Less than 100 miles from the syrian coast. Its december 7, what president Franklin Roosevelt called a date that would live in infamy. 74 years ago today japan attacked pearl harbor and brought the u. S. Into world war ii. Day honors those who died. Im emily chang and this is bloomberg west. President obama, Hillary Clinton and others asked Silicon Valley for help in the fight against islamic state. Been on a hiring binge in the last five years. Will be extra headcount affect the companys push for profit . And the real money behind Virtual Reality. We look at the market some say will hit 70 billion in the next two years. Urgingte house is Silicon Valley to join the fight against islamic state. In a televised address, president obama called on Tech Companies to do their part in helping prevent terrorist attacks. President obama ive ordered the departments of state to review the Visa Waiver Program under which the female terrorist in San Bernardino originally came to this country. Thats why i will urge hightech and Law Enforcement leaders to make it harder for terrorists to use technology to escape from justice. Emily its a message echoed by Hillary Clinton. She says Tech Companies need to deny online space to terror groups. Hillary clinton we will need help from facebook and from youtube and twitter. They cannot permit the recruitment and the actual direction of attacks or the celebration of violence by the sophisticated internet user. Theyre going to have to help us take down these announcements and these appeals. Emily joining us is michael cyberly, bloombergs security reporter. Thanks so much for joining us. What has been the reaction to these remarks . A continuings is conversation, but they are stepping up the rhetoric here. Issue, fromcryption privacy advocates and who along with companies of Silicon Valley thought they won the debate in october have been cautioned. They are seeing the ground shifted over the last two months , as you see the attacks in paris and San Bernardino. I think it has caught them by surprise a little bit. Mitch mcconnell, leader of the senate republicans, his answer was bring it on. Powers to allow u. S. Law enforcement to intercept encrypted messages, we will give them to you. Thats a sign of how the republicans think they can use this as a political wedge in the next election, because of has already conceded a lot of ground to the Tech Companies. Emily encryption is one thing and what facebook and twitter and youtube are doing and can do is another thing. Bring us uptodate on what we know about the San Bernardino attackers, what they posted on facebook at when, and what facebook actually did about it. Facebook and other social media have become in the words of a lot of politicians the command and control of terrorism. There is a lot of recruiting and messaging that goes on on line some of that is encrypted so it is hard for Law Enforcement to just dip in whenever they want. In the San Bernardino shootings, one of the shooters used devotionto declare her to islam and state. There was also a lot of communication and interaction with other groups and other anddists for social media online. This is a larger problem of it is that easy to use and protected form of commandandcontrol for the hottest. What Hillary Clinton and others are saying is we have to get control on this kind of thing. This asrcement can use a command and control because it is sort of open, to watch the terrorists. The fbi says wait, we dont want this taken offline because they will just go to someplace that is even more protected and encrypted. Emily thats interesting. Michael riley joining us from washington. I want to talk about this further. I want to bring in a Research Fellow in the international ,ecurity program of new america who previously worked at the cia as a military analyst. Brian, do you think at this point that facebook and twitter and Tech Companies are going to do more . First theres the issue about encryption and whether they will allow a backdoor to allow Law Enforcement access, and they said no. As we talked about previously, they need to seize control of this issue again. , the europeansme i think may go forward and be more aggressive and mandate that they need access to this communication. If that happens, that presents a problem because theyre not going to produce two phones are two types of email systems. They will have to deal with that in the eu and then with policymakers here in the u. S. Emily you are saying the europeans will take a harder line on this. I think they are, particularly the brits. David cameron has said they need to be aggressive and they need access to this. Emily how helpful or unhelpful are facebook and twitter in situations like this . Social media is one of the many types of intelligence to be monitored. Its called open Source Intelligence along with more classified forms. The problem right now is not just the encryption side of the , but using it for propaganda and recruitment purposes. While the companies are doing a lot to crack down on it, twitter has suspended thousands and thousands of accounts. At the end of the day it becomes a cat and mouse situation. You take down the accounts and as they pop up. There are three areas of concern. Theres privacy concerns over whether or not they can shut down or monitor accounts, there people mightncern, stop using the platforms overall, and freedom of speech issues. At the end of the day, there are also practical concerns. This is not an Automated System taking these down. They rely on being alerted by individual users. It is it tedious and painstakingly difficult process. They have hundreds of millions of active users. Its not easy for the Tech Community to do. Emily given all those concerns and difficulties, is there a middle ground . What should these companies do . She has it exactly right. Its a slippery slope. Thatwe should do is expect usbased Companies Take a role to stop this type of activity online. When they suspect somebody is using facebook or twitter to solicit and recruit, they are much more active in taking it down. You have to prove that you are not inciting terrorism, rather than proving that you are. Going to listen to other governments that they do business with . The government is in a hard position here. Emily an oped today touches on these issues, saying its not just transmitting information from place to place without regard for who is typing on their keyboard are reading on their screen. The people who use any , technology doesnt work on its own after all, its just a tool and we are the ones who harness its power. Hes saying the tools are within reach, but the power of the internet can go into the hands of the wrong people. Eric schmidt, chairman of google , what is a company like google to do . What is the middle ground . There are a few steps that are middle ground measures. At the end of the day, its going to require publicprivate partnerships. You need people in the state department who are tracking violent extremism working closely in conjunction with analysts and individuals and Companies Like twitter and facebook. This is not something that can be solved by psy lowing their efforts siloing their efforts. These companies have tried to comply with government requests. At the end of the day, they do have some conflicting motivations. Private companies have different incentives than the government, but everybody wants to keep people safe and not have a horrific attack like we saw in paris or in california. Its going to require a systematic organizational overhaul where we can work more closely and in greater coordination. Maybe getting employees rotating in from the private sector and trying to make better connections between these two realms. Emily i understand you had your own sticky situation on twitter over the weekend. Can you tell us about that . My twitterived handle was used in a tweet itself, whether i was speaking on a panel about isis. A follower tweeted and i reported it and the account was suspended within less than 24 hours. That relies on the user taking the action. Its not like twitter can monitor millions of accounts and have a systematic way of going about this, unless they use some sort of our rhythm which would take down more content than intended. I think they are doing their tot, and it falls on users report these things that crossed the line for twitter to take action on them. Emily obviously twitter has pledged to crack down on harassment and its been very difficult. I still get harassing tweets all the time. How do you see this playing out . Do you see the Tech Companies eventually capitulating . I think you will see a statement of principles. They are doing a lot. They are really stepping forward. Not doing ity are in public and transparently, it can come back to bite them. As the pressure on Tech Companies increases, the statement of principles defining how they view the is and what their rules and thresholds may be. It differs from company to company. Incitey be read to terrorism on facebook may not be read the same way on twitter. They have to put it out so people understand and can read it. They can move on to other avenues and thats bad for basic intelligence collection. We need tighter coordination with Law Enforcement. The director said hes expecting more tips to come in. At the end of the day, it comes down to the cliche that it requires a whole government of effort to really stop this from happening. , thank youn and tara both so much for being here today. Verizon could be in the market for another oldschool internet portal. At an Investor Conference in new york, the cfo said the Company Might buy yahoo if it is for sale. Its still not clear what Marissa Mayer and the rest of the yahoo board are planning but verizon would look at a deal if it makes sense for shareholders. Verizon bought aol earlier this year as part of its push into mobile video advertising. Yahoo has both content and add technology, two things that attracted verizon to aol. The last big tech ipo of the year is set to happen later this week. This time its coming from down under. Nasa has liftoff, some surprising supplies that are en route to astronauts from the space station. Releasedobe will fourthquarter earnings this week. Last quarter of adobe shares dipped after the Company Revised its fourthquarter outlook lower. A few other big things in tech to watch for this week. , alex, i want to start with you because were going to see the last tech ipo of the year. On the verge of making australian corporate history by going public. What is this company and what do they do . Making tools for developers to help them manage when they create software. The Company Started 13 years ago and since then they have built out into a kind of Team Collaboration company. Software helps developers create applications. Hip chat is kind of a messaging tool that is sort of like slack are along those lines. 13 years later the company is going to ipo and investors are excited about finishing the year with what has been a slow year for ipos. Emily ive heard of it as the Great Australian hope. Is there a dearth of tech ipos coming out of australia . There are not a lot. There has been some criticism about there not really being as much support from the government for Tech Companies as you see here or in Silicon Valley or in london. This is the one people are pointing to. It has been an interesting company. Its a tech company that has only taken a little bit of funding. It was down youd a little over 3 billion in its last round and now its pushing a ration of 4 billion at the market range. It has in profitable for four years. That is something we have not always seen from Tech Companies out of the u. S. Unicornsnicorn among in australia, but one that has built kind of a mature business. Alex, bring us an update when they go public. Take you. Jack clark is also with me in the studio. You will be taking off her candidate this week, going to the biggest ai conference of the year. Jack i will be flying to montreal in canada to see over 2000 of the top representatives that will be talking about making computers think for themselves. Everyone comes together from the private companies and academia. Its where Mark Zuckerberg chose to announce the formation of facebooks ai group. Biggesthat are the themes in ai in the coming year . Ai to go fromg apps that we use online to industrial robots and factories around the world. That will make a big impact on business. Emily what about the big Companies Like google and facebook and what they are doing with ai . Will we see their efforts come to fruition . We have already seen it. Email and respond using ai. Next year we will see more of that and we will see more speech and language technology. Bring us backark, news from montreal. Thank you so much. In todays edition of out of ofs world, 7700 pounds equipment and science experiments are on their way to the internationals ace station. The article payload blasted off from cape canaveral, the latest unmanned supply run. An important delivery. It was last attempted in october 2014 and ended in a fiery explosion 15 seconds after liftoff. A russian cargo rocket failed in april and space as launched a rocket in june. Visorsft hollow lens will allow controllers on the ground to see what astronauts are seeing and potentially could be used for realtime training between Mission Control and the iss. Tesla has more than 1600 job openings. Will all the new hires hurt the companys push for profits . Emily if you are looking for work in the San Francisco bay area and you know anything about cars, you might want to send your resume to tesla. Than 6000y has more openings. They have been adding headcount to years, growing from 899 over 14,000 this year. What does it mean for turning a profit . Founder elon musk said he wants tesla to hit profitability by the Third Quarter of next year. Its shocking how quickly they have grown over the last few years. Thats right, in 2010 they ended the gear with 800 99 employees. Now they have over 14,000 in just under five years. All over the world they are hiring engineers, they are entering new markets, opening a new store this week in mexico city and edinburgh. As they ramp up sales they have to have Service Operations to service all the cars. Emily what does it mean for profitability . No one cares if amazon is profitable, so does it matter . Investors are wondering at what point tesla becomes profitable. He is the companys largest investor and has a long time horizon. Everyone keeps talking about teslas cash flow and a lot of the cash flows going into hiring people. Emily when you look at the numbers, what is the likelihood that that profit comes by the First Quarter of next year . Salesot of it depends on this quarter. Theyre hoping to sell between 17,00019,000 cars. Lookingext year we are over to a cheaper model tesla. The big milestones will be xl out in greater numbers, entering new markets, and another model due in late 2017. Was my firsteekend time in a tesla. Its pretty awesome. Thanks so much for stopping by. We will talk about Google Ventures,. Next. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Emily i am emily chang and this is bloomberg west. Are joined from hong kong. Good morning. Oils tumblee shows no sign of slowing. Opec abandoned output limits. Oil has slumped more than 40 instant november of 2014 when suspendabia decided to its market share against higher costs expand its market share against higher costs for users. Oil hit a metric low, below 40 iron ore fell below 40 per metric ton. A Third Straight decline, having lost 80 since peaking at 190 one dollars in 2011. Beijing has issued its highest smog warning ever as choking haze returns to the city. Authorities upgraded to the pollution morning from Tuesday Morning until thursday with some Investor Companies ordered to curtail or stop production. All Outdoor Activities have been canceled, and even Healthy People are warned to avoid the open air. I wanted to tell you about a japans security and exchange toshibaon recommending finding toshiba a record 60 million for falsifying earnings. This will be the largest financial penalty ever sought. Glad you brought up the toshiba story because apple because as it has been developing, it is absolutely mind blowing what they have done. Going onssue has been for months and years. We have seen toshiba restructuring its business. Raising cash and has already announced the sale of one division. There are also many plans coming ahead. The president is saying that toshiba is also considering combining its pc business. Back to you, emily. Emily thanks so much. Are we approaching a golden age of Virtual Reality . A new report says the total value of the vr market could hit 70 billion by 2020. That would be 10 times what they expect the industry to generate by next year. Here with me to discuss are our guests. Heard that number, i thought that sounds really high. What do you think . I think its reasonable. Emily they actually said its an understatement and that it could be higher. It could be. Market,we look at the Virtual Reality is a computing paradigm. There are an awful lot of companies we will look at and of virtual not reality company, but they will be using Virtual Reality to enhance their model. I think its going to take a while in the next couple of years for people to get hardware in their hands to be able to consume these kinds of experiences, but the power of it is clear. We have been running second life now for 12 years. A lot of users had already started to create these kinds of experiences and Virtual Reality otherken it to a whole level. Last year, we cashed out 60 Million Dollars from users creating virtual experiences. Thats just a glimpse of what is to come. I was recently speaking with the ceo of oculus about to this very question. Take on Virtual Reality and when it will be mainstream. We definitely believe in the mass market there are going to be a lot of early adopters, but if you are looking at the smartphone scale, that is going to take a long time. Ok, so he says it is going to take a long time. I have been lucky enough to try. Culus Google Cardboard is the only thing i own. It was cool for 10 seconds until it fell apart. Eadsets are quite expensive who is going to buy them . Gamers will obviously buy them early on. Architecture or other situations where you have to visualize 3d space, companies that want to have more effective meetings will be able to have them in Virtual Reality. General consumer adoption will take longer. Be a lot of businesses will able to take advantage of this to do business much more effectively. Point . Is there a tipping is it when oculus comes out . I think thats too early. There are certain pieces of hardware that are going to be available, but they are right but they are too much of a niche. Google cardboard, as you said, is a short experience. The first things will be used for small ounce of time on a smaller basis small amounts of time on a smaller basis. It will be learning what the right experience is an and the next iteration. Emily you could not find a commercially viable option previously. What is different this time . The hardware immersion makes it much more appealing. A lot of learning, a lot of technologies coming together. What we did 10 years ago was quite early. Technology is catching up so that it is possible to create these immersive and comfortable experiences that you could not have done five years ago. Aily what do you think him area . Are people going to be buying more expensive headsets think, eric . Are people going to be buy more expensive headsets or are cheaper headsets going to be what takes it over. I think the numbers and scale are going to be more normal, for sure. If you are interested in virtual notity though, and you are a gamer, you will probably come through the mobile pathway a thousandnding dollars on a pc is probably outside this group the scope for most people. Think people want to find a pathway to the hardware, so it is really just a matter of time. Emily i had a conversation with brian grazer, and i asked if we were in a tv bubble because there are so many scripted programs, nonscripted, distribution channels, platforms. I said is the tv bubble about to burst . He said i dont know if the bubble is about to burst, but there is so much content, and what will change that is a new platform like Virtual Reality. Do you think vr can do what video did for tv or smartphones did for telecom . It could be. Its a platform that going to be a reference decades. Its still early, but it is going to fundamentally change the way we do everything, teach, learn, socialize, do business. Its going to impact on most everything. I think there will be more units , but ultimately, the incredible immersion you can get from the high end gear is going to take hold. Its a matter of time. Its not 10 years, but in five expect it to have substantial reach. How does this play out . I think gaming first because that is the market that has been most exposed to the technology and the market that can get the hardware they need. Definition, gamers are going to be early adopters in the market. But to the point about your , by 2020,bout video you will be able to put on a Virtual Reality headset and the quality of the video on the screen will be just as high as your hd at home. Emily and it will be like you are in the audience. You will be able to watch it with anyone in the world. Emily looking forward to it. Thanks for your time. Iw to Google Ventures where was speaking to brian grazer earlier. The vc firm is investing less and backing fewer companies, they say. They have invented invested 20 less in 2015. Theyre also abandoning the idea of running a separate fund for overseas and testing, the move months after8 setting up an International Fund and an office in london. The ceo says they want to have more flexibility and where they invest, so they will be pooling their investments into a single vehicle next year. This comes on the heels of the whole alphabet situation. Bill merits will be joining us tomorrow. Do not miss that exclusive conversation right here on bloomberg television. Up next, netflix is stepping up renemy status. How the Company Plans to expand in 2016. Emily tomorrow on bloomberg go, trudeau. Ss mark dropbox is changing its course after introducing to consumer friendly apps last year. Pulling the plug. The first app displays a phone. The other is a mailbox. What is the new direction . What does this mean . Joining us is a Bloomberg News reporter who covers dropbox for us. I was a carousel user and was devastated by this news. I brought my whole family onto carousel. We were very excited when we talked about it. What happened . Craigs i am a photo user on google photo. Dropbox has these huge competitors and its hard to compete. Its also a matter of focusing in. I think dropbox had the sort of tangential products that some people like yourself loved but that a lot of people were not using and are not really core to their business. Emily i sat down with the ceo on google on studio 1. 0. Here is what he said. We want to do more and more to help people over time. Its exciting. Mailbox has been a new way of dealing with an overflowing inbox on your phone. Carousel, our idea with that is to have a photo app that lets you have your whole life in your pocket wherever you are. Have every photo you have ever taken in my life with me wherever i am. Emily i know you are tangential, but it seems like kind of a big shift. Part of the idea was creating a family of apps like Mark Zuckerberg was doing at facebook, and now that seems to not be what they are doing. I think at the end of the day, dropbox had to say we make most of our money from businesses, specifically businesses working together and in teams. So, is dropbox becoming more like . . Re they more similar just in scale, they are bigger. They use theay Consumer Option to scale in, which is very different from box. Emily dropbox keeps coming up as one of those companies that isnt living up to its valuation, its unicorn status. What do we see about how well the business is doing . To a box got a 10 billion valuation early on, and since then it has gotten a lot of flak. Fidelity marked it down. Another mutual funds that it is worth maybe half that. I have written a story saying they got out a little ahead of their skis, but i think there is still business there. I think there is still a lot for them to do. So much fors joining us. We did get a statement from over the last year and a half we have learned that the majority of our users prefer the convenience and the original storage we had in mind. He says next year netflix will release 31 original series, 12 documentaries, 10 feature films. As netflix gets deeper into the original content game, our networks becoming more hesitant to license their content . I love your opening line. News, hollywood, netflix is less interested in buying your movies. Its not necessarily great news for other content buyers out there. It has been a slow revaluation of the relationship with netflix if you are sitting in the shoes of companies that make tv and movie content. Netflix pays a lot of money to license their tv shows and movies. On the other hand, Radio Companies are starting to think, you know, we made it Media Companies are starting to think, you know, we made a deal with the devil here. People are canceling cable subscriptions and not watching traditional television, and that is how most media makes their money. Emily is netflix becoming more like a studio then someone than somebody who licenses content . Yes, and they have been going that way for a long time. Netflixs original business was shipping dvds by mail. They got questions from the beginning about how long this was sustainable. They shifted their model to streaming video, mostly bought from traditional Media Companies. They set a goal for themselves of having Something Like half of their spending on content on programming to be from their own pockets, their own original series, their own original , rather than purchase content they can not necessarily rely on. Emily they are also spending big to increase their international presence. How is the business of netflix looking . I think it depends on if you are a longterm believer in netflix or not. They have basically said we have put profits on hold for a while while we expand into International Markets which are very promising growth markets. If you look at their cash flow and profits, they dont look very good, but if you think the netflix strategy is ultimately smart, becoming more of a global company, becoming more reliant on its own content, this is a reasonable shortterm hit for netflix to make. Emily thank you so much for joining us. Breaking now, speaking of warsal reality, the vr continue. Then a max has deposed mark xenomax has sued oculus and deposed Mark Zuckerberg. , canada pill really make you smarter . One company in San Francisco says this is the real thing and entries in horowitz is investing in it. If you like Bloomberg News, check us out on the radio, at bloomberg. Com and on serious fm. Emily what if you could take a pill that would make you more alert and help you boost your memory and focus . Sound too good to be true . One Company Thinks its possible. Nootropics. Led rise,lls are called sprint, jan. What is in them and how do they work . Drugs, are smart compounds that affect and enhance different aspects of cognition. Most popular caffeine. Today is it only affects a single act cognition. Pect of emily so what is in the pill . Fda generally regarded as a safe compound. Blend offfeine, a new tropic compounds for specific cases. Emily what are the compounds . Are they all natural . Quick some are all natural are synthetic. Emily you are profiting but reinvesting the money in r d. What other types of things are you working on . We are super excited about the notion of personalization. How can we personalize . E look at genomes your dna is different from my dna . Your dna will tell you how you react to caffeine or respond to different nutrients. Second is environmental factors. Your schedule, your stress levels, your daily routines are different from mine. It stands to reason we can optimize according to your regimen. Emily we have been talking a fda. Bout issues with the you have had issues with the fda. Are you concerned about dealing with a Regulatory Agency like that . I follow that story because i think its pretty interesting but i am not qualified to talk about it. I think they were fairly secretive in their approach. We have taken the opposite approach. We are open source and very transparent. Look at the exact ratio on compounds of the ingredients we use and all of the ingredients are fda generally regarded as safe. We want that discussion. Emily thank you for joining us. I will keep my eye on you guys. That is it for us. A guest from Google Ventures gv, excuse me. Clicks from our studios in new york city, this is charlie rose. Torlie growing Links International terrorism in this weeks shooting in San Bernardino. One of the suspect was in communication with folks in the United States and abroad who have links to terrorism. His wife pledged allegiance on facebook prior to the attack. Searches of the suspects home making equipment, dozens of pipe bombs and thound