storiesere with the top first of the appetite for equities has continued to sour. stocks decline with emerging market currency. asian shares fell the most in one week after oils weakness. now it is below 140 for the first time since 2009. oil is followed with biggest two-day decline after an oil minister said plans different production was ridiculous. the biggest oil producers in saudi arabia and russia agreed ifcash out at january levels others followed suit. in hong kong, the economy grew

at its slowest pace since 2012. the financing terry saying it is trending down the territories budget today. the local economy is laden with the risk. the government is protecting 2016 gdp growth between 1% ansd 2%. questec look at the markets, hong kong and china currently closed for lunch. here's how they were trading, we're seeing the global rally we're resuming a selloff picture for tokyo and mumbai. time now for bloomberg west. emily: another suitor for yahoo. appears in the form of time inc. where does bill gates and stand on apple and encryption. we asked for the microsoft cofounder to clarify reports

that he is on the side of the fbi. the market selloff is dragging fintech down with it. we check in what is happening to funding and evaluations. ♪ emily: one day after apple called on congress to take up the matter of encryption and privacy the senate has proposed a measure that would make it illegal for apple or any u.s. tech company to refuse government orders for access to encrypted data. to help me break it down, here is kevin whitelaw. what do you make of this latest development? it certainly has people on both sides of the aisle talking. kevin: i think this is an interesting thing. we watched the encryption debate bubble up a little bit last year. this seemed to fall under the

same category as a lot of things in washington where the two sides could be brought together. back when the san bernardino shooting happened. there was some talk about whether that could change the dynamic and it didn't at first. now the government might offend -- have found the case that has the potential at least in the senate to actually force legislation to go through. this is not a republican versus democrat issue. it is a really unusual split. that makes it hard to predict going forward what might happen. emily: dianne feinstein is coming out saying quite strongly i didn't think a company could set itself above the law. the fbi is doing everything it can to make sure americans are protected. opponents say this forces companies to become spy agents of the government. how do you expect this to play out?

kevin: this was is starting in the senate. where it might have a slightly easier time of advancing. you have a key democrat dianne feinstein who represents california, where apple is based. on the side of this legislation. they insist is broader than just about encryption but it is about forcing these companies to understand they have a legal presumption or requirements to cooperate with these requests. what that triggers on the flipside is from very liberal democrats as well as very libertarian republicans. they say no, this is an overreach of what the government should do. it violates civil liberties. a central law and order group and then you have folks on either side of the spectrum. talking about civil liberties and privacy.

you will see that in particular on the house side. it actually might have a tougher time passing in the house. of is the, that is firmer control of the republican party in the senate does. emily: apple has kept a fairly low profile in washington up until now. what is the next step here? is it tim cook testified before congress? kevin: everyone is waiting to see when he is going to make his move. he will have to take his case to congress. they could come as early as next week. what committee he might decide he wants to talk to. he has received at least one invitation. they will have to present their case. they have not done a ton of lobbying work. a lot of members of congress use their products. some interesting arguments.

they said let's get a commission, let's get congress involved. some cynics would say you get congress involved to slow things down. that might be part of what apple is trying to accomplish. emily: apple has at least until friday to respond to that order. we will be closely watching this. another suitor knocking on yahoo!'s door. time inc. is now interested in possibly buying yahoo. for business. the publisher of time and people in sports illustrated has gone so far as to hear presentations from yahoo! bankers.

they began approaching private equity backers on monday. they are competing with others such as comcast. adventure capital firm that invests in social data. how exactly would this work. alex: this could be appealing to both yahoo! and time is that the structure of this deal would be called a reverse morris trust. when one company spins off assets they would be merging in the stock for stock deal with the company that is slightly smaller. time is actually well sized for this transaction. it would be a tax-free transaction. if yahoo. believes that it is

undervalued with the current market. conversations with the bigger players such as comcast and verizon and at&t. private equity firms are interested in yahoo!. it doesn't get the price of wants from one of these companies it could do this merger with time and then you could theoretically still get the upside of yahoo!'s valuation because you would still own at least 50% equity in that company. it is appealing to both sides. emily: is it really good idea? we would looking at the stock charts which closely mirror one another on the way down. one headline called this the aol-time warner merger. tom i can see the argument. operationally this would be a

disaster. the year of your one million -- one-year decline of think it gets close to 40%. i think that it is a struggling company struggling to find itself in the digital world let alone the mobile digital world. you have, putting these two companies together would be a mistake. emily: the ceo of time is very interested in this deal. talking about his digital strategy. joe: we are investing heavily in our digital content and our digital audience is up to now a 185 million social. our digital audience over the last two years has grown dramatically. last year we produced 23,000 videos.

short form videos new opportunity for us. a real opportunity for us in native video. it is supposed to become a $30 billion industry. emily: why would it make sense for time to scoop up dying media properties? alex: he alluded that they had to do something. yahoo! has a billion users. many of those are still readers. joe used to work in aol. you would imagine that there is some knowledge in fact time has several people that came from yahoo! as well. there is some knowledge there is some knowledge thereby have a theoretically leverage some of the ad technology that yahoo! has similar to what aol had. the question is, is times offer going to be better than verizon's, which actually owns aol now and it has a ton of money?

i spoke to one banker who admitted to me yahoo! is a rounding error for verizon. if they put to that of all-cash offer out there will that be thatcompelling to yahoo! some sort of reverse morris trust? emily: what you think is the best and worst case scenarios? john: yahoo! still has strong assets. some specific vertical assets in finance and weather that are strong. the court it was holding yahoo. together was the e-mail hub. over the last year we've seen significant decline there . particularly among desktop usage but also mobile usage. that is pulling apart the core of what is yahoo!.

if somebody could make sense of this, and i certainly think that in 2016 there's going to be more mergers and acquisitions between technology and media companies. i just don't think this one makes any sense. time is a company that is still struggling to find a strategy. a blind man with an ax is a dangerous thing. emiky: i know you give us honest. thank you for being straight up. speaking of tech, dell's proposed acquisition of emc is gaining antitrust approval from the ftc. they planned to fund the deal of $16 billion, but cut that amount to $4.25 billion when banks offer up to $50 million in debt. months before one of the biggest

credit market selloff in years. the same sort of financing may not be so easy now. bond markets have become much more volatile. making it difficult to conclude -- complete deals with large amounts of debt. this is a good sign for the tech coming up, sec's shares rallying. ipos? we will discuss. bill gates disputes a report that he backs the fbi in its dispute with apple. this is a bloomberg exclusive. ♪

emily: shares rallying off the back of the latest earnings report. stronger than expected guidance through 2018. its gross margin could be in the mid-60's by then. before today, investors were actual turning their back on the

company. sending shares down some 50%. is it a sign that ipos are coming back? what would you highlight? cory: you saw this kind of increase in the guidance. i love companies that don't always follow the earlier numbers. we really saw tremendous growth. most impressively, they were getting more revenues than they were even getting in terms of gross merchandise growth. they are selling more stuff but they're are taking it even more in terms of revenues. that is a very positive sign for this business. gil, what trends do you see? gil: the quarterly report was very good it was a very strong

quarter for e-commerce across the board. it is lower-than-expectations. but i think investors will increase and appreciate the invisibility. the one concern i have is that their position continued to decline. they were cut by more than half in the last couple of quarters. if they can't get enough sellers there won't be enough merchandise. their growth is decelerating very quickly. there were growing twice as fast just a year ago. this is a process of them

reverting to the mean growth of e-commerce. eventually they will be growing 15% just like the rest of e-commerce. there are other properties in e-commerce like paypal that are better. but the quarterly figures were very good. emily: we've been looking at fitbit as well. what do you see when it comes to a broader trend with these 2015 tech ipos that people of been so worried about floundering? cory: it is a change of market sentiment. from promise me to show me. there is concern about this just being a fad. if you look at it sees marketing costs they are spending a lot of money to get new customers. 26% of revenues in the last quarter. fourth quarter was a big order for them in terms of spending and marketing. the guidance suggests that number is going to continue to be very high. slowing edition of sellers. slowing growth. a company that is so young. even as they are spending so much more on marketing.

that is what keeps his company from turning a profit. wmily: what do you see this doing to the tech ipo pipeline? gil: pipeline to the really big hit with betsy's post-ipo performance. it is still below were closed that day. it is going to be very hard to convince private companies to do that in this kind of market. the reality sets in very quickly that the private valuations go out the door when the public markets make their better informed decisions. emily: does this mean a boring year ahead? cory: it will not be a boring year. stay tuned. the window does not open will see a lot of the companies they

didn't raise enough money that are built around burning money to try to get big to try to get the ipo. we will see those companies start to collapse. we will see executives start to leave. a massive disruption in the way the economy works here are particularly in the bay area. a lot of these unicorns falling on their horned faces. emily: trouble in unicorn land. and we had a front row seat. thank you very much. what does the market selloff mean for fintech? the connection with the big banks. ♪

emily: in the race to dominate the cloud google may have a new customer. spotify is saying google cloud will provide its platform infrastructure everywhere. nicholas went on to say that google has an edge when it comes to storage and network services adding that this big project

could take time to complete. tuesday's announcement is a big win for google which is an outstanding competitors to develop its own cloud business. amazon leads the market and big margin right now. microsoft is right behind. but the competition is fighting to close the gap. bank stocks have been having a tough time. the sector faces falling revenues and higher compliance costs. increasingly facing the threat of a broader economic slowdown. could this bodes poorly for fintech? is there fate tied to the bigger banking sector? a lot of banks actually are investors in the start up. brooke: as banks run into harder times they may be less likely to invest in these kinds of startups.

once you see these funding sources dried up, they could give up their premium evaluations. emily: but we've been seeing companies raising record funds. brooke: you have to see these firms seeing the market volatility in the same time and seeing these fears about an economic downturn. you have to think that they are going to be at least more cautious in looking at some of the startups. we are hearing about lending club raising rates to deal with the credit crunch. some of these companies there are questions about whether this business model that they have built of offering very low rates will be sustainable in a massive recession. most of these company's came about in the wake of the financial crisis. they have never really been tested by a big economic

downturn. that does give people some kind of pause. they are not going to be willing to pay those huge premiums that we have seen. emily: he think that valuations could fall another 25 to 75% how much of fintech will take the hit? brooke: maybe a third, it is not so crazy when you compare it to lending club which is down about 26%. it is easy to see how some of the startups could be seeing similar drops in their valuations. emily: some experts say there are 25,00 fintech start ups out there. do you see this investor sentiment actually hitting the ipo market as well?

brooke: yes i think it is already hitting the ipo market. we have seen so few ipos so far this year. we'll see that continue to happen until we see less volatility as that hurts your chances of exiting some of these investments if you are a venture capital or private equity firm. emily: is this an opportunity for one of the bigger players such as google to move into this space? brooke: that is deftly the -- definitely the big threat. if you are trying to compete with somebody like google or apple that is a huge challenge. we had citigroup talking about google buying aig and that is still something of a pipe dream at this point but there could be some top opportunities are these companies to get into finance especially with all the concerns about privacy and making everything more secure and we are moving toward a more digital world. emily: thank you so much for joining us.

coming up, bill and melinda gates give us an exclusive interview. first up apple versus fbi. where do they stand? ♪

angie: oil continues to slide . the plan for producers to freeze production was ridiculous according to some. last would be too big is our agreed to cap output at the january levels. falling crude is weighing on equity markets with asian shares falling for a second day. economy may grow at its lowest pace sent at least 2012. the finance secretary handed down the territories budget , forecasting that the economy expanded to 1%.

the pound drop below 142 the dollar, its lowest level since 2009. the bank of england policymakers said the uncertainty of a vote for britain's exit from the eu is weighing on the currency. mark carney said the weaker pound could opt at the uk's other economic frailties and help boost inflation. honda has announced a shakeup at the top is quality concerned persist a year after the carmaker replace the ceo. thechairman and eight of top executives will leave the company. honda is recalling tens of thousands of 2016 civics on the month after engineers in the redesigned model because of manufacturing errors could lead to engine failures. now two point 5% down. those of the headlines from bloomberg news powered by 2400 journalists. check in on how the markets have been trading. slipping once is

again. we continue to see regional benchmarks at the lows. the influx in parts of the region are all in the red. except for the new zealand stock. s really taking a tumble now. yennikkei, that stronger weighing down on the index. utilities and materials are falling the most. the slowest growth have seen in four years, the fighter secretary talking about how they need to stimulate this economy. 1.7% downore seeing after gdp figures for an upside surprise thanks to services. there are economists boring this will not the -- continue to outperform given how manufacturing has been.

i want to bring some figures on malaysian inflation numbers that came out. 3.5% of that is below estimates but the highest level since march 2014. we're counting down to hong kong and china the top of the hour. ♪ emily: the dispute between the fbi and apple continues. apple is now saying they have received nine similar requests since october 8. bill and melinda gates weighed in on the matter. let's listen in. >> it is a challenge to update the policies, including those issues of when does the government have a right to know? having a really good debate about when is that appropriate, -- the extreme view that the government always gets everything, nobody supports that. having the government be blind, people don't support that.

>> were you blind-sided a bit, i came in and saw headlines that said bill gates backs fbi. bill gates: i was disappointed because that does not state my view on this. i believe that with the right safeguards there are cases where the government on our behalf, like stopping terrorism -- that is valuable. but striking that balance, clearly the government has taken information historically and used it in ways that we did not expect, going all the way back to the fbi under j edgar hoover. i'm hoping we can have the discussion. i believe there are sets of safeguards with the government should not be completely blind. >> what is to be done in this case? you were blindsided with knocking your exact message. bill gates: the courts will

decide this and i believe apple said whatever the final court decision is, they will abide by. in the meantime it gives us the opportunity to get this discussion. these issues will be decided in congress. the patriot act and how that gets evolved. you don't want to take the minute after a terror event and swing that direction. nor do you want to completely swing away from government access. you are to strike that balance that united states leads in setting an example. >> is it the same stage now as environmentalism. it's becoming as fundamental to them as greenery to a previous generation. everybody wants to feel like their information is kept private -- particularly,

because more and more of your activity is in that digital log. >> they put it all out there. bill gates: when people are empowered by technology in terrorist activities, it's not just that they can kill a few people, its nuclear and biological they can kill a lot. we do what the government to be out there trying to stop things from happening. it's not completely in one direction. >> if you look at the early liberals to refuse to open people's letters because they were frightened. you've generally seen yourself as a sort of liberal. bill gates: i think that governments always are there to try to maintain order and having some awareness of what is going on, the u.k. strikes the balance differently than the u.s.. there are some degree of terror activity.

the idea of cameras in london, people are comfortable with that. i don't think that is likely to happen in the u.s.. the u.s. will always want to be making sure the government doesn't overreach more than most places. >> you have used technology to empower the developing world. there are fears that type of connection does lead to terrorist type of behavior. how do we manage that, and control that, and use that for good. you yourself have said at one point maybe your 14 or 15 you did hacking. >> we are so focused on -- it's a tragedy when these things happen but it's a small number of people. look at the amazing stuff that technology does. when i see it used at scale in tanzania and the philippines and you see people saving a dollar a day or two dollars a day you say i still have this on my phone to

pay to keep my child in full that has a profoundly different effect on society. you of millions of kids going to school, and women saying for the first time that i have access to a bank account. i have my own money and i do not have to renegotiate with my husband over household finances. that is hugely forward momentum. we have to where is it enhancing the world. not just in the ways we seeing in the united states, but worldwide. stephanie: to counteract that, what do you say when the woman from flint michigan writes you a letter and says you are making extraordinary advancements in tanzania but what about me? i lost my job four years ago. i don't have the skills for the job they replaced it with and my home is valued at zero. what do we say to that woman? melinda gates: we say that we do care about people in the united

states and we are trying to rebuild the country in those ways which is why we also put money into the u.s. system. helping to train people through community college is one thing that people do. making sure kids get a college education, you have to do both. we feel that with our own philanthropy we are focused on the part of the world where most people focus, but we focus on the u.s., too. stephanie: are you sure you do not want to run for president? [laughter] melinda: definitely not. emily: pro apple supporters are rallying outside the fbi headquarters a week after the fbi went to court to force them to weaken iphone security. the internet rights group fight for the future organize several events outside apple stores in united states, the u.k., hong kong, and germany. we are monitoring. the encryption debate is proving to be good business for one startup.

telegram, a messaging app that encrypts messages end to end has surpassed 100 million users. it's still less than the 45 billion messages set daily the cofounder is also pledging his support of tim cook in this encryption debate. the ceo of chip designer arm holdings has told us in the past that the company is looking to the car industry for its nest -- next growth spurt. he said demand will tempt a $15 billion a year by 2020. this week the focus is still on the mobile business. calvin had asked seeger if he's worried about the business. >> smalltime shipments are slowing down as everyone has expected. it's gone through a phase of hypergrowth. it seems like everybody has a smart phone these days so

naturally the industry is slowing down a bit. it's a market that still very vibrant. emily: they are still found in most of the world's smartphones including the iphone. coming up, jack dorsey and mark cuban joining forces speaking out against visa restrictions. we discuss what they stand to lose next. stay tuned to find out who is having the worst day ever. the future is not as full as it looked in 1989. ♪

emily: whole foods and insta cart are taking their partnership to the next level according to a report from recode. the grocery store chain is now

investing in the on-demand grocery startup. the deal makes insta cart the exclusive delivery partner for whole foods. they could use a boost to the brand. the stock has dropped 45% over the last year. silicon valley is not just challenging the government over encryption. tech ceos are asking congress to rethink a new law that limits travel for people of middle descent.nd sudanese a letter penned by leaders in the tech community claim that the law stifles business development and limits seed funding from middle east investors. joining me to discuss is an angel investor. so these travel restrictions or something that really upset you personally. but you also say it is a threat to the economy. >> the law essentially restricts european from visiting america.

that is a sanction against europe. europe has said they will respond by restricting all americans. by requiring visas for all americans, including you. ly: how does this impact tech specifically? ali: a lot of people in silicon valley are shocked and offended by this. it's offensive time it happens but it's doubly offensive when it's against a group that you work closely with day in and day out in the trenches. iranians pervade silicon valley. the highest ranks of google, twitter uber and dropbox. every were you look either founder or investor or key executive is iranian american. emily: there are a lot of individuals backing this letter but what about the big companies?

ali: during the same period that the law was passed, both mark zuckerberg and the ceo of google wrote their own separate essays advocating for tolerance and saying that they stand by muslims. as far as where they stand with ideology, groups who don't agree on everything else have come together to agree on this. emily: it sounds like the white house is just reiterated their position. ali: the core of the issue is the law. the white house has been dealt a law where it is kind of problematic to implement. they either have to implement it in a discriminatory way or the honor system. check this box if you are a possible terrorist and then we we will keep you out of the country. we would not allow a lot to stay on the books if congress had mandated special travel papers for european jews or european people of color. that would not be ok. we would not want to wait and see if the next president will

be as tolerant as the current one. the law has to be fixed. emily: there are issues coming up in this election and i wonder how you and your comrades in silicon valley have been watching this election and how it has played out much to the surprise of many. ali: cannot speak for everyone. the people who signed this letter came together a rather -- around a simple principle which is that there is a balance between upholding national security and upholding american liberties. this particular law has gone too far. for the election i would say that this discussion is part of a bigger picture. the bigger issue at play is whether we are going to allow fear mongering and intolerance govern our country. emily: how do you see the election playing out? ali: i wish that i knew. i am not an expert on printing -- predicting that. emily: talking about your

efforts of getting more young people coding, what is the latest on how that is going and how many schools. what is the state of affairs? ali: in the state of the union, president obama basically announced that computer science is not just an optional skill. it is an essential skill alongside reading, writing, and arithmetic. in his new budget he asked for $4 billion to help make computer silence available in every school in america. you might think it is the president's budget, republicans will not go along with it but last week republican and democratic governors came together and said this is the one part of the budget that they both applauded. a group of governors has created a budget to work together and make computer science a standard topic in schools. emily: thank you for joining us today. it is great to see the work you are doing.

shutterfly says a private equity firm is showing interest in buying the online photo company but is not saying who. reuters is reporting that thomas h lee approached about a possible sale but the firm will not comment. shutterfly says that details of the deal were sent to others in the investment community without knowledge or permission. they say they are not negotiating a buyout but are focusing on hiring a new chief executive. can facebook top google and twitter at their own game? we discussed the implications of the new search function next. if you like us on the news you can listen on the bloomberg cap. more of bloomberg west, next. ♪

emily: is facebook moving into google and yours turf -- twitter's turf. in october, facebook released a new feature on its platform. now you can search for all public posts not just material posted by friends. how will the new search function impact the current user base? could facebook become a competitive threat? facebook has tried this for. why is this different? >> the have tried it before but not in a way that spoke to how people wanted to use search. they did something called graph search that was complicated. you had to say like my friends who like wearing high heels -- it didn't make sense. it was like talking to a robot. this is something that is supposed to allow you to tap into the knowledge of the 1.6 billion people on facebook, all of the public posts bringing you information on what is happening

now and also how to travel, which restaurants -- everything. emily: it is within the facebook walled garden? you can do the search on google? >> that is where they and the value. this is what people are saying about donald trump and the articles that appear in the new york times and not so much what those articles are. if you are going on google you are researching, twitter you are getting a live updates. and on facebook you are supposed to get the context and the reaction from people who may even be original sources about the content. emily: how big a threat is facebook to twitter and google? >> the big issue now is that people who use facebook do not use it to search. even if what they have built is something valuable. as i have worked on the story i have tried it a lot and got used to it, i still think it's a

natural behavior for facebook users. if you're looking to buy something, you not going to do a facebook search first. you are still going to do a google search if they change first. user behavior it could be a huge threat. emily: and i what to talk to about this other story coming out of brazil. the communications minister says brazil is interested in a $250 million undersea cable. that would link brazil directly to europe. it's part of their attempt to avoid u.s. fines. brazil announced the construction of this link late last year after learning that that the u.s. national security agency was monitoring the president's communications. what do you know about google and facebook's involvement? >> with heard that they're interested in using the cable. whether that means that they want to avoid u.s. spying --

i don't think that's the main reason. for facebook and google, anything that helps them send their data over faster speeds is extremely valuable right now. especially as they move into more video streaming virtual reality. all of these methods of using the internet on smart phones that will be a lot more intensive with data. emily: with mark zuckerberg coming out sympathetic to apple, but not going all the way, what do you make of facebook's broader position on encryption and spying. aside from the fact that they are probably happy that it is not them facing off with the fbi. >> when you have inside of the phone that could threaten all other phones emily: they have the power to encrypt things more stringently than they already do. >> that's true. with facebook they do want to

toe the line a little bit they want to make sure they are being hard on terrorism. twitter is doing the same thing. they delete it hundreds of thousands of isis accounts but they don't what to be the poster child. apple is in a tough spot that is not enviable. but they are leading the charge in the companies must stick with them or not be tech companies. emily: sara, thank you for joining us. it's time to find out who is having not the best but the worst day ever. unfortunately isn't quite the future that marty mcfly envisioned. amazon has quietly removed all hoverboards from its website. a search for the item returns zero results. an ad takes you to a nonfunctioning amazon page. the boards have been under scrutiny for reports of the occasionally caught fire. in january the company offered

refunds for anybody who bought a board on the site. a sad day for all hoverboard makers. tomorrow you have sales force and hp earnings. ♪ ♪

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