the iraqi army itself, to put new generals in, to reconstitute it, and to help marshall outside forces in the coalition to come together to help them. >> the islamic state assault against kobani has been going on for a month. and a lawsuit over the short term rental site, which is called unconstitutional, saying it benefits rival airbnb. it requires people to live in their homes at least nine months per year in order to legally rent them out. and a french advertising giant is pushing deeper into digital ads after a failed merger. inez agreed to buy a firm for 3.7 billion dollars in an all cash deal. it is called a ground jewel, allowing clients to receive digital transformation. and new clues as to when the digital watch will hit the market. in an internal memo, it was said the watch will be launched in the spring of next year. at a september product unveiling, apple said the watch would be coming early in 2015. now, to our lead. was it a mechanical problem, pilot error, something else? analysts are trying to figure out what caused the virgin galactic ship to crash in the mojave desert, and preliminary results are pointing to human pilot error. here is richard branson. >> the ntsb and the people who will speak about the causes, and they are doing a very thorough investigation, what they indicated was that a lever had been pressed a few seconds sooner than it should have been, and we will leave it up to the ntsb to decide whether that had any effect and whether that was the cause. >> the crash killed one pilot and injured another, but branson says he is confident there is no fundamental flaw with the spacecraft, and he is vowing to push ahead in the private space race. joining us is our editor at large, cory johnson, and there is a commander of the international space station. i will leave it to you. we spoke on friday. albeit that it is little information, what questions are you asking? >> actually, it seems that we have quite a bit more information, the ntsb having made official announcements, that they found a fuel tank and a motor largely intact, which indicates that those elements did not explode, and then they have cockpit video showing the copilot unlocking the device. now, i emphasize he moved that lever apparently a few seconds early, but it was only to unlock the device, not to engage it, so a second command would've had to have been sensed or a malfunction of some kind to gaza to activate, which, barely, it did, so the ntsb is telling us that is what happened, and it cause the aerodynamic situation to break the vehicle apart. this is not unlike several airline accidents that have happened over the years, where a thrust reverser has accidentally deployed in-flight. with the thrust diverter's -- reversers, which cause planes to land on the runway, you will sometimes feel it when they engage, and it goes the other way to slow the plane down, and that has caused planes to break up in flight. that is not the same thing, but kind of the same thing. >> now, i want to bring in a former ntsb chairperson using skype. just how much trust these pilots \put into hands of humans, not just themselves, but also humans on the ground. take a listen to this from richard branson on the ground. >> we have to feel comfortable and safe about taking people up, but that is why test pilots put their lives on the line, to see if there is any little thing that the 400 engineers done on earth have missed. >> do we need less trust in man and more in technology? why aren't more of these features automatic, automated? >> in any new project, you're going to have to test the boundaries. you're going to have to test the edges of the envelope, and that means taking the aircraft up, not just having models or predictions, where you can see how it actually does perform, and it will be testing it with conditions where perhaps it may unlikely face in service, but you want to test the engines. you want to make sure they know how that aircraft will perform in any scenario. >> leroy, let me ask you, am i right to be suspicious when the investigation turns up to point blame on the one person that cannot defend himself? i think we see that a lot and find it more systemic with aviation crashes. >> i think the ntsb is being objective in this. they want to get to the bottom of this. i do not think they are trying to do anything like that. the ntsb announced they do have cockpit videos showing the copilot moving that lever a little bit early. as i said, there had to be a second failure, because just unlocking the device, to my understanding, would not cause it to deploy on its own, so, no, i think they are being objective with this. >> devereaux, what do you think -- deborah, what do you think they are doing right now, and how does this differ from traditional aircraft and airplanes? >> the ntsb does have protocols. they have procedures. they are time sensitive. they have used them for decades. they have used them to investigate other issues that have led to fatalities, so they will be doing the exact same things they have done in the past. they will be working hard to interview with anybody involved with the programs. procedures and protocol, and some of the pressures, and i think it is really important to say it is so early. there is so much that is not known. there are going to be more pieces of information that are going to come out, and i know it will be hard to hold judgment, but we have to give them time to develop them all. >> leroy, and emily asked a great question earlier about man and machine and who should be in control of this thing, and it takes you back to chuck yeager and the ex 15 rocket planes and the great debate about whether these should be man-made lights or whether they should be controlled by computer. is this going to be kind of what we are always talking about when there are accidents like this in the exploration of space? >> it is an interesting debate. we will continue. i think most pilots and ants -- astronauts would agree you want to have a blend. operations which are totally appropriate, the nominal mode is auto until the landing. it came down to the actual seconds and landing. we actually felt more comfortable having a human hand on the stick to go through the landing, because humans are so adaptable. we are tradable, and we can react quickly and appropriately. an automatic system does not have judgment. you want to be able to have an override to take over manually. coming in to dock with the international space station, we were on autopilot with a russian sore use --soyuz rocket. we had to take over. if we had relied on auto, we probably would have crashed. >> some said that richard branson's enthusiasm for getting us into space is far beyond the capabilities of the technology really as it exists today. debra, how big of a setback is this for the private space race? how much of a delay until we really do see richard branson's dream come true? >> i think that is only a question that richard branson and his team can answer. they are dealing with a lot of difficult situations right now, and particularly with the loss of the crew. these were their friends. these were people that everybody worked with, were respected, and they looked up to, so they are going to have to get rid this period, and then they will have to make decisions about how they move on with the program and at what pace, but i think that many of the failures that we have seen in the past when we charge -- chart new territory are really kind of part of the process. unfortunately, when you are doing something risky, when you are doing something on the edge, when you are doing something that is new, there are always going to be areas that are risky, and i think there is really no other way to talk about it when you do something new. unfortunately, when you do have new products and technology, the products fail, or you do not experience reliability. when you have a human endeavor, and there are people involved, and you have a failure, it is much more catastrophic, like in this situation. >> ok, the former ntsb chairman leon wright, two experts, thanks so much for weighing in today. and up next, virgin galactic and the prize for innovation. how will this impact the future of space travel? we would discuss that with the president of x prize, next. ♪ >> i am emily chang, and this is "bloomberg west." based on the award concept of spaceship one, where a rocket is lifted on another aircraft before lifting independently. they got an x prize award years ago to the tune of $10 million. editor-at-large cory johnson has more. >> the public competitions to encourage different kinds of technological development, and it has drawn some big names, including larry page, elon musk, among others, and we are with the president in los angeles. bob, it is a fairly amazing thing what the xprize has wrought. was the notion to bring tourists to space, or was it more than that? >> is more than that. certainly, that is at the core of virgin galactic's business, that one has to keep in mind that we are trying to open a new frontier, and the costs and risks of going into space is part of that. at the xprize foundation, we believe that a lot of the issues can be solved by proper use of space. we are in a closed system. when those consumables are gone, then we are in trouble. if we have a way to get more energy and more of the things that we need, then that does not have to be the case, and the space offers that potential, so virgin galactic's efforts to send individuals to space is part of that larger opening of a new frontier. >> yes. i was out there in the mojave desert 10 years ago when the xprize was won by burt and the company that launched this thing and put all of the money behind it, but the notion that it was going to launch a new private space race seemed ridiculous, and yet here we are, with elon musk and spacex and with blue origin with jeff bezos and richard branson. did you guys realize that xprize would lead to that? >> yes, when our founder and i and a group of others formed the xprize, it was with this was in mind. there were certain market forces in place. it was not what nasa was doing, so we very specifically wanted to launch a new industry, and the xprize was a very visible demonstration that it was possible, and, in fact, with the winning of the xprize, we did open up a new era of space flight. we were not sure what would happen. originally, we thought it would be within a few years of the winning of the xprize. we did not anticipate it's starting within the competition itself. >> with the competition, launching a new industry, can one crash like this bring that new industry to its knees? >> that is a good question, and we think not. there is inherent risk in doing these things. with every great venture, where you are looking to open up new frontiers, there are going to be some hazards, and so the risk is inherent. you take activated risks, and you do it so the ultimate saying you are trying to do or ultimate operation, in this case a spacecraft, is much, much less risky. these test pilots knew that was involved, and you do it in a calculated way. you do it in a way that a business that is operable and safe can be run. this one tragedy is not going to change that. we are going to learn from it. we are going to make the proper course corrections that will benefit not just virgin galactic but the industry at large. >> it has to change it on some level. there was a perception that this would be a tourist spaceflight. on some level, it has got to be a change in the reception of the consumer and the market here. >> well, i think it is not a complete analog to compare it to passenger flights. it is more like adventure tourism, and there are other forms of it, where there are risks. people climb mountains, take rides in submarines, two other things that have more inherent risks to it, so it is not like just going to work. so those risks, when you take them, need to be done in an acceptable action, and in a way, it is completely understood by the people who are not taking those risks. >> i do not know if you have done this, bob, but the zero g flights which are made to simulate weightlessness, i took that flight about one year ago. there have never been any crashes, and i was terrified before i went up, but it turned out to be a blast. it is that kind of thing. it brings up a great deal of fear with out the crash, and i imagine this will be different. is there a way people will be going after refunds, or will the ultimate size of this business change after last week? >> as i understand it and from the statement that sir richard has made, not only have people not asked for their money back, but since the incident, they have had an additional two people signed up to take a flight as a vote of confidence. certainly things are going to be delayed. time is needed to understand what happened and make the appropriate course corrections, but virgin galactic will persevere, and ultimately, be safe or passenger flight, and one hopes that the sacrifice that was made by the test pilot, who died during this tragic accident, will not be in vain, and that we will stand on his shoulders, as it were, as the company goes forward. >> well put, bob weiss, president of the xprize. emily? >> apple trying to raise money with another large bond sale. but it has some asking why. that is when "bloomberg west" returns. ♪ >> welcome back to "bloomberg west." i am emily chang. goldman sachs and deutsche bank have been hired to organize a call involving apple. so why? why is apple doing this when they already have so much cash? >> interest rates are low, and by borrowing this money, they are using it to pay for the buyback program, returning money to shareholders, people like carl icahn and other investors have been hiding over the years, so this is the way they are funding that. >> any idea about how much they plan to raise? >> no, they did something like this last year which was the biggest offering in history over $10 billion, and that is something they returned back to shareholders, so it is a way for them to take advantage of really low interest rates, keep their shareholders happy, and still not cutting into their own capital reserves too much. >> so is that what they're going to be using this money for, as well? returning it? >> they said earlier this year they would be doing this. a will do some in the u.s., and they will talk about doing some of it in europe, and that would be a first, if they raise this money in euros or in pounds, something like that. >> are we going to see more and more of this over the next couple of years? >> i think while the debt markets, it is this cheap to borrow money, i think you will see this while rates are really, really low, so it makes sense for companies to do that. >> ok, covering apple for bloomberg news, thank you very much area. not shying away. next. >> it is 26 minutes after the hour, which means bloomberg is on the markets. i am mia saini. let's catch up with where markets are. gains across the board. the s&p is up by about one quarter of 1%, and this is higher than the october 15 low, manufacturing data adding to evidence that the u.s. can't sustain the withdrawal of stimulus. for on the markets, we are again back in 30 minutes. stay with "bloomberg west.:" ♪ ♪ >> you are watching "bloomberg west," where we focus on technology and the future of business. i am emily chang. looking at services like mobile pay, and our market makers editor erik schatzker joins us. he is at the 2020 conference in vegas. >> technology and the future of business. here at the money 2020. you call yourself the chief ninja? is that right? >> i started out at princeton. i did not want to negotiate. >> tell us a little bit about your company. >> with the platform, we hope to engage our customers, with rewards. >> sell apple pay, as i understand, i am not a customer, but i understand a bit of how your product works. applepay in many respects validates what you are trying to do. >> overall for us and our merchant partners, it is a good day. what we are pushing to consumers is you should pay with your phone at your favorite merchants, and you should automatically accrue rewards when you do that. and apple pay is basically the biggest company in the world to do this. you can put your card, your starbucks experience, right into that wallet. now the gates are open, as long as you play in our, apple's, wallet. >> and for your company, as long as you choose to use the company as opposed to a credit card, correct? >> yes, and i think that is the most exciting thing apple did. they have given this to the merchants, not be credit card companies. yes, your credit cards are in the apple pay. we can beacon you, we can say leave the credit card in your wallet and pay for this loyalty program, and it would be better for you and better for the merchant. >> what kind of change? what does it mean for payments now that apple is in the game? >> apple is undoubtedly the most influential technology company in the world, and everyone is waiting for apple to say, let's make it happen, and over the next two or three years, we are seeing people rushing to make payments in a way that is good for them. merchants want low interest rates and data; apple wants them to use their wallet. and with apple pay, we integrate into both of them. one of our investors, one of their investors is on our board. we followed along. i actually think you will see google wallet get a lot of lifted now that apple pay has done this, and google users have been able to do this for a while, but now they will start to. >> what might google do to one of apple's game? >> i think one of the biggest things that apple left out and which is an opportunity for google is the loyalty rewards. apple is a hardware company. google is an advertising company. it will tie in rewards much more tightly. >> what about other companies that are trying to solve the merchant side of the electronic payment problem? possibly doing it from a position of advantage, like they manufacture the terminals, the point of sale, or they develop a software that goes into those at the point of sale. they can do some of what you are doing. those kinds of companies. >> absolutely. it is possible and very much competitive space. what levelup differentiates on is on three key points. you see an announcement, are nearing with sprint, carrying the interchange further. and a tied in loyalty reward. >> ok, i love the idea of lower interchange. what that means is lower fees for the merchant and savings for me, the consumer. >> absolutely. >> i hate my phone bill only slightly less than i hate my cable bill. the last thing i want to see on my phone bill are more charges that i do not understand. >> they will make the conscious decision to use it, but what is important about carrier billing is the optionality. right now, it is a monopoly. you can only play -- pay with your credit or debit card. >> right now, we have very few options but to use a credit card. your company has integrated with credit cards, as well. >> yes. >> you're able to chip away at it, but at the end of the day, we are slaves to the credit card company. what about for a company like apple or google ultimately to be the trojan horse? the credit card companies, working directly with the consumer, the merchant, and the bank? >> i think it is exactly what you are seeing happening now. by moving payments to a mobile phone, which is effectively a supercomputer in our pocket, you can use whatever funding source you want. this is what levelup is doing. >> do you believe that that is what apple's and game is? >> i think apple wants to enable that. they make money off selling devices. apple is getting 15 basis points off of each transaction. if every american paid with apple pay, apple would make $3 billion a year, which is roughly what they made in the day they started selling the new iphone. they are so big that what they want to do is enable the ecosystem and allow other players like us and potentially square to make the experience better and hopefully make it better on the iphone that people buy more. >> he made a key point earlier that google is an advertising company. would google think about it differently? >> i think google will think about it differently. their natural revenue stream is advertising. i think as we see google wallet move more aggressively to this space, that will probably be there mo. >> really interesting stuff. thanks so much. he calls himself the chief ninja. starting his company, levelup, here at money 20 20 in las vegas, some fascinating insights from somebody who understands the payment industry from the mobile side. >> thanks so much. up next, president obama's campaign shows how critical technology is to winning an election, and now, putting their own high-tech technology into place. a sneak peek at the gop technology, next. ♪ ♪ >> i am emily chang, and this is "bloomberg west." election day is tomorrow, and the big storyline is about taking control of the senate, and while the gop has long trailed democrats in technology, republicans are fighting back, doubling down on their technology. north carolina, home to one of the tightest senate races. >> big names. tens of millions of dollars in tv ads. >> kay hagan enabled president obama's worst ideas. >> it may all come down to this guy and his iphone. >> i really appreciate your support. thanks so much. right now, we may be getting annoying to people, and that is to be expected. everybody says they do not like phone calls or doors, but it works. >> a 21-year-old volunteer working for the north carolina republican party, in a dead race between republican and the incumbent. his job -- >> they have no idea how people get into their door. >> is to get people to the polls. he knocks on doors. >> hey, how are you today? >> he makes phone calls, and he is in every day test case as to whether republican investment in technology is actually working. >> we have opened up a number of sources to collect data, but what is more important is how we act on it, how quickly we are able to put that into work with our field program. >> there is hope that their tech revamp may help. >> you can just go as you please, and it makes canvassing so much easier. >> paper used to be the old way, with a physical book, where information had to be manually entered and updated, a far cry from real time data. >> with gps. it basically tells us to walk down the street and gives us a script and what to say and how to say it. >> this imports decision-making. once updated, they take it out of the latest canvassing lists. >> whatever their answer, you are going to put that in. >> right. >> and put it into the entire system. >> yes. their name is tillis, and they have already voted. >> whether volunteers are working off the best information around the country may make a difference. there is a tried and true way to find out. >> ultimately, our work will be judged by how well we do in the polls. >> newburgh, north carolina. >> so who will win in north carolina? which party will control them in january? join us for an election all nighter tomorrow only on bloomberg television. well, these days, you can do virtually anything on your phone from trading stocks to renewing a business license, so why can't you vote on your phone? ringing voting online, next. ♪ >> welcome back to "bloomberg west." i am cory johnson. you can renew your is in this license and pay your taxes online, so why can you not vote? as some go to the polls, or some don't, because it is just too hard to get there, and teaming up with the atlantic council about the risks and rewards of online voting. we are joined now by skype. our lives are so wonderfully automated with these smart phones and laptops and tablets, and then you go to the voting booth, and you go through this antiquated system, whether it is filling out boxes or even flicking the buttons. what is the actual potential of online voting? >> the potential for online voting is huge, right? i think one of the challenges they see today is the fact that it becomes really popular about this time, whenever there is either mid-year elections or presidential elections, and it gets a lot of hype, but after the hype fades away, the incentive for doing this kind of goes away, so i think the potential is there, and the technology is there. we really need to drive it as an ongoing agenda item that goes beyond the election cycle. >> so beyond that, are their technological limits to this, reasons why it has not happened that are technologically-based? >> i think the technology to make this doable -- if you think about it, every device you buy today has the means of using things like biometrics to help authenticate that person, and we have better encryption technology. we have better ways of making sure that that transaction can take place with some of the requirements for online voting, so i believe the technology is there today. it is just a matter of getting the electoral board to embrace it. >> how much cheaper? >> i do not have hard numbers on how much more or less expensive it would be, but it would really open the window up for new voters. younger voters you are tech savvy with their phone can do it. i think about the elderly and infirm. i think about my son. he is a first lieutenant in the marine corps. he is stationed in spain right now. i bet you he is not going to be able to vote just because of the complexity of voting from remote locations. >> as an american, i am embarrassed that countries like estonia are leading the way. >> countries like switzerland, and actually india uses a lot of evoting technology, but they have some sort of 900 machines. especially where they have a high degree of literacy. as part of the process to allow these machines. canada, india, estonia, as you mentioned, switzerland. brazil has had some success. australia has had some success. we are kind of a late bloomer when it comes to this with voting in the united states. >> late bloomer. it makes it sound like there is blooming happening. i wonder, who would be voting more if the voting were allowed in this kind of way? who is being disenfranchised by the lack of online voting? >> that is a great question. with the factors, if i am the elected official, do my constituents benefit, does my party benefit by having online voting, and if you think about the fact that more elderly could vote, younger voters could vote, the infirm could vote -- who best benefits from that? is it part of my constituency or party to benefit to help drive this going forward? >> can i suggest the sort of myth that voter fraud -- the people who do not want more people to vote are behind the sort of efforts to keep this technology away from people who would vote if it was easier to do so? >> you know, i do not believe that is the case. if you think about our electoral process, it is about everybody with the ability to vote and giving them the means to vote. >> yes, gary, i have to push back on you a little bit there, because there are repeated cases across the country where there are new laws, and especially this election, this week, to keep the ball from voting. >> agreed. there has been some legislation that has this advantage some segments of the population, that i do not know if that same segment would be disadvantaged by online voting and opening up these means. the intent of those was to stamp out fraudulent voting, people doing multiple votes or fraudulent voting. >> it does not happen in any significant statistical level. >> a really well-documented source, a documented outcome that the number of people who are doing that are very, very small. >> so, again, does online offer the potential to allow for more people to vote who are being disenfranchised, or just the opposite? would this further exclude people who are poor, people who do not have english as their first language, and so on? >> it would depend on how it was publicized. if you're trying to get somebody who does not have a smartphone enabled for an online vote, and if you get them to a polling place that has the voting machines and allow them to use it in a language they are familiar with, because the technology exists to allow that, it really depends on how you educate consumers on this. not allowing the disenfranchised the ability to vote. >> yes. just real quick, i wonder a nature of an election that has to be on one day does not allow for -- like healthcare.gov, a flawed rollout, and now it has been a great success because they have had time to get it right, and that is not the case in an election. >> this happens every couple years, and the fact that it is so infrequent by comparison, there are some challenges, and one of the biggest uses is getting consumers comfortable with voting using online and voting machines and things like that, and when they do it every couple years, it is different than when you go and engage health care online, for example. >> thank you very much, and a reminder to watch mark halperin and john heilemann tomorrow night, and this is not to be missed on bloomberg tv tomorrow. and the bwest byte, where we focus on one number that tells us a whole lot. brian, i have no idea what you have got for me. what have you got? >> the number is 29. >> 29. >> yes. >> not 28. >> that is the number of countries around the world that have access to google blue trends, which is new lately. >> what is that? >> that is an interesting service, were basically google looks at web searches around the world and says where is flu popping up, based on searches, and it is interesting. just on friday, google announced a revamp, that they are not going to be using all of this school, and digital information. they are actually going to start using older stuff. >> epidemiology, live and at your computer, great stuff. a reminder, the latest headlines all of the time on your phone, tablet, bloomberg.com, and bloomberg radio. we will see you with more "bloomberg west" tomorrow. ♪ >> the following is a paid advertisement from star vista entertainment and time life. >> ♪ somewhere beyond the sea >> bobby darin, dean martin, frank sinatra. >> ♪ volare >> tony bennett, nat king cole, johnny mathis --