♪ >> live from pier three in san francisco, welcome to "bloomberg west" where we focus on innovation, technology, and the future of business. i'm worried johnson. greece is offering compromises ahead of an emergency meeting with creditors tomorrow. greece finance minister says the new government will implement devon the percent of the reforms already included in the current bailout agreement. german's finance minister wolfgang threw some cold water on optimism, saying the sides are still far apart. the creditors cannot negotiate something new area apple completed its first bond sale in

switzerland, and raised 1.2 5 billion swiss franc. apple taking advantage of record low borrowing costs across the country with bond yields headed to negative territory. apple has tapped into 39 billion since april of 2013. -- borrowed to pay for vivax and dividends $158 billion overseas cash pile. goldman sachs says it hired just 3% of the 267,000 people who apply for jobs that goldman sachs. the ceo called goldman sachs the employer of choice in the industry. the bank is breaking out numbers for fixed income trading with interest rate products generating 90 percent of the revenue in the past five years. space x is securing leasing rights, the first-ever landing pad at cape canaveral not a takeoff pad. companies like asus x, it says

it will transform the missile launching site and landing pads for rocket boosters. the agreement was for five years and now it is set to you -- prove it can land a rocket safely back on earth. a cool video. a second launch is scheduled for later today area to the league the white house is creating a new agency, and the mission is to stop cyber attacks and improve information sharing about those threats. the cyber threat intelligence information center will collect from various government -- government departments including homeland security and the justice department and the white house has zeroed in on cyber threats in a recent months following the hacking of sony pictures. will it work? joining us now via skype, the vice president and former director of the u.s. national counterterrorism center and also the crown straight chief security officer john henry with the fbi. let me ask you first, do we

really need yet another bureaucratic agency to look at the problem that has artie got a lot of bureaucratic agencies looking at it? class of he put another layer in that area, you're crating problems. if this was done as described today, specifically as a coordination of intelligence, i think there is value there. there are multiple centers now where there is a lot of coordination across intelligence agencies. the facts are in the details. the key is to see exactly how this is to be utilized, what the white house's goal is. >> as the story is described the president wanted to know over thanksgiving what was happening at sony and no one could tell him. there was no central place to get information area is that a real problem? >> i think it is. people are right to be dubious about the creation of a new layer and a new organization in washington to halt the broader problem. it will not.

i disagree little bit with my friend sean in that often, when you have the most organizations in government looking at a problem, you actually do need a coordinating agency. i think the center should not be viewed as something that will solve all the problems, but there is a need for knowing what the nsa is seeing, olivia geyer saint. that information can then be conveyed effectively back to the u.s. government. >> line not require companies to disclose when they have been hacked? if customer data of a certain level has been taken, copied, hacked, wouldn't that shine some light on it and just force those companies to do a little bit more to raise their game when they're fighting against hackers? let's you're absolutely right most of the cyber problem in my view will not be solved by the

government. it will be solved by the private sector. the private sector will have to continue to invest in technology and training and information sharing within the private sector and that can include public disclosure, disclosure to the government. this is much smaller. it is really trying to ensure the u.s. ever met is on the aim page so it can intelligently interact with the private sector. i do think disclosure within the bounds of how industries already are seriously regulated on the front, is appropriated -- appropriate. they then need protection from the government so they do not face liability for those disclosures. >> holding to the high standard once they have to disclose it. there is a compelling argument it seems to me, when the president said he did not have information he wanted to have on a thanks giving day. that is the story the white house is telling. does that approach the right place to do it and would that not work? >> i do agree with mike and i do

not think we disagree in this area. my concern is what we call another agent and, if that agency is expected to conduct operations that a lot of organizations conduct operations. if this is solely about collecting intelligence five visibility on one single point, i concur. in terms of the white house not the image to get the information, i find it hard to believe. i know we worked there when i was at the fbi. we had fbi, nsa and dod, the entire u.s. government that is involved in cyber, all sitting in one center together working on one problem. certainly, the mines are there and it is a matter of trying to coordinate and bring the intelligence to a logical conclusion so decision makers and leaders could make appropriate moves. >> i also wonder about the relationship with business and with companies whose information is getting out there. are there relationships out there with cio's of the

companies, companies who knew like sony? does the white house have best relationships there and does anyone in government have those relationships? >> that is the ideal, what i call intelligence sharing, not just information sharing. the u.s. government is collecting a whole host of data that would be of incredible value of -- if it could get in the hands of the cio's responsible for the companies that often does not happen because intelligence is collected in a classified format. i think that is one of the goals and when the president -- president speaks on friday, that will be one of the things he suggests. the classification level needs to come down to the companies are in a stronger position to identify who the adversaries are and detect them on their network here might just set it. they have got to develop better technology that allows detection on the networks so companies can better detect themselves. >> the president is coming to silicon valley on friday. but mike i wonder, the

companies and silicon valley have a very different relationship when it comes to private and data with this president and what has happened with the nsa the last president for that matter as well. what does he say in his messaging to the companies and silicon valley? >> you are right, there has been a strained experience between those companies, the government especially, after the snowden disclosures. i think that relationship has to be rebuilt, for the companies for them to have success internationally outside the united states and their business, and it has to be rebuilt for the united states because the u.s. government will continue to rely on the private sector for people and technology that the u.s. government also has to use. this is a possibility and an opening to rebuild that trust and again, we have to accept that there is no silver bullet to stopping the cyber problem.

we have put all of our wealth and information on network and many of those networks are vulnerable. this is going to be a combined effort, the u.s. government and the u.s. have a sector and individuals. it will be a long path. >> the former director of the national counterterrorism center. thank you very much. we appreciate your time. sex, violence, video games. the company behind grand theft auto hopes for another big hit. coming up, talking about the latest game, you've all. he hopes to get grand theft auto into china. that is next on "bloomberg west." ♪

click here is a check of your world news headlines. vladimir putin is cementing ties with the egyptian government area in egypt today presented

egypt's president with an ak-47 assault rifle. he does not come with flowers. a new defensive, the physician in a key eastern port city. facebook getting a boost in india citing a deal with reliance customers without -- charges without incurring data charges. the japanese camera maker canon is making its largest acquisition ever as it looks for growth outside the slowing camera business. canon is buying a swedish video system for $2.8 billion in cash. video surveillance equipment is used in casinos and shopping malls. take two interactive has built his is nice on franchises like grand theft auto and nba, but it

is now betting on a new first-person shooter game called "evolved" hitting humans and monsters, just like real life. playstation 4 and xbox one, rave reviews already. i sat down with the ceo to tell us what makes "evolved" unique and if it will be the next big thing. >> it is pretty unique in that you have an opportunity to either play as a monster or a team of four fighting the monster. as far as we know, that is novel . the game won best of show. as far as we know, it has not happened before in the same year. we have high hopes for it. we will know very soon. >> how do you make plans to launch such a thing and figure out what the scales will be when you do not know how the game will take off? >> it is true of every entertainment business. it is certainly true of the movie business where you spent your money and create a market budget. until the feature opens, you basically do not know.

we have more insight because we interact with retail and 810 to be very expert. our retailers really know the market and usually they can signal to us through their analysis about how the launch will look. it is unusual we would ship a product into the retailer and be disappointed with how it sold through, although it occasionally does happen. in this instance, the retailers are enthusiastic. it still remains to be seen and we never like to claim victory before the curse. -- before it occurs. >> i said i just not -- do not care about sex and violence in videogames. is that just morally bankrupt? >> i think you said it is right. you just want to know if it is there. it is incumbent upon us to deliver a rating and then by the rating and market appropriately to the right audience. the rating system particularly used is the most robust system

and has the highest level of compliance measured by third parties. when a parent goes to the store to buy a videogame for his or her child, they know to buy something rated e for a child. if an adult goes to buy m rated games, they know they are likely to have them rated content there the same way if you watch in action television show at 10:00 at night, you know what to expect. i'm a big believer that the right to bring what the publisher wants to the public is a terribly important right in america that we need to stand behind. weekly have a social responsibility to do what is right and only market to appropriate audiences and let them know what is in the box before they get home. both are important. our ability to do what we think is right is important. our social responsibility to the market is equally important. >> the demographic bucket, how

do you see who your user is? do you put them into small or big groups? >> we typically look at it with the core being hard-core gamers. people who love video games and people for whom it is their primary entertainment activity. >> age? >> all across the board. females -- more males than females but not as much as you would expect. really, adults and older adults. the reason for that is one consumes for the rest of one's life entertainment about which you are passionate in your late teens and that never changes. that is why our cohort is growing so rapidly and aging. videogame has been around for about 35 years. every year that goes by, our media cohort will increase in age which suits us just fine. people do not stop play video games once they play them. they love them.

the second circle would be the people who play videogames sometimes but for whom it is not the most important activity, and on the third is the broad audience for which video games are not their primary or secondary activity. 45 million units sold today, one has to believe you address the entire margin. in the case of certain of the -- certain other titles, the only address the core market. we create a title beautiful to look at and also really compelling to play. >> final question, when you build "evolved" do you imagine going through those circles where you imagine a lifetime of that product region people who find it first tomorrow but 10 years from now -- >> unquestionably. a group -- a great movie is a good story well told. a grave videogame is easy to

approach but difficult to master. >> i'll add more next but we will talk about the proposition of sex violence, of grand theft auto in china. that is next. ♪

>> what is the future of take two's digital business? i asked the ceo and the rest of our interview. >> we primarily sell to the pc and the consul. i think, in a way, it does not really matter. we want to make our products available wherever the consumer wants to be. if that is digitally distributed, fine. physically distributed fine. if it is consul, great care that is a big part of our business. if it is pc or another format, that is also great what matters is we are grading a aaa entertainment expense.

>> pc. grand theft auto marched 24th is that still the schedule? is that something that will be a significant catalyst for the company? pc market has always been small. >> we have high expectations and other than that, we will wait and see. if history is any guide, we will be pleased. we have artie sold 4.5 million units of grand theft auto five. >> tell me about how it works. >> they were our partner as he sought to develop online in china, a free to play multiplayer game in the chinese market. we entered because they were the premiere company there and they had a point of view about how to go about doing it and were prepared to mitigate -- mitigate the risk.

it is still to this day the number ones words title in china for a game. >> in terms of the profits already, what is the growth like and does it latch right onto the same thing we see at large? >> that is a great question. certainly, $.10 own growth is a nice factor but the game has to stand alone. it continues to grow and we hope that it will continue to grow, but right now, it is month to month and we cannot predict it. it is very positive. >> the consoles, the xbox, what does it mean for you guys? it is a brand-new market. >> you said it exactly right. people of games in china. free to play online games. this is a brand-new business.

playstation 4 is not launched yet in china. a relatively small base. we are seeking to get government approval. it is our title for the xbox and china. it is a massive market of 300 million people in the middle-class. the entire state of america's consumer population could fit inside china's middle-class. this remains a very small market so far. >> what you expect in terms of timing. do you have any idea what the prospects will be? >> so far, the content has been balanced with local and international. the movie is actually on the ground in china. that gives them an advantage. all of us need government approval for what we do appear that is a bit challenging, as you know. >> does it give you an advantage? >> i hope so.

basketball, hopefully, is not as controversial in any way. >> it depends on how you play it. will we ever see a grand theft auto in china? >> i certainly hope so. >> do you have lands for it? >> we do not talk about those kinds of plants and certainly not with regard to our titles. the chinese government has a strong point of view about content. unless or until that is widened i think it will be hard for us or competitive's -- competitors to bring that to china. >> first-person shooter games like the ones you are introducing they will have trouble getting into china or you will make attaches to it into china? >> it remains to be seen. what i expect is over time the chinese government will reppert -- recognize entertainment properties trust and in contrast to the values of the chinese culture, that they could coexist. i also think over time, the chinese government meet -- needs

to collect intellectual property with vigor if they want properties straight out in the market. >> that was take two's interactive ceo. we will be right back. ♪ . .

>> you are watching "bloomberg west" where we focus on innovation technology and the future of business. i'm cory johnson. some of the biggest names in tech art gathered here for two different tack conferences. brad stone is on-site with some big interviews coming up. what have you got coming up? >> this is one of the biggest events on the silicon valley calendar. they have a lineup of ceo heavy hitters and stars. we've got tim cook, apple ceo, giving the keynote and tomorrow marissa mayer from yahoo!, dick

costolo from twitter. we've got a great lineup here on bloomberg tv. we've got matt maloney, the ceo of grubhub. his big competition yelp, just acquired one of his big competitors. we also have the president of goldman sachs and he will talk about his interview with tim cook. >> those are some big names. we will see that in just a few minutes. pandora finds itself in a big court case in manhattan that could determine its future. pandora is raising off with emi -- the organization that represents 650 thousand songwriters and publishers. bmi says pandora is trying to present itself as a terrestrial radio station and paying royalty rates that are lower. there actually buying a radio station so they could actually make that claim.

this comes after pandora one against as cap last year, holding on to its royalty rate. during this is the ceo of the future of music coalition. to me this is texas dental for pandora. they cannot survive in the long run unless they can get lower rates to compete with new competitors. >> that may be the case, but this is part of the process. the southern district court of new york oversees the ratesetting process for pandora and performing rights organizations, ascap and bmi. the real political fight here is more about what evidence is allowed to be considered in the rate determinations or whether there should be government oversight at all. to me and a lot of songwriters we feel having a public process is important because it is more transparent.

one of the challenges in the digital era for songwriters is understanding how much you are supposed to get paid, by whom and when. to me, the transparency issue is key. the rate setting issue is important and the outcomes will be watched important -- will be watched closely by folks on both sides but everyone benefits from having webcasting continue to be a vital part of the music sector. >> on its face, it is ridiculous for pandora to claim to be a terrestrial radio station no? >> pandora serves a similar market to traditional radio. and the old days, the music industry functioned in a pretty basic way. you heard a song on the radio, if you heard it, and liked it you might go buy a physical copy or later a download. now, there are all kinds of ways to hear music that pandora is still a lean back experience. stations can be customized to

taste, but for a lot of folks, that is just radio. the interesting thing about streaming is we have a two-sided market. you have a lean back side, which is pandora and then you have an on demand side where you can choose the song and choose the album, make a playlist and share it with other folks. that's more of a spotify marketplace. the law treats them differently. from a market perspective, i don't know it is entirely fair to expect a radio like service to make up for revenue that is lost from a shrinking sales market and that complicates the debate. >> forget about the debate between the songwriters and song performers, but i wonder if pandora is paying a substantially different rate than i heart radio, which is owned by clear channel which owns a lot of radio stations in the u.s.? >> a large commercial fm broadcasters are able to lock in the rates and they do look

different than pandora's rate and they are predicated on different evidence. that is the issue bedeviling policymakers in this transition to a digital environment. these services are becoming similarly situated. >> why shouldn't pandora pay the exact same rates as i heart radio, which is a streaming app on a phone or device? >> that's an excellent question. the fact that clear channel operates a webcast type platform would indicate those rates should be closer to equal or brought into parity. the terrestrial radio side versus the streaming side is like bananas to kiwis. if you have a big megawatt station in l.a. and you play a song 20 times, that's going to reach a ton of listeners and it might take pandora's -- might take pandora a million spins to reach that number of listeners because it's one stream per

listener usually. valuing this stuff is really tricky and the processes we have to do so are patchwork and piecemeal. what's happening in washington is people are trying to figure out how to articulate what they want from a potential rewrite from the rules that govern music licensing. this is part of it but it is not the be-all, end-all of the broader conversation. >> thank you very much. the fight for dominant online food delivery is red hot. we are back with the ceo of grubhub, next on "bloomberg west." ♪

>> and this is "bloomberg west." i'm cory johnson.

the market for food delivery is spurring competition. online services are inching closer to your plate. yelp just ate at eat 20 form -- eat 24, and grubhub announced to acquisitions last week. brad stone is back with us from the goldman sachs tech conference. >> you have been active since 2004 the ceo of grubhub, facilitating food pickup and delivery. now all of this activity. let's start with the yelp acquisition. what is going on and how worried are you about yelp getting into your business? >> it is just business as usual for us. eat 24 has been around and have had a business partnership with yelp for years, so i'm questioning why they pulled the trigger on the acquisition on the benefits of working together already existed. for us, it's about the

opportunity ahead of us. there's $70 billion in takeout spins and we processed 1.8 billion last year, dramatically more than anyone else in the space, but there's a lot left to go in front of us. >> it must be validating to see them looking at your market and finding it appealing. >> am not thinking about it too much because i want to build best product and service and is why we acquired the restaurant delivery companies to deliver for more than 3000 restaurants in 15 major markets. that is what i see as an opportunity to increase service levels. >> let's talk about those acquisitions. you want to control more of the value chain and make those deliveries with i imagine a grubhub contractor. why? >> the vast majority of our business is still the restaurant delivers themselves. we found we can increase the

level of service and make it more consistent if we own the last mile. we can maintain the heat of the food make sure the delivery gets there really fast. by leveraging our technology and scale, we think we can bring a better experience to the diner and add a bunch of restaurants that did not deliver before. >> how does that work? are these grubhub employees making the deliveries or do you spin off a service like huber -- like uber? >> pc a lot of people are doing a vast amount of individuals. independent contractor is a strong way to go. >> do you see uber l oryft -- or lyft companies getting into the business or do you see them as competitors? >> we will leverage whatever we can to get the food there as fast as possible. it's different -- they pull over

to the curb and someone gets in. there are new packages and we will see if that gets to the place where you can put some of you gets the food from the restaurant, make sure the order is accurate, deliver sure food. for now, we are going to do it because we know we can do it well. if they are able to execute that at scale in a cost-efficient manner, we will go with that. >> that's talk about the value proposition for restaurants. i love the service, but it's not complete. how do you convince restaurants that they are not leaching commission to you guys and they are not losing the relationship with their customer to an intermediary? >> restaurants want to make money. they want to process orders and they will leverage whatever they can to do that effectively. what we bring them is a low risk, high reward opportunity. we say we only make a dime when you make a dollar and then it's

up to us to make them more successful. we have them think of their options and delivery boundaries. we give them a tablet to make them more efficient so they can process more orders and then we drive those orders to them through our 5 million plus active diners and 800 cities across the country. if you are a major restaurant tour and growing in a tear to you or tier three suburban market, you are crazy if you are not on grubhub week is will make a lot more money. >> to what extent has opentable been a model for you? they got their start helping restaurants manage in-house in -- restaurant inventory. >> absolutely. the difference between opentable and grubhub is grubhub has a vastly bigger addressable market. $70 billion in annual takeout sales, of which we are doing to.

in reservations it's much smaller. we are trying to figure out how can we add transparency and control, how can we increase the level of service to give diners a better service so they order more. >> no conversation is complete without a mention of amazon. their grocery service ruling out nationwide and they are integrating restaurant delivery. do you see them as a partner or competitor? >> amazon is a very interesting company. they are unique and powerful and have a lot of resources, but nobody is doing what we are doing at scale. we are processing over 200,000 orders per day more than a million orders per week. nobody is executing restaurant deliveries at our scale and level of service. it is tough and amazon is testing the waters, but we are going to stay way ahead of everyone else.

>> thank you very much. >> did stuff with matt maloney. time now for a check of the world headlines. sky and bt are paying a record amount to broadcast english soccer games. it's 70% more than last record deal. the cost will ultimately vast -- be passed on to british viewers who pay the highest price in the world to watch the games. the alibaba chairman, jack ma, says he will work to fight counterfeit goods on his company's website, including using customer data and cloud computing to help track down fakes. he met with quality regulators in china three weeks after a separate regulator chastise alibaba for not doing enough to prevent fraud. remember the penny stock that recently surged to a $6 billion market cap does write a lack of

things like revenue or assets? the sec has sued to belize-based brokerage firms, saying they made $75 million dumping worthless shares of shell companies. the company is not named directly, but one of the firms sued was tied to the company. "autumn line" is coming up at the top of the hour with none other than mark crumpton. >> the number of reported measles cases in the united states has topped 120. in a typical year, the number would barely break 100. what is going on and are u.s. health officials prepared? what about parents who for personal or religious reasons do not want their children vaccinated? i will ask the director of the u.s. center for disease control and prevention. i will see you in a few minutes. lacks good stuff. -- >> good stuff.

facebook is opening up a new application that lets people buy and sell things. is this a craigslist killer? ♪

>> i'm cory johnson and this is "bloomberg west." facebook as a new application that lets people buy and trade stuff. is it a craigslist killer? they hope so, but facebook has tried and failed before. can this be any different? tell me about this service. >> basically, facebook will allow people to create for-sale groups. say you are having a yard sale and want to create a facebook group.

facebook will make it more like you are actually selling them and that having a post where you describe it. then you can say whether it has been sold. they are trying to build in some functionality for people to use it, but the thing is people just use craigslist for that kind of activity. >> it is intriguing on the face of it. it seems like the network is limited as vast as your friends network might be, it's smaller than the rest of the world to see a craigslist listing. >> is why people go to a craigslist listing. if you look at the site, it has not changed at all since 2005. but sellers go there because they want the widest universe of possible buyers and buyers go there because they want the biggest selection.

>> they want what works. >> it's such a strong marketplace effect that other people have had trouble competing with craigslist. >> one wonders -- that's why you have been looking at it -- i wonder if when facebook looks at this world they think they have some kind of advantage because they have data about what users do. the temptation would be to say do you mind if we share this with people who are not your friends but are nearby and interested? >> for now if you go look for things for sale it's only for a group you are part of. i'm sure it will add more functionality. this is to collect people around -- say they have a combined interest selling collectible dolls or something. facebook has that where facebook is less organized. >> let's talk about facebook's

failures or face plants. they have tried a lot of these things and announced with fanfare and then they face plant. their facebook credit, the facebook phone, facebook deals, facebook e-mail -- >> all of these things they are trying to add onto facebook itself when this year, they said they are going to try to simplify all of their apps, so maybe now they have a separate group at that this is a future that -- a feature that would work well with that. but they have tried a lot of attempts to get people to buy stuff on facebook overtime and it just has not caught on. >> i give them credit for trying rather than blame them for failing. now it is time for the bwest byte, one number that tells us a whole lot. here is matt miller with a bite surprise. >> i have 4 billion. it is a big number. it's a lot of money but for a

movie franchise these days, not so much. this is all the spiderman movies have brought in. sony owns the rights even though he is a marvel character. they made a deal with disney so that marvel which has made the much more successful adventures and captain america films as well as ironman, marvel will produce the next spiderman movie as sony hopes they can do a better job than sony did themselves. sony's amy pascal, who resigned amid the hacking scandal will coproduce this movie and it means spiderman will eventually be able to show up in the avengers movies or avengers will be able to show up in spiderman movies. >> this raises many questions. number one, why are you hating on a store, the god of thunder?

>> i'm not hating on thor. i'm not into the twin dude doing a lot of movies these days. i'm more of an ironman fan. >> let's not forget our friend nick fury. these things have done fantastic and it's interesting to watch them wind in the different plots , but spiderman has been stuck in his web. >> i have two admit that i'm not into the whole comic book thing. i'm not really a comic book dude. i don't really dig it at all. >> come on end. the dweebs are waiting for you. >> if they made a movie about call of duty, i would watch that. >> they made a few that are just like "call of duty." you can with the latest headlines on your phone, tablet and on "bloomberg -- and on bloomberg.com. stay tuned for mark crumpton.

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>> from bloomberg headquarters in new york, i mark crumpton and this is "autumn line" the intersection of business and economics with a main street perspective. to our viewers in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this tuesday. our anger -- our agriculture reporter has details on the latest crop report and what it means for your grocery bills. our chief washington correspondent, peter cook with fed speak and more from his exclusive interview with