tv Bloomberg West Bloomberg May 19, 2016 11:00pm-12:01am EDT
♪ i am mark crumpton, and you are watching bloomberg west. air city officials tell us the debris in the mediterranean sea does not belong to egyptair , contradicting early reports that said it was from the plane. the plane went down halfway between the greek island of -- and egypt's northern coastline. it was carrying 56 passengers and 10 crew. terrorism is not being ruled out. soldiers and police continue a desperate search for hundreds missing after landslides
destroyed three central sri la nkan villages. three bodies have been recovered. tensions escalate between the u.s. and china over disputed international waters. two chinese fighter jets intercepted an american reconnaissance plane over the south china sea. the jets came within 50 feet of the u.s. plane. ruledrado jury has cinemark holdings is not liable for shootings in 2012 that left 12 people dead. they could not have predicted an attack from gun man, james holmes, sentenced to life in prison last year. i am mark crumpton. bloomberg west is next. ♪
emily: i am emily chang, and this is "bloomberg west." coming up, a question of trust. did a high-profile meeting with mark zuckerberg convince conservatives that facebook is a friend? we get details from someone who attended. plus, google and xiaomi a plan to take on apple and amazon. i caught up with xiaomi global vice president and former google exec, hugo barra. and dyson's second wind. the manufacturer is reinventing mainstream home appliances. the ceo joins us to talk about new products and the plans in the pipeline. now to our lead. mark zuckerberg met with conservative leaders wednesday at company headquarters to address concerns over a bias in the company's trending topic section. among those in attendance, glenn beck, barry bennett and former white house press secretary dana perino. after the meeting, zuckerberg took to facebook posting, i wanted to hear these concerns personally and have an open conversation about how we can build trust. i want to do everything i can to make sure our teams uphold the
integrity of our product. the meeting seems have placated at least some of those in attendance, including beck. in fact, beck left the meeting taking issue with the conservatives in attendance. in a post on his website, he wrote, the overall tenor to me felt like the salem witch trials. facebook, you must admit you are screwing us. if you do not, it proves that you're screwing us. joining me now to discuss is someone who attended that meeting, arthur brookes. and with me here, my guest host for the hour, ethan kurzweil. investor in twitch, periscope, and more. i will start with you. how would you describe the overall tenor of the meeting? guest: it was a constructive meeting. facebook senior leadership was there and expressed they are worried about trust and not just conservatives, but people
who are concerned about being misrepresented on their platform. they told us about what they're thinking of doing to fix it from an engineering perspective. it was interesting. emily: would you say that mark zuckerberg admitted in any way there was bias in the trending topics section? >> no, the investigation is ongoing. they do not think there is a y goingseat -- conspirac on. emily: why do you say that? guest: conspiracies are hard to pull off, and they are not very profitable. there are 176 million facebook users in the united states. they want a platform that appeals to people of different viewpoints. not leadership trying to shut that down. it would be a pretty bad idea for business.
i do not think that is what was going on at all. crowdpackan, released to data that 89.6% of facebook employees are liberal. does that matter? guest: i do not think so. facebook is probably an overall reflection of the demographic that works there. they are a young company in silicon valley, where people are left of center. what i think is interesting about this story, emily, is that it is moving us closer to the line where facebook is acknowledging they have control over us in subtle ways. they take that very seriously. it sounds like that was reiterated today. that is something we have to watch. did facebook and knowledge that -- acknowledge that?
that they have influence over what people perceive? guest: they talked about trust, and trust is everything when you are a media organization, particularly one that disseminates without trying to editorialize. not want to identify it with one particular point of view. this brings up one question -- does it matter that liberal point of view are so overrepresented on facebook? that is an interesting question and a big opportunity for facebook, as a matter of fact. facebook can represent liberal point of view, but it would be a good idea to have different points of view in the room. i think mark zuckerberg and sheryl sandberg can use this as a major opportunity to have facebook be a forward leaning company that tries to represent americans in a more unbiased way
simply by getting more voices in the room. emily: arthur, there seems to be some tension here in that facebook is an independent business organization. the conservative party would say that the government should not interfere or interfere as little as possible. what exactly do you really want from facebook? h, i do not know what i particularly want from facebook. they were asking my opinion. it is not like i was going to facebook with demands. i want free enterprise. i want a great company to grow and serve americans better. that is what is happening, as far as i am can turn -- concerned. they wanted to know how they can make the situation go from conflagration to opportunity. emily: what do you think they can do? guest: i think this whole idea of using this as an opportunity to pivot to a community that is
provean algorithmically there is a systematic bias one way or the other. i am curious. did they talk about deploying improvegy to be able to the status quo or rebut allegations made against them? guest: for sure. the trending topics algorithm is a pretty new thing and small compared to the newsfeed at facebook. it is something they are trying to get right. they are extremely interested in how they can improve it. they are very much listening. in the weeks and months that come, i think we are going to see some actual positive changes in the way they deal with engineering solutions. cultural solutions will have to come along too, and i think they are interested in those as well. emily: arthur brooks, thank you for joining us. ethan kurzweil, you are sticking with me. tim cook's in awe ural visit to
india. visitected -- inaugural to india. announced thepple visit will create 4000 jobs. they are looking at setting up a development center in bangalore. local news outlets are reporting that he will meet with prime minister modi later on. coming up, we speak with the former director of the nsa and tackle the next frontier of encryption and security. ♪
has sent tens of thousands of corrected on test revolts -- blood tests results. patients may have been given an dented number of in accurately. the elizabeth holmes-led company's readings were once touted as revolutionary. machines came under the microscope after reports by the wall street journal. the fbi apple battle may be over, but the encryption wars have just begun. a bill lies in wait in the nation's capital with tensions between the government and silicon valley at an all-time high. our next guest is a former director of the cia and nsa. in a twist, he backed apple at the height of the encryption debate. michael hayden joins us now and
ethan kurzweil is still here. general hayden, thank you for joining us on this issue of encryption. given that you cited with apple, -- a formeron director of the fbi, who is saying that encryption is impacting investigations, what would your response be? guest: i sympathize. he has a problem. encryption allows people who would do us harm a safe haven for communication. security,e world of there are always trade-offs. one of the great threats to americans now is not just terrorism. it is cyber threat. jim clapper, the director of national intelligence, for the last couple of years has said cyber threat is threat number one. you have to be careful before -- legitimate
reasons, do something that will make it difficult to be successful in a security sense. the bottom line is the government has a right to do this. i do not think there are constitutional issues. think, on balance, for security reasons, it is a good idea. , you hadneral hayden said in the past we are heading for a world of unbreakable sincerity -- security. -- do you believe there will not be hackers in the future that can break into things? do you think we will get past the point where there are a lead hackers -- elite hackers? was, we have meant to embrace, the security community, law-enforcement, we will have to embrace the reality that, no matter what law we pass, what court judgment we get
, it will become increasingly difficult to retrieve content of intercepted communication. that is just a reality. that technological arc is inevitable. rather than trying to prevent it through legislation or court action, we need to get on with our lives in terms of still doing our jobs, even in the absence of collecting the content of communications. remember, i am arguing for security, not security versus privacy. the point i am making is there is a lot of digital exhaust that can be retrieved and used to create actionable information for both law enforcement and intelligence. that is still a legitimate target. emily: now, klapper and other u.s. officials have said they are ramping up a cyber war on isis. what exactly does that mean?
what is going on behind the scenes? guest: i like the fact we are saying we are at cyber war with isis. i have lived my entire life and government. it has only been in the last couple years we can say things publicly that need to be said. now you have the director of national intelligence publicly announcing we are taking offensive cyber action against islamic state. i celebrate the action and the announcement. with regard to the operational details, i am not in government. are making itwe more difficult for them to sustain their digital identities , more difficult for them to use social media for recruitment, command and control, and raising funds. i applaud the effort. emily: now, speaking of the current presidential election, r recently il mahe
would be concerned if president trump governed in a way consistent with the language that candidate trump talked about waterboarding. you said the american armed forces would refuse to act. it would be in violation of all laws of armed combat. you work for president bush. now that trump is the nominee, are you still that concerned? will you be voting for the democratic candidate? on that will fall back australian secret ballot system we have had for over a century and not talk about how i am going to vote. nothing has happened since a couple months ago. nothing has changed my view that, if president trump governs s, i candidate trump talk think america is far less safe than it would otherwise be.
some of the things he has said are unacceptable. closing the nation off to the greatnce to one of its being able to detect and deport 12 million residents, those should be scary things for everyone. it will be hard for candidate tomp, after the convention, undo the things he has already said. emily: general michael hayden. thank you so much for joining us today on "bloomberg west." i appreciate you sharing your views. ethan kurzweil, you are sticking with me. coming up, the company that reimagined the vacuum cleaner is after your hairdryer. we will look at how this everyday appliance is being completely redesigned. ♪
the company wants to totally remake the way we think about home appliances, first updating the vacuum cleaner and now redesigning the lowly hairdryer. they spent $71 million developing the supersonic. here to tell us about it and other plans, the ceo and my guess for the hour, ethan kurzweil. this is a $400 hair dryer. why should i spend $400? guest: first of all, when i turn it on, we can still talk. emily: it is fairly quiet. we have really reinvented everything about the hairdryer. the first thing is we developed a small, digital motor. it is very powerful and creates a lot of the air pressure. we put that in the handle so my hands do not get tired. controlntelligent heat in because most hairdryers burn hair. it dries faster, and i have
three of them in my house. me ifould absolutely kill they took this away. guest: you spent all this time on the technology. what else can you do with this tech? what other products can you reinvent? i do not dry my hair that much. guest: i do not have enough, unfortunately. it is a great example of what dyson does. our engineers get frustrated about things and want to solve a problem. , no we looked at hairdryers one had really thought intelligently about it. we developed different motors and came to a different place. it is the same with vacuum cleaners. hours hour battery driven -- ours are battery driven. we are doing the same with fans and air purifiers. emily: what else are you
spending r and d on? guest: we are in the midst of launching what i think is the most exciting stage of dyson technology, the ones i just talked about. we will be launching an autonomous vacuum cleaner. when you are on vacation, you come home, and your house is clean. emily: your vacuum can clean when you are not home? guest: when you are not home. we have 2000 engineers at 14 universities. there is enough frustrating things left in the world that maybe we can find a solution. guest: why do you think it took so long for someone to redesign the hairdryer? it has been the same product for 30 or 40 years. reallybecause, if you want to come up with different technology, you need to take a foundational approach, and others do not do what we do.
we developed a motor, spent $70 million to make it better hairdryer. very small, the fastest spinning digital motor you can have in the world. out of that, you can create a different appliance. guest: you can make all household appliances quite are. guest: there are others that are frustrating. emily: so you have also filed patents in the battery area. you are working on making better batteries. what is the state of your research so far? guest: we are very interested in batteries. ,t goes back to the engineers getting frustrated about motor technology. we knew nothing about motors, but thought surely we could develop digital motor technology. similarly today, we are relying on the best conventional battery
technology, and it is limiting what we can do. inare investing with the aim delivering significantly higher energy density. that means machines that can run longer. emily: do you think you can take on tesla? guest: we are not commenting and will not. but we get teased about what our engineers are working on. thank you forze, stopping by. i will think about the hairdryer. i appreciate you joining us today. guest: thank you. -- i dothan kurzweil use hairdryers everyday. i appreciate the problem. guest: if you try it, it will change your mind. emily: coming up, a look at the new set-top box. hugo barra gives me the ground
show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc.
president hasw focused on economic issues in her inauguration speech, saying the island needs wage growth and should join regional trade agreements. she also called for pension reform and promised to boost opportunities for young people. the promise advocated looser ties with mainland china. sydneyres swinging in was bought in a deal worth $2.29. $2.2 billion dollars.
the deal is expected to lead to greater integration of projects in papua new guinea. the obama administration is pressuring japan to avoid weakening the yen, which has surged 10% this year against the dollar. washington says the problem with the world economy is waning demand. those are the headlines from bloomberg news, powered by journalists in 150 bureaus around the world. let's get the latest on the markets. >> we are seeing a lack of conviction playing out in this last session for the week in asia. we have been oscillating between gains going into the later part of the session. we are seeing strong gains from hong kong. 1%, shanghai, .1%.
nikkei 225, .2%. the yen is driving some of that positive sentiment. iorn -- iron ore prices are rebounding after the last couple of days. is ready to go potentially as soon as june, which would result in pressure on emerging market assets. a bit of weakness from indonesia. the central bank did hold rates yesterday. malaysia is reporting rates unchanged, .1%. energy names are doing well. singapore up by .8%. the picture is not looking of .1% whenupside it comes to the asia-pacific.
australia sitting at 110 as they await some statement from policymakers on the currency. ♪ this is bloomberg west. google is heading to the highest administrative court in france to fight the right to be forgotten decision and a fine of $12,000. google was ordered to leak search results that led to personal information about consumers who complained. google removed links from a french domain but stopped short of removing them from a dotcom domain. ngey would add geoblocki technology that would make it harder to find domains. sticking with google and shifting focus back to io's,
google's annual developer conference, where xiaomi unveiled a new 4k set-top box called the mibox, a way of stepping up competition with amazon fire tv. i got an exclusive first look at the mi box in mountain view, california, with hugo barra. i started by asking him why he decided to launch in the united states. >> it is the biggest entertainment market in the world, a market we care deeply about and want to enter. this is the first product we have chosen to enter the u.s. with. emily: show me how it works. >> you have the android tv home. a couple different rows of apps. on the top, you have a voice search. then an entire row of personalized recommendations from many different apps.
the more you watch content, the better they will be. the box supports 60 frames a second, which is relatively new in the industry and also supports hdr content. emily: do you think 4k is taking off? >> it has already taken off. emily: how do you think this fax up against amazon tv? >> the interesting thing about , in addition to the great processor and so on, is really the approach to content. we are working in collaboration with google. android tv brings all the content you want. you have google play, all the major entertainment brands, bringing their content to android tv. a huge number of games. you have youtube. a wide variety of content options that you do not get anywhere else. plus, a lot of google innovation.
for example, i can do this. what is that movie where jim carrey gets his memory erased? there it is. "eternal sunshine of the spotless mind." emily: google assistant made that happen? >> essentially. that is google assistant in the background. emily: do you have an answer to amazon echo or google home? >> it is kind of the future, in so many ways. we have a very mature marketing strategy. it would not be a terrible guest of think we care a lot about this. but we are doing the basics. we are launching tv-based projects, smartphones. emily: talk to me about your international expansion strategy. great numbers came out about the up 46% year over year, but most of the sales are in china.
how do you think the xiaomi brand will translate a broad? >> i think it will translate well. market cares about -- it is a sophisticated and demanding market. we are a softer company. our focus is to select products which we believe people in this market are going to associate with high-end products. that is where we are going to come in. that is the angle. emily: are you running into challenges looking at expanding globally? what are they? >> no challenges in particular. but we want to be focused. we have been in china for six years, in india for almost two years. we are doing well. we are number three. faster than we expected.
we are just about the point where we are thinking about the next line. the u.s. feels like a market worth investing in not only because it is a large market, but it is the most important market in the world. what happens in the u.s. impacts the rest of the world. having a strong product in the u.s. will help us ever else. emily: my interview with xiaomi's vice president of global operations, hugo barra. ethan kurzweil, you have invest in twitch, periscope. you are focused on video, live video. you just did a summit on this issue. do you think mi box stands a chance in the u.s. market? guest: it is a smart strategy for them to pursue because of how influential the market is. the u.s. is brand conscious. u.s. consumers like apple iphones.
they like certain brands that they know and trust. it is possible, but i would not bet on it. emily: who wins the battle for the living room? >> everyone will take a little slice. apple shows fallibility, quite frankly. apple tv is a great product, but they could do more with it. other consumer electronics companies have shown that really, really strong entries in the living room. i am not so convinced that apple will run away with it. xiaomi will stand a chance. there will be different players winning pieces. emily: at your summit, you have people from facebook live, periscope. let's start with facebook live versus everybody else. who wins? guest: facebook is a strong player, and they showed that yesterday when they talk about how they see it. they have a commitment to video.
zuckerberg has been quoted publicly. mobile.video as big as i would not count facebook out. when we talk at the summit yesterday to some of the top creators creating apps, they are taking facebook seriously. emily: hardly counting them out, but do you think they could steal from twitter? guest: they have a chance. i do not think there is one player. facebook has a chance of being very dominant. i think twitter made a smart acquisition in periscope. we were investors in the company before. i thought it was massive. take a slice of live. that is a huge opportunity. they have shown just how much they can benefit from being part of twitter. emily: what is the next big thing in video? guest: i think lots of things are happening. creators are showing that self-
made people can take away the mantle from hollywood and create content without the production expenses of hollywood machinery. there will be lots of sites that proliferate. we were part of twitch, which has certain verticals they focus on, gaming. there will be things upcoming nvidia. some may go to facebook. some may go to periscope. emily: ethan kurzweil, you are sticking with me. bass is juggling a major business strategy transition. activists investors will focus on what he is doing to revive the bottom line. ♪
emily: one stock we are watching, cisco. shares jumped the most in three months after a stronger than expected forecast. chuck robbins explained his positive outlook earlier on bloomberg. inin the switching space particular, data center switching performance shows that customers buy into the notion of a hybrid cloud world. they are taking advantage of public cloud services and continue to build out infrastructure as well. emily: he went on to say that earnings are not where they should be, but cisco is in the early days of transition away from hardware. earnings, the software maker known for engineering software like pad. sales came in soft, continuing a trend from the next -- last two
quarters. joining us now, carl bass and still with us, ethan kurzweil. is in the midst of a business transition away from licensing towards cloud-based subscriptions. how is it going? guest: we are pretty far into it. we started a year and a half ago and are about halfway through it. when we first started, we were the high pole in the tent. now it is obvious every software company will go to term-based subscription. the transition is going great. we are way better than most people expected. all things are good. ,mily: sales are down, though as you go through the transition. the forecast for the current quarter is lower than expected. when will we see revenue level out again?
guest: we do not want it to. this is the funny part. we gave guidance last quarter. a great result was lower-than-expected revenue. it means people are moving to the new model faster. we had to report the number of subscriptions exceeded guidance. as people moved to the new model, where they pay less up front, revenue goes down. i would love to have the same thing happen next quarter. this is a paradoxical situation that will only last two quarters. after that, things return to normal. it is hard to root for lower revenue. guest: you have been active in acquiring startup companies over the years. is that going to continue? does that continue to be court to the autodesk strategy? guest: most of our acquisitions are relatively small, almost
tiny by silicon valley acquisition standards. in anafter talented teams area we have decided to invest. we identify the market opportunity and we go out and say, if we can get a great team working on this, that is the thing to do. guest: has that played out well for the acquisitions you have made? guest: we have had a higher rate of success then reported. the degree of difficulty is easier. team of fiveented people is different from 1000 employees. guest: assuming they stay with you. a smallhen you bring in team, they get to lead the effort and you deliver a platform. emily: you have been pushing for better shareholder returns -- dealing with activists investors pushing for better shareholder
returns. they got board seats. how is your relationship with them? guest: activist investors, you root for them to disappear. it is not like you cannot wait to have more of you. to the extent their contributions are positive, we live for ideas from anyone. , with athe discussion lot of activists, is what kind of returns are you looking for, and what time frame? whether it is the short-term or long-term. kind of the easiest thing you can do as a ceo is dried up short-term return at the expense of long-term. our job is balancing the two. emily: any advice for marissa mayer? guest: i had a vice for her a couple years ago. guest: she did not take it. emily: you advised her not to take it? guest: i advised her not to take
the job. you have seen a series of ceo's. strategically, i thought it was a company that was becoming increasingly irrelevant. emily and i have talked. when carol took the job, i thought they had two problems. one was execution. the second was a strategy problem. there are a lot of people in the valley that can help on execution. on strategy, i do not know that the properties they have become more relevant. guest: and a momentum problem. it is very difficult. emily: do you think yahoo! disappears? what happens? unfortunate that they valued the company, which is a real company with real revenue and profitability, as negative. it is crazy. a lot depends on what the tax rate is for other investments. i think the first thing they do
is they clear that up and separate the holdings versus the core business. then i think they can go back to the real business of running yahoo! emily: you do not think it disappears? -- itink it's a high survives? guest: the important question is, what does it become? it has had a long time and has not become more relevant. e-mailot like an aol address, but when you get an e-mail from a yahoo! business address, you do not think it is a business person. emily: carl bass, thanks so much. always appreciate your honesty. guest: thanks. emily: we will be back. ♪
iscorns were brave enough expecting $450 million in revenue this year. why is it a big deal? it has no sales status, which has turned heads among competition. president jay simons joins us with more along with ethan kurzweil. about your ceo's talked sales staff being like adderall before an exam. what does that mean? guest: we are focused on products that can sell themselves. maybe the adderall reference was an additive that we have not needed. emily: how do you grow? guest: we grow by building great products, through word-of-mouth. we grow on simplicity and innovation. may be the same way tesla does not have salespeople, we build
great products that sell themselves. guest: it is important to get the sales without salespeople. why haven't others followed these approaches yet? guest: it takes discipline. you go back to when the company was born. it was born after the dotcom crash in 2002. venture capital can be short-term oriented. you are trying to grow a business as quick as possible. we are focused on building a long-term, viable business. we have to focus on not hiring salespeople. you have products in so many categories. the companies continue to innovate over time. you have competitors in all those categories. how do you stay relevant on so many fronts? guest: we are a company that focuses on all three legs of the collaboration stool. productivity,
share content in real-time. universalpporting the need of what teams do is a differentiator. also, personal collaboration, personal productivity tools, we are the one company that has focused on building a social capability that brings people together around what they need. emily: there are reports that chitchat.ed -- for how do you keep them at bay? guest: i think chitchat and slacker take advantage of a shift towards how people are communicating in real-time, with video, audio, screen sharing, the synchronous real-time capability people need. that is a huge market. we are displacing incumbent technology like skype or
microsoft's live communications server, things from a generation ago. emily: quickly, should more unicorns go public? yes or no? guest: they should go public when they are ready to go public. took the, when we stage, we were a business ready to take the public stage. hopefully, the evidence shows we worked really hard. emily: jay simons, president of atlassian, thank you for joining us. ethan kurzweil, my fabulous guest host, you missed your calling. actually, you have made some good calls in investing. let's see who is having the best day ever. today's winner is applied materials. stock jumping 8% in extended trading after forecasting third-quarter sales that may surpass estimates. revenue in the period ending in july will rise to 18%.
>> it is noon here in hong kong. here are the top stories. sworn in as taiwan's first female president, she is saying she will maintain dialogue with china and keep the peace. beijing has warned of consequences if she does not embrace the 1992 china one in principle. the global economy with watching 10 warning that intervention will not help the search for growth. japan is under pressure not to weaken the yen, and washington says the real problem is global demand.