tv Bloomberg West Bloomberg May 12, 2016 6:00pm-7:01pm EDT
in peace president dilma rousseff on charges of using accounting tricks to manage the federal budget. president rousseff promises to permanent removal from office saying "i may have committed errors but i never committed crimes." in washington, donald trump and paul ryan medicus the backdrop of what the speaker has called a bruising primary season. i want to keep the things we discussed between the two of us because they are very important and they are personal. and that means we talked about what it takes to unify, where our differences were, and how we can bridge these gaps -- so that we are strong as a party going into the fall. rump also spoke separately with senate majority leader mitch mcconnell a federal judge has ruled them of the of veritable care -- the affordable care law isn't allowed. the ruling has been stayed pending the white house appeal. times" reports that dozens of russian athletes
were part of a state run dop ing program. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the country, i am mark crumpton. emily: i'm emily chang and this is "bloomberg west." facebook response to accusations that the social network has been suppressing conservative news story. apple shares slip below $90 as -- with apple that' -- with al phabet at its heels. the winklevoss twins are back. first, our lead.
facebook faces accusations that is human editors are more involved in choosing what you you might think. gizmodo sourced several anonymous contractors who accused the social network of censoring its trending topics by pushing certain stories and suppressing others like conservative stories. the chairman of the senate commerce committee sent a letter to mark zuckerberg saying "if facebook presents its trending topics section as a result of a neutral, objective algorithm but it is subjective and filters is a or suppress particular political viewpoints, facebook misleads the public." is reporting it obtained documents that shows facebook relies heavily on human input. in a statement, the company's vice president of global operations said "the trending topics are result of algorithms, not people. but there is a team of people who play an important role in making sure what appears in trending topics is high quality and useful." he went on to say the trending
topics are personalized for every user. joining us for more jerry smith. bob o'donnell. and our bloomberg intruding editor david kirkpatrick. my guest host for the hour. what is your thought on all of this? david: first of all, there is nothing in terms of the supposedly all seasons around this trending new stuff. -- in terms of the suppose it malfeasance. going to keep focusing on how facebook does control what people see, because facebook's news feed is a black box. it is the primary source of information for a growing percentage of the world population. so, it is a really legitimate question to ask how do things get in there? of theactual issue trending stuff, what they were
doing is not much different than what any news organization would do. i think his statement shows he does not understand how our rhythms work. -- how algorithms work. emily: the way it actually works is different then facebook wants you to think it works. jerry: facebook is saying, we have an algorithm. we also have human beings who are also involved in the process. good point that is a is the fact that should win maybe think about facebook as a media company? there are people on twitter saying maybe facebook should have a public editor sort of like "the new york times" has. right now facebook is so powerful in terms of dictating what people see that there are human beings who are making some of the decisions in how these trending topics are being seen on facebook. so, maybe we should see facebook as a media company just like bloomberg or "the new york times." bob: i agree.
i think facebook is a media company. the story is the fact that facebook has this much influence on the news that it becomes an issue. there are plenty of other people who aggregate news and use algorithms, that we are not talking about them. to me, that is really the story. the other thing is, there is no objective algorithm. david mentioned that. i'll go with hims -- algorithms are sets of rules. there is nothing that's perfect. all of these things have some degree of bias. that is life, that as humans beings -- human beings. about, is it a problem because just how powerful facebook is? more powerful than the media -- if you think global. >> it has been said they are the world's number one source of news. more people get their news from facebook by far than from any
other single source. therefore, there is a unique set of responsibilities incumbent upon them. to some degree, they are still a little immature as a company to know how to deal with that. emily: really? the way, being a new source and having editors is a new thing. explains that was only in 2014 when the ice bucket challenge was trending over ferguson that they decided they had better put some people in there to keep the algorithms and getting out of control. arey: all algorithms trained by humans consulate. what makes this different? -- by humans constantly. jerry: this is also, i think, something the media industry itself, there's a lot of anxiety at publishers about, you know, what is facebook going to do? right now they are promoting live video. we're seeing all these media companies that are churning out live video.
there are entire media companies whose business model is based on what does facebook want? so, you know, like we said, i mean, this ihas been how facebook's algorithm works has been a black box. today we got an enormous amount of detail we never had before. perhaps it made sense to be more straightforward about just how much human intervention there really is. bob: gagain, we are going to see these algorithms improve over time. facebook is a young company when it comes to this kind of news aggregation. there are going to be a lot of efforts done to improve the process by which it is done. you cannot just focus on things that people are talking about on facebook because those are not always newsworthy, and there may be things they are not talking about. those kinds of things are going to get developed into these algorithms, and they will get better over time. emily: do we need to hear from mark zuckerberg? david: i think mark zuckerberg
needs to talk more about the power his company has amassed. unfortunately, a lot of the things he will have to decide about probably from a social policy perspective would push them in a left commercial -- a less commercial direction. when you have a commercial institution with this social power, it raises fundamentally new questions the world has never faced, and it is not just about news. politics is an equally problematic area where this question of could they swing elections is a very real one? emily: david compactor -- david capacitor -- kirk patr ick. invidia shares getting a boost after forecasting sales that beats estimates. the world's biggest maker of graphics chips used in high-end gaming. this corner of the market for ligh-end gaming pc's is stil
growing. semantic issuing a forecast more positive than analysts expected. of cyber biggest maker security software is in the middle of a transition. looking for a replacement for mike brown and trying to recapture momentum lost or newer, more noble security startups. its latest report the country is stemming some of the decline slightly in computer, consumer and enterprise sales. coming up, we'll head to the salt conference in las vegas and hear from tyler and cameron they ares ands and why still bullish on bitcoin. ♪
winklevoss. erik? erik: thank you very much. i am here with the winklevoss twins. for those of you string wherever, cameron is in the gray suit.nd tyler in the dark exchange.bitcoin spot as of last thursday, we got approval from governor cuomo -- to add another digit it encrypted -- another digital encryptor. erik: what does that mean, being a licensed regulated company? >> our cap requirements are similar to a bank. we look and feel and we have to go to the same procedures are bank does. it means we are regulator and we are safe and secure venue to buy and sell bitcoin. mean, does that because people have accused of the currencies of being a store for a hideout for people who
want to do things to run afoul of the law. now that you are licensed and regulated, does that mean that you will share data with law enforcement? to be there's going situations like any money service business where law enforcement might compel you for certain reasons, but we do not do anything with actual of subpoena or something with legal enforcement. erik: are there customer requirements you have to comply with? >> that is part of being regulated. we have a bsa state secrecy act that has been vetted by the new york department of service -- which is the highest regulator in the land of new york. know your customer, it is the principle, one of the core principles of our business. it is spelled out in our user -- erik: a number of people, bankers included, have talked about the promise of the block chain technology, but they
have distanced themselves from bitcoin as a medium of exchange. can you just -- disentangle one from the other? >> we think the open block chain is very different than some of these bank chains. it is similar to how the internet is what we think the bitcoin -- is like, versus aol o r compuserve. that is not really the open internet. it will improve the banks and how they settle and whatnot. but we're not competing for that. it is a very different space. erik: how so? does the things that people use the block chain to build will be different from call it bank provided services how? >> they are open. so anyone can build on it just like anyone can build on the internet. you may not be able to build on jpmorgan's block chain. there may not be transparency. there's just different -- they
are private, right? so, you do not know what is going on in there. irsus an open block chain, if send you bitcoin, the whole world sees that happening. this ideais there the computers need to talk to each other using a crypto currency or transact using a securityrrency when on exchanges around the rolled, there are all kinds of computer-driven trading strategies that -- around the wo rld -- that transact in multiple currencies we use every day. >> we are seeing the future of economist actors and agents like self driving cars and things like that. you cannot bank a machine. go to wellsnnot fargo and get a bank account. but they can get a bitcoin address. those trades are not settling. when you buy your share of apple
it settles in three days. a bitcoin settles when you send it. erik: instantaneously. >> the same thing with ether. when you are buying a couple coffee or hiring a self driving car, you cannot wait for three days for that car to pick you u p. erik: why do you guys bitcoin described bitcoin as tokens, as call options? >> the token ether is used on a bitcoin network. if you believe these networks are going to grow and there is going to be a lot of demand for orm, you can buy a token effectively bet on the future valuation. >> it is like indexing the entire bitcoin, the entire ecosystem. gemini is the only exchange in the world that is actually licensed to buy both bitcoin or ether. if you want to do it in a
licensed manner, then we are the place to do it. >> the internet, you could not in the early days buy a picece of the internet. you can buy a piece of bitcoin. erik: thank you for spelling it out for us. cameron and tyler winklevoss at the salt conference in las vegas. emily: i want to bring back my guest host for the hour. what do you think of the rebirth of the winklevoss twins? >> i'm glad that they are occupying themselves with bitcoin instead of trying to start another social network, because i do not think they proved themselves very good at that, despite the fact they were able to argue well enough to kind of legalme situation to get a gigantic settlement which basically gave them the money they are using to invest. i actually, from knowing the story of facebook's early days extremely well, find it very hard to believe that mark
zuckerberg learned anything particularly actionable from them that really defines any significant aspect of what facebook finally became. so, i don't think that they are the inventors of the concept of facebook or social networking. in fact, what they were doing at very similareally to something that had actually existed at stanford two years earlier, something called club nexus, created by a guy who later went to google and started -- a social network. history. very muddy and mark zuckerberg did work for them. i think he did not do a very good job for them. and they were angry about that. the fact they got hundreds of millions of millions done dollars out of it, also -- their third partner did very well. emily: do you think they have the potential to be great entrepreneurs? david: i have no idea. they did buy bitcoin early.
and they have got a good appreciation on their bitcoin based on what i can tell. give them credit. but there are a lot of people with a lot of money that want to do interesting things. emily: david kirkpatrick sticking with me. coming up, apple shares dip below $90 putting the iphone maker in danger of passing a key milestone. we will discuss next. ♪
emily: apple that below $90 a share, putting in danger of losing its title as the world's most viable,. erased all gains made over the last two years. alphabet is close on its here 494h the market cap of $9 billion. first sales decline in a decade in losing the backing of carl icahn. scares triggered
the most recent declines. shipments of chips for the iphone 7 will be lower than level seen in the second half of last year. which -- bearish reports makes the iphones. logon precision which make the pointing to a shift in sales momentum for apple's top-selling project. still with us to discuss, our lubricants are beating editor david kirkpatrick -- our bloomberg editor. erasing all the gains from the last two years. how significant is this? david: it is something that has been coming for a long time. if you really watch apple. what we have seen is the world of computing devices, first pc's, now smartphones, hitting as drivenk and apple h the profitability. look at the percentage of revenue they make from iphones
and other hardware devices to that part of the business. what we have seen them do is slowly but surely trying to shift towards other things. but there is a number of dilemmas they are facing. first of all, the services business is the one that gets the most attention. when you dive into that services number, a lot of it is what it would called digital retail. if you are selling an app, movie, that is a one-time sale. ly --ces in fly -- imp apple music. that part of the businesses very small. the other challenge they face is moving into other categories. some people say apple is a follower. other people what do. my argument is, i am not sure they can continue in that realm. i think they need to think about making new innovations. another thing they will also have to think about is dipping into that war chest. they have hundreds of billions of dollars there.
game changingsome acquisitions. i think they are going to need to do that to start to drive some of this pressure off of the iphone. if they keep defending -- depending on the iphone, i think it is going to be a tough short-term period for apple. emily: apple has a $20 billion cash -- $200 billion, excuse me. o'donnellike this guy. i agree with everything he says. they could get a big revenue bump that way. it is a weird problem to have that they had a product that got goes said -- so gigantically successfully blew the entire company up and made everybody think apple was the iphone company. any product is going to plateau at some point. i do think they have a lot of potential other product areas that could grow over time. the watch could be big business. i think their car software that they licensed to other car companies could be big.
maybe their own apple car, depending on what that turns out to be, could be big, an iphone is going to remain a gigantic dismissed for the perceivable future. just maybe not a growth business. emily: whwerere is this going? a venture capitalist who has been hard on apple says he thinks that amazon will have a $3 trillion market cap in a decade. carl icahn said that apple would have a $1 trillion market cap. bob: a lot of these productions have been crazy. let's talk about the car. let's talk about the reality where apple is. we are entering the era where i don't think we are going to see the kind of breakout products that smart phones and pc's were for some time. butave got vr, wearables none of them are going to get anywhere near as big as these other categories. pthat mean you can't -- that means you've got to have
multiple bets. interesting. is i was in detroit talking to carmakers. there is this sense that the possibility for disruption in the auto business is huge. however, there is also a lack of awareness by tech companies on how hard it is to build a car. that is going to be challenged for apple to overcome in the near term. emily: bob o'donnell, thank you as always for joining us. with karirkpatrick stick me. the former tesla executive -- ceo joins me to talk about his futuristic fleet next. ♪
chosen senator elizabeth warren as a running mate. now he reportedly wants her to be senator clinton's number two. the white house says the obama administration will not halt funding to north carolina while the battle over the state's so-called bathroom law heads to the courts. nepal is increasing the estimate of money needed to rebuild after last year's powerful earthquake. the country says it needs nearly eight alien dollars. the earthquake and aftershocks killed nearly 9000 people. iran says it will not be represented this year at the arabiahaaj in saudi after a disaster at last year's muslim pilgrimage.
, paulined by my colleague allen, with a look at the markets. good morning. paul: good morning. stocks, evenr u.s. though oil had some gains. if we look at new zealand, currently the only market open in the region, as you would expect, looking flat there as well. modest gains expected on the nikkei in japan. we will be looking closely at mitsubishi shares again. have to see if there are any legs left in the huge rally they had yesterday. lanterns they would be taking a 34% stake, making it the biggest shareholder. they are obviously seeing value in the minicar business, despite the scandal. sharp has a new ceo.
ceohe first non-japanese for sharp, so there will be some interesting cultural challenges. elsewhere, we are looking at the bank of korea today. 15 of 18 economists surveyed think they will be ok to hold the cash rate. we are currently at 1.75% here in australia. that is just some of what we're watching across the asia-pacific today. emily: transportation may be on the verge of a massive transformation, from the weight -- the race for self driving
cars than the mission for the hyperloop. when company just announced a new battery enhanced bus capable of traveling a whopping 194 miles on a single charge. ceo joins us and now. he also happens to be a former .esla executive still with us, david kirkpatrick. thank you for joining us. a new bus.leased what is it capable of? ryan: it takes the capability of the vehicle platform, a zero emission battery/electric vehicle that is capable of carrying 77 passengers, and it increases the range the vehicle a single charge
significantly. fundamentally, it lets us address even more and more north american transit routes so we can go after our goal of limiting 100% zero emission leads in transit. emily: you have said buses will be first to go 100% electric. why? it inyou can already see some of the behavior of transit agencies. we have already seen agencies and boards of directors calling .or 100% electric fleet we have also seen state regulation in california contemplating 100% zero emission fleets. we are seeing the world are struggling to deal with local pollution problems. while buses create a lot of value in terms of moving a lot of passengers per hour, they are the least it should and some of the most polluting vehicles on the road. from the technical side, they are the best application for vehicle technology i have ever seen. a bus stops and starts 500 times during a single route.
it is low-speed urban application, and buses require a lot of torque, which is what electric motors do naturally. david: as a new yorker, the pollution and noise of buses are such a problem here. i'm curious what you think, it's likely time people like us who live in cities in new york will really live in an environment that is transformed by electric buses because it sounds like such an appealing opportunity. >> once you experience an electric us, it's hard to imagine why we run diesel fuel or natural gas through these high-power engines that are giving off so much noise and vibration that they can literally shake buildings as they go past. i'm very optimistic, though, that this will happen quickly. i would say that by 2020, every transit agency in the united states will have a pilot program going. by 2025, i estimate that you do percent of new heavy bus
purchases in the north american market will be ev. i'm increasingly inspired by the number of cities that have stepped forward as early adopt .here's -- early adopters we have teen of deployments already going in massachusetts and we just announced a 25-unit deployment for philadelphia. closeer cities that are by adopt, hopefully, we will see the big apple get cleaner buses as well. emily: you worked at tesla for a long time. we have heard elon musk is sleeping in a sleeping bag in his office right now just to make these ambitious timelines. how confident are you that he can meet the deliveries for the model s and get the model three out on the schedule he said he would? benefit ofe the having worked for him, so i would not bet against him under any circumstance. i think it is inspiring what they are already accomplishing
and what they have announced, and i think it creates an interesting dynamic for the rest of the automotive industry. if you bet against tesla and you're wrong, they will take your market share. if you bet against them and you are right, we do not have electric vehicles and desperately need them from an environmental perspective. emily: what do you make of the recent departures of other executives? does tesla need to hire more people to make it happen? ryan: every company that is growing and developing new technology is constantly on the hunt or developing executive talent. for all the companies in silicon valley, you see a fair amount of leadership turnover, so i would not read into it too much. i spent a couple of years at tesla, had a great time, and moved on to another role in my career. you have seen a lot of people who worked for tesla,
contributed a lot, moved into other roles in clean technology and continued to do good things for the industry. it is a tough place to work, and everyone who is there now or has been there would agree, but i do not think it changes or signals any change about the core culture or competence of the company. much forank you so joining me. david kirkpatrick, still with me. an israeli startup looking to turn any surface into a keyboard using what it calls a smartfoam. elliott has this exclusive report. elliott: you have heard of smartphones, but how about smartfoams? the cofounder says tapping on mobile devices makes much more sense than typing. invented a new smart textile that when placed on your hand, you can turn any surface
into a keyboard. it's important because when you have a smart watch for ipad or any other device that you need to activate or interact with on the go, right now, you have to sit down and have a keyboard or touch on a screen. elliott: that sets limits on what these devices can do. this is not the first time he has tried to revolutionize an industry. power mat, which he founded 10 years ago, has not quite it is the world of charger cables. it is now being broiled by .anagement infighting he says he has learned from the experience. >> lesson number one is go after a very large market. when we started, it was clear that the market would come, but it is not there. when it started, it was like a magic concept. i think it is absolutely here and will be greater and greater from wearable devices all the
university of southern california. the president and ceo announced he is leaving the embattled blood testing startup. the decision has been in the works since last year. in the meantime, it has added three new members to its board of directors. with me to discuss, my guest host, david kirkpatrick. is a fairly controversial figure in that he is a longtime tech executive, but when he joined the company five years ago, he did not have bio or medical experience, and yet, he took over research. he took over the lab. can you explain what his ? parture means >> there has been a long-standing criticism of the company that it does not have a
lot of executive or board members with medical or home expertise. that is something clearly the company is trying to work on. i think it really opens up a question for who they will put in that role next, and i think that will be quite telling. i have a feeling the company is looking for someone with medical expertise to fill his shoes. emily: a couple board members they added were on the board before, then they joined the advisory board. explain the players. >> there has been a lot of board shuffling, and i think they are still working out where they want people to be. they have also added a former executive from amgen, a former vice president of operations, so
that is a good person for them to have on the board because he has operations experience, and that is something the company needs right now. emily: the sec is investigating david as well as federal and health regulators. can they overcome this? >> it's hard to say. it turns out one tiny drop may not change everything, and yet, they have not added -- own up to that. one of the things i find tragic about the story is for all the criticism and questions, elizabeth holmes has not addressed in. all she does is come out and say the same things, and ultimately, that is not sufficient. it's really sad to see a company which seems so promising brought so low, and yet, where is it really today? we don't know. you and i talked about what people want to see if the data, and they still have not provided that yet.
they have not provided evidence that the technology actually works. >> but they say they are going to, so i think that is what is interesting. it has been months. , but has been a long time they scheduled august 1. emily: what are the next steps? we know these investigations are happening. caroline: they have to get their lad in california back in order and in compliance so they are not shut down. i have a list of things they need to fix to satisfy them, and once that is done, they need to get back to publishing data. we hope that at the meeting, they will have some substantial data or the community to see. were just saying, people have been waiting a long time for that. emily: thank you so much. now, for a visit day intake
history, 75 years ago at the height of the second world war, a german engineer avail -- unveiled the world's first entirely automatic computer controlled by programs. at invention was presented the german lab for aviation in berlin in 1941 and red programs off of punched her own. he sold one of his machines to german aviation authorities to help them solve aerodynamic problems. coming up, has donald trump's new status as effective republican nominee given hillary clinton a boost in silicon valley? plus, do not forget to tune in this weekend. we will bring you all of our best interviews from our field trip to boston. west" -- of bloomberg this weekend on bloomberg television. ♪
look at how the presidential campaign is playing out in silicon valley, and specifically, are there signs hillary clinton is getting a boost in the days after donald trump became the effective nominee for the republican party echo which way will silicon valley's conservative lean? tim higgins joins me to talk about it in my guest host, david kirkpatrick, still with me. we know peter thiel is officially a delegate for donald trump, but i know that has surprised a lot of people. ago, as we watched results come in out of indiana and ted cruz dropped out, making donald trump the presumptive nominee, we are looking to twitter and seeing that mark andreessen tweeting out that he will essentially support hillary , a real indication that political partisanship in the
valley is not as strong as it is elsewhere in the country. here is a guy who donated to a super pac supporting mitt romney four years ago and now tweeting out his support for hillary clinton. emily: it was not that direct. #imwithher. that's it. these are very rational people who think of themselves as engineering-oriented, very, very evidence-based, and they do not really go for partisanship, generally. peter thiel is libertarian. i don't think he is necessarily hard-core republican, but it is hard for thinking, rational people who pride themselves on their engineering mindset to go for donald trump. talked to peter thiel a few weeks ago and tried to get him to tell me who he was supporting. take a listen to what he had to
say. peter: i find political philosophy interesting and a lot of these fundamental questions. if i was involved, i think i out orust blow my brains something. you would just go crazy after a wild. did not get a straight answer there, but he is on the board of facebook. 's ceo has- facebook made public comments against trump policies. >> i would say that is a positive sign for facebook where they have the kind of lord where people disagree -- the kind of board where people disagree. you want to be surrounded by people who do not think just like you. i think zuckerberg needs to hear people who do not agree with him. he is so powerful. he needs to have people who do not kiss his feet for everything he does. i think he has quite a few
people who question him, and he does not mind that. emily: a venture capitalist said to me yesterday they cannot believe people in silicon valley are not calling out peter thiel for his support. everyone is entitled to their opinions, but do you think peter thiel's support for donald trump will have a ripple effect? the republican party was thinking this was going to be the cycle that they really could crack into that money that had been generated in silicon valley over the last few years. be to them like an atm like it is for the democratic party. we did see a lot of money come out of the valley. jeb bush and marco rubio did very well against -- with some of the silicon valley elite. according to my analysis, bernie sanders is outpacing hillary givers, and atech
lot of that has to do with small donations. these are probably programmers and that sort of thing. hillary clinton is doing well getting the big, bold names like elon musk and sheryl sandberg, and those are people who help her tap into the social network of movers and shakers in the valley. emily: this is increasingly important as companies are lobbying more than ever in washington and we were speaking moreer about facebook powerful than ever in shaping what we see and hear. david: that's one reason why they do not want to be too strongly for either party because they want both parties to do their bidding to some significant degree, but i do think there is a lot of rationality. one thing i keep thinking about, though, and that it have to believe is a actor is none of the candidates in either party have been talking about tech transforming the economy, which is a holy grail in silicon valley, and you would never know listeningdy talk that
to the presidential race, which has got to be disturbing to a lot of people. emily: the california primary is coming up and it could certainly be influential. how do we expect that to play out? tim: not as exciting as when we thought ted cruz would be going against donald trump and the republican party in california might have some influence. if bernie sanders does well clinton, heary still will not be sure in the delegate count he needs to win the nomination, and yet, he says he is going to go to the convention and make his stand. it means hillary clinton will have to continue to fight for the next few weeks all the way to the end where she would like to be turning to donald trump. has given no indication he will slow down. david kirkpatrick, thank you so much for joining me. great to see you. it is time to find out who is having the best day ever.
today's winner is charter communications. they won final regulatory approval to buy time warner cable and become the second-largest u.s. cable provider. shares in both companies were given a boost after california authorities gave it the green light. the deal will give charter new subscribers in cities like new york, los angeles, dallas and serve about 24 million customers compared to 28 million or philadelphia-based comcast -- for philadelphia-based comcast. that is all for now from new york. ♪
♪ >> from our studios in new york city, this is "charlie rose." me start with the guy in the middle, mark halperin, tell me right now -- what are the five most important questions about the political year we are in? mark: five? rose: ok, 10. the most important questions .hat you are in search of i'm interested in the bigger