♪ >> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation and technology. i am cory johnson. u.s. stocks rebound after days of losses, and may be reaching a deal with creditors, greece even though they say a have no plans in germany to discuss a new accord with greece tomorrow. one of the big reasons nasdaq was up today, apple. apple's market cap closed at a record 710 billion dollars, the first time any u.s. company" the

$700 billion mark. apple is now twice as valuable as its longtime rival markets off. meanwhile, apple is investing $850 million in a new solar farm, a partnership with first solar. they have a data center in northern california. president obama has called for vladimir putin ahead of the ukrainian peace talks tomorrow and mr. obama reaffirms u.s. support for ukrainian sovereignty and warned putin that the costs will rise if russia continues to send troops, supporting rebels. president obama also spoke with the president of ukraine portugal -- poroshenko, and anthony nodo at his account hacked, and he was sending tweets. and they also hacked a page of delta airlines, and they

the white house is creating a new agency whose mission is to stop cyber attacks and improve information sharing about those attacks. they will collect that information from various government departments involved in cyber security including homeland security and the justice department. this follows the hacking of sony pictures and anthem among others. the former director of the counterterrorism center and the chief security officer with the fbi -- formally with the fbi. do we need another bureaucratic agency looking at this? rex if you put another layer into this area, you are creating this area.

this was described as the coordination of intelligence. i think there is some value. there are multiple centers where there is a lot of coordination happening. the facts are in the details. this is exactly how to be utilized. collects at the described, over things giving, nobody could tell them. there was no central place to get this information. collects people are right to be dubious. they're looking for solution to solve the broader problem. i disagree with my friend sean and that often when you have the most organizations in government looking into the problem, you actually do need that coordinating agency. this should not be viewed as a

panacea which will solve all of the problems but there is a need to know what the nhs is seeing, what the fbi is seeing. >> why not require companies to disclose when they have been hacked. if the customer data of the certainly a -- level has been taken, isn't that shining some light on that to force those to do a little bit more. >> most of the cyber problem will not be solved by the government, it will be solved by the private sector. this will have to be able to be involved with information sharing in the sector. this piece is much smaller. it is trying to make sure the

u.s. government is on the same page so it can intelligently interact with the private sector. i do think disclosure within the bounds of how industries are already seriously regulated. corporations need protection from the government so they don't face additional liability. >> i think that they will hold them to that high standards. >> there is a compelling argument when the president says he didn't have the information that he had on this thanksgiving day. is that the right place to do it and wouldn't that work. >> i don't think we disagree in this area. my concern is that there is another agency. there are lots that conduct operations.

i have silly concur. in terms of the white house i find that hard to believe we worked at the nci gtf. we had the cia dod fbi. the entire u.s. government all sitting and working on the same problem. certainly the mines are there. it is trying to correlate and bring this to a logical conclusion. >> i also wonder about the relationship with business and with the companies whose information out there. are there relationships like that right there with the cio's of companies? does the white house have the best relationship? >> that is really the ideal. tactical intelligence, the u.s.

government is collecting a whole host of data that would be of incredible value of the private sector. it was able to get into the hands of the cio's responsible for collecting these companies. when the president speaks on friday, that will be one of the things that they suggest. the companies are in a much longer position to identify who the adversaries are and to protect them on the network. they have to have protection on the network so that they can better protect themselves. >> the companies coming to silicon valley. we will the bloomberg west. the companies have a very difficult relationship when it comes to privacy and data. what does he have the same as to

those companies here in silicon valley? >> you are right. there has been a very strange expense between those two companies and the government. i think that relationship has to be rebuilt, it has to be rebuilt for the companies for them to have success internationally. it has to be rebuilt in the u.s. because the u.s. government will continue to rely on the private sector for lots of people and technology that the u.s. government also has to use. this is a possibility and an opening to rebuild that trust. many of the networks are vulnerable. this will be the combined government with the u.s. private sector and individuals.

>> shawn henry, thank you so much. the company behind "grand theft auto" is aiming for another big hit. the ceo will talk about his latest game "if all" and how he hopes to get "grand theft auto" into china.

>> this is "bloomberg west," i am cory johnson. the russian president vladimir pugin is cementing ties with the egyptian government. -- vladimir few putin is

cementing ties with the egyptian government. troops have broken through the rebel positions in the key eastern cities. facebook's internet data is getting a boost in india. the partnership will enable customers to access facebook and three dozen websites without incurring data charges. this comes in six indian languages. the japanese camera maker canon is making its largest acquisition ever as it looks for growth outside of the slowing camera business. they are buying a swedish video company. they make video surveillance equipment used in casinos and shopping malls. take-two interactive has built its business on franchises like "grand theft auto" but now they

are betting on a new game called "evolve" pitting humans against monsters. it has gotten rave reviews. we sat down with take-two interactive ceo strauss zelnick. >> it is pretty unique in that you will either play as a monster or as a team of four bank fighting a monster. as far as we know, that is novel. it won the best of show. >> we will see. >> how do you make plans to launch such a thing and to try to figure out what the scale will be? >> i think it is true of any entertainment business. certainly it is true of the movie business where you spend your money. you just don't know. we have a little bit more insight because we interact with retail and retail orders

products from us and they tend to be expert. usually they can signal through the analysis about how this is going to look. it is unusual that we would ship the product into the retailer and would be disappointed with how it sold. occasionally it does happen. in this instance, the retailers are very enthusiastic. that said, it remains to be seen. >> there is talk about sex and violence. i just don't care about sex and violence in video games. is that morally bankrupt or is the market is bigger? >> i think you said it right. you want to know what it is. it is up for us to deliver a rating, standby the rating and market appropriately to the right audience. what they use is the most robust in the industry. it has the highest level of

compliance as measured by third parties. when a parent goes to the store to buy a video for his or her child they know to buy something that is rated e for a child. if an adult goes to buy an m rated game, they know that there will be violent or sexual content. the same when you go to an r-rated movie. the right to bring what a publisher wants to the public is terribly important right in america. equally, we have a social responsibility to do what we think is right and only to market to appropriate audiences. i think both are important, the ability to do what we think is right. our social responsibility is equally important. >> how do you see who your user

is? do you put them into a big group? ? >> we typically look at it as concentric circles. the core being so-called hard-core gamers. people that love videogames and people for whom it is there primary activity. >> what about age sex? >> it is across the board. the median age is 37, really, adults. i think the reason is that one consumes the inner tame it that you're passionate about in your late teens and that never changes. that is why it is growing so rapidly and aging. the video game business has been around for about 35 years. every year that goes by, our median cohort will increase in age, which suits us just fine. they love them and they keep

loving them. the second circle would be people who play video games sometimes but for whom it is not the most important activities. then the artist to a sort of -- the person who is interested but it is not there activity. one has to address the entire market. you might only address the core market. certainly the goal is to dress as broad a market as possible. we want to create a title that is cool to look at. >> when you build the business do you imagine going through those circles where you imagine a lifetime of that product? would people find it first tomorrow and it would only be there 10 years from now? >> that is our goal. we are not always successful at it. a great videogame is easy to

approach, difficult to master. >> he will have more next. we would talk about a proposition. sex, acquisition, "grand theft auto" in china.

>> what is the future of take -two's digital business? i asked ceo strauss zelnick and the rest of our interview. >> pc, console. we are economical. we want to make our products available wherever the consumer wants to be. if that is due distributed, fine, if it is physical, fine. if it is pc. they are crating this attainment experience.

>> "grand theft auto five" going to the pc on march 24. is that something that will be a significant catalyst? >> we have high expectations. if history is any guide, we should be very pleased. >> you have this partnership. tell us how that works. >> they were our partner as they sought to develop and be a 2k online in china which is a free to play multiplayer game. they were the premier company there, because they had a point of view of how to go about doing it and they were prepared to mitigate a good deal. it has been a great partnership. we have a lot of people on the

ground. i think we have 24 million registered users to generate every month. >> in terms of turning profits already, what is the growth like? this is the same kind of growth we see. >> that is a great question. certainly, $.10 growth is a nice act top but it has to withstand the loan, it continues to grow and we hope that it will continue to grow. right now, it is month to month. >> the consoles, what does that mean for you guys? that is obviously a big market. it is a brand-new market. >> people love games in china. they are free to play. this is a brand-new business. so far, only be xbox has launched.

the xbox has not launched in china. we are seeking to get government approval to sell our basketball title. it is a massive market. 350 million people in the middle class. the entire state of america's middle class could fit inside of china's middle class. >> what do you expect in terms of timing? >> so far the content has in dallas with local and international. this gives them an advantage. all of us in the government approval for what we do and that is a bit challenging. >> maybe that gives you the advantage.

>> will we ever see a grand theft auto in china? >> forever is a long time. >> we don't talk about this kind of plans, certainly not without our titles. the chinese government has a strong point of view about content. it will be hard for us to bring a lot of action. >> might that mean that this is a first-person shooter games like the one that you are introducing that we will have trouble getting into china? >> it remains to be seen. i think over time the chinese government will recognize the entertainment properties do not stand in contrast to the values of the chinese culture and that they can coexist. i think over time the chinese government needs to protect intellectual property with much greater vigor if they want

international companies to dissipate accurately in the market. >> that was take-two interactive 's ceo strauss zelnick.

>> you are watching "bloomberg west" where we focus on innovation technology and the future of business. some of the biggest names in tech are gathered in san francisco for two big conferences. brad stone is on site of the goldman gig with some big interviews lined up. >> this is one of the biggest on the silicon valley calendar and they have a lineup of ceo heavy hitters. we have got tim cook giving the keynote lunch. tomorrow, marissa mayer from yahoo!, dick costolo from

twitter. we have got a great line up here . we have got matt maloney, the ceo of grub hub. his big competition yelp just acquired one of his competitors. stay tuned, we have a lot of good stuff coming from the conference. >> those are some big names. pandora finds his health and a big court case that could determine its future. they are facing off with bmi. they represent 600 50,000 songwriters and publishers. bmi says that they are trying to present themselves as a terrestrial radio station. a are even buying a radio station in south dakota. the reach is much larger than any terrestrial radio station

part of the 81 million listeners who are not most of them in south dakota. this comes after pandora one against its rival organization. join us is the ceo of the future of music coalition. to me, this is existential for pandora. they cannot survive unless they can get lower rates of music. >> that might be the case but it is true that this is part of the process. the seventh district court of new york oversees the ratesetting process for pandora. the real policy or political fight here is more about what evidence is allowed to be considered in the determinations of whether there should be government oversight at all. to me and a lot of songwriters we feel that having a public process is important because it is more transparent. one of the challenges for

songwriters is understanding how much you are supposed to get paid by whom and when. the transparency issue is key. this is going to be watched closely by folks on both sides of the marketplace and i think that everyone benefits from having webcasting continuing to be a vital part of the music sector. >> on its face, it is ridiculous for pandora to claim to be a traditional radio station. >> they serve a similar market. in the old days, the music industry functioned pretty basic. you heard a song on the radio if you liked it, you might be motivated to go and buy a copy of that item and later a download. nowadays there are all kinds of different ways to hear music but pandora is still a lean back

experience. it can be customized to taste but for a lot of folks that is just radio. the interesting thing about streaming is that we have a two-sided market. we have pandora and other kinds of webcasters. then you have an on demand side which lets you make a playlist, share that with other folks on the service. that is more of a spotify rocket place. from a market perspective, i don't know that it is entirely fair to expect the radio-like service to make up for revenue lost from a shrinking sales market and that complicates the debate quite a bit. >> forget about the debate is pandora paying a substantially different rate than i heart radio which is owned by clear channel, which is of course the largest owner of radio stations in the u.s.? >> the largest are able to lock

in the rates. they do look different than pandora's rate and they are predicated on different evidence. that is the devil in the details for lawmakers. all of these services are becoming similarly situated. >> why shouldn't pandora pay the exact same rates as i heart radio? >> that is an excellent question. the fact that clear channel operates a web chat a platform would indicate that those rates should be closer to equal or brought into parity. the traditional radio side versus the streaming site is like bananas to kiwis. if you have a really big megawatt station in l.a. and you play a song 20 times, that will reach a ton of listeners and it might take pandora a million spins to reach that level of listeners.

so, valuing this stuff is really tricky. the processes that we have to do so are kind of patrick and piecemeal. what is happening now in washington, with the folks trying to figure out how to articulate what they want from a potential rewrite of the rules that govern music licensing. this is part of it but it is not the be all, and all of the broader conversation. >> the ceo of the future of music coalition, thank you. the competition of online food delivery is red hot. we will be back with the ceo of grub hub next.

>> this is "bloomberg west," im cory johnson. hunger in the food market is

spurring competition. online food services is moving closer to your plate. yelp spent $124 million on an acquisition. grubhub made acquisitions last week. we go back to the investors conference with ceo matt maloney. >> you have been at this since 2004. the food pickup and food delivery and now all of this activity. $134 million what is going on? how worried are you about mighty yelp getting into your business? >> it is business as usual. each one he for has been around for a while. i'm questioning why they pulled the trigger on acquisitions when the benefit of working together existed. it is about the opportunity ahead of us.

we processed 1.8 billion last year. dramatically more than anyone else in this space. there's a lot left to go. >> it must be validating to see them looking at your markets and finding an appeal. >> i want to build the best product and service and that is why we acquired the restaurant delivery company to now deliver for more than 3000 restaurants across the country. that is what i see as an opportunity to increase service levels. >> you were once in the business of facilitating a purchase event and then a restaurant delivered the food themselves. now, you want to control more of the value chain. why? >> the vast majority of our business is still the restaurant delivered the food themselves. what we found is that we can increase the level of service and make it more consistent if we are owning the last mile.

we can maintain the heat of the food, we can make sure it gets there fast. by leveraging technology and scale, we think we can bring a better relationship to the diner. that is the value we are going after. >> are these employees making the deliveries or do you spin off the service? >> we are seeing how other people are deploying. independent contractors is a strong way to go. >> do you see the sidecar and an uber-like company getting into the business this week? do you see them as partners or competitors? >> we will leverage whatever we can to get the food there as fast as possible as hot as possible. the transportation pulls over to the curb somebody gets in. we will see if this gets to the

place where you can put someone who goes and gets the food from the restaurant, makes sure it is accurate, delivers it, delivers your food. we will do it because we know we can do it well. if they are able to execute at scale in a cost-efficient manner, of course we will go with that. >> as i told you i am a grubhub user but it is incomplete. how do you convince restaurants that they are not bleaching commission and they are not losing the relationship with their customers? >> restaurants want to make money. that is what they want to do. they will leverage whatever they can to do that effectively. what we do is bring them a very low risk, very high reward opportunity. the only make a dime when you make a dollar. it is on us to make them more successful.

we help them with options what are the delivery times. we give them a tablet to make them more efficient so they can process more orders and then we drive them to our 5 million active diners in major cities across the country. if you are a diner in a major city and in tier two tier three markets, you are crazy if you are not on grubhub because you make a lot of money. >> to what extent is this relationship to opentable? >> it was a pioneer, absolutely. the difference between opentable and grubhub is grubhub has a vastly bigger addressable market. $70 billion in annual take out sales. reservations are much much smaller. we are looking at our

opportunities and really evolving our product. how can we add transparency control, the level of service to give diners a better experience. >> no conversation isn't complete without a mention of amazon. they are rolling out a grocery delivery services. to what extent do you see amazon as a potential partner or competitor? what if they are very interesting company. you look at what they are doing, they are unique, they are powerful, they have a lot of resources, let's be clear nobody is doing what we are doing at scale. we are processing over 200,000 orders per day which is more than a million orders per week. there is nobody executing restaurant deliveries with our scale and deliver of service. it is tough. we will stay way out ahead of everyone else. >> matt maloney, thank you very much.

>> we appreciate that. time now for a check of your world headlines. sky and bt are paying $8.78 billion for the u.k. writes to broadcast english league soccer games. 71% more. sky will show 126, bt gets the remaining matches. the cost will be passed down to british viewers who already pay the highest prices in the world to watch. jack maas says he will work with the chinese government to fight counterfeited goods on his company's website. -- jack ma says he will work with the chinese government. the government chastise alibaba for not doing enough to fight fraud. remember the penny stocks that briefly surged last year despite a lack of things like revenue or assets?

the sec has sued to belize-based firms. they may $75 million while selling worthless shares of shell companies. one was run by a man tied to sink. facebook is rolling out some new features that will let people buy and sell things on their network. is this a craigslist killer?

>> facebook has an interesting new service letting users buy and sell stuff. craigslist killer? they hope so. they have tried and failed before entering into the world of commerce. so, tell me about this service. >> basically, facebook will allow people to create for sale groups. let's say that you are having a sale, you can list all of the items. it is like you're actually

selling them to set up for you have a post where you describe it. you can say where it is available, what the delivery options are. then you can say whether it has been sold. they are trying to build in functionality for people to use this. people use craigslist for that kind of activity. >> it seems like that the network has limited it. this is smaller at the rest of the world. >> that is why people go to craigslist. if you look at the site it hasn't changed since 2005. they don't even have a mobile app. sellers go there because they want as wide a universe of possible buyers. buyers go there because they want the biggest selection. it is such a strong marketplace

in fact that other people have had trouble. >> one wonders if they look at this if one facebook looks at this world, they think they have some kind of advantage because they have data about what users do. the challenge would be to say, d-i share this with people who aren't your friends but are nearby and interested? >> for now, if you look for things for sale it will only be for groups you are a part of. in the future they will add more functionality. this is to collect people around. facebook has that where craigslist, maybe is little bit more disorganized. >> let's talk about facebook's failure. they do try a lot of things and

a lot they announce with some fanfare and many of these things, they face plant. they don't take off of. the facebook phone, the facebook gifts, the facebook e-mail. >> it is all of these things they are trying to add on to facebook itself when this year they said that they are going to try to simplify all of their apps. maybe now that they have a separate groups app, this would work well in that. they have tried a lot of attempts to get people to buy stuff on facebook overtime and it hasn't caught on. >> at least we can give them credit for trying. thank you. now it's time for the bwest byte. here is someone who tells us a whole light, -- a whole lot, matt miller. >> i have 4 billion. it is a lot of money, obviously. for a movie franchise, a whole

franchise, not so much. this is all that the spiderman movies has brought in. what they have done now since marvel is owned by disney, they made a deal with disney so that marvel, which has made the much more successful avengers and captain america films, marvel will produce the next spiderman movie and sony hopes that they can do a better job than sony did. sony's amy pascal who resigned amid the hacking scandal will coproduce this next movie. it means that spiderman will eventually be able to show up in the avengers movie or avengers will be able to show up in spiderman movies. >> first of all, this raises many questions. why are you hating on thor, the god of thunder? >> i am not big into the war. i am not into those twin dudes

doing a lot of movies. i am an iron man fan. >> you see more norse -- seem more norse. it is interesting to see them wind th the different characters and. spiderman has been stuck in his web. >> i have to admit, i am not into the whole comic book think. >> come on. >> dude, i don't do good at all. >> come on, the tweeps, we are waiting for you. >> yeah, well. if they made a movie about call of duty, i would watch that. >> they have made a few which are just like "call of duty." remember, you can watch us any time on bloomberg radio, bloomberg.com, or on your tablet or ipad.