roof to death. the justice department says he is the first person to get the federal -- the death penalty for federal hate crime. jeff sessions is in the hot seat today. he says that as attorney general, he would crackdown on illegal immigration and islamic terrorism. is beingnfirmation delayed. voxhearing for betsy to will be next week. the hearing for labor secretary may not happen until february. president obama makes his farewell speech tonight but he will not be speaking at the white house. he will deliver his speech from chicago. you can watch that tonight on bloomberg tv. coverage begins at 9:00 eastern. global news 24 hours a day,

powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. "bloomberg technology" is next. ♪ i am caroline hyde, this is "bloomberg technology." media giant is back in the u.k. ahead of its potential $25 billion ipo. plus, the jeff sessions files. the trunk cabinet pick answers tough questions. we break down the headlines. and alibaba's offline that. jack ma is betting he can revamp

china's retail industry. first, to our lead. snap has chosen london as its headquarters. it was a surprising move for its -- for a u.s. company. months, the practice morech giants to move to tax friendly areas has them under scrutiny. >> what we are aiming at his behavior. the things that happens, if one company or a group of companies are given state aid not available to other companies. that seriously makes the playing field not level. move by snap?t

alan: they have been snapping up a lot in london over the past year, there up to 75 people in the city of from six the previous year. but having it as their tax hub is unusual. a lot of companies have been in ireland or luxembourg to take advantage of better tax rates. a lot of companies have been touching regulator higher -- ire as a result. is this a reaction to the european communications commission? a lot of companies have been spooked from what they have seen from regulators going after some of these tax havens. at the same time, we should not put snap too much on a pedestal.

tax rates in the u.k. have been coming down. there are some optimism among business leaders that taxes will come down further. they could be trying to get in ahead of that. an upside for the united kingdom among uncertainty after the brexit vote. adam: certainly. for snapchat, this is a logical hub because the global advertising industry is headquartered in new york and london, and since that is a big part of their business, it makes sense for them to have a big office there. they have opened a shop in the soho neighborhood. they are looking for another one. caroline: is this a slight race ahead of what is expected to be there ipo as soon as march this year? a big part of the ceos pitch to investors is going to be the company's global

opportunities. it has clearly done well in the united states, especially with younger people, to justify the valuation, said to be $25 billion or more, they're going to have to show it will resonate in other countries. in europe, they have about 15 million users and 10 million in u.k.. that will have to grow quite rapidly to justify the valuation. get the: let's investors take. snap expands above -- before its ipo, what does wall street want to see from the company? here with me, founding partner at a venture partners company. is this a smart move? >> i think so. having worked in soho myself, it is the hub of the creative industry in london. you have advertising, creative agencies, startups and talent.

it is a hub of creativity and advertising. i think soho is a great place to be. caroline: we are seeing expansion in europe but also as far as asia. this is a scaling up a fact. -- effect. sunny: you have to understand your audience, the content. different territories are not a homogenous group. different areas have different styles of how they communicate and the kind of visual messaging they use. i think having close -- being close to your audience is important. caroline: you have to drum up the excitement that they are worth twice $5 billion and have a growth potential outside of the app. how are they doing this? sunny: the ceo is twice six-year-old and has stayed

authentic to the target audience. think they can evolve over just messaging. they have shown that they can, with phase filters and lenses and etc.. i think virtual reality is an exciting possibility. i think better targeting and analytics are an area that will fuel revenue machine that a public company needs to fulfill and a whole host of other things. ar is the most exciting thing. caroline: you talk about working with businesses the same way facebook has leveraged. how much is facebook copying them, how much are they copying facebook? sunny: i think the most egregious copycat move was

instagram, copying with instagram stories, it was literally copying snapchat stories. they are basically ripping off some features that have worked well for snapchat. some features that have worked well for snapchat. the difference being that when you're already going mass-market, you are no longer cool. your audience is no longer native and natural. the one thing snapchat has working for it is that it is authentic. caroline: how can it keep that? and thatgood question, remains to be seen. when you see companies have to focus too much on monetization, you have to see the ego's a were os they were- eth tonded on start

disintegrate. the jury mains -- remains out. caroline: is it just for millennials? space, ashink it is a they keep refreshing themselves, i think these spectacles are a good way to do that. if you can open up your app through the camera, they view the way -- world as you want them to see it, many times per day. what you choose to overlay on top of that is similar to the way the original isps were in the 1990's. do you think they will live up to the hype? i think defining gross and analytics and metrics and

showing those going up and rising quickly, they have been able to do that. there's been speculation that some of those metrics have been slightly falsified, which has not been confirmed or denied by the company. i think when you look at snapchat compared to when facebook went public, it paints a different picture in terms of real money and revenue. caroline: great to have you on the show, great to have your perspective. liberty medias john malone is banking on a new era of consolidation during the donald thep presidency despite position of the president-elect during at&t merger. malone raised the possibility of three major cable tv companies joining forces reported -- forces.

coming up, high-profile hacks are on the rise. with the ceo of clout flair. that is next. this is bloomberg.

aroline: cyber threats remain major concern for businesses and government agencies owing to 2017. bloomberg is reporting that the former italian prime minister is among those had in a message -- massive cyber operation. runs a cyber security firm with clients in many countries. he says they have to ensure the

number of hacking attacks drops. welcome to the studio. cyber attacks, will they get -- andand more frequent, more frequent? >> we have already seen what twice 17 is going to bring at the end of 2016. attacks against the various presidential campaigns. the story big part of at the end of the year. we don't see that decreasing in 2017. are attacksen you coming in, does it matter specifically as to where they are coming from? particular regions, particular groups the continue to be the perpetrators? thereand russia, but are many different come -- countries? matthew: attacks are incredibly

democratized. we have seen very large tax that turn out to be 15-year-old kids in the u.k. but we have also seen government actors, as well. it is hard to attribute who is launching the attack. we also have some circumstantial evidence based on who is being attacked, but from our perspective, regardless of who is launching the attack, we want to be able to stop it. caroline: weak spots will become more plentiful as the internet becomes natural reality. what are the key threats when it comes to building up defenses? i've -- people didn't understand, why does it matter that might toaster gets hacked? if your toaster gets hacked, it virtualommended into a

army. that means if we don't have devices around the iot in our homes, that will make us more vulnerable to large attacks. that is one of the things we're working on, how can we wrap security around those iot devices as well as around the big corporations, national governments, other organizations. caroline: talk about the demand you are getting, who is coming to you and want in your services, because you have been building up funding and on the ipo trail. we have not raise money since december of 2014. we are on a path to being a public company, but there are two reasons committees go public, either because they have to or they want to. we are in the fortunate position to choose timing for what is right for us. we will pull the trigger on that when it is right.

from the perspective of our customers, we have over 6 million customers, we sign up about 15,000-20,000 new customers every day. mom-and-pop to fortune 500 companies. 14 of the 15 presidential candidates. everyone but hillary clinton. you say you either become a public company when you want to, why would you want to? you have more people to answer to, or is it a marketing element? of zen desk ceo said it best, he said at some point you have to move out of your parents basement. i think there is a right time and place for companies to be just a couple of people in a garage, to take funding from venture capitalists, to take

funding from larger private equity institutions, and eventually you have a responsibility to your investors and employees to go public. i think that is the path we are on and we will do it at the time it is right for us. it is deadly something we're working toward. caroline: in 2017? matthew: no, not in 2017. i think twice 17 is going to be a distorted year for a lot of reasons, especially as of the changes of the donald trump administration. i think it will result in a lot of distortion in the market and often times a lot of volatility is not good for new entrants into the marketplace. we have the luxury of being able to pick and choose the timing we want and i think we are looking at more in the future. caroline: thank you so much for giving your time today. ceo of cloudflare.

ellen pao is making a comeback. joinedmer reddit ceo has a vc form -- firm. you will remember she had a lawsuit that sparked the debate about gender equality. to change.for people there's a system that works for them. i think it is great because it works for them and they don't have the ability to think outside of that system. you can not think about them and continue to live in your world or you can open up and really here other people's ideas and think about what are you missing by having this static system? caroline: another revolving door in tech, tesla announced an its auto program.

finally, the ceo of music service -- is stepping down. this follows the exit of the chief product officer last year. of music employee,will remain an serving as an advisor. uping up, biotech shares are -- off to a great start in 2017. how things were turned around. this is bloomberg. ♪

caroline: now let's take a minute to dig into a few market trends you've been watching, using some great bloomberg charts to tell the story. i am joined by our bloomberg editor at large.

i'm talking about biotech. byon square is dominated jpmorgan's conference. biotech is killing it at the beginning of this year. this chart showing you on the white line over the course of twice 17, the best year we've currently had in a decade. we are up almost 8%. that is biotech and the return of biotech over the course of the last 12 months. caroline: exactly. , we areg into that trying to how we are seeing overall. cory: it is interesting. the market itself has not been quite as strong. here is my chart. chart that shows the

return of the nasdaq am a that is the white line. caroline: beautiful valuations. cory: i would call them disgusting valuations because the underlying companies are not getting better at creating cash. is torpose of business sell stuff for more than costs and have money left over. that is a free cash flow. the stocks are going up but the free cash flow is not. if the market was reflecting the value of the company, how much free cash flow it was creating, that purple line would march along with the stock. in an overvalued market, the stock is still up, the free cash flow still down so the difference between the price and that yield, it indicates a problem. the businesses underlying the stocks valuation have not caught up. if this turns around, and free cash flow -- caroline: it is about 3.5 at the

moment. cory: yes. it is true these are growth stocks you'd quite often they are being managed for revenue and not-for-profit yet. but the belief that things are going to get better, and that the new administration, casual get repatriated -- cash will get repatriated, but we see the stocks are well ahead of that cash flow. amazon is just at two if you look at their yields, but some are better. i think we are entering a period where it is possible the stock doesn't matters. every stock is not going to be correlated, the market isn't being driven by quantitative easing or cheap cash and low

interest rates. suddenly we have some companies that will do better than others and the cheaper than others at that shows you that as an index, all of the stocks on nasdaq are getting more and more value when compared to the free cash flow. caroline: a word to the wise. maybe don't go plowing and. tread lightly. you are a wonderful weather man. thank you very much. still to come, will donald trump's pick for attorney general get grilled on capitol hill? we will learn more about where he stands on immigration and russian hacking. next. with the xfinity tv app,

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. >> you are watching "bloomberg technology." let's get a check of your first word news. the chairman of donald trump's inaugural committee says

president obama has invited donald trump to the white house before the swearing-in. they say the two men will ride with their wives together to the capital. israel says it has proved president obama pushed for the adoption of a you and resolution the declared israel's west bank settlements illegal. israel's prime minister said mr. obama broke a long-standing commitment not to allow the yuan to impose conditions on israel. mexico's new foreign relations secretary says the company isn't only willing to go shake train just -- changes to the north american free trade agreement, it says it wants to begin as soon as possible. there is enormous uncertainty after the election of donald trump you'd donald trump has vowed to renegotiate nafta. germany plans to keep a closer watch on asylum-seekers considered terrorists in the wake of the christmas market attack. the plan includes easing deportation of seekers, and

limiting aid to countries which don't comply. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. "bloomberg technology" is next.

caroline: this is "bloomberg technology." back to a top story we are covering. the parent of snapchat has named london as it international headquarters.

snap says it will pay british taxes on sales in some overseas markets. the move is a win for the u.k. in the wake of the brexit vote. we report on the road ahead to the pub a golfer and pete -- public offering. >> the parent company of snapchat could be valued as much as $25 billion when it hits the public market this year. once famous for disappearing images, it is rebranding itself as a camera company. its first hard way -- hardware product has gone viral. meanwhile, the user base continues to grow at a breakneck pace you'd although the companies daily active users are mostly based in the u.s., it is gaining ground in europe. snap has not turned a profit yet but it showing revenue growth. it is on pace to bring in just

under $2 billion by 2018. . investors want the ceo to prove he can grow snapchat beyond its young demographic. caroline: that was caitlin meehan. we will bring you all of the headlines leading up to snape's. turning to washington where president-elect trump's choice -- jeff sessions is underscore me. >> if i am protecting the american people from radical islamic terrorism, it will continue to be a top priority. we will work diligently to respond to threats, using lawful means to keep our country safe. partnerships will be a vital to achieve effective enforcement against cyber threats and the department of justice clearly has a lead role to play in that

essential effort. caroline: joining us now for more during the hearing is kevin. we heard that some tech elements were being touched upon. or the mostthink contentious issues today? i think we're having some technical issues. can you hear me? we will come back to that report with kevin in a moment. next, we will bring you some other stories you should he watching. there are a few headlines, has purchased vesper. this follows its acquisition of pebble in november. meanwhile, airbnb is branching round.its latest funding

it is expanding its offerings to travelers to restaurant reservations and making itself a one-stop service. month tot will take a integrate the new app fully into its services. i think we've got the technical issue -- tech show, sometimes a fashion -- sometimes it happens. you were talking about jeff sessions. his first hearing. what came up that was really contentious? democratic lawmakers continuously try to bring up the previous racially charged statements we have heard from senator sessions years ago while republicans said he would help restore law and order to the united states. a moment i found particularly interesting was when senator he would recuse himself from an investigation into the clinton foundation. he told the lawmakers on the

senate judiciary committee that the issue had become too politically charged. he would leave that to investigators and not be involved in what was a key point on the trump campaign trail. caroline: fascinating that he is distancing from that element. what about other elements, the russian hacking element and immigration laws? these are two key topics. immigration is a big topic for senator sessions. he was one of the first senators to endorse donald trump on the campaign trail at a time when many people were wondering who exactly was going to endorse him and if he had any support. is of his top advisers stephen miller, who left senator sessions office and was the architect behind some of the ultraconservative immigration policies and went to the trump campaign and trump promoted him

to senior policy advisor in the incoming administration. that is on immigration. on the issue of cyber hacking, he got a lot of questions on this, obviously with the intel reports coming out last week about precious meddling into the u.s. election and he said that if there was a hack from a foreign country, that the u.s. should not be afraid to retaliate. that is a clear signal that this is someone who is going to work with the u.s. intelligence community, he is had decades of expense in congress, he says that some of his close friends and some of the most trusted people he has used in washington are members of the u.s. intelligence community. he struck a much different tone than what we are used to hearing coming out of the president-elect's mouth. caroline: this is a confirmation hearing for senator sessions. he would be replacing loretta

lynch, who we previously spoke to on the show. significantlyte when she talked about the san bernardino shooting and the role it had. withr only concern is warrant encryption. i think of these are developing things every day. technology has changed so much in the last six months, two years, three years, and we don't know what is on the horizon. caroline: access to encrypted data, this is something that will rear its head again. how do think someone like jeff sessions would respond to silicon valley? he did not get questions about apple today, but behind the scenes, the folks i am talking to here in washington, particularly in business circles and republican circles are pointing to something they would

like to see, take the opposite approachable we saw in the obama white house. has been a big debate in washington about whether or not regulators should have access to companies'data and whether they can regulate the business company. the question is, why should we hand over data to the white house when they cannot protect it themselves? appeared i goim back to the first point where senator sessions said if a foreign country is attacking and there's evidence in the cyber u.s., he believes the should use all the tools at their disposal to retaliate. kevin is in washington, thank you for your time today. we will be covering president obama's farewell address. 9:00is in chicago tonight, p.m. eastern. you can also watch it on

bloomberg.com. coming up, alibaba wants to take a big step off-line. we will take a look at their bid for a department store chain. next. this is bloomberg. ♪

caroline: alibaba is making a big bet on rick and mortar. they are leading a bid to buy out a department store chain for as much as two point $6 billion. the move adds to their burgeoning hold in physical retail.

cory johnson is back with us. we will be digging into whether -- digging in and looking at another chart. soind us why alibaba is inquisitive? is worth noting how inquisitive they are. buying an off-line retailer, to me it does not seem to make a great deal of sense. amazon tried retail stores, now alibaba is going in. one of the things to pay attention to is the volume -- i usually say pay attention to one thing at a time and certainly do that, but they have done so many deals. 98 acquisitions announced in the last five years. spent $42 billion. 98 deals.

lineu click on that yellow , it will illuminate it a little better. size of the deals, and this is the number of deals they are doing every quarter. they are doing so many acquisitions. i'm not saying it is a rollup but it looks like a roll appeared -- roll up. and these are just the deals we know about. there are some that are too small dimension. this overhey had done the course of five years suggests there are a lot of parts of alibaba in the process of integration and those kinds of things can be difficult for company, many companies have fallen from these cuts of acquisitions. cisco is the rare exception. let's get an asian take. peter alstom joining us from tokyo. can you reason with us why

they're flashing so much cash in the off-line world? i can explain as much as i know. they have been very inquisitive and trying a lot of different kinds of deals in video and games and all sorts of different areas, and in off-line retail. the differences that china's retail market is much more fragmented and less efficient than the u.s. market, and they see an opportunity with some retailers they have invested in to bring some of their know-how and customer experience and technology to bear on a retail sector that has not been operating so well. remember the backdrop, the chinese economy is falling quite a bit in the government is trying to shift to more bait consumer driven economy. there is an appetite for giving consumers the choices that you would have any more u.s. type retail space.

cory: first deal of 2017, it is the 10th of january. it tells a story right there. caroline: what does it tell us about the aspirations? we have this element, you are seeing amazon double with it, what does it mean alibaba wants to become? cory: i think what they are looking at, they could become like amazon, a company that develops an idea, throws it at the wall and sees if it sticks. or maybe they will make messes investments. but this is $2 billion in shareholder money so we should expect some return from this and what happened or investors will wonder where all of this money is going, who is getting the money, and is it being squandered? we've not seen substantial results from acquisitions. caroline: peter, how is it being digested by investors in asia? i think the you in china

is a little bit different. there is this fast evolving technology sector in the primary investors are different. they are investing a lot of these startups, so a lot of startupsls are in where trying to invest in fast-growing opportunities in things like right hailing -- ride hailing. they are certainly experimenting with some things. i think there is more of an appetite to try that because the sectors are growing rapidly and there is a lot of opportunity if the returns take off. caroline: thank you very much, peter. johnson, as ever it is great to have you. demonstrating so beautifully your chart. wednesday, we will speak to the finance manager of columbia on the economic outlook

of that country and trade with the u.s.. coming up, we will introduce you to the french entrepreneurs applying their love of speed on the high seas to traffic congestion. we will explain. this is bloomberg. ♪

caroline: now to one wild idea. thuman once broke the record for speed in a boat. now they want to apply that to city congestion. replacep aims to traditional water taxis. ourselves looking at cities looking at solution to public transport.

there are a lot of people to get on and a lot of people want to move, they want to be faster. you get ae is that traffic jam on land, today the waterways have kind of been abandoned. what we're trying to do is bring whichem to those places is environmentally friendly. is -- it makes no noise the cousin is electric and has no pollution. caroline: and it could be autonomous? >> yes. we're looking for partners. technology is and what we know. with autonomous boats am a obviously every boat today goes

on autopilot, so i think it is less complicated than on the street. in a book like this, you can have a 3-d scanner. it is probably a little bit easy -- easier to handle than a car. we are looking for different options right now but we are a startup. caroline: how are regulators looking at this? >> it is always the same, they always are like, what are you doing, and then overtime it changes. us toave been helping bulldoze the way forward because at the end of the day, the more success we have the better it is for everybody. less pollution, less traffic jams. caroline: give us a sense of how quickly this could come to market and become a reality. water onell be in the month from now and the system dog, going to deploy, the

-- dock and boats will be ready in june. seeing fore are passengers and one driver, it could eventually carry more. this is more like a taxi. >> yes, the bubble is pretty much the link the car in a little bit wider. people. hold 5-6 batteries have come forward a lot this year. kilos.now down to 90 a boat is very weight sensitive, so the quicker we get the weight down, the more people we can add. we will see who is working on the batteries. basically, we're going to

--duce them in the continent here in the u.s., i think we can say people have an hour going from downtown to silicon valley. produced inll be the u.s. for the u.s. market. it makes no sense for me to pay the money to ship it oh all over the world. give me the utopia, the dream. how big does this become? >> and a place like new york city, you have the hudson river, we are talking about four or five knots of current i have water chart -- current. i have the turbines. i don't need energy from the city. for me, that is pretty cool. -- seeing theg

different areas have different needs. san francisco does not have the current but it has more solar. it is early stages but we will march, april and may. caroline: coming to a waterway knew you -- near you. on wednesday show, we will be speaking to fire ice head of threat intelligence. theill be talking about russian state-sponsored hacking. and bloomberg will be covering donald trump's press conference live on wednesday.

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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: 11 days, today is january night, generally 20th, a new president takes over. , 11 days left in the obama administration, what do you think? i think there's still a lot of work we have to get done in these 11 days. i'm glad it's just about that and not many more. thank god we did as much as we did until now