Live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business.
I'm cory johnson.
A check on the top headlines.
Carlos slim will buy at&t 8.3 stake in his wireless company.
It is worth $6 billion.
At&t indicated they would sell for its directv purchase.
An online peer lending company is aiming for an ipo.
That is according to people with knowledge of the matter.
Lending club turned a profit of $7.3 million last year.
Online luxury retailers are fancy, seeking a new lu asian of $1.2 billion.
-- new valuation of $1.2 billion.
Bids are due for the bitcoin auction and the results will tell us how much demand there is for the virtual currency.
30,000 are on the block.
20% of bitcoins seized when the government shut down the silk road.
Potential bidders need to be screened to make sure they have no connections to the silk road or its founder.
They are required to deposit $200,000 in cash grid the winners will be announced on monday.
Matt, this is a fascinating story.
I love it.
Think about all the things they seized from silk road.
Probably heroin, they could have seized fake passports, any contraband you could've bought there.
They certainly wouldn't be auctioning it off.
But they will be auctioning this off, which says a lot about the legitimacy of this currency.
The marshall's office must be technologically advanced to even know how to store bitcoin and pass it on.
Apparently they are not good using e-mails, or the making mistakes that we all make when using e-mail.
They will be very cool to see this.
It will be interesting to see how the price of bitcoin is affected.
It is a sizable chunk of bitcoin.
About 30,000 bitcoins will be auctioned.
This is just the beginning.
They have 144,000 total.
There are only 13 million bitcoin in existence today.
Or that have been mined altogether.
A million have been lost or locked away because the original bitcoins have never been moved.
A lot are lost all the time.
It is a big chunk of change in the bitcoin world.
They are not selling them all, though.
Is this the ipo style -- did a nice pops you can sell more at a higher price?
That may be it.
The u.s. marshals office sells billions of dollars of stuff every year.
They are not new to auctioning things off.
They know how things work.
They know how markets work.
They will sell off this initial 30,000 bitcoin chunk in blocks of 3000. the idea is they don't want any one group or any one person to be able to drastically affect the price in the open market.
That is one of the ways they have figured out to trying curtail that possibility.
Bidders have to put a deposit down.
They are good for decent bid by the end of today.
6:00 p.m. is the deadline.
They bid an amount, and for how how many blocks they want to buy.
On street smart, we will show somebody putting a liability in.
-- a live bid in.
Matt, sit tight.
Joining us now from wedbush securities, gil -- does this lend a different type of credibility to bitcoin?
What does this mean for bitcoin?
I agree with that.
I think the government -- various agencies of the government have learned to accept bitcoin and are in the process of learning how to deal with it.
We have already had treasuries and the fed comment on bitcoin, where they think it belongs.
The u.s. marshals could have treated it as an illicit asset, and not surrendered it.
And not try to sell it.
But they did.
You realize it is a unique financial asset, they need to sell it in a unique way that makes sense for that together asset.
That is what they are doing.
Those bitcoins are actually more valuable in that they are coming from the government.
There is even going to be a certificate from the u.s. -- [no audio] the u.s. marshals office, saying they come from the government.
It makes them more attractive to potential bidders.
What is the path -- the price reaction to this upcoming auction?
The price rose a little.
It was trading at 5:83. -- $5.83. the bloomberg terminal now has a function where you can check the bitcoin u.s. dollar price, which i think says something about his legitimacy as well.
That basically values each 3000 bitcoin block at $1.75 million.
A couple of days ago was worth substantially less.
In november, it was worth a heck of a lot more.
If you look at the price over the last year, it has not been a bad ride for people who got in on this currency early.
You see this bike there right around november -- the spike their november december, you are up 500% where you would have been if you bought a 12 months ago.
I have totally come around this notion of bitcoin, and what the possibilities are technologically.
The way it works technologically -- gil, let me ask you.
Is bitcoin still the dominant alternative currency out there?
Our competitors to get more love?
The coin has by far the biggest infrastructure.
Thousands if not tens of thousands of software developers that are working on bitcoin.
There are some efforts to try and take the functionality into a different coin, into a different type of technology that has some advantages.
By and large, bitcoin is really where all of the activity is as we speak.
I think you will see a lot of the alt coin -- ripple may be a different story.
Alternatives to bitcoin that are similar, when you find a positive and that, it is brought into the bitcoin source code.
When bitcoin source code exhibits a negative, that these other alt coins don't have, that can be worked out as well.
It is an evolving currency, constantly changing, and it is a very democratic currency.
That is a huge advantage that speaks to the long-term survival of bitcoin over any smaller competitors.
Matt miller in new york, gil, with wedbush, thank you.
The manhattan district attorney isn't making friends as they order social networks to turn over user data.
That's next on bloomberg west.
I'm cory johnson.
This is "bloomberg west." facebook is in a legal dispute with the district man that -- manhattan district attorney.
Judges ruled that the social network facebook must turn over user data.
Information from these accounts will be used for fraud investigation that workers have filed for federal disability.
The government thinks they are faking it.
The facebook pictures show them healthy.
Facebook says the warrants are unconstitutional.
This is an interesting story.
Who owns this information?
When the government requested this information, they weren't just requesting it for the the individuals themselves, they went straight to facebook.
They wanted it on hundreds of people.
Facebook couldn't tell the people, so they couldn't let the people sign up for themselves, or give them a warning.
And they had to turn it over.
The couldn't deny the government that information because the fourth amendment rights are their own.
If the people -- if the pictures are in my file cabinet, i own them, they would have to subpoena me.
But because facebook has them, are they facebook, or are they the users'? the courts have said is an online -- it is an online repository of data.
Facebook happens to have the data.
The manhattan district attorney can ask for it.
Facebook is appealing that, saying this is the equivalence of going into someone's home and taking out all their stuff.
What is different when it is digital?
So they already turned over the information?
But they are trying to get it back.
The da is trying to figure out away to keep it?
Do we know what people these are, what injuries they thought they were faking?
Government employees, retired police officers that said they had injuries and trauma related to work.
The photos show them doing water sports are proving that they were not disabled.
For some of them, not all of them.
Is obviously raises issues for facebook will be on the small case in new york.
This happened to twitter too.
They protested the government asking for information occupy wall street protesters.
They refused to turn over.
This is an example of how our data is at the disposal of the government.
On top of all of these nsa regulations.
This will come to a head.
Thank you very much.
Is the next best thing in gaming watching other people play videogames?
We will talk about why the social gaming platform has taken off.
You can also watch a streaming on your tablet, phone, or bloomberg.com, or apple tv.
Welcome back to bloomberg west, i'm cory johnson.
Hard-core gamers want to play other people -- wants to watch other people play.
This allows people to record their own gameplay and watch others.
They found this thing and put money in it early.
It seemed ridiculous.
I saw this report about internet traffic.
Twitch is getting up there.
It's one of the biggest things on the internet.
There is peak traffic.
And what you're doing live video, or transmitted in real-time, that is what creates peak traffic.
There is so much data that goes across.
It started as a company called justin tv, who wore a camera on his head and broadcast his life 24 hours a day.
He got people very upset when he went on a date, and took the camera off to go to the bedroom with the state.
And that was an investment point?
Sometimes you want to be a little crazy.
Rational doesn't always make good investments.
The audience thinks this could be turned into what?
It's not a rational process.
There are four kids.
We are doing really edging stuff with video.
That was pretty much it.
This is ridiculous.
I feel like you have had such a long term in this business of investing.
Have you always had that approach?
Especially when he made the jump from being a journalist to an investor?
Being a journalist requires some reason.
You have rules to abide by and trying to report on what is actually going on.
That was a bit of an adjustment.
When you want to be ahead of everybody else, you can't be rational.
Specifically around which -- twitch -- people who aren't exposed to it, aren't exposed to it.
You and i are old.
We grew up in the time word is different than it is now.
The vast majority of millennials actually experienced playing games as a core part of their upbringing.
Mainstream as movies and television and anything media going forward.
The new xbox was a last -- announced last year.
When they announced you could use twitch directly on the xbox, there was this big thing -- and on for him of people went crazy.
I wasn't aware before that.
Let me give you a broader perspective on twitch.
It's not that you just want to watch other people playing video games, is that now there is a professional sport where people make a full-time living playing video games competitively.
They have formed teams.
Teams have formed into leagues, and the leeks compete.
-- the leagues compete.
It is all of the instructor of a professional sport, whether it be european football or american football, or whatever names you want to apply to it.
When you make an investment this early, how do you start to imagine the way the business will look -- considering the notion of what could be?
We are just investors.
It is the team that figures out.
The guy that is the ceo of twitch right now worked with justin, and that's now blown -- grown to be this huge business.
It ships infinite numbers of minutes of video.
Typically, do follow investors from one business to another?
If someone makes you money, you want to bet on that guy.
The four founders of justin tv, what is now the ceo of twitch, one follow the company that was sold.
The fourth has launched a company called cruise.
They are the only start up crazy enough to take on google in the area of self driving cars.
That the start up?
You start seeing google talking about android and on the dashboard, and self driving cars might be a business long before we get to a time of self driving cars.
That is what happens when you get to be a big company.
People are saying that google's future is more like microsoft's present.
These guys are saying screw that.
If you happen to have a black audi, we will sell you for $10,000 all of the equipment that you need to turn your car into a self driving car.
If you were a rich guy with the black audi, a kind of goes back to henry ford.
Then we will put this equipment on.
They install the thing that turns the steering will for you.
They install the sensors to make sure you will brake.
It is self driving.
It is only in a limited use case, which is when you are on a long commute.
When you are on a highway.
You are not going through radical turns come off the road.
It just makes it easier to commute.
You don't have as much road rage.
We have bill gurley on the show.
We were talking about the difficulty of some businesses getting into regulated industries like health care or broadcasting, finance, this is for good reason.
This is aftermarket equivalent.
So it is regulated differently than the car manufacturer.
Audi has to take care of the fundamental regulations and building the car in the first place.
You choose to install it.
It is a total buy-in -- an opt in.
This is where google is very helpful.
Without even being an official partner, because they take all the slings and arrows.
They take all of bieber agency's response ash all of the agencies responsible for regular thing cars.
Whoever set the rules for that, they worry much more about google than they do about this tiny little company.
Interest in stuff.
-- interesting stuff.
Thank you very much.
Is it time to change patent lawsuits?
A little help from silicon valley to clean up the junk in patent regulation.
Let's get you traded -- caught up on where stocks traded.
Finishing the day higher.
Technology and utilities salvaging the session for much of the day.
Stocks were mixed.
You are watching bloomberg west.
I'm cory johnson.
The legislation to kill patent trolls died on the senate floor.
Patent trolls live on for now.
But the supreme court is not letting patent reform remain at a standstill.
Head of the patent office made a major policy announcement, offering a new approach to combat use trolls.
Let's take a quick moment to define the straight -- to find that phrase.
They are called patent trolls -- companies who have acquired the rights to patents but don't actually sell or produce anything.
They build patent arsenals often collected from the abandoned stockpiles of universities, failed startups, and defunct big the companies.
Once they build their war chest, those trolls go out for blood, targeting companies whose technologies are similar to those outlined in the patent.
They threaten costly lawsuits unless licensing fees are paid.
Most troll attacks are settled out of court for nondisclosure agreements.
Of the 4700 patent lawsuits filed in 2012, 3000 were from these so-called patent trolls.
How we regulate against the abuse of little use -- litigation and patent trolls?
Michelle lee joins me right now.
You were at stanford talking about patent trolls.
What do you fundamentally see is the problem with these trolls?
That is accompanied in question.
-- that is a complicated question.
I think the bigger question is for us to ask is what can we all do to better improve the patent system?
To make it the best we can be?
There are initiatives being undertaken by the court and by the congress, and also by the administration.
Happy to go into those in as much detail as you would like.
You've worked in silicon valley, you worked in the apple microsoft case which was so important.
How do you explain how different things are now than they were even 10 or 15 years ago?
I think companies are just as innovative as they have always been.
I do think there has been an uptick in patent litigation, and also, abusive litigation.
The goal of the administration is to help curtail abusive patent litigation, and create a system that promotes and encourages innovation.
What kind of litigation is considered abusive?
Asserting a patent where you have no ownership rights.
Asserting a patent and stretching the meaning of what it covers.
Using a tactic where you said and demand letters to a lot of folks saying, don't look too much into the details, you can settle this litigation for $3000. less than it would cost you hire a lawyer.
How do you stop that?
More precisely, what has to change to stop that?
The patent office is undertaking a huge priority to increase the quality of the patents it issues.
The clearer and less ambiguous the patents, the less the ability or likelihood of that patent being used in abusive litigation.
And the more likely that the companies are able to focus on innovation.
How do you make the patents better?
Can they do better patent examination?
They are already doing a tremendous amount.
They do an excellent job searching, however, we are actually using silicon valley techniques, such as crowd sourcing.
We are going out and asking experts to say, look, you are experts in your field.
What do you think our examiners could be using to determine whether a patent should be issued?
We are also bringing in people from academia and that sit outside the world of the pto?
Come in and give presentations on their areas of expertise.
Give the training to our examiners.
We will televise it and broadcast it to all of our members.
Smart examiners this will make , them up to speed on fast-moving technology.
What you think you didn't get through the senate?
It is obligated.
-- it is complicated.
There are many factors.
We want to curtail the use of abusive patent litigation.
We also want to preserve the right of legitimate patent owners.
To balance that, to have a valid set of reforms that promote innovation -- there are a lot of issues at stake there.
We are not waiting to move forward.
We have a number of initiatives underway, we are tapping into experts in the field.
We are also using the data.
So many of our companies use.
We have a lot of data.
For the first time, we're able to go over that data, review the data, and feed that back into how our examiners review the patents at every stage of examination.
President obama -- there was a time when patents weren't the scene of a meter challenge.
I think it sort of highlighted the importance.
Let's pass a patent reform bill that allows businesses to stay focused on innovation, not costly and needless litigation.
It shows us how relevant this issue is.
But i wonder if, the twenty-year timeframe of patents needs to change now.
Innovation happen so quickly.
That is true.
Innovation is coming quickly.
But we have to keep in mind there are many industries for which a 20 year term is justified and needed.
For example, biotech and pharmaceutical companies put hundreds of millions of dollars into developing and getting fda approvals for new drug.
In order to recoup their investments, they need longer-term protection.
Longer than 20? 20 is long enough.
They seem to be operating just fine with that time.
You do need a certain.
Period of time of exclusivity.
Do you think it should be morsels of/-- more exclusive?
If we start having different rules for different technologies, think about it.
How quickly technology evolves, to divine what category or definition is for a certain area of technology, it will change.
When an application comes in, it might be in the software space.
It is also used in bio techs days -- base.
When an application comes in, it how would you actually frantically deal with it if it touches upon two technology areas?
Do expect more executive action for the president?
We have seen the executive actions we are going to see.
We have over a dozen executive action items.
They are very ambitious.
They pertain to clarity and quality, getting main street businesses the tools they need to respond to demand letters.
These are big media initiatives.
We have plenty of work.
We are well on our way.
I think a lot is being done.
We are making good progress.
Developments and improvements are being made.
I think you will see legislation coming forward in the next congress.
Let's see if he gets through then.
Michelle lee, thank you very much.
We will call it the kardashian effect.
The reality stars'gaming app.
You can watch us streaming from your phone, on bloomberg.com, or apple tv.
? welcome back to "bloomberg west," i'm cory johnson.
Bloomberg television stephanie ruhle spoke with three power players in technology am a culture, and design.
They talked talked business, marketing, branding, and technology trends like instagram.
The internet as a whole -- the world as a whole is ugly.
The internet as a whole is ugly too.
But i'm not in the construction business.
I know more people that could help repaint -- when i went to kevin, i said let us redo instagram.
But instagram is nice-looking.
[laughter] but just in general, it's like everyone spends the majority of their time looking at the screen, or looking at their phone.
Just as a simple task, we could clean that up.
You can catch the full interview at 9:00 on bloomberg television.
From kanye west to mrs.
Kanye west -- kim kardashian has found success in the gaming world this week.
Sales of her game have soared.
It shot to number two in the app store.
Congratulations, this game is huge.
It is, it's number seven or eight first thing.
Talk about how this game came out.
We have been working about a couple of years to get this to come to fruition.
It's an incredible partnership around a proven monetizing game engine.
Her brand, her user base.
She exceeded expectations for us.
It is driving -- maybe our biggest game of the year.
What is the gameplay?
You were in kim's world, and she is coaching you on how to get through.
But you are not all an a-list celebrity.
She is helping you become more acceptable.
Kim gives advice?
She gives advice, there is voice overs, she helps you complete tasks so you can become more successful.
How did this come about?
Originally it was our idea, but she has been very critically involved.
She's been great to work with.
She has been quick with approvals and working through how to tie her life and world into the game it.
Talk to me about the development effort, and what it cost to make a game like this.
She is a very high-profile person, there is a lot of opportunities to do a lot of stuff like this.
Really we are focused on concentrating our efforts on big ip, the right game engine that attains, monetizes, and ultimately, we haven't had any orders.
This is probably a two or $3 million effort.
Excluding marketing costs.
How many people work on a game like this?
A couple dozen.
How many of these are you making?
12 or 14 a year.
We put out one month on average.
With the average duration?
Stuff that makes us the top 10 grossing, like our dear hunter game, it will go many quarters.
I think there will be a long on this ultimately in the next year.
We could have kim kardashian deer hunter?
I'm not sure that would be a good fit.
This will be our biggest year.
Kim will help us on our way.
We haven't gotten this far by getting the wrong mix of ip and interest.
You think kim kardashian and deer hunter is the wrong way.
30% year-over-year sales growth.
Is that about the growth in mobile, where the number of games you're putting out, or both?
It's a lot of things coming together.
We had restructuring going on, we have had our two biggest profitable quarters, where we produced $6 million of more growth.
Mobile keeps growing.
We are very strong in the android business.
Very strong overseas.
But we have been concentrating our portfolio on benefits between ip that we own, acquisitions we have made, partners we are working with -- we have kim, we have the james bond game announced next year.
You never know.
Anything is possible.
When you do these games, are you finding out that certain things are working better that you try to replicate?
Things are becoming more predictable.
Our business will double and triple in the long term.
It is just the case of making sure we have the right titles in the right languages and devices to capture that growth.
And developing talent?
It is hard to hire right now.
It is hard.
We have 550 plus able around the world.
We just made and next visit in -- we just made an acquisition.
We are launching diner dash.
That should probably be big as well.
You just raised much money.
What we do with that money?
Most likely employ it for acquisition.
We are on the lookout for more of the diner dash's, deer hunters in the long run.
We are always shaping our portfolio with talent.
Good to see you.
What are the usa's chances against belgium and the world cup?
How technology could give us the answer.
You can watch a streaming on your tablet, phone, or bloomberg.com.
? welcome back.
Let's turn to the number that tells us a lot.
We have a special guest.
Eric jimmy joins us from new york.
38%. that is the chance that the u.s. soccer team will win its next game against belgium.
Tuesday at 4:00. 1:00 on the west coast.
How you come up with 38%? that comes from be sports.
They look at all the numbers.
They look at the opponent side, how they have performed as well.
If you take those matchups and you see who can do better -- that is where you get this number.
62% belgium, 38% usa.
The numbers have been really accurate so far.
The game they thought was going to be the easiest was against ghana.
They won that game.
The next game in terms of difficulty was portugal.
They tied the game.
The most difficult game was germany, they lost it.
So far, the numbers are proven to be really accurate in terms of producing how the u.s. will fare.
Luis suarez had three bytes.
How many times has he been people -- bitten people?
Three times on camera.
When you get to three, they suspend you.
But apparently, the first two you get for free.
Give me another the west bite -- bwest byte.
That's the number of current she careens -- streams espn app had during the game it.
It crashed for most people.
They had never seen it that big.
They had a total of 1.7 million for the total.
1.4 million was the total for the u.s. game against germany.
2%. that's the chance the u.s. has of winning the entire world cup.
If they can get through the 7% chance of getting to the final game, the overall chance of them winning the whole thing is 2%. that seems pretty low, but that is what we saw for uconn in march madness.
Anything is possible.
Nate silver had a 1% handle on their odds.
Is his methodology substantially different?
Everyone has a slightly different methodology.
Some people have it at 2% or half a percent.
The metadata you will ever get is when you combine all of these models together.
That ends up being more accurate than any individual models.
You want to look at everyone's to get the most accurate number.
It has been an amazing tournament.
I don't know if any of the games have been great.
But i wonder why this year has been smart traction in the u.s.. i wonder if it is the technological aspect -- social media, the ability to screen it on mobile phones.
This is the first world cup we have had in our time zone since 20 years ago.
We are getting to watch games at a normal time for us.
We can blow off a little bit of work in order to watch the games.
Woah, we don't want people blowing off work for bloomberg.
It actually work to get people to watch it in real time like noon on your lunch break.
The stories have been really compelling.
The demographics here, we are finally at a point where guys our age group playing soccer.
That's what they said four years ago, and eight years ago.
I don't think that story is new.
You can always make that case.
You know what they will say in four years from now, regardless of what the numbers are.
This was certainly getting all the love in new york.
We appreciate it.
You can get the latest headlines all the time on your phone, tablet, nubber.com, and bloomberg radio.
We will see one monday with more bloomberg west.
Thanks a lot.
This text has been automatically generated. It may not be 100% accurate.