♪ emily: from pier three in san francisco, this is “bloomberg west,” where we bring you focus on technology and innovation in the future business. i am emily chang. here are your top headlines. mario draghi was attacked by a protester at his news conference in frankfurt today. the protester jumped on stage and blue glitter at him before she was put in a headlock and carried off. mario draghi was not hurt and carried on where he said that there is clear evidence that bond buying is working and the economic recovery will strengthen gradually. >> the risks surrounding the

economic output for the euro area have become more balanced on account of the recent monetary policy decisions, but falling oil prices, and the lower euro exchange rate. emily: draghi push back at the idea that the program could be cut short at the inflation returns to target earlier than expected. bank of america's first-quarter results beat estimates. profits rose to $3.4 billion and revenue was down 5%. noninterest expenses dropped 29% in the quarter, but some analysts were expecting to be cuts -- deeper cuts after litigation over bad mortgages wind down. the sec is concerning to ease limits of foreign ownership of american broadcasters. just last month, republican commissioner michael o'rielly says the fcc is to permit foreign ownership above the current 25% cap. the foreign ownership issue has

had an impact on streaming companies like pandora, which has been unable to buy a radio station in south dakota because they cannot prove the nationality of its shareholders. nokia is buying alcatel. it is the largest acquisition ever for the company and will make it the biggest maker of wireless networking for mobile equipment. here is their ceo. >> we were doing well on her own, but if we look at the long-term, in order to be competitive and a leader in this field, it was important and made a lot of strategic sus from a lot of perspectives. otherwise, we are doing pretty well. they are also doing well at alcatel lucent. we will make the right per folio that customers will need and want to make us competitive like nobody else in europe. emily: the deal will have to pass a u.s. national security review because alcatel has security clearance to do work for the u.s. government.

and a jury has found former new england patriots star aaron hernandez guilty of first-degree murder and sentenced him to life without parole. hernandez was convicted of killing a man who is dating the sister of hernandez's fiance. at the time, hernandez had a $40 million contract with the patriots. now to our lead -- in europe, google faces the biggest threat to its bigness after -- business ever as the eu files a formal trust complaint. how did it come to this? it's all started five years ago when the eu began investigating such practices after rivals like microsoft and expedia complaint. uggla try to settle three times to no avail. now that eu has file formal charges against google called a statement of objection in europe, accusing uggla being anti-competitive and abusing its dominance. specifically, they claimed google favors is shopping service over its rivals. for instance, when you start for

an item like a laptop, google shopping results come up first and that prominently displayed. leading the charge, eu competition commissioner a top danish politician. >> today's statement of objection on comparison-shopping is of course limited. it is also the first place were we got a complaint. the first place where we got a complaint that google is favoring as products as such for a long period of time. however, we will continue to look at google's conduct in other areas. emily: she also opened a new policy into android, the google mobile operating system. she is also still investigating search results for hotels, flights, and maps. google controls 92% of the search market in europe compared with 75% here in united states.

in response, google is not backing down. the case is likely going to tile -- trial. while google may be the most used search engine, google can now find information numerous ways and consumers and competitors have been proven to be wide and market in 2007, the sec wants a similar investigation, but close it without action. not so in europe. if guilty, google could be fined up to $5.3 billion for last year and could face severe restrictions on how it operates. still, legal experts believe that such a find is highly unlikely. running me in the studio is cory johnson. in london, paul handsy is an antitrust lawyer. ncs guide, ben leg -- and bias skype, ben leg. i will start with you who worked

at google for a very long time? what is your reaction to this. ? >> this is not a new revelation and the statements that we have heard so far -- i do not think they are relatively bland. we will see what comes out. i think a lot of it comes down to is number one if google is dominant and if they abuse that dominance. if you look at the universal search, google has 92% market share in europe. if you look at how people shop for hotels and consumer electronics and credit cards and banks, etc., they increasingly used vertical special sites and movable -- mobile apps and google is not part of that. yelp says that most of its searches come through it at. are they abusing it? from my time in observation, google will always be expense --

instrumental and saying how do we get consumers what they want. knowing google and the way they were, i do not think they ever said let us place our product first. consumers seem to like vertical searches first and they would say let's change our format to see if they like it. every time google makes a product or search or algorithm change there are winners and losers. it is no surprise that people have been hit in complaint. the question will be whether it is upheld and how they abuse it. emily: paul, how serious is this allegation against google? the eu has now ratcheted the sub -- this up to formal charges. >> is a -- is important to emphasize that this is an interim stage. it is not the first stage of the investigation. the commissioner looks at a full and a point of view. the statement of objection is basically a short surmise avoids got to in its investigations.

and now google will have the opportunity to put inside of the case in more detail. it is important to emphasize as well that there is no finding of liability. it is direction of travel and the commissioners thinking. we do not have a conclusion from the investigation in terms of whether or not there should be a fine and if it is a fine, that could be 10% of google's worldwide turnover. this is very much in the interim stage. i think it is safe to say that it is serious and google has been trying to settle this through some form of commitments. unfortunately, that has not worked. it will still have the opportunity to offer concessions, but unlike the fcc investigation has not been able to close by that channel. emily: in the worst case, how could this hurt google? cory: there is billions of dollars at stake, but even more so. the moral issue is what does google promise to do compared to

what is google accident. i lifted the ipo today. the company said that our search results are unbiased. people believe that google is going to give them the best search results. in defense of the eu case google searchers can go on from flights to jfk you'll get these results across the internet and it will be the same. someone did that and compared a kayak search and a google search. guess what? i found cheaper flights on kayak. that says to be the real risk for google is that the information of their search results are sometimes biased in favor of google favored results not the best deals for consumers. that could hurt this company even more than $5 billion. emily: then, what is your reaction to that? >> my reaction is not so much that google is being biased, but not doing a good enough job and search. if they want to do a better job, they will become irrelevant to

consumers. it is proven to have lots of data and especially on mobile the less and less consumers especially sophisticated consumers with lots of money they are starting their search journey with google. like the example by cory gasquet, finding a better experience and better deals are elsewhere. google has an obligation to its shareholders to try and improve its results. that means improving the format which probably means having more choice, more images, more ability to select and filter and sort the way that kayak does, etc.. otherwise, they will become irrelevant and start declining at some stage. at think that kayak is still winning so why would kayak worry about google finding better office -- offers? google needs to keep improving itself if it wants to do more of the same rather than lose its battle. coming back to the $5 billion

fine -- i think that a $5 billion fine as far worst for google then saying that you cannot do vertical search. that would mean that google's expanse would get worse and worse compared to vertical search specialist overtime and which make the less relevant overtime. the fine to me is not as worse as google having to stop innovating. emily: take the most dramatic scenario. could google have to break up in europe? >> i don't think it can come to that. it is what we would call the hay bureau investigation. it could be that google would be in search of a concession. i think this is an unlikely scenario that it could offer some formal breakup to implicate the commission's concerns. but i think as your guest has said, i think the most worrying aspect of this is that google will be forced to comply a with

a legal precedent. there are other aspects of what has come out of the commission today which are very interesting. looking at the angela case, it is talking about the way in which google licenses with manufacturers such as motorola and samsung and saying that is obliging those manufacturers to exclusively install google apps. that is interesting from an antitrust lawyer perspective. is relevant to what happened to microsoft media player and microsoft windows back in the 1990's when windows was as important as a gateway to several markets as mobile devices and operating systems are today. quite frankly, the market shares of android is really quite impressive. particular against apple it is a strong market player. the will has done very well to get it and a good market position. emily: google does have 10 weeks

to formally respond. this is something that we will continue to follow. coming up etsy has a handmade problem as it prepares to start trading tomorrow. and spacex fails again trying to land a rocket on a barge. what happens now? ♪

emily: this is "bloomberg west." i'm emily chang. etsy closes his public offering. billionaire investor stanley druckenmiller shares his thoughts on snapchat. secretary of state john kerry flew to germany to tell his fellow foreign ministers that the iran nuclear deal will hold up under congressional scrutiny. >> yesterday, there was a compromise reached in washington regarding congressional input. we are confident about our

ability for the president to negotiate an agreement and to do so with the ability to make the world safer. emily: the white house signaled it would accept revised legislation, giving congress the authority to review any nuclear deal with iran. samsung is trying to deep its ties with its archrival apple. the company has created a standalone team of 200 employees to work exclusively on screens for apple products according to people with knowledge of the matter. samsung display make screens for ipads and macbooks and applies -- allies more on chipmaking as the smartphone sales stall. wall street may have high hopes for etsy's ipo tomorrow. many artisans who sell stuff on the site are not thrilled. after filing the ipo merchants father outrage on blogs.

on bloomberg elder -- are bloomberg editor went to figure out why they are so upset. >> stuff alice just like hipsters are vector -- rebecca sailors think it to spend five hours sewing and decorating each one by hand. she sells them for $50 apiece on etsy the online marketplace with one million shops for handmade products. >> etsy was a perfect platform for me. they are doing their part to gain customers and elevate the experience of handmade. >> that is, she says, until etsy became more corporate. >> they made changes which caused a weird shift in the ecosystem. >> 18 months ago, etsy allow sellers to use manufacturers to produce en masse. the goal was to help sellers grow their businesses while etsy build greater sale. her sales have slipped 50% since

then. the new policy has made a harder for consumers to find her pillows and compete on price. why not just use the manufacturer to compete? etsy>> etsy have this extreme emotional connection to their piece and they want the public at large to feel the same way which they feel they do, i'm sure in many ways. at the end of the day, it is a business. >> etsy was founded as decade ago by rob k went into france. the idea gain traction with other artisans and caught the attention of big-name venture capitals. over time, success bred conflict and he rejected any stray from the company's core values. he left in 2011. now, etsy is going public and the new policies can make it look more checked if wall street. etsy charges 20% -- $.20 for each listing. the more transactions the better. etsy declined to comment on the

policy changes. palin did not respond to requests for comment. even if it means offending some customers. >> customization to evolve -- companies need to evolve even if it risks their customers. i think the check is to do it in a gradual way or a way that does not offend the original base as if the company moves too quickly, it can have negative impact on the current customer base. that shows up in terms of revenues and margins and all those things. >> at him etsy team lead up in san francisco, mixed reactions to the idea. some say it is the price you pay for being part of a large ecosystem. but rick left the site when the policy changes were announced. >> for a site that claims to really empower crafters, i didn't really feel that it was actually saying that. >> and get some see the ipo as

an opportunity. they started a campaign to raise $1.5 million and build a stake in the ipo. those used to expressing themselves through art are starting to do so with their wallets. emily: an leslie picker joins me now from new york. all these artisans are etsy's biggest assets. what has the company done to call their concerns? >> they say that manufacturing is there to say. -- to stay. post a listen to not get behind that are going to have to find other ways to compete. what sellers are concerned about of course is at the going the way of ebay. and as a big concern among them as the company goes public. emily: we will be watching. i know you will be there on the floor tomorrow as etsy start trading. that was leslie picker. thank you so much. coming up, legendary investor stanley druckenmiller took a big hit in text on the.com era.

what does he think of evaluations now? that is coming up next. ♪

emily: this is "bloomberg west." i'm emily chang. stanley jordan miller has one of the history of investing. his fund was returning 30% annually. he sat down with bloomberg stephanie ruhle in an exclusive interview and discussed pressure. >> i see them having to respond to shareholders if they lose their job. i do think it is the reason that a lot of these tech companies are staying private so that they can look at their businesses and run in the long term and not short term. >> what you think about tech evaluations right now? i remember you saying to me that one mistake that you made was getting emotional about investing. you take yourself back to 1999 and look at the guys around you were buying all these high ipos

and you are jealous and excited and then you got your head blown off. >> it was 2000. i was in was just 1999. i think evaluations, at least in the private market, are kind of crazy. i don't know -- not chat -- >> i love snapchat. >> it was 2 billion act then and now it's 20 billion and don't have any revenues yet. i think the company is great. is a fancy price. uber -- it's a fancy price. there are a lot better quite high. it is certainly not like 2000 because we never had a networking effect before. see can have companies get $500 million -- 5 million customers that they did not have years ago and then monetize it. i think it is all part of a product of zero interest rates. i don't to get his outrageous the way it was in 2000. >> you are not that concerned?

>> i don't know if i would go that's where our -- if i would go that far. emily: coming up spacex launches its cargo capsule, but fails the landing. and is there a tech bubble in china? ♪

>> this is bloomberg west where we focus on invasion technology and the future. china's economy grew at a 7% rate in the first quarter, the slowest pace since to,000 nine. new figures on out put point to a slowdown. anew impetus is showing momentum but in general it's still small in size although it's growing fast. we are still relying on a traditional growth engine and that is declining and has huge

impact on our economy in the short term. >> the i.m.f. maintained its projection for a 6.8% expansion in china. that's slower than india for the first time since 1999. there is a deep partisan split on iran and israel. in a three to one ratio democrats were more optimistic a deal would make the world safer. republicans were more pest mystic. they are more sympathetic to netanyahu and democrats are more sympathetic to president obama. >> the strong dollar and falling oil prices are hurting overseas demand. delta is cutting flights.

delta gets about 30% of u.t. revenue from international flights sflfment the scooter company segway has been acquired by its chinese competitor. terms of the deal were not disclosed. it started just two years and now sells personal transportation robots in 38 countries. close but no cigar for space x. the company successfully launched the rocket into space on tuesday but it's tempt to reuse the rocket by landing it on a barge fell just short. dragon on route to space station. rocket landed on drone ship but too hard for survival. for more i'm joined by former nasa deputy administrator from

washington. first of all, so close but still not successful. give us an idea what you think might have gone wrong and why this is so hard to do. >> well people have been trying to take advantage of the reuseability of rockets for decades and i think this is so incredibly close. we're just going to be able to see this happen in one of the next couple of launches. i can't speculate anymore than elon has or looking for more data to come back. twice in a row they've found drone ship and been able to land on the barge. too hard for survival is still a huge success. and let's not forget that the rocket itself has launched successfully is going to dock with the international space station on friday. >> in case anyone is worried about elon, he tweeted if this

works i'm treated myself to a volcano larry. he's still trying. >> next time i trip and fall, remind me about my lateral velocity. >> everyone out there should get a volcano layer. >> you get accustomed to the heat. it's a dry heat. for all of the criticism we give of their financials and the things elon musk has done, this is e normously am birgs. it's important to have a u.s. based space company. with nasa out of the game, there are satellites that don't have any way to get in space. it's important for this country to have those kind of spying capacities and military capacities where they can't trust a rocket launch by a

foreign government. >> what kind of oversight is necessary to make sure what they are doing is actually safe? >> i would say that this is very similar to how we have been going into space for years. i take issue a little bit with the nasa out of the game. they are not out of the game. they are in the game. five years ago president obama stood at the space center and outlined this way of partnering with the private sector to advance transportation similar to how we've advanced transportation in all other ways. we would be spending much too much money if we threw away the engines in an airplane every time we threw and we can't do that in space traffic either. the government has used proift sector to launch satellites and military satellites as well as our scientific payloads for decades. the space shuttle that was retired a few years ago was

three or four billion a year. now being able to get there with the proift sector for pennies on the dollar is the right path. these vehicles will be carrying people to and from the u.s.a. shores here in just a couple of years. >> give us a better idea of what he's grappling with here. what kind of technology is necessary to thrand rocket safely and make it reusable and save that money? >> reuseability has been a holyly grail. that is what it takes to reduce the cost and have sustained space activities that will take more people and things to or bit. we at nasa had been working on it more than 15 years ago with a different vehicle called the "x" 33. it was going to lead to a fully reusable vehicle and the investments were too high. because the technologies involved were not yet advanced

enough. but truly the private sector and elon specifically is innovating to do this on a ship in the ocean because they don't get the capability to get licenses to land on land. and this is a great invasion. so of course we reused the space shuttle engines. they came back and we refurbished them to fly again. but the space shuttle took a number of parts. the gas tank and rocket motors that were expendable thus the cost was too large to be sustained for these long term plans we have in space. >> you think it's only a matter of time how much time? >> well, i would say within the next year elon will have landed successfully. starting that reusable. they have six launches. they are in a 12 laumpling contract to the space station. i think people will be going on

dragons and their competitive vehicle here in the next two and a half to three years. >> maybe he will get that volcano layer after all. >> thank you. coming up after the break are chinese tech stocks getting too hot? later we look at the rise of messaging apps.

>> still to come a look at the explosive rahlfully chinese stocks. tech in particular. plus where vape or the chat sees its in the crowded market for messaging apps. walgreens is freezing pay for senior u.s. executives. it's part of a cost cutting program. wall greens is in the middle of closing 100 u.s. stores revamping its technology

following it's purchase of the swiss drugstore change. >> alibaba founder is expanding further into china's healthcare market. they are moving the pharmacy business into a publicly traded area. they are currently limited to selling over the counter medicines but today's deal prepares the company to move into prescription drug sales in and when permitted by the government. >> the on line retailer j.d..com has launched gd worldwide that let's consumers buy foreign products that may not be available on the current market by expedited deliveries. the new service gives international suppliers a chance to sell to china without establishing a formal presence there. they've seen the value sore much like other companies leading the

country's market surge. some company evaluations have risen to 2 to fimes their reported profits. compare that number with 156 of u.s. tech stocks when the nasdaq peeked in 2,000. what should we make of these numbers? are we seeing a bubble in the making in china. have you been in china for many years, what do you think we're seeing now? nothing gets investors more rised up than the word bubble. is there a bubble in china in tech? >> there certainly more earnings around than back then. there weren't earning bags in 2,000. we shouldn't compare with it 2,000. however there has been a massive appreciation as you've said. we should look at which kind of soap we're talking about.

there is domestic chinese stock market and there is a second board which is massively overpriced. we have the hong kong shares linked to the mainland and new york listed companies. so you have to look at what you are talking about but there has been a big run up, that's for sure. >> what about kinds of technology, are there kinds of technology where evaluations seem out of control? >> obviously we talk in china of the b.a.t. within those alibaba and 10 sent have a billion evaluation. they are moving into areas, we're seen them in transportation and media finances. you expect them to disrupt other sectors. in other technology companies, can they be the leader. people talk of private evaluation of over $45 billion

which is aggressive begin we don't know how they are going to make money in the future. >> and the rest are in the danger zone? >> well, no. the interesting thing about this time around is that al by bab ba and some of the others are buying companies. so this used to be the problem there was no m and a in china. that's changed. one of the reasons we've seen this huge change in china is you are not just going for an i.p.o. you are gunning for one of the big guys. not everybody can win. what will happen if there is a downturn and there will clearly. the evaluations will drop off quickly for those third fourth fifth place people. will there be deals done for the leaders in categories, will they be able to list? the question is how long does

the music continue. >> that was my next question. how far away are we from a correction, from a bubble bursting? >> interestingly the chinese macrosituation is getting more difficult, 7%, the lowest for many years. the excitement is still about these new economy companies. some of them are really profitable. in a sense we may see a shift away from the more companies that are old economy hit by downturn anti-corruption, the state companies and shift into these large tech could wanters. but the question is ultimately there will be a connection. if the economy continues to slow and consumer spending which is what this is all about is hit, they would take a hit. so far we still see a rising tide, we see continued urbanization. but the value, the price of getting into these companies is getting a lot higher.

that's a concern if you are a private equity investor. >> duncan clark who happens to be writing a book about alibaba, thanks for joining us. >> breaking news out of d.c. capitol hill is on lockdown. more from new york. >> the u.s. capitol was on lockdown because of this continuer landing on the lawn. but the lockdown has been lifted after an arrest was made. one person was detained after this chopper landed. i'm not sure what it is. my colleagues were telling me it's a small helicopter. there you see the pictures of that continuer through the trees you can see a little bit of the machinery there. one person detained after this chopper had lanned. according to the tampa bay

times, it was meant as a campaign message. i don't have any further details on that. one person has been arrested and the lockdown at the capitol building has been lifted. >> lockdown is over. we'll watch to see what happens there. thank you. a new con terned entered the growing field of apps. how can vapor chat stand out from the rest? that's next.

>> messaging apps are all the rage. facebook spent $22 billion for what's that. snap chat has popularized teck. there is another one on the market with focus on business. >> vapor chat has been live for four weeks. snap chat for business. really interesting. joining me to talk about this is ken, the c.e.o. and founder of

vapor chat. the messaging space is crowded but this is intriguing taking the idea of messages that the user can drol duration and bring that to business. what is the opportunity for you? >> this applies much more than businesses. fundamentally the way people text, every day people text is flawed. the second we send a message to someone we lose control over that message. if i text you right now you can take that message and you can do anything you want with it. you can post a picture on facebook, copy my message save it, whatever it may be. we created invasion in this space. now for the first time users can have control over their messages after they send it. for example you could vapor a text or photo after you send it and remove it off your phone and the other person's phone. >> what are the use cases you

imagine? >> there is tons. we all say things we regret sometimes. and texting has become such a popular form of communication, it's what we do all day long. a lot of times we send text that we regret. with vapor chat now have you that control back. there is many different use cases. you can send a text to the wrong person and immediately vapor it and they won't get it. everyone knows how annoying auto correct can be. vapor it and it's gone. someone might seasoned a selfie to their bomb instead of their girlfriend, just vapor it and it's gone. we're seeing many applications for this. this is targeted for everyday people not businesses. businesses could use it to board members of a publicly traded company. where before maybe they would be afraid to to the have a conversation they can do it on

vapor chat and it's as good as having a conversation. you can take it back. if you say something, you can't. we're seeing tons of different apply igs cas, not just in couples, businesses, teenagers using it etc. >> it's a separate app or does it sit on top of a layer of texting applications? >> both people have to be on vapor chat. you match within the app and you can have a conversation. and the vision here was really to bridge two worlds. on one hand you've got the large regular chatting apps such as i message, line and kick. on the other hand you have a handful of self-destructive apps whether it's snap chat etc. we realized there was a big opportunity to bridge these two worlds together. now people are using vapor chat as their everyday chatting app just to chat normally. but now at your finger tips you

have all this option nalt of protection. so you can just chat regularly and all of a sudden if you want to take a text back or we have great copy settings you can determine ahead of time which text or photo can or cannot be copied or saved to your camera roll. we built in all this control and protection we think people deserve. >> thank you very much. >> i can't keep track of the chats. >> there is no reason for lack of communication anymore. >> someone should tell that to -- >> people we don't communicate with. >> it is time for the one number that tells a whole lot. what you got today? >> this is a $56 500,000.

that is the cost of launching. space x says if they can pull off this reusable rocket thing they can lower that down to $5 to $7 million. >> that is why reability is a holy grail. >> it changes the economics of everything. and what we do in space could change dramatically with that cost falling so much. >> that's why elon can avoid the volcano layer. >> and selling lots of stock. >> thanks so much. and thank you all for watching this edition of bloomberg west. all the latest headlines all the time on bloomberg.com and bloomberg radio . we'll see you later. ♪