Than 30 minutes.
Bloomberg "west" is up next.
? live from pier three.
Welcome to the early edition of bloomberg "west." cory johnson in for emily chang.
Apple going to war with the court appointed monitor in the e-books price x in case.
Netflix ringing in the new year with big changes.
Losing the rights to the popular movies.
The drone is nice about to get a big boost.
Six states for unmanned flight testing.
More than $82 billion in the next decade.
First, apple engaged in a big fight with the court appointed monitor as part of the case over e-book price fixing.
The court appointed a monitor.
That monitor says that apple has been uncooperative and has made executives unavailable for interviews.
In court documents filed yesterday he failed to make all kinds of executives unavailable.
Apple has been fighting every step of the way.
In return acting in an improper manner.
Says they have been overbilled and refused the claim that they were keeping keep personnel from being interviewed.
It has not been returned.
Nicholas thompson joins us for more.
This is fascinating complaint where the bromwich guy is pushing back in every possible way.
Apple is pushing back in every possible way.
Apple has anhe has overstepped what was done by every single monitor.
Apple has resisted.
They say that he is being paid too much money.
He has unreasonable requests left and right.
Apple's overall view is that they should not have lost this case and they are resentful that there is a guy who was monitoring how they are behaving afterwards.
They don't think they should have lost the suit.
They are giving to this guy who was supposed to be monitoring their business practices.
I was reminded of the 23 and me case where a silicon valley company that has government intrusion.
They are saying, oh, my gosh.
We have stuff to do.
Do you really have to be looking over our shoulder?
Do you have a meeting with tim cook, he has other stuff to think about.
Some say that this is misguided from the very beginning.
They think that a bunch of small book publishers conspire together.
Apple's opinion believes that this is five mice conspiring against a cat, perhaps against the law.
Overall, apple was not making the book market less competitive.
They are very frustrated.
A lot of people are frustrated that the original actions were misguided.
That began and that leads to the secondary fight which adds onto the fact that silicon valley does not like washington getting getting into their business and you can see where this is going.
It is interesting.
The big giant in the book, amazon is hardly mentioned.
The suit clear focuses on what steve jobs did.
You call them five small publishers.
Five of the six largest had secret meetings in manhattan restaurants and they rose the price of the e-books affecting millions of consumers, making them overpay for the folks.
Is the case against them.
To go back to the fundamentals, the argument of the prosecution is that this was bad for consumers and there was clear conspiracy.
The argument for the other side which is pursuant to a lot of people, look, the look company was threatened.
This was a must the publishers got together and got another pricing options.
It was not a classic antitrust case.
It was not like there was a conspiracy of the big to crush the little.
There was a dispersive little to combat the big.
This is were comforted than most antitrust cases.
All of that said, there was a ruling, apple should comply with the ruling.
There is a monitor.
That is amazing to me.
The thing in the complaint that jumped out at me was apple's argument that an hour-long interview would give a "loss of market share, growth him and interference with making new products?" it shows they're trying to litigate this even though they have already lost.
They said, that is ridiculous.
I do not send you this e-mail to negotiate my prices.
This is what i charge.
This is the happy with the largest cash reserve of the world and they are bickering over the rate of the monitor.
Apple has decided to stumble.
He has done this.
He was inspector general of the justice department, he has been appointed in the same role before.
He said "i've never waited as long as a month to have such meetings and interviews.
Apple spokespersons said that they were very concerned about the interviews.
They were very busy.
This is quite evident.
Apple's litigation shut as he and we have seen this in their patent cases, we have seen this every time they go to court.
Their litigation shut as he is not one of compromise, it is fight, fight, fight.
They think they are fundamentally right here.
They think they're right in a larger sense and they are going to push back and then assist the way they operate.
Thank you very much.
There has been no shortage of sees sweet shakeups in the last year from microsoft to blackberry him a zynga.
-- from microsoft to blackberry, zynga.
What is your number one pick for the most exciting ceo shakeup?
For me, this is one that has one foot in the auto industry and the other foot in technology.
Microsoft, even though it has not been completed and even though the auto industry is just media speculation going incredibly rapid, steve ballmer expects to step down by august of next year.
They're focused on 20 individuals.
We, the media are only focused on alan mullally at ford.
Maybe mistakingly because he says he's staying there through at least the end of 2014. he is from seattle, he ran there when he went to boeing.
He is advising steve ballmer on ways to change things at microsoft.
Ballmer has touted for posterity.
-- touted ford's strategy.
Mullally never confirmed any of the speculation.
He does not really deny it either.
That just keeps it going on.
The groupon change was to me not a big change.
And your mason certainly was a ceo the company but the power was with the largest shareholder.
The fact that eric was officially running things, maybe he was always running things.
He was the most fun of the ceo resignations that we saw.
Andrew mason had had troubles and tribulations along the way, the way he conducted the ipo, a lot of investors were not happy with.
His pr was not especially fantastic but he was a young kid from playing the drums in a band to being the ceo of this billion dollar company.
His resignation letter was fantastic.
He said i decided i would like to spend more time with my family.
He said, just kidding, i was fired today.
It went on to say things like, you feel like ceo's are really thinking and not saying because they cannot get around the corporate speech.
He just went for it and recorded an album instead.
That is clearly a piece of satire.
That is a hard-fought piece of satire but it is funny.
It is hilarious.
I will check it out.
Apparently he is a pretty talented number.
Am i wrong?
Really more talented as a jammer than a ceo.
One of the interesting stories i think is the money flow that we have seen.
You mentioned but very and heinz would have gotten $46 million if he had sold the company and been ousted.
He did not get the big bonus.
I'm sure he left with a pretty decent golden parachute.
Also, mark pincus.
He left after the company was sort of driven into the ground.
John macek came on as the ceo.
The guy that comes from the microsoft xbox division and he got a $45 million loan is just for joining the company.
-- bonus just for joining the company.
They are selling hundreds of millions of dollars worth of stock before the company's even got up the gate.
They avoid taking their big collections.
The performance was very much the second thought for them.
Mark pincus, at least in the case of zynga, he owned a majority of the company.
It is at least one case where the ceo was not ousted or he ousted himself.
Thank you very much.
Happy new year.
Ntu as well.
-- and to you as well.
If you are planning to watching -- to watch some classic movies, some movies might not be available on netflix in the coming year.
Welcome back, i am cory johnson.
This is "bloomberg west." netflix has been a big year.
They had critical shows that won a slew of awards and they continue to add subscribers.
The company is making some big changes altering its pricing and losing some favorite shows and movies.
Jon erlichman has more.
These changes are not small.
They are doing a lot of stuff.
The last couple of days, people have been talking about some of the top performing stocks of the year.
Netflix is near the top of that list.
A lot of that has to do with the subscriber growth.
That number really drives the revenue story and continues to climb and it stands at about 40 million.
A lot of the moves they're working on our hide to growing that number.
There is the tide shaanxi or the idea of purging some titles where the licenses are expiring.
It is all ultimately about getting more members longer- term.
Let's talk about this purging of some titles.
There's been some press about this is your last chance to watch "titanic" or cory johnson's favorite movie, "top gun." i hate "titanic." i've never seen "top gun." now, i want to.
Well, you can buy the dvd.
The netflix strategy is to find all of the new stuff.
They cut these deals for new television shows through marvel or dreamworks.
They want to be the place where you see the movies that were in the theaters first.
They are choosing to spend a lot of money on stuff that will be exclusive and new as opposed to stuff that you have seen a billion times or maybe in a few cases, you have never seen it but you have heard of it.
On the pricing strategy, they know that there are a lot of people that are using netflix, sharing accounts.
They are trying to generate more revenue per user.
They are having a bunch of different pricing structures depends on how many screens you want to be watching.
Is a purging or losing the rights?
This is the rising content costs, will they have the depth of the catalog?
They have to be selective.
There is no doubt about it.
You have to choose it.
One of the advantages they have claimed to have is that they can look at what people are watching and site whether or not it is worth it to re-up for that stuff.
If you look at the strategy like this "house of cards" strategy that they have been using.
This became a big hit for them.
We don't know how many people are watching it but clearly the demographics of the people watching netflix like this kind of show.
They can continue to market it as a movement into the second season.
To go back to this of being a winning year for netflix, the idea of winning and emmy or potentially golden globes feeds into this being a new hollywood story to watch.
This is a fascinating company to watch go through all of these big changes all the same time.
How big could the growing drone industry be?
You can watch a streaming on your tablet, phone, and at bloomberg.com.
I am cory johnson, this is "bloomberg west" on television, streaming on your ipad.
Jeff bezos was testing drones to deliver packages.
Now there are six states that are testing sites.
Oregon, hawaii, and new jersey are partnering with those states to get part of the drone action.
There was all times of performance.
The general counsel of unmanned vehicle systems joins me now.
Give us a sense of how big this business could be and how you measure that.
This industry has been around for almost 100 years but it was not until the last decade or so where the challenge he is going to the where there is now a lot of viable uses for commercial activities.
Our association cannot with a report that projected that within 10 years this industry is the over $80 billion and contribute to over 100,000 jobs in the u.s.. you are making those numbers up.
What are they come from?
This is to assist aerospace and aviation jobs and what this could mean to any individual state.
Oregon does well in these numbers but really this industry is so new that almost any state can really take advantage and potentially steal away some of those jobs from some of the other states that made be aviation hubs today but night not be the hub for unmanned aircraft in the future.
What characteristics do imagine would allow that to happen?
Because the drones are smaller?
Would these not be needed in drones?
A lot of those big aviation and aerospace companies are certainly in the unmanned systems game but for the smaller systems which is where the commercial market will be for the next several years in the foreseeable future, the barrier to entry there is relatively modest.
A lot of these companies are very small and if you have a good idea basically, this is an industry where the ideas are welcome and you could play big role in this.
Presumably presumably about working with the faa and they are putting the guidelines for these tests.
What are these tests fundamentally going to uncover and what will they discover in the process?
The faa's response ability is the of the airspace.
They want to ensure that they need the safety data.
The creation of these test sites is basically to create a geographic area where these unmanned aircraft can fly with other manned aircraft and perform different tests, provide that data back to the faa which will help the faa work towards building more widespread integration across the u.s. in the coming years.
I still don't get it.
They're just going to fly them around in circles and see if they run into an airplane?
What is the goal?
Well, commercial activity is ultimately the goal.
The faa currently prohibits all unmanned aircraft to fly for commercial purposes.
The industries and the companies building these systems are hampered in the u.s. from flying for agriculture or pipeline monitoring and things like that.
A lot of those barriers that exist others -- overseas and other countries are way ahead.
Within these test sites, they will allow for some commercial activities.
There could be some small unmanned aircraft being used for farming.
Do think there will be an illegal use of these things?
I know a private investigator teaching himself to use drones.
I would imagine that less scrupulous investigators are probably doing things like this.
It is important to differentiate between an unmanned aircraft and let's say a model aircraft.
There is no difference, it is all about the intention and the purpose of the flight.
I brought with me a small unmanned aircraft at about two pounds.
It is being used by a number of public safety agencies and also some farmers.
Is that how you got to the studio today?
No, it is not quite that big.
It has small lithium ion batteries.
This is where the commercial market is going to be.
It is going to be for monitoring crops, doing surveillance.
The general counsel for the association of unmanned vehicles, thank you very much.
Hong kong ringing in the new year as celebrations take place around the world.
I will count down the top five stories of the year when "bloomberg west" continues.
You are watching "bloomberg west" where we focus on technology in the future of business.
People in the northeast will be ringing in the new year's in several inches of of snow at the same time.
Weather watchers have issued a hazardous weather warning.
New york city, long island, nor the and new jersey.
Boston, nine inches.
Home prices in 20 u.s. cities rose in october from a year ago by 13 point six percent.
The biggest single year gain in the s&p case schiller index.
Age when celine inventory limits the supply of homes.
Starting tomorrow, people in colorado will be able to legally buy weed.
Yes, it will be legal and year after colorado and washington voters made the sale legal.
According to colorado law, residents with a photo idea can legally buy up to one ounce of pot.
Those of out-of-state candidate quarter ounce.
We wrapup 2013. we are taking a look ahead at the stories that will make headlines in the coming year.
Joining us is jeff hazell.
He is also a strategy consultant for a giant number of fortune 500 companies.
Probably 501. i think that it is right there.
First of all, everyone has been talking about mobile for years.
This is the most personal device there is in the world.
I think this will be finally the year of mobile.
We will be talking about a lot more.
Companies will take advantage all of this information.
You have been seeing this for a long time.
Many more services will be available on your phone.
Click so, number four on your list is a phrase that i will start taking contention with, big data.
What is the difference between the data and data outside of the word big?
We know how to use it, extract it from a small point of meaning our laptops, desktops, being on our phone.
We are talking about massive amounts of data is that companies have in the c suite.
Being able to get that data and make sense of it and be able to do predictive analysis of where customers were go, how they will react and be able to trim down expenses inside of companies.
Big systems, big data.
Television, we talk about over-the-top television.
This is one of the hot areas and we work in this area a lot.
We like it because of the stuff we have done a bloomberg.
I am talking about more and more choices.
More young people are not viewing the television the way that we normally do.
We are watching it on our laptops and mobile devices.
More and more content over the digital device.
They are apple tv, many others.
You can see this in churches where churches are taking advantage of over the top televisions.
It is interesting.
I don't even know if they know how to find channels on the tv but they know how to fire up netflix.
This is very important that over-the-top television will be very big as you see more and more people put more content and may their own channels, their own stations, their own tvs, so to speak, on the internet.
You have small business.
I'm excited to see this.
There are 17 million businesses this year and in the u.s. and now we're moving into what i would call expansion.
A lot of people have been doing this recovery.
We will move this into expansion.
Small businesses will be the key.
There are 17 million businesses just in north america alone.
You think about the impact of those businesses when you think about minimum wage and the things with obamacare in terms of health care and everything else.
Small businesses make a great big huge impact.
Every single day, these small businesses are being affected by things that are going on.
They're going to be the group that saves the economy.
We talk about this is all the time let's talk about small business.
We have seen some examples.
Pat robinson, abercrombie & fitch.
You go back to the dixie chicks.
We say things that we might misinterpret sometimes are we say things that are inappropriate or sometimes we'd say things that we believe.
The impact that those have on our personal brand and the impact that they have on business, i don't think we have ever seen the full extent of it.
Especially with social media.
People are being turned down for scholarships because they are seen on facebook drinking.
We have got to watch out for these kind of things.
Versatile branding will be very important for this upcoming year.
Gawker has this notion that in fact what might happen is kind of the opposite.
Once we can see everyone's works.
Everyone has the kickstand pitchers, we become more of first or have that kind of reaction.
The business impact is that it doesn't have the same kind of impact because it would not be as rare.
That could be but what we will be finding that a brand is a promise.
I've said this consistently.
If you are making comments on politics, or pat robertson, he is able to say whatever he wants.
It is freedom of speech.
As part of that, that does not mean just because you say it it doesn't have an impact on your personal brand or that of the brand of the company that you represent and there are commercial consequences.
For him, i was talking with to someone yesterday who got back from louisiana and was saying that if you put a homophobic knucklehead redneck on tv, he's probably going going to say things like that.
Maybe that is the brand.
That is not mean that they have to employee him or give him a platform to say those things?
He has been consistent.
Those are very normal things for him to do and god bless him for those kinds of things, for at least what he wants to do and the way he wants to portray himself.
That does not mean that it does not have commercial implications for his brand or those people who'll air his show.
Those are the kinds of things i'm talking about.
We will see more scrutiny about public comments that ceo's make for the year 2013. was social media has wrought.
Be careful what you say about me, ok?
I have a whole team of experts that shields the word -- the world from my raw fonts.
From uber to sidecar, ridesharing service is gearing.
We will talk about plans tonight and why he is getting behind the wheel himself.
You call lyft car this evening, it might be the cofounder driving.
He is getting high and the will to help the company on what could be their busiest night of the year.
Is capping its prices at 200%. uber faced criticism for implementing search pricing during a snowstorm back east.
The company is calling its pricing plan primetime tips.
The usual money goes straight to the drivers and the cofounder john zimmer joins me to talk about his big night of driving, what kind would you be driving tonight?
It is a jetta hybrid.
How often do you suit up?
A lot of members of the companies actually get out there and drive, my cofounder does it a lot.
This is a 97 accord.
This is a car new enough.
This would be the busiest night that i have ever happen i want to get passengers around safety.
This is to get of the friends and family out.
What are we talking about?
We expect this five or 10 times.
That gets to this issue of search pricing, there is a lot of criticism.
They have thought a lot about this and how you will deal with it.
Tell us about this and how you came to the conclusion?
We want to be very transparent we have cap that amount at 200%. typically, we don't go anywhere near that.
Hundred percent of the extra tips goes to the drivers.
Lyft has zero percent of to add an additional amount for prime time.
It's perfectly aligns us with the rest of the community because we are not benefiting at all.
Do you think the consumer exelon about that, that the money is going to the driver or the company or are they saying, oh, look at my bill?
I think it is a combination.
They don't want the costs to go higher.
By not having incentive to make the costs go higher, we will always have the lowest costs.
If the primetime incentive is to get more drivers on the road and we are not taking any from it, then the amount will be more on the road for less money.
I think it is important.
It does matter to the consumer that they are not trying to benefit from this, they are trying to make the marketplace work.
Just a personal story, somebody who recently used uber solve the mustache in the trunk.
Are there a lot of uber drivers that are moonlighting for lyft?
We have seen several coming over to drive on our platform for a variety of reasons.
A lot of times the passengers pop up front and treat the drivers as equals and it is a competitive environment.
There are people that are choosing to drive on all different platforms.
Before we go, how late will you be out to make?
I plan to be out till 3 a.m., hoping to get people around safely, even if it is late.
Let us know how you do.
We want to know the financial returns for you driving around.
It sounds good.
Most of the right idea will be free.
Ok, the cofounder of lyft joining us.
I think i would us go straight to the man himself tonight.
You might also need some champagne and she's delivered tonight.
This might be thanks to a san francisco startup.
This is "bloomberg west" google, amazon, even ebay have launched several ways of local delivery.
A san francisco e-commerce startup is delivering wine and cheese for free.
We have wine, we have cheese.
A little bit of bread.
This is the business, delivering wine and cheese?
I'm interested in this because there is this big question going on in the world of technology whether it will be amazon, walmart or it will be vertically focused.
Talk to me about why wine and cheese?
Who want to focus on where it is a small company and we can compete with other players and work with the margins that work.
Wine and cheese, we can get margins that will allow us to provide free delivery and other aspects.
Those are substantial.
Double the price.
What do you work with?
Hours are over the net but they're still pretty healthy.
As we work with more makers, it will improve.
Do you carry inventory or do you have deliveries from other companies?
We try not to carry inventory and we makers and merchants.
You are sourcing directly from the makers?
I mean makers and margins that do things like put together the platters themselves.
In this case, they put them together.
They work with cowgirl creamery and other makers to do this.
This is all local cheese ranging from cow and sheep cheese here and the breads from here.
And they are selecting the lines.
How do you imagine this?
What cities are you thinking about?
Major markets right now, just the wine and beverage market alone gets to 200 billion.
If you look at california alone it is about 20% of that market.
I focus on california first.
It could be a lot easier.
Los angeles is spread all over the place.
You have these delivery zones.
We have the zone for downtown.
You will have santa monica zone, the hollywood zone.
What exactly are you doing?
Is a settling something on the grid?
This was to optimize the delivery routes to bring your costs down.
We think the delivery costs will plummet.
These are reaching get six deliveries per hour.
Those deliveries increase.
Is there a technological capability that you have to do that in not exist five years ago?
You see people doing the driving just around the mobile phones.
There's a lot of sophisticated status seen around this, around failed deliveries.
People were not home, those kinds of things.
You need smartphones deployed in cars to make this work.
What are you doing now?
We are just incensed is gone now.
Do you have a rollout plan or will it af wine equine and cheese?
We will focus on geography first.
We have a huge demand from the peninsula.
We will also focus on the east bay and the north bay and we will move to los angeles as fast as we can.
Staying focused on the wine and cheese?
For now, definitely.
What do you do about this problem?
Is it legal?
This varies by state.
We have a lot working on this.
You have to have the signature.
You have to put the money into an escrow account and the license vendors to take their money first and those kinds of things.
I feel that we should be eating and drinking.
It is midnight somewhere.
Thank you very much.
We appreciate your time.
We have the byte from los angeles.
I have one and four, as in 14, as in 2014. when the ball drops, it will be a big flashing 2014. these are bulbs that you can use in your home, connected to himan ios or android device.
Some are not as technologically savvy.
It is kind of a coordinated effort.
It is kind of cool that you can control lights broadly speaking.
No dim bulbs here.
There you go.
Happy new year to all of you.
It has been a great year for us at "bloomberg west." you guys live down there in l.a., you'll have to fend for yourself but you are quite capable of doing that.
And a special happy new year to our emily chang as well.
Yes, wherever she is.
We appreciate your support and watching the show.
More good shows in the coming year and more "bloomberg west." happy new year to everybody.
Happy new year.
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