Government be allowed to prevent anyone on a terrorist watch list from buying a gun. Republicans disagree. They said a court should have to sign off on nobuy order. From bloomberg World Headquarters in new york, im mark crumpton. This is bloomberg west. Apple facing the threat of a sale freeze. How serious are the allegations . Were break them down. Bill gates sits down exclusively and hear his views on the linked in deal. In ollywood dips its toes Virtual Reality and why the gaming industry is still sitting on the sidelines. Apple hit with a patent dispute in china. The beijing intellectual Property Office has found that he iphone 6 and 6 plus are too imilar to the chinese baili. Dback. Ickly fire are gearing out to roll out the next model. R. B. C. Joined j. P. Morgan for the stock. So how big a deal is this . Really. Research president bob odonnell joins us from fran and with me for the hour. Bloomberg news executive editor tom giles. First off, tom, thank you for joining us. I never heard of baili. I lived in hong kong for four years right across from shen jen. Tell me about this. Tom well, theyre a tiny company. Tarted by a former executive technology. But this whole story really makes you wonder about whats going on. You look at those phones as you look on the screen. They dont look the same. There are plenty of other phones that look very, very similar. Withh, by the way, werent the 6s and 6plus included . Theres a lot of questions marks about whats going on. There could be some back door political cron yism happening here. And thats the big question here. It begs the question is this a real patent dispute or is this a load of bull that beijing is trying to pull here. What do you think . Tom i think its more the latter. Ill be honest with you. It reflects the challenges that a lot of western Companies Face when they go to china particularly as somebody as big as apple. Look, the Chinese Government knows how important the china market is to apple. Weve seen a number of these things. Weve seen itunes and the story being blocked. Weve seen a number of challenges there. We saw the invest dwhrament they did in didi. Theres a lot of back door happening that we dont know about. But im sure some of this stuff is at play. Bottom line, i dont think it will impact their sales. How much does a legal precedent set . This is a company that is still putting in place policies that govern how they deal with patents. How much could this affect rulings in the future . Bob if it plays out, it could have an impact. There have been smaller cases like this that have been overturned. This is a bigger player with apple and it may be that they want to make a statement. And that is a bit of a concern. But i have hard time believing that anyone would really take this to an extreme level. Again, as it is, its interesting that they focused only the 6 and not 6s line. That suggestses to me that it may not be that big of a an issue. Big y wanted to make a issue they would big issue they would have to go after both of them because they look identical. We had a conference in San Francisco. And we had the opportunity to interview michelle lee who heads the u. S. Patent and trademark office. She talked about how much time and energy she and her staff have been putting china to rewrite and reform their patent and their i. P. Protection. Id like to listen to some of the things that she said briefly for a moment. Keep in mind that countries cross the world view the intellectual property system as a tool. Theyre undergoing changes to their trade sequence law and there are no other areas of law in intellectual property. They want input wanting a system more like ours. Theyre establishing courts much like ours. So the combination of laws on the books, Court Systems that are less prudential, subject to favoritism and a real desire by upper level management. And it will take time. Its a huge society with lots of Different Levels but at the highest level theres an intention to move in a direction ats more respectful of copy rights. Not because trading partners are asking them to do it. So michelle talks about the need for there to be reform. She talks about there being political will. But do events like show how far we have to go to prevent that in china . Its very provincial. The thing to remember about this. This is from beijing which is just the city, its the biggest city but its not the whole country. That reflects to me that this is more of a provincial challenge that reflects the complexity of the Chinese Government and the regulations there and the kinds of challenges that all company who are going to be big in china are going to face. Yes, im sure the best intentions are there in china to change this but its also going take a very long time before this plays out. Well see if this becomes a bigger issue. My guess is this ones going to blow away and a week from now we would have forgotten about it. Up with more question for you. If iphone sales do get stopped how much hurt will this bring to apple . Apple gets about 25 of its revenue from greater china. But this is the iphone 6 and iphone 6plus specifically. Any numbers . I dont think it will be huge because this is the older generation 6, not the 66 s and not the,s plus. So its the older generation phones. Its going to have less of an impact. Fundamentally, i really dont think this is going to become a real issue in terms of stopping sales. Even if it was, it would be in beijing and not the rest of china. Bob odonnell, thank you very much. And tom staying with us for this hour. Speaking of apple, Regulatory Filings shows warren buffet pays 49. 40 a share. Bershire has 9 dels 97 million. At the time it sheed slowdown in iphone sales. But the rebound has yet to materialize. Shares fell another 2 in the friday session. Coming up, what does the cofound oaf the microsoft think of linked in . Our exclusive interview with bill gates is next. Later, facebooks annual shareholder is on monday. What investors are trying to say about the companys third class of shares. Welcome back. Microsoft announced its plan to buy linked in in one of the biggest tech deals ever. Wall street acted with mixed reviews but how about bill gates . Eric sat down with bill gates for an exclusive interview. Take a listen. Great nk its a a transaction. Linked in brings a lot i node Reed Hoffmann and jeff, the team there built an incredible audience and so combined with what microsoft does, working with people and productivity helping professionals communicate there will be a lot of synergies there and so i was very encouraging if that deal came together and glad to see it that it really happened. So far investors havent been very supportive of the transaction. Should they be. The stock market is going to jump up and down. Im no expert on what the stock market should be daytoday. I think the company is better combined. I love the idea that the market wants us to show that. I mean, the company is expert in software and managing those audiences and its great that they have an opportunity to surprise the world and say, oh, linked in, feed on thats how i want to learn about my career, my company, my industry. If we can make that as say valuable as the facebook and the social world thats huge Value Creation and that will happen over a period of years. You were c. E. O. And chairman of the world. You know deal execution and integration are tricky especially with a deal to this size. What are the keys to not screwing it up. What are the keys to not screwing it up . A lot of what licked in does will stay exactly the same. The idea of how you get the files, list and the user its pretty easy without changing a lot of the engineering. So microsoft like most Tech Companies have had deals that have gone better than others. I think weve got good preparation and the nature of the synergy is pretty clear. All right. Microsoft cofounder bill gates. Bloomberg editor of Technology Tom giles to talk more about this. Lets look ahead on the microsoft linked in deal. The biggest challenge that it has now is Regulatory Approval especially over in the european union. How likely is that . Theell, margrite is head of antitrust at the e. U. She said are we going to use data in a way that kind of creates a disadvantage for competitors. Now, they took a close look at facebook, whats app. We dont have any indication that theres not significant indication that theres going to back huge hurdle. I would turn it and say that the biggest challenge theyre going to face is getting their synergies, really making as bill gates say he thinks two are better than one. They need to prove it. I think thats going to be their biggest challenge. I dont think regulatory is going to be their biggest. Looking into the data that theyre talking about that the e. U. Chief talked about. What would be a barrier that might potentially raise a red flag here . I think any time you have a monopoly situation that you use that to put up barriers to entry for another player to come into the market, a smaller player, again, its not something that weve seen a lot of concern over. We talked to people out there. Were not hearing that thats kind of the thing that is really rising to the surface. All right. Lets switch to a suiter a failed suiter according to people familiar to the matter. What didnt that go through . Its a very expensive deal. Salesforce. Com has a few money in cash. It would have been a difficult deal to digest would that have lot. Sue shares, borrow a what would have happened linked in went to microsoft and said hey were starting to get down the aisle with this other player. What do you guys think . And microsoft came in and said this makes a lot of sense for us. We think theres a lot of ways that we can use our pickup trucks, mesh them with the linked in products and connect them to the hundreds of people that are using linked in and theyre so much more well captainized. They have capitalized. They have tons of cash. Microsoft looked at basically buying sales force. Do you think they might look at that again . What youre going to see with linked in, theyre going to give them the potential for a sales force to help people and theyre going to go out on a sales call. Well, youre friends with three of her colleagues. So you can bring that up in a conversation and all kinds of way that microsoft is going to try to leverage its knowhow with that network that you were working with on a daily basis. Well leave it at that for now. Tom giles sticking with us. We saw the drm c. Court of of appeals rule that internet oviders cannot slow internet content to consumers. It defies it as utility that all americans should have access to. Bloombergs oliver explains. Net neutrality calls for an open Internet Everything on the web shouldle be equally accessible. While everybody claims to honor that principle, interpreting it in real terms is a bit of a different story. Heres the situation. A u. S. Federal court recently upheld the f. C. C. s opinion to have more oversight of broadband track. Comcast and verizon will be treed the same as public utilities. They cannot prevent to charge like netflix for preferential treatment. It stops them from blocking or slowing web traffic. While the rules already in place in much of europe, the Internet Service companies which fought the new rules say they want an open internet. Heres the background. The term Network Neutrality was coined in 20002 by tim lu who argued people would pay for more bandwidth. In the late 2000, the f. C. C. Stepped up under the principle of Net Neutrality challenging comcast an verizon in court. On the one hand supporters needed this power to have internet providers to treat all web trafficking equally. But providers say this regulation deters investment and we should know u. S. Broadband speeds are behind that of france, u. K. And south korea. But beneath the legal policy questions rises the more philosophical one like who owns the internet . Do consumers pay to connect to it . And who balances all those competing interests . Bloombergs oliver roenick on Net Neutrality. Coming up, ted talks about apple buying test la. Thats ahead. Youre watching bloomberg west. West. Is bloomberg alphabet fell the most in friday trade. One citigroup analysis suggest thats second Gross Revenue could come 1 to 2 below expectations. Shares came at 3. 1 , the biggest decline since april. Microsofts 26 billion acquisition of linked in is raising the question which other cash rich Tech Companies might be looking to buy. Ted west spoke with leonisis about the future of tech. I could see sincerely apple buying test la. Tesla. I think that would be a smart move. Tribleist o get into cars. Has next generation leadership. So a Computer Company is buying a car manufacturer. And tesla is a Computer Company. Just has some wheels on it. I think youre going to see those kind of big going outside f your swim lane to try to get capability, i. P. , to try to get management. To grow into eeds a conned category to continue the growth because these companies have such incredible skeafment i looked at a walmart. Walmart needs to grow 1 or 2 per year because theyre so big. And where where will that growth come from . 1 or 2 comes from growing their biggest competitor on an annual basis. Unless you start to look at difference industries or businesses its hard in your lane to get that kind of growth. Youre all shot. A. O. L. Is owned by verizon. It seems to be a significant bitter for yahoo . Does the deal for yahoo make sense . I tried to buy yahoo , i think it was in 1993. We offered 2 million to jerry and david at the time. And, you know, we watched the company grow and they really replicated a. O. L. In terms of email and search and content but built an unbelievable franchise. Now the world has moved totally away from desktop and desktop search numbers are way, way down mobile. Thing is about so ve roy zone buying, acquiring a. O. L. Wasnt just about a. O. L. s content being put into so a smaller footprint but it was about their ad servicing technology. All of facebooks growth is coming from advertising. Googles one achilles heel is falling behind and how do they catch up on mobile. I think it would make incredible sense if verizon and a. O. L. Were to merge and acquire the yahoo but there are lots of other really, really talented people out there that are making a play for it. But it needs to be in some one elses hands right now. I think theres a collective understanding that its time and that this needs to be on someone elses platform. Its not a platform in and of itself. Bloombergs david wests interview with ted leonisis. Coming up, facebooks annual Shareholder Meeting is monday. Investors are looking for news on the news class of shares. Well discuss Mark Zuckerbergs plan for the company if you look bloomberg news, you can listen on the Bloomberg Radio app and on sirius x. M. More of bloomberg west continues next. Im mark crumpton. Youre watching bloomberg west. New details are emerging about the terror attack in orlando, florida. Multiple Media Outlets are reporting that omar mateen sent Text Messages to his wife, noor, during the shooting. Its unclear if she knew where he was when she received them. She and the gunmans father have been placed on nofly lists. The British Parliament will be recalled from recess on monday to pay tribute to slain lawmaker joan cox. And david nister cameron laid flowers in coxs memory. Parliament has lost one of its most passionate and brilliant campaigners the one who epitomized the fact politics is about serving its. Its time to stand back and think about some of the things that are so important about our country. Mr. Corbin called thursdays killing an attack on democracy. Russian track and field athletes wonbe able to compete in the rio olympics after a doping related ban was upheld by the International Association of athletics federations. Russia called it unprecedented. Sebastian cove talked to the media. The statement that we made today is a very clear indication that over the long haul is for us to protect clean athletes rmer the International Olympic company is scheduled to discuss the decision next week. Doctors without borders will no longer seek funding from the european union. Last year the group got about 52 million or 8 of its budget from the e. U. Massachusetts senator Elizabeth Warren gave a pep talk to ry clinton staffers as at clintons headquarters. Senator warren has endorsed secretary clinton. The Clinton Company is actively looking at warren along with other potential candidates as a running mate. Firefighters battling a 1200acker wildfire are hoping winds wont kick up and send the fire roaring west of santa barbara. About 140 homes and raverages would be at risk. 800 firefighters are battling flames and steep terrain. So far theres no containment. Global news, 24 hours a day powered by our 24hour journalists in 150 news bureaus around the world. From new york, im mark crumpton. For emilyi esencio in chang. Tom giles for the hour here as whelm all eyes are on facebook specifically those of its share holders. Stock closed down slightly 1 ahead of the companys share holder meeting on monday. They announced a plan to create a third class of shares this would cement Mark Zuckerburgs control of the company. It will send about 5. 7 billion facebook shares but stripped of their voting rights. Joining me to discuss this is tom giles and in San Francisco facebook reporter sara fryer. How does this keep Mark Zuckerburg in leadership . Sarah zuckerburg said he would give a bunch of his wealth through initiatives that he sees are outside the schoop of the company such as eliminating disease, counteracting poverty, improving education. So as he invests in those fill anthrop cal initiatives, he needs to maintain control of facebook and this is going to cement that control for as long as he leads the company. So sarah, this sounds well and good now when facebook is killing it. The stock is up. People are buying their shift into mobile. Theyve got great leadership in place. My question is, what happens if and went and we know that fortunes can change on a dime in the tech sector, what happens if the story isnt quite so rosey at facebook and there comes a time when people arent as satisfied with marks leadership . What happens then . Well, the company is saying that they want a c. E. O. To be longterm focused and they believe in the founderled company. So this would even if Facebook Stock would become under pressure. Maybe Mark Zuckerburg is investing too much in Artificial Intelligence and Virtual Reality, he still maintains control of the company. They think that the longterm focus is important to the health of facebook. Their argument is look where it got us, almost trip the value we were on i. P. O. Day. This is something thats worked for facebook. Ven when they questioned facebook. So theyre asking shareholders to say this is really say that you look how things are going. And i assume we expect that this is going to pass tomorrow. But my question is, arent there some shareholders are that barred from Holding Shares and companies where there is so much ownership by one individual . And will we see some maybe some change some movement in the Share Holding base as a result . Sarah well, the funny thing about money is it is up to vote by shareholders and Mark Zuckerburg is the majority of the shareholder. So his vote will be enough to tip this over the edge. If there are any protest, they ll discuss whether this will hinder the Facebook Stock. They are already are doing so if they own facebook. And we are expecting for that to happen on monday because of course, Mark Zuckerberg the majority owner. Sarah, thanks so much from sfrab. Investigators are linking russian and sibe bangs with bank heist culminating in 81 from he central bank in bangladesh. Theyre known to operate in ssia and former soviet countries. Mary jo white said Cyber Threats were the biggest threat to the Financial System. So how can global institutions protect themselves from cyber crimes . For more were joined by jim flagging, the head of Business Strategy and tom giles still with us. So first off, i want to talk about bangladesh and central bank. Its getting hacked. Its one institution, jim. But when we expand to a huge network for example the Swift Network all around the world the issues get harder. From one institution to something around the world . Jim i would start with the phrase another brick in the wall. This tells us that were not talking about smash and grab cyber theft. This is a patient, highly talent adversary that found the weakest link. Got access to the score system. Used that access to create valid accounts from which they perpetrated their crime and then sort of deathly covered their tracks. I think with swift and any of these trust based organizations have particular challenges in being able to influence but not necessarily mandate the type of cyber hygiene and Risk Management program that you would find with a corporation or a single intendity. Jim, my question is we are seeing this attacks become more and more sophisticated coming from these qua say state actors. Are we as a nation taking the Cyber Threats as seriously as we should as a National Security issue . And if not, what needs to change . Im actually more of an optimism on this issue. But it is worth stepping back and looking at how cyber is different from the other forms of our defenses, air, searks land and space where in those cases the government would acknowledge we have the primary expertise. We are the main body on this. And Cyber Security that primary expertise sits in industry. And so i think its very positive that government has asked industry to lead on this. Asked us to continue to innovate because Cyber Security is an area that is rapidly changing and the status quo quickly becomes tomorrows vulnerability. Let me ask you another thing, given that this is afking the Financial System and Mary Jo White talks about it being such a big threat, are these attacks going to give a leg up to alternative systems like the block chain that at least according to their backers say will insure Greater Transparency and potentially greater security . Yeah, its a great question. I think first its a fantastic that chairwoman made that statement about the importance of Cyber Security. And i think what this will help do is send yet another wange call into the Corner Office into the board because clearly Cyber Security is no longer a technical risk for those guys down the hall. This is a Business Risk and for many, its a top Business Risk and as such it needs phillip the c. E. O. And the board. It needs to be funded and inspected and reviewed accordingly. I think what we saw with what appears to be the case in the swift example is some of the them had awareness but did not take actions that were commiss rat as part of the Swift Network. Now back to yeah, go ahead. In terms of what are some things people can do, and maybe the back end of that question on block chain, we think that one of the key areas is identity. Identity used to be this sleepy issues back on i. T. Operations, i need my password reset. Its a fundamental Building Block and scumplete simply by following the five as of security, you could go along way to reducing your risk. I want to talk about m. N. A. 2. 6 ked about it about million. In terms of what acquireers are looking for, what are Companies Looking for . Well, first on the semantic blue coat deal thats a good deal for customers, for everyone involved. Semantek brings threat, email and Data Security. And blue coat has been a leader in cloud gateway security which is critical as we go furtherer in that direction and is also very strong in network and advance persistent threat, detection and response. Its a very synergistic deal. In terms of some other areas to watch, i. O. T. Security is going to be a big deal particularly as it relates to industrial security. We continue to think theres going to be very Interesting Properties around both identity and Data Security or other areas. Are we going to see more deal s whether its i. P. O. Or acquisitions . And if so what are the companys that are going to be in the cross hairs . I think theres a number o good company, 100 millionplus, growing and profitable. Some may make it. I think in another area that factors very squarely into security the private entity players. I would highlight toma brava who have a Business Model thats very conducive to growing security companies. Theyre less worried about about security result. They can invest for the longterm. Its critical as some of these Companies Make the move from selling licenses to a fast paced model and need to make tuckin acquisitions an emerge as a much stronger i. P. O. Later. Talking about the m. N. A. And i. P. O. My guest holse tom giles stays with me for this hour. Coming up, Virtual Reality is getting the hollywood treatment. We sit down with the c. O. O. Of a company that scored a major investment. Thats next. This is bloomberg west. Virtual reality is getting heavy investment from federal venture firms and more and more from film studios. One company thats beginning getting the hollywood treatment is verse. They announced a funding round led by andre horwitz. Here to discuss is drew larner, the Parent Company of bloomberg Parent Company is an investor. Drew, congrats on the new round of funding as well as the new name. Got to ask about that. Why the name change . Thanks. Congratulations on the funding. As far as the name, for the last couple of months weve been thinking about how we have a name that grows with the company, you know, the name itself, the old name verse, fourletter name, one vowel, hard to pronounce. But the bigger reason having a name we can grow with as we start to move forward with our mission to start driving her forward. When you think about what Virtual Reality is as opposed to books and tv, youre looking at characters. Youre no cussed on characters that are over there. But with Virtual Reality its about characters that are around you. We any that that name sig nay fies what were trying to achieve as a company. What can you see when you hold hands with hoomed and Holding Hands with hollywood and getting us in there. What are you working on . Can we see out there . Theres a lot of content on our platform with vice, the new york post, the u. N. And u2. Over time where i sigh see the business is going more where the company is a around today. Whether its writers, directors, talent youre urkly seing in the movie theyre going to v cack that is our goal. Are we going to have v. R. Head sets when we walk into the theater. Already talk to me about the nuts and bolts of it. Have we gotten over the hiccup. I dont like it when i feels hen i wore a head set . If you belief that this is a the medium by which severin going to be consuming their content going for war. You know, watching him just lose husband mind with delight over what he was seeing. I could pg that everyone is going to be consuming everything through the medium. Ly get more comfort nl. It will get smaller. Thats what were counting on. What are your favorite whats the hardware that youre most that has the most potential so far. Im not going to pick one. Ere reckonned on every pass work. You saw them yesterday. Well be placing a play station v. R. In the fall. We want to be ubiquitous and there is room for many platforms. Basically what were seeing the hollywood pushing far into the v. R. But the gaming world not so much. Early this week, the president of the company talked about. Audio. Nt to play the it takes content creating Companies Like us to really make things that the consumer want togs companies, that they want to jump into the particular technology. Thats how we move it forward. Weve been looking at the space. With us we want to make sure that our next content is going to be mainstream, mass market approachable and when Something Like v. R. Is at that point, you could expect nintendo to be there. What makes it more profitable forhood to get in with you guys . Its not the best thing to focus on because current think theres not a lot of revenue generation. But over time is similar the way people consume content now. Add supporter will be a big part of it. Ultimately where i would like to see him go is aa di crippings along the lines of networks or hoob. Of the way hboo nows appears to court kirts. They sub scrime really for two shows, game of thrown and equal silicon valley. To it. Look forward tom giles is still staying with us. Up next on bloomberg west. , sit down with a microsoft analyst. Are we alone in the universe . That conversation coming up next. Welcome back. And in this addition of out of the world we hear from dr. Nathan mervold the former c. E. O. Of microsoft who now runs his company. Hes worked with steven hawking. Hes partnered with paul allen to find extra terrestrial life. We asked him about the chances that theres other life in the universe. Most neutral unbiased scientific analysis says its probably pretty likely. Now, theres a separate question if life is throughout, how well can we detect it . Single celled life, algae or bacteria, it may be there but you have to go there because we cant listen to their broadcast. Yuri and i have been involved for the search of extra intelligence. Were look us to that life which would send a radio signal or a tv signal. Will we get a single back in your our lifetime . We, we may get one tomorrow. Now that one that splay been fanned a million years ago. So a twoway communication might be tough. We dont know for listening at the right frequency. A ould be the give lent of primitive tribe listening for rum beats where theyre on l. T. E. Cell phones. Were too technologically immature to know how mature we should listen. You cant rule that out because when you try to reason about is there life or is there intelligent life, fundamentally, we have one example. Heyve heard us. And generalizing that is difficult. Right. I must think for a living in a come pirate generation. What do you think . If we lived in a compute keanu on, i like the reeves one. The matrix was awesome. For as long as there have been philosophers there have been people who Council Member up with ideas reich this that perhaps all of what were exerntsing is hallucination. Im not traying to make too much of a fool of myself right now. Because what if there really are people watching this on tv, right . Well, unfortunately, its fond to fun to speculate like that. I dont think theres any usefulness to it. So what. If you can tell, great, tell us what is your evident. He liquid this simulation be so complicated that it could fool us. Well, whats the point . Go on to work on my useful problem . Great conversation there. Hat was intellectual venture nathan mervle. Do you believe in alien life . Yes, i do. If theyre listening, i want them to know that i welcomed the overlord. Im looking forward to that broadcast. That does it for this edition of bloomberg west. A big thanks to tom giles. Bloomberg continues around the world. From our studios in new york city, this is charlie rose. Charlie welcome to the program. We begin this evening with the president of the United States in orlando. President obama i am pleased to hear the senate will hold both on preventing individuals with possible terrorist ties from dying guns, including assault weapons. I truly hope that senators rise to the moment, and do the right thing. I hope that senators who voted no on background checks after newton have a change of heart. I hope the house does the right thing and he t