Sharp shares plunged after foxconn put the brakes on its proposed takeover. Just hours after sharp accepted the bid. New material information. The deal would give the company two thirds ofost sharp. Those the headlines on bloomberg news. Lets take a look at the markets for you. They are closed for lunch. Asian stocks jumping. Mistakes keep getting higher for the battle on encryption. How to unlock an iphone. Controlling antirefugee posts. Whose job is it to police the internet . Its got whose in the spotlight as suitors swirl. This is not a case about one isolated iphone. The government seeking a dangerous power, the ability to force Companies Like apple to undermine the basic security and privacy of hundreds of millions of individuals. Tim very powerful language travel. Accusing the fbi of trying to hijack the National Debate on privacy. The head of the fbi telling members of congress that this was not an issue where they were trying to send a broad message rather this was dealing with one individual issue of trying to get into this iphone. Perhaps they would send a broader issue. It is about this phone and the need to get in for this case. We also saw microsoft talking about how they are going to support apple. One of their executives bringing out a near 100yearold adding machine to illustrate the statute that the fbi was trying to use his from that. Corey were going to dig in deeper into this later on. Thank you very much. Lets look at the legal arguments. James comey this isnt us going and opening peoples phones. Going to a Constitutional Court and asking for permission under the Fourth Amendment to do something area it would be a precedence that a court would look to deceive it was useful. The entire framework is under our rule of law. Corey apple rejected that argument. The government knows those statements are not true indeed the government has filed other applications for similar orders that are pending other courts. During ms. That fighting terrorism. What you make of apples argument . Apple had quite good response right now. They are saying to take two to four weeks. To write this code to the fbi wants. Theyre saying this infringes on their First Amendment rights. They have a strong case. The Justice Department didnt think this battle. This is some it was engaged in active terrorism. Corey this notion of code is free speech. Paul a lot of code functions as speech. Shared between people as much as it is executed on the computer. Almost like youre talking to other programmers and the computer. Corey it performs a function that expresses something. Richard we see the privacy all the time. We find ourselves in a situation where privacy has to be given back and we do with search warrants and we allow agencies to go inside of homes. Tank accounts. If they have shown enough proof that there is a risk here. This is analogous to a crime uppening and they just clean the mess and there is no police tape. Paul the cases that the fbi is relying on our very outdated. The Tech Community has said that we are going to provide a device they would not be a way for lawenforcement even with a legal authorization. Time relying on infrastructure hacking into peoples devices. Engaged in terrorism, engaged in crime. They dont have the ability to gain access. Corey does the government need this information to fight terrorism . Paul it does need away into this type of information. These companies are at the core of how we communicate today. Theyve been talking about setting up a Blue Ribbon Commission on this. It may get to the Supreme Court before congress acts. Privacy sacrosanct as part of our society . Paul if you give them an inch theyre going to take a mile. Other phones are going to get unlocked. People are digging in for a long fight. It is possible to create very difficult to crack encryption that people can use other phones. That will take months or years to resolve. Richard historically one of the is thein the backdrop nsa Edward Snowden scandal. You will a standard that had to be met. What we found with the nsa was that things got out of hand. That was behind closed doors not in the courts. It has been a few years now. We are not ready to give you a second set of keys yet. Corey thank you very much. More when bloomberg west returns. Corey this get back to the main story on encryption. Apple is saying the u. S. Government has overstepped its authority. Dan i think apple can do it. For all the reasons you guys discussed. This soerally built that others cant do it so it is even that easy for them. I think i think have an obligation to fight for privacy. Let the courts decide. Brian yes they can do it. It would take them to the four weeks. Once that is out there, Everybody Knows there is a way around the encryption. Current models you would be able to do this on. Dan you have an obligation as the ceo of a public company. Imagine you are going to allow the United States government to get into this. The Chinese Government wants this. You dont get to say only america gets it. Get to make that choice for hundreds of millions of users that had no expectation that government would get at this data. They have a responsibility to do exactly what theyre doing. Debate at least. Brian the Tech Companies have learned we dont want to be complying with the government because they want to shine a light on what theyre doing. Their position does become untenable. If there was a bigger terrorist event or if more and more crime was committed on these phones. It will go to this commission. It cant be all or nothing. Maybe we let the courts decide or the Tech Community stands firm. Dan if you are dealing company otheras to do this companies would be saying dont buy apple by us if you want your privacy protected. I think tim is handling this the right way. If you feel like the company you buy from rolls over and gives the government everything wants. Originally 75 of people said apple should do it. Now the percentages lower. This is not an urgent matter of lives that you can save right now. In the United States could be very harmful. Brian if there was a bigger events, comparable to 9 11, would Public Opinion go the other way . Corey is it facebooks job to Police Online racism . Check us out on the radio. More after this. High level talks between google and the european union. Meeting facetoface with the competition commissioner. The eu is in final stages of the investigation of google. Google is fighting back by highlighting its contribution to the european economy. Mark zuckerberg and Angela Merkel in berlin. Countering racist posts targeting refugees. Its an interesting role for zuckerberg. Sarah they cant do much about it. They are trying to be a bastion of free speech. There are millions of posts coming on every single day. Which ones make people feel uncomfortable. We have to use crowd sourced responses from our users. If you try to post something i a copyright issue with it. They really try to tear on the side of only doing that when it is totally illegal. Theyre want there to be as few barriers as possible. They rely on it after the fact. Facebook also siding with apple in its case over free speech. It will have a brief submitted next week. Corey thank you sarah. Coming up, the megafight between apple and the fbi. Pressure continues to mount on yahoo can they placate investors . When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. The Goldman Sachs president says he hopes china will improve communication. Financial markets try to understand the tools that china is using to stimulate the economy. A more globaln approach to monetary policy. The chinese are in a tough position. The world right now is looking at what are the stimulative measures, what is china prepared to do it growth slows down. ,ere looking at mario draghi what is the Federal Reserve going to do in the United States . The Singapore Stock Exchange may be expanding into shipping. Discussions are at a preliminary stage. A nonbinding bid for the shipping board. In talks with others including the london metal exchange. Lets look at how the markets have been trading in the asiapacific region. They are set for a second weekly game. Shanghai stabilizing. Highsn from some of the after we heard from the pboc governors. This is the new normal. After plunging 6 we have seen a steady in the end and steady oil prices. The nikkei is up about 1 . Cory to turn to our top story, apple laying out its arguments against the fbis request to unlock one of the iphones of one of the San Bernardino terrorists. We seen fbi we have seen fbi director james comey testified. What happens next in this battle . Tomorrow, apples annual shareholder meeting. We will be looking from any comments for any comments from shareholders in cupertino. Next week, we expect apples top lawyer and apples top lawyer and the head of the fbi to be on capitol hill for a hearing. March 3 is the deadline for apple allies to file their briefs of support. Reports of about midmarch, another apple event for their products. They are selling a lot of products. The annual spring event is around this time of year. Toward the end of march, we are expecting to have a Court Hearing on these issues. Cory apple said they were developing a phone that would be impossible to do the things that the government is asking for right now. Maybe we will see that in these new products. The issue here is that Silicon Valley would make the case that technology is developing and changing at such a rapid pace that it is outpacing where the law is, and that is why there needs to be a National Policy discussion, rather than done in the courts. Moving onto yahoo and the rush to sell its core business. The Management Team does not seem to have the same sense of urgency as some of the investors. Earlier this week, time added its time, inc. , added its name to the list of potential investors. What assets weve seen some news about depleting numbers of homepage, mail, the most valuable assets at yahoo , outside of alibaba cash. What other assets do you think the other Companies Might want . I think each of them might want something different. If they are a private equity firm, they would be interested in how much cash flow it could generate in the next couple of years. I dont know that thats going to be about reinventing out who, as much as it reinventing yahoo , as much as its going to be about cutting costs and higher margin. Each one will have a different perspective. Verizon has aol. There are properly lot of synergies there are probably a lot of synergies between the two. All of the assets that yahoo acquired over the last couple years were available for sale. Aol could have bought them. They opted not to. I dont really know. If you take them at their word, which is all i have, i think they would consolidate the media site and try to have more content come through the pipe. Verizon is trying to have a smart pipe instead of a dumb pipe. That is there articulated reason. Comcast doesnt have significant Digital Asset play. They have extraordinary assets in nbc. I think everybody will look at it differently. Cory are there enough assets they could sell off to make investors happy, but still have a yahoo that would be different from the bigger entity . Dan it has been 10 years since ive been there. One of the things i think is misunderstood is, it is not like you can sell off a channel. Cory you can sell sports. You can sell finance. Dan you would have to separated from all of the servers, separate all of the ads. What would you be selling . There were ads that run on yahoo sports that were not sold on yahoo sports. What part of the servers would be going . Hosting fees and all of those things its not as easy to separate the channels. One of the reasons yahoo did not sell the channels is they end up shutting them down. Its not like ebay where they could sell off skype or separate out paypal. Those were very different businesses, separate units. Yahoo does not have separate units that way. Even when yahoo said it was going to make cuts, it is talking about selling real estate and things of that nature. I think there is a misunderstanding of what is actually sellable as a separate, independent Business Unit inside of you who, which of yahoo , which there arent very many. Cory is there a price at which yahoo could acquire you as ceo . Dan i am extraordinarily happy right now. Cory that is not the question i ask. You asked. You have been asked this question a lot in the past few weeks. Dan they have had feet of activists had two activists, multiple ceos, a hostile takeover bid. The Company Needs to reinvent itself outside of the public light. Anything that had one billion users we may not be able to articulate why people go to yahoo , but people do. If you have those assets, what could you do with them that represents where the industry is going, not where the industry has been . Try to trickle down on brand advertising trying to trickle down to triple down on brand advertising may not be the direction for the future. I think yahoo could have a very bright future. I think it just needs to be left alone to execute on doing that. For whatever reason, when a small for whatever reason, a small Market Cap Company is getting a lot of attention every day. Cory so many of us have worked there, including you and me. Im taking that as not a no. It is possible to change a fanbelt whilst the engine runs, but it is hard. Thats what you guys are doing. Thats what the stock price looks like right now. Dan the company is excited about where it is going, but it is difficult to change the company. Yahoo is going through the difficulties. Going from a transition of a traditional business, textbook rental company, to a pure Digital Business into a highgrowth, plus30 grower, focusing on young peter people and education is a wonderful mission for us to be on. The fact that we have actually for millions 4 Million Students we are trying to do it in a public light and go through a transition where we say revenues are going down before they go back up. But the actual chegg services, we see the middle range already. Four years ago, they did not exist. The future is really bright for chegg. We went from losing 18 million to 13 million to plus 5 million. We are excited about the future. What it says is ondemand education is a powerful place to be, and almost nobody is focusing on it. Going directly to the student, giving them highquality, lowcost products, where they can get them directly is a very big business. Cory much different business than renting them out. Dan it is easier to rent them then to read them than to read them. Textbook rentals have changed the Publishing Industry forever. Textbook companies have had to go through bankruptcy. We did not intend to do that to those companies, but it just shows you how powerful it is. We deliver over 6. 5 million textbooks per year. Our Digital Services had over one million subscribers. We only have two of them so far. Cory dan rosensweig, always great to see you. Coming up next on bloomberg west, new numbers for electric cars. Sales predicted to soar. Could it be enough to tip the scales in terms of the worlds next oil crisis worlds next oil crisis . Shares of baidu are up. Making investments beyond search and advertising. Those efforts are beginning to bear some fruit. More bloomberg west next. Cory tesla. A legal fight involving General Motors and indiana. Lawmakers siding with a bill that would stop the electric car company from selling its vehicles directly to consumers. Indiana voted to send the bill to a summer study session, summer school, tabling it. Tesla accused gm of being the driving force behind the new legislation. They are facing off to bring lowerpriced electric market vehicles to market soon. Causing concern for big oil. Unsubsidized electric cars will price match gaspowered cars in as little as six years. The question how much oil demand will be affected by this disruption and put it change the rules around selling oil and could it change the rules around selling oil. We have so many automakers already making it a lot of making electronic vehicles. We talk about gm. Nissan, ford selling electronic vehicles and making them cheaper and cheaper. Electric vehicles reach massmarket production. If you look out for the next six years, the component prices of the electric vehicles the battery makes up about 1 3 of the cost of the car. As battery packs continue to fall, we think by 2022 electric vehicles will be cost competitive with their internal combustion counterparts, and thats when you start to see growth really take off. Exponential growth. Cory why are battery prices coming down so much . Tom because electric vehicles are already starting to be adopted. The model s is a very expensive car, but it is competing with ferraris and bugattis. Cory they lose money on every single one, and thats not a Sustainable Business model. Tom they are losing money because they are investing in the model 3. They will unveil it next month. Cory those costs are capitalized mostly. What about the surge of lithium . Isnt there a headwind that there isnt a ton of lithium, and we