Netflix-Verizon Battle: Bloomberg West (06/06)

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June 6 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Filmmaker Jon Favreau, Common Cause's Todd O'Boyle, Privacy International's Mike Rispoli, Wedbush Securities' Michael Pachter, Able Works CEO John Liotti and tubHub President Chris Tsakalakis. (Source: Bloomberg)

Live from pier 3 in san francisco, welcome to "bloomberg west," where we focus on innovation, technology, and the future of business.

I'm emily chang.

Ahead on "bloomberg west" netflix and verizon are not backing down after a feud over internet fees escalates.

Netflix says it will not remove messages it shows to viewers and blames verizon for the -- they demand that the company stop the messages or face illegal -- legal action.

And uber has soared to a record $17 billion.

This comes after they raised another $1.2 billion in a round led the fidelity and clement perkins and blackrock and others.

Uber will use financing to expand its operations.

Today marks the 30th anniversary of one of the most popular ego games ever -- tetris was designed by a russian scientist who worked in a soviet computer lab when he came up with a puzzle game.

The game has millions of paid mobile downloads and is on 50 different platforms.

To the lead story of the day, the fcc created creating internet fast lanes,, netflix has no plans to back down and is fighting with verizon over internet speeds.

Some say netflix will continue to display on screen messages and blaming internet providers for slow-moving videos.

This comes after verizon sent netflix a cease and desist letter, demanding they stop displaying the message blaming arises credit network for the videos loading slowly.

In verizon lawyer wrote -- there is no basis to assert that issues with respect to playback of any particular video session are such available slowly -- solely to verizon.

We have jon erlichman in los angeles.

Is this really verizon's fault?


Broadband service providers are not keeping up with demand.

Verizon for whatever reason is not doing its job.

Some blame netflix for putting so much traffic out there.

I don't think so.

If you think about it, why do people buy broadband?

They buy it so they can have access to the best content of their choice.

If anything, shouldn't verizon or netflix have a fee for new for the customers to the market?

They don't shy away.

Jon, is it a good strategy?

I think there are a couple of things to clarify.

I'm not surprised that verizon would go after netflix.

They care about their brand and the reputation.

There have been situations where at&t has used a certain language about its network being very reliable and fast here at that educates verizon as well.

-- fast.

That agitates verizon as well.

They are testing something with their consumers.

There is a handful in the grand scheme of things.

Netflix customers right now in the same way you get recommendations on shows you can watch, you will be alerted when there is congestion in your area to that fact.

Netflix is tried to figure out if doing something like this and going behind the curtain and sort of telling you what is happening to the technology, to see if that is something customers like.

This is a broader issue.

What is the solution?

Absolutely not.

I think the solution is for the fcc to write strong rules that protect all consumers whether they subscribe to verizon or tried to get netflix or to bloomberg west website.

One of the problems with all of the deals we hear about with verizon striking a deal with netflix and contrasting the same, there is a lack of transparency.

Consumers do not know what is going on.

We welcome the picture and a light on what is going on, we would much rather see leadership in washington to protect all consumers.

More traffic for "orange is the new black." i known applicable point said it was the most-watched original show on that licks.

Does i mean it is more popular than " -- on netflix.

Does that to me it is more popular than "house of cards?" initially i got more viewership than when they had previously rolled out "house of cards." in terms of all of the viewership that has taken place, this is an important second season.

This is a company that is clearly trying to use these originals to get more subscribers.

I think you're not just seeing them spend millions of dollars per episode for shows like "orange is the new black." there's a lot of marketing around this program.

They want to figure out if going down this road and doing originals like house of cards and origin -- is the new black will help them with the goal of getting more users.

It is interesting.

Netflix is not just creating content, but delivering the content.

What you think netflix's responsibility really is?

I think netflix should continue to innovate.

The lack of net neutrality -- it is a threat to the way that entrepreneurs bring new products to market.

It is a threat to the way that consumers -- what consumers may see and say online.

We need to work hard to make sure the great opportunity generating mechanism of the internet has proved itself to be a source of innovation of commercial innovation and also social community entrepreneurship.

The program director at -- this debate is not going anywhere.

Thank you.

Uber's evaluation rises to a record high of $17 billion.

The company hit the mark after raising another 1.2 billion dollars led by fidelity investments.

One of our bloomberg reporters joins me now.

We know it is confirmed.

$17 billion.

There was a lot of competition.

We have reports of other people trying to lead this.

Fidelity seems to have gotten it.

They have been talking to a lot of different possibilities here.

$17 billion seems to be the consensus.

There is also perkins.

Demand was very much there.


They weren't raising quietly either.

They were saying they wanted to raise at a record valuation.

This is coming.

He says it is about capitalizing so they would be ahead of themselves.

That has been a lot of discussion about what else the future could hold -- delivering packages come in taking on fed ex here at howell close are they to -- fed ex.

How close are they to going into other businesses?

They have the money.

It is quite a lot of capital.

They can expand internationally, which they have done a bit of.

They will be able to maybe put more effort into fighting these battles with governments and coalitions and get into places they haven't been able to get into.

I think we will see them expand quite a bit this year.

The bidding was so heated that some bailed out.

We're talking about air bnb.

Drop box at $10 billion.

It seems there is no limit.

I was talking with cory last week.

Is there and it's rotation that these companies will be worth more down the line?

Or is there a moment in time?

The co-founder says we should keep in mind the valuations are a point in time.

They do not necessarily reflect how valuable something will be.

I do still in this for the long haul?

I think they are probably getting some calls today.

Sraarah frier, thank you for bringing us that story.

Edward snowden -- what has changed?

? i am emily chang.

This is "bloomberg west." it has been one year since edward snowden's nsa revelation.

There are secret wires that allowed government agencies to listen to conversations in some countries.

There's government access to voice calls and other data moving across networks.

Vodafone has over 4 million customers around the world.

We spoke with a communication managers for privacy international.

He joins us via skype from london.

First of all, what was your involvement in getting vodafone to release this information and how difficult was it to get them to do so?

We have been working with vodafone for two years on this.

What we have seen is the communication providers and government requests for data.

What we needed was a global survey.

It is incredibly important for us to nick sure that we have got a global picture on what are these types of data that governments are requesting and how they are getting the information and what is vodafone doing to protect the rest of the users?

This reveals that governments can listen to user conversations without really asking for permission in certain countries, right?

That is correct.

Normally what happens with these reports coming out, governments don't ask companies for customer data and they push back against it or they [indiscernible] what we have found in this report is that different countries -- the ones that vodafone operates in, governments have direct access.

It to be everything from matted that are -- meta data.

It is incredibly intrusive.

This is going out without vodafone being aware that the government has access.

They do not know what type of information governments are taking from them.

They do not know if they are targeting anyone or just gobbling up all of the data.

It is incredibly problematic that this is going on.

Vodafone said that they want this type of direct access immediately.

As i understand it, they know which countries have access, but are not saying.

Do you have any idea?

We do not know necessarily for sure.

Vodafone has legal reasons that they can't release that information.

Vodafone has done a great job detailing the surveillance logs and the companies -- countries that they operate in.

It is really difficult to tell.

We hope that vodafone does make the information public and that governments are more transparent . at the moment, we're are not sure which countries those are.

Any idea how often it is happening?

Is are hundreds of thousands of requests.

There is an appetite for this kind of information.

It goes on all the time.

They were closely.

There was one in italy.

It has the most requests coming out of their country.

421,000 and it's a really small country.

Meta data requests.

It happens on a broad scale.

These reports they are releasing our small.

One year after edward snowden's nsa revelation.

Not much is shocking now.

Thanks so much for weigninghing in.

Well, tetris is turning 30. you can also watch a streaming on your tablet, phone,, apple tv, and amazon fire tv.

? welcome back to "bloomberg west." i am emily chang.

Google has unveiled a new prototype for developers that has 3-d sensing abilities.

This is the first to come out of their project all tango.

The seven inch tablet will be sold to developers starting in late june for just over $1000. developers are hard at work on a smart phone that was unveiled in february.

Today works the 30th anniversary of tetris.

It was the class again create a moscow by and russian scientists.

That just is inspired by his favorite puzzle board game and was named after tetra, the greek word for "four" and "tennis." how did it become one of the top-selling video games of all-time?

What kind of impact is tetris have on the games played today?

I'm joined by my guest.

I have memories of fighting over the game with my sister and my mom.

That was 30 years ago.

This game is still popular today?

You probably were not even born 30 years ago.

[laughter] it is a remarkably simple game.

The challenge never goes away.

I think what he did that was different from what anyone else had done for was he came up with something that involved geometric shapes that fit together nicely.

As you said, tetris comes from tetra, the word "four." they come flowing down.

If you think about it, there is always symmetry.

There are four blocks fitting into the puzzle.

It will come out square ultimately.

Where he had a breakthrough innovation is having rows disappear once you complete them.

That is like at the game going.

You would fill up the screen immediately if you do not have the rows disappear.

I was a clever innovation.

I think tetris bonding games like bejeweled that people play and candy cre¿che which about everyone plays.

They will all born -- candy crush, which about everyone plays.

They will all born from games that people want to be the machine.

-- beat the machine.

I don't play other games, but i might want to play tetris.

If you look at the gaming community, it is about 250 million households.

The pc community that is connected to the internet is about 2.5 million people.

That just appeals to everyone although it has been on every console made since the game was invented.

The thing about games is that hard-core guys like simple beings just as like -- as much as they like hard-coresimple games.

Casual gamers like them.

This game has the broadest possible appeal.

It is interesting.

A game like tetris has survived for three decades.

If you look at zynga, they have one great hit, but basic can't seem to survive paste on that.

Is there a difference?

I think for zynga, you are right.

The more popular games that people have heard of our games like farmville and cityville will set you accomplish all that you can accomplish in the game.

But poker has an unlimited life.

And "words with friends" has an unlimited life.

The same candy fresh -- crush.

People will keep playing it.

I think these polite games or games like poker were ever hand is a brand-new adventure, they have an unlimited shelf life.

It is the farmville's where you finish building everything and what is the point of continuing?

They have a limited shelf life.

Speaking of zynga, have you seen evidence that the new ceo can really turn the company around and get it out on top where it used to be?

I think that the problem with zynga where my -- when mark pincus was ceo is that he defined the company as a social games company.

He wanted to have a social angle to everything.

I think you're going to see a tower defense games where you battle other people and take their stuff.

It is not very social.

You will see them exploit poker more.

I think they will make a racing games.

They would do things that are very antisocial.

Clash of clans is the most money maker antisocial be impossible.

We will keep an eye on this.

Great to have be here on the show.

You can play tetris now.

Thanks for joining us.

We will talk about -- ? this is "bloomberg west," where our focus is on technology and the future of business.

I am emily chang.

The mayor of san francisco calls a crisis.

We go to east palo alto for a look at how some lower income residents are struggling to survive in one of the wealthiest regions of the country.

Silicon valley is famously home to tech giant and billionaires.

It is also home to a childcare worker at stanford university.

Together with her husband and kids, she has been living happily in east palo alto until an unexpected eviction note arrives.

Homelessness could be a reality for our family.

Her fight was against equity residential, america's largest public trading landlord founded by a billionaire.

In late 2011, the company paid $130 million for her apartment complex.

They've twice tried to evict her.

Equity residential would not make anyone available for an interview with bloomberg elevation.

Why do you think the landlord wants to evict people like yourself?

Because they can make more money.

They can have more people move in and market value rates.

She currently pays about $600 less than the market value thanks to laws that have left east palo alto is the last low income refuge between san francisco and san jose.

This bridge marks the dividing line between the multimillion dollar mansions of palo alto and affordable housing of east palo alto.

But that housing may not remain affordable for much longer.

The medium house price of palo alto has jumped over the past five years from 800,000 up to $1.9 million.

Meaning that other workers are pushed out to east palo alto and rents there are pushed out.

Telephone a lot allows them to raise the rent to market rate for a new tenant -- the law allows them to raise the rent to market rate for a new tenant.

In the first half of 2012, soon after equity residential purchase the land, it evictions notices soard red.

In one instance, the firm try to evict a tenant that was just .75 short.

What is unusual is the aggressive and rapid nature of it.

Most landlords other than woodland park are not going to take such tenants on the second day of the month.

Many tenants are not aware of their rights.

It is a largely hispanic community.

Some fear retaliation based on the immigration status.

Urc mass displacement.

It has been the fabric of this community changing.

-- you are seeing a mass displacement.

It has been the fabric of this community.

He says rent stabilization was a core rinse on which east palo alto was founded.

It is part of who we are.

We made a commitment.

I was city government will look after the most vulnerable people in this community when it comes to housing.

The city council had recently passed a new housing ordinance.

It's is designed to prevent landlords from threatening behavior and delaying repairs or harassing tenants in the small community that feels under siege.

Bloomberg, east palo alto.

So, what can or should people do to help communities like east palo alto?

My guest joins me in the studio.

He works with a nonprofit that provides counseling and financial services.

He has lived in the east palo alto area for 14 years.

Thanks for having me.

People don't realize unless you're getting off the freeway, you drive through east palo alto . it is a separate city from palo alto.

It is.

It dissects our community in half.

How would you describe housing in east palo alto?

Interesting thing, the housing prices peaked in 2005. it was below 100,000. you have seen astronomical inflation in prices in just three years.

How much pressure is is putting on residence?

Tremendous pressure.

Mainly because there has been such an infusion of capital.

Most of theit is cash.

These are the childcare workers and cafeteria workers and massage therapists that work at these technology companies.

The problem is is that east palo alto is expensive hurt.

You're surrounded by great companies of affluence.

There is tremendous pressure.

They need a multisector approach.

They need to come together to look at the combined approach to deal with the issue of affordable housing.

How much does that tech community health?

-- help?

They are a business and not a nonprofit.

They do what they can do.

Truth be told, the best thing the tech community can do is to look at the larger systemic robbins.

It is all connected.

Transit is related to real estate and policy is connecting to housing issues.

The tech community can provide the right kind of innovation to address these issues.

You mentioned that mark zuckerberg's wife has done a lot of work in the community.

What kind of work have they done?

His wife has done a lot of work with a local clinic.

Steve jobs whife helps with this program for afterschool kids.

The issue is we have got to look at things from at a micro level not just macro.

Again, a rising tide raises all ships.

I don't want to see the primary driver of the silicon economy is a negative thing, but i think i can do more when it comes to the working-class.

We're not talking what the middle class and the working class.

He believed the working-class and middle-class should exist in silicon valley.

If they need to be there, they should be there.

The crime rate has dropped.

It has dropped quite a bit.

There is still regular crime.

We have seen quite a drop.

San franciso is seeing a lot of the same problems.

The mayor is pushing for new affordable housing mandates.

Based on your experience, what do you think should be done?

The challenges of san francisco will be the challenges of silicon valley.

What happens when these young techies want to start having kids?

They will come to this area.

We need solidarity.

I think there is a regional wide effort to deal with the issues of affordable housing.

What work are you specifically doing?

We are in the trances.

We're working with single mothers and students and helping them to thrive and flourish in the silicon valley by to get a foothold.

It is good to hear you're doing that kind of work.

Thank you for showing -- sharing the situation with us.

Well, can tech help you navigate ? find out how you can find the hottest tickets in town next on "bloomberg west." ? i am emily chang.

This is "bloomberg west." if you are t-mobile's colorful ceo, you will not be out of a job.

They say it doesn't bother him if he doesn't get to run the combined company.

They're trying to agree on a deal that could be announced next month.

Most people know when their favorite sports teams are playing.

It is hard to keep track of all of your favorite musicians and tutoring schedules.

-- touring schedules.

Stubhub has a new discovery app.

So, who is playing tonight?

Who is playing tonight?

I do not know.

[laughter] if you got the app, you can find out.

It is simple.

It looks that all of your music on your iphone and tells you what concerts are coming up for those artists.

It recommends other artists aced on the artist that you like.

I'm the kind of person that will only go to a jay-z or beyonce, but i don't know when it is coming.

How do you get casual concertgoers like me onto the app?

We ask you to download the app.

Stubhub have a huge business and concerts.

30% of our business is concerts.

We are appealing to the existing users, but most of the advertising we have done has really been focused on the concert audience.

That is a big opportunity.

We think of the people who go to events.

Half of them are going to concerts.

That is 50% of the concert.

Thomas do expect to drive ticket sales?

-- how much do expect to drive ticket sales?

You want people to interact with the app.

In addition to telling you what events are happening and making it easy to find tickets, we give you information on the artist and music samples and info on the venue.

We give you biographies on each of the artists, including the opening act.

It is a way to get a lot more information about upcoming events whether or not they are artist that you know or artists that were recommended.

Why focus on music versus sports?

How much comes from one versus the other?

Sports has always been the cornerstone.

When we look at brand awareness, it is huge for season ticket holders.

The sports fanatic knows us really well.

They know the stub hub brand.

Music is 30% of our business.

The knowledge that concertgoers have is not as high here at the brand awareness is not as high.

We have been able to grow our concerts business more rapidly than the rest of our business for the last few years.

We have been focusing on that area for growth.

The nba finals are upon us.

Stanley cup is around the warner.

-- corner.

For the nhl finals, huge amount of growth and sales.

Nhl finals are outselling the nba finals by 3-1. really?

You have a team like the new york rangers in a big market and they haven't been to the finals in 20 years.

When you look at things like average ticket prices, there is a huge difference.

The average ticket price sold for the rangers is $1600 for the same matchup, but in los angeles, $800. a big difference.

That includes all fees.

What percentage of your ticket fees are people who make a business of buying tickets and reselling them?

The percentage of tickets bought by ticket brokers is very low on stubhub.

You look at the percentage of tickets sold by professional ticket brokers versus individuals.

The percentage sold by ticket brokers is more like 35%. the majority of what we sell are individuals or people making a very small business in smelling -- selling tickets.

Thanks so much for joining us.

He is one of hollywood's biggest stars both in front of the camera and a behind-the-scenes scenes.

Actor and director joins us to talk about how tech is changing the movies.

? welcome back to "bloomberg west." i am emily chang.

Jon favreau has been a big name in hollywood.

In recent years, he has been directing blockbusters like "iron man" on his latest "chef" reveals the ups and downs of social media.

He talks about everything from drones to a friendship with elon musk.

Jon asked how his own experiences with tech factored into the new film.

Is our generation is the one that remembers life before twitter and now sees the world and what has changed after it, we have seen a lot of good things happened and a lot of people make their lives very complicated.

I have been on twitter for about five years.

I'm very careful every time i get on their.

There are many cautionary tales about happens if you're too emotional or have had too much to drink or think you're being funny or sarcastic.

It is a whole different language that our kids generation understands better than we do.

You sometimes pay the price for a tweet.

For "chef" there have been a lot of shout outs.

The list goes on.

What does that do for a small film like this?

This is a bit of an experiment to see if social media really does have this much irrelevant should as a marketplace seems to think.

Right now, traditional marketing where you dump hundreds of millions of dollars into commercials that still seems to rule the day, you see it is dictated by marketing machines.

I have been on the other side.

Flmilm has that kind of push behind it.

It touches a specific audience in a sincere way without a big marketing push behind it, without a billboard, it can that word-of-mouth spread angst to social media?

This grew from two cities to 70 screens and 500 screens and over 1000 screens and this is thanks to social media.

Unicredit robert downey to join twitter and that has -- you convinced robert downer to join twitter.

When it comes to social media -- how does it get used by big studios?

I think it is a little bit of like nuts on top of a sundae.

A food truck or an art gallery opening or a standup comedian, that size of an audience and independent film world really is impacted by social media.

Speaking of peers, you mentioned elon musk.

He was part of inspiration for the film.

Dust out of curiosity, is he an investor?

He isn't an investor.

He is someone i have become friends with through the course of working on "iron man." for "iron man 2" we feel part of it at space x. tesla is also an example of a company that has benefited from social media.

It has enabled them to avoid doing things like doing their own tv spots.

I would like to know if you have had any interest in directing a tv commercial for tesla?

I'm a tesla driver.

I put my name on the list because elon was a friend and was nice enough to let its film at his factory for free.

He did a cameo for us.

He is making a car.

Let me sign up and make a guy feel good.

[laughter] i was one of the first was to get one and it turned out to be the car of the year.

I sold my other car.

I haven't looked back.

Right now we know there is a push in hollywood to get faa approval for the use of drones in productions and films.

What do you think about drones and films?

The use of technology to help keep a set safe is a good thing.

Whether it is having a digital double for a very dangerous stunt scene and not putting a human in harm's way or if you could eliminate the use of helicopters in precarious situations and replace it with a very controlled situation with a remote control vehicle, i think it could be good.

It is worth exploring.

Your career progression is because of the different things you have learned of the different films you have done.

You have got "chef" right now, but you'll be doing a big production.

What are some things you have learned on this project that you can take to next project?

I realize how much fun i had and how much fun the audience seems to enjoy what my tastes are and the things that make me laugh and feel good.

I'm seeing it in the audiences that they feel good, too.

When you go through the studio development process, it becomes a big committee and a lot of people.

If you speak from the heart, do something wonderful and sincere.

It is refreshing in the marketplace.

If you could come it is nice to hear that sensibility into big movies.

When we made "ironman" it was the same tone i would use in an independent film.

Same type of comedy and casting.

It ended up being something that all the offbeat was successful and now there's a whole marvel universe.

Jon erlichman joins us now.

I love it that he bought tesla's car.

Who knew back then?

I will give you the byte -- that is the price in pounds for the tesla model.

Higher base price than in the u.s. because of taxes.

They have to ship them their.

-- there.

They're also adding supercharger stations.

The u.k. is behind in this category.

Jon erlichman, thank you.

And it thank you for wanting this edition of "bloomberg west." happy friday.

Have a wonderful weekend.


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