This will be problematic for the fed. If we get stronger wage growth that trumps everything. We have not seen a pickup in wages yet. Consumer confidence rose last week to the highest level since 2007. Bank of america cut the bonus pool for equities traders and sales staff by as much as 10 . The bonus cuts come as be of as trading divisions revenue fell 1. 8 last year. Revenue failing to keep pace with expenses. Forget deflategate. Arizona Health Officials are monitoring hundreds of people for the measles as an outbreak started at disneyland and is spreading. Tens of thousands of fans trekking to phoenix epidemiologists are looking for people in hospitals, groceries and postal stores where infected people visited. Arizona reported eight cases so far, including two in the county where the super bowl will be played. The fcc auction of us airways has ended with a record of bids totaling more than 45 billion. That is bigger than the combined take of every auction of airwaves before it. The sale ended with just a 341 rounds. Verizon, at t, dish, tmobile all among the Companies Register to take part in the sale, all anxious to get more spectrum for data hungry customers. Now to the lead. Alibaba sees opportunity in mobile. That mobile focus is hurting the company in the shortterm. Revenue was up 40 yearoveryear to 4. 2 billion. It is slower than the growth rate of the prior quarter. More buyers are shopping on mobile. Ali baba is also dealing with a recent Chinese Government report accusing the company of allowing fake goods and fraud to sell on its suite of websites. Earlier betty liu spoke with the chairman from hong kong and started asking him about ali babas mobile strategy. We had a very good quarter. If you look at the growth and the metrics that we really focus on, it is gnv and active buyers. O nan a gnv basis during this quarter we grew 49 . We now have 334 million active buyers on our platform. These are consumers coming to our platform day in and day out to buy things online. We are very happy with that result. On a net ad basis this quarter we added 27 million new active buyers. A lot of that is driven by the User Engagement and activity on the mobile platform. Lets talk about mobile. I know it is hip and cool these days for company ceos to talk about what theyre doing on mobile, and theres a lot of growth there. Your add rates on mobile are lower than they are on desktop. Is it really a great move for growth for ali baba to encourage their shoppers to go mobile . Yeah, so this shift to mobile obviously there are two sides of the coin. On the monetization rate the reported 1. 96 monetization which has been trending up over the last few quarters. The one thing to remember about mobile is we have 265 million monthly active users coming to our mobile apps to buy things. That is a very good result especially in light of the net ads. We added 48 million monthly active users in this quarter. We believe that as long as you continue to attract users on mobile to buy things to engage on your platform, at some point monetization will follow. One thing i would like everyone to remember, in the fourth quarter, ali baba generated one billion u. S. Dollars in mobile revenue. This is a very substantial number. We broke that 1 billion mark this quarter. Speaking about mobile, yahoo saw some good mobile ad Revenue Growth in their quarter just a day ago. Marissa mayer has not spun out her ali baba shares now spun out her ali baba shares into pimco. Would you have any interest in buying all or part of pimco . We dont anticipate entering into an agreement with yahoo or spiconco. This is something that is the right of yahoo to do. Their board has decided to do the spinoff. From our perspective operating the business day today, today we have a 15 shareholder in us yahoo . After the spinoff we will have another shareholder, that is the spinco. It doesnt change anything from our perspective. I would like to take this opportunity to thank Marissa Mayer and jackie races, who has been on our board of directors until the ipo. They have been great partners with us over the last couple years. I know you are a great deal maker, and you have made lots of deals for ali baba. Is yahoo on your radar at all . We are very focused on our business in china. If you look at the deals we do in terms of investment and m a activity over 90 of them are focused on how we grow our user base, how we increase User Engagement, and how we expand our categories in china. With a limited activity that we do outside of china, its very much focused on the crossborder trade, always with one elg in china leg in china. That is how to enhance our ability to serve Small Businesses to sell chinese businesses to sell to overseas consumers and more so now how to help Small Businesses from around the world, including u. S. , to sell to chinese consumers. Our platform has 334 million active chinese consumers. I mentioned earlier about the fight you have had in recent days. Im sure its not something you wanted to talk about or that you would want to talk about on a day like today, but the fight you have had with the chinese regulators over alleged fraud at ali baba, it is one of the risk factors in buying into your company. What exactly are you doing to combat fraud on your Online Marketplaces . The underlying issue is an issue that we take very seriously. Alibaba runs retail platforms that trade 370 billion a year on the last 12 months basis. Thats a lot of transactions. In a way, we very much reflect a very significant part of the retail economy in china. The issue of Fake Products counterfeit products are really a matter for all the participants in the economy to solve, they involve online efforts and offline efforts. Let me just say this, for us there is nothing that is more important than the trust that consumers have in our platform. That means they should feel comfortable to come to our platform to buy things and trust that our vendors are selling them highquality goods. We take a very draconian approach towards counterfeits. We spent a lot of resources and money and people to combat this problem. We work with Law Enforcement of agencies to shut down factories and warehouses that make counterfeit products and put people in jail. We are doing as much as we can on this issue. Bloombergs betty liu with alibaba executive vice chairman joe tsai. Facebook killed last quarter on mobile and everywhere else, even using numbers user numbers. Also up, a massive jawdropping, billion dollar r d spend. We will look at what Mark Zuckerberg is spending all that money on next. Time for a check of your world news. Investigators of the airasia flight that crashed in the sea found the plane descended that move likely done to avoid bad weather. All people on board were killed. A new round of peace talks aimed at ending the fighting in Eastern Ukraine is set to begin tomorrow. Meanwhile, the eu may slap more sanctions on russia for support a prorussian separatists in ukraine. Shell saving 15 billion after a drop in oil prices. The ceo says hes confident of an oil comeback at some point. He also pledged to do all he can to keep shelled evidence. Shell dividends. Hes helping hes known from growing facebook one of silicon valleys most outspoken investors. The focusing his sights on the social and capital partnerships of an unconventional venture fund. You are legendary when it comes to growing facebook. What did you do, how did you do it, and how much of it was you and how much of it was facebook . It was 99. 95 facebook and 50 basis points me in my job. I inherited an unbelievable leader who had an unbelievable vision, and i was lucky to have a group of people who wanted to tolerate me for 4 or 5 years. I know that startups today are consciously looking for their chamath. I know one startup has a code name for you, charlie foxtrot c f. What are facebooks Biggest Challenges today . It is the challenge of any successful company, the in internal internal inability to distract yourself. Facebook, google apple. Extreme wealth creation, all the distraction that then creates extreme amounts of incremental focus, attention, press adulation. The accolades come out of every part of the woodwork. It takes a really special person to not be able to be affected by that. Google and facebook are trying to do a lot of the same things. Who wins . They both win, but in different ways. Google wins with respect to the entry point. They own the front door to the internet, and they own the front door to 90 of the mobile world. Dont miss much more of emilys interview on studio 1. 0 tonight, 8 30 on the east coast and west coast. Facebook continued its growth with lots more users. The social network has managed massive ad Revenue Growth, especially mobile. The ceo Mark Zuckerberg spending faster to chase the opportunity of mobile advertising and messaging, as well as new hires. Mark mahaney joins the right now. It was an interesting quarter for facebook. So much to talk about here. The growth in mobile, 38 of the users on mobile only, and revenues just march onward. The single biggest trending internet is a switch towards mobile devices. Facebook caught up two years ago and facebook today is ahead of the curve. When all is said and done, when the quarters are printed, they will probably have one of the best growth dynamics in the internet sector. What do you mean, growth dynamics . Fastest growth rate. Revenue 50 plus. They are investing at the right time. They can hold off on investments, raise margins and two years from now their growth will probably stall out. They spent 1,000,000,111 in the quarter on r d. Its a bigger percentage of revenue some they have done for years. When they first were a private company, they thought they could run a much more lately than everyone else in the valley. They learn from their mistake that no, you have got to bring in a lot more researchers, r d people, sales and marketing people. Why . This platform has become bigger than i thought. What is the r d challenge . I dont think theres an r d challenge. If you want to go from 1. 5 billion people to 2. 5 billino people billion people and you want to add up their properties it was not included if they include instagram or not. They dont. Whatsapp was tremendously disruptive. Facebook is bigger than china, just to give you a data point. More people. I want to talk about google. What should i be looking for . There are three surprises we would like to see. First, give us a sense of how the nonsearch ad revenue is going at google. Theres a lot of headwinds now. You have this apple maybe market share loss with safari. Backup. Safari is gaining market share over chrome . It is marginally gaining share. The decision coming up in the next few months is whether safari outsources search, not to google, but to microsoft, yahoo . Marissa mayer talk about it on the earnings call. Will all that business go to one, or could they split it up . It would go to one or the other. Yahoo is in the hunt. Yes. Apple is returning a lot of that cash to shareholders to shareholders trade why not you google . People want to see how the core search business is doing, and want to focus on the pricing stabilization. It has been negative for four years. Cost per click is one of the metrics they put out. When i break the earnings later im going to pretend like i knew all this without talking to you. Cost per click, thats the big number . That is paid clicks. 15 . It is a combination of the two. If they were to get cpcs or pricing flattish yearoveryear, it would be the first time in four years cost per click been declining rapidly as more and more people are mobile. Monetization is lower on mobile. But at some point along the way they get enough liquidity in mobile searches, enough advertisers to buy in, and mobile websites improve, Conversion Rates rise, cpcs flat across the board then they start racing. You want to own google at the right price when that curve tips up. Thank you very much. Bloomberg west will be right back. Welcome back to bloomberg west. Alibaba shares are slumping down this much is 10 after fiscal thirdquarter revenue missed estimates. Wall street, where is the love . There was a whole love love that alibaba. A firsthand look at working as the ecommerce giant. When you enter alibabas headquarters in china, its a lot like stepping into any tech campus in silicon valley. Inside there is a starbucks to fuel all matters, yoga classes and three cafeterias serving employees. But the perks dont stop there. Alibaba takes it one step further, helping employees to find love, marriage, and even start families. It may look like any other tech company, but the culture here is unique. Employees referred to each other as ali people in many use nicknames taken from kung fu novels. One of the big influences on jack mas life was a martial arts novelist. In the early days, people took on nicknames of different characters that were in these martial arts novels. That fighting spirit has attracted young people to work at alibaba. The average employee is 30 years old, works 9 00 to 6 00, and has a starting salary of nearly 33,000 a year nearly seven times the average of the urban chinese worker. Alibaba attracts Young Chinese who are at the top of their fields. People feel they can break down barriers and do innovative types of things in their work life. Jack ma is also unlike any tech company founder. From serenading employees to play matchmaker. A heartshaped getting bored between a gym and a cafeteria is filled with photos and phone numbers of single employees looking to find their match cap this. Jack ma is so revered within the Corporate Culture that every day on ali day he marries dozens, if not hundreds of alibaba employees. They now have ali babies photos on the wall, babies born to alibaba employees. Those new families can get an interestfree loan for a down payment on their first home and over the years, alibaba is also given birth to a whole new generation of chinese internet companies. Former employees have helped to start more than 145 new businesses. Theyve attracted people who believe they can do something different, individuals who are dreamers and fell that they could change the chinese economy through alibaba. This close knit culture has been a critical part of alibaba s identity, and keeping it all in the family has helped the company grow into a global powerhouse with over 24,000 employees. That is more than facebook and yahoo combined. Kenny chang, bloomberg, china. That is crazy. Office love, imagine that. Our dish network has an answer, sling tv. It one big at the Consumer Electronics show. It won big at the Consumer Electronics show. You are watching bloomberg west where we focus on technology, innovation, and the future of business. I am cory johnson. Dish network is rolling out sling tv. It will give customers access to channels that they usually do not get from cable like disney channel. What is the reaction to this . The reaction has been beyond what we have expected. It has been a phenomenal reaction. We opened our website on january 5 where people could preregister and it has been beyond expectations. The options are interesting. The most interesting is espn on devices that people have not been able to get any other way except for cable or satellite. Yes, this is the first time people can subscribe to espn without those traditional contracts with cable or satellite. That was one of our key objectives. We know that millennials love the content that is available on cable, but they do not like the model of credit checks, installments, wires, all of that and we wanted to create something that was more like what you have two cell music but for cable channels. At that the Cable Companies love this. Maybe not. This means that they will be able to sell more broadband which is their most profitable business. But there business is also to hook people on big packages. If you want espn, you are going to take tnt cbs, all of these other things. These are the hooks they use to jack up cable bills from 20 a month to 100 a month. Yeah, i think our business will continue to be strong. The real issue with, what we seeing is, the Younger Generation is getting into their first apartment. They are not choosing paytv at nearly the same rate as the generations before them. They also like to schedule what they watch it when they watch it. They cannot do this with this model. Why not . We work with the providers to make as much of our content on demand as possible. On many of our channels we have a Replay Service where anything broadcast over the last three days, you can go back and watch. Our real objective is, lets if the content tent providers to make as much available as possible. I watched hbo lead of the way it time warner in terms of what they want to do online and how they want to go over the top. Of course, they are very tightly tied to people who already have a subscription on cable because that is where they are a moneymaker. In what ways have they offered feedback . I think the real landmark deal in this industry was when we announced our deal with disney last march. I think what they saw and the other programmers have seen is there is the demographic that the traditional employers are not reaching. If the only way to keep your business package is to meet these consumer needs, the traditional bundles are not meeting needs. So they need the service. Youre saying the east espn is not reaching millennials . Young men who would not consume media another in any other form . What i mean is that is a very popular channel for those viewers. The problem is, they are not signing up to paytv in the same proportion as the generation before them. They want to watch the content area they just need another business model. Raley . What are those numbers like really . What are those numbers like . And rough numbers about 100 million paytv households in the u. S. And about 100. 5 million homes. The number of households is declining slightly. The gap is declining. The biggest contributor to that gap is money. Interesting. How does the business tie in with your corporate parents there . How does this scale in relationship to those broadcasters . Why wouldnt they work for a completely separate entity . We could not do this on our own because we rely on the programming relationships that dish network has with all of our programming partners. We did set it up as a somewhat separate entity because we needed teams with a 100 focus on building this, not worrying about what is the satellite business, where do i put my time. We want a company that is focused on this. But we certainly rely on dish network very heavily. Interesting stuff from the ceo of sling tv. We appreciate it. When will you be able to stream your favorite tv shows midflight . We talk about the future of wifi, even the presence of wifi in the skies, next. Im cory johnson. This is bloomberg west. The fcc lifting a ban on inflight cell service. They may make a decision about whether to allow inflight voice calls. All of the most traveled routes now have wireless access on flights for inflight amenities but how fast and how useful is wifi . We are joined by my guest that provides this service for planes. You have been at this for a couple years. Jetblue and others come in for your satellites. Yes. Bloomberg did a story on that and route happy is not just ranking do you have wifi or no, but how good is it . I tend to fly Virgin America and they have go go with that. I cant stand gogo because it is so slow. They are working on something opposed to terrestrial access where it is coming up from the ground and quite slow. Theres a lot of confusion. The thing that we do, we talked about this about three years ago, a little over three years ago, we added more bandwidth than all of the other satellites, and its all about bandwidth that makes the service so fast. Lets geek out on that a little bit. I was talking to one of your former employees and he described it as the most powerful satellite ever launched. Thats right. How so . Were talking about bandwidth. What makes Internet Connection slow is too many people trying to use the same amount of bandwidth. So you have to manage the total amount of bandwidth. That is the design criteria we used. We now have another when going up that is twice as capable. I think that will do even better than we are doing now. So how is that . We have one for the continental u. S. And we have one from the tip of south america to europe. Premuch all of north america. Jetblue is one of our launch customers. The caribbean is a big market for them. So, one of the things we want to do is cover the caribbean for them and we have a partner in europe. We can provide coverage with viasat 2 that provides coverage from, say, mexico city to do by to dubai. Wow. Its not just more, but it is the way that you do it, right . He bandwidth you use the bandwidth you use. We have good numbers. We are adding about 140 megabits of capacity. Theyll have literally 1 , the competitors. So, one 100th. That means that people are just competing to get access to it. So, all that bandwidth that we have is what makes it fast and responsive, and also is what will let you do streaming. For the first time, people can do netflix, download videos, be able to watch live sports. You dont need to get off the plane. You can just stay up there. [laughter] what is interesting, in europe, there are a handful of companies talking about ways to get wifi to lots of people. What are you crazy . We think transmission activity is an essential. It is one of the three legs of information. You talk about Processing Stores and transmission. Transmission requires facilities. You just got to have things cost effective. What we are 20 do is be the most costeffective satellites and we think that that is the path we are on. There are others interested in technology. I do not think that they can be as costeffective as we can be in the same timeframe. Why cant they find a solution for the access and there are googles plans. Why cant they be as costefficient as yours . Theyre talking about launching large numbers of satellites. You can think about it two ways. Number one, there is the amount of bandwidth you can put through a satellite and the cap of the dust capital cost. Our mantra is how many gigabits per mega buck we get . The other factor that is important is improving the delivery on target. What you do not want to have is tons of bandwidth over, lets say, the middle of the ocean and have lots of demand in certain parts of africa. Not only do you have to create that bandwidth, you have to deliver it on target. One of the big issues in dealing with global earth orbit which we do below earth orbit where of the problems is bandwidth is fairly distributed over the world. What you find is, if you look at any measure of business or economic activity, it is very, very concentrated. You have to look at concentrations of people, minerals, economic activity. That is what we can do. So, if you cannot get internet reception san francisco, best suggestion, get in a boat and go out in the ocean. Thank you very much. The german inflation rate turned negative this month. Thats right. Deflation for the first time in more than five years. They fell half a percent. The European Central bank buying 1. 1 billion euros to stimulate the economy. China will now allow sales nationwide after a trial in shanghai ended a ban. Microsoft, sony, nintendo stand to gain from this exchange. And a Russian Online dating service settled with a hacker to prevent the release of 20 million users addresses as ransom. They paid the hacker and nondisclosed amount. The Company Called the payment and award for finding a vulnerability. And Mark Crumpton is coming up on bottom line at the top of the hour. What have you got . We will look closer at the u. S. Relationship with iran. The Senate Committee passed a bill that would impose sanctions on iran if it fails to sign an agreement to curb its nuclear program. The Senate Action as the Obama Administration is engaged in diplomatic efforts to reach a deal with uranian spirit could todays developments derail those talks . Your cook will have peter cook will have an exclusive interview with Richard Shelby from the banking committee. I will see you at 2 00 p. M. Eastern. Thank you very much. The next step of microsofts mobile strategy. We will look at that next. Im cory johnson and this is bloomberg west. Microsoft is revealing its next move into mobile. It released an email app maker. It is the center of a strategy for the phone and tablet. They have plans to give office away on rival operating systems but what will they do to improve the experience . If you picture a full inbox, you can imagine how bad this could be. I talked with the general manager. We are trying to make mobile email more about more than just about reading messages while you were drinking coffee. This incredible medium we have been using for multiple decades and we have had mobile email for white a while a different devices. When we started the company that microsoft acquired i was ceo of, we looked at it and we said this is an extraordinarily Important Communications tool and it is underutilized. So, it has not taken off like the others. How do you expect people to use this new app . The way we approached it was look. Think about situations. The hard thing about building great email products is everybody uses email little bit differently, right . The challenges, people talk about design and building mobile products that have a point of view and things like that. You can have a great point of view what does that mean . It means you design a product to appeal to a specific situation and the challenge is email has thousands of specific situations. You probably have thousands of emails in your inbox i asked a go to my work and box, my work address, zero emails. I try to have no emails. My personal email i cant keep up. I have 900 emails. Exactly. And somewhere between that are many different ways you can approach a problem. What we said before there was a line of code written, lets think about situations. Lets take a random sampling of 1000 people and ask, what holds you back from doing better emails from your phone . What would they say that would be universally true across this large sampled of different habits . And we came up with three things that guided our process. What are they . Composing anything but the simplest message to art. Finding things inside of your email with the associated Knowledge Base it represents. Two hard. Switching in and out of apps to get that done . Too hard. Sorry, i want to go over the ring number one, it is too hard to email. Number two, you cant find stuff in your inbox, and number three switching to another app . The third one is primarily is difficult because it rubs up against primary problems with email. Unless you get an uber it will let you get an uber car quickly, right . You get email from me saying hey, i would like to come on your show, when you can do it when can you do it . Go to calendar, go to schedule. The beautiful thing is they cross into each other all the time. So, in that scenario, if you are trying to set up a meeting right, and i am without outlook i wouldve to switch out of the email app, look to the calendar, look around, remember stuff and that is usually more than ample excuse not to do with that message. And outlook is so widely used in the enterprise. It did not exist up until today, right . It is the thing to bring that familiar brand and experience and the goodness that represents as an email tool in a Communications Tool into this new offering. You joined microsoft somewhat recently. Do you have a sense that they are raising this changes in a different way than they have in the past . Absolutely. Long before we started talking to them first as a partnership and then an acquisition, one of the first remarks we had about the industry not respecting tradition and respecting innovation, that resonated with most of the team a fairly experienced people we had. That is caused to be attention to what was going on at the time at the company. Now we are excited to see that. Its a really interesting seachange for them. The Microsoft Outlook general manager javier soltero. The bwest byte, one number that says a lot. What have you got . The number is zero. That is the number of drones that the federal Aviation Administration wants people flying over the super bowl. We will see if the public heeds that. Your tax dollars hard at work. Check this out. Going to the big game . Have fun. Chair on your team. Cheer on your team. Dont spoil the game. Leave your drone on home. Leave your drone at home. That is hilarious. They cant come up with regulations, but they can come up with this . In this case there are regulations that prohibit regular aircraft as well as smaller aircraft flying over these events. The faa is just reiterating over the top of them. Im reminded that in 2008 the flyover with the air force jets but it was dont and no one could see it from inside. Thank you very much. Thats great stuff. You can get all the latest headlines anytime on your phone, your tablet, bloomberg. Com and bloomberg radio. We will see you tomorrow. From bloomberg World Headquarters in new york, i am Mark Crumpton. This is bottom line the intersection of politics and business with a main street perspective. To our viewers in the knighted states and those of you joining us around the world, welcome. We have full coverage of these stocks and stories making headlines. Alix steel examines whether Lower Oil Prices are a blessing or a curse. Matt miller reports on the success of the f1 50 and how it tied into ford motors