a solution for replacing the affordable care act. the president will ask for a $54 billion boost in defense spending in his first budget. that is an almost 10% increase. george w. bush says the country needs answers about the extensive contact between president trump's team and the russian government. the former president defended the media's role in keeping with leaders in check during an interview on nbc's "today" show. he also expressed skepticism about his approach to immigration. wilbur ross is headed toward confirmation as secretary. the congress will vote at 7:00 this evening. easily cleared the senate commerce committee and a procedural vote by the full senate. multiple outlets citing reports say the deputy to al qaeda's leader may have been killed in a u.s. airstrike. the terror leader is a close associate of osama bin laden and linked to the bombings of

embassies in africa. i am alisa parenti. this is bloomberg. "bloomberg technology" is next. ♪ ♪ cory: i am cory johnson and this is "bloomberg technology." befores its final stop the big ipo planned for later this week. investors question its growth. warren buffett takes a bigger bite. he has purchased more than 100 million shares of apple. spacex shoots for the moon. two a name to citizens have put money down for a lunar mission.

as wall street prepares for the first tech ipo of the year, snapchat's management team make s its final roadshow in san francisco. investors are pitching the company to investors. million users but growth has slowed to 3%. joining us now, sarah frier. this user growth issue to me is one of the biggest issues with this company. when you look at the sequential user growth, is slowing down. sarah: it has been a top question for snap executives at the roadshow. and in new york, a lot of people we talked to who went to the roadshow expressed skepticism. their answer to the user growth issue was it was due to some issue with their android product. worried maybe are

this is because instagram copied snap's product in august. exactly when story happened is when their user growth started taking. sarah: that is one thing prequel worry about. snap said they see instagram is a different case. calm theirt seem to fears about growth. that was at the roadshow in new york. cory: they were in san francisco today trying to pitch that story to investors. ; it is a lot of stock but there is lazy of demand. this is the first big tech ipo in a long while. the last big one was twitter. these are companies that people wait a long time to get into. if it is a facebook situation, even if it has a rough first year, it could be a good opportunity over the long-term.

if it is a twitter situation -- cory: it is hard to imagine what the negative growth margins, there's a great deal to be had. i started building a model of the company this weekend. the cost of goods, the money spent historically. i put together a chart to show this. the cost of serving each user. the cost of goods sold compared to have the users they get. over time, you see the opposite of what you want. they are spending more on every user every quarter instead of less. since they don't own their own servers and rely on google, that seems to be an issue for them. sarah: it is definitely an issue in the minds of investors. they have aed different cost structure that we are not as used to. they are not in the business of building servers. that is their response to that. question is, are they going to be able to increase the amount of money they make?

are they going to be able to scale the advertising business to the point where it becomes profitable business? cory: what is the timing of this deal? sarah: we are expecting it to price on wednesday and lift on thursday. cory: price wednesday, trade on thursday. there should be excitement. we will have you come back on. great stuff. sarah frier from bloomberg news, thank you very much. , the annualthaway letter was a great thrill. the company doubled its stake in apple. warren buffett says it now owns 133 million shares. katherine chiglinsky joins us now. is this warren buffett or other money managers as well?

on cnbc earlier today to talk about the investment in apple. he more than doubled his stake in the technology company, which is a lot more than we learned at the end of december. he mentioned while he manages the bulk of the investment, it is one of his deputies that pitches the other bit. that is interesting because he is adverse to technology shocks. he showed his flip phone on tv today. he is not that into technology. it shows the growing influence of his two investment deputies. he did not clarify which one it was, but it is an interesting sign that he is willing to plow into the company. cory: it is interesting to me because one thing i noticed in the letter was up all of the stocks they listed -- was of all thehe stocks they listed,

only loser in all of his holdings is ibm, a company he has lost money on and has been invested in for many years. three or four years. there was no commentary in the rest of the letter about that holding. >> he has taken some heat for being so bullish on ibm for a while. that stock has done much better. it rallied the past year, especially since the election. he started to exceed the cost of purchasing that stock. he definitely took some heat when it was not doing well, sticking with it proved ok. it is interesting that now he is like ibm was good and apple might be even better. cory: it is interesting we have seen so many tech leaders over the years who seem to have a great love of berkshire hathaway and understand that business regardless of its lack of overt technology. if you look at the railroad, if

you look at so many of the holdings, all of these companies are being transformed by technology. he is buffett knows spending money to make these companies better through technology. >> definitely. you cannot avoid that conversation forever. he mentioned on cnbc today is budgetary mentor questioned some of his bets a little bit. he said i cannot avoid things forever. things are changing. that does happen. i think that is what he is saying with some of these different bets, with apples, with airlines. they had a bad first century but they are doing better now. i think he is willing to change his mind. cory: airlines is one he has always hated and regretted. katherine chiglinsky, thank you very much. executivethe chief opens up about president trump's expected tax overhaul and gives

us a look at how complicated taxes can be for businesses in technology. this is bloomberg. it ♪

cory: softbank is said to be working on a merger with a satellite company. softbank invested $1 billion in december according to a person familiar with the matter. talks could still fall apart as other options. the transaction could be valued at $18 billion if successful. reports results on wednesday. details are expected before a

joint session of congress. may comes to the multibillion-dollar videogame business -- when it comes to the below -- multibillion videogame business, it is not easy. the new tax policy could have unintended consequences. >> i think the biggest opportunity on tax policy is the repatriation of cash trapped overseas. to be clear, that is not a take to issue. 90% of our caches domestic. it is a broader issue for our economy. cory: we have had the tax repatriation holidays. in the past, that has gone to stock buybacks and special dividends. one can argue it trickles down to the economy. one can also argue it does not. has not gone into hiring and spending. >> this administration has talked about job creation. i think it is the primary goal

of the administration. it seems you could tie favorable treatment to repatriated tracked cash, to whether that is invested in the economy as opposed to buybacks or used to pay dividends. you could tie them in the same way exchanges in the real estate business have obligations and timing restrictions to generate tax benefits. cory: as it relates to the gaming industry, the border tax rules are interesting. the way you develop software, you may develop some in canada, a lot in the u.s. some of the same software in the u.k. how do you tax what is made in canada versus what is made in the u.s.? it is all lumped into one game. >> it is possible to do it. the question is is it something that benefits our economy. generally speaking, erecting trade barriers is not something that generates value in our worldwide utterly major

collection -- matrix-engaged system. our industry is especially interested in low or no barriers to trade because we are an exporter. we are one of america's largest exports, india came in general. i think we are the -- entertainment in general. i think we are the second largest after aerospace. having as few barriers to free trade as possible benefits our industry and certainly our country. from our point of view, we want people working at their highest and best opportunities. is a trainederica economy. we like the fact we have worldwide engagement and can put jobs where they belong. we are a big domestic employer of course. cory: as the products are more digital, you can play that out to entertainment, movies and so

on. as they are increasingly digital , what you are selling is bits and bites and lines of code. where it is written may determine if it is made in america or not and how the tax policy works. it has to be confusing for condos and the white house to figure out what that means. >> there are certain rebates triggered in foreign jurisdictions. there are rules around what constitutes local work. i have no doubt one could make rules and make those work. the question is, would it enhance or detract from productivity, achievement, and the overall macro economy? i am suspicious we can be so smart in centrally planning trade restrictions that it is a net positive. generally speaking, free trade is a net positive. cory: it also seems that valuation placed on the i.p. versus the actual creation of

the code is a balancing act. is the a.p. is owned by a u.s. company but the code is written in ireland, where is the work and how will it be taxed when exported? >> all the questions. cory: how do you help congress figure that out? >> we encourage congress not to erect trade barriers. i think that is the focus we have. i think at the end of the day, because the sitting legislature is republican dominated and typically republicans are believers in free trade, that ultimately there will be negotiation with our president. i think we will end up probably in the right place. cory: where is your development intak take two? >> we have people in california, massachusetts, baltimore, canada. we just acquired a company in spain. we have a bunch of people in the

u.k., some czech republic and china. cory: these are interesting challenges. >> absolutely. way: it is possible in a you could not have done before with teams working round-the-clock. >> everything is connected electronically. in don't need to be sitting next to someone to work collaboratively with them. cory: that will increase in the future. >> we should avail ourselves of expertise where we find it. if we are smart in america about increasing our engineering talent, which is a big issue here, through improving our educational system and focusing on engineering, those are very high-paying jobs and we and all of our competitors are hiring hand over fist. we all have open positions. cory: taxes. we are talking about taxes. that was strauss zelnick. on tuesday, we will have special coverage of president trump's

address to a joint session of congress. toing up, we will take you tech's biggest showcase. the samsung european vice president of mobile and how they plan to bounce back after the note 7 saga blew up. our interactive tv function is right here. you can watch us live. you can see old interviews. look at bloomberg functions and become part of the conversation by sending me a message during the show. feel free to interrupt me as much as you can stand it. free for bloomberg subscribers only. this is bloomberg. ♪

cory: everyone who is anyone in mobile is in barcelona right

now. what you will not find in barcelona this year, a flagship smartphone from samsung, the largest maker of phones. the v.p. of the european mobile division. >> we have been through a big challenge with the note 7, one of the biggest challenges in our history. learning, andof we want to demonstrate today that quality is part of our mission. we want to thank all of the customers that stayed with us the noteembraced more 7 in the past few months. stillemonstrates we are wellington with our customer base. we owe them more innovation and quality the future. that is what we are showing today. >> will you refurbish the note

7? many loved it. many seem to be taking it back. will it be going back on the market? to findnk we are trying to disperse the products in the most responsible way. we are working to find the most responsible. >> samsung has been known to , sometimesation putting out equipment early in the lifecycle before they have been practiced. do you agree? do you think you always wait until it is at the best possible moment and then release? >> i think sometimes we are early. we are ahead to drive the market. one of our responsibilities as one of the biggest dealers in the industry is to drive it forward. we have demonstrated this last year, actually a couple of years

ago, with the big event last year to bring it to the next level. yesterday, we also announced in the vr, the new controller which will bring a new dimension to the vr experience. i think we like to say we are early in the technology and bringing new technology and democratizing them to a wider audience. >> vr is very hot. a.i. is very hot. is a are coming -- is a.i. coming? can you elaborate? >> i wish i could elaborate. there are many things in the labs in the moment. we have acquired companies in different areas. we leverage technology the best we can. wille now announcing we tune speakers on the new tablets with one of the most famous brands in the sound industry.

we definitely will use all of our technology. 8, will it sell more in terms of quantity? >> we are always confident in our products. that is why we make them so attractive and sell them to as many people as possible. demonstrates the innovation is relentless. we launched with the tablets yesterday. some of the features introduced another manifestation of how innovative we can be. we created it with the first note several years ago. now it is in the tablets as well to give more experience to our users across our portfolio. >> when you don't launch a phone here, everyone starts to look at

who is. we have been shining light on lg. another wants to eat away at yours and apple's market share. does it worry you and they are coming out with new phones when you did not? >> we always recognize there is competition in the market. i think it is good for the market. it is good for us as well because it pushes us to bring more innovation. it is not just about launching a new product, but serving customers with experiences. samsunghe strengths of as a big company is we can deliver not only a true portfolio but a full because one size does not fit all. cory: that was samsung's vice president of the european mobile division. coming up, we check in with the godfather of net neutrality, tom

wheeler. his view of the future of internet regulation as some of his rules are being undone by his successor. that is next. elon musk aims for the moon with the surprise announcement he has significant deposits for a space tourist mission around the moon. we will check with our spacex reporter later this hour. this is bloomberg. ♪

>> i am alisa parenti and you are watching "bloomberg technology." let's start with a check when you first word news. mexico says it will cut off renegotiation on nafta. the economy minister tells bloomberg the moment the u.s.

says it will put a 20% tariff on cars, he is leaving the bargaining table. the french presidential candidate has opened up his and has pulled within two points of marine le pen according to the latest polls we have seen. macron commanding a 25% piece of the french electorate. his surge is said to be pushing by increasing endorsements. both surveys show le pen losing in the second round. theresa may is preparing for battle in the house of lords overheard draft brexit law. she and her team have demanded lawmakers in the upper house of parliament not rewrite the legislation while debating it. may remains opposed to a second referendum on scottish after reports scotland is preparing to call another vote. scottish leader has repeatedly said another referendum is likely. police was's secret

involved in the killing of kim jong-un's brother according to the "new york times" citing south korean intelligence. the killing is being described as state-sponsored terrorism. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am a lease of karin bloomberg. it is just after 5:30 p.m. in new york. i am alisa parenti. this is bloomberg. david, good morning to you. feeling the tail winds blow across the pacific in singapore. you look at early indications. it does seem we will be shaking off the dull session on monday. features for japan and australia open in 30 minutes pointing to a higher open. yields in sydney higher.

lots of data to latch onto for traders. the big one is india gdp, largely expected to reflect the negative affect -- effect of the demonetization efforts. pleading guilty to one count of wire fraud. we are talking to the president of universal robots about this new wave of automation across industries and countries in the asia-pacific. a lot to talk about today. i'm really excited. singaporeingles in with more from "bloomberg technology." ♪ cory: this is "bloomberg technology." i am cory johnson. our top story this hour, snapchat's parent company continues its roadshow.

the highly anticipated ipo set to price on wednesday after the market closes. they are continuing to pitch the company to investors and explain away the phone growth. who is us, alex barinka very excited about this deal. crawford del prete also excited. what is your take on this deal? >> this is a tough one. snap likes to say they are a camera company. and then they go on to talk about how they compete with anthony's like apple and facebook. i would argue snap is an that has oneompany key case one demographic is interested in. they are struggling to add use cases, to add features that will get the growth accelerating. that is the problem. alex, youhat point, have been talking to people doing these roadshows. i assume you have talked to people who invest in ipo's. what are they saying about this

deal? >> crawford is hitting it on the head. they are trying to figure out how to make money off the millennial generation. in the best case, people are looking at a slower user growth at the end of 2016, the coming down of engagement metrics. those are things they are increasingly concerned about because they like to compare new stocks to past companies. when you think about snapchat, you think about twitter and facebook. twitter was kind of the issue there. they did not have a second act. they are still figuring that out three years plus since the ipo. that is some of the overhang here. for the folks making a long-term bet on the company, they think the sales growth opportunity is evan and they trust

his team to figure out what is next. they are making that that without a lot of information about what the next generation of snap will look like outside of spectacle. spiegel, the c.e.o. is thought to be a great product guy. snapchat is a product people love to use. margins.ative gross alex is right compared to twitter and facebook. facebook is profitable and has tons of free cash flow. twitter has cash flow from operations but is not profitable. snapchat is not even gross profitable let alone operating profits. >> you have a tremendous amount of cost they are incurring to build up his infrastructure. they may want to build up their own infrastructure which will take huge cap x.

herde talking about this e twostomers, this moov snapchat and then move on? waswere talking about how it when facebook started adding features that the user growth started to turn? cory: we put it up briefly before. i want to get your take. the chart shows simple math. the cost of providing the service. i took the cost and divided by how many users each quarter to see him as they have to spend on every user. in any business in the world, that number is supposed to go down. you add more users and have economies of scale. instead, the cost per user is going up. >> because the herd is thinning, it is getting harder and more expensive to get to each member and monetize them. if your growth is roughly the same in europe as the united

states and network costs are higher in europe, it will be cheaper -- cory: is that what the rising cost is about where it shows the numbers going up because they are expanding? >> i don't know that. i'm talking about network cost, using the network service. cory: there is the chart. $.97 per user in the fourth quarter. $.61.ar before, only >> they blame it on android. really i think it is about getting to the more expensive person to get to. cory: this is one of your favorite tricks to compare the amended offer to the actual offer. we have also committed to spending $1 billion over the next five years. that is $3 billion in expenditures they are on the hook for in this business losing money with every transaction. >> it is. this makes up the majority of their cost when you look at the

cost of revenue. we heard questions about this on the roadshow. they did say they would consider potentially doing the own infrastructure. there are no plans for that now. companies trying to explain this by saying we are making these investments upfront so we can expand quickly. the proof will be in the pudding. the revenue model is new. it has only been about two years they have been making larger amounts of money. in the next few years, whether they can continue to monetize the user base, whether they can ramp up revenue to a point where you are outpacing the rising costs, that is phase three the company talks about. it is one of the few salient points they point to as something to look forward to from a financial perspective. cory: she is alex barinka. she covers ipo's.

she puts everything in the ipo hot sheet or bloomberg news. crawford del prete, thanks a lot. in barcelona, the mobile world conference is underway. established the net neutrality rules. his successor was a vocal opponent now trying to unwind some of those regulations. caroline asked for his views on what is happening next. >> it is highly dangerous to fourw four companies, internet service providers, to determine who will be able to andon their networks determine who the winners and losers, what are the special terms. i will favor you, i will not favor you. we will not have the kind of economic growth. we will not have the kind of innovation necessary if we don't

have networks that are fast, fair, and open. >> i was talking to the deutsche telekom c.e.o.. he feels europe has a better way of doing things. do you believe that as well? >> it is interesting. europe adopted their open internet plan after we did ours, and they based it on hours. i help them work through it. i think they are very similar. >> what could this do in terms of innovation and the internet of things? there are going to be many more connected device. crucial to infrastructure and health care. the right datare is flowing through the pipes? >> you have to make sure the pipes are open. we cannot be sitting in a situation where somebody who

owns the pipes is determining what is going on, what is going over the pipes. two guys in a garage are working on something right now you and i have never thought about that will be transformational and will use the power of ubiquitous ofnectivity and the power more powerful and lower cost microchips to change things again. they need to be able to get on .he network without permission not, can i get on the network? i am competing with one of your companies, what about my product? one of the things the chairman shutdown when he came and was the initiative i had on zero rating. zero rating.

there are some carriers in the united states who are using the fact that they control the productso favor their over competing products. the internet of things will not grow if that is the reality. two guys in the garage will not be able to compete if that is the reality. we will not have the kind of innovation and economic growth we need to have is that happens -- if that happens. >> how does that not become reality? ensureeds to happen to net neutrality stays the way you would like it to be? >> the great thing is we have a law in the united states called the administrative procedure act. it stipulates how regulatory entities have to act. you have to build a record, a public record. you have to make a decision based on the record.

a court has the right to review that record. when we put out our open internet rules, we built an extensive record. and it was reviewed and affirmed strongly by the court. whether you can come back in a couple of years later and say things have changed so dramatically that you need to reverse all of those other decisions affirmed by the court, this is going to be a long process. we will see what the record is. we will see what the court appeal is. and then we will see where things end up. cory: that was chairman tom wheeler speaking to caroline hyde. she will sit down with his successor tomorrow at 7:30 in the morning wall street time. coming up, the latest chapter in the samsung corruption saga. topic second of a week -- top executives await indictment.

is it just getting started? we will see. this is bloomberg. ♪

cory: huge story out of asia could be reaching its final chapter. a special prosecutor in south korea will make a final decision on tuesday whether to indict samsung executives over bribery charges. is he? >> he is the heir apparent at samsung. the broader picture is there is this investigation into influence peddling at the highest reaches of government. a special prosecutor was a

ported to month ago and has been digging into allegations about corporations giving money in exchange, allegedly for political favors, including at samsung. the special prosecutor had a deadline to finish the investigation at the end of february. had asked to extend that because it is a big project and was denied the extension, so they need to file charges today. a spokesman for the special prosecutor said yesterday of the five samsung executives identified as subjects, almost all will be indicted. we are expecting that later today. past,it seems in the of the korean companies have been able to avoid prosecution by having close ties with elected politicians. >> the political climate has changed quite a bit. you are right. in the past, they have been prosecuted for things and convicted.

they continue to work at their companies in most cases. the political climate has changed quite a bit. there is a lot of outrage about this influence dealing at higher levels of government and business. the public is looking for more serious measures at this point. you saw this when the special prosecutor sought twice to put jay lee into jail as he continued his investigation. he is waiting for these charges, the indictments to be filed, waiting in jail. cory: it is a remarkable development for this company. this management team is important to the company, it is not just a c.e.o., the way they worship a family at the company is amazing. >> right. jay lee has been the focus of this. samsung is a large organization.

executives run individual pieces of it. people at samsung has said c.e.o.'s of individual businesses will be able to continue to run these operations. where it gets more challenging is if you take out the top leadership, it is hard to make big strategic investigators -- decisions about where they will invest in technology they think is promising. the bige big -- strategic moves get more challenging if you have top leadership distracted with this sort of thing. cory: thank you. we appreciate it. a programming note. starbucks c.e.o. sits down for a wide-ranging interview on tuesday. spacex c.e.o. elon musk's announces a surprise mission to two unnamed space

tourists have put down big bucks for a trip. details next. this is bloomberg. ♪

segment "out this of the world" because it is about space. elon musk says his company will launch two space tourists be on the moon. two passengers, they do not want their identities disclosed yet, the company says they are paid a significant deposit. unanswered questions, there are many. what? the moon? passengers? they're going to put a living thing in the rockets? >> spacex was founded to send humans to mars. so moon is closer than mars maybe this is step one as they figure this out. what is interesting is this comes at a time when the trump administration has signaled

interest in sending humans to the moon. part of this is maybe a marketing effort by spacex to show excitement around space and show to trump they can do it. cory: many years ago when elon and i were like this, i did a story with him at spacex. we walked through the factory and i looked at this capsule that was going to be the top of the rocket. i said, what do you need a window for? he gave me this grin that suggested those plans were absolutely there to put people into space. spacex has ar, contract with nasa to send astronauts to the space station. this is private citizens, not astronauts. while they are working with nasa they arertified, announcing today two people have paid a significant sum to fly around the moon late next year. had arichard branson successful flight last week in the desert. they are charging $250,000 per

person. should we try to guess what it will cost to go to the moon? isi think what is different spacex and jeff bezos are talking about letting people experience weightlessness and bringing them back. this is orbiting the moon, a whole different ballgame. one analyst told me it could be $50 million apiece. there are plenty of people in silicon valley and hollywood who have that kind of money who would love to be the first to do it. cory: would you want to go? >> probably not. cory: i find the notion terrifying. maybe there are braver people. doingy are talking about it with a rocket they have not flown. we have not even seen it in the air yet. cory: experimental stuff. where are they in terms of the satellite business? they launched last week. what happened? >> they docked at the international space station.

they had a satellite office in seattle where they are building their own satellite network, but that has not been launched yet. they have been quiet about that as of late. they have several projects. the next big moment for them will be they have landed the first stage of the rocket on land and on the drone ship several times, but they have yet to reply it. they are supposed to do it this spring from cape canaveral. they have to get this in the air before they fly humans. cory: that does it for this edition of "bloomberg technology." all episodes of "bloomberg technology" are now live streaming on twitter. check it out. every weekday at 5:00 wall street time. 2:00 on the west coast. that is it for now. this is bloomberg. ♪

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