live from pier 3 in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. jd.com get a jumpstart on alibaba, going public in new york today. we look at what the shares say about the market for tech companies. getintel is looking to inside the growing maker movement. we will check in with their ceo to find out his plans for their future. this is a "bloomberg west" exclusive. is taking steps to improve user privacy.

they will now automatically default to friend. that means it can see bc my friends only. -- be seen by friends only. there are also rolling out a privacy checkup tool the lower spine you -- that will remind you about privacy setting. move more than 1400 workers to it this new complex in sunnyvale. they declined to comment. they're also leasing space in santa clara as they fill their new headquarters. spying feud between the u.s. and china is not letting up. china now says they will apply tighter's group me before --to foreign internet companies. companies that do not pass will no longer be allowed to sell products and services in china. this is after the u.s. charged five chinese military officials

with espionage. first, to the lead story. j.d..com are off to a good start as the company went public today. shares rose after being priced at $19 last night. they raised about $1.8 million for jd.com. they now have a market cap of $28 billion. they are the largest chinese internet listing in new york. alibaba will easily take that title once a ghost public. cory johnson is here with me in the studio. these companies are often compared. they are very different. >> principally because jd.com is an old-fashioned internet retailer. >> more like amazon. >> they take on inventory and sell that too. unlike amazon, they are not

experimenting with delivery. they are very big in the world of delivery. they have warehouses all over china. they will deliver right to the door. they're right there delivering product. >> there is also same-day delivery. >> 86 warehouses. when you look at the revenue story, you see a company that is selling a lot of stuff. you translate that to u.s. billion in $3.3 revenue and growing. still growing at a 60% clip. that is a very impressive growth rate on a very big number. >> what are the prospects for a company like jd.com. it seems like investors are into the essex. >> the valuation is very high. things will get better. part of this deals very interesting. they are selling 15% of the shares at $.10. they will say this is a $.10 platform.

there is next with the detail that goes -- deal that goes many years beyond me payment. they will get to a place where they could tell all of their products. they are losing money, but the losses are getting better with every quarter. on a dollar basis, because it is a seasonal basis, they are getting better and better recorder. it looks like you can see the improvements you want to see, at the same time that revenues are growing. be speakinging to with the cfo in just a few moments. i want to ask him about that partnership. lori johnson, thank you. now to another big tech story of the day. roughly one year after edward snowden of first unveiled some surveillance secrets, the house has approved its first legislation designed to rein in the nsa. critics say that the bill does not go far enough.

peter cook is on the hill with more. what does this bill actually do? is a signals say it moment in this whole debate over the american surveillance program. they insist that this bill balances national security with americans'right to privacy. critics contend it does not strike the right balance. they still basically to give the government too much latitude in terms of searching records. let me tell you what it does. the bill, according to supporters, bans the government from bulk collection of data. it also requires phone company to store that data. the government cancel search it, but they need a court order. there is more oversight of that court under this legislation. there's is also greater disclosure on the part of companies that request information from the government. they can disclose more about that, something the tech community has lobbied for.

they say there are two main loopholes in this bill and it gives the government too much latitude. supporters insist the balance has been struck and detractors say no, we need to look at this more. take a listen. >> in the post-freedom act world, we have turned the tables on the nsa. we are watching you and we will. changes appear to allow multiple interpretations as to what the nsa can and cannot do. the bill now confuses what it intended to make clear. it seems we are back where we started. >> though today was overwhelmingly supportive. more than 300 votes in favor. the white house supports this bill. what will happen in the senate, where leaders insist they will take a look at this legislation and likely propose something quite similar as well. and what about the technology companies? they are not too happy with this

bill. >> they are not too happy. a were initially supportive, as were a number of privacy groups. at the end of the day, there were late changes with quested by the intelligence community. they say there are loopholes here that will allow for the bulk collection of internet users' data. there are a number of companies, google and microsoft, who said they could not support this bill at the end of the day. they urged congress to dig deeper into this. the specific area they are worried about -- the terms of surveillance community, the language used in the bill like terms identifying a person entity, town, address -- they say that language is too broad. they worry they are going to pay

the price from a business standpoint in terms of reputation around the world. not just in the united states. they're still playing ball with the government too much. >> ra, we will continue to follow the spill is a progresses. thank you. starsahead, jd.com trading on the nasdaq and the biggest offering ever of the chinese internet company in new york. we will speak with their cfo next. you can watch a streaming on your phone, tablet, bloomberg.com, apple tv and him is on fire. ♪

>> i am emily chang and this is "bloomberg west." jd.com rang the opening bell as they went public in the united states. he raised 1.78 billion dollars in their ipo. shares are $19 a piece. they have been compared to amazon and this comes ahead of the highly anticipated ipo of

alibaba. cory johnson is still with me and we are joined by jd.com's cfl. thank you for joining us. i would like to start off with the comparison to amazon. is that a fair comparison in your opinion? >> yes, they do share the same of session for customer experience. step furthero one in providing our own in-house logistics services. deliveryhe last mile to our customers. >> what about alibaba? you hold inventory and they're more of a middle man. that gives the margins that you may never people to achieve. over oure control product quality. authenticity. we also have control over the service level. so this is a very important

differentiation of our business versus the pure marketplace business model. >> sidney, talk to me about the partnership with 10 cent. i wonder if revenue growth might rick sorry because you have so many customers on that mobile platform. >> this is really a very important part of jd.com, combining the largest e-commerce company with the largest withnet company in china the largest user base on pc and mobile. whatw, talk to me about you're investing in fulfillment sectors. youris really the key to continuing to grow and be able to reach the rural and western parts of china. it also puts the pressure on your timing when it comes to making a profit. >> if you look at historically and in the past few years, for cap level was

pretty manageable. we have been able to have free cash flow over the past two years. i think investment is actually more measured than most people expected. and moving ahead, we will continue to invest, especially for the seven major film and centers. we will make sure we have control over the key geography. >> sidney, as a former kpmg auditor, you probably know more about auditing than i will ever learn. why your company

has a material weakness in your control. >> we have recruited a very large number of professional finance and accounting teams. we have more than 30 staff with accounting backgrounds. at the, if you look nasdaq or the chinese companies that initially go public -- everyone has this material weakness. certainly, as a company in a foreign country, we will continue to improve our competency in the u.s. cap. it makes it even more concerning that they cannot even check the audits of your auditor. i would expect -- would you expect the material witness to be corrected and how can you keep that from happening in the future? have confidence that this material weakness will be lifted in the near future. >> last question about your founder. have expressed concerns

that he maintain something like 84% of voting power. how do you assuage those concerns going forward? forit is very important to -- an entrepreneurial company to have control over its operations. common in theery internet space. if you look at facebook in the --ther baidu in china shareholding structure is pretty common. your firstt, cfo on day of trading as a public company in the united states, thank you so much for joining us. apps havesocial media surged controversy in silicon valley. is it warranted? we will ask the founder of secret coming up next. ♪

>> welcome back. secret is one of the highest apps in silicon valley right now. it has also been called a scandalous. it allows users to post their thoughts anonymously. secret expanded to android users this week and internationally. with me now is their cofounder and chief of product officer. thank you for joining us. everyone is talking about you guys. i have been looking forward to this. i was looking at the app and they pulled a few secrets to give people an idea of what they can see on it. number one, the best part of my day is when i see his face. number two, i am gay. that is better. three, i have not washed my hair and 11 days. what is your vision for the? >> david and i have worked on social networks for several years. over the years, we notice that

something is missing. we have all these thoughts and feelings that we have every day. we do not have a place for them. they do not belong anywhere. like some of those things you just mentioned, or i want to get engaged. or i want to quit my job or i am falling in love or him falling out of love. all the software we have every day, they just don't have a place. secret is a place to share those thoughts with your friends. these ideas start a secret. they start as private and personal to you and there's nowhere to put them. >> you both worked at google. david, i know you worked on buzz, google plus -- there is a lot more guild with using secret than a typical social app. is that a good thing? >> yeah. i think being provocative is good and interesting. >> can you give us an idea, google are using it? >> it is a secret for now. >> all right. you asked for my e-mail, my phone number when i set up.

why do you need that information? can your employees see that? >> as fully not. security is most important. we ask for those so you can connect with your friends. you immediately build your social network and social graph. you can start sharing with friends and friends of friends. >> anonymity breeds negativity. how concerned are you about negativity? >> safety is a top party press. we want secret to be a safe place. we do not want it to be a place where people can hurt each other. we have invested a lot in our security team in moderation team. we have worked with experts to build out our internal guidelines. when things are flagged on our platform, the team does redo it. it is taken down and it does not meet our guidelines. >> we're having to grow up really quickly. >> in terms of taking down

posts, what does that involve? how actively are you watching and removing? some of the post single out specific people by name. maybe they are true, maybe they are false. >> absolutely. we want this to take place for private individuals. newsworthy individuals is a different story of another. we should be able to talk about obama or whatever. >> what if it is not true? >> we are not in the business of deciding between true and false. when people in the community flagged content, that is when we look and make a judgment call. >> do you worry that could open you up to legal issues? >> well, we have really good lawyers and we are repaired for the stuff. in the case that someone does do something illegal and we are subpoenaed, we do have the ability to turn that information over. ultimately, this is not a place for him awful or illegal activities. >> ok.

you have a lot of reporters and big-name investors. you also have mark andreessen who went on twitter -- never singled you guys out, or eted for it by name, but twe such experiments start out as not a fun and in the end everyone regrets participating. how do you reply? >> he has experience, but it is our job to solve this problem and make a productive product using anonymity. >> this is silicon valley. secret is not only in silicon valley. people are using this around the world now. when you see it, it is more like a dinner conversation. you go around the conversation and add your story. that is the majority of the stuff we see on secret. people like to protect the future. it is very hard to predict where they will go. >> when you look at the product,

it is somewhat of a reflection of who you know and of your friends. a lot of things you see are actually things that are being said in public or in private. evan williams and jack dorsey are two of your mentors. i know that they have been helpful. >> in various ways. we spoke early on about the idea of this product. he helped us think about and talk about it. jack is just a very deep thinker. he was the one who helped me realize that this could he a powerful force for self-awareness in the world. >> , you make money? >> is still really early. we have only been out for four months. we have a lot of ideas, but it is not a priority. we're focusing on the product to make sure it is successful before we consider that. >> last question, the whisper. he seemed to be focusing on content and breaking news. how do you see yourself as different? >> we are a communications

platform. we went deep, meaningful conversations. >> we will keep watching you guys. i well. secretly, on my app. miggy so much for joining us. well, intel is betting big on the maker movement and we hit the maker fair with brian krzanich next. ♪ >> it is 26 after the hour. there is a rally underway. utilities, health care, consumer discretionary leading the way. homed have an existing sales rising for the first time in four months in april. culinary manufacturing also increased in may. one stock we want to highlight is ice. they announced their ceo has

resigned from his position. he is stepping down one month earlier than originally planned after saying they will melt with there new owner. we will be back on the market in 30 minutes. ♪

>> you're watching "bloomberg west." intel is one of the godfathers silicon valley. they have tried to establish themselves in the modern world. making tools for hackers and hobbyists. our editor-at-large, cory johnson, met up with brian krz anich. that word, hobbyist, makes it, this is not a big movement. >> it is a big movement. it is packed. when our producer and i were going to this thing, we were stuck in traffic for miles around the cement.

>> what are they making? >> everything, firebreathing dragons, computers that control trash cans. electric cars, wild stuff. it takes us back to the earliest days of technology. every member making a heat kit. they are making all kinds of things. brian is at the center of it. check this out. i was born and raised in silicon valley. in my backyard was a plum orchard. that is obsolete true. --absolutely true. that is old silicon valley. this is the future. this is a galileo board. yes. the cork in the center there. it is designed for just this kind of environment.

developed. what we it is made for the maker. we are starting to use it in wearables, stuff like that. >> do you see the makers gravitating towards this chip? >> we are sold out. this was taken off -- we give 50,000 of them away to universities. we are building them as fast as -- demand was six times what we forecasted. >> really? why is that? intel chips have been -- >> i think it is probably because there seeing it and we embrace it in the community. the board itself is a beautiful board. asked inteluld have

10 years ago where the direction mobilee -- pc, pc, maybe pc. not robots, lights, stuff like this. how do you make sure that intel is an integral part of this movement? >> i think it is by me spending days like today. hiring guys like joey that you just saw. we have a whole group focused on this maker community now, making products for them. these are the people who will be the next steve jobs and the next google and everything. these are the people who are being raised up with technology and innovation. that is really what we saw the last couple of years. they are not aware of intel technology and what we are capable of doing -- if we are not aware what their needs are, then we will not line up together. it is really interesting to see intel in that environment.

could you imagine him being so buttoned up and formal. what about the rest of the business? how are they planning for their future? they're not a big and mobile. >> they are thinking, how can we get so far ahead of the next development? we are just part of that atmosphere. part of it was not just the makers. they are very involved in encouraging young girls to stay with math and science through that age when they stop. brian has young daughters, i have young daughters. is dear to both of our hearts. we met some girls they're doing this really cool project and technology, using intel chips. releases --n that.k at >> that is one of those galileo boards. >> very cool.

that is what turns it off when it closes? that is very clever. >> we really discovered this in six. . th grade. part of the reason is so that we can capture them in third grade. we went to keep them through college. once they get high school, there is no program for them. by capturing them in third grade and keeping them through 12 craig, we hope to propel them in. >> how big is this market? you look so far into the future. >> i don't know how big it is going to be. we have our next product coming out this summer. ar about thend c size of an sd card. we have a contest going on called make it wearable. it is to see who can make things. we do not know what is going to happen. i think that is the fun part of this.

we have a lot of things that just kind of -- so-so. but one of these things will take off. >> i was surprised when i looked on facebook. >> is everybody now. whether you participate or come to watch. a lot of people come in to this movement. they become big. >> what is so attractive to people who are not in tech? i guess in this community most people are in tech. >> i went to a maker fair in rome. it was just as exciting. people are in and out of tech. it is something about the innovation and thing with somebody can make. this is not all about this event is not all about high tech. not everyone is building everything with galileo boards. cardboard elephants or wind generators using home depot buckets.

or even these devices. it is about creativity. figuring out just what you could build. are you tryinge, to seed a market or be there for whatever market takes off? what is your business plan? you surely sat down with spreadsheets and what are we going to do. >> actually, we have not sat down with spreadsheets as much as said, this is a community that you see things like kickstarter. these are the places where the next new product, the next great product, will come out of. either this place were these people. but we found was that we were absent from this. they did not know intel and we did not know them. by engaging with them, they now know intel. they know our products, they

know we can do. they will come to us. what we have found, as you saw, they are making our products better. they give us input. this, we like this feature. by working with them, they will know us and we will know them. this is an investment for the long haul. we do not know where this will go and we're ok with that. >> it is interesting, they spent so much money. they're are the most active venture capital company. tsis is a way to seed marke and get in front of the inventors before they know what they're going to invent. >> do you see this becoming a core part of the business? >> peddling elephants, probably not. inventors saying i have a cheap circuit board, what can i do -- whether it is a little girl who wanted speakers on speakers, which i loved.

there was a girl who invented a unicorn. it closed the circuit in the horn wouldnd the blink. for that girl to be inventing stuff, who knows what she is going to invent when she is 18 or 35. she has got this experience. early on in her life. it really did have me thinking about when i was a kid. we would have these heat kits. we would learn what a capacitor was, how to solder together a circuit board. i did not become someone who invented circuit boards, but it has. on to wearing makeup tfor a living. >> ok, thank you, good to e hear. us tot, al franken joins talk about consolidation in the tv industry. from time warner cable and

comcast to directv, we get his thoughts on how he feels it will impact those businesses and consumers. ♪

>> welcome back. i am emily chang. spotify now has more than 10 million paid users and more than 30 million users listen for free. face appears competition, including pandora and a possible apple beats. they spoke about their future with charlie rose. >> for spotify, we started off with the ability to play music. we are now becoming experience for every moment of your life. going forward, what i hope is

that we can take this technological shift and move it from not just being about listening to music to being about how we create music. the fulln catch interview tonight on turley rose at 8:00 and 10:00 eastern. now, comcast and time warner -- they all have made huge efforts, spending millions on lobbying campaigns. cory johnson shows that if money talks, then contrasted shouting to get this deal. comcast is shouting to get this deal. >> in washington, there is lobbying and then there is longing. the proposed merger is an exercise in lobbying. million in spent $18 lobbying. that is more than any other company. a lot of that went straight into the campaign for politicians.

$59,000 to john boehner. $57,000 to mitch mcconnell. $27,000 to greg walden. $25,000 to harry reid. the real power has often been -- take neil smith. he is the chairman of the national cable intelligence the gave 19 million in lobbying last year. going to the same politicians that comcast gave to. that made them the top five lobbyist in all of washington dc last year. before smit, the chairman was tom wheeler. where is he now? president obama named him the who willof the fcc, decide the fate of this proposed merger. for anyone thinking about their next job, michael powell is now

the ceo of the ncta. and meredith baker, who approved to goal, she left the fcc to comcast. she is one of 167 lobbyists trying to get power, influence, and money. al franken has been one of the most outspoken opponents. he sent a letter to comcast's ceo, asking him to explain. of letter comes on the heels another proposed mega-telecom merger with at&t announcing a plan to buy directv for nearly $8 million. -- $50 million. he serves on the subcommittee of eight senate judiciary committee. he joins us from capitol hill. cory johnson is also with us. take you for joining us. have you gotten a response for your letter yet?

>> not yet. they just got it. they have been going on tv and how theyhow -- touting are buying time warner cable and that will extend net neutrality to a greater number of consumers. but, that is because they are required to by the conditions put on their acquisition of nbc universal in 2010. this is -- that runs out in 2018. they refused to say what they're going to do after 2018. >> let me play that. >> go-ahead. >> i want to play a good portion of that. i just saw it today. here are seven seconds of that ad. >> how do you make life online

better for more people? star by extending net neutrality protection to more americans. your reaction? >> ok. they served by buying the second-largest cable provider and they are the first-largest. you start by buying the third largest internet broadband provider. you are the first largest internet broadband provider. live up to the conditions that were imposed upon you by the fcc. the moment those conditions stop applying to you, you do anything you want. not is kind of really entirely honest. >> you have called the comcast and time warner deal a disaster. you're not too happy with at&t and directv either.

how disastrous you think this could be? more&t and directv is consolidation. i have not really looked at that as thoroughly as i have comcast and time warner. comcast and time warner cable are really competitors. they are both -- broadband providers. to me, that was immediately, i propose that -- opposed that from the get-go. and directvudy at&t a little more. we had one hearing comcast and time warner, comcast said that this would just start more competition if we combine. there'll be a dogfight and innovation and this is the first

thing that has happened. orther huge company buying wanting to buy another huge company. that therepening is is more concentration in telecommunications. that is very, very concerning. i believe, will be less innovation and less choice for consumers. higher cost for consumers and more service. >> which is a greater concern for you? concentration of cable and broadcasting with these two companies coming together, or the potential impact in the future on the world of broadband? >> they're both very concerning. of course, there is a relationship between ned neutrality and this comcast buying time warner cable. they both have 40% of all broadband. netflix has paid, essentially.

>> not essentially. they paid for the plan. >> they paid for a fast lane. that speaks directly to net neutrality. for your viewers who may be -- net neutrality is a term that not everyone understands. it has basically been the foundation of an open internet. travels to the consumer at the same speed. the perfect example of this is that there was this thing called google -- media. or google tv or google something. there was this format. youtube was starting up the time to compete with that. it was google video. they, over a pizza shop in

california, started to develop youtube. because youtube could travel the same speed as google video, people like you to better. they could sample it and youtube became a youtube. if there is a fast lane for , big content,ties netflix, or any corporate entity, which is what wheeler is talking about -- chair of the fcc. then he would not have had this kind of innovation. innovation has happened not just while we have had net neutrality's, because we have had net neutralities. they happen because of net neutrality. we have to maintain that. >> you're worried about the -- finish your thought, sorry. ofyou asked about delivery

television and ownership of content. that also is a concern of mine. bloomberg, there is a relationship there. when comcast bought nbc and universal, they also bought a whole bunch of other stuff. bravo,ught cnbc, telemundo. when they bought cnbc, they neighborhooded it. they were supposed to do that. that was part of that purchase. but you should have been neighborhood there. they did not do it because they do not own you. they wanted people to watch cnbc, their 24-hour financial news network. they want as many eyeballs on that as possible, so they put bloomberg in the nosebleed seats.

that was violation of a condition. that is where you guys fit in and that first question. if they have both the number one and number three cable tv providers and they own 12% of all television programming, they can favor their own programming. that is a problem. that is a problem for a lot of small cable networks. that is a problem for a lot of small programmers. they have come to my office and stated their fears and objections. they refuse to go public because they know they will be retaliation. >> senator franken -- we of course know the details of that situation all too well. i want to ask you what you think the government is going to do in the situation. comcast has paid so much money to members of the judiciary

committee. tom wheeler seems to be moving that action as well. how do you see this ultimately playing out? >> comcast has not paid members of the judiciary committee. they have a lot of lobbyists and a lot of executives. they have contributed money to members of the judiciary committee. i don't want to comment on that. as far as tom wheeler, you mentioned that there is a revolving door. michael powell heads up the cable association. o, you know, i don't know what the fcc will do. they are the ones who make the decision on the comcast and time warner deal. objections known right away when i first heard about that and i have sent. i will continue doing that.

i try to raise those during our hearing. i don't want this to happen and i am doing everything i can to stop it. >> it sounds like your concerns are very strongly about business. and the business opportunities that would go away after the merger. >> exactly. has to look at the antitrust aspects of this look at if has to this is in the public interest. that is what they have to measure the spy and they have failed. >> all right, senator franken is joining us from washington. a key so much. we will continue to follow both of these murders as they play out. thank you so much for watching this edition of "bloomberg west." cory, have a wonderful day and we will see you later. ♪

>> from bloomberg world headquarters in new york, i'm mark crumpton and is "bottom line." wages -- workers call for better wages at mcdonald's. the mayor of seattle proposes a $15 per hour minimum wage. and sales of existing homes rise in the u.s. for the first time this year. to our viewers here in the united states and to those of you joining us from around the world, welcome. we have. -- full coverage of the stocks and stories making headlines today. peter cook details theou