>> live from pier three in san francisco, welcome to "bloomberg west." i am jon erlichman. rebel up saleso and lower the price of its cars by building a new lithium-ion battery factory. tesla and panasonic partnering on that project. at a site been broken in nevada but there is a chance the plan could be moved to another state. the l.a. dodgers are in first place, but if you live there, you may not know it because of a standoff between time warner cable and various pay-tv providers.

that has resulted in games being blacked out. and memberschairman of congress are getting involved, urging an end to the standoff. a federal judge rules against microsoft in an e-mail privacy turn saying microsoft must over e-mails stored in a data center in ireland to federal investigators. microsoft is appealing saying that e-mails deserve the same privacy protection as letters sent in the mail. lead story, alibaba group is pouring millions into u.s. tech companies as it progressed to go public this year. the chinese e-commerce giant investedrted 120. -- $120 million in a san francisco videogame company, this as we hear about possible investments , lyft, cap, -- snapchat and now for more, we are joined n. da

largeith us is editor at cory johnson, who is in new york this week. dan, let's start with you. lots of different investments, everyone is trying to make sense of what alibaba is trying to do in the u.s. what do you make of it all? >> it is difficult to know because the strategy in china is different. own start companies, they them or buy them, but do not necessarily invest in them. first of all, i think they have learned the value of investing in some of these companies as we did at yahoo! come a making a fortune --, making a fortune for alibaba. now they are seeing if they can make success on their own, or maybe they can assemble them and buy them, that is the operating

premise that ali baba has been on. spoke before how they hired someone from liberty media who did justice, buying stakes. does this suggest that maybe they are taking these early investments and then making decisions later on is because they have to slowly but surely figure out the u.s. market, is it a regulatory thing? >> it is probably all of it. they are not public yet. all, they are trying to figure out how to grow outside of china and asia, particularly in the u.s. it makes sense that they are buying pieces, that when you add up all the pieces, it is part of apple, amazon, google. they are assembling a collection of pieces through investments that they may put together one day, or at least understand what's going on in the market,

and then decide how to participate more successfully. aboute is my question their investments. one of the things we see across chinese industry are companies in china, homegrown companies usually, blessed by the chinese government to operate in china, and they get an advantage. cape the chinese government apple at arms length, now growing a little, they are keeping google and facebook and twitter out to some degree. likerown companies , across thebo spectrum, are allowed to operate. it alibaba makes an investment in something like snapchat, does that mean that snapchat becomes a company blessed by the company in china and is therefore the only messaging app allowed to grow in this market and becomes worth more by virtue of the alibaba investment?

>> that's an excellent point. in some cases, that is likely the scenario. look who ali baba is modeling themselves after, softbank. when they made all of those investments in the u.s. many years ago in the late 1990's, yahoo!, e*trade, they were the gateway to japan and asia. that is how yahoo! japan got so big. , if alibaba were to make an investment in a media company, which i doubt they would do, that those companies could be successful in china. there are some things that china will not allow to happen. i ensure sure part of their argument with people is we have the connections and distribution, we can ring you into asia. i'm certain that is a large part of the dialogue going on. >> is it crazy to think that alibaba could be in a position, after its ipo, to buy yahoo!? >> it is in that position now.

i believe it's -- if it is going to be a transaction, it is more likely to be softbank because they have more of an interest in owning yahoo! to get back a greater percentage of ownership babahoo! japan, van ali does in buying the rest of the shares. i think that ship has sailed. public, theba goes story will be more interesting. ceo, you were recently acquisition by an online tearing business. how do you feel about players like alibaba? are they in your mind as you think about the kind of investment that you may need to make, maybe move faster on? space.re on education we do not even think we are in the major leagues get. this space is just adding huge. billions are being invested in it. i doubt alibaba will think about

the education space in the u.s. given all of the regulatory it does change the way that people think about valuation. the difficulty has always been when you are public, the private valuations are higher. when companies make big investments at high numbers, it makes it difficult for public companies to buy private companies. all of this affects the landscape, but from our standpoint, we think the education market is huge. we have 7000 tutors on the network. it is like uber for tutors. we think that will be a massive market. everything that happens affects the ecosystem but i don't think ali baba will focus on education. i wonder if the changes going on in the for-profit education space, particularly around company like corinthian colleges and others, which are being forced to change and get rid of

some operations, whether that has any impact on your potential growth plans? >> yes, and that's a great question. so many people started to go to the for-profit colleges. that name should tell you something. ofthat they will spend 30% their revenue on marketing and not education. >> and they claim to have the lowest tuitions but students that go to those schools have the highest percentage of student debt. it is something the government should have looked at a while ago. i am grateful they finally are. what it will do is move people back more into the mainstream. most people do not know the schools, we all know their name, there are thousands of online degrees you can get from these schools already. it will push more people to online, less to for-profit, more to the brand names, and that is

healthier. but ultimately over the next 10 years, think about the netflix model. the more streams people can use, the more they will consume content. the more they consume content, the more they will consume education content. whether it is online or off-line, real-time, video-based, it should all expand people's opportunity to learn, but the for-profits have done so much damage, it is about getting past that. >> lots of opportunities for you and companies like alibaba. when most people think of someone at alibaba, they still think of jack ma. shift,e have had a ceo does that mean that they should continue their investments in the u.s., but that has changed the strategy for the company overall? >> i think the strategy will have to change once they get outside of china. they recently invested in an

amazing gaming company, a fantastic investment. but you would never see jack pay attention to games in china. he thought they were bad for young chinese kids. you will see an evolution of the strategy, country by country, which is something that american companies have had to learn as they go outside of the u.s. i do think jack will loom large over the entire vision of the company, the same way that reid hoffman does here as chairman of linkedin. jeff does a phenomenal job, but these founders, their personality and presence remains, even if they do not run the day-to-day operation. >> always great insight, happy friday. ory, enjoy new york. up next, the battle to build tesla's giga factory. where it could be built and how

it could have a huge impact on tesla's business.

>> this is "bloomberg west." i am jon erlichman. tesla has broken ground at one of its possible locations for its gigafactory, but there are other sites still competing. for more on the story, we go to cory johnson and alix steel in new york. >> the news of the gigafactory discussed in the conference call yesterday, reporting in the second quarter. they started out with a weird sentence. they said they had broken ground at a location that could be the site of a factory. breaking ground at a place that

is not yet determined to be the site of a factory? do they have the capacity to build enough cars, can they get battery capacity if they do not have their own factory, but is there enough lithium capacity? >> lithium is used in a lot of stuff, like your batteries in your computers, but is also used in medication. it is also used to make your air conditioner quiet. it is pretty much used on everything and that's part of the issue. if you look at the supply and demand dynamics, right now we are ok. demand is around 150,000 tons. reduction is about 200,000 tons. you can see a seven percent annual growth for demand, so we would not have as much lithium as the project shows right now. see straight

supplies and rising demand, there gets to be a problem. of prices, you cannot hedge it or buy it forward. you are buying it between you and your supplier and it's a unique agreement. obviously, prices are rising because of it. there is 13 tons of lithium in the ground -- >> for the non-commodity geeks -- >> are there others? mining, they measure what is known to be there, what might be there. >> in terms of the actual reserves they know is there, 13 million tons. so there is enough out there but it takes quite a long time to get it out. a few projects, onstream. it takes about a year and a half to two years to get the lithium

out of brine, which is salty water. it for aeeds to sit on few years and then you have to add a lot of stuff to it and then you pounded into what winds up looking like cocaine. >> are there some uses for lithium that we do not see coming? you mentioned ceramics. that is a quarter of the usage but those product are not worth using lithium for. are there other substitutes? >> i am sure that you could. in the same way that lithium has replace nickel with batteries. that coke bottle that you are drinking, that has lithium in it. >> so from coke to coke. the other thing i see about the risk that tesla could be taking by committing to this massive buildup of this gigafactory --

which means, of course, more. >> more than one billion cells is what they will make. >> committing over the long-term to this particular technology which is somewhat new to vehicles. tesla has had some success. is this going to be the technology of the future? if they commit to this, is lithium batteries what will power electric cars in the future? >> if they can get the price down, and that's the key. they want to make these batteries at about $200 per kilowatt hour. the cheaper it is, the bigger the battery can be, the more energy you can put in there and the longer you can drive on one charge, and the price stays the same. it helps their margins and you as the consumer. that is the goal. to reiterate, their goal is to build a bigger factory so they can lower the price of lithium batteries. the problem is lithium prices

will only go up as keeping up with supply. that sounds like a messed up plan. the moreea is batteries they create, the more they can lower the price, which helps you. up sourcing the lithium and how much it costs is a different issue. there have been a lot of start up companies over the years because of the ev market coming into its own, trying lots of different technologies to get lithium. simple materials is hooking up with a geothermal plant that sucks up brine, they give it to them, and they get the lithium before they injected back into the earth. supposedly they can do that in 90 minutes as opposed to two years. way down the road. >> a volatile commodity and substance itself. thank you very much.

>> coming up on "bloomberg west ." in the world of bond investing, everyone knows bill gross. bondsns know less about and more about beats. what he is trying to do in the music business. ♪

>> welcome back to "bloomberg west." bill gross is one of the best-known names in the bond business but his son nick knows more about the music industry.

he is making some investments tied to the music industry. i recently caught up with him to find out what he's up to. 25-year-old nick gross loves drums. that is an 18 inch tom. that is the crazy one. been driving has since the age of five, is the son of bill gross. >> i cannot tell you what a bond is, to be honest. it is a coupon -- i will not even get into it. >> he shows us around his studio in hollywood. his dad has also seen it. >> he said it was intense, do you know how to operate it? and his brother are pursuing creative paths. >> my brother is a photographer, my sister is into the arts. i am doing what i'm doing.

he has always supported us. >> that is not to say that the son of a famous father doesn't have business ambitions. >> i put pressure on myself to do well, as he has done. >> beyond his rock dan, open air stereo, he is a producer. and his fledgling music company, strz enterprises, is helping artists and managers grow their band. world, in thec production world, you have to be ahead of the curve. >> he is also investing in businesses that could shed on where the music industry is headed. or 12ave invested in 10 different things all on the social side, data. he has come to every open air stereo show. he has supported this whole thing for so long and never pushed bonds or stocks. >> is your dad musically inclined?

>> very. he said that if it were up to him, he would take this career over his career any day. huge rolling stones fan, the beatles. in his office, he jams out and he loves it. i think he is happy that he was able to pass that down. >> he can drum. the fcc is not happy with time warner cable and it all comes down to dodgers fans not being able to watch the games on tv. we break down the fcc baseball brawl. ♪ it is 26 minutes past the hour which means bloomberg tv is on the markets. let's check out where stocks are moving. off the lows of the session.

s&p on track for its worst week since 2012. a couple of stocks in focus. procter and gamble announcing fourth-quarter earnings that beat estimates as they cut expenses. that is the latest update, now back to bwest. ♪

>> you are watching "bloomberg where we focus on innovation, technology, and the future of business. i'm jon erlichman. the possible merger between time warner and comcast has resulted in the block out of l.a. dodger games. congressional members have sent a letter saying that they were troubled by the effects the standup is having. more than a dozen members of congress from the l.a. area have written letters urging the company to end their feud. for more on the story we are ofned by a former president

the texas rangers, now with the university of texas at austin. back from new york is cory johnson. this mightme people, seem like a regional story but it is now definitely getting national attention. what is the back story, how did we get to this point? fees have just escalated. outside of everyone california thinks there must be something wrong with the people in l.a. who keep driving up the price of tv rights between the clippers and the dodgers, but this is a national story because the price of tv, cable, satellite has gone through the roof. it is tremendously funding all of the sports weeks. leagues that were very unhealthy very healthy across-the-board. thes an integral part of

major leagues sports story in the u.s. function of the technological innovation of timeshifting where people are soording everything on tv, sports is literally the only thing where people have to watch the commercials? >> that is probably part of it, but my gut tells me, as ratings decline and as viewership declines on almost every channel on cable -- you know the channels keep multiplying. as viewership declines, the only thing that remains a constant is sports programming. there will always be a core group of people watching sports, especially major league sports, especially in a town like l.a. sports rights become tremendously important as cable operators and channels tried to keep the interest of the viewers. >> even though you have had this

arement that live sports incredibly valuable, the one thing that holds up, in this particular case, you have a bunch of pay tv operators who cox,aying, directv, dish, they are holding firm. what message does that send? >> you do have to look at the l.a. market -- and last year, the average l.a. dodgers game -- i might be off by a few -- but around 150,000 viewers per game. think about that. about 150,000 out of around 4 million viewers in the l.a. area. that is under five percent of the viewers watching dodgers games even though they are perceived to be very valuable. so the problem here is that time warner went out on a limb, way

out, to pay $8.3 billion over 25 dodgers, betting that it could pass on a fairly substantial charge to the cable and satellite operators in hopes that they would pay it. this is by far the biggest that any station, channel owner has gone to for the rights. this is a difficult one. even their fellow operators are saying enough. i think part of the issue, as well, they are having to deal with one of their competitors, time warner, so that does not help the process either. thee have certainly seen same thing with college sports. as a giants fan, i am always glad to see the dodgers lose, but with college, especially seen a changeve

in the revenues from television. how do the regional and college , your network, others, how are they changing the game? ut signed ups ago, to do the longhorns network. it almost caused the demise of the big 12. it changed a lot of the dynamics, certainly in college football. you have teams like texas and missouri disappear from the big to the sec,ver thinking they better get there now. it sent a big shock through college football, and frankly, while there is some stability , as every major conference has put together their own tv deal, there is more to come, more shifting, a smaller group of teams that will be able to

compete for a real national championship in college football, because the money will be concentrated in probably the top 50. >> before we go, in terms of this dodgers dispute getting settled, everybody involved seems to be on board with the idea of a mediator getting involved. comcast looking to acquire time warner and get the link -- regulatory approval on the deal. do you think that transaction will ultimately force time warner cable to get this resolved? >> i don't think so. there are a lot of heavyweights of look at who is involved in this. you have united states government aside, i guess that is big enough. but you have comcast and time warner that are merging. you have at&t and directv that are trying to merge. they are four of the top providers of television content

to viewers around the united states. of theke up a majority operators that provides service to subscribers around the united so that for you are fighting here. a few ofyou layer in the other medium-sized operators on the west coast fighting about this, and all of a sudden you have almost everyone in the cable industry, all of them fairly large companies, all of them having an interest in this. i do not in this alone changes that deal. i think it will be talked about, they do not want bad pr, but i don't think it changes the deal. get the we can broadcast rights for these board room meetings. johnson,er, cory joining us from new york. billions of dollars at silicon beach. we look at what snapchat's

skyhigh valuations could mean for the l.a. tech scene. ♪

>> welcome back to "bloomberg west." i'm jon erlichman. on alibabae reported investing in snap chat. it is the standout of the l.a. tech scene. for more on the l.a. startup scene, i am joined by the founder of plus capital, also the cofounder of the startup accelerator launchpad l.a. how does this compare to what you usually see with startups in l.a.? >> the valuation is definitely a new bar being set for los angeles. it is really amazing to see only a few weeks ago, maker studio sold for half $1 billion, and that was considered one of the best exits in a decade.

and then you had oculus. it is important to cds these outsize returns to make venture capital work, so it's really important for los angeles. thehe stats suggest financing in the pure volume of deals, transactions, has been going up in the past few years. i think roughly a hundred deals or so in 2009, tripled last year. our others in a position to follow the snapchat lead? in theteresting evolution of los angeles, if you look from 2009 2 2014, that was a time of education and organization. once they learn the playbook of venture capital, we live in a town of storytellers. los angeles is one of the best places in the world to tell a narrative. what you are seeing now is entrepreneurs getting money and try to execute. what will happen next is a lot

of them will fail, and that's ok. sell for $30will million, $50 million, and what is important about not chat -- snapchat, what was a $200 million exit a year ago and everyone celebrating that, i was intently disco wednesday and then entre manure walked over and he was almost apologetic that he had sold his company for a couple hundred million dollars and moved on because, in the with $30 million, the person would get rich but the venture capital does not see their return. so what you see in this next chapter are people ready to go the distance and building venture companies that have large multibillion-dollar returns. i think that will change l.a. forever. >> we do not know really what the business of snapchat will be. they are more focused on growing their business potential.

hypothetically, if that business plan fills out, what could that mean for the startup scene? , a trulye capital large company focuses on unit growth before commoditization. people bashed facebook for not having enough revenue, and then twitter. both of those companies have done incredibly well. i think you will find snapchat falling into that communications and media bucket where you see native advertising specifically with brands. i'm not really worried about their advertising model as long as they focus on continuing to dominate in the space and getting more users and more engagement. they are teaching a lesson to other entrepreneurs that it is not just about flipping the company and making money but about truly changing the world and building large-scale companies that others have to emulate. i think that is the biggest lesson for los angeles.

maker studios.d disney acquired the business. there are all of these networks of youtube creators and stars popping up and being acquired. where are the biggest investments happening in l.a. right now? >> media companies are at our back door so you have these networks like maker, full screen , they are the first ones to get the attention. but right behind it you have style hall which has a billion views a month. other vertical networks as well that are truly the definition of what could potentially be next-generation cable networks. it follows the model of 20 years ago. that is getting big focus in los angeles. the question is, are they going to sell for a couple hundred million or will they build multimillion dollar companies out of it? that is where the jury is still out with media companies.

even fox is worth less than google or apple. tech company versus media company valuations is the interesting question right now but it's definitely the focus in los angeles, can you build next-generation media companies out of these youtube networks? i think you can. >> thanks, an interesting conversation. coming up, amazon betting big on india. but can they beat out indian commerce giants? ♪

>> welcome back to "bloomberg west." i'm jon erlichman. big bet onaking a india. the e-commerce giant recently announced plans to invest $2 billion into its indian operations. it comes hours after an indian rival received a billion dollars in funding led by a group led by

tiger global management. how smart is this push into india? cory johnson is in new york. also with us is the vp of e-business and channel strategy at forrester research. clearly there is an e-commerce landgrab in india right now. how high are the stakes? is absolutely a bubble. indian e-commerce market is tiny, smaller than even the number of sectors in the u.s. probably no more than $5 billion translate rupees into u.s. dollars. a $2 billion investment added to another billion seems like a lot somethinglowing into that is really not that big. i question the sanity here, to be honest. >> there are a lot of people in india. people be those

online eventually, doesn't amazon want to be there when that happens? is where i am interested to see what exactly this investment could go toward. is it going to go to logistics, acquiring other companies? is it going to go to influencing government officials? where is this money going and what value does it ultimately provide? china also has a billion people and china is much more further along in e-commerce. it is a market that is nearly $300 billion from an e-commerce standpoint alone, versus india, --re even the middle class, a number of statistics, even the level of the average income of the average chinese citizen versus the average indian middle class citizen, a huge cap. india is just not where china is. i do not think that is necessarily a fair comparison.

in addition, amazon has had a lot of challenges internationally. there are only three market that comprise the bulk of their international revenue, japan, the u.k., and germany. of that 80% coming from those three markets, that share of amazon's revenue has been declining globally. they try to make investments in countries like china. they have a is to be chin centers there. their revenue distribution center there is lower than anyone else in the world. they said they would invest in brazil a while ago and really brazil has a lot of the same protectionist issue that india has, really the only play they have had is to try to ndles there.ki they have not really gotten into the core retail business. company that some people may be less familiar with. we caught up with one of the

cofounders to find out what they were doing with the money. this allows us to take a long-term view on the e-commerce in india. we can take a strategy on what the ecosystem will look like in the future. and not just to be a part of the ecosystem but to shape the ecosystem. >> this is a company with big plans. i think they were quoted as saying they will be profitable when they get to 100 million customers, so they are thinking about big numbers. what is your take on the flipkart business? companies are in the best position to let them figure out what the best strategy is, let them make their mistakes, and lose money for as long as they need to, and then to swoop in and buy them. that is probably the best approach. there have been so many examples of foreign companies or american

companies trying to make plays into these bric countries that are highly protectionist. there are very few examples of success. investmentf internal -- what i should say is local domestic investment that is needed, the fact that there are huge terrace put on imported goods -- these are all obstacles that are really hard to overcome. on top of that, you have the size of the prize issue. there are other markets that it probably makes a lot more sense to continue investing in, rather than in these very nascent emerging markets, like india. >> good insight, thank you. bwest byte.

cory has more in new york. >> 0-1. microsoft is 0-1 in its appeal against the government, its desire to capture e-mails that microsoft is storing in dublin. in manhattan today upheld the federal magistrates decision requiring the court to turn over e-mails in a drug investigation. microsoft argued that these kinds of requests really hurt their business. to brad smith, the chief legal officer. sayen to what he had to about the effect of these things are having on the business and everyone else in technology. >> i personally believe it is a problem for all of us in the tech sector, a problem for us, other companies that are focused , in particular, on cloud services, or devices that connect to the cloud.

>> a big deal for all tech business. it in ibm, hp, all the big companies doing global business. >> it was a great interview that you and emily did. do we have a sense of what microsoft's next steps are? >> in this case, it seems they have flat-out lost. they have not said what they will do next. fundamentally, it is about a single drug case. the bigger implication is a big deal. some companies are responding by moving servers overseas. they thought that would help them, at least from the nsa. and then you have some problems with verizon and germany and spying. it is hurting business for a lot of companies and they are beginning to cry about it. bei believe they will appealing. always watch what you write in those e-mails. and remember, you can get the latest headlines on your phone,

tablet, bloomberg.com and bloomberg radio. thanks for joining us. ♪