♪ caroline: i am caroline hyde. this is "the best of bloomberg technology," where we bring you all our top interviews from this week in tech. coming up, the president elect meets the press. donald trump faces reports from russian hacking to the media itself. plus, it is her job to make sure tech titans play by the rules. our exclusive interview with the eu competition minister. and driving the future in

detroit. our interview with general motors chairman and ceo mary barra, ahead. in his first formal news conference since winning the election, president elect donald trump tackled one of the most controversial issues plaguing his administration this week, russian hacking. he has previously cast doubts on russia's role in the u.s. election and the accuracy of u.s. intelligence. he did so again wednesday. mr. trump: i think it was russia, but i think we also get hacked by other countries and othepeople. if putin likes donald trump, i consider that an asset, not a liability. we have a horrible relationship with russia. russia can help us fight isis. caroline: trump vigorously denounced reports that the russian government has gathered compromising information about him. so we wanted to take a closer look at the hacking itself on bloomberg tech. the fbi and others in u.s. intelligence have linked the dnc hack to a group of russians.

that group is known by some as -- fireeye was amongst the first firms to identify this group and their connections to the dnc hack. take a listen to our fireeye head of threat intelligence laura galante. laura: before this became a political hot rod of an issue, we were profiling this group and attributed their operations to the russian government, the sponsor behind them. what we have seen is a variety of targets, everything from journalists in chechnya to the elections and the dnc and the world anti-doping organization, the same entity that put the ban on russian athletes, some russian athletes before the 2016 olympics. so a variety of different targets we have seen this group go after.

they have done it in a couple of ways. they will breach the networks using malware. software used maliciously to get information. they will take data, frequently emails. we are seeing another side to these operations that play out on wikileaks. this is when the troves of emails have come out that change the conversation. it is the combination of network intrusion and the ability to change the narrative through leaked data that has been so powerful in what the arsenal of what i have been doing in the -- of what they have been doing in the u.s. in 2016. caroline: and using social media as the means to do this. is there a risk that this is actually still going on? how much could the u.s. or german government still be compromised. laura: it isn't just going on. the group behind this is innovating and is taking it to europe next. we will see this occur around policy issues in the u.s. the elections were o of a variety of targets this group has gone after. when we look at the upcoming elections in the netherlands,

france, germany, we are seeing the same mechanism, the ability to get hashtags trending, to push documents to journalists, a focused ability to change how the conversation in the press plays out. they do this very flexibly. they don't need to change the malware, the tools that the use. they just need to change the flavor of how they get their message out, and that is what is so powerful here, and also easy to deny. so if the narrative changes, was it just a sense of what needed to be reported on or was it actually operations? there are clear intentional operations with the forensics behind it that link this back to a russian government-sponsored effort. caroline: can you illuminate how you managed to track them back? laura: there are hallmarks within the malware that this group has been developing since 2007 that give us these indications.

for example, the compile times, the marks that show when malware was built, continue to go back to the time zone that moscow and major russian cities are in. over 90% of the samples we have tracked over time align to the working hours when this malware was compiled. we also see the marks of a well-resourced effort. the malware shows a certain techniques to evade detection, so that people catching the malware cannot unpack it and understand it as well. these are the signs that the developers behind these tools are thinking aboutow to do it. they are resourced. they aren't just buying tools online for $300 and applying them. this is a state effort that takes years of planning, and the targets say so much about this, the combination of caucus agencies, agencies in georgia.

defense attaches, ministers of foreign affairs, these are the type of target that show an interest. with the totality of that evidence, that is what has led us to believe that the russian government is the likely sponsor of the group. caroline: i had no idea hackers kept a nine-to-five regime. give us an idea of the work you are doing, the light you are shining on some of this, and government institutions and bodies listen to you. is this a game of whack-a-mole? can something be done to tackle vulnerability? laura: the question is where is the line between acceptable state espionage that has been happening since the beginning of time, and aggressive measures that interfere with the internal affairs of a state? so what is sovereignty in cyberspace? do we consider cyberspace or do we consider information space? that is the question at hand between russia and the u.s.

right now. russiansnd chinese government have long considered this broader, more psychological definition of how they consider this domain. while on the u.s. side and other nato countries, they thought about this in terms of networks and systems, ones and zeros. do you take an expansive view or think of this in a more traditional technology approach? what are the implications of choosing either mentality? caroline: so when we hear from president elect donald trump saying he does not think he will be attacked while he is president in terms of cyber security, should we be believing him or pouring cold water over it? laura: we have long said it is a matter of when, not if. we have long seen in the u.s. government a variety of different breaches, whether the department of defense, against companies, and what has changed is the type of actors and intrusions. what has not changed is the predilection for rival countries and state-sponsored efforts to go after key government targets in the u.s. i would be surprised if that changes in 2017.

caroline: now, while trump is claiming he is the victim of fake news, facebook is taking steps to help curb it. they announced a stronger partnership with media companies, support for local news, and better efforts to educate users on how to avoid hoaxes. it follows a year of debate over facebook's role in the media and faced questions whether them network is biased in the way it presents news. members of the media will be updated on a new facebook journalism project page. coming up, jack ma's trump card. get he deliver one million new jobs amid tension between beijing and the president-elect? we are live streaming on twitter, check us out on bloomber tv.g tech this is bloomberg. ♪

♪ caroline: alibaba group chairman and founder jack ma met with president-elect trump monday. the two men discussed how alibaba is focused on creating one million u.s. based jobs over five years. jack: very productive meeting, helping small businesses sell things through the alibaba platform to china and asia. we mainly talked about small business and young people and american agricultural products to china. we also thank the china-u.s. relationship should be strengthened, it should be more friendly and better. caroline: the visit is the latest from growing list o business leaders eager to work with the president-elect. david westin caught up with general motors chair and ceo mary barra for an exclusive interview at the auto show and spoke about the upcoming administration.

mary: there is a lot of opportunity. we have more in common with the administration and president of than we have at odds. we are looking to strengthen the country, strengthen obviously business performance, because we are a big provider of jobs and provide over 100,000 good paying jobs, and looking for reforms, regulatory streamlining, so those are all things that are going to improve our business and allow us to reinvest. david: there is an opportunity there for you? mary: i believe there is. this is a complex business with long lead times. the volt and the traverse are built in lansing, michigan. those were decisions made years ago. we need to understand how investments are made but look for opportunities. david: let's talk about autonomous vehicles. where does that project sit right now at gm?

everyone is announcing some sort of autonomous venture. how do you feel about the competition? mary: we feel good about where we are at. we have vehicles getting real-world experience in san francisco, arizona, and detroit. it is not just about miles traveled. it is about experiencing all the different situations. downtown san francisco, there is not a better place to experience a lot of traffic, things that come into the roadways, double parked cars, so our vehicles are learning a lot and you will see movement early this year. david: there was talk of changing from a model of selling cars to providing a service for a fee, almost like a subscription service. where are you in that process? is that realistic? mary: as we get to autonomous vehicles, we believe it will start in a rideshare environment. we are also excited about what we just launched with cadillac.

we have a subscription opportunity for people who want to dri thapeormance the series car on the weekend. david: a record deal for vehicle sales, 2016 you beat it. what does 2017 hold in store? mary: we think we will have a strong year, much like 2016, and we are looking to continue to improve. that is our goal, build on the momentum of 2015 and 2016 and carry it into 2017, and we think we can have, and we are making sure we can deliver another strong year. david: you have a great product people want to buy. people have to have the money and want to part with it. as you look at the factors that could drive 2017 to the upside or downside, what is most important to you?

wages? disposable income? consumer confidence? what really drives it? mary: consumer confidence is important, but we are seeing household wealth go up. if the indicators stay in the direction, we will have another strong year. david: one of the topics much discussed is wages. we just had numbers on friday. you are a big employer in the united states and elsewhere. are you seeing wages go up materially? mary: they are going up as expected. it is important where we manage that. i am proud of the fact that of the 100,000 jobs, we have good paying jobs that allow people to live a very good life. caroline: still ahead, our exclusive interview with e.u. competition commissioner margrethe vestager, her regulation battles with tech giants from google to apple.

plus, high profile hacks are on the ri and security software could balloon to a $40 billion industry we will spwith matthew prince of cloudflare next. this is bloomberg. ♪ .k

♪ caroline: as 2017 gets going, u.s. tech giants are gearing up for hurdles they face in europe. apple, facebook, and google head to court to settle a number of cases regarding taxes and privacy. david gura spoke with the european competition commissioner, margrethe vestager, who has targeted these tech titans. take a listen. margrethe: i consider this a

very important issue. we cannot do our jobs if we do not get the right information from the businesses in question. the concern we have here is that facebook did not give us the right information during the merger procedures. that ocourses a huge problem if that appears to be true, because if we are not told the full story, we will not be able to take right decisions and enable competition on the other side of each and every merger, and that is why this is so important, both in the concrete case, and the take away from the business community that we will police are procedures to make sure we get the right information. otherwise we cannot do our job. we try to do that as best as possible within the short deadlines we work in. david: you have been looking at google as well. the european union has gotten a

reply from google. how satisfied are you? margrethe: we got the last part of the android answer, so we are in the process of analyzing it, and therefore it is too early to say what will be our final decision, but we are in the process of going through it. it is very substantive and obviously there is a lot of data to go through, but now we have the working material, the answer from google on the cases in question. david: you have seen the rise of populism as we all have, the shifting political firmament, and i wonder what that means for you and looking at competition in general? margrethe: it is important that people see that we do our best to do the job ahead of us, to make sure that citizens are not being cheated when they are in the marketplace, that businesses do not agree on prices in the back office or petition the

market, but that businesses do compete with products, prices, services that they can offer customers. because i think for every citizen, it is important to see that the authorities do their job, and they do their job to service the citizens and on behalf of the citizens where the individual might be too small, but where we are together we can do something good in making our societies work. in that respect, it is important what we do. david: how pivotal do you see the apple ireland case to your office? it has certainly elevated you to prominence. how do you make the relationship better between your office and tech firms in silicon valley? margrethe: we have tried to make it absolutely clear that we have no issue or grudge against any company. what we are aiming at is behavior.

for instance, the thing that happens if one company or a group of companies are given state aid that is not available to other companies, that seriously makes the playing field no longer level, and that is the issue. i don't think as a company when you are a competitive, when you have a competitive culture, you want to innovate, you want to present the best produs to potential customers. well, how cayou approve of your competitor having benefits that are not open to yourself? in that respect, of course, the business community is served by enabling fair competition. caroline: the e.u.'s competition commissioner margrethe vestager there. cyber threats remain a major concern for business and government agencies. this week, we got reports that both mario draghi and matteo renzi, the former prime minister

of italy, were among those hacked. our next guest runs a fast-growing cyber security firm with customers in more than 50 countries. he says it is time to build a better internet. he is cloudflare ceo matthew prince. matthew: i think we have already seen what 2017 will bring, large cyber attacks against firms that brought down substantial amounts of the internet, then attacks against presidential campaigns, they were a big part of the story in 2016, and we don't see that decreasing in 2017, so we are busy at cloudflare. caroline: when you are seeing the attacks coming in, does it matter particularly where they are coming from? have you identified specific regions or groups? we always seem to be saying china, russia, but there are many different countries.

matthew: one of the things that is amazing about cyber attacks is they are incredibly democratized. we see some of the largest attacks by what turns out to be 15-year-old kids in the u.k., while at the same time nation state actors as well, so it is hard to attribute who the attack is being launched by. we often have circumstantial evidence based on who is reading attack, but regardless, we want to be able to stop it. caroline: the weak spots will become more plentiful as the internet of things becomes a reality, not just something we are shown about as journalists and interested technologists. i.t., mobile, what are the key threats when it comes to the building up? matthew: i think what people do not understand, everyone thought why does it matter if my toaster gets hacked? what we have learned from the last few months is if your

toaster gets hacked and it can be commanded to a virtual army to launch attacks against critical infrastructure. that means if we don't have security around iot devices, that will make us more vulnerable to large attacks. that's one of the things we are thinking about at cloudflare, how to wrap the security around the devices and the big corporations and other organizations that we help protect. caroline: talk to us about the demand? who is wanting of your services? you are a company that has been building up funding and you are on the ipo trail as well. do you need more cash to expand this outfit? matthew: we have not raised money since december 2014. we are on the path to being a public company, but there are two reasons companies go public. either go public because they have to and need more cash or because they want to.

we are in the fortunate position to pick and choose the timing right for us, so we will pull the trigger when it is right for us. from the perspective of our customers, cloudflare has a 6 million customers, 15,000 to 20,000 customers a day. they are mom and pop companies to fortune 500 companies, 16 of the 17 presidential candidates were a cloudflare customer, in fact, everybody but hillary clinton used cloudflare. caroline: quite a marketing line that you could use. you say you can become a public company when you want to. why would you want to? because you have more people you would have to answer to? matthew: i think the ceo of a zendesk said it best, at some point you have to move out of your parents' basement.

there is a right time and place to be just a couple of people in a garage and take funding from venture capitalists and larger private equity institutions, and eventually you have a responsibility to investors, employees, in order to take the company public. so i think that is a path we are on. we will do it when we think the time is right for us, but definitely something we are working towards. caroline: in 2017? matthew: no, we won't do it in 2017. i think 2017 will be a distorted year for a lot of reasons, especially the changes from the trump administration around tax policy, the repatriation of cash to tech firms. i think it will result in distortions in the market, and often times a lot of volatility is not good for new entrants into the market. caroline: the health care tech industry has grown dramatically since the obamacare was passed in 2010. how the industry will fare if president-elect trump repeals the law, next. if you like bloomberg news,

check us out on the radio. you can now listen on the bloomberg app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

♪ caroline: welcome back to "the best of bloomberg technology." i am caroline hyde. speaking at a news conference wednesday, president elect donald trump said he will repeal the affordable care act. then thursday, the senate took the first step in repealing the affordable care act in a razor thin vote. obamacare helped to connect the health care system to a new era in technology. we explored the changes under the groundbreaking law. caitlin: when the affordable care act was signed into law in 2010, one of its main goals was to bring u.s. health care into the digital age. since then, investment in digital health technology has exploded. venture funding rose from $1 billion in 2010 to $6 billion in

2015. that money is going towards things like electronic health records and computer modeling to track spending. major companies want a piece of the action. ibm launched its watson health unit in 2015, and since then, spent $4 billion on related acquisition. last year, general electric said it expected its i.t. unit to grow more than 20% over the next two years. but now the industry is bracing for a serious shift in u.s. health care policy. president elect donald trump promises those changes will come as soon as possible. mr. trump: as soon as our secretary is approved, almost simultaneously, shortly thereafter, a plan. it will be repeal and replace. caroline: that was bloomberg

caitlin meehan reporting. so will there be a slowdown if obama care is repealed and replaced? joining me now are our two guests. i'm going to start with you. will in fact the affordable care act be fully repealed? can it be fully repealed? sunny: it is unlikely to be fully repealed without an alternative. over 20 million people have been added to the system, many from states that trump won, like michigan and wisconsin. in those states before the affordable care act, more than 14% were uninsured in those states. i think it is highly unlikely. furthermore, i think there are many aspects of the affordable care act that will continue and flourish that health care investors have been investing in. caline: you heard the views.

you are at the heart of helping modernize and making more efficient the infrastructure behind health care. is this something that if repealed would be moved away from the deficiency search, the drive for it in the u.s.? lisa: i completely agree with sunny. many of the market drivers for technical innovation are not going away if aca is repealed. the shift of cost to the consumer, the shift of value-based care that we are seeing that is led by cms, followed quickly by the private industry, private insurance market, that is not going away and that is driving a lot of innovation that we are seeing. caroline: the underlying factors are still there. does it change your opinion in the investability in health care in terms of certain verticals, because there is uncertainty at this time? >> there is a level of uncertainty that is causing a pause in the buying process, but in the long run i do not think this will be a big impact.

lower cost and higher quality has been the mantra within the affordable care act, and also within the trump approach. whether the payments or consumerization or shifting the fight of care, all of that will continue and maybe accelerate. even when you think about the digitization of the medical system, the stimulus had $30 billion allocated to move medical records from paper-based to electronic-based, and that has been a foundation for software and applications that have been developed to advance health care. innovation and disruption will continue within health care. technology investing, regardless of how this shakes out. caroline: has it slowed your decision-making process in any way, the electoral changes and administrative changes that will

come? >> no, many of the bets to digitize the medical industry were made prior to the aca and will continue. from our perspective, and the only point where i will differ with sunny, even with economic stimulation and the adoption of electronic medical records, much of that is written on circa 1990 software. what we are expecting to see from this administration and their commitment to investing in infrastructure, is a commitment to modernizing health care in the u.s. for the first time. companies like pocket doc are creating open software development platforms to bring these products and solutions to market quickly, health care systems, right at insurers, even -- private insurers, even cms, they have made their bets. they are starting to deploy on platforms like ours. caroline: what does the spectrum look like out there at the moment when you are analyzing the environment? who is the most interesting to be investing in?

which parts of the system are more likely for disruption? >> the areas we primarily invest in our the intersection of health care and technology, where people are developing applications at a higher quality and lower cost. the foundation has been laid with the digitization of medical records, so we find that to be quite robust. we have companies like tiger tech, that are within these clinical communication workspace and their mission is to improve outcomes and lower costs, and they are benefiting from the trend we are seeing. even as you look shifting site of care from hospitals to home-based care whe it is lower cost and where patients would rather be. we have companies where they are at the center of that, and so almost across the board, we are seeing a ton of innovation and disruption, but with any discussion of aca repeal, there is some uncertainty created, so we could see some pause in buying. caroline: is that something

pocket doc is dealing with? when you looking at your suppliers, those you are working with, how are those discussions? lisa: health care as the longest enterprise sales cycle known to man. we have not seen a slow down in that sales cycle. at the same time, we have 10% week over week growth, and emerging companies coming to our platforms and signing up and building product and production today, so that has not slowed down. i do hear, and certainly hear in the industry from other companies that they are experiencing somewhat of a slow down. as we go in, i think most recognized that the aca, that is not going to impact what they are doing today. it will not impact the out-of-pocket costs for the

consumer driving these innovations or new access modelsbut it will have some affect for sure. caroline: where is the competition when you're looking at startups helping provide this sort of efficiency to health care? they must be coming out of asia and europe. is it only u.s. companies that will be adopted by u.s. health care providers or to you think they will go further afield? lisa: platforms like ours that provide an open software development platform allow companies from outside the u.s. to enter the u.s. market in ways they have not before. the other thing it allows is other industries to insert themselves into the health care workflow like financing, banks who want to offer financing to consumers who cannot afford a certain procedure, or supply chain companies like amazon that want to start providing different goods and services, durable goods and services to health care.

we will see a lot more of that as we come into this year and as there is a move to the cloud across the industry. caroline: still ahead, london, snatches snap. why this social media giant is banking on the u.k. ahead of its $25 billion ipo. this is bloomberg. ♪ ♪

caroline: there were a few deal headlines that caught our eye this week. fitbit has purchased vector and is focusing on luxury watches following its acquisition of smart watchmaker pebble, a sign fitbit is stepping up wearables beyond fitness devices. airbnb is branching out, investing $30 million in an app for securing restaurant reservations. this is another move to expand airbnb's offerings to travelers,

making it a one-stop service when taking a trip. it will take a few months to integrate its app fully into airbnb services. square has integrated its system with wix, a cloud-based platform with 100 million users. the deal is a large online-based contract that is mainly focused on brick-and-mortar businesses. the parent of the popular snapchat messaging app has made london its international headquarters this week. they will pay british taxes on sales booked in overseas markets. the move is a win for the u.k. as it attempts to lure businesses in the wake of the brexit vote. caitlin meehan reports on the road ahead for snap's public offer. caitlin: snap is gearing up for hotly anticipated ipo. the parent company of snapchat could be valued as much as $25 billion once it hits the public

market this year. once famous for disappearing images, it is now rebranding itself as a camera company. its first hardware product, spectacles, have gone viral. thanks to an ultra-limited release in select cities. meanwhile, snap's user base grows at breakneck pace, and although the company's 150 million daily active users are based mostly in the u.s., it is gaining ground in europe. snap does not turn a profit but it is showing revenue growth. it is on pace to bring in under $2 billion by 18. now investors want snap ceo evan spiegel to prove he can grow snapchat beyonits young demographic. caroline: for more on the choice of london as international headquarters, we checked in with london-based bloomberg technology reporter adam satariano, and asked him if this was a smart move by snap. adam: you are a kind of formalizing something that has been going on a while. they have been staffing a lot in

london, up to 75 people in the city come up from six. having this as their tax hub is unusual because companies have been taking better advantage of lower tax rate elsewhere. apple, amazon, starbucks, a lot of other companies have been touching on regulator's ire as a result of that. caroline: is this potentially a reaction to how we have seen in particular the european competition commission react to some of the tax arrangements that the like of apple have? adam: a lot of companies have been spooked by what they have seen from the european commission and other regulators going after some of these tax havens. but at the same time, we should not put snap on a pedestal too much year. the tax rates in the u.k. have been coming down. there is some optimism among business leaders that tax rates will come down further because of that vote.

they could be trying to get in ahead of all of that. caroline: certainly an upside for the united kingdom. amid a lot of uncertainty surrounding the brexit vote. adam: certainly, but for snapchat, this is a logical hub because the global advertising industry is headquartered in new york and london, so it makes sense for them to have a big office here. they have opened up a shop in the soho neighborhood, they have one building open, and they're looking for another building. caroline: is this a race ahead of what is expected to be their ipo as soon as march this year? adam: snap's ceo evan spiegel, part of his pitcto investors for the ipo will be the company's global opportunities. it has clearly done well in the united states, especially with young people, but to justify the valuation which is said to be $25 billion or more, it will have to show it can resonate in other countries. in europe, 50 million users, 10 million in the u.k., so that number will have to continue to

grow quite rapidly to justify that high valuation. caroline: let's get an investor's take. as snap expands ahead of its heavily anticipated ipo, what do investors, what does wall street want to see from the versioning -- burgeoning social media company? with me is sunny dylan. welcome to bloomberg technology. u.k. headquarters a smart move? sunny: i think so. having worked in soho, it is the hub of the creative industries in london, advertising, tech companies, startups, talent in that local market, so as a hub of creativity and advertising, i think soho is a great place to

be. caroline: notably, we are seeing expansion in europe and as far as asia as well. this is a scaling up ahead of the ipo, isn't it? sunny: you have to understand your audience, local influences, content in each different territory. they are not a homogenous group. people are different in how they communicate and what kind of visual messaging they choose to express themselves with, so this means being close to your audience. caroline: what do they have to do a head of the ipo is drum up the excitement that they are worth $25 billion and they have growth potential perhaps outside of a social media app. how are they doing this at the moment? sunny: the ceo is 26 years old and has stayed authentic. i think evolving beyond

messaging, it has been showing itself evolving over time, with snapchat stories, filters, geo lenses, etc. augmented reality is an exciting area for snapchat. i think that has increased activity with brands and analytics will fuel the revenue machine. a whole host of other things on that similar trajectory, but augmented reality is probably the most exciting. caroline: the most interesting thing is you talk about working with businesses in the same way facebook leveraged an ecosystem, targeting you and i. how much is facebook copying them? sunny: the biggest and most egregious copycat move was from instagram, copying instagram stories. it is literally the same product as snapchat stories. there has been a whole host of efforts from facebook ripping off various features that have

performed well for snapchat. the difference here being that when you are going mass-market, shoving ads and monetization efforts down the throats of your audience, it is no longer native and natural. the one thing snapchat has for it is that it is empathetic and authentic, and people want to be associated with it. caroline: will that give the revenues the investor base was to see? sunny: that remains to be seen. when companies focus too much on monetization, the original originally you coast of what those companies were founded on the great overtime. we saw it with twitter post ipo. so the jury remains out. caroline: will they always tackle just the millennials? sunny: if they come up with new

ways to express themselves, it is a safe bet that if they keep refreshing themselves, i think snap spectacles have been a great example of a way to do that. they are a camera company now, genius piece of marketing. if you can open up your after e cara, they view the wod the way you wa them to see it, and what you choose to overlay on top of that is similar to the way the web portals used to be in the 1990's with original isps. caroline: so much has been hoped for by the ecosystem, silicon valley. do you think they will live up to the hype? the way they are pursuing the map to the ipo is the right one at the moment? sunny: so showing metrics growing quickly, that is what they have been able to do. there has been speculation that

some of those metrics have an slightly falsified, which has been vehemently denied by the company. if you look at where snapchat is compared to where facebook was when it went public, they paint a different picture in terms of real money, actually getting dollars and revenue. caroline: this week, hon hai's posted its first annual revenue decline, down to an a half percent from the year before. -- 2.5% from the year before. the taiwanese company is the main assembler of apple iphones. hon hai is the world's biggest contract manufacturer of electronics. up next, the iphone turned 10 this week. we will look at how it became apple's most important product and whether the company can ever re-create its success. this is bloomberg. ♪ ♪

>> today apple is going to reinvent the phone. caitlin: 10 years ago, steve jobs unveiled a new product called the iphone. at the time, it was seen as the heir to the ipod, albeit an expensive one. since then, it has revolutionized the smart phone market, destroying industry heavyweights like nokia and blackberry, and inspiring a handful of rivals around the world. apple has sold over 1 billion iphones to date. they helped to drive up apple's stock price more than 850% to its peak in 2015. in 2016, strategy analytics reported that operating profit hit $9.4 billion worldwide. apple alone made of 91% of that, but with these numbers come high expectations. the iphone is now apple's most crucial product, making up 63% of revenue in fiscal 2016. that is worrisome to investors, because annual iphone sales fell for the first time last year,

and apple's operating system held on to 12.5% of the market versus android 87%. still, analysts remain overwhelmingly bullish on apple stocks. nomura believes the iphone eight will shatter all previous sales records. caroline: that was bloomberg's caitlin meehan. now, since the iphone took off, apple has been under pressure to prove it can re-create that kind of sales success. we checked back with activate ceo michael wolff. take a listen. michael: with over 1 billion iphones being used today around the world and 100 million of them in the united states, they are poised for a large percentage of that base to

upgrade to a new iphone eight, and they have got a lot more coming. it is likely they will have much more integrations of siri. imessage will have bots and other functionality built-in. there is going to be a new operating system next year, likely in the middle of the year. apple has everything they need to be successful, and they don't have to have all of the market. they can skim off the most profitable customers, not only the ones who will not only by their phones but participate in the itunes and app store. caroline: you are sounding pretty bullish. over the past decade since they launched the iphone, the market has been bullish. analysts recommendations on bloomberg, the majority all the way back to 2007 have always said buy. the green chart here shows how many analysts say to buy the stock. 80% at current levels. the lowest they ever got was 65% in 2008. generally analysts say buy apple and look through the gloom.

what about their movement into the emerging markets? does that spell to you that they could be going for lower margin profits or were they just going for the growing middle class in india and the likes of china? michael: where apple comes out with lower cost products, they do not seem to do as well. once again, they can go after the premium customer. they can go after the people who want to have the entire apple experience. all they have to do really is get a large percentage of the billion people today who are carrying around an iphone to continue that growth. they have a lot of other avenues into that growth including new products like apple tv products, a new operating system, that will allow them to get more revenue out of this, not just in terms of sales of the phone. caroline: that does it for this edition of "the best of bloomberg technology." we will bring you the latest in

tech throughout the week. tune in each day at 5:00 p.m. in new york. 2:00 p.m. in san francisco and 6:00 a.m. in hong kong. tune in on tuesday. we will be talking with a partner and cofounder with index ventures. that is all for now. this is bloomberg. ♪

♪ carol: welcome to "bloomberg businessweek." the deep entangled relationship between hollywood and president-elect trump's pick for treasury secretary. oliver: netflix wants to be the next amazon, google, and facebook combined. we will tell you why that strate bins in brazil. carol: how sleepless nights led to the birth of one pillow king. oliver: all that ahead on "bloomberg businessweek." ♪ carol: we are with the editor-in-chief, megan murphy. you guys take a look at something, that is paypal for india. megan: this is a story that goes to the scramble in india.