>> live from pier three in san francisco, this is "bloomberg west." i am cory johnson. this is a check of the top headlines -- president obama will nominate former pentagon official aston carter is the next defense secretary. he would replace chuck hagel if confirmed. connecticut senator richard blumenthal talks about the selection. >> a very solid choice. he is the and ultimate professional. he knows the department of defense inside and out and is a former assistant secretary for

acquisitions and weapons development. professional who drills down on questions. i think he is a solid choice. confirmed, carter will be president's fourth defense secretary in six years. money tories to raise $40 billion, citigroup is becoming the latest major company to allow workers to take uber writes on business trips. the nation of vietnam is considering legalizing uber. sprint is raising the stakes in the wireless price-cutting wars starting this week. they are promising to cut the monthly bills of verizon and at&t customers and a half. tois offering gift cards cover early termination fees, the latest move by their ceo hoping to boost the fortunes of the struggling carrier.

google started signing of customers for its google fiber service in austin, texas. if they can get enough people interested, they will install the super internet service. they want to bring the service to nashville. back in the day, the apple ipod was king. remember this? ipod, 1000 songs in your pocket. again atdays are back least in court. apple is appearing in a decades old class-action suit over the ipod. is whether apple violated antitrust laws by forcing customers to use the ipod to play music downloaded only from itunes and nothing else blocking access to music from other services. it found liable, apple could be on the hook for $1 billion in damages. steve jobs will play a key role.

a video deposition from steve jobs taped month before he died will be key pieces of evidence as the court gets underway today. joining us now is robin feldman to talk about this. also michael carrier from rutgers law school. what is at stake in this case? in antitrust, the damages can be quite high. the questions are fairly simple. it's what you do with the girth that matters. -- was apple computing on merits or was the company trying to throw its weight around? >> michael, there is a lot of discussion about apple saying they want to controlled her own world of letting music on there. i remember when they announce you could not download other types of music on to their device. ? what would make that a legal -- what would make that illegal?

>> apple is trying to show that they have a reason for doing what they did. they wanted to make it harder to connectof ipod with itunes. there is for security reason and they wanted the best quality music. that will be crucial. if you have a good reason for doing what you are doing, that gets you a get out of jail free card. on the other hand, the plaintiffs will claim there is no good reason. the only reason that apple links the ipod with itunes was to purge rivals and increase prices. >> can they make the argument that everybody else's service made it confusing for users? >> it's a legitimate argument. they could say that the itunes store had the best quality music and if there were competitors, it would not be as good and it could crash the ipod. they could come up with stuff like that but they would have to

substantiate that. if it looks like there was no such good reason, they could be in more trouble. , the beauty is in the eye of the beholder if they claim it is beautiful, is that enough? you have a jury in front of you, the question is who can tell the story the jury believes? is wasstion for the jury apple trying to do the things consumers wanted? did they create greater security in greater products or were happening just a way to try to strangle competitors in the cradle? the key concern is technology that gets older and ipods were playing songs downloaded from other services. question is, with apple doing things legitimately or trying to strangle competitors? >> looming large in all things apple is steve jobs. the videotaped testimony of

steve jobs has got to be powerful. there was no better storyteller. of a sick steve jobs before his death going to change the jury and what has the judge done to keep that from happening? >> it is a complex question. the judge has said that apple -- the plaintiff don't get to introduce some sort of inflammatory material that he may have said as long as you don't open the door to talk about what a great visionary he was. you facee difficulties in antitrust litigation is that steve jobs, no matter what a visionary he was and no matter what aging as he was, he says some things in terms of apple striving to be the best and to quash competitors. looking at through the lens of an antitrust filter does not look so good. in the business world, when you say we will be the best that is one thing and when you say we will quash arrivals and it's tossed up on the screen in front of a jury in an antitrust trial,

that is something else. you mentioned the word visionary. the judge has said if you use willord visionary, it bring in the basket of all the things steve jobs has done that has been anti-competitive. there was the case to limit hiring apple him -- employees and book publishers may have conspired with apple to fix prices. of describingue steve jobs is a visionary could trigger some big changes in this trial. >> raising steve jobs from the dead is a risky strategy. the plaintiffs want to show that he was an aggressive businessman , determined to win at all costs. that could backfire reticular late for a jury in silicon valley. steve jobs still holds icon status here. one does not have to use the term visionary to remind people of the type of sympathy he brings to the area. >> this trial is being held in

oakland. technology is around us here in the bay area. is it reasonable to expect a to not hold steve jobs in unique regard after his passing? will remember the impressions they bring with them from what they heard before. steve jobs is a character larger-than-life. apple is also a company that has been in the news a lot. it has done things tremendously procompetitive and things that are anti-competitive. itself as one of the most exciting procompetitive moves that happened in recent times. it opened up a tremendous amount of competition in the music industry by allowing individuals to download songs individually and to buy them online. on the other hand, if you mentioned apple get into trouble the electronic book by trying to publishers,l with

the question will be which side of the divide was the company on this time? feldman, and michael carrier, thank you both. up but itay sales are might be slowing because of the deals spread out around thanksgiving. we will look at those numbers. we will try to make sense of this. you are watching "bloomberg west." ♪

>> i am cory johnson and this is "bloomberg west perko preliminary cyber monday results are in and sales were up. i estimate cyber monday sales rose 8.5%. smart phones and tablets accounted for 41.2% of total online traffic yesterday. how is online shopping changing? scottwingonow is who collected his own cyber monday data. we showed that cyber monday

we were up 16.7%. differencethe between thanksgiving and cyber monday and we were up 26% for those five days and saw things shift earlier. you have to look at the whole five days. sounds like a d.c. comics superhero team. it's interesting to watch the different superheroes rise in importance. numbers out of amazon showed that saturday had tremendous year-over-year growth and sunday as well. when you compare the different companies, amazon did not see much of a boost. >> you have to look at the five days. ebay outperformed on cyber monday. they help back a lot of their promotions for cyber monday. . amazon went early with their so they had a great saturday we are seeing a lot of things out of stock.

a lot of top toys and electronic items become hard to find on virtual shelves and real shelf so ebay benefits. with auction format, that's where many people go when they are desperate to find one specific item. >> that second market for that hot item -- i'm glad i don't know what those are. i was struck by some of the numbers that showed as different results. and youtheir numbers had numbers that were dramatically different. talk to me about the discrepancy which is not small. ibm data is from a company called core metrics. they are just looking at clicks in the kind of data. they are on a couple of hundred

retailer websites and we have over 2700 customers and we measure the transactions that go to our software. we're not taking a survey to extrapolate to the broader internet. we're looking at our data and reducing store sales reports are our data is not diluted by any customers we gain or lose. we think that is the best approach. is we help retailers by traffic they drive to their site and do search comparisons and look at what's happening at ebay and amazon which is unique. >> let's talk about how people shop. writing in an airport shuttle buying a shirt from a small retailer in texas. manycurred to me that people are probably shopping tablets and smartphones in bigger numbers this year. your numbers said 63% were still shopping pc's. how has that changed?

when we look at traffic throughout the year, about 40% of the folks were using mobile. we put the tablet and smartphone and mobile. on thanksgiving, it went up to about 50% which is the highest watermark we have seen in the u.s. in europe, they are ahead of us. certain retailers in the u.s. are well ahead of 50%. lowervenue is a little because mobile is lower than desktop. on thanksgiving, 35% of orders or sales were from mobile. cyber monday is becoming interesting. you see a movement for the same thing that happened to black friday where everyone is moving it to thanksgiving and before. everyone is moving cyber monday up. many retailers run cyber week deals. on the saturday after black friday, they launch their

traditional cyber monday deals. of cyberwhole trend monday even matter? we used to use broadband at work. the peak hours used to be 12-1 p.m. to 7:00:00 p.m. now we see it later in the evening. 10:00 p.m. was the peak eastern. that's where we saw a big chunk of cyber monday sales this year. work anymorely for and largely the motions are driving it. it's almost like after work is when people are doing their cyber monday shopping. >> the death of cyber monday makes me feel so sad. thank you so much. the fall off from the massive hacking at sony pictures may be just getting started. the fbi is warning u.s. businesses to be on the lookout for destructive cyberattacks, that story and on "bloomberg west." ♪

this is "bloomberg west." the fbi is warning businesses that hackers have already used illicit software to launch a cyber attack in the united states. this comes following a breach at sony pictures that saw unreleased movies leak out on the internet. said the attacks are connected. how many other businesses should be concerned about this warning from the bureau? the vice president of research and boston. specifically, what makes us

think these attacks go beyond sony pictures? that thek investigations they have been carrying out suggest there is seenre that has been elsewhere. i would suspect they have that whoever is perpetrating these attacks is targeting other companies as well. it's very common to use malware to go after this and extract information that might be useful in attacks. hishingng word but these are attacks where they will see what they can find and look forholes insecurity and maybe exploit those? >> that's the typical way it goes. you are not that far off when attacks.hishing the most common way to get malware onto websites is to send

e-mails to people to full them on clicking on attachments. sometimes they will go further and do a spear phishing attack which targets high-value people within a company. -- to getto try them them to install malware. once that malware is installed. , there is destructive malware which is what the fbi is warning malware which destroys all the information on the hard drive and makes the machine inoperable. it simply deletes everything it finds. there is spyware that tries to observe what the user is doing and capture making keystrokes or files. and differentt types of malware. that theis speculation james franco/seth rogen movie has them as leaders of a plot to assassinate the leader of north korea.

that theynotion brought north korea's hackers to attack them, the fbi is warning that maybe this is not the case and this could be a broader fishing expedition -- exposition. what do you think? this, should the world be afraid of seth rogen? >> it depends on how you want to look at that one. story that there is a movie about this so it must be north korea. in truth, i don't think there has been specific information that has come out yet that has tied them to that. generally speaking, all companies are being targeted. anybody with valuable information, sensitive information, cardholder information, all the breaches we have seen, make most large companies a very lucrative

target for attackers. it's not unreasonable to think it would go beyond sony. >> i'm still scared of james franco. thank you very much. out.g up, sting speaks he is waging a war against spotify we will talk about the new threat to the music industry next. ♪ >> bloomberg tv is "on the markets." rally across the board but not huge. energy east trucks ironically are leading gains even though oil is lower. data on manufacturing in the new york area that came in better than estimated. movers,al semiconductors are surging after

the company announced it was chipmaker stanchion for 1.6 billion dollars in stock and created a company that supplies chips to products in cars and electronics. we will have more later. ♪

>> you are watching "bloomberg west." i am cory johnson. it came of age at a time when there was no such thing as itunes and spotify and became one of the world's best selling artists, sting. sting still hasn't millions of potential revenue at stake in streaming. betty liu set down with the 16 time grammy winner and asked him where he stands on the changing music business model. >> the model is changing obviously and i don't think the model we have at the moment is necessarily the one that will be there in 5-10 years.

we need something with a little bit more equity for musicians. musicians need to be paid for their work. it's fine for me. >> you have made your money. >> i am have made my money and i am well-off. those beginning their career, the idea of making a living from this business is tough and increasingly so. whatever model is created needs to be equitable. the streaming model is a good one but they also need to be paid. >> you are on streaming services. in some ways you support these models? >> i think they are evolving. i was interested in the taylor swift stand. i thought it was a brave stand and she also brought it into public debate. it was good and people me to talk about this. what is good for music? music is important to our society. it must not die out. it is a vibrant part of society.

i thought it was good to get the debate out. whether she goes back to spotify or not is up to her. to raise the debate is a good move. >> when that happened, that created some seismic changes. >> some people have no idea there is any issue. but musicians need to be paid. >> i would hear from people who said why should artists feel they have any rights to be making tons of money like they have in the past? >> not tons and tons of money, it's making a living. in this industry, you can make it killing but it's hard to make a living. it needs to be more equitable. do you think mark artists should push back like taylor swift? >> i think the streaming companies have gotten the idea and they are working as best they can, i suppose, to make it better.

it's evil all the end every day is different. i am intrigued by where it is going. i'm glad i am starting out in the music industry now. that would be difficult. >> would you be able to make as much money as you have if you started out today? about i have no guilt making extravagant amounts of money. i did that at the time. but i worked hard for it. i'm still working hard. i enjoyed it. >> you are still taking risks. >> >> yes. >>what do you think of the new artists today? you have made comments about justin bieber. >> i feel sad sometimes when people leave school and they have a hit on "x factor" and then they get involved in this crazy world without any kind of thing to compare it to. i don't know how you stay sane in that. the pressures are enormous. unless you have had some grounding in real life, it must

be very difficult to survive. should the music industry be more responsible towards that? is there anything that can be done? >> you cannot entirely blame the music industry. the media is responsible and society generally. people in these positions that are difficult to sustain. person ande a young you suddenly become famous and successful, you think you're entitled to that forever. entitlement doesn't help. >> you don't let that get to your head? >> no, because i had a real-life before and i may not be possible in this era. i'm glad of my time. >> that was a former schoolteacher, sting. for more on the changing music model, paul sweeney joins me from new york. he has done work in the music industry. with streaming industry, there

has been a big change with different artists fighting arenst and suddenly they fighting against spotify and their increasingly dominant model. what do you think? >> the music business once again is changing and it's really going from a business where consumers actually own content to where they just rent it. longer are people buying albums. we have known that for over a decade. at the apple results, they talk about how their itunes sales were down last quarter. people are actually renting music and streaming music and i think the artists are saying this is a bigger part of the business and we need to make sure we get paid adequately for our content on these services. as sting phrased it, i'm a more equitable pricing policy is what i think a lot of these artists like taylor swift are pushing for. >> it's interesting that there has always been a battle within

the music industry of the songwriters versus the performers and who will get the most money. you can make a killing but you cannot make a living said sting. has that balance of power change in the world of streaming? >> it has. company's live nation, the largest concert promoter in the u.s. is of the stories they tell that for performers, it's very difficult to make a living producing content where the performers really make their money is on live events. that's why the concert business remains a vibrant business in the music sector. it's really a challenge as consumers change the way they consume music from owning lots and lots of music and building libraries of music to simply renting it on streaming services and it makes it difficult for

the artist throughout the food chain to get paid. >> it was great hearing that interview with sting. garth brooks is another supersmart guy has been talking about this lately. he had an interesting tweet -- "songwriters are hurting and i applaud ms. swift and everyone for standing up for the songwriters." continues to say they will find some way to lower their cost by getting ascap and the mi to lower their cost of providing music to pandora. >> what you've got is a very classic standoff between the content creators, the talent, the artist's, and the big media companies come in this case the streaming companies. one of the biggest costs in streaming is the royalty payments you pay for the content for the music.

we have sting calling for higher rates and yet the streaming services are really pushing to lower the rates or to keep it cap on the rates they are paying. >> paul sweeney, thank you very much. startups may be tempted on not going it alone but a new model for venture capitalist might offer a longer runway for sustainability for startups. we will talk about that next on "bloomberg west." ♪

i am cory johnson and this is "bloomberg west." how can founders to the rent while growing startups? there is a solution to this big problem. there is a firm that is a new model combining pure mentoring with staying afloat. great to see you. tell me about how this idea came about. >> i was having breakfast with and he was telling me about his company he was building and some of the issues he was having building it. because i had for startups and i was feeling some of the pain he was having. being a professional and trying to grow a company quickly is

stressful and the stress is equally big on the personal side. to help a better way founders growing these very fast-moving companies and not only think about how to do that better but also solve some of the personal issues that put stress on them and distracting from building the business to its full potential? abouthink we are talking founders who have founded many companies and of done this a few times but the financial stress on the families on an individual when you've got this business in his early days will lose a lot of money. >> the other thing is these companies are growing faster and using less money than before. as a result, they are staying private longer. what used to be four or five years, you are looking at the 10-12 years for these companies staying private >> so after long time. the big payout than is further out for these founders. what kind of companies are you trying to identify? >> we wanted to focus on companies that have evidence

proof of amazing product. just onre focused companies that had similar issues, we could be way more helpful. >> these are some examples -- what do these company's have in common? it breakaway growth when a company has a minimum of $40 million in minimum growing at 40% per year and 40% gross profits. line at 40% is probably not profitable. exactly, these are category leaders. $40 million in revenue it seems would have a lot of choices for another round of fund raising. >> they do but the problem we are fun -- solving is not with a company needs for many times these companies are profitable for the cash flow is the tip.

the real issue is they've got people who have been working their tails off for five or seven years that have student loans they need to pay and they are trying to buy their first home in the bay area and have other issues built up over 5-7 years. we like to think about it -- an approach to buying the private shares while they are still private? of a brokennd model. it does not really a line with the company. these reallyof amazing companies is like running a 26 mile marathon. we are the water station at mile 20 12 if a peptalk and learning and a little bit of a boost to help these ceos. are fightingthey for his liquidation preferences, how does that change? buying company shares put you in the back of the >> line. it does not matter to us. we are focused on his breakaway

growth companies. by definition, there is a lot of enterprise value that is built up in the business by the time we are intersecting. we are trying to do things that work naturally with investors and the company and the founding team. >> you don't demand those kind of liquid options? >> that's right. it's a great way to solve the problem. is andin every third have been on the board and been on the founding team and understand the company issues for you to do something unnatural and demand things of these companies that are clearly breaking away does not make sense. a great example is what we did for kabam. kevin said we are seven years into this and i think we should stay private for another couple of years. my team has been working hard, can you help me? they wanted more liquidity with the employees. there are a lot of interesting issues there.

it's a complicated problem. thank you very much. line" is coming up next and mark crumpton is in new york with a preview. new york consumers and auto sales finished higher than expected. what is driving consumers into the showrooms and how long will the good times roll? james albertine covers the automotive industry for steeple equity research animal joint me from washington. i will see you in a few moments. >> can't wait for that. are fighting to attract consumers during the holiday season and are battling to get packages to your doorstep the fastest print we talk about how companies are turning to tech to win the shipping wars next. ♪

>> how our e-commerce companies turning to technology to get packages closer and faster to your door? we help businesses ship like amazon so we help them easily integrate the carried -- the carriers like fedex and ups and all the major carriers to their existing infrastructure so they can have a scalable shipping and logistics infrastructure. this is part of ebay that has the same services but of also incorporated warehouses for online retailers. how is what you do different? it's similar but we might be the next generation of that. >> we have client libraries in major languages and can tell any

companies and help them get integrated with their shipping integrators as quickly as possible. >> this is a software solution so how big is your business? >> we ship millions of packages each month and have hundreds of customers and those customers range in size from hundreds of thousands of packages per month down to hobbyists. it is customers want to have dynamic shipping integration. we set them up with whatever carriers they need from day one and they can build on top of that like tracking updates to customers and insurance and address verification. all the services you need from the carriers. >> let's talk about what is happening with cyber monday. we are hearing about cyber week, not cyber monday. is this cyber monday substantially different than the past couple of years? to up tod it was up 7% 30% over last year. online retailers are trying to

push more into this week. they are trying to extend it past monday and the carriers are trying to push retailers to ship earlier. if you get your orders and early this become you don't have to rush during christmas. it's a strategy from both of them trying to get the orders in earlier so they get more successful deliveries. >> i spent yesterday at an amazon fulfillment center. i watched them use robots. it was fascinating and they crammed 70% more stuff into this building. if you were a target or walmart and you looked at this, these guys will have more capacity at their warehouses, how can we compete? is amazon becoming the standard of the world? >> i think drones are cooler. robots are cool but --

>> this stuff is happening right now. thehat's a big part of reason that walmart is still running their online operations in a loss. record day on cyber monday but it's very expensive and amazon keeps setting the bar higher. the rest of the market is struggling to keep up. >> so it's really amazon that is driving this. >> it is but you cannot get everything on amazon. thee is a huge portion of market, 75% of the market, that will not sell on amazon and they do their own fulfillment. the battle is getting the other companies up to amazon standards. >> maybe you offer the opportunities for small and local businesses that have to compete in some way to at least be able to be in the fight >>. absolutely. >> fascinating stuff. the bwest byte is one number which tells us a whole light. -- tells us a whole light.

desolate tells a whole lot. >> the number is 2015. that is the year that so-called internet pirate kim.com will bring his internet party to the u.s.. he said today in a tweet -- >> does this involve a disco ball or is this political? >> it will stir things up and he says he will be hillary's worst nightmare in 2015. here is a guy who tried to do this in new zealand and did not get any seats in parliament and the september election. he has not been that effective so far area he also tweeted to this -- he said he will help with the public relations area he has hundreds of thousands of twitter followers but he -- but the u.s.

is trying to make him a flight risk. they want to keep them out of the country so i don't know how this will work. dotdom hasnds likeim more to do. is this serious? >> he will certainly put his money behind politics and has donated more than $2 million of his own money in new zealand. he says this will be an american run operation. be a huget plan to part of it except for the engine behind it. >> a fool and his money are easily separated perhaps no more so than in politics. thank you for that ridiculous ki m dotcom story. you can get the latest headlines all the time. we will be back with more "bloomberg west" tomorrow. ♪

>> from bloomberg world headquarters in new york, i am mark crumpton, this is "bottom line. -- bottom line." the intersection of main street and economics. to our viewers here in the united states and those of you joining us around the world, welcome. we have full coverage of the stocks and stories making headlines on this tuesday. su keenan tells us why crude oil prices are dropping again after a one-day bounds. matt miller tells us how discounts helped gm, ford, and chrysler auto sales