>> live from pier three in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. our focus is on innovation and technology, and the future of business. let's get straight to the rundown. companies like facebook and walmart are developing the facial record -- regulars and technology to be used from everything from security to advertising in google now owns the cheetah and other robots from boston dynamics as it buys it isr robotics company

all part of a secret company project. and silicon valley turns its attention to style as the players like apple and facebook commission the first -- the world top architects to design new headquarters. >> worst to the lead, facial commission technology could be that -- one of the next big things from facebook to walmart, and they are working on it did not only some technology getting closer to widespread use, it is also getting closer to government regulation. starting in february, the u.s. commerce department will hold meetings with industry and privacy advocates to draft a voluntary code of conduct for facial recognition products. scanning -- agood good scanning faces for ads. cory johnson is joins us from new york. >> it could be really big. in some ways it already is, but

we are starting to see as processing power goes way down, and security concerns go way up, a lot of people look at this as a way to solve a letter problem's. i think in places where we have seen it, and government security that actually use this, like in las vegas, where they do not want people counting cards when they have used facial working knowledge -- facial recognition that bills you for a long time. it is about to get much broader. >> how exactly did facial recognition work? other different types of technologies >? , the imageront-end of someone's face is captured, and then algorithms look for where things are. look for the eyes, nose, the mouth. you start to find things with those figure points that make the face particularly unique. that is when you compared to a database and match the identity. the ability to do all that

processing on the fly is what makes it much more accessible. when that technology was there years ago, the processing hour wasn't. now it is involved in desktops and everywhere else. of conferees re: spell -- the buddies are planning to use this technology? >> facebook is planning to use this for tagging and marketing purposes. walmart says they're using it only for security at their facilities right now. apple and google are looking at this to unlock phones in the same way that apple has a thumb print on their new iphone 5 and they're hoping to look at this in a different way so that the photos who you are. finally, lockheed martin is using this with specific government security military uses. they may be the leader in the field because that is where the leap -- feel has been up to this point. >> thank you.

if you recognize the face in that graphic but i want to bring in our washington correspondent who's been looking into the regulation side of this. the process about of the commerce department and how this is going to work. testesident obama actually the commerce department to look into this as well as well as the number of privacy issues come a that was back in 2012. holder multi-stake process, and so the commerce department is going to bring it industry groups, and also privacy advocates. they will be getting in february, the whole is to have a convict agreement by june. it will be voluntary, but if the companies find -- sign on, they could be subject to oversight by the fdic. whole thing reminds me of the mayor nor to report -- of

the minority report. and a lot of company's are expired temerity with this -- arts parenting with this. internet giants can match photos to individuals in the facebook tagging system. for the business side of this, one research firm estimates the global market for racial -- facial recognition but it's could reach several billion dollars by 2018. privacy is a concern if there is some really strict regulations. that number could change. >> are you expecting any controversy here, any tension at these meetings? >> absolutely. this is a very controversial topic them and you retailers sitting next to privacy advocates. privacyates he gets -- advocates ask you because still be on a miss in public. we talked to one of the pioneers of this industry, he says there needs to be some piece to this. transparency in

the industry, at the level of the customers. we're not talking about the knology with minor impact with society we're talking about technology with district of consequences. group makes the case that regulation could slow the technology rated walmart is looking at it, apple is looking at a cost that will be part of their argument. >> has there been any pushback from lawmakers who want to see tough privacy rules? privacy always a hot button issue, and i'm assuming there will be people who are not happy about this. >> they're not really talking about legislation so much, they are the stakeholder process take place. senator al franken who is a big privacy advocate in congress did send a letter voicing his concerns to the commerce department.

his point is that this data is permanent. it is not like credit cards or bank account numbers. want to get into the wrong hands it is not very easy for you to change your face. it is something he is voicing concerns about at this point. a number of lawmakers also back in the spring expressed some concerns over global glass and facial recognition with that. they did take that off the table and say they did not included, but hackers are trying to grade some work around there. it will take a hot topic. >> thank you for that update, we will be watching. google is expanding its arsenal of robots with the new acquisition to find out why boston dynamics and a wildcat robot is a smart target for the search giant. you on "bloomberg west," can always watch a streaming on your phone, tablet, and a bloomberg.tv. ♪

," ihis is "bloomberg west am emily chang. google is grabbing another company for its robotics arsenal. the search giant acquiring dynamics,te -- austin known for creating a machine that can run and walk like a cheetah. founder about the plans for glass and robotics. >> when it's not going to be on the market? >> next year. >> can you tell me anything about the robot stuff you're working on? >> that will be best left for andy. >> not a lot of information there. so what is former android hae

there?y working on i believe this company boston dynamics was spun out of something that was going on at m.i.t.. you are familiar with this project, and it is totally mind blowing and bills with these robots can do. >> boston dynamics was founded by an m.i.t. professor roulette -- gave up his tenure and left m.i.t. to pursue his vision to create some of the coolest robots in the world. flies in mocha motion -- they specialize and roccin locomotion. it captures their imagination when i show these to my students. it is on the cutting edge with what you can do in a challenging environment today. >> we are looking at how they

move right now, but what are some of the practical applications about his robots? it seems like something that the military should be buying, not google. >> i do know that boston dynamics has done a number of contact for the military, for example they are building a robot called atlas which is being used something that is something called the robotics challenge. pricere competing for a to build a robot that can use tools, quite above allers, and responded disasters in areas like after the fukushima disaster. these are robots that can interact with the physical world and a very powerful and capable way. that would be relevant to the military, but i think there are a range of civilian applications. anything that involves going out to the field, disaster response situations. interesting.

i want to bring in jon erlichman. you spoke with the google heads. there been so much speculation about what these robotics companies could be working toward and perhaps a production line, long-term google manufacturing supply-chain, what is looking most likely at this point? >> some people don't do that the big dog could track down some of those amazon drones, a new form of amazon versus google. there are a couple of things to highlight. ofgle does make lots acquisitions and all sorts of different areas. we shouldn't be trying to sort of tie this back toward what google has been traditionally. were buildingals a moat around its advertising business. the deals they do now coupled with some of the various projects we talk about, from driverless cars to the global glass, which highlighted the

bear, to balloons that are powering the internet, google fiber, all of these are google looking for its next leg of growth. a lot of times the conversation of what google is becoming is more like a new version of ge. looking for those seven growth -- looking for those new legs of growth as opposed to tying this back to what google has been in the past. we just don't know yet. they have done it lots of robotics deals, but this is a company that is ambitious and is trying to figure out where it's future is going to take it tied to the technology that it can go out and buy because it is google. theohn, you mentioned that founder must be very passionate about this company because that's because the game of his tenure at m.i.t. to work on it. what do you -- budget and compelled them to sell to google? that -- in imagine

19 faculty want to make an impact on the world, and it allowed him to make a greater impact. a long-term investment into the technology of robotics, and if i use the analogy of a self vehicle, they went and hired the very best people in the world to lead that effort. with this acquisition as above the other recent acquisitions, they're getting some of the top superstar talent in the world affiliated with some of these darpa challenges. i don't know where it might lead in terms of the very short-term, but in the long-term it is an investment and the core fundamental technologies of interacting with the world. i have to think that that has a value. >> it is absolutely fascinating, and we will be continuing to watch for any little clues. professor of mechanical engineering at m.i.t., and our

very own jon erlichman, thank you very much both of you. architecturey's revolution. we getting a peek at the plans for tech's stylish new headquarters. ♪

>> this is the early edition of "bloomberg west," i am emily chang. blackberries executive ranks are getting thinner as interim ceo puts his stamp on the company. global public policy mark cameron and others all leaving paid their departures follow those of the cmo, cfo, and coo. blackberry said in september he

would lay off 40% of its workforce. and markfamously again zuckerberg's harvard dorm room, and apple computers were first built and steve job's garage. that is about to change. my partner cory johnson has more from new york. nations most important a, -- is thein the but most important economic engine, as far and i card register, it is a joke -- as far as architecture, it is a joke. paul global or explained in a jittery it issue -- in the january issue of vanity fair. this is a great piece. i think that this these captured

silicon valley better than any magazine article i've ever read. describe what silicon valley looks like. >> the most amazing thing to be about silicon valley is that it looks mostly like any other place. you have stanford in the mountains, and that is pretty nice, but most of it is kind of a banal suburb. you expect some magic, but it is not there. >> i have lived there for 15 years now, and it is kind of amazing. i was a money manager for a while, and i would go to let the companies that would never make headlines, and they were inevitably in a strip mall, and little place you could park your car and there would be 30 people there, but they would be a huge company. >> silicon valley at the beginning was very opportunistic. these guys started in garages, and then when they moved the next level they just took what office place they could find.

>> i think one of the things you influence.the intel they have a corporate culture about being cheap, and not flashy in any way. >> you are right there. that set a tone for some of the first big companies. they didn't do anything but expand the little building they had. that is taking advantage of what grand rapids was offering in terms of furniture in the 1970's, which was cubicles, cubicles command more cubicles. ' final jobs appearance was all about this incredible design. >> he set the tone for

everything, and knew how to up the nk. -- ante. he knew how to up the ante in and even apple's existing quarters are a little bit different than the competition. they are little bit sleeker, and little more refined, not much, but he really dreamed of something that would translate the apple athletic into the architectural scale. >> this is on an old hewlett- packard owned site. a little ironic. i wonder, this is hard to imagine to work again. -- work in. >> i love the ambition of it, and i love that he wanted to raise the architectural level of silicon valley, but i do not think he fully understood that a building is not a gargantuan

ipod. it is not an object, it is much more complicated that involves a lot more inconsistency and a certain amount of mass. -- link is a perfect shape shape,g is a perfect huge, bigger than the pentagon. it will not encourage interaction, which what he and the architect say it is being designed to do. >> a really interesting facebook reddit, and at amazon project that you're not too fond of, but i thought it was older interesting that you really identify twitter as possibly the most interesting and important future of technology, why? >> what twitter is doing, as a work environment it is really good, but not in itself very different from google and others. a lot of the other companies that have designed lose lively structured work

environments. they took over three floors in an old industrial warehouse type building in downtown friends ever cisco and ape art of the downtown area -- and urban.ty silicon valley hate people outside of san francisco. that is an urban building in an urban place. a end up with a different type of technology. valley hatedlicon the city and what it represented, but all of the workers who are under 30 say i want to live in the city with a do not want to live in the valley, they want to live in the city. andge number of startups they are in the valley. we are at the beginning of a seismic shift. the really huge companies are not going to move, but a lot of the others are. -- >> look at this

he's in vanity fair, thank you so much. >> we will be right back with more of "bloomberg west," talking code next. ♪

>> this is the early addition of "bloomberg west," i am emily chang. now, for your bloomberg top headlines. the fda is taking aim at antibacterial soap. under a new rule proposal the to will require many factors prove that the popular soaps are safe and effective. there's no evidence that antibacterial soap is better than regular sub, and it says there may be long-term health risks in using it. isretary of state john kerry in vietnam for meetings on climate change. while there he also talked about china's new defense zones.

china should not try to extend the zone further south, where it has territory disputes with the anon and the philippines. and china is calling its mission to the moon a success after its unmanned moon rover sent back pictures of the moon surface. china became the third spacecraft to land a craft on the moon over the weekend. the next launch is scheduled for 2017. krisher, to others, celebrity signed up for the code.org initiative. >> learning the skills isn't important for your furniture, it is important for our countries future. if we want america to stay on the cutting edge, we need a known americans like you to master the tools and technology that will change the way we do just about everything. the nonprofit organization

got 15 million students in 100 countries to sit down for an hour long coding session. of five students in the united states participated in the event. can this translate into many more hours of computer science education? guysbeen talking to you from the very beginning about this, and it is great to see you getting traction. how do you feel about the numbers so far? >> this has been the most amazing week of my life. one week ago i was up at 2:00 a.m., and we had 35,000 classrooms signed up to do this our code, and all i could think was one of the servers can't handle it? in history has opened up to the amount of uses we were going to happen. >> you had more girls participate in this hour of code didn't -- that in the last 70 years of computer science, is that true? >> absolutely.

more girls expanded -- experience better science last week than in the history of it. >> how to get teachers to do that going forward? >> one of the great things we do with the hour of code is we are not recruit the students, we recruited the teachers. they have an even number of boys and girls, but we did not actually go out to go out for the girls, the teachers didn't and they brought in equal ratios because that is what you have in math classes at the gross classes. this has given us free nude optimism in the potential of the american teacher. >> the other people that you have recruited personally, i know that you guys have been the boots on the ground getting these people to join you, mark zuckerberg, bill gates, jack orsi come i have they given you any feedback about this process? mark zuckerberg has been there from the very beginning. we are hard -- it is hard to tell you apart. >> everyone has opened us with

open arms -- welcomed us with open arms. they're been very few people who thought this is not a good idea, because who is against teaching technology to kids? >> how you get them to continue their support? >> we have a long-term plan aired in we started about a year go, and we wanted to change the face of commuters that computer science and america. this is not an easy task. schools don't not had he does, there are not enough teachers did you discover even with the offer gives do not want to take it. state education does not recognize it. we have to help the schools, and we had to make it cool. the hardest part of that is how to make it cool. >> how have the kids received it? a class that they don't want to take? >> we have had over the top

backg -- comments coming saying that the girls are doing this all weekend long. >> how do you make it an established curriculum? i did turn one hour of code into many hours of code, for many years? schoolnered with the districts, we have partnerships with both chicago and new york come into the top three district in the company that country, and we announced a program to give classroom awards to teachers for every teacher that puts that are classroom -- puts it in their classroom. >>? where does that money come from? >> mark zuckerberg, and other investors. >> do you find yourself in a lot of red tape? >> some have been easier than others. chicago and new york have been rather easy, but there've been others that have not been, so we

locals will say that they are interested. >> it is the holiday season, and i've been buying gifts for some little kids have and i had trouble finding some stuff that i could give them which would encourage them or expose them to coding. exposeas for gifts to kids to coding? >> there is a gourd called robot turtles that just came out where you are writing codes that move these turtles on the board. that is a great one. ipad apps, and then the code.org website itself has not just one hours worth, and an ongoing set of problems that kids are actually really getting hooked on. it is fun. can turnow how you that into a gift, but is a great activity for families to do. >> congratulations again.

we will be watching you for many more hours of code going forward. thank you for joining us. 24 states across the united ines see a big opportunity droves. we will tell you how they are competing for a slice of the drone pipe. if you miss any of our interviews can now watch us on apple tv, it is a brand new experience. ♪

>> this is "bloomberg west," i'm emily chang. jeff bezos is testing drones for delivery, and now many local governments see a business opportunity in droves. 24 states are vying for permission to build and run testing facilities for commercial drones. -- ita says that plans to plans to select six sites this month.

one example of commercial drones drone, thewest spy maverick. the drones design takes an innovative approach to self. observer andound looks like a circling bird of prey. here's the newest intelligence gathering tool. ♪

what the future holds. now turning to bitcoin. if you want to bet long on the virtual currency, what better way than to put them in your retirement account? that is what we are looking at -- on day six of our 12 days of bitcoin. it were up to me i would say no. you have been digging into a fund that lets able put it going into their retirement account? >> let me jump to the end of the

and just tell you that this is a story that caught my eye initially because i saw fidelity allows that going retirement accounts. i thought that that sounded insane. market who runs a second and who is now starting a new bitcoin investment trust has said himself that that coin is an incredibly in -- risky investment. you either end up with nothing, or very meaningful returns. right now we are looking at a bit quite little less than a $800 -- a bit quite a little less than $800. $1200, but it did not hit that. some people trade on ebay, it is that type of currency,/commodity

/trade. notlity decided they would carry these retirement accounts. in any case, it is still interesting to look at the bitcoin investment trust as sort of an etf per bitcoin, although it will not be an exchange traded fund for several years. this is only for accredited investors. this is in for grandma to put her retirement in, you have to be an institution or have more than $1 million in pretty liquid funds in order to get into this. you can go in for a couple of other financial service indirectlyand then invest in bitcoin. the minimum there is $25,000. bitcoin,lso just by a

or fractions of bitcoin for well under $1000. >> great to know. thank you very much. >> thank you. the hobbit is back in theaters, and desolated the competition. is it really all good news for warner bros. pictures? we will take a look at the holiday box office next. ♪

>> this is the early edition of "bloomberg west," i'm emily chang. avagoore-based chipmaker is buying lsi. also $4.6 in cash and billion in investments from partners.

had a monster opening weekend rate it is not all good news for warner bros. pictures, the studio that distributed the film. it missed the $85 million mark at the first hobbit film achieved on opening weekend. jon erlichman is back with more on today's new hollywood. a curious title with the second hobbit movie. >> that could be a story in itself. the holiday season so important, also sometimes deciding if it was good or not to release. , big weekend for "the hobbit" perhaps not as big as some had thought, what is your reaction? solid weekend, $74 million is a big big number, it

is a little below expectations, and allow the first edition, but is beginning to be the busy holiday season. what are the busiest we've seen over the past several years, so this is a big franchise, it is getting a lot of marketing support. we think it will play well in the united states market, and most important for these big franchise movies is the international market. that is become such a big part of the movie business, it really does make or break the movie. >> let's talk about what is happening in north america. this is a time when people have entered us -- endless entertainment options. what is going to happen in the box office this year? >> hollywood has been hanging in there pretty well with box office receipts so far. coming into this holiday season, docs office attendance was about as flat as well. what we are hoping here if you're a hollywood executive is some of the biggest movies

coming here in the last several weeks are going to be really important. there are 12 major releases in the month of december or the traditional hollywood, that is more than we have seen in the last dozen years or so. it is really going to be a key driver for the overall ox office this year. >> in the early days of 3-d, that was seen as a potential peoplentiator, a way for to come to the theater. in the case of the hobbit film, about half of the people sought in 3-d. what does that tell you? >> what we have learned from 3-d over the past several years is that it really is movie specific. the 3-d effects really do enhance the moviegoer a variance, and that gets out, and moviegoers will pay for it. the new normal for the percentage of box office coming from 3-d is somewhere in that 45% to 55% range certainly below where we saw "avatar," the first big success.

incremental dollars to both hollywood and to the theater owners. >> paul sweeney, always appreciate your insight. i send it back to you, emily. some breakinghave news. the nsa's phone surveillance program is probably unconstitutional, we have a ruling. the plaintiff can probably show that this program violates the fourth amendment which is the right to privacy. a gun -- a judge has ruled that it is probably unconstitutional which means a lawsuit can continue. we'll continue to bring any details as we have been but but this could be a violation of the fourth amendment. we will have more of "bloomberg west," after this. ♪

>> welcome back to "bloomberg -- quick update on the breaking news. a u.s. judge has ruled that the nsa phone surveillance program, the one that was revealed by the former contractor edwards noted could be unconstitutional, and could violate the fourth amendment. that is the right to privacy. this means that a pending lawsuit can go forward because this judge has ruled that this program by the nsa is probably unconstitutional. we will continue to cover the story on bluebird television throughout the day. --y tuned for anymore in details as we have them. it is time for on the markets, 56 past the hour. i'm going to get straight to olivia sterns in new york. >> one company in the news

today, tesla. car company launched its chinese website earlier this morning. what is the plan here? they don't sell the cars in china yet, is it to get the pre- orders? >> it is to gauge how much demand is going to be. elon musk has said that china is really a wild card in their expansion strategy. they will be taking $40,000 $200,000ons for a model as our model acts. they could get as many as 5000, or it could be more, or could be less. they are very few taxes, are expecting at least some demand that their, -- demade

nd there, about half of what they see in europe. we got to speak to the man behind the model, and what the is pretty behind the design was. >> this happened four years ago as a clean sheet of paper. design process usually starts ,ith some sort of inspiration and for the model s it really began with an idea of how to capture efficiency. we started with a whole new drivetrain of a whole new architecture by whole new drawing. the us version came a little bit from looking at athletes, and trained they are to winning the game. that is the story of efficiency. at the time i was influenced by

the tour de france, and the bikers who really had zero body fat on them. i was trying to translate that idea into a sculpture, where an individual could look at the car and realize that the car had no access. looking at the mystique, there is no access and there is beatable musculature, and i tried to capture that in the model s. this shoulders of other hunches, the stance, and the solidity that was not excess body weight. it could go an incredible distance, but also be able to sprint. that really translated into exactly what tesla, and what the model s does.

that doesn't for on the market, we will be back -- does it for on the markets. "money moves," starts right now. ♪ ," andcome to "money moves i am deirdre bolton. we let you know what is going on in private equity and more. hedge funds means $300 million just to break even, and that is from the head of a group that will be joining us with more on the business of hedge funds in just a few minutes, and we are going to show you how you can use a virtual currency to save for later, and dumping gold