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tv   Bloomberg West  Bloomberg  February 29, 2016 6:00pm-7:01pm EST

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offensive military capabilities against islamic state will get about half of the money. 30 people are dead and hundreds more are wounded at a suicide bombing at a funeral north of baghdad. state has claims responsibility for the twin bombings on sunday that left 70 people -- 73 people dead. the centers for disease control and prevention say one out of five residents of puerto rico are treated to get zika virus, raising the threat to the united states. casesare four times the than at the end january. urgent action is needed until mosquitoes reach their peak at april. they will meet tomorrow to talk about the vacancy on the serene -- supreme court.
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any efforts are being sent by republicans they will block. from the bloomberg world headquarters in your, i am mark. ♪ emily: i am emily chang, and this is bloomberg west. the judge in brooklyn back to the company's hands. we will bring you the latest. the former head of the nsa weighs in on apple versus the fbi. general keith alexander does not buy apples argument. and the biggest security conference of the world kicks off here in san francisco. we can -- we talked to the
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symantec ceo on cyber threats. victory for apple in a separate but related privacy battle moving to a court in brooklyn, with the judge ruling that the techtarget does not governmentp the unlocked and alleged terrorist iphone. fornt to get to our editor legal coverage to have the latest in new york. first of all, what exactly happened? >> it is the first judge to exhaustively look at this issue. they said the demands were excessive by the government, and has now said this can be to lunch. this will not have a direct on the california terrorism case that will be in the public domain and will influence thinking about it in the higher court where these issues are likely to go forward. is this case similar and different to the california
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case? >> we are trying to decide how much security is essential, and does an invention of visual privacy trump that national security -- and does individual security trump national security? it is a drug dealer's iphone. he has been convicted. the terrorism case in california and ball somebody who is dead. it is also a different operating system than apple. said it has moved to a greater encryption going forward. but this was an older version of the iphone, and this is the kind where apple has in the past been operating with the government. a dozen cases that their fighting across the country on this. there are multiple cases that continue to pop up on this very issue. could this be a very important precedents? apple has a hearing on capitol , will this president.
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sway?precedent holds -- will this precedent holds sway? >> they say that this is going to far, this would be too much to do. a convicted drug dealer, there might be information on his phone that is useful to law enforcement. executed warrants for other purposes in this case, but not this. i think this is a crucial win for apple. it will only fuel the public debate about what is too far. going there are 12 cases on. twinighter directionless cases are going as well? -- do we know which direction those cases are going as well? >> next app in the california case is a hearing in which both sides will make their argument. they have finally accepted citing firstt case
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amendment and fifth amendment kind of things that could rise of to the supreme court. that case is being looked at as a test case. had disagreedes on which direction it should go, because the california judge said apple should comply. this judge says that you do not have to. that's a sense of the very kind of thing that rises to record system. emily: the all over that hearing coming up between apple, the sei, on capitol hill tomorrow. thank you so much for that update. watching,k we are shares are lower in after-hours trading after the company came in softer than analysts had expected. workday makes human resources software and competes with sap and oracle. it is one of several software companies who's shares have taken a beating in 2016. : 24% since the beginning of the year.
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google has announced they have companies the editing -- a video editing companies. they want to create a content creation experience in consumers everyday flow. shares of gopro are down more than 70% in the last year. coming up, i sit down with the former director of the nsa. he helped break down apple encryption case and what it means for the intelligence community. cyber security's most important conference kicks off in san francisco. the ceo of symantec joins us later this hour to set the agenda. more of bloomberg west, next. ♪
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emily: it looks like one of google self driving cars got into a fender bender, and this time it is on google. this is the first time itself diving technology is partly to blame for an accident. they released a report about the incident which ca happened two weeks ago. the test driver, required to be the bus wouldeat,
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yield, and did not have control of the collision happened. the vehicle was rolling at two miles an hour while the city bus was at 15 miles an hour when they collided no one was injured. let's get back to our top story, the conversation on encryption and privacy heads to the hill this week. they are preparing to get testimony on tuesday, and congress is considering a bill to create a digital security commission, bringing together government officials, tech industry leaders and privacy advocates to put forward recordation unwanted national policy should look like. i sat down before the same director to ask who is right, apple or the f the eye? -- or the fbi? they both need to come to the middle. my opinion for the question is not who is right for the phone to resolve this so that we have both, protections of civil liberties and privacy, and how
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to ensure our security as a country? and how to redo the new ways of the american people know that communications are secure unless they're doing something that should not be doing. in the past you had the authority to get a war it. -- to get a warrant. but if you have encryption that cannot be broken, how does the government then go after bad guys? >> in it possible to have that? >> all things are possible. what i would do is get the greatest minds in industry to get to work with the government to create a solution that can be laid out the american people in a way that does both. i not for the government reading everybody's e-mail. that is not the fact. when you can see in the investigation after the edward snowden thing, they found out that the nsa was doing that the courts are congress, and executive branch asked us to do.
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trampling were not over people's civil liberties and privacy. that is what came out. so how do we make them aware of the facts? i think if people understood the facts, and had that laid out, then what they can do is make a reasoned approach to how you stop terrorism. why do i say that? terrorism is going to grow. look at what is going on in the middle east. the middle east is breaking down, no matter what we say. we have some fundamental problems in the middle east. population 25% of unemployed. 82 million people. where do those 25% go? jihad -- a big group for jihad. but as a big problem in the united states, and for stability in the middle east for those who depend on oil. i think we have to solve that problem. i am not for a backdoor. i for a transparent front door
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that tells the american people first how to solve this problem can and the second ticket to our allies and say is this an international solution that we can work with? you can see both sides of the argument, but i think the argument has become polarized around all one way or the other, when really what we want is the middle. intelligence and law-enforcement be undermined by having this conversation so publicly? >> there is a risk in that. that is a great question. as you see, what happened to bin laden after the east african embassy bombings in 1998, it was revealed that the community was tracking him with his satellite phone. and then three years later, 9/11 . and then the snowden links, and then we saw a lot of issues that
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we were not going to be able to stop. in the past we have been able to stop things that the tele-community and law enforcement worked hand-in-hand in stopping. emily: you think the paris attack could have been stopped is edward snowden had not least that? >> what terrorists are learning or how to bypass intelligence and law enforcement. are we giving up more information, the answer is yes. that is going to make it more difficult. with that difficulty, if you look statistically at what we attacks thatut 54 25made public, we found that were in europe, 13 in the u.s., so that means you are twice as likely to have an attack in europe. said with trish regan back in
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2014, but the most likely place to be hit was paris. for all these reasons. and it was. you're going to see increased attacks in europe and the united states. and we have lost capability. communications have been encrypted over the past decade, what would be different? is if you encrypt communications and the government cannot read the content when it is authorized by a court order to do so, and in that one that is where an al qaeda terrorist was talking to somebody colorado the nsa intercepted that. they talked about making bombs, and make sure that with the guy could go and find out who is this address, this phone number, and that led to him.
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it was encrypted, all we would knows that somebody would talk to somebody in the united states. assessment that someone would have gotten through. subwaythe attack on the would've happened if mutations have been encrypted? >> yes. emily: more from my interview with the former nsa director coming up next. also, we continue the conversation, talking about the global repercussions of the apple at the idea encryption battle, straight ahead. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg and sirius xm radio. more coming up next. ♪
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emily: one of shutterfly's
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largest shareholders is agitating for a strategic review in light of an unsolicited offer for the online photo sharing site. according to a regulatory filing they have increased their stake in shutterfly to five point percent and is urging shutterfly two-putt is permanent ceo search on hold. they have an attractive unsolicited bid on the table, and they say the company should consider it. mark is trying to dispel the idea that she is unfairly targeting american companies as she crackdown on preferential tax deals. the investigations into tax undues all under her advantage look. the companies say they have nothing -- it done nothing wrong. turning back to my interview to general keith alexander, saying
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they need to come to middle ground on this battle. i asked him why he thinks the standoff got to this point. >> i do not that the fbi chose this issue, and we were talking about this with a number of people. first, jim komi is the ultimate rational person. the head of the fbi. if you want somebody who was balanced in their approach, look at what he did on the nsa program in 2004. give ministersto to that individual this is i need this information. i do not think he does it cavalierly. this is an issue that has to be put forward. how do you do it? he has a good reason for doing that. it is not just give me that and let's see where this goes. i can see both sides of the issue, and apple is a this is
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step one of what could be multiple steps. i say step back. step back and get the right solution. i question whether anybody should be able to defy a court order. that is something that has to be looked at separate. emily: do you think apple is being arrogant? >> i think there is a lot at stake. i can cfo apple's concern about if you do one, that is the gateway to many. i can see the end the a's concern that if you do not do this, we're going to have a problem in the future, and that gets back to the beginning. --in approach that does both you have to have an approach that does both. include apple in it. get their help. do not say to the government you cannot have this, good luck with you protecting our nation. the constitution is not a suicide pact. it is a constitution that was built to defend this nation.
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if all of a sudden we are saying that we do not have to do this, i think we are in the wrong place. emily: is there a technical solution that actually is a middle ground? apple was being asked to create a key that could become a master key to all iphones. like cancers it is for iphones. it will put everybody who owns an iphone, hundreds of millions of people, at risk. does that give you pause? theret i would say is in -- is there a way to create a solution that can be held by a body or something that does allow the government and others to look at communications that they need to stop a terrorist attack? i would go to google, facebook, apple, ibm, the tech community. i would get some of the best experts in the world, and say can you come up with a solution? kid get folks like jeffrey stone, who is very rational,
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shows that you protect both and come up with a solution that doesn't -- does it. emily: you think there is a way to get into this one iphone without compromising all of them? >> i am saying differently. i am saying to set up the process to do it, first. we will attack this one thing without having any solution. we have not driven to a solution yet. so what is the solution can put on the table that would allow others to say this is the solution we will give to you. they woulds the key, use it. the issue the government has is that we do not have a way of getting cremation. emily: is there a middle ground? >> i think so. it is a technical and policy solution. emily: apple is saying there's
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no technical solution. >> i do not bind us. i think we have given up to click. that.o not buy i think we have given up too quickly. what we are saying is there is no solution without looking at everything to see if there's a better way. emily: apple think they have done do gelatin -- due diligence. >> you need to get to a solution that is better than where we are. -- how manyquestion lives would you want to lose to not have government been able to protect our people? that is the question. what you are saying right now is it could be an unlimited number because if we cannot read and we cannot stop it. good luck with that. i think that is the wrong approach. i am not saying you, free access to all communications. i saying there is a middle
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ground. find the middle ground. apple operates around the world. if do this for the u.s. government whose to say thank you to this for the chinese government or the russian government? >> those are issues that apple and others are facing right now. when i would say is if we can come up with a solution that we, the united states can put forward as a ballast solution, that is the solution that is not we have hadook and a disconnect between industry and government. because of the edward snowden series of things. my perspective, it is in our nation's best interest to help apple, google and facebook. we have to come up with a solution, and that our government has to meet with other governments and work that solution. it has to be something that is balanced in that way.
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these companies are international companies. just by your statement. we do not come up with my solution. leaning one way or the other. with: coming up, encryption in the spotlight with the central securities most important conference kicks off in san francisco. mike brown is with us with his views, next. and tomorrow i sit down with the u.s. attorney general loretta lynch for an exclusive interview. that is 4:00 p.m. in new york, 1:00 p.m. in san francisco. more bloomberg west, next. ♪
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>> a check of your bloomberg first word news. on super tuesday-eve, hillary clinton has picked up the endorsement of the congressional
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hispanic caucus pac. she and vermont senators bernie sanders have been battling for minority voters. senator sanders raised $36 million this month. he is trying to make it to $40 million by midnight. he raced $1.3 million in january. cruz took in $7.6 million. president obama has awarded the highest military honor to a navy seal. he helped rescue an american hostage in 2012. korea says that a u.s. college student has confessed to what officials call a hostile ac t. he appeared at a news conference in pyongyang. he is accused of taking down a propaganda sign.
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all of this is happening as the u.s. is pushing for more economic sanctions against korea. from bloomberg world headquarters in new york. it is just after 6:30 p.m. in new york. we are joined by paul allen for a look at the markets. >> right now we have new zealand up one quarter of one percent. indicate rises are likely on the nikkei as well. japanoyment figures from have been released coming in at 3.2%. policymakers were hoping for a good strong read their. wage growth might equal higher growth. the big story of the night was
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the rrr ratio. cut to improve liquidity in the system. that had an immediate knock on effect sending the australian dollar higher. the week aussie dollar is one of the goals of the bank's. they meet -- of the bank of australia. they meet today to set the reserve -- policymakers set to remain on hold today. there is some division among analysts about where they might go. many expecting a cut to the cash rate further on the line. chinese emi is expected to come in below 50 today. i am paul allen from sydney. emily: cyber security talks are set to dominate.
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while apple and the use of encryption may overshadow discussions, leading security firms discuss the ever-changing nature of cyber threats. , the ceo of the world's largest security software maker. mike brown. thank you for joining us. >> encryption is a small part of what we do at symantec. it is not only threats, but how we protect information if compromised. weit relates to encryption,
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are strong believers that privacy and encryption go together. we need strong privacy supported by strong encryption. one of the things that we say is , we would not be supportive of any backdoor ideas. what has been discussed about that is correct. any backdoor created is not just a backdoor for good guys but away in for bad guys. emily: do you think that apple is correct in saying to the government, wheat will not do do this?e will not >> without commenting on that case, there have to be different alternatives in this debate. how do we want to think about profit -- privacy at all costs or national security at all costs? i watched the interview with general alexander, he is right that there is probably a middle
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ground. this is a debate we need to have right now. emily: how our debates like this impacting your business and the encryption technologies that you use? >> the debate is not really an impact on our business. encryption is a small part of what we did. consumers are a big part of what we protect. we are much more focused on the more prevalent threats. while the encryption debate is very newsworthy, the biggest threat affecting consumers is ransomware. increase year over year that we have seen. organized crime that comes in and attacks your laptop or pc. your screen goes dark and unless you pay $500 -- they have calibrated how much can i charge that you will be willing to pay it. emily: is this the equivalent of
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cyber blackmail? >> definitely. emily: we saw that happen in los angeles. could you see this on a much broader level? >> it is already happening on a broad level. it is important to have the right level of 10 point protection. pointappens to be -- end protection. that happens to be the biggest part of our business. if you have that, you are protected from ransomware. emily: you authorized a selloff of veritas. what is your number one focus? >> security. we are going back to our roots. i'm very excited about the fact that we are 100% focused on security going forward. that means consumer enterprise and protecting governments and on the enterprise side, how do we stop the bad guys and keep the good stuff protected. emily: you say that you will
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have a about $5 billion in cash to make acquisitions. do you see making more buys? what kind of businesses are we talking about? >> with the proceeds from veritas, we have committed we will return that to our shareholders. billions us with $5 afterwards for a variety of uses . we spent a fair time detailing whatever it is. we allow them to outsource their
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security environment to symantec. that is a service we provide. assets that come from it our capability in those areas. emily: analysts say you are losing market share to much competitors. >> now that we are focused on tourity, our primary way focused -- restore the complete a growth is organic product development. we're at the front end of a wave of organic new products. hey are just now being released. -- they are just now being released. emily: you have some big investments from -- how does it change the focus of the direction? >> we are happy to see there is extra validation.
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are two years through a three-year transformation and this is an important reflection point saying now it is time to get in that story. emily: we talk a lot about cyber security. some have said to me you'll see a lot more specifics verticals. >> for a long time, every new technology is a slice of the security problem. the industry has approached it in a piecemeal fashion. every point of architecture, every new technology brings a new security solution. our customers say that is at the breaking point. i cannot integrate 100 technologies to keep my enterprise safe.
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customers are asking for more visibility. can you give me a broader view of what the threats are? that plays well to companies that provide a broad set of solutions like symantec. emily: mike brown giving the keynote at the rsa conference later this week. thank you for joining us. apple executives are holding a conference call after a judge in brooklyn back to the company ruling apple does not have to help unlock a drug dealer's iphone. a senior apple executive says it is not a binding precedent but they believe that it may be persuasive in the upcoming case in san bernardino. on enterprise tech seems to be paying off. why they are targeting cloud-based medications. in a very special birthday today. we will tell you later in the show.
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emily: a vote of confidence in alibaba's stock buyback. spendingnd joe psy are $500 million of their own money to buy shares. not know howdid much they would spend. the stock has fallen about 20% in the last year as it grapples with slowing growth. turning to cloud-based communication. last year vonage shifted focus away froms customers its consumer strategy and the move is paying off. earningsreleased numbers earlier this month and they beat analyst estimates.
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the ceo, a former google executive has been leading the charge into enterprise technology and joins me here in the studio. thank you for being here. two years ago, you made a decision that you would not focus on consumers or homeowners, but businesses. how is that working? opportunity in the cloud. what is really changing is that at software that used to be the actual location has moved to the cloud. it changes the way workers work and companies operate. you are no longer tethered to
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one advice. you can work across devices whether it is a landline phone, cell phone, or software on the computer. emily: what is the impact on traditional companies? >> much of the carriage is still carried by the carriage -- the carriage of the call is handled by many of these same carriers. what is unique about what bondage provides is -- about is thenage provides software is handled by the cloud. the changes the way companies operate. vonage need to make acquisitions to beef up? >> it is about one third of our revenue now. this tentative business -- we have jumpstarted through accu's -- acquisition and had very fast follow.
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now the business from two years ago is about one third of our revenue. the residential side continues to contribute significant profitability for the company. emily: do you expect the pace of m&a to keep up with what you have been doing? >> the simple answer is yes. emily: more deals to come? >> i think so. do a15, we had to tremendous amount of foundation building. now that those platforms are in place, we have a more stable base. the 140 for million dollars --
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dollars -- consecutive year of revenue growth after four years of revenue declines. emily: you have been co for 15 months? -- how ist shaping your experience at google shaping what you are doing now? >> we are going through a cultural transformation in addition to the business and financial transformation. we have some thing called "employee first." vonage to be a great place to work. google has really achieve that. there are a lot of lessons i learned from their. when you talk about being a destination laced to work, it means different things to -- , itination place to work
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means different things to different people. your wage or other talent development and career development. those are the things we are focused on. emily: thank you for stopping by. another story we are watching. microsoft says that developers olensreorder the hollo dev kit for $3000. they say there are games and apps already on the device to spark creativity. up, amazon is causing quite a stir in the u.k.. the online retailer's partnership with a grocery store chain causing a market shakeup overseas. leading us to question what is next for amazon abroad.
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greenspann with alan in an exclusive conversation in washington. here the full interview at 5:00 a.m., new york time. ♪
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emily: a story that we are watching, one of asia's most valuable startups may be less valuable. morgan stanley has slashed the valuation of flip cart. morgan stanley cut the value of its shares by 27%. in its most recent funding found, flipkart was worth $15 billion. speaking of amazon, shares of a british grocer taking major hits after news that amazon is partnering with its competitor. growthy limits their
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that decreases the revenue stream. amazon will use them as their primary delivery partner. why to find out what is next for the retailer as it makes inroads into the market. this is interesting. amazon switching partners. they are a huge american company that can throw their weight around. they are a more promising company just by partnering with it. emily: have thousands of product lines. compared to morrison's, they only have a few hundred. new technology and fully automated warehouses. why would amazon do this? >> they are already focused on the logistics effort and amazon is good at saying we can maybe do that, too.
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they are a good logistics business so they can partner with someone like morrison and turn them into an efficient delivery system. emily: we know that amazon is after world domination, but what is the broader plan? >> i think that they seriously think that groceries is promising and huge. everybody needs to eat. it is not just a new game boy. it is getting food to everyone in the world and partnering with stores like this is a way to get into the business. >> not just food, but a new partnership. a partnership between amazon and britta, where they will make smart water pitchers that auto-order your replacement filters. >> it is part of their dash replenishment system. amazon wants to know when you need something and say, let's get it to you. when the consumer doesn't even need to make a decision. that is money.
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mentioned, i use amazon to deliver my groceries. i use dash. one of the biggest problems is not knowing when i need a replacement. i don't know when i am running out until i am out. it would be interesting if they could figure that out. is an interesting data science problem. you have to figure out how regularly you use something. some of it will be teaching people to trust the machine to order for them. regularlyearning how people need replacements. emily: how often do you need to replace a water filter? >> i don't know. [laughter] emily: thank you for joining us. havingme to see who is the best date ever and today it is "bloomberg west." five years ago, our show aired
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for the very first time. here is a flashback. mark andreessen. look how i teased the interview and what we were saying then about valuations. >> they are one of the few firms that have a stake in groupon, facebook, and twitter, so one of the things we want to talk about is how fast these companies are making revenue. groupon raking in the cash. facebook has been around longer, twitter is still behind. according to one marketer, they will not catch up for a while despite this investor interest. the valuations of these companies are soaring. how does it all at up? if there is one man to talk about it, it is mark andreessen. emily: what a difference that five years makes. we are having the same conversation. my hair is a little different.
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happy five-year birthday to bloomberg west. thank you for making the show what it is. we could not do it without somebody people that put the show together. that does it for this edition of "bloomberg west." tomorrow i sit down with attorney general loretta lynch. at the top of the agenda, apple versus the fbi. ♪
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charlie: we begin with our continuing coverage of the encryption debate. twitter, andogle, yahoo! moved to throw their support behind apple. the fbi director james comey calling encryption the hardest problem i have seen in government. joining me now is max levchin. he is currently the cofounder and ceo of a firm at


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