>> welcome to "bloomberg massar.week" i'm carol self-driving technology gets revved up. flaws of intel that may chip away at the company. that ahead on "bloomberg businessweek." here with assistant manager jim. you head up the business section.

fascinating story we so focused on the auto sector. of self-driving cars. we think of the auto manufactures. >> it's a really interesting we think this technology is all about sensors and high-tech things. now some of the most old school companies around. manufacturers so key to technologies. the sensors, need to be able of bounce off another on coming vehicle around. the distancege between them. make this work. the problem is, it turns out there's a blind spot that these cars have. sensors have. that is that people can't read very well cars that are black or dark colored. julia: there's a lot out there.

needed toncing that determine things doesn't happen black.ings get paint manufacturers are coming tonew ways to figure out how make things bounce back. they've taken inspiration from unusual place. from the eggplant. that the eggplant, which is dark, but also grows in it'sun, it stays cool when picked. an engineer at ppg, researcher out that that's because near ultraviolet rays go through the dark skin and they bounce off the white underside. back.ome what they've discovered is that you can do paint that has a goes through the dark outside, goes to a white undercoat and bounces back to sensors. therefore it can be used for vehicles. julia: we got autonomous

technology. the amount of paint that's required it's higher. >> turn out you're right. if you got autonomous vehicles lot more shared vehicle, then fewer cars. if i make paint for cars, i will lose business. great, however, electric lots andicularly need lots of paint and coatings. all the batteries. the entire bottom of the car is new battery. they have to be wrapped in paint. carol: paint was kind of high-tech already. it's been used to control temperature. didn't know that. >> we got so many sort of smart features building in the newer cars now. the cars that can park cars that have the distance determination within the car. all those things require sensors and a lot of those sensors work can either have special paints that around the

themselves or personal paint that's around the part of the car on the bumpers andllow the waves to go in out. --ia: ppg [indiscernible] i want to move over to the u.s. cover story this week. who love to paint over cracks. travis.be >> it is quite of story. look at the year long fall of uber ceo. startfrom sort of the hot up the company that get to do to wrong. to the company that seem to be hated. that everyone it's really interesting tale because it's a tale of hubris, overreach. of carol: it's great thing about

on all fours.k brad stone got a book out. update to that story. we think about one year ago, uber was riding high. valued atompany almost $70 billion. success,en as unimaginable success story that transformed transportation around the world. the public perception. inside there was a little bit of worry that this company had gone too hard, too fast for too long. one of the things they did, they took the first step forwards hiring a professional manager. guy named jeff jones. as the president. he was a marketing guy. he came to uber. he only lasted couple of months. things he decided to do was do some marketing. marketing surveys. the perception of the company was. julia: there was voicing slight

concerns. what sos no concerns ever. >> travis kalanick, the ceo, he felt pretty secure in his aggressive approach. jeff conducted some polling research, they found more people is runout uber about how and who was running it, the less favorable of perception they had. meeting where eric and i started our story in business the meetingll about where they were talking about this. the question was did uber have a problem. julia: culture problem. >> this was before lot of the happened. at this moment, in this debate, news, wey, bloomberg post a video of the dash cam footage of travis kalanick over super bowl weekend berating a driver. carol: talk about timing. kalanick looks at the that

video. meeting back to this and he starts calling around on all fours >> when you saw the video. he'son his knees and saying, i'm terrible. i'm horrible. you know, it's funny, it has big this.cations to report on our story is about the unravelling of uber. wasthing that happened travis went and entered into a financial arrangement with the that alienated some of its colleagues at uber. another thing that happened, he really addressed the core problem. he continue to think that it was problem. julia: even at that point, he pr liking we need new strategy. i want you to expand more about that financial arrangement with this driver. you point out this was meant to be a conversation. andas going to go apologize. the thing got heated again and start saying he write a check

to the guy. another member of uber was going on here? >> that's one element. element, travis went driver.the he was advised to spend couple minutes apologizing and leave and said he debated him for an hour. he agreed to give him uber stock. uber's lawyers objected to that. he ended up making a privateer payment. enough, after he had gotten removed as ceo but still involved in the company, there was some sense that maybe the media will report on this. asked uber head of security to look at e-mails leakinge who might be this story. precipitating event that led in part to the entire member executive leadership team writing a letter to the

membersking board travis in particular to step out day-to-day. carol: turning trouble into uber was design of director crisp >> there was no photos of him doing these things. hired this illustrator to do kind of couple of of these different scenes. is the most sort of visually him on his knees after watched this video of him arguing with this uber driver. it's a different cover for you guys. i'm thinking it's a photograph of different things and lot of type. there's a lot of white space. wanted to to be resting. we used a topography to zero in and have these events. carol: is it the company's ultimately it turned out to be the ceo who was the problem. >> definitely. he's falling and falling.

julia: up next, kentucky's medicaid. with carol: gerrymandererring finally gets its day in court. this is "bloomberg businessweek."

carol: i'm carol massar. julia chatterley. carol: in the politics section, requiringill begin medicaid recipients to show that they are working. julia: we spoke to matthew phillips about how the plan my unfold and what maybe the outcome. >> it's long wanted to do in to shrink eligibility to medicaid and make it harder for the social safety net that exist for poor and low income americans.

on january 12th, the trump administration gave states the authority to start experimenting with medicaid. however, they really want, they have to apply for waivers. that will include adding work requirements to that. day, they approved kentucky request to do just that. been pending since 2016. starting this coming summer in be the firsty will to requiree union medicaid recipients to prove that they are working and it's working, they are disabled or pregnant or volunteering or in school. julia: very briefly, who does then?ctually apply to excluded?will be the 53-year-old federal and state program that forimed providing insurance

low income american. right now 72 million americans medicaid.ed in that spending is about just shy of $700 billion in and counts of total healthcare spending in the united states. it's a massive social safety net program. now, your income threshold will 138% of the poverty line amounts to 16 thousand dollars. that was expanded under obama and about 30 states including kentucky chose to expand medicaid. nose numbers -- those numbers went up in 2014. what we're seeing now is on top tothe gop effort in congress undercut and repeal obamacare, kind of chip away at it. moved to thee has state level. kentucky is the first state to do this. other states that

have similar waivers that are the federalront of government that will probably be approved some time in the next months. we're going to see from 18 and years this social experiment that conservatives has been wanting to do to raise medicaid andty for to save money and to get people work.o cases.two redistricting the supreme court may decide on voting map violate the constitution. from peter coy. >> gerrymandering is when you either you have pack all the voters from the other party into district where they'll be harmless. you put them all in one place to vote.at one you you'll try to spread them always inhinly but the minority so they can't win. it's way making sure your party than the other

one. support.tionate to the julia: what's going to be heard this year. >> they heard one case involving wisconsin, which was state assembly and republicans did it. democrats objected. the case will be hearing in maryland. single congressional district. redrawn.en districts what's the excuse given it's not reason?tical carol: it's done every ten years. related to the census. one reason you draw the lines is to make sure you have the same number of people in each district. that's one person one vole rule. anyway. to do that then it comes down to where you draw the line. there are many different ways to get the same number of people in

district. thecan see some -- gary was word gerrymandering came from. it was in massachusetts. of dragon.he shape with modern software getting more creative in finding ways to pack and crack, thee are the term of art in profession to get maximum advantage. charge of's in drawing line. algorithms,rs and you can throw the data in and let the computer decide. make it fair. meeting all the requirements. who really ultimately -- >> state legislatures do it. here's the case, john roberts, chief justice, is very strong on the idea that he want the court to be politicalized. we wants to keep the hands

clean. theaid credibility of supreme court is very important. preserve.be julia: bipartisan. >> he's afraid if they start disallowing this redistricting and allowing that one, sayitably people will they're being partisan. julia: up next, political instability is leading some bankers to seek friends in unusual places. a brainilicon sees drain to china. julia: this is "bloomberg businessweek."

julia: welcome back to "bloomberg businessweek" i'm chatterley. carol massar.

julia: in london on bab, mux3 in asia on the bloomberg radio plus app. in the economic section u.k. party the labor party has been sort out by fund over the ceo bankers past six months. carol: the reason maybe simple. prospect of labor winning power is starting to overshadow brexit. not your typical politician. of labor andeteran he's a man who has waved the mouths little red book and debate in parliament. interest ashis ist.throw of capital >> talk about that. business people, investors from what i understand from this

story, they are more concerned in the nextwinning they are about brexit. >> the party performance last year was wake up call to britain. that's a high water mark that 2000's.k to so, i think the expectation is very good shota of winning the next election. whenever that happens. years.not scheduled for we know that government is very troubled. it can come sooner than that. i think there's this moment, other out where we stand. it's an opportunity perhaps for say theseo go in and are parts of your agenda that make us really uncomfortable. any kind of room for flexibility in these areas. i think w. of the big issues is that the party stands on brexit

has been more flexible than the conservative. and bankingness totor certainly attracted that. julia: traditionally the labor party would be pro europe. in thisit wouldn't be if first place. there are some strange irony here. what extent are business now courting, approaching him, talk to him? you said, there are concerning thecies win you look down list. raising corporate taxes or reversing corporate tax cuts. raising level of personal taxes dramatically. activelyk people are seeking audiences with corbin and mcdonald. more people have been talking with mcdonald. it's a strange situation because lobbiest and so much of the

firms don't have contacts into labour. they date back from new labour. they're having to scramble a bit. some people have resorted to the idea of trying to get a seat mcdonald at a bench. carol: i love that. >> he walked up to him, we like meeting. julia: in the technology and sole conneers valley are moving back home in number. >> they are getting tired what ceiling.as a this perception that aren't leadership roles available to them in the major silicone valley companies. it's taking them too arrive above the level deal with the grander

problems they see with friends colleagues. julia: finance has taken over finance. forhe most popular reasons these guys to go back home. >> according to recent survey for one in six. a time when xi ping is cracking down and approach to these companies. easierit so easy, or forthese guys to start up their own companies? not creating the space? >> according to the head hunters, big piece of it the 2014, ipo of backin any case, getting to sort of ceiling question, engineers seem to have

much better time of raising they're in china. carol: you do talk about the china.lowing into is it three of the five starting up. >> absolutely. the other piece of this aside from question the money one as engineer reporters on this story. they received $30 million in conversations for four year de deal. carol: whoa, $30 million for year deal for engineer? like a ports contract. piece to it, according to the engineers we spoke to has what you'reo do talking about the looser the privacy laws that this idea that, $700 million chinese users, privacy and data

accessible and useable. julia: when does this become a problem to silicone real that losing all this talent back to places like china? i'm sure it's going on in other too?ries >> the thing that silicone valley has to worry about in long term is using ai related engineer. of anybody inmand the valley or elsewhere around the world. token, it can take the while for 850,000ai engineers or ai related workers inthe u.s. right now that 1 12 are at 70,000 have chinese heritage some kind. still more ai engineers in china. cosmetic next, latest information in china doesn't come in tube or compact it's in a dish.

this is "bloomberg businessweek" ♪

julia: welcome back to "bloomberg businessweek." ahead fixing intel chip. julia: making a fortune from mexican drug balance. carol: film finance year of hollywood. julia: tall that -- all that on "bloomberg businessweek." ♪ back with assist ellis.g editor jim beauty maybe skin deep.

but that skin matters. lot. matters quite a it turns out that around a veryly humans all have similar epidermis. outside of our skin. beneath that, there are lots of ways that individual cells react depending on the race or nationality or locality of a person. l'oreal, the french cosmetic company is doing very interesting work with that. at how it can make coz cosmetics for chinese skin. ofs gone to the lab and sort making chinese and growing it there. carol: it's fascinating. this is how they can play around products, a and adapt existing products. >> turns out that even when the products have the same name, differences ifig they're made for the chinese market or u.s. market. wrevital lift in the u.s. lift

gettingpe, it goes for rid of wrinkles. is, the way chinese skin ages, it tends to plump up as woman age. for ae looking ofxibility and get rid discoloration. you discover this when you grow skin and then test it and see reacts versus skin they've been growing for for years. carol: the skin they're developing, they're creating market where they're selling other markets. >> they're donating it to researcher. but they're selling it to other cosmetics companies. julia: there's another challenge. that's the chinese demand products tested on animals. shops.se those body they branded based on that.

holds possibility of allowing companies like body currently don't sell directly in china to actually enter those markets. once you develop what truly is equivalent to skin, you can possibly test on that skin and test one don't have to animals. we've already seen lots of abouties getting excited that and this is a way to the future for skin care. the futures see what of intel is. this is another story that we have. this is going to end up being of 2018.e big stories it's about intel. a group researchers discovering major flaw in intel chips. >> what's so interesting about the fact that we found the flaw. we find flaws in technology a lot. some ways that's a good thing. you're constantly trying to make can tighten things up. but the issues here was that,

researchergoogle discovered this flaw in intel's chipsand the thing is, and devices pc's around the world. sudden, it's what it involves. section of a the you put the most information there and they figured out a way to access that. things like passwords, security codes. that is a problem. especially a problem that intel knew for six months and never it. anything about julia: there's some shares in that too. an fascinating story. here's reporter. just about a week and a half ago, consumer electronics the big gadget

ceo of intel the gets on for short amount of time. serious.thing very which is not quite an apology sort of explanation of this flaw that hadity been discovered just days earlier. it was very awkward situation. the security flaw, it's the flaw in thety history of computer chip. julia: what exactly did he say that stage? this is huge. the storykind of what gets into. he didn't quite apologize, which surprising. he thanked intel's partners for standing with the company in the face of this security flaw. basically tried to change the subject. cowriter get into this is not easy subject to change. year, beginning of the intel disclosed these two

vulnerabilities, one called other called melt down. -- amount to the most secure part of your computer, uncrackableught was is is crackable. it gets really technical quickly. it's the memory access by the colonel which is the operating your computer. group of security researchers led by somebody at google but people allg with around the world, figured out get into it. carol: there maybe a way to get in it. there's no way intel could have left open a hole like this for folks to get in. but they did. the thing. this is one of those ones where people seniority sort of talking terms.n theoretical the story bloomberg reported previously, the security research kind of looked past this because they consumed no this.uld miss

putl: accusation here they speed before security. most of their clients, partners thisbeen tight lipped over subject. microsoft has to be the one i thesepoint here, fixing flaws, could mean delays. >> it's important to remember, one thing that happened, you have this bad flaw and then you have most of intel's partners exception of microsoft, publicly come out and basically with intel. arm in the background, they're not all so happy about this. that we haven't seen sort of more stuff out in the has a virtual monopoly in server chips. chips are run the internet. it's not the biggest but probably the most important line of intel business. they still sell tons and ton of cpu's for personal computers. they are the only game in town moment.r chips at the amazon, microsoft, apple, all

these companies that buy a lot chips, dell, hewlett-packard. they can't break with this company. one of those flaws is patchable sort of. going to really slow down the chips. other flaw is not really patchable. case, the only way that we're beginning to sort of get pass this with a full chip redesign. that's going to take a long time. it's not the kind of thing that can just fix overnight. that's why you're seeing these providers, publicly try to put on great face, maybe saying, whoa, this is bad.y julia: on the look out for bitcoin bubble. giving highook out school and college a bad grade. this is "bloomberg businessweek" ♪

chatterley.ulia chatter bitcoin question. 20,000.rom 900 to >> you seen incredible price movement in bit coin in the last year. a year ago it was under a thousand dollars. brieflyto over $20,000 last month. now it's back to $12,000. it's not often you see asset in bubble and crash at the same time. what we are looking at, is sort thingt are the kind of that could dent that confidence in bitcoin. that making the case really bitcoin is a belief. people believe in it. the first digital currency

that can't be stopped by governments or corporations. lot ofvery appealing to people. i think that's what got us from year with like last bitcoin you've seen hacks that exchanges. millions ofdreds of bitcoins stolen. you seen governments try to plan it. goings been a civil war on among the developers who years.al to this for yet, none of that has really stopped this incredible upward momentum. carol: one thing you say is a risk. that would be the underlying bitcoin.y of that is blockchain. maybe having problems with that. problems. seen any >> that's right. that's the thing that makes bitcoin possible. blockchain. it's a time ordered sequence of every transaction that's ever done with a bitcoin. you know everything you can history of the bitcoin you just bought. the digi digital currency

works. to go in ande overwhelm that network of computers all around the world that history.ange you could pay for a yacht for your bitcoinith and go in and hack the network and take that bitcoin back and you still got your yacht. silly example. what's so interesting about you can take over the network and have that much computing power, you might as bitcoinsthere and earn for the transactions that you verify. oneget free bitcoins for you do. the incentive sort of fascinating that there's not really an incentive necessarily to hack it. unless you're like what people from the bat man movie, some joker type. chaos.o wants to sow that's possible. there's aesting strong counterargument. carol: the cost and benefits of

education. considered the controversial theme of economies brian's new book. carol: it's called "the case against education." why the education system is of time and money. julia: listen in. >> it's an economic theory which produced bunch of nobel prizes. degree,n having a walking into an employment office with a diploma says stuff an employer about sort of of intelligence, you're willingness to work hard and complete that four year degree. your degree of conformity, that you managed to work through a fairly rigid and comply with all its rules. thea: it's about that signaling effect. what you actually gained. learned.ou core idea if you believe in can study anything

as i make it up. perfectly fine as far as the employers are concerned. for whatot paying you you learned in college but just from the fact that you have that degree. julia: only five percent of americans should actually get a college education. that's a headline. >> pretty extreme. lot of people i think are going read this book and be with him on a lot of his points. to college and spent lot of time throwing frisbees around. i learned.w how much in much of what i learned whatever thator is.f .arol: it's interesting point how much you use it on a daily basis. you also say that, if he says

only 5% of people should go to school. if you take away funding and support and college loans, who gets to go to school? ultimately the wealthy. >> that's kind of where i come at the end of the piece. i believe that, as a focused on how getting government out of the picture and the free market will for the best.t the people who should go to college will go to college it toe it will be worth them. i'm afraid what actually might happen is the people who will money or their parents will have the money who will see the benefit of college as a signal. make sure they're kids go to school. of benefit oftial college for equalizing society. does make the distinction of vocational education. what does the evidence suggest getting a college education and actually you're earning power going forward? the u.k., we

gettingg more people degrees. and racked up a lot of debt didn't manage to get a job afterward. >> that's strong part of his argument. if you're academically inclined can actually learn a lot. you can actually do get lot of that human capital benefit. for people who aren't, they actually could be better off learning productive trade. heating and ventilating and air-conditioning. they'll be happier, they'll work harder because it will be something they have a interest in. their lifelong earnings could be artsr than go into liberal program that don't learn anything. star: up next mexican finding fame singing about the drug trade. julia: super talented agent

award winner charles king on getting black people seen and hollywood. this is "bloomberg businessweek" ♪

julia: you can listen to us on on sirius xm and also 1061 in boston. london on dabmux3 and asia on the bloomberg radio app. in the feature section, look at the semiofficial music the mexican drug cartel. julia: record label twins music dark has made this pretty

genre a reality. >> he is a singer, songwriter performer. a pop star. also seeing sort of tradition romantic love songs. -- with any kind

music. popular. huge following. andhows in california atlanta, these guys play all the u.s. carol: people are watching what doing. >> it's very elaborate video. they kind of make the video into five minute movies. they're savvy about that.

breaking. heart glamorizing something that has implications to the country. we've seen the mexican government really crack down in the last few years on this. point out. lot to do with the -- last year drugeadliest year for related killings we've seen in many years. talk to us about the record labels that he's actually signed to. what kind of push back have they the music that they're making? >> they are twins. it's run by two guys who are twins. one of them now lives outside of office in burbank. the label has been very successful. big star.er is their it's not assh back, think. you might

i guess the best analogy, if you gangster raport of here, there are people upset about it. for the most part it's become of the musical landscape. theo has become part of mexican landscape. julia: focusing on entertainment it's charles king. carol: he was the first black hollywood agency. julia: now king become king financing film in hollywood. >> he's a guy from atlanta who to vanderbilt and harvard law school and moved to hollywood. was inspired by barry diller and couple of moguls who took same path. agencies long been the way to in hollywood. he became the first black

in endeavor. after about 15 or 20 years in hollywood, he fulfilled his his ownf starting company and specifically bankrolling filmmakers of color. because hollywood for its reputation a this progressive place, primarily has white directors, white male directors. an agentet out both as in representing likes of tyler perry. he's trying it get more people of color behind the camera. made some interesting comments. he said casting in hollywood is appeasement when people are color are hired. he thinks think that he can change that specifically? thatthink he's hoping macro, his company, like movies.g colors of have a cast that's more diverse. if you look what's happening in hollywood now, there are a

powerful directors taking. she made a tv show for oprah winfrey's tv network where all the directors and most the writers and most in the crew were people of color. that nots right to do just with one director with one project but with almost that he does. while that's just a handful of projects in a town where there projects, every small company makes a big difference. does he say about his path to where he is today? how hard was it for him to work the ranks? >> i think he like lot of people their 20's had to figure out where he wanted to go. he was in college. little extra money by modeling and acting. sense that hethis was good at identifying talent and kind of making deals for behind the scenes. he seems like one of those people who was very driven and

sense where he wanted to get from an early age. he made the decision to move out in anlywood and work talent agency mail room. he rose up through the ranks there. reasonably quickly. when he had this opportunity to start his own company, he did so. faced histhat he challenges. he was someone with a very clear and focused. carol: "bloomberg businessweek" is available online now. julia: we have to talk about the cover story. the trial and tribulations downfall of the cofounder ceo travis kalanick. and teamnvestors kalanick. employees behind them, they're him anymore media got holdhe of actually what was going on at company. the core of it, that's lesson to be learned about management

as well.s in 2017 for year uber. julia: more bloomberg up next. wra

>> moody says new regulations are damaging asset manager. credit negative. banks.and plus trump one year. what discuss what difference the president has e-mailed to rules and regulars in the america's financial sector and what's next. welcome to "bloomberg markets: rules and returns." a show where we dive into theat