevent that in china . Its very provincial. The thing to remember about this. This is from beijing which is just the city, its the biggest city but its not the whole country. That reflects to me that this is more of a provincial challenge that reflects the complexity of the Chinese Government and the regulations there and the kinds of challenges that all company who are going to be big in china are going to face. Yes, im sure the best intentions are there in china to change this but its also going take a very long time before this plays out. Well see if this becomes a bigger issue. My guess is this ones going to blow away and a week from now we would have forgotten about it. Up with more question for you. If iphone sales do get stopped how much hurt will this bring to apple . Apple gets about 25 of its revenue from greater china. But this is the iphone 6 and iphone 6plus specifically. Any numbers . I dont think it will be huge because this is the older generation 6, not the 66 s and not the,s plus. So its the older generation phones. Its going to have less of an impact. Fundamentally, i really dont think this is going to become a real issue in terms of stopping sales. Even if it was, it would be in beijing and not the rest of china. Bob odonnell, thank you very much. And tom staying with us for this hour. Speaking of apple, Regulatory Filings shows warren buffet pays 49. 40 a share. Bershire has 9 dels 97 million. At the time it sheed slowdown in iphone sales. But the rebound has yet to materialize. Shares fell another 2 in the friday session. Coming up, what does the cofound oaf the microsoft think of linked in . Our exclusive interview with bill gates is next. Later, facebooks annual shareholder is on monday. What investors are trying to say about the companys third class of shares. Welcome back. Microsoft announced its plan to buy linked in in one of the biggest tech deals ever. Wall street acted with mixed reviews but how about bill gates . Eric sat down with bill gates for an exclusive interview. Take a listen. Great nk its a a transaction. Linked in brings a lot i node Reed Hoffmann and jeff, the team there built an incredible audience and so combined with what microsoft does, working with people and productivity helping professionals communicate there will be a lot of synergies there and so i was very encouraging if that deal came together and glad to see it that it really happened. So far investors havent been very supportive of the transaction. Should they be. The stock market is going to jump up and down. Im no expert on what the stock market should be daytoday. I think the company is better combined. I love the idea that the market wants us to show that. I mean, the company is expert in software and managing those audiences and its great that they have an opportunity to surprise the world and say, oh, linked in, feed on thats how i want to learn about my career, my company, my industry. If we can make that as say valuable as the facebook and the social world thats huge Value Creation and that will happen over a period of years. You were c. E. O. And chairman of the world. You know deal execution and integration are tricky especially with a deal to this size. What are the keys to not screwing it up. What are the keys to not screwing it up . A lot of what licked in does will stay exactly the same. The idea of how you get the files, list and the user its pretty easy without changing a lot of the engineering. So microsoft like most Tech Companies have had deals that have gone better than others. I think weve got good preparation and the nature of the synergy is pretty clear. All right. Microsoft cofounder bill gates. Bloomberg editor of Technology Tom giles to talk more about this. Lets look ahead on the microsoft linked in deal. The biggest challenge that it has now is Regulatory Approval especially over in the european union. How likely is that . Theell, margrite is head of antitrust at the e. U. She said are we going to use data in a way that kind of creates a disadvantage for competitors. Now, they took a close look at facebook, whats app. We dont have any indication that theres not significant indication that theres going to back huge hurdle. I would turn it and say that the biggest challenge theyre going to face is getting their synergies, really making as bill gates say he thinks two are better than one. They need to prove it. I think thats going to be their biggest challenge. I dont think regulatory is going to be their biggest. Looking into the data that theyre talking about that the e. U. Chief talked about. What would be a barrier that might potentially raise a red flag here . I think any time you have a monopoly situation that you use that to put up barriers to entry for another player to come into the market, a smaller player, again, its not something that weve seen a lot of concern over. We talked to people out there. Were not hearing that thats kind of the thing that is really rising to the surface. All right. Lets switch to a suiter a failed suiter according to people familiar to the matter. What didnt that go through . Its a very expensive deal. Salesforce. Com has a few money in cash. It would have been a difficult deal to digest would that have lot. Sue shares, borrow a what would have happened linked in went to microsoft and said hey were starting to get down the aisle with this other player. What do you guys think . And microsoft came in and said this makes a lot of sense for us. We think theres a lot of ways that we can use our pickup trucks, mesh them with the linked in products and connect them to the hundreds of people that are using linked in and theyre so much more well captainized. They have capitalized. They have tons of cash. Microsoft looked at basically buying sales force. Do you think they might look at that again . What youre going to see with linked in, theyre going to give them the potential for a sales force to help people and theyre going to go out on a sales call. Well, youre friends with three of her colleagues. So you can bring that up in a conversation and all kinds of way that microsoft is going to try to leverage its knowhow with that network that you were working with on a daily basis. Well leave it at that for now. Tom giles sticking with us. We saw the drm c. Court of of appeals rule that internet oviders cannot slow internet content to consumers. It defies it as utility that all americans should have access to. Bloombergs oliver explains. Net neutrality calls for an open Internet Everything on the web shouldle be equally accessible. While everybody claims to honor that principle, interpreting it in real terms is a bit of a different story. Heres the situation. A u. S. Federal court recently upheld the f. C. C. s opinion to have more oversight of broadband track. Comcast and verizon will be treed the same as public utilities. They cannot prevent to charge like netflix for preferential treatment. It stops them from blocking or slowing web traffic. While the rules already in place in much of europe, the Internet Service companies which fought the new rules say they want an open internet. Heres the background. The term Network Neutrality was coined in 20002 by tim lu who argued people would pay for more bandwidth. In the late 2000, the f. C. C. Stepped up under the principle of Net Neutrality challenging comcast an verizon in court. On the one hand supporters needed this power to have internet providers to treat all web trafficking equally. But providers say this regulation deters investment and we should know u. S. Broadband speeds are behind that of france, u. K. And south korea. But beneath the legal policy questions rises the more philosophical one like who owns the internet . Do consumers pay to connect to it . And who balances all those competing interests . Bloombergs oliver roenick on Net Neutrality. Coming up, ted talks about apple buying test la. Thats ahead. Youre watching bloomberg west. West. Is bloomberg alphabet fell the most in friday trade. One citigroup analysis suggest thats second Gross Revenue could come 1 to 2 below expectations. Shares came at 3. 1 , the biggest decline since april. Microsofts 26 billion acquisition of linked in is raising the question which other cash rich Tech Companies might be looking to buy. Ted west spoke with leonisis about the future of tech. I could see sincerely apple buying test la. Tesla. I think that would be a smart move. Tribleist o get into cars. Has next generation leadership. So a Computer Company is buying a car manufacturer. And tesla is a Computer Company. Just has some wheels on it. I think youre going to see those kind of big going outside f your swim lane to try to get capability, i. P. , to try to get management. To grow into eeds a conned category to continue the growth because these companies have such incredible skeafment i looked at a walmart. Walmart needs to grow 1 or 2 per year because theyre so big. And where where will that growth come from . 1 or 2 comes from growing their biggest competitor on an annual basis. Unless you start to look at difference industries or businesses its hard in your lane to get that kind of growth. Youre all shot. A. O. L. Is owned by verizon. It seems to be a significant bitter for yahoo . Does the deal for yahoo make sense . I tried to buy yahoo , i think it was in 1993. We offered 2 million to jerry and david at the time. And, you know, we watched the company grow and they really replicated a. O. L. In terms of email and search and content but built an unbelievable franchise. Now the world has moved totally away from desktop and desktop search numbers are way, way down mobile. Thing is about so ve roy zone buying, acquiring a. O. L. Wasnt just about a. O. L. s content being put into so a smaller footprint but it was about their ad servicing technology. All of facebooks growth is coming from advertising. Googles one achilles heel is falling behind and how do they catch up on mobile. I think it would make incredible sense if verizon and a. O. L. Were to merge and acquire the yahoo but there are lots of other really, really talented people out there that are making a play for it. But it needs to be in some one elses hands right now. I think theres a collective understanding that its time and that this needs to be on someone elses platform. Its not a platform in and of itself. Bloombergs david wests interview with ted leonisis. Coming up, facebooks annual Shareholder Meeting is monday. Investors are looking for news on the news class of shares. Well discuss Mark Zuckerbergs plan for the company if you look bloomberg news, you can listen on the Bloomberg Radio app and on sirius x. M. More of bloomberg west continues next. Im mark crumpton. Youre watching bloomberg west. New details are emerging about the terror attack in orlando, florida. Multiple Media Outlets are reporting that omar mateen sent Text Messages to his wife, noor, during the shooting. Its unclear if she knew where he was when she received them. She and the gunmans father have been placed on nofly lists. The British Parliament will be recalled from recess on monday to pay tribute to slain lawmaker joan cox. And david nister cameron laid flowers in coxs memory. Parliament has lost one of its most passionate and brilliant campaigners the one who epitomized the fact politics is about serving its. Its time to stand back and think about some of the things that are so important about our country. Mr. Corbin called thursdays killing an attack on democracy. Russian track and field athletes wonbe able to compete in the rio olympics after a doping related ban was upheld by the International Association of athletics federations. Russia called it unprecedented. Sebastian cove talked to the media. The statement that we made today is a very clear indication that over the long haul is for us to protect clean athletes rmer the International Olympic company is scheduled to discuss the decision next week. Doctors without borders will no longer seek funding from the european union. Last year the group got about 52 million or 8 of its budget from the e. U. Massachusetts senator Elizabeth Warren gave a pep talk to ry clinton staffers as at clintons headquarters. Senator warren has endorsed secretary clinton. The Clinton Company is actively looking at warren along with other potential candidates as a running mate. Firefighters battling a 1200acker wildfire are hoping winds wont kick up and send the fire roaring west of santa barbara. About 140 homes and raverages would be at risk. 800 firefighters are battling flames and steep terrain. So far theres no containment. Global news, 24 hours a day powered by our 24hour journalists in 150 news bureaus around the world. From new york, im mark crumpton. For emilyi esencio in chang. Tom giles for the hour here as whelm all eyes are on facebook specifically those of its share holders. Stock closed down slightly 1 ahead of the companys share holder meeting on monday. They announced a plan to create a third class of shares this would cement Mark Zuckerburgs control of the company. It will send about 5. 7 billion facebook shares but stripped of their voting rights. Joining me to discuss this is tom giles and in San Francisco facebook reporter sara fryer. How does this keep Mark Zuckerburg in leadership . Sarah zuckerburg said he would give a bunch of his wealth through initiatives that he sees are outside the schoop of the company such as eliminating disease, counteracting poverty, improving educ