♪we're having a party happy birthday, grandma! ♪we'll be swinging ♪dancing and singing ♪baby come on over tonight >> tech companies including apple and google join forces urging president obama to protect your data. we will take you to the front lines to ensure your safety while also protecting your privacy. ♪ emily: i'm emily chang and this is "bloomberg west". coming up, google and twitter make up. after a year-long standoff google can now see your tweets. we will tell you what the partnership means. and mark zuckerberg facing growing backlash for internet.org. i will introduce you to the coalition accusing facebook of being misleading. and samsung left a footprint in silicon valley. i will also speak to the guy who designed the new campus.

all of that and more ahead. first to breaking news. etsy is out with its first earnings report. shares are plummeting. the company is warning currency values may hurt buying behavior outside the united states. etsy has had a bumpy ride since it's ipo a month ago. shares have lost a lot of value. they are down 30% from a $30 high on april 16. on top of all this they have been hit by a lawsuit. accusing them of selling counterfeit goods. i bring in leslie picker to being in the numbers. what is the take away today? it seems surprising. leslie: the rule of thumb is when you have an ipo, make sure you have one quarter of earnings in the bag. that is not what etsy did here. as you said they missed on earnings. revenue came in almost exactly where analysts were estimating. this is something for a company that has already been overvalued relative to peers, missing

first-quarter earnings is not a good sign. emily: how big a problem is the currency issue? leslie: it's interesting because during their ipo they said it is not a big deal for them on the revenue side, because most of the products are denominated in dollars. it is more an impact on the expenses. so i think it is a surprise to look at earnings and fx as cited in the press release as being a big cause for the weakness demonstrated in the quarter. in the prospectus, they did highlight the currency that could impact their earnings as the euro and the pound. as we know, over the quarter that has seen some fluctuations. , it isn't a surprise from that perspective. however, it was not highlighted as a big part of their business historically. emily: what about this concern about counterfeit goods? something like 2 million counterfeit items that infringe on copyright. this is supposed to be a site

for handmade and vintage goods. is etsy not going to be etsy reporter: great question. why are we seeing brands pop up at all, let alone things like chanel earrings for $19? it is a big issue as far as combating this idea of scaling business while maintaining the handmade east coast that they -- handmade egos that they were founded on. emily: if only they were i would $19. be there all the time. leslie thank you for breaking it , down. now to a developing story. apple, google, twitter facebook. a few of the tech giants telling the white house to keep its hands off our data. more than 140 companies, encryption experts, and activist groups are asking the president to reject any legislation that would limit encryption or give them a backdoor to product. law-enforcement agencies are not amused. they say it would prevent them

from getting information they need to protect us. so where's the line between what is public and private? cryptography research president paul kutcher is here with me. we also have a senior adviser and a former cia officer. brain cunningham. and derrico cofounder. you actually signed this letter that was published today, why did you sign it and what do you want from the president? guest: yes, i did. what i'm looking for is for strong internet security. i think it has caused economic growth. it has allowed us to do so many things in cryptography, and it is a fundamental part of providing internet security. and i don't want it to be weakened. i think that's going backwards. we need to move forwards to our cash protect our data from criminals, foreign governments and even our own government. emily: paul, what exactly is weakening the data are providing -- or providing a backdoor

actually means? because why would the government , want these companies to introduce vulnerabilities into their systems? doesn't that mean everybody else could get in as well? guest: this theory is you can put a god key that could read everybody's data. but the problem is how do you control that, how do you make it so the policies work with all the different foreign governments that will immediately want access? in practice, it does not work. but there is this sort of hint that something might be possible that is very tantalizing, if you are in law-enforcement. and you see a way that you might get more power. emily: is it possible? paul not in practice. : emily: brian, i want to ask you, what does law-enforcement want? i'm assuming they don't want these systems to be more vulnerable than companies can make them. brian: as a former intelligence

and law enforcement officer, i will tell you, cops and spies always want every technological advantage they can get. and we want that. we want them to do everything they can to protect us. i think, if you can ask jim kobe what he wants, he would say, i want a neutral judicial observer to have the ability to direct companies to decrypt communications once we get the appropriate warrant. in the past that has not been a huge problem, because the providers, microsoft, google etc., would always be able to decrypt communications. as we move into a world where the state-of-the-art is going to be the providers themselves do not have the keys, then this becomes very frightening to law-enforcement intelligence. they are afraid that guys can -- that bad guys can make them go dark. there would be no way, even with the right procedure to get the

key. emily: you mentioned the head of the fbi, who has made the point that we need to protect privacy but also we need to protect innocent people. doesn't the nsa have the capability to break did the doors anyway, why do they need a backdoor? paul: a door is a door. they might want to have cameras in your house is or having government mandated vulnerabilities in your crypto products. that would give people who held the keys a great deal more power. the practical consequence would be that there will be lots of other countries that will not put this kind of law in place. it's probably unconstitutional in the u.s. anyway. but even if hypothetically it was constitutional. the people you care about will find other methods for doing their data protection. but what it leaves you with a -- what it leaves you with is great deal of risk for ordinary

consumers, people who might not be the government's favorite people but who have unpopular opinions, but are constitutionally protected. emily: interesting that amazon did not you know why? -- did not sign this letter. do you know why? i know edward snowden has been more critical of amazons technology saying it is not good enough. guest: i don't know why amazon did not sign it. i know people on the team, my company uses amazon's services. i have looked at their security. i think it is good. i don't think it is because they have weaker crypto. emily: obviously they have made it clear this is what they want. but how big is this impact? brian: i've given you the law-enforcement intelligence perspective, putting on my privacy lawyer hat and former white house official hat sometimes our national leaders have to look beyond just a short-term technological advantage for law enforcement

intelligence. and look at not just privacy and civil liberties, but also the competitiveness of american companies overseas and need to -- you need to get the trust back of customers around the world. so i think it's too early to , tell what the impact will be if this letter succeeds. but i will say this. although i'm in favor of the letter, i don't think we should view this as a cost free decision. if our law enforcement and intelligence agencies lose the ability to decrypt communications from real bad guys, there probably will be a -- attacks and threats. what i think national leadership should do is put the big picture into the perspective, agree with what is and the letter but be straight with the american people that this can do some damage. emily: brian cunningham, along with cryptography research

president paul kocher. we will continue to follow this letter and see what impact it has. today in cybercrime news, the u.s. government charging six chinese citizens with stealing mobile phone technology and sharing it with aging. -- beijing. here's what allegedly went down. two chinese researchers met at usc and went on to with -- work at us-based companies. there, they took valuable code and designs for wireless signal filters and conspired with officials at china's state-run university to re-create that technology at home. the espionage charge could mean 15 years in prison for the people accused. this case is being prosecuted by the u.s. attorney's office here in san francisco. next, trouble is brewing for one of mark zuckerberg's tech projects. over 60 organizations are asking for changes to internet.org. after this quick break.

plus, distracted driving hits new levels. a surprising number of smartphone users use facetime and drive. ♪ ♪

♪ emily: a story we are watching. a potential challenge to yahoo's plan to exit its stake in alibaba. the irs is considering changes in its rules for spinoffs of trades or businesses. that could impact yahoo's plans to hold a tax-free spinoff.

the deal is widely seen as a critical step for ceo marissa mayer who is under pressure from investors to find ways to cut taxes. the story has sent yahoo's shares down 7.5%. well the backlash against , internet.org is mounting. over 60 different organizations across 28 countries signed a letter to mark zuckerberg criticizing the free program that gives simple internet access to people in the developing world. the program is up and running in 11 countries, but advocacy groups are demanding big changes, citing net neutrality and privacy. joining me is advocacy director josh levy. his organization wrote that letter to mark zuckerberg. sarah frier is with me in the studio. john i want to start with you. why is this backlash against internet.org gaining momentum right now? josh levy: we are at a very critical moment in the fight for internet neutrality and to

protect privacy and peoples' security online. we had a big victory on net neutrality in the u.s. there is a lot of fighting going on in india and elsewhere around the world right now. so people are paying attention to this issue and realizing that facebook is expanding to all of these countries, that net neutrality is important. even if you are just having developing internet access people realize that they need access to the full internet, not just part of it. they are really getting outraged by what they see internet.org doing. emily: i spoke to mark zuckerberg in december about this. it is a pet project of his. i asked him about calling it internet.org and whether that was a genuine term for the organization. take a listen to what he had to say. mark zuckerberg: if we were primarily focused on profits the most reasonable thing for us to do is just focus on the first of billion people who are using

the product. the world is not set up equally. the first billion people using facebook have way more money than the rest of the world combined. so from a business perspective , it actually doesn't make a huge amount of sense for us to put the emphasis that we are right now. emily: josh, mark made it clear that this is a business. so should this be called a.org? -- a .org? if they are not giving access to the entire internet? guest: that's a good question. the big question is should it have the word internet? -- the word internet and it? it is access to a handful of cherry picked internet connected services. this has come up many times among advocates that maybe we shouldn't call this internet.org whatsoever. maybe it should be facebook.net or internet connected emily: is -- internet connected services.org. emily: is facebook conflating

the internet with facebook? guest: what facebook is saying is this should be a gateway drug to the internet, and if you look at some of the basic services in the u.s. we get for free, like 911 calls, this is something as essential to people's lives as that according to zuckerberg. that is how he equates it. keeping people connected allowing them to have contact with others in times of need. let's start there and maybe one day be people will realize what potential the internet has and actually become internet users. emily: another criticism is is the internet more essential than food and water? i also asked mark zuckerberg about this very question, mentioning bill gates who has criticized the internet everywhere projects by other companies, like google. take a look. mark: bill and i had a few conversations about this and other things we have worked on together. the reality is people need a lot of things in order to have good lives.

health is certainly extremely important. we have done a number of things at facebook to help improve global health and in the area. -- and work in that area. but the reality is it is not an either/or. emily: josh is facebook putting , the internet before food and before water? and what do you want him to do instead? guest: i don't think facebook is doing that. i do think that i agree with mark zuckerberg, it is a false dichotomy to say the internet is not as important as food or water. that is a bit of a distraction. i think the focus here is on the fact that the internet is important, it is essential in in people's lives, and we need to make sure we are not creating more inequality by creating a two-tiered internet. where people who cannot afford it gets scrapped. the reality is a lot of people won't ever be able to afford expensive data plans.

we think that there are a few things facebook can do that would help alleviate these issues. first off, provide access to the full internet. there are models out there and suggestions that facebook can provide low data caps for free that can allow people to access all services. if they want more they can pay for regular data plans. other things they can do is protect privacy and security for users that are accessing the internet through their app. right now, those things are not protected. emily: there is a question whether the services are encrypted. and they are quite basic. thank you both for joining us. we will be watching to see how mark zuckerberg responds. in today's edition of drive, a new survey commissioned by at&t finds that smartphone users are doing a whole lot more than texting while driving. 7 out of 10 users are on the phone. but 4 out of 10 are on social media.

tweeting, instagram in and snap chatting. what's more, 10% of people actually video chat while driving. about the statistics, the marketing chief of at&t says i don't even have words for that. but there is a disconnect here. according to aaa, more than 84% say it is totally unacceptable to text and drive. that's what most people think. coming up samsung is expanding , its footprint in silicon valley. with a glassy new flagship building. i sit down with the man behind the architecture. ♪

emily: it's time now for the daily byte. one number that tells a whole lot. today's number is 9000. that is the number of tweets per second that twitter's so-called "fire hose" sprays into the ether. the fire hose is at the heart of a rekindled partnership between

google and twitter. starting today, google incorporates real-time content from twitter into search results. remember, the two companies used to have a similar deal, but it fell through in 2011 for a handful of possible reasons. but they appear to have made up. twitter responding, google, we -- googled tweeted, "your search results just got more time. twitter responding, google, we are feeling lucky. investors thought perhaps this deal could be the key to boosting tweets outside of the traditional feed. there is a building spree happening in silicon valley. tech companies from facebook to amazon, google to adobe are expanding their footprint, each one with a more sprawling and green and glassy building than the next. but there is one company that is building a home away from home. that is samsung. it is nearly finished with a new 1.1 million square-foot office which has cost $300 million to build. it should be open by the end of summer. let's take a virtual tour with indy b.j with scott wyatt, the man

behind the project. his firm has designed buildings for amazon and microsoft and many more. what is different or special about samsung's project? different than all the other things he designed? -- all the other things you designed? scott wyatt: i think it is really pushing where the technology companies are going becoming more urban. more relevant to the employees. and more connected. emily: how so scott wyatt: this is a tall building, up against the sidewalk. it is next to two rail stations. it is about the energy happening outside the building as much as it is inside the building. inside, there is great connectedness, vertical gardens, it's a great place to work. but it's also different than a lot of things that are happening in the degree to which it is an urban place. emily: i know you are on the project from the beginning. how much time, thought, and money samsung put into the

project -- did they spare no expense? guest: no, they were very careful with their money. just like most clients are. it was not throwing money at all. but they put a lot of thought into it. and we dealt with a lot of the same stuff. emily: give me an idea of some of the debates you had. when you were conceptualizing this. where they said, we want to go more this way than that way. scott wyatt: well, was it to be a tall building, do we bring it to the sidewalk, do we deemphasize parking? those were issues they thought about. they were very interested to know what their future employees are like and how this can be a workplace that attracts them keeps them there, and importantly becomes a very innovative place. emily: talent and retention very important. is the tech industry redesigning the traditional office? are you seeing things they're putting into their headquarters that other traditional companies are adopting? guest: very much so.

the change in what work is and how work is happening is causing this. there is a lot of experimentation going on with a lot of companies. they're looking at how we can get work done and how we can be more productive. it is a time of tremendous change and experimentation. emily: how is samsung different than working with amazon or microsoft? scott wyatt: every company is unique in its culture. and samsung has a culture. it is an international company and it is headquartered in korea. it is fascinating to work with people of those cultures. and how does the culture of their society impact work, and how did they become a culture of both americans and many different diverse people working in the same facility? emily: when will it be done? guest: it will be done this fall. emily: looking forward to seeing it. scott wyatt, who designed the

new samsung building in silicon valley. scott thank you for joining us. , and thank you for watching this edition of "bloomberg west". that is it today from san francisco. ♪

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