in san from pier 3 francisco, welcome to the early edition of "bloomberg west." and emily chang. our focus is on innovation, technology, and the future of business. snap chat issues an apology after hackers issued policies information on accounts. is promising an update area some of the biggest nfl games are this weekend. ogle fans may not to see them. we look into how tech is turning the experience upside down. and did the holidays save microsoft's tablets?

web traffic spike, suggesting they are still in demand. and first, to the lead. the snap chat ceo stopped short of a formal apology. 4.6 million user names and phone numbers were posted online. they say in a blog post that they will launch an update to the app. the new version will let users opt out of the find friends feature. this is the future that was exploited to get all of these are details. the ceo also told "today" that they did ignore warnings about potential ballmer ability. >> we thought we had done enough. in a business like this, that is moving so quickly, you spend your time looking backwards and you will kill yourself. >> so, are they doing enough to quiet the storm? we have a special roundtable today. mark milian is here. also, jeffrey hayzlett.

jeff, i want to start with you. would you call this an apology? >> it is not. they have ignored the three a's of pr. acknowledged, address, and a sure. it was embarrassing. it was weak. they have an obligation with social media. transparency and trust is paramount. they are blowing. >> mark, what do you think? this is a different kind of company. the founders 23 years old. he obviously had sympathizers. why not be more contrite? >> these apologies are cookie-cutter. i do not know why he could not just go through the burger moral of saying i'm sorry. it just felt insincere. he is saying that in a business

like this, we cannot look back. you should learn from your mistakes. >> i went back and looked at mark zuckerberg's apologies. early on, i thought we would see the same thing. hisally, in 2006, i found first apology. it was quite contrite. he said we messed this one up. it was newsfeed. he said we did not fill in the proper privacy controls. this is a big mistake and i am sorry. apologizing is not enough. he quickly wanted to do something about it. they are doing better for privacy controls. what do you make of that? >> i have that same list. there are a whole bunch that they could pull. they could use those as their examples. he said, done, we hear you. in this case, they say that no big deal. it is a big deal. names thatnap chat

we can compare with phone numbers. there is a database of phone numbers. i could identify who those people are. very poor in judgment. they are taking it too lightly. most of us were waking -- waiting around to say i told you so. we know that this information is never fully safe. he is a that it is, smart 23-year-old, but start putting systems in place. you're the reason it week in the first place. >> they did just recently hire a ceo from facebook and instagram. sort of like the grown up in the room. there are also people on the board -- one of the advisors is scott cook. had reid at the time, hoffman. are these people not giving him good advice? is he not taking it? >> emily white, for example, her

expertise is creating revenue. learn a lot.e to mark zuckerberg became very quickly a pro in apologizing. he had to do it a lot. so yes, snap chat is going to have to. in the scope of things, this is not the worst security breach. it is phone numbers and usernames. there is no credit cards. >> it is phone numbers. people's phone numbers are online. you cannot easily change that. you can change a password, but not a phone number. >> i would not downplay it. it could be worse. >> even more important, you could put the names of the people -- if you see these names, some of these people would not want that information out. he needs to be taken to the woodshed. the rest of them need to take them out to the woodshed and give him a spanking. take the stuff serious. trust is foremost for holding

onto users. people to information has been released. it is not the worst-case by any means. it is a step towards that. he needs to know that you need to reassure these people. do not be week about it. >> we have seen facebook dealing with privacy today. over and over, privacy has been one of their issues. for snap chat, it may be the same thing. this is an issue of security. it will not go away. do you think there could be long-term consequences? >> without question. it is one thing that people will say the, should i really be doing this? they try to get a lot of people to use it. you might say that it is not that safe, so i will be careful. assume, whatways will happen if my mother sees this? if you go with that in mind, you will probably not do half of the stuff. it does have an impact.

i think that they will have to get better about showing people how you can trust us. that is the key. >> this is a good point. the whole point of snap chat is that the data disappears. you are sending people photos that you do not want to exist. if they are having problems of security, why snap chat at all? --i almost think that being taking security seriously and actually going the extra mile to make sure it is secure, is maybe more important for snap chat than it is for facebook print --. everyone has 5000 facebook friends. they are conscious of how they shared data there. snap chat is designed to implicitly trust them. you give them their most personal pictures. any sort of breach of trust chips away at this company.

they need to keep a hold on that. >> one other thing that was mentioned is that snap chat does not have a bug bouncing program. they actually incentivize hackers to exploit flaws in the software. they reward those people with something that they stop short are, thereey, there are longer-term things that they could do. convey? >> i would go over bird here. -- overboard here. these are the steps that we're going to take to ensure your privacy and trust. you can use us in the future and know that you're safe. i would go find the biggest security expert that i can. i would name them to a commission at -- and a committee. we will put forth new guidelines. i would do those kinds of things or go higher companies to do that and tell the world that

this is what we're doing and make sure that we are stopping. give assent or guarantee. go overboard. >> we will see what happens. if he indeed get the spanking, as you suggested. jeffrey hayzlett, mark milian, thank you both for joining us. week, the consumer electronics show kicks off in las vegas. there is a lot of buzz about products that are being unveiled. we will tell you what to expect from this year's show and you can watch it streaming on your tablet, phone, and bloomberg.com. ♪

this is "bloomberg west."

google last integration is coming to hyundai's luxury sedans. they will offer an app for google glass and other wearable devices. the app can be used for pre-driving operations. alson and mercedes are planning to integrate wearable devices with their cars. it is almost that time of year again with some of the biggest names in tech descending upon the city of sin. we start next week in las vegas. with what we can expect on annual show, i am joined by jon erlichman. you are going to be in the city for this. every year there's a lot of cool stuff. a lot of perky gadgets. i question is, are we going to see anything that will go mainstream? will we see wearable devices that we want to wear? >> that is the place to do it.

we are all interested. they caught our attention. you have been there and we have both spent time there. it is enormous. literally. there are 20,000 product. you have a golf cart. it is hard to see everything. you are getting to a very important point here. of these massive televisions that will be on display and some of the technology we are arty familiar with, some things to watch for our digital health reports. these highlight the fact that you will be seeing digital health companies they're showing off fitness apps and wearables. the wearables category is one that we are still trying to figure out. 3-d printing, what will happen there? television focus. connected cars are a big area as well. you talk about google glass. there are a lot of automakers. they all want to say we are the cool kid.

whether that is a game changer is always tough to say. we will try to find out for it >> i notice tvs. this could be their moment. it is always a who's who of the tech scene. i think bill clinton was there last year. why do people like that -- what did they get out of cest? it may be becoming more irrelevant. it does not have to be at ces. >> if you look at the companies that are present at ces, samsung, sony -- it is an important platform for them. outside of the obvious conversations around things like ofrt phones, in the case samsung, this is a company that has smart refrigerators. a company like qualcomm is trying to lead innovation in new categories as well. i do think that, at the end of the day, the biggest message

that can be learned is from the companies like microsoft and intel. there traditionally tied to the pc. they're trying to battle companies like apple. they do not have a presence to say here is the way some of our software is integrated. this is why we have to shop and make decent sales. those are some themes to watch. >> all right. we will see you in las vegas. thank you so much. the hype around the virtual currency bitcoin may have started to reach its peak. i financial search form listed a position for a junior bitcoin traitor at a hedge fund. the hosting -- the posting read that they are seeking a junior trader for execution and general fund off rations -- operations. matt miller is joining us. if you remember the 12 days of

bitcoin. how could you forget? what does this mean? >> the first thing i thought when i thought was that they won a junior trader. he must already have a senior trader. i know that that got a lot of way. it blew up on twitter. people talked about it this morning. for people who are involved in the bitcoin world, hedge funds have been part of the discussion for a while. there is a lot of bitcoin meet ups here in new york. there is always a good showing of hedge fund employees. they are either trading for themselves or trying to find out more for the hedge fund. there are stories about hedge funds that may be fantasy, but stories that took huge positions back when bitcoin was trading for one dime or a dollar.

then you have the winkle vossen fault meant. -- the winkle vossen involvement involvement.voss >> there is still uncertainty around bitcoin. we sell price fluctuations over the last couple of weeks. >> all the better. huge price fluctuations is exactly what they are looking for. traders love nothing more than mad volatility. that is exactly what you have seen with bitcoin. the only problem really, that i can think of, that i cannot get my head around, is a lack of liquidity in this market. also, lack of exchanges. there are no regulated exchanges. they're not exchanges that allow you to get in and out quickly. whatn execution trader, you want is someone who will come in and take a big position and make a lot of trades throughout the day. they will close the position before they go home.

you want to be flat overnight. if you have read the stories about the bitcoin exchanges, sometimes it takes days to weeks to get your money off of those. people are not lucky enough to get the money off at all. it would be a difficult area. thee noticed quickly that job posting actually had recently been scrubbed to erase all mention of bitcoin. what do you make of that? >> i cannot quite figure that out. they did scrub it. -- the only thing i can think of is possibly that is a red flag for regulators. they wanted to deal with that quickly. we all saw it. it has been on the internet. good luck. >> this out there. matt miller, our expert, thank you. we will be right back. ♪

>> welcome back. the nfl playoffs kick off this weekend. fans in one of the four cities may not get to see it. that's because the game in cincinnati is on the verge of being a blackout on local television unless the game sells out at the stadium. i talked about this with espn vice president and my partner jon erlichman. take a listen to what they had to say about weak ticket sales for the playoff games. >> there was such a cost and also such a demand. the combination of our short demandmbers and the immediately coming up on six days notice, it is a stretch. yes, i think you said it in the tease. home is sonce at

much of a comfortable experience that the nfl is confronting it. the former oakland raider president was talking about how the emphasis of the nfl is on increasing the experience at the games. to make it very attractive for people to spend that hundreds of dollars for tickets. that is what the push poll is. especially on short notice. you do not know what time on saturday or sunday. that is why you are looking at a blackout rule. that was the substance -- subject of a legal entanglement. >> i was talking with amy, the former ceo of the raiders. she thinks the blackout rule is irrelevant. there's an argument for the local communities to continue to have this rule in place. there is a risk in place. these games could be whacked

out. what to the networks think about this? when you go into the end of the regular season and you do not know which teams are going to make the playoffs. that boost your ratings. as he was highlighting, you're left in the situation were not enough people had time to buy tickets. he did not know if their team would make it to the playoffs. this will always be a concern for the networks. it will be a concern for the cable companies as well. how often are we talking these days about the fear of people not signing up for cable or canceling their cable? live sports is the one reason why a lot of people have to hang onto their cable package. the football is at the top of that list. anytime you frustrate fans, that is a big deal. >> what do you think? will they be blacked out or will they sell it in time? >> i think there will be a rush. this is where the local abc --

cbs, fox, and all of the affiliates who are involved, nbc as well, we'll get involved and try to sell up and do the right thing for the local community. is len deluca with jon erlichman. it is time now for on the markets. matt is in new york. >> we want to get you caught up on where the markets are trading this afternoon. a little bit of a turnaround in the index. we are seeing green across the board for the second trading day of the year. this morning, the s&p 500 is unchanged. the dow is showing again at 20 points. the nasdaq is firmly down. a couple of stocks that we are watching, 3-d systems. they are making 3-d printers. they are acquiring gentle giant studios. they make three-dimensional models for entertainment companies. they plan to use the company for action figures in conjunction with films and licensed items. we are also watching micron,

they are falling. the valuation is trading too far ahead of the fundamentals. they expect a solid lead from micron. ♪

>> welcome back. you can also catch is that are later time 6:00 eastern. now for your top headlines. at least six people have been killed and dozens more hurt after clashes flared up in egypt. according to state media, the muslim other hood had a call for mass protest today against the military backed government in cities across egypt. russian resident vladimir putin has made a few rounds on the ski slopes. that is weeks ahead of the winter olympics. he will also be inspecting venues in the coming days. he has found to improve security. a pair of suicide bombings killed three dozen people last month.

chicago once again lead the nation in homicides last year. 416. there are signs of progress. that is down 18% from 2012 and is the lowest since 1965. meantime, the murder rate in new york in the late dropped last year. when this storm approaches like the one in the northeast, there is only one thing on our minds. will there be a snow day? a group of seniors from illinois are using algorithms to predict snow days. our meteorologist bonnie schneider is in new york with all of the details. i am assuming this involves some sort of historical data. how are they doing this? >> they are putting this into an android application. they look at the amount of time that a snowstorm a last and calmly inches of snow are expected. what the temperature is. they created an album that will determine if you're going to get a snow day. it depends on where you're going

to live. if you grow up in a silly community, you know whether or not you are also getting a snow day, no matter how much snow you managed to have to go to school. there is fluctuation too. you have to give the credit to these kids. they have turned it into an app to curb -- predict the weather. >> no historical data. perhaps they could improve their accuracy. we talked about the nfl games earlier. there is a potential blackout. there is one game that is still not sold out. there will be cold temperatures this weekend. how will that affect the game? >> the storm system is pulling away. behind it, we have bitter cold temperatures. really cold wind chills. he can show you some of the games that we have. there is an indoor game and the outdoor temperature does not matter as much. for the ones that are outdoors, there will be cold temperatures below freezing. some in the single digits.

whomber, for those of you love to tailgate, if you will be outside, you're looking at cold wind chills. especially in the upper midwest and here in the northeast. a cold one today as we recover from the blustery snowstorm. this is what it looks like on the road. that is probably earlier today. we are really seeing some tough conditions to travel in. so many flights were canceled. by the time we get to tomorrow, things will be back to normal. be careful shoveling out there. it is not only heavy snow, but it is really cold out there. >> be careful out there. on a schneider, thank you so much for that update. turning now to the cell phone business. if you have sticker shock over your wireless bills, wi-fi may be your best friend. helping to create what may be the cheapest cell phone network. we wrote about this in the weekly edition of bloomberg businessweek. brandon, tell me how exactly this works. you can make calls only on

wi-fi? >> i talked to a company called for public wireless. you have to buy up front for a special version of a new android. you can make a call over the wi-fi network. you you're out of range, borrowed time from sprint. this all works out to a network cost to you of between five dollars and $40. that does not seem that extraordinary. you could do anything with skype now. what is extraordinary that they have made the phone to get a normal dialtone. this is not difficult. it is very difficult to pull off in terms of a business trip. all of the handsets are sold through the carriers. the carriers have a vested interest in the strength of their non-wi-fi networks. >> what about the quality?

sometimes you try to do a skype call or face time on the road. it does not always work. >> the qualities actually better. i talked to the engineers who said they had trouble making sure that the handoff was clean. theory is a much higher capacity network. the voice call sounded better and worse went to one onto sprint. i tested the phone. that is a start up. it is an insignificant part of the market. they are working with serious companies. there are -- what they are part of his this trend were large carriers are recognizing that they have to offload their data on to wi-fi. the networks cannot handle it. china mobile -- 72% of their data goes over wi-fi.

not over a china unique network. -- i spoke to verizon and they are not thinking about this technology at all. they are completely focused on their network. at&t has recognized that wireless is an efficient way to get a signal to people. they are wiring up stadiums. sun life stadium in miami now has antennas all over it. they are dual use. they have lt on one side to make a phone call and they have wi-fi on the other side to make sure that you can upload data. one of the things that we're learning is that after tens of billions of dollars and years -- >> we are losing him there. interesting stuff. you can get some of these plans for just five dollars a month. pretty cheap if you're looking to save some cash.

brendan greeley, thank you for joining us. check out the latest issue, download the businessweek plus app on your ipod or iphone. nighterry is saying good to alicia keys after just a year. are more cuts to come? ♪

>> welcome back. today's plan to launch of the space x rocket has been delayed till monday at the earliest. the company pushed back the launch to conduct more inspections. they will. a satellite into space for a tech communications company. blackberry is parting ways with pop star alicia keys. they hired her to be their global creative director a year

ago. she appeared on stage last january at the launch of the blackberry 10. we're joined now from toronto. hugo, people have been fired before this. now alicia keys. are we expecting more parting of ways? >> more parting of ways? well, 40 500 parting of ways were announced in september. it is the number of jobs that they will cut. that came after a cut of about 5000 deer before. parlance, they have themselves down to the level that they want to be. certainly the jobs that have gone has been in areas of consumer marketing. ist is what the new ceo saying. a get out of the consumer game and focus on the enterprise. to do that, you do not need to 18,000 people that they want have. focus ony are going to

the enterprise, what happens to the consumer? there are a lot of consumers out there who have blackberries. >> indeed. essentially, what you saw with alicia keys is the signal that consumer smart phones are not going to matter as much. at least insofar as they still are, that is what foxconn is going to be doing going forward. essentially, that is a partnership two weeks ago -- it will produce phones and design and market those phones. that will in theory take a lot of risk and liability off of blackberry and put it on to foxconn. that will help to promote the new blackberry ecosystem that is out there. >> we know the blackberry tried to privatize. that did not work. is that something they could still do in the future? >> i think everyone is in a wait and see mode. the sense that i get from

investors is that they are willing to give john 10, who has come out with a different approach or different style, he is much more forthright and honest trade they're willing to give him the benefit of the doubt until next summer. give him a six-nine months. period to work the magic. however, it is august or september of next year and there is nothing -- if there is no sign of improvement, the bears will be howling. they will argue for a breakup of the company. it will be loud and clear. it will be very hard for him to ignore the calls. >> we will be watching. hugo miller, thank you so much. ofll ahead, is the revival the surface tablet happening? a new survey shows that usage

spikes after christmas. we will give you the details. ♪

>> comeback. phone,streaming on your tablet, and bloomberg.com. the year has started off on a

positive note for microsoft surface tablet. a new report says that the share of tablet web traffic generated ice surfaces spiked over the holidays. they tracked the devices on ads from networks that appear before and after christmas. here to discuss the report is matt from the mobile group. a lot of people wanted to write the surface off. are you saying it has a chance of it coming a real established player in the tablet market? >> according to our stats, we believe so. with a reduction in price at the major retailers, we saw three percent increase in surface traffic from six percent of the tablet non-ipad traffic. the price reduction really has allowed the price to gain traction. >> one of the things i found shocking about your report is morethe traffic spiked

than on the google nexus? >> that is correct. that is one of the findings. our report comes from the network of over 300,000 publishers. this was a report that you are referring to. it was five days before christmas. also, five days post-christmas. >> microsoft still has a long way to go. what would you say is the long-term prospect compared to google? we see amazon as a very strong second player. microsoft is really pushing their way to be number three or number four. we really see them as a strong contender. also, there might be other players. not just ipad centric or google centric.

the ipad still dominates the market. what trends will we see in 2014? what we see a true competitor to the ipad? anything that comes even close? >> we will see the ipad is a strong competitor. our numbers say that almost 80% of the tablet traffic is ipad. that is stronger than the sales share. again, we look at the actual stats, not sales stats. we are looking at the kendall. it really gained traction for its price. they are selling at a reduced price, cheaper than the cost of making the device. microsoft did the same thing. they reduced the price and they saw a spike. out,other devices coming we see it as a strong player in the space. >> another interesting thing is

tablets for children. dreamworks is coming out with a new tablet for kids. what can you tell us about it? >> we're seeing that now that the tablet traffic is increasing, they will be specialized for children. there are wearable devices right now. the tablet that children will have will be the same kind of device. kendall as a future for children. it will be a specialized device for children specifically. we will see that in the next few years. >> talk to me about the tablet for kids market. his neck crowded? there is some competition there. or are people using their adult tablets with parental controls? >> anecdotally, i see that friends and family are using their old ipads for their children. they do not care if they drop them or break them.

a stronger, cheaper device will be what parents will be looking for. waterproof. drop proof. also, restricted access to buying and other features. >> we will be watching. thank you. general manager of the mobile group. we will have more of the show after this quick break. ♪

>> welcome back. edition, on the late with luke skywalker's hurt swing across this cap some possible? jaime hyman is trying to find out and they will tell us how today at 3:00. fans out a lot of there. you do not want to miss this. is 56 past the hour. that means that we are on the markets. let's get back to matt in new york. >> but get caught up quickly on the markets. we had gains to start the second trading day of the year. the indexes have turned around.

the s&p 500 is unchanged. the dow is still holding out. ae nasdaq is down about quarter of one percent. automakers have released their december sales. each one of them disappointed. chrysler kicked it off with missing analyst estimates. they were followed by ford, general motors, toyota, nissan -- for more, i am joined by jamie butters. he is in charge of our auto coverage. what happened in december? why did every carmaker disappointed? >> to everyone's surprise, december turned out to be a cold month. >> not usually cold. >> it was a little colder than usual. the thanksgiving holiday drew some sales. weather,did get bad there was not as much time to make it up. or were not enough weekends to make it up. they had across-the-board.

it did not seem like one dealer one company dropped the ball. there just was not as much energy and time in this month. november was extremely strong. best month in cash since february 2007. there has been paid back in december. >> general motors fared the worst with a drop of six percent. why did gm seem to under perform all of the others? >> right. how bad is bad enough? toyota was down when they were supposed to be up. like i said, everyone disappointed. gm has really had some challenges. they have são tomé are selling at good prices. all of the cars, as you have commented, they have improved their quality. it is hard to get chevy buyers

to be used to paying top dollar. they have been able to get really good deals. good prices and good discounts. they cannot get that now. is that a better business for gm to sell fewer vehicles at a better price? maybe it is. it is a shock at the moment. >> they have been hugely successful this year. i am looking forward to seeing the new f1 50. i will see you at the auto show in las vegas. will we see that there? >> we will. for does not talk about it on the record. they show the concept truck and they would not talk about that either. that was going to be their main effort. it will be again this year. they already showed the mustang. this will be a first public show for regular people to see up close. this will be be first time that we see the real f1 50 that it should be very exciting.

it is a high-stakes game. >> i am looking forward to it. the best-selling vehicle for over 30 years. thank you very much. head of our auto coverage. we're on the markets again in 30 minutes. "money moves" is up next. ♪ to money moves, where we focus on alternative assets. i am deirdre bolton. investorsow you what are doing in hedge funds, equity, private estate, and more. financeore, the u.s. and economic editor at the guardian. our in-house private equity expert will tell you what he thinks of joe lieberman joining a pe firm, what it says about the industry, and ben bernanke on how the fed is chan.