greg live from. three in san francisco, welcome to "bloomberg west." and cory johnson. a major deal in the drug care -- health care industry. buying pfizer for $17 million, the biggest move since the collapse. -- buying hotspur us for $17 billion, the biggest reasons the glass.

it hundred 92,000 subscribers in the first quarter. price cuts certainly help. sprint really stays ahead of t-mobile as the nation's third-largest wireless carrier. sprint has posted two point three $8 billion -- $ 2.38 billion in the first quarter. the sprint name is not as viable as it once was. disney says the heir apparent co2 bob iger -- heir apparent ceo to bob iger, tom staggs stepping into his new role. meanwhile shares are showing strong earnings early in the week. sony pictures cochair amy pascal, jokes that president obama and his opinions on movie salaries is stepping down from her role in the film business there. she's not leaving sony altogether. she will start a new production

company with backing from tony that will retain all this region rights to her films. hackers in the lead again. and indianapolis based company says it was the victim of a sophisticated attack, with criminals breaking into their database and sweating information of tens of millions of customers and employees. anthem says the names, birth date, social security, home address, even e-mail address was accessed. they are still trying to determine the full extent of it. we have complete coverage of this developing story with attorney george jepson, who has written a letter to anthem, demanding details. but first, jordan robinson, and also with us, michael kaiser the director of the cyber security alliance. how does this continue to happen at arguably the company that

should be thinking about this kind of problem the most? >> the big problem here is that hackers see a lot of value in all of this kind of data. whether it is health or financial data, regardless of the nature of the information, they are after it for a lot of reasons. they are highly skilled, highly motivated actors and as you saw here, they got a lot of data. they got 80 million potentially social security numbers on people. that is the worst kind of data. it opens the future for so much criminal hacking. hackers got it badly enough and they got it. >> and to tie that was income they can source those that they want to target with the most money, right? >> income is the interesting aspect here because that is a sensitive detail as well, just like health information. and there is a strong correlation between folks that you would like to target for

financial fraud and those making the most money. it will be a lot easier to pull some big lines of credit on those folks. but since anthem is in here -- >> michael, since anthem is not here, can i blame you? your company's main job is collecting sensitive information about its customers. why does this continue to happen? >> you cannot blame me. i have no involvement in income at all. it continues to happen for several reasons. one, the systems people are putting in place are very large complex, and very -- interdependent. these people are sitting on huge amounts of data, millions and millions of customers, and they are just a very target rich environment for the bad guys. they want to go after this data, and they will work very hard to get it. correct to what end, michael? -- >> to what end, michael? things are not going to get less complex as we get more data.

we will have more complex systems. do you not worry about the hat but what they do with the information? >> yes, we do. and this is very valuable information. i mean, credit cards, this is what people used to having stolen. that impact on consumers can be very little. here, with a rich -- we see a rich data set that can be used by criminals to create identities and conduct cyber theft. this data is very valuable and it is worth money. and having these records is something they can sell large numbers of them on the black market and people will try to monetize them in different ways, of course. but that is how it will be distributed, sold in broke -- in bulk. north korea attacked sony pictures -- >> jordin, when

north korea attacked sony pictures, they wanted to stop the release of a movie. they failed at that. or perhaps they got what they wanted. what were these hackers after? >> one thing is clear, we know they wanted a lot of information. we do not know exactly what they wanted to do with it. but we do know they wanted a lot of it and wants to keep their options open. there is a pretty big standard with hack attacks. if you have access to a company that is not segmented we were a group of individuals or small group of individuals has access to 80 million social security numbers, you will take all of it and sort it out later. some of the tools indicate that these were possibly state-sponsored attackers, you know, sophisticated attackers. but we don't know what they wanted to do with the data. we just know they wanted a lot of it. >> the line between state-sponsored criminal --

state-sponsored and criminal is hard to distinguish. >> and there is a very interesting dynamic at play where we have seen cases where nationstate attackers, espionage attackers, will be inside a system and see a bunch of data that they can tell in the criminal underground and take it. is that a nationstate attack? over these individuals that tried to take a little off the top? it's hard to tell without intercept and nsa intelligence whatever what's the motivation of these attackers will ultimately be. >> jordan robertson and michael kaiser, thank you very much. this is already raised the ire of government officials, one is the attorney general, who is asking the company some tough questions about what measures they had in place to protect that viable information. he will join us in an exclusive interview next. ♪

>> this is "bloomberg west." i'm cory johnson. here's a check of world news. an emergency visit to moscow today in an attempt to end the conflict between the pro-russian rebels and ukrainian government. john kerry was in ukraine today urging a diplomatic solution. a huge telecom deal in the u.k. bt group has agreed to buy wireless carrier ee. the deal is expected to be completed by march 2016 providing antitrust approval. lookout, apple. swiss watchmaker swatch, which knows a thing or two about

making watches, is planning a smart watch. it's set to come out sometime this ring, perhaps in march -- this spring, perhaps in march. it will work with android and windows. turning back to our top story, the massive cyber attack on health insurance giant had them impacting as many as 80 million customers. president obama has called this data breach right concerning and my next guest is demanding answers from anthem. attorney general george jepson joined us in exclusive interview. thank you very much for joining us. this is a big deal. what do you want from and from? -- from anthem? >> we want answers. we have immediately pressed an inquiry with anthem as to how many consumers are effective.

we know it is up to 80 million. the kind of information impacted, which is concerning, and what is being done to make sure this cannot happen again. there is so much at stake. >> what might inform your questions? >> we learn best practices for storing the information. you cannot know every method for every hacker possible, but we want to cover best practices. have you seen in the past? >> the major ones -- >> y? what have you seen in the past? >> the major ones are ongoing investigations, so i cannot comment. x with a major -- >> a major company like anthem, they are not health-care provider or a doctor. their job is to handle data. if anyone has protections up,

you think they do. >> right and with things i credit cards, names addresses -- things like credit cards names, addresses, and social security numbers. this is deeply concerning. >> has this been an area of focus for you? and if so, why? >> when i came into office four years ago i found we were being too reactive to data breaches, so i created a task force within my office to adopt as practices and persuade businesses to adopt them. unfortunately, once a breach has occurred, the cap is out the door and it's tough to get him back in. >> it seems to be happening over and over a. i wonder ifhere is a protection to be had at this point. hackers set their sights on sony and a got what they want. they stop the release of a movie, and now the executive of

the company is out. and hackers set their sights on anthem, and they got the most sensitive data. >> the fact that they were able to get so many different categories of data is especially concerning. >> anthem is based in indiana. you are not. what is your purview in this matter? >> there is a local anthem-blue cross that is the largest insurer in connecticut, about 50% of the market. we work together with other state attorneys general on things like this in the past looking at target and home depot. i think we will be adding this to the list. >> is the federal government doing enough to help in this area? >> well, one would hope that they could do more. it seems that hackers are always one step ahead. i think whole industries, for

example, the credit card industry needs to have some kind of shakeout where we shift from magnetic bands to embedded chips, like they do in europe. >> although, when you are talking about, these one-off data breaches i guess the notion that nationstate or criminals working with nationstates are going after these really big target like all of the data at a company like sony, which has playstation network, or all of the data at j.p. morgan, or all of the data at home depot, and now at anthem, is this a different kind of threat that the state can respond to? or does the white house need to do more? >> there is room for everybody to work on this. and when businesses feel the heat not just from the federal government, but state that well, just two days ago we announced a settlement with standard & poor's that was with joint federal and state investigation. the state played a significant

role there. the states can play a significant role here. >> what can companies do now to prevent a phone call from you when they are hacked? what is the one thing, these are not doing enough of? >> i think they need to make the backdoor not just a priority, but priority number one. there is so much at stake not just for consumers, but themselves. >> george jepsen of connecticut, thank you for your time. coming up next once an encourager of the patent now worst nightmare. we will talk to a company that fought back when it got sued by someone who owned a patent in an amazing way. ♪

>> i'm cory johnson and this is "bloomberg west." several members of congress have introduced a bill that will address the bigger increasing problem of patented it. the proposal has the backing of companies from macy's to google and aims to define how they will use certain products. one example is a family network called life 360. just days after announcing a $51 investment in may, the company -- a $50 million investment in may, the company received a notice that they were in violation of a patent. here's an incredible story of

fighting back against what he says is patent control. >> my company raised a $50 million fund for our security company and two days later agis sent us a very terse letter. quick their letter said what? -- >> their letter said what? >> that we were infringing basically on a marker on a map and, pay as, or discuss royalties or we will go for any injunction. >> and you've got $50 billion in the bank that you want to use to grow your business. so you coward in the corner and cried? -- you cowerd in the corner and cry? >> i didn't, actually.

we stood up and sent a strong message to this, what we consider a troll, and said we would put our money toward growing business that really helps people. >> tell me exactly what your business does. a company called life 360. we focus on sharing location, messaging, communication with family members, with a big element on safety. if you are out and about and need help, you can push a button and everyone in your family knows where you are and we can help you. >> they do own a big pile of patents and they are a nonpracticing holder of patents. and they are not unique in this. there are a number of companies that hold patents as opposed to develop them. >> they will not confirm any of vessels. it seems to be driven by lawyers. i had very little contact -- they will not confirm any of this.

it seems to be driven by lawyers. i have had very low contact with anyone in the company. what we guess is happening is they were not making money as a business, and this law firm in this case, kenyon and kenyon solid $'s and said, hey, we can make some money. -- saw the dollar signs and said, hey, we can make some money, and they went after us. >> they said we have retained counsel and currently in the process of investing in this matter. and you respond and say i will present a car israel and that you are is worthy recipient. >> patent controls do not expect a big fight back. they push you to what they think is the brink, right to the point where you would rather pay them off than fight. we are trying to turn the

question around and say, you know, we will name you if you come after us. people don't want to be known for abusing the legal system. and we think that by shaming them, sharing all of this work that we are doing, we can catch them off guard and go on the offensive. >> you are also helping other companies through just these guys, or other patent trolls -- tolls,? >> we have spent an unfortunate amount of money and time researching the patents among researching what makes them -- researching the patents, researching what makes them invalid. they've been falling apart. instead of just keeping this in a file cabinet and hoarding it to ourselves, we are open sourcing this to the entire community and make ourselves available with any company with less than $25 million in funding

that is also being threatened by these ties. >> and you've had some -- by these guys. >> and you've had some success in the court. >> yes, and at trial something called the martin and hearing where a judge decide how these claims should be legally interpreted. he tossed out four of the 10 claims they had before it even went to real trial. his opinion on part of this was it was completely shoddy and it was a shame that it got past the patent them. and that is the biggest problem. $80 billion a year spent against -- spent defending yourself against patents that probably should never have been issued. >> the ceo, malcolm troll -- malcolm toldbeyer, told us this.

coming up, at the --etsy's crafting his own issues in dealing with local merchants. that story is next on "bloomberg west." ♪

greg you are watching "-- >> you are watching "bloomberg west." i'm cory johnson. paypal cofounder max luncheon shares the story of his fateful encounter with peter thiel a meeting that led to the founding of the company. then they sold the business to ebay. was at the right decision? take a listen. >> the paypal engine was long, as you know. -- the paypal story is long, as you know. was selling at the right decision?

>> there was no alternative. it is clearly successful today. it is impossible to argue that the stale -- the sale to ebay was not a step in that direction. could we have been bigger and farther along and less bureaucratic and more nimble as a standalone company? maybe. would we have been more challenging our ability to expand and have taken longer to bring the product to more people? it is hard to tell. the team was very tired and still blocked in a brutal battle with ebay because they had their own payment service that they were not about to give up on. so, probably the right call. on the emotional front, it was very difficult. on the business front, probably the right thing. >> what was difficult about it? >> it is your baby. it is this family teenager that was growing up and to be --

growing up to be a beautiful company. >> the full interview with andrew left it -- with max luncheonlevchin tonight. etsy merchants express their outrage and blogs -- in blogs. why are they so ticked off? we spoke to some san francisco sellers to find out. >> stuffed animals dressed like hipsters are rebecca thing. she spends five hours selling each one by hand. she sells them for $50 on at the --etsy. >> esty was the perfect platform for me. they were doing their part to

elevate the experience of the greg that is, until they were changes. >> they did nixon changes that cause a weird shift -- they did make some changes that cause a weird shift in the ecosystem for the next 15 months ago, they allowed manufacturers to produce and math. the goal was to create greater scale. the new policy has made it harder for consumers to find her pillows, and compete on price. >> why not just use a manufacturer to compete? esty sellers have a strange emotional connection to their peace come they want the public at large to feel the same, which they do in many ways. but at the end of the day, it's a business. >>etsy was founded a decade ago. the idea caught the idea -- the attention of venture

capitalists. over time success spread conflict and they strayed from the company -- and they rejected any strain from the company core values. now the ark -- they are preparing for a $3 million ipo. etsy charges $.20 for each listing in a 3.5% commission for each sale. the more transactions, the better. they declined to comment on the policy changes in the ipo. these changes are common in a lead up to a public offering even if it means offending some companies -- some customer. >> companies need to be able to evolve. the trick is to do it in a gradual way, or in a way that does not offend your original base. if a company moves too quickly it can have a negative impact on the current customer base, and that shows up in revenues, margins, and all those.

>> at a meetup in san francisco, sellers had mixed reaction. some say it is the price you pay for being part of a larger ecosystem. but rick left side when the policy changes were announced. >> for a site that really claims to empower crafters, i did not feel he was doing that. >> and yet, some see the ipo as an opportunity. they have started the campaign to raise $1.5 million and build a stake in the ipo. those used to express themselves through art are starting to do so with their wallets. >> leslie picker joins me from new york. making changes just as the business is going public. the first company at work for said, you can change a fan belt while the engine run, but it's not the best way to do things. >> right, and when the company

for started it was going to change the world. that is the joke around silicon valley. that whole mantra of saving the world, then you certainly have to embrace this concept of wall street and growth and profit and those two concepts do not always mesh well together. that is the one thing that is kind of happening at etsy right now. >> how big a risk is the outrage at the ipo? >> if you look at the campaign where one of the sellers is trying to raise money and buy a stake in the ipo, they have only raised about $130 at this point $130 out of $1.5 million goal. there is plenty of interest from investors to buy a stake in this thing. that said, when you look at the ecosystem surrounding this company and the customers and sellers and buyers, there are certain values they focus on. as more sellers accept the site, that puts them at risk in terms

of what makes this company attractive to investors and an ipo. >> these craft people that found the perfect universe, where else are they going to go? >> most of the sellers i spoke to said there are no perfect alternatives. there are other places they can actually list their products, or they could, of course, build their own sites themselves for their shops. but none of them have as attractive metrics as etsy. when it comes to an exact alternative, there really are not any. that is why, i think, many of these sellers are taking to forums and blogs to protest these changes. because they cannot just pick up everything and leave. >> i'm so wary of business is making these kinds of changes just as they go public. you wonder what it is going to be after the company comes out of the chute. i cannot think of a lot of other

examples off the top of my head. do you? >> other companies see the need to monetize before the filing is disclosed. one analyst i spoke with gave the example of pandora. they made their ads as users were going to mobile a little more invasive. you are listening to pandora and the music stops and you haven't had -- you have an ad. that upset some users and they defected to other sites. and that is slightly different because the users have other places to go. but focusing on that idea of monetization ahead of an ipo, as opposed to the core values of music streaming. >> leslie picker, good to see you. up next, snapchat for the business world. it lets you send a screenshot

self-destructing photos and other images. ♪

but i'm cory johnson. what is snapchat when you get rid of the naked selfies? it is a messaging app off the record. it can be sent to dropbox or google drive and then it disappears. john, talk to me about this business. it is fascinating. >> it is an incredible business. you really hit it in the intro. the spoken word disappears after we say it, but whatever we communicate digitally remains archived in the permanent digital record and a cloud keeps

copies of it everywhere and recipient has a copy and we think it is crazy and dangerous, particularly for sensitive to medication. >> it really wasn't made for insider trading. or it was. what kind of information lend themselves to this? >> anytime you send an e-mail that says "confidential, don't forward" or "hey, can i call you?" that is an opportunity to confide. if you drill down on that, you think about job references, deal point, conjecture or subjectivity on a sensitive matter or maybe some good-natured office gossip. >> there are certain industries where information is so dangerous that people have secrets. >> that's right, but people have sensitive information in every industry. and we just announced confide for business.

we literally got about 1000 inquiries from 14 countries and 25 different verticals everything from tech to media to entertainment from small and medium-size businesses to fortune 500 companies. we think this is a global need across all sectors and industries. >> yes although i wonder if it is appropriate for finance, when there are so many rules about maintaining records about maintaining to medications. where traders have to keep every bloomberg messaging medication they are having -- every messaging indication they are having across the chain. >> i think that's a great point. if a compliant companies will have to take some time --hipaa compliant companies like you take some time to sort this out. >> our member talking to the ceo of lincoln a while back and the question was, why do you need

linkedin? and his answer was, the kickstand. -- keg stand. if there is a photo of you somewhere on the internet doing a keg stand, you don't want that on your professional network. >> snapchat has done an incredible job of the disappearing or from an old -- or ephemeral medication. we are laser targeted at professionals and business people. often we say, we are to snapchat what linkedin is to facebook. >> at sony, that certainly raised a lot of eyebrows about things that are set and taken into another context when they reach the broader world. has that changed your adoption rate? >> it has been unbelievable. we are experiencing terrific growth.

the sony hack has completely accelerated our growth rate in such that every week has been a record week across all metrics. >> the sensitive business information, and then we have this huge health care hack at anthem today, and then the sensitive information at sony, two, were those particular to your customers ecco -- your customers? >> if you go back 12 months, we have seen a lot of poster children to the dangers of digital communication. first, it started with snowden and the ability of surveillance and prying eyes. he had served lawrence and kate upton and then with the cloud and the fear of the cloud. sony internalized it for everyone where you said, well could you imagine every digital communication were exposed? that is where we are as of friday. everything we communicate by e-mail, im chat, it will be

exposed at some point in the future. >> thank you very much, president of confide. now for a check of your world news headlines. no progress was made in the first direct talks between greece and germany's of the anti-bailout government took power last week. finance ministers from both countries met in berlin and they did not agree to disagree. the meeting -- this came hours after an off 30 push ostensibly by germany. ford will boost production by -- after an austerity push sensibly by germany. ford will boost production. ford ceo mark fields said annual ceo reached about 400,000 vehicles this year. sport has invested about $2.6 billion to expand the valencia

factory. get ready for more katy perry this time a mobile game. from the maker of the wildly popular kim kardashian game they have signed the popular fox -- popstar for five years. revenues were up 78% in the fourth quarter. shares were el fuego today. speaking of el fuego mark crumpton at the bottom of the hour. >> nice segue. what will trade deals mean for the u.s. economy and for american workers? and will giving president obama trade promotion authority fast-track authority and help negotiators as they pursue agreements in asia? i will be asking john engler. i will see you in a few minutes.

>> looking for a job in tech? it might be time to go for a run. we will show you what made one popular fitness application stand out among all the others. ♪

>> i'm cory johnson and this is "bloomberg west." google is setting itself up to play a big role in the future of transit. air schmidt hosted the secretary of anthony foxx, at google headquarters this week, and after taking a spin in google's self driving car, they had a discussion about how technology and policy might shape the future of transportation. schmidt said they have a model for reducing bay area traffic. >> i believe we operate the largest private bus system in

america in terms of the number of people we move. and it's the only way to deal with the fact that we want our employees roughly here and in a couple of other locations and they are spread out. it has been a huge success. >> it was a fascinating discussion. we will have more of it tomorrow on "bloomberg west." that is just a tease. it's time for the bwest byte, one number that means a whole lot. we are joined by dave miller. what is the bite? >> the number is 8.1. if the number of miles iran in order to spell out the words "hire me" on the streets of san francisco. >> my runs don't usually spell things. occasionally, in the shape of objects some words cannot be mentioned on the air. you ran in the shape of the letters that spelled "hire me" and ended at headquarters where

you wanted a job. did you plan to found? how much backtracking did you have to do? >> there was backtracking. i had to connect the letters in a way that line everything up. basically, i planned everything up with route planner after submitting my application. i was playing around with the product and it seemed like a fun thing to do. >> it was fascinating, what you did. and he ran at a 9:22 pace? and all the backtracking in the city. >> when you run in city, you pick up the pace a little bit. >> i don't want to the punch line, but did you get the job? >> they have reached out. it is only a week and a half ago that i did this. instead time for the >> -- things take time. >> you always hear things that companies are saying they cannot find enough people. it technology world is the

lowest in this country and in this industry. what is it like to be someone in this industry looking for a job? >> i think it is fun. >> looking for a job is fun? >> yeah. and the companies that your -- you are super passionate about and getting a response, that is the struggle. once you find that you want to be working around people that are just as passionate as you are. >> as the rest of the world hears about the perks and silicon valley and the free food and the gyms and stuff, they think we are crazy out here. do you think you are in the driver seat to get the job you want think in front of right money or environment or whatever it is that motivates you? >> personally, yes. i have worked at google before but perks don't matter as much to me. honestly, they might to a recent college grad. i'm more looking for a product i caring about. >> because you want an upgrade

or you want to not suffer while you do it? >> an upgrade is the focus. >> one of my job -- one of my goals with this job is no a-holes. i have done that before and that is one of the bloomberg west mottos. what are you looking for? >> i'm sure that if i did work with people like that, i would want -- >> what is it about this job that interests you? >> i got super serious about running after i started using these self quantified as that track my runs. i'm really a geek when it comes to visualizing exercise data. >> really? i think everyone in the world now things you are an exercise the when you talk about visualizing exercise data. thank you for coming on.

more "bloomberg west" tomorrow. ♪ . .

>> from bloomberg world headquarters in new york, i'm mark crumpton and this is "bottom line" -- the intersection of wall street and main street with a -- of wall street with a main street perspective. to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks making headlines on this thursday. shall be holiday examines the high cost of maintaining a measles outbreak. julie hyman looks at one of the key players in the staples and office depot deal. but we begin with our chief