Transcripts For BLOOMBERG Bloomberg West 20150202

Will not face charges in the United States over the United Kingdom phone hacking scandal. The u. S. Justice department has decided not to prosecute either company after the u. K. s own investigation into the phone hacking and payments to Public Officials concluded. It may be the end of the road for radioshack. The company is in discussions to lease half of its stores to sprint and close the remainder. Radioshack would cease to exist as a standalone retailer after nearly a century in business. People familiar with the matter say this is not a done deal, and talks could still collapse. Apple is going to repurpose that arizona factory that was supposed to make sapphire glass for its iphones. Apple is going to invest 2 billion in the factory to turn it into a data center. The phoenix area building will employ about 150 fulltime apple employees, and is going to run on 100 renewable energy. Apple originally set up the factory for the supplier gt advance which filed for bankruptcy after apple decided not to use those sapphire screens. Now to our leading story, uber is coming under fire from all corners as it seeks to spread its taxi hailing service around the world. The most significant threat to the appbased transport company may be closer to its own backyard. Bloomberg businessweek just learned that google is preparing to offer its own right hailing service most likely in conjunction with the development of that driverless car. Googles major backers participating in two fundraising rounds since 2013. Googles chief legal officer joined ubers board, and has informed ubers board about google buzz project. This person said they uber board is considering whether to ask drummond to resign his position. Redber Driverless Cars, and competition for money . This is really about what seemed at one point to be an unrealistic futuristic scenario Driverless Cars which is seeming a lot more plausible the stays. Google recently said it sees Autonomous Vehicles on the road to between 2 and 5 years. The question that google likely faces is, do you sell these vehicles . Do you send them out into the world in an appbased Ride Hailing Service way, where you control them and people share them . The problem here is that google and uber our partners. Google ventures has been one of ubers biggest investors. The head of googles car project was at the Detroit Auto Show last month. He talked about that vision saying Driverless Cars are likely something that are shared. That is concerning to uber. Uber is considering maybe asking David Drummond to step off the board. There is a report today in the blog tech crunch that uber may be looking at starting its own Autonomous Vehicle lab in pittsburgh with folks from carnegie mellon. What were seeing is the very earliest stages of a friendship turning a little bit sour. What was it 258 million dollars, that is how much google has invested in uber since 2013 . That was the First Investment in 2013. Then there was a followup investment in 2014. I dont think the exact amount was ever revealed. The great irony is that google has made an enormous return on its investment in uber and can probably fund the development of this uber alternative with the proceeds of its investments in uber. Im sure the folks at uber dont get a lot of satisfaction out of this statistic. It has been an enormously successful thing for uber ventures. Perhaps it was difficult to see in 2013 other companies would end up really intersecting in their strategic visions. It brings to mind the previous enmities between apple and google, where eric schmidt from google i dont think there is the same level of animosity here. Steve jobs is famously furious about that. These two companies, i dont think you can put them in the friend camp anymore. What about the concept of owning the app . Its all about the icon you press to get the information or service you want. If google has its map and search functional most every phone, it doesnt require much thought to expand that to, pick me up on the corner. It doesnt matter what you are driving. I dont care if there is a driver and it. Thats an excellent point. Google occupied such a strong position here. Uber lyft all the right sharing companies are standardized on google maps. Theres no other mapping tool that is as comprehensive and global. It really needs a global partner. Who are the alternatives . There arent many. Google sees the transportation patterns, sees ubers internal data. These Android Devices are walking geolocation signals. Google has all that data and is integrating data into cars. Google occupies a strong position here. If they were to lose access to google maps it would be a major blow to uber. Its a real shortterm concern for uber to see how structurally dependent they are, a company that over the longterm term might be one of the largest rivals. Im going to date myself and use the term netscape. Your member when there was a battle for the browser on the desktop and whoever controlled your eyeball there controlled your wallet . You have written a book about amazon. Com. They have that button on your phone. That is why you buy stuff from them. Thats right. I think being the first app to summon a car is important. It is equally as important about who is doing the best job of getting the price on a ride down. That is why google has been able to maintain and establish its leadership position. Lets imagine five years down the road, when you can open uber and summon a driver, or you open this imaginary google app and summon a driverless car. It seems implausible, but this is what people are talking about now. This will soon be a reality, even if it is a regulatory reality. You summon that google car, and maybe google is showing you ads. That is a cheaper ride fundamentally, and uber will have to find an Autonomous Vehicle partner, get closer to google, and they seem to be moving in the opposite direction, or spend the money to develop a Self Driving Car Technology inhouse and added to its fleet. That would mean, for example, uber doesnt control the vehicle or the driver. If they decide to go to google and offer their services in that is a transition move to mac. Too. Right, and particularly if google is able to offer less expensive alternative, that is significant. These are a couple of chess moves down the road. You get the sense from the way these winds are blowing that this is what uber is concerned about right now. Brad from bloomberg businessweek. He is the Senior Writer joining us from San Francisco. Still ahead why one commissioner once regulators to invest 3 billion in discounts. That story is coming up. Watch us streaming on your tablet, your phone, and bloomberg. Com as well as amazon tv and apple tv. The largest spectrum auction in u. S. History, 45 billion in bids, its all in the books, and one of the big winners, dish network. The satellitetv provider secured 13. 3 billion in winning bids, trailing only at t and winning more spectrum than verizon. Dish is a market cap of 33 billion and is coming under fire for using small loopholes to get 3 billion in discounts that is supposed to be for Small Businesses. Earlier cory johnson spoke with republican fcc commissioner. He is asking the fcc chairman tom wheeler, to investigate these discounts. Also joining, the Program Director for common cause, the group that advocates for media reform. The results of the auction were amazing. They showed once again that Consumers Want and need better wireless conductivity connectivity. Its too early to say exactly what to make of the winning bidder. What matters is whether and how they put to use the spectrum licenses they have won. It should be noted that dish has a lot of spectrum they have won before and not put to use. When you look at their use of this loophole to qualify as a Small Business partnering with entities but owning 85 of these companies, could you see this coming . I certainly did not see it coming to this extent. I dont think anybody else did either. This is part of what is generating such outrage. It is in front of the fccs integrity. Dish claiming 3 billion worth of discounts makes a mockery of the entire program. All with the purpose of that program . What was the purpose of that program . Originally congress directed the fcc to set up a program to help small entrepreneurs get a foothold in the Wireless Industry and engage in what is called facilitiesbased competition, using spectrum that they get at auction, building a network, and providing end user service. The fcc has loosened the rules over the years so much that we get a situation in which the big, sophisticated corporate interest can gain the system and use these shell corporations in order to get multibilliondollar discounts. I think that is wrong, as a commissioner and taxpayer. The notion was to help Small Businesses to help competition to help women and minorities. Dish is none of that. Our policy should be facilitating market entry, and we are always glad to see new Small Business new, Diverse Firms entering the market. Im glad to hear more about facilitiesbased competition. There are all sorts of steps the fcc can be taking to improve that, including by relaxing or preempting bad legislation in the states, preempts communities ability to create networks. Theres lots on the menu for the commission to do to really ensure that we have marketplace full of options with lots of entrepreneurship. Those issues todd, what is common causes take on dish using a Small Business loophole to win the auction . We support using designated entities to enter the marketplace and receive bidding dicounts. What matters is from our perspective, on the back end, what is a clear timeline for them using these licenses and entering the market . I want to read from the letter he wrote to the rest of the fcc. You wrote, quote, we must change course, and soon, by closing loopholes that allow big business is to rip off the American People to the tune of billions of dollars. The American People should be outraged about this. What can you do about this . It is incumbent on a fcc to do a full and thorough investigation into these particular applications. The integrity of the designated Entity Program is at stake. If it turns out that the scandal is what is legal under our rules, it is incumbent upon the agency to reform the rules to close these loopholes. I dissented last year from a number of proposals to loosen the rules even further. I protected almost exactly this result, corporate interests would find ways to arbitrage the system and game it at the expense of the american taxpayer. Why do you think the other fcc commissioners went for this . They support some of the same goals. Is this about maximizing revenue and letting the biggest bidders win in the interests of competitive interests, women and minorities be damned . You would need to speak to them. We seem to share the same goals of having a Small Business program that works. The question is, are you willing to take on the efforts to reform the program to ensure that Small Businesses benefit . That is where we have seen division. I hope this current episode will inspire the fcc to take action to ensure that those who claim the bidding credits are the women and minorities who historically have not had a chance to break into this marketplace. Those are the people we should be looking out for. Todd, if theres one rule change that has to be made before the next auction, what do you think that should be . The best steps they fcc could take are ensuring reserve spectrum for the smaller competitors to ensure we dont have yet another situation where all of the scarce public resource and sub concentrated in the hands of the big two verizon and at t. Lets make sure theyre going to smaller players, entrance and upstarts. The fcc commissioner and todd boyle, director of common cause. Im cory johnson. This is bloomberg west. President obama submitted his 2016 budget to congress today. This area of health care is believed to have huge potential, but could present problems when it comes to logistics. Caroline jen joins us to explain covering biotech for us. What an interesting thing this is, combining specialized medicine and big data. Exactly. The president s proposal the idea is to gather volunteers up to one Million People together, and gather data on them. Characteristics, whether it is hair color, eye color, and your habits and the idea is to draw links between underlying features such as your genes to the way youre experiencing disease. Is not creepy data the government have all that information . The privacy issues, would this become a serious issue . I think the government is well aware this is going to be a question. They specifically set aside some money to figure out that question. How do we ensure that the data is kept private . What theyre doing differently is that they are hoping that all the volunteers will be able to have access to their own personal data. It wont be anonymized the minute you put it in, youre supposed to believed its going to be anonymize on the backend . Are biotech up is excited to have this . Biotech companies excited to have this . They are looking for specific targets. If they can find great connections, this target goes with the disease am of this biomarker indicates you will experience disease in a certain way that information goes to drug makers. They are excited for that. Im adjusted and why technology will technological advances happen now. Are the electronic records and the government able to handle this kind of depth of data in a standardized way . Not at this time it. I think i have been told there more than 600 different possible electronic records. In some hospitals, the emergency room records is not the same as the one used on the fourth floor. They dont talk to each other. The hope is to standardize the way the data is collected across different hospitals. If i said to you, do you smoke . Thats a different question than how many times do smuggle week versus when did you quit smoking . Smoke a week, versus when did you quit smoking . The government is trying to get it together, Caroline Chen thank you. Trafficking drugs promote reaching the white house grounds, spying on professional athletes. Incidents like these make people say drones are no good. We look at the future of drone regulation. That story coming up next on bloomberg west. Im pimm fox. Heres a check of your Bloomberg Top headlines. President obama said his annual budget to congress. The budget would raise taxes on corporations and some inherited wealth, and spend more on education, housing, infrastructure. We would be making a critical error if we avoided making these investments. We cant afford not to. When the economy is doing well we are making investments, when we are growing, thats part of what keeps deficits low because the economy is doing well. The budget has now been delivered to congressional offices. Some weak economic reports for december raising eyebrows about the u. S. Economy strength. Consumer spending posted its biggest decline in five years, falling 3 10 of 1 during the month. Manufacturing in the u. S. Fell in december. Hewlettpackards chief executive meg whitman is getting more money. After three years of sales decline, the Company Raised whitmans total compensation by 11 head of hps split into two separate companies ahead of hps split into two separate companies. The numbers are in for last nights super bowl. The game drew a record 114. 4 million viewers, making it the mostwatched program in u. S. Television history. Nbc says its Live Streaming platform attracted an average of 800,000 viewers per minute. The new England Patriots defeated the Seattle Seahawks in dramatic fashion, 2824. The Chinese Government released a scathing report about counterfeit goods, misleading ads. Today jack ma spoke about the issue in hong kong. We have a problem almost every week. The problem we have last week, we already have the first stage solved. This thing i think is going to be very transparent. This thing is going to be pretty meaningful for ecommerce groups developing in china. Its not supported by certain government officials. It is how we can do things in a good way, in good legal procedures. And so far, were pretty happy, and we are moving things ahead. He didnt look happy. He says he is eager to correct any misconceptions. We were misunderstood by the world. But we are not transparent, we dont want misunderstood by the world, that is a platform of selling fake products. And we want this company as always, i said, not represent china internet. It represent the spirit of internet. Of the whole world. Ma was in hong kong to launch a fund for entrepreneurs in that city. As drones whizzed their way into hobbyist, they are also going into the sky and taking off a few people. An employee crash of drone into the white house lawn, calling the president to call for more rules on the Recreational Use of drones. Tijuana police found a methladen drone crashed on the border. The nfl is taking steps to ban drones around stadiums. Why is the faa so slow to move on regulations . And can they control these things even if they want to . Joining me is patrick. The drug drone was amazing. Just a guy forgetting he may have crashed his drone near the white house . The guy was part of the intelligence community, which to me is too large to fly drones by the white house. Thats just me. It brings to mind the old catch22, military intelligence is an oxymoron. Are these signs of a lack of regulation . Maybe to a certain degree . Their hundreds of thousands of these being sold. I was there telling the faa back in 2007 and eight that these systems were going to get cheaper into the hands of people, they were going to be top consumer electronic products. The proliferation, we can see it, and anyone can buy one can fly one. Nefarious activity, like that in mexico, theres a steep learning curve. The cheaper ones cant carry that much weight. I dont know that theres that much to worry about. Im not saying can totally take it off the table. But there are easier ways. Wonder if we might look at these drones like frisbees, they will just end up like on someones roof. But theres a class of drone the needs other regulation. Whats the dividing line when they go from deutsche tool . From toy to tool . They can be used by a lot of different people. There is a lot of good uses. And then theres a lot of talk about good, commonsense regulation. Most people want to ally rely on the law. We want it to make it to be easier for people to use these for business. The people using them for business are going to be responsible. The people who are using them hobby wise, are going to be safer. The traditional hobbyists, others are just members of the public who want to consume electronics. They dont recognize the faa as regulating toys. We did a conference near San Francisco where we had a drone battle, where drones would crash into themselves. One of the drones got a little high, caught some wind off the golden gate bridge, and never to be seen again. As far as i know, thats the one that landed at the white house. Does this happen a lot, where drones just go missing . You have to obey the laws of physics. Theres no getting around that. I have seen a lot of these systems flying and people saying it malfunctioned or crashed. But they do not get away from you. Do get away from you. They are not foolproof. You do have to have some skill to fly them. Some of them are preprogrammed and you can program waypoints or whatever else in the return to home up. Sometimes i just get away from people. They just get away from people. You may find a drone in your yard one day. The game of drones continues. Patrick egan, thank you very much. Can africa be a world leader in solar power . And can it help solve longstanding infrastructure problems . A ceo that has big african plans, next on bloomberg west. This is bloomberg west. Off grid has a mission powering African Homes and businesses with solar power. Babylon more power to do it with the world bank announcing a 7 Million Investment in the tanzaniabased company. Off grids ceo and cofounder joins me now. Xavier, its an interesting business. Describe the conditions of your typical customer. They live on one dollar to four dollars a day. They are burning kerosene, which is gentle jet fuel for light. They may have to want three miles and have to pay for the privilege. Went to the end up paying for that what to the end up paying for that . It varies wildly. Ive seen up to a dollar a day. Up to 30 a month to burn jet fuel in their living room. These are not people with capital to buy solar panels a cost. How much do yours cost . We dont sell it as a product. We sell it as a longterm lease. A typical system would cost 91,000 dollars or more coming up to get a battery and electronics and the lighting. We have been able to radically reduce the cost on our side by buying in bulk. The basic idea is you are following a solar city model. You own the product, they rented, and it reverts back to you . They honored at the end of 10 years. They pay at the end of the month . Every day. It behaves like a utility. We have down to seven dollars a month. With the uptake like . What is the uptake like . Its the easiest sales pitch of ever seen. Do you want electric light in your home . Of course you do. But typically they couldnt afford it. Now its can you take the money you are spending now on kerosene, and how are your house. How are your house. The payment of a structure exists in these places infrastructure exists in these places . Tanzania is ahead of us in mobile payments. Everyone has a cell phone. They send us money over their mobile phone. We sent him a text message that unlocks the system, and they go on. This is a forprofit enterprise. We are incredibly motivated by the social effect of what were doing, but we think its usually a huge commercial opportunity. There are more people off the grid than when edison turned on the first libel. Light bulb. One in five people. There are more people off the grid now . William gibson said it was the future is here, just unevenly distributed. I think the electricity is the ultimate example. Its not even a Second Thought for us in the studio. But for people most people in africa, and a lot of people in india and other places in southeast asia, it still unattainable. Do the communities change . How you pick the places you want to do business . Where we work, its 90 off the grid. 10 of people are on, 90 are off. Anywhere we go, theres huge demand. We rollout geographically. We have seen as high as 30 to 40 adoption. Thats the reason everyone has gotten so excited. Its not so stinky. Xavier helgesen, thank you. World news. Tony abbott could face a leadership challenge after allies lost badly in state elections. Australians are upset with spending cuts, abbott says he has restored order. We were elected in 2013 because the australian people rejected chaos. Thats why we were elected, because the australian people rejected chaos. And we are not going to take them back to that chaos. We really are not going to take them back to that chaos. Australias economy has lost momentum under abbott with growth hitting its weakest levels in 18 months. Apple is planning to sell 6. 5 billion of bonds. Proceeds will be used for buybacks, dividends, and more. Apples latest offer raised 3. 2 billion, allowing the company to raise funds without having to repatriate foreign cash. Is the tech industrys diversity problem getting any better . And why does it matter . One Organization Says it is in an accident is when it comes to profits. Thats next on bloomberg west. Im cory johnson, this is bloomberg west. On average, companies with the highest percentage of women on the board of directors outperform those with fewer women. By 53 . Similar stocks said racial diversity correlated with performance. Joining me is laura wheaton, code 24 is a nonprofit organization. There are plenty of social reasons to want everyone to get a chance to succeed. The idea you can make more money is often lost in this. Talk about what your latest effort is to find some way to get feet indoors . We are launching two new initiatives. Weve had 50 students go in the last few years, and in the next two years, we are going to roll out programming for 5000 students. Its about 10 times more. [laughter] that is supported by google. Org, helping us to bring our learning program out to 10 times as many students to help them get their foot in the door at tech companies. Its interesting, because google has struggled with this issue. Among the things they did was an audit, they publicized it, and this didnt make them look good. Its mostly men, asian men, and white men. People who look like me, not people look like the most of the world. I think hats off to google for publicizing that and then taking steps to do something about it. The other program we roll out is backed by google for entrepreneurs. They are launching the next Wave Campaign specifically to get more blacks and latinos and underrepresented folks into entrepreneurship. Is this a google project . Is our project with google backing. This is interesting. You are going in a certain city, giving each one of these dudes or women people 40,000 to start a business, give them free housing, and they go back to the mothership, the google plex occasionally to see what theyre doing. We find high potential black and Latino Entrepreneurs in these target cities, and they get support for a year, for 40,000 to launch their business. In turn, they work with us to help craft local programming that will get more blacks and latinos into the entrepreneurship base. I love the durham is on the list. Why did you pick these cities . Google has relationships with hubs in a few cities. These are three of them. When were choosing where to roll out the program, we looked look to what the demographic makeup was of the cities, and what was kind of happening there around entrepreneurship. We working with three attack hubs tech hubs in the cities. We are partnering with them around the diversity involved. Google fiber also coming into the raleighdurham area. I cant hurt. I do get shows a Real Investment in geographic areas that have a lot of potential as an entrepreneurship space. I was in provo, utah, where you dont see a lot of african American People. But a lot of startups, because of this highspeed access thats available in that town. We thought happening kansas city as well. I imagine it will be something similar interim a. In durham. Thank you. Bwest byte is when we focus on one number. Shelby holidays joining us with more. The bwest bytes 14 billion, the amount of money president obama dedicated to Cyber Security defense in his budget. That would be spread across the government, funding things like training for the fbi, Software Updates for weapons programs and construction of a civilian cyber campus that aims to boost private public partnerships. Lots of spending involved, lots of details. Overall, the message here is Cyber Security is incredibly important. We cover these stories ad nauseam here on bloomberg west. They spring up out of everywhere. The president seems to recognize what a big issue this is. When they put themselves in a bind with the nsa, with trust us, we want your data is hard to get by with a history of this administration and the last one as well. An interesting dynamic. Another thing that stuck out is that he is dedicating 100 million to a Digital Service team, that aims to regulate replicate the team and that turned around healthcare. Gov. He realizes we are moving towards a digital government. If were going to do that, we have to protect it. I wonder how much megan smith, the white house chief technology officer, is helping to lead this. She came after a long kick nader a long career at google. This Digital Service team is also modeled after former googlers ideas. They are trying to attract more for the private sector. Shelby holiday, thank you very much. You can get the latest on your phone, your tablet, and we will see with more bloomberg west, tomorrow