>> live from pier three in san francisco, this is "bloomberg west." microsoft is the latest tech company to want a piece of the entertainment pie. we'll take you inside the microsoft santa monica studios where it is working on original show starring big names. it is a viral content website with a twist -- we will speak to upworthy's cofounders. first a look at your top headlines.

the supreme court is taking a pass on hearing a case collection the nsa of american phone records. the court rejected an activist position to bypass the at traditional appeals process. any changes to the nsa surveillance program have to go through congress. twitter is diving deeper into android. the company which was launched in october makes an app that allows android users to create customizable screens on their devices on the cover team says it plans to produce something even better. dropbox has obtained a edit facility of more than $500 million. the financial times says the storage company will use the money to set up a data center and expand globally. dropbox earlier rates free hundred $50 million earlier this year.

cory johnson is with me now talking about yahoo! and the fight to dominate content. yahoo! wants to buy original series? >> it's amazing how many companies we see who have the same interest in infrastructure. looking at original content to try to drive people to their sites for all the other stuff. >> yahoo! have been doing short form stuff but they are looking at 10 episode shows that my cost $700,000-a few million dollars per episode. workl these businesses headed toward search. now they are going toward this original content business. can you only watch it online? we are seeing but the success that netflix has had drawing customers.

these other companies are saying we want those same people and we got the cash to spend. >> at the same time, netflix has produced a number of hits and amazon has not named one yet. erlichman who jon recently got a look inside the microsoft xbox entertainment studios and microsoft is making its own original series with the likes of steven spielberg. tell us what you saw. >> it's a pretty fascinating story. a year-and-a-half ago, microsoft producer forknown the longest time, everyone has been asking what does that xbox team working on? they had not said much until now. we got an exclusive look at what they have been doing behind the scenes. here is a taste -- this low-key santa monica office building, microsoft is

plotting its tv future and it is tied to this area and xbox entertainment studios is a unit of xbox created to make original tv shows. >> this is the start up with the help of microsoft. they're t nancyellum, developing all sorts of shows. a steven spielberg series, robot thriller, plant life coverage of the bomber room music festival -- bonaroo music festival. to watch, you will fire up your xbox and if you are one of the 48 million members of its online entertainment network, you may be able to stream xbox originals. strikeft may also partnership deals to distribute some of the shows outside xbox. shows will also be interactive. you will be able to do funky stuff gamers like to do that is different than lying on your couch watching cable. microsoft is doing this to keep xbox loyalists happy but also to broaden its reach.

it's estimated each xbox sold is worth $1000 of purchases to microsoft between games, shows, and xbox live, a number that would climb. they have a goal of making xbox one the anchor of its home entertainment network, connecting to other microsoft advices like tablets and phones. -- thistional tv places is different. tech office the you'll come a ping-pong table, well-stocked lunchroom, and -- >> we commemorate our successes by ringing the spell. , make that tves shows begin. for those curious about when these shows will start rolling out, they will start with this bonaroo music festival coverage and other shows will follow. maybe the one where there is less developed is the one so many people are interested in, halo" show being produced by steven spielberg. >> we will have more with nancy

pellum, now president of xbox entertainment later this hour. what do you think of yahoo! now getting into this game? >> yahoo! has tried original shows for a while now. whenef we have heard is they make a show, where does it end up? there are different positions of our inside yahoo! when you make a show, does it end up on the homepage? it still becomes a very important question. yahoo! has been trying to figure that out but as that is getting figured out, they know they've got this time of year when you got to make splashy announcements in front of advertisers. have something encouraging to say at a time when everybody is fighting for agile and traditional tv dollars. i think that is the back story of white yahoo! would feel the need to pony up more cash for

original shows. >> we have heard netflix warned about the rising costs of content and what that might mean for future shows. "ow much of a game changer is house of cards" was and the viewing habits. ? that has been an accounting challenge for netflix. they have had to pull the costs forward making the show more expensive. yeah, the biggest problem with netflix will always be that we really don't know the specifics on how many people are actually watching the shows. i think netflix got a break from people who follow the company because their subscriber numbers continued to climb as "house of cards" was rolled out. you are right, it is clear they paid a lot of money for that show and we don't necessarily know how many people are watching it. that sets us up in this golden for highlevision

spending by everyone who is hungry for content. the end result may not be a winning formula for everyone. big starsyou've got in the shows as well like kevin spacey and robin wright, these are expensive talents. how does yahoo! and everyone else keep up or is "house of cards" an anomaly? >> the benefit that these big players have besides having deep pockets is a different -- is different business models. if you go to the case of netflix, you are talking up boosting their overall numbers of subscribers. orused to be a show lives dies on television based on how many people are tuning in and whether that is good for advertisers. for the xbox, if they can sell more consoles and get people to sign up for xbox live, maybe that is the metric for success. i think there is coverage to a certain degree for all of these

potential big spenders in new tv content for it >> thank you. we will be right back with more of "bloomberg west." ♪

>> welcome back to "bloomberg west." microsoft is pulling the plug on windows xp support tomorrow. >> the most popular operating system ever. more people use it now than any operating system presently but with no support. use it and atm's they're worried about security issues because of this. tomorrow is the final security update for the operating system. how big a security risk will this be? let's bring in the lab director

at cyber security management company. who still uses xp? >> 15% of internet users are still using windows xp. 18% globally and 13 in the u.s. countries likeo china, more than 50% of users are still using windows xp. i was reading data from microsoft outlook my mind. in the last 10 years, in china, 70% of the users never supply and security update or windows xp. the real threat we are facing is not that microsoft is ending support, it's about the laziness and stupidity of users. >> lazy and stupid users could suffer. i have this image of hundreds of hackers in eastern europe and gettinga rest

ready to attack because of the vulnerability. >> they have been doing that for years. low usually go for the hanging fruit. microsoft is not updating the patches. >> with atm's, could they hack the money out of atm's? thanks put in security measures and usually the atm's are not connected to the internet. who is most at risk? themselvesy, users and small and medium companies that don't have the resources to up eight -- upgrade to new security. >> one thing we see is bigger attacks at bigger targets and ways we have not seen before. are we likely to see more of those because of this? is it that the people who are

not up dating, the 15% of users are not going to be the targets. >> let's say we are making cyber crime -- we read the news that is going after people stealing financial information. how much does it cost to upgrade? >> you have to buy a new operating system. that is the best case scenario. if you are running all hardware, you will need a new version of microsoft windows. >> facing the average implementation for a company to upgrade is 15-18 months. [indiscernible] if companies did not have enough

time to update and upgrade the systems, that's several years fo, probably they are not in a hurry. tomorrow they will be at risk. >> we will monitor what happens tomorrow. thank you for being with us. tech companies play a big role in protecting your data, you can, too. ande will give you tips tricks anyone can use to keep your identity safe online. you can watch us on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. and on apple tv. ♪

>> welcome back to hope oh bloomberg west."

issues blew up, there have been a lot of questions about what we as average consumers can do to make ourselves more secure. we decided to take a closer look. >> the target and neiman marcus incidences shows what the risks are there in target is really really for the -- from this thing. they are suffering serious business losses. >> one of the biggest hacks in history. brian white is with us to give us some of his tips and tricks to stay secure while online. where does this start? what is the easiest thing we can do? >> it's great you're doing this. many of the problems we can solve but just having consumers take control. i think about this as consumers understanding what the risk is and doing some rude and and necessary steps to secure themselves. by doing that, they can sleep a little bit easier about the

cyber risk they read about every day. >> you say e-mail and passwords? >> that's the hardest thing. how do you do this? i say you start with maybe your social media sites with one password and your banking sites with something else. you have to go ahead and do upper and lower case letters and symbols and numbers. those have become, that we have to be honest that those are very hard for many people to remember. some are moving toward a phrase or word or sentence that you use the first letters of each sentence as your password with a couple of numbers at the end. >> how many different password should we have? >> you should have at least three. i would use one for maybe a media site reading the news and maybe for my social media sites which i am concerned about my most secure password i would put on my banking sites. >> in terms of using these, as people start to pick those sites, it is going to the strange and unusual site that

starts to involve download software that gets funkier. >> now you are hitting another issue. when you look at downloads, it is presumed you are guilty. you should presume you should not click on it and download it. >> how do you figure that out? whyou need to think about someone sent you something. you can download that if it is reliable. if anything is suspicious, it's easy to copy that link and put it into your browser. --the browser comes up oftentimes, there is something in the middle and they can click through it. >> the link might say yahoo!.com and you click on it take you to an eastern european download site? >> exactly, that is happening increasingly on social media sites. linked in and twitter because we are using those sites so often. they do something to the actual

address and you click on it and all of a sudden, you have malware on your machine. >> let's talk about browsers. what browsers should we use? >> i think google chrome is considered by most to be them most secure. then you see firefox and internet explorer being number two and number three. pc magazine had an article where they said it is hard to tell the difference between all of them right now. what is important is making sure you are taking the updates. >> what makes chrome better? >> it is a more stable platform and was built on open source code and has the ability to incorporate more security features and protocols, even how it opens pdf documents. it is important you have to make sure you do the upgrades. when you see the updates come across your desktop or on your phone, hit that update. if you are using an outdated >>, those are not secure. >>which sites are most secure?

there is a difference between attps and attp? https is becoming the de facto standard. it actually enables encryption between the browser and the other browser. this is important in that that data as it moves is encrypted. that is something you see on banking sites and that has been adopted elsewhere. make sure when you are on sites, https and if you don't see that, be reticent about what you do online. >> we are an amazing day when will being supportive but 18% of all world businesses done on windows xp. i wonder what are the best actresses for a company to make sure they are not exposing -- i wonder what are the best practices for a company to make sure they are not exposing themselves. how can they be reasonable about

security? >> you have to think about how the network is architected and segment individuals. you have to assume your employees will hit those sites. what is concerned about leaving the network and make sure the browser you deploy and how you push software is always up-to-date. it's your responsibility as the administrator to make sure the employees are using up-to-date software. >> what about your phone? do you get the updates on your phone? if you are on mobile, what other additional steps can you take? # make sure you have a pin and you can lock th device. make sure you go ahead and put on your geo location even that -- even though that may drain the battery. you can erase the device if you lose it. the most important thing is don't download applications directly from the site. move through the application store.

whether it is the apple store or android store, those app stores are developed to look at each application and see if there is any bad code in those apps. >> interesting, thanks so much. security 101, it's amazing how many people don't do these things. it is simple and obvious steps, thank you, ryan white. still ahead, we'll sit down with nancy tellem, former president of cbs and now president of xbox entertainment to talk about microsoft push into original programming and you can watch us on on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪ >> bloomberg television is "on the markets." it's looking like the friday selloff is caring into monday afternoon and the nasdaq is seeing the heaviest selling as big names in tech and consumer discretionary and biotech stocks

are being dumped. a couple of individual movers -- the solar company backed by blackrock is dropping its solar power project in india and those shares are down nine percent. it was canceled due to local equipment shortages and high prices. we will be "on the markets" again in 30 minutes. ♪

>> you are watching "bloomberg west." let's get to our lead story of the day -- tech companies and the fight for original content. we took you inside the microsoft santa monica studio earlier. jon erlichman is back with more from l.a. and a special interview. arrived atcy tellem microsoft, the tv team consisted of one, her. now you have people in a bunch of different offices and headquarters in redmond, washington and vancouver and london but the key team focusing on the hollywood story is in the santa monica office.

i asked her about how broad the different tv originals xbox will be focusing on? >> we are dealing with serious, we are dealing with limited series or what i used to call many serious, feature-length projects, have our projects, short form projects, animation, live events, sports, news -- we cross all jobless. --genres, where you can find it is through xbox live. we are still trying to figure out from a strategic standpoint where it fits. it is something that is unique to our platform and it will be under the banner of xbox originals. >> should be think about these shows being produced start to xbox ory microsoft or is it in partnership with other studios? >> we are open to all. we have an arrangement with channel 4 in the u.k. where we

are producing a series together. we can coproduce or solely reduce and bring in talent. we are very flexible with whom we will work with. >> use showtime as an example. traditionally tv, you think 30 minutes or one hour. what are you guys thinking about in terms of how long the show should be? >> for our platform, if someone comes and says i have a great animated series that i think can go for 11 minutes or 10 minutes or we see something that only should be nine minutes, that's all it needs to be. >> one of the shows you are doing is "humans" which is a thriller. something else you're doing is covering a live event, bonaroo. there is a real range of stuff you're doing. what is the thought process between the kinds of shows you want to be doing? >> we are obviously starting with the focus of who is on xbox

and who is using our service. millenial's and gamers at this moment in time that are both women and men. we are also looking and why they are on on our platform and how we can integrate the technology to make their tv experience much richer and more engaging. the you talk about bonaroo, ideas that many people would like to attend or maybe they don't want to attend but i want to listen to the music and avoid going to tennessee. what we are hoping to do that while it is well attended, i think they get close to 100,000 people, you can actually have a virtual festival in your own living room by being able to choose the station want to watch and have actual real-time interactions with the talent before and after their onstage using skype. >> the first look we got what might come out of xbox thertainment was "halo"

signature game with steven spielberg producing. what is the timeframe for that show? >> we are in development on this project. we have not much to say about this one. on the other projects we are developing, again, on certain aspects, we're looking at franchise building and looking at certain levels of ip that can expand the franchisor build a successful franchise that can live not only with television but in games as well print >> the many flagship games that have come to represent xbox, these are all fair game in terms of becoming television shows? >> this was a wonderful discovery for me when i arrived is that there is a rich backlog of stuff microsoft owns. it could be any of their previously they games. -- their big games. we weree things that if not attached to microsoft,

everyone would yearn to have these. it is an amazing platform to work from. >> we have also asked her what does satia nadella think about the platform and what about sony? you can see her additional comments online at bloomberg.com . >> thanks so much. coming up, it is one of the fastest growing media sites online, find that how upworthy makes content go viral. ♪

>> welcome back. is on a mission to bring attention to things that matter. it is known for its catchy headlines and has over 50 million users that watch and share its content every month. they recently announced upworthy collaborations, a way to partner with organizations seeking to

draw the attention to topics important to society. we sat down with the cofounders and asked what they think the most important topics in the world are in who decides? site,e any other media that is something that our readers trust us to help figure out. we think far too much media focuses on trivial stuff like celebrity news and gossip, stuff that does not help people be better citizens or understand what is going on. when we started upworthy, we started with a focus on just a bushing stuff about that important topic. >> you gotten attention for your headlines. toentists are trying to talk aliens and its mega interesting or unless you are ridiculously wealthy, this graph might make you angry. how do you come up with these headlines? is there a rule of thumb? >> we have an excellent team of

curators. they are really interesting and creative and generative. we give them the mission of try to make stuff interesting, try to figure out why someone who is busy and has a thousand other things to do, how do you make them care about this now? we started by throwing out the old playbook of the proper way to write a headline, the proper way to run a media company and decide how would we do it and what is personable and real and kenexa people. >> as your traffic has shot up, so has controversy around the website. what do you say to people who claim you are stealing their content and changing the headline? >> we get very little feedback like that. the actual feedback we get are from these people that put their

heart and soul into a video and post it to youtube and i got 100 views or 200 views or 500 views. one of these upworthy curators find it and package it and share it with their huge audience and i got 500,000 or one million or 5 million views. >> there has been a lot written lately about you. how would you define the phrase"click fraud." it refers to someone else running up the numbers. he tried to devise headlines that bring people to the content they will love. upworthy only works if people get to the content and love it so much they want to share it with all of their friends. the average media site gets about 600 social actions. upworthy on average gets about 31,000. that's how much people want to share our content. >> talk to us about your audience.

who do you consider your target audience? been called the fastest growing media company. how fast are you growing? >> i think it is in the known universe, the latest we heard. the way we think of our audience, we have about 8 million core prescribers as the upworthy community who have signed up and it is a passionate and wonderful group of people who have not totally given up on the world. they in turn share the up for the content -- share the upworthy content. >> how do you increase the value of them to your advertisers? there are a number of people going to the site but what you do to increase the value over time? really isn't tapping into this trend of people who want to do well and do good. they are people who believe and i use the go beyond just buying things. that's one of the things we

found in our recent research for it there is this real concentration among our audience of people who want to be introduced to products and brands that help them make better, more socially conscious buying decisions. >> how do you think you compare or secret apps. whisper hired a guy from gawker and they are trying to repurpose viral content. >> we start from the mission first-rate we say we are trying to draw massive amounts of attention to the topics that matter. one, we said we will only post things that really achieve that mission. make themedia sites general trade-off where they will have the content they are really proud of and might win them a pulitzer and then they have the content they know will drive traffic. to say let's make the content we are proud of that moves the needle forward and make that drive the traffic.

>> what is the most shared upworthy post of all time? >> it was an amazing 20 minute 's battleut a teenager with cancer. that gota great video seen over 17 million times. i think it's an amazing thing we have learned in our journey in the last two years that the stuff you think will go viral is not the stuff that goes insanely viral. a 20 minute video about cancer -- it has inspiring ending but he loses the battle with cancer. it's a very serious and very real video. it's the number one of all time for our site. >> you guys are launching upworthy collaborations, what is that and where is the future for you guys? >> upworthy collaborations are in a way for us to work with brands and focus on the thing we are really the best at and i

think many brands are trying to do as well wishes start conversations and draw attention to important topics and brand values and other issues of note. we can work with brands and a number of ways. our number one way is to focus on sponsored generations we work with a brand to figure out where their brand value is. it's not just if you can sell a product. what are you trying to evoke in the world and we look for an overlap between that and something we care about deeply. cofounders and co. ceo's of upworthy. when president obama signed the jobs act into law, one goal was to encourage more investment in small business and we will take a look of that is working out next. ♪

>> welcome back. it has been two years since president obama signed the jobs act into law. >> i feel old.

it's an amazing ringgit change the investment landscape in a lot of ways. -- it's an amazing thing that changed the investment landscape. >> we have seen companies like twitter and others file secretly to go public. it has been great for crowd funding in terms of helping small businesses and it raises the funds they need to survive. joining us here to discuss this is the circleup founder. what do you guys do? you founded 30 businesses since the jobs act was enacted? >> that's right, we are an online investment platform and help match high-growth consumer retail companies with investors. investors can find diligence and investing companies across the country in an online platform. that this will

work great when the market is going up but horribly when the market goes down. what have you seen in terms of results? >> the results are coming in. the average company that raised capital on the platform has grown 80% year-over-year after they raised capital and gross margins which are critical. have increased. one of the reasons we focus on consumer goods, companies that produce a tangible product that sits on the shelf is we allow investors to do better diligence. you can visit your local grocery store and see the product on the shelf. we believe online investing helps improve the availability of information across the board instead of isolated conversations with angel investors. how you can compare one company's financials against another and see them all in comparison. >> let's talk up bout a company that was crowd funded that

should have a physical product on shelves and that is oculus which facebook bought for $2 billion. they raised money on kickstart her and people give them money are upset saying they did not get a product and they don't in any part of this to billion dollar upstart. >> that is one of the reasons equity crowd funding with us is better. oculus whichunded was a donation-based crowd funding. oculus was one of the most successful donation based sites but until you have equity investment, we think equity crowd funding is the better way to go in the long run. >> doesn't need to be products? is that the only thing that really works in this format? >> we think it's the right way for the market to start. we think you will see a host of other companies but in the early days, it's a different type of

fundraising and different type of environment. we want there to be information and ability for investors to compare different companies and products. >> what you think of kickstarter and indiegogo, is that the wrong way to go about this? >> it's a different business, we have a lot of respect for them. the goal is to support creative projects. it's a different market entirely than sustainable growth for for-profit companies. equity in all types of capital markets aligns interests. >>, companies have you rejected from the platform? >> over 3000, we accept about two percent of the companies that applied. >> what is the criteria? in my old business, is to look for people who are liars and cheats. has that been a concern? >> doing diligence is a big

concern of we have hired a team of professionals in the consumer space to do that work. we do a background check on the business and look for a distinguished brand, something that sits on a shelf and has strong historical performance. >> what have you found in a background check that would say this guy's background is not good enough. fraud orstory of securities related at it he that does not pass muster is not what we want to put in front of our investors. we found that and have passed on, is for that reason. >> thanks so much. byte time for the bwest and we have a special guest, ari levy. there will be two classes of alibaba shares when

the company goes public. will notus says he invest in alibaba over concerns over corporate governance. >> it's a big field. in china, it will be more and more tech oriented and more internet oriented. internet shopping is a global phenomenon now and is growing very fast. you have to pay attention to alibaba. it is one of the greatest ones. he is not alone. there are many big companies d --ual share class are the way companies have been looking to control their company. >> google was one of the first. what do you make of it his comments? this is a structure that is becoming more and more prominent in technology companies. >> a lot of technology companies like facebook and going back to

google and zynga have been able to get away with this because there is so much demand for their stock at the time of the ipo. shareholders have been willing to say we will not have a vote or control but we cannot miss out on the opportunity. that is the only way a company can get away with this is if they have the leverage. it depends on what kind of shareholder you are. do you believe the company will look out for the best interest of shareholders or do you believe the shareholders need the ability to question the holocene and decisions made by management? >> why does the u.s. allow this? many investor laws are written about investors who know what they're doing and take the risks. the notion that a certain class of stop -- a stock will be more risky than another -- larry haverty is very concerned with corporate governance and concerned with finding value. he likes alibaba even though he says the corporate governance

issues should be at her. >> you wonder why people are not calling this issue into question more. other companies went public and flopped. not every company is facebook and google. >> that's absolutely true. prior to zynga and groupon and we wrote about how much control was in the hands of so few. you can only get away with this if you are rocketship. if you look atbiox, it has taken so much and -- venture capital money. the ceo owns very little of the company. groupon and zynga got to the point where they did not run into their wall until the ipo. all of a sudden, you have investors who have no say on what goes on who are seeing the stock plummet and they cannot do anything about it. that raised questions but it does not hamper the alibaba efforts. >> thanks so much. you can catch the interview with

mark mobius online and thank you for watching this edition of "bloomberg west." ♪

from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line," the intersection of business and economics with the main street perspective. protesters stormed government buildings and ukraine. then, a look at the republican party's new digital strategy. stilly baseball cards are the business. viewers in the united states and those of you joining us from around the world, we have full coverage of the stocks and stories making headlines today. phil mattingly has a bloomberg special report