Why the FTC’s Lawsuit Is a PR Risk for Amazon

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July 10 (Bloomberg) –- Bloomberg’s Paul Sweeney discusses the FTC’s suit against Amazon over mobile-application purchases made by children. He speaks on “Bloomberg West.” (Source: Bloomberg)

You are watching "bloomberg west," where we focus on innovation, technology, and the future of business.

I am emily chang.

The tsa is upping security for some passengers at u.s. airports and it involves mobile devices.

Yang yang joins us from reagan national airport to explain why your phone needs to be on when you go through security.

What is the latest?

The big question we are all asking is did they find a phone bomb?

That is something we don't have an answer for.

At this point in time the tsa has not named a reason or specific threat or incident for these new rules.

U.s. authorities have been on heightened alert to prevent terrorist activity from al qaeda stemming from yemen or syria.

They could be a u.s. airliner.

The department of homeland security announced a directive requiring u.s.-bound travelers to europe -- from europe or the middle east to power on the phones to prove that they are real and not just guys -- not disguise explosives as they embark on planes coming to the united states.

That rule is being expanded to domestic flights in the united states, according to 2 people familiar with the matter, who were not able to disclose the names because this is not public yet.

They spoke to tsa offices to say if they knew about the requirement.

They say that something we all know is that the tsa has these rules the travelers don't always love.

In 2001 we had the shoe inspection requirement.

In 2006 we had the limits in carry-on liquids from liquid explosives plot that was foiled by british police.

And now in 2014 we have this potential for having turned -- having to turn on mobile phones.

No, again, explanation for why this is, but the message should travelers is make sure your phones are charged.

They are taking this seriously.

No sweet talking your way out of this one.

What if your phone is in charge -- isn't charged?

You have to throw it out or figure out a way to send it to wherever you are going.

If you are someone who likes going to the airport a little earlier, find a spot to charge your phone.

But if you are like me and show up at the last moment you might be out of luck.

Some airlines have disclose how they plan on dealing with this.

British airways say they will pay to help you shape your phone to your destination.

If you can't go through security, go to an agent and they will help you with that.

Virgin airlines says they won't help you, it is up to you.

American airlines said if you want to take extra time to charge your phone they will help you book a new flight free of charge.

But who wants that?

May be the tsa should set up a charging station, right?

Maybe they should fit right now all the charging stations are past security.

But at this point in time it sounds like they don't want to be with that burden.

The charging will have to be on the burden of the travelers.

Yang yang at reagan national airport, thanks so much.

For more on what specific threats to be hiding in mobile devices, we turn to the senior policy director of the united states travel association.

As yang yang said, nobody has said why they are doing this, but did they find a phone bomb somewhere?

There are concerns that the technology may have been developed, that there are now ways for bad actors to plant explosives in small electronic devices.

They can be hollowed out and could be difficult to detect with current x-ray machines.

This is an added layer of security to guard against the threat.

There don't seem to be specific out in the general public at this time.

Why can't machines detect this and should we be worried that they can't? well, they can.

It is difficult to tell whether the electronics are native electronics that are supposed to be there or if it is actually explosives that have been implanted in hollowed out of ice -- hollowed out device.

Because that is difficult to tell the tsa has decided they will do extra checks by making travelers turn on their cell phone or power on their electronic device just to make sure it is not something that could threaten to bring down aircraft.

First it was international travelers, and now it is to master travelers -- domestic travelers.

Are we going to see more and more of this?

Tsa more and more is doing selective process for the screening.

If you remember the shoe bomber or the underwear bomber or the liquids lot, all of those security measures were carried out in a one-size-fits-all fashion.

Everybody had to take off their shoes, everybody had to take out the liquids.

Now you see tsa employing a risk-based approach where they are targeting-airports, a high threat individuals who they think pose a risk to the system.

These added layers of security are targeting those individuals or areas that may pose a higher risk than others.

I don't think this is something that is going to impact everyday travelers.

Is not something you can count on 100% of happening in the airport.

But it is something to keep in mind and prepare for just in case.

I know they have been on heightened alert for people traveling to certain countries.

As the threat level been raised?

I don't know that it has been raised.

It is probably a change to the landscape more so than a heightened threat due to a specific plot.

I think we are living in the same world we were before except there is new technology out there that could perhaps pose a threat and tsa is guarding against that.

Senior policy director of the united states travel association, thanks for sharing your thoughts.

Netflix scored big at the emmy nominations, getting nods for best drama and best comedy.

Welcome back to "bloomberg west." i am emily chang.

Netflix doubled down on its emmy nods, in the running for 6 of the top categories, including "house of cards" for best drama and "orange is the new black" for best comedy.

As usual, hbo led the pack with 99 nominations.

We want to revisit a story we told you about earlier.

Amazon has been sued by the federal trade commission for making it too easy to make purchases on mobile apps without parents permission.

The ftc says amazon charge parents millions of dollars for inapt purchases.

Joining us from new york is pulsed when he -- paul sweeney, bloomberg industries director of research.

What exactly happened here?

With the 4 kids myself, i know how this can happen.

Kind of a nightmare.

There requires obviously some parental controls, but the key issue for amazon and even apple, who has come to an agreement with the ftc -- it is tens of millions of dollars we're talking about in terms of refunds that amazon has had to make.

But clearly it is a public relations issue that amazon and even apple wants to stay ahead of and make sure it doesn't become a problem as it relates to their position with consumers, particularly parents.

What kinds of things were kids buying?

All kinds of goods and services within apps.

If somebody's playing a game that requires them to buy something or a dollar here or there is part of the game, a lot of those purchases can be done very seamlessly within the app.

This requires a fair amount of control on the part of the app developer, on a part of amazon, and the parent as well.

It has been an issue on the fringe with a lot of these app games, and a lot of the folks that -- platformers, whether it is amazon or apple, they need to stay on top of it.

Do we know how much the ftc is alleging amazon made office?

We don't, but just for a point of reference, the fines, restitution's in terms of return fees that apple paid is about $32 million.

Relatively small number for a company the size of amazon so it is not exactly a risk for them, but arguably it is a public relations risk.

I think what amazon is claiming here is that they are abiding by the agreement that apple agreed to with the ftc in terms of how they police this issue.

From amazon's perspective that they feel like they are in compliance.

Amazon does give 30% of all those purchases but what exactly have they said about it?

They said they are in compliance.

What kind of statements have been made?

They're generally pretty quiet.

In the immediate term, the news of the suit just came out today.

I suspect they will work with the ftc for resolution on this.

They deal with the federal trade commission on a wide variety of matters across all other business lines.

Given the relatively small financial impact to amazon, i suspect they will negotiate in good faith with the ftc and get this behind them.

Paul sweeney, thanks so much for sharing that developing story with us.

A and new mobile apps.

We will speak with the ceo of the company up next.

I am emily chang on bloomberg television and this is "bloomberg west." taskrabbit has revamped its website to better help customers.

So how exactly does taskrabbit work?

We take a look at a day in the life of one of taskrabbit's taskers.

Helmet on, feed said, it is just another day at the office.

In an average day i might do six to four deliveries.

Appearances living -- he earns his living doing chores for people using website called taskrabbit.

Everything from furniture assemblage you have steeping to -- to housekeeping to sushi delivery.

Technology has ushered in a new era of sharing.

Airbnb lets you rent out a room in your house.

If you need to rent a bicycle, you can do that on spinlister.

Only 10% of taskrabbits do enough tasks to make a living on the site.

The rest are part-timers.

Justin is peddling hard.

In a typical day he earns about $200. his tasks today involve buying a diver bag for an expectant mother.

As long as i stay professional,i'm i'm free.

What does the new and improved taskrabbit, launching today, involve?

Joining me is the founder.

Thanks for joining me.

So what does it involve?

We have been working on it for a while.

We launched this new model in london the last 6 months.

Over the last 12 month alone reacquired 12.5 million users.

We just need to better match supply and demand.

Is it an algorithm thing?

What is the tweak?

Before you leave the website you know who you are working with and what you are going to pay and what is going to get done.

We have made pricing and payments super easy.

Give us an idea of numbers and users.

We have almost 30,000 taskers across the u.s. and are in 19 cities now.

It has been tremendous growth, and with this evolution of the new product, it is going to more efficiently match supply and demand.

There has been this question of how big this business can become.

Is it more of a niche thing?

Is it a big future thing?

What we are seeing is that the majority of our tasks are happening in and around the home.

You see with the new taskrabbit that we focus on home services and we have always been a trusted leader in the home service category.

You will have listings for handyman, housecleaning, shopping and deliveries -- and it is those categories that are making up the majority of the service.

In the new taskrabbit we make it simpler than ever to get those things done.

Monday tasks like helping to clean your house, but what is the most expensive and crazy task that has ever been on taskrabbit?

I have a new perspective because as a new mom myself i know how hard it is to pull everything together sometimes.

We had someone powse for my four-year-old's zebra-themed birthday party.

You found this one night or had the idea when you could not get dr.

For your dog -- could it not get dogfood for your dog.

It was a wintry boston evening and i was out of dog food and i thought there had to be someone in my neighborhood who could help me out.

Amazon is doing a listing site later this year.

How big a threat is that?

I love seeing these institutions come in and validate this market.

Having amazon even think about potentially coming in to play in this space is exciting.

What are your plans for extension?

London was recent.

London was the last number six months.

You will see more global expansion from us the next year or so.

All right, thanks so much as always for joining us.

Well, it is time for the b.west bite, where we focus on one number that tells us a whole lot.

Jon erlichman is in sun valley.

What have you got?

I know you have been hobnobbing.

How about $1800, emily?

That is the price of stylized google glass, courtesy of diane von furstenberg, a regular here at sun valley.

A couple years ago she started talking with the google gang.

Obviously, we have seen sergeiy brin make appearances on the runway in new york with the google glass being a big part of it.

They work on branded google glass, more fashionable.

You have got to buy the original google glass, $1500, but then you get a little dvf style.

She was sporting her first pair of these stylized guy fun?

-- diane von furstenberg google glass.

What are your business expectations?

I don't know.

It was a great collaboration and i love working with technology and it is just the beginning.

Will not be developed here?

-- was that developed here?

Yes, it started here 2 years ago.

There you go, emily.

Sometimes we talk about deals, mergers.

Here is a conversation that led to cool glasses.

You know, if anybody can make google glass fashionable, it is dvf.

It looked for a goo -- looked pretty good.

It doesn't sound like she is with the all-purpose wear for her good white water rafting -- i'm not sure if google glass is perfect for that so far.

But it is interesting that fashion accessories are here, and technology is present beyond google glass, smart watches can be found.

We had a conversation with david kenny from the weather company.

Paul jacobs, chairman and qualcomm -- qualcomm has made a big push into smart watches.

Yesterday we talked about how tim cook seemed a little offended that a bloomberg news reporter would ask him questions holding a sensing device -- samsung device.

I don't know if tim cook is keeping an eye on the smart watches people are sporting good that this is full of smart, innovative people come and they know the cameras are around and they might get pictures, too.

I don't think they would look as good on anyone else as they do on her.

But on the subject of deals, has anything happened?

What is the biggest news?

Bob iger of disney went we ask him today said "you tell me." there always is a number of discussions that pop up in the press surrounding an event like this, and certainly -- it is not to say that there isn't anything happening.

We find ourselves right smack in the middle of 2 major transactions, as he highlighted.

The fact that you have this at&t -directv transaction and additionally the comcast-time warner cable deal, and how can you not think that everybody else was wondering how the chips are going to fall or play out from here?

You had dish coming out against the time warner high-comcast cable deal.

We will see.

All right, jon erlichman.

We are watching disney ceo bob iger walking in, jeffrey katzenberg, michael dell.

We will continue to follow whether you can bring us any more scoops.

Thanks so much, jon erlichman, senior west coast correspondent at sun valley.

Thank you for watching this edition of "bloomberg west." get all the latest headlines on bloomberg.com.

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

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