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tv   With All Due Respect  Bloomberg  December 17, 2016 10:00am-11:01am EST

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>> "hello, world." it's time for a thought experiment. let's imagine the cold war went another way. , the the nazis surrendered soviet union flexed its muscles and asserted its imperial might from tokyo to tacoma. memorials to the fatherland popped up around the globe. this would be the washington monument. this could have been your morning commute.
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now, let's fast-forward. these were the first semiconductors. this is your keyboard. this was the first ibm computer. headquarters.ok this is silicon valley. well, that didn't happen. but in modern russia, it's easy to get confused. with an extra helping of spy -- spycraft, technology here developed a world apart from silicon valley, and that did not change when the soviet union collapsed. 25 years later, russia has copied large parts of the web the rest of us know and love. they built the russian internet. and with the new laws cooked up
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by the kremlin and rubberstamped in moscow, more and more, it's a sovereign internet. like anything sovereign, it needs walls to protect it. and virtual walls are going up today. to find out exactly how the russian web works, there's only one thing to do -- i had to upload myself. now that i'm inside, i will meet a tech oligarch, travel to into a, and dive surprising and very remote startup scene and chase the ever elusive russian hacker. >> you could create the technology which helps to predict the crime.
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>> silicon valley may be home to some of the biggest tech giants in the world, but it's being challenged like never before. some crazy tech geniuses have popped up all over the planet making things that will blow mind mind. my name is ashlee vance. i'm an author and journalist, and i'm on a quest to find the most innovation -- the most innovative tech and meet the beautiful geniuses behind them. the moscow over the past decade, 'dedication to the proletariat have given way to the modern russia. popular capitalist towers that poked through the clouds. the heart of this is where i met , one of only a
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few people in east of helsinki who can drive me to the office in his own tesla. ashlee: dimitri sits atop a russian empire and runs a domestic fund for robotics and silicon valley. that does not make you want to move? you have so much going on. >> maybe one day. never say never. do you consider the russian tech scene competitive? do you consider the russian tech scene competitive? ashlee: why are russian
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engineers so good? ashlee: ok, so everybody knows when you are in the office. he has tried to copy silicon valley culture here in moscow. two instant messaging networks, a search engine, a price comparison website, and a time of online games. they also control the three largest russian social networking sites. the biggest one is vk, a facebook knockoff. the company took over in 2014
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after its founder refused to reveal information about ukrainian activists to the kremlin. he left the company and now lives in self-imposed exile. to be treated as one of the world's biggest investors in robotics. he put $100 million into american firms that produce some submit -- familiar faces. what has been the biggest hits of all your robotic companies? >> i like all my investments. definitely, i like bb-8 a lot. ashlee: he ships all kind of nerd gear to moscow. out and sees if he wants to invest.
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with the play of the game? >> these are cute robots. that's good for you. as someone who puts all his money into robots. get a taste of the highlights of a tech oligarch, we had for a bite to eat at this restaurant in europe. 354 meters above the moscow traffic. tell me a little bit about your family history. ashlee: the soviet union's answer to area 51, a top-secret city where rocket scientists like dimitri pas grandfather tested ballistic missiles and rockets during the space race. programming on computers that plugged into soviet tv's, but things really
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took off when he enrolled at moscow state technical university in 1995. ashlee: he might have failed to rewrite the world's most popular operating system, but he did stumble on the copycat business that became his company and at the height of the 2001 tech crash, he had to find a way to keep the company alive with no cash.
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ashlee: it's hard to imagine now, but in 2004, only 9% of russians had internet access. what was the russian government assessment of the tech industry? changed int all 2012. russia had become the biggest internet market in europe. some people use the web to putin andbout organize protests against his reelection. the kremlin responded in full, orwellian glory with a series of laws that allows them to flag opposition sites as extremists and blacklist them. ever since, it has been hard to beginsere the vladweb
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and ends. in the u.s., the idea is the russian government and tech companies are just intertwined and if the government wants to read people's emails or whatever they want to do, they will let them do that. ashlee: the new laws passed this year would make edward snowden weep into his borscht. axisdemand all off-site move here. once on russian soil, they have to store six months' worth of
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data about people's every move online and give the kremlin access. russian companies like mail.ru protested, saying these measures would take a ridiculous amount of storage space, but they obviously lost. american companies have said there's no way they will move to russia, so now they are criminal enterprises here. that's how you build a sovereign internet.
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ashlee: just a couple of weeks after we visited dimitri, he stepped down as ceo of mail.ru. ceo isernment-approved taking his place. the new got also happens to be the son of the head of russia's largest state run television channel -- the new guy. coming up next, it's off to siberia where the russian government is trying to build a tech utopia in the tyga. .> this is useful ♪
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>> the game is changing. there is a lot less isolation.
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ashlee: to find out how russia
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makes tech magic happen, all you have to do is talk on a flight from russia to siberia. -- hop on a flight from russia to siberia. yes, that siberia. it's not just for gulags anymore. it's hard to wrap your head around just how big siberia is and even harder to understand how most people live here, so, to get acquainted, i found another dimitri. this one, a real natural born to initiate me into the ways of the russian wilderness. >> perfect idea. ashlee: a trip to the bonior -- ya is an ancient and some would say masochistic russian
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idea. it consists of three steps. step 1 -- nearly have heatstroke. step two -- shrinkage. step three -- get whacked. beating other men with birch branches, my new russian friend is a philosophy professor. that's my destination -- a small town hours by plane from moscow and about 30 minutes from .ussia's third-largest city nikita khrushchev's government declared 60 years ago this would
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be the siberian home of the soviet academy of science, build from nothing in the middle of a remote taiga forest stretches halfway around the planet. how has it changed over the last 40 years? >> compared to soviet time, we have not so much opportunity. ashlee: shall we toast? what do we toast to? ♪ soaked, swatted, steaming, and having proven my
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loyalty to science, i was ready to explore. the soviets hid temples to science in the trees with shrines to match, like this one. to all the mice they sacrificed on the altar of genetic research. inside the nuclear physics institute, it feels like i walked onto the set of "dr. strangelove." these analog dials, contraptions, all built to push nuclear science to its summit, replicating the power of the sun by smashing atoms together. people have been chasing fusion for decades. what is still encouraging an exciting about this field?
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ashlee: this professor researches something called open trap mechanisms to encourage fusion. in theory, it's a shortcut to the top of the mountain with a smaller load. can use this to power a spaceship going to mars? so this is more of like a 2080 sort of thing? [laughter] ashlee: the soviet government attracted brilliant minds to siberia with spacious apartments and the kind of prestige they
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could only get in a town founded as a utopian nerd-ocracy. but when the soviet union fell, so did the walls keeping scientists here, and many of them bolted to work at ibm or m.i.t. or boeing. for those who stayed, the utopia has lost its luster. ashlee:ashlee: 10 years ago, the russian government decided it needed to hit refresh on the entire town to pull siberian science out of its post-soviet slump. they are turning to a new generation of engineers.
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one of the most successful so far is another dimitri. ashlee: his company started off making king-size air filters for hospitals and other businesses. as far as starting a company here, you didn't think, "now that i have this idea, i'm going to run off to silicon valley?" you decided this was the spot for you? ashlee: today, dimitri is the
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poster boy for a siberian startup success story and feels like he is close to raise one on the startup of his vision. phase two takes him to china where his company is rapidly expanding. he hopes to get his devices out of hospitals and into homes with this little guy that detects pollutants in the air like co2. ashlee: so the lights are going down? ashlee: cool. it seems to work. dmitry is not a wholly self-made man. success belongs to him, but it's built on a blueprint john up by the russian government.
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his headquarters is on a sprawling campus with this crazy tower in the middle of it. not recommended if you have a fear of heights. of place is a prime example one of the big ideas in russian tech -- the cradle genius factory. across the country, they start them young with a strictly uniform education heavy on math and science. they pulled the best out of siberia and send them down the street to university. from there, they used to funnel their brains to places like the nuclear institute, but now that that is a bit retro, many of them end up here in the tech tower. it's like someone visited a few silicon valley startups, punched the copy button, ran it through google translate, and then hit paste in the middle of siberia.
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and their maker space 3-d printed putin. gym, only it's in siberia, so there's bears. case in point, my new friend. where are you from originally? mother was your father, engineers as well? ashlee: ok. you can tell by the "terminator "-looking device on the table that he makes drones. he says his drone is special because it can take off vertically and then fly very, very far very, very fast.
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you can go to the site of forest fires or floods out of siberia. a team of engineers fresh out of high school and most definitely still in college built this carbon prototype by hand in four months. ashlee: this is seen as sort of radical? so, this drone company started in a russian .overnment-funded incubator it's two clients who -- maybe you guessed it -- are part of the russian government. they built this first prototype with money from a
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government-backed venture capital firm. they would not exist about the government, and they barely exist because of it. you have to get exceptions to test your drones and fly them around here and that is difficult to do? are there many drone companies in russia? ashlee: it looks really cool. it looks good. ashlee: it's through the sheer force of their engineering smarts and passion that they have gotten off the ground. out here in siberia, they are part of one grand experiment in state-supported innovation. we will have to see what the
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next 60 years brings to this silicon forest. up next, i find myself at a party for cyber cops and hit the streets of moscow to shatter what remains of your illusions of personal rights. ♪ quirks "hello, world" is supported by ca technologies, powering the application technology. explore more at ca.com. ♪
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ashlee: there's never been a better time to take in the of modern-- epic-ness russia. the wealth that poured into the country over a decade has remade moscow times you a classy european capital, only supersized. after all, this is the land of tchaikovsky and pushkin, tolstoy and the bolshoi. now it's home to bohemian
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cocktail bars and some of the best restaurants in the world. the result is something intimidating and, well, romantic. if you come from the west, you can live like an oligarch on the cheap. sanctions and low oil prices have cut the ruble in half, doubling the fund for outsiders for me -- doubling the fun outsiders like me. but ask anyone here and they will tell you that tensions with the west will diminish the russian soul. russia's power comes from the force of its intellect, and that's on display here at this gallery with the country's most iconic modern artists hang from the walls. it got me thinking -- what is art, really? an object? an idea?
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a union expression of a super alien impulse that creativity imposes on its creator -- a unique expression? swirly.is one is i wonder what this app does. this app gets five stars for sure. it's called prisma, at its creator uses machine learning magic to rebuild your photos into something that could hang in a museum. this painting is done by alexander dexter. does it look like one of your filters? ashlee: what would prisma pick
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up on? ashlee: prisma topped 2 million downloads a day earlier this year. they program a vast network of computers to study great artists and repaint your pictures from a blank canvas. compared to that, instagram filters are weak sauce. how do you train it to do something like that? you take, like, a picasso and -- these past few years, russia has honed the art of turning computer science nerds into ai-building geniuses.
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to put another footsoldier in that they are army to the test, i went right across the street to one of moscow's spectacular .ublic spaces just five years ago, this was a decaying soviet relic. with peoplebuzzing on wheels and friendly russian faces. few.al here is to find a hi, would you mind if i take a photo of your face? and trying to do a little bit of an experiment. can i take a photo of your face? i just take a photo of you, and we see if it can find your the k -- vk. it doesn't work on facebook
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because it cannot search the database. in a few seconds, it scans all 250 million photos from vk, the russian facebook knock off, and then finds a match. all right, see what happens. moment of truth. here we go. ashlee: and your hair is so different in the photo. ashlee: do you think it's strange? ashlee: yes, so you guys like it? ashlee: this year, find face
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took its algorithm to america for something called the mega face challenge. it beat google and a lot of other face-spotting software. to find out how they did it, i went to meet the algorithm's creator at the office of his company. do you mind showing me how the technology works a little bit? can we try me? these are my russian brethren, my cousins. is it ranked in order by who they think looks most like me? this is, like, a 60-year-old with a machine gun. another guy with a gun. why am i a bear? ashlee: he programmed a neural
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network that approaches face-finding differently than others. he said it thousands of images and after about six months of training, voila! to read faces. so you essentially don't even know what the network is seeing? ashlee: are we creeped out yet?
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maybe we should be. they have already signed a contract with the moscow city police, though he will not talk about it. he says they already have agreements with other law enforcement agencies inside and outside russia. it's easy to imagine what the fbi or its russian counterpart could do with this kind of technology. it's a little bit controversial, right? because anyone can identify you now within a crowd.
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ashlee: this idea that you are not anonymous when you walk the street anymore, someone can just snap your photo and identify who you are -- you must have thought about that when you were developing the technology. on the outskirts of moscow, you will find the mothership of state-sponsored innovation. coaxing people
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here. i came here to meet one of its rising stars, a criminologist. heads a private company based in moscow that tries to find ever elusive russian , and thenask them hand them over to the authorities. ashlee: look at your picture. you look like james bond. ashlee: they specialize in ,nvestigating fraud and theft which makes up 99% of cybercrime.
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ashlee: they walk a tightrope, cooperating with russian law enforcement while also serving major international clients likes to the bank and microsoft -- like citibank and microsoft. you have foreign clients today, huge companies, but as the tensions between china and the u.s. and russia seem to be escalating, especially when it comes to cyber security -- ashlee: it just seems like that would make it so much harder for you guys to expand.
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ashlee: you think with the tensions between the u.s. and russia right now that russia would be upset if you had an office in silicon valley? ashlee: you think of hackers sitting in a basement with their hoodies and their hats. these are the people who hunt them. this is russia's largest
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cybercrime event. ashlee: ilya started this in college with a few buddies. one of them is the company has had hacker hunter -- the companies had hacker hunter -- the company's head hacker hunter.
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ashlee: i visited the moscow office to find out more about how dimitri chases cyber criminals. community --acking is that the biggest cybercrime community in the world? ashlee: what's the art of that and the technique?
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ashlee: what does a russian hacker look like? who are these people?
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anlee: they know occupy uncomfortable position at the intersection of cold war geopolitics and organized crime, like the mafia from russia's unruly caucuses. ilya learned that one of the targets had ordered mobsters to kill him. ashlee: do you have bodyguards?
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ashlee: peace on cyber earth may come, but just in case, russia is building a series of startup cities to increase the might and reach of its cybertek. to an outsider like me, the depth of russia's state influence on companies feels flat out wrong. -- backward and flat out wrong. it's hard to imagine a tech utopia springing up from somewhere like this. edward snowden -- yes, he is
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somewhere out there, too, saying the u.s. has its eyes everywhere, too. if you are on this internet or that one, you are never alone anymore. up next on "hello, world," i travel to chile to go hunting for the origins of the universe and find myself with the help of a shaman. ♪ "hello, world" is supported by ca technologies, power and opportunity in the application economy. explore more at ca.com. ♪
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♪ >> i am emily chang. this is the "best of bloomberg technology." we bring you the top interviews from the week in tech. trump's mostnald outspoken critics. big tech leaders came face-to-face with the president elect this week. plus, yahoo! out with a new numbers. the second hack affect did over one billion users. what does it mean for the verizon deal?

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