Off the the annual film, music and Technology Conference here in austin. The president and the first lady in town for a Democratic NationalCommittee Fundraiser in dallas. And the president stopped by for a conversation late friday about that debate, and about technology in this country. But that legal standoff between apple and the fbi took center stage. We recognize that just like all of our other rights, freedom of speech, freedom of religion, et cetera, there are going to be some constraints that we impose in order to make sure that we are safe, secure and living in a civilized society. Reporter the president did say the debate wont be settled with a, quote, absolutist view. And he said that while he understands the value of en description for citizens, that he does worry that the sophistication of the devices we will eventually carry will mean we are all Walking Around with the equivalent of a, quote, Swiss Bank Account in our pockets. That debate aside, though, the president s very presence here at south by southwest has fueled more criticism that this conference has become simply too big. It does add about 300 million to the economy here in austin, but it swells the population by about 30 . So the criticism has continued. But nonetheless, it has become a favorite for a lot of companies to build brand recognition, whether its big startups like spotify, uber, lyft to blue chip names like mcdonalds, united, pepsi, budweiser. Evening this morning, Goldman Sachs who has representatives here in austin, it will be buying a Company Called honest dollar. That it believes is the future of retirement benefits. Its a mobile company, its based here in austin. They are going to continue to keep it here, but it just shows you, carl and john, how every company is trying to throw their hat in the ring when it comes to tech, and it comes to innovation. And so certainly, every company that wants those buzz words to apply to its company is going to be here in austin. Well have more for you throughout the hour. Thats a nice curtainrazor. Well talk more about austin throughout the course of the hour. Lets stick with apple. The government saying apples arguments about security and privacy in the San Bernardino case is simply diversions. The companys reply due by tomorrow. Ahead of the response, apples lawyer, ted buttrose joins us and josh lip ton in san francisco. Hey, job. Reporter hey, carl. Ted, thank you for joining us this morning. Thanks again for having me. Reporter you know, since i last spoke with you, ted, only about a couple weeks ago, it seems like this fight between apple and the u. S. Government has just gotten a lot more hostile. We saw department of justice call apples rhetoric false, and corrosive. Apple firing back that the dojs latest brief is nothing but a cheap shot. Why has this confrontation escalated so quickly, ted . These are tough issues, difficult issues. We are working on a reply to the government right now, and i think that there is some disconnect from between the rhetoric we saw in the justice departments brief and what youve heard from director comey, what youve heard from president obama about the fact that this is a policy issue. This is Important National global issue that we need to talk about and work through as a policy matter in congress. And i think the lawyers who filed the brief in court last week, i think, got a little bit carried away with their rhetoric. Were going toim could back and show why their arguments are legally wrong. Why the order theyre seeking would have terrible consequences for National Security for the security of citizens, and why its simply not an issue that a court can resolve in an order. And its something thats really a policy issue that we have to resolve. The American People have to resolve. And you heard ted, president barack obama at south by southwest now weighing in on this issue. He seems to have taken the side of Law Enforcement. You heard him speaking at the top of the show. And he asked, ted, if were going to create these devices or systems where there is no key, there is no door, then how can Law Enforcement stop terrorists plots . Whats your response to president , ted . Well, i heard the president s comments, and saw the commentary over the weekend, and online. And i think a lot of people were interpreting him as supporting a back door to encryption and back door to devices. But the president s advisers, National Security advisers, the secretary of defense, the commission that the president appointed back in 2013, all have been strongly supportive of encryption and against back doors that would make all of us vulnerable. And so i think its part of a conversation. President obama is someone who will listen to both sides of a dialogue, and thats what we want here, is a dialogue and a conversation as president obama put it, a while back, about these important issues. With respect to the specifics, the government is often confronted with competing interests. So we have attorneyclient privilege, a reporters privilege that protects reports from having to produce their notes or give up a confidential source. So our constitution creates limits where you have competing interests. And here were talking about privacy interests, were talking about compelled speech that the government is asking the court to order, to order apple to go in and spend weeks writing software, creating a new operating system that the Company Believes would be dangerous, that would threaten the security of all the citizens around the world who have iphones. And so its these are competing interests. But its not like the government doesnt have access to information. Apple cooperated immediately with this investigation, produced the data that it had in its possession, and so its not like theres a vacuum of information. But we have a system that protects the individual rights of citizens, privacy and the like. We also respect the needs of Law Enforcement. And the issue is, how do we reconcile those competing interests . Thats not an issue that a court can resolve. Its for the congress. Ted, its jon fortt here in new york. And you mentioned its an issue for congress to resolve. Its not just apple in the spotlight. Facebook is also in the spotlight. Not a terrorismrelated case, but the government would like access to encrypted messages being delivered on whats app. How much are you thinking broadly about, you know, beyond apples case, also the whats app case, in the arguments that you make in this particular case . Because they might influence what congress does, which could, of course, have a big impact on apple in the not too distant future. We really are looking at it broadly. The a cavill indicated. A Family Member of one of the victims in San Bernardino filed friend of the court briefs supporting apples position. The Technology Community and i think citizens recognize that this case in San Bernardino is going to set a precedent that if the government can get an order in this case, one case, its going to be used around the country, around the world, to create this tool that can unlock phones, that can threaten the privacy of citizens that could then be hacked and stolen. So its a big issue that goes far beyond apple. It affects all these Technology Companies, all citizens who use these devices. And so it really is a big policy issue, and as we brief the case and are going to argue next week in court, thats going to be front and center. Because its not just one phone. Its not just one case, as the government keeps saying. You cant blind yourself to the fact this is a major policy issue. Its important. We have to resolve it in a way that protects everybodys rights. Ted, im wondering how the brooklyn decision changed the legal calculus for the company, and if that has changed any either strategy or communication, as you plow forward. Yes, judge orensteins decision in brooklyn, in federal court in brooklyn, was very important in the sense that he really walked through the constitutional problems, whats called the separation of powers, where you cant have a court basically creating new laws. And thats really whats happening here. The administration going back to president obamas comments, decided not to push for legislation in the fall and pull back from that, that would have sought a back door to devices and really resolve the very issue were now seeing the government raise in court. And judge orenstein talked about, in his opinion, how thats just constitutionally impermissible. That you cant have courts resolving legislative issues in that fashion. So its really given us even more arguments about why the government cant get what it wants from the courts. It has to go to congress, it has to deal with the policy issues. So i think its very helpful to us. And ted, part of when the government filed its latest brief, part of what made a lot of headlines was it seemed like the government was suggesting that there was this kind of special relationship between apple and the Chinese Government that the Chinese Government had requested information on more than 4,000 iphones in the first half of last year. And that apple had accommodated them by producing data more than 74 of the time. So what people were asking, it ted, is apple accommodating in china, but refusing similar accommodations with our own government . No. Not at all. That was really just baseless and false statements in the governments brief. And really showed a lack of understanding of how apple functions. In china, as around the world, apple responds in the same way it does in the United States. And no country has made the sort of sweeping request that the government is making in San Bernardino, asking apple to create new software, to create a back door. So its really apple is very consistent with how it responds to Law Enforcement requests in the United States and around the world to valid lawful orders. So its doing nothing different in china or anywhere else. Highly misleading statements in the governments brief. Well be addressing that in the brief we file tomorrow. Ted, taking a step back, as you know in this case, the revenue that the government is suggesting does involve rewriting the operating system to remove barriers, to breaking into a particular phone. But is there some middle ground here in the future when it comes to Encryption Keys . What if there were a demand made or request made for apple to retain a certain ability to get access to messages on a phone after due process has been followed . Is there any room for that . From apples perspective, do you think . As you know, apple shortly after this order came out and the government made its request, called for a commission to study exactly those sorts of issues. The danger, and this is one of our arguments, once created, software that could be used to unlock and to break down the encryption in phones becomes subject to hacking and theft and cyber crimes. And once its out, the former head of the office of Homeland Security called it a bacteria logical weapon that you cant control it. And the government cant control its own data. So thats thats the real risk and danger that apple and other Technology Companies confront. The question of how we move forward, how we address these issues, is really an important question in that everybody, experts, politicians, leaders of this country, leaders of the technology industry, Civil Liberties groups, need to come together and see what we can do to come up with a solution. But we cant do it through judicial proceedings in the midst of a political campaign. Thats not going to thats not going to work. Well, ted, thank you so much for joining us this morning. And were going to be looking forward to reading that brief tomorrow. Thank you very much. Ill go back to work right now. Carl, well send it back to you guys in new york. Josh, thank you so much. Lets get a check on the markets here this morning. Some muted action, dow down 2 points. Bank of japan tomorrow night and the fed on wednesday. Some Traders Keeping their powder dry. Oil is a big story, down over 4 , worst day in more than a month on some negative headlines out of iran regarding production. Starwood up sharply on some deal news. The hotel chain getting unsolicited takeover proposal from a consortium by china, worth 76 share in cash. The board says it has not changed its recommendation in support of the companys plan to merger with marriott. When we come back, donald trump versus big tech as campaigns turn more contentious. A closer look at some of the candidates remarks attacking business, and the co founder of youtube on the Current Media landscape and his new project which combines live video and food. An experimental cannabis drug up over 100 this morning. Thats coming up on squawk alley. Okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial ServicesCompanies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. After a weekend of rally violence, were awaiting Donald TrumpsFirst Campaign stop ahead of tomorrows crucial primaries in ohio and florida. Silicon valley executives also closely watching the trump phenomenon. The gop front runner often openly criticizing apple, facebook and this recent swipe at amazon. I have respect for jeff bezos but he bought the Washington Post to have political influence. And we have a different country than we used to have. He owns amazon. He wants political influence so that amazon will benefit from it. Thats not right. And believe me, if i become president , oh, do they have problems. Theyre going to have such problems. People buying Media Companies have political influence. Imagine that. So whats just the impact of trumps Silicon Valley future. Were joined by the columnist for the American Enterprise institute. Jim good monday morning to you. Hi, good morning. So is donald trump going to win this one, because the Tech Companies and the tech elites hes criticizing are really groups he wasnt going to get voting for him anyway, the coastal elites that he so oft often der rides or is this a problem Going Forward . Listen, republicans overall have been trying to make in roads in the Silicon Valley. That effort, especially if donald trump is the nominee, has had a setback. If you look at whether its immigration, trade, encryption, donald trump has taken positions which are antitech, anti Silicon Valley. He must not view this as a group he ever hopes to win. Republicans from a campaign standpoint, they wanted to have more tech input so they can be compete on equal footing with democrats, whether its bernie sanders, or hillary clinton. Donald trump has made this less likely. Not only does this sort of hurt his campaign, it makes it harder for republicans to win in the future. When such a key group, not just technologically but cultural, as well, will become more anti republican. Jim, im you know, remember when jeb bush went out west and took an uber are ride and all of that. But how realistic is it that the gop would do well in this front . We all know how california has historically leaned. Right. Listen, its an uphill push. But there are a lot of areas where theres a lot of where theres a lot of overlap. Or there should be between sort of republicans, center right and Silicon Valley. When i talk to Silicon Valley executives, what is the big problem facing you . What prevents Small Companies getting big or Big Companies from prospering . And the first they mention, regulation. Then theyll mention corporate taxes. These should be issues where the two sides can work together. But its not going to happen if the front runner or the next republican nominee is not just seen as sort of anti tech, but also seen as, you know, bigoted or prejudiced. Those are not Silicon Valley values. And the donald trump values seem to be something very different. Yeah. Silicon valley does have a strong libertarian streak that could swing either way party wise. I wonder if you think this pushes tech elites who otherwise might not be that political to actually donate the other way. Do the democrats end up benefitting even if theyre not kind of ginning up the same degree of excitem