wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. ♪ emily: i'm emily chang and this is the "best of bloomberg technology." we bring you all our top interviews from this week in tech. coming up, mark zuckerberg speaks to the press. the company now says 87 million users could have been impacted in the most recent data scandal and that they are learning from mistakes. our extended interview with sheryl sandberg. tesla tumbles on monday. elon takes to twitter multiple times. looking at the factor driving the client that the electric

carmaker and why investors seem to be shrugging them off. plus, spotify's trading debut. first to our lead. facebook revealed that 37 million more users may have had their data improperly accessed by cambridge analytica appeared that would bring the total affected to 87 million people. the news came before mark zuckerberg spoke to reporters on a conference call on wednesday. he said it is clear facebook didn't focus enough on preventing data from being abused, but that he is confident they are making progress in security. he added he is still the right person to be running facebook. despite this breach of trust. >> i'm the first to admit we didn't take a broad enough view of what our responsibilities were, but i think it's important to keep in mind there are billions of people who love the services we are building, because they're getting value in being able to connect and build relationships. that is something i'm proud of our company for doing, and i know we will keep on doing that.

emily: facebook revealed that all of its 2 billion users could have had their public profile scraped from the platform. on thursday, we sat down for an extended interview with sheryl sandberg. >> we had a feature or you could look up people by name or email. that was important for finding people. someone made a directory they shouldn't have with that information. to be clear, all of that was public information. that was information that was already publicly available on facebook. to your broader question. we know that we did not do a good enough job of protecting people's data. i'm really sorry for that and mark is sorry for that. we are taking strong action. monday we will be starting the process of rolling out to people all around the world at the top of their news feed all of the apps they are connected to and an easy way to delete them.

we will tell anyone who might have had their data affected or accessed by cambridge analytica who they are. we are taking strong steps to restrict more data that apps historically have had access to, and were looking beyond that. we announced we are taking steps to shut down certain use cases and groups, pages, searches, and events. these are the latest steps. this is going to be a long process. we are systematically looking at all of the ways facebook data is used. identifying more things. we will tell you about them, shut them down. this is a forever process. security is an arms race. you build, someone tries to misuse. you build, someone tries to misuse. we are committed to this for the long run. emily: mark has taken responsibility. he said we didn't take a broad enough view of our responsibility. that was a huge mistake. that was my mistake. how much do you feel personally responsible? sheryl: i feel deeply personally responsible.

there are mistakes we made and i made. if you think about what has happened, we were focused on building social experiences for a long time. a lot of good happened because of those. when we found problems, we would shut down the problem. the cambridge analytica case was shut down in 2015. what we didn't do until recently and what we are doing now is take a broader view, looking to be more restrictive in ways data could be misused. we didn't build our operations fast enough, and that is on me. we had 10,000 people working in security at the beginning of the year. at the end of this year, we will more than double to 20,000. we are massively investing in smart technology, and we are doing this to make sure we get to a place where we can proactively protect people's data.

emily: facebook has constructed a model that leverages personal data that users share with facebook. you're the chief architect of that. assuming the model will evolve as a result of these changes, how will that impact the bottom line and profitability? sheryl: we have never run this company for short-term gains and we have never run this company to maximize profits. we have run this company for the long-term health of our community and business. these investments are big and they will impact profitability, and that's ok with us as it's the right thing to do. we will update at the next quarter. emily: you mentioned a few advertisers have paused to their spending of the result of this. how big is that pause? sheryl: what matters is the question they're asking. advertisers are people, people who use facebook, so are investors.

everyone wants to know the same thing, are you protecting people's data? i think the advertisers and people who use facebook also what to know the good things will continue. those are important as well. earlier this week i was in houston. i met this incredible man and went to his local taco store. when hurricane harvey happened, he lost his space. he used facebook to find a competitor who had a taco truck and teamed up with him and than they used facebook to drive around and find people. those people were publicly sharing their location on facebook. what people want to know from us is, are we going to take steps to be more protective and more proactive? the answer is a firm yes. we are also going to take steps to make sure that the good that happens on facebook can still happen. emily: with all we know now, do you believe facebook played a decisive role in electing donald trump? sheryl: there is a lot of concern about what happened in this election.

we are concerned about the foreign interference on our platform. the overall picture here, i don't think anyone knows yet, but it's an important question. it's one that is going to be studied for years to come. where we're focused now is taking the lessons of the past in making sure they are applied going forward. foreign interference, you may have seen we took strong steps earlier this week to take russian ira content off of our site. that was content that was in the u.s. election that we did not find quickly enough. now we are analyzing ahead, and we found 270 pages and accounts linked to them that were deceptive, in russian, targeted mostly at russians. our message is clear, there is no place for this deceptive content, for these troll farms, anywhere in the world. we took this down in russia. we're looking for others and we will take them down.

been asked if he is the right person to lead facebook. do you believe he is? he says he is. do you agree? sheryl: i believe deeply in mark. he has a vision for what social services and sharing could be a important. mark remains with me and all of us, takes full responsibility for what is happening and were making an important shift. we're going to keep building social products, because sharing is important. we are going to be more proactive. emily, i'm not going to sit here and say we won't find more problems. we will. we will continue to find problems. we are going to continue to shut down situations when we find them. this is a forever thing. security is an arms race. this is something we are signed up for, not just now, but on an ongoing basis. emily: be sure to tune in as bloomberg technology has to washington next week for full coverage as mark zuckerberg

testifies before congress. in the meantime, the fda is calling on twitter and facebook to be more proactive in stopping online opioid sales. the fda says that social media companies need to root out ads for the addictive painkillers, which contribute to hundreds of thousands of fatal overdoses in the united states. the fda is also planning a summit with internet ceos to identify technology gaps. coming up, spotify's debut. how did its approach to going public fair? we will talk to a key investor, next. if you like bloomberg news, check us out on the radio, check out the bloomberg radio and app. this is bloomberg. ♪

♪ emily: alibaba is stepping up efforts to expand into china's meal and food delivery market.

the move signals the desire to compete with tencent in that market. they operate a fleet of people on motorbikes across china. sony stands to reap almost $1 billion from its stake in sweden's spotify. the amount reflects the stock sale on tuesday and a higher value of sony's stake after spotify's listing. sony operates the second largest record label and largest music publisher. the music streaming service kicking up trading as a publicly listed company with a share price under $166. spotify has more than 70 million subscribers valued at $28.7 , billion. caroline hyde spoke with an spotify, a dayin

after it started trading. >> the company has a few competitive advantages that is hard for the others to replicate. one is that it actually reaches the entire device ecosystem not , just apple products or within the u.s., which is the case with amazon. i think it is a business model that is largely a function of that the entire music industry is working now toward a very well orchestrated idea but trading marketplace largely the brainchild of daniel and his team. they can thereby intermediate a significant part of the industry and thereby significantly improve the margins. caroline: you mentioned we have seen a bit of a selloff in the share price. closed down about 2%. i'm looking at my bloomberg and will explain to you what i see. you can look at how spotify is

trailing his peers. it rallied a little bit at the end of trade. underperforming market, underperforming pandora, serious sirius.ra, what about the direct listing and the volatility we see in the shares? do you feel this direct listing was the best way to go rather than a public offering? >> i think it's a really to really draw any firm conclusions about that. it is clear the company made the decision to do a direct listing because there was little point in having the cost of an underwriter to raise capital or sell secondary shares when there was no interest in either raising capital are selling secondaries in a more conventional matter. i think the downside is that you don't have the kind of investment banking methodology of propping up the share price a few days after the listing, and

i think that was a part of the expectations with many, including us, that there would be and will probably be some volatility going forward until the market has fully understood the qualities of the company and maybe seen in another quarterly report so they have their business sign a great order. in great order. caroline: what about you going forward? this is i understand to be the single biggest ever return for european vc fund. what will you invest in next? >> we see a lot of interesting things going on in europe and also in the united states. i think the difference with the venture industry right now, 20 years from when i started, we are addressing huge markets, fundamental market shifts, like

entire multitrillion dollar financial institutions industry. it is ripe for creative destruction, and you see there is a lot of venture capital money going into that space, so we are quite excited about that. also, obviously the ideas of destructing the traditional way of selling stuff, typically through stores, and this is the direct consumers trend is here to stay and will build over time. emily: that was pj speaking with caroline hyde. coming up, keeping the internet safe from extremist content. the man helping to stop that content from ever being uploaded. that is next. later, amazon under presidential fire. the president ramps up his war of words against america's biggest online retailer.

a potential cloud contract with the pentagon in the balance. this is bloomberg. ♪

♪ emily: we were live on air tuesday as reports came in about the shooting at google's youtube headquarters. the shooter was identified as a video creator who was upset with the company for policies that she claimed limited her audience. the suspect killed herself after wounding three people at the san bruno, california campus. one victim remains in serious condition and two others were released from the hospital tuesday night. since the shooting, we have heard from google. the ceo tweeted, "there are no words to desribe the tragedy that occured today -- we are supporting our community and youtube community together. thank you to the police and first responders for their efforts, and to offer messages of support." "we send ourting,

support to youtube, google, the victims, and their families." jack dorsey tweeted, "we are here for you, your family, and friends. misinformation being spread on twitter and are working on product solutions to help." i spoke with mark bergen the day after the shooting to talk about the larger implications. mark: they say she was upset at youtube's policies, and we have seen from some of her videos that were taken down yesterday, her website, she was a strong vegan rights activist. she posted a lot of videos about animal rights, some of them looked like grotesque images of animals being tortured. her claim is something similar that we have been hearing from youtube creators have been seeing less and less ad inventory, some claim youtube is hurting their livelihoods.

that is the point she has made. it is an extreme example and it seems like this response was probably driven by mental health issues. emily: what about how google and youtube are responding to this, given that she got into a private patio at you to pay -- at youtube headquarters, which presumably there is badge access. somebody with a gun shouldn't have been able to get inside? mark: we don't know if they're changing their policy. it's likely they will. companies like youtube, google, facebook are structured like college campuses. they were meant to have this open and free environment. this may change that. emily: what about the story about the big policy changes that youtube has been making and we talk about the obvious creators like logan paul, the ones people recognize, but there

are so many creators that use youtube and they are making decisions that are dramatically impacting how creators are paid, how creators, the rules about what content can be uploaded. mark: one of the issues, youtube has made a series of policies that have been reactive and not proactive. there is a tug-of-war between advertisers and lawmakers and the general public who say you're not doing enough to moderate content, some of the offensive content on the website. in response, they have limited the number of ads. you have creators saying you're doing too much. you are taking over. both parties are saying youtube, you're not communicating well with us what the changes are. emily: these are the kinds of videos that perhaps shouldn't have been uploaded in the first place, right?

should never have been allowed in the first place? then they are changing the policy. mark: that is the basis youtube has had for years. it was "broadcast yourself." they are dedicated to this revolutionary idea that anybody can upload any video at any time. is we started as a small town and now we are big city. clearly they have a big city where they haven't put enough rules and bumpers in place to prevent these kinds of issues. emily: mark bergen, thanks so much. i know you will continue to report on this story and we will hear more from you. reports that the youtube shooter posted online rants about the company have people asking if that should've raised a red flag. my next guest has made a career of tracking illicit content online. developing technology that identifies things like child por

nography and extremist videos. it is the focus of our latest installment. in the socially responsible network series. i want to bring in a senior advisor to the contrary extremism technology project. he has worked with companies like microsoft. his work has led to the detection and prevention of the uploading of child pornography and extremist videos. i want to hear your reaction to this shooting. at the being of the situation, we didn't know what happened. now we have a fuller picture of the story. what's your take on this? >> there is no doubt there are complex issues when you deal with platforms of the size of facebook and youtube. youtube has hundreds of hours uploaded every minute. there will be complex issues. we have always known that and we have tried to contend with that. our point has been that while there are gray areas, there are

areas that are unambiguous. when we have videos of child pornography, videos of beheading, glorification of violence, those are clearly ranging from legal to clear and violations of the terms of service. my view of the situation is that the platforms have been, as your previous guest mentioned, more reactive than proactive. if you will have policy in place, which we all agree you --e to have -- we may agree argue let's argue about the policy, what we want on our social media platforms, but then we have to be transparent. we have to have due process, and we have to be consistent in the application of those rules. that is something technology companies have not been good at. they can do better to avoid the types of confusion and

misunderstandings and being tugged in both directions. emily: you suggested the establishment of a cyber ethics commission to counter the lies of technology. can you explain this as it relates to this discussion? dr. farid: sure. for the last two decades or so we have seen somewhat of a wild west in silicon valley. it has led to amazing growth and wonderful things in our lives, but i think we all agree over the last year and a half or so we have seen the dark side of that from the data privacy issues to the election tampering to the child pornography to the online extremism. i think we have entered and continue to enter a complex and digital age. i don't think we are thinking about these things as carefully as we have.

i think often we are being reactive versus proactive. in the same way we had a bioethics committee established 20 or 30 years ago to deal with the complexities of modern medicine and biology, i think we should bring some of the best minds together and start thinking about how we live in this very connected, complex, digital world. everything from the social media issues we are talking about to the self driving cars. we have seen complex and troubling things over the last few weeks. i don't think we are prepared to think about them at a technological, legal, philosophical, moral and economic level. i think we have to give more thought to that before we run in headfirst and create enormous platforms we don't know how to control, and then trying to back our way out of that. i don't think that's the right way to do business. emily: that was dr. farid. senior advisor for the counterextremism project. coming up, president trump ramping up his critiques of amazon, but will be administration take action against the tech giant and will

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♪ emily: welcome back to the "best of bloomberg technology." i'm emily chang. president trump's criticism of -- criticisms of amazon have come into focus is weak. speaking tuesday, he said the post office needs to renegotiate its deal with amazon. on wednesday, we learned oracle ceo safra catz has resized the bidding process for a cloud contract where oracle and amazon are competing. catz complained to president trump that it seemed designed to amazon to win according to people familiar with the matter. president trump was receptive. we went to washington to get the details from alex wayne. reporter: it is interesting it was an invitation from trump.

it was to the ceo venture capitalist who brought along safra catz, and she apparently returned to the subject several times over dinner to win this pentagon cloud computing contract. it is a 10 year contract worth billions of dollars, big business, and oracle is afraid that amazon is in the pole position to win the contract. the way the pentagon wants to do it is to award the entire business to a single company. amazon is the leading company in the world really on cloud computing. their competitors are trying to get the pentagon to split the business up among multiple companies, and they have got some members of congress on their side who have asked the pentagon to do this. that is the only way they can hope to defeat amazon in this competition. emily: so the president was receptive, as we understand it, but could he really interfere, or are there any actual plans to interfere?

it is obviously an interesting question given the fire amazon has taken from the president over twitter. alex: we asked sarah huckabee sanders about this at today's briefing at the white house. she said the president did not intend to interfere in the contract, but he did hear out catz during the dinner, and he told her that he wants the competition to be fair. one thing he could do to put his thumb on the scale slightly without looking like he is really tipping the contract against or away from amazon is to tell jim mattis the defense secretary that he thinks the business should be split up among multiple companies. emily: meantime shares of amazon have been under pressure ever since the president began tweeting about the company. but the selling slowed down wednesday after bloomberg actived there are no policies against the company, and several analysts reiterated their bullish calls on amazon. we spoke with tom forte. senior research analyst at da davidson.

tom: i think that when you look at president trump and his intent, i think he has a strong feeling against jeff bezos to the extent that jeff bezos, he is ceo and founder of amazon, also owns the washington post. so i feel like a lot of these tweets are directed at amazon, but the real target is the washington post. but for amazon the company, though given he is the , president, i think you have to take these tweets seriously. in the case of the postal service, i do think amazon is getting a bit of a sweetheart deal. in that regard, the president is actually accurate. emily: one of the president's tweets -- i am right about amazon costing the post office being the -- office costing lots of money for being there delivery boy. amazon should pay these costs and not have -- we have done the math at bloomberg, and we have learned the post office does make money on their relationship with amazon.

perhaps they should be making more money on their relationship with amazon. that is up for debate. how do you think this will actually affect amazon in the near-term? tom: sure, so first and foremost, all the tweets from the president basically convinced me that the second headquarters from amazon will be in his backyard. if you look at the 20 finalists for the second headquarters, three are in either washington, d.c. or a suburb of washington, dc. basically the process of picking a second headquarters is about influence, and where else could amazon have more influence than being next door to washington, dc? why is that important? having influence with the policymakers in washington, dc, including the president, i think is very important. as far as implications for the second, postal service, a, it's possible they could pay a higher rate. i think why i say sweetheart deal is that amazon could not probably get the same economics with the fedex, ups, or any of

the regional players like a laser ship or on track, but the good news for amazon is they are increasing their first party logistics asset. they have air freights, they have trucking. and interestingly now with the whole foods locations and 10 bookstores give or take they , now have a physical presence that they can also leverage to work on their logistics. i will give a quick example. when i go to my local whole foods now i'm greeted with an , amazon locker. why is that important? it's another place i can pick up products i order on amazon or return them. so while there is potential that the disruption to amazon from losing the postal service perhaps in the most dramatic scenario, i think the impact would not be as significant as some may fear. emily: postal service aside what , about the bigger picture regulatory issues? we were just speaking earlier about a huge pentagon cloud computing contract that amazon competitors seem destined to win. oracle ceo safra katz complained

about this directly to the president. he was receptive. but there is no evidence the white house would actually interfere here, but on a broader regulatory level, there's concern about how big amazon is becoming and how many industries they are getting their hands into. is that something that the president can stand in the way of? tom: sure. antitrust. most of what amazon does increases competition, lowers the price to the consumer, therefore at this point in time i don't think antitrust is a , significant risk. on cloud computing, to that end, second, amazon's strategy has been the early leader in the past -- in the space and passing on lower costs to its customers. netflix is a great example of that. so let's beat you know frank, when was the last time anyone ever talked about oracle in -- and lowering prices? never. so i think it is opportune for competitors of aws to want to have the president's ear. in this instance but it comes to

this large federal contract. if he wants what is in the best interest of the country, the lowest-cost provider to the federal government, it is likely aws and amazon. emily: thanks to tom forte. with da davidson. espn is debuting a new streaming service that will cost $4.99 a month. espn plus will offer live sports including hundreds of mlb and an lh games, college is sports, pga golf, and tennis. it will debut on april 12. the company says subscription video on demand of disney, pixar, marvel, as well as lucasfilm movies will launch in late 2019. still ahead, tesla's production goals get even more elusive after it misses quarter targets for the model three. off withtors shrug it the stock rallying. that full story ahead. this is bloomberg. ♪

♪ emily: a stock we are watching, shares of fitbit tumbling in monday's session after the stock was downgraded to underweight. the analysts saying the company continues to struggle with burning cash and bringing in revenue. tesla also took a tumble this week, plunging after the report that the ceo told employees in an email the carmaker may exceed a weekly production rate of model three sedans. 2003by midweek the stock was making a comeback after its toughest week and more than a year. we spoke with our bloomberg reporter craig who leads our automotive coverage from detroit and another reporter. this conversation took place monday before tesla stocks came back from its low. reporter: and so definitely i have been sleeping at the terminal moving all of these

headlines, emily if elon is , sleeping at the assembly line. definitely -- you mentioned the report and the idea that tesla maybe was approaching 2000 model as of today actually. perversely that actually spurred a little bit of a relief rally. the shares were down as much as 8% earlier today. just, as you mentioned, a ton of negative headlines. the most important really from a financial perspective being the ongoing problems with model 3 and getting that car ramped up. that is supposed to be their mass-market sedan. they have not been able to get manufacturing going from the beginning, and so tesla needs to figure that out, and it helps sort of explain these issues with elon sending angry tweets to reporters. and i think one of his most recent ones was i need to build , more cars. that sums up the predicament the company is in right now. emily: let's talk about some of

the tweets that have rolled in over the last 24 hours. one to the wall street journal about the model s recall. saying tesla policy is to recall before there are injuries. this is absolutely the right thing to do, yet there were dozens of other recalls by other car companies including injuries and death. you only wrote an article about tesla. why so? bloomberg responded saying, here is a new reason to be nervous about tesla. the ceo is complaining about press treatment. never a good sign. you saw that with the information story. musk wrote back not criticizing, just asking questions. should he stop tweeting and start focusing on the cars? reporter: i mean it's a fair , point. you know i think we are in a , twitter era. not really sure what -- i am sure he does not take that much time. obviously the importance for tesla is ramping the model 3. it has everything to do with

what investors are focused on and it has everything to do with the cash burn story. they can't get this ramped by q2 i think they will have to go , to the market and raise capital in q3. that is a challenge for them, because they usually come to the market with good news. they usually have a story to tell, a new product to sell. and if they are going to the market because they are actually in a cash bind, it is going to be the first time that they go in that kind of challenged position. emily: so you have a cell rating, why? colin: one, we are very concerned about the production ramp. they are in a tight cash position, and that's not a desirable position for any company to be in which is the production ramp. secondly when they get on the other side of this, i estimate they will get a working capital benefit. you still have to worry about the underlying profitability of the model 3. at the low price point we think it might eventually sell at, it is going to be very

challenging to have a wide profit margin on that type of vehicle. lastly, to think about competition coming down the pipeline. you know audi, jaguar, porsche, , hatley had the emission coming next year. emissione had the coming next year. a lot of competition coming that will cut into the opportunity. we have seen reports of quality issues with the model 3. not only just ramping but making sure those products are up the quality level the customers expect for what is going to be, you know even for the lower , model -- it is still going to be a luxury price point for that vehicle. emily: we can't forget about the tweets about the ntsb. the ntsb spokesperson reportedly saying they were concerned about the investigative information that they are getting from tesla. musk tweeting -- lots of respect for the ntsb but groupte -- another advisories cars. safety is the ultimate priority here.

should we be concerned about the safety given, you know the rush , that appears to be happening behind the scenes? craig: i think it may be unfair to sort of link the rush behind the scenes to this accident that the ntsb is investigating, but it is definitely a fair sort of question to ask whether tesla was acting inappropriately and putting out several blog posts, the most recent of which was sort of critical of the driver involved in the fatal crash. the company did try to walk the fine line saying it is tragic what happened and it's sorry that this occurred, but the company came out, and during an active ntsb investigation talked about the driver not having his hands for a period of time leading up to the crash. and this is just sort of a no-no, and the ntsb, when it looks into accidents like this,

it requires that the companies that are the subject of the investigation to cooperate but also to sort of keep quiet as the investigation is going on. emily: that was ubs analyst colin langan and craig trudell. well in the midst of all his , tweeting about tesla on monday, musk also fired off a tweet celebrating spacex. monday afternoon, spacex had another successful launch from cape canaveral florida. ,the falcon 9 carried supplies for the international space station. spacex is starting roughly 30 total missions this year. and monday's launch brings the tally to seven. coming up, why your next iphone may look radically different. the product scoop on future smartphones next. this is bloomberg. ♪

♪ emily: in the latest tech revolving door, apple has hired google's top artificial intelligence executive to help the iphone maker catch rivals in one of the most important fields of modern technology. john d'andrea will report to ceo tim cook and has a lot of work to do. apple has lagged behind amazon, google, and microsoft when it comes to ai, and apple wants to make sure future iphones will stand out in a crowded market. in a bloomberg scoop, we have learned the company is working on touchless gesture control on curved screens for nextgen devices. this according to people with knowledge of the matter. the control feature would let iphone users move their finger close to the screen without touching it. and yet another bloomberg scoop on apple this week apple is , delving further in the chips business. chipsns to use its own and mac computers as early as 2020.

the move will replace intel chips currently in the hardware. the news was a blow to the chipmaker with shares plunging. we spoke to the reporters who broke this story. ian king and mark gurman. mark: what we reported is that for the first time apple is now designing and planning to use it s own processors, the main chips which would replace intel, which gets 5% of its revenue from the mac maker. emily: so why is this such a big blow to intel? ian: about 5% is not the end of times for intel, but if it spreads, it becomes a phenomenon. it could show that intel's chips are no longer the leading technology that nobody can live without, then it becomes a major issue. emily: what is the likelihood of that? ian: well, there have been lots of times over the years to try to knock intel office spot. qualcomm is trying to get into the pc industry. no one has really made any impact, but if apple can do it,

than people are going to look. emily: how does this fit into what we know more broadly about apple's plans? mark: so what apple's strategy over the past six or seven years or so is to increasingly bring more features from the mac to the ipad and iphone. theell as vice versa, ipad and iphone to the mac, and over that time, the mac has languished. it has taken a step back from prominence from ios, given how much money that generates for the company. the iphone over 2/3 of revenues. but apple is going to start this year and will announce in june is a big push to sort of bring the software platforms of the mac and iphone and ipad together. they are going to start allowing users to run iphone and ipad apps on your mac. so the next logical step is to move to the hardware space in terms of merging, and that is what we are seeing for the chips, apple watch, iphone, apple tv, they all run the same processor, the same lower-level

functionality, they can run the same features and get new enhancements at the same time. emily: intel is weathering this. you know in an already bad year , after the chip flaw that you reported on earlier this year, how does this fit into the bigger intel story? ian: i mean, this is the thing like -- there is much more risk for apple. if you are saying we don't need intel anymore, then we trust samsung and others to make these chips. we trust them to catch up with intel if not surpass intel. in the past, those bets have been made and haven't panned out. intel has been able to reassert itself, so we will see. we are 18 months, two years ahead of everybody else, now we are not for sure about that gap, and i guess this could be a major test. emily: what about the risk apple is taking here, a company that certainly doesn't want to make any mistakes? mark: this decision is 10 years in the making. in 2008, apple bought a company

called pa semi. it was a u.k.-based manufacturer and developer of low-power chip sets. a few years later, they turned that into the main processor, called the a4 which was the chip first behind the first ipad and iphone 4. now, they have chips for everything. they have chips that manage the security and some features on mac computers. they have chips for basically everything in an iphone, so they have been working towards this for a while. they have a gigantic chip team of people in israel, which is a big hub for chipmaking and other endeavors and in california near their apple park campus. they have been working towards this for a while, and now you can sort of read the tea leaves and see everything come together. we have the hardware portion, what we reported on today, we have the software portion that i reported on in december, merging ios and mac app stores, and all we are waiting for is to get to that final point, to get to that peak, the plateau where they

bring everything together and do a complete merger of the hardware and software. while still maintaining what is good about the mac versus what is good about the iphone. i don't think they will do touchscreen macs. those will be separate. in terms of the risk, i don't think it is very risky because they have to walk a fine line which they have always done and will do. there is really no chance apple messes this up here they will not alienate their customers. emily: that was bloomberg technology's ian king and mark gurman. and that does it for this edition of the "best of bloomberg technology." a reminder that we will be heading to washington next week for full coverage of facebook ceo mark zuckerberg as he testifies before the senate judiciary and house commerce committees. tune in every day. 5:00 in new york, 2:00 in san francisco. remember, all episodes of bloomberg technology are livestreaming on twitter. check us out. at technology weekdays. that is all for now. this is bloomberg. ♪

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