Abe says heal review the results f that meeting tomorrow. Im alisy, this is bloomberg. Bloomberg technology is next. [captioning made possible by bloomberg television] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] emily im emily emily , this is Bloomberg Technology. Coming up, anothera hoo hack rattles investors. Verizon rethinks its 5 billion deal with the struggling web portal. Well have the latest. Plus, a surging dollar slams oracle. Shares slide in late trading after the Company Reports sales missed. A ubers rule out selfdriving car hit a roadblock . First to the lead. Verizon has second thallingtsba his 4. 8 billion deal to buya hoo after the Company Discloses it suffered the biggest data breach of all time. Bloomberg was first to report that verizon is exploring its options, whether thats cutting the price of the acquisition or backing out all together. It sent yahoo shares down more than 6 at one point in thurts trade. We also learn that of the one billion accounts compromised in 2013, more than 150,000 of them were u. S. Government employees and military personnel. To put this into context, the other yahoo breach from 2014 reported back in september affected over 500 billion accounts. At the time we thought that was the largest hack of all time. The second breach is double the size. Joining us now for more on the future of the deal, Bloomberg News reporter ed hammond. Also in new york former yahoo board member and venture capitalist, eric hippeau. Whats the latest we know about the deal and verizons plan for it . Ed i think verizon, they are exploring their options. What can they do here . I think its inevitable theyll look for a price k its not the company they set out to buy. Its had these serious issues come up. There are also questions if yahoo knew this was going on and this hack, why was this not disclosed to verizon . I think the issue of whether or not they walk is a slightly more complex one. Even if they wanted to pull the plug its not straightforward to do that. They need to prove there had a been a material adverse change. They need to say because of these breaches yahoo has suffered some serious loss of subscribers. They are not going to be able to prove that for a while. So the question of them walking i think is not the immediate one. Much more what we should be focused on how they try to recut this deal to make it more favorable. Emily eric, as someone who had known yahoo for a long time, how do you think it should affect the deal if yahoo still worth buying . Eric i think for verizon, the reason to buy yahoo , is for the users and large billion dollar plus user base is still valid. Obviously it warrants a price cut or concession. Because there is a lot of liabilities here. And they also want verizon will also want to protect itself from a bunch of lawsuits that are bound to happen. Today there was a number that were announced. To me this is yahoo is adding to its reputation as the Silicon Valley in Silicon Valley. The shareholders want to get access to the yahoo japan equity, and this is just in the way. Emily i did speak with the current c. E. O. Of yahoo , the data deal was announced. There was so much optimism back then. Take a listen to what she had to say about the synergies between the two companies. For us verizon has tremendous mobile distribution. We are very excited about. But overall i think it represents just a huge amount of scale and opportunity for verizon. Emily eric, what is your sense of whether there was any negligence on yahoo s part here . Or were they simply too vulnerable . Eric as ed mentioned, its kind of bizarre. This happened in 2013. This is 20162017. What happened in between we dont know. Hard to tell whether there was negligence. But its its time for yahoo to get its act together. They need to put a Team Together that is going to execute this transaction. Execute it in the cleanest possible way. It doesnt really matter at the end of the day if there is a discount because the shareholders want access to the yahoo japan equity. Emily how long could this drag out whether its getting a price cut or dropping the deal all together . How long will the process take . Ed i think if its a price cut they could potentially do this quickly. Yahoo obviously is in a position where they probably have to recognize themselves this is a bit of a botched business. And verizon are going to come out quite hoord and say we want to do this, but we want to do it for less money, which is fair. That could happen first. I think its in no ones interest to see that dragged out. The shareholders want to see it closed. Verizon, too. This isnt a huge amount of money either way. They would probably want to move quickly. If verizon decides lets break it up completely it could take longer because it has to go through the court. We have to do this thing, verizon proving this is not the business they set out to buy. It has been this material adverse change that. Could go on and on and get ug. Emily how much of a price cut could we be talking about here . Ed one thing mentioned in one of our stories was the market is assuming this is going to knock off almost 1 billion of value, which is quite substantial if you think originally this was struck as a 4. 8 billion deal. For that, that would be a huge hit for yahoo and i suppose substantial embarrassing for marissa who struck this deal. That would be the most expensive breach in histry. Emily eric, called the most capless company in Silicon Valley. You still see value. If a deal falls through, what does that mean for yahoo . Eric its a big, big problem because i dont see how they can make it as a stand alone business. They have to in my mind they have to replace the c. E. O. , put a team in place that is going to streamline the business and make it attractive to another buyer. Possibly at t who was interested at the time. The landscape is shifting constantly. There is no question that there is value in the billion dollar monthly active users that yahoo still has. Somebody has to come, put that together. Package it in a way thats rational and sell it as quickly as possible. Emily if youre marissa, what are you thinking, what are you doing . Eric youre thinking that your reputation is even more on the line. You have a duty to your shareholders to see this transaction through. It might be hard to swallow a billion dollar discount, but if it has to be done, it has to be done. Egos have to be setaside. And the rational decisions have to be made. Emily eric hippeau, managing rty, ed hanmond, thank you both. Well follow this closely. Another story we are watching. The murdocks have expanded their empire at 20th century fox. Folding in the full stake of sky tv for about 14. 6 billion. Rupert murdock made a similar bid in 2011 but it fell through. 21st century fox explained how the deal helps push the companys content around the globe. Combining our fast growing direct to consumer platforms, including our streaming apps like f. X. Now. Our interest in hulu, with europes leading overthetop service and digital video experience, create the Consumer Power outs reaching approximately 100 Million Consumers household directly on these platforms. Emily coming up oracle beats on its latest earnings. Shares are lower. After hours well dig into the numbers next. A reminder, all episodes of bloomberg tech are Live Streaming on twitter. Bloombergtechtv. This is bloomberg. Emily oracles latest earnings Beat Estimates but revenue fell short of forecast. This marks the companys first Quarterly Report since its 9. 3 billion acquisition of Cloud Software did netsweep. The chief Research Officer jins me to break down the results on crawford del prete. Crawford saying they had a phenomenal performance in the cloud. How would you evaluate it . Crawford yeah. Thanks, emily. They did have a really Strong Performance in the cloud. The bottom line is they had some significant portion of oracles revenue is offshore. They had some significant currency head winds, and that affected their overall Revenue Growth when you look at the numbers as reported. But having said that, i mean their Cloud Business is really starting to accelerate. The Revenue Growth up 81 . This business is really now hitting major milestones. Their overall Cloud Business is now 1. 1 billion. So now they are the largest company, if you will, on a quarterly run rate basis. As well what is really interesting about the numbers is how its starting to scale from a gross margin standpoint. Listening to the call, the Gross Margins have accelerated from 43 last quarter to 61 this quarter. And guiding to 80 in the long term. Once youre through the cap buildout of the cloud, as that sales force keeps humming, the sale happens on the back end where you get this gross margin expansion. Emily quick clip there of the cap in new york yesterday. Ahead of a meeting with president elect donald trump, she was very positive about the meeting. What do you make of the outreach thats been done so far . And whether or not a kch like oracle could benefit from a strong relationship with the white house . Crawford in my mind we just came through one of, if not the most contentious election cycles in the history of our country, and i think what you saw yesterday was the president elect trying to reach out to the Tech Community and start a dialogue. Theres a lot of cynicism around that. Theres a lot of cynicism was it a publicity stunt . The reality is hes engaging the top management of some of the harmest Largest Tech Companies in the world. Those companies happen to be based in the United States. So based on that, i think that there its a lot of discussion around jobs, bringing jobs back to the United States, manufacturing jobs, you and i have talked about this in the past. I personally dont think that they are going to be able to crack the manufacturing job nut. I dont think there is a lot there. But when you think about the repatriation of curncy, you think about the percent of revenues, someone like oracle has offshore, a company like oracle, being able to put that money to work in this country as a way to employ people to do innovation on the next phase of tech, that is very enticing to a company like oracle. And also to someone like president elect trump, thats something that will employ people and start to change the momentum of how we hire and how we think about hiring in this country. Emily particularly relevant given the currency head winds that played out in todays results. I do want to get your thoughts on another story. Facebook rolling out its attempts to crack down on fake news. A combination of crowd sourcing anyone can flag something as fake news. As well as influence from third parties. Whats your take on the strategy so far . Awford my take on this is facebook is doing something which they have rarely if ever done. They are putting something out to their vast network of users and they are basically crowd sourcing a problem. And they are saying, if you dont think this is legit, you can report this as fake news and we will then start to examine it. They have they have a massive ability to do analytics. This ability to crowd source problems on facebook is tantalizing and gives people a reason to start participating. And it kind of starts to take a gameification aspect to it as well. As you start participating in facebook, you feel like youre having more of a role in what facebook is. Having said that, there is a huge risk that the herd mentality could start to dam stories they dont like and push those down. Having said that thats why you need the anta litics, turns out this is something you dont like, but it is real news. But this ability of giving people a way to participate and crowd source could be applied in a lot of interesting areas. I applaud facebook for thinking about this problem in a unique way. Emily its certainly not a game. Do you think that ultimately this is going to be enough for that facebook itself needs to take a greater role . Crawford its not a game. I dont mean to say that. What i mean is that it starts to get people to participate. Do i think i think facebook has to play a significant role here. And just like 30 years ago, it was really important for newspapers to allow people to have a voice, to be able to write into the editor, to be able to get those opeds published. I think its very important that the users of facebook start to participate and also that facebook thinks of itself as a Distribution Site for media and a place where media is consumed. I have said testimony times, facebook and twitter is the future of media. Emily crawford del prete, thanks so much for stopping by as always. Is setrs movie rogue one to the light the gocks office on fire. It may take in 155 million when it opens nationwide december 16. Before it is expected 460 million domestic debut. Although there is a lot of interest in the film, its not likely to match the performance of last years star wars, the force a awakens, which grossed 2 billion globally. The business of building virtual reality. A stealthy startup backfires. Trying to help developers make better v. R. Games with the help of google. This is bloomberg. Emily this week, announced it signed a new strategic partner, google. Improbable makes a platform calledation o. S. A Game Developers can use to build Virtual Worlds. It takes a lot of Computing Power to create the amount of graphic detail needed to make a good video game. That is the reason why v. R. Gaming hasnt taken off. Thats where google comes in. With the cloud support to one the back end of the service. Improbables c. E. O. Herman marula joins me in studio for more on the business. You guys have been in stealth mode until now. Its great to have you here. What does this mean in terms of super charging your business . Herman its all about promoting innovation. Its not just about v. R. But any complex online world has been challenging to build and risky to create. People spend hundreds of millions of dollars trying to build massive detailed Virtual Worlds. With our technology and googles backing, developers can do that for free. At least during development. Emily why do you think v. R. Hasnt taken off yet . Cost . Headsets . They are too expensive . Or not an appetite . Herman finding a killer app. Something people cant do without. It was halo that filled the x box. Emily thats similar to something nintendo president told us. Take a listen to what he had to say when i asked him about it last week. When our Game Developers have a brilliant idea that can only be done through virtual reality, thats the day you ll see us engage in that technology. But the games and the experience always comes first at nintendo. Emily talking there about why they havent invested heavily yet. Are they making a mistake . Are they going to be behind . Herman i think you have to experiment to find out whats fun. One of the first things we realized not just the v. R. But all kinds of online worlds. Developers cant iterate easily. Finding the fund usually happens with a small team. Three or four people even in the Largest Companies that find something that works. You have to investigate these things and experiment to find something that could be a killer app. Emily do you see potential for v. A. . What sort of potential do you see to move out of a nish set of hard core gamers to a broader world . Herman i think the key thing to distinguish between v. R. Devices, a way of interacting with the worlds and the worlds them sefments if youre simulating a city or modeling infrastructure or doing other things that require the same kind of computational power, its not just visuals that matter. Its being able to actually recreate behavior to answer questions you couldnt before. The real v. R. Revolution is how we use it to solveng, where do you seat most common use case . Herman one example, we are looking at problems right now in tellycomes where figuring out where a company has coverage and how they think about their investment in infrastructure in challenging. If you build a massive scale simulation, all your infrastructure, and subscribers, can you see inside you cant even get from Machine Learning or data. You can literally try things in v. R. And see how they impact the real world. This side of the industry isnt talked about enough. It isnt something people have fresh in their heads. We are very much dominating the conversation. For me thats the beginning. Emily do you think it will be a consumer thing or enterprise thing . Herman both. I think we are likely to see one great new killer app, a Virtual World that woudnt have been possible without a Technology Like ours or v. R. Head seds or combination. 245 will that will spike consumer interests. Particularly in heavy industry and where you are dealing with loads of complicated infrastructure to using v. R. To understand that infrastructure. Emily google has its own v. R. Ambitions. Niantice part behind which proud pokemon go. Is there any future google involvement in your company . Theres been hints of a google interested in acquisition. What are your plans . Herman we are building an operating system. The only way that can be successful if we work with an ecosystem of companies. Team developser and developers in general want to know they can trust who they are working with and many options available to thefment we are intending to say neutral. Google is a partner we think we can do a lot with. There are a lot of people we think we can partner with. Emily herman, c. E. O. Of improbable. Thank you so mu. Next, new questions on russias involvement in the u. S. Election. Stemming from a report that president putin was personally involved in the d. N. C. Hack. How the Intelligence Community