Good conscience. Bloomberg is the founder and owner of the Parent Company of bloomberg news. From bloomberg world headquarters, i am mark crumpton. Emily im emily chang and this is bloomberg west. A favorite new target eager to rein in skyhigh marketing budgets. Amazon quietly changes course on encryption. Bezos brings it back after public backlash. In his first interview since Winston Stott lost 50 of its value, i speak exclusively to jeff weiner. Another twist in the standoff between apple and the fbi. The u. S. Has appealed a brooklyn courts ruling that apple does not have to help unlock an iphone. Lawsuit shows apple did this routinely. The company has complied every time until now. In fact, apple helped open joining me now is adam, who covers apple or bloomberg news. Adam there are a lot of things in multiple coast. In california, you have the case involving the San Bernardino shooter and in new york apple is battling the government. It shows what operating system was on the phone in question. In San Bernardino, it was software called ios8. It has hefty your encryption. This one is ios 7. What the government is saying is with this software system, apple has the capabilities to do it, they have done it in the past, and they should be helping. Emily it seems the government should be changing its rhetoric because it is just this one phone they are talking about and now we know there are 12, 14, multiple phones across the country where the government is asking apple to do this. You think they are trying to point out the i dont know, the hypocrisy in apples own argument . Adam they are trying to show the inconsistencies. About howck and talk as far back in 2008, when the original iphone came out, there were some cases involving some crimes where they went to apple and asked for assistance. Apple has been providing some level of assistance to the government, but they have been ratcheting that back and putting more protections in place in the area of encryptions. That is what steers us to what is happening in california. Emily how much does this undermine apples argument that it should not do this for anyone, let alone the terrorist in San Bernardino . Adam they put it on the umbrella that the government is overreaching under the centuriesold law, which is what the government is using to ask apple for assistance. Apple is saying that that is going to far and company should not be compelled to provide this sort of assistance. Emily why did they not make a stand until now . Adam that is a good question and one they need to answer for. In the brooklyn case, the difference is that this is something judges typically sign and send the order on its way. In this case, the judge asked apple for its opinion on doing this. Apple use that as an opportunity to contest it and say they were asking too much. What changed is the judge gave apple an opening. Emily what is the timeline . We are waiting for the government to respond to apples responsively San Bernardino case. Adam you have dual tracks going on. The next thing in San Bernardino will be the governments reaction to apples reaction, and from there this thing is. Oing to get a lot of appeals if apple loses in San Bernardino, they are expected to appeal, and vice versa. This is ultimately going to bes decided by higher courts or policymakers in congress. Fory thank you so much bringing us that update. To another story that we are watching. Alibaba opening the week with a the affiliateat is raisinglipay money. That would make that violation would make alipay more valuable than uber. I want to bring in author and chang. Tracker gordon chai gordon, what you make of this news, especially given the broader news . Gordon this is good news for alibaba because it shows that in affiliate has a high valuation. The other thing that is really important is in the first round of financing, the state took 12. 4 interest through two entities. This time you have a state bank. You basically have the government taking bigger and bigger interest in the financial. I dont think that can be a good thing. Emily this is a company we have been expecting to go public at some point. I find this interesting, especially given the Business Climate in china. David i am not sure about gordons point. I would like to as gordon y eight it why it is bad. It is even possible to do it without government involvement . I think, if i were an investor, i would be reassured by that. System, ofchinas course the government has interest in your business because of what david is referring to. You get a favored position. This is really not good for china because you have a company that is involved with some of the most innovative going on in the chinese economy and now you have the dead hand of the state bank wanting to take it over. I dont find that to be a good thing. It is a lot of things about the chinese economy. Emily what is your take on how this fits into the broader climate . We have been talking a lot about valuation in the united states. This number, doesnt strike you as extremely high . David it strikes me as of certainly high. I dont understand how it could possibly be a legitimate valuation. They havent achieved it, they are just trying to get it. It does not make sense to me. Longterm, the chinese economy and ecommerce and payments in ecommerce in the chinese economy is a huge opportunity. Going back to the government versus alibaba, alibaba is a surprisingly strong counterweight to the government. As companies go, i would say it is one of the stronger ones and i think jack ma has always like to play a little to the edge. He knows that you cant really cross the government. I think they will continue to have quite a bit of authority over the company direction. Emily we are seeing another alibaba philly alibaba affiliate buying the china lottery, which is something that alibaba has stayed away from because of government regulations. What do you make of this . Gordon i dont think this is a good one, either. Alibaba has a core business. They can expand it into rural areas. They can expand it into the united states. Instead, we have seen, even before the ipo, alibaba buying into business is kind of like a scattergun shot. I think they need to concentrate on what they are best it best at. When you see at, the markets dont like this. Alibaba and stock drops every time he makes an acquisition. That is not a good sign. Emily what is a Progress Report on alibabas push into rural china . In sunniht a big stake. Is it working . Gordon it is certainly working. They have 12,000 or so rural centers. They plan on going to 100,000. I dont doubt they will make it. That will not be a material factor in the next couple of years. They have this big head start. This will be huge because there are so many people in rural china that have had no access to online shopping. This is a good thing. Emily gordon chang and David Kirkpatrick, with me for the rest of the show. Coming up, activist investors appeared to have a new favorite techtarget this year, but will they help or hurt this budding industry . Later, my in depth interview with lincoln ceo jeff weiner. How hindsight changed his thoughts on yahoo s uncertain future. Emily shares plummeted monday because late on friday, the Company Announced that its ceo and cfo had sold the majority of their personal stakes. Not a boost of confidence for investors, especially since the disclosure came after dismissing doubts about their Business Model. Just eat is the u. K. Version of grubhub and it is facing local competitors and the come additive the possibility of amazon and uber encroaching on their home turf. They have a limited window when they can legally sell shares. Investors have found a new favorite lace to circle the software market. Look at the recently disclosed technology. N space is looking increasingly attractive to activists and a big reason why is spending habits. Man deke saying joins us from new york. Also still what does is david kurt hat trick. What do you make of these trends . What happens is when you are a small Growth Company like click and cornerstone, you have two choices. Either you have to keep delivering on sales growth or you have to start proving profitability. And has happened with quick cornerstone is growth is tapering. What typically happens is you will have a bad quarter, via ua should is correct, they come down quite a bit, violations valuations correct, they come down quite a bit. The difference is with autodesk, it is a case of Business Model transition. They are transitioning from a license model to a subscription model. It is about operational improvement. I think the playbook is slightly different in case of smaller versus large companies, but it all comes down to valuations coming down, margins being lowered, what it could be, and that is a perfect setting for an activist to get involved. The software feel like a emily the software feel like a clunky sector . A lot ofthink there is innovation. Carl at autodesk has a longterm view, but maybe that is what investors dont like. I am not as familiar with the other companies. I dont see a fundamental problem in this sector, no. Usly connect the dots for about activists in software and tableau shares which have been smashed her in mandeep every six months smashed. Mandeep every six months, things change. Data Management Companies were doing exceptionally well until last year when the focus was on big ada. Now the focus is shifting towards artificial intelligence. What typically happens when growth starts to slow is these Companies Get acquired by oracle, ibm, microsoft, and this kind of consolidation has taken place in the past. Spss. Quired there was massive consolidation it while back. B. I. Was hot. Once growth started to slow, there was consolidation. Emily i spoke with the ceo of last week. Symantec they have taken a stake in symantec and subvert we have a threeyear transformation of the company and i think this is an important Inflection Point for investors saying, now it is time to get in the story. Emily a bit more optimistic there. This narrative . Mandeep with companies of that size, it is about divesting of business, making operational improvements, bringing the market margin back up to where it has potential, and these things take a while. It is possible. Time and again we have seen companies have to diverge as this is to focus on their core, which was the case with symantec , and i think will be the case with autodesk. They have divested one of their businesses. That is what i expect. Emily thanks so much. Kirkpatrick,vid you are sticking with me. With a slapping verizon 1. 35 million fine. The company failed to tell customers about a tracking technologies that fall you from website to website. The super cup your super cookies can target customers. Amazon reverses course on encryption. Why the aboutface . Plungingtflix shares 6 in trading after itt research noted the 2016 domestic streaming estimates outlook is too aggressive. Netflixicipate anticipates that streaming substitutions will increase by 1. 3 4 million. They missed their fourthquarter estimate last year. Amazon is reversing course on encryption. The ecommerce giant will restore the security option on followingevices customer backlash. They decided to remove encryption on their devices. Cory johnson has been following this story. Ptin or opt is it opt in or opt out . Ry you complain were for devices that dont get ads or pay more for ads when you login. With the existence of identity theft, this could not come at a worse time for amazon. Emily why did they do it in the first place . Cory they have not said. They have been asked and did not say. It may have been for simplicity of use. Amazon is an important player in the world tablets. They have in any given year anywhere from the top four or top seven. They sold over 19 million devices in the last three years alone. With the market share hovering in the top five, top six in the quarter, and having sold over 19 million devices, they are a very Important Company in the world of tablets and their Cyber Security approach is felt by tens of millions of users. Emily we talked about amazon at go, which could become amazon echo, which could become a another big item. They are lowering encryption on their tablets and publicly coming out and saying they support apple. David i think there is an overwhelming and somewhat surprisingly large support for apples position in the entire tech community. I think amazon clearly believes in encryption given their support of apple, but even going back to why apple is fighting the case in brooklyn earlier, i think mood has shifted and it is surprising even people in tech how many other people in tech agree with them. There is almost a uniform view that the government should not have the right to have backdoors into this product and that things should be encrypted for the safety of consumers. Emily how important is this as a branding issue . Cory it is important also as a consumer issue. Visibilityses their as a tech company. They also have Amazon Web Services as one of the most Important Services on the internet. I think that is why the corporate concern about privacy is so concerned about amazon. It is crucial for amazon when it comes to technology. Emily you also have a big series coming up this week about amazon prime video. Cory the company is going to sell over 2. 5 billion of content over the counter your. I was in hollywood last week at the premiere of a new show. I talked to some the people in hollywood and even people in hollywood are shocked by that number. Emily netflix is spending just south of 5 billion. Cory amazon doubling its spend every year. They are in a very serious they areayer very serious and important player. The competition is done by disney, hulu, showtime, hbo, amazon, and netflix. We are to look at what that means, who is leading the effort at amazon, and what that means. Emily amazon has a couple of hits on its own. This used to be netflixs game. Is it anyones game . David anyone that has multibillions to spend. If i was in hollywood, i would feel nervous because these companies are gigantic as this is and have gigantic ability to raise capital and borrow if they want to because these are the areas. I am amazed by the numbers you are talking about here. Emily David Kirkpatrick and cory johnson. Thank you both. Our exclusive interview with lincoln ceo jeff weiner. Yahoo ,is take on china, and more when we return. Find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. You are watching bloomberg west. The results of a new poll showing first exclusively first to bloomberg, the distrust that americans have for immigrants even those who enter the country legally. 61 of americans polled say continued immigration jeopardizes the u. S. , numbers were among baby boomers. Turkey has new demands for fresh concessions. The Prime Minister showed up at the summit armed with a new wish list that includes more money for asylum seekers. As part of the lastminute deals, it could be 6 million euros. The funeral for nance iowa reagan will be held on friday in california. She will be in repose for public visitation. Involving or stories sports superstars. Two super bowl championships, Denver BroncosPeyton Manning nounced his retirement and sharapova took full responsibility for what she called a huge mistake. He could face a lengthy ban. Powered by our journalists and news bureaus, from bloomberg world news headquarters. Re in new york, 10 30 in sydney. We have a look at the markets. Paul, good morning. Good morning. A mixed picture from wall treet is a mixed picture here. Here in australia, we have been open for 30 minutes and we are up over new zealand and a lot of data, expecting revised g. D. P. Figures but not expected to be great news. And the big one, chinese trade data for february expecting a decline of 12. 2 there. It will be interesting to see how that number squares away with some of the rhetoric we had from the National Peoples congress about Growth Prospects and more risk of a hard landing in china. The big talk in the morning, the stock price up, 19 , biggest gains on record and seeing australian iron ore ising 3. 4 in early trade. Emily this is bloomberg west. Is season we kick off season four. Studio 1. 0. I sit down with a c. E. O. , first interview he has done since it was slashed in half. The stocks plummeted over 40 . They are shares and down 49 . Last week, he decided to give away his entire 14 million stock bone just back to the employees. I started by asking about his reaction to the freefall. I think it was a surprise. We werent expecting that kind of response. And when you look at the core elements of our business, they remain healthy. If you look at north american el cells, growth cells has remained consistent. Sponsor updates, business line, still the Fastest Growing business. And post the launch of our reimagined and seen an acceleration on engagement. The core elements of the business. Emily you gave a speech to employees at a meeting and you said linkedinis the same company. How do you feel about this, not the c. E. O. , but you . Im not sure it stinks. There were some surprises. You want to make sure you are there for the people that matter most. Create value for our members and customers and nothing whatsoever has changed. Emily do you think you can accelerate growth . As we continue to execute, you want to address opportunities. Emily has this impacted morale at all . It brings people closer together. And the more you go through these kinds of challengeses and meet these challenges head on and successful and nothing fundamental has changed. The stronger the team becomes, the stronger we become as a company. Emily you have talked about compassion nature management. Give me an example of where you have applied it . I apply it in every interaction. Putting in the persons shoes and undering their perspectives. And you are going to disagree. They are trying to get one over on you. Its a zerosum game. And that may be the further thing. They may be having a bad day. And you may be talking about something that they are not as knowledgeable about and dont want to show that vulnerability. Emily some of the most successful c. E. O. s have been ruthless like steve jobs. They are known for things completely uncompassion nature. Different styles work for different people, Different Companies and different situations. The worst thing somebody could do is emulate what somebody else does because that person has had success. What works for steve or what works for others and people like that may not work and more often than not does not work for other people who try to employ that style and people just dont follow. I think it depends. Emily more of my interview where we discuss his relationship with his partner. Mmp ws says the cars will be robe ots on wheels. It features a retract i believe Steering Wheel to switch between manual control. B mmpwmp said, most vehicles ill probably be completely selfdriving. People will get around. How will we justify the existence of vehicles, a brand for the individual and sheer driving pleasure are the focus of everything. Bloomberg west continues next. Snow emily jeff weiner joined the company in 2008. I asked him to talk about the secret to their relationship. There is a lot of mute tall respect and we were friends. If you ask reed the question, it turns out that hell tell you the story and veer bait im, so there is something to that, just in and of itself, we see the relationship so similarly. One of the most frequently questions i was asked, waste my relationship. That was code for what kind of drama is there and the former c. E. O. To the newly hired professional c. E. O. And there was no drama. What people didnt realize was i didnt join linkedin because of reed and the opportunity to work together. He is one of the most thoughtful people i ever had a chance to work with. Emily you said you never aspired to become c. E. O. I didnt aspire to be c. E. O. Because i have seen particularly in publiclytraded companies and that could be a rough ride. It wasnt about the title but was about a sense of purpose. Emily you have given a lot of thought to the future of the workforce and how its changing and i would love it if you could paint that picture for us. It is a significant issue in southern european issues, you have youth unemployment hovering 50 . Where people dont feel like they have access to opportunity. They dont feel like they have a bad voice and bad stuff starts to happen. Fragmentation of work by virtue of the sharing economy and some of these new marketplace environments where people can set their own hours. Emily how do you plan to account for the 1099 economy, the uber drivers, people who are freelancing or have multiple jobs. They have their profiles on linkedin. And thats how opportunity accrues to them. Emily do you think this is a dangerous trend. Do you think Companies Like uber should make it fulltime . Clearly, things are changing and have to revisit as a society the laws and regulations that govern the Way Companies used to operate. When you are working, there should be certain benefits that are afforded to individuals. Emily you said creating Economic Opportunity is the greatest issue of our time. Women are critically underrepresented in technology. Why do you think that is . You have a pipeline issue where you may have had historically fewer graduates with specific degrees in engineering per se. And that now starts to improve, which is wonderful, hopefully we will see the gap. And we are casting as wide a net as possible. Emily women are 90 of technical and 30 in leadership roles. Im not happy but is it moving in the right direction, yes . We want as inclusive a base and employees as we have for our membership. And that certainly is the goal. Emily would you advocate hire women just to see what happens . I dont think we should be hiring people to see what happens or hiring people in a way that reduces the bar. We should be hiring the best possible person for the role. And one of the things we can do to improve diversity is employ techniques which the nfl has used. They arent mandating you have to hire these kinds of people, whether he gender or ethnicbased. You need to interview people that is representative of the and more inclusive of the population that you are drawing from. And they have had amazing success with regard to improvements and Diversity Inclusion as a result of that. Emily up next, i asked him out his past at yahoo and Marissa Myers strategy. We remember a technology reliminary year, tomlinson developed the first persontoperson email in 1971 while working for raytheon. He said dont tell anyone. Email wouldnt take off until many years later and would become part of modern life that we now take for granted. More of bloomberg west, next. Unlocking an iphone doesnt present a burden on apple. This comes as prosecutors appeal a brooklyn judges decision that apple didnt have to unlock the iphone of a convicted drug dealer. Mack with jeff weiner. We know he was executive Vice President at yahoo where he ran the Companys Network division. And we talked about the turnaround strategies. Trying to change the culture of an organization is prohibitively difficult. I think marissa walked into a situation that she must have known was going to be challenging to the point there as probably not a huge probability. Credit to her for still taking on the role and i think she was able to make some changes there in terms of the culture and in terms of the Development Culture and the transition to mobile. But thats a really, really challenging situation. In terms of not just the culture but in terms of the Legacy Assets and way people used yahoo , the world has evolved dramatically from the earliest days from the consumer web and so trying to navigate that, its tough, its hard. In terms of where they are now, it sounds like they are very seriously evaluating to sell the company. Emily is that the right call . Im not in marissas shoes. I cant see the leading indicators or the future road map. And one of the reasons that marissa has been reluctant to sell the company because she may have been excited or confident and create value. There is a whole host of valuables when you are on the outside looking in that you really have to put yourself in her shoes. Emily what do you think is the best and worst Case Scenario . It is being used by millions of people on a global basis. If it is sold, it sold to an acquirer that recognizes the value that not only that yeah who creates. And that is how marissa is trying to do whats best. Emily how do you make sure that linkedin is not the next yahoo . If i didnt worry, i wouldnt be doing my job. Only the paranoid survive. Its the right level of focus in terms of the broader landscape and never losing sight. Emily facebook is chewing it up. Linkedin do it . Its highly fragmented and efficient and target the right Decision Makers so we are going to continue to focus on building up that part of our business. Emily one thing you have on facebook is china. You guys have found a way to penetrate china. How would you rate your progress in china . Do you feel like you have cracked the code, do you feel like there is a lot more work to be done there . I would hardly suggest we have cracked the code. China is a highly competitive landscape. And it exceeded our expectations. When we started, roughly a year ago, we amassed roughly four million members in english in 10 years. We have seen that substantially grow. And in terms of our core businesses, talent solutions, marketing solutions, et cetera, there a lot of room for growth and early days and focused on getting the membership before we prioritize modernization. We are pleased where we are. Emily you mentioned you had to make compromises and ask users to crens sore themselves. How do you navigate that process . How often has that happened . We started to navigate that process before we launched. We spent the better part of 18 months understanding who we were as a company, our culture and values, what it would meet in terms of compliance and despite all of those discussions, the first time you re asked to censor a member or take down a profile, its gutwrenching, those members are creating value for those mbers is why we do what we do. China plays an enormous role and by virtue of our presence in china, we can not only connect our chinese members and enable to live the kind of life they want to live but Better Connect companies within china to the Global Economy and thats going to create more value for everybody. Emily do you think that facebook and twitter have a chance in china or are they so different that arent going to make it work there . We are a platform that is creating opportunity. And the chinese are expanding ranks of their middle class. In twitter and facebook, you have platforms that are oriented towards facilities and so its different. It doesnt mean its not possible but its not different. Emily my conversation, check out the entire interview at bloomberg. Com. And still with me my guest host linkedin stocks havent recovered and you said they dont look that bad but clearly investors have a problem with this company. I was speaking with an investor over the weekend was disappointed how linkedin communicated this to the street. It is interesting listening to jeff and it was a great interview, but i think clearly something has been missing in the way they are explaining their business and the questions you asked him about growth are ones that i dont think he fully answers but again, he is still growing fairly well, but the question remains, is this a massive Startup Growth opportunity or a steady as she goes kind of longterm business sort of value stock over time. I dont think the answer is clear, although my opinion, my gut is the opportunity for linkedin is massive. Emily i wonder for any company, where the growth story just simply changes . You asked him that and maybe. But my gut is it has nt happened for linked in. It is still a fairly young business that is beginning to figure out the ways to quote, unquote,mon advertise. I think its position in the Global Economy is unique and it is a Global Social network with the highest quality demographic in every country where it operates and Getting Started with advertising and media publishing. I think it is a fantastic marketplace for content and a place that is going to continue to matter for global growth. And thats why the Chinese Government wants linkedin in there. Emily do you think that china could change linkedins growth story . Possibly over time. China is a big question mark. But i want to make sure i fit in this point. Its amazing what a great Business Leader he is. And considering how cynical americans are now about business, more people should hear him talk. Emily i have been trying to get him on the show for a long time and he finally agreed when he found out we were going to be talking about the elephant in the room. As always, david, great to have you. As we wrap up this hour, one thing, passengers on Alaska Airlines flight will witness a total solar eclipse. They changed the time so passengers could see the entire event. Lucky to have a ticket to that one. Thanks so much for watching. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. President have the of uber technology. The transportation and Logistics Union corn and more luable and valued at 62. 5 billion. It has expanded to ridesharing. A class action lawsuit