♪ i am emily chang. this is "best of bloomberg technology." we bring you the best of all of our interviews in tech. amazon is teaming up to improve virtuale acted intelligence. we will speak with the creator of alexa. we then speak about immigration

and the overhaul of the culture you left behind. we will then hear from the ceo of starbucks to hear how the company adapts in the age of technology. we sent bloomberg technology to seattle for the geek wire summit. we spend time with the biggest names in the region including amazon, microsoft, and starbucks. let's start with amazon vice president of alexa devices. nottells us that they would rule out partnerships with rivals if it means improving their voice activated technology. i am focused on trying to reduce friction for customers and drive towards what we call our customer experience north star. really, it is making sure that alexa is more humanlike. pathwe can shorten the from where the customer is starting and where they want to be with less and less work on

their part. want alexa responding likeless of the "ah ha's" in the snl skit? >> something like that, yes. emily: when it comes to understanding human language, are we already there when it comes to how much improvement can be made? >> we are definitely not there. it is still day one, very early stages. machine learning, artificial intelligence, i think we will see a lot of improvement over the next few years. emily: how so? >> i think the technology is there. developers need to be able to build features in the cloud which will allow for a lot of computer power and i think you

will see a ton of innovation out of that. emily: what is mixing from -- missing from alexa? humanhink the sort of conversational behavior. friction andng making the customer experience more delightful, but we still have a long ways to go to make it an even more robust experience. emily: you recently partnered with microsoft and watauga. what do you see -- microsoft and cortana. what do you see customers getting out of cortana that they are not getting out of alexa? >> we see this world where there will be multiple ai's. a.i. that are expert in different domains. you will be able to search out an expert in a particular space,

and then you will have a group of ai's who could handle your question. emily: do you see more partnerships coming in the future? >> why not. for us, it is very customer focused.hould -- we are super passionate about the customer first approach. improvelieve it will customer experience, then we will work towards it. center ofalexa at the a bunch of home devices, or is it the center device in the home? ambiente alexa being an experience in the home. customers can invoke this experience wherever they are. we also see it going outside the house. we have announced partnerships ,ith automobile manufacturers

so that alexa can be embedded in some of the cars. we also have partnerships for when you are traveling on business and you are checking into a hotel. so, we see this going beyond the home as well. emily: do you see home security as an area of interest? >> potentially. emily: what do you mean by going beyond the home? rooms.mobiles and hotel emily: amazon got a jump on the market, but now other competitors are there. is there anything that your competitors are doing that you find impressive? with a lot ofsed the innovation happening in this space. we are focused on building new features and experiences for our customers. we think that, in the end, the customers will wind. -- will win.

emily: still with amazon, we spoke with the resident of the web services division who says that the shift to the cloud is just beginning. with amazonusively web services ceo and asked about amazon's explosion in the cloud. did it even surpassed his wildest excitations? >> it has certainly grown very fast, and i do not think any of us had the audacity to realize how fast it would grow. amazon, which is a very strong technology company, we have a lot of internal development teams which wanted help moving ine fast and quickly building their technology platform. have do not think we would addicted that it would be $850 million revenue business growing

a little over 40% year over year. i do not think we would have addicted that we would -- have asdicted that we would have many active customers or that we would get a six year head start. emily: now, your competitors want this, too. how do you make sure that amazon is favorably positioned? >> it is such a great value proposition for customers, and that is why it is being adopted so fast. others will then want to participate. i think there are some real differences between the platforms today. aws has a lot more functionality than anyone else. we are also innovating at a faster clip. i think there are also different ecosystems around these platforms. it is not just that thousands of

system innovators and integrators, but these staff members will often adapt their technology to a particular infrastructure platform. some will do two, and only a few will do three. and they all start with aws. we have an expression we use internally that says there is no compression algorithm when it comes to experience. you just have to learn it different lessons when it comes to the scale. learned thest not lessons yet, see you see that in a variety of infestations. emily: you just added ge as a customer while at the same time losing spotify. go -- tell us about the lengths you are going to two keep and maintain your customers. >> we think of our customers as a non-amazon entity which uses

our platform over the past three days. they really span the gamut. -- the past 30 days. and they really run the gambit. these are companies like pinterest, airbnb, slack. the adoptionyears, has really increased with the cloud and aws. you see every meaningful vertical business segment using aws. when you talk about bp, hess, and then the financial services inh capital one, manufacturing you have ge. they have been using aws for a long time. you have shire electric and phillip's. even though we compete with netflix on our video business, they are using aws.

we just have a lot more customers in every imaginable segment then you will find elsewhere. was president of amazon's web services. coming up, we have more from our geek wire summit. this is bloomberg. ♪

♪ emily: qualcomm was accused of violating antitrust rules in taiwan and collecting licensing fees from local companies at that time. qualcomm agreed with the --

disagreed with the decision and intends on appealing. we have more from our geek wire summit in washington state. i sat down with brad smith to ink about microsoft's impact seattle, and i also act about -- asked about his reaction to president trump's stance on immigration. isdaca is a issue we believe important to our country and our business. in our industry, we critically depend on having the best and brightest who are among these a thousand -- 800,000 people registered under daca. any of the 44 microsoft employees who are daca recipients, we are not going to sit on our hands -- on their hands and watch. we are going to help them get legal counsel. we will be by their side.

we want our employees to know that we have their back. emily: microsoft has a history of challenging the administration when you believe it is warranted. >> we have a history of challenging every administration. the executive branch for times when president obama was in charge. typically, it has been around previously the protection of privacy, but immigration has been the more challenging issue this year. we step forward in the wake of the travel ban, and we step forward again in the context of daca. we believe we need an immigration system which is in force and balanced, that we also we also-- balanced, but benefit in this country when some of the best and brightest in the world, to work here. i you concerned about any

sort of retaliation or blowback the federal government? >> the good news, in our perspective, is that we are principled and explain things i you concerned about any sort of retaliation orclearly -s personal. we stood up strongly for daca. i then went to a virginia school with a bucket trump to stand up for -- with ivanka trump to stand up for technology. >> i really have nothing to add. this is an important issue, and microsoft is always very principled in their actions. emily: facebook, google, twitter, all were called before congress to answer for these russian political ads. microsoft'sing at platforms?

>> we are looking, but we have not had anything pop up yet. we are trying to learn -- i think we need to do two things. first, we need to look at 2016 and ask what we can learn from this. the question we should focus on is not what happened in 2016, but how do we prepare for 2018? there will be a new prime minister elected in 2019. there will be a presidential race in the united states in 2020. let's assume that there are people who are going to get more sophisticated in trying to abuse the social media platforms. they are going to get more sophisticated on these cyberattacks against local candidates. how do we get better -- against political candidates. how do we get better as a tech sector and to get government to work together to use their voices to say that this is an attack on democracy and it needs to stop. emily: can we trust microsoft to

take on these issues? >> i do think we will need some congressional action here. >> i would agree with that. we need to accept once again that, as an industry, we have a high responsibility. we may even have the first responsibility, but it would be a great mistake to think that these fundamental as -- acts are something that the tech sector can defeat why themselves. -- defeat by themselves. it is like seeing people looting a store and telling the store owner to just put better locks on their doors. this is an attack on our democracy, and the government and the government's of the world need to come together. i believe i heard earlier that the tech companies were woefully ignorant in this regard.

do you think so? >> i do not think so. the truth is that these platforms are very large. there are so many different people using them, and there are some any different types of ads being purchased good i do not think it occurred to anyone in the tech sector -- purchased. i do not think it occurred to anyone in the tech sector, the government, or the media to ask if there was someone from foreign countries buying these ads. emily: they did say that they started looking into it in june which was several months before the election, but, at that point, they did not know the scale. >> it is kind of like looking for a needle in a haystack. if you look at all the ads purchased on a social media site, it is quite a big haystack. you do get better at finding needles once you learn how to look for them, and i think as an

industry we are starting to figure that out. we need to do more, we need to look better, and we need to look acksd, because those att are going to get more sophisticated. let's not assume the government should be new -- should do nothing here. emily: are you concerned about more regulation coming for tech companies? are you bracing yourself? >> i worry less about more lessation than i do about thoughtful regulation. i think there is a place in the world for good regulation. the whole industry is focused on may 25, 2018 which is the date next year in europe when the general data protection regulations take effect. there will be stronger privacy regulations which i do think is better for people around the world. it will give us more legal clarity. good regulations,

we figure out how to manage them. >> when i moved here, microsoft had 12 people in albuquerque. you have moved a lot of technology here and the times have changed. you opened an engineering center in the seattle area. played aobviously role. talk about the competition here. >> i think seattle is the cloud capital of the world. it is also cloudy in the weather, but it really is between amazon, microsoft, and all these other companies. you will find an extremely forent environment technology. i think as we continue to grow, i was happy to encourage the p eople of that company.

we have some great relationships with microsoft. i think as the world comes to seattle, we will have new opportunities to play a leadership role in the world. emily: amazon is your biggest rival, so to speak, and especially in the cloud. >> and that is great. incrediblyn competitive industry. the truth is that we have some of the best competitors in the world. if you want to look at competitors doing great work, you just have to look at amazon, facebook, google, and apple. we also work together. we do need to collaborate on problems like cybersecurity attacks. at the end of the day, if more people have confidence in the if we can move the

frontier of artificial intelligence forward -- this is a big world, and there is something for all of us to be successful. emily: on tax reform, you might be more in line. ont is your thought progressive tax reform? quick i do think we need tax reform. i think it has been long overdue. we want to see a territorial system which is like what the rest of the world has. let's get rid of the system we have today which creates incentives for us to keep profits offshore. let's figure out how to get money back into the united states and put it to work in the united states, and let's bring our tax system into between first century. with: that was our talk and aoft's president university of washington professor. coming up, a discussion on president trump's stance on

trade. that is up next. this is bloomberg. ♪

♪ emily: they are expanding their presence in the u.s. by developing -- by creating a new base in seattle to develop ai technology. aboutke with mr. zhang president trump and his dance on china. on china.stance >> china is becoming more open than ever before. the technology industry is growing phenomenally. china,when i was in facebook and google were allowed, but then they all got shut down. >> obviously, there is a lot of momentum in china for the industry, but it is also hugely competitive.

there are more search companies in china than in the u.s. alibaba, they all have search technology. you also have half a dozen other companies doing search. there are also new technologies that compete with them. the whole competition is scorching, it is fierce. i think that will make us more constructive and innovative. emily: how would you characterize the health of the chinese economy? particularly the pileup of debt? chinese economy is very resilient. the 6.9% growth in the gdp is such a large pace, it is amazing.

there might be things here or there that need to be fixed, eral, i am very confident. overall, things are quite healthy. emily: i you concerned about president trump cracking down on free trade -- are you concerned about president trump cracking down on free trade? >> america benefits from the flow.ss and free emily: coming up, steve ballmer will speak out. we have interview with the l.a. clippers owner and former microsoft ceo. a reminder, all episodes of bloomberg technology are live streaming on twitter. this is bloomberg. ♪ who knew that phones would start doing everything?

entertaining us, getting us back on track, and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com.

♪ emily: welcome back to the best of bloomberg technology. the first time since reports emerged that russian actors focused on targeting voters in the election. the platforms should apologize to the american people. we're going to give them the material they want. we want to give them the material, we want the full picture to be understood. we don't want this kind of foreign interference and none of us should want this and in order to prevent it we will have to fully cooperate. emily: facebook has already

turned over more than 3000 ads to house and senate committees. join facebook and google at a hearing on capitol hill next month. says techrosoft ceo companies cannot do more at present to police the spread of fake news. i sat down with the l.a. clippers owner in seattle and spoke with him about a website released earlier this year. take a listen. >> we launched our platform of data from the government, about the government, no fake news or alternate facts. we keep adding more data and we keep the information current. is real thing we are doing we're trying to help citizens run through topics of the day. we have a walk-through that will walk you through the president's budget in the context of what has happened historically. like, whatdp look

does the deficit look like, and how does that compare to the cbo? we make no predictions, we want to make sure people can walk through and look at these proposals in the context of the past. then be about to say, does this make sense to me or not? we have a video that goes along with it that will explain to citizens, this is the set of data and the way to think about, how do you think about something like the budget proposal? >> i know you know these facts better than anyone. as we talk about health care, do you have advice? >> in a way. these are holistic. we look at tax reform, the budget, and we look at health care. when you look at the economics what doeshree things, it mean to have a budget without tax reform? i'm not condemning anybody but it is nutty. you have to have a tax plan and order to have a budget.

it would be like a company having an expense plan without a revenue plan. it doesn't make sense. one of the biggest pieces of expenses is health care. , understanding how these things mesh together would be a key piece of advice i would give decision-makers, legislators, and the executive branch. this is a mentioned page of misinformation and fake news, how big a problem is that what is the responsibility of these platforms, facebook, google, twitter? >> this notion of people being able to be fed whatever will make them feel good, that is what people are really doing. people want to feed whatever their instinct are. the goal has to be, this is how it is, you can see it how you want to but at some point you have to be able to take a look at things objectively. i'm not sure that is facebook's job. they are not in the news business. they pass along news.

same thing with google. that is part of the issue. look authentic. we did a poll and when surveyed people would say, i find my information most often on social media and they trusted the least. facebook and think google and twitter should be policing more or is that their job? >> they can't. over time there needs to be something to the equivalent of authenticated user on twitter where you get the little bullet that says you are who you say you are. it would be nice to have authenticated sources so that people can say, i really want to see, not just with the crowd is saying but i want to hear from authentic sources. emily: what if that information is not coming from the crowd, if it is coming from our president? if he is the one spreading misinformation? >> we elected the president, our country as a whole.

he is our president in chief. there are people that have problems with that and people who are supportive. at least when he speaks he is speaking authentically for himself. in a sense that is a set of facts. when a major policy leader speaks, you could say it is true or not or you like what he says but it is what he is thinking. benefits from having the ability to either directly just as we heard directly from other people, i get a chance to speak directly on the internet, lebron james gets it chance to speak. people don't always agree. we have certainly seen that with lebron and the president. emily: there are some that say the president is taking it to another level, perhaps inciting nuclear war on twitter. should he be kicked off twitter?

should he be allowed to make the statements on twitter? >> everyone has the right to speak for themselves. that includes the president of the united states. everybody has the right to speak for themselves. that is in the fundamental nature of this country and it is an important one. the citizens have an obligation to elect the people who they think will best represent their sts.st -- intere that gets the chance to get battle tested every four years. i love our system. people have to constantly prove our system. if people are doing things that are valued, the where system works, it does not take 100% to win. it takes logically 51% with the electric -- the electoral college. people have a right to hear directly, as they cast their ballots. you ran microsoft word

-- you ran microsoft word many years, do you have concerns? >> my dad was an immigrant. my grandparents on the other side were immigrant. i value the fact that immigrants come into this country. i think it is usually important. not just something that was important 100 years ago. it remains important trade in terms of high-tech workers , people moving back and forth across our southern border. there are complicated issues. issues of national security but there are also issues of economy and fundamental humanity. too think it is important look at all of those things including humanity as we address so-called dacahe

. also how he dealt with the new ceo of microsoft. >> he recognizes the good and the things that needed to be changed. he has navigated that well. for my perspective, we knew we needed to get into the cloud. i got that started. he has taken it to another level and i respect the fact that he is had to do things differently. i knew things would need to be done differently in that area. that is part of the reason it was a good time for change. hardware is a different deal. he has pushed that along with xbox and service. things need to be shaken up and freshened. it reflected my personality and bills personality.

like children, things need to keep growing if you will. we revel when our children are grown up and are making their own way. i revel that he is taking microsoft to its next level. going forward in new and different ways. moving along that amazon web services much bigger and growing faster. do you want more, better, faster in the cloud? >> absolutely. investor on our quarterly call, i say let's keep it moving. let's keep it moving. emily: are you listening into all the calls? >> no. i do a quarterly call with the cfo. i think microsoft has done a phenomenal job particularly on the office side but also on the azure side.

is there a lot of room for improvement? yeah, i do think there is. emily: what kind of improvement? >> you need to have better attachment and ability to sell to startups and other development companies. developers, developers, developers. with azure you have to win the developers. microsoft is getting there but still has more to do. emily: you said you are done being an investor? >> i'm not making new investments. emily: mutual funds, microsoft, and twitter. >> index funds. keep it simple. i have bonds, microsoft, twitter, and a couple small private things that i don't do much of. i have a basketball based investment. i have one investment with friends and that is it. ai,y: about the future of

and whether it is dangerous, elon musk saying that robots could take over the world and supersede the human race. has said that is irresponsible to talk like that. what do you think? usual, effervescence of the tech community. let's say something extreme. let's time down. when you get down to it, is ai important? yes. will it improve the way people live, yes. do we know what we will conflict today? no. smartercomputers to be at helping people, that part cannot get bad. there is a place in time where we can speculate about all of the tough societal issues but we are years away from that. elon musk, of course what he says in the long run could be

right but the long run could be a long, long run. not in the next 10 years. mark zuckerberg is ready and prepared and has a right to talk about that. but some of that clutter out of your mind, artificial intelligence stuff will make a big difference. emily: you think it is possible the human race could become extinct? >> no, the human race will become extinct. but how powerful the computer's ability to reason and what that will fully mean, we do not know. we are not going to do with that problem for 20 years. that was steve ballmer, the former ceo of microsoft. richard branson has joined the board of the soon to be renamed virgin hyperloop one. aa and to raise $200 million for the futuristic transportation that elon musk first theorized in 2013. after visiting the test site, richard branson is convinced the

technology will dramatically change travel. coming up, and excessive interview from seattle, the ceo of starbucks, kevin johnson. we find out where the coffee giant sees the biggest market for growth. this is bloomberg. ♪

♪ tim cook met with emmanuel macron in paris this week. as discussion for aggressive overhaul on how tech companies pay taxes. amazon was slapped with an order luxembourg. the summit in seattle, the city is known of course for its coffee and starbucks reigns supreme. after opening the first or their

46 years ago. i caught up with kevin johnson and i started by asking about the difference between his leadership style and that of his predecessor, howard schultz. >> howard is an iconic merchant and founder. in many ways he has years of intuition. i would characterize him, he has a more spontaneous, intuitive leadership. with my background in tech and digital i am much more thinking about using data to help inform decisions and be more intentional about what we do. at the end of the day, we have worked together for a long time. i value he's creativity and his point of view. i think i bring unique things to the table that will help us as a company as we make the transition to the future. emily: i interviewed you in your prior life. >> many years ago. emily: how is a tech company guy going to change coffee? >> the tech industry and coffee industry have different business

models but they have a lot in common. and coffee,dustry we have to innovate to stay relevant in our sectors. emily: what does that mean? >> we have innovation that starts with all things coffee. you go to our rose tree up the street here and you have a chance to experience some of the new copies, whether it is cold brew or whiskey barrel aged coffee. in our store design, our digital mobile connection with customers. we innovate around our partner benefits and our social impact agenda. there are five major categories of innovation that drive us. how is how i am getting my copy going to be different in the next five years? continue to elevate the expense we create in our stores around a wide range of beverages. much of that is focusing on convenience and connection. a lot of times you are in a hurry and you want to use mobile pay and have it ready when

you arrive. may be other times you want to go with your family and sit down and share your beverages and have a conversation. we will continue to build stores and elevate the experience and continue to bring new beverages and food items to the stores. emily: what about people who order ahead and wait in line? we just implemented new technology in our stores call the digital order manager. when someone orders, when their stuff is ready, they get a notification. we're doing more to communicate with customers when their order is ready. emily: taking a tough stand on political issues, planning to hire refugees, you got pushback from conservative shareholders. how do you navigate that? how long you plan to continue? peoplentimes misinterpret what we are doing is political.

our social impact agenda is about opportunity. that started with the work we are doing to hire better in. -- higher veterans. we've exceeded the number we pledged. fact thatied the there are over 6 million young people, ages 16 to 24 are not in school and not at work and we started opportunities where we hire 40,000 ofto these young people and are now hiring 100,000 of them. the refugee portion is consistent. that was our first global initiative given that there are refugees in europe and other countries around the world that we felt like we could play a role in helping those communities with jobs and opportunities. this is core to who we are. it is not about making a political statement. emily: you get pushback from the board on this? >> the board is heavily involved in this.

the things we do, we work to make sure that it is consistent with our mission. they are not politically german. the fact -- they are not politically driven. we have fantastic partners in our stores that make our company better. much of this is core to who we are and how we get the talent we need. emily: you're getting pushback over your paid it leave policy, 18 weeks for moms. how do you reconcile that when employees on the frontline are getting the same benefits? >> we offer best in class parental leave in our stores compared to anyone else in the industry. every year we take feedback from partners on what is important to them. in the stores,s what has been important is the increase in wage. we have made significant increases in wage for partners in the store. million dollars

for wage increases trying to do the right thing for them. we continue to listen to try to do what we think is right to help them in their situation. they: check us out on radio, you can listen on the radio app and on sirius xm. this is bloomberg. ♪

♪ emily: cities across the u.s. , j ramping up their campaign

ensley knows what it takes to keep that firms happy. >> this is, in a sense, a signal of amazon's incredible success. they're growing faster than any other corporation in world history. they're are adding another 6000 jobs in seattle. hundreds of square thousands of square feet. the growth will continue in washington state. this is a signal of their aspirations and ambitions. geography is an issue. it is not shocking to us that in a rapidly expanding business, they would be willing to look at other options but our state will suggest some locations for them and there will be proposals from

a variety of communities around the state. in the event that they see washington as a potential option. one way or another they will grow here in our state is a perfect place for them and i think some proof of that is their success to date. we are glad they are succeeding. when you look at the growth here and what is to come, is their advice or things you would share with other governors as they look out to manage or attract such a large and successful company? we have a strategy for technological growth in our which is succeeding for not just amazon but google and andbook and expedia microsoft. we have companies that have rapid expansion. the development of intellectual talent, we know the number one recruitment tool is intellectual talent. to make it available in helping

grow in that is why we have been focused on growing our computer science programs at our university, growing our graduation rate in schools. doordly, having an open welcoming approach to welcome talent to our community. this is a secret sauce we have welcomed. smart people from other states and countries to be able to help build these companies did that to developractive the nucleus of an ecosystem which continues to build once you hit critical mass of an electoral count. what we have learned is these companies and industries cross pollinate. inomputer scientist working aerospace one year is working in the biomedical industry the next. we have that critical mass and it continues to feed on itself to grow these businesses. smarter approach is about policies. we have a light touch from a regulatory standpoint. it is one of the reasons we have

two dozen companies working on autonomous vehicles right now, because we have had a welcoming approach. a regulatory light touch. these companies can grow new technologies on this new revolutionary stride forward in our transportation sector. we also have a perfect place to live and enjoy life. we are now in a recruiting battle and there is no better , someonerecruit talent can come to washington and ski and sale on the same day and enjoy a beautiful place with clean air and water and a cosmopolitan culture that embraces foods and music from around the world. this is a great place to recruit a 23-year-old computer scientist . that is been one of our secrets of success. emily: that does it for this edition of the best of bloomberg technology. tune in each day, 5:00 in new york.

all episodes of bloomberg technology or live streaming on twitter. check us out at bloomberg tech tv, weekdays. that is all for now. this is bloomberg. ♪ is this a phone?

or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. julia: welcome to "bloomberg

businessweek." we are in magazine headquarters in new york. today, how to measure the legacy of the chinese premier. a look inside the most expensive house in the global property markets. all of that ahead on "bloomberg businessweek." ♪