♪ >> the iphone intend is here featuring an edge to edge screen and no home button. the price tag? $1000. waymo is going to trial over claims that uber sold trade secrets. another bloomberg exclusive. blue apron discusses life after an ipo and the strategy for

fending off growing competition. apple ushered in another era for the iphone tuesday at the new st. john's theater in california. tim cook unveiled a suite of new products with the iphone x grabbing the headlines. >> the most advanced iphone we have ever made, the new design, face id, depth camera system and more powerful technology then we have ever put in an iphone before. it really is the future of the smartphone. emily: we spoke with bloomberg technology's mark groopman to get a first impression of the new product. >> it is a nice phone. it is really cool.

edge to edge, i am sad it does not go on sale until november. from an investor perspective, that misses a quarter of sales. that will be interesting to see >> the other thing that struck me was the height of the screen. you do not have to scroll so much. the facial recognition technology. >> i was able to set up quickly. it was easier than fingerprints. i feel like i was the first person to enroll my face and face id. if you have a touch id on your phone it will transition. the screen is taller, you can see more video. emily: i know you will be getting your hands on one sin but from your perspective,

looking at the big picture, how big of an upgrade cycle do you think this will be given, that 80% of people already buy this phone already have an iphone? >> the biggest change was not having a phone to having a phone that happened 10 years ago. it is a big upgrade cycle that they are facing. one of the things apple has found over the years is that when people, when people upgrade, they upgrade to another iphone. it is a system, and ecosystem they tend to stay in. when people leave and android device they will switch to an iphone. over time they grow that larger. the time between buying phones has been growing longer. which suggests the upgrade cycle could be very big for apple. the question is, will the consumers really feel the need

to get this new device? the bells and whistles, something you experience from looking at your neighbor using a phone, is what will help them sell this phone. as mark was mentioning, the facial recognition, that might be more pleasurable for the user but it is something that the person that has yet to upgrade is going to see. emily: it is a significantly different new factor, new design. several analysts have suggested to me that it might discourage people from buying the iphone 8. why would you buy it if you could spend a little more and get the most expensive? i was speaking to another person who said that it would be a home run. >> the 8? i don't know why anyone would

buy that. they raised the price. now it is $700. now you are $300 between the 8 and the 10. you look at that in terms of dollars per month, that is six dollars more a month. i don't see why you wouldn't get the 10 if you are on the installment plan. i think the phone could have come out next week. how many would there be available in the apple store? four or five of them. now that they have announced, they can bring in more people and factories, i think they are saving up for a big november 3 launch to have as many as possible. emily: it will be available to many more countries. >> multiple countries per wave, it is a big expansion for the iphone.

emily: i want to talk about the apple watch. they emphasized the health features, the sports features, they introduced the watch with a surfer wearing the watch while riding a wave and getting a call on the watch. corrie, you are obsessed with fitness trackers. apple says this is the most popular watch in the world. what is your take on just how much bigger a product category the watch can be for apple? >> the watch was launched, with i don't know what people will do with it, business plan. they threw it out there to see what would stick. dr. oz was there when they announced it. we got to cover that. they have always thought that health would be a part of it. it was really fitness that drove fitbit. they have had success with that product.

it seems that apple has figured out that as much as they thought fashion was going to be a part of the watch, fitness is the thing. showing off the water proofing capabilities that other competing devices don't have, and a very big way be at paddling. surfing and swimming and everything else. emily: if you are in hawaii or tahoe or in the water, it works. that is what they say. let's talk about apple tv, they demoed the box and four k capacity. it is impressive but not if you don't have a four k? >> this was a big shock to me. the video, if you have videos in your itunes library, they will convert that for free. that is not something i would imagine them to do. they would typically try to

offer both and charge more for the higher end. they are upgrading and if you buy a new they will charge the same price. it is a great thing. emily: cory and mark there. mark did rush into the demo room after the presentation and got his hands on the iphone x. take a look. >> we do have one more thing. [applause] ♪ >> we are here at the steve jobs theater at the new apple park campus. this is the new iphone x. there is a little not for the face recognition sensor. the glass back. this thing looks nice. the screen makes other colors pop out. you can see the time.

bottom charger and this has wireless charging on the back as well. the screen is 5.8 inches, so it is bigger than the iphone 7 and the iphone 8. because of the features, i know people have been asking about the side button. it is longer and you can hold it down to activate siri. double-click for apple pay. to go to home you swipe it from the bottom and you can go multitasking from there and swipe between different apps. you can see so many more texts at once and it is great for video. this goes on sale november 3 after preorders at the end of october starting at $999. there is also a version with more storage.

emily: mark their giving as a first look at the new iphone x. coming up, president trump has blocked a chinese investor from buying a chipmaker on security concerns. we speak exclusively with blue apron ceo matt salisbury. his life post-ipo and thoughts on fending off the competition. this is bloomberg. ♪

emily: social media as now a red-hot focus of robert mueller's investigation into the 2016 election and possible links to president trump's associates. the team of prosecutors and fbi agents is zeroing in on how russia spread fake and damaging information through social media. seeking information from facebook and twitter about what happened. last week it was discovered that facebook had discovered money connected to face -- fake ads. just a fourth time in a century where a president has halted a takeover from a foreign firm. because of a security risk. our editor at large, cory

johnson, spoke to ian king about this story. >> a very small company. they make programmable types. >> programmable logic. they can use these tips and they don't have to design the whole thing they can make the chip to certain things for them. >> the seven used when you design another chip because you knock it out using an fpda. you know it works. >> you use it because it has optionality. you specify the chip once you have done that. >> right. >> this doesn't seem like, it is complex. it doesn't seem like -- >> no. this is obviously not a large company. the product itself could be used

in various ways, useful to the military and so forth but that is not what we are talking about here. what we are talking about is a broadening of the purview of a change in policy from washington and a hardening of the stance from washington toward china. >> if french backed venture capital firms, might not face the same sort of pressure? >> yeah. >> the technology in and of itself, is there a suggestion that there could be an embedded ability to monitor the use of chips, if they chinese government controlled company can see what is happening with these? >> there is an element of that. they are often used in networking equipment. the stations are on phone networks and they control

various functions. i want to stress, quite clearly, security is the stated reason. whether we look at these things fundamentally, the u.s. semiconductor industry, the u.s. government does not want china coming in and taking those key capabilities away from it. >> else competes in this area? >> intel. zylinx. >> also this is bigger. >> they divide the market up between them. >> when the altera deal went through, i thought of it as a time, an fpda was an accelerator to another chip. >> they have had a specific use, even more neroli confined to the design of other chips.

the suggestion was they would spreading get into data centers. microsoft is using them in data centers now. that is happening but not quickly. it is how the chips can be used. a broader point is, we're seeing the chip industry consolidate massively over the last several years. we are down to 6% market share for the top 10 companies. china needs to get into the industry, it doesn't have anyone in the top 10. it is the largest market for semiconductors. it will throw a lot of money to buying its way into the domesticating industry. >> it seems that it would also limit the ability of all the other semiconductor companies to get higher prices in the market with the notion there might be a chinese bidder? >> what do you do?

everyone else is getting together. you haven't been bought and you can't by anyone else. it doesn't make sense. where do you go? one haven was supposedly all this money china had said it was going to spend, that will be the rainy day fund. not looking like it will happen. emily: our editor at large with ian king. coming up, why we may see self driving trucks on the road before taxis. this is bloomberg. ♪

emily: this week a u.s. appeals court cleared the way for waymo's lawsuit against uber. the judge declined to send the suit to arbitration. a former employee of both companies was accused of taking

files from waymo to uber. they will get access to a keep these of evidence. a report that tried to prevent examination of files. >> super influential engineer at google, waymo, leaves, starts this company called auto. >> all of a sudden, self driving trucks? what is that about? >> uber buys them a year after he left. >> they buy the auto trucking company? >> a small team. >> they are not pursuing that at all.

>> uber's focus is self driving cars and they put him in charge of that effort. waymo digs around to see if any trade secrets have gone with him. that is the basis. >> uber wants arbitration because why? >> there are embarrassing details that could come out. it is easy to say it looked like a stretch and they lost. they were basically saying, waymo should be bound by its agreement to arbitrate things with lewandowski, even though they are only suing uber. >> the arbitration clause, that, oh that applies to us too. >> yeah. >> so the trial happens? and we will get discovery, but the trial in october seems soon.

>> the key other ruling here, uber suspected there would be issues. they did this diligence and had a cyber forensic firm look into everything lewandowski had. that report has been tightly kept and they have refused to give it up and didn't mention it. finally a judge has said you need to hand that over to waymo. it will be interesting to see what that firm said because we have been not been able to turn up the 14,000 files. that was the explosive claimant the beginning. there were these files that uber had and so far waymo has not been able to say, there they are on uber's computer. emily: sticking with waymo, the ceo was on stage at the bloomberg: sooner than you think conference. speaking about when we get self driving cars on the road.

>> the answer is literally the name of this conference. it is sooner than you think. we have an working on this at google and now at waymo for over eight years. we have started to talk about the simulation models we are driving right now which are more important. last year alone, 2.5 billion miles in simulation. we are to the point now with the technology is feeling mature and ready which is why we are spending a lot of time in phoenix and mountain view. there is something in phoenix called the early rider program where we have families driving around in our cars and we are beginning to understand how real people would like to use this technology. that is the last part for us. understanding that as we continue to refine the technology before we are ready to deploy. >> yesterday was interesting in terms of regulatory framework.

elaine cho put out a vision strategy statement, which some consumer groups criticized for taking a hands off approach. the same day, highway regulators were thought to need to be more active, pointing to the crash last year by a man in a tesla. what are your concerns about taking this tech forward safely? >> if you look at what the administration has done in the last couple weeks, it is encouraging for this technology. we are in the early stages. we really haven't served our first users yet. it makes sense that we are careful and flexible so we don't unnecessarily or inadvertently squelch in of it -- innovation. how many things of the house of

representatives -- have the house of representatives united behind recently other then self driving cars? i think that is great. it bears reminding, there is a difference between the problem we are trying to solve which is self driving and removing the human from the car and letting our technology do the whole driving task. the different problem that is trying to be solved today is driver assist technology. >> that is what the mtsb was rolling on. our drivers getting too comfortable with these technologies? >> it is the fundamental conundrum we face in this space. we learned it at google prying to becoming waymo in 2012, we had a pilot experiment where we put employees in cars for highway use.

we told these smart googlers, they had to be very attentive, we would be watching them and if they did not behave we were going to take this free car away from them. we ended up having to stop that pilot experiment after a couple months because of those google employees couldn't stop taking their eyes off the road. they very quickly came to trust the technology too much. that is the fundamental conundrum. if at some point the car needs to ask the human to pay attention, the human has phone asleep, got distractive, is in a deep conversation, that can be a big problem. emily: waymo ceo speaking with brad stone. aqua fax is still reeling from a -- equifax is still reeling from a massive data breach. what are they doing to stop the bleeding?

all episodes of bloomberg tech are live streaming on twitter. this is bloomberg. ♪

♪ emily: welcome back to "best of bloomberg technology." i'm emily chang. the massive equifax data breach could be the largest in history. the hack may have hit 143 million customers. and a class action lawsuit is demanding up to $70 billion in damages. company carries an insurance policy for this, reportedly it covers $100 million to $159 million. we spoke to the chief information security officer at fortune net about the hack. >> i think what it means is the company is trying to figure out what happened, the extent of the breach and what they need to do to the -- to address the victims

to include probably cooperating with local law enforcement to get to the bottom of it. emily: in europe there are laws against not reporting things like this faster. i believe you are required to report data breaches within 72 hours. wouldn't that make more sense? so that the hackers don't get a head start? phil: what you are talking about is the european regulation called gdpr, designed to bake in privacy protections for companies that handle personally identifiable information. in europe versus the united states, they are a little different. in the united states our model is more one of market forces, with perhaps the end of that continuum being legislation. more specifically here in the u.s. we go from market forces to

public outcries to executive orders to regulation to legislation. that is a continuum from minimum to harsh. in the european union they start closer to the regulation part of the continuum. there are indeed hefty fines if you have massive breaches of private information. up to 4% of global revenue. emily: bloomberg spoke with senator dick durbin who said we are duty-bound to step in on behalf of innocents who are going to pay a price, adding this is an indictment of our current level of regulation when it comes to this industry and others. how do you respond to that? >> i think there is a role for government, the legislative or executive branch. at a minimum trying to incentivize companies to avoid the false choices. false choices between convenience, privacy and security. i want all three as a consumer. the best architectures can

provide all three. emily: what do you imagine investigators are doing right now? explain what is happening behind the scenes. phil: they are looking for forensics. hopefully they are looking to the future. they are looking to see what types of strategies and techniques and technologies they ought to be implementing. things like really good segmentation, both at the macro level and micro level so future breaches' scopes are limited. they are looking for solutions that implement defensive depth rather than relying on point solutions, they might have automated solutions working together. over a security fabric. quite honestly, i'm guessing they are looking closely at what is the best way to communicate with the private sector since so many people were affected by the breach. emily: there are reports it is possibly accomplished by

exploiting certain networks that other major companies are based on. what is the likelihood that many other companies could be at risk of the same kind of attack? phil: we don't have specific information about where the original breach was. there was one company that stepped lowered, that said, i think it might be us. this is software used in the top 500 companies. we don't know if it is a zero exploit of that software package or that a patch has been released. yes, there is a point of entry the perpetrators came in through, but there are likely other points in the network when the network defenses did not live up to what was necessary. emily: would you say the scale of this breach is as bad as it gets or could it be a lot worse?

phil: the scale of this is about as bad as it gets. there is probably not a viewer of this tv show that has not been affected. this is unique both in its scale, number one, and number two in the type of information. this is not basically having to change my email password or email address. this is resulting in hard to secure information. my social security number, my date of birth. these are very personal things. so it is different both in the scope of the compromise and the nature of it. emily: what do you imagine is going to happen to all of this information? phil: quite honestly, this is most likely to be a criminal event. i like to categorize it in four categories. one, individual hackers looking to cause mischief through trophy penetrations of companies and organizations.

two, persistent criminals making a buck with private information. three, countries looking to destabilize democratic institutions. four, countries looking to impose their will on other countries in times of crisis. it looks like number two, a criminal element. it is likely they will try to commoditize this private and financial information and sell it on the dark web or other places. emily: the chief information security officer at fortune net. coming up we speak with matt salzburg on the meal kit company, blue apron, strategy for fending off the competition -- that is next. plus ibm ceo and chairman ginni rometty, our exclusive conversation about her vision for the future of artificial intelligence throughout

business. this is bloomberg. ♪

emily: blue apron has had a tough time. shares are down 46% since the ipo. the meal kit company says it sees potential in partnership in its effort to expand its brand. bloomberg spoke with the ceo. from cornell tech's new campus.

matthew: our ipo happened right at the end of q2. it was 3% of our network's volume. we have been investing very aggressively in our supply chain in order to get people new products, more flexible offerings, new ability to monetize our customers with personalized offering and lower infrastructure costs. linden was a big opportunity for us. it still is a big opportunity for us. we still expect it to be our lowest cost operating center. as we moved into q3 with our ramp plans, we were overly optimistic on how quickly to ramp it. our business is incredibly hard to do what we do. if you think about operationally what is involved with getting a blue apron home cooking experience to people all over the country, working with hundreds of farmers, growing

ingredients, bringing them to incentives for quality control, portioning, packaging, shipping, delivery nationally in a high-quality way, that's incredibly difficult. >> that is fair but that is the value you are pitching to investors. matt: that is what we are doing. it's about a start of a new center. because it took us a little longer to launch linden, we are operating two centers side-by-side. in new jersey, right now. that has additional costs. those are short-term costs because we are closing down our jersey city fulfillment center and opening up our linden the -- linden fulfillment center. we were a little overoptimistic and we realized that as we are getting through q3 but we are working on the number of initiatives, both short-term and medium term in nature to get it up and running and take on about

half of our network's volume. that is what we are doing. >> you are having to do it all in the public eye. would this have been better worked through if you were a private company? matthew: you have to be confident about what you are trying to do. we are confident in what we are trying to accomplish with our business. we are building a company about new experiences, helping people cook at home, and going for a large industry that's in massive transition as more and more dollars move from off-line to online and new brands capture share from old brands that are no longer relevant to customers in the world we live in where people are looking for healthier alternatives, more emotional brands and experiences. we feel good about our long-term prospects. what does that mean? we have to do the things we need to do to achieve long-term goals. going public is one of those

things that has helped make our company stronger through access to capital, access to having capital markets and public currency. for talent and the like. we have to be confident to say we know what we are trying to do, we know who we are as a company. as we execute over time people get to know us better in the public markets and they will appreciate what we are doing. >> i have one other thing i gave our audience, a stepping down as coo. this is a reorganization of the structure. talk us through that briefly. matthew: there was an important reorganization we were working on and completed. at the time we announced my cofounder was stepping down as part of the whole re-organization of the company.

as we are moving into this next phase of company life, it is more important than ever for us to innovate fast on emerging consumer needs, understanding customers who want to cook with blue apron but they have a diversity of needs. for the first five years of the businesses life we've been focused on scale. we saw very large and attractive markets and we felt the need to attract capital and talent and resources to invest in building a world-class brand and supply chain that allows us deliver great products and great prices. but in this next phase there comes scale. personalization and innovation of new products so we can address new segments of customers that we have historically not addressed because we have been focused on scale and monetization and increasingly stronger ways in terms of revenue per customer. what we did with the reorganization is divided up some of the teams and the company more clearly to allow us

to go to new product opportunities. we elevated tim smith and pablo cazadi. to help divide those and help us accelerate our consumer products. >> the timing of it, you came out with a team. post-ipo. you pitched your story to public market investors and you turn around just weeks later in a reorganization of the dna of the company. why did that decision happen when it did? matthew: no company should sit still and do nothing. my job as ceo is to every day, do what i can do to improve the business. our job as a company is to take one step forward. every day we will continue to do new things. in terms of the exact way we have personnel structured and the like, we will continue to make decisions when we come to the crossroads and see opportunities to improve the company. we are not afraid to make changes. that is our job.

>> you talk about confidence and trust. some of the investors i talked to don't like to see this kind of change so soon. thinking back to that stock chart with your stock down 46% since listing, how do you continue to instill trust in the investment community in your strategy? >> we need to execute and show investors we are doing things we say we are going to do. we need to continue to build value and building a great brand, great products, for a supply chain and continuing to engage millions of customers all over the country. we need to continue to prove that. i think people, as they get to know us better, will begin to appreciate the amazing assets we built and the strategy we are going after. if investors say, we don't want change, i think that is

misguided. it is a company's job to continue to change in new market environments, when they see opportunities. the weakest companies are the ones that are afraid to change. our willingness to continue to change and evolve and build a business in a gigantic market opportunity is something that i as the largest shareholder am really excited about. >> you talk about making more money off your existing users, focusing on that channel, may be -- as well as looking at scaling your products. talk us through your biggest opportunities. why are you different? why is blue apron different? matthew: the food and grocery market is one of the largest that exists. it is not a winner takes all market. there will be many brands and kinds of companies trying to feed you in different ways. what we stand for is this love of home cooking and the experience of home cooking and a lifestyle around that. our mission as a company is to make incredible home cooking

accessible to everyone. the reason we call the company blue apron is because chefs around the world aware blue aprons -- they wear blue aprons when they are learning to cook. it's a symbol of lifelong learning and cooking. this participatory component is core to how we engage our customers. it's important to understand. we think of our business as a branded consumer products company, not just a distributor of other people's products. you have to be great at innovating around customer needs and have a supply chain to do that. in a low-cost way. >> those new innovations, touch on some of those. matthew: the one we just announced recently. we have been expanding our menu offerings to allow us to offer different accommodations of meals to address different customer segments. we have more recipes that are designed intelligently to accommodate wider audiences. more flexibility for our audiences. any combination of recipes they want. we announced 30 minute meals specifically designed to be really fast for people. we might send you pre-chopped

chicken, pesto sauce, or recipe for a fast meal. some customers want faster in and some who want more discovery. >> that sounds similar to the core product, for at least the same mealtime. are there additional add-ons? where does the additional revenue come from? matthew: there are a lot. the biggest opportunity is in the core of what we do. emily: that was blue apron ceo matt sulzberger. --matt salzburg. still to come, hours was a -- a conversation with ibm chairman and ceo ginni rometty. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio at, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

emily: the role of artificial intelligence and business. ibm ceo ginni rometty is reinventing the way you use it everyday. megan murphy is set down with her about watson's impact on business. ginni: we are on a path to hit about one billion people will have a decision impacted by watson in some way. financial services. it's interesting to watch. some of the biggest banks in

europe have adopted it far more quickly to this. customer call centers. you take 350,000 emails a day, you don't just sort them by keyword for urgency and how to solve them. these are sorted by important sentiment of a client, their customers. that is what they use watson for, possible answers. i was saying to megan that financial crimes, you think people spend all the time decisioning. if i'm doing a dossier on money laundering, they could take me five hours to pull the data together. now i get the data and i spend 15 minutes gathering. and i do it. on weekends i was with a big oil and gas company. everybody has this problem. an aged workforce.

many industries, i can name many in the room, have this. how do you gather that knowledge? they use watson to do things like safety, making decisions on where to drill, all of that. i was chatting with someone about the weekend and the hurricanes. some of you may or may not know this but we also own the weather channel. on your phones, that is what you are hitting. we have now introduced watson to that. over the weekend, a new weather forecast recalculated across 3 billion points of earth. on the weekend with both irma and with hurricane harvey, the most recent one, we held one million conversations, interactive conversations i had, on how to prepare for the hurricane. and then it was half a trillion interactions with watson to help 140 airlines reroute.

these are things you learn for business that are very different when people traditionally talk about a.i. >> you have touched on the criticism that it's still too dependent on human interface. we talk about financial services, underwriting risk, the weather, they cannot than fast -- that it cannot learn fast enough and it has been not transformational enough to live up to some of the dependency both of ibm and how it's being marketed. how do you respond? ginni: ibm is an $80 billion company. when people say, "why hasn't this grown ibm by two?" that's an unrealistic expectation. it is an era, and you teach these systems. those of you that work with them, they have to learn to

teach. watson is exactly where we thought it would be. watson is exactly what we thought it would be. and a great example, and when you're a pioneer, people shoot. not deadly but they shoot. health care is an example. when we did our very first oncology teaching watson, the first was long, breast, colon cancer. it took the doctors a year. this is another key point about professional a.i. doctors do not want a black-and-white answer. nor does any profession. if you're a professional, you don't want it to say here is the answer. what a doctor wants is, ok, give me the possible answers, tell me why you believe it, can i see the research, the evidence, the percent confidence. what more would you like to know? these are really what we are

doing. the first took almost a year. we are down to less than 30 days now. by the end of this year watson will have been trained on what causes 80% of the world's cancers. i find that kind of criticism out of line for what it is we are working on together with doctors. emily: ibm ceo ginni rometty. that does it for this edition of "best of bloomberg technology." we will be live from the tech crunch disrupt conference next week speaking with steve jurgensen and sam altman. tune in each day. 5 p.m. in new york, 2 p.m. in san francisco. remember, all episodes are livestreaming on twitter. that is all for now. this is bloomberg. ♪

announcer: the thrill of living well, is in the pursuit. the pursuit of the rarest experiences. the pursuit of the finest products. the pursuit of quality in everything you do. and in all of these pursuits, you need the best intelligence to make the best decisions. >> we know that she sells for a lot, but what makes her important? >> it isn't easy. it's difficult work. announcer: welcome to "bloomberg pursuits," where you find information that helps you follow your inspiration. in this edition, utility meets luxury in three new suv's. hannah: immediate power. immediate response. announcer: master the offbeat etiquette of eating ramen. ivan