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tv   Bloomberg West  Bloomberg  February 18, 2016 6:00pm-7:01pm EST

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christian. little -- trump wasted time before responding that it's disgraceful to question a person's faith. meanwhile, the pope may be willing to offer flexibility to the faithful because of the threat of the zika virus. the virus has been linked to birth defects. here in the u.s., president obama has signed legislation hitting north korea with more sanctions for redues -- refusing to stop its nuclear weapons program. and president obama will plaque an historic visit to cuba next month 55 years after the u.s. broke demoim -- diplomatic ties after an agreement. the castro regime is still criticized for aluminum rights abuses. bloomberg news is powered by
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more than 150 flues bureaus from around the world. ♪ emily: i'm emily clang and this is "bloomberg west." coming up, apple gets lukewarm support from the tech industry in its standoff with the f.b.i. what is really driving the in -- encryption debate? plus i -- what if the san bernardino shooter had been using an and roid instead of apple? and can set top boxes handle even more competition? we will ask the experts.
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emily: apple is still in the spotlight two days after opposing court orders to unlock the iphone of the san bernardino shooter. reaction from the tech industry has been polluted, with calls for more debate and states of broad agreement that companies shouldn't be forced to create so-called back doors in their products. google tweeted that it could set a troubling precedent. adon, book company, am microsoft and twitter declined to comment. is apple's stand putting other tech companies in an uncomfortable situation? many companies while publicly allying themselves with apple do in fact comply with requests for official -- official requests for information. i put this to hiroshi lockheimer. asking what he would have done
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if the gunman's phone had been an and roid instead of iphone. >> honestly we focus on building really secure products ut if requested by law enforcement agencies, with proper documents we will make those available to them. i think in this case apple is being asked to, it sounds like, help in harking their product. i think that's a very different scenario from sort of the way things work today and i think that requires a lot of discussion and debate. an important decision. i have a lot of respect for law enforcement and of course, you know, don't have any respect for criminals. that's not what this is about. more a completely new way of thinking about things and we need to debate that more. emily: you have opponents out there, including president obama, saying this is restricted to one criminal and if it's going to save lifers, isn't that more important? why would you protect criminals
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or put innocent people's lives at risk? >> like i said, it's a new area and i think it warrants more discussion to make sure how is this actually going to work, what kind of precedent is being set and so forth? so i any more thoughtful debate is warranted here. emily: if that phone was an and roid phone, what would you -- android phone, what would you fell the f.b.i.? >> hard to get into the hypothetical since that's not the case we're talking about now but i think we would feel the exact same way. look, this is a different scenario now and let's think this through a little bit more and have that debate. emily: edward snowden has said this will be the most important tech case in a decade. these are important issues you have the power to control as the head of android. >> i think it's about privacy,
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which i think everyone agrees is important. you know, it's easy to talk about these cases in general terms, but the specifics do matter. i'm not familiar with the specifics of, you know, the san bernardino apple situation so it's hard for me to comment on that, but it does feel like an important area that requires more discussion. emily: us tune in to "bloomberg west" for my full interview with hiroshi lockheimer. google's senior vice president of android, over the next couple days. with us now, wicker co-founder here with me in the studio. tim, i want to start with you. lay it out for us. who is supporting apple and who is staying conspicuously silent? >> you have the drade -- trade group here in d.c., and facebook and twitter, all coming out in support of alle,
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saying they don't think the government should be able to force them to hack it and then donald trump is quickly saying who does apple think they are, adding to the mix of this toxic situation that the debate is just going to get much hotter as we get further towards the general election in november. emily: what do you guys think? >> well, you know, the thing to think about from my perspective is we have to separate this case from some of the largef -- larger questions. i think of? the details of this case air little bit different. clearly breaking encryption is a wig problem and that's something we have -- be absolutely have to avoid. the reason i think some people have been not quite as strong on this is the specific details of this case aren't really about encryption. hacking into the system but not involving encryption. that's important. it's a very complicated case. the concern is by focusing on
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this one that really isn't about the bigger encryption question, is it unfortunately bringing into a conversation this maybe we weren't quite ready to have yet? that remains to be seen. emily: now, nikko, you run a message -- messenger service. you have actually had requests by the f.b.i. to build a back door. explain. >> i was lucky enough to be educated by the best hackers in the world. thomas croft taught me and many others how to break into a back door and as soon as you have learned that lesson it's very lear that if you put a hole or circumvent security encryption, it will be used by the bad guys. we've seen this with juniper recently. this is really frightening because of a couple of things. one, the government is acting more like a dictatorship, trying to force apple to build something it does not want to build and what it's asking them to build is actually a weapon
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that would be way more detructive to the united states and the entire world economy if it got out. i think tim cook is standing up more for national security than anyone right now. emily: so the same question with an droird, if this is saving lines of, targeting one criminal, what is wrong with that? >> i believe tim cook is saving more lives by making this decision and it's the right way to go. what you are hearing from public technology companies, maybe they're not supporting this. i've spent the last day with cyber enception experts and everyone agrees that tim cook is making the right decision here. the government is asking us to build a unicorn, something that doesn't exist and if it's made for one, it will be made for others and the code will spread. so this is a very landmark case
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here and we need to make sure we hold our ground. emily: bob, what do you make of how as businesses these companies have respond or not? hiroshi lockheimer stopped short of saying we would -- would do exactly the same thing. >> couple things to think about. number one, the details of this case aren't necessarily for release of a, an encryption key. that clearly would never pass muster. the challenge is we know a lot of tech companies have cooperated with authorities and provided information if they've had it and the question is where does this particular case fall on that range of options that are there? some are arguing that it doesn't quite get to the level of it being a huge issue. some are saying it is. i think there is a lot of validity there. the other question frankly that apple has to think about and i have to give tim cook a lot of
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credit for this stance is it's going to upset a lot of people and there are some for whom apple is going to be perceived more flegatively and it would -- could have a world business impact on them. so all credit in the world to tim cook for having the strength to make what is clearly a difficult decision. whether this was the right case to do it on is up for debate. emily: does apple end up standing alone here at least publicly? >> i think you are already seeing some voices of support. really in the d.c. world you are going to see the trade groups and coalitions stand up in support. they get their funding from silicon valley companies and will push money to those groupss to help support apple publicly. they will be there hind -- behind the scenes. emily: and nikko, the f.b.i. asked you for a back door in 2011, 201 it.
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still no back door. >> it's not that we don't work with law enforcement. same with apple. they complied with over 70 requests last year alone. it's just that if you have information you can help law enforcement but asking them to circumvent security and build something brand now is not smthd government should do. emily: and another statement, we stand with tim cook and apple and thank his -- limb for his leadership. >> we do, too. emily: thank you so much. tim higgins in d.c. covering this story for us, thank you as well. a story we are watching, starboard value is taking initial steps ford -- toward a proxy fight approximate -- with yahoo. sources say a proxy olicitation advisor has been calling i can't ooh share eleders -- yahoo shareholders.
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ast month c.e.o. marase meyers outlined those. >> we are really very confident in the strategic plan 2016 and beyond in terms of a few key products. we're focusing on news, sports, sports and lifestyle, that's more supposed -- focused sthanl we've hb in the past. emily: all this is casting a shadow over yahoo's obomanu developer conference which kicked off today in san francisco. a statement reiterated that mobile engagement is the company's key focus right now. interestingly, on the projection above her it read, "imagine what the next seven years will bring." yes, indeed. coming up, why federal regulators are pushing for more
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disruption in the pay for tvmarketplace. plus free wi-fi for all of new york city. too good to be true? we will dig into the ambitious plan later this hour. ♪
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win : espn ask trying to backcourt cutters. the goal is to lure subscribers who are canserling higher priced cable contracts or not signing on at all. it tase -- pays the highest per subscriber of any network. the sec just voted to begin writing new rules that would
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expose set top box users to bigger competition. there is big money at stake here. the plan was backed by google and op orsed by the national group that represents providers. craig moffett, thank you for join is is -- joining us. why are the cable companies so upset about this? >> it's about more than set top boxes. that piece alone wouldn't cause the kind of controversy you are seeing. what i think people are reacting to is the mechanism for the proposal, which is to unbundle the video stream itself and effectively make the cable operators video stream generically available to third party providers who can then repackage it however they see fit. emily: so, craig, what's really at stake here? how much of it is about the fees? and by the way, looking at this chart, the set top box
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marketplace generates $20 billion a year. average household, including mine, pays over $200 a year just to rent the box. are there other benefits to cable companies? >> you know, that's what makes this so complicated because there are so many pieces of this proposal you have to run hack -- unpack. the boxes themselves, as you say, it's about a $6 fee on average for a box. there's two and a half boxes fer -- per household, so about $20 per month per household. if you excuse me -- assume that maybe 10% of customers over five years switch to others and half those fees could be recovered by the cablele industry by just shifting them to service, you are only talking about 20 cents a month that's atstake for the cable operators.
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what you are really talking about here is unbundling the video stream itself and that's what the operators are concerned about. emily: we have a quote from dish saying the video industry is currently under going a true wave of unprecedented changes. it's really not clear to us that regulations need to encourage innovation. that quote sounds to me like somebody is going to be on the wrong side of history. >> no, what mr. dodge was saying today on the dish call and i think it's what almost everyone in the industry would say right now, is that things are happening quite quickly. you can get a roku box, an app from time warner cable that operates on your box and you don't have a -- to rent a box from the cable operator. he mechanism to the s.e.c. from the people opposing it
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would seem to be overreach. they say no, you have to separate information about the video stream from the video stream and what the customer has bought and we've allowed them to watch. it is trouble some to the distributors, to the content makers and to lots of people in the creative community as well. emily: craig, you said a 50/50 chance of actually changing regulation? >> yeah, look, from here the process is, this is just say notice of proposed rule making. from here you go through a process of comments and reply comments to eventually get to a report and i give that a 50% chance of happening. then it probably goes to the courts and you have a 50% chance of it surviving a court challenge. emily: ok. we will of course continue to follow this. thank you so much for coming on "bloomberg west."
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ming up, the japanese game maker ask building and army of big-name partners to develop products outside its core asian market. we'll speak to the c.e.o. next. ♪
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emily: another stock we are watching, i.b.s. it's stock rose after news roke that it is buying truven. true sven provides cloud-based management and analytics to more than 80 health care clients. the purchase is seen as another move by i.b.m. to amass huge data on how to work its software better. turning now to gaming, nexon,
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right now it's core market is asia. japan has -- happens to be the world apt largest mobile gaming market. but nexon has its sights set on the west and making key partnerships abroad. owin, great to have you here. you are actually from san francisco but the first american c.e.o. of nexon, which is sort of a testament to the priority now. you are doing sort nve reverse what other game companies are doing. they're trying to expand in asia. >> the north american markets for games are huge. we think there is a huge opportunity in north america. what they have had less experience where the last 20 years is rm online games. that's where we learned what we do 20 years ago the and we think they have a lot to offer by tying up the best of asia and the best of the american.
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e just finished up fiscal year out $1 billion, and our u.s. and european business about 10% but growing. emily: this is a very hit-driven business. do you have to make regional changes for different markets? >> in some cases they do and some they don't. we have a game in the west called domination. it's been very successful in the west -- emily: shocker. >> then it did even better in asia. we brought it to the u.s. and we've m -- had -- fantastic quarter with dominations and it's continued to grow. emily: zenga and king have struggled to come up with their next hits. how do you overcome that? >> we come from a very different perspective.
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we build the games we really want to play as gamers and they -- we think there is a huge opportunity and plenty of space for games that are truly fun and immersive. if we build those sorts of games, the kind that game players warrant to make, then we will have a very robust retention of our game players and that creates a nice business overtime. emily: i was speabing to andrew wilson and he said in order to survive today as a gaming company you have to do a little bit of everything, con solse, subscriptions, premium yums. what do you make of that? issue is k that the not so much being on a lot of different platforms. we think it's about making games that are really fun and really different or unique and if you do that, as long as you are on a big enough platform -- platform like mobile, p.c., console, any one of those address a very broad market. having said that, e.a. has done
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a fantastic job on being on all those different places. emily: all right. owen mahoney, thank for joining us today. great to have you. coming up, bloomberg's cover story features the most important apple executive you have never heard of. and check us out on the radio, the bloomberg app, and more of "bloomberg west" next. ♪
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emily: i'm emily chang and this is berg west. new japan rules threaten but the new rules could make it illegal. and stumbling blocks on the company's expansion plan. and we join live from tokyo. first of all, explain the situation the latest. what is the situation in japan? >> sure. you know, it is putting on a brave face in the face of these new regulations that are coming online. you had your first fully licensed, fully compliant list tings in japan going live. throughout the country,
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throughout the major areas over the coming months and years. the key thing about this legislation, fine, you can stay in a house but stay at least for a week. and in reality, people don't come that long. if you stay for less than a week, you will be breaking the law. and the person you are hosting will be breaking the law. a lot of the hosts are worried. they don't want to be breaking the law. they put a lot of money into their houses. they are putting on brave face and saying yes, in isn't great. hang on. we are pushing the government for a specific law for sharing the economy because this is a very different business. emily: talk to me about the hotel market in yap and because
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it's hard to find a hotel in tokyo, isn't it? >> absolutely. the rates are over 90% and that is on top of a price increase. not only more expensive to stay, still just as hard to find a room. and here's the key thing for hosts and why they are optimistic. the government needs tourists. one of the few drivers of growth sm the government will be supporting the people going forward. emily: they are trying to take advantage. thanks so much. ncident incident -- incident emily: braces the cover.
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he is the most important apple executive. he joined the company in 2008 and has been running the division. a latest success was the 9-processor. here to talk about the man our d the author and reporter who covers apple for us. who is johnny and why we haven't heard of him? >> he joined tim cook's management team but he has been at apple since 2008 and running the semiconductor division. this is a company that likes to make everything from the software to the hardware down to the processor and what allows apple to differentiate the prouts and they would say better
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products. but we talked to him. emily: he was recently promoted. talk to us about his trajectory. >> he is an israeli-born ngineer and worked for intel and after the first iphone came out, it was limited and steve jobs made the determination that it needed to design the processor and the brains and by doing that, they thought they could have new features. emily: why is what he is working so important? increasingly, they are, which is an interesting development, right? ma their pcrmp's and
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crmp's and the silicone, more and more. they have to convince the world to pay more. there is something special about apple. they make the argument with the design and the cloud service. and really, they are trying to play up silicone. the security debate, the encryption debate and why the f.b.i. is finding it so difficult taps into silicone. they have design features into the chip. emily: talk to me about that a little more. > the chip, very, very tight encryption and makes it fficult for everyone to hack it. they have asked to have a
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skeleton key. emily: and that is the chip? >> we are talking about the blending of the hardware and software. elements of it and the incorporation of the software and taking the i-messages and when i hit go, it scrambles and when it gets to you, it decodes to you. law enforcement wants a step in between. emily: apple does president provide this access, why now, why with this guy? >> this is something we thought about. this is something strategic. questions about whether the smartphone market is becoming saturated. they are trying to reinforce that differentiates them from others. >> we asked them to talk to
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jobs. emily: we talked to them. >> maybe the time was right for them. it is too good of a story. emily: the timing really interesting given the last 24 hours given the f.b.i. >> and the skepticism and the stock, having them to continually reiterate why their products are different and their products are different. emily: check it out in this issue of this week's mag zeen. all right. free which file service that is where pay wifi phones used to stand. we checked out one of the very first locations in downtown manhattan. >> hello. >> the good old phone booth,
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moviesused except in the and on tv. in new york city, this is taking their place. link ny crmp. the program to bring the communications. w inch fmp i with a guaranteed range of 150 feet. thedestroyed tablet to surf web and usb ports. >> free phone calls. just got on the internet. we are brage a computer touch point to every touch point. towers.bridge run the and build them and intersections which installs and maintains them using ad revenue from hese, making it easier for
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taxpayers. they expect to make $500 million doll. the first link locations are now in service on third avenue. locations will go across new .ork to 4,500 locations as for security concerns, the link network is encrypted and information won't be sold. e goal to blanket new york uninterrupted w inch fi. >> this is it for the city. >> some long phone booths. emily: a convertible. the numbers will surprise you.
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we will dig in, next.
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emily: a new report from facebook data nearly one in five venture deals in 2015 included convertible debt and that number is on the rise. the rise of loans has doubled and trend proof of a greater trategy or startups are up for cheap money. great to have you back on the show, dave. let's start with you, what is convertible debt and what does this mean? uber and jet. >> convertible debt is in which
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investors will give a company money and will convert to equity or something similar to that and it becomes more attractive in imes when valuations are fluctuating and everyone agree on reseat an valuation and the investor thinks the company is worth less and easier to move forward to get new forwards. emily: uber hasn't had any trouble. what does this mean? >> and large and late-stage companies from early stage companies. this is an instrument for companies raising capital and there are a couple of reasons. it is a quicker instrument for a lot of reasons. it doesn't cost as much.
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and it is an easier document to use than a larger priced round. emily: you are seeing it at the early stages. what are you seeing? where do you think we are in the sick call? >> in this case, the lateer part of the stages of the market have seen stages. bear market that might happen. that has kind of happened. that has happened. emily: secondary shops, flooded. >> i think what you saw there was a lot of interest in money getting into private companies because they weren't going into public. public companies, international companies were all trying to get into the tech market and it was attractive and gave a generous
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multiple for that money. there is thought that evaluation can fall. >> i love keith and crystal ball is wide. emily: it is wide. take a listen. but we have a quote. >> it is a normal. things are going to change radically and everybody has not adjusted to that. all hell is going to break loose. >> i think he is partially correct. multiples are coming down or have come down. i think that is what he is talking about. eople were giving generous multiples. we have seen that come down in and ally like linked
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and that might be priced generously. i don't think that's the same story in the portion of the market. >> where are you going to see differences snr >> we will see a holdback in our stage, like 10% to 20%. we think there is a lot of interesting companies out there. a lot of demand internationally. emily: you have been from traveling a lot. is an ark and gloomy, it attractive market. emily: how so? >> if you are an investor, that is a test story. if you are in russia, that is a test story. if you are in oil and gas. it maybe not as great as
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used to be. emily: do you see yourself doing anything differently like focusing on the business? >> we have focused on that. that is not new for us. we do a lot of our investments in other markets, we have to be concerned where there is downstream capital and profitability or at least to get profitable. emily: a lot of it has been on on-demand economies. is there anything in danger? or a different story. >> there are sexy stories. drones and i. t. are interesting sectors and
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capital intense i have. invest, s we e-commerce, things that solve problems. emily: and drones and internet things. >> i think they are going to be that big, but right now the current story that i think is big is mine craft and that is an augmented reality that my kids play constantly. it isn't over the horizon but the 3-d technology are amers i strong. those are quite emily: thank you both. well, they running shorlts and running pants shoe and apparel companies are adding them to
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heir products. on the road, we are talking to one of the latest players in the game. not miss the polish prime minister at 6:0. now
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emily: top officials atlanta twitter are scooping up shares. a former gooble executive last all bought $2 million worth of shares and anthony bought
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scotts. worth of and there was twitter shares and thiff fall en35% since then. the car industry is in stages and getting a little crowd he had. they were going to get into the driverless car sales as well. dim hit try thanks for joining us. what is it going to take for driverless cars to actually be on the road because we are speaking earlier about some of these industries like drones are alked about yet still so
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nacent? > other cars, objects. you can still drive it today. it's a question about the technology and legislation. but i'm pretty sure in the next three to five years, we will see it. emily: you are talking about car software, do you have any deals with car makers to get the deals to market? >> absolutely. maker has every car its own strategy how they are going to bring the driving into
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the new models and we are part of quite a few initiatives and where we have contributed and experience of the future car. ut again as we see this, the models which will enter the role, will have it. emily: why blackberry and google in the arther along self-drifling car? well, this is an industry great system which is currently on board of 60 million cars.
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it's ready to go. they have been out for a long time and see opportunities. emily: do you see other companies to compete in the self-driving car market or will google or apple take it all? >> it will be all about -- and it is a promise from apple and i'm sure tesla. i don't think google is in a osition to enter this space. emily: thanks so much for joining us. time to find out who is having the best day every. on tuesday, uber is losing a billion dollars a year in china.
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but uber is profitable in the united states. the news suggest that the ompany might be ahead of son gratlations. and that does it for "bloomberg west." do not miss it all and that is it today from san francisco.
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>> from our studios in new york city, this is "charlie rose." charlie: a ceasefire to take effect on friday and the state department acknowledged that world powers have yet to negotiate the details of the ceasefire. the agreement announced called for humanitarian aid. but on tuesday, the state department could not confirm at any of it reached its recipients. the assistant


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