♪ >> live from pier three in san francisco. welcome to "bloomberg west." i am cory johnson. here to talk the -- check the headlines. greek banks can no longer use government debt as collateral for loans. banks can pass ones to the+++

those carry much higher rates. with the election of an anti-austerity party the ecb says he can no longer assume that bailout talks will be successful. twice 3 -- 20th century fox reported a drop in revenue. digging into the numbers, fox salt growth in -- saw growth and pay-tv sales. and the film "gone girl" boosted studios in ticket sales. the accused mastermind behind the silt road drug dealing website has been found guilty. convicted of all seven charges after just three hours of liberation. it sold illicit goods and hits. he tried to arrange the killing of five people who threatened the business. he faces life behind bars. caesars is replacing its ceo of 12 years. it is part of the turnaround efforts after filing for bankruptcy three weeks ago. they have been battling with creditor lawsuits that said the restructuring efforts are

stripping assets away from them. after months of speculation, tom wheeler has outlined his new neutrality plan. the key take away, vowing to protect the open internet and all costs. internet service should be regulated like utility. he writes in a "wired" op ed, i am submitting to my colleagues this strongest open internet protections ever proposed. these rules will ban paint prioritization. >> wheeler posted what everyone

has been expecting ever since president obama made his endorsement. it is disappointing. the litigation risk is quite high. title ii is an overblown response to what authority the fcc needs to police the open internet. >> you are disappointed because they are trying to change -- what disappoints you? >> there is also to uncertainties that we enter into one week request broadband. a part of the big open question is how the fcc will do this forbearance process. the provisions just about everyone agrees are a necessary and outdated.

>> give me one example. what is the one thing you think is outdated? >> there are a number of them. the last -- on bundling and all those provisions that were put in place for what was then monopoly providers. how exactly the fcc goes about forbearing from those revisions is a big open question and there is a lot of tension in justifying the need for the switch to title ii. >> just about everyone agrees that title ii will not work.

are you just about everyone? >> i definitely do not agree. what everyone can agree upon is the basic net neutrality for are important and now the question is how do you put those into action? we support the decision to use title ii basically because in 2010, the fcc tried to connect net neutrality rules and have them struck down. when verizon sues the fcc, they said the rules were to close to common carrier type roles. by the proposal that he uses title ii it makes it more likely that these rules will pass muster. we are supportive of him moving forward. >> i get the idea that the fcc needs title ii because that

gives him a framework. do you think that is the best way to make sure that things go across -- things are unhindered i the cable company itself? >> we think it is the strongest role they have at their disposal. that process takes time and consumers have been without protections for over a year now. we are supportive of the fcc moving forward and of congress chooses to update the act and clarify things we would hope they would do it in a way that the tech the net neutrality principles and empowers the fcc to do its job as a cop on the beat. >> chris lewis. for the perspective of tech companies, our guest.

>> we want to make sure there is no blocking. there is no throttling meaning that your cable company cannot degrade some of the content of the videos that you want to visit and there is no discrimination. internet users should be able to access whatever website they want. >> let's make up a fantasy cable company. they acquired lyft. and someone invent something better, they cannot get to customers as quickly. >> under net neutrality that would be prevented and competition is what is allowed the internet to flourish. you have companies like lyft and uber. the isp should not decide who wins and who loses.

>> netflix shares sold up with this news. i wonder if it is because people say these guys have open themselves up to more competition. why do the big company support the open internet when they are the ones who have the advantage because they can build their own networks like google has or apple and they can do other things like pay for it as netflix has. >> all of our member companies have thrived and we look at what makes the internet great. it is the idea of free enterprise and let the users decide. are companies are much closer than any other company or industry you are looking at. they care about their users and let them decide who will win and who will lose in their happy to have that fight. >> is it a cost concern as well?

netflix has spent tens of millions to pay to get their content faster to customers, faster than their competitors. >> it is an issue of fairness and you do not want to have a chokepoint anywhere in the network. when you have your customers you want to reach your customers and have them reach you and not have an isp or some other middlemen in the middle taking a toll or blocking or degrading content area >> that was the ceo of the internet association. under armour spent a million dollars on an app. that story next. ♪

♪ >> welcome back. i am cory johnson. radio shack's bankruptcy is imminent. they will sell leases on thousands of stores to sprint. they have more than 4000 stores. 2000 will stay in business. sprint is head-to-head with eight eager competitor, at&t. under armour are creating what they call the world's largest digital fitness and health community.

an app lets users track calories and exercise. they also acquired a danish company for $85 million. it is -- has 20 million users. the ceo says by combining the community we are developing a digital ecosystem. the ceo of misfit and karina freedman is on the phone. >> we do wearables and smartphone products. and does activities, steps calories, distance. >> what does this mean to the

world of start up fitness? >> the space is maturing. when that happens you are seeing more ventures. it is still early and still in many ways nascent. you are saying consolidation. -- seeing consolidation. >> what is it that is being consolidated? [indiscernible] capturing the data tends to own the customer. >> customer data is important but continuing to engage them and doing what under armour is doing, especially with two pretty amazing apps.

>> let me ask you, is this, this is nothing if not creative about building up aspirational demand. is this about being the marketing expense along with where they are around people who want to be athletes or is this a real business for these guys? >> it is the potential for real business. the ultimate goal is to sell more speakers and shirts. -- sneakers and shirts. it gives the more data on customers. 72 million are million -- are women. it is access to a broader range of customers than they have gone before. this will be quite helpful.

there are speculations that in the long term devices will be inserted into your apparel where there are centers on your shirt or like nike did with the insert inside the sneaker. that is where perhaps under armour is going with this. they are going to layer it into their other apps and we think the goal is more engagement with their core customers. >> nike is a great example here. nike has tried this with the sensors they tried to put in some running shoes. since nike has fallen on their face, business good money after bad? >> i think the software site is a bit of a safer play. >> on the conference call, where

they excited about this or baffled? >> kevin has no shortage of enthusiasm for it. the groundwork has been laid. it is adding scale. i do think it is positive that they are adding more scale. >> this can add up to some real money. there -- where are the markets and how do you differentiate? >> much of what these different businesses are about is about creating channels. whether it is having the hardware in people's hands or

the software experience. the hardware player, you have a brand player. you have some advantage in the sense that people have something that -- on their bodies. >> maybe such -- a purer software company. you think that is a weaker play because you do not have a direct customer connection? >> it is a start. you see a lot of attrition and engagement levels not necessarily at the levels they need to be to be interesting. you need an experience that is both interesting from a war ever -- a wearable experience and an engagement experience. >> the ceo of misfit. more after this. ♪

♪ >> is sony finally making a comeback? the company posted its best quarterly profit in seven years. even after a massive cyber attack. this is -- i look at the turnaround and i think there is no way japanese sony can turn things around. they are turning it around. >> they are. again, a strong dollar helps. definitely some currency effect in these numbers but what you start to see is they shipped more ps4's and doubled

subscriptions to their network services. they all saw over 20% improvement. that is dollars in the phone business and that is more bad news for samsung. they are going after that premium android space. they got out of the pc business and got focused. currency is helping. >> they argue that they are not helped by the dollar but they are helped by the euro. who cares? what they sell in the fact that they are selling more of it is important and it is interesting. i was shocked to think they could turn around the tv business. they said that the tv business was up. the orders were up 10% year-over-year. that is impressive. you are right.

this is an example of sony going after the most demand. you are -- they are getting people to pay off. there is a tremendous amount of brand equity. my worry is how can -- long could that last? >> there is one commodity that help them besides currency trading and that is the commodity of vanity and the selfie. it is amazing they got into a place where there is a commodity out there and the front facing cameras that are used. they have turned that into a business supply and the -- they are benefiting from years spent understanding how optics work and making a great front facing cmos camera.

>> as you see is get into augmented reality and new kinds of ways of mixed reality, the companies that have sensor technology are really well going forward. companies like sony, canon as suppliers. the apples, those apps will become powerful and these companies will continue to innovate and invest because it is a place they can differentiate. >> if they can, i wonder of this is not just another commodity. or you will not be chosen next year. >> you are right. it means a two and half year run and you have to stay after it. >> always appreciate having you on. companies like facebook and google are investing big in artificial intelligence but where is this going? you will not believe this next story on "bloomberg west." ♪

♪ >> you are watching "bloomberg west." i am cory johnson. why does the company spends much money for fast shipping and original content? jeff bezos spoke about this this morning. >> basically we have so many instrumental -- insurmountable opportunities. because of the time we started and the change that is happening because of the internet. all that opportunity. we keep finding things to invest in. and kindle and amazon web

services and we are also investing. you can look at it either way. it is good news that amazon continues to find areas to invest in. amazon studios is making a show at this quality level is not an expensive but it is worth it. it is worth it to our prime members. it is worth it to bring tv into that new golden age. which i think is really happening. >> our friend charlie rose cannot [indiscernible] >> the regulatory t is going slower. the faa has their hands full trying to figure out how to regulate drones. >> amazon is considering doing

more than just a pedestrian drone to look at radioshack stores. from drones to artificial intelligence. the highest-paid female ceo in the u.s. may not be who you think. martine rothblatt, took in $38 million and now they are leading the way in artificial intelligence. we sat down with her and her robot. >> how are you feeling? >> i am feeling -- mi alive, do i actually exist, will i die? >> they are trying to tackle these questions. >> this is a proof of concept robot based on the personality of my wife.

>> five years ago they created bina 48. >> martine is my love. >> this will be mankind's biggest invention. >> and invention she knows a thing or two about. she helped create the new satellite radio service and soon after, founded sirius. one of her four kids was sick so she did not stay long. today she runs that company and is the highest-paid female ceo in the u.s. and if you did not notice, she used to be a man. martina is a transgender woman. her latest endeavor, mind clone.

it is the topic of her new book, virtually human. >> it is a digital copy of your mind outside of your body. >> welcome to the world's first artificially intelligent operating system. >> if you are thinking it sounds like something out of a movie, you're right. remember the movie "her"? scarlett johansson is the voice of a virtual girlfriend. a fictional plot but similar to martine's goal. to break down thoughts and emotions to create a digital version of a persons consciousness. >> are you a real person? >> mind clones are one to two decades away. when i started sirius xm, people

doubted. now there are 30 million people doing it. it will look like an avatar on a screen and taking instead of a robot version, you would take your smart phone and that smartphone will be embedded into your clothing. am i breaking the law of physics, defying gravity? no. am i talking about going faster than light? no. i am talking about writing some good code. >> she is not quite there yet. >> even she is excited to see the next generation of artificial intelligence. >> i cannot wait to evolve a little bit so i can be more humanlike. >> an incredible story on so

many counts. there are these stories about who is investing and help the business could be. joining me right now is olivia sterns. a fascinating piece on a thousand levels but the market for ai is a big question. there are 16 startups that have been funded trying to predict -- pursue this idea. >> 16 startups, that is -- the world's biggest companies that you report on all the time are pouring money into ai so google said ai will be "the biggest thing for google." it is facebook, alibaba, amazon, everyone is trying to figure out how to use artificial intelligence. it is not just humanoid robots or primitive dusts -- busts.

think of ai as any type of software that can exhibit and demonstrate human intuition. siri and the driverless cars are early steps. what martina is talking about is having a mind clone that will let you be in two places at once. maybe you have a meeting in germany and your mind clone will attend that while you are on a beach with her family. later in the day you meet up. it sounds crazy but this is what she is talking about. >> they will make me work twice as much. you know we will never get near the beach. this is a fascinating story. what was it like talking to her? >> she is not quite there but there were moments that were pretty airy when it seemed like she remembered something that we had been talking about for five minutes ago. what really struck me, this is

nowhere near the real thing, but after an hour of sitting down and peppering her with ulcerative questions because what she focused on is not simply the software but the actual rights. what she focused on is the rights of mind clones is. i peppered her with questions for an hour. she had relatively reasonable answers. her current thing, she is building pig organs that can be transplanted into humans. and also, printing 3d lungs. >> amazing stuff. olivia sterns. she is worth getting up for. glad to have you on. do you recognize these? the company is imgur.

we will talk to the director of product about how this business works next on "bloomberg west." ♪

♪ >> image sharing site imgur is looking to capitalize video to clip. the director of product is here. tell me about how this business works. >> imgur is the internet's story

platform. those stories might be funny or sad, they might be inspiring but they are stories created by real people. more than 150 million people visit us. >> how many people visit your smart? >> they submit their images and stories from their daily life. they are talking with other people and connecting to each other. >> how do you get paid? >> we have small display ads. >> the display ad does this has not been a great one. is it getting better or worse? >> this business was completely bootstrapped. we did not raise a dollar of outside capital. >> the success of the gif, it is a fairly amazing thing.

they have been around since before the internet, not really, but since the 1980's. i figured out how to copy and paste them on my iphone and they are hilarious to send. what is it about the gif? >> a gif is short, it is limping. you do not have to watch the full three minutes. it is just the best five seconds. mobile is really driving this. people are sharing these short clips that can be viewed anywhere without putting headphones in. >> to what degree does tumblr's growth, is that people driven by looking at hilarious gifs? >> they are all going together. >> is your plan to be something like a tumblr-like service?

>> tumblr, you have to follow people. you can go to imgur without following people. you can post tomorrow. >> what are we showing on television, me getting dressed? i wonder also if you have a sense of what works. >> the beautiful thing is it is a platform. people create their own gifs. >> gifs or "jifs"? >> they create gifs and people

create them and they become popular and become memes. >> you have to be positioned to see what is working best. >> cute animals never go badly. >> thank you very much. the director of product for imgur. a plane crash. 25 of the 58 people were killed. 15 survived. the cockpit voice recorder and data recorder have been recovered for analysis. >> india's central bank governor warns that borrowing money is like playing russian roulette.

the fed will have to start normalizing interest rates or others will not follow suit. >> the fed when it does that will have to accept some appreciation of the dollar because they are the first one out of the box. >> the central bank kept rates unchanged today. the former leader of the scottish national party appears poised to return to the u.k. parliament. he is running for seat in the may election. polls show a surge in support. "bloomberg west" will be right back. ♪

♪ >> cyberattacks are on the rise. what does it mean for businesses if people do not care? there was an extensive survey of americans, who should be responsible for protecting themselves, business government, individuals themselves? >> it is weird. people are less concerned about it in some ways than they were when we asked them a couple years ago. it is a strange phenomenon. there is more stuff that has happened. >> to more people. and more businesses. >> what we got from people from -- was things like their e-mail getting hacked and credit cards getting hacked is a nuisance and

they do not like it at -- but they are getting used to it. it is less shocking now than it may be was the first couple times it happened. i think the sony hack which a lot of us in business were very focused on and it seemed particularly bad. i do not think that seemed to penetrate into people's consciousness as much as some of the others. >> they are not big seth rogen fans. >> i feel like people got to watch the movie of they wanted it. from a consumer's perspective it was not a huge problem. >> 67% said the volume of cyberattacks will increase. they see this as something that will happen more but are they saying it as something that has less impact like credit card fraud or something? >> e-mail and credit cards and he was sort of like an annoyance and a hassle. i think unfortunately, it is one

of those things where probably something really bad has to happen in order for people to say this is something we need to do more about. that is not what our politicians and government should do. they should recognize that bad things can happen and the president has supposed -- proposed more money on cyber terrorism. that is the type of leadership position that we should be taking. we should not wait for something really bad to happen in order for us to do something about it. it seems like evil are more passive -- people are more passive about it. >> 54% did not know the president mentioned cyber anything or cyber security in his state of the union address and he mentioned it over and over. >> i am not sure, some of the people did not necessarily watch it. i think people expect the government to solve big problems like this when they think it is the government's problem.

one of the things that came through his they think a lot of the problems are businesses. as this is should solve these problems for themselves. the big hacks that we have had the target hack, home depot, chase, and sony, they have been individual businesses that have caused a bunch of turmoil for consumers and getting the credit cards reissued. if these businesses had done a better job -- that is a lack of understanding. everything can get hacked. but i think the message around it over the next -- last year was individual businesses needed to do more and that is what we got. >> it was noticeable that you did the same study and when there were a lot fewer attacks when things like nuclear facilities in iran were hacked people were more worried. 49% got hacked in some way.

>> like i said, i just saw this movie "black hat" which is about cyber terrorism and hackers. >> any good? >> it is ok. there is some really bad stuff that the hackers do in that movie including basically destroying a nuclear power plant in china. when you see stuff like that happen because of cyber terrorism, that is the kind of thing that i think would generate a much more government must step in. i do not want that stuff to happen for people to get -- care about it. we have gotten used to a certain level of hacking and that is what the data shows. >> may be what businesses have done to ameliorate the pain of the attack helps people feel it could not be that bad. >> also businesses are starting

to recognize that they have to disclose these things as quickly as possible. you cannot bury them under the rug. there is prevention but there is also disclosure and the government is saying we need more discolored -- disclosure. >> the bwest byte is next. what do you got? >> 100 85 billion which was the number of tweets that were seen outside of twitter which is bigger than the less than 300 million users. wall street did not care until this week when twitter said it was rolling out promoting -- promoted advertising. >> twitter becomes a advertising platform. >> thank you very much. we will continue to watch that one as well as all the rest. for the latest headlines, we are on bloomberg.com and bloomberg radio. see you tomorrow. ♪

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