>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. first a check of your bloomberg top headlines. boeing has been awarded a contract with the international space station. it could be worth as much as $4.2 billion. the spacex award could hit $2.6 billion dollars. a third company was shut out. the goal is for service to begin by 2017. adobe is hitting some tough spots as it transitions into a cloud-based company. sales dropped 46%.

-- sales dropped just 1%, profit dropped 46%. still, the photoshop maker says it ended the quarter up 22% from the previous quarter. and rackspace hosting has decided to remain an independent company after completing an independent review of its business. a promoted president taylor rose to ceo. shares are plunging in after-hours trading. first to our lead. netflix targets europe home hoping original content and its library of shows will convince europeans to fork over eight euros a month. they are expanding into six new countries this week including germany and france. reed hastings spoke to bloomberg last night at the launch party in paris. >> it is our biggest international launch ever.

we launched three years ago in the u.k. and a year ago in the netherlands. we are excited to be here in france and germany and what a reception. there has been so much excitement about netflix year. -- here. >> in europe, they face a number of rivals including amazon and free tv channels all stop -- channels. netflix announced a new original comedy series called "love." for more on all things netflix, i'm joined by the managing director of wedbush in los angeles. this is the biggest international launch ever for netflix but it's the most risky. how so? >> it's the biggest because the territories are expanding into about half the population of the u.s. this is a giant step for them and they've managed everywhere pretty well except japan. i'd think -- except for latin america. i think western europe is for

more like the u.s. than latin america, so i think they will have some success here and it's risky because culturally france and germany are a bit different from japan and the u.k. where they have had a ton of success. those countries are a lot more like us and the content translates quite well. i remember an article about how "seinfeld" failed in germany because the germans did not find it funny. netflix will have a challenge and they are probably up to it because it will resonate with the audience. they have some pretty smart people. they have succeeded elsewhere, so my expectation is they will ultimately succeed in france and germany. >> reed hastings tells us they are tailoring the product, or at least trying to. they are dubbing over some of their popular series and they

prefer that and are developing some original content geared toward a audience over there. take a look at what he had to say about that. >> we are doing both. we are licensing local content and developing local content and we are commissioning a series in french set in the political context and we have our original content here in france also. >> they've also got the rights to some of the most popular american tv series, which they actually don't have here in the united states. what does a french or german audience want to watch? >> one thing he did not mention was "house of cards" because netflix doesn't have the rights to that in france. it's one of the signs that they'd don't necessarily own any of its original. if you remember back to your childhood, there is a famous comedian named jerry lewis. his movies were immensely popular in france and none of us could figure out why. but french culture is a little different.

netflix's originals have been very good so far. he mentioned two of them -- "orange is the new black" is my favorite. i imagine they will develop three or four for the french market and three or four for the german market but that's not that many hours of programming. they will either thrive or fail based on their ability to take the series that works the best. some of the shows like big bang theory will resonate in western europe will stop i estimate -- western europe. my estimation is that netflix is going to do just fine. >> let's talk about how they will survive in the long term. we did ask about when the company will be profitable, and it's not anytime soon. >> it will be challenging to be profitable.

we have a lot of content and we keep getting more and more content. in the long term, if we go five or 10 years, we should be profitable. >> they have signed judd apatow to produce a new series. he is really expensive i imagine. >> i am famous for having downgraded netflix to a sell about three years ago. it was pretty clear to me that it would take them many years to be profitable in this international expansion. investors don't seem to care. it has concerned me for three years but hasn't concerned netflix investors ever. investors don't care if they are profitable. they're not going to be profitable for at least five years. i think investors just don't care. they expect netflix to dominate the globe and they probably will dominate the globe in terms of streaming service and be well positioned to raise prices, which is what they will have to do. it will slow their growth but they will be profitable once they do that. i think netflix is going to be a

very profitable company, just a slow growth company. investors seem to think they will be a high-growth and profitable company. i think those things are inconsistent. i doubt investors will actually see what they expect, but i have been wrong for three years and i prepared to be wrong for another 5-10. >> you have mentioned that "orange is the new black" is one of your favorite shows. we got caught up with one of the actors on the show. take a listen. >> what i love about netflix is the programming is so fresh. it feels edgy and as an audience member, you can watch it whenever you want. you can do whatever it is you want with it. i appreciate that freedom myself. >> of course, it is not just netflix that is giving viewers this kind of freedom.

you mentioned investors being sure that netflix will dominate. what about the competition? what are the biggest challenges coming for netflix down the pike? >> on the programming side, hbo is a formidable competitor. amazon is an upstart wannabe. they've got the balance sheet to pull this off as well. those two guys are going to hit up the cost of new content. that is what reid was talking about, signing new deals that ever increasing prices. content creators have a lot of options. you see edgier content on cable with shows like "walking dead" and "breaking bad." that is edgier than what we normally see on broadcast television. i think they're finding many bidders for their content. as netflix pays more, because there's a lot of competition for the content, i still think we win as consumers. we get a lot of great content

and we get it when we want it all stop that is valuable to a lot of people. >> "the americans" on fx is one of my favorites. great to have you. coming up, alibaba raises its ipo range from $66 to $68 a share. is it still a good deal for investors and what does it say about their valuation strategy? and we hear from tim cook about the role steve jobs played in getting him to join the company. you can watch us streaming on your phone, your tablet, and at bloomberg.com. ♪

>> i'm emily chang and this is "bloomberg west." a battle to control russia's was popular social network has ended. the stake owned by capital partners has been bought out for $1.5 billion. the two sides have agreed to drop all litigation. from one of russia's biggest tech companies to china's largest tech company -- just a few days to go until ali baba starts trading and what could become the largest ipo in history.

but with the company boosting its offering to $21.8 billion, is it still offering investors a better bang for their buck than some other options out there? how does it compare to other publicly traded chinese internet companies? what do you think of them raising the price? >> low end to low end, they have raised their price by 10%. that suggests demand. there is a significant amount of demand. you've got jack ma and his team going from institutional investor to institutional investor, having that conversation, and really talking to the complexities of this company. they like the story, there is demand, now ali baba is going to try to capitalize on that. >> much has been made of alibaba having a price to earnings ratio lower than its chinese competitors. what does that? -- what does that mean? is alibaba a better buy? >> it could be right now, but you have to get into the story and get comfortable with the governance around what jack ma is trying to do.

you've got a complex ownership structure and this yahoo! situation out there, but it is pretty much known what they will likely do with their shares. the biggest issue is you've got this amalgam of google, some amazon and some paypal in their and you have to get comfortable with what that is. that understanding is maybe depressing some of the expectations right now. >> you are saying people do not understand it. >> they may not understand it. how many people have the ability to sit down with jack ma and have the clout to sit down with him and understand the different governance structure and what this company is going forward. >> there is no clear parallel to american technology companies. it is amazon, google, and paypal thrown in there. there is no exact comparison. >> we have never seen one of

these before. it is big and doesn't look like any other fish we have seen. that makes me wonder about the consumer going forward. are they going to understand what they are buying and and -- and are they going to see and compare and there got what they -- in their gut what they see and are seeing with other companies out there? this stock, what could it potentially look like six months or a year out? >> we have asked you about the new iphone and they are not selling them in china yet. reports are they are delayed in china until next year. what you know about this? >> is a lot of speculation, but if you look at what is out there, it seems like it could be related to subsidies and the pullbacks in subsidies we have seen. it is going to be an expensive device, so there may be concern on the carriers part or the governments part on how much it's going to get subsidized. >> china mobile already started selling the phones. even though they weren't for say -- for sale. >> so the government stepped in. there is another issue here. which is the locals. they have been making way with beautiful designs and big screens which is what apple is showing up with, so is this a situation where the chinese companies are getting a little more runway in order to get some breathing room before the iphone hits the streets.

>> china has been a huge market for apple and its only getting bigger. could this hurt apple? >> i don't think so. apple will get their fair share of china. those people who have bought into the apple platform in china will get their product, they just might have to wait a little longer. >> thank you as always for stopping by. coming up, what does the future of apple design look like? we will hear from ceo, tim cook,

himself when we return. ♪

>> welcome back. germany's nationwide band on uber has been tossed out my frankfurt court. while they say the service violates the law, the ban was done under illegal procedures. uber is still operating in germany even with a previous ruling. the fcc will begin discussions today to consider expanding that -- net neutrality rules to mobile broadband. this is with the open internet rules proposed in may and received a record 3 million public comments. now regulators look to acquire

these rules for rwireless carriers as well. the co-author of "big bang disruption" joins me now from washington. you have been at the round tables all day today and you're going back after you speak with us. give us a window into how the discussion is going and what is actually happening in the room. >> chairman tom wheeler is sitting in the room taking notes. mostly, these are the kinds of discussions where they are briefing the staff, mostly going through some of the comments they filed. there is a lot of debate. we talked about the scope of the rules and the need for the rules, and they are talking

about the transparency rules. then we will be talking about mobile broadband. >> is the tide going in one direction or another? >> i would not say that. the bulk of the comments -- many were auto sent to various spam bots, but they really just told them to save the open internet. none of the experts are in favor of ending the open internet. the question is how the fcc does it and to what extent their rule should apply and to what extent does congress get involved and to what extent do we leave it to the market? >> should the rules cover mobile broadband? i mean, it makes sense if we are using the internet, should it matter? >> there's a difference. the last time around, the 2010 rules exempted mobile services from some of the rules. that is what the fcc is proposing to do in this 2014 version after the court through out -- threw out the 2010 rules. mobile is very different. the capacity of mobile networks is constrained by two key inputs -- one is spectrum and the other is towers and other infrastructure. those are the two inputs completely at the mercy of government to allow, and so far, since 2010, we've had a 700%

increase in mobile traffic, but the fcc has been unable to provide significant amount of new spectrum and local authorities are camping up their -- am paying up -- amping up their resistance to new towers and antennas and other new equipment that would give mobile operators the kind of flexibility wired operators have. >> what does this mean for me? what does it mean for companies like google and netflix? >> it shouldn't mean anything for you. presumably, these open internet rules didn't exist before 2010. the court threw them out before they went into effect. the rules didn't matter how particularly in terms of how it's happening and what services are offered. is a lot of competition for more consumers.

you see fierce competition among wireless carriers over service, terms and devices. for most consumers, particularly mobile consumers, these rules played no part in how the networks are being deployed and probably won't have much of an impact regardless of what the fcc does this time around. >> in terms of the timeline, how do you see this playing out? when is there going to be a decision? >> there is no official timeline. the fcc does not have to give one and they don't. these roundtables are going to continue this weekend throughout next month and then go into private mode where they will deliberate and go through the comments and the real ones as opposed to the fake ones. there will be a lot of negotiating among the five commissioners and they may come back later in the fall asking

more specific questions. they did that the last time around. if there are certain things in the record not clear enough to them, they will ultimately take a vote. if last time is any indication, it won't happen until the end of the year, maybe into 2015. >> i will let you get back to those roundtables in washington dc. thank you for taking the time to join us. does peter peter thiel hold the key to stop the next terror attack? we will talk to him about the highly secretive company he cofounded, next. >> it is 26 minutes after the hour which means bloomberg tv is on the markets. i'm olivia sterns. i will show you where stocks ended today's session. rising oil prices spurred around the in energy shares. also, news from china walls -- china's central bank. they started providing loans. the s&p ending the day just below 2000. ♪

>> you are watching "bloomberg west," where we focus on innovation, technology and the future of business. with president obama launching an offensive to take on the islamic state and terror threats rising, could technology be the key to stopping the next attack? peter thiel founded a company called palantir. i spoke to him about whether it could stop the next 9/11. do you think palantir could stop the next 9/11, or has it already? >> something like palantir is the key.

i don't think we are going to do it by projecting military force throughout the world. i think we will do it by cleverly uncovering these conspiracies before they come together. >> some have expressed concern that your client could use palantir to do evil things. do you worry about that? >> there is always a two edged part to these technologies. technologies are never intrinsically good. there's always the question of how they could be used and abused all stop i think there -- abused. i think there are a lot of checks in place. >> someone described it plugging into the matrix. >> one government agency that gave us a bunch of data -- during the trial, we discovered a terrorist plot they had not suspected and had to reclassify a lot of data. >> would you say palantir has helped thwart multiple terrorist plots? >> i suspect that is true. >> he talks about it in his brand-new book that's out today. you can hear more of my interview with peter thiel and see the interview in its entirety in october. i want to take a deeper look at the technology powering palantir.

the company disclosed it raised $50 million last week in its latest funding round. they are backed by the cia's investment division and customers include the defense department, fbi, army, marines, and air force. why are some of the biggest leaders in security partnering with palantir? alex more joins me in the studio. you were the very first client -- very first as the director of the company. what did you do? >> this was around 2004 and my two smartest friends were working on a secret project. i said i have to be involved in this and that ended up being palantir. what ended up happening that was unique is that peter thiel was

willing to work with smart young people. we saw that with facebook and i think that's what it was. just a call of the smartest people at stanford. >> what was the company then and what is it today? it has changed a lot. >> i think back then it was a typical silicon valley startup. we were all basically working in what was the basement of a hospital and it was hiring the smartest friends and beginning to crack the problem. a lot of our folks flying to d.c. every weekend flying back and it grew at a very fast rate. >> there is so much mystery and secrecy surrounding palantir.

why? >> i think part of that is protecting the initial customers. it's a very broad business and works with the government and large enterprise, but it was that and it was his idea that what we were working on is special and we don't want it to be replicated or cheapened or confused by larger companies that don't have the insight we had. >> it's basically using data on a massive scale to solve things like conspiracies and stop threats before they happen and even fight disease. when it comes to the terror part, there's a lot of fascination around it. how many terror threats has this company stopped? >> that would be fascinating to know. i'm not sure you can get that specific but i know routinely when i was there and now as the

company gets bigger, you have people from these groups coming in, general heads of division and the government saying we stopped a real event from happening. these types of attacks don't happen anymore or we have a handle on them. it's a unique level of confidence that did not exist in 2004 and 2005 when we started. >> do you agree with peter thiel that this could stop the next 9/11? >> i think that's a bold statement, but it gives us a better hand on understanding what's happening in the world, what the trends are, where do we need to focus our energy? at the end of the day, the public has a misconception of how much time and energy the government has. it's very contracted on all of these resources, so palantir helps them focus. >> where is the data coming from? what data is palantir mining? is the stuff we would not want them to see? >> this -- that's a very specific question depending on which customer it is. a lot of what palantir is doing is taking information from different databases and getting them into one interface. it is less about is their

specific new data but about getting it into an interface and getting an analyst to work on next play. >> what about the technology getting into the wrong hands? if it is powerful, can people use it to do bad things? >> i'm not sure that's much of a concern. i would love to know what that case study would be. >> you could say the bad things are what the nsa is doing. some people disagree with that. >> we could talk about edward snowden, but i think palantir is on the front of data auditing. i have an analyst that works on data and it's also tracked, so on able as a manager to say what are my analysts doing? if we had that, maybe we would not have the edward snowden problem and we would be able to understand how we are analyzing it. >> one of the things that is on

-- is controversial about peter is that he thinks ceos should not pay themselves too much. he thinks companies should pay employees in equity and i know palantir was once the top spot for stanford graduates, yet they have a salary cap much lower than other silicon valley startups. is palantir still attracting the best of brightest? >> i think so. if you get in, that's a sign you're a brilliant engineer. there is a self-selection there. they are filtering for people who want to work on really hard problems and believe in the mission. maybe by overpaying, you are bringing in a wider set of people that may or may not be your company culture. in the long-term, it's an edge for palantir. you know you are not getting the people chasing the short term but people who want to build long-term value.

>> palantir's very first employee, thank you for giving us a window into the early days. while companies like palantir help to counter terrorism, how do does a company like apple help with privacy and security? the answer from the man himself, tim cook, next. ♪

>> i'm emily chang and this is "bloomberg west." technology is playing a key role in fighting terrorism and maintaining national security, but revelations about the government and nsa knows about us has led to a public outcry. in part two of charlie rose's exclusive interview with apple ceo tim cook, cook talks about how apple is looking to maintain a balance of security, freedom and privacy with their customers.

take a listen. >> i think it is a tough balance and i don't think that the country or the government found the right balance. i think they aired too much on the collect everything side and the president and administration is committed to moving that pendulum back. however, you don't want -- it's probably not right to not do anything, so i think it is a careful line to walk. you want to make sure you are protecting the american people, but there is no reason to collect information on you. or 99.99% of other people. >> apple also put a strong focus on product design. take a listen to tim cook describing the future of design apple.

>> we are just not making product to sell. that does not get me up in the morning. i get up in the morning and many other people get up in the morning to change things. that is who we are as a company. we may change other things. we may become more open and participate in these things we have not done before, but what drives us are making great products that enrich people's lives. >> tim cook joined apple in 1998 from compaq computers. but according to cook, it was only after steve jobs fought hard to join the company. >> it was an interesting meeting. i had gotten a call several times from the search people had employed and i kept saying no. i was happy or thought i was. they were persistent. i finally thought i'm going to go take the meeting.

steve created the whole industry i'm in, i would love to meet him. so i'm going into the meeting just thinking i am going to meet him. all the sudden, he's talking about his strategy and his vision and what he was doing was going one hundred percent into consumer when everyone else in the industry had decided you couldn't make any money. they were headed to storage, servers and the enterprise. i always thought following the herd was not a good thing. it was a terrible thing to do. you are either going to lose big

or lose, but those are the two options. he was doing something totally different and he told me a little about the design, it have -- enough to get me really interested. he described to me what would later become the imac. the way he talked and the way the chemistry was in the room, it was just he and i and i could tell i could work with him and i looked at the problems apple had and i thought i can make a contribution here. working with him, this is the privilege of a lifetime. all of a sudden, i thought i'm doing it. i'm going for it. you hear this voice in your ear that says go west, young man. i was young at the time, but you come back and try to do the things people do with spreadsheets and none of it makes sense. it didn't make sense. and yet, my gut said go for it. i listened to my gut.

there was literally no one around me advising me to do it. >> the rest is history. you can watch the full interview on charlie rose tonight on live -- on bloomberg television at 8:00 p.m. and 10:00 p.m. eastern time. it's good to check on some of the other stories making headlines with mark crumpton in new york. him >> president obama will announce that the united states will deploy about 3000 troops to west africa to help fight the ebola outbreak. the troops will arrive at about two weeks and will build medical facilities, train workers, and educate residents. the plan may cost the u.s. more than a billion dollars. the government of french president francois hollande won a key vote that will allow the government to proceed with its economic plan. the president approval rating has plummeted to 13% as the country deals with a sluggish economy and high unemployment.

radisson hotels has suspended its sponsorship deal with the minnesota vikings after running back adrian peterson, already charged with hitting his four-year-old son with a tree branch was accused of hitting a second son. radisson is the first sponsor to take action following the accusations. what we will tell you about a new ebay resale program, next.

west." >> welcome back to "bloomberg west." i am emily chang. the new iphones come out on friday. should you sell your old phone? take a listen. >> ebay has always been recognized as a destination for consumer electronic enthusiast. we've got a great selection of top brand products. it's also the great place to sell your phone. ebay has initially had the best price for -- best price for consumers to sell their phone. we sell almost a hundred thousand cell phones a month and customers who sell their phones

on ebay can get anywhere from $100 to $300 more than they would get trade-in. we have a program running called ebay for the win. if you put your phone on sale on ebay and it doesn't sell for some reason, we will give you a $100 gift certificate. >> the carriers have their different offers. how does ebay compare? >> we are the best place to sell your phone in terms of maximizing your dollar. we have a simple selling flow and customers coming to ebay selling direct on our marketplace can make $100 to $300 more than you will get at a carrier today. when you combine that with the guarantee of selling your phone and take the price guidance, you've got the best offer out there. >> you say if it doesn't sell, you will give people $100? >> we have just launched this. it's called ebay for the win. now through october 24, if you list your phone on ebay and for some reason it does not sell, we will give you $100 gift certificate on ebay. >> i was online looking at my options through verizon and apple and the leasing programs. i have an iphone five. what can i get for this on ebay? >> sounds like it might be time to trade up. >> it's definitely time to trade

up. >> a 32 gig coming from a carrier like verizon, you're probably looking at anywhere from $250 to $400 depending on the condition of the phone. comparatively speaking, you are looking at making $100 to $200 more than you would make anywhere else.

>> it's not in the best condition. there are a few cracks, will you take it? >> absolutely. >> really? someone would buy this with cracks? >> absolutely they will. customers will take the phone -- and we have seen a 30% increase in the number of five -- number of 5s's selling. consumers are selling the phones, and there's a lot of demand for the phone -- somebody might take it and spend a couple of bucks to fix the glass and they've got themselves a brand-new phone. >> what about scams or fraud issues? how are you policing that? >> ebay has always taken trust in the marketplace very seriously. we've invested a big amount in detection systems and making sure we are aligned with agencies and our customer service groups to make sure customers are protected about this process. through those efforts, we've seen a reduction in fraud of almost 50%. we make sure that customers are having a fantastic experience and we stand behind it. ask and you say there are -- >> and you are saying there are already listings for the iphone 5s.

what kind of a spike have you seen so far since the new phones were revealed? >> absolutely. it has increased 30% to 50%. funny enough, there are customers selling that on their platform. that is where the supply of the phones is coming from. at the same time, for those looking for an iphone 6 who did not have time to wait in line, those phones are starting to appear on ebay as well. >> the iphone 6 plus is going for nearly $1300 on ebay. hope you ordered yours early. time now for the bwest byte where we talk about one number that tells a whole lot. we've got the numbers guy with us today -- i'm so excited because you give us all of these fancy numbers. i hope you got something good.

>> my number doesn't sound like it on the surface, but it is 5%. that is the percent of advertising spent that will be associated with wearables by 2020. >> this is what advertisers are going to? >> it will be associated with wearables by the year 2020. we think we will cross the 50% spot for mobile advertising. we think wearables will be one of the fast-growing application development platforms. but there's so much excitement about it, but when you get to the end, you are looking about -- looking at about a $13 billion opportunity associated with wearable advertising. a lot of interest, but we are not there yet. >> 5%. thank you for joining us and thank you all for watching. we will see you later. ♪

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