China Goes After Apple: Bloomberg West (07/14)

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July 14 (Bloomberg) -- Full episode of "Bloomberg West." Guests: IDC's Crawford Del Prete, Twitter Vice President Joel Lunenfeld, former ESPN Senior Vice President Len Deluca, Stylecaster CEO Ari S. Goldberg, Misfit Wearables CEO Sonny Vu and KPBC Design Partner John Maeda. (Source: Bloomberg)

Live from pier three in san francisco, welcome to "bloomberg west." i'm emily chang.

Stuck in neutral in new york city after a court hearing today.

Lift her missed not -- lyft promised not to launch until the laws are checked with the taxi commission.

Lyft says there is a smear campaign to shut down their business.

China central television reported location tracking software in the iphone could lead to the leak of state secrets, but apple says it does not track user locations and does not have any backdoor deals with governments.

Google is expanding its presence in san francisco as more young tech employees are sticking to work in the city instead of the valley.

It has bought a building on the embarcadero and is leasing 250,000 square feet of a tower, a cluster of offices within blocks of each other.

The lead story of the day.

It will be a little longer beforel lyft cars with pink mustaches hit the streets of new york city.

They said they will launch when the eyes are dotted with the limousine commission.

New york state did not issue an injunction for violating state and local laws.

They are trying to reach an agreement.

Here is cory johnson.

In new york, matt miller.

I know you have been following this all day long.

What is the status quo now?

I have been following the story for weeks.

I spent time with the cofounder last week and have been talking to the company today as they have been going through this hearing.

What they told me is, they are working with the taxi and limousine commission to try to reach some agreement as to how their fleets and base stations are going to work.

It is interesting because it is territory we have not explored before.

The tlc and even buber -- uber have a base station for their fleets, from which their fleets will drive, they will embark and return to.

But that is easier because they have actual fleets.

In the case of lyft, these are obviously regular people like you and me.

Alexis, who you know from reddit , does this for fun, as a social interaction.

People drive by something to add to the other social activities of their life, and not so much as a job.

It is hard to have a fleet and hard to have a base station.

Use of the kinds of things the tlc wants to get lyft to adhere to.

They say they are cooperating together well, and are set to reach an agreement.

It is not a caustic situation.

It is not something where they are angry with each other and trying to stop each other.

They are just trying to find a solution together, and it is going to take a little bit longer.

The new york attorney general has cracked down hard on lyft, on airbnb.

We have seen a lot of services just launch and see what happens without figuring out local laws.

Technically, they are breaking the law.

What is the way to go?

What is the way to launch?

Works for all the libertarian urges and notion that government does not serve a purpose, the reason these laws exist is because of his history of abuse, a history of problems with taxi drivers, with people who rent out rooms in hotels.

They go back more than 100 years.

These government organizations have crept up to fight the pernicious problems which have shown themselves in the past, long before these services were a twinkle in the eye of their creators.

The taxi and limousine commission -- there are significant hurdles.

I was a yellow cab driver in new york.

I got my hack license in the ancient years.

There was a requirement about what a driver had to learn, how much a driver had to know about the geography, safety requirements, and licensing requirements, the required the training of every licensed taxi driver in new york city.

Those are very difficult to get over when your business model is, any joe can drive anyone.

First, i would like to say libertarian views are not just from the founders of these companies, but the founders of this country.

What are you talking about?

Like that is what this country is based on.

Seriously?

I spent time in the hospital as an accident victim, surrounded by people who had been hit by drivers of yellow cabs.

For all the safety lessons maybe they are taught, i do not know that they learn them so well.

The attacks are really laughable.

If you get hit and your life is fundamentally changed because of a yellow cab taxi driver in new york city, a lot of times there is no recourse, and the taxi driver will continue doing what he does every day, and may hit somebody else.

The taxi system in the city is broken.

If someone else comes in to fix it, i think that is for the better.

Matt miller, obviously you have an interesting first-person perspective, though there have been questions raised about the insurance policies at ridesharing companies.

That is something we will have to discuss another day.

Apple's fight in china is heating up.

China is accusing apple software of causing security problems.

The central television says tracking could be used to identify activity of individuals in china, which could result in the leak of state secrets.

They wrote, our customers want and expect their mobile devices to be able to quickly and reliably determine their current location for specific activities.

Editor-at-large cory johnson and i spoke with the chief research analyst and asked him what the statement says about google -- excuse me.

Apple's efforts to refute these claims.

Apple is being definitive, saying that at the device level this is how the information is tracked, but it is not information apple is capturing, not information that apple is using.

I think they are being very smart, trying upfront to say there is positioning data that you need in order to figure out where you are, but that is not data apple has.

They can get on the offensive and address china's concerns up front.

I think this is yet another chapter in the sword fighting that has been going on between the u.s. and china.

I think apple is smart to get in front of it instead of backing away and leaving a lot of questions.

There has been a lot of back-and-forth over cyber spying and the nsa, and chinese hacking between the united states and china.

China is a huge market for apple.

How much could this hurt apple?

There are a lot of contexts that are important.

Domestic competition within china from companies trying to gain share and have more backing from the chinese government -- i think this ways in, in some way.

Enterprise side have talked about slowing sales in china because of revelations about the nsa spying.

Companies like cisco, oracle, and hewlett-packard have seen slowing's -- slowing sales in china.

This speaks to another context that is important, the context of all the people using personal information to target advertising, facebook, and others.

Not in china, of course.

The general concern about privacy and how companies do or do not respect their privacy, and what it means for individuals as opposed to some companies.

Go ahead.

I agree with you.

Especially the first point you made.

There is a little bit of an agenda.

China has a big that on a number of different -- a big bet on a number of different things.

Or is an opportunity to drive this agenda, which is, that is a western platform, and not necessarily getting most favored nation's status.

I think that context is really important when you look at these comments, we just why i think apple is smart.

Get on the balls of your feet.

Go forward.

Really take this on.

At the same time, you have a report out of china from an analyst in taiwan, saying that the iphone 6 could be delayed until 2015. sent everyone into a tizzy because we were expecting this into the fall.

What is your take on this?

Apple headlines sell, and on the internet, apple headlines go crazy.

People want to run with anything apple and put it out there, whether it is true, check, or not.

It would be shocking news of apple did not come with a phone this year.

But the notion of this analyst from somewhere in taiwan, reputable or to be believed, seems unlikely.

We will see stuff that is completely phony, people making up or guessing about things.

When analysts come out with reports about launch dates, they often say they are getting information from the supply chain.

Does this report; holds water?

There is going to be a lot of stuff coming out.

What is interesting about the report is, there is a lot of discussion around some of the advanced screen technology, and you sure you have consistent rendering of colors.

The world needs to get used to -- whether it comes out in q1 or or the fourth quarter, one of the biggest products did a long time.

The drug testing issue, questions around dropping a 5.5 inch -- the drop testing issue, that was one of the most important things i read.

That is a good point.

People have to change their expectation on what you can do with a phone and how fragile a phone can be, when you get a piece of glass this big that you use as a phone and a tablet.

What do i make of it?

I agree with cory.

We will see a lot of different stories.

I do think the drop testing and reliability around color rendering -- that is the stuff i am trying to sniff into an figure out if there is something there.

Life that was the idc -- dallas the idc chief research analyst.

Amazon has poached a google developer.

What does it save for the future of the amazon product line?

? welcome back.

One of the lead developers behind google glass is leaving the company.

They are leaving the google wearable project to join amazon.

What does this mean, and what insight does this give in to amazon's future product development?

Redstone has written about the secretive lab 126. so, brad, why is he going to amazon?

What is amazon doing in wearables?

Amazon wants to compete everywhere its customers are.

The fact that jeff a's has spun up a wearables project at amazon is not surprising.

It has been pursuing image recognition for a long time.

It bought a company called snap tale in 2009. you can scan barcodes and recognize the world.

That makes more sense if it is mounted on your face or your wrist than it does on a phone.

I expect them to be there at some point.

The firefly thing -- i think that is the most significant phone announcement.

They changed their iphone app, using a similar technology to firefly, amazon.

Essentially, if you take a picture of an object, you can see these images as it tries to recognize what you are using, and catalogs that, and figures out how you can buy it on amazon.

That is a really interesting way for them to take the change from desktop computing shopping to mobile shopping, and make amazon a much more prevalent thing there.

Whether it is glass or the phone, having a guy who knows how people -- has taken a lot of the lessons they have come up with from google glass -- you can imagine how attractive that would be to jeff azores at amazon.

A statement from google saying he made great contributions to optics and miniaturized electronics.

We wish them well in his next endeavors.

If you are going to work anywhere doing truly groundbreaking, pushing the boundaries of what we know today , it is google, isn't it?

What could amazon possibly be working on?

Google glass is becoming a sort of mature project.

It is outside of the research phase.

They have a veteran in the fashion industry now running that product.

He is a researcher, a scientist.

He is assistant professor at the university of washington.

He will probably be on the ground floor, trying to develop something unexpected, to take the augmented reality ideas that are in the fire phone, and try to make a wearable computer.

It is just a kindle hanging in front of your face.

Kindle was a cutting edge project and still is.

The paper white -- those are impressive and important technological products.

Amazon is no slouch, particularly in seattle.

The culture in seattle that revolves around those companies -- google has a huge operation in seattle.

But amazon, microsoft, google, in seattle, drawing the very best minds from technical schools in washington.

You can see why those of the choices available.

What else are they working on?

We have seen that set-top box, the phone.

This has been a breakthrough year.

They also got what they call science projects.

There is the want project, where you can speak your grocery orders.

And the drones.

Opticopters.

From businessweek, brad stone.

Coming up, we talk twitter.

? welcome back.

Did you catch the world cup final yesterday?

The 1-0 fit or refer germany drew the third highest u.s. television ratings for a world cup match on espn or abc.

The world cup was also huge for twitter.

Jon erlichman and i spoke with twitters vice president of global brand strategy on this summer's record-setting world cup.

Take a listen.

If you look at the world cup as a whole, it is one place professionals and fans came together to celebrate.

Everything as it half and was celebrated on twitter, and it was a huge deal.

What would you say is the biggest social event on twitter so far?

Maybe the elena selfie -- ellen selfie?

Donald sterling?

Lebron?

Ellen was 250,000 tweets per minute.

That happened almost every single match of the world cup.

The game yesterday was 1.5 more tweets than the super bowl.

The overall conversation around 40 events on twitter -- germany and brazil broke all records, 35 million tweets.

There was a lot of engagement, but how many new users do you think you brought on as a result of the world cup?

We do not have our financial earnings call for the second quarter until a few weeks from now, so i cannot talk about users and revenue.

We worked with fee for -- with fifa and official broadcasters.

There was no other place you could see and listen instant replay's. we worked with univision and had instant replays of what was happening on the world cup on twitter.

What about on the advertiser side, the brands?

If we think about brands that may have come to twitter because of the world cup, and maybe will now stay, any sense of that?

When you think about brands that celebrated twitter, they came because people want to connect with their passions and brands want to connect with those people.

What was really cool is, they were doing it in the moment on twitter.

You think about official sponsors like mcdonald's. they were able to dream up a global campaign.

Twitter is one of the only places in the world where you can do this.

57 countries in 15 different languages celebrated with their fans on twitter.

You have people like budweiser, who for the first time ever -- the outcome was voted on twitter.

You had people like adidas and visa connecting to their tv campaigns by tweeting hash tags.

You have these moments that no one could have predicted, like when suarez bit another player.

Snickers tweeted, "more satisfying than italian." you mentioned the suarez moment, which was quite a moment.

Snickers seized it.

You did see more engagement with snickers on twitter versus facebook.

But these moments -- the world cup happens every four years.

These moments are rare.

You do not know when they are going to happen.

How can you convince brands to focus on twitter only, or twitter first over facebook?

Just like tv, it is not either/or.

Twitter is about what is happening right now.

Whether it is the world cup, the super bowl, or tuesday, there are things that are relevant to them.

What is important to you and to people, and how can you connect that every day?

Twitter's vice president of strategy, along with jon erlichman.

Lebron james is one of the nba's biggest stars.

Are his text messages big enough to make his power off the court greater than on?

? a focus on technology and the future of business.

Lebron james returned to his hometown cleveland cavaliers.

It instantly pushes the valuation of the team to over $1 billion.

His endorsements have netted an estimated $30 million this year.

For more, i am joined by editor at large cory johnson.

I am also joined by the former vice president of business development for lebron james, who is currently the ceo of [indiscernible] and a cleveland native.

You were so excited when the news got announced that lebron was going back to cleveland.

You have worked with him personally.

What do you imagine was going through his head when he made this decision?

He is not only a special athlete, but a special person.

The things he dealt with as a teenager -- wise between his ears.

Such a redemption story.

I have always felt connected to both of them.

You see the way the story has played out.

It is the most phenomenal thing we could have asked for.

Seeing them rebuilding the city, the great entrepreneurs of our time, homecoming stories, teaming up with lebron to do the same things in cleveland.

You mentioned the owner of the cleveland cavaliers.

We talked a little bit about what lebron is doing off the court.

He has the luxury of signing a two-year deal, making a decision as a free agent.

Is he worth more on or off the court?

He has made the break on the lake for all of cleveland and ohio.

I was talking to some of the nba broadcasting folks.

Over 25 national appearances coming toward the cleveland cavaliers he did not have this year, the maximum they could have.

Think about the fact that he held up the signing of 12 players that cascaded from his announcement on saturday.

They are talking about dan gilbert.

Richard nixon has made such a comeback in terms of perception from four years ago in cleveland.

Now, he is the king of ohio.

I thought you were calling for a subsequent comeback from nixon, which did not happen.

I have covered basketball for a long time.

I did not expect in this job i would be covering it again.

In what way do you see the business opportunities change for lebron or the cleveland cavaliers by social media, by a sort of new media landscape, things we saw perhaps even with the world cup, that were not around last time?

From the media standpoint, you saw what the clippers just went for, that one billion estimate for the cavs if they have a kind of success the heat had with four finals in a row.

That is just the tip of the iceberg.

Cleveland and ohio, in a sense, can become boston, which has used its sports teams to push its commerce, its tourism, and its entire image.

This is an ohio rising story, which i think has business implications far beyond the basketball court.

You know a little bit about lebron's inner circle, previously with a lot of his close friends that worked with him.

I know a lot of them were very upset when he left cleveland.

He has probably learned a lot from that experience.

I think in general the media attention is usually blown out of proportion.

A lot of people do not know the inner circle that are making comments about the inner circle.

Maverick carter, richie vance -- these guys are good guys.

They want to protect lebron.

The loyalty is unbelievable.

This is a homecoming story.

This is much greater than basketball.

As a kid from cleveland, ohio, this is a town that has been down on its luck.

We have seen the shot, the drive, the fumble.

We saw the indians lose in game seven of the world series.

What lebron is doing and what dan is doing, what these guys all came together to partner to do is much greater than sports.

This is about kids coming home to start businesses, start families.

We're getting all these kids to come back.

It is very similar to what dan gilbert is doing in detroit.

These guys need to be commended.

It would be great to see the haters come out and apologize and show respect for the great things these guys are doing.

I wonder, when you look at the way lebron -- his skills are unbelievable.

A fantastic layer.

I wonder if you can share his view on technology and how he uses technology.

I wonder if that is different not just because of who he is, but because of the generation he comes from.

This is a technology-driven generation.

It is a credit to the work that mav has done, and rich, and randy, alongside lebron, to get him involved in fields like these.

You can only make $25 million a year as an nba player.

Your nike deal is only going to bring so much.

It is about the other investments you make.

Lebron might be the savviest entertainment, sports athlete businessman, maybe ever.

They show pictures of him rolling around with warren buffett.

He knows what he is doing.

Look at his nba contract.

He is signing a two-year deal for a specific reason.

He knows the collective bargaining agreement is coming up.

There will be more tv dollars at stake, and he will cash in again.

These are savvy guys.

They understand technology.

They are at the forefront of their generation.

I saw one article referred to lebron as a master puppeteer, in terms of how he managed his career, skills aside.

Would you agree with that?

How is he different from other athletes, in terms of what he does off the court?

I would go with what ari just said.

Lebron is probably this generation's magic johnson, because he is going to happen impact into the -- have impact into the business world, the education world.

That is brilliant.

What he has done not only is brilliantly master his own story, but those 12 other players i talked about before, this morning with the heat being the last in the line up, 12 that are signed.

Look at the way it was handled 4 years ago, when the decision, the highest rated non-football game ever seen on espn, was pilloried by media critics.

This time, it was so understated, the new york times on saturday, and is.com -- si.com, coming out digitally.

He controls his fate.

He is a unique product.

I think he is a mature product.

Now hopefully a rising tide will carry all boats in ohio.

And he will win a ring in cleveland.

I know i hope so.

Ari goldberg and len deluca, thank you both.

Do ahead, a wearable device that works while you sleep.

And you can watch as streaming on your tablet, phone, apple tv, and amazon fire.

? welcome back.

It could be a huge boost for three-day printers.

Home depot is going to start selling them in store.

The printers will be first available in 12 home depot stores as part of a pilot program.

The maker bot ceo called the deal a step into the mainstream.

Home depot said the printers can be used to make a variety of home improvement supplies.

We turn now to misfit, makers of the shine fitness tracker.

The company just partnered to offer a new sleep tracker that slips under your mattress to collect data on your sleeping habits.

We are joined by the ceo of misfit wearables.

We are wearing a misfit on your wrist.

You can wear in many different ways.

How does misfit standout in the sea of wearable devices?

We do similar things to what other chargers do.

Steps, sleep, that kind of thing.

We do it a bit more beautifully.

One thing people like about it is, you do not have to charge it.

It is very design focused.

To me, it is one of the best looking out there.

Thank you.

How do you make decisions about looks versus use?

You know, believe it or not, we almost did not have a sensor in the product.

We were just going to make a reminder to help people be inspired to be more active.

We figured we should probably put a -- just a reminder?

No sensors at all?

We wanted to make something people would wear first.

We thought about materials, wearability, size, how you could fit with fashion.

We figured, we are in the world of connected devices.

We should probably put sensors into it area does i was thinking of a partner at kleiner perkins, from the rhode island school of design, very design focused.

He was wearing one of those.

I wear a misfit shine.

I have one of those.

It is a watch, and i am an older person, so i like to wear a watch.

I wear it all the time.

Obviously he liked the way it looks.

How do you deal with those challenges?

Read it and design challenges?

We look at feedback.

Our favorite place is amazon.

They are one of the highest-rated amazon products in the category, 4.3 stars.

People love it for the function and form.

It does not look like it does more, but it does more than other products.

We are the only one that does automatic sleep tracking.

You go to sleep and it tracks it.

It just works.

You have partnerships with beddit, tracking sleeping.

A partnership with pebble, a smart watch company.

How do these partnerships fit into your future vision?

We are trying to get lots of information, data.

Whether it is off our hardware or other people's hardware, or hardware we work on with other folks -- it does not matter to us.

It is about getting that data and improving our science with it.

Apple is a company focused on design.

How worried are you about an apple smart watch if that ever happens?

If it comes out, i think it will be if it comes out, i think it will be called the ipod watch.

That is my thinking.

Data, getting information -- we're looking forward to products like that.

Everyone who has a competing product, when i asked them about the competition, that is what they say.

You have to be thinking about it.

You must be a little bit concerned.

We would love to be one of the first apps running on devices like that.

Data, getting informationyou do not see other companies doing that.

I really think it is going to be about getting that information, whether it is off of our hardware or other people's hardware.

There is going to be quite a few people who do not wear smart watches.

There are people who do not wear anything on their rest, because they do not want 10 lines.

What is the size of the market you see?

I'm sure you have done research.

$65 billion in watches sold each year.

Perhaps some portion will be displaced by smart watches.

A portion will become smart.

Beautiful watches that become smart.

I think we will see some of that.

Like a smart rolex?

It is not that hard.

What would the features be?

Right now, i feel our imaginations are limited to activity tracking, alerts, and notification.

I think that will be the first wave of watches becoming smart.

Over time, i think we will see more mission-critical functionality, more compelling use cases.

Those use cases are great to start with activity tracking, but i think we need more.

And more will come, whether it is identification, security, controls, devices that help us, where i can point to a light or point to a camera and say, turn off, and it turns off.

We will see.

Right now, we have got some great places to start with.

The ceo of misfit wearables.

Thank you for sharing your vision of a watch that become smart.

Coming up, an 11-year-old boy ended up in the hospital because of his ipad.

We will tell you why.

And google is buying up office space to expand its presence in san francisco.

? quick scan the ipad make your child sick?

An 11-year-old san diego boy had a rash, and doc is found the boy was illegal to -- allergic to nickel.

They traced it to his ipad's outside coating.

The boy was told to use the smart case, which provides overall coverage of the ipad, and the rash diminished significantly.

Nickel is found in electronic devices, jewelry, zippers, and eyeglass frames.

We reached out to apple for comment but have not heard back.

We turn to the bwest byte, one number that tells a whole lot.

Cory johnson, you have the byte today.

A bit of television magic.

$60 billion.

Google purchased a building for $65 million late last week.

An interesting building three blocks from here, a couple blocks from google's existing san francisco operation.

Take a look at it a little while ago.

Check this out.

That is the oakland bay bridge.

That is a seal in the san francisco bay.

This is san francisco.

This is increasingly the center of technology in america.

Perhaps putting a seal on that deal, google acquiring this building on the embarcadero for $65 million.

They have also just signed a lease on the big tower back there, the spirit our -- the speare tower.

Google taking a significant presence here in the city of san francisco, bigger than ever before.

The building right behind me on embarcadero -- that once represented the old world of san francisco, the old economy.

It was a maritime building.

There were shipping companies there.

Now it is going to be the heart of technology.

In this neighborhood, sales force, autodesk.

Tons of startups.

A lot of companies in the technology world moving their operations increasingly away from silicon valley, closer to the urban area, closer to san francisco.

A change perhaps in the broader economy, not just the san francisco bay area.

Google putting a stamp on that with the acquisition of this building last week.

That is the building.

I think it does represent a change in the city, in the same way these bloomberg offices were once places where lots of merchandise was brought in off the shore by the longshoremen.

A real big change in technology, moving away from silicon valley, away from the production of manufacturing disk drives and semiconductors.

Isn't it all about talent?

They want the best people, and a lot of good people want to live in san francisco.

It is centrally located, near the bay area rapid transit trains, the terminal and bus station.

It also reflects the way technology is more incorporated.

Technology businesses incorporate into people's lives.

It is consumer facing, with a product that regular people use.

Crack speaking of talent and google, this dispute between the technology companies, that they unfairly agreed to not put each other's employees -- google at one time considered having the senior executive at google, larry page, sergey brin, eric schmidt, reach out personally to employees at a store.

-- at facebook.

They have insisted on meeting every higher at the company before they start jobs.

People around google complains that delays hiring, makes it slower to hire people in very competitive worlds.

I think it is an important context to understand that google is weird in that way.

They have always had senior executives involved.

The talent battle between google and facebook is as intense as anything silicon valley has ever seen.

It is interesting talking to people from the older guard check-- tech beat, the people here when silicon valley was booming.

Imagined a future in silicon valley.

Totally perplexed that everyone wants to be in san francisco.

It used to be about manufacturing.

Our member going to a trial than about toxins released, people making disk drives, knocking down stone fruit farms.

That is the old silicon valley.

You do not need that space anymore for the kind of technology we have now.

Thank you for hitting the streets for us today.

Cory johnson, editor at large.

Thank you for watching this it vision of "bloomberg west." ?

This text has been automatically generated. It may not be 100% accurate.

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