the emily chang san francisco, and this is " bloomberg technology." the u.s. supreme court frieze state and local governments to collect taxes on internet commerce. brian kucinich is removed as ceo violatedafter the ceo company policy. we will discuss who is in the running to permanently take

over. streaming services trying to outspend each other with users. can traditional media like disney keep up? landmarkop story, in a ruling, the u.s. supreme court just ruled state and local governments can start collecting billions of dollars of sales tax from online retailers. the decision will impact online businesses that do not currently collect tax from customers if they don't have a presence in that state. it overturns a 1992 ruling that made much of the internet a tax-free zone. joining us now from minneapolis, cofounder of loup ventures in new york. and we have bloomberg intelligence's analyst.

who are the winners and who are the losers? >> the winners are probably brick and mortar for the next year. we can go back and look at what happened with amazon -- rewind 10 years ago, only about 10% of the items they collected taxes on. now that's about 70%. during that time, they accelerated their growth. the reason why it is a win at least near term for traditional brick-and-mortar is there will be a period -- probably a year -- where people will maybe stop and think twice because they on't get that 5% discount some items. i think over time, people will forget about that and by what they want where they want, but it is a small win for traditional brick and mortar. we spoke with a hedge fund with a big physician and it's notand he said

that material because most internet retailers are already collecting taxes. consumer behavior will not change. would you agree? sure about that. i actually think it will make a big difference for companies newegg becaused they are not used to collecting these taxes. we're talking 12,000 if her and tax jurisdictions that they will have to comply with. amazon is already doing that, so they have an advantage over wayfair. like certainly brick-and-mortar companies will benefit, but i think amazon will benefit as well. emily: consumers love low prices, but in this day and age, they really love convenience. you are exactly

right. foundsurprised when i this out -- cost/price is the third reason why people shop online. usually it is selection and then the delivery. wrap them up as more broadly convenience, but it is the third most important piece, so i think that is the reason why after a year, people kind of move on and come back to online despite higher taxes, but, yeah, to put this quickly in perspective, there's about 350 million unique items on amazon it's obviouslyd difficult to drive to a store and get that kind of selection. that is paramount in consumers' decisions. emily: ebay' statement in today's ruling -- ebay's statement in today's ruling -- talk to us about what this

decision does not address and what will be left up to congress. has alverman: congress lot of areas to address. one is back taxes, going back years for taxes that have not been collected. -- de minimusmus rule. congress has approved a couple of different rules that set de imus, so, you know, for small businesses, this rule essentially says that states can tax them without any sort of minimum. you sell one thing in one state, and you are taxed. emily: how are we expecting

congress, then, to respond? before i answer that, there is a little wrinkle in this for amazon. they have a service right now that they charge third parties for managing their taxes, typically 2.5% to 3%, for all the headache we talked about. the 12,000ed about different tax jurisdictions. if there is a universal tax congress does pass to simplify tax in retail, that may have a negative impact on that business, but to answer your questions, we do not really know what the terms of this are the guys congress needs to still decide. i don't know what the timing of that is, and i would say the probability that there is some online holistic view on taxes is extremely high by year-end. i would put it above 90% chance that we get something. emily: you have a little bit more on the timeline. how does this play out?

mr. silverman: typically it takes congress about five to eight years to address supreme court decisions. it would be great if they could address it by the end of the year. we have not seen congress getting their act together on things that are even this significant, so it's pretty hard to say. i would like to see something by the end of the year, but it's difficult to see -- to say if they will be able to do something, although we do have a couple of bills that are already there, so they could just reintroduce one of the bills that are just pending. emily: maybe we will be talking about this at the end of the year, maybe in five to eight years. who knows with this congress? thank you so much. you will be back with us later in the show. coming up, the shakeup that has rocked silicon valley. and if you like bloomberg news, check us out on the radio, listen on the radio app.

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a shocking shakeup at the top of the biggest u.s. chipmaker. intel ceo brian krzanich resigned after the company learned he had a consensual relationship with an employee, which is a violation of intel policy. krzanich moved up the ranks at intel over more than three decades, becoming ceo in 2013. he oversaw the company through an era of intense consolidation and competition in the industry, but he leaves much unfinished. he was in the middle of trying to make intel into a more general provider of chips and navigating the company through a massive chip design flaw.

ian, you probably know more about intel than any other journalist in the world. hat happened here? ian: this is obviously shocking. this happened all of a sudden, and we're still looking into exactly what happened, what kind of relationship there was. this is very much an ongoing process. the company is trying to draw a line under this and move on, but i don't think they will be allowed to let that happen. and you have written about yourself, this kind of behavior is no longer something that just gets wet and at the table, and this won't be. emily: actually, brian krzanich was out there talking about equal rights, advocate of the me too movement. ian: exactly right. if you look at his twitter account, which is still open, you can see the statements he made.

the semiconductor industry, they just are not that many women at all. theas out there, one of public faces of "let's do something about this," and then this happens. referrale increased bonuses for diverse candidates as part of this push. i want you to look at this chart showing intel's growth under krzanich. your team has had the opportunity to meet with brian several times. how did this strike you? him aactually met with few weeks ago and i've always had a tremendous amount of respect for brian. he has always been very straightforward and candid in response to our questions, which i can tell you is a rarity. . thought he did a good job under his tenure, the company grew revenues by almost $10

million. they grew earnings per share by almost 100%. emily: intel has always, always, always promoted from within. could they break tradition here? plan all have had a the time, where they will encourage executives to get experience, and then they will see who sorts themselves out. has also been fairly dynamic of bringing in people from the outside and one of the people who would we one of the natural successors or the people who would step in this kind of smith.on is stacy the main competitors are gone. he got rid of them, or they left because they did not want to stay, so that does leave a vacuum in terms of that continuity. yes, intel is going to have to

widen its viewpoint in terms of where it goes next. only: the interim ceo was bloomberg television a couple of weeks ago talking about the accomplishments over the last couple of years intel has had. >> over the course of the last couple of years, we have dramatically expanded our market. where we used to focus primarily on cpu's, we now focus on demand candata and where silicon be a differentiator. our portfolio today includes ca's, so we had dramatically expanded the market we serve. emily: who are the most likely contenders, and should it be an insider or an outsider? insideh: if they go the route, i think the top candidate is probably murphy, who is effectively their chief

engineering officer, but i also think there are some outside candidates that intel will seriously consider. highlighted sanjay, former qualcomm executive, somebody respected by some of the largest shareholders in the sector. probably not much left to do at broadcom, so that would be a big change in culture for intel. emily: i want to go back to rene james, a woman to pitched with krzanich become president, and she left so fast.

ian: she basically left the company and now has set up her own company which is effectively competing with intel, trying to get into the server market. that's not the actions of someone that feels a lot of loyalty and affection, at least for the current leadership of intel. would she be on the list? we will have to see. if they are open about diversity, open about looking at the candidates who might make the most sense, she would certainly be someone they should put on their list. t, what would you like to see, given the challenges intel has ahead, given the consolidation of the industry, this design flaw they are still trying to get through? mr. shah: i thought they brought in a world-class cfo in bob swan, and i would like to see them go externally. there's a tremendous opportunity as an investor in intel.

the company obviously has very good momentum today which i think will continue. they are struggling, though, struggling with manufacturing execution. m&a hasin the day -- looked at times wasteful. if you bring in the right executive with a good track record, i think there is a tremendous opportunity. the current price could actually be a very attractive entry who that we will see person is. it is pure speculation at this point, but i do see this change as an opportunity in intel shares. , and werian krzanich crunch the numbers, leaving $45 million on the table. ian: that is a mistake. all the things brian said he would do at intel, he has put

the beginnings of those in place, though none of that has fleshed out in the business. if we are to believe romit's counterparts, that train will come to the end of its run in the near future. they need someone who can either execute on what he said he would do or find a new way forward for them. emily: thank you both. we will continue to follow. ian, you are continuing to dig on this. coming up, apple announces plans to stream children's programming, partnering with the akers of "sesame street." this is bloomberg. ♪

race int is an arms streaming with the competition trying to outspend one another on high-profile deals. this bring, netflix signed a production deal with former president barack obama and first lady michelle, and in early june, amazon announced a deal with academy award winner jordan weeks later,o

apple announced it signed one of the most influential people in media, oprah winfrey. munster, back with us, and here to give us the global perspective. we have caroline hyde in london. apple making big moves, and yet, netflix stock keeps going up. how well can apple compete? wayhey can compete in a big because they have the resources to do it. about $15spend billion in original content over the next five years. netflix will probably be about 45 billion dollars, but i want to give people some insight into why apple can be a major player. if we rewind the clock to 2013, .etflix had 13 original series apple now has 17 in the pipeline, so they are kind of five years behind, but they have

a distinct advantage over netflix, and that is the power of the operating system, and we have seen that play out with apple music. they had 20 million subscribers a year and a half ago. they have 50 million today. that's those notifications you periodically get to sign up for apple services. that's the kind of thing i think netflix should be worried about. we know even though apple has messed up on content today with car play karaoke and planet of apps being disasters, they have a unique institution to compete against netflix. emily: and yet, you have analysts out there with a $500 price tag on netflix. the market cap is higher than disney. does that make sense? mr. munster: it makes sense that content -- overused, long-standing phrase -- that

content is king. you can see how things can get disrupted. i think there can be multiple winners in here. i would look at it a little bit different. people who view apple shares don't usually give original content a second thought. this is something of an afterthought for investors. this ultimately could account for 3% to 5% of apple's total revenue and be a very profitable it'sof their revenue, and all very incremental, so we look at it more from a perspective of tech companies are in a unique position and apple is one that is uniquely capitalized to go after this. top to us about the international picture because amazon has made strides acquiring local sports programming. netflix has shown very solid international user growth. is this anyone's game abroad? caroline: i feel like it is. netflix has -- what apple 125 million subscribers?

what? lix has -- 125 million subscribers? where is it right now is a big focus point for the likes of netflix -- where i sit right now is a big focus point for the likes of netflix. they have in making such groundbreaking content such as "the crown" which is doing really well for them. we have also seen with amazon -- you mentioned it -- big moves into sports. right here, it's the premier league. football, you guys call it soccer. it is showing where the desire is. they want to get this content -- if it's sports, original movies and broadcast and series -- to be able to get more subscribers to prime, to push and above 100 this just as, and

spurs more competition for the likes of hulu but also sky right here in the u k, which is not only a cable network but also has a streaming subsidiary. emily: the combined disney/fox behemoth will be weaker than the original, and netflix is the winner, and you've got at&t rolling out over the top. apple, meantime, making deals doing adren's shows, deal with the makers of "sesame street." a lot is in flux. what will determine who are the winners and who are the losers? a unique advantage netflix does have is the international peace you were talking about. that is something apple is not as interested in. they will have 1000 -- hard to believe that number, but netflix

has said they want 1000 series titles in the next year, and apple will be much less than that, but i think those two are clearly going to be winners. one of the challenges traditional media will have is around the distribution. we talked about the power of having the operating system and also just a good understanding like netflix does about how to capture and retain some users. i think it makes sense, what has happened with netflix stock. thebiased because i view world from more of a tech perspective, but i think the tech companies, because of the operating system play and customer acquisition, are uniquely capable of being the content companies of the future. right, we will be watching the battleground. thank you both. coming up, the pentagon wants to on theer command defensive. we speak to a pulitzer prize-winning journalist on the risks of a possible cyber war.

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emily: this is "bloomberg technology." i'm emily chang in san francisco. the pentagon has made a notable change in its strategy for a division that until now was primarily a shield against cyber attacks. last month, the state department issued a report saying the government needs to come up with a new strategy for stopping cyber intrusions. what does it mean for american cyber defense or offense? to answer that, i want to bring in david sanger, who is out with a new book on cyber warfare called "the perfect weapon: war, sabotage, and fear in the cyber age."

cyber weapons to the invention of the atomic bomb. give us the lay of the field. where are the biggest threats? when the airplane came in and the right brothers first showed it to the military, their first response was, "this is great. we will put it up over the enemy troops, see where their vulnerabilities are, and send in he cavalry." it was about four years before people began dropping bombs with airplanes and ultimately dropped the atomic bomb, the ultimate culmination of technology. it gave them the reach and the power. for cyber, we are just at that were we haveeriod gotten past the fact that cyber will just be used for surveillance. we understand that you can arm and blow up iranian

centrifuges with it, but we keep discovering other vulnerabilities that take up by surprise, and that is what the russia hack was all about. just think -- the election system was not on the department ofhomeland security's list 18 areas of vulnerability. emily: is that with the biggest threat is coming from, russia? mr. sanger: the four big actors are discussed in this book are iran., china, the russians are the most savvy. the chinese are the most determined, and the iranians and north koreans see this great leveler. they know that for all their pursuit of atomic weapons, they are never going to use an atomic weapon. they can't. they know what the next 45 minutes would look like.

whereas cyber, you can dial up and you can dial down. you have to think of sort of counterterrorism strategy. for a while, we were saying we are going to go inspect everything coming into the border to see if there is a bomb aboard a freighter or an inplane, and counterterrorism strategy post 9/11, we started knocking down houses in pakistan where you thought the bob makers -- the bomb makers were at work. go toecurity was to places where they think code is being developed to attack the united states -- cybersecurity where they to places think code is being developed to attack the united states. how open is the trump administration to being on the cyber offensive, and do they understand it? mr. sanger: really good

question. when john bolton came in to be national security adviser, the first thing he did was fire the two people who knew the most about cyber. one was the homeland security adviser, who has been replaced by someone from the coast guard. the other was a long time in sa nsa employee who had run the unit that breaks into foreign computer systems. he was a cyber offense of expert, and they not only got rid of him, they eliminated the position and cannot really explain to us or haven't explained to us why other than to say, "well, cyber is everywhere. it's part of everything we do." emily: how well armed is the u.s.? we are very well armed, and we have absolutely no strategy around the armament. a the book, i describe

similar operation of dubious success against the north korean missile program, but we have not developed a doctrine under which -- that would decide when we will use these weapons and when we will not, and we will not even talk about this to the public. if you will might do that, you cannot begin to set guide rails of what is off-limits. election systems, no one should attack. systems that support hospitals no one should attack. communication systems used by first responders no one should attack. and yet, they are being attacked all the time. mr. sanger: they are. part of the solution is technology. there have got to be the beginnings of some political solutions. emily: is there hope for that in this administration? have notr: so far i seen much of it. there was discussion in the obama years of cyber norms and the united nation groups set up

to do it. the last discussions they had broke down, not really because of the trump administration. really because of the chinese, but if you do not begin to discuss how to control the technology, you are going to end up being on the losing side of it. hasy: u.s. infrastructure been undermined, attacked. we are heading into the midterms. is it happening now? will our elections be undermined again? mr. sanger: good question. one thing that helps is this time americans know a little bit about what this looks like from the russia hack. does not mean it will look the same way the next time, but in france, with the warning of what happened to us, the fake facebook posts and all that did not have a lot of effect because people were identifying this coming from russia. what worries me about our next election -- not just 2018 but 2020 -- is there will be other countries that will learn from what the russians did and will

devise new approaches, and the constant problem in cyber is you are always behind the eight ball. the attacker is always thinking of new ways in, which is why you are seeing new defense technologies that look at behavior and past patterns, but we also need to begin to dig about what the geopolitical solution for this is. emily: how vulnerable, even though they have new information, is facebook to being turned into a weapon again? less vulnerable than tin of years ago when they were clueless. less vulnerable than two years ago when they were clueless. but, as you say, they moved. mr. sanger: they move. peopletalked to a lot of at facebook. the really brilliant guy made the point that the reason they missed the hack was that they were not looking for it. they did not actually understand

the behavior on their platform, and that could certainly happen again. talk about north korea because you reported on the u.s.'s efforts to disrupt north korean missile systems. talk a little bit more about how that happened. mr. sanger: conjunctiva and the same one who showed up in singapore with a friendly smile -- kim jong-un, and the same one who showed up in singapore with a friendly smile, and went to the hotspots and hung out with all the millennials and took selfies -- emily: got to get your groove on. mr. sanger: not what you would expect of the north korean leader, but it was good he was there, and he liked seeing what another society looked like, but he was launching something a couple of years ago, and my colleague and i noted that they were having an 88% failure rate on something that was a pretty well-established technology. we dug into it and sure enough

found what we expected we would find, which is a program president obama had accelerated called left of launch. if you think of the moment of launch and you are aiming missile efforts to intercept those and after the launch, left of launch is what you do to keep the missile from getting lost, and that's everything from to cybern bad parts attacks on the command and control systems. the problem is we cannot tell what percentage of their high failure rate was because of the u.s. program and what was because they were north koreans making mistakes -- bad welding, that engineering -- bad engineering. that's part of the difficulty with cyber. you don't know how well your weapons are working. emily: is this why kim jong-un came to the bargaining table, and will they stay there? mr. sanger: i think he came for a variety of reasons, number

one, the sanctions, and maybe even the spirit of donald trump's threat. i wish i could be more optimistic. i think the president did the right thing in trying to go meet him and talk to him. we have not tried that since the end of the korean war in 1953, but that said, the agree at -- the agreement they came up with was much more vague than what kim's father and grandfather signed onto. david sanger, thank you so much for stopping by. mr. sanger: great to be with you. push-ups,ll ahead, coaching sessions, a live-in preparing you for your next of petition -- it's the regime of a modern sports star, the video gamer. next. ♪

emily: the largest radio broadcaster in the united states has turned down an offer from liberty media. i heart media formally rejected stake and said0% other talks are continuing with other interested parties. the company is working its way through bankruptcy. job, are you looking for a one that lets you gunned down the competition, fight off hordes of alien invaders, let you be part of a team of top athletes with rapid twitch fingers daca maybe e-sports is for you. >> just imagine living in this $15 million home. you are paid a steady salary

supported by a whole team of staff, whose sole purpose is to get you to play at your best. if you don't perform, you are cut from the team. >> here we go. round three. round three. no breaks. >> if you think this sounds like the life of a pro athlete, you would be right. kind of. life of the future, lived by the lucky few today. gamer.a professional for someone who is uneducated in and doesn't scene understand how it works, the way i would describe it is it's kind of similar to a professional athlete. and preparation, hard work, and team effort. plays playersning

like mike to play in videogame battles -- ghost gaming. yes, that is a real job now. more people watch video games then netflix, hulu, espn, and hbo put together. it's already a billion-dollar industry. can afford toost shower players with all kinds of house, ae this team 10-bad 16-bath mansion ,verlooking hollywood -- 10-bed 16-bath mansion overlooking hollywood. >> when most people look at the house we are living in, it's a bunch of teenagers, and it's a lot of us, so you would think it's rowdy, we're just reckless, but we are professional e-sports players. aki: here's the day of a professional gamer.

9:00, 9:30. .reakfast 11:00 a.m., we have workouts. that lasts for an hour to an hour and a half. from 1:30h, we play to 7:30. that's just a long grind of laying against other talented teams. we play from lunch to dinner. aki: mike did not want to discuss his contract, but when he joined ghost, it was reported he and his teammates shared a $50,000 signing bonus and were salary.ered $4000 month

sells his own, he line of apparel and earns money twitch.ws on but like professional sports, gaming is not a lifelong career, and is a ton of turnover. three months after i met mike, ghost dropped him from the team and he's now back in new jersey. >> this sounds really tragic and good and could end a player's career, but it's really comment on the scene. players get dropped and switched around all the time. my advice to players -- you've got to stay patient. you got to stay dedicated and understand you have to sacrifice because there's always another player out there trying to take that spot, but i don't have any plans to give up the gaming career. i'm going to bounce back from this and make my mom and dad

proud. emily: i want to bring in "bloomberg tech's" aki ito. do all pro gamers live like this? aki: no, they don't. this is the best of the best. it is true they get signing bonuses and all kinds of perks, but that is the most glamorous. if you are playing video games all day, that's an incredibly unhealthy thing, so you do need to correct some bad habits. we sawthe characters here, what are they up to now? just signed on with a new team. we heard him in the video talk about how he was going to bounce back, and he did. emily: tell us a little bit about the inspiration behind the series. journalist,chnology

i spend a lot of time talking about the jobs technology is replacing, and that is a very real concern, but it's harder to see the jobs technology is creating, so i want to go out and find those. the jobs that kids now once they graduate from high school or college could go into. emily: i have three boys. is this what they have to look forward to? aki: possibly. for joining us. 911 call centers around the country will soon be able to accurately locate those in need of help. we speak with the ceo partnering with apple to make this a reality next. this is bloomberg. ♪

911 system has been operating in the u.s. for decades but has been slow to adapt new technology. the majority of people now call 911 on their mobile devices, but call centers cannot access a crucial piece of data from that device, and that is there location. the startup rapid sos is changing that. the ceo joins us from new york. first of all, how backwards is the united states here? i find it shocking in 2018 that they cannot access our location from a cell phone. >> it is remarkable. extraordinarydo work every single day in the united states, but america's 911 infrastructure dates back to the 1960's and 1970's in most parts of the country, so the result is when you call 911, there is

available from that call. it is primarily a voice-based system still today. find me, butn uber 911 cannot? is operating from the telephone system primarily. when you call, nine times out of 10, they do not even have your name. emily: other countries are way ahead in terms of this. they can tell down to what floor you are on. martin: we developed this system back in 1968, and since then, it has been a real challenge because we have such a rag minted system. we have over 6000 911 system -- systems, so it is a very antiquated and

infrastructure that sits behind our 911 system. emily: how does your partnership with apple work, and how will it change my iphone? mr. martin: apple announced monday at the national emergency center operator conference, that when a user dials 911, the location information, the information we use every day in apps like uber will be translated securely and robustly directly to the 911 operator that is managing the call. the result is we expect meaningful improvement in terms of response time and outcomes of emergencies. emily: talk to us about other partnerships. apple is not the only maker of mobile phones. mr. martin: our clearinghouse has the support designed for millions of different types of data. this with theed ability to push life-saving data

directly to 911 responders. we work with digital health companies to pass real-time health and medical data. we work with automotive companies to pass tele-metric data during a crash. we have disclosed our partnership with uber. microsoft is an investor behind us, so you are seeing silicon valley start to embrace all this data they can start to use to save lives. emily: tell us about the work you are doing with uber and how that might be a prelude to other like deals. mr. martin: starting in six cities now, if you have an emergency while you are on an uber ride, you can press a button and share information otheryour location and information associated with the ride, the make and model of the vehicle and other information,

so first responders will be able to pinpoint your location and get to you faster and be able to pinpoint the nature of the emergency faster, so it can really help offset and improve response in those circumstances. new era of privacy concern, how to handle dealing and all this sensitive data consumers who may not want first responders to another location? mr. martin: to be clear, this information is only shared during a 911 call, and it's fully encrypted and uses a similar type of technology you would use with mobile banking, and that's only available to the 911 call taker managing that call. otherwise, there's no access to that data. emily: michael martin, thanks so much for sharing. that does it for this edition of from sang technology" francisco. i'm emily chang. will be back here tomorrow. ♪

profit warning helps reignite trade trauma. the dollar weakens. behind the scenes some white house and chinese officials are working to revive talks and head off a full-blown trade war. opec and partners are said to act a plan to boost all output by 600,000 barrels a day. >> the aussie media company