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tv   Bloomberg West  Bloomberg  February 29, 2016 11:00pm-12:01am EST

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angie: noon in hong kong. australia's central bank is kept interest rates unchanged at a record 2% low, but they said they could be cut again in the future. if inflation remains low, there will be scope for easing the policy further. the rba says prices are expected to remain low for the next year. today brought further signs of slowdown in china. official and private pmi figures show manufacturing contracted last month. february was a record seventh straight month of slowing numbers. earlier, the pboc's cut over the
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yuan. today's intercontinentalexchange is said to be exploring the london stock exchange. ice owns the new york stock exchange, but is unlikely to move before deutsche bursts the deadline. those in the headlines from bloomberg news, powered by 2400 journalists and 150 bureaus around the world. let's take a look at the market. despite a contraction, we did see a rrr cut, and that is helping hong kong and china. that's how they were trading in the morning session. this is a picture of the rest of the market. ♪ emily: i am emily chang, and this is bloomberg west.
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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 talked to the symantec ceo on cyber threats. a 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 have to help the government unlocked and alleged terrorist iphone. i want to get to our editor for 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
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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. emily: how is this case similar and different to the california 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. apple has 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
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operating with the government. it is now a dozen cases that their fighting across the country on this. emily: 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 hill, will this precedent hold 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. they have 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.
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emily: there are 12 cases going on. 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 papers in that case citing first 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. these two judges had disagreed 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 fbi, on capitol hill tomorrow. thank you so much for that update. now a stock we are watching, shares are lower in after-hours
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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 whose shares have taken a beating in 2016. 24% since the beginning of the year. google has announced they have bought two 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
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community. plus, 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 happened two weeks ago. the test driver, required to be in the front seat, the bus would 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
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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 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 to ensure our security as a country? and how to redo the new ways of the american people know that their communications are secure unless they're doing something that should not be doing. in the past you had the authority 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?
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>> 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. and so, we were not trampling 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. egypt, with 25% of population unemployed.
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82 million people. where do those 25% go? that is 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 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. emily: is intelligence and law-enforcement be undermined by having this conversation so publicly? >> there is a risk in that.
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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 we were not going to be able to stop. in the past we have been able to stop things that the intelligence 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.
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with that difficulty, if you look statistically at what we gave out, about 54 attacks that we made public, we found that 25 were in europe, 13 in the u.s., so that means you are twice as likely to have an attack in europe. we said with trish regan back in 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. emily: if communications have been encrypted over the past decade, what would be different? >> a great one 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
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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. it was encrypted, all we would knows that somebody would talk to somebody in the united states. it is my assessment that someone would have gotten through. emily: the attack on the subway 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
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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 radio, and sirius xm radio. more coming up next. ♪
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emily: one of shutterfly's 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.
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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 rulings all under her undue advantage look. the companies say they have nothing -- it done nothing wrong. turning back to my interview to general keith alexander, saying 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
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at what he did on the nsa program in 2004. first we ought to give ministers 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 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.
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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. 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. 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. tim cook says it is like cancer for iphones. it will put everybody who owns an iphone, hundreds of millions of people, at risk. does that give you pause? >> what i would say is there a way to create a solution that can be held by a body or
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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, shows that you protect both and come up with a solution that 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 the court and others to say this is the solution we will give to you.
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if apple has the key, they would 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 no technical solution. >> i do not buy that. 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 due diligence. >> you need to get to a solution that is better than where we are. here is the question -- how many
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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 ground. find the middle ground. emily: 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 apple, facebook and we have had a disconnect between industry and government.
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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. these companies are international companies. just by your statement. we do not come up with my solution. solution. leaning one way or the other. emily: coming up, with encryption in the spotlight with the central securities most important conference kicks off in san francisco.
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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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follow every pitch, every play and every win. change the way you experience tv with x1 from xfinity. angie: 12:30 here in hong kong. china expecting to announce plans for so-called financial super regulators sometime this year. it concerns market stability and investor confidence. the most discussed proposal would be the banking, securities, and concerns regulators merging. four valeant, it is the subject of a previously undisclosed investigation by the sec. the committee declined to say what it concerns. the drugmaker is already being investigated over last year's scandal.
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shares plunged more than 18% in new york. apple won a crucial victory of privacy is a new york judge ruled it does not have to hel p the fbi unlock a terrorist's phone. it reaches a new level later on the capitol hill meeting. it's not known if he will testify today. those are the headlines, powered by over 1200 journalists in 150 bureaus around the world. let's check in on how the markets have been treating. david: thanks. the market story at the moment is japan. we are one hour into the afternoon session, and we look at to china in a moment. lots of lines coming out of japan -- shinzo abe is speaking at parliament right now, lines coming through that he has a
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knowledge the risk-off spreading in global markets. he is asking for japanese companies to raise their pay and is looking at a study, which he says is needed to gauge the impact of the negative policy when it comes to spending. on that note, we're seeing gains on the nikkei to do five, mostly underwater today. the 10 year yields are pushing toward record lows. this comes after the government officially is now being paid to borrow money. people are paying the japanese government. it'first auctions the for the 10 year in negative yields. we will see how that plays out. -7 basis points for the 10 year. a record love a 20 year. elsewhere, asia is looking like this, and japan was the main laggard. we are mostly seen gains with
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the exception of singapore. we'll see how this plays out later on when markets reopen. with a view of hong kong. ♪ emily: cyber security talks are set to dominate. while apple and the use of encryption may overshadow discussions, leading security firms discuss the ever-changing nature of cyber threats. joining me now, 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
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compromised. as it relates to encryption, we 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, we will not do this? >> without commenting on that case, there have to be different
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alternatives in this debate. how do we want to think about 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 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
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ransomware. a 113% 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 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. that happens to be -- end point 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?
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>> 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 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. it leaves us with $5 billion afterwards for a variety of uses. we spent a fair time detailing whatever it is. we allow them to outsource their security environment to
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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 smaller competitors. >> now that we are focused on security, our primary way to focused -- restore the complete a growth is organic product development. we're at the front end of a wave of organic new products.
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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. we 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.
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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. 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
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is not a binding precedent but they believe that it may be persuasive in the upcoming case in san bernardino. vonage's bet 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. jack ma and joe psy are spending $500 million of their own money to buy shares. until now we did not know how much they would spend. the stock has fallen about 20%
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in the last year as it grapples with slowing growth. turning to cloud-based communication. last year vonage shifted focus to business customers away from its consumer strategy and the move is paying off. the copy released earnings numbers earlier this month and they beat analyst estimates. 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? >> we saw this opportunity in the cloud. what is really changing is that the software that used to be at the actual location has moved to the cloud.
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it changes the way workers work and companies operate. you are no longer tethered to 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.
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what is unique about what bondage provides is -- about what vonage provides is the software is handled by the cloud. the changes the way companies operate. emily: does vonage need to make acquisitions to beef up? >> it is about one third of our revenue now. this tentative business -- we have jumpstarted through acquisition and had very fast follow. 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
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have been doing? >> the simple answer is yes. emily: more deals to come? >> i think so. in 2015, we had to do a tremendous amount of foundation building. now that those platforms are in place, we have a more stable base. the $144 million -- we had a second consecutive year of revenue growth after four years of revenue declines. emily: you have been co for 15 months? how is that shaping -- how is 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
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"employee first." we want 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 -- destination place to work, it means different things to different people. it could mean 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 can preorder the hololens dev kit for $3000. they say there are games and apps already on the device to spark creativity. coming up, amazon is causing quite a stir in the u.k..
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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. we sat down with alan greenspan 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
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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. not only limits their growth 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
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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. 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.
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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. emily: as i 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. >> that is an interesting data science problem. you have to figure out how regularly you use something. some of it will be teaching
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people to trust the machine to order for them. and also learning how regularly 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. it's time to see who is having the best date ever and today it is "bloomberg west." five years ago, our show aired 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,
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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. 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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