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tv   Bloomberg West  Bloomberg  March 29, 2016 11:00pm-12:01am EDT

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♪ mark: i am mark crumpton, you're watching "bloomberg west." let's get a check of bloomberg first word news. mark kirk of illinois became the first republican senator to meet with supreme court nominee merrick garland. >> by leading by example i want to show how we can make this constitutional process go forward. >> he is one of the first three to say they should hold hearings on merrick garland's nomination. florida police have charged donald trump's campaign manager with battery. corey lindau ski grabbed her when she was trying to ask a question during a rally.
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trump says he is innocent of the charge. brazil's biggest political party is formally known as a coalition. move could head off and peach men and a corruption scandal. and an egyptian national is in custody after hijacking a flight and forcing it to land in cyprus. he was wearing a flank explosive -- officials say the man was wearing a week explosive belt and was trying to communicate with his ex-wife. everyone on board the plane was released or escaped before the man surrendered. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. from new york, i am mark crumpton. bloomberg west is next. ♪
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♪ cory: i'm cory johnson, in for emily chang, and mrs. bloomberg west. -- this is bloomberg west. coming up, the u.s. government have dropped his legal case against apple, but should they work with the security flaws not found in the iphone -- now found in the iphone? and soundcard launches a premium streaming service commitment doesn't match the biggest players in the space? i will sit down with the ceo. but first to our lead. countless questions remain one day after the department of justice dropping charges in the case against apple related to the san bernardino shooters iphone. it is counted as a win for tim cook, boosting shares more than 2% in trading. it may have had more to do with the fed. but it is a complicated story. apple never had to give in to the government request. but the government found a way
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and without apples how it may have exposed a security vulnerability. the lawsuit may be over by the constitutional privacy questions have just begun. >> what was interesting in the apple case with the overreach by the fbi. they do not ask for assistance in cracking this particular phone, they asked for a backdoor they could use on hundreds, thousands, perhaps millions of phones, even remotely. so we think the fbi will come again with a request, perhaps a little more modest. but the working group needs to understand encryption, the important role in place in every aspect of your life and then fashion changes if appropriate that are limited in their scope so as not to endanger the ability of you to have and keep your personal records. >> now that the fbi has a way into the iphone, doesn't have an obligation to give the key to apple? >> is a great question. your cia, your nsa has had countless methods, countless tools to hack into computers and other things that are otherwise
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private for as long as they have existed, the enigma in world war ii. they generally keep those tools generally classified in secret. those are the methods that are most how close. this would be no different. a tool like this is held close so that nobody knows there is a vulnerability. it is more likely one that can be taken advantage only if you have the phone in your possession and can disassemble it, and hack it, if you well. i do not think the american people are afraid of the fbi having that tool. >> that was congressman darrell issa speaking. you grown that he brought a key issues disaster -- he brought up some key issues.
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we speak to several experts. >> we should all be concerned about these issues, court to our founding principles and our democracy. i listened intently yesterday, and of all the aspects they disclosed, the question i kept asking was why are they telling us that they did it at all? >> why are they telling us? i think that they needed a reason to drop this case. i do not think this is the right case for the fbi to push forward because they were asking technology companies to create, new code, which they think is dangerous. i think they realize that this is not something that technology companies will back down on, because the democracy will not survive if we do.
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cory: is the case of a terrorist who had multiple murderers u.s. soil, if that is not the right case for the guy and the justice department, what is? neema: this case has never been about one iphone. we saw the fbi requested the assistance of new or other cases, and we can expect it will still be a foot from the department of justice to break into these phones. members of congress and the public have a right to be concerned, not only that their privacy will be undermined by the very security of the devices that we rely on for medical records, to send e-mails, to send loved ones text are going
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to be undermined by our government. >> the case from the fbi was specifically about this one iphone. they made it very clear that this was about just this phone, just this case, and this was as simple as a search warrant for this one phone. what makes you think it is any more than that? neema: the reality is that the legal precedent set in the case could be used in any case. it could be used in an investigation of a drug crime or misdemeanor. when the government is asking is for the authority to force private companies to essentially undo the security features that have lived in their own products. that is fundamentally with the case has been about. cory: in terms of the hacking of this phone, do you think they
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will always have this capability? >> i hope so. we pay the government a lot of money to do this. there are a number of governments and organizations out there that have the ability to get information on any of the iphones out there today. >> even the new ones with the latest encryption? >> nothing is 100%. what we trying to do here is raise the bar. right now it is way too cheap and easy to get this information off the phone, and it needs to be difficult and targeted. cory: i am concerned about a society where law enforcement does not have any ability to find anything if we decide as a society that things like search warrant's are illegal. if it was kept in a filing cabinet and can be limited in a certain way, just inside it was legal to do that kind of search. neema: we have to think about the integrity of our electronic devices. what the fbi was asking was something that many other security specialists said were actions that would undermine all of our products. to the extent that the apartment justice has discovered a vulnerability and not sure of it to be passed, that is a hole that exist for all consumers and members of the public. that is something we may need to be concerned about.
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cory: should the government be required to share this vulnerability with apple? neema: yes. it is something we in the hacker community call responsible disclosure and it is something we do every day to protect all of us. cory: thank you very much. we appreciate your time. european lawmakers are already working on their own framework for encryption or for limited encryption. we are following the story from london. >> the privacy debate that has raged on in the u.s. between the government and apple is also being fought on the other side of the atlantic. here in europe, the demand by some governments to have stronger powers to access data has been growing louder after
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tragic bombings in brussels and the weight of violence. tech companies such as apple, google, facebook have already voiced their concerns, worrying again about the president set by -- the precedent set by tech urging law enforcement agencies to hack people smart phones and computers. not all european countries are seeking those types of powers. germany and the netherlands are going to -- going vocal with opposition to such backdoors. but while apple may have delayed this the toss over privacy , versus national security is set to continue further afield as well as at home. cory: up next, soundcloud launching a service similar to
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spotify and apple music. the ceo explains why is different and who will survive the streaming wars. ♪
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♪ cory: soundcloud is hopping on premium streaming service bandwagon. launched the committee's first paying service -- we sat down with the ceo and asked him. what makes soundcloud standout from the competition? >> you started from the creator community from the beginning. it has gone directly to the
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source which is the creators. we play over 12 million creators a month, which has attracted 75 million unique listeners a -- 170 5 million unique listeners a month. the creative community shares content freely on the form and that has given us much larger capital they in any other service out there. wait a minute, why are you saying creators instead of musicians? >> it is broad. it could be podcasters, djs, anybody. it really could be any kind of creator. cory: i will give you that. what makes this different from apple, spotify, or pandora? >> the subscription service we are launching for $9.99 a month is similar and different in many ways. you get some same things would expect ad-free.
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ync is the most requested service by our users. but we also have an expanded library. everything from the biggest hits to the deepest underground tract that just came out. is the only service in the world where you can get that full breadth of content. everything from the industry giants to the emerging creators in one place you have the stars from yesterday, today and tomorrow in one service. cory: i want to talk about the struggles you are seeing. i wonder what your take is on apple music. let's not be kind. when you look at what succeeds and fails, what do you see? >> i think apple was in some ways a little late to come into streaming, but as i said, we are very early in the market overall.
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them helping the market grow, not just from the perspective of their service but in terms of focusing strongly from a device perspective is good. choice for consumers is always good. at soundcloud, we have always wanted to build the music service that could contain the entire world creativity. all of the different creators out there. that is something that is appealing to the world and what we're focused on. cory: let me ask you about pandora. a different service to be sure, but also going through struggles with the ceo suddenly out this week. the founder comes back as ceo again. tim westergren. i wonder, if you were looking at pandora, what do you think that they need to do to right the ship? >> what they have done well is peoples intent that capture peoples intent to listen to radio on their mobile device. wanting to enjoy a long, uninterrupted listening session. that is something we have noticed with our users as well. they want to be able to just open the app, and with a few clicks listen to a great stream of music.
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that is why we have also released features like track stations that allow you to take the 125 million tracks, start a station from that, and then have it play for as long as you want. cory: can you think of anything where they are focused on a different radio experience? is there a downside to having the ability to pick individual to? >> consumers today want to listen in different ways. i have for myself, sometimes i
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want to be lazy and just let like them and sometimes i open it up and went to go to something specific. some days i want to listen to a top 40, sometimes i just want to listen to something not available in the system yet. that is universal for most music listeners. on soundcloud, we are trying to cover all those different cases. depending on what your mood is you can have the music experience that you want. cory: that was soundcloud ceo alex young. coming up, we will talk about what investors are worried about and what is next for the struggling solar company. ♪
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♪ cory: the battle ceo of our mask is offered to resign. the forward blackberry ceo at the center of a radel with a wireless charging company. one faction wants him out, another want him in. final settlement is pending.
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china's leadership summit cap -- wrapped up last week. we have a look at the latest five-year plan on china's clean energy. china revising down its targets for carbon intensity, aiming for cleaner and more efficient growth. they also have cap total energy consumption. a large version of that is nonfossil sources. one surprise is that -- is something bloomberg's energy analyst justin woo has his eyes on. >> to speak to china's policy circles, most people would say that last 10 years are about wind and solar, and the next 10 will be about electric vehicles. in 2015 they will be the biggest -- in 2016, they will be the biggest market for electric
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vehicles and they believe the batteries that go into the vehicles are the key strategic emerging industry. it is something they want to support in order to revise the economy. cory: we will certainly be keeping an eye on china and electric vehicles. sun edison could be facing the end of the line. shares plunged another 55%, on the edge of seeking bankruptcy protection. if you look at the long-term trading of the stock, it has been a disaster. terraform global, a holding that controls sun edison, things are looking bad at this company. we look at my go to source. my go-to source for understanding what is going on in the world of solar energy.
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edison, look at sun what is going on. what is the fundamental problem with this business outlook that was so promising to investors? benjamin: thank you for having me on. it is shocking what is going on with sun edison in a short amount of time. the fundamental issue, as you are addressing, is that the coupling of fundamental value of assets on sun edison's books from the devaluation that has been given by the equity markets. sun edison's management has not been able to effectively communicate and do so with a consistent transparency what the value of those assets are. we have had this conflation of a development company with a company that owns development assets and solar space. cory: what they have done in financing a spinoff the assets, claim they have a certain value based on for certain cash flows. maybe those cash flows, on closer examination, they were
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not they seemed. benjamin: that could be the case. a bigger problem is they have not communicated with the values of this cash flows are. solar has some perceived complexities in the form of tax equity, which is the investment tax credit. it is another layer that institutional investors are not familiar with even when you look at solar abs and other instruments in the debt markets that are familiar to investors, they need to it comfortable -- get comfortable with the same risks within the solar context. sunedison has not been able to communicate that across the lifecycle of the asset. that makes this transparent for those that are trying to get to institutional investors. cory: benjamin, i mean, they had hoped there would be great
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revenue growth, but i go into my bloomberg terminal you can see the revenue growth from 2007 to 2014 is great, but down from where they were. they were unable to generate consistent revenue growth. regimen: yes. and cory i think this gets exactly back to when i was saying before about having operating assets and trying to communicate the value of those and then tapping the public targets, tapping other vehicles through debt financing and structured finance, and through yield codes that they cannot get control of. cory: talk about it debt. if you look at something, that distribution. you can see how much they have over the past year, nearly 600 million the year after that. most of the death is coming due -- most of the debt is coming due soon, and that does not include the off-balance-sheet things where they do not even put it on there. a billion do this year, billion do next, nearly 600 million after that. much of that is coming too soon. they have 49% of this not even on that. it seems to be this notion of a
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bankruptcy filing is about their inability to deal with this. benjamin: again, this comes back to the development pipeline being used to service the debt load taken on for existing operating's. they do have consistent low risk cash flows. cory: final note from the bloomberg, if you go back to last july you have the stock at $10 billion, and now it virtually not existant. if you take it forward into today, it is even uglier when i entered 2016. $210 million. from about that shows to show 10 million. you -- that goes to show you what happens. t-rex, benjamin cowan, i really appreciate you coming. benjamin: thank you. cory: legislation in china can make it harder for foreign
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companies to get access to the company's great firewall. details coming next. if you like bloomberg news, check us out on bloomberg radio,, the bloomberg radio app. more coming up after this. ♪
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cory: this is bloomberg west, i am in for emily chang. this is cory johnson. major u.s. tech companies, and google, facebook, twitter, all blocked in china. joining me live from hong kong. gordon. gordon, always good to see you. what are these roles and how were they different?
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gordon: sorry, i did not hear that. cory: what are the new roles and how do they differ from the devious regime of roles? gordon: this basically creates and internet because they are no longer able to provide access to websites with foreign domain names. that means unless those foreign domain sites are given approval they are not going to be accessed in china. these are just proposed rules. this is one in a series of attempts to cut china off from the internet. they tried it five years ago and it did not work. cory: it seems like it would would not help and it seems like it is focused on individuals and not on helping
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businesses do business. gordon: absolutely. the premier, the czar of the economy, talks about innovation economy because you have manufacturing contracting and investment losing efficacy, so he is looking to the internet and he has something called the internet plus strategy. well how can you have that , strategy if you don't have an internet? it doesn't make sense. cory: is this saber rattling? gordon: i think it is. because, you know, they have tried this before and obviously they have not carried through on their threats. the we've got to remember this is consistent with a line of attempts over the last of three or four months to really close off china. for instance, they had rules that would prohibit foreign websites from publishing in china. it goes on and on. the leader of the country is severing china from the rest of the world. this is what he wants. people say, oh, he is a
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reformer. but only if you think a 1950's style economy is progress. that's reform then. otherwise, it's not. cory: so you think this is coming from different voices in the economy? gordon: absolutely. this comes from the politburo standing committee and the seven guys who run china because it is consistent with a number of initiatives we have seen during xi's rule, which started in november of 2012. if we go back to the era of hu jintao, we saw some of this, but not at the pace of all of these rules being proposed one right after the other, all with the intent of trying to synthesize china. for instance, this last week they said they could not use foreign names for streets. this is an indication of the closing of the chinese mind. cory: in deed it seems to be that way. it seems to suggest also that it is going to sell rate through it.
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ping seems to be tightening his noose in the way china communicates with the rest of the world. gordon: really, what they're trying to do is build up their own internet companies. so you have what is called baidu, alibaba. others. so, they're going toward that line to try to shut of china from the rest of the world. but there is something called the world trade organization. china is a member of it. and these rules do not sit easy with their wto obligations. so for instance, the january rules i talked about are completely wto violative. and i think that when we do the analysis on the proposed rules i have just been talking about, domain names, those are also going to be violet if. -- in violation. there will be push back, but this is clearly the direction they are going. cory: it we had talked to jeff weiner and some reaction about how linkedin might be affected.
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check out jeff weiner here. [video clip] jeff: we have 18 million members. when we started roughly a year ago we had roughly 4 million members over 10 years. we are now 18 million members. we have seen that substantially grow by virtue of localizing our core offering. cory: so, the go along to get along approach of linkedin, is that also potentially in peril because of this rule in china? gordon: i think that is what china is trying to do, to force foreign companies to create content in china. they'll of course, that would violate the january rules, but that's the only approach i think, in the short term, because clearly china does not want to have foreign generated content on chinese websites. so that, i suppose it sounds
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terrible, but yes, i think that is the only thing companies can do right now. cory: gordon chang, thank you very much. author of "the coming collapse of china." turning to the u.s. markets. janet yellen suggested no rate hike anytime in the near future. we take a look. >> i have two words ringing in my head right now, and those words are "proceed cautiously." janet yellen was talking about interest rate rises or may be the lack thereof. in the next several months or so. taking a look at what has happened in the markets, the s&p, dow, nasdaq, all in a broad rally, going higher. the nasdaq up the most by about 1.7% here. and, if we look intraday on this day of trade, we can actually see that when janet yellen said those words, it gave a lift to the markets. right around 12:20 p.m., you see that leg up here.
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and we just really never looked act. sincesdaq up the most march 11 and at its highest level since january 5. let's take a look at some of the specific stocks. for tech stocks, you can see these were the biggest gainers, on the order of 2% or more. with apple of course up to .4%. the latest there, the doj shelving a court hearing with apple in the case of the iphone. that was the case of the san bernardino terrorists. microsoft getting a boost from ubs. ubs going bullish on the company's cloud service. amazon also 2.4% up. facebook up by 2.1%. news coming off of instagram of course, facebook owns instagram, instagram saying that they will increase the amount of time users can post videos to 60 seconds. on the flipside, let's talk about some laggards. first off, over to ebay ending
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flat, but it had fallen as much as 3%. barclays cutting the company to underweight from it will wait saying that fundamental improvement is lacking. tesla ending flat as well. it had fallen by as much as 2%. mixed analyst calls after the model three unveiling. but also, ubs going the other way, saying that higher not betions just might met. but overall, a positive day. for every one stock down, three stocks were up. cory: thank you very much. coming up, robo advisors -- yes, that's a big thing. changing the entire personal finance sector. we will have the hot star who has been defying bc caution with success that is being defined differently from other sectors.
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we talk about funding that suggests the success of the company. and here is a hint. this person will be sleeping with the sharks. ♪
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♪ cory: on today's financial board, automated startup funding. some silicon valley companies are having trouble with valuations and are seeing them cut. firms are truly disrupting financial services. john joins us from new york. i have to tell you, on our bloomberg radio broadcast, just about every financial services firm we talked to of any size talks about what you guys are doing with robo advisors. what is it that has these big companies so concerned?
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john: it's great to hear that people are talking about us. we have been -- cory: you are making them nervous. john: we have been building i think a crazy flow of business financial services that turns the model on its head, providing unbiased advice and better service than people have had in the past. and this is threatening to the incumbents, i think. with the disruption in the base. the financing is a big validation we think with the model and with the us as the leaders in this movement. cory: i am not terribly interested in the financing. lots of people get money and i say you're not coming on the show just because you got money. although it is interesting in this environment given the size of your business. give us an and occasion of that
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size and of your revenues. john: we don't talk about revenues. cory: oh, come on, just between us. well, today we have 3.9 billion under management and 150,000 customers. we have grown customers three times and balances even more than that. january was a volatile month. our fastest-growing month ever and i think it gave people confidence in the business model. we actually had a really good month. cory: so, january, the nasdaq by my recollection, down about 9% and you had more money flowing and then ever before? john: more customers signing up. more deposits from existing customers. ward net deposits from new customers. it was our best month ever until this month. now, march is going to be our best month. we keep growing faster and faster. and that is something investors like to see.
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cory: what are you going to do with the money? john: we are going to build out our original vision of becoming our customer's central financial relationship. we have always said we want to try to use our advice and business to help people do more with their money, make it stretch further, do more with it. to make more of it. and, you can see from recent introduction, like account aggregation, we are giving advice on assets at the same place. and we are giving advice at the same time. where you going? we are also investing in better institutional and advisory business. and we have a new 401(k) business that's growing like crazy from a start in january. cory: if we can, really quickly, we often talk about the money raised or the valuation, but we don't talk a lot about terms. what do the term sheets look like that you rejected and those you accepted? john: we look for really clean term sheets.
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there were a number of offers out there. some higher offers. we took an offer from a great partner, an amazing firm, and i can tell you that part of the deal was that it was a clean term sheet. we value that above any sort of valuation -- no liquidation preferences, no ratchets. john: nothing like that. it is the most common friendly terms you can have. and every one of our rounds has had that same common, friendly structure. we just, like, to us -- we prioritize the value of our shares. i am a common holder. all of my employees are common holders and we put them first. cory: it's interesting, because we see a lot of these customers with late rounds and all kinds of deals. john: that stuff may seem good at the time, but then you get into a rough spot, and all of a sudden, you really regret having that structure. i also think having that structure, once you have got it, your next and investors will
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want to put an end. in your next ones, even worse. that gives us a really strong point when we get to the table. cory: so many things seem like a good deal at the time. great company. thank you for spending some time with us. coming up, microsoft at the annual build conference. why should you care? we are going to dig into why microsoft matters. ♪
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♪ cory: something we are geeking out about, computers inspired by the human brain. at the livermore lab, lawrence livermore, being a large-scale computer with 16 microprocessors, that's a human brain. it's called true north. it burns just 2.5 watts of
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energy. microsoft is working on chips that speed up complex computational tasks. of course, they are always working on that but ibm says true north will be 5-7 years away and ready for commercial use then. they are working on them in the labs at berkeley across the bay from me right now. the annual build conference is upon us. who cares? we care. let me tell you why. here to help me, managing director matt all the way from seattle. sorry about the weather. matt: i love it. cory: microsoft is undergoing this really big change. focusing inward. not the big one-of announcement every two years or so. so, why do we care about this conference? matt: it has for big platforms. windows 10, which they are trying to get to run across all devices. the big cloud azure offering. that is something more and more people are using. behind, you are well
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and nothing else is close. google may be getting there. matt: and microsoft offers office 365, which pulls along the extra cloud. -- the azure cloud. so you are really getting two-for-one. has all been true before this week. what are the new functions? matt: those are the platforms, but i think you're going to see the focus on productivity. they have cortana, which competes with siri, which competes with alexa. so i think there will be a lot announcements in and about cortana. they also have a swift key, which is the way to swipe on any
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device -- in fact, it doesn't work on windows mobile devices. it works on ios and android devices. microsoft has been buying a company to have application intelligence that swift key brings along to the way people interact with their mobile devices. cory: swipe to do what? matt: i can swipe it just to search for something or interact with an application. so, swipe is versus typing into a keyboard. it's a competitor to some of the other things out there. it has been one of the most successful ones both as a user interface and a capability in machine learning and algorithms, all the data science and intelligence we are seeing. and that is another area where we think microsoft is going to have a number of announcement on how they are using machine learning. they use it today. cortana using it in today. cory: in this context, if i could paraphrase, the computers don't learn from what is coming into it without someone saying learn from this.
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matt: here is a good way to think about it. software applications are programmed. intelligent applications are trained. they are trained on data and fancy math models. that is the machine learning. in the future, any application that will be successful will be an intelligent application. powered by data and training. microsoft is all over this trend. they are not alone. amazon has a bunch of things. but i will bet that is a big emphasis. cory: you have a lot of people at uw with a focus on math and science. machine learning. matt: massive focus. there's the amazon professor of machine learning. pedro dominguez wrote a book about all the different styles of machine learning. and on and on. that's a terrific area of depth for the university of washington. and i do think you are absolutely right. there is an interface between microsoft and the university of washington. there is a dedicated lab working on analytics.
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cory: that might explain why amazon came with alexa, which might not have been a product you would have thought of, but it came from uw. great to see you here. great to see you here in sunny san francisco. imagine. time to find out who is having the best day ever today. they will win airbnb's competition for sleeping one night with the sharks. the company is offering a free one night stand -- one night stay. the winner gets to sleep in a circular classroom 30 feet deep in millions of liters of water surrounded by sharks, if you could, in fact sleep, when you are surrounded by sharks. i guess it depends on your shark phobia. that does it for this edition of "bloomberg west." we will see you back here tomorrow. ♪
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? >> this program is a paid presentation for omega xl and is brought to you by great health works. ♪ larry: my name is larry king. i'm here to help on an investigation of entity place the last couple of years. the information that i will provided in the course of the show is relevant to everyone's health and well-being.


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