emily: drama in the c-suite. jack dorsey's appointment as twitter ceo is not a done deal. what does it mean for his other company, square? ♪ emily: i'm emily chang and this is "bloomberg west." coming up, a heavyweight battle is brewing in the video streaming market as amazon takes a swing at apple and google. plus, at the same time, google and microsoft declare a truce in a five-year battle over smartphones. and a huge payday coming up for some of the executives at first data.

the payment processing company getting ready for the biggest ipo of the year. first, to our lead. just yesterday, it was reported that twitter interim ceo jack dorsey was back for good. today, recode updated its reporting, saying it is not a done deal just yet. twitter shares closed down slightly today. still, dorsey seems to be the top pick for the job, and right now the only pic for the job. so what does it mean for his babies, twitter and square? he has referred to both companies as his children. joining me from new york, james, an analyst, as well as the david austin professor of management sinan, and alex barinka bloomberg news reporter , a who covers ideas. alex, what are you hearing from your sources today about what this means and what it does not mean? alex: i can tell you about the

state of play in the last few months. we have reported that, according to our sources, that they were planning on moving forward with the ipo with or without jack dorsey. our sources told us that the bankers think the company is healthy enough to go on. but one thing to keep in mind is this ipo process includes a roadshow, and they are out-marketing and -pitching the company. it does raise questions for investors -- are they comfortable buying into new public shares at a company where it is not certain at this time whether or not dorsey will be there? those will be the big things we will be paying attention to when it comes to whether or not square becomes a public company in the fourth quarter, which they are planning on doing as of three weeks ago. emily: james, let's talk about the near term -- let's say he is doing both jobs. steve jobs did it. elon musk did it. does that make it ok? absolutely not. basically, those justifications by pointing to jobs are not

warranted in this case, because those are completely and entirely different scenarios from what twitter and square are facing. these are companies in developed markets, facing fierce competition from all angles, and really are facing a do or die right now. they're operating independently -- operating deep had only -- dependently off of two different companies is not the right thing to do. it is concerning now. emily: it's interesting you say that. because last week, i spoke with a partner at sequoia who is on the square board. i asked him, look, what would you say to jack if he came to you and said, i want to do both of these jobs? take a listen to what he had to say. >> i don't think it is for me to judge, tell him that he can't do that. emily: there you have a square board member saying he does not really have a problem with this.

sinan, what do you make of those remarks? sinan: it sounded like a soft pedal to me. it sounded like, well, i can't really say for him what he should do. in my opinion, i think jack dorsey is a very credible ceo. i think he has a lot of talent and skill and leadership ability. i think that will be really a benefit to twitter. because twitter right now is in a position where they need to focus on product, and that is his strength. as i have said before, i think that being distracted by another full-time job, let alone one at a company that is about to go ipo, is a really important concern that he should think about, and that square investors and the square board should also think about. emily: let's talk about that. alex, i want to get your thoughts on this. on the one hand, there is talk this could delay the ipo or put some pressure on the ipo. on the other hand, if something is announced before the square

ipo goes on the road that certainly adds some clarity to a very confusing situation. jack dorsey was going to be hampered with questions about this situation anyway, and if twitter makes a decision before the show goes on the road, i could imagine that could be beneficial, right? alex: it seems like clarity will be key here. it's that uncertainty that might have unsettled potential investors a little bit. you would think that in they might be able to figure out how to get their ducks in a row. but the bottom line here is, management is putting their face out there, and if you don't know who that face is going to be for square, for these potential investors, that uncertainty could be a problem. emily: it is interesting. james, you guys actually upgraded twitter recently. the ceo situation has not changed. dorsey has been the front runner for the last several months and there hasn't been an obvious outside candidate. it seemed clear early on that adam bain was not going to take

this job or get this job for whatever reason. why are you optimistic about the longer-term future? james: basically, we see twitter as one of the only companies optimized for mobile. so you have that advantage for the next stage of growth within the industry, but also they have the election-year benefits and limited downside for now. the big thing is, what we think we are going to see, is changing the conversation from from talking about the subscribed monthly active users and making it about the total audience as they curate the content on behalf of the users. you can go from a sunday night football game to a presidential debate and have that curated stream and have a total audience approach. i think if they change that conversation, confidence will come back into the story. the kind ofis product guy that can make that happen. weighedrisk-reward, we the benefits and saw 15% downside risk, limited at that time, and that's why we decided to upgrade the stock.

emily: sinan, you say this could make or break twitter. that sounds obvious, but on the one hand, as you say, it could be so wonderful for twitter, just like steve jobs coming back to apple, or it could go in the opposite direction if it does not work out given the position that twitter is already in. expand on that for me. sinan: i think this is a high-pressure situation for jack dorsey, because this is certainly the hallmark of his career. if he can pull this off successfully, being the head of both of these companies, he will join a very short list of tech greats, but he is not in that position currently. he hasn't demonstrated yet the success that he has the potential to demonstrate with these two companies. i think that for twitter, it is a crossroads. stock price has tanked in the last several months. everybody has questions about user growth and user engagement,

and there is a ton of potential with this product, but it requires a long time frame and hard work to change the product into something that is useful for everyday users and is usable. i think that jack dorsey is the right person for that job. they need to have some shuffling both in terms of who is in charge of product and on down the line, they have made some of those changes recently, as well as, you could see some boarded dashboard -- board changes in the near future that might be very beneficial for the company as well. twitter and jack dorsey are at a watershed moment. let's see what happens. all the best of luck to him, because if he succeeds it's going to be one hell of a party. emily: sinan, m.i.t. management professor. analyst, and alex barinka, our idea reporter. alex, i will speak with you later. to another story we are watching. amazon will stop selling the

main competition to its tv product. the apple tv google chrome cast, but not necessarily the roku or xbox. tom joins us now for more. amazon says it wants to avoid customer confusion. but is this really putting the customer first? tom: good question, emily. it gives the appearance of being a little bit less than friendly to consumers who want to get on amazon and buy whatever product they want. in particular, it is something that could be more damaging to google than apple. remember, we can buy all of the apple gadgets we want by walking down to an apple store. we can get it online from the apple store online. google is a little bit harder. google doesn't have quite the retail presence that apple does. in particular, if you are a consumer that wants chrome cast and go to amazon to buy it, you will be a little bit stymied.

emily: tom, what do you make of this? on the one hand, we are seeing google and microsoft strike a deal over patents. on the other hand, we are seeing amazon shot across the bow to google and apple. and prime customers are the minority of amazon's business. the vast majority of people don't have amazon prime and don't want amazon video on demand, right? tom: exactly. that's the point here. there are a lot of people who are looking for ways to download streaming video right onto your tv, use a device, bypass cable operators. emily, we have been talking about this for a long time now. the kids right now are not subscribing to comcast, they are not going to dish, they want something easily accessible, easy to stream. these are not even cord cutters , these are cord-nevers. devices like apple tv and chrome cast, amazon fire, these are all

things that make it really easy for millions of people to get their tv easily. the competition between apple and amazon and google is intensifying in so many areas, including this one. it does have the feel of being slightly anticompetitive. emily: could there be an antitrust issue? tom: that is where regulators will come and say there are other opportunities and ways to buy your things. amazon does not have a monopoly on this. so we don't think you will see regulators get up in their grill. emily: interesting. tom giles in new york. thanks so much, tom. emily: still ahead, first data could become the biggest u.s. ipo this year. we will tell you why the payment processor could be worth over $17 billion. ♪

emily: first data is seeking to raise as much as $3.2 billion in what is poised to be biggest u.s. ipo of the year. according to a regulatory filing, first data selling 160 million shares priced at $18 to $20 apiece, meaning it could be worth as much as $17.6 billion. first data was taken private by kkr eight years ago. you know them because they handle 45% for all u.s. credit and debit card transactions for companies like kohl's and panera bread. the company also provides the security technology for apple pay. still with me, alex barinka, who covers ipos for bloomberg. alex, step -- set the stage for

us here. why is first data so important? why is it worth so much? alex: for a few reasons. this is kkr's biggest equity bet ever. this company was taken private back in 2007, as you said, in that area of big ipo's. they struggled through the recession, they replaced the ceo several times. they finally got this guy, "mr. fix it" on wall street, and he has been in control since 2013. now kkr is looking to make money back on their investment. billion in $3.9 equity. right now, as of the price range that came out this morning at the high end of the range, their stake is looking to be about $5.3 billion. on the surface, it looks like they are winning on this one, but that is the stage here for how big of a bet this is for kkr and how much is riding on this ipo pricing and trading while going forward. emily: it's interesting -- as we have seen all this market volatility, companies are still going public this year.

jay, i'm curious -- what other companies out there are at this level that have been going public this year? jay: there are a number of big deals in the pipeline with some well-known brand names, ferrari, albertsons, neiman marcus, as well as companies without real popular brand names, such as pure storage. but we are seeing a slowdown in biotech activity with a decrease in biotech prices. and energy offerings have dried up. emily: alex, i know you have been crunching the numbers. flesh that out for me in terms of the biggest ipo this year when it comes to general and tech focus. alex: the biggest is looking to be first data. if they price at the higher end of this range of $3.2 billion for the offering, that will top the charts in a slower year for ipos.

sell, -- did to cell, lookingigi to be about $2 billion. there are some other companies in the mix -- tall grass energy, blue buffalo, and fitbit, but as you can tell, not as big of as a year as last year. we had alibaba in the third quarter of last year, and that $25 billion offering made it a hard call for 2015. you mentioned pierce storage. they are looking at an ipo this week, $450 million. talk about what else is coming up for the rest of the year. we were talking about square earlier in the show. jay: it all depends upon what happens with the stock market. as many people have noted, a lot of tech companies have been finding it very easy to get a lot of private financing, not only through venture

capitalists, but also from mutual funds that are willing to invest in private companies. i think they will be very sensitive to public market valuations. if the stock market goes up, then they will tap the public equity markets, and if not, a lot of them will bide their time. jay of the university of florida and our very own alex barinka. thank you both. uber is fighting back against the proposals to tighten private car regulations in london. the crowd source car service has gotten more than 118,000 signatures on a petition against the regulation. among the proposals are requirements that private cars wait five minutes before picking up a customer. another that would prevent available cars from showing up on a map. the proposals came after london's black cab drivers claimed the lack of regulation was hurting the bottom line. the proposals and to the

problems that uber is facing in europe. yesterday, two google executives in paris appeared in court, and on tuesday police raided uber's european headquarters in amsterdam. coming up, two tech giants bury the hatchet. microsoft and google reach a major truce on patent lawsuits, but why? we will tell you, next. ♪

emily: a three-year old fight continues to escalate. filed amark lynch lawsuit in london today seeking $160 million from hp. lynch says he suffered a significant amount of damage to his reputation and unable to pursue business opportunities,

-- business opportunities. remember, they agreed to a $10 billion merger in 2011, but hp wrote it down and accused autonomy of accounting fraud. but lynch was not the first to strike, hp already sued in earlier this year for more than $5 billion. staying with lawsuits, microsoft and google have agreed to a monumental truce over patents. they had been clashing over royalties relating to technology and the xbox gaming console. in a joint statement, microsoft and google say they anticipate working together in other areas in the future to benefit our customers. joining me for now is bloomberg patent reporter susan decker and david long. susan, you have been reporting on this today. this deal is significant for what it does cover as well as what it does not cover. lay it out for us -- what is included in here and what is not? susan: first, they are dropping

20 lawsuits in germany and the u.s., eliminating all of the suits that google had inherited when it bought motorola mobility. they are also going to be quite operating on some patent issues. what it doesn't include is the android licensing program. microsoft will still be collecting royalties on android when it can. emily: david, how significant is this for both of these companies in terms of how much they spent on litigation over these patents , and what potential deals it could open the door for? it is significant and giving them certainty as far as resolving the dispute between them. when you look at it, google kind of inherited this case, which was brought by motorola mobility, back when it was its own independent company. the business justifications for bringing the lawsuit when it first was brought changed after google acquired them.

in fact, google sold the motorola mobility hardware to lenovo. so the business justification for the case changed even more after that. it gives them certainty. it allows them to focus on the things that their interests are aligned in, both with patents and otherwise. emily: susan, we saw apple and samsung go all the way to the wall in the united states over patents, and now we are seeing the truth here. -- the truce. is this a start of a trend? susan: it certainly marks the end of the smartphone wars. we still have samsung and apple fighting for specific issues they have to do, but we can tell there is some maturation in the smartphone market. it is not growing the way it used to, so there is not a need for a lawsuit. emily: david, if this is a milestone or potentially the end

of the smartphone patent wars, what is the next phase in tech patents? what are you watching for? david: that's a good question. i will say in this case, it is a good example of the ebb and flow we always see in patent law. whenever there is a new technology, mobile phones, back in the 1800s there was sewing machines -- whenever that comes up, we see a lot of these patent battles. the next thing we will look for is the next adventure, frontier for innovation, and we will see patent wars come up again. you know what, they are good because at the end of the day, the consumer benefits because of all the innovations that come about during that process. emily: susan, what are you watching for? in terms of your reporting, are you looking for more deals? what is the next big trend? susan: right now, we are seeing a number of fights over the fundamental technologies, you are seeing old-school companies like erickson and are no longer in the

business of making phones, but they have fundamental technology and are fighting to get some money. in terms of new technology, we are looking at the internet of things, entertainment systems on automobiles. i'm actually keeping an eye out for fracking lawsuits, since the fracking world is coming down. we have to look at what is happening in different industries, and you know if they market is going up or down, companies will start fighting. emily: susan, i know you will keep us on it. susan decker of bloomberg news, our patent reporter, as well as patent lawyer david long, thank you both. that does it for this edition of "bloomberg west." tomorrow, we have the new ge cmo. you do not want to miss that conversation. that is it today. ♪

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