♪ emily: i'm emily chang and this is "the best of bloomberg technology," where we bring you our top interviews from this week in tech. coming up, more fallout spreading through technology. our conversation with arm holding ceo simon segar. plus, highlights from the coverage on the ground at the consumer electronics show. in the next hour, you will hear from the ceo of nissan and sony's ceo. and gopro takes a dive. we speak with ceo nick woodman after the company cuts its forecast and slashes jobs.

first, to the lead. the continued fallout over the microchip security flaw affecting nearly all work devices. this week, microsoft said fixes for the vulnerabilities may significantly slow down servers and personal computers. in a blog post on tuesday, the company suggested they could be more substantial than intel previously indicated. microsoft is also temporarily suspending some updates to windows operating systems that use chips that are freezing or not putting up. monday night at ces, the intel ceo tried to reassure people that their data would be safe. >> the security is job number one for intel and the industry. so the primary focus of our decisions and discussions have been to keep our customers' data safe. as of now, we have not received any information that these exploits have been used to obtain customer data.

emily: we broke it down with ian king, who covers the chip industry. ian: to start off with, intel was very much, we are all in this together, everything will be fine, nothing to see here, move along. now we just heard from brian krzanich admitting that maybe things are a little worse than we said. and then microsoft coming out, saying, we are finding problems. so really, this industrywide effort to put a brave face on it and say there was no problem appears to be fragmenting. emily: what is microsoft saying here? ian: that in certain circumstances, particularly in servers, it appears as though the slowdowns as a result of these remedies are being put in place are worse than had been previously thought. emily: so talk about what exactly this means. because if the fix doesn't work, then what? ian: it's a choice, right? you fix it and your computer doesn't work like it should, or

you don't fix it, and you are vulnerable, right? so, you buy more servers to make up for their performance, you struggle by with the corporate system that doesn't work? there are all these ugly alternatives. emily: we also have an update from arm. they are saying 5% of their chips are affected. luckily it is not 100%. so, what does that mean? ian: this is important. arm is in every smartphone. right? many more chips based on arm technology are saying since 1991, 120 billion chips using our technology are out there, only about 5% are vulnerable to one of these potential exploits. they are really saying it isn't a huge deal. emily: so, we have headlines crossing the terminals about senators urging the sec and the department of justice to investigate brian krzanich's share sale. we talked about this last week.

you mentioned it was a planned share sale, but he is down to the minimum of his holdings. do you expect more to happen here? ian: as we discussed at the time, intel's stance is this has been in place for a long time, this is why companies do this, however, this problem was known to intel before the plan was put in place. people are looking at this and saying, hold on, maybe this kind of a regular plan, the excuse executives always use to ensure themselves against this accusation, maybe that doesn't stand up in this case. that is what has led to senators putting pressure on the fcc to have a look at it. emily: we also have a headline crossing, saying, they don't expose any exploitable vulnerability related to intel, related to either issue. what does this mean? ian: they are just adding to a list of companies that said,

look, no problem here. the most prominent among them is probably google. we have patched, everything is ok. there is no slow down. we are getting conflicting information here, and what we have to find out, and what we are working on, what is the truth here, and what really is apparent is a lot of people don't actually know yet. we will honestly be seeing a lot of -- emily: what's next? what are they waiting for? ian: we need to see these patches deployed, we need to see what material impact it will have. we will see intel report earnings later this month. we will see how it impacts intel. maybe people don't buy their chips, maybe people need more of these chips. emily: as a consumer, should you download the patch or not? ian: this has been one of the consistent messages. if you are an average pc user, if you have a fairly modern system, one in the last couple years, you don't have anything to worry about. download the patch and you will be safe. emily: that was bloomberg's ian king. one company feeling the heat from the chip flaw, arm holdings, which is at the heart of most major mobile phone

components. 5% of chips made using this design are to the potential hardware hack known as specter. we spoke with arm holdings ceo simon segars in las vegas, and asked how concerned consumers should be about these issues? simon: it is a very serious issue, but it is one the industry as a whole is taking seriously, one we are taking seriously. we are thinking about our future designs and how to mitigate against issues such as this. we are working closely with partners to make sure the software mitigations we have developed over a series of months are distributed, that people are using them, installing them correctly, that we can provide the maximum safety to any user of our electronic systems. emily: how long before remedies are fully in place? simon: well, i think it will depend on which system, which type of device you are talking about.

for some, it is relatively straightforward to update devices, but in other cases, there is a vast number of companies involved in the supply chain to get products to market, so it may take some time. it is really going to be case-by-case, and up to the individual oems of the products, who need to take on the software and getting pushed out. exactly how long that will take, it's hard to say, but everybody is on this with a huge sense of urgency. emily: android updates are pushed much more haphazardly than apple, which means some older phones might be left stranded. how much of a concern is that? you feel android is more at risk? simon: well, one of the things about those older devices is they contain less sophisticated processors, which are much less susceptible to the security issues we are seeing here.

there are a vast number of android devices using cpu's from arm, which are not susceptible at all to the security issue. it's not an over characterization to say that every phone every issued is at risk here. emily: when it comes to the actual hardware, is there a fundamental way for you to redo your chip architecture to avoid this? simon: the hardware features can dictate how much risk there is. so going forward, for anything that is easy to work around, we are going to do anything that is easy to work around. some of the more sophisticated features, it is about the combination of hardware and software that determines if there is a risk introduced or not. i think what you are going to see going forward is tighter guidelines on how to write software to use microprocessors in a safe way. i think what this episode has shown is that we are in a new world of security, and security risks are changing all the time, and the definition of what safe looks like has changed. we have had a fundamental rethink of it.

emily: i'm curious how much of a wake-up call this has been for you? has it raised any concern that the chip industry is too concentrated? simon: i mean, in terms of a wake-up call, security is something we take very, very seriously. we always have. we have been looking at the deployments of arm processors in safety critical systems, in security critical systems, for many, many years. so, we have always been looking at and thinking about how might a hacker get it into a system? trying to stay two steps ahead of how bad actors will try and exploit the system, try to learn as much as we can from the research that goes on in a very broad way. on one level, this is another case of a security tool that has been uncovered. it is different because it is much more hardware fundamental than others in the past, and many security issues use he talked about are down to software and the way that software is written.

it is a little different. i think one thing to take away from this whole incident is the way the industry has come together and collaborated in a really positive way. the issues around competition have been put aside as industries work together to try to mitigate these issues. that is a positive thing, because there are going to be new issues in the future, and the industry needs to react in the same way and work in a positive way together. emily: but do you think the way that the industry has consolidated so much over the last several years could actually be a negative, especially when considering just how widespread this flaw is? simon: i guess there's two ways of looking at it. you can say there's a lot of consolidation and a relatively small number of points of failure. on the other hand, with the relatively small number of parties involved, it is much easier to coordinate a response.

one of the reasons we are seeing time taken to get all the software pushed out is because of the complexity is because of the diversity of the manufacturers involved. emily: that was arm holdings ceo simon segars. well, apple is facing a french criminal probe on whether the company deliberately slowed battery performance on older iphones. this follows allegations from consumer groups. a preliminary investigation began against the company last week for "program obsolescence and deceit." and here in the u.s., a member of congress is also speaking out. republican senator john thume wrote a letter asking about how apple is handling customer complaints. john thume was disappointed with apple's responsible far. sen. thume: we don't think they have been sufficiently transparent with the american people. there are a lot of customers and consumers who have noticed the changes in some of these apple devices, and the fact that they would have those devices degraded in terms of their capabilities without them

knowing why, i think is what we are trying to get at. emily: and more news for apple this week, an activist investor is urging apple to create ways for parents to restrict children's access to their mobile phone. the shareholders want the company to study the effects of heavy usage of mental health. they fear the mesmerizing qualities of the iphone could fuel a public health crisis. coming up, carlos ghosn joins us next to talk about the future of automotives, from ridesharing to electric cars. and if you like bloomberg news, check us out on the radio. you can listen to us on the bloomberg radio app, bloomberg.com, and on sirius xm. this is bloomberg. ♪

emily: more news out of the consumer electronics show in las vegas this week. amazon's alexa service will be available in certain toyota and lexus cars sometime this year. the voice-activated virtual assistant will let drivers and passengers get directions, control entertainment features, and perform other functions in

the car via voice command. also at ces, mitsubishi announced a new venture capital fund with plans to invest $1 billion over the next five years. the chairman and ceo joined us from the event in las vegas to talk about the fund. take a listen. carlos: you know, we have so many things to do for the next six years, which is about the transformation of the car. and i don't think we can do it alone. i think we will need a lot of innovation and creativity coming from startups, or support coming from partners, and we think the way we are organized today is not sufficient. that is why we came with a new organization, which is a corporate venture capital who will invest up to $200 million a year, which adds up to more than $1 billion, in order to support our efforts, transforming the car into electric, autonomous, and connected product.

emily: vc investing just hit the highest level since the dot com boom. $84 billion deployed into startups last year. how much competition is there to develop and deploy the kind of technology that you are trying to develop? carlos: oh, there's a lot of technology out there. i can see it. i am receiving a lot of people, and hearing a lot of ideas. we have to be very careful, because it means that there are a lot of interesting ideas, but how many of them are going to survive, be able to be implemented, executed, at a reasonable price consumers are willing to pay? this is where the challenge is. now, when we are talking about $1 billion over the midterm plan, let's not forget that the alliance has been investing $50 billion. so $1 billion over $50 billion is about 2% of our export.

emily: so will you really be reading people' brains, and using that to help them drive their cars? carlos: well, this is, i think, an illustration about the fact that this is not only about autonomous driving, which means that the driver can drive whenever he wants, but also the car will have the driver be an effective driver. what we call enhanced driving. so what we want is on top of the autonomous driving and what we call enhanced driving experience, the car has the driver be a better driver, be much safer, and optimize the driving experience. that is what they are talking about. emily: what do you think we will have fully autonomous cars on the road, and when will people use them? carlos: i think it is going to be down the road, within the next four years. i am talking about massmarketing here.

i am not talking about having prototypes already to use because we are we have prototypes working very well. it may take three to four years before the regulations allow this to be massmarketed, before we make sure the system is totally robust in any condition. so, i would say 2021, 2022. emily: wow! that soon. so, how do you see u.s. tax reform impacting auto demand? do you think there will be a shift toward the luxury segment? carlos: i think this should support activity and spending and consumption, which means that i think this is going to be good for the auto industry in general. and the fact particularly that the support and incentives for zero emissions cars have been maintained, it is also very good news for electric cars. i am seeing it really positively as a business person.

emily: what are you hearing out of nafta negotiations? do you think there could be a deal that won't raise the price of cars significantly? carlos: you know, it is very difficult to predict. i think in this field, we have to be prudent, watch carefully what's going on, try as much as possible to give the different policy makers data and facts in order to make the best decision for their own company, from the united states and mexico. that is what carmakers can do, make sure the revision of the policy is in the best interest. emily: "business week" once wrote a story that if the president has announced he will be attending davos. what do you think of the president attending this global event, preaching "america first?"

carlos: i think it is going to be extremely interesting. davos is the place where many people meet to discuss important subjects that matter for countries and that matter for people. and the more people participate, particularly people with high-powered levels, the more interesting it is, and the more it gives meaning to davos. so, i welcome this opportunity. emily: carlos ghosn. and still ahead, sony has had some big moment at the box office this year thanks to smashes like "spiderman" and "jumanji." but the ceo says the company isn't stopping there. he joins us later this hour. this is bloomberg. ♪

emily: china has entered the top five in u.s. patents for the first time ever.

chinese inventors received 11,241 u.s. patents last year, a 28% increase over the same period in 2016, this according to a report by ifi claims patent service. china ranks behind the u.s., japan, korea, and germany overall. and gopro's challenges are coming to a head. the company missed its fourth-quarter sales guidance, signaling that revamped cameras and price increases aren't sparking revenue growth. shares tumbled on the news, leading to its worst performance in a year. m&a is the likely next up for the struggling camera maker, but the gopro ceo spoke to bloomberg's selina wang and tonight reports they have higher jpmorgan for a potential sale. take a listen. nick: jpmorgan is, in fact, our banker, but we have not engaged them to help us sell the company. and you know, with that said, if there were an opportunity for gopro to partner up with a larger organization that could help us scale, the company's scale or brand and reach, that is something we would consider,

but it is not something we are actively engaged in at the moment. selina: do you think you will want to actively engage in this? is there some catalyst you see coming? have any potential suitors reached out? nick: well, i will answer the question in so far as, would we engage in something like this? this is something we explore from time to time, as it is our job to grow the business in the most strategic way possible, and that is definitely one way to do it. so it is not a new topic at gopro, but i cannot share any more information than that. selina: nick, can you talk a little bit about organizations that you would love to work with, if theoretically something did work at in terms of a sale or a partnership? i can think of any number of consumer electronics company that gopro could fit well into. how are you thinking about it? nick: well, i am not going to go into too much detail, but i would say that being a company

that is enabling people to capture and share themselves in exciting ways, gopro is a really social company. and we have one of the strongest brands in the world that is very well regarded for our ability to help people capture and share their active lifestyles. and so, we are primarily focused on spreading our brand, and spreading our hardware and software solutions to reach as many consumers as possible. so to us, scale is very important. selina: shifting gears to today's announcement, it seems like gopro is steadily continuing to narrow its vision. the entertainment unit shutdown, now the drone business is closing. how should we understand the product roadmap and diversification of gopro? nick: i think what you are seeing from us is that we are listening to our customers more and more. we are investing in development of products and solutions that our customers want from us. whereas in the past, i'm even on

record as having said in the past, that one of the things that makes gopro strong is that we are our customer, and in the past, we developed products we really wanted, and that seemed to resonate well with the market. we realize now that we are in the business to build products for our customers, and we need to identify what they want and go and invent for them. and that can be difficult, because as you are inventing new solutions because the consumer doesn't know what they want. but it is our job to read the data, understand the trends, and build for our customers. our customers love the entertainment that we produce today, but they didn't need us to become a whole blown entertainment business. our customers have told us they really love buying our cameras from us, and while a passionate number of them wanted to buy drones from us, the majority wanted to buy gopro's but

connect to a great app, and that is what we are investing in moving forward. selina: nick, there have been several rounds of layoffs over the past year, and with this most recent reduction, there are still 1000 employees. should we expect to see further reductions to reach that target level of operating expenses? nick: no. the recent reductions, which involved headcount reductions, get us to the necessary sub $400 million opex level that will allow gopro to be profitable in the second half of 2018, and we are seeing good sales for our products. so as long as sales trends continues as forecasted, we feel like we will be in good shape. emily: that was gopro ceo nick woodman speaking with selina wang. coming up, as a longtime netflix executive, she pushed forward the thinking that employees are adults and deserve freedom. and somehow, it worked. we talk with patty mccord, next.

and a reminder, all episodes of "bloomberg technology" are live streaming on twitter. you can check us out 5:00 p.m. in new york, 2:00 p.m. in san francisco. this is bloomberg. ♪

♪ emily: welcome back to "the best of bloomberg technology," i'm emily chang. during her 14 year tenure at netflix, patty mccord helped to define the modern workplace. there, she was one of the authors of the famous 124 page missive called "netflix culture: freedom and responsibility" that has been viewed 15 million times. but as we all know, silicon valley has not always been the picture-perfect image of maturity. patty mccord just published a new book this week and joined us from new york. patty: we didn't just assume that we would have a great culture that would stick around and be the same forever. we realized that we could innovate and evolve the culture of the company at the same time

we were innovating and evolving the product itself. emily: in some cases, having the right rules when it comes to netflix means having no rules, like unlimited vacation, which is the policy. do you think it is more about hiring the right people or creating the right structure? patty: it is absolutely both. if you create a structure that says you need people who have, who like a lot of responsibility, they like to have a lot of judgment in their work, they want to make their own decisions, then you have to hire those people who like to do that. and it is not everybody. i wrote my book not as a memoir about what we did at netflix, but i wrote my book because i think some of those rentals we principles we applied apply to everyone at work today, and we can all think about work differently going forward. emily: looking at silicon valley

specifically, we have seen many examples where this industry has tolerated really brilliant jerks, or so they are called. looking at the former uber ceo travis kalanick. when you look at that situation, obviously, he helped build a $70 billion company, but what went wrong? patty: i think people get enamored in their own success. a lot of these companies received lots of money, and it was a growth at all cost scenario. and so, when you grow fast and you are rewarded for doing that, then you assume that you are doing it right. so, these things happen when things are going extraordinarily well, and you know, we had a bit of a different circumstance at netflix because at the time we started coming up, we didn't have a lot of money, and we didn't have a lot of freedom to go outside of the boundaries because we had a lot of work to do. so sometimes i think it happens because you are kind of overcompensated. you have so many people doing so many things that you stop paying attention to good discipline and

good efficiency. emily: now, part of the problem is that this idea of the young, brash founder, or engineer, or product's guy is a stereotype that people buy into, whether it is investors who fund them or companies that hire them. how problematic is this idea, that is what is ideal? patty: i think it is problematic across a lot of industries. i consult now to small startups and large corporations, and i talked to people around the world, and i see it over and over again. some of it is human nature. you know, when you are successful, you think, i want to surround myself with other successful people, and i want them to be smart, articulate, and fast on their feet. i want them to be, well, just like me. right? like hires like hires like hires like. but what is really interesting, i got interviewed earlier in the week, and the woman was asking me about how interesting it is

the so many men who were fired for sexual harassment charges are being replaced by women. we were talking about hoda in specific. i said, isn't it funny? i hear in the silicon valley all the time that the reason we can't have women in management positions is because it is a pipeline issue. there are not enough qualified women to take the jobs. in each of these cases, the women are already in the room. she was sitting right next to him, matt lauer, at his desk. so i don't think we really have to look that far to find really qualified, capable women in our workforce. emily: amen to that. patty: yeah. emily: i want to ask you about another silicon valley issue, which is that a lot of companies from facebook to google provide these amazing perks, meals around the clock, transportation services, gym services, you can bring your pet to work, you can get a haircut at work. netflix, on the other hand as i understand it, were fairly light on these kinds of perks and encouraged people to go home

when you are done. do you see anything problematic about this sort of campus mentality? patty: i've got to tell you, it is pretty sweet here at bloomberg in new york. [laughter] emily: we do have some fancy stuff. patty: you do have some fancy stuff here. emily: i don't get to bring my dog to work, but other than that. patty: you know, i think anything can go overboard. i worked in the silicon valley for over 30 years, and i have seen the pendulum swing more than once. and so, you know, the problem for me with too many perks and taking care of people from everything from their laundry to their transportation, you have to figure out what things makes the company efficient and effective and what things treat people like children. and so, you know, i understand the trade-off people make. i understand the transportation issue in the bay area, and we don't have the infrastructure that you have here in new york, for example, to get people around. but you know, some of it seems silly to me.

and it might be just because i've seen the rich times and the poor times. so, i want to link what we do and how we treat people to our successes as businesses, and to the delight that can we give our customers and our clients. and if you focus on that, then you rethink some of that stuff. and that correlation that people assume that if i make employees extraordinarily happy, they will be extraordinarily successful, i'm not sure i really buy that. emily: patty mccord, author of "powerful: building a culture of freedom and responsibility." most companies don't expect police to regularly raid their offices, but uber isn't most companies. this week, we learned in order to foil raids, they developed a secret tool they call ripley. that tool allows uber to lock down equipment in foreign offices to thwart police raids, according to people with knowledge of this system.

uber routinely used ripley from spring 2015 to late 2016. coming up, our conversation with turner ceo john martin. what he has to say about the potential at&t/time warner merger, next. and also from ces, we ask the sony ceo if the entertainment giant plans to sell its tv or movie studios. this is bloomberg. >> for now, this strategy is, as i said before, shore up are more should picture business, and make sure with any of the deals we make concern the future, that we are in the drivers seat, and not in a situation where we have to give up control of the assets we have grown over the years. ♪

emily: huawei's u.s. expansion plans had a serious bump in the road. the chinese smartphone maker and at&t deal fell through what people say is political pressure.

they had been set to launch their new flagship smartphone with at&t in february. at&t's cancellation comes weeks after the u.s. senate and house intelligence committees reportedly sent letters to the fcc, arguing that huawei was a security threat. and it is bad timing for huawei. the company showed off their new smartphone earlier this week. and now, we head back to the consumer electronics show in las vegas. while there, we caught up with sony ceo kazuo hirai. he told us that sony wants to be a buyer in media consolidation, so naturally, we asked just to they might be targeting. take a listen. >> the strategy right now is to make sure we really have a really strong operation, first and foremost, before we start looking at options. as these assessments come up, we will enter into them, but the first priority is to make sure we shore up our own studio.

emily: so, let's talk about the broader strategy then. would that involve better ip, better distribution, better tieups in asia, a focus on more niche movies, for example? kazuo: i think you hit some great points. the first thing we really need to do is look at the ip library we have, "spiderman" being one of the greatest. we have a lot of other ip's, "jumanji," for example, and make sure that we go back into our library and take advantage of the ip libraries that we have. i think there is also a lot of potential for tapping into our video games ip, the first party software we have, and those are questions on going as well. and it is also making sure that we have the right kind of financing as we go into motion picture production, to make sure that we have the appropriate producer fees and take sure we

control production costs, which is another area we need to focus on a lot more. emily: now, you guys are a stakeholder in spotify. i'm curious, what do you think of their plan to list directly, and does sony have any intention of selling shares? kazuo: at this point, we have not made any determinations in that regard, and obviously, it is spotify's decision to go into the public market. and i think that over time, it will give them more ability to really grow their business going forward. emily: the music landscape shifting dramatically. curious what your thoughts on and what your expectations are for a music services, and how services, paid music and how that will impact the record industry at large? kazuo: i think with youtube, spotify, any of the other online services that we have deals with, it's really going to make sure that the music industry, the recorded music industry, continues to grow, and that we

give artists more opportunities to really get their music out to the consumers through these services. so, i actually think the music business is at a very important inflection point toward further growth, and we were talking about the decline in physical distribution, and i think it's a great time to be in the music business. emily: sony atv recently made a deal with facebook. what is the motivation for that deal, and what do you think facebook's intentions in music are? kazuo: i think that with other online players, they are also looking to make music a part of their service that they provide for the customers. i think it is a very competitive edge that a lot of the other providers have because music is such an integral part to everything that we do and in terms of how we enjoy content. emily: so, looking out through

2018, what do you think is the biggest risk to economic growth this year? kazuo: you know, i think that from a sony-perspective, we want to make sure that whether it is multilateral or bilateral discussions that happen between countries and territories, that there is a free flow of content, products, and also data as well as people. every time there is an issue or some hindrance to stop that free flow that will impact our business in a negative way. so i just want to make sure that in these discussions the free trade of various goods and services is at the forefront of everything we talk about. emily: so sony ceos traditionally have about a six-year tenure. you are coming into your sixth year this year. curious what your own plans are and what your intentions are for this year?

kazuo: you know, i serve at the pleasure of the board and the shareholders. as you know, we are just completing our second, three-year mid range planning session, and going into our third as of april. so, we need to make sure that we plan and execute accordingly. emily: that was our interview with the sony ceo, kazuo hirai. we also caught up with john martin and asked about at&t's possible merger with time warner, and whether he has spoken with the entertainment folks about the priorities of if the deal gets done. take a listen. john: i think the benefits of turner, and more broadly speaking time warner connecting with an at&t, is right now premium content companies are racing. we are trying to pick up more scale technology, more data, more ability to reach our fans,

and know who our fans are, and at&t's data, their scale tech platform, i think it will enable us to have significant advertising opportunities that we -- it is just going to supercharge the strategy turner has been on. in addition, at&t, directv subscribers and it's tens of millions of mobile customer relationships are going to provide us new and innovative ways to get our content and products directly to mobile customers, because i believe the next five to 10 years, the fastest growth in video consumption will be through mobile. so those will be the priorities, drive advertising, make it addressable, find out who our fans are, and reach more and more people over more and more devices. emily: there are major regulatory challenges, however. what role do you think president trump's disdain for cnn played in the doj's review of the deal?

john: i really have no idea. i can't possibly speculate. it would be inappropriate for me to speculate. fortunately for me, i am focused on running turner, and we have got teams of incredibly capable people who are working really diligently and hard to make sure that the deal closes, and we fully expect that it will. we are planning for that day to happen, and we cannot wait to get going. emily: fox news and msnbc have made gains on cnn, largely driven by sean hannity and rachel maddow. what can cnn do to buck that trend, and do you think the moderate model, if you will, is sustainable? john: well, i think cnn's model is sustainable. if you look across the three networks you just mentioned, all their ratings are up. cable news ratings in 2017 were the highest they had been in years. and yes, depending on the particular climate, and depending on what the particular subject matter is, you know, it might be possible that msnbc

does a little bit better, or it might be possible that fox news does better. but i will tell you, cnn completed its best year in 2017 ever. a record year. it has been the top 10 ad-supported cable network for 5 quarters in a row. the cnn business model has never been stronger. and frankly, i don't think there has never been a more important time for cnn's place as it relates to journalistic integrity, and what it means not only to the country, but the world. i am incredibly proud of what jeff zucker is doing with leadership there and what journalists are doing every day. and we have no plans on changing, trying to be the best journalistic organization in the world. emily: at&t has talked about slicing up shows, making them more adaptable for a mobile audience. is that something you would consider doing? john: absolutely. i think it is something we would do with or without at&t. i think the ability to break down traditional, longform formats to shorter shows, making them available on mobile

devices, and frankly, maybe changing the windowing of our shows, making them available on alternative devices before they show up on linear tv. i think all of this would be ways that we with our big brands and with our fan base, and we will be experimenting with a lot of different ways to do that. emily: that was turner ceo john martin. coming up, the crypto craze in 2017 seems to have died down due to regulation concerns. what to expect from digital currencies in the new year, next. this is bloomberg. ♪

emily: dropbox is said to have filed confidentially for an ipo in the united states, and to a person familiar with the matter goldman sachs in jpmorgan will look at the listing, privately valued at $10 billion. dropbox offers filesharing and cloud storage services.

the sec is cracking down on a hong kong-based company that benefited from 2017's cryptocurrency fever to the tune of a 900% stock surge. the sec is suspending trading in shares of ubi blockchain due to "unexplained market activity." the company, lacking in revenues and a product, reached a $3 billion market cap before concerns about executive history were raised in a story by bloomberg news. we were joined by the managing partner of hong kong-based kinetic capital, who started investing in bitcoin in 2013 when it saw its first major rally, and since started a venture capital firm investing in blockchain technology. also joining us from new york, the author of the story, our editor at large, cory johnson. >> this is really indicative of how the entire market is reacting to the phenomenon of bitcoin and blockchain and cryptocurrency trading. and i think it is important to note out if this story that the sec did step in, and i think it is a good thing they did, to investigate.

there has not been any sign of wrongdoing, but they are adding guideposts, they are adding some investigation, they are adding some type of structure to the market to try to grow it in a more safe and i think sustainable way. now as far as ubi, they are doing what they are doing. i think what we are seeing in 2018 is really the year of bitcoin and cryptocurrency trading becoming a social phenomenon. emily: what does that mean? jehan: i was in new york in line at a bagel shop, eating noodles, and everybody was talking about trading cryptocurrency. emily: but does that mean it has inherent value is the question? jehan: no. trading does not mean inherent value, but what it does mean is it has a massive onslaught of attention. and it is attention that turned into actual development and add support and liquidity to the market, developing into meaningful and lasting applications.

at the end of the day, that is what this is about. blockchain technology is about software that is being built. and cryptocurrency trading is just so we see on the surface. cory: god is in the details, right? this company in hong kong, even that is more interesting. their lawyer is a guy in chicago. his business partner is a guy in las vegas. when i called their new york headquarters, it rang on someone's cell phone. when i called the main number, it rang and was disconnected. things are much more interesting here than they seem, and i think that is probably true. the difference between bitcoin and ripple are substantial. it is worth finding out, to really understand what lies beneath these things to try to determine what the intrinsic value is, and not just guess that there is a greater fool who will pay a higher price. emily: meantime, cryptocurrency is running into headwinds, not just in the u.s. but in china. this talk about the chinese government cutting off the power supply to bitcoin miners.

how serious do you think that is? jehan: i think this is the final strike of the chinese government's desire to reset the entire story of blockchain. i think what they want to do is clear the decks, and they have done it with exchanges, ipos, and now they are doing it with mining. ultimately, i think they understand the value and potential of utility for society, for the economy, for industry to build anew, and i think that is what they are doing. i don't think it's the end of exchanges. i don't think it is the end of ico's. this is merely the chinese government resetting and taking control of what they actually believe will be a truly transformational technology. emily: meantime, other cryptocurrencies are getting dragged down today. cory, you spoke with the ceo of ripple. take a listen to what he had to say. >> there is no doubt, 2017 has been, amongst other things, the year of crypto. and within the year of crypto, xrp has outperformed every other digital asset out there.

year to date, as that chart showed, we are up about 20,000%. emily: that is xrp from december 27, but ripple is going down with some of the others today. what do you make of it? cory: i think the volatility -- i am trying not to say something obvious -- it has been volatile with these currencies and trades. but i think our traditional lens of looking at the volatility in equities, for example, saying, wow, it has been down a lot since 2007. i took last week off so i looked at my bloomberg terminal. look at what happened to ripple trading over the last day. sure enough, it is down 11%. but if i changed this to the last 14 days, it's up a lot, up 100%, 138% in the last 14 days. so, i think one of the interesting things is the volatility that we have seen tends to take the headline, but

the long-term rise we have seen really tells more of the story. i think more to the point when you look at the details and you see the differences between ripple and bitcoin and between the xrp and the like-minded blockchain technology, but the different ways they work and trade, and the different problems they are trying to solve, you find a much more interesting story. again, that long-term lens is not the lens we are used to apply when it comes to most in equities, but maybe the appropriate one to apply, even though interestingly the futures contracts have not reduced the volatility in the trade of bitcoin. emily: that was jehan honshu, kinetic managing partner, and cory johnson. and that does it for this edition of "the best of bloomberg technology." tune in this wednesday when facebook, youtube, and twitter head back to washington to testify on terrorism and social media. we will bring you all the headlines.

tune in every day 5:00 p.m. in new york. and remember, all episodes of "bloomberg technology" are live streaming on twitter. check us out. that's all for now. this is bloomberg. ♪

carol: welcome to "bloomberg businessweek." in this week's issue, solving complicated problems. whether the jobs include penn station new york. and the fear of missing out. carol: all that ahead, on "bloomberg businessweek." ♪