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tv   Bloomberg West  Bloomberg  April 13, 2016 6:00pm-7:01pm EDT

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emanuel to investigate a police shooting has released its funding. the report accuses police of having "no regard to the sanctity of life, when it comes to people of color, and alienate minorities for decades, using excessive force and honoring a code of silence." haslgian police force unseen footage of salam a bdelsam. he is seen walking through a market in a neighborhood of brussels. families of the victims of the german plane crash are suing the flight school. he crashed the plane in the french alps, killing all 150 people on board. he was treated for depression before taking flying lessons. tax officials from around the world met in paris today to discuss the following from the math-leakage of financial data papers. panama they expose how the wealthy used shell companies to tax -- dodge
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dodge taxes. day,l news 24 hours a powered by over 2400 journalists in 150 bureaus around the worl., ♪ emily: i'm emily chang, and this is "bloomberg west." the latest from facebook, are they really facing a decline, and what type of hardware can they work on? all of that, i had. plus, a serious setback, ban onors calling for a elizabeth home, and an --
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a long-awaited draft of encryption legislation that would force companies to comply with court orders for data. we will break down all the details. worse to our lead, reports that u.s. regulators are looking to ban elizabeth holmes from the company for two years. the president would also be barred, according to the "wall street journal." they had a letter for centers to medicare services, proposed her from banning receiving payments for medicare. over the last few come -- months, the tests were not as accurate as they should be. york, is with us from new and max mason from our fast commentary section, as well, and greg ingles, chief executive from a firm that audits last. and our guest host for the hour, keith rabois.
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sheila, i will start with you. have spoken at length with various people from the company. how serious is this? potentiallys devastating information for them. they have proposed sanctions, send out this letter on 18th of march. they're basically saying that they have not taken adequate steps to address insufficiencies that they found in their main lab. they were expecting at them and of their year, they sent the company a letter with five things they wanted addressed, including hemoglobin testing. now they're saying the laboratories obligation of compliance is not credible, and evidence of correction is not acceptable. they are basically telling are unhappyt they with how the company is addressing their concerns, and they're threatening one of the harshest sanctions that they can
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place to revoke their license and put them out of business. a spokesperson says this is hypothetical. if sanctions are imposed, it could take months. the fact is, we have not received sanctions. greg, you read through the entire report. what is your reaction? greg: frankly, anyone who is ever audited a lap, and we have several of our senior inspections go over the finding, and had a discussion, they take a while. a lot of the beginning of the documentation books about 150 pages of citation. we are pretty ry. and jive -- and d it is across multiple departments, not just standard operating procedures not being followed, but multiple quality
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control fails. it is as bad as we have ever seen. that is where it stands. is mostly centering around the competency of the personnel. 20, 25 page to a report. a lot is rectified in the paperwork process, but there are some fundamental things that are very, very wrong. the supporting documentation was not there to address the deficiencies. and that is why they were upset. keith, this was a $10 billion company. investors put money into the , and did not have visibility into what is going on. it does not make silicon valley look very good. inth: this company is novel a few different ways.
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they were not operating in the greatest zone, from what i could tell. companies and startups should take advantage of ambiguity, but there is a difference between violating a law, and violating regulations intentionally. flunked labsay they 101. right, and that is not ok for any starter. but they should do more like uber has done, where there is a gray zone. acceptable forly startups, that is how we get innovation in america and the world are aware there is a clear line, you cannot violate that line, ever, especially in a federal area. the burden is so high in this particular case. this is a really significant sanction. is other is in this company
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anomalous, there were no other traditional silicon valley bcs around. this did not go through standard that the things we invest in every day would. that is one of the variables that is unique. emily: it is interesting, max. theranos has failed to provide evidence that the tests actually work. that is the main thing regulators want. what is your take on what is going on here? max: it shows a pattern of behavior from the company, all that observers have ever wanted purity ofd data, studies, things that are really standard in the medical establishment, and especially, should be, for anything having to do with peoples health. the company says they will continue to provide data, submit to studies and medical conferences.
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that they have never given a timeline or unleashed visibly to the public. this latest round of allegations and the potential expansion of their license, i think the time a black boxcontinue with their data is running out for the company. max, sheila, greg, thank you all. keith, you're sticking with me. phase two of the facebook developers process included a virtual reality headset, a selfie pick, and a room full of voters. theirrviewed the ceo on ambitions and potential sharing problems, next. ♪
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emily: turning now to facebook, shares of the social media giant flunked at one point, amid heavy trading volume, among comments that spending on facebook was down 18% from the quarter before. they recovered after ad parlor clarify, just a junior level employee made that comment, and his data was incomplete. he did not provide proper context. such a briefing will not happen again. in the meantime, their developers conference continued, with mike schroepfer talking about zuckerberg's 10 year plan. there was the potential of social, virtual reality. i caught up with him later and talked about a new hire, for building eight. >> we are super fortunate to have her.
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there are so many things for us to do, so many things we want to embark on that we have not done yet. she is going to start kicking off some of those new initiatives. she has not gotten in the tolding yet, but we hope achieve this ambition. emily: she worked at google. broadly, do you see her working beyond these actual scenes? she is going to be building things, everything we do is to connect the world. there is a lot under that umbrella. she will be doing things you have not seen from us, maybe like oculus, it will be confusing in the beginning, because people will be putting together the pieces. but it will all come together for our mission. i want to talk about personal sharing, because we have heard it is down on faith, as opposed to news, or article sharing. what is actually happening with personal sharing, and what are you doing algorithmically, what
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do you want to be happening with other types of sharing? so many things are happening at once. you're seeing the rise of live video, people watching a lot of live video. the same thing happening where people are sending lots of private messages, the other whatsapp messenger. it will be interesting to see how this all shakes out. emily: what is the ideal mix? what you going for? mike: the right medium for the right conversation. there are times you want a long conversation, times when you want to share something with all your friends, and times when you want to share something with it the whole world. there is probably a proper experience for each of those that we want to make our own. algorithmically, what do you want? are you algorithmically doing things to encourage more personal sharing? it is like an existential problem, because you actually
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have power over what people see. algorithmically, how are you handling that? mike: there is lots to do, all the time. you measure the results of these and all sorts of ways, including user settings, where he asked people if they like the stories they saw, do you want to see these things instead? --t of the goal is to get give people what they really want. here are all the possible things you want to read, what are the things you actually want to see? products't build people like, it is a competitive market, and people will see other things. emily: doesn't that change all the time? mike: people did not know they wanted video and mobile, and now they do. you're seeing immersive the video and the are -- vr, something we could have only dreamed of. emily: do you worry that this could hurt personal sharing, and what makes facebook rate?
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mike: i don't think so. to watch something on tv, or go to a concert, humans are pretty natural about finding different groups they want to interact with. i think we can build products that hit all of those interactions are -- interactions. emily: let's talk about ai. it is taken longer than we have expected. mike: it is not taking longer than expected, i talked about some of the technology we have been employing to make this work really well. different of that is about this, it is a mix of humans and artificial intelligence to read what you can do is unlimited, you can do anything you want. there is a much broader service that develops, these technologies we will need over the decades. emily: facebook has built
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multiple platform products, mass distribution, and then changed the rules, to cut down on bam, for example. but there are still investors out there that are skeptical. should we invest our time in facebook? how concerned are you over that? mike: developers are smart and will use the tools for them. this is a challenge in the entire ecosystem. how did they get featured on an app store or get more downloads? that is a very competitive market, very tough. new channels are interesting for people. we are seeing tremendous pickup apps, ways for people to get reengaged. if we provide the right tools, to give people distribution, they will use it. emily: on the other hand, i have seen an uptick on messenger itself. what are you doing about that? mike: a lot of the work we are and other -- in ai
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systems, i'm not sure if your experiences are indicative of what others have seen, but if there are 20 billion messages a day, we do our best. emily: my interview with ceo facebook mike schroepfer. i want to pick up keith with this idea of personal sharing. because you have something to say about it. first of all, you chuckled when i asked what was the ideal mix. you said it is what people want. what is your reaction to that? keith: it is the best possible case mike is making, a difference between a private content shared between friends and family, to more broadly applicable content, where there is life streaming or very very private messaging. that is the best case. without a doubt, a year ago, there was a significant decline in sharing new content on facebook. the executives on facebook went
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into a panic from the very top down, to remedy this. so it is not something they are not concerned about. they send the bat signal internally. if you open your facebook app, you will see all the recent photos you have taken our ---populated any courage encourage you to share that. facebook has a clever growth team, with very smart people working on encouraging users to share more. the market is always based on sharing. but maybe it has to change over time, but it will change, if sharing continues to decline. emily: facebook says it sharing overall, is still strong. said, and -- if there is a decline, facebook becomes a well-curated twitter.
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you said true, but a total sharing is in decline, which it has been for over a year, facebook's statement says sharing rates are on par. and you said that that was misleading, and talk about some of the panic, and say you might short twitter and facebook. keith: obviously misleading, if you make the number one priority sharing. it depends on what methodology you use. back in the day, we could calculate what percentage of our users came from ebay in five different ways. some were positive, some were worse. there is always room for how you describe the data publicly. that is why i say it is arguably misleading. content unique to me and my crowd is on the decline. what is not there, is the total mix of sharing, how that is calculated, and what it is improvement -- including. is it including messenger? we would not assume that, by
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intent. it changes the nature of facebook, and the long-term viability of facebook. emily: interesting. my colleague was recently speaking with someone no longer invested in facebook, and asked if you would like to invest again today. take a listen. >> yes, i would be. how about twitter? companies -- as we are out of some of the positions, i'm following the very closely -- not really interested in twitter at all, it seems from that statement. what do you see on the path for twitter, and for facebook, overall user growth on twitter has plateaued, and on facebook, things are changing.
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the whole idea of what facebook is. it is dangerous when you have a monopoly, a network effect very it may take a while for people to figure out how to take advantage of that, or what it means for users. for example, private sharing may be better for snapchat, and public sharing better for things like twitter, which have a follow-model. i would rather send this to the broadest possible audience, which is better for twitter and facebook. shifts, the how it structural advantage of many companies may shift, also. they may be right about shorting twitter, but it could also be better for twitter if all the istent shared in the world mostly around politics and people's perspectives on society, rather than things intimate to themselves. emily: interesting. rabo with me for thei
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hour. s detailed next. ♪
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emily: turning now to the broader markets, u.s. stocks climbed the highest in four months. ramy inocencio joined us in new york, with what tech movers moved particularly far. ramy: basically, it was a broad green across the board. numberse where the stand. s&p 500 up 1%, but that was the least of the gainers. of higher, the nasdaq of the most, at 1.5%. that is its highest since new year's eve. good chinese data that we thought, as well as earners of these estimates over a jpmorgan. let's take a look at some of the biggest point gainers at the nasdaq. this is where they are. apple up by 1.5%, but amazon even be that, up by nearly 2%,
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alphabet of by 1.2%. all seeing gains not seen in the past two or three months. that, i mentioned good chinese data. what we are seeing, hearing the are, chinese-based stocks going above because of that data. 3% or even 5% in particular, the reason for this is because of china's overseas shipments. in march, they rose you're on your. that is a sign that china's economy could be strengthening. also, i want to look at a couple of stocks in the playful sector. first to activision, writing a little more than 5% here. that is because of an upgrade to people boosting the target from five dollars and up. a record year for blizzard,
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based on a new game. and they are optimistic on call of duty. most sinceying the july of 2014, up by a little more than 19% here. the news off of this, is a rare defection from apple to gopro. longest serving designers could be pushed by gopro to be a little more classy, get some of the magic back. emily? emily: all right, new york's ramy inocencio. up, draft encryption legislation is out, mandating that companies would have to comply for court orders requesting access to data. ♪
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mark: after months of mounting evidence, scientists are ready to say definitively the zika virus spreading across the americas is spreading birth
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defects. the virus is linked to a spike in microcephaly, which causes babies to be born with of normally -- abnormally small heads. the virus has been reported in 33 countries. louisiana's governor has issued an executive order banning discrimination based on sexual orientation or gender identity. the order includes an exemption for state contractors that are religious organizations. the south korean president's ruling party suffered a setback in parliamentary elections, failing to win a majority in the national assembly. and is limited to one term was trying to gain a large enough majority to execute key legislation. a committee vote was canceled
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for tomorrow on a plan to help puerto rico restructure its $70 billion debt. the white house warns without congressional help, puerto rico faces economic collapse. say assisting the u.s. territory would set a bad precedent. dayl news 24 hours a powered by 2400 journalists and 150 news bureaus around the world. i am mark crumpton. it is after 6:30 wednesday night. 8:30 in sydney. paul allen joins us with a look at the markets. paul: another strong day on wall street. the s&p 500 erased losses for the year. investors were expecting great things from the asian pacific. new zealand is looking flat right now. asx aftercted on the iron ore pushed above $60 a ton.
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it will be interesting to see how sustainable that is. is strengthening yen expected to hold profit growth on earnings which began four years ago with shinzo abe's policies. the bank of japan governor is speaking in new york within the next hour. , we arein australia expecting unemployment data for march. it is expected to show an increase to 5.9%. though, it is notoriously volatile. i am paul allen for bloomberg tv in sydney, australia. ♪ ♪ emily: turning to encryption. and diannechard burr feinstein have released a draft
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of a bill that would require companies and individuals to comply with court orders to protect citizens from criminals and terrorists. feinstein said, we need strong encryption to protect data and we need to know when terrorists are plotting to kill americans. they are soliciting input from the public before introducing the bill. as the public and private sector grapple with the fallout from the debate and a death to a new normal of tighter encryption. ski, joined by luke dombo former attorney general for national securities. it has been exciting and dramatic times in the world of cyber law. what is your reaction to the encryption bill? should companies be required to fulfill all data requests? guest: first, thanks for having me. it is a very emotional debate. i have not reviewed the proposal.
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i understand that many industry groups have come out against it. essential thatbe any legislation have broad support to have any chance of passing in the end. emily: what is a realistic and productive way for tech companies to work with the government? guest: many have been trying to work with the government. i think the answer is to find a balance between privacy and security. it is not something that is completely out of reach. whether this is the right approach remains to be seen. emily: in june 2014, apple and turned on encryption, making things more difficult for law-enforcement. when you are at the doj, what was the reaction? guest: i was close to these cases. i do not want to talk about one particular case. it is very difficult as a general matter to solve cyber
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cases. evidence is fast-moving, very fleeting. anonymity is easy to have on the internet. it was yet another challenge in the ability to make the cases. it does not mean it cannot be made. emily: you don't live fallout from data breaches from target to sony. interesting when you look at the financial performance. it has not changed. what has been the real cost of data breaches? guest: we are moving out of the shock and awe phase of this. it seems like there is one in the news every week if not every day. we are moving into the liability phase. we are starting to see privacy lawsuits, shareholder suits against companies. regulators jump in and bring heavy fines. i think it will only increase.
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ist is important to know that companies can prepare for these things and lower the risk up front. emily: you were very involved with negotiations with the chinese government over these issues. what about china's pledge to stop hacking u.s. companies? do you believe they have followed through on that? guest: i should say first that i was very excited that presidents were able to strike an agreement as part of the negotiations. foras a huge breakthrough these governments, for the first time ever, to say we agree that nationstate hackers should not be used to steal economic advantage, trade secrets from private companies. it is a huge step in the right direction. it remains to be seen how it will play out. it has already brought the rest of the world closer together. emily: but we do not know if it
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has actually stopped? are they standing by what they agreed to? guest: it is early to tell. thatnk it is very hopeful china would take a forward leaning stance. it is a constructive move as china moves from a manufacturing economy to an innovation economy. emily: what other nationstates are you worried about? guest: every cyber crime in particular is prevalent in many countries. it used to be dominant in eastern europe. particularlywere strong in cyber crime areas. it has gone way beyond. we see groups in the united states, parts of africa, the middle east, and asia
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participating in sophisticated cyber crimes. emily: what are companies telling you? are they being attacked by nationstates? what are they seeing? guest: they are certainly being attacked. they may not know whether it is a cyber criminal or nationstate. many companies are unsure what to do, pouring a lot of money in the issue. i think, with some proper adviceg and a targeted up front, they can manage and reduce risk. that is the positive thing. lessons have been learned that are applied going forward. emily: what is your take on the panama papers and the mega- leak ? it shows a trend that many of us in the cyber security area already know. law firms, perhaps hedge funds and others, are providing services to clients where they sold valuable client data. they are increasingly targets. law firms and others cannot assume just by helping a client they are not also a target. sky, thank youmob so much for joining us. fascinating and difficult work.
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bt going on the offensive to tackle cybercrime. the telecom giant is recruiting 900 people to work in threat intelligence, risk management, and related support roles. they will identify some of the best talent by participating in game competitions. high-profile data breaches prompted a surge of interest from consumers. cancer research set to get a healthy dose of funding from a tech billionaire. we will bring you the details. ♪
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emily: cancer research just got
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a boost. sean parker announcing he will be donating $250 million to support immunotherapy cancer research. parker,ly sat down with where he spoke at length about how philanthropy is driving cancer research forward. capital, when it is done correctly, happens at a time when a business is ready for commercialization. ,here is a middle ground where cancer immunotherapy. if you're going to find it, you are taking money away from existing labs and researchers. there is a hesitation. breakthroughs happen quickly that have been driven by private philanthropy because governments have been too slow to recognize that a technology is ready for, you know, investment. whether that is philanthropic investment or venture
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investment. emily: any crazy areas in biotech you are thinking about funding that we do not know about? poor job ofs done a drugstanding where past that have been, you know, demonstrated safe in phase one ,nd phase two clinical trials could have been approved in a much narrower indication. it would mean you need access to a drug that only 300 people need access to. have a regulatory framework today that is good at getting those drugs to people. emily: what is next for sean parker? science is the single most interesting area of exploration. it is to the world today what
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social media was to the world in 2003 and 2004. cases, it is easy for a grad student to do something that somebody would have spent 30 years of their life to do previously. reductions,ost because of new technology leading to faster progress, are an enormous opportunity. the fundamental question of the 21st century is, how do we make sure the technological innovations coming out of life sciences are available to everyone? emily: sean parker, cofounder of napster. still with me, keith rabois. it is fascinating what he has done. he is creating a new organization that gets competing cancer research institutions to work together so that these researchers are not competing with each other for money when
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they are. trying to get to the same place. . philanthropists have taken offense to some of the comments, speaking up for the world of philanthropy. he says he can get ahead of venture capital. i am curious for your reaction. it is fantastic he is donating this money to propel research forward. many americans suffer from cancer. anything we can do to propel cancer solutions is a great idea. more brainpower and more money can only be helpful. we are on the precipice of a revolution in cancer research. sean interviewed to a few of , fastthe use of data feedback cycles. democratization of access to equipment. all amazing things. we funded a fair number of
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things at the periphery. we have an investment in something that replaces the need for a biopsy with a blood test. we invested in some things genomicreast cancer and sequencing. all of this is becoming viable. all these companies are selling products in helping people today. i think he will accelerate a new wave of products that can come to market and really help people immediately. thiel i spoke to peter yesterday, your longtime friend. he said we can be more effective in getting things done than pretty much everyone. >> is there a sense of agency? it feels like you can actually do something on a smaller scale. i think this is where people will make a much bigger difference in solving various problems, changing society, etc. emily: instruct us today that
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republicans are stalling funding even for the zika virus. what do you make of the comments? keith: peter is generally right that private price -- enterprise can be more effective. the corporate charter, the corporate vision, has proven to be incredibly effective. there are examples of government collaboration around at the manhattan project or putting a man on the moon. there are more examples of a nation driven by company collaboration. take research and throw it in a corporate structure, that may be the way we solve human life issues. emily: at the same time, you have there are no's -- theranos, a $10 billion potential company, that just evaporates. keith: there is a correlation between risk and reward. to get ahead, you have to take risk.
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when dealing with human life, it is a complicated industry. there is a correlation between mistakes and learning. astronauts, for example, were killed. rockets blow up. that is what gets to the state of affairs where people improve. you cannot have one without the other. emily: keith rabois, thank you for joining us today. it has been great to have you here. coming up, details on the security breaches behind the panama papers. we will hear from the checkpoint ceo next. ♪
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emily: the panama papers are causing an uproar around the world. one man says the leak could have been avoided. elliott gotkine sat down with gil shwed, ceo of checkpoint. are
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there are great demonstrations of technologies. we have them. companies use to them, they would not be susceptible. we have technology from end to end document encryption that i use everyday. we have technology for data leak prevention. do that,ething that we if it leaves the company premises, it would be stopped. when they do not use them, companies get hurt. >> would you be surprised if we see more reaches of this nature? >> i am sure we will see more. it is part of human nature. part of it is human nature. part of it can be reduced or eliminated completely with the right technology. >> has the phone been ringing off the hook from the british virgin islands and panama? >> i have not heard that yet. in the last few
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years with the enterprise market is not reacting to the change in cyberspace, not proactive enough to address it. business, we believe security is good. it is good that people do what is right for business and life and not just worry about the risk. there is plenty of risk around it. it is good we drive our lives not just based on risk. there was a drop off in high corporate data breaches, such as apple and jpmorgan. have you noticed slowdown as companies are less fearful and less inclined to spend money they need on products like check point? >> cyber security is one of the best areas in terms of spending today. demand is growing. that is what i hear. i am not an expert in
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microeconomics. that is one of the good places in i.t. today. >> where is most money being spent in cyberspace? >> the money in cyberspace is diverse. that is one of the challenges. companies need to adopt strategies, consolidate. the spending today is very diversified. theuse of the demand and needs, from the largest to the smallest companies in the i.t. space, there will be consolidation. customers need to focus strategy and energy and create a new solution. you get a sense they are eating your lunch or beginning to nibble on the sides? are they making headway against check point? >> it is challenging to the
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marketplace because of the customer cannot absorb 1400 ideas. but the idea of innovation is healthy to the market and gives us all a great chance to experience new technologies and ideas. >> you said you are open to making more acquisitions if the right opportunity comes along. is there any kind of limit to the size of acquisitions? could we see something transformative taking place? >> whatever opportunity we find, we will go for it. check point is a healthy company. we have around $3 billion in cash. i think we are ready to do whatever is right for the business. we are not hinting we will do a major acquisition. but we will do whatever is right. >> do you expect to see more acquisitions this year? >> i hope so. we have a great business developing department. i hope we will find something. >> last time we spoke, you just
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signed a contract with an israeli startup to prevent hacking of cars. you will be approaching vehicle manufacturers. have you gotten any traction? any deals so far? >> we are in discussions in different areas, but the car industry is slow to react. the deployment cycle is five to seven years. security is interesting. there are plenty of things to be done in the internet of things area. some things are by protecting the network itself, which is where the majority of the technologies are applied. emily: elliott gotkine with gil shwed. timto find out who is having the best day ever. today's winner is you drone enthusiasts. drone racing is officially
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mainstream. espn has signed a multi-year deal with the drone racing association to bring the competition of television. the first will be the championship in august on governors island in new york city. i cannot wait. i am a little dizzy after that. that does it for this edition of "bloomberg west." tomorrow, we hear from glenn newmon about the firm's billion-dollar fund to find a new jack dorsey in china. ♪
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>> from our studios in new york city, this is "charlie rose." charlie: we begin with politics. house speaker paul ryan ruled out a presidential bid at a press conference today. the announcement comes after weeks of speculation he would accept the nomination at a contested convention. addressing the republican national committee, speaker ryan said delegates should choose someone that participated in the primaries. >> count me out. if youy believe that, want to be the nominee for our party, to be the


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