Youre watching bloomberg s lets take a look at markets here today. Currently closed for a lunch break. Heres how they went in the morning session. Just fractionally down. today on the hang seng. We are seeing a turnaround youre watching bloomberg west. Im emily chang, this is bloomberg west. The d. O. J. Picks away apples legal argument of not being able to yahoo adds two directors to the board. Can they give the company a much needed lift. Amazon goes to hollywood. Well hear from the head of the amazon studio. First, u. S. Government strikes back in a legal fight thats expanded beyond apple including dozens now of the worlds Biggest Tech Company taking stand of the protection of encryption. The d. O. J. Is seeking to narrow the focus back to one iphone 5c. Apple opposition to a federal court order to unlock one of the season bernardino shooters phone. Apple wants desperately needs this case not to be about one isolated iphone. That there is probable cause to believe there is evidence of a terror attack on that phone. Meantime, apple out with its own announced just hours before the Company Confirming it is holding an event on march 21st. Which a is new iphone. Joining us now to discuss alex webb cover apple and tim higgins. Tim i want to start with you. Coming from the Justice Department, how has it evolved. Has the government updated its original point . Theyre really hitting apple hard, saying this is a diversion. It needs to become a more national debate. Making the argument to the court that this is not a burden on apple because apple created this situation by building guy devices beyond the reach of a government. Emily revealing new bits of information. For example, i thought it was kind of a bombshell that apple has provided data to the Chinese Government thousands of time. 4000 requests, apple has 74 . Apple talked about this quietly in the past. There was an interview in the chinese newspaper where they talked about this. Apple Justice Department and the u. S. Attorney making the case that apple has repeatedly allowed search warrants to be issued and has given up data whether its in the u. S. Or 27,000 cases or 4000 cases china mentioned. They regularly reviewed these things. Part of the tests of this act is the reasonable burden can the Company Actually do the work being asked of it in the search warrant. It filing makes a great point. This is very capable. Apple dedicated this topic. Emily apple announced it will be a product event. Business as usual on the 21st. Day before this big hearing where a judge is going to rule on this apple fbi issue. These are the kinds of things that the apple boy and girls live for. What do you make of the timing . One hand, they got a huge stage to address the world. Its going to be elephant in the room. Flip side could be, look, ewe will try to refocus on the product. Were about making great product. If they do that, that could also a viable tack fix. Emily what products are important enough that they wanted to announce the day before the big hearing . Its going to be two things. Pretty sure from sources, its a new iphone. Which will be smaller. Its going to be about the small size at the 5s. Thats the one with the flat edges. Theres a new ipad. Theyre going to be sort of the iphone low end of the range. Watch bands. Emily its interesting, they will be announcing lower end iphone that can be more accessible to people around world. I guess to the point, every phone they sale makes it more likely, some phones will be used by people who find themselves subject to search warrants. It is interesting. Apple specifically said, they dont have to go down feature to go down market. Here they are coming out with something that might be targeted towards asia. That would be a lesser phone in terms of features and size. Emily Something Else about the governments argument today. It narrows back to just one phone. I was speaking with the attorney general about this very issue if it really just one phone . Arent there 14 other phones you trying to get information about. Take a listen to what attorney general lynch had to say. It shows this issue is going to grow. But, in every single one of those cases, same as if we were looking to go into someones house and look at documents, we craft a request. We narrowly taylor it. We want to look at what the law allow us to look at. Emily this is the argument that is most troubling to me. Its not just one phone. There are multiple phones across the country and around the world that government want access to. Isnt apple just going to say, its not about one phone at all . Thats what they have been doing. They want to make a global conversation. The fbi and d. O. J. Filing today, saying this is about one phone. This is not about creating a master key or backdoor. It would remain in apples hands and apple headquarters. Emily alex, take us into the bigger context in regards to the business. Apple is predicting sales to decline. Yet, all of these thing are happening at once. We had a piece that came out little bit earlier talk about the interest in apple. It has reached lowest since april 2012. That implies that perhaps, all of the doubts having priced. Lot of people are expecting the stock have to recover. There is going to be a decline. Lot of people are predicting that. The question is, whether its the first or second big step, second big decline, where we are now. Emily all right, alex webb and tim higgins and cory johnson. Yahoo add two new Board Members. Well take a look. Emily former apple executive named coceo of Bridgewater Associates that oversees more than 150 billion. The news comes as investors look to cap stocks. Ruben will replace greggenson. Now to yahoo s to revolving door. The company appoint the two new directors. Returning the size of the board to nine. The newly appointed Board Members are Catherine Friedman and eric brandt, former chief Financial Officer of broad come. Whats odd is the timing. Its also the same week that yahoo was set to have a meeting with jeff smith. Shares of yahoo closed down over 2 thursday. Joining me on the studio is brian womack and eric hippeau. Who are these people . Thats interesting. These are two people that have history of doing deals. Former broadcom ceo. Catherine from morgan stanley, she did deals here on west coast. This is really bringing on two people that do deals at a time when yahoo is looking to make deals. Of course, in the context of when investors won, it comes interesting. Theres a proxy this can be seen a defensive move by yahoo . Emily dangerous boardroom jujitsu. I love that line. It does make it harder for outsiders to take control of the board. This is the same week that yahoo is posed to be meeting with supposed to meeting for the first time. Eric, whats your take here on the timing and the ultimate intention here . My take its a last ditch effort on the part of the yahoo board to push away the activist who want to have a representation on their board. I think thats a very dangerous move on their part. I think theyre all guaranteed to face a proxy fight. It might delay for another six months. They could lose big control of the board if there is a fight. Emily brian, how does it meeting happen . We dont know all the details on whats happened this week. We do know that, this is an important shareholder, whoever needs to be meeting with them. That said, this is a key point in the proxy world time line. We are getting close to that deadline when they put up their nominees. And at the same time, lets not forget, if they sell the company in the meantime, maybe some of this is all for not, if they can get that deal done. Emily that was my next question to you eric. Do you think adding these Board Members, does it confuse even further what Marissa Meyer wants to do here . Im not sure what Marissa Meyer want to do. The board has announced, they are looking at strategic alternatives. Theres a lot of confusion as to whether Marissa Meyer is on board with this particular project. This is all very dangerous. If you say you are looking at selling assets, putting the company up for review, you have to do it. You cant just play games with it. It could look like theyre playing games. Emily what do they need to do to get majority of the board at this point . They would need to put up a nomination slate. Heres what we want to come on to the board. This is done before a lot of companies. Essentially theyre saying, hey, were going to take control here. Were in charge or at least these investor groups are in charge. We want to drive this forward. Obviously they talked about sales. Emily eric, how do you envision the rest of this year play out based on this latest twist . I think it will be tumultuous. I think theyre facing a proxy fight. I think theyre playing with fire and they could very well lose control of the board. Emily at the same time brian, marissa is trying to streamline the company. Shes laying off people. She trying to cut costs. We dug into the bloomberg terminal and found a number of jobs high level jobs still vacant. That was actually interesting thing. She has been under pressure, why havent you made cuts. Why you got this place more efficient. She did some pretty aggressive things. Now shes kind of going forward. Were cutting costs, were focusing and shutting down these things that arent performing well. Now were going to grow. That is a nice goal. The big question is, will investors care. Theyve been waiting a long time. Shes been there since the middle of 2012. Its already 2016. Emily all right, brian womack, yahoo reporter, eric hippeau. Thank you so much for joining us. Coming up, we hear from the man at the elm of Amazon Studios and find out what the retail giant trying to prove in hollywood. Emily amazon is continuing to make strides as a player in hollywood. Expanding its original series and green lighting featured film part of a 2. 6 billion. Roy price is one of the most powerful people in hollywood. Hes going to spend about 2. 6 billion on condition content. Lot of it is original content. Same way in netflix uses house of cards. The message from an industry point of view, were going to set a high bar and were going to make the great version of the show and we are were interested in doing things in a new and different way to make the show better. Every show we produce, we think about it as we want the show to be somebodys favorite show. Were not looking to do middle of the pack show. Unaneled world, to on demand world, people is have to watch it to demand it. Welshing we came to that conclusion. Somewhere around 2008 because it just seem inevitable that everybody was going to want their product to be different, special and to serve customers in a unique way. It seems like an opportunity that we could dig into and create something really unique. Why not take the best content thats out there already and make a Distribution Plan . When do you that, you get the stuff from the outside. But then you put the Little Cherry on top with Something Special developed just for your pleasures customers. Its something unique for your service. What makes an amazon show and amazon show . Theres a certain depth that you can go after and the context of a streaming service. Depth and complexity of characters. Because the shows are on demand, you can expect people to watch one episode after another. I think you can be a little more layered and interesting with the story telling, with giving out the information, the stories can what are the metrics . What are the metrics of a successful amazon show . Its relevant. How many people are watching the show. Are they just watching episode one or they carry through the end. That tells you something about how satisfying the show is. Bausch in particular done well there. I think the other question is, are people talking about this show. Is it reaching people who maybe arent amazon customers yet or people who havent tried the Video Service yet or whatever. Get the word to those people and have them try it out. Are there things that youre able to do with data with book sales and that no one but amazon can do . If theres a book series, you have a lot of insight into how its selling. Number one. Do those people tend to be prime customers and watching prime video up. Similarly, even if there isnt a book series, were doing tv series. Obviously we know a lot of people who are huge fans of woody allen. I think well be able to do a good job reaching out to that community. We can do a good job identifying customers who responded to that kind of show in the past and reach out to them. Explain to me in math how this business works ultimately, idea that people we want people to subscribe to prime. Because an incredible deal that brings shipping and video and music and photo storage and all of this stuff. Prime video is part of prime. Original content is part of prime video. Original content includes great shows for adults. We wanted the golden globe. Great shows for kids. We won emmy for best preschool show last year. Great movies, which are coming out in 2016. And a lot of license content and that all is part of prime. People subscribe to prime and that the economic prime fiends prime video in the original content. When youre a subscriber of prime and subscription base grown over the last year, its up more than 50 , its definitely working for customers, people tend to get more engaged with amazon and shop more. Its good for them and it works out for amazon as well. When you see netflix what do you see . Theyre a great service. Theyre part of this whole phenomenon of subscription video. Theres room for multiple players in this whole subscription video thing. Are we getting to a spot where the original creator of the content is what youre doing with netflix . Where catalog and other people stuff is less important . Why we are in we are getting to an area where the value of kind of a solid show, pretty good show is not what it was because it used to be hit show at 8 00 and you have a hit show at 9 00. You need that show at 8 30 that going to keep enough people around to get them to 9 00. But, on demand world, you dont have those hammock shows. The role for the good or pretty good show, its not as important. In developing shows or developing movies, the hard part is not so much distinguishing between something thats bad and something thats good. Hard part is distinguishing between something that is good. Its like totally solid and something that is really distinctive and its going to capture the right guys. Its going to be one of the best shows of the year. People are going to be talking about. Thats really the more challenging part. Emily cory johnson our editor at large with roy price, amazons head of studio. When we come back, the Silicone Valley Bank goes to london. We take a look at britains version startup theme. The chinese currency is strengthening after the Chinese Central Bank raised its limits. The governor will hold an annual press conference on this. Key data on retail sales is coming out. Lawmakers in myanmar are selecting a new president. They are choosing between two candidates. One put forward by democracy in one put forward by the military. He is constitutionally barred from that. Suspend the relevant clause of the constitution. South koreas latte group may be among those bidding for vietnam stores. Holding also submitted offers. C stores in vietnam could fetch a high price. Bp is avoiding some key lawsuit. They blamed bp for the losses they suffered after the ban on offshore drilling that was imposed after the gulf of mexico bp oil spill. Those the headlines. Lets check in on how markets have been trading. Asian stocks are making a comeback. Now gaining for a second consecutive day. The shanghai composite is up. The hang seng is gaining momentum. Was in negative territory but not anymore. Telecoms and utilities are a rebound in japan. The highest in two months. Emily this is bloomberg west. As u. K. Startup scene flourish Silicon Valley bank roughly 4 billion in management. Is expanding into the united kingdom. This is a bank that helped 47 of the u. S. Tech companies that went public in 2015. Bloombergs carly sat down with Gregory Becker in london. What is interesting, you want an entrepreneur. You want these companies to think about being independent. You want them to build independent companies. Thats kind of the first part. What we found on the survey, theres also realism to it. Roughly 56 to 59 of clients are saying we believe in acquisition is the exit strategy over the long term. I think thats realistic. Its actually conservative. When you look at the data, m and a is about 95 of their exits. Id say its more of a realism that m a, the final exit strategy with regetting realistic with the evaluations . Graduate question is how long would it take to find that stability. Its not like the Public Markets adjusted immediately. Private companies, the evaluation change when the next round of financing is raisessed raised. Some of the companies raised 50 million to 100 million, they may have cash that can last a year or two years. They may not have a evaluation question they maybe able to grow into their evaluation. If its earlier, we see what the markets is going to value that company at. It depends upon when they need to raise capital. Do you think the market, do the market get ahead of itself . Yes. Absolutely. It depends upon any given company. My comment is a broad generalization. The mark get ahead of itself. You can look at some of the companies and what theyre doing, is unprecedented. I been with Silicone Valley Bank for 23 years. To me, this is a question about companies being priced for perfection. Which is a little bit different than saying the Business Models dont make sense. I think well see evaluation production. Some companies will grow into evaluation. Some companies will fail. Thats just a Venture Capital model. I dont think we should be surprised. Would that be a dramatic failure . I dont know for sure how its going to play out. These Companies Got incredible mass. If you look at all Unicorn Companies out there in the u. S. , clearly, some of those arent going to make it. Whats different, again, these companies do have large revenue. Going after big markets. The probability theyll go away completely is a lot less likely. Probability theyll raise lower evaluations is lot more likely. Interesting in unicorns being born in europe as well. Lot of great data that spun into rival the amount coming out of u. S. What about Silicone Valley Bank helping foster the growth in europe . The u. K. Is more than 100 employees here. U. K. Is a great market for us. London is kind of the hub to allow us to look other parts of europe. Markets were looking at and germany will probably be next on the list. You look at a level of Venture Capital. Its very consistent what you seen in the u. K. What is the geographical trend coming out of china. Im interested to know you did the source and gathered data on china. What differentiate the startup coming out of china . One big difference you see between china and u. K. And u. S. , what their expectations are for exit. What you see in china, very high portion of Companies Expect to go public. Part of it is, there hasnt been for a lot of m a transactions happening in china. Philosophy why we want to acquire something we can Hire Developers and build it ourselves. Its pretty consistent across all three geographies. Bank ceo Gregory Becker speaking in london. One stock were watching is square. Showing strong growth but dropped today on three potential areas of concern. First square capital. This is the still Small BusinessLending Service housed under the software arm of the company. Some say this business could be huge for square but with high margins comes agreer risks. Ceo jack dorsey spoked to he over the phone. These are small and microbusinesses that were not able to get advances from their banks from the past because a lot of these advances were just too small. One of the things that were focused on and what were seeing as a behavior is that our sellers are actually asking to pay down the advance fastest and get another one. Emily second concern is of course, competition paypal. First data apple venturing on squares turf. Dorsey told me no one is competing with square on all things. Just parts of the business. Third, is of course split responsibility. Dorsey is leading two public companies. Both twitter and square present opportunities. I asked him whether he think running both companies is sustainable and good for both companies long term. My focus is making sure both companies succeed and thats exactly what im focused on. I think both companies in different phases and market dictates Different Things for both companies. Emily dorsey did reassure me the company will start making the money before the year end. Saying profitability is in his line of sight. Now nasa is not giving up on the next mars mission. The Insight Lander was supposed to launch earlier this month. But was canceled due to a key construction. Instrument malfunction. Its now rescheduled for may 2018. The goal of the trip is to investigate the interior structure of mars. It will drill down 16 feet and measure subsurface activity. When we return, diving deeper into the london tech theme. Can the city startup keep growing. Later all eyes on vietnam. Why he thinks its a texting on the rise. The company would charge 150 for a secure antipiracy box that grants access to new film. The service isnt cheap while the movie maybe available within a 48 hour period, you still have to pay 50 per view. Coming up this weekend, be sure to catch that exclusive interview well have an extended conversation from his home in los angeles talking about facebook, spotify and more. Lets get back to the startup theme in london. The whole sector is now valued around 44 billion. Making london the Biggest Technology hub in europe. The city claimed 13 Unicorn Companies and investor interest is growing. Russ Shaw Technology ambassador for the mayor of london is in the united states. He joins me now from new york. Russ, thank you so much for joining us. London tech scene is growing robustly. Perhaps the hottest startup city in europe. Ill give you that. How recent is this development . I think this development has been building over the past five to six years. Weve seen Something Like 10 billion of investment going into the sector. I think as each year continues, we see more and more money, more and more startups were starting to see good exits. Momentum is there. Emily london rent is among the highest in the world. It is not a cheap city. What are you doing to help startup overcome those hurdle and encourage growth . Grandparent were seeing there are a lot coworking spaces. There are plenty of incubators and accelerators. Many startups can get access to these facilities and cost of rent in these facilities is pretty low. That is very helpful. Were also seeing tech move to many different parts of london. Going out further east. Its going to the south of london. Many of these companies are saying, look, i may not be right in the heart and central of london, they are finding other places around the city where rents is more reasonable. We have to keep on top of it. We have to make sure that property is accessible. Emily i want to take a look at uber. Boris johnson has been fighting uber from the very beginning. The look cabs arent happy. What is your position on uber . I think we need to take a balanced approach. I think what we saw from london, we think theyover reacted. Uber was out there with a petition. They managed to get 100,000 signatures in a short amount time that sent strong message back to the leaders in city hall and to transport for london to say, hey, wait a minute, many londoners value uber. Its an important part of the economy. Its growing. The traffic patterns are moving out and you can see many people saying, i want to use uber. We need to have a balanced approach. Black cabs are an important part of the citys history. Emily now, defeat the opposition, uber has been growing exponentially in london. Specifically, what regulations would you like to see uber operating by . How are you advising the mayor on this issue . What were saying, rather than doing anything drastic at the moment and there was a call for example where customers would have to wait five minutes before the uber could set off and things like that. Lets sit down and bring some of the folks from uber in. Lets talk about what will be practal. Lets not over regulate the sector. Lets get the right parties around the table and have a proper discussion. What is the balance here . How do we make sure black cabs which play a vital part of the economy, dont feel overly threatened by this. At the same time, Companies Like uber, sharing an economy is so important. Emily now mayor johnson is also campaigning actively for the u. K. To leave the e. U. Our college in london is reporting that its impacting the tech and startup companies. Theyre seeing investors back off. How does london address that the Technology Sector has been pretty strong saying, being in the e. U. Is very important. I run a group called tech london advocates. We surveyed that group a few months ago. 87 of our advocates said they want to remain in the e. U. 10 werent sure, 3 said lets have a break. Weve seen other surveys whether its from tech you can. Coming out with similar results. Clear message that says, we really want the u. K. To remain in the e. U. The challenge is, we dont know what lies after a break. There is uncertainty there. What would that actually mean. We dont exactly know. The other side of it, theres a positive story for staying in the e. U. Theres an initiative called the Digital Single Market Initiative which would make it far easier for the scale ups to transact with each other to have reduced expenses and to make sure Legal Expenses arent significant. Were trying to make sure this message gets through but its a personal decision. Emily were going to continue to foul. Russ shaw, Technology Ambassador for the mayor of london. Have fun. Thanks for stopping by. Coming up now, 500 startups increasing its stake in southeast asia. Why investors sees potential for another new tech hub. Emily update to our top story. Apple quickly swinging back to the u. S. Government after the Justice Department released a firing. Saying apple was desperately trying to make case. It came as no surprise apples general counsel saying the company will stand by its legal rights. The company is both desperate and trying to sneer the company. The u. S. Is the only government to have asked the company for a backdoor. But warn that if the u. S. Have the precedent now, the rest of the world will follow. Vietnam may be just the next tech hot spot for innovation. The company most famous tech export was the 2015 gaming hitfloppy bird. Here with me now David McclureFounding Partner of 500 startups. Why vietnam . Lot of people in vietnam. Lot of people online in vietnam. Internet is exploding all over southeast asia. I think theres a lot of hot sectors were still focused on. Basic things that make money. That will be around financial services, probably around healthcare and education and lot of excommerce. You got giant firms say were not going to invest my money abroad. I think theyre very smart guys. Mark is one of my investors. I wouldnt rip his opinion. Emily personally he isnt an investor in 500 startup. I think their expertise is in the u. S. And English Speaking markets. Thats great for them. Just because they dont choose to go to other International Markets doesnt mean theres not an opportunity for us. Emily what kind of competition is there for investment in places like vietnam . Not a lot. A lot of emerging markets still pretty new. Especially at the stage were investing which is at the early stage. Theres not a lot competition at allly. Usually were the first checkin theres may be only a few of funds that are active. Its awesome. We happen to be an investor. Our managing partner was very early investor in that company. I know founders here, lyft and obvious. I think its a great business. Travis is doing great and lyft is doing great. Emily lyft and grab they have some alliance to take on uber. Everybody who is not uber is competing with uber. Travis is pretty formidable competitor. Emily i know youre on the road half the time. What from your perspective what goes into figuring out where the next big tech hot spot where you need to be . I spend a lot of time traveling. Were investing in those countries out of our new fund. We raised 200 million fund. Were also starting funds in each of those regions. We have ten of those off the ground so far. Most of those are people who are native to those countries. We think theres a lot of opportunity to go direct and really get in early on a lot of those companies. Particularly places like vietnam, thailand, latin america and middle east. Emily dave mcclure, always great to have you here on the show. Thank you. Now, to find out who maybe having the best day ever. Perhaps future commuters in slovakia. Transportation Technology Says its looking at building a super fast transport system with the government. One hour drive would take eight minutes in hyper loop at full speed. Its unlikely a hyper loop could travel full speed. You get the drift. It will cut down your travel time by a lot. That does it for this edition of bloomberg west. Thanks for watching, well see you tomorrow. Announcer the following is a paid advertisement for time lifes music collection. Chances are because i wear a silly grin announcer the moments you will always remember. 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