♪ >> welcome to the best of bloomberg west. every weekend, we bring you the top interviews with power players in global technology and media companies who are reshaping our world. we begin with google. the search giant faced its biggest threat ever, as the european union flak debt with an antitrust campaign. it all started five years ago,

when the eu started investigating google search practices. the eu has filed formal charges. they have accused google of being anti-competitive and abusing its dominance. they claim that google favors its shopping searches over its rivals. google shopping results come up and are prominently displayed. a top danish politician is leading the investigation. >> it is the first place where we got a complaint. first place where we got a complaint at google is favoring its product in search for the longest period in time.

we will continue to look at google's conduct in other areas. >> she also opened a new probe into android. she is still investigating search results for hotels and maps. google controls -- while google might be the most used search engine for finding information in different ways and allegations of harm for consumers and competitors have proven to be -- white and the mark. in 2013, the u.s. ftc launched a similar investigation the close it without taking action. not so in europe. if found guilty, google could be fined as much as 10% of its revenue, which would amount to $5.3 billion last year.

they could face severe restrictions on how it operates. still, legal extras believe such a fine is highly unlikely. i spoke with a antitrust lawyer, and a former coo of google europe. and our own editor at large, corey johnson. >> this is been going on for quite a while, it is not a new revelation. the statements of objection are relatively bland. i think a lot of it will come down to is google dominant, and how they view that dominance. if you look at a universal search, google versus ya who, -- iago -- yahoo if you look at how people shop for hotels consumer electronics, credit card banks etc., they use mobile apps. yelp says 40% of their restaurant bookings come

straight through their app. number one, are they dominant? number two is are they abusing it? google will always say, how do we give consumers what they want. knowing google in the way that they were i don't think they will of ever said, let's place our products first. they would have said, consumers seem to like vertical specialist search. let's change our format and see if they like it. before any back to you every time google makes product searches, elder than changes -- algorithm changes there are no surprises that people have had -- been hit and complained. emily: how serious is this allegation against google? how serious is it that the eu has ratcheted this up to formal charges. paul: i think it is just an

interim stage, this marks the end of the first phase of the investigation. the statement's of objection is a short surmise of where it has gone to in its investigations. and no google will have the opportunity to go in more detail. is important to emphasize there is no finding in liability. it is the direction of travel in the commission's thinking. we do not have a conclusion in terms of if there should be a fine. if there is a fine, it could be up to 10% of its turnover. i think it is fair to say it is serious. google has been trying to settle this through forms of commitments. unfortunately, that has not worked. they will still have the opportunity to offer concessions, it has not been

able to close it by that channel. emily: in the worst case, how could this hurt? corey: i looked back at the google ipo today and it said they were unbiased. people believe google will give them the best search results. if you are to go on google and search for types -- flights from charles de gaulle airport -- the results of be the same. i did a kayak search and a google flight search and guess what, i found cheaper flights on kayak. that says to me, the real risk is that the information is sometimes biased in favor of google favored results. that could hurt more than $5 million.

-- $5 billion. emily: then, what is your reaction? ben: my reaction is that they may become irrelevant. coop -- consumers are realizing they are not getting the best deals on google. it is a proven fact with lots of data with desktops and mobile, that lesson was consumers, especially sophisticated ones are searching their search -- starting your search journey with google and they are finding better experience and better deals elsewhere. google has an obligation to its customers and shareholders to improve its results. that means improving formats. that means having more choice, more images. filter and sort the way kayak does. otherwise, they will become irrelevant. they could start declining at some stage.

kayak is still winning, why would kayak worry about google? i realize there are more subtleties and that, but google needs to keep in freezing -- improving if it wants to do more of the same, rather than lose its battle. i think a $5 million fine is far less worrying to google been saying you can't do vertical search. that would mean the google experience would get worse and worse compared to the virtual search specialist overtime. which would make google less and less relevant. i think the fine is far less worrying than google having to stop innovating. emily: paul, paint the most genetic scenario. does google have to breakup in europe? paul: i don't think it could come to that. under what we call a behavioral investigation. it could be that google would,

in search of a concession although unlikely, it could have a formal breakup. i think as your guest said, the most worrying aspect is that google will be forced to comply with a legal precedent. emily: paul, ben, and our own cory johnson. up next, hillary clinton is in the race for the white house but the digital campaign will be different from the last time she ran. her former senior adviser joins me next. later, how will social media be a game changer in 2016? that is all coming up on bloomberg west. ♪

emily: this is the best of "bloomberg west." i am emily chang. she is in. former first lady hillary clinton has finally announced her candidacy for the white house. the response has been overwhelming with over 500 -- 5 million video views in the first few hours of her video. i spoke with alec roth, her former senior adviser and asked what his involvement would be. alec: i think she wants support for her presidential run. when we connected, she was in ohio on her way to iowa.

and very excited about her new presidential run. emily: how did she feel? alec: the rollout has been a huge success. it is kind of bananas. they came out with this new video, and within the first 18 hours, it was viewed 5 million times. one of the other presidential candidates who gets credit for being tech savvy is rand paul, his video had been watched 250,000 times. i think 20 times as well as the next tech savvy candidate is not shabby. so she feels pretty good. emily: do likes and followers on twitter and facebook, do they translate into votes? alex: we are far past the days of ronald reagan doing a perfectly executed campaign event with the flag positioned

just so, and then he shows up again three days later. you have to have a continuous dialogue with the american people. you have to educate them about who you are and why you are running. that is what really matters. the 5 million video views and so far as it means 5 million people people listened to what she had to say. emily: using social media is a given these days, yet she literally just joined facebook. she is already doing quite well but she joined twitter relatively late. why has it taken her longer than some of the candidates to embrace these platforms? alex: the biggest reason was that when she was secretary of state, it was a lousy job to use social media. in diplomacy there is so much nuance, so much attention given to every little comment, every little semicolon, it did not lend itself to 140 characters or

lend itself to liking and unlike in. i was off for diplomats using social media, but i do not blame her for not using it personally while she was at the state department. emily: the republicans have caught on. marco rubio saying he is on snap jet there is -- snapchat how big are hillary's challenge is going to be in the hit to change republican media landscape? alex: in 2008, obama won because he figured out how to use technology very effectively. almost surprisingly, in 2012, the republicans were still fairly incompetent. mitt romney's technology platform broke down on election day. that will not happen in 2016. whoever the republican candidate is, bush, cruise, paul, they are all technology -- technologically savvy.

and they all get it. i think will be a challenge for hillary in that they are going to be competing fiercely with her, and whatever democrats run against her in the primary as well. emily: what is her mindset when it comes to leveraging technology, leveraging these new tools? obviously we thought different kinds of campaign announcements, what else? alex: we will see which tools get used. what i do believe we will see is an unprecedented use of big data in this campaign. social media was defining any -- defining in the 2012 race, i think the -- i think it will make a big impact. emily: alec ross, former senior adviser for innovation at the united states state department. the 2016 candidates are already sparring over twitter and youtube, but when it comes to tech and politics, campaigns including marco rubio's are already investing and big data to learn more about competitors.

i spoke with someone who has seen firsthand obama's campaign. >> i think rubio's approaches -- approach is clever. he is going up against a incumbent who has a huge amount of technology behind him. using the strategies of his father and brother, they are planning on raising hundreds of millions of dollars through traditional means. rubio's strategy is about raising money from investing in areas where they can have a big impact in terms of efficiency. that is where i think using data to help make decisions is critical. emily: areas like what? >> i think particularly around fundraising. if you think about where the campaign can spend their time, certainly as a candidate going through and doing traditional fundraisers in hotels will bring some money, but if they can use optimization and testing to

improve the effectiveness of their website and online presence, that can raise money through many small donors. emily: what is more powerful big data or money? who would you rather be? >> big data is a way to become big money. if you look at the history of the hillary campaign versus obama in the primaries in 2007 the first quarter, hillary used traditional means to raise slightly more than obama. but the following quarters through many small donations , obama was able to beat a traditional big fundraiser. emily: former head of analytics for obama's 2008 campaign, dan. tim armstrong explains new technology. ♪

emily: this is the best of "bloomberg west." i am emily chang. aol is taking aim at google and facebook with new advertising technology. on monday, aol unveiled a new ad platform designed to help advertisers figure out how to spend their ad dollars. it will allow brands to measure the effectiveness of their apps -- ads across all formats. cory johnson spoke with aol ceo, tim armstrong. corey: what is happening today is the biggest pivot point in media, from the way traditional media was done to the way it will be done in advertising which is the targeting of advertising at a much deeper level.

today, our lunch was probably the forefront product for the next generation of internet advertising systems. i think as you just described it is the most powerful time. -- time for marketplaces in the world. aol is stepping up as the most powerful futuristic marketplace. it has been five years of work. it is exciting externally, but our teams internally are more excited. we know the power of this product. cory: you guys have done so many acquisitions of little companies, is this the stitching together of all technologies in a single platform? tim: we started five years ago as a team. closing video, always in advertising, one was an global content brands. when you think about those three areas overall, we have knitted together aol historic platforms together with exciting acquisitions.

when you take a step back aol is a top player in video distributed content on facebook for social, no one has a more advanced system all the way through mobile than aol does. i think the stitching together of our strategy has been important. we have not changed in five years. it is a 20-30 your strategy in front of us. cory: when i think about this, i think about what clever marketers do. i have the ceo of carl's junior. right around the super bowl. they did not buy it a super bowl ad but they went to the markets were they thought they had the most impact. they recognize they were not mcdonald's so they wanted a particular ad that would reach a young male customer. they were clever the way they reached tv markets and markets on the web. social media, going up to the demographic.

it sounds like what you're talking about is the shift from demographically focused advertising to results focus. tell me how that might work in a real case example. tim: if you are into it, which is one of our partners, they are taking advantage of a singular trend, which is media was built in bulk and since to consumers -- sent to consumers in bulk. now it is being built on a similar basis in many cases. as an advertiser, we are in tax season right now, intuit can talk individually to consumers. when you think about it, the future of connecting with people will be on a singular basis. that is why social networking is important. that is why people doing individual searching is important. our platform is the first platform to take advantage of

of the singular nature of singular content going to consumers. when you look at a recent tv statistics, the fact that almost all human beings are walking around with machines in their pockets that are essentially as powerful as a cable box, all of our systems are built to essentially deliver high-quality content and high-quality advertising and a singular way into everyone's pocket. that will be a significant shift for the entire media and internet business for the next two or three decades. cory: how can you track and add -- and add on a smart phone when you cannot get the feedback from a cookie like you can on the web? tom: mobile is about device targeting, for us we have about 100 million devices in the united case that we recognize and understand and we can cross-link. that creates a powerful union.

if you think about the way consumers consume media, on digital, a broadcast network today we can cross format target and target you in general. it actually makes what cookie targeting was in a more powerful way. it is cross device. when you think about advertising in the future, a lot of people think technology will deflate ad prices over time. i would make 2 bets, one will get better and more creative the second is, ad prices will go up. there are a lot of ads and you do not know how they work. people still spent $600 million. imagine how much people will spend when you know how each ad works. emily: tim armstrong with cory johnson. hundreds of commercial planes could be vulnerable to hacking according to a new government report.

we talked to one of the researchers behind that report next. ♪ . .

emily: you are watching the best of "bloomberg west" where we focus on innovation and , and technology, and the future of business. i am emily chang. in-flight wi-fi connects travelers to the outside world, it could also give hackers a way into planes on the computer system. the government accountability office reports that hundreds of commercial planes could be vulnerable to cyber attacks. passenger wi-fi access. many modern cockpits rely on the same wi-fi that passengers use. meaning a hacker could commandeer a plane and shutdown navigation systems. how can airlines and faa keep hackers out of the sky?

earlier i spoke with the co-author of the gao report dr. gerald dillingham. and mark weatherford, the former undersecretary for the department of online security. dr. dillingham: i think it is important to understand that we are talking about the potential for this kind of intrusion to occur, rather than saying that this is an imminent threat because faa is in fact taking precautions. we are talking about the future as more and -- aircraft become more internet dependent. emily: how exactly does it work? if the plane is on cabin wi-fi the passenger wi-fi is connected to the cockpit system, back that is where you see the vulnerability? dr. dillingham: as we described

in the report, the example we gave is, in the cabin, passengers have broadband available to them. they can upload a program onto their computer. if that program has malicious software in it, and again this is important, if in fact the ip connection on the airports is is able to connect with the cabin and avionics, then you have the possibility. right now what happens is there are firewalls that prevent that kind of incident occurring. keeping in mind, firewalls are software, too. you up-to-date, faa has only special rules preventing this. we are pointing to the fact that 10 years from now when 60 to 70% of the fleet will be like the new aircraft we see today in terms of the dreamliner, there or the a350, and there needs to

be regulations and standards so that this does not become a special condition. emily: mark, you guys are t the chertoff group are usually examining threats like this, how bad is this? mark: i agree with the doctor, the big issue is, as security professionals, we are concerned about technology touching each other. obviously there is a great concern when you think about the avionics of an airplane or the communications of an airplane being able to touch the same wi-fi or entertainment system that the in-flight passengers use. as dr. dillingham said, while they may be contacted with firewalls or other devices those are regularly defeated by bad guys. we have to get better about thinking about building security into these controls at the beginning, at the design phase. i posit that building security

into the design of the aircraft is just as important as building safety and efficiency features. the world has changed. as things are more and more ip enabled, we have to think about this from a security perspective, just as much as a safety perspective. emily: planes that could be affected, the boeing 787 dreamliner, airbus a350 and a380. gerald, which percentage are we talking about being affected here? i heard planes newer than 20 years? aren't most newer than 20 years old? dr. dillingham: i would not say most are newer than 20 years. i would say that the fleet is being renewed. what is important now, as was said, to build insecurity and

build in cyber. that is what we were talking about. the older fleet had much more separate controls, and not as many points of potential contacts across the systems. like 1/3 of those are ip-based. going forward, it will be 60% by the end of the decade. that was the point of the report, not to cause concern of among the flying public that this was an imminent danger, but to point out that cyber security challenges change every day. the faa must in fact not only build security in, make sure the manufacturers build it in, but constantly monitor it because the threat changes every day. you need to be one step ahead. that was the basic point of our report. emily: in the worst case, you are saying a hacker could

commandeer the warning and navigation system. mark, worst-case scenario, could a hacker bring a plane down? could a hacker fly a plane into a building? mark: that is the worst case. i do not think anyone is predicting that. that is certainly be concerned we have. we need to keep the control s separate, the systems separate so that that potential does not exist. when you think about this, when you have a wi-fi network connected on an aircraft, it is just like a wi-fi anywhere else. you could potentially have bad guys on an airplane that could compromise the network on the airplane itself. so keeping these -- segmenting networks is incredibly important. emily: dr. gerald dillingham and

chertoff principal mark weatherford. up next, another crash landing for spacex this week. we discussed how difficult elon musk's rocket catching plan actually is. ♪

emily: i am emily chang, and this is the best of "bloomberg west." close but no cigar this week for spacex. the elon musk company successfully launched the falcon 9 rocket into space, but they fell short of the goal. elon musk live tweeted the whole thing. the rocket landed on the drone ship, but too hard for survival. it looks like falcon landed

fine, but excess water cause it to tip over post landing. i spoke to lori garver in washington and our cory johnson about what is next for spacex. lori: people have been trying to take advantage of the reusability of rockets for decades, and i think this is so incredibly close that we will be able to see this happen in one of the next couple of launches. i cannot speculate anymore than elon has. they are looking for more data to come back. the fact that now twice in a row within a couple of months they have found the drone ship -- the barge -- and been able to land on it, too hard for survival, is still a success. let's not forget the rocket itself has launched successfully and it will be docking with the international space section -- station on friday. emily: in case anyone is worried about elon musk, he tweeted he

"if this works i am treating myself to a volcano lair." cory: the next time i trip and fall, remind me to blame it on my excess velocity. emily: don't crawl into your volcano. cory: everyone should get a volcano. you get accustomed to the heat. it is a dry heat. [laughter] for all the criticism we give up tesla and their financials and the things the market has done on the financial side, this is enormously ambitious. it is very important for the government, in particular, to have a u.s.-based space company. with nasa out of the game, there are enormous payloads of military and spy capabilities of things that have nowhere to go. it is important for this country to have those kinds of spy in capacities and military capacities. emily: lori, what kind of oversight is necessary to make sure what spacex and elon is

doing is actually safe? lori: i would say this is very similar to how we have been going into space for years. i take issue with nasa out of the game. nasa is not out of the game. they are in the game. five years ago, president obama stood at the kennedy space center and outlined a new way of partnering with the private sector to advanced space transportation. similar to other ways, we would be spending much too much money as we threw away an airplane every time we flew. the government has been utilizing the private sector to launch its satellite, yes, even though they are important military satellites as well as our scientific payloads for decades. the space shuttle that was retired a few years ago with $3 billion to $4 billion a year .

it helped us develop the international space station. now to be able to get there with the private sector for pennies on the dollar, that is the right path. and this will be carrying people to them from the good old usa shores in just a couple of years. emily: lori, give us a better idea of what elon musk is grappling with here. what kind of technology is necessary to make it reusable and save money? lori: reusability has been a holy grail. we know that is what it takes to reduce the cost permanently and have sustained space activities. that will take more people and things to orbit. we at nasa have been working on it more than 15 years, we have a different vehicle that would call theed the x33 that would lead to a fully reusable vehicle, the investments are too high. because the technology, but

because of propulsion, we were not advance enough. the private sector is innovating to do this on a ship in the ocean because they cannot get the capability to get licenses to land on land. this is a great innovation. of course we used the space shuttle engine that came back and we refurbish them to fly again. but the space shuttle took a number of parts that were -- the gas tank, the solid rocket models -- that were expendable, thus the cost continued to be too large. to be sustained for these long-term plan that we have ends base. emily: if you think this is only a matter of time how much time? , lori: within the next year elon will have landed spacex successfully, so starting that reusability, they have six launches now, they are in a 12-launch contract.

to the space station. i think people will be going on dragons and their competitor vehicle with knowing here in the next two and a half, three years. emily: lori garver in washington, and our bloomberg editor at large, cory johnson. coming up, sprint is making house calls. will it help the company hang onto his edge over t-mobile? that is next on the best of "bloomberg west." ♪

emily: welcome back to the best of "bloomberg west," i am emily chang. sprint is making house calls and could deliver and set up a new smart phone inside your home. as competition heats up with t-mobile, the nation's third-largest carrier is trying to differentiate itself by bringing the in-store experience to homes or offices. allowing customers to buy new

phones and upgrade from anywhere. i hope with sprint ceo marcelloo claure and asked about how they tested this program before launching in kansas city this week. marcelo: we did this with a group of select customers in kansas city. we sent them an offer they asked , for direct to you and we had our trained experts go to their homes and offices and take them to the whole experience. it is a thorough experience. i don't know the last time you went to be store to buy a cell phone, but if you are switching from one carrier to another, it takes a long time, and if you are switching from one operating system to another, say i was too android or android two ios it , can be painful to transfer content, most people are not tech savvy. before we get our big

launch i wanted to experience it , myself. i went to a customer's home and the customer was delighted. when we felt the customers were delighted and they wanted to recommend it to others we said let's announce it, let's go big let's launch it in kansas city today, we will do miami and chicago and a nationwide later this year. emily: you have an interesting story, as i understand it, you started by selling phones out of your car in college. you even made house calls. how did that inform this decision? marcelo: that was back in 1996 when i was at a partner in a company called cellular solutions. back then it was different customers had never used a cell phone. we had to take them through the whole experience of how do you make your first phone call. things have not changed that much. if you get your new smart phone, the amount of things you can do , is in many cases like getting a brand phone -- a brand-new

phone a lot of customers do not want to order one online because when you go home and open up the box, you have an intimidating latest galaxy or iphone, and it is not easy. basically to transfer all of your contacts or your apps or your photos or videos. i have so many e-mails from customers telling us, i lost all of my pictures that i had in my phone. we thought this would be a clever way to basically go to the customer's home and more importantly, it is delighting the customers. having the ability to go to a customer's home, by the time they are done, i can tell you these are customers recommending sprints to everyone. emily: there seems to be a race to the bottom when it comes to price between the different wireless carriers. t-mobile has been pushing prices down. do customers care more about price or convenience? what kinds of phones are you selling the most of through this program, the higher end phones

the higher end plans, or on the lower ends as well? marcelo: customers want to get the latest and greatest device. if you look at sprints where we get is, we lost one of the innovative ideas we had a few months back, we had he phone first leasing, iphone for life, that gives you the ability to get a phone and every year you have the ability to get a new phone. you get a lot of people who have a two-year contract and the with their operator but the new technology comes up once a year. imagine you sit in your home you have a one-year lease on your phone, and every year you change your phone and you go to an app, you click on your app and you say where you want the phone to be delivered, and you choose where and someone shows up and exchanges your phone. iphone 6, less any future it will be an iphone 7 that is a

, type of experience. emily: sprint ceo, marcelo claure. a struggle to keep artisans happy. we will speak with that sellers next on the best of "bloomberg west are." ♪

emily: this is the best of "bloomberg west." i am emily chang. wall street may have high hopes for etsy. with its trading debut. the handmade goods website raising 267 million dollars in its public offering pricing at , $16 a share. soaring and opening trades. many of the artisans are not so thrilled. bloomberg news' ipo reporter leslie picker visited some merchants in san francisco to find out why.

leslie: stuffed owls dressed like hipsters are rebecca saylor's thing. she spends five hours of sewing and decorating each one by hand. she sells them for $50 a piece on etsy. rebecca: etsy was the perfect platform, they were doing their part to elevate the experience of handmade and gain customers. leslie: that is until etsy became more corporate. rebecca: they caused a weird shift in the ecosystem. leslie: 18 months ago, etsy allowed sellers to produce en masse. saylor's sales have slipped 15%. the new policy has made it harder for consumers to find her pillows and compete on price. why not use a manufacturer to compete? rebecca: etsy sellers have

an extreme emotional connection to their fees, and they want the public at large to feel the same way, which they do in many ways can i am sure, but at the end of the day, it is a business. leslie: etsy was founded five a decade ago. it caught the attention of big-name venture capitalists. over time, success bred conflict, and they rejected any stray from the company core values. now etsy is going public. now etsy is going public. the new policies could help make it more attractive to wall street. it charges $.20 for each listing. the more transactions, the better. etsy declined to comment on the policy changes. if these changes are common, to the lead up in a public offering, even if it means offending customers. >> companies need to evolve.

those that do not, will be left behind in a world that changes around them. the trick is to do it in a gradual way, or way that does not offend your original thing. base. i think if a company changes to quickly, it could have an impact on the current customer base. leslie: as a team meet up, sellers have mixed reactions to the ipo. some say this is just part of the price you pay. to be a larger part of the ecosystem. but rick left the site when the changes were announced. rick: for a site that claims to empower crafters, i did not feel it was doing that. leslie: some see it as an opportunity. they have started a campaign to build one point $5 million and create a stake in the ipo. they are starting to do so with their wallet. emily: are bloomberg news ipo

reporter, leslie picker. that does it for this addition of the best of "bloomberg west." you can watch our regular show monday through friday. catch you later. ♪

betty liu: hi. tom steyer: good morning. betty: tonight on "titans at the table" -- this place is gorgeous, it really is. i will be chatting with billionaire businessman turned environmental activist tom steyer. tom steyer was born and raised in the financial capital of the u.s., new york city, but chose to open his investment firm farallon capital management in san francisco. he founded farallon in 1986 with $8 million, and by the time he stepped down in 2012, he turned the initial investment into $30 billion, making farallon the fourth-largest hedge fund in the world. his personal fortune is an estimated $2.6 billion.