Homeland security secretary jeh johnson today visited louisiana, where severe flooding has impacted the Southern Region of the state, as well as ongoings ongoing response and recovery efforts. Federal governments issued a disaster declaration for 20 parishes. Brazilian authorities are accusing american swimmers of lying about being held up at gunpoint. The countrys chief of civil police as the four were confronted by Armed Security guards after leaving a party in a rio suburb. Press reported that two security guards pointed guns at the athletes during the dispute at a gas station. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. Emily im emily chang, and this is bloomberg west. Uber hits the gas on its push into self driving cars. All the detail on the companys biggest acquisition to date and its driverless car pilot in pittsburgh. Can apple cut its smart watch free from the iphone . We will bring you a preview of what not to expect from the next generation to be released this fall. And, 10 centimes up with a new innovator in hollywood. We will speak to spf entertainment about their latest asian backer. But first, to our lead. Uber users in downtown pittsburgh will be able to summon a self driving car this month. They will beat google, tesla, and all the biggest carmakers in a self to getting driving right hailing fleet on the self driving right hailing fleet on the roads first. The deal is not exclusive. Uber bought the self driving truck startup auto this month for an undisclosed amount. Joining us now to discuss, our editor,g contributing and one who wrote this exclusive story for bloomberg businessweek. Were also learning a judge has denied ubers settlement with california drivers in the threeyearold lawsuit over whether or not drivers should be treated as employees or independent contractors. It looks like even though uber lost the settlement, its good for uber. Can you explain what this means . Uber is locked in this ongoing discussion over what its drivers are. Are they employees cut . Are they employees . Are they independent contractors . Small business men are women . Or women . Its not a huge bit of news but it does show this is a problem that uber will face for some time. Emily how does it give uber the upper hand . I suppose because what happened in san francisco, a judge wanted ubers drivers to be able to get out of arbitration. He was saying he would not approve the settlement without this clause that would have allowed them to get out of arbitration. Uber said no, we will walk away from the deal if you do that. That is what is happening. They wont have been forced to be in arbitration situations. Emily fascinating story you broke earlier today about uber pushing the self driving cars, people in pittsburgh will be able to ride in a self driving uber volvo this month. Tell us the details. The acquisition of auto, we have a pretty good idea of price. It was 680 million, one of the biggest deals in the states. In pittsburgh, uber will be launching its pilot program, right now, in the next couple of weeks, where riders at random will be able to experience this new era. People will be experiencing it with a test driver and also with a kind of copilot, a guide there taking notes. Its very, very early, but its exciting. I rode in one of these a couple weeks back. Its an experience. Emily i rode in a google self driving car 4 years ago, but the technology has improved so much. David kirkpatrick, youre on the show when we interviewed the founder of the self driving cup self driving truck company. What is your take on all this . Its stunning. Im really impressed by that, though im not sure if i would want to be one of the people to ride in them. Uber has put all this money into its pittsburgh labs, where they hire these people away from carnegie mellon. It feels to me that they may be disappointed with the outcome of that and thats why they felt they had to buy auto. It sort of took away those google expertise. It looks like from the way theyre describing it that auto will be the center of gravity of efforts,lf driving which might be a negative for those people all the way in pittsburgh. Maybe they are salvaging their selfrespect by deploying cars in their hometown. Emily you specifically research decisionmaking by humans versus machines. Are we ready to let robots take the wheel . Our robots ready ready really ready for the challenge . This is really all about establishing trust. Ive written about this extensively, when should we trust machines with decisions. This is a bold move by uber. They are going out of the simulation mode and putting this out there into the real world. Thats the only way to establish trust with consumers and even more importantly, trust with regulators who really need to be convinced that this thing works and its better for society and it doesnt impose huge risks on individuals. Theres only one way to do it, which is to put it out there. This is brilliant because it puts them in a position where they gather really valuable data that others dont have, so it gives them that first mover advantage of gathering data from vehicles operating in the real world. And thats different, and they need to do that to establish trust, which is key for these kinds of systems. Emily how will this work . Do users opt into wanting to be picked up by a self driving car, or does one show up . You opt in, and use the platform normally. Its like being caller number 100. You get an alert saying, you will be in a self driving car. Hope you dont have a lot of luggage, because the self driving cars have giant computers in the trunk. There are practical considerations as well. The passenger number is limited because of the driver and copilot. One thing thats really interesting about this uber self driving thing is the data angle, which is that uber has driven many hundreds of millions, i guess billions of miles. They are saying they may be able to use the data theyre human to use the data of their human drivers are collecting to train the robots, which is kind of an exciting thing for people who are deep in the space. Thats key. In the real world, you get these things called edge cases, other people refer to them as rumsfeldian unknowns. You have to have these machines experience as much of that as possible, and its only possible when they drive in the real world. The other thing that hasnt been talked about, this is uber getting back into china, in a way, because volvo is really owned by the chinese. Emily interesting point, on the back of them selling their China Business to their biggest rival in china. What about people like you and me who may not opt into this right away who are on the road and did not choose to be driving next to a self driving uber volvo . Thats related to the question running through my head, which is that they better hope nothing goes wrong here. Tesla was claiming they had more data about self driving because they have all these cars on the road. Maybe this is ubers way to jumpstart that. But then look at what happened when tesla had one accident that was probably quite predictable, but these overly valued companies, whether public or private, they almost have this extraordinary pressure to prove they can do these things. That means they are in a perilous position if they go wrong. It is pretty dicey to be doing it so early. From everything i hear, theyre not going to get those two people out of the front seat anytime soon. If they did, they might be inviting disaster. Emily we will continue to follow this. We will continue to watch competitors like tesla and google. David kirkpatrick, you are sticking with me. Max chaplin, who wrote the story. Its a great read. Check it out in business week. Staying now with uber, text are cofounder david cohen was one of the companys earliest backers, an Angel Investor before the company had any cars on the road. Bloomberg sat down with him in berlin and asked what he was thinking when he bet on the company way back then. It was not a hot deal when i invested in it. Ryan graves, the first employee, was mentoring tech starters. It wasnt hard to get into. They did not have any cars on the road. It was just an idea, like any other, but you are excited by the people and the vision they have. Didnt seem any better than many of the other investments ive made. I was just fortunate to be involved. Emily catch the full interview tomorrow on bloomberg west. Up next, apples next step for the watch hits a snag. Whats holding up the latest developments ahead of the companys major project event next month. This is bloomberg. Emily one stock to watch, samsung now at an alltime high , fueled by the success of its latest flagship galaxy phone. Shares are up 30 this year, outpacing apples roughly 4 gain. Secondquarter profit exceeded expectations. You will hear from one of those rivals tomorrow, the Vice President of global operations. He will join us to talk about declining smartphone sales in china and the companys Global Expansion strategy. Apple is hitting some snags in severing its watch from the iphone. Currently, in order for the apple watch to work, you need to have your iphone close by. That font change the new updates. The Company Still plans to announce new models this fall with improvements to help tracking, but they wont be able to connect independently to Cellular Networks. Join me to discuss, my cohost, and mark gurman, who broke the story for bloomberg news. What do we know . We know this apple watch will not be able to connect to networks from at t, verizon, etc. And internationally. Apple plans to come out with a new version this year that can connect to Cellular Networks. You could get sports scores, and download text messages, email, mapping data they hit some snags. Related to engineering, related to the battery life. The cellular chips of todays age consume too much power for an apple watch, a small sized watch. The tradeoff was too large to have that in there because the battery would drain too quickly for the users. Emily what do you make of this . I think its not shocking. One of the things we have been looking at is, what is the Modem Technology going to be behind this . We have been hearing apple is working on their own Modem Technology. They would need to design a modem onto the computer. I had been hearing that was delayed for some of the reasons that mark said, we were not on the same track. We see with existing watch owners, we have Research Data that suggests that they want that feature. I admit sure that a normal, new person wants that feature. Whatreally a question of the necessity is. The modem, im not sure. It would be a nice feature, but im not sure that is why someone would go out and buy. There is still potential for the market to grow. Emily will the new watches be unveiled at the september 7 event . We know there will be a new watch unveiled this fall, without the cellular. Emily what will be new about them . New Health Tracking features. Big advancements there. Partly that will be because of a new gps chip. Gps right now is in the iphone. If you want the most accurate data for running and walking, you have to either calibrate for a 20 minute process or bring the phone with you. Now the gps will be built into the watch so you dont have to worry about that. You can get consistently accurate data with every workout. Emily what do we know about how the watch is actually selling . Youve had more positive analysis than some others. How are watches selling . Will people buy new ones . Its interesting, because they are waiting to the fall to update this product that has been on the market for over a year, versus if they had done a refresh in the spring, we could have seen more optimistic sales going into the momentum of this year. If you look back at this category in general but particularly watches, clearly its a holiday product. It makes sense to do that refresh. For me, this is all about can they grow sales to new customers . Theres a lot of techies and early adopters. Can they bring it to normal people . What price points do they get to . What model do they keep in market . Do they do much on design . We still see most of this being gay fitness and health market. I would like to see it expanded into some other use cases. Thats where the new software, new developers might expand it. We still think theres a lot of headroom in this market, and theres an evolution for watches. I do think it is going slower than we thought. Thats fine, there is nothing wrong with that. Thats the big question, what is the size of the market . And what the cadence of sales overall might be from a volume point. Emily david . I always thought apple overplay the fashion part of the watch. One of the reasons there isnt that much demand from nontechies is that they havent explained it very well. I have one come and i like it. I went to the dinner last night i was hosting, very busy. Somebody was unhappy somewhere in the room and i got a text message on my watch and it really helped me do my job in a way i could not have otherwise. There is no way i would have pulled my phone out, knowing i had a message at that moment. I think theres real benefits to the watch that are not understood. I think the price is critical. I did not buy mine until it got to 300. It seems to me more than it was worth up to that point. About the battery, this is the thing thats holding back this industry, and one of the reasons its a problem with the watch. There are watches that connect to Cellular Networks perfectly fine, they just dont have as many other features. Its apples desire to have it all at a time when Battery Technology is not moving forward quickly enough. Its the one thing i keep finding disappointing about apple and his predictions of what the next iphone is going to be, its not going to have dramatic improvements in battery life, which is the one feature that people really want. Emily Battery Technology has not improved significantly in a century. There are technologies to improve it. I went to the launch of this phone the other day. They have amazing technologies built into their phone to extend the battery life, to help you manage the battery, that i think will give some phones and some phones an advantage. Its desperately needed. Emily quick thoughts . On the watch side, it is positive. We continue to see existing Customer Satisfaction be high. That is what tim cook likes to measure. That hasnt changed. The battery and design stuff, we are in a different cycle in this industry. That is the bottom line. I think that for us is the key thing to keep observing. Emily as always, thank you. Thank you all for joining us. More of bloomberg west next. This is bloomberg. Emily shares of Advanced Micro Devices surged after unveiling a refreshed product line aimed at cracking intels dominance in the chip market. Amd has been struggling to regain lost market share from rival intel. Cory johnson sat down with amd ceo lisa sue to find out how the Company Plans to reverse the trend. I think the way to think about it, zen is a foundation for highperformance computing. We are pleased with where it is. The key for us has been to hit our goals and we are right on track with where we asked acted where we expected to be. We have more work to do before we go out into full production, but i would say from our standpoint and customers we are pleased with where we are. Cory theres a notion it will hit peak pc. That they will never sell as well as they did three years ago. Here you are entering a market that will have many outputs. How do you see the pc market that is shrinking, not growing . The key thing to think about is what pieces of market are growing. If you look at highperformance gaming, pc gaming, game consoles, virtual reality, anything that requires a lot of computing horsepower, those are areas that are growing and they are quite profitable. We believe we have targeted our products to the segment of the segments of the market that are both growing and highly profitable. Cory surely you are planning for subsequent versions of it. What do you expect the cycles to be for upgrades of this Going Forward . An 1824 months timeframe . Or are we going to do something more aggressive . It depends on the market. The pc market tends to move faster, so you might see something on a 12 month cycle. The server market, 18 to 24 months is reasonable. For us, zen gives us an incredible foundation to build on top of. Weve already worked on not just zen, but the next generation to come on top of that, to ensure our customers we have a longterm roadmap that satisfies their needs. Cory sounds like you are focused on the heavy processing that happens on servers and with games, and not mobile. Where we are in terms of size, we need to pick the places we believe are the highest growth segments. In terms of High Performance computing, both on the graphics side and cpu side, we think its a huge market. There is more than enough areas for us to grow. Its true we are not in mobile , and i think thats totally ok. Emily our editor at large, cory sue. On with lisa illumina spiked as much as 8 on the report that scientific wants to buy the company for 30 billion. This latest bid is an all stock offer and would be 4 billion higher than aluminas current market cap. Four years ago, the Company Rejected takeover attempts, and one offer valued at nearly 7 billion. And a story weve been following, the final chapter for online media pioneer. Online media pioneer gawker. The founder told staff that gawkers flagship site will shut down next week. Earlier this week, univision won a 135 million bid to acquire gawker media, which includes gawker. Com, jezebel, among others. Gakwer was driven into bankruptcy after losing an invasion of privacy suit to hulk hogan. We will be back with more bloomberg west next. Avtk0 the top stories this hour, asian stocks after a oneyear high, and a two year low. They have run out of steam. Oil is on a longer streak of gains in four years. Opec will announce a production freeze next month. Australian oil and Gas Producers reported a firstquarter net a bigger1. 1 billion, rival Software Office cut in half because of low prices. Also, 340 million there. In a billiondollar bid in for oil was rejected last year. Provided outlook for five australian banks and negatives. Members equity banks are facing a challenging environment, which would lead to profit growth. Mo