i am mark quant -- mark crumpton and you are watching bloomberg west. presidential front-runner, donald trump says that if elected he would put the united states first. also said america's allies need to do their part. >> our allies must contribute toward their financial, political and human cost. many of them are simply not doing so. statesok at the united as weak and forgiving and feel no obligation to honor their agreements with us. >> mr. trumps be -- beach came a day after the primaries.

republican presidential candidate, ted cruz has named carly fiorini as his running mate. she dropped out of the race earlier this year. she told a rally in indianapolis that cruises presidential bid is not over. for the third meeting in a row, the federal reserve has opted not to raise interest rates of -- they remain positive about the under fittings of u.s. growth and our last worried about risk. global news, 24 hours a date powered by our 24 hour generalist in more than 150 news bureaus around the world. bloomberg west is next.

emily: facebook hitting investors' sweet spot with another glowing earnings report. surging revenue and steady user growth. mark zuckerberg has more to come. paypal giving the markets a strong showing. leading revenue and profits. how long can the company fend off the competition. yahoo! scores a narrow victory against activist investors. the company may have averted a boardroom showdown but is it speeding down the fast lane to a sale? facebook shares surging after hours, the stock jumping as much as 9% off better-than-expected revenue. the social network reporting quarterly revenue of $5.4 billion, up 52% over the same quarter last year. a profit of $1.5 billion. positive engagement messaging. steady growth in daily active users. the biggest surprise was a proposal for a new class of stock.

mark zuckerberg wants to issue a new class of nonvoting shares so he can continue to make big bets on things like connectivity and virtual reality and fund the zuckerberg initiative. without diluting his ownership stake. he writes, i will be able to keep founder control of facebook so we can continue to build for the long-term. priscilla and i will be up to give our money to fund important causes sooner. right now there are amazing scientists and educators doing incredible work. joining me now to take a deeper look at the numbers, gene munster, josh marsh and steve case. facebook is doing well on every measure. what do you make of zuckerberg

asking for this new class of shares? gene: it gives him more control in terms of the company, i think he is wise to do that. this is him making it very clear that he is in charge of this company. he wants to see some longer-term bets throughout. he doesn't want to be pressured quarter to quarter. emily: mark zuckerberg did speak about this in a little more depth on the call. mark zuckerberg: this will allow us to improve the funding structure that has served us so well. more than $1 million worth of stock in facebook shares over the next three years. that is still my commitment. i will update the shareholders on future plans beyond that. emily: i spoke to the cfo who says that a large part of facebook success is due to

mark's leadership. this will allow us to maintain the structure that has served the shareholders well. what you think of this? steve: it is been an extraordinary success. i applaud their work on these moonshot, big bet projects. i think the dual class of stock is a tricky issue. it sometimes can be a bad thing. i'm not sure the dual class structure is a good thing. but he has earned the right to continue to steer the ship. when we look back at the history of different companies, sometimes there is a change of strategy and somebody is locked in the doesn't have control of it. that resulted in not really making the right decisions. that has not been a problem in the past decade. it might not be a problem in the future. in general, i think there is some question about whether the

dual class structure is a good thing in the long run. the underlying issue is how do you make sure ceos and founders have an incentive to take that long-term view and invest in those long-term projects. i do think there is a general concern about wall street being too focused on short-term quarterly results. emily: this is a good time to ask, when you beat expectations on every measure. personal sharing has been in decline. on facebook. dave weiner told me that people sharing more on facebook but how they share is different. he says they are very well positioned across all forms of sharing. josh, what you make of that response.

josh: posting to social media has been dropping. it could be a big challenge if that continues. it doesn't seem to be affecting the revenue yet. it is definitely something to keep an eye on because so much of facebook's revenue at the moment is driven by new advertising. interest in the newsfeed isn't necessarily governed by the original sharing. emily: when you look at the results they look great across the board. what are your main takeaways? gene: they are growing revenue at a similar pace as they did in the december quarter. the reason is that they are continuing to find ways to insert more ads into the feed. they don't feel as much like ads to people. that is one of the genius things that they have been doing. they are having success without tapping into these other areas like instagram.

it is hard to find things that aren't working. i'm at a loss to try to point to something that is disappointing in these results. emily: it is hard to imagine a time when facebook would be challenged. over the next decade, what do you think the biggest challenges would be? steve: facebook live has been a big success. getting a lot of traction. continuing to add to the platforms. some really smart acquisitions. the risk particularly as we transition from the second wave of the internet to the third wave, the focus of my book, is the innovation and things like health care and education. some of the leaders will continue to lead the way, but some other new companies will crop up.

that is a danger when you are the incumbent and you are so strong. emily: we are in the early days of monetizing instagram. but they have these messaging apps that they have even turned on the firehose yet do you see much more potential not just for the short of the long-term to make a lot more money with this family of apps that mark zuckerberg is made these big bets on? josh: they effectively have another two facebooks that they haven't even really started monetizing yet. they need to start out monetizing these platforms. you can't just click and send them as you can on facebook. driving one-on-one engagement between businesses and customers. working with messenger with companies like sprint for customer service.

we are still very much in the early days. emily: investors are still wildly optimistic about it. its shares are surging. thank you for being with us. other tech stocks we are watching today. apple and twitter shares plunged off the backs of their latest earnings reports. twitter drew more users last quarter but not enough to attract more ad dollars and that sent shares down the most in eight months. apple shares reacted to the first quarterly sales decline in a long time. the decline was more than the entire market cap of many other companies. coming up, we take a look at paypal.

shares rising after hours after they beat some expectations for profits. we break down the numbers after this. ♪

emily: paypal beating expectations on both sales and profits. earnings per share of $.37 higher than the estimate of $.35 per share. volume of processed transactions up 26%. payment transactions also up 12%. revolution ceo steve case is here. and gene munster. we're almost a year now from the split with ebay.

gene: there's a nice tailwind in terms of the use of payments. they celebrated their total volume which is a key metric. as the business stands today, it is going well. the future chapters are going to be more challenging. things are going well today. emily: i know you think of paypal as part of the third wave. steve: the first wave was really building the internet. the second wave has been building apps and services on top of it. twitter and facebook. the third wave is really integrating the internet throughout our everyday lives. it will require a little different mindset. partnerships and policy regulations will become more important.

perseverance will become more important. these are tougher battles. emily: let's take a look at the competition. apple pay, samsung pay. what do you think is the biggest threat to paypal? gene: as soon as apple launches the new version of its apple pay that could be a turning point. if apple was able to use a secure online piece that encrypts financial data that paypal won't have access to. apple only has about 25% of the global smartphone market. people spend a total of money online. ultimately those combinations of all those players impacting paypal. apple pay will be more potent in terms of the impact. emily: at revolution you guys

have taken a look at fintech. a lot of that innovation is taking place outside the united states. how well positioned is paypal to compete with them? steve: i think they are doing well. there's too much focus on what is happening there. the bigger picture is these large financial banks like jpmorgan. the debate in washington is are they too big to fail? i think the question is are they too big to innovate? the third wave will be about the connection between the innovators in the policymakers. someplace like london is really leading the way. we have to enable the right kind of innovation. enabling those startups to take on some of these giant companies. emily: what is paypal need to prove? gene: they need to prove their five parts of the digital wall.

they do a good job of desktop. there are two important parts, in app and point-of-sale, where they haven't proved themselves. having a seamless product, that is the key. small amounts of friction have a dramatic impact on behavior. think about when you put your credit card into the chip reader and you have to wait an extra five second, how that feels. paypal needs to streamline what they're doing to make it is frictionless as they can. emily: thank you for joining us. arianna huffington wants to help steer uber in the right direction. she is joined to the board of directors. she is already an investor.

was working to fulfill a promise to shareholders that they will be profitable by the second quarter of this year. they are facing increasing competition from lyft. bringing emotional intelligence that the company is lacking. coming up, yahoo! ceo marissa mayer makes a deal with one from august vocal critics. we dig into the details. a stock we are watching closely. lending club. shares surge as much as 9.4%. closing just under 8%. after an analyst at loan marketplace says origination fees charged to riskier borrowers. they are now being charged a 6% origination fee. the price increase could contribute 12% to revenue growth. ♪ ♪

emily: activist investors have reached an agreement with marvell technologies to add five new members to the company's board. starboard took a 6.7% stake in the circuit maker in january. marvell ceo and president agreed to step down. the company still looking for a new ceo. another star wars target. yahoo! has scored a narrow victory. reaching an agreement with the activist investor. it will name new members of the board immediately. they threatened ceo marissa mayer and let management retain some sway in deciding the company's fate. avoiding a proxy war may increase the likelihood of the sale of yahoo! assets.

who wins and who loses? paul: it is pretty clear that starboard wins. probably shareholders win too. yahoo! executives and existing management lose. they now have a chaperone on every day. they couldn't be trusted. emily: now i understand. they said this will allow us to keep our focus on the increasingly important objective. we are looking forward to working with the entire boards to maximize your shareholder value. what does that mean? brian: there is some truth to this idea that a sale may be more likely. we've had a long battle with

starboard. it goes back to 2014. we've had saber rattling and proxy wars. now marissa mayer saying let's come together and see if we can work it out. this shows up we can all get together and this connection happen. who knows? emily: do you expect the sale process to proceed now? how do you expect it to move forward? paul: having put the kind of people that they have. they suggested there were probably involved. there was a sense that this had to be a monolithic sale in terms of the size of the company. i wouldn't be surprised to see more of a focus on a kind of dismemberment of yahoo!. some of it goes in bits and

pieces rather than a single monolithic sale. that is why you saw a number of people brought to the board that you did. emily: talk to us about the status of the bids. who is still in the running. brian: we believe there are more than 10 that were involved. this is a winnowing process going on right now. it is a question could there be sort of a breakup of yahoo!. a lot of people who matter what happens say let me get a reasonable valuation. $4 billion $8 billion. that is where we are at. we are not in a resolution. that's another speed bump. emily: paul, we don't know the substance of the office.

from what appears to be on the table, what is the best case scenario for yahoo!? paul: i think the best case is that kind of dismemberment. i think yahoo! is being held for ransom in a sense. people say they have to buy this pile of stuff and go out and retail a bunch of pieces of it. so i'm going to be lower than you think i should. it is kind of like he used car problem. that was bored to knows this and star board knows it. they are saying made we can make the margin ourselves rather than selling it at a lower price to a bidder. emily: when will we hear more, brian? brian: the next fight will be coming up a shareholders meeting in june. we can look at what happens.

there's a lot of stuff on the table. i think there is more of a spring in the step of some investors now. emily: could this take through the end of the year? brian: it could be sooner than that. because it is not we never know for sure. emily: thank you both. coming up, an intimate conversation with the young computing whiz who grew up to master the music industry. spotify's ceo tells us what it is like to be a tech celebrity in sweden. more of bloomberg west coming up next. ♪

the top stories this hour, the yen jumped. it unexpectedly kept its program unchanged. -- it isal bank says half of 1%. japanese stocks are set to tumble at the afternoon open. shares have dipped after it to buy back $1.8 million. the early release of the galaxy of $4.6ought in income billion. malaysia's governor has fled

continuity of policy. he has worked closely with outgoing bank in the giro chief. those are the headlines from 150 news news. over all over the world. with a quickstart check of the yen. we saw it coming off a cliff. where we are now. we are still high by about 2%. is going to create a pain when it comes to japanese. a reactionto see when it comes to the korean currency. we are seeing movement at 1141.60.

but get back to the equity. we saw this pointing to downside of over four percent. at the moment is reacting to the bank of japan's decision not to move forward with any decision. the bank of japan is also saying that the growth to inflation remains much stronger than outside risk. at the end of the day, deciding not to do anything. we are looking at the rest of the region hanging onto gains for the most part. we are certainly coming off the highs. decision, theyt are staying put just a 10th of 1%. it is down by 7/10 of 1%. we are seeing a weakness coming

, given 60%m taiwan had been expecting a move from the bank of japan. that is how we are looking in asia after that announcement. ♪ emily: this is bloomberg west. my guest host today is aol cofounder steve case. he has just written a book called the third wave. he claims a new paradigm we are entering. the first wave of the internet was the years between 1985 and 2000 when companies like aol were bringing people online for the first time. the second wave involved companies like facebook and twitter putting ecosystems on top of the internet through apps. and now the third wave. what companies survive and thrive in the third wave? steve: it depends on what they

do. we were talking earlier about facebook and twitter. they didn't exist in the first wave. zuckerberg was still in high school. so some people will emerge and some of the current leaders will remain leaders. it depends on how they play it. when i was a kid kodak stood for photography. they ended up going bankrupt because of digital photography. they actually invented digital photography. but they didn't invest in it, they didn't partner. some people may need to partner with larger companies. to get that market entry. sectors like health care and education and transportation, things like smart cities that require a lot of companies to be working together just as the first wave a lot of companies work together to build the internet. emily: uber hasn't partnered with anyone. steve: and it is causing them problems.

they are not available in germany or south korea. they had some real challenges. in washington two floors of the building have focused on policy. they get started and second wave hasn't happened. as it takes on more importance it will have significant policy implications. that will be much more common in the third wave. emily: we talk about a bubble and inflated valuations? steve: 75% of venture capital went to california and new york and massachusetts. but we are seeing the rise of the rest. great regions all across the country. health care i.t. in madison wisconsin. great educational tech companies in new orleans. we're seeing innovation disperse. investors in california are starting to realize that the

entrepreneurs are building great companies there. their starting to invest in those places. emily: do others suffer? steve: sure. there are delayed public offerings because people don't want to go public and have the risk of a down round. so in the last couple of years things have been overheated in that late stage private market. you're here that problem if you are in chicago and nashville or new orleans. some of the cities of the rise of the rest is that magic leap has raised money from google. they are in fort lauderdale florida. that is the rise of the rest. emily: you are based in washington. we've been talking about the tense relationship between silicon valley and washington. we have seen apple vs. the dept. of justice.

what more do both sides need to do to reach common ground? steve: we need to talk to each other. right now we're talking past each other. in silicon valley, most innovators don't want to talk to the government. they want nothing to do with it. when you are dealing with things like health care, we do care about what drugs we taken things like food systems have to make sure the food is healthy. the idea things like driverless cars or drones. it will require much more dialogue in the third wave. that was common in the first wave. the internet was possible because of the cooperation between the government and private companies. the government actually invented the internet. it was less common in the second wave because of all the apps. it will be more common again in the third wave. even though it is hard to deal with government, and may require more perseverance. the winners will recognize the partnership policy and

perseverance. emily: will yahoo! survive? steve: i hope so. they were great innovators in the late stage of the first wave. i hope they continue to be a leader. it depends on what decision they make and leading into the future rather than focusing on the past. emily: steve case, revolution ceo. cofounder of aol. always great to have you here. in our new series hello world, bloomberg takes a fresh look at the explosion of technology around the world. sweden has the highest number of per capita unicorns. startups valued at $1 billion or more. one of the most famous exports is spotify. >> you have to set off on the

path of doing tech and music. you had to learn to play music. i got a guitar when i was about three or four. the computer was when i was five. for me it was all about games. just fun playing. how hard would it be to try to fix the games. so i started coding games. i never had a normal job. when i grew up i didn't realize how you make money. starting something yourself, that was just a totally foreign concept. >> aside from silicon valley, sweden has the highest per capita number of unicorns.

always new money and fame. like much of scandinavia, it operates under a cultural code of conduct known as the yondola. it is a philosophy that demands people do not think too highly of themselves. the people recognize you out on the streets? >> they do but because this is sweden no one really comments on it. cut to 2016 and this way of living finds itself in conflict with tech billionaires boozing it up in clubs. he knows the situation as well as anyone. >> by the time you are 21 you were a billionaire. you had sold a couple of businesses. you went through a period of showing off. >> i was almost ashamed of

myself. today i realized that there was a huge time of insecurity. it was a lot of fun. don't get me wrong. it was not who i am. the idea the you don't want to stand out in sweden. you do stand out when you are making billions of dollars. >> it is changing. i see ferraris and lamborghinis on the streets of stockholm. the fabric of how we use today. emily: check out the full episode of hello world this week on bloomberg.com. coming up, we sit down with the ceo of doordash. the food delivery market may be overstuffed.

this weekend we will bring you the best of the week. and our longform weekend show the best of bloomberg west. why the always colorful ceo hopes arise and will spend a boatload of money on yahoo!. ♪ emily: an aggressive status

update from elon musk. spacex tweeted planning to send dragons to mars by 2018. details to come. we are referring to the specific type of spacecraft spacex would send. it also attached concept art of what dragon would look like. it could land anywhere in the

solar system. the red dragon mars mission is just the first. it would help demonstrate the technology needed to land large payloads on mars. the goal is to enable people to live on other planets. the ceo of doordash has a lot on his plate right now. despite being in an overcrowded market, it is expanding to its 24th market in columbus ohio. announcing partnerships with carl's jr. and the cheesecake factory. some question whether doordash deserves unicorn status. tony, you guys have been expanding. making deals. talk to me about your experience with expansion and partnerships? tony: the biggest challenges keeping quality up. doordash was only in three markets for a while.

it is certainly no small feat. to do that while maintaining the quality that the customers deserve is very difficult. emily: i am a working mom so i see the need here. but there are many competitors. why does this company survive? tony: it is important to understand how the company get started. it was founded on the principle that technology can create a new type of logistics company. because we can do that we can offer a better service. a service with more selections. we make the complexity of logistics simple. emily: let's talk about the unit economics.

investors have been skeptical. when you going to be profitable? tony: from the beginning the company has always considered its economics and how to build a stable company. for the first 60% of our lives this company was only in three markets. we were able to grow very quickly once we got it right. while doing so we were able to get our first four markets to be cash flow positive. that means every penny that is spent on the market, everything from marketing expenses to salaries. emily: in what markets are you closer to profitability than others? tony: in the beginning we are just making sure we get the service out there. getting the word out and making sure the quality is up to snuff.

once we make sure that the quality that we have is good then we can actually grow and change the business. for us, as long as our unit economics are positive which they are, we can continue growing. emily: you are facing challenges ahead. restaurants and customers have sued you. why? tony: the complexity of running a market like this is that we have to balance different needs. we are not just a consumer app. it is always a set of trade-offs that we have to offer in our ecosystem. emily: you talked about being more transparent. when are we going to see that transparency?

tony: you will see that in the coming weeks. we want to make sure the service was always transparent. we thought the best way to do that was to show you up front with the prices would be periods he wouldn't be surprised later on during the checkout process. we were experimenting and sharing customers feedback. you'll see those changes rolled out in the next few weeks. emily: uber just settled a lawsuit. what is your position on the contractors, the dashers? tony: one of the most important parts here is the balancing of the needs of every audience. for our contractors, the most important product is that flexibility. what you want to do is to make sure that you can honor or maximize that flexibility for them while making sure the to take their input. bettering the entire marketplace. that is what we will continue to do. emily: i mentioned the unicorn

status at the top. you ended up at a $600 million valuation. what happened? tony: no company, ourselves included, ever goes for valuation. for us we actually had a saying that the score will take care of itself. we never mentioned to the valuation in any of our financial documents. when it comes to financing, it comes to financing, is not getting the money that we need and building the business and doing it in a way that investors are employed. if we can achieve both of those needs that we will let the store take care of itself. emily: thank you. google has been fighting off an eu antitrust investigation for five years. getty images is now jumping in, filing a complaint against google is well. the details are next. ♪

emily: getty images has placed an official complaint against google's use of images. they say they made an agreement about image search, allowing them to use high-quality photos for free and removing the need to visit the original source site. getty is now pointing to widespread copyright infringement. getty images general counsel yoko yamashita joins me from seattle. why file this complaint now? yoko: this is an issue that we have been looking at for a good three years. in terms of the format changes that happened in 2013. this has been an ongoing discussion within our company as well attempt to engage with google in a constructive dialogue on how to address these issues. we first approached google right after this occurred in 2013. we had very little progress in terms of options here.

we were given an option of robots detecting our site and images and removing them from the internet. this doesn't address the issues we face when you have so many licensees. these images in turn get indexed by google. it doesn't have an easy solution as proposed. we joined the existing inquiry and to search. as an interested third party in may. we have made no real progress in moving this forward. emily: can you estimate how much business has been lost by getty as a result of google search? yoko: you have to look at the multiple dimensions. let's start with the traffic lost. when those images are no longer clicking through to the source, you have all of that user

engagement and the data that comes from that engagement that you are no longer sending directly to us. you've got paying customers whose websites are losing traffic. simply because those images are being indexed from their site are not that captive traffic that is engaged on google and not clicking through to the licensee websites. to your point of the infringement, you have got piracy occurring. emily: did google ever try to settle? yoko: we have an ongoing business relationship with google. we try to have a constructive dialogue about these issues. but they really led nowhere. we have to stand up for content and creators rights here. that's why we filed. emily: thank you so much.

it is time to find out who is having the best day ever. today's winner is facebook and mark zuckerberg. shares in the social network up 9% in extended trading after earnings shattered analysts expectations. also proposing the creation of new class c shares so that shareholders would get to shares for each class a or b share they currently own. this would allow mark zuckerberg to sell some of the shares while still maintaining control over the company. that does it for this edition of bloomberg west. tomorrow my interview with twitter cofounder biz stone. plus, earnings from linkedin and groupon, among others. that is all for now. ♪

>> this program is a paid presentation for omega xl and brought to you by great health works. ♪ larry: welcome. i am larry king. and i'm here to report on a significant health-related investigation that has been taking place for the past couple of years. the information i will provide you during the course of the show is related to everyone's health and well-being. several years ago, i was