Election. In canada, alberta is under a state of emergency. The declaration comes as crews with to hold back wind, wildfires that have already torched 1600 homes. Officials say there are 490 49 wildfires, seven out of control. More than 80,000 residents have fled. No word on injuries or facilities. Fidelitys. At least 20 people are dead, dozens wounded, on a syrian refugee camp near the border with turkey. Hundreds fled, including from aleppo. Global news, powered by 2400 journalists, and more than 150 nurse news euros around the world. Im mark crumpton. Emily im emily chang, and this is bloomberg west. Coming up, square his firstquarter reports are out, and shares are plunging. How jack dorsey Payment Company plans to end up increasing competition from apple and paypal. We break it down. Plus, the media get serious about snapchat. Whyear from the ceo about hes setting up a studio for snapchat, and where he thinks new media is heading. And the man i string in a digital revolution in education. We hear from the founder of the khan Academy Leader this evening. Plunging,irst, square despite the First Quarter revenue, topping analysts estimates. Revenue was 37 9 million. There was also a net loss. Investors are disappointed in the loss, and high operating costs. What does Ceo Jack Dorsey need to show wall street at this point . We speak with a former visa executive, and our editor at large, cory johnson. Cory a couple of things. Maybe the most worrisome thing was commentary in the letter, in the note to investors. Theres a cryptic message, what they called challenging credit market conditions. Square, the way they extend credit to small businesses, i nk 153 million in loans they take the credit and sell to investors who want to get damons back. The letter that. Hey had little default however, they said Challenging Market conditions mean they cannot sell during the quarter as quickly as they wanted, and that is a big worry. The business part of their growth, where they think they can get profits, but they cant sell the paper, a big problem. Emily youre talking about square capital. They were giving up cash advantages, and they turned it into fullfledged loans. That is what investors were optimistic about. It was supposed to be the future growth of square. Cory thats a part of it, but i dont think thats unique to square. Guest i think thats a part of it, but i dont think that is unique to square. Cory they have not had a problem until now. Emily is it macroeconomic or . Cory it doesnt matter. If they cant sell paper, they cannot grow business. Guest i think its true for that piece of the business, but i think theres a bigger story. They grew by 64 yearoveryear. There are not a lot of publicly traded Companies Growing at that clip. They continued to expand product that is amazing for small businesses. I think they see themselves as essentially an operating system for small businesses. Emily lets talk about this. We saw results from paypal, visa, mastercard, they all performed well. To first data, which seemed be more of a direct competitor to square, has been struggling. Another company is actually doing well. Online Lending CompaniesLike Lending Club have complained wall street does not understand them. I was able to speak with the head of square capital. I asked, does wall street understands where . Take a listen to what she had to say. I think Financial Technology is a new industry, particularly on the lending side. There is an evolution of understanding and appreciation for models that work and dont work. I do think there will be a bifurcation as we go through the credit environment of Business Models that have stood the test of time over the last cycle, and our evolving, and are strong Business Models. Emily do we need time . But they are coming out as the loser. Guest i dont see that at all. They are killing it. , their newf products apis, that can plug into other applications, i think back and be powerful. Again, i point a point i made squarepast, they have a a point of 70 which is often charge. A much broader suite of services and i think they see themselves as bigger as bigger than a Payment Company. Emily what are you optimistic about . Cory helping Small Companies manage businesses. Help everything from scheduling services, to managing employees, managing pointofsale, and doing it in a design that is more like a consumer designed product. I think thats one of the real innovations. Its rare to find a company with such a combination of audit, design, product, design, engineering, talent, and a great managing team. Cory i would argue if you sell something for less than a cost, you will be very, popular with customers. That is what we have here. Topline growth is fantastic. But if they cannot turn the capital business into the capital machine they thought, they cannot sell the paper. It will be a longterm concern, emily and a big concern. Emily paypal is also try to get into the lending business. How wellpositioned is square visavis other potentially more established players to compete . Guest i think they are in a good spot, because they had transaction data back and see the real status of the data. Quarter soed this they can provide a brighter range of options. I dont see them competing with paypal so much they have traditionally been more retail pointofsale, although they are starting to go online. Paypal is more doing lending on the consumer side, historically. Perhaps it will get into the merchant site. Im not sure they are direct competitors. Emily last word. Cory there is a 50 million settlement. A cofounder has been suing the Company Since 2010. They settled in the First Quarter. It was a 50 million payment, suggesting the case was not good for them. It was a very big payment. That problem goes away, but it goes away at a substantial cost. Emily cory johnson always read the fine print. [laughter] thank you both. With earnings, alibaba shares got a 4 boost after releasing earnings early thursday. Asias Largest Internet Company posted betterthanexpected sales sales. The reported new users and more mobile purchases, shrugging off concerns over the slowing economy in china. It is interesting, looking at the alibaba results. You can see them performing better than china at large. What do you make of that . Guest i think thats exactly the comparison. Even if you are concerned about the chinese economy, which i am, the consumer in china is the least of your concerns. It is the transition from investment to consumption. Nobody sells more to consumers or helps consumers buy more than alibaba. That is the strong result they had so far. If you are going to be in china, and get beyond the concerns about the overall economy, all of the alibaba seems to be a good place. Emily what about the Acquisition Strategy . Alibaba has made Big Investments at home and abroad. Investors are putting two and two together about the grander plan. Is that starting to emerge . Guest i think their investments are doing well. , that the portfolio, of investments that they dont consolidate is now worth 37 billion, just investments, including a big increase in the pay. Of the owner of ali that part of the strategy is working well. They made a lot of money investing in zulily in the u. S. Investments are doing well. The acquisitions are more about extending geographies. They made a bid for South East Asia ecommerce provider, and they will consolidate that. That tells you where they are going. They want to expand and emergingmarket. Not to where they are buying and consolidating. That is where the strategy is. Emily what about the Alibaba Cloud . We talked about the amazon cloud, google cloud, apple. But they are actually making big strides. Guest one of the things that differentiates alibaba from ebay of 10 years ago, is that jack ma and the leadership are paying close attention to what works for amazon. What works for amazon is getting into media, expanding the cloud business. There are following that playbook. They are following it well. They grew more than 150 this quarter from cloud business. From amazon, it was an incredible incredibly profitable paying point. Emily should we be more worried about the macroeconomic environment china . Flow that catch up to alibaba will that catch up to alibaba . Guest obviously the data from china is uneven. It is not inconceivable that the consumer is there as well. Thats one concern. The other concern to keep in mind is that they are losing shares. Believer or not, they grew 40 of the quarter, that is slower than jb. Com. 10 years ago, ebay was bigger than amazon then, but jb is more like the amazon of china. They are growing a lot china faster. Emily what about International Growth . Theres a question of when alibaba revenue from international will be on par with what they see drastically. How far off are the . They . Guest it is going very fast. The consumer and crossborder company is growing fast. Domestic business outside of but expectill smoke, its still small, but expect that to change. Their India Business is going to grow as well. Thank you, always great to have you here on the show. Staying with earnings, gopro swings to a d in the First Quarter, the company posting an adjusted loss per share of . 63. Sales sliding nearly 50 yearoveryear. The ceo reiterated consumer demand remains solid addressing concerns that the, portable cameras market is close to saturation, and the company is challenged with challenging the base beyond the adrenaline addicted core. Shares are down 21 of the beginning of the year. Coming up, our european officials spending sending u. S. Tax giants next messages when it comes to Consumer Privacy . We speak with the former Homeland Security expert, next. Emily in todays revolving wealth an executive social announced in a cyber securities companies. A full year came in short of analyst expectations. They lost more than 20 of market value as the industry grapples with increased competition from new were Cyber Security started. We will get more into the numbers tomorrow and on the show, when he we speak to the new ceo we speak to the new ceo. Earlier this week, brazilian officials shut down the face of messaging set service whatsapp. Almost half the population uses it regularly. Ceo Mark Zuckerberg called the action very scary in a democracy. Its just the latest example of how the worlds Biggest Tech Companies are under competing pressures from government to make their content accessible to local Law Enforcement. Joining us to discuss the issue, former Homeland Security secretary from washington. Thank you so much for joining us. What we make of the issue around whatsapp in brazil, and what happened and why . Guest the issue was that a judge ordered whatsapp to turn over certain data that was present in the u. S. , and u. S. Law would have created a problem had the data been turned over. In order to put leverage on the company, the judge shut down whatsapp. It wound up hurting a lot of innocent people during the the three days the application was shut down. This was one example of a larger problem, and a world that is divided among sovereign states, but where data moves around the globe. Emily in europe as well, officials have complained about u. S. Laws being outdated, and Company Policies preventing the work of Law Enforcement. What do you think the problem is . The problem is, our laws are nationstate based. Can control the law within its own domain. The challenge is when you are dealing with data, it is housed anywhere in the globe and moves around the globe. When a Law Enforcement authority wants to get data on a matter of investigating it is investigating, the issue for the company is, is the data in that state, is it in another state . You have competing or inconsistent rules of law. That was the company in a position, they are dammed if they do, dammed if they dont. Worse for the individual consumer, who could see their application shutdown. They want to be third party victims to a fight between sovereigns about what law governs. Emily but arent there mixed motives on all sides . Look at the International Outrage spawned by edward snowden. Guest sure. From one standpoint, you have countries that say, we dont want to have this information turned over, because it reflects privacy issues. In another case, the country says we do want to have that information, because we are protecting ourselves from terrorism. Recognize that in countries where, for example, or is not freedom of speech, the desire to get information to punish a political opponent might not be acceptable in the united states. We would be refusing as a nation to cooperate and turned that over. The question is, how do you come up with Global Standards that allow Law Enforcement with proper authorization to get access to information that prevents terrorist attacks, but not allow nations to impose views on political issues on other countries in the globe . Emily lets take the attacks in example. And paris, for what is the evidence that is lawenforcement had access to u. S. Tech company data, that the attacks could have been prevented . Guest actually, what appears to be the case is a problem was not let of access to u. S. Technical the european a 30 had information and they do not follow up. It was reported the authorities had information and they did not follow up. The belgian authorities knew that they were planning something, and they simply did not execute in their own country. Sometimes it is easy to blame these International Differences for a failure of intelligence. In the case of belgium, it is more an internal and paneuropean issue, then an issue that implicates american law. Emily what needs to change . Guest i think we need to reach a common understanding about the law. If a country wants to obtain information about a citizen, said the law of the countrys citizenship prevail or should it depend where the data is . My own view, if it depends on where the data is, you are ultimately going to fragment the internet. Every country will insist its citizens keep data only within the country. That destroys the Global Nature of the internet. What you want is a set of principles that says, a citizen generally has the right with proper authority, to get data about its own citizens, but if they want to get data about a citizen of another country, they have to comply with the rules that govern the country. Emily encryption, by most accounts, seems to be the way the Tech Industry is going. Is there anything Tech Companies themselves should be changing as well . Guest the purpose of encryption protection here. We are making it harder for hackers are criminals to get the data and exploit it. Those people who say we should weaken encryption so lawenforcement can get access, are really agri arguing we should trade security of the money for instances when Law Enforcement wants to promote a particular case. It is always a mistake to trade up security in general to get security in one case. There are things that television intelligence and Law Enforcement officials can do, that is a very powerful set of tools to prevent terrorist attacks, and we have been doing that for years, and generally successfully. Emily what im hearing you say, secretary, is that a company like apple, moving in the direction of encryption, that they stay the course and do whatever it takes to make information more and more difficult to decrypt, so to speak . Guest i should say, we do work with apple, but i think the Companies Creating strong encryption, should be allowed, because they are protecting the vast majority of people against criminals and terrorists. There are other ways Law Enforcement can get access to data. Certainly, when a company has access to data, they should cooperate if they get the proper legal authorization. Emily former Homeland Security secretary michael chertoff, thank you for joining us. Coming up, is the driverless car revolution right around the corner . And gm are teaming up to bring self driving taxis to a city near you. Emily more earnings acts action. More than blizzard doubles sales. Acluding content from what Gaming Company acquired. Profits rose to . 23 a share, . 12, than estimates of. Nd it was up to 908 million shares enjoying a nice lead in afterhours trading. Rising es also after Company Raised projections for the year, following betterthanexpected revenues in the First Quarter. They had 158. 6 million topping estimates. Amazon could take as much of a 30 stake in a large Cargo Carrier called atlas air. It is the second such deal this year as the Company Steps up efforts to take control of delivery logistics. I list will operate 20 going theo planes, doubling listing fee. Shares of atlas searched as much as 51 at one point in thursday trading. Coming up, well hear from the men ushering in a digital revolution in education, sal k han. ai a look at top stories. Japanese market