>> live from pier 3 from san francisco, welcome to late edition of "bloomberg west." we cover the global media and technology companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. let's get straight to the rundown. the value of the bitcoin is falling fast, now cut nearly in half from its recent $1200 high. we look at why, and where you can even use it.

mark zuckerberg and andreessen are cashing out millions of their facebook shares. is it time to end the blackout that keeps sports games off tv? the nfl's -- nfl says no. first, to the lead. the spread of the digital currency bitcoin is causing governments around the world to pay attention. that has set the value of bitcoin tumbling. the currency is hovering around $700 from a high of $1200 in recent weeks. china's biggest bitcoin exchange was forced to stop deposits. denmark has become the latest nation to propose standards to protect consumers from what it calls the risks of bitcoin. joining us from new york is matt miller, who is conducting a series, the 12 days of bitcoin. you are on day number nine. let's talk about what countries

around the world are excepting bitcoin these days. >> if you want to talk about who is accepting bitcoin, i want to go to the coinmap.org chart. it is a different map. it has a bunch of little dots over it. this is where you can take your bitcoin and pay. these are brick and mortar stores. the internet takes it quite all over the place. 99 in new york, 78 in san francisco, 75 in san diego. in europe, you can see the map is covered. you can even pay for things in bitcoin in china, south korea, and thailand. it is about conducting business that is the problem. take us back to the other map, and i will show you where the regulations have really crushed the value of bitcoin. china has had two weeks of basically slaughtering the currency.

the first thing, the bank can't use it, then saying third-party software providers cannot help merchants take bitcoin, then shutting down btc china, which had quickly become the biggest bitcoin exchange in the world. you can still pay some individual people -- if i wanted to send somebody in china a million dollars in a bitcoin, i could do it and it would happen almost instantly and for free, but what would you do with it when you are in china, that is the problem. regulators have been coming down with different verdicts. i have marked in green countries that are particularly accepting of bitcoin, france loves bitcoin. canada. there is even an atm in vancouver. certain countries have struggled with how to classify it. is it a commodity, is it an asset, a currency? they want to tax it in germany, like they want to tax everything they can in germany. the question is, will denmark and germany follow norway and taxing actual purchases of bitcoin? if you pay with your fiat currency, do you have to pay a back tax for buying that bitcoin just like you are buying

software or anything else? in the u.s., regulators have come down hard on people who want to be exchanges. operating a bitcoin exchange means you have to register in each different state as a money transaction company. it will cost you millions of dollars around the world. i found over the last nine days you can pay for virtually anything with bitcoin. i have lived on it for the last two weeks, only using dollar bills for tips. >> it is crazy to think how much the value of this has fluctuated in the nine days you have been covering it. we will be closely watching the next few days as well. >> i do want to point out that we join together with network media all the way down to npr in sensationalizing this $1200 price. it went to $1200 because one or two people bought it for $1200 in a 10 minute period.

it has been hovering around the $1000 mark and down to the $700 mark. two months ago, this was trading for less than $200. it has really come up in value. >> we will be watching. thank you. federal prosecutors are accusing a senior microsoft manager and his friends of insider trading. that brought the pair more than $393,000 in profit. the sec and government attorneys are pointing to brian jorgensen, a member of microsoft's corporate finance and investment division. they alleged that he tipped off a friend ahead of company announcements. our editor-at-large, cory johnson, is in new york. what do you make of this, someone inside microsoft participating in insider trading?

>> this guy jorgensen was a certified financial analyst, and his job was to analyze likely market impact of coming microsoft announcements. his job was to do sensitivity analysis to figure out what would happen with microsoft stock price. the sec alleges he had a joint brokerage account with somebody else, and that i would make these trades, and their goal was to open their own hedge fund with these games. they get caught in the process. >> we talk about insider trading a lot. how common is something like this, really? >> insider trading may be very common. what we know in terms of statistics is that when the sec goes after these things -- when i was a money manager, you would see some things that were egregious. the number of sec prosecutions of insider trading have fallen

quite a bit trip they only prosecuted 44 cases in the last fiscal year. -- bit. they only prosecuted 44 cases in the last fiscal year. we can look at those numbers from the sec and it suggests they are not looking for them like they used to. >> we will continue to follow the story. the secret service says it's investigating a major credit card breach at target or if the retail chain warns hackers gained unauthorized access to about 48 million credit and debit cards between november 27 and november -- december 15. in a statement to bloomberg news, the ceo of target said that target's first priority is preserving the trust of our guests, and we have moved swiftly to address these issues so guests can shop with confidence. we take this matter seriously and are bringing those responsible to justice. customer names, credit and debit card numbers and security codes are at risk, stolen from point- of-sale credit card swipe machines at target stores across the country. jason glassberg joins us via skype from seattle.

it is unusual the way this happened. it happened at the pos terminals. explain how you think this happened. >> that is what makes this attack unique. we expect these kinds of things to happen through web vulnerability, and it appears that the point-of-sale terminals, the machines we swipe the cards, were the ones that suffered the vulnerability. >> how can a company protect against something like that? how is it different from protecting against online breaches, for example? >> you would think the company would have more control over the access to these point-of-sale

devices. they should not be available on the web, they should not be accessible from the web. it points to some inside phone or ability or exploitation, whether it was an inside job or someone had inadvertently allowed some religious software to run and gain access into the company. >> why would the secret service be investigating this? >> it certainly is alarming. this is not the kind of attack one normally expects, especially of this scale. what makes it so interesting is that it appears to have attacked all of the target stores at one time. you can see where someone can go into an individual store, replace the card reader, and be able to get credit cards off that one store. it appears that the entire target point-of-sale infrastructure was exploited. >> in that case, what do you think happened? >> it would appear that somehow, someone was able to get control of some centralizing updating facility, where he was sending

down code or programs or some kind of updates to these point- of-sale boxes, and in that update was the malicious code. from one central location it was able to spread out to all of target's mortar and brick stores. >> what can consumers do, what should consumers do now if they shop at target? i was one of them. >> as were we all. there's not a lot you can do as a consumer. this is something that needs to be handled at the corporate level. you can talk about patching computers and running the latest versions of operating systems and browsers, but this is something generally outside of the consumers control. at this point, you have to take a more reactive step, monitoring your credit card balances and statements to make sure there is no illicit activity. there is nothing proactive you can do. you go up to a machine and you expect to swipe your card. this not a lot of protection you can put in place.

>> what is the likelihood that you think this was an inside job? >> it's hard to say. we do a lot of work with security companies in the security field, do a lot of work with companies -- in the scheme of security, the human user is always the weakest link. whether he was someone who did it intentionally, maliciously, or whether he was someone who might've gotten some e-mails that contain malicious code they clicked on -- it is hard to say. one way or the other, there is going to have to be some kind of human element involved in this. >> jason glassberg, thanks so much for weighing in. we will continue to follow this story as it progresses. 18 months after he went public, facebook is planning its secondary offering. mark zuckerberg and mark andreessen are taking part. ♪ >> this is "bloomberg west."

i'm emily chang. 18 months ago. facebook joins the s&p 500. cory johnson is back with more. how big a deal is this? >> it's a great question. i don't have a great answer for you. you have got andreessen horowitz really taking a lot of the table here, taking some profits with the share prices. it's a very expensive stock. what mark zuckerberg is doing in his sale is giving exact opposite message, where you see him selling so much and you think, what is this guy doing, he says he's selling it for a

tax bill. what he's really doing is exercising a number of stock options. it's only bullish. it's only a bet on the company that it will be worth a lot more later, so he wants to take the tax hit now to avoid the tax hit later. would you look at what mark is doing as part of this, it is something where he's really betting on this thing for the long term. >> is it really all about paying taxes? >> we don't know what charity, it could be a charitable trust. you will put the money in a trust now, spend that money over years to come, or someone will get a nice check for christmas. mark has taken the idea that his facebook shares will be a lot more valuable in the future, and you will take the short-term hit by exercising the options now. >> this is a question all investors are asking. is he getting out because it's a

good time? >> what you see from this company is they are quick turn to mobile, and the terrific success they're having with that has really accelerated revenue growth. as expensive as the stock might be, that accelerating revenue growth really suggests that things are going quite well at facebook. that this may not mean -- not mean the stock is worth the price today. >> cory johnson, thank you. coming up, more of "bloomberg west." government regulators say they want to and tv blackouts. the nfl opposes the move. ♪ >> this is "bloomberg west." i'm emily chang. beyoncé surprised the world when she released a new album on >> this is "bloomberg west."

i'm emily chang. beyoncé surprised the world when she released a new album on itunes without any pre- promotion. the surprise records sold nearly 830,000 copies in three days, setting a new itunes sales record, and soaring to the top of the itunes charts in 104 countries. could this change the way that artists sell and promote their music in the future? i am a fan as well. i bought the album. i don't think i have bought an album in years. she's the only person who can also get me to go to a concert. how much do you like her? >> a lot. [laughter] who doesn't like beyoncé?

>> everybody is saying, this is a model for artists. what other artists can pull this off? >> lady gaga. >> also in a league of her own. >> there are a lot of dj's who are big. there are a lot of artists who, if they became creative in making me buy the album, i would pay the money for it. somebody said on twitter that when you buy an album in the old days, there was the liner notes and there were pictures and there was the cover art and a created an emotional interaction with the album. i think if these guys want us to buy their albums, they have to create that emotional connection. beyoncé has the ability to create that emotional connection. >> what you are saying, it's not

just about the music, it's about creating some sort of experience? >> it has always been about the experience peer you did not i the beatles -- buy -- experience. you did not buy the beatles just because it was great music. >> i never bought the beatles. i was too young. [laughter] >> somebody into the beatles way of thinking and living. the same thing with -- bought into the beatles way of thinking and living. the same thing with elvis presley. they don't just buy the music. the music you get on radio. what you get with the album is an emotional connection. that is the opportunity. >> now that she has done this, and not that people are expecting it, but it has happened before -- do you think

other artists can be as successful? >> i think rihanna could be very successful. bono talking about his work in africa, and with aids. all those add things to the album which lead to a better experience. i think bjork was the first one to explore beyond music ideas. i think there is an opportunity. this work for beyoncé, some people ought to think differently about how they're going to do their album. >> something you wrote about is the idea of not just creating an album, but an appetite experience. what do you mean by that -- app- type experience. what do you mean by that? >> we used to buy cds. -- cd's. now we buy apps. the analogy now is apps. records, cd's, apps. if you're going to bake something, make an interesting

app. it is not just music. we can't go back to, there is 12 tracks and you pay $15 for it, and that's the end of the story why can't it be and -- an app that is living like the music is? the idea is to have an emotional interaction with the music. >> let's talk about itunes. it seems to be a huge win for itunes as well. itunes does not always do everything well. when they put attention on something, that thing blows up. they have that attention they can focus. >> what do they need to do better?

>> they need to learn how to use data better, how to target in a smarter way. if they know i have bought 10 albums of norah jones, maybe next time her album is coming out they should let me know. they need to learn how to use data more effectively. they need to stop being so manual as a company. >> what will be the music story of 2014? we just talked about spotify. they have been making changes. what will define the music industry in 2014? >> what will define music in 2014 is exactly what has defined music always, the experience. the concerts, how we engage with the artist. i would say 2014 you will see more and more artists trying to

do different things. >> we will be watching. a phil beyoncé fan -- i did not know -- fellow beyoncé fan -- i did not know until now. the nfl strongly opposes an fcc proposal to and blackout of games. ♪ >> you are watching "bloomberg

west." i'm emily chang. barry diller's interactive is turning match.com into a separate business. as part of that change, match.com ceo will become ceo of the new group. iac will be without a ceo with business heads reporting to diller himself. two chinese billionaires are eyeing the wireless market. alibaba and the tycoon will get the license to start phone

companies in china, allowing private companies to use the networks of state owned china mobile, china unicom, and china telecom. intel just signed a deal with the 49ers and will become one of the sponsors of the new levi stadium, which is two miles from intel headquarters in santa clara. one quarter of the stadium will be named intel plasma, and there will be a fan experience center featuring intel gadgets. the 49ers will move to levi stadium next year. staying with football, the nfl says", strongly opposes a proposal to eliminate the sports blackout rule. the rule is meant to encourage fans to attend live sporting events by keeping the games off tv while tickets are still available. the nfl tells bloomberg west, that while affecting very few games, the blackout rule is very important in supporting

stadiums. how big of a threat is the proposal to the nfl? joining us, our editor-at-large cory johnson. amy, great to have you on the show. >> there is a lot of attention right now being placed on the fcc's recent statement. i believe the focus on that fcc perspective action is misplaced for two reasons. we don't know yet what the breadth or scope of the fcc's action may or may not eat. -- be. the focus should be and is on

what team should be doing to entice fans to leave their homes and come to the stadium. i can share with you from my own experience that each of the 32 clubs and the league as a whole are focused on, how do we get fans out of the home? there is this magnificent television experience. >> it's pretty comfy in their. >> it is hasslefree. >> there is no line for the bathroom. >> and you don't have to pay to park in your own driveway.

what the league in each of the teams are focused on is, what do we do in the stadium to entice fans to come in to fight the crowds, the traffic, parking, food lines? how do we make our stadiums technologically bodacious, and provide fans in-stadium with some things that fans at home don't get. this is about the blackout rule, and the perspective fcc action we don't know how broad that's going to be, or will it -- if there will be a focus on getting the fans in stadium. >> i got a chance to go to the levi stadium. it looks like it's going to be fantastic, but can every team really make that happen? >> emily, you are right in every regard. it's not an easy feat to pull off. the 49ers, the york family, gideon, all of the management had done a spectacular job. i do believe they're going to offer a technologically stupendous stadium. this is something i proposed while i was with the team. there are some markets where it's not going to make sense to

do a 68 -- 60,000, 80,000 seat facility. maybe the next generation of stadiums will be scaled down, 40,000 seats or 45,000 seats during you can chop off the third deck -- seats. you can chop off the third deck, and make that stadium like a living room experience. >> i want to bring cory into this conversation. what do you think about that proposal, make stadiums smaller, instead of focusing on this role rule? >> what is interesting to me from a business angle is what this does for the fan experience. there is nothing bigger in america than the nfl. we have seen the number of blackouts come down, which the league is quick to point to. the experience of fans in hometowns with bad teams that just when teams need fans, by keeping those local markets unable to watch the games when those teams are bad and the stadiums empty ultimately hurts the growth that community could have. we have communities that are paying taxes to support these coliseum's. the nfl change those rules -- changed those rules, but the

local support could be eroded by this kind of policy and the inability offense to watch these games. we have a game this weekend where the bengals need a big win. it is where the biggest games they have had in years, the bengals playing the vikings. that game looks like it will be blacked out. >> what do you think about that? you are with the raiders for years. times are not always great. >> you make tremendous points. i think you should go sit in the black hole. i will do it with you. >> i know the way that goes there. >> cory, you may spectacular points. we come out -- make spectacular points. we come out in the same place, the importance of games being broadcast in the local markets. the issue is how you achieve that. if you're looking to promote a team in its local market and grow a fan base, then having a three-hour infomercial during your home game is very important.

the question is how you achieve that. my focus was on, and i believe the league's focus should be on, what do you do to entice fans to come out. >> would you go so far as to say the rule is irrelevant, the blackout rule? >> there are entirely different forces at work today than there were 10, 20, 30 years ago. the in-house viewing experience is not simply in-house anymore. it's on your mobile devices, your pads. if the goal of the rule is to get -- to bring people into the stadium, there are other manners in which to get people into the stadium. >> i also wonder what the teams we are talking about the rights that businesses that are granted certain privileges have to their community. it is even more incumbent on the teams who borrow money from the citizens of that community to share that information. when a team has a chance to

broadcast their game, they should do so, and this rule has got to go. >> as a fan of the nfl, these are not decisions left up to individual teams. to the extent there is going to be a change, it has to be at the league level, not the individual club level. >> this has been debated before. it sounds like if you're saying this rule will go away anyway at some point -- >> i don't know. there's a lot of complexity. there are the individual contracts the league has between and among their various broadcast partners. we really need to see how this plays out with this proposed rule. it's out for public comment now. i'm quite sure the public comment will be similar to what you hear cory saying. i just don't know how it's going to play out.

in the meantime, the emphasis needs to be on, let's not force fans to come to the stadium. let's figure out a way to entice them. corey, your points about public financing are very fair. >> former oakland raiders ceo amy trask, thank you for joining us today on the show. we will be right back. ♪ >> this is "bloomberg west."

i'm emily chang. jeff bezos says he is working on delivery by drone. how close are we to receiving our kindles via robotic area pigeons? -- carrier pigeons? >> i think you and i are very close. we were far away this week, but close. yes, drones. robots. ridiculous science fiction stuff.

interesting things that amazon is clearly focused on. lots of companies are beginning investments to try to build these things. one of those investors who is looking at the space from bain capital, joining me now to talk about this. what do you think amazon saw in kiva? >> the beauty of kiva systems was that nick had seen that in a traditional e-commerce warehouse, the typical worker spends 75%, almost 90% of their time walking in the warehouse, trying to find a particular item you're looking for. you think about something like amazon, with 150 million individual items in their warehouse that they are carrying

on their website. a consumer may order any combination of those items. the insight with kiva is, instead of having the work or go to the shelf, which could be a 10 minute walk, a 20 minute walk, why not use robots to bring the shelving directly to the worker, remove that 80% to 90% time walking, and make the individual worker three times more productive than they would ordinarily be? >> i have spent time at those amazon fulfillment centers, with the pickers and stowers. they think they walk 10 to 12 miles a day at that job. >> it's incredible. you think about the issues that amazon has at this time of year with the holiday season, when they are probably doing 50% of their revenue, and the number of workers say have to hire to fulfill that peak demand -- now with something like kiva, those workers can fulfill three times as many orders. that allows amazon to be more efficient, and allows them to manage the peak demand during the holidays. >> let me ask you a question.

what is a robot? how do you define what a robot is? >> the way i did find a robot is, it is a combination of hardware and software -- define a robot is, it is a combination of hardware and software. if you think about the kiva robot, these are robots that maneuver on the warehouse floor. they're intelligent enough to follow particular grid patterns. the software all the rhythms would control an early a fleet of these -- algorithms would control a fleet of these robots. >> if there's something about technology now that is allowing robots -- there are certain innovations or hardware, software making this more possible now than it was in the past? >> absolutely. some of the trends we're seeing across technology have affected robots. you now have cloud-based computing, massive amounts of

power. you have things like lower-cost manufacturing that can bring down the cost of these individual components. as you are seeing with some of the acquisitions google has made, particular robotic tasks and problems in robotic skills are now getting solved. you think about the company that google recently bought. they are really solving this idea of, how do you have a robot operating in a terrain that is unpredictable. it is one thing to have a robot operating in a warehouse. two now have a robot that can walk across and uneven pavement, climb up the hill, scaly snowing mountain -- that is an incredibly -- scale up a snowy mountain, that is incredible. >> is a drone a robot? >> a form of robot, absolutely. >> are you looking at investments in the drone arena? >> we have evaluated investments in the drone arena. you do have elements around the airspace which is regulated. you have safety considerations.

you have tremendous limitations right now in terms of the range of these drones, how far they can travel, given certain size and safety requirements. from a venture investor standpoint, in the robotics field, leveraging robots -- whether manufacturing, logistics that is where we see more opportunities. i think drones will come in the commercial arena, but for the short term, it's going to be much more in the military arena and more humanitarian situations. >> bet on robots, not drones. good advice. thank you. >> we will be right back. ♪ >> pinterest is sharing its top >> pinterest is sharing its top

pins of the year, showcasing over 600 items in 29 categories. the top hints -- pins in the travel section were in scotland and jamaica. other categories include home decor, tattoos, and tech trends, where 3-d printers were a top item. turning to privacy, the debate over government surveillance took a new turn this week after the white house advisory panel recommended significant curbs on the practice. the panel said in the past, the nsa's powers have been enhanced at the expense of personal privacy, and they urged president obama to impose major oversight and restrictions on the nsa. joining us is a partner at new enterprise associates, who says

there is a massive backlash from over sharing on social media sites because of the nsa. how does this translate into areas of investment? >> just to your point, there's a lot of talk about the ephemeral internet as a reaction to the nsa, as a reaction to over sharing on facebook. snap chat, whisper, all these companies. it is something new and amazing. i think it is powerful because it is really old, in two important respects. all human communication has been ephemeral. when our ancestors walked around the pond, those conversations disappeared into the air. when i hang up with my friend, that conversation disappears. it's only in the last 15 years that our conversations on facebook, twitter, im, text have been preserved for posterity. when you give people an opportunity to speak in the moment, to speak without consequence, they're going to take it. >> he singled out snap chat --

he doesn't know how long it's going to last, but my question is, is snap chat going to be as ephemeral as the information itself? is this just a fad? >> i don't think it's a fad. we want to be able to speak unguarded. the other piece is that right now, social media has existed to help us become closer together. they have evolved such that they become what my friend jeremy calls highlight reels. you only post when something great is happening to you. >> what does this mean for facebook? >> that's a good question. you will see facebook make offers on snap cap. you will see -- snapchat. you will see facebook try competitive products. we are trying to get back to

facebook's real mission, which is to connect people. you cannot connect people when their facebook accounts are a fictionalized ideally sent -- idealization. >> i want to ask you about 23 and maybe. i spoke to the ceo about what is going on. >> we fell behind in our communications. it is a complicated area. we have recognized that. it is not a clear path about how to regulate all the genetics in this new world of sequencing. we are committed to it. we are going to do everything we can to show the fda that we are really committed to this process. >> my question is, why did they fall behind, six months behind on the communications? >> it is, as and says, a new frontier. -- anne says, a new frontier.

our dna is probably the least ephemeral thing about us. i believe that all of us have the opportunity, should have the opportunity to learn amazing things about ourselves that are helpful. that is ultimately the company's goal and the fda's goal. >> why six months in lag time? was that part of a strategy? >> we have complied with all of the fda requirements to date. we have applied within the 15- day time period they gave us. >> but you can't tell me why they fell behind. >> as anne says, we did fall behind. the company's top priority is to work with the fda to figure out a way to accomplish our joint goal, which is to make everyone a beneficiary of the amazing advances. >> it is a fascinating field,

and there is so much work to be done. it will be interesting to see how long it takes to get that particular service back on the market. i know some of the services are still selling something. >> we have a vital business here. we are still the largest ena ancestry service -- dna ancestry service. you think your half asian, half white -- it's a phenomenal thing. research continues to be a huge priority for the company. ultimately, we stand behind the quality of that data and we hope that very soon everyone is going to be able to participate. >> patrick chung, thank you. cory, i want to get to you for a quick byte. >> the number of redditors participating in the secret santa program on reddit. heifer international is a wonderful charity. >> what a nice guest. think you all for watching.

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>> live from pier 3 from san francisco, welcome to late edition of "bloomberg west." we cover the global media and technology companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. let's get straight to the rundown. the value of the bitcoin is falling fast, now cut nearly in half from its recent $1200 high. we look at why, and where you can even use it.