According to an aide. Wants a threemonth moratorium on student loan payments. A proposal to appeal to sanders supporters. Resident obama says u. S. Troop withdrawals from afghanistan will slow down. Take a listen. Instead of going down to troops by the end of this year, the United States will 8,400 in approximately troops in afghanistan into next year through the end of my administration. The president says security in afghanistane remains precarious and the taliban is a threat. Global news 24 hours a day owered by more than 2,600 journalists and analysts in more countries. This is bloomberg. Bloomberg west is next. This is bloomberg west. The titans are back in sun valley. Seel dig the idaho buzz and which deals could result. Who is taking a bite out of and well take a deep dive into china and the next. Trend, whats two allstar chinese tech Investors Join us for an in depth conversation. Coming, soergers are ays the former the consolidation is coming and also fears it will cause creativity suffer. The cbs thinks recent deals make sense for both buyers an sellers executives among many attended the annual conference with otherey, idaho, titans. Forget winter, mergers are coming, or so said barry diller, who believes the consolidation is coming and also fears it will cause creativity to suffer. The executives among many attending the conference in sun valley, idaho. You have been killing it. I have been to this conference a couple of times. It is sort of amazing, the giant heads of business and Media Business and tech business who gather there. We watched as folks came in yesterday and it is a broad swath of people, so you do have executives from tech, entertainment, and media. They tend to mingle very organically. You do see folks talking, going to get coffee, and we on the outside are left wondering what they have in talking about, but a few of them are sharing what they have been thinking about, at least in broad terms. Cory we have pictures of everyone from Michael Eisner to jack dorsey. When these people gather, there is a lot of buzz in the air about a handful of deals that have been done. The business of providing content has never been hotter, but theres these looming giant epic moves here, not least of which what is going on with the redstone family. David yeah, really fascinating. We were all waiting for Sherry Redstone to arrive last night. We have not seen philippe dumond at all and nobody has confirmed for us that he is here in sun valley. Sherry redstone, interestingly, has taken on a really outsized role here, again, just walking the grounds, i have seen her several times today, sometimes alone, going to get coffee. More often than not, with other people. We have seen her with bob iger last night. Les moonves gave her a ride on the way to dinner. We have not seen phillipe dumont. Drama around disney. Really, the viacom drama has been the biggest one here. They all got out of the same car. Car, three people getting out of the small car. American made cars. Cory these are powerful Business People indeed. You talked about the demeaning nature. I want to ask you about it a little bit. I do not know if it is demeaning, but reporters are separated from the people who actually do business. I dont think we should ever pretend that we are them and they are us, but there is a physical distance but on where reporters may gather but may not participate. David yeah, you have seen the footage. There are places where we are allowed to film and shoot pictures, but that is very restricted. We are only allowed to approach without microphones and cameras on and it is a very funny dynamic. Our colleague who covers him in it is like going to cover an nba game from outside the arena having no idea what is going on inside. There were executives who wanted to come over and give us a sense of what they hoped to talk about. Obviously, there are big macro issues weighing on all these industries. We dont have a look at the program. The recent brexit decision. When you hear about the program we do not have a look at the program even that is a lot of what they are talking about. The Prime Minister of canada was here this morning. Were expecting the president of argentina to be here as well. While they are all talking about their particular lines of work to each other, we are also hearing from Global Leaders as well. Cory tonight you will have the experience of sitting outside the bar while everyone else is drinking, hoping someone stumbles out. With some breaking news. David exactly. We of course do not have access to the bar. I know where it is, but that is about it. A big topic. V. R. And i. I. R. I had the opportunity earlier today to talk with sebastian and he was with the founder of udacity, and we talked about a recent story about a tesla model that killed its driver when the assisted driving feature was on, and i asked about that, given that he has put so much time and energy into automatic vehicles and also that he is a tesla driver as well. I am a tesla driver and i use the autopilot feature all the time. For me, it is a way to relieve stress in bumpertobumper traffic, but i do not take my eyes off the road, so i would surmise the chances of me running into a truck at high speed are probably small. Going forward, it is, of course, extremely tragic that a person lost their life, and for me, i am personally saddened that an autopilot feature was involved. We put safety absolutely number one. Googles track record speaks for itself. We have actually been safer than human drivers. Take us back to what i imagine was a philosophical question. David you have tesla looking at semiautonomous driving. Google looking at fully autonomous. Why was that direction the one you wanted to take . Its very ambitious, but it was our goal. To asset sales, having a person in the loop is tricky. We needed to be able to get to the point where you could push a button at some point, so we pushed a metric of interventions. We got to 300,000, 400,000, 500,000 miles. This is going to be a big year for ai. When you look at a competitor to vr, which is the more mainstream . I think all are very exciting. I love vr in the classroom to give kids the ability to in the to go in the room, go somewhere, and see something as opposed to flip the pages of a book. Ai can make our brains super brains. It can remember everything, recognize anybody, list every experience you ever missed. It will turn us into better human beings in the tasks we do. For me, ai is a productivity enhancing thing we do to make humans more efficient, in the same way farming equipment made farmers more efficient. David there is so much conversation about content, commoditization of content, who will be producing it. I imagine that extends to the education space as well. I find it fascinating how content has evolved. When i was a child, very few people were allowed to do content but now we live in an age where everybody can do content, which means we have an enormous amount of content, so sorting to find Quality Content is important and the race to the bottom. We make content available free of charge so everyone can consume at their leisure. What we charge for is only certification and services. If you want feedback on your project, come to us. We will even give you all your tuition back if you cannot find a job afterward. But i think the future of content will be interesting because you have to have a race to the bottom and it will get cheaper and cheaper at some point. The company is still a private company. Do you think about taking it public . Im really happy that we are private. It takes away the stress from my brain. But i would like to achieve is basically grow the company a little bit more, maybe learn something new. Like last month, we launched android and had a huge spike and then led to a flat period. Cory really appreciate it, david. Udacitys founder was there, of course, but i want to get to some headlines just crossing now. Attorney general lynch saying Hillary Clinton will not face any charges as it relates to the email investigation following the recommendation of fbi director james comey. All right, well, later this hour, the Worlds Largest vc mystery. S still a investing in china. Do you think about the future. Verizon is expected to be on yahoo. Next, this is bloomberg. Cory a live shot of sun valley, idaho, a place that is nicer than where almost all of us are right now. Beautiful sun valley, idaho. Yahoo put itself up for sale, starting an elaborate process that may be coming to an end. Today is the deadline for the third round of bidding, which in theory could be leading to the decision of who could be buying parts of yahoo . Of course, theory is one thing. Practice is another, but one potential suitor, verizon. Aol Ceo Tim Armstrong is a big player in that deal. Armstrong basically, one thing that is nice to see is we have been heavy investors and content even when it was not popular, and content is the great differentiator and helps people differentiator and helps people not have their businesses get commoditized. If you look at what happened in france and am guessing what will happen this week here, you will see a lot of Silicon Valley players investing in content, and it will really be that being the future differentiator for all these platforms. I think we are at the early stages of the content era when it comes to mobile and online, and im excited about it. I think it is the right place for the industry to be and for us to be. We have these Seismic Shifts certainly in television to internetbased consumption of tv, material. How do you focus on monetizing that . How do you think its going to go . Armstrong you will see people like the nfl bring their content online, and when you look at things like Virtual Reality and augmented reality, we just bought a Company Working with the Huffington Post and the rest of our brands and when you see how that content can get brought to life, consumers are going to love it and also advertisers are going to love it. Theres 80 billion or 90 billion. They will switch from video, tv, to more online things and mobile platform over time, so you are at the early stage of another Seismic Shift besides the internet that is going to happen around video and it will be even better for consumers and advertisers over time. Might be more expensive for advertisers, but Better Outcomes for everybody. David i know you have been looking at ways to get around that, to gain a bigger foothold. What are they . Armstrong google and facebook are juggernauts at this point. They have done an excellent job executing. Its great to have competitors like that. It helps our game overall. We had been really focused on being an open platform. Part of the reason we did the verizon deal was to make sure we had differentiated data. We have 40,000 publisher relationships to bring to the table. Our standpoint is copying google and facebook because they are strong in their positions. Our position has to shift and we want to be the best company in the world building brands. They are very good at social and search, but our business is about holding brands through media, through content, through advertising, and that is our core skill set. You are going to see us partner with some of the Largest Companies in the world and it is an exciting time because the shift happening in tv is starting to fuel the entire Media Business overall and people are picking their heads up. It is a very exciting time. I would again make an analogy to the beginning of the internet. Our competitive advantage is the fact that we are in content and technology. Cory tim armstrong, the ceo of aol. Snapchat, the photo app for sending and deleting photos in conversations, says it will allow users to retain those in memories. Search photos that would normally disappear in the section. 150 million users saving their reations and the other app, Company Hopes they will safe snap chat. The new connectedcar. Is it going to take ontes la . Gm, knows, apple, google, ford, honda . Well go for a test drive next. Cory the European Union has approved its first rules on Cyber Security, or sinc businesses to strengthen defenses and Companies Like google and amazon to report a tax. Officials say Cyber Security incidents cost eu 300 billion every year. Cbs plans to spin off its Radio Division this month. Cbs is looking at options for the business. Bloomberg estimates it could be worth as much as 3 billion. Ad revenue is falling even as listenership is expanding. Cbs wrote on the value of all of its licenses last year. Alibaba is joining the battle to control the automobile dashboard, unveiling what it calls the first internet connected car. We took it for a ride to see if it will prove to be a major disruptor. Alibaba says what they have done with this car is effectively put a computer on wheels. In fact, they will see if it is going to be as disruptive as the first iphone. You have the app and you just click the unlock button. There we go. Go for a ride. Ok. The car knows we will be passing a cafe, so it has offered us the option of ordering our coffee before we set off, so am going to say yes and order one of those. The car uses alibabas operating system, and they say it is always connected so you can use Voice Controls, book a parking space. It uses 4g, and they say this is basically using the car as a platform for the internet. As we set off, we ask the car to order us some coffee. We pull up and the coffee is already ready for us. And the car paid for us. The Voice Control options are pretty extensive. You can turn up the air conditioning or the heating and also open the sunroof. There we go. Open sunroof on a beautiful day. We have been on the road for a couple of minutes and used the Voice Control to open the sunroof, to turn on the airconditioning, but we have come to the end of our journey, so we are going to book a parking space. Alibaba says this is a fully connected car. What they mean is there is internet in here, but also it connects this car to other cars around it and when the infrastructure is in place to the towns and cities it is driving through, so it is really another internetenabled device. Cory that was bloombergs tom mckinley. Coming up, we stay with tech in china. Conversation on investing in china. Thats next. And if you like bloomberg, check us out on the radio in boston, new york, d c, san francisco, and anywhere on the Bloomberg Radio app, bloomberg. Com, and station 119 sirius xm station 119. . C sv top stories this hour, gold twoyear gapes near a high as brexit demands haven assets. Losing confidence in the u. S. Economy. Benchmark is higher with Energy Shares leading way gains. The countrys Credit Outlook was stable to negative. The agency says without more orceful criminal 308cy government budget deficits may persist becoming incompatible levels of external debt. Shares higher after preliminary profits Beat Estimates thanks to the success of its galaxy smartphone. 6. 9 ting income rose to billion in the three months to june. Apple, meanwhile, has fallen to chinas ive in Smartphone Market with just sales. 11 of increasing its lead with more than 17 . Oogle news, 24 hours a day, powered by more than 2,600 journalists and analysts many countries, this is bloomberg the latest on the markets. Stable and uneventful, i think, are the two best words describing whats happening today. Mixed. Lets see what is happening, japan gets under way a little lower. Is up a third of 1 . Out of the mix, gapes of. 9 of ins of about. 8 or 1 . Holding patternings if you will, on d of the jobs data friday. Asia divvies up like this if you losers. Inners and consumer services. Consumer goods. Financials, call it flat there. Up a fifth of 1 . If you want to call it action, have a look at the below 100. Just strengthening for a second straight day. Ound sterling coming off the low we hit yesterday. 1. 2931. To go120, if you want by these forecasts. Ratcheted down these forecasts. End on d, let me just this. Bid, nuing to get a decent 13. 68. Gold holdings, holdings of gold topped 2,000 tons. For the First Time Since july. 2013, so the green line that you see that tracks the Actual Holdings and the brings this lineup, is the ticker at the bottom of your screens. Thats the bid so far. Were calling this series a. Ell focus on china and dig deep. Whats interesting about china, amassed the Worlds Largest arsenal of venture funds ready deployed. Lso, elusive to international investors. Were going to help you understand the inner workings in market. Ese ofounder and general partner is joining us as well as another partner. Glad to see you both here. Were at a break and i want to off the conversation, when i came into this world, when i was an investor, investoring in companies, hedgefund here in the bay area, i was focused on publicly traded were garbage. I was looking for shorts. But there were a lot of publicly companies, kind of this postolympics era that were just junk. Were architected to be that, there were dozens of these companies, most of which have collapsed since then but at the same time there, were some companies that have proven to be bigger, much more successful. Ou were saying to me if i invested anybody in short, i was short, Security Companies and milk manufacturers and the like, but also did quite well, you can only make a hundred percent on a short. A can make a lot more on long. What with reseeing coming out of china in terms of an investable product . Of all, there are two worlds when it comes to public china. Ies in there are the ones that go public on the u. S. Exchange like New York Stock Exchange , nasdaq. Whole separate ecosystem around the domestic public. S that go in the shanghai yes. They could only go public in the u. S. , largely because the domestic requirements are profitable,ad to be et cetera. I think on the u. S. , probably the best Tech Companies general go public in the u. S. Ts changing a little bit but typically its very choppy. We probably had 11 ipo, chinese ipos in the u. S. In 2015. This rst six months of year it was zero until one public, which was one of our early investments. What do you see thats different . Over the last 10 companies, werenies you were shorting the old company, they werent growing as fast and they resort to engineer,ctics, whats on paper looked like interesting growth but over the last two years the real story is the growth of internet. Internet enabled business in china. Thousand x over a 10 year period. I was one of the first very fortunate to do so, the new economy, where internet enables to you add more system and o the build a big consumer business in time. H shorter period of in a green field world where some of these names and ideas re new, how do you assess out what can be real and what cant be, for companies that are just so young . Fundamental things that, you know, you look are worldwide, whether youre in the u. S. Looking at you tartups, but i think, know, until maybe five, six a lot of the Chinese Companies were metoo, companies. They would talked, say thats the google of china. One as a e and basketball thing. Innovation is starting to be truly cutting edge in china as well there. Shift. En a i think we would look at, you know, what succeeded around the its japan or er the u. S. , and then, you know, of a copycats kind company in china that does well, i think the last five years, you know, were fundamentally for Innovative Companies ust the way Silicon Valley firms, you know, find players investing in content, and it will really be that being the future differentiator for all these platforms. I think we are at the early stages of the content era when it comes to mobile and online, and im excited about it. And then you also want to see a team that can build a product, solve a real world problem thats very big. Product, tend to be he we look at investments. I also am thinking about stage, when do you all of that . The earlier the better. The last few years, you have about 400 or 500 companies public. E gone those Companies Come with more directors. These days its okay to go earlier. There also been Chinese Companies looking to the u. S. That notion that weve got chinese entrepreneurs ideas, not just the and ones, or twos, but weve got the u. S. And t numbers and i wonder what the companiesof u. S. Tech to Chinese Companies that are looking here . I think its largely strategic, much the way, you started the 1930s, gm u. S. Ll cars outside the citibank going global. Probably in the 1970s and 1980s. In that sense, many of the Chinese Companies, they are investing in u. S. Companies and want to see cuttingedge technology to bring it back to china. Number two, they want to start dabbling into global expansion. As great a market as china is, you see a lot more now. Cory you are saying that as much as they might be interested in technology, they would be more interested in a beachhead where they could have a sales team and to know a company that they would sell their products to . Yes, i was part of the team that helped to recruit hugo barra. It was a collective team effort. He joined because he saw this interesting android product emerging that could be more than just a smart phone. It could be beyond just china. And the team, google or microsoft, they have the ability to shock. It is not just regional. We are both invested in a company, where its most recent new mobile app cory is this chinabased . 90 of it is based in shanghai. It is the First Time Ever that a mobile app goes across a mobile platform. So that is something that was hard to imagine 510 years ago. Cory this is fascinating. We will take a quick break here so we can watch my daughter it is hilarious. [laughter] cory we have a lot more to talk about. And we want to talk about how business is done in china. It has always been an interesting thing for Business People all over the world. We will get you that a little bit later on. And were talking about china has evolved. And why do Companies Still struggle to catch the first foothold . Tune in this weekend, we will bring you the best interviews from the week at the highlights from the conference with the best of bloomberg west. This is bloomberg. Cory welcome back to bloomberg west. We are on series a. David is here and hans tung. David, we talked about the broader thing that we are doing and looking at acquisitions in the u. S. We have seen some multibilliondollar deals. They go beyond hiring a local sales staff. David yes, i think that we talked earlier about access to technology and the fact that they want to grow globally. And i think there is also a factor where Silicon Valley is still very an attractive place to invest. And i think a lot of Chinese Companies, there is a lot a financial perspective and they realized that now that they have experienced their own tech success, and they know what cutting edge is now, they actually have decent eyes to figure out what company they could make money. Cory when u. S. Businesses are looking to do business in china, investing or beyond, the relationship with the government is so peculiar, in china, compared to anywhere else in the world. What is the relationship like today, in contrast to what it was 10 years ago . Hans over the last 1015 years, chinas government has opened up a lot more. Theyre are more experience with investments on the internet side. A lot of government attention was on fixed asset investments. Over the last few years as the economy has slowed down, internet growth has been more interesting. Cory why . Hans just in general, the last few years, growth has slowed down because you get to a point where cory why does that make tech more interesting to the government . Hans because tech growth at a faster pace. Look at the ecommerce in china, it has grown by 35 a year as a sector. Look at retail, it is growing at a single digit. When you see the number, it becomes obvious you should put more emphasis on tech. Cory anyone in the world more government attention is a good thing. With the Chinese Governments increased focus on technology, has it made investing in technology easier . From our standpoint . We definitely see the government play a role but not hindering us in any way. The number has grown in the last few years. Uber. Uber is expanding aggressively in china. The Chinese Government 1020 years ago, have allowed that to happen . Have a li na. But look at what is happening in china with the Transportation Industry standpoint. There are a lot of cars out there and you need more players to be in the market to provide sharing services. And uber enables us to do that. Cory it sounds like what youre saying is that government involvement is with investment matters . I would say if you take japan as a good analog. In the 1950s, the minister of trade and finance had grips on everything. They were the ones telling toyota which countries to export next. And then the market force kicked in and these companies have gotten bigger and more powerful, and on a global basis, i would say the government has lost more influence. And they are not deep diving into those decisions. A classic case is 15 years ago, they told one of the telecom companies, you must merge with one of the state owned telecom companies. Cory which one is that . And the investors werent treated all that well. But if you remember the case where intel makes most of the wifi chips and china came up with their own encryption for the security piece but because that would hinder chinese laptop manufacturers to sell worldwide, they said no. And the government backed off. Cory a pivotal moment. So i think the progress is very similar to what japan or korea went through. Cory towards the point where government is forced to back off because companies are more powerful. And they are more global. And the Chinese Government realizes that. Cory im not a big believer in journalism by personal anecdote but i do see that innovation happening interestingly in the messaging space. Where the kind of messaging happening in china is very different than what is happening in the rest of the world. I was stunned at the apple announcements around their new messaging over the new ios that looks so much like the messaging of some of the stuff we see in china . Talk to me about that. In terms of what we are seeing with messaging in china, how it is an innovation as stupid as it seems with emojis i have an emoji coach. Years ago, use our messaging happening writing the iphone wave. In china and it initially looked similar to the mobile at that with the third iteration, a different. Now, you can buy stuff, you can use services, you can send Global Payments to a friend. As someone who just carries a phone with we chat, and 95 of merchants except my payment. Because they have it too. And you dont see that with whatsapp. It is mindboggling how it is happening in this space in china over the last few years. And you know, 10 that is a very Strategic Partner to us, i dont want people to take it negatively but if you look at we chat, what they really did was see the phenomenon going in korea. Actually, korea was the innovator on the messaging. Was the First Investor in the first round. And they invested in the third round. And now, they are an 8 billion company. Because they looked at that and said oh, we shouldnt just be like whatsapp. We need all of the other features. And then we chat took off. In china. And that is a great example of a Chinese Company investing outside of china, and then really learning what works or what is the cutting edge. And bringing back features. Cory is there something cultural about china that makes the messaging stuff so much more robust . In china . In japan and korea, you do see this kind of issue with items, it is a powerful way. Is another popular feature. All three companies see users gifting each other. Having said that, the argument is always that these companies cannot do things that are beyond these regions. So back to musically, it is a great example where you have american teenagers who love using it, it is not just a utility, it is a social network of its own. Cory stick with us, we will go on to talk about investing in china. Also, coming up here, we will get into that. This is bloomberg. 10 years ago, the first wave of ebay and amazon. Amazon has done so so in china, but ebays strategy was a failure. Largely because they would hire a u. S. Based person to run companies in china. Without the local knowledge, it is just really difficult. But you know, u. S. Companies still do this. Company. Y a and they bring in a gringo to run it. Well, they dont have to be white, but they are very westerncentric. What is the most common mistake investors make when they get involved in china . China is very different than the u. S. In operations, it is very different. They need a more massmarket approach. Very interesting turning to help them to think through that. More companies can do better in er thanvertime, bettor amazon and ebay. They have to be empowered to make decisions locally. Guys. Nk you very much, that does it for this edition of bloomberg west. Be sure to tune in tomorrow. It is going to be so cool. Now, he is working in Silicon Valley. This is bloomberg. Anna currencies make the headlines. The yen is near its highest since 2013. Morrison sayst now is the time for australia to move within its means. Apple is feeling the heat in china, falling to number five in the smartphone league in the face of local rivals. And the 10 billion