>> from pier three in san francisco, welcome to "bloomberg west" where we cover the future of innovation, technology, and business. i'm emily chang. what a week it was -- the s&p 500 rallied the most since november 2011. oil was on the rebound as well.

the price of brent crude up as much as 5% but still ending the week with losses. boomer has been declared illegal in taiwan. >> it's really sad when invested the money tries to stop them because capitalism -- 0 so it can grow unfettered? >> regulation is very different than people being affected by immigration and regulation. are we going to talk real? are we going to be confused? we know exactly what's going on. >> uber is limiting service in portland while they work on the

city. repayle agreeing to like forfor services scoops. the hacking leaked scores of internal e-mails and prompted sony to cancel the release of the film "the interview" the picking the fake assassination. anding us now, peter cook intelligenceformer

. the statement from the fbi is pretty significant. they are even making a statement on this, correct? >> you have the federal officially accusing another country of engaging in a cyber attack on a private entity in this country. it's a very significant deal. something we've been reporting the last few days that the government was moving this direction. we get this statement saying categorically that the fbi has enough information to conclude the north korean government is responsible for these actions. details specified three areas in which they have built the case against north korea, again, calling this basically out of bounds activity from a foreign government, saying there will be cost and consequences for those responsible. it does not specifically say what those will be. >> peter, exactly how do they know for sure that the north korean government is behind this attack?

>> if you look at the statement, they are not that specific, but they say they recognize malware here is being can stand with malware used by other north korean actors in the past. there are other consistencies in regard to infrastructure that was used. for example, ip addresses similar with previous malicious cyber activity. other aspects of a technical nature that they say lead them to conclude at this point that north korea was involved. it's pretty clear that there may be other sources of information they may have that point to north korea. maybe more intelligence allowing them to make this definitive statement that north korea is to blame. >> we also have a statement from the department of homeland security secretary jeh johnson's weighing the cyber attack against sony pictures with not just an attack against the company and employees -- department of homeland security secretary jeh johnson.

what do you make of the fact that the the i is making a statement on this and that they are officially linking this back to north korea? >> north korea obviously left enough breadcrumbs to track back to their proxy to who actually executed this attack. it was not very smart of them if they intended to be anonymous, but the fact that the fbi came out shows they have enough evidence that points directly back to north korea. the key part is what the u.s. government will do in respect to a response. >> on that note, what is the u.s. government going to do? what can the u.s. government do? >> we have heard of to this point rum the white house that there would be an appropriate response to the actions by whoever perpetrated this, but there are real questions about what the u.s. can do. we already have sanctions on north korea, limited contact between the countries to begin with. there is perhaps a question is

naming and shaming enough here. is that enough to change the situation in any particular way? there will be a lot of pressure on the administration to do more. we've already heard from republicans to impose even tougher financial sanctions on north korea. it will be interesting to see, but options are limited. if it was a cyber response from the u.s. government, as you know, highly unlikely we would ever find out about it. >> what is sony likely to do about it? how close are we to the end of it? the leaks of damaging information continue. now they are threatening attacks on people if they attend this movie, which sony has since canceled, but what does sony do now? when can they breathe easy? >> this is not the first time sony has been breached. i think they may be need to take a hard look at their i.t. infrastructure and cyber security environment. the fact that terabytes of data were able to be exfiltrated out

of the environment undetected is very concerning from a business perspective. they have to address their i.t. environment. >> peter, the continued gridlock in washington over cyber security legislation -- do you think this will accelerate things? >> this could be a turning point in that conversation. the fbi goes out of its way to praise sony for cooperating and making them aware of the hack in the first place. as you know, there are questions about whether or not players in the private sector can communicate and cooperate with the government and vice versa right now. there are legal liability questions, and there has been an effort on capitol hill to push forward legislation, but there have been obstacles. i see this certainly lighting a

fire under lawmakers to try to reach some bipartisan cooperation on that front. it's pretty clear that what is on the books right now, this administrative guidance may not be enough at this point. >> do you think the hackers will continue? now that the u.s. fbi is speaking out on this, do you think they will continue to release more information? >> absolutely, and it is our intent to do that and to continue to embarrass sony. there's no doubt that they will continue to release information. we cannot mirror image our own thoughts upon an irrational group such as north korea. we have to think in their viewpoint, and that can be difficult for u.s. lawmakers to think as they do. i'm certain in my view that they will continue these leaks because they probably already have piecemeal this out -- piecemealed this out. the dangerous is the threat to physical terror that has changed from this perspective in this event.

>> the creative community is very upset about sony canceling the film. do you think sony made the right decision? >> we do not know that there was any government influence in it. i would like to see this continue to go forward, and maybe underneath the covers a deal has been struck between sony and the hackers to say that they will not release this if they do not release more data, so that is a possibility as well. >> where does this go from here when it comes to the u.s. government, our relationship with north korea and our response? >> it basically rest in the hands of president obama at this point. as we talked about, limited options for the federal government to respond to north korea, but there are options, and it will be pressure from capitol hill to come to bear on the white house, to be aggressive, to be forceful, and we will have to see what they do, but again, this has changed

the debate in washington significantly. the fact that they went after a private sector actor so maliciously, the way they put the public at risk as well with the idea of going to theaters to watch this film also changes the debate significantly. this will be a major talking point throughout 2015 on capitol hill, at the white house, and beyond the u.s. >> peter cook, thanks so much, as well as jeff darden, chief intelligence officer at trent stone 71. this story far from over, and we will continue to stay on top of it. a sales shortfall overshadows a major milestone in blackberry's turnaround. ♪

>> this is "bloomberg west." i'm emily chang. it should have been a day of celebration for blackberry. revenue continues to be a problem with sales dropping 34% in the quarter. earlier today, i spoke to blackberry ceo john chen and started by asking when we will see revenue growth again. >> i have been very consistent about it. we are going to turn out positive cash flow and positive profits before we get to revenue growth. we will keep launching products, and revenue growth will come sometime next year. >> tell us a little bit more about who is buying these devices. how many of these people are new blackberry customers aqua how many are upgrading from old blackberrys, and how many are using it as an additional or

second device? >> i think you see a lot of people using two devices. i have a new software product, by the way, coming out next year, probably around the june timeframe. i'm hoping to convince people to one device -- obviously, the blackberry device. you see, in the case of classic, probably more uptick from the in-store base and the people who have used the 9900, the very successful older blackberry product. i think it will resonate with them. i have seen that already. on the passport, there's a real mix. there are some really new users coming from other devices. there are some win-backs, people who have left and came back. there's also a lot of loyalist. so there's a lot of mixture on the passport. >> we saw hardware side -- hardware sales down but software sales up.

how you expect that balance to play out over the next few quarters? >> i'm hoping both of them go up. one of the reasons people need to understand -- i understand the impatience of the revenues, but it was the quarter that was important for us to clear out our old inventory. year-over-year, 93% of our inventory was cleared out, so i am very pleased with where we are positioned. the channel has very little inventory. i cannot even produce old phones anymore, so let's clear the way to get to the new phones. the investors had a different view about it at this point. >> apple and ibm just showed off their suite of enterprise apps geared towards the ipad. what do you think? how much of a threat are they? >> that is something we always

have to take seriously. we are aiming at the same enterprise space. those are workflow products. it is not really very deep, but it is the one thing about their collaboration -- it's very much on a proprietary system, the iphone and ipad. nothing to ignore, and i'm not the first one to tell you that, but our solutions -- we have equivalent solutions -- are more open oriented. they can be run on any devices, and we can manage all those devices, and the partnerships we strike are a little bit more broader like salesforce.com and others. i think we will continue to stay open. >> you just closed the second smart deal. what are the chances we see another acquisition in the next six months or so, and in what areas of the company, and what

parts of the company technology could be bolstered by another acquisition? >> acquisition itself is certainly something of interest to us now that we have the ability to generate cash from operations. we have over $3.1 billion as a cash balance. but i should not comment on acquisitions by itself. if there is one that >> i know we talked about this at length, your interest in the internet of things. we know you will unveil the internet of things strategy. what is the chances we see a sort of connected hub for the home device or something like that? >> not a connected hub on the home device, but something we are strongly interested in. safe to say we are working on it. we have very strong and connected cars. you come to see us, you will see one of those models. i believe it will be the

maserati. >> when we spoke six months ago, you gave yourself better than an 80/20 chance of turning the company around. what would you give yourself today? >> i hope, looking at my results, we will be here to stay. i don't want the headline to be 100% because every time you say 100%, you might jinx it, so i'll give it 99%. >> how about this -- you also said you did not know whether blackberry would be iconic again, that that was a question you still had to chew on. what is your answer to that question now? can blackberry be iconic again?

>> chances are better. i'm working on it, and i feel good about our products and our roadmap and our focus on security. i think there is a big space waiting for us, a big white space, and i feel good about the opportunities. one will never know until we execute, but there is a path i can see to execute. >> blackberry ceo john chen. social media sites struggle to keep up with what is hidden in high school. a new study shows facebook is losing favor with teens and twitter is gaining ground. that's next on "bloomberg west." you can watch is on your phone, your tablet, apple tv and amazon fire tv. ♪

>> i'm emily chang. this is "bloomberg west." is facebook losing its cool? the portion of 13 to 17-year-olds on facebook dropped to 88% this year from 94% in 2013 while twitter and messaging

apps scored more young users. twitter young users have grown from 39% of those surveyed in 2012 to 48% this year. facebook messenger is still the top messaging app, but it could face more competition. 80% of snapchat users are under 37 years old. only 55% of facebook messengers are that young. the report also showed that teenagers do not see facebook as safe and trustworthy in comparison to other social media. instagram is however apparently hotter than ever. the app, which facebook bought in 2012, is now valued at $35 billion according to a citigroup analyst, double its previous estimate. that means the photo sharing app is valued at roughly the same amount as kraft foods and

american airlines. it recently surpassed 300 million active users, more than twitter. coming up, the bbc releases a scathing report of poor working conditions for apple factory workers in china. how is the company handling the response? we'll discuss, next on "bloomberg west." ♪ >> we actually sell the s&p 500 touching record high. three-theybiggest jump in stock since 2011 spurred by janet yellen's comments earlier in the week. energy leading higher with the best-performing groups. ♪

>> apple is under fire again over claims that factories run by its suppliers in asia exploit workers. a bbc documentary released last night chronicles apparent poor working conditions at apple's factories in china with workers falling asleep on an assembly line for the iphone 6. it also cited dangerous working conditions in a mine on an indonesian island where apple sources minerals. apple declined to respond to our request to comment, but a leaked memo from apple's head of

operations said, "tim and i would deeply offended by the suggestion that apple would make a promise to workers in our supply chain or mislead our customers in any way." joining me now from minneapolis is senior research analyst at piper jaffray gene munster, and from new york, china labor watch's program coordinator. you have visited apple supplier factories in china -- and what to clarify -- these are apple suppliers, not apple itself that owns these factories. describe this scene. does any of this information revealed in this bbc documentary ring true to you? >> i think the pure scale of what is going on rings true, and the concept that this is 700,000 workers building apple product -- the conditions are clean but cramped. i think that is just the reality of some of the manufacturer that

goes on. the parts i have not seen as some of the sleeping. i don't speak mandarin, so some of the comments from some of the supervisors that were kind of demeaning to the employees -- i would not be able to pick up on some of that. overall, i saw what i expected, and i think for people who do not understand how these things come together, it may be a surprise, but for people who understand how this system works, it's not that surprising. >> apple has arguably been more transparent than any technology company about its labor practices, about what is is trying -- what it is trying to do too change those practices. that said, what is your reaction to this report? >> apple is one of the most often double companies in the world, the most profitable

electronics company up there with samsung. the fact that for years we have been focusing on apple since 2006 along with other companies like samsung and seen these violations continue, and the act that these violations have continued without proper reforming on the ground shows that whatever apple says is not important. it is not doing enough to correct these violations. >> what more can apple do? >> like i said, they are the most profitable company in the world. if it wants to put more resources into the supply chain and ensure that things like excessive overtime and child workers -- there's a child worker who died at an apple plant -- unpaid benefits -- if they want to ensure that these things do not continue to occur, it can do so. it's apple. it knows what is going on in the supply chain. >> am not aware of that story.

we will have to verify that. do you doubt that apple is doing everything possible to make conditions better? do you think apple is doing enough? >> i think they are doing a lot. i think the question is -- this is the slippery slope part of this whole complex topic, which is -- how much is enough? apple does more than any other manufacturer when it comes to even policing some of this. it is obviously under tighter scrutiny, too. the reality that this is even a topic and that it gets ceo-level attention is something that is unique, so i think it is a starting point. they are doing something. are they doing enough? that is the debate. i think it is not apple cost place to provide -- i don't know what the standard is we are trying to get to. again, it is a slippery slope, and this is something that is again complex, and we are trying to figure out what that right pieces. i think they have done more and are going to continue to do more. >> kevin, what do you think about that? >> he said a moment ago what can they be expected to do -- i think we can at least expect

them to live up to the promise they make. if you go on their website, they have a list of labor standards they advertise showing that they are socially irresponsible, but they've shown over and over they do not live up to these promises. i think we can expect that they at least live up to the standards, a routing chinese labor laws. apple right it into their own standards -- apple writes it into their own standards. if they do not live up to the standards, why are they able to continue to promote and advertise them? >> one of the reasons that's not the case, there's the corruption in the supply chain and corruption in which manufacturing -- some of these things in which apple can do more, but i think some of these things are out of their control. >> one of the interesting parts of the story i did not know as much about was there -- the suppliers in indonesia, the documentary details that some of the suppliers in indonesia are

taking tin from illegal mines, that children are mining these metals and dangerous conditions. what do you make of those accusations? >> this is a completely different topic now, much less on apple's watch because now we are getting into a broad, long chain of suppliers. i thought it was disturbing, some of the things they were showing, but again, i don't think this is an apple issue. this is an industry issue, and indonesia issue, a government corruption type of issue. i thought that they were concerning, but again, if you use soldering to start a small manufacturing parts at home, you could be participating in this as well. again, it's a much bigger issue. >> all right, piper jaffray senior research analyst, program coordinator at china labor watch, thank you both. we will continue to do some digging and he what we can come up with. still ahead, udacity welcomed its first batch of nano degree

graduates. ♪

>> i'm emily chang. this is "bloomberg west." six months ago, at&t teamed up with udacity to offer a new kind of degree program focused on entry-level software skills. over 3 million students have enrolled in the nanodegree, and this week, udacity is welcoming the first batch of graduates. the cofounder and ceo of udacity joins me now. sebastian is also the founder of google x, home to projects like the self-driving car. great to have you here, as always. the nanodegree program -- you and i were speaking about this

last year, but now you are actually seeing the results. how many graduate, and where are they off to? >> it's exhilarating. employment is 100% month over month. it's amazing how may people care about education. they are typically young professionals, age 24 to 38, and they live all around the world. >> what jobs do they go on, and do they get better jobs than where they came from? >> we just had our first batch of graduates. it's too early to tell what jobs they go on to. software development and data analysis worthy -- were the topics. >> you've been very vocal about how education can help bridge the skills gap in the united

these. who should be held responsible? >> i think all of us. we should be proactive about it and create new pathways for people to find education. we have a college system that is completely updated that was created 150 or 200 years ago and behaves exactly the same way, except perhaps the escalation of tuition fees. we do not teach people very well, so i think we have to be creative. >> how about president obama's executive action on immigration reform? how do you see that is affecting the tech community as a highly skilled person from abroad? >> skilled workers from all around the world are what makes silicon valley tick and i think are important for the united ways. they are often confounded with other things. in silicon valley, we have a huge shortage of highly qualified people. >> i want to ask you because it is always so interesting to hear your dots on what is to come.

first of all, the self-driving car, which you invented, so to speak. what is in store for it next year? >> i think it's making great waves forward. the team is taking a different direction, driving our local city streets. the team is making fantastic progress in its ability to safely operate. a legislator passed a law a few years back that you can have cars without people inside that come to you when they need them. >> i know you do not technically work at google anymore, but you are seeing carmakers like audi

and mercedes resistant to google's push to get under the hood. how much of a challenge to you think that will be? >> i think it will be a challenge. most cars are not used most of the time, as uber says. the challenge is to make driving safer but also utilize cars much better, which means we have fewer cars on the streets. >> i'm glad you mentioned uber because it has been so much in the news and on so many people's minds. lots of pr issues, challenges. i mean, the list is too long to go down. do you have any advice for a company like over -- like uber? >> i don't know. i use the company regularly. i believe these incidents happen daily, but just not with self-driving cars. >> what you think of the possibility of uber using self-driving cars?

>> as the technology matures, i assume everyone will pay great attention to the technology. it's fundamentally not just a for, but it's also much cheaper. -- it's fundamentally not just safer but also much cheaper. >> what about a company like sony under attack, and now the fbi saying north korea, itself, a state, is behind the attack, and every day, more devastation for the company. >> i do not know what -- much more than what is in the public news. this is just the beginning. we will see much more of it. it is not an insulated event. we will see much more systematic espionage and break-ins and cyber attacks. it is actually something that my company is partially involved in the sense that we love to educate workers to be ready for the next generation of technology. i think in five years' time, the attacks we will see will be much more massive. >> is there a way to create and it risible internet, -- and in

rasul -- an erasable internet? >> i think the trend is the opposite. there's so much we do not even know about, like security risks we do not know about. the more we use digital devices, they are less and less safe and private conversations. that is just the way it is, to be honest. >> peter thiel joined me on "studio 1.0," a show you have also been on. he said he wanted to live to 120 and is trying to find ways to extend his own life span. taking human growth hormone every day. google is also pursuing calico and ways to make our health better. what do you think? >> i would like to celebrate 150. we have done work on cancer research and other things. there has been almost no research on life extension. life span is about 120 years max or so for people, and a think there's an opportunity to look

into it to see what we can do. if calico finds a solution, then they have a customer. >> sebastian thrun, thanks so much. always great to have you on the show. happy holidays. uber says it is developing biometric technology to improve its driver screening process, but will fingerprinting and voice recognition software actually help? we'll talk with a former fbi biometrics expert next. ♪

>> this is "bloomberg west." i'm emily chang. uber is promising safer rights for passengers and more rigorous screening for drivers. the company promises to bring voice-recognition technology,

biographic screening following allegations that over drivers raped passengers in both india and boston. if warmer fbi biometrics expert joins me now from washington -- a former fbi biometrics expert. first of all, what do you think? are these new measures realistic, and they will improve the safety of the entire operation? >> it's a good question, and it it's into the water question of how they intend to use them. if you think about how the government uses this type of information to do background checks for employees, at the one end of the spectrum, you have the classic well-known failures of people like snowden and the shooter at the washington navy yard.

at the other and, 99% work just fine. however, there are federal and state laws that have to do with what thing a prince can be submitted to the fbi to run a nationwide fingerprint check. currently, things like gambling casinos have state laws that permit them to send them to the fbi, but the answer is they do not go back to the casino. they go to the fbi's representative or state police or some consolidator who only is able to give them a yes/no type answer. i am a little confused as to how exactly they anticipate using these. if you would like me to speak about voice, i think that is a good one because you are in a car, you have a cell phone, they can call that car and verify that person is there, but they cannot verify necessarily the cell phone is in the same car they are tracking. >> uber has said they believe they have the safest transportation service out there because they have this gps tracking system, the driver rating system that can

immediately give over driver information to authorities. what do you make of that claim? >> i am a uber user myself, so they are tracking them. however, it would take a human to verify -- let's see -- let's say they had become recognition, and they call the car to verify that person. first, they need to verify the phone is in the car, not someplace else and my brother is driving the car, and secondly, if i am in an underpass, and they get a false match or false non-match, how do they evaluate that or arrive at the conclusion rather or not -- if i really am in the car? >> the company has also discussed adding polygraph exams to the screening process.

how would they go about that? are there any legal or regulatory issues surrounding that particular screening process? >> there are. yes, there are many state that have -- and i think even some cities -- have laws about the use of polygraphy. as you know, it is not accepted in a federal court system as proof positive one way or the other, so a polygraph is really a tool that a professional interviewer can use to drive where they might ask all of questions. having been employed by the fbi, i've been through a polygraph, and it's not dumping at the end of which they say, "ok, you are not who you say you are. you are lying or co--- you are lying or co--- you are lying." they have to go evaluate, so they would have to hire professionals who understand how it fits into an overall background check. >> thanks so much.

uber a story we will continue to follow, and we'll be watching whether or not they put these screening processes in place. time now for the "bwest byte," a number that tells a whole lot. matt miller is with us today. what you got? >> 70 million, paid for a mansion. the creator of minecraft, but this is a real-life mansion he bought with the pilot cash he got from microsoft. i guess you have a byte today as well. >> i will take your 70 million and raise you two -- as in, i'm having baby number two. some of our more astute viewers may have noticed i'm expecting. >> congratulations. >> thank you very much. i think i beat you on the byte today.

don't you think? >> two children is worth about $70 million. have you thought of a name yet? >> i think we just settled on a name. it's been a long debate for the last nine months, but we have a name that him feeling pretty good about. today is my last day, so cory is going to be holding down the fort, and i'm sure you will be making a few appearances. definitely terrified about having two children, but we are all excited to welcome a new baby to the family. >> we wish you the best of luck, and hopefully someday soon, that baby will be here on live tv with all of us. >> and you will be there to witness it. thanks so much for joining us today and sharing the news with me. and thank you all for watching this edition of "bloomberg west." it's my last show for a few weeks and months. enjoy cory while i'm gone. have a wonderful holiday, and i will see you in the new year.

♪

>> the following is a paid program. >> here's johnny! >> from the moment he stepped on stage to the day he said goodbye -- the king of late night was johnny carson.