>> live from pier 3 in san francisco, welcome to "bloomberg west." i'm cory johnson, in for emily chang. two big stories right now that have a huge impact on the future of business and technology. first, the supreme court ruling against the tv -- streaming dealing areo, potential death blow to aereo's business. we will have a lot more on this big decision, including whether the startup can actually

survive. first i want to get to the google developers conference. the keynote is underway right now. highlights include a preview of the next version of android, one, a l, and android phones.to design what is going on there? levelyou hear the noise -- one of the key things we have seen in the first hour of what google has been showing to the world is there is this need to continue to make the software as thence as important hardware experience. they have been talking about the next generation of android. we know that while there is arguably dominance for google, something like 80% of the market in the first quarter, there is

this need to stay relevant. lot about that, and you can expect they will continue to talk more about all the places that android can touch. a discussion about android on television, android tv -- we will see if more details emerge there. the focus of wearable technology and having android where, software that can go along with watches, and google executives presenting today have had watches on their wrists. >> sounds like a hell of a band there. [laughter] i want to turn back to the aereo story. the supreme court ruling that aereo's business violates broadcasters' copyright. is the court really taking a stand against innovation in pay-tv? -- paid tv? i want to move on.

we have the general partner of benchmark and paul kedrosky here. i want to talk to you about this aereo thing. what do you make of this ruling? >> from the very beginning, this was going to end up in the court system. >> it was designed for that. >> it really is. the bottom line is whether you are looking at big media that is based out of hollywood, or any type of telecommunication threat whatsoever. have two very well prepared, large institutional masses that know how to litigate, know how to lobby, and know-how to win those types of battles. if you go headstrong into either one of those trying to disrupt, you will end up in the courts. >> you have this big investments in uber. uber, surely you guys have thought about the fact -- you probably thought from the beginning, this will run into

issues. something very different about municipal regulation than federal regulation. in municipal regulation, it's very easy for a mayor, a city council to stand up and say, those laws may be outdated, maybe we should revisit them, maybe we should rewrite them. that has happened in d.c., chicago, new york, california, and colorado. that is much harder on a federal level. we tend to have these laws that thened for 200 years and the supreme court tries to retrofit them for what is going on today, and they make a ruling, and that becomes a piece of the puzzle of how those things are viewed. big question, whether there is ever a moment where a federal government can stand up and say, maybe we ought to start from scratch on something. >> the court's majority opinion tossed it back to congress. raised a really

interesting issue in their arguments for the court. it is not just about aereo, it's about cloud computing. dissenting opinion took up issue with that or said that the implications were ominous. it majority opinion saying could be different, the dissenting opinion saying this will be used against the cloud anyway. >> i think it's really important for broader technology. i hate to say this. i agree with justice scalia on this one. the majority tried to define its way out of the problem and say this is a limited decision to what is happening here and should not be seen as having direct implications for broader innovation with respect to cloud services. thisce scalia pointed out is the majority arguing that if it looks like cable tv, we have rules about that very do it must be cable tv. results driven

approach. the court's technology has changed. it is anti-innovation. if something looks enough like the thing that came before, it must be regulated like that. that is inherently antithetical to innovation. we look to provide the same thing at lower cost or much faster or something else. it's not like we are trying to do a completely different thing. innovation is about doing the same old things in new ways. that is the part of the decision that really worried me. >> the notion that this could go not just beyond aereo, but even beyond that. >> it's not something i'm worried about great a lot of the cloud applications would be ones that were caching media that you own. no one owns media, anyway. they stream it. >> so the issues of having an itunes song on multiple servers will not be an issue? seem to be with

the use cases that are going on today. the aereo team brought that argument to the table to try to increase the weight of the decision rather than that being an issue that people were particularly worried about. >> i wonder what the implications are for enterprise software, where there are copyright issues. charge extra,t to and this court decision might get closer to that. >> let's hope every single startup does not find themselves needing lobbyists. that would be a horrible outcome for silicon valley. onstephanie ruhle asked me an earlier show if this was northern california fighting southern california. it was a notion that it was silicon valley versus l.a. it is very much that kind of case. bill talked about the difference between municipal and federal law.

monolithic providers of services who believe that we only need three or four large media companies and the rest of a should pat ourselves on the head and expect this content to come thisg at us, as opposed to idea we are breaking down, aggregating the providers of media and cashers and streamers and all these bits and pieces. these are two very different views of how the world should look over the next year, five years and 10 years. northern california represents that upstart view. southern california represents the federal view of copyright and license holders. a small group of people providing the content to everyone else. that model is breaking down. it is unfortunate that you have to work through the monolithic federal system as opposed to dealing with a problem one municipality at a time. >> if a startup where to come to you today and say i have this really great idea, a new way to present television shows or

, netflix-like or something, does that make it a less interesting investment to you? >> i would not call it the ruling today. i would call it the powers in effect in that market which paul just referred to. take any of our most regulated industries, finance, health care, telecom, media. we are getting to the point where there are three large providers. which wasdd-frank, supposed to help the consumer. worseatures have gotten since.-frank. free checking has gone away. i happen to think this is a bigger topic. the mock receipt and capitalism corrupt one another -- democracy and capitalism corrupt one another if they spent enough time together.

these heavily regulated industries are minefields for startups because market forces are not at play. >> interesting stuff. with me.osky will stay we are talking about the impact of the supreme court's decision on aereo. you can also watch a streaming on your tablet, your phone, and at bloomberg.com. ♪

>> i'm cory johnson. this is "bloomberg west." the supreme court ruling today that aereo's business violates copyright. jon erlichman there at the google i.o. event. you have been covering this aereo story quite a bit. what do you make of today's ruling? >> the broadcasters are pleased

with this decision. you guys talk about this already. people want toe consume video and content, tv and movies in a whole bunch of new ways. i do think that at the end of the day the broadcasters feel like beyond all the subjects surrounding the cloud and cloud technology and what this says about the limit, perhaps more cloud technology going forward, ais was always a story about signal that others are paying for and getting paid yourself for it. potentialink there is to play out in a lower court. we will see what happens. the question of whether or not there could be some kind of compromise between aereo and the broadcasters, certainly that would involve money. the company was always clear there was no plan b, they did not set up a business whereby

ultimately they would be paying these fees that broadcasters get. it is something to watch for sure. me there isseem to great opportunity in this places where there's a lot of regulation. that businesses are more rife for innovation, because they have been protected from it for so long. >> some of them get really good at protecting themselves. yourne if you look at senior team's top talent and you say, what are our competitive advantages? you take a company like comcast and you look at the policy group. these are some of the leading executors in the company. for many of these companies, their ability to lobby and control regulation is their core competitive advantage. call the marketing department or product apartment and say, we need to hustle, what feature should be release?

they call their policy and legal department. oni feel like you and i were conference a while ago. asked a question about bluetooth and he did not know it was. someoned amazing that running a telecommunications company -- it occurred to me that he probably knew everything about the union contract -- >> absolutely. silicon valley is not completely faultless. everyone here likes to believe if you can build something with technology, you should be able to. there is also the libertarian thing. if i can build a technology that will steal all the content that people legitimately paid money to create, that should be ok. i still was impressed by the responsibility that the broadcasters have because they

were given these licenses with a promise to provide free stuff on en't given these licenses with a promise to provide free stuff on the air. why did these licenses exist in the first place? because of scarcities that don't exist now. we are acting partially in defense of -- people try to usurp legislation largely in service of scarcities that don't financing.ok at the billion plus financing. that have been so intensely regulated in the past that now look so ripe for innovation, we will see these very concentrated, very legal theseattles now as heavily protected incumbents try and prevent similar things from happening to them, even if it's not just prankish nests on -- p

rankishness of silicon valley. why in the world do i have to go through this nonsense of process trying to figure out who the nearest doctor available is? 2014, butsurd in these things exist in part because of regulatory capture and all this nonsense. paul kedrosky, bloomberg contributing editor, thank you very much. stay with me for a bit. coming up next, we will talk about the supreme court's landmark ruling and what it can mean for the future of the cloud. ♪

>> welcome back to "bloomberg west." the supreme court's landmark -- we willnst aereo

talk next with jon erlichman. i want to start with paul kedrosky. can you think of any company that might be impacted by this directly? >> not specifically, but on the other hand it's hard to see how you specifically exempt them either. the court try to carve out this exemption and say it does not apply to cloud computing. if you read further on, they say, that is in part because we have not seen a case yet that specifically addresses the copyright act. it is sort of an invitation for someone to say, i see that dropbox is storing all kinds of content. they can e-mail to their friends. maybe this is copyrighted content. performance is the other loaded word in the decision. all of this opens a gigantic trapdoor through which all sorts of legal nonsense will start to flow. you can still find just about

any copyrighted song you can imagine somewhere on youtube. are there implications about this that are different than old copyright law? it is worth pointing out that youtube [indiscernible] had differences for years. that speaks to the reality that technology pushes ahead, whether the content creators are ready for it or not. sometimes you have to go through the court system to get all these things resolved. in terms of who this affects and how it affects them, there are some other players. there were some before aereo, and some now who will continue to watch, pushing into similar territory. i find myself curious about all of the in-house technology being developed or that continues to be developed by the paid tv

distributors. as we watched the story unfold, some wondered, if aereo is victorious, what does that mean for the directv's and comcasts and dishes? could they have their own workaround technology they will put out? since their consumers are interested in that kind of technology, what do they do? do they leave it on the floor, or are there ways to put it to use? >> you are so involved in uber. i'm curious about what the approach has been. has it been a surprise? as you put it, municipal objections? >> not at all. asi said earlier, as long you let corporations work inside of government, you get this corruption type stuff that starts to happen known as regulatory capture. in the local municipality -- >> regulatory capture? >> yes.

in the municipality, the only person really under threat from uber is the taxi owner. the taxi drivers can switch to liberated byy are this. there's only two or three people that are harmed in each city. >> because the taxi ownership is so concentrated? >> concentrated because it is regulated. you can make the argument in places like new york, where there are individuals who pay upwards of a million dollars -- >> and the fact that the medallion is worth so much implies you are not at market equilibrium. you are buying the right into some oligopoly that is protected. at the municipal level, it's really easy to see, the citizens

can have their voices heard. that is originally what happened in washington, d.c. with over -- uber. that is harder on a national level. customers that love aereo cannot really get their voice heard in a quick way against congress or the senate. >> thank you very much. paul kedrosky, i do listen to you. [laughter] thank you very much. >> i know. >> coming up, new smart watches, all kinds of stuff. report from google i/o coming up next. ♪ is 26 minutes after the hour. bloomberg tv is on the markets. i'm julie hyman. take a look at where stocks are trading today. we see a little bit of a rally overall for markets today. a look at some individual stocks as well. general mills is one. the results still missed

analysts's demise. the company said it started a review of its north american manufacturing and distribution. we will have more on the markets in the next hour. ♪

>> you are watching "bloomberg west." i'm cory johnson, in for emily chang. i want to get to google. the new version of android software for smart phones, other devices being discussed in san francisco. wherelichman is live google i/o is taking place. the ceo of ever note and paul kedrosky still with us. what is the biggest thing you have seen come out of the conference today. >> it is still ongoing. the improvements to android are very exciting.

there is a ton of capabilities that we want to take advantage of. >> exciting in what way? >> i believe you, but prove it. we have been huge fans of wearables. google's announcement that the new watches are coming out is fantastic. >> we noticed all the executives wearing these big watches onstage. >> we have been building for smart watches for a while and plan to have an app out on google wear as soon as it is available. there's a lot of things going on there that will fundamentally transform the way we deal with technology. like google and apple are doing interesting things. the announcement a few weeks ago, apple made a big push to become more developer friendly, more extensions, which. -- new language. google is talking about making things more beautiful.

it feels like both companies are trying to play in the other's sandbox. >> paul, what did you see out of this show so far? >> i will echo phil. this back-and-forth, that apple is forcing google to be better. google was forcing apple to be better and more open. that is a wonderful change. in the past, i thought some of the android products were pathetically low some -- loathsome. there are sandbox problems with respect with not allowing apps to talk to each other directly. , andis hugely welcome augurs well in terms of the next generation of apps we will see that will work better on both platforms in terms of allowing process communications. it's hugely important. it was sorely missing from apple in the past. the aesthetics on the android site will help drive adoption around the world. it was one of the points, they

showed penetration of smartphones around the world. it is remarkable how low the penetration is in some places in the world. jon, you are on geek patrol for us today. what are the developers jazzed about as they made that announcement today? >> paul use that word market. it is an important one. almost with a one two three four you get a sense of the markets where google is focusing on. they spend a huge amount of time talking about this new version of android, highlighting the security built into it. that seems like a call to the enterprise, and i'm sure phil has some comments on that. as more businesses adopt phones that are using the android, and this android related push in cars, obviously with the tv initiative they talk about over the last hour and having

software that can fuel a variety of tv's, and getting back to the wearables -- they're looking at all these new markets. spending more time on all of that stuff and maybe less time on smart phones and tablets which are already the established markets. phil's closer to this than i am. i will defer to his expertise. >> i'm still baffled by the wearables size of things. evernotenow what plans has on the wearables side. so far, nothing has been very exciting. >> phil, wearables? >> wearables will change the world, and much faster than people think. all of the current generation stuff is very much companies trying to figure out exactly what wearables will be. >> [indiscernible] >> all of the bracelets,

watches, glasses, clip ons. a natural extension, what is on your car or your refrigerator or tv. int will happen is the times your day when you don't have the benefit of visual intelligence will disappear. five years ago, you only were interacting with the digital world every couple of years when you sat down with your laptop. >> i remember the days of desktops. i'm older than you. >> that was once a day for a few hours. then it became two times a day for 20 minutes each. interactphones, you with the digital world every few minutes. what will happen now when you always have the benefit of digital technology? >> they are talking to android tv, a whole development platform around the tv. i'm struck by the fact that apple has been working on tv. amazon, with their very interesting tv offering. and then you have google designing around that for

android. watchhink the tv and the have a lot more in common than people think. people think these are two totally different things. they are more similar than different. when you design an app, a digital experience -- >> it is more passive? >> you won't have the patience on your tv to think about apps. you just want the information right there. you will not have the patience on your watch to think about apps and files. they are very similar in terms of this ambient, always on delivery of information and delivery of delight. we are figuring out how to do that. idea that we are separating intelligence and presentation. presentation may be the tv or the watch. that i buy. >> paul kedrosky, great stuff. phil libin, great to see you. the supreme court's aereo

decision is grabbing headlines. the court also banning mobile phone searches. we will explain what that means for the mobile phone business. watch is streaming on your ,hone, tablet, bloomberg.com amazon fire tv as well. ♪

>> you are watching "bloomberg west." the supreme court today ruled that aereo's business violates broadcasters' copyrights. joining me now from new york, trish. what do you think? >> he had a lot to say. i think he was pretty pleased. we have seen investors pelased - - pleased. his initial reaction was, this is a situation where he said i believe justice really was served. take a listen. >> we are very pleased.

justice was served. we expected to win, but it certainly feels good to win as decisively as we did. we continue to get paid for our content, we will continue to do that. billion byeive $2 2020 in retransmission fees. all that is important here is that broadcasters and cable content companies and everyone involved in the content producing business gets paid appropriately for their content. >> he went on about what aereo was doing was not technology. aereo made the point that this antenna technology they developed was really just a technological advancement, and not entirely dissimilar to what you saw with rabbit ears on television. this is a technological version of those rabbit ears. he said, it's not about technology. it's about plain and simple theft. was doing was

taking our technology and selling into the consumer. is that appropriate? no. the people that produce the content of the people who should be able to deliver the content to the american public. it should not be done by an illegal third-party. >> that is the crux of his argument there, that this is is creating,cbs and this needs to be something that cbs and other content providers are compensating for. what this all boils down to, the protection of the intellectual property and the fact that he believes you create the content, you get paid for it, plain and simple. he did on to say that think this would be helpful in terms of the retransmission fees and their ability to grow the business going forward. stock trading higher on the news. >> interesting. he did not want us to see the

touchdown dance. >> [laughter] this has been going on for quite a while. i talked to him numerous times over the last year and a half. he was always very optimistic that they would be successful. a big sigh ofhave relief when you get a decision like this out. optimistic. he did have some contingency plans. we talked a little bit about that as well. gone in if it had not our favor, we would have basically been in a situation where we would have had to take other measures. we know what those other measures are. they had talked about pulling off of the overall signal so that aereo would not have been able to broadcast it and just give it to cable companies directly. >> trish regan, thank you very much. the only big tech

decision to come out of the supreme court today. the justices ruled on a major question on privacy rights. the question, should police be able to search the cell phone of a person being arrested? details ons has the the justice's decision. big ruling here. unanimous one. they unanimously said police should not be able to do this. police most of the time we'll have to get a search warrant before they can search a person's mobile phone before making an arrest. the trove of data -- we are not just talking about correspondence -- medical records, photos with times and dates, social media updates, browsing histories that police can get from this smartphone. chief justice roberts writing that decision. he deemed the sensitive data on phones make it an unreasonable search banned under the fourth amendment. here is one of the things he had to say. ago officersde might have occasionally stumbled

across a highly personal items such as a diary. today more than 90% of american adults who own cell phones keep on their person a digital record of nearly every aspect of their lives. this was a surprisingly broad decision, and a unanimous decision. a lot of lower courts saying that police can look through a phone just as they can look through other things they find on a person at the time of an arrest. nearly complete agreement from the justices that cell phone data should be treated differently. >> good stuff, meghan. i want to get back to what is going on at the google conference. joe brown of "wire" magazine joins us. what is your take on what google announced? >> what is really cool is that you are seeing these different platforms, android wear, android couch, android tv -- >> there is no android couch. >> android tv.

all of these things operating on the same android platform. makee will be able to content seamlessly for all these platforms. it's a huge integration move right now. >> how long have we been hearing write once, run anywhere? >> you saw apple give a nod towards this with swift. now android is doing the same thing so that developers can get him as many platforms as -- on a s many platforms as android has. >> is this a big deal? >> it is. i thought the android versus os fight would be that apple would go for the beautiful experience and pc's would go for the power. both companies are forcing each other to do better. >> interesting. little bit more about google. google wants to get behind your dashboard with the android auto product. this will mean for the car and

app makers. we will have more about that on "bloomberg west." catch us streaming on your tablet, phone, bloomberg.com, apple tv and amazon fire tv as well. ♪

>> welcome back to "bloomberg west." exclusivelyr speaks to bloomberg news about being two hours late to a key advertising dinner. the event was hosted by ipg advertising executives. think the, quote, i dinner is unfortunate, how much attention it has gotten. i was late. mayer told the guests she had overslept. she called it a productive set of days. we will turn back to the google annual i/o conference. google just announced a software product for the car.

they are calling it android auto, a voice enabled service that will bring music and apps to your dashboard. us, seniorey joining vice president at the intelligent transportation society of america, and joe brown with us as well. let me start with you, leo. a lot of activity in the getting into the car business. you were talking with bill about regulated industries. you cannot just put anything in a car or dashboard. >> you can't. you are correct. the hard part is integrating the technology into the car. so that there is a seamless experience of applications, services that can be done in a safe way. we do not need to introduce additional safety concerns into the transportation network. android integrated with the vehicle is a tremendous step forward. >> i have a friend in vegas. he drives a limo.

she has wired it so she can watch tv from the front seat of the car, which is an illegal mod. do you think we will see a lot of this stuff or will it be too hard to do with regulation? >> android in the car will be regulated by google and the highway transportation safety agency. announcement is brought to you by the number six and the number two, because the average length of car ownership in the u.s. is six years and the average length of phone ownership is two years. you get android in somebody's car, it is a way to keep people invested. is one of the most interesting studies. muchows that people are more willing to switch off of android than they are ios. >> the flip side of this is also true. one of the biggest problems of getting electronics in the car is that they age so much faster than the car does.

your brand-new system you get in your new car, within six months, it is crappier than what you can get in your phone. this is a way to make sure the experience in your car will be as great as you can get on a phone and keep up. >> i have talked to the car developers about this. they have told me they have separate divisions to design the electronics because they have to iterate so quickly. has there been a big change in terms of the ability of carmakers to welcome these things into the car? >> or has been. it's a concerted effort across the automotive industry to bring software and technology people into their shops, and create greater technology platforms with more capability. it's a real movement within the industry. as everyone on the panel is saying, it is essential because of the time difference in development because they want to control and keep things safe.

important for the auto industry to embrace this. it's also important for the folks like google to embrace the car as well. it will take an ecosystem of companies to figure this out. it's not just a one-time integration. there's a lifecycle we have to manage here. >> [indiscernible] is it nav, is it phone? >> nav is a killer app. google talks about three pitbulls. navigation, communication, entertainment. your phone does all three of these. if you have that doing it as well on the car screen as it does on your phone, you really win. right now our phones are so much more advanced than our cars are. do in termsou guys reallyour product is not an automotive product. do you have to start thinking about those things? >> our product is everything you need to be productive at work. all of your essentials, everyday things. driving into silicon valley

for two or three hours a day, it's torture. >> it's a core part of what we are trying to tackle. the killer app in the car is uber. fromshowed you my uber tab last night. killer is the word. >> let's work on bringing these charges down so people don't have to drive anymore and then internet in the car will get better. >> if you are looking into the future, this is definitely at play at google's version of uber, which is the self driving car. they continue to bolster their ability to recognize voice. you're moving closer and closer to a car that drives itself. libin, thank you very much, and leo mccloskey, the intelligent transportation society of america -- we are all for it. we focus on one number that tells a whole lot. jon erlichman, what do you have? >> houses.

125. the director of engineering at google said today that the average android user checks his or her phone 125 times a day. that is great context for some of the initiatives we are hearing from from google, especially the opportunity that lies with a smart watch and beyond. 125 check my phone at least times during our morning meeting every day. [laughter] is that a suggestion that that is more than it used to be? that is a healthy amount of checking and gives us the idea that maybe there is a better way to be doing it. we will see what happens. >> may be unhealthy. i don't know. thank you very much. it the latest headlines all the time on your phone, which you are probably checking right now, as well as your tablet, radio,rg.com, bloomberg

apple tv, amazon fire tv. see you tomorrow. ♪

>> i am mark crumpton, this is "bottom line." business and economics with a mainstreet perspective. what is next for aereo after today's loss at the supreme court? picks -- and ag bloomberg exclusive, president bill clinton. and the senior fbi director on the battle against financial crime. to our viewers in the united states and those of you joining us from around the world, welcome, we have full coverage of the stocks