tesla responds to its latest roadblock. first, a check of your top headlines. nuno resigned pc sales. sharp sales are falling. shipments fell. gartner says sales fell in the same time period. gartner says that the pc market is showing signs of improvement with corporate demand helping to offset a consumer shift to mobile. there is a new coo for the purchase of the motorola handset business. he helped lead the launch of the moto x. facebook plans to roll out an updated design for right-hand column ads. the ads will be larger and there will be fewer of them. the updated look will make right hand column adds more visually consistent. to our lead story of the day, cory johnson is here with me now. we are talking about this massive security bug. it is security encryption software that two thirds of all servers and websites use. >> basically anytime you see that little lock symbol, it means you are on a secure site. >> it means a third-party cannot see what you are doing. >> or maybe not. apparently the bug has been around for two years. >> it is an interesting story. it represents not just a potential threat, but we have been hearing more about increasing threats. attacks that we have never seen before. this resonates deeply. the issue is looming large. >> this bug can expose personal information. we are joined now by jordan robertson, our cyber security correspondent. we also have the founder of parameter security. they specialize in the financial and banking industry. jordan, i will start with you. what happened here? i know this was exposed by google security users. >> it was found by google researchers and some researchers from another company. it is a tremendous find. they found a serious bug. they also coordinated the release of a fix for it. a software patch. the bug is tremendously powerful, but there's also a fix available. most large websites have pushed out that fix. as you guys were discussing, this is a flaw in the encryption software used by two thirds of the world. it is open source software. it is community-created. the fact that this flaw has been around for two years raises some interesting questions about who knew about it. >> is this a victory for open source? so many people are looking at it so they could find the problem. where is a failure, because so many people were using this? >> i would not even look at either one of those. one of the things we really have to understand is that the problem with these is that they are out there all the time. it does not make you better or worse it takes two years to find it. there are a lot zero-day exploitables they have not found fixes for. however, i would say that one of the nice things about the open source is that you do have other people looking at the source code to be able to find us. like the previous commenters said, you do not know who else has seen this in the past two years. they may have exploited it. >> let's talk about what they actually see. you put together some good visuals about what the information looks like unencrypted. it is not obvious. i cannot see my password in this information. you have to be quite skilled. but there was a researcher who did some interesting stuff yesterday. after the bug disclosure came out, he was able to run some tests on popular websites. >> this from yahoo!. >> this is one of the companies that did not push out the fix right away. they have since fixed the problem. he was able to say, i can grab usernames and passwords. they fixed the problem. it looks like gibberish to the untrained eye. >> let's talk about which companies were vulnerable and when. some of the biggest technology like google, facebook, amazon seem to have avoided this. yahoo! is vulnerable and did not fix it. google and facebook said that they are not vulnerable. we do not know if they were vulnerable before fixing it, or if they were never vulnerable. a lot of large organizations like banks were never vulnerable because they do not use open source software. there are a wide range of companies that were either vulnerable before and have been fixed, or were never vulnerable. we do not know. >> may the most threatening thing was the ability to see what was in any individual computer's memory. that opens up everything that someone could have been doing. >> let me take a step back. i would not say that banks were not vulnerable. you have to understand that vpn and e-mail and atms, all of these use ssl. the question is, what version were they using? to say that the fix has been put out, it has been put out by the open source foundation. i was on a flight last night and the servers were compiling at 10:00 p.m. to get to your question, you are looking at arbitrary data in the working ram. this is where the temporary data is held. one of the things to understand is that this is arbitrary. i cannot pick what information i am getting. it is just handing the random data. that is where it gets good. it could be from any program running on that server. i cannot pick and choose. >> what should we do? should we change our password? >> for most large sites, it is will be a wise practice to change passwords. the interesting part is probably that it is less to protect yourself against criminal hackers. this is been around for two years. the likelihood that intelligence services did not know about this is low. it is good internet hygiene to change your password. if a site has not fix the bug, you may want to wait until they fix it. you are disclosing it; late. it is always good practice. change your passwords. >> internet hygiene, just like going to the dentist. jordan robertson, thanks so much. thank you both. more on these massive data breaches later this hour. we will be speaking with the symantec coo. how the comcast time warner merger could impact you. you can watch a streaming on your tablet or phone or bloomberg.com. ♪ >> welcome back to "bloomberg west." announcing today a new photo app, plus a new mobile e-mail tool, and a a new board member, condoleezza rice. i asked why photo sharing needs another app. >> it is one among many new things that we have launched. it is the newest member of the dropbox family. carousel is all your photos, your entire life, in your pocket. it is great to have your photos on your phone. but what about the ones on your computer? what about the ones in all these other places? we bring it all together and reorganize it for you. you can see this timeline of your life. it is completely private. there are other things i can get into. it is a lot stuff that has been hard. it is so hard to get your photos together and share them. you go on a trip and we all bug each other to send photos. >> it is so easy to send photos publicly. but privately it is difficult. >> we do not do it. this is the answer. what if you could make something so easy that you could text 1000 photos in a second. that is what the carousel does. >> this is chapter two of dropbox? >> what are people putting in their dropboxes? they're putting in files. these things used to be in your house. your photos, your documents, whatever was in your living room. those are all now on servers. they are in your dropbox. that will only continue. what we realize is that we are not just building an app, we are building a new home for all the stuff you care about. it is a home for life. it is your personal stuff, your work stuff. you will not have questions, it is altogether. >> we will have more of my interview with the dropbox coo tomorrow on "bloomberg west." tesla has been hit with its first lemon lawsuit. a wisconsin man purchased a $95,000 tesla model s. he said it was out of service for 66 days in the first month he owned it. you say that this suit has factual inaccuracies? >> we totally support lemon laws. they are in place to protect consumers. that is a good thing. we are on the side of the consumer. but in every deal and we have had to try to replicate the issues that they claimed, we have been unable to do that. we have a situation where the guy files through this lemon law lawyer and he still had service bookings with us. we have been trying to work with the customer to work through the problem. we have been unable to do so. we have been trying to fix and replace things. suddenly we get this lemon lawsuit. >> you fixed a lot of things for you suggested the car was tampered with? >> there is evidence to suggest that in the process of the faults he alleges, in the front where the fuse box is located, the trunk was open several times. when we went in to investigate, we made sure that the fuse box was intact. in the end, we tried to address these issues. we were unable to replicate them. >> it is quite a claim. why not just give the money back? >> we operate on a policy that if a customer -- lemon laws exist to protect consumers. we respect those in every state. secondly, in this situation, we we worked with a customer and we were very fair. if any customers unhappy within fair and reasonable bounds, we will work with them to find an amicable settlement. >> the ban on tesla stores goes into effect. i know you guys are fighting that. next we have had some legislative resolutions in washington. we have reached a compromise in ohio. we are working as you know they're all available legal channels in new jersey. we are working with the state of arizona. we believe that our business model is right for customer. it is right for the product we are putting in the market. >> you are working on expanding internationally? elong is going elon is going to china. how big do you expect the china market to be? >> it could be bigger than the united states. it has huge potential. the appetite for electric vehicles. the chinese government is being very proactive in the way in which they are encouraging electric vehicles. >> what is the marketing push? >> we already have a first store in beijing. we are building out these supercharger network. we will make our first deliveries later this month. elon musk will do that personally. we are expanding in europe. we will be in the u.k. market and in japan with the right side driver-side. >> reports state the tesla model s had choked in the u.s. how do you respond? >> we respond to the numbers when we see them. we have a different kind of business model. we are also now building for export overseas. i think we must explain our delivery process. there is huge demand for the product. they are working hard in fremont to produce models for the united states and elsewhere. ♪ >> welcome back to "bloomberg west." the senate judiciary committee has just wrapped up a hearing on the comcast merger. peter cook is tracking the hearing. sounds like it will be a tough sell. >> i think that is a safe bet after what we saw over the last three hours here on capitol hill. senate judiciary members and top comcast executives over this merger between the number one and number two companies. they were firing back and saying that this deal will ultimately be good for consumers. it will not harm competition. it will lead to faster broadband speeds. at the end of the day, this is not anti-competitive. >> objectively, this is not a challenging transaction from an antitrust perspective. our companies are distinct areas. we do not compete for customers anywhere. the transaction will not lead to any reduction in competition or consumer choice in any market. >> that line was challenged by other witnesses from public advocacy groups and consumer groups, as well as aspiring ultrasound network. they are trying to crack comcast systems. they were challenging that the sheer size of this combination would give this company new leverage. it would have unprecedented market power in other areas of the media business. there was at least one member of the panel who said that he will oppose this deal. he says at the end of the day is about his consumers being hurt. >> it is understandable that contact has a responsibility to look out for its investors. but i'm concerned that the bigger and more dominant the company becomes, the less incentive they have to look out for consumers. the more power they have to squeeze them. >> he had some of the toughest questions today. we will chat with him about his opposition. the fcc will decide it. >> would you say about the likelihood of this being approved? >> based on what we saw today, the hurdle has been moved higher, and they will have a possibility for the folks i'm talking to approval. there'll be tougher conditions giving the politics around this. the confessions that the companies have offered may not be enough. they may have to go further. are those concessions so large and the conditions are so tough that they have to decide it is not worthy to move forward? >> does the sec listen to congress? is this just a show? >> they do listen to congress. congress controls the jurisdiction over the eve. they are watching and listening. justice department officials were listening to some of the answers to the questions that were put forward. there are politics involved. they have to make an independent decision. you know the way things work in washington. what matters and what happens on capitol hill will affect the regulatory process. >> some of the big tech companies did come up, apple, google, potential talks were happening with twc before the merger was proposed. >> i can tell you that the comcast executive was arguably the biggest accolade. he says that there is real competition. those tech companies, apple, google, all of these companies represent the real competition to comcast. that is why be competitive landscape is different and more robust than members of congress would consider. >> peter cook, our chief washington correspondent, thank you so much. we will continue to follow this story. we will have more on the potential merger coming up. we will be joined by the iowa senator, the leading republican on the judiciary committee. you will hear his concerns about the deal. we will be right back. ♪ >> you are watching "bloomberg west." comcast executives are testifying before the senate judiciary. senator chuck grassley is the top republican. he is the ranking member. thank you for joining us. you are inside the hearing today. where do you fall on this debate? >> our purpose is process and not making a decision of whether or not this is a legitimate merger. the federal communications branch and the department of justice will make that assessment. hopefully those are not political decisions. their decisions based upon economic and antitrust laws. this committee meeting and the hearing serves a very important purpose. that is to get all of the stakeholders interests on the table. particularly the consumers of america. this merger is eventually going to serve 30 million people, compared to 20 million people. get everything out on the table and make sure that all of the interests are taken into consideration. make sure that the fcc and the justice department knows congress is watching. they expect the laws to be carried out. >> senator grassley, there is an argument on the way the law has been interpreted as geographically, not the characteristics of the industry. this may be a different scenario because we are in a new, modern age. do you think of that when you evaluate the effect on consumers? >> yes. that was one of the questions i had. mr. cohen was there. i asked that question. when it comes to content, it could have an impact. when comcast makes a certain deal, maybe in the less sparsely populated areas of the country, it could have an adverse effect. whether he drives down the price and it is raised him or else. that is one example. he took the position that he would not raise rates for anybody else. we also had a consumer representative there. other interests were represented. the consumer interest took exception to what he said. >> at this point, what are the pros of a possible deal? what is in it for consumers? >> in a highly competitive environment, where there are all sorts of new technologies and tomorrow will be different than it is today. if we were talking about this 10 years ago, this sort of merger -- we would not even be talking about it. things move so fast. we have to consider the impact of that change and what we are talking about today may not be a significant tomorrow. we have new technology and ways of getting information around. particularly the internet and everything you can get over the internet. the competition today is different than it was. mergers like this may be legitimate today, but 10 years ago they may not have been legitimate. >> you are the one who is looking into the future. if you determine that this will keep prices flat or raise them, would you vote against the deal? >> you ask something that congress will not do. congress is not going to vote on this merger. this will be decided by the department of justice and the fcc. if i came to the conclusion that you just asked me about, what i would do is i would write to those two government agencies and tell them that i have this fear and i expect them to take that into consideration. the more senators you have making this communications, i would not want to say it is going to determined fact in the case of these two agencies, but they better take it into consideration. that is our view. you understand that in the history of our country, congress has not -- except in the case of the oil companies in the early 1900s, we have not gotten involved in splitting up. the courts have, like at&t in 1985. they split up something. the oil companies like standard oil were split up. but normally, that is why the sherman antitrust act was passed. so that we have a general view of what is antitrust and what is not. the justice department makes that determination. it should be an economic determination based upon protection of the consumer. that is the purpose of antitrust laws. it is not a political decision. >> at this point, given what we have discussed, and all of the issues, which way are you leaning? >> if i told you i was leaning, that is like i am trying to influence this. let me tell you what i do. whether it is business or banks or airlines, i write a letter to the department of justice expecting them to take everything into consideration. they must make sure that the antitrust laws are carried out according to the intent of congress. that is where i go. >> senator chuck grassley, thank you for joining us. we will continue to follow this story. thank you for sharing your position. how is the affordable care act changing the landscape for digital health startups? we will talk to one investor who has been investing in life science companies were nearly a decade. are we entering a biotech bubble? that is next. ♪ >> welcome back to "bloomberg west." i'm emily chang. the aca has created incentives for companies. funding has shot up 87% this last year. $700 million in the last quarter. kleiner perkins general partner has invested in life science companies for nearly a decade. she has been a ceo two times over. she is a physician by training. she joins us in the studio. thank you for joining us dr. you have such an interesting career are from physician to ceo to investor. how did that happen? >> it happens by keeping your eyes open and being ready for whatever opportunity is in front of you. it started out with the hiv crisis. trying to make a difference for people who were suffering. i did the first clinical trial. i was part of that for azt. i developed a passion to make a difference for patients and do it on a larger scale. i practiced and they took care of patients or years. the man went into product development. then i worked at amgen. i develop products and decided that i wanted to build companies and make a bigger impact. >> why are we seeing this flood of money into biotech? >> biotech is seeing a renaissance. it is a combination of great technology and science that we have never had the opportunity before. the tools of genomics, the ability to predict locations will respond to therapies. that is allowing us to develop drugs that have a higher probability of success. it is making huge impact in curing diseases. >> i know you said they are seeing tremendous progress in cancer treatment. how close are they to a cure? that is the question i'm always asked. it is so important. >> it is tremendously opportunity. is one of the largest killers worldwide. it is a passion of mine. i worked with tremendous entrepreneurs working on breakthrough therapies. we are making progress. we are doing it one cancer at a time. what is exciting is that we are starting to beat that the cancer is telling us what therapy to use. before you were diagnosed with breast cancer and you had one treatment option. now you are diagnosed with a specific mediation. we have targeted therapies that allow us to have much better outcomes for patients. >> some thing else you are focused on is the digitization of health records. a company is the leader in this field. it never ceases to surprise me how behind our job as our in terms of e-mail. electronic records. it is shocking. >> as a physician who trained in the era without computers and walking around with a white coat with big books and shoulders drooping, i am thrilled that we are finally seeing some technology in health care. this is one of the industries that has not been disrupted by technology. it is happening now. it is very interesting to look at what is happening. there was a high-tech act. a benefit of the economy going into recession in 2008 what the stimulus package. for the $7 billion was put aside to build the pipes for electronic medical records, to allow us to have incentives for physicians to start putting their records on computers. now we are seeing a generation of patients and people like you and me who live our lives on our iphones and blackberries. some people use those. i don't. our ipads. we cannot understand why we can't get all that information on our computer. >> how much is the affordable care act impacting you? >> it has a huge impact. it is a combination of high-tech and affordable. those things are allowing or what i would say is titanic changes in u.s. health care. what is happening with both is that we are providing people with the tools that they need to actually be able to have their records or have the information that they need to manage their health. >> about this biotech bubble, the index has dropped. valuations have been skyhigh. there were a lot of venture ipos. what is happening? >> i think that there is a tremendous interest in biotech because companies are developing products that are getting to market and are -- they have huge revenue. the biotech index is outperforming the s&p 500. people realize that money can be made in that space. is there a selectivity in which companies are being valued very high? i do not consider a bubble. i consider discriminating against investors who are still excited. >> dr. beth steinberg, thank you for sharing your work with us. we do not get to talk about biotech very often. it is incredibly important. >> thank you. pleasure to be here. >> a security firm symantec said that we have entered a new world is either reaches. we are talking to the coo coming up. ♪ >> welcome back to "bloomberg west." 2013 was the year of the mega-breach. there were data breaches of bigger payouts. half a billion identities were exposed. just before news broke, corey and i sat down with the chief operating officer of symantec. we asked about the biggest concerns today. >> there is the introduction of the term that we call the mega-breach. 10 million or more identities stolen through malicious activity. >> there was a big rise in those? >> in 2012, we had one mega-breach. 2013, we had over eight. that trend is exploding. >> it occurs to me that this sounds like organized crime. >> you look at it and there is organized crime. there are nation-state actors and individuals. some are in it for notoriety and some are in it for intellectual property. they are targeting personal assistants and pr professionals as a way to get access to business executives. >> beginning of target, target is one of your client. they weren't using your software and it detected the breach. they ignored it. what happened? >> i do not want to talk about a specific company. you have to have a layered approach to your security. network, gateway, how you use information. that is something we do for target and others. >> there was a report that target should have caught it earlier. given the amount of money that companies are spending on cyber security, if they cannot detect a breach that big, what is the state of the cyber security industry? >> look at the layered approach that companies need to take. rather than a deploy one solution, you need to look at the layered approach. are you training your employees adequately? do you have a triangulated approach across your users and in permission? >> right now you see cyber criminals who are much more patient and persistent. >> more patient than they were? >> in 2013, you see an increase in the target attacks. they are much more sophisticated and they are much more patient. they are going for the big payday. >> quite interesting. some people have called it a cyber security bubble. what does a ceo do? >> you have to know what is important to you and what information by your employees and customers you want to protect. you have to make the visibility of that a core initiative. it cannot be regulated to i.t. it has to be critical to what you do every day. >> in terms of a breach, you talk about the size of them. what are the commonalities besides the scope? >> it depends on what they are going after. are they going after a consumer like my mother? or are they going after corporate assets? on the consumer side, they use those engineering and patience to get information. on the enterprise side, depending on who is going after you, they could be going after intellectual property and ransom-ware. they could encrypt your files and get you to pay ransom to get them. >> symantec is in the middle of a transition. your ceo was recently fired. what happened? >> i can say that the board is very active in looking for the right candidate. it will lead the company through the final years of its transformation. in terms of why our ceo was let go, we have no new information on the announcement. >> you are in the midst of an enormous corporate overhaul of stop you change the way that sales people are compensated. you have change the product outlook. things have come and gone. how do you manage during this time when you have a threat changing? >> one of the things we did last year is restructure the sales force. we distributed our program for our key partners. there was a lot of heavy lifting. as you go through that, there is a lot of adversity and change. you have to stay pertinent and leadership in the areas that you do business in. you have to be able to bounce that fairly well stop >> how is mobile changing for you? >> mobile changes where information is being consumed. bring your devices to work. people bring their phone into their work and they ask to get it working for their corporate e-mail. there are solutions that allow that concept. certain acts can get encrypted. whether you have mobile distribution by your employees. all of that bring services and solutions that the meds bring to the market. >> that was the coo of symantec, steven gillette. it is time for the bwest byte. >> $400 million. it is buried in the comcast file about this proposed merger. one lines says that comcast expects approximately $400 million in expense efficiencies. the merged company will spend a whole lot less on technology. that is bad news for high-tech companies. >> who are those companies? >> they are all over the place from cisco to telecommunications companies. >> what is it mean for netflix? >> netflix is trying to get better positioning in the home. all the players, even if they are teamed up with cable or doing it on their own, they are trying to deliver a better experience. the cable guys want to get together because it will mean an advantage for netflix. >> we will be covering this potential deal throughout the day. the transition will lead to $1.5 billion. >> big profits for comcast. >> thanks for watching. >> hello and welcome to the smart medicine show. we have a great show today. if you have pain or know someone who has pain, joint pain or back pain or if you suffer from arthritis or fibromyalgia, stay with us for the next half-hour.