>> it is 1:00 p.m. in hong kong. i am shery ahn with the update on the hot stories. donald trump took to twitter to denounce the report that russian intelligence has potentially damaging information on him, calling it take news. he is said to have been briefed by officials as an update on moscow's allegedly attempts to influence the election. president obama made an emotional farewell, saying america is better now than when he took off his eight years ago. obama warned against personal attacks and social media bubbles , but mentioned his successor only once. taiwan says the flagship of the

chinese navy sailed through the navy's best the islands air into -- the island's air zone. the carrier has been carrying out combat drills in the south china sea since last week. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's get a check of the markets. another day of gains for markets in asia. afternoon trading getting underway. han signed index at the highest level in more than two months. shanghai sinks and downsides. -- seeing some downsides. ♪ caroline: i am caroline hyde, this is "bloomberg technology."

what social 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. it covers encryption and integration and hillary clinton's emails. we break down the headlines. and alibaba's offline that. -- bet. jack ma is betting he can revamp china's retail industry. first, to our lead. snap has chosen london as its international headquarters. the parent of the pop where does popular snapchat as to cap -- messaging app. it was a surprising move for a u.s. company. in recent months, the practice of tech giants to move to more tax friendly areas has them under scrutiny.

he spoke exclusively on monday regarding competition. >> what we are aiming at his -- is 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. that disables fair competition. caroline: smart move by snap? alan: they have been snapping up a lot in london over the past year, there up to 75 people in -- they are up to 75 people in the city, up 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. apple, amazon, starbucks, mcdonald's. a lot of other companies have

been touching regulator ire as a result. caroline: is this a reaction to the european communications does competition commission? adam: 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 is some optimism among business leaders that taxes will come down further. they could be trying to get in ahead of that. caroline: 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 initial ipo as soon as march this year? adam: 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. caroline: let's get the investors take. snap expands before its ipo, what does wall street want to

see from the company? here with me, founding partner at a venture partners company. u.k. headquarters. 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 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 being close to your audience is important. caroline: you have to drum up the excitement that they are worth $25 billion and have a growth potential outside of the app. how are they doing this? sunny: the ceo is twice best 26 years old and has stayed authentic to the target audience. i 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. 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? sunny: a good question, and that remains to be seen. when you see companies have to focus too much on monetization, you have to see the ethos they were founded on start to disintegrate. the jury remains out. caroline: is it just for millennials? sunny: i think it is a space, as 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 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. caroline: do you think they will live up to the hype? sunny: 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.

now, liberty medias john malone is banking on a new era of consolidation during the donald trump presidency despite the position of the president-elect during at&t merger. malone raised the possibility of three major cable tv companies joining forces. coming up, high-profile hacks are on the rise. we will speak with the ceo of clout flair. that is next. this is bloomberg. ♪

caroline: cyber threats remain a major concern for businesses and government agencies owing to 2017. bloomberg is reporting that the former italian prime minister is among those hacked in a massive cyber operation. my next guest 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 bigger and more frequent? >> we have already seen what 2017 is going to bring at the end of 2016. attacks against the various presidential campaigns. that was a big part of the story at the end of the year. we don't see that decreasing in

2017. caroline: when you are attacks coming in, does it matter specifically as to where they are coming from? particular regions, particular groups the continue to be the perpetrators? china and russia, but are there many different countries? matthew: attacks are incredibly democratized. we have seen very large tax that -- attacks launched by what 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? matthew: i've -- people didn't understand, why does it matter that might toaster gets hacked? if your toaster gets hacked, it can be commended into a virtual army. that means if we don't have security around the iot devices 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.

matthew: 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. they range from mom-and-pop to fortune 500 companies. 14 of the 15 presidential candidates. everyone but hillary clinton. caroline: 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? matthew: the ceo of zen desk 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 definitely something we're working toward. caroline: in 2017? matthew: no, not in 2017. i think 2017 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. the former reddit ceo has joined a vc firm. you will remember she had a lawsuit that sparked the debate about gender equality. >> it is hard for people to change. there's a system that works for them.

they 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 exec for its auto program. finally, the ceo of music service -- is stepping down. this follows the exit of the chief product officer last year. he will remain an employee, serving as an advisor. coming 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. union square is dominated by 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 this trading year, the best year we've currently had in a decade. we are up almost 8%. cory: that is biotech and the return of biotech over the course of the last 12 months.

caroline: exactly. if we dig into that, we are trying to how we are seeing overall. cory: it is interesting. the market itself has not been quite as strong. here is my chart. this is the 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. the purpose of business is to 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. it indicates 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, cash will get repatriated, but we see the stocks are well ahead of that cash flow. caroline: amazon is just at two

if you look at their yields, but some are better. cory: 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. ♪

>> it is 1:30 p.m. here in hong kong. i'm shery ahn with an update of today's top stories. foxconn has reported its first annual revenue decline after the smartphone markets your steep worst year on record. the first fall since 1991. u.s. prosecutors have charged three traders for rigging policy rates. they are accused of sharing

confidential information. they would have to be extradited from the u.k. if they do not surrender voluntarily. the deborah people killed by flooding did tyler fell through -- flooding in tile and that the world cup is getting bigger. teams for 2026, up from the current 32. critics say the move will lower the standard of playing and extend the tournaments to six weeks. it is expected to increase revenue by as much as 25% and more than $6.5 billion.

let's get a check of how markets are trading in the asia-pacific. >> pretty good. sinces the highest level october of last year. the ppi number coming through yesterday. the shanghai composite is down. mining spots lead to the gains in asia. the hang seng up. the backrong finish on of that rally in commodity prices. -- that isto leave as the ceo is to leave.

the fact we have seen the yen weaken after that we can -- that recent rally sees the nikkei up. this is bloomberg. >> back to a top story where covering. snape said it would pay british taxes on sales. the move is a win for the u.k. in the wake of the brexit vote. we report on the road ahead to the public offering. >> they are gearing up for its hotly anticipated ipo. 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 hardware product has gone viral.

meanwhile, the user base continues to grow at a breakneck pace. 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. -- snap's ipo. turning to washington where president-elect trump's choice for attorney general jeff sessions. he will inherit unresolved issues. >> 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. what do you think or the most 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

-- the watching. there are a few headlines, notably fitbit has purchased vesper. this follows its acquisition of pebble in november. meanwhile, airbnb is branching out in its latest funding round. it is expanding its offerings to travelers to restaurant reservations and making itself a one-stop service. it says it will take a month to integrate the new app fully into its services. i think we've got the tech show, sometimes it happens. you were talking about jeff sessions. his first hearing. what came up that was really contentious? kevin: 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 sessions said 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. kevin: 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. one of his top advisers is 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. she waited quite significantly when she talked about the san bernardino shooting and the role it had. >> our only concern is with 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? kevin: 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? i go back to the first point where senator sessions said if a foreign country is attacking and there's evidence in the cyber

field, he believes the u.s. should use all the tools at their disposal to retaliate. caroline: kevin is in washington, thank you for your time today. we will be covering president obama's farewell address. that is in chicago tonight, 9:00 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 in and looking at another chart. remind us why alibaba is so inquisitive? cory: i think it 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. they have spent $42 billion. 98 deals. if you click on that yellow line, it will illuminate it a little better. these are the 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 up. and these are just the deals we know about. there are some that are too small to mention.

the fact they had done this over 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. caroline: 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? peter: 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 -- to more of a 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? who are they disrupting? 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

-- massive investments. but this is $2 billion in shareholder money so we should expect some return from this and a lot more to happen over 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? peter: i think the you in china -- the viewing 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 these deals are in startups where trying to invest in fast-growing opportunities in things like 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. meanwhile, cory johnson, as ever it is great to have you. demonstrating so beautifully your chart. tune in on wednesday, we will speak to the finance manager of columbia on the economic outlook of that country and trade with the u.s. tune into the interview. 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.

these two once broke the record for speed in a boat. now they want to apply that to city congestion. a startup aims to replace traditional water taxis. we caught up while they were meeting tax executives -- tech executives. >> we find 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. what we see is that you get a traffic jam on land, today the waterways have kind of been abandoned. what we're trying to do is bring a system to those places which is environmentally friendly.

it makes no knows -- noise because it is electric and has no pollution. caroline: and it could be autonomous? >> yes. we're looking for partners. our technology is in 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 boat like this, you can have a 3-d scanner. it is probably a little bit 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.

they have been helping us to 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. >> this will be in the water one month from now and the system we're going to deploy, the dock and boats will be ready in june. caroline: we are seeing for -- four passengers and one driver, it could eventually carry more. this is more like a taxi. >> yes, the bubble is pretty much the length of a car in a little bit wider. it could hold 5-6 people. batteries have come forward a

lot this year. we are now down to 90 kilos. 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 produce them in the continent -- here in the u.s., i think we can say people have an hour going from downtown to silicon valley. the boats will be produced in the u.s. for the u.s. market. it makes no sense for me to pay the money to ship it oh all over -- to ship bubbles all over the world. caroline: give me the utopia, the dream.

how big does this become? >> in a place like new york city, you have the hudson river, we are talking about four or five knots of current i have water current. i have the turbines. i don't need energy from the city. for me, that is pretty cool. we are seeing the different areas have different needs. san francisco does not have the current but it has more solar. it is early stages but we will see more in march, april and may. caroline: coming to a waterway near you. that does it for this edition of bloomberg technology. on wednesday, we will be speaking to fire ice head of

threat intelligence. we will be talking about the russian state-sponsored hacking. and bloomberg will be covering donald trump's press conference live on wednesday. that is set to begin at 11:00 a.m. eastern.

anna: russia, trump's friend or foe? unconfirmed reports that russia has information on him. obama says farewell. the outgoing president makes an appeal to the american people to preserve his legacy before trump takes office. obama: if every economic issue is framed as a struggle between a hard-working white middle class and an , thenrving minority workers of all shades are going to be left fighting for scraps while the wealthy