tv Bloomberg West Bloomberg February 19, 2016 6:00pm-7:01pm EST
out earlier. it gives britain a seven-year emergency brake period to impose well for curbs on eu citizens working in britain. peace talks will not resume as planned. turkey intensified cross-border shelling on regions held by the u.s. backed kurdish militia. democrat and republican presidential candidates are chasing delegates in separate states tomorrow. polls show hillary clinton and a virtual tie with bernie sanders. race alsoarolina that tightening. a poll released today puts within fivecruz points of donald trump. president obama and wife michelle visited the supreme court to pay final respects today to justice scalia. the funeral is saturday. harper lee, author of "to kill a mockingbird," has died. she was 89 years old.
news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. i am ramy inocencio. ♪ emily: i'm emily chang and this is "bloomberg west." increase vowing to encryption. we will bring you all the latest in this mounting standoff. yahoo! sets up an independent committee to explore selling. are they serious? we break it down. could you tube dominance the under threat? we talked to the king of online music videos about his plans to go it on -- go it alone. ♪
first, to our lead, the apple standoff with the government tends to mount dramatically. the justice department asked a judge to force apple to cooperate. in response, apple is vowing to increase encryption in the future, claiming the u.s. government is seeking a master key to break in. the company hired two high profile lawyers. aoomberg has gained access to secret decision memo asking various government agencies to find ways of cracking encryption software after the government decided not to legally pursue backdoors into tech companies. now is michael riley, who broke the story for us, and a former site security advisor to the white house -- cyber security advisor to the white house. apple is saying, we will make it even harder for you. how about that? >> it seems both sides are
upping the ante. you have difference of opinion between the government that seems to think this is entry to a single device they're asking believes this is a technical president that has huge global implications. >> extremely strong difference of opinion. michael, let's talk about this memo that you obtained. tell us about the implications here. last november it seemed everything was ok between washington and silicon valley. but this indicates perhaps not. >> we had the memo described to us. the white house say, we are not going to seek access or seek legislation or require companies to put in backdoors. , skeleton keys the government could use to access data through a warrant legally. after that you have this problem
the government faces, this problem of going dark. encryption is becoming more and easier to do. it'san get an app and really easy. if they're trying to track terrorists or criminals anybody for an investigation, it's getting harder and harder to do. did is say, they this is a big national security problem and we are going to get together and figure out how we're going to deal with this as the future moves on. you can get to encrypted data in other ways straight you can stack attacks on one another, you can do things like what the fbi has asked apple to do, which is get to encrypted data by bypassing authentication mechanisms. there are all sorts of out-of-the-box ways. this has become a big priority for the government. you make a point in your
story that by saying in the past, the government said multiple devices to apple and they would figure it out and give them the information. chris, what you make of the fact that the fbi took this public and is continuing to put pressure publicly on apple? >> the law enforcement community saw an opportunity to go nuclear and use this raw emotional event to its advantage. the legal standing in this case is somewhat dubious. they are trying to apply pressure, public and political pressure on apple to agree. emily: donald trump has been speaking about this all day. take a listen to what trump had to say. >> you ought to boycott apple until such time as they give that security number. the phone is not even owned by this young thugs that kill these people. the phone's owned by the government.
is looking to do a big number, probably to show how liberal he is. apple should get the security. emily: trump was treating from an iphone shortly after he made those comments. big number, probably to show how liberal he is. you can see he was using an iphone. he caught wind of the iron he both anaying i use iphone and samsung. if apple does not give the information to authorities, i will be using samsung. this did not come in iphone -- thish did not come from an iphone. e said, -- this did not come from an iphone. michael, how does this play out? apple has two incredibly high profile lawyers, the same guy who represented bush in birth -- bush versus gore. where does this go from here?
apple is in a tough spot and they are making a real stand in terms of privacy and the way technology is going, but effectively if they're able to do this, the judge has said, you need to help the fbi with this investigation. if they're able to do this, they have to make a complicated argument that doing it is going beyond what they just are not capable of, they have to create creating this new firmware is the same as creating a new backdoor. there's an interesting conflict going on. the fbi is saying, we want this information. you can help us get it through by pressing -- bypassing certain things. apple has been working on this
technology for two years. they have effectively put apple in a tough position. to play ball.oing you have the judicial system and a judge saying, if you can help them, you have to help them. radioactive material recently disappeared in a territory controlled by isis in iraq. what kind of position is the white house in here? they obviously don't want to undermine tech companies, and especially not apple, but what can they do? >> there's a lot of way to target surveillance against terrorists. getting the contents of an iphone are not the only way. emily: it could be pretty important evidence. >> the intelligence community has other ways of looking at metadata of identifying threats. apple was collaborating before this went public. to look at this and parse this through and recognize that there are many lines of defense. the government is going to take terrorists seriously.
in terms of forcing an american company that has to do business in the global community to do something against its business interests that will not prevent a terrorist incident, that strikes me as absurd. emily: who has a better legal argument here if it goes to the supreme court? >> if you look at the legal arguments, it sounds very technical. they're going back to legislation laws that are almost 100 years old. they are making an argument on whether or not apple has to create something to do this and whether the law can compel them to create something. what they mean by that is this firmware that can bypass pin they haveechanisms installed. they said, we don't have that lying around. the other side, the fbi and justice department is saying, apple, you are doing this as a marketing ploy. you can do this, and the stakes are very high.
somenow it's going to take people in your company some time, some days or weeks to create this, but it's not a good excuse. it's a tough argument. i had a question for chris. what do you think in terms of the white house and position it puts it in? over the last year we really saw the president try to thread this needle, and suddenly it looks like the needle is not only being threaded, but we are in an explosive, nuclear confrontation. the president can't be happy about that. -- thethe president had president doesn't have the luxury of always thinking about national security. he also has to consider the americanonomy -- businesses and the economy are facing having to be in a globalized world. unlike the fbi director who is very focused on getting assets for investigatory purposes. the president is also worried about cyber security.
a huge cyber security implication if you begin to undermine these protocols. that will make data theft easier, make it easier for hackers to get the same technique, as well as governments overseas who could use it to target dissidents. the president has to weigh all these factors. emily: it's certainly a fascinating standoff. we will be following this very closely. chris, thank you for joining us today. michael o'rielly, great scoop from you. turning to mountain view. earlier this week i caught up with the man hand-picked to head up android. mobile world congress kicks off on monday. we bring you that exclusive conversation. first, here's a sneak peek. do you have one device you rely on? >> not necessarily. it's part of the job, but being able to really rely on a phone without having another phone is
an important testament of how this stuff works. i like to test things and find issues. emily: what's your favorite? >> right now i'm using the nexus 5x. last night i was using the nexus 6-. -- nexus 6p. these are phones i use to test the new version of the o.s. we will have ac bunch of new phones come out from our partners so i'm sure i will be swapping in and out a lot. emily: how often do you check out the iphone? >> not that often. emily: don't you have to know the competition? >> i guess so, but i like to have our own identity and ideas and not feel like being or not.ed
it's busy enough just coming up with our own ideas and implementing them. it's important to kind of keep that vision intact. emily: what is your wife using? android user,al which i appreciate. i also get feedback from her. that is sometimes painful. emily: do not miss my full conversation with the google executive on monday. coming up, the music video giant in vivo stepping out of youtube's shadows with its own revamped app. ♪
planning a hostile takeover. suggestk price moves investors anticipate the venue will have to raise that bid. the hostile takeover is likely in the course of distant -- discussion with vendors. in the land of music videos, vevo is king. in january alone it racked up 17 billion views worldwide, mostly on youtube. recently vevo made strides to stand on its own and capture a greater share of online video advertising market expected to surge to nearly $20 billion this year. its apps and plans to launch an ad free subscription service. eric, thank you for joining us. give us an example of what kind of content we will see here. is this the same kind of
content like spotify an apple music are trying to get to to differentiate ourselves? oure produce a lot of content in-house as well. there are the music videos, and that is our bread and butter. besides that, we produce quite a lot of content with new artists that are trying to break through with emerging artists that are trying to reach new audiences, and established artists, helping them find, build businesses. it's a wide variety of programming. that is one piece. the second piece is we will be commissioning quite a bit of content with third parties as well. more to come. stay tuned on that. emily: it will give your videos on youtube but also have the separate app. what makes you think people will come to your app? >> youtube is an important partner of ours. they are a shareholder of ours and we are very happy with that relationship. if you think about youtube,
youtube is the supermarket where you can get anything your heart desires. what we are aiming for is to be the specialty store where we really care about one thing and one thing in particular, and that is music. we want to deliver an experience where we know you as our audience better than anyone else, and cater service to you that you can't get anywhere else. how much will your service cost? >> we are not ready to talk about price point. emily: will it be less than red because they have more than music videos -- >> stay tuned on that. emily: what about timing? sometime this year is really the guidance i was given. ship untilgoing to we know it's really ready. i don't want to make the mistake of putting products out in the
marketplace that audiences will not love. emily: we are taking a look at it here. what makes this different from other viewing platforms? >> first and foremost, this is all about the artist. taken advantage of this new apple platform because it's got amazing capabilities from a graphics and processing perspective. canaid, let's see what we do with that. what you see here is a couple of features. spotlight gives you your own personal channel based on your interests. your favorites, it literally is all your favorite artists in one place. all the top videos you can find by genre, curated by our specialists but also driven by algorithms. watch again, out of those 17 billion videos, a lot of people watch those videos over and over again. very easily being able to find that music video that you love, and obviously search.
what i will say with this application is it represents 1% of our ambition. while it is a huge step forward in ease and simplicity and usability, it literally is 1% only. emily: your platform is known for short form videos. could we see longform as well? >> i don't want to be pigeonholed by the short form video. of the 17 billion videos, 50% is consumed on mobile devices. when we think about longform, i think about lighthouse commissions in the music video space that go beyond the traditional length of music videos. that is an area we are actively exploring. emily: ceo of vevo, thank you for joining us. 65 years ago, harper lee published "to kill a mockingbird." how the publishing world has changed since. ♪
emily: harper lee, the author of "to kill a mockingbird," has died at the age of 89. for a look at the most popular pieces -- and one of the most popular pieces of fiction ever. landscapee publishing has changed since. recap, in 2004, google launched google books. in 2007, amazon released the kindle, which sold out in five hours. in 2010, apple got in the game with ibooks. the, harper lee got in on new technology, saying, quote, i'm still old-fashioned. i love dusty old books in libraries. this is "mockingbird" for a new generation.
thank you so much for joining us. you make the argument that harper lee could not exist today. why not? >> certainly not in her form. publishing companies would be all over their clients who scale andbooks in the magnitude of "to kill a mockingbird." social media would make her life very uncomfortable in terms of disappearing. the authorsyou see who have been in that mode of producing one great book like jd salinger are all authors who lived in other eras and written in other eras. no one could really pull off what she pulled off in her disappearing and her treatment of the external world the way harper did. had she self published "to kill a mockingbird," would it have been as big a success? would she have made her
millions? >> it would depend how she played the game. self-publishing would depend on authors building their own brand, in many cases on their own, using social media effectively, doing things like going on bloomberg tv, and taking charge of the promotion of their own works. it's hard to imagine a harper lee doing that. emily: the publishing industry is more difficult today than ever. i wonder if there are "to kill a mockingbird's" out there that have not been discovered. >> if you talk to writers, they would say there are many of them. if you talk to people who run publishing houses, they might have a different point of view. you do see writers breakthrough, young men and women with books who hit the moment just right. they breakthrough because they at some level played the game. they go on television, develop their brand, they move ahead through social media. they tweet, they do a lot of it, and they are willing to be in a game that harper lee didn't have
to and was unwilling to be in. emily: when and how does the publishing world get better for authors? or does it only get worse? asit gets better self-publishing tools improve and people understand, just like with youtube, anybody can be an author today at some level and anybody can post a video to youtube and that is empowering and democratizing. that's a good thing for young artists who want to get their work out there. the web makes everything available to everyone in real-time. if you are a great writer and pursue that route, you will find your success. brown, montclair state university, thank you. ♪
the idea of who's a creator and who's a distributor. the former abc president to an joined bloomberg go earlier to discuss. >> because you have binge watching, because it you have people looking at things many weeks after they start airing and can catch up very comfortably, narrative storytelling is driving this new renaissance of tv. >> and yet you have to ask , is netflix an enemy or a friend? i have to be more of a seller than a buyer. in terms of about five years ago, it was something like 220 scripted shows. now there's over 400 scripted shows, comedies, and dramas.
places doingmany content. netflix, amazon, other cable networks are doing original programming. it is more competitive out there. that doesn't necessarily mean more costly. so the business has changed. more and more providers. >> yeds. -- yes. i think les has done a better job than anybody in consistently creating good tv and being patient with it, not jumping to replace a show that is not an instant hit. question it's a different landscape, and he's right. -- you to be that u.s. had content creators and distributors. now two of the biggest distributors, netflix and amazon, have become some of the largest content producers. whatever really hedged
emily: the yahoo! saga continues. the company has hired financial advisors and told independent board members to explore strategic options. yahoo! is creating a separate committee of directors to do so. shares closed out 2% on the news as yahoo! gets closer to potentially selling its poor assets. what is next for the floundering tech icon? ken marissa mayer avoid a proxy fight? here with me is a partner at true ventures. in new york, our deals reporter alex sherman. explain to us what is going on here. there have been some questions about how much yahoo! actually wants to sell. but now they are taking concrete steps to do so. to avoid a of trying proxy fight, a think part of this is that yahoo! has a fiduciary duty to explore its options to try to figure out what is in the best interest of shareholders, and it is well-known among people following the yahoo! story that the market values yahoo!'s core business at zero, if you assume
valuations of alibaba steak and yahoo! steak and yahoo! japan. yahoo! has hired these bankers to try to solicit offers. this is not a surprise. we have known this for several weeks, really, since we first reported in early january and yahoo! came out. there is still confusion, even today, in terms of exactly what yahoo! wants to do. it's a little unclear if ceo marissa mayer is on board with the idea of selling. this will be done by a group of independent directors who has hired these banks to solicit offers. is curious to hear what thought about whether marissa mayer is on board with the board or not. emily: i asked marissa this question a few weeks ago and said, if you sell this company, will you consider that a personal failure? take a listen. >> what's good for yahoo! is
good for me and vice versa. there's not a personal interest that is separated their. we want to see the best possible future and the best possible outcomes for yahoo!, for our users, our advertisers, employees, and shareholders. emily: what is marissa mayer really want? .> i don't know what she wants what yahoo! needs to do is be very serious about trying to sell its assets. as news came out earlier this week, their value is declining, usage is declining, people are moving away. they may not have much to sell in a few months or a year. emily: at the same time, she is separate from this committee that is looking into selling. she is focused on streamlining the company, trying to get it to a better place. we have reported that some buyers say they are getting the cold shoulder from yahoo!, there is this impression that marissa mayer and the board are not aligned. how do you see this process playing out?
will this be clean-cut or messy? >> yahoo! is a very dysfunctional -- you could make it to lenovo about yahoo!. a movie about yahoo!. if they want to sell, they should be serious about it. >> you cover m&a across global business. how unique a case is yahoo!? is it often this messy, this difficult to discern what the company actually wants to do? this entire situation is pretty unique. this is not common. it is usually pretty straightforward, a company hires a bank. -- in thisies situation, there have been a series of confusing press sources.
they have hedged it by saying they would maybe want to sell some assets. with! is moving forward this turnaround plan. if you listen to marissa mayer, and even read the most recent press release, there is still language in there about turning yahoo! around, making yahoo! the best yahoo! we can. it's odd language if you are selling yourself to also sort of push this separate narrative. i think it's a little bit confusing to shareholders about what's going to happen. i think there's good news on the horizon. starting, it's going to start, it's starting today, over the weekend, monday, we will have a better idea in the coming weeks of exactly who is interested in buying yahoo! and how much they want to spend. emily: what is the best and worst case scenario? >> the best case is they go to verizon. i think that would be the right home for these guys. they can shift through their
entire portfolio. the worst case is that it is sold in pieces. fore's a lot of buyers flickr. in pieces it's actually more valuable. emily: why is that worst-case? >> it does not get the entire company in one place. they don't get the full value. they get piecemeal value. emily: great to have you on the show. thank you, alex. coming up, we take a look at the clean power plan, how its chances of survival improved with the death of supreme court justice antonin scalia. ♪
emily: a reminder for all you j-roll lovers out there, it's your last day to register your drones with the faa. havean 342,000 people already paid the five dollar fee in order to fly their unmanned aircraft. all drones weighing more than 1/2 pound and less than 55 pounds must register to avoid penalties ranging from fines up imprisonment for up to three years. we learned recently the supreme court had intervened to halt the implementation of president obama's clean power plan. a major part of what the u.s. had agreed to in the paris climate accord. but now the sudden death of justice scalia, could that plan b back in play? bloomberg's chris martin sat down with the ceo of the solar energy industries association. verye future for solar is
strong. the clean power plan would not begin implementation until 2020 and beyond. we did not see in the near term a bump, if you will, from the clean power plant. we feel confident that the clean power plan will finally be approved by the appeals court and be put in place. it is on a year, year and a half delay. what that means is that any long-term growth that will be german by the clean power plan will still be in place and we will see new markets open up for solar, including states like illinois and indiana and florida and others. >> they will force states who have not been open to solar power, it will force them to open up, is that what you are saying? right.'s the main driver for solar historically has been states who put in place a renewable portfolio standard. what the clean power plant requires states to do is look at all of their electricity generation and move away from
those that produce carbon. look atthey're going to solar as one of those compliance options. states will start to put policies in place that encourage the use of solar, wind, and other technologies. those foundational policies are critical for us to be able to access the electricity market. >> are you more confident now that the clean power plan will move forward? >> i am confident that the clean power plan will move forward. you still have 20 states going forward with the development of their state implementation plans. they states who aren't, are going to get stuck with the federal implementation plan. i think most states would rather develop their own implementation. statesl see more recognize that this is just a stay and they need to get their plans in place soon. >> another issue you are finding in states that are resistant to solar power are these metering
where the utility basically will pay you for the when yourproduce meter spins backwards. how do you see that battle playing out, and do you think it will come to more states? net-metering allows you as a homeowner to compete in the electricity market. utilities don't want competition rat. we are trying to make sure that net-metering is in place. you only see solar markets in those states where you do have net-mtering laws in place. until it is across the country have decided they want to fight net-metering. they want to put a tax on solar around the country and are doing it state-by-state. we are stepping up and pushing
back against utilities. electricity customers, rate payers, want to have the option for going solar. we will represent them even though the utilities are not listening to their own customers. inthere was a big battle nevada recently. the solar industry lost that battle, where they eliminated faced it out.r do you think the solar industry will ultimately prevail there? >> without a doubt. nevada has incredible solar resources. the decision made by the public utilities commission is temporary for sure. we are going to take steps to try to reverse it, to make sure that consumers who want to go solar can do so in nevada. politicians are realizing they will lose a lot of economic growth by this decision, and several companies have already pulled out of nevada. you're talking about several thousand jobs impacted by this decision. be theely it's going to
consumer and the individual who wants to go solar who has to have a voice in this discussion in the batter, and we will see that reversed in the next year. >> do you feel bad for the utilities? a goodcompetition is thing. in the long run it drives down costs for the consumer. we saw the same thing take place in the telecommunications industry. you had monopoly telephone companies that got disrupted by the cell phone industry. that improvement in americans' lives is something that nobody wants to see reversed. we can see that same type of change occur in the energy industry as long as the rules are allowed to be flexible and create competition. >> wall street has hammered solar stocks the past couple of years. do you think there's going to be a rebound? >> absolutely. if you look at the growth projections, just the next couple of years for the solar industry is remarkable. will have 100 gigawatts installed in the united states by 2020.
we will have more than 44,000 people employed in the solar industry by 2020. any projection you see for solar is massive growth, all of these companies are going to benefit as long as they are well run, as long as their business model is sound. it's an indication now that those who are interested in solar should consider it. the ceo of the solar energy industries association speaking to bloomberg's chris martin. and this edition of "out of this world," war than eight year after the original spaceship was lost in a tragic accident, richard branson unveiled the new spaceship in california. spaceship ii would be dropped from a height of 40,000 feet. it is designed to carry up to six passengers on a high-speed
orbital flight to the edge of space. nasa announcing more than 18,000 asked her not hopefuls have applied for the next class, were than double the previous record of 1978.irst class nasa says it relies heavily on social media to promote openings, but odds of getting it are slim. nasa only selects between eight and 14 americans. the latest android operating system always gets a sugar and innickname, alphabetical order. up next, the letter n. i caught up with ahead of android on the google campus. the next version of android starts with a n. can you give us any hints? >> i'm usually the last to know. emily: but you do know? >> no. i really don't know. emily: do they know? >> i don't even know if they know.
i think it's the one thing that is sort of sacred about the name. it's a fun thing we do. marsh mellow, we are right next to marshmallow. last year it was lollipop. emily: my producer caddie suggested -- candy suggested nutella. i keep thinking of nestle, but that's a brand. they make a lot of sweet things. >> kit kat was a nestle product. it hasto be tasty, and to be practically speaking, you have to be able to make it into a statue somehow. emily: guys, anything that starts with a n that is sweet? >> nougat. emily: that's kind of a mouthful. i'm going with you tell a. -- nutella. interview, just
emily: it may have been a short week, but it's been long on great stories. i am joined by our bloomberg startups reporter. eric, i want to start with you because you been making waves with your benefits story, and you have a new piece out today saying that not only did the ceo resigned, but they miss the revenue projections. >> they had this $4.5 billion evaluation -- valuation. to raise that money, zen if it's put together this -- zenefits put together this deck.
that was off in the future, but in 2015 they expected what hundred $26 million and they talked $60 million. they started missing the number really early and had really ambitious long-term numbers. is noti'm sure zenefits the first startup to miss its internal revenue projections, but it's being taken as another sign that things are not going well in unicorn land. what do you think? >> the real problem is when you value private companies, young $10 billionanies at or $60 billion, that wraps up the pressure on these companies to deliver on revenue projections and when they don't, it gets harder and harder to mathematically justify these valuations. that is the problem, they are valued so richly that any miss
sets off alarm bells. to talk aboutnt us apple story. we continue to get new details, the latest that apple actually says the password of this phone was actually changed 24 hours after it got into the hands of law enforcement. the fbi says it wasn't them, it was in the hands of some other government agency, but really, shira, the layers here, and apple releasing all this information, pushing back really hard -- how do you expect this to play out? >> it has been really interesting to see the last few days. we've seen apple taking a hard line, and the government taking a hard line and kind of going at each other on principle. apple interesting to hear talking about the pass code changes, the implication at least is that the government
changed the pass code on the itunes account. i'm not sure why that would happen. emily: the fbi saying the password was changed i somebody at the san bernardino health ifartment, but apple saying it wasn't changed there would be a backup of the information and they would not have to create this master key. eric: i think this will be a huge news story. it's apple against the u.s. government. it is super important to apple, its bottom line. it's a huge question of how much they are going to protect their vacy, even when those users are committing heinous crimes. emily: it may be going all the way to the supreme court. eric newcomer, who covers startups for us. sure over day -- shira ovedi of gadfly. today we have a double-header.
after waiting a decade, elon musk has finally gotten his hands on the domain name tesla.com. the website had been owned and unused for 24 years and musk had to settle for teslamotors.com. either way, it's a win for musk. jeb bush may be having the worst day. jebbush.com redirects users to donaldtrump.com. com. still owns jeb2016. that does it for this edition of "bloomberg west." on monday, do not miss my interview with google's head of android. ♪
>> from our studios in new york, this is "charlie rose." politicswe begin with and the 2016 election. primaries in south carolina and nevada are taking place weekend and next week. marco rubio the endorsement from governor nikki haley on wednesday. >> i want a president understands they have to bring a conscience back to our republic. ladies and gentlemen, if we elect marco rubio every day will be are