>> live from pier three in san bloomberg, welcome to " west." where we cover innovation, technology, and the future of business. i'm emily chang. a check of your top headlines. stocks are surging after a tumultuous week. the dow, nasdaq, and s&p posting gains of about 1.5% to help trim weekly losses. the cdc will be issuing stricter combating for those

the ebola virus. >> we have all hands on deck. man. also named the point the former google lawyer michelle he has been nominated for patented trademark offices that state without a leader for nearly two years. had a silicon valley. and making a new push for diversity after his controversial comments that women shouldn't ask for raises. said microsoft needs to expand diversity and redouble its efforts. now to our lead. it is a proposal that can change the internet as we know it. we are talking about internet fast lanes.

lastly, president obama once opposes the plan as supports net neutrality. internet fast lanes are a no go? joining us are editor-at-large cory johnson. you hady downes, testified at some of these hearings on net neutrality. he says they are on the same pages sounds like they are not on the same page. >> if this was a game of survivor, he would have the ultimate blind side. he is trying to respond to the court ruling that got handed down to him. they give him a roadmap for how to get the rules right. and somehow those public advocate who are his natural allies have turned on him and try to turn this into a discussion about authorizing fast lanes. there is nothing in the proposal that will do that. what they want to do is get the fcc much more involved. the proposal he put forward says

they are prohibiting certainly -- certain isp contact which now is legal. whether it is prohibiting and off, it is not anything that will be authorized. >> there is the issue of some content getting favorable speed. the notion that the cable provider could slow down certain content by their own decision thereby on favoring those businesses is a serious issue. >> that has been legal all along. no one has done it and no one has offered that service. that is at the backend. >> that is the content, those technologies have been in place for 10 years. no one is talking about those. >> how long will we talk about

this, when is there a decision? >> the fcc has two more meetings this year, both of them after the next set of elections. that does not affect them explicitly. it is possible they will issue new rules but whatever they do it will be litigation based on the last time that happened. at will be a couple of years before the next set of rules gets decided by the courts. the fcc is doing important work today. the issued rules that would ease the restrictions on how silly their infrastructure can be deployed and they looked at how we can get to five g services and we are still talking about net neutrality. >> one of the issues is people are imagining new companies. the companies that have made today will use that to secure deals with cable carriers to prevent anyone else. let's take over and left. what if your signals could get to you faster because they pay and lyft's competitor cannot get

off the ground. do we want to have an internet that is regulated to the point that it allows for more businesses to start on equal footing. >> the way we have had that is light touch regulation. that is what is continuing to work. >> how do the other commissioners feel? >> there is a split. there are three new democrats and two republicans. the republicans think there is no harm that can be determined. the immigrants are walking a thinner line. they will go along with whatever the chairman comes up with. >> let's talk about what this means. what does it mean for them? >> it does not mean anything for them.

in the last model no one has offered this fast lane service. some of the carriers said they will not do it whether the rules prohibit them or not. it is at the backend when we are talking about big pipes that what netflix uses. we have had all these technologies try to optimize that and that fight is a business fight. is not a legal fight. >> netflix will have to cut more deals like they did with comcast. >> so is every other large content provider given how much traffic they count for. they have had to place technology all over the effort -- network. they will have to do more of that. >> what is weighing on the fcc, they have heard the arguments and they came up with the proposal that got rejected by the courts twice so they know this quite well.

what are they waiting for? >> it is not clear, the court did not give much of a guideline. the court gave a blueprint and the fcc said i have an invitation and i will take that invitation. he could regulate and get through the court and that is what he is trying to do. his friends and colleagues turned out to be the kinds of friends you do not want. >> of the commenters who wrote in, would you say you have nothing to worry about? >> you were misled and -- by people who had a lot of ulterior motives to get the fcc more involved. they have nothing to worry about. >> larry downes, thank you as always for giving us -- giving it to us straight. senator liz krueger of manhattan

will be joining us representing 500 blocks of new york city and sponsored a 2010 illegal hotel law. ♪

>> this was the largest software conference in the world. we had discussed everything from as early career and under larry ellison and his vision for the future of salesforce. you started your first company when you are 15. >> i did. you went to apple. what was the single most important thing you learned from him? >> passion. steve jobs is one of the greatest, most passionate people

i ever met and i remember in 1984i was programming assembly language which is the language at the core of the microprocessor. we were writing the first software that did assembly language. steve jobs came storing down the halls, motivating the developers, his energy was infectious and everyone wanted to work as hard as they could because he was there and he was working so hard. i learned that. you have to be all in and that is something i try to bring to salesforce. >> how confident are you in the future of apple under tim cook? >> i think tim is doing a great job. we saw some great new project -- products with the new iphones. i have one in my pocket right now. apple is a great company, the greatest story in american business.

look, steve was the greatest of the greatest, we all know that. being the follow-on will be tough new matter what. just that point makes steve a success. >> how were larry ellison and steve jobs different as bosses? >> both were phenomenal visionaries, able to have a feeling for where the industry is going and work hard with their teams to create that reality. where they are different, larry was maybe eight more of a suit and tie kind of person. steve was in his jeans and black turtleneck. their styles were remarkably the same. that is why they got along. >> in what way? >> it gets back to that passion. they were very passionate, dedicated, focused people. the number one issue for both of

them, the business. nothing was more important to steve than apple. nothing is more important to larry than oracle. there is a message in that. if you want to put everything above everything else, you will achieve that. whatever you focus on, you are going to get. and for both of them, the number one thing in their lives was their work. you tweeted, there has been and always will be one ceo at oracle. what do you mean about that? how optimistic are you about the co-ceo's? >> i'm sure they will continue to do a good job, just as they have the last two years. but we all know that larry ellison is a force of nature, and what larry ellison wants, larry ellison is going to get. so whoever is the ceo will have to bend to his desires. >> larry gave you money to start salesforce. >> he did. he was our first investor. >> and salesforce has become a competitor of oracle -- >> that might be true. >> what did salesforce do write that oracle has done wrong?

>> we got focused on a vision of the cloud. like what google or yahoo! do. but instead of delivering books or search results or something we deliver business functionality. we stay focused and dedicated to that idea for 15 years, and because of that singular focus we have been able to achieve great success. there is a message in that, which is you have to be dedicated. >> is there another message that oracle missed the cloud? >> oracle has a different business. the chairman, who just retired, took me into his office and said, good thing you are leaving oracle. i said, why is that?

he said, it will be hard for us to do a brand-new technology model and a brand-new business model, because everything from the way you deliver the software to the way you recognize the revenue is completely different in cloud computing. larry ellison had a rivalry over the years, and more recently a partnership. what is your relationship really like behind the scenes? >> larry and i have a great relationship. we are always hugging and kissing. [laughter] >> frenemies? >> we have been friends for 30 years. that has been exciting. look, i had some great mentors in my life, people i have been thrilled to have. my parents, grandparents, but also like you mentioned, steve jobs, colin powell. i don't think anyone influenced me more than larry ellison. i would not be the ceo i am today. salesforce would not be the company it is, not just because of his money, but because of everything he continues to teach me. >> big tech companies are splitting up. why is that happening, and are we going to see more of it?

>> there is a lot of different reasons why that's happening. one thing, these companies might be too big. they've become unmanageable, and you want them to be smaller, easier to manage. in an organization like h-p, they will have one for each, and that will be a great strategy with two ceo's. the same thing as a great strategy for you. >> is horrible of those companies -- oracle one of those companies? >> it is hard to do. the most important thing, portal has to innovate at a higher rate. that's all we have not seen in the last decade. >> how he continue to buy companies without losing focus? >> acquisitions are hard. after doing 25 acquisitions over the last five years,

acquisitions are hard. but you can transform your company through acquisitions. the other thing acquisitions do, they bring all these incredible people into your company. if you can nurture those people, you end up with phenomenal results. >> what you do to overcome the hard part, the challenges when you buy a company? >> as ceo, you have to choose which one you will be in. it will dramatically increase the success of it. i only have so much time, so where i spend my time is super important. i divide my time into four quadrants. in a certain quadrant, the transformation quadrant, is where i spend most of my time. the things that i know, if i don't do them they will not get done. there are other things a run operating the business, nurturing things for two to five

years from now, things around efficiency, that i don't have to be as involved in. i still have to be involved in some level, but the transformational things, i have to pick and choose carefully, then i can really deliver. ♪ >> welcome back to "bloomberg

>> welcome back to "bloomberg west." i'm emily chang. u.s. tech companies, beware. the fbi is warning about hackers sponsored by the chinese government. the agents say they have use customize malicious code that security experts could not attacked. the u.s. government accused

china of widespread economic espionage, indicting five chinese military officials in may. our security reporter is with me in the studio, with more. the fbi says they have even more capabilities than the hackers of a year ago that we were concerned about. >> that's right. just as the u.s. gets better at hacking other countries, one thing about foreign adversaries, they are getting better all the time. the threats you saw, that's one of the things that makes the security industry such a dynamic space, it is evolving. >> any specific reason this is happening, or is it a continual escalation? >> a lot of it is standard industrial espionage that

happens between the u.s. and china. but also, we have ramped up pressure on china in the u.s. we have called them out as intellectual property theft perpetrators, so there is added incentive. there are very few consequences for this in china, if you are caught hacking u.s. companies, so there are very few reasons not to improve your capabilities. >> the fbi is asking companies like apple and google to be more cooperative and give them a front door to information on our smartphones. of course, apple and google recently ratcheted up security, making that supposedly more difficult. why would apple and google want to help the fbi? >> it's an interesting mission.

fbi and law enforcement are saying, if you make it harder for us to pull data off of devices, our criminal investigations will be stymied. the thing left out of this organization, all that data can still be accessed through standard, legitimate warrants. apple and google says, if you own our device and it gets stolen or gets into the hands of law-enforcement, the device will be harder to crack, but every other investigative tool available to the fbi and nsa, this does not change that. it's a contentious issue. apple and google are saying they are protecting their users. >> general keith alexander, former head of the nsa, i asked him if this lack of trust between tech companies and the government can ever be repaired. he said, tech companies will do whatever the government asked them to do, because they have to. >> we learned only recently what the consequences are two companies that resist the nsa's commands for data. yahoo! was facing fines of

$250,000 that would multiply every week they resisted. they are not backbreaking, but still potentially huge financial penalties for resisting government requests for information. what apple and google are proposing, they say we don't even have access to the information, so we cannot give it up. it is good for users. someone said, logistically it reduces a lot of burdens on the companies from responding to law enforcement requests. >> are cyber security reporter, thanks so much. we will continue to follow all this. as marc benioff told me yesterday, there is no finish line when it comes to security. a shocking secret of its own -- is whisper sharing information with the federal government? that is next. ♪

>> this is "bloomberg west," where we focus on innovation, technology, and the future of business. billionaire investor mark cuban is hot on netflix. with the massive fall this week, perhaps in relation to disappointing subscriber numbers, shares of netflix are falling again after driving 19% yesterday. they tweeted, i am buying netflix at a small percentage of major media companies. take a listen --

>> in the future, it is either if you want to watch something you just google it and go straight to it or youtube and go straight to it, or netflix, if you are going to buy netflix stock, i would not recommend it, but on a day it is down 25% i might recommend it. netflix could have one billion subscribers by the early 2020's. >> seems they are at the same page. the anonymous social media at whisper faces claims it has been tracking the location of users who share their most intimate secrets on the platform. "the guardian" detail the data collection they witnessed while visiting the company's l.a. headquarters. they claim to be the safest pace -- place on earth and are allegedly sharing information. joining me are cory johnson and paul kedrosky. what do you make of the story? >> it is pretty bad for them. i tried to go through this.

i am sensitive to problems of making privacy and anonymity work online, because it is very difficult. based on what we saw in the "guardian" story that came out, there are actual screenshots of this thing. they seem to show the incredible level of detail with respect to tracking people's physical presence. that makes it tricky whenever you say, give the example of some quotes from somebody who seemed to be located somewhere in the white house proximity and said something about how people -- if people only knew what was going on. it is remarkable stuff. >> i was also amazed when it was said there are 2.4 million messages every day on whisper. there is clearly a demand for this service. but to put things up anonymously, is this over for whisper?

>> i think it is deal over in a broad sense for a lot of people claiming true anonymity. we saw a little of this with snapchat. the whole notion of being able to protect people's data is up in the air. when it comes down to it, if you read comments from the company, the cto was responding to complaints people were making. it boiled down to, we have the data, we just don't use the data. so now rather than protecting information by not collecting it, now we say trust us, we have it but we will not use it. that is what a lot of -- i don't think that is what a lot of people sign up for. if things are going to change, they have to change dramatically. >> i spoke to the ceo of whisper at sxsw, and he championed the anonymity. take a listen. >> anonymity is a very powerful

tool. there is a spiderman quote "with great power comes great responsibility." >> i know that one. >> we view anonymity in the same way. >> paul, would you say they are not practicing what they preach? >> it might mean something different than what i mean by anonymity. there is a story today, they did some forensics on the data collected by the whisper at, -- app, and there are unique user id's that stay with you for the life of the account. to say they falsify identity and location, it is not borne out by the facts. >> whisper came out with a five-page response, saying we do not track or follow our users. we will continue to follow this story. still ahead, the top law

enforcement official in the state of new york says 70% of airbnb rooms are breaking the law. up next, we speak to state senator liz krueger. ♪ she sponsored the 2010 illegal hotel law.

>> welcome back. i'm emily chang. airbnb is taking some blows from new york state attorney general eric tiedemann. a report from his office says nearly three quarters of their listings in new york city are illegal. the company told us that the report relies on incomplete and outdated information. the findings do not account for the more than 2000 listings we already removed from our -- from new york. seems to be a never-ending battle. matt miller has been looking

into this. what is your take? >> clearly we all know a lot of people offering their homes via airbnb are doing something illegal in one form or another. if you ever lived in new york, you have probably rented an apartment and realized you are not really allowed to sublet that apartment. that doesn't stop a lot of people from doing it. these spokeswoman for airbnb who talked about the money she made, she turned out to have been sued by her landlord for doing it. that's a concern, but not so much of a concern to attorney general schneiderman. he is more worried about commercial participants on the airbnb website. a concern for him is the risk of a flophouse or hostel, renting out your rooms to dozens of people at a time. also tax evasion.

the attorney general estimates $34 million during the period the survey was taken was avoided in taxes by people using airbnb. you're supposed to charge a 6% hotel tax when you rent out your room. a lot of people are not doing that. airbnb is saying, maybe we will start charging tax to the people doing this, setting up a system that makes that possible. they have apparently taken 2000 people off the list they have, but only since june. not like they had taken them off for years. they are trying to, they say, work together with government officials to create a better framework for a sharing economy. although it does not appear they are working with any government agencies. they just put that forward is a possibility. the statement was pretty corny they issued. they want to move forward while they continue to make money off

the system they created. >> hang on, i want to bring in editor at large cory johnson, and also on the phone liz krueger, to new york state senator representing district 28, the east side of manhattan from below union square to 96th street. why are you so against airbnb? >> i have had constituents, whole sections of communities in my district, coming to me with more and more complaints that residential buildings where they live, where the grandparents and children live, are being overrun by strangers with luggage who have keys to the building, who have no respect for the private rights of the neighbors. everyone says airbnb can be great for the hosts and guests, but in new york city people live

in big apartment complexes. it is never your home alone. it is everybody around you. so my actions have been consistently driven by protecting the residents of the city of new york and protecting our desperate shortage of affordable housing units from being taken off the market for residents of the city of new york and turned into a legal hotel rooms. -- illegal hotel rooms. >> i wonder what the effect is of changing a residential housing unit into a hotel unit on the city? not wanting someone in your hallway you don't know is one thing, but i wonder if the character of a neighborhood can be changed by this? >> absolutely. if you look at europe, where this is also going on, a whole section of berlin is no longer available as a residential community.

they didn't set the right laws in place and didn't protect tenancy of neighborhoods. amsterdam has passed laws that allow some things to take place. they have 11 full-time employees doing enforcement to make sure rules are followed. they report the employees are overwhelmed and cannot keep up with violations of the rules and are having a very negative impact on the city. it varies by community, but heavily urban, residential dense areas with housing shortages see a norm his problems, likely in new york city. i talked to people from around the world regularly.

>> i recently spoke with the ceo of airbnb about working with regulators. are they trying to wage a war, or partner with them? take a listen -- >> we work with them. we show them it enriches the city economically. a city like new york or london, we can generate over $1 billion for the city in the next year. bringing people from 190 countries together. you can win people over, but they have to understand you, and you have to understand them. >> that was in san francisco. how would you respond to that? >> they are spending $30 million here in new york to market and advertise and convince people they are the best thing since sliced bread. we know from a recent story out of san francisco that their investors have spent over $500,000 to influence the outcome of an election, trying to make sure the anti-airbnb person loses and the pro-airbnb person wins.

i don't think his statement is completely accurate or since there. >> he seemed to be talking absolute nonsense earlier, beyond your typical corporate marketing spin. how is he bringing 190 companies together -- countries together? i don't think it takes airbnb to do that in new york city. i want to ask you, the idea you are somehow protecting the affordable it he of housing. i understand if i lived in a building in new york, i would not want my neighbors to let people in. but why is it somehow protecting affordability? wooden airbnb in fact increase affordability? >> no, just the opposite. it is taking units out of the residential market. >> you say using units commercially. if someone who can't afford to

pay $1700 for a one bedroom and occasionally goes home to the parents and rent out the apartment on the weekends to better afford incredible high new york city rents? >> the attorney general's report shows 72% of units on airbnb in new york city were in violation of the law. close to 30% are legal, and that's what you are doing, or if you are staying in your department while you rent out a room, that's not what the law i worked to pass says is illegal. >> only 36% were commercial letting, so the lion's share is people like you and me renting out a room to make homes more affordable. >> the 36%, if you look at it, could be someone with many, many units they have taken off the

markets permanently and turned into illegal rentals. sometimes landlords themselves are doing it, sometimes individual entrepreneurs. the city of new york just today announced enforcement against two buildings that had been converted almost exclusively into full-time illegal hotel rooms. those were until that happened residential affordable units in the city of new york that disappeared. i have been tracking any number of those examples. they also harass tenants out in some cases. the other case, people are violating leases, and that has nothing to do with state or city law. their landlord can use their use of these websites as a basis to evict them.

the apartments might be really for a significant increased cost. taking that unit out of affordability forever, and that person, who may have unintentionally broken families out there without a home to live in. >> new york state senator liz krueger, certainly not a problem we will sell today. appreciate you sharing your views. and matt miller in new york. mark crumpton is standing right in new york with a preview of what is coming up on "bottom line." >> on the customer as we his housing -- one of the top stories we're following his housing. more home building in september. will that give the u.s. and offer against any of the economic slowdown? see you at the top of the hour. back to you in san francisco, home to the national league

champion giants. >> yes! go giants! thank you. awesome game yesterday. the giants going to the world series. >> third time in five years. >> corey and i were at a restaurant in 2010, he did these -- it was kind of like jumping jacks. >> synchronized swimming on land. i was excited. >> we will talk about sports, coming up. more on "bloomberg west." ♪

>> travis ishikawa hits one into right! the giants win the pennant! >> the san francisco giants are heading to the world series on that dramatic walkoff home run. the giants will face the kansas city royals.

everybody is buzzing about it. our editor at large cory johnson has more from the newsroom. i moved here in 2010, and since then they have gone to the world series three times. i think i'm the lucky charm. >> three times in five years, has to be you. nothing to do with bruce bochy, i'm sure. the question of what the future of media, it is interesting in the world of sports. the ceo of sportsblog.com, i love this story. tell me how your business works. >> we recognized that blogging has been formed, and there's tremendous change in how people are consuming and creating media. our approach was to harness the power of crowdsourcing. so we developed our own bloggins platform -- blogging platform, and quickly had 10,000 people

sign up. it is 20,000 now in the last year. >> how many users or viewers do you have? >> averaging 30 million a month. >> that is huge. >> the trend is growing quickly. >> what's interesting about this, i used to write for "sports illustrated." the giant tentpoles of media, what you have done is build a business about the long tail. 30 million users. what's the most on one site? >> some of our individual blogs see 5 million page views. >> what is the average, the median? >> tens of thousands a month. for fan blogs. some professional athletes blogging, hundreds of them, can see even more.

>> one interesting thing, people are timeshifting viewing and not seeing commercials. how does that issue the -- affect the value of advertising online? >> people are going to blogs for sports. we are the 12st largest -- 21st largest sports media site online. that is viable to advertisers who want to connect with our influencers. 10% of all males 18-35 are frequenting one of our sportsblog.com sites. >> a fascinating answer to the question of the future of media. appreciate your time. >> it is time for the bwest byte, where focus on one number that tells a whole lot. you better have something

giants-related for us. >> how about 6-3? that was the score last night, though jake peavy nearly put an end to that. the starting pitcher ran out on the field after he hit the homerun, because he thought it was only a double. he has to run the bases for it to count. the famous incident where he didn't hit home plate. none of that for travis ishikawa. exciting to see the giants so well. >> wish i could have been there yesterday when they won. >> more jumping jacks. >> an exciting series. thank you all for watching this edition of " bloomberg west." all the latest headlines all the time on your phone, tablet, and

bloomberg.com. ♪

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