>> from pier 3 in san francisco, welcome to the best of "bloomberg west," where we focus on innovation, technology and the future of business. i'm emily chang. every weekend we'll bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. it is premiere battle in the smart phone world. samsung versus apple.

for over two years the companies have clashed in a scale almost unprecedented in business history and engaged in a series of tit for tat lawsuit has cost more than $1 billion. the battle is being fought outside the courtroom. on tuesday, apple is set to unveil not only a new ifeen or iphones but details on a long awaited smart watch. who'll ultimately come out on top in the great smart phone war between apple and samsung? i spoke with michael gorman and ryan, the director of mobile device at i.d.c. i started by asking ryan what his biggest wish for the new iphone is.

what are you asking for? >> this has been confirmed at this point. this is the most important thing for a few reasons. you've got this iphone user base that have been using the same screens for the duration of iphone. this will be the game changer. it changes the computing experience and more real estate. >> will it be a game changer if they are like the last? >> it's a bigger screen. >> they have been doing ok without it, but the real opportunity there, i think you ad a lot of people that were choosing android simply because they could get bigger screens. a lot of people like having more room to look at their phone and you will pull in more folks. >> what else is on your list. >> a few things, i don't expect it next week, which would be wireless charging. pretty confident in that. for those of you who have used it, it is a game chinger in my opinion. -- changer in my opinion, it makes things a lot easier. this is their way into making mobile easier and pairing devices with other products as well. that's something that i expect

to see. >> widgets? >> from the services side. it is not something that we expect but we kind of know what is happening. but i think this does kind of change the landscape and you see android had widgets as well. i think it does change how you interact with the device. but again, not something i expect because i think it's less about software next week. >> all right, michael, your turn. pin it down for me. >> let me kind of cast it in terms of what i like. mostly i don't like having cases on my phones. >> i don't either, but it's dangerous. >> a few of mine are making it durable. the sapphire display, you don't need any kind of screen protectors. super hard. >> we think that is going to happen, right? >> that is one of those we are

likely to see. they are using that glass on touch buttons and camera lenses. that is first and foremost and the next is waterproof. >> i want that too! >> japanese manufacturers have been making waterproof phones. samsung is doing it now too. you hear about people dropping their phones into a toilet or out in the rain, wherever it might be. it would be nice to have a waterproof iphone. a lot of people end up having to replace theirs because of water damage. that would be a way to remove hat. so those are for durability. one thing i want that i'm almost guaranteed not to see is better integration with dual services. i use gmail and google maps. and google calendar. and i want the same experience on an android iphone. you can't get that because apple

and google are not the best of friends. >> you also wishing for a two-day battery life. a larger display, mobile payments, a sapphire screen. any surprises on tuesday? >> i feel like we're bound to see a surprise. apple usually does that. i don't know what it could be, though. >> for me, the biggest surprise is going to be a lot of emphasis on the battery. when you double the size of the screen or the device itself, it gives yourself the opportunity to a bigger battery. i'm expecting roughly the double the size of the battery and 50% increase in battery size as well. this is going to give people that longer lifetime on the device itself. >> do you think these phones are going to be that impressive? are they going to be enough? >> i think i have mentioned this before. i've been saying this for a long time. the bigger screen is what people want.

iphone users have not necessarily gravitated towards his. >> is the mobile platform so important because that is the first computing that many people in china will ever do? >> absolutely. >> to me it is too big. >> you guys came up with a report that said fablets are going top tablet sales in a couple of years. right? >> there is a lot of people around the world where the phone is it. that is their whole computing world. it is why you're seeing cheaper large screen phones showing up in china and elsewhere around the world. >> exactly. a lot of that is cheaper android device outside of apple's target

audience and they will never go towards that either. i think so this will help refresh current customers but apple now has the opportunity to steal back those who only went to samsung because of the larger screen. was ming up, an -- apple also in the news after some lebrity iphone accounts were hacked. we look into it next.

>> welcome back to the best of "bloomberg west." i'm emily chang.

apple says its icloud service was not breached by packers. but apple said the celeb accounts were compromised by a targeted attack on user names, pass worsd, security questions. meantime home depot is working with authorities to investigate a possible data breach that could involve thousands of cards. nd debit i asked ken what exactly happened with apple? >> odds are that the attacks were highly targeted specifically toward the celebrities. using social engineering or guessing their passwords. usually if an attacker, they can gather a lot of information, they can begin to guess on their security questions, possibly what their passwords are. try to bruce force them. i think that is what happened

here. >> they say icloud wasn't breached but it is unclear if photos stored in icloud were taken and icloud password and user names were taken. eric, is apple at fault in any way here? is anyone who is an apple user be concerned? >> apple as a company has icloud as a service. the icloud service itself could obviously improve security. making it the default choice for users. things of that nature. across the board cloud services can improve security not just apple services but across the board. >> ken, what kind of things can ple do to make things more secure? >> they have two factors of thent indication. one thing that is difficult to find and implement. if you go there now and try to implement it there is a two-three day waiting period

before it can be implemented. raising more awareness around existing security tools that they have and provide training and better education of resources around that can do a lot to help protect that information . it is also scary that you know, your apple i.d. is also tied to ps and s for buying ap things like that. >> apple's big event is just a week away. we expect them to unveil two new iphones and an watch. and that requires us to give more sensitive information. how big a deal is it, we are talking about healthkit. where we're supposed to be giving them our health information as well. >> we will probably learn more about this attack even if apple won't tell us.

fundamentally it is about how this happened and why. the how might tell us the wide. eric, let me ask you -- is there a sense that, was it the incredible and penetrable wall of apple or was it the incredible appeal of naked celebrities that drove this thing? >> it always was more that celebrity factor. what led to these breaches. apple itself on the back and has had a lot of room for improvement. when you sign into gmail they keep track of your ip's when you login and they have systems that correlate when you're supposed to log in and look for anomalies. these things are not as prevalent in apple's cloud systems. as you mentioned as these things control more information, they should be. >> let's talk about this home depot incident as well. it seems everywhere, nothing is secure. what are we supposed to do as users with credit cards? >> it is funny.

about a year ago a reporter asked me what i would do to help my best protect my information and i said i get a new credit card every three months. we use them in restaurants when they are out of sight and at all these different stores. and seeing all these data breaches i am paranoid enough to where it is easier to get the new credit card every three months and it provides me piece of mind. -- peace of mind. it is a hassle to go through and reset your automated payments but having that piece of mind is more important. there is more retailers are going to be coming out with announcements. i'm guessing at least one or two a week. the secret service said there is 1,000 that have been impacted at least one family so we will see more shoes drop. >> we know apple is very involved in its investigation.

the f.b.i. also investigating that case. can we find the people who did this and can apple and the f.b.i. find these people, eric? >> absolutely. computer forensics experts have gotten more advanced through the years and the people that usually execute these type of attacks not really criminal motivated attacks but more just for fun attacks. they are not very good at hiding their tracks. in 2011 the last person who had -- hacked celebrities got 10 years in prison. >> would you guess that this is a single hacker or a ring of hackers or hackers who are not necessarily related to each other? >> i think with the apple hack, thenes that are targeting individuals, it is a loose knit group of folks that are involved in that. with the hack hitting the retail stores like home depot, that is a much more sophisticated group and odds are they are operating outside the u.s. and that raises

a big challenge to be involved in some discussions with people ho work those cases. nce those credit cards get exfiltrated outside the country, when the end of in russia and eastern europe it is almost impossible to follow up on the investigation from there. in many cases these organizations operate with impunity within those countries. here in the u.s., it is more difficult for them to hide. odds they will not be able to find them. >> you will be in cupertino at this event. do you think we're going to hear anything about this from apple at that time? >> the topic is so salacious it is hard for it to go away. the discussion about the home depot attack is going to be forgotten the same way the target attack is only discussed i those in the cybersecurity.

i suspect this will linger for some time because there is such a salacious element to naked celebrities particularly in our culture. there's nothing like it. >> cory johnson and eric and she has helped google's moon shots. now megan smith is head to washington to become the nation's new chief technology officer. we talk about what she brings to the table next. ♪

>> welcome back to the best of "bloomberg west." i'm emily chang. from google to the white house, president obama has named long time google executive megan smith as the nation's new chief technology officer replacing todd park.

they are creating moon shot products like the self driving car and delivery drones. she isn't the only executive heading to washington. alexander mcgilray. their mission, to help the united states stay on top of technological innovations and dealing with free speech issues and for, we are joined by the very first chief technology officer who served from 2009 to 2012. i started by asking him what he thinks of these appointments. >> a great selection for our country. it really affirms the opportunity to make sure we have the best team in place to harness the full power of technology, data and innovation to both grow our economy and ensure that the internet is a source of innovation and problem-solving in areas that we need in health, energy and education. > sergey brin, co-founder of

google said megan inspired so many people. we will miss her and excited to see what the future holds for her in washington. google would like a lot of things from washington, they want self-driving cars and drones delivering things to our doorsteps. is that the kind of stuff she is going to be pushing for? >> let's begin with the history. do you know where the origins behind the technology of the self-driving car came from? >> darpa. >> you got it. that was my point. you have a long history in our country where research and development is a building block for an innovation economy and as our nation invests in r&d, it will open up sectors in the economy not yet known. i would say megan has a front-row seat how the commercialization model is working. and can help support the next generation of breakthrough innovations. >> let me rephrase the question. how does she represent google and silicon valley's interest

without it being a conflict of interest? >> i don't think it is about representing any given country. i think if you look back at the role of government, as president obama has identified it, he wrote a strategy for american innovation in the first term which continues to be the road map for this role. it basically stays country invests in these building blocks and making sure we have the human capital to be successful in a global economy and broadband. the s.e.c. chairman today gave a speech on broadband competition. what megan will do is continue to advocate for infrastructure investments that will facilitate innovation for decades to come but it is also about rules of the road. a big part of what they will take on is to make sure that the force for n be a innovation by making sure we get privacy and

security right. we had a lot of principles that the president adopted in the first term and will continue to be successful. last, but not least, harness all of these technologies to face the challenges of our day, health, energy, education, and more open and collaborative government, megan has done a phenomenal job in all of her history in bringing new ideas to the market. >> and alex was actually a big champion of free speech at twitting. should google and twitter's rival like twitter and facebook be worried? >> this is about talent. two individuals with incredible capability. they understand the technology in question and they understand the opportunity to bring seeds of an idea out into big commercial opportunities. and i think that talent is what matters and will have an impact for the entire innovation economy. not just a individual company. >> what are the biggest challenges they are going to face? the president has embraced technology but there are problems like the rollout of healthcare.gov. >> we will have plenty more challenges operationly in the

years to come. you don't move a big $80 billion operation inside the federal government on a dime. you put the seeds to make sure you have long-term success. suggest the following. one, we are in execution mode. they are going to take the playbook that my successor started in the first term and execute, execute, execute. i wouldn't imagine new surprises or concepts. they are going to put their stamps on these playbooks. they are going execute with great rigor. the at did you find was hardest part of the job? >> it's culture and change. it's ok to try new ideas and fail. part of innovation is creating the capacity for failure, that doesn't happen every day. it is less a technological challenge and kind of a cultural change issue, how do you bring the mindset to people. that this is possible. that we can in fact have

ubiquitous data flying and people doing what they need to do. >> there are so many technological issues on the plate. the hacking of jp morgan, what should be the first thing on megan's to-do list? >> execute the plan that todd park set up for her. launching with rigor a playbook for the digital service for the government and ensuring we have r&d investments, to create long-term economic opportunity and working as i hope alex will take the lead on, execute the internet policy principles so when we make these tough decisions on cybersecurity and privacy that we execute. the policies have already been written. we are not inventing new privacy policies but how we execute new ideas and see them to the finish line. >> what does it mean in practice for silicon valley and technology companies like google? like facebook?

like apple? how does the c.t.o. impact them? >> i hope it's an opportunity for an interface and not solve problems with government on its own or the private sector on its own but the public-private interface and i think the principle role is to foster greater improvements between the public and private sector. as government opens more data, it allows to build new products and services. as the government works to shape rivacy and security policies, it is working to ensure that we engage on commerce on the internet, we can do so with confidence. the public-private interface is critical and having an individual at the white house makes the process easier. >> she is also an engineer. does that help? >> it does. what a statement that our third c.t.o. is a woman and see a lot of room for improvement to bring

a woman in. what an inspiration for the country. i'm excited for her arrival. >> former u.s. c.t.o. coling up, the wait is going to get a bit longer for alibaba's i.p.o. we'll tell you what the delay means for alibaba next. ♪

>> we focus on innovation, technology and the future of business. i'm emily chang. alibaba's i.p.o. has been dried with the potential to be the rgest offering in u.s. history. the road show will now start the week of september 8 because the s.e.c. wants some answers to some questions. this according to a person with knowledge of the matter who

stays company may price on september 18 with trading starting the following day. i spoke with our bloomberg contributing editor paul kedrosski. jeff and leslie. >> according to the sthures gave me this information, depending on how detailed they were, that would decide when they would start the road show. it became clear that what they were requesting was much more detailed and much more information-heavy than what they had initially anticipated. >> does this have anything to do the alipay situation? for example, the subsidiary that alibaba spun off a few years

ago? i know there were questions about that. >> it is most likely something different. he company hazardsed alipay in two filings earlier. the most recent where they amended their agreement for alipay which lifted the cap. the parent company could receive proceeds from that i.p.o. it looks like the s.e.c. has gotten those questions out of the way. >> we know i.p.o.s get postponed all the time. >> you have to keep in mind that alibaba has been able to survive cloud of in this secrecy. they have been able to execute a business plan that seems like flawlessly without anybody really knowing or understanding the model that they are able to achieve these types of

results. it does concern me, because transparency, if you look at the clouds on the horizon, transparency is clearly one of hem. >> paul, you were a tech analyst for many years. any concerns? i know you have been nervous about alibaba anyway. >> yeah, i am nervous to the 10th power now. we can speculate about what the cause of this particular day delay was, but surely there were some things in their most recent filing that were unsettling. when we talked about it, for example, there was this whole procession of one time items. both on the expense and the revenue side. in particular, examples are they fairly radically revalued their investments and then treated that as income for the purposes of their income statement and cash flow, which seems capricious in terms of how they did that, not a lot of justification. that is going to continue to be

a pattern that you might expect given the number of investments they have made over the last 18 months, raising questions on how they plan to account for this. you're going to see wild fluctuations in cash flow with a lot of capriciousness in terms of how they treat income. what is income in a company like this built up by acquisitions? >> jeff, what is the top westjet on the minds of investors as we get closer to the roadshow? >> i think the top question is there is a number of questions, but first is -- is alibaba going to be able to operate under the standards of the new york stock exchange? will they be able to provide enough transparency that investors will be confident and willing to invest? also, what is the sustainability f the model? that is very important because we are dealing with a model that is somewhat untested, with a scale that is much larger than anyone anticipated. it is really to see if this company that has done very well in china and has had potential

in europe, whether it will carry over into the u.s. and whether investors are going to embrace it with very different ideas about transparency. >> we cannot forget that this is jack's second i.p.o. hit hong kong stock exchange. it did not go so well. what are the similarities and differences here? >> the market backdrop is very similar. hong kong was skyrocketing, similar to the records they reached every day, now here in the u.s.. he sure knows how to time a rally. as you remember, it was many, many times oversubscribed. it saw significant pop in its first day. we might see a little bit of a different situation from the parent company here because it is so massive. it is harder to get multiple times subscriptions on a first-day pop

but it is some interesting timing and similarities. >> quick programming note on alibaba. how did alibaba become china's first global internet company? what challenges did its founder face? we will tell you in "the alibaba story." it draws over 200 hours of footage filmed at the company's headquarters and a splashy corporate event. take a look. can you feel the love tonight ♪ ♪ >> to see more, don't miss the

broadcast premiere on monday september 8, 9:00 p.m. eastern right here on bloomberg television. coming up next on the best of "bloomberg west," microsoft is facing some challenges in china dealing with an anti-trust investigation. will it hurt the software giant's business in asia? that is next. ♪

>> welcome back to the best of "bloomberg west". i'm emily chang. microsoft is facing anti-trust pressure in china. they are looking into how microsoft sells windows software and office applications. authoritied launched the probe and raided microsoft's china office in july. the ceo will be traveling to china later this month. a microsoft spokesperson says that the trip was planned before

the investigation began. they are committed to comply with laws and addressing the uestions and concerns. started by asking davis evans how serious this is for microsoft. >> for microsoft it is pretty serious when you have one of the chinese anti-monopoly agencies launching a significant investigation like this. certainly it is something that if i were running microsoft i would take very seriously indeed. >> what, exactly, is the chinese government so upset about? >> it is not clear. one of the difficulties with the investigations taking place in china is that it is not clear, at least, in the early stages of the investigation what, exactly, the allegations are. in the case of microsoft, there are various claims flying around

concerning windows and internet explorer, which is a very old claim, about microsoft being very aggressive in terms of how it deals with anti-piracy issues in china. but the full array of claims, i don't think we entirely know at this point in time. >> how much good can a visit rom satcha nadella do? we know that ceos like tim cook go to china every year. >> tim cook, as chief executive, has been making an annual pilgrimage to china and it has not helped his company. beijing authorities have been attacking apple at every particular opportunity. people say you have got to go to china, got to show that you want to be the foreign paying tribute to the chinese, but i think there is a little bit in that but on the other hand, once you start to do that, you show weakness. the chinese authorities always jump. look at what happened to

google. look at what happened to apple when they went to china. this is not a good story for microsoft. >> microsoft is not the only u.s. company facing an antitrust probe. you have got dell. you have qualcomm. david, i believe that this is about a law that was put into place in 2008. why now? >> i think the point is exactly what you just said. the law was only passed in 2008. it has only been in existence for six years. in the world of antitrust, this is a baby antitrust law. it took about 50 years for the european commission antitrust authorities to really come to life and act as a professional agency. antitrust in china is really a very new thing. one of the things that you are seeing now is that antitrust agencies now need to take some time to learn antitrust and we

-- beep up their staff and figure out what they are doing. relative to how it is developed in other parts of the world, this is actually fairly quick, for china to take the antitrust law seriously and be using it so aggressively. if anything, it is surprising that they are doing this as early as they are. have been ou vehemently disagreeing. what do you have to say? >> this is not a system of laws. the problem here is that state enterprises have become very powerful politically inside the chinese political system and they are undercutting foreign business. this has been going on for quite some time. also you have political disstress among senior leaders fighting among each other and you can't compromise with foreigners. this is the closing of china from the rest of the world.

we have seen it across so many different platforms. i think that this is something fundamental, not just an issue with anti-monopoly laws. >> gordon chang and david evans. well, the answer to some of football's big questions may be very small. find out why the nfl is turning to quarter-sized sensors to track the health and performance of some of the league's biggest stars, next. ♪

>> welcome back to the best of "bloomberg west." am emily chang. >> the 49ers are getting ready to play their first game this season. it showcases innovation in ways no other pro sports stadium has done before. but the stadium has already had its share of problems. traffic gridlock. the turf had to be ripped off

not once but twice due to sodding problems. i got a look inside. 69,000 fans. >> i get crazy excited about it all stopped >> 170 luxury suites. >> i can't wait to see it. >> $1.3 billion. >> we are talking about a world class stadium. >> the san francisco 49ers are kicking off this nfl season in a brand new, state of the art tech-savvy stadium. intel and sap have signed on to be at partners at levi stadium and yahoo! is sponsoring the fantasy football lounge. >> we have more tech partners that any other sports stadium. that's because of the vision we are trying to build. we wanted this place to be the physical manifestation of silicon valley. >> 22,000 flat screen tv's are mounted throughout and if that is not enough, fans can always

look to the end zone if that's not enough. >> this is the largest outdoor hd video board. the players will run down the field and look at the video board to see who is chasing them. >> most cannot compete with the high definition experience fans get watching football at home. the new stadium is in santa clara, 45 long miles south of san francisco, in the heart of silicon valley. that means it has to woo the smartphone set. >> these days, you can't get a photo or instagram -- maybe not even make a phone call because the lines are tied up or the bandwidth is not there. >> you will be able to check twitter, go to instagram and most importantly, send texts. > the niners have 29 engineers like from companies google. those engineers filled a special game day after instant replays. it is a cashless, ticketless experience where concessions are ordered from your phone. >> anywhere you sit in the

stadium, you can order beer or hot dogs to your seat. whether you are front row or upper deck -- that is half tech and half industrial engineering. >> wi-fi access points are with it and be of every seat and more than 200 phone charging stations have been installed. internet bandwidth is 40 gigabytes. that is four times what the nfl mandates. but with all of that, what about traffic issues and tech glitches? >> there's going to be a learning experience for everybody. we tested a lot of sound and it's going to be very loud. but you won't know until you put 70,000 fans in here. >> one thing for sure. nobody is more pumped than the players. >> i just can't wait. i have dreams about this stadium. >> the nfl wants to keep vernon davis and other players healthy and in tiptop shape. to do that, it is using some quarter-sized sensors to track player movement.

zebra makes the censors. i asked jill how they work. >> we put quarter-size sensors in football players shoulder pads. they can tell you everything about their speed and movement 25 times a second. so very, very quickly. >> >> how can fans and coaches and players benefit from this? how do they use the information? >> in a coumple different ways. for fans, one of those questions we like to ask ourself, why isn't that guy open? why can't the quarterback see the open receiver? questions like that. i think we'll now be able to see that through lines and speed trails behind players. >> espn on "sportscenter" does this wonderful stuff where they illustrate the play moving the

player and letting everyone else hold still. are we going to see very different graphics? will they be universal across all different networks? >> we have worked on the graphics. this is onor those things that is very new because when you track that subsecond movement, a bunch of new information becomes available. for example, the push of a line. the offensive line. what grouping of five people can make that push better than anyone else in the league? that is kind of an interesting stat and a new graphic that we'll be able to see. >> we were talking about the microsoft partnership with the nfl. a marketing aspect. i would imagine that you'll have data that coaches have never been able to see before and you are measuring that microscopically. >> we do. i think for the first time ever we'll be able to see how peyton manning behaves in the game and

in practice which will be fun for the coaches and it will help ultimately extend the careers of athletes because we can help them repair and recover after game faster if we know exactly their level of exertion. well, it started with selfies on your phones. now people are using drones to take mooning selfies calling them droneys. we'll give it a try next. ♪

>> welcome back to the best of "bloomberg west." i'm emily chang. amazon, google and facebook are not the only ones testing drones for their own use. enter the latest craze. $1,300 dronesing a

to take a selfy. brad stone and took it for a spin. let's do it. what do we got? >> this is a somewhat expensive but fun toy. it is made by a chinese company. it is the phantom 2 vision plus. it is a drone. they have a camera in the bottom. you have a rate game controller and you take videos. >> tell me about dronies. that seems to be the next big thing. >> it is the drone version of a elfie. you fly your expensive drone up in the air and take a picture of yourself and then you post it on twitter. >> is not the easiest thing to do. you have been working on it for a few weeks trying to figure it out. >> is not that easy to configure. they can make it more user-friendly. practice is rewarded.

i made the mistake of flying it without much practice and had some crashes. >> i have heard of some people who lost their drones in the bay. >> this is the sort of classic journalism. >> twitter has a dronie account. companies are using it for marketing? >> i am starting to see dronies from burning man. out in the nevada desert. it is more of a fad maybe than a thing. i wonder if we will be doing it next year. > let's give it a try. i'm impressed. ok. landing. >> here we go. >> whoo! captain stone. drone pilot report for duty. >> i'm going to keep any day job. >> you can add that to your resume.

seriously, are these things just gimmicks? >> there are real estate agents using them to do flyovers of a property. obviously they are small and relatively affordable. when you go higher end, you have mining companies and of course the military. this is a very low end of a line of hardware being deployed. >> not to mention all of the drone enthusiasts. >> i will say i tried to deliver an amazon package with this thing and it did not work. >> all right. here is to our first droney. joining me now, the drone pilot himself, brad stone. we did it. you did it. >> i'm glad we didn't use the footage of me crashing. >> luckily no one was hurt in that operation but we got our first dronie. it is a gimmick. >> it is fun. the thing when you have one of these things, they are

irresistible. i keep bringing it out and playing around with it. you know, i'm not going to say it is worth $1,300 because it is an expensive toy, but it is a lot of fun. >> bloomberg "businessweek's" brad stone. that was fun. that does it for this edition of the best of "bloomberg west." you can catch us monday through friday 10:00 a.m. and 3 nm the west. 1:00 p.m. and 6:00 p.m. in east. we'll see you next week. ♪ >> coming up, possibly the most

amazing medical discovery this century. a miracle ingredient known to be critical to every aspect of your life and has been shown to ensure strong bones and optimal brain and prostate and maintaining an adequate level of