>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. i am emily chang. ahead this hour -- amazon trying to turn its drone delivery team into a reality. the company just filed with the faa, working on delivering packages less than five pounds. it is a company with no assets, no revenue, and just one employee. its shares plunged in the second half of trading after rising more than 3000% in the last two

months. we try to uncover whether this company actually exists. and microsoft ceo such in a della outlined his company's strategy in a memo to employees. he says that organizational challenges are needed as microsoft focuses on mobility, cloud, and mobile. pc sales are down, and tablets sales are starting to fall for the first time ever. amazon asking the federal aviation administration for special drone testing permission. the e-commerce giant says its drone scanned flight 60 miles per hour and they want to test them outside the federal government's current restrictions. this is to speed up a plan that would deliver packages to your door via drone. this literally just happened.

what exactly is amazon asking for? >> amazon is asking the government for leeway in terms of how it is testing the use drones jeff bezos was to use for delivering packages. so right now, the testing of drones is centered on a few areas. amazon is saying let us do it in our own backyard, if you will. >> you're talking about the octocopter. people have said this is not happening a time soon. other people of been more optimistic. i don't know -- is it a few years out. >> in this document, they revealed for the faa, they talked about how they have some that can fly 50 miles per hour

carrying a five-pound package. they talk about how large portions of the packages they deliver every day are very light, so they lend themselves to this sort of delivery. i do not know if having these drones will be dropping dead at your house anytime soon -- >> that could be quite a few packages. how does this fit into amazon's broader vision of taking risks and world domination? it seems like that is what they want. >> a thing here is speed of delivery and shrinking the amount of time between someone pressing by that and the package arrives at the first up. building fulfillment centers, closer and closer to big metropolitan hubs, trying to get them closer to people's houses. this is an extension of that. drones coming from these

warehouses to drop off a package. it kind of seems out of science fiction almost, but jeff bezos was criticized a little bit when he used "60 minutes" to show this off as a publicity stunt. but they continue to show that they are serious. >> and they have been testing out there grocery -- their grocery delivery service. i am actually a prime fresh customer. it has been interesting. the groceries come super fast. and you can order non-grocery items and get them in your amazon fresh delivery bag. so, they're really moving fast when it comes to getting things to your door faster. >> yeah, absolutely. their business has grown dramatically. just in the past week, if you think about the different things they are dealing with -- they have this ongoing battle with e-book book publishers.

they are being sued by the government over child apps, for in-app purchases on kindle tablets, things like that. they are everywhere. >> jeff bezos, the ceo, his ambitions are as big as ever. thank you so much. i want to talk to you a little bit about cynk technologies. we mentioned this on our early show. it has never made a dime. but as of today it is worth more than aol, verifone, amd, and the number of technology companies. shares have risen more than 3000% in the last two months. at one point they were up more than 33,000%. it was a penny stock back in may. at there are signs that the party may come to a crashing end. shares ended just under $14. they did hit a high today before the 37% plunge.

it bills itself as a special marketplace. the company is headquartered in belize, incorporated in nevada, and list say single employee, the ceo. what is going on here? it dropped 20-something percent right after we had a conversation on our show. people are seemingly wising up, and yet this thing is worth $4 billion when the product is unknown. is there more to this company? >> it is astonishing, emily. we have spent a lot of time try to figure out exactly what is going on with this company. you go to the otc markets group website. they say, buyer beware. questions about fraud, spamming people. we tried to track down their

headquarters in belize. we spoke to someone in the office building who said, we know nothing about that suite number, that company. we have not been able to track down the single employee listed. no revenue, as you pointed out. huge mystery as to what is driving the stock. it is certainly getting a lot of attention. and people are taking a closer look. we will certainly be paying more attention to a going forward. >> there are reports, tom, that there was a barrage of tweets in june saying the stock was on the way out. the stock was going up. stock was going up. and that may have been was started driving this thing up. >> we are in an environment where people are looking for what is the next big thing in tech? what is the next big thing in social? what is the next big thing in digital, on the web?

people are looking for places to invest. obviously there were a lot of people who got behind this. as you said, this as a market value greater than amd or aol, several other big tech companies. a lot of people bought into the hype on some level, thinking there was something there. seemingly out of the blue, it has come onto everyone's radar screen today. i think it is a testament to the environment we are seeing and it is a technology sector where stocks are going up and up and up and everyone is wondering when they are coming down. >> it is interesting when you talk about a bubble in valuations. is facebook overvalued? is twitter overvalued? but here is a company as far as we know, no assets, no revenue. someone made a lot of money on this. this is not a joke. >> i shudder to think the people who will lose money on it.

we have not been able to verify any information other than what we saw in the filings. we are trying to track down this company, what exactly they do. you get on their website, they offer you information about how you can get in touch with celebrities and venture capitalists. it is something that people might find intriguing. as you dig deeper, they are asking for information, to deposit funds into a paypal account. there are aspects of the website that do not work properly. the basic information that you would need, even if you were willing to give away your money for such a questionable venture. >> right. has the sec said anything? is there apparent fraud? >> i can't speak to that

question. we have tried to reach out to the sec. they are not commenting on the issue. you have to think someone is taking a look at this given the rise in the stock and the potential that someone is going to lose a lot of money here. >> all right, tom giles. we will keep an eye on this. tom giles, thank you. satya nadella says nothing is off the tablet when it comes to changing the culture at microsoft. hear more from his letter to employees, next. we are streaming on bloomberg.com, apple tv, and amazon fire tv. ♪

>> welcome back to "bloomberg west." i'm emily chang. the sec is bringing charges against amazon. they are saying that they do not implement measures to prevent

children from buying items on their parent's account. amazon offered refunds for unwanted purchases. in a new memo to employees, satya nadella writes "we will reinvent productivity to empower every person and organization on the planet to do more and achieve more." nadella also saw that microsoft sees plenty of opportunity in mobile. he says in the next few years we will see many more categories above. microsoft will be on the forefront. this comes amid a new report that microsoft may still have a bright router selling its windows operating system. sales fell just under one percent in the second quarter, the smallest quarterly drop in

two years. and this as the tablet shipments declined for the first time ever. what is the future of tablets? pc? microsoft? joining us from boston, we have the ibc chief analyst. the pc may be alive, but it sounds like the tablet is dying? what is going on? >> what you're finding is these categories are settling out. it was an interesting dialogue for the last few years. people needed these lean back consumption devices. what we are seeing are these tablets are propagated many, many different types. it does not give you the lean forward that you need, especially in a business

environment. we expected this. we see it is starting to happen. we see it is starting to stabilize. we are seeing the consumer segment. what you will see in the future is a shorter lifecycles, people upgrading faster. i think you will see stabilization on the pc side. >> what do you think? is there more hope for pc than tablets? >> pc is in a tough spot. >> every time someone predicts the death of it -- >> pc's are not dead. that story is an old, crazy story. we need to look at the resettlement of what is going on. the very beginning of the year,

i wrote a column called the post-tablet era. because i think the signs were starting to show up even then we were going to see this tablet markets that allow. the other thing we have to bring into this story are smart phones. all of these categories start to blend together. when you talk about having a five-and-a-half inch screen, six inch screen, like we will see with the iphone 6 and samsung note, you ask, why do i need a tablet? maybe the best combination of devices is a large phone and a pc. that becomes the ideal combination. >> and anecdotally just for myself, when i am on the go, i use my phone. when i want to get work done, i use my laptop. i do not really use my tablet. i want to get to this memo from

satya nadella. it was bold, inspirational. it was very long. what is your take? what are you pulling out of it? >> what i pull out of it -- what i thought was fascinating was his acknowledgment the tech industry does not look to the past. it looks to innovation. it looks to the future. i see stocks coming out and saying -- i disagree with your opening comments a little bit saying it is all about services. i think microsoft is all about services. they are about enterprise, consumer services. that is the language of how people get things done. they want to unlock the value of the services in addition to things like link, sharepoint, skype, one drive. i think what they want to do is differentiate on microsoft products.

that is a brighter light on microsoft devices. this segmenting things into the cloud, moving to the cloud, i think it is a continuation of a long strategy, and frankly a very good articulation of the fact that microsoft wants to participate on all kinds of devices with their services. >> and yet they are putting resources behind surface pro 3. this is the tablet they have lost a billion dollars on. >> the thing with surface pro 3 -- they are calling it a tablet. i think they should be calling it a hybrid. it is really one of these two in one devices. >> it is more like a laptop? >> calling it two in one implies it is 50% tc and 50% tablet.

it is not. these are 95% pc and five percent tablet. that is fine. yes, they are competing, but they are not competing that much. there is plenty of opportunity. i completely agree with crawford's assessment. i think this is a very smart move by microsoft. they are setting themselves up to be able to provide services regardless of the underlying platform. that is where they differentiate themselves from both google and apple. both of those companies are much more closed. they are not as willing to open up their services to people. microsoft is saying, you know what? we will continue to do our our own os, but we will do these other devices. we will do office on android. >> is nadella the guy who will

turn microsoft around in a reasonable time? >> i am very optimistic, emily. people are excited at microsoft. he is trying to drive more innovation at microsoft. as bob said, the next few years will show as weather an end to end solution or modular works. microsoft was to take advantage of this modular world. nadella is moving there through services. i am very optimistic he could turn the ship. >> all right. thank you both for watching. we will be right back. ♪

>> welcome back to "bloomberg west." i am emily chang. and more questions about a uber driver on a high-speed chase. his latest ride in washington, d.c. was like an episode of "cops." the driver took off to avoid a taxi inspector and ran red lights, racing down the highway. he and a fellow passenger even tried to get the driver to slow down. the passengers got out when the driver was ordered on in a bit ramp. uber says the driver was fired. a kickstarter campaign to make potato salad seems to have lost nearly $30,000 overnight. on friday, it had raised over $37,000 to make potato salad. we reached out to the

kickstarter for comment, but we did not get a response. and netflix is looking for someone to watch movies and tv and describe them and add keywords to enhance netflix recommendations. they will also work on algorithms to work with a viewer's watching history. the catch is it is in the u.k.. the stub does not exist in the united states. new rules that could impact your summer travel plans. you can watch us on bloomberg.com, apple tv, and amazon fire tv. >> time now for bloomberg television on the markets. i am julie hyman. resumption of the declines we saw earlier in the week after a pause it yesterday, set off by concerns over financial

instability in portugal linked to its second-largest lender. we did see those losses shrink a bit by the end of the session, but it down across the board for the major averages. ♪

>> you are watching "bloomberg west," where we focus on innovation, technology, and the future of business. i'm emily chang. if you're heading out of town, charger relict run x. the tsa is raising security for some passengers at u.s. airports and it involves mobile devices. we are joined now from reagan national airport to explain why your phone needs to be on when you go through security. what's the latest? >> hi, emily. the big question we are asking is did they find a phone bomb. that is something we don't have the answer for. at this point in time, tsa has not named a reason or specific

threat or incident for the new rules. all we know right now is u.s. authorities have heightened the alert for potential terrorist activity from al qaeda stemming from yemen or syria, and some worry that could be a u.s. airliner. the department of homeland security sunday announced a directive requiring u.s.-bound travelers from europe, africa, and the middle east to power on their phones and prove they are real and not disguised explosives when they go through security as they are about to embark on the plains to the united states. now according to bloomberg news, that rule is being expanded to domestic flights here in the united states, according to two people familiar with the matter. they were not allowed to say their names. we asked tsa officers if they do about the new domestic requirement. they said they did not know, but something we all know is the tsa

has quite a few of rules on the travelers. in 2001, the shoe inspection requirement from the shoe bomber flight in 2001. 2006, we had the limits of carry-on liquids from the liquid explosives plot that was foiled by british police. in 2014, we have the potential for having to turn on mobile phones, a ban on uncharged mobile devices on airplanes. no explanation, again, as to why this is, but the message should travelers is make sure the phones are charged. they are taking this very seriously, no sweet talking your way out of this one, emily. >> would've the phone is not charged? what happens? >> if the phone is not charged, you have to throw it out or figure out a way to send it to wherever you are going. so if you are going to the airport earlier, find a spot to

charge your phone. but if you are like me and show up in the last moment, you may be out of luck. some airlines have arty disclose how they plan to deal with this. british airways says they will actually pay to help you ship your phone to your destination. if you cannot go through security, go to the agent and they will help you. virgin airlines say they will not help you, that it's up to you to cover the cost. american airlines has said if you want to take extra time to charge your phone, they will help you rebook on a new flight free of charge. but who really wants that, emily? make sure that you charge your phone. >> maybe tsa should set up a charging station, right? >> maybe they should. right now, all the charging stations are past security. at this point in time, it sounds like they don't want that burden. they are viewing this as a potential threat. the charging will have to be the burden of the travelers. >> at reagan national airport, thank you so much.

for more on what specific threats could be hiding in mobile devices and how it could impact travel plans, we talked to eric hansen, the senior policy adviser of the u.s. travel association. nobody has said why they are doing this, but did they find a phone bomb somewhere? is that why this is happening? >> there are concerns that that technology may have been developed, that there are now ways for bad actors to plant explosives in small electronic devices. they can be hollowed out. they may be difficult to detect with current x-ray machines. there don't seem to be any specifics that are in the general public at this time. >> why can't all the machines that are already there detect this? should we be worried they cannot if the phone is off? >> well, they can. they can be difficult to tell whether or not the electronics are the native electronics that are supposed to be inside the cell phone or tablet or if it's

actually explosives implanted in a hollowed-out device. because it's difficult to tell if there are questions or discrepancies, the tsa has decided they will have extra checks to power on devices just to make sure it's not something that could threaten to bring down airplanes. >> first it was international travelers, now it's domestic travelers. do you think this is going to ramp up? are we going to see more and more of this? >> i think tsa more and more is starting to do more selective process for screening. if you remember the shoe bomber or the underwear bomber or the liquid plot, all of those security measures to guard against those threats were carried out in a one-size-fits-all fashion. everybody had to take off their shoes and take out their liquids. now tsa is employing a more risk-based approach, targeting high-threat airports and high-threat individuals.

these extra securities will be targeted on those individuals or those areas that may pose a higher risk. i don't think you will really impact everyday travelers. it's not something that you can count on 100% to happen at the airport. it is something to keep in mind and prepare for just in case. >> what is the threat level right now? i know we have been on heightened alert for travel to certain countries. as the threat level been raised? >> i'm not aware it has been raised. i know intelligence has sparked these new procedures. it is probably a change of the landscape more so than a heightened threat as of a specific plot. i really think we are living in the same world as before, except there is a new technology that perhaps could pose a threat. tsa is guarding against that. >> all right, eric hansen, senior policy director of the u.s. travel association, thank

you for sharing your thoughts. netflix scored big at the emmy nominations, getting nods for best drama and comedy. can the streaming service when the top prize? that's next. ♪

>> welcome back to "bloomberg west." i'm emily chang. netflix more than doubled down on emmy nods, nominated for 31 emmys, up from 14 last year. they are in are the running for six of the top categories for "house of cards" and "orange is the new black." hbo led the pack with 99 nominations. we want to revisit a story. amazon has been sued by the u.s. federal trade commission by allegedly making it too easy for children to make purchases on mobile apps without their parent's permission.

the ftc says that amazon charged parents millions in unauthorized payments for in-app purchases. amazon says they have given refunds for unwanted or justice. joining us now is bloomberg's industry directive for north american research. paul, if i had access to my mom's amazon account, i might go crazy, too. what exactly happened? >> with four kids, i know how i can happen. >> it's kind of a nightmare. >> it is, and it involves a rental controls. i think the issue for amazon and even apple that has already come to an agreement with the ftc, this is not a big issue for them, it is only tens of millions of refunds. clearly it's a public relations issue for amazon and apple that they want to stay ahead of to mature does not become a problem as it relates to their position with consumers and parents. >> will kinds of things were kids buying?

>> all kinds of goods and services within apps. when somebody is playing a game that requires them to buy something for a dollar here or dollar there as part of the game, a lot of those purchases can become very seamless within the app, sometimes to seamless if you're a parent. it requires a fair amount of control on the part of the app developer, on the part of amazon, and on the part of the parent as well. it has been an issue won the fringe, i would argue, for a lot of these app games in particular. a lot of the folks, the platform, whether amazon or apple, they need to stay on top of it. >> do we know how much the ftc is alleging amazon made off this? >> we don't, but just a point of reference, i think the fine and some of the restitution in terms of return fees that apple paid was about $32 million. again, it's a relatively small

number for a company the size of amazon. it is not necessarily a p&l risk for them. it is more public relations they want to stay ahead of. what amazon is claiming is they are in fact abiding by the agreement that apple agreed to with the ftc in terms of how they police this issue. from amazon's perspective, they feel like they are in compliance. obviously, the ftc feels differently. we will see what kind of compromise they come to. >> amazon keeps 30% of all in-app purchases, but what have they said? they say they are in compliance? >> they have been generally pretty quiet just in the immediate term, the news of the suit just came out today. i suspect they will obviously look to work with the ftc for a resolution on this. they deal with the federal trade commission on a wide variety of matters across all of their

business lines. this is something that, given the relatively small financial impact to amazon, i suspect they will negotiate in good faith with the ftc to try to get this behind them. >> all right, paul sweeney, thank you so much for sharing that developing story with us. taskrabbit shows off a new look and some new mobile apps. we will talk with the ceo of the errand-running company next. ♪

>> i'm emily chang, and this is "bloomberg west," on bloomberg television, streaming on your tablet, and bloomberg.com. taskrabbit has revamped its website and mobile apps to match clients and mobile helpers. clients can look for help for everything cleaning up the house on the picking up dinner, dog food, you name it.

how does taskrabbit work? we look at a day in the life of one of taskrabbit's taskers? helmet on. feet set. just another day at the office for justin. >> in an average day, i might do 15 deliveries. >> he is a professional errand runner, doing chores for people who find him on taskrabbit. he does housekeeping to sushi delivery. prices range from a few dollars to hundreds, and taskrabbit takes their cut. it is a new era of sharing. if you need to rent a bicycle, you can do that on spin list. for now, only about 10% of taskrabbit's taskers do enough

tasks to make a living. the rest are part-timers. back in traffic, justin has been pedaling hard. in a typical day, he earns a few hundred bucks. his task today? picking up something in the ferry building, picking up cookies, and picking up a diaper bag. >> i can do whatever i want as long as i stay professional on the task. >> so, what does the new and improved taskrabbit launch today involve? with me is the founder and ceo. >> thanks for having me. >> what does it involve? >> we have been working on it for a while. we launched the new model in london the past six months. we saw huge growth in the u.s. market over the last 12 months. we acquired 1.25 million new users. >> is it an algorithm thing?

>> on the new taskrabbit, even before you leave the app or close the website, you know who you are working with, how much you will pay, and when it will get done. it's a major investment in the matching algorithm and scheduling communications app, and we have made pricing and payment super easy. >> give us an overall number of taskers and users. >> in the u.s., we have 30,000 taskers, we're live in 30 cities now. it has been tremendous growth. with the evolution of the new product, it will much more efficiently match supply and demand. >> we have talked about how big this business can become. is it more of a niche thing? >> what we are seeing is the majority of tasks are really happening in and around the home. with the new taskrabbit, we focused in on home services.

we have always been a trusted leader in the home services category. on the new taskrabbit, there is handyman, housecleaning, help shopping, and deliveries. it is those four categories that are making up the most. we have made it simpler. >> i'm sure it's mostly mundane tasks, like buying something or cleaning house. what is the most expensive or crazy task that has ever been on taskrabbit? >> as a new mom, i know how hard it is to pull everything together sometimes. we had somebody post "help me plan my 4-year-old's zebra-themed birthday party." i thought that was fabulous. with my upcoming birthday party, that will be the new thing. >> you had the idea for founding this when you could not get dog food for yourself. >> that's right. it was a cold boston evening, february 2008. i was out of dog food and i

thought there has to be somebody in my neighborhood who can help me with this job. >> amazon is reportedly launching a local listing and marketplace site later this year. how big a threat is that? >> i love seeing these bigger institutions come in and really help us with the market. there is definitely a need for these trusted home services. having amazon even think about potentially coming into play in this space is exciting. >> what are your plans for expansion? >> london was the last six months, our first international market. we will have more global expansion in the next year or so. we're pretty excited about all that is ahead with the new taskrabbit. >> all right, thank you so much for joining us. it is time now for the bwest byte, where we focus on one number that tells a lot. jon erlichman is in sun valley for a company conference. jon, what have you got? >> how about $1800?

that is the price of some very stylized google. diane von furstenberg is a regular here in sun valley. a couple years ago she started talking with the google gang. we have seen sergey brin make some appearances on the runway in new york with google glass being a big part of it. they worked on coming out with branded google glass, more fashionable. of course, you have to buy the original google glass, $1500, then you get a little style. she was coming out today and sporting her first pair of the stylized diane von furstenberg google glass. there is more of what she said. what are your business expectations for them? >> i don't know. it was a great collaboration and i love working with, you know,

technology. is just the beginning, you know. yes, it started here, two years ago. >> there you go, emily. sometimes we talk about deals, mergers. here is a conversation that led to google glasses. >> you know, it if anybody can make google glass fashionable, it is dvf. i mean, come on. they look pretty good. >> well, yeah. it does not sound like she is sure exactly on the all purpose wear. there is a lot of white water rafting here, and i don't know that google glass works for that so far. it is interesting that fashion accessories are here and technology is present. beyond google glass, watches can be found. we had a conversation with david kenney of the weather company

who is sporting some samsung smart watch here, paul jacobs from qualcomm. qualcomm has made a big push into smart watches. yesterday, we talked about how tim cook seemed a little offended that a bloomberg news reporter was asking questions holding a samsung device. i don't know if tim cook is keeping an eye on the smart watches that people are sporting, but i think they are smart, innovative people who want to show off some of their gear, plus they know the cameras are around and they may get some pictures, too. >> i'm not quite sure if they would look as good on anyone else as they do on her. on the subject of deals, has anything happened? what is the biggest news? >> yeah, bob iger of disney when we asked today said, "you tell me what's going on." i think there always are a number of discussions that pop up in the press surrounding an event like this.

not to say there is nothing happening. we find ourselves right smack in the middle of two major transactions, as we have highlighted. the fact you have this at&t and directv and the comcast-time warner deal. how could you not wonder about everybody else thinking about where the chips will fall. dish this week came out against the comcast-time warner deal. the broadcasters have been pretty quiet overall about where this is. but we will see. >> all right, jon erlichman, watching disney ceo bob iger walking in, jeffrey katzenberg, michael dell. we are continuing to follow whether you can bring any more scoops. thank you, jon, senior west coast correspondent in sun valley. thank you so much for watching this edition of "bloomberg west." get all the latest headlines all the time at bloomberg.com. ♪

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