What internet fast lanes could mean for consumers and business, but first, a check of your Bloomberg Top headlines. A chinese smartphone maker is getting into the tablet business as it broadens its challenge to apple and samsung. Pad has a mi seveninch screen and uses the software as android. We look at how it may shake up the Chinese Market later this hour. Companyd computing rackspace has hired Morgan Stanley to explore strategic options. Could mean a sale to a larger company, a going private transaction, or any type of option, really. Slumped 22 this year. The u. S. Air force says it is hire 100 60 million to people working on certifying spacex satellite. To our lead story, uber in talks to raise a new round of funding, nearly tripling the valuation from its last private deal last year according to people with knowledge of the matter who say that uber is talking about raising less than 1 billion and a new private equity round. It goes through, it would join an elite club of startups valued at that really giant level for private companies, including airbnb and dropbox. This is a really big number. Which athe stage at private company would go public. Several rounds ago. You have seen a trend of Companies Staying Private for longer because they have somebody options for capital available to them. Is looking at private investors. They have options to raise that debt as foursquare and a number of other companies have done. If they think the interest is great, they raise debt, pay it off, and keep their equity ownership. If they think it is time to go public, they go public. They are kind of picking and inbetween. Yes, you have seen a number of other Companies Going this sort of route, and you are seeing Companies Like fidelity and blackstone get in in much later rounds. Theres a number of options for them to raise money. Is a pretty capitalintensive business. They need to hire in each of the cities they go into. They arent about 115 cities around the world now. They need to hire people, they need to invest in lobbying and sort of trying to fight off all these angry governments that want to shut them down. What i think of capitalintensive, i think of my day when they were belief building railroads across the country. That was when capital was intensive. There are places where uber was not legal. That would seem like the ugly fact that might keep an ipo from surviving. They will need to get it tattooed down before they can broaden it to the retail or wall street having the appetite to take on such a risky investment, but this has been true of their entire history, back to 2008 when they were just Getting Started in san francisco, and local california regulators were saying, this does not sound legal. California backed off. New york has for the most part back off. A lot of these cities that went after them at one time have decided that it seems like it could be a pretty good thing. Now you are seeing cities like religion and brussels cracking right now cities like berlin and brussels cracking down on uber right now. In london, you have halo, which is basically the uber of london. Uber is trying to find a way into china, but they are having. O compete in germany, there is easy taxi. Get taxi in the middle east. Aboutis an uber of just every city in every region, so that is another thing they will need to figure out, how to battle dozens and dozens of clones that are popping up just about everywhere. I think about Bloomberg News reporters as the uber of bloomberg west because supply increases as demand increases. Hopefully nobody clones us. Thank you very much. Voted todayided fcc to consider new rules of the road for the internet. The proposal could pave the way for broadband providers to cut fast lane deals with some Companies Like netflix, who has already had a fast lane deal with comcast, and it also leaves the door open to a heavier dose of regulation. Chief washington correspondent peter cook was there. It is not everyday we see protests during sec meetings. This was a contentious event. It was. It is normally a pretty somber place, and not all that exciting for the meetings, to be honest. Not today. We have protests outside the building. We had protesters inside the meeting. Nothinghem convinced less than the future of the internet was at stake. Some of the protesters had to be removed from the meeting room. At the end of the day, tom s proposal did prevail. It would bar Internet Service providers from blocking illegal contact and also separate isps with some content and a faster lane of traffic, but wheeler said the steels must set a very high bar and must be commercially viable. Again, despite all these reservations out there on the part of some of his fellow democrats, they backed wheeler today, giving him the vote he needed. I strongly support an open internet. I look forward to engaging with the American People to finally void thatill the exists today because there are enact open finally. Nternet rules that was chairman wheeler again defending his proposal, making the case that he is not that far removed from some of his critics out there, including some of the protesters in the room, but there is still a long way to go here. What i like about the way you have been covering this story is we have been so focused on business when some of the others are focused on consumers. What has business reaction been to this proposed new rule . We certainly have heard more so far from Internet Service providers, broadband providers. Verizon and at t issuing statements, saying nice things about the open internet, nice things about the fcc, but clearly saying that if they reclassify the service, that is a very bad thing. Let me walk you through a quick statement from at t it would represent a tragic step in the wrong direction. That is the sort of reaction we are getting from providers. Interesting stuff. Thank you very much. We are going to look at these proposals and talk about what it means for the future of business. Emily chang and i return on bloomberg west. Welcome back to bloomberg west. Im emily chang. The internet as we know it may be about to change. What does it mean, and what is the cost to you . Editoratlarge cory johnson back with us now, and also the George Washington center for business and Public Policy and coauthor of big bang disruption policy joins us. Thank you so much for joining us. Larry, i will start with you. Who is this good for . Who is this bad for . I dont think it is good or bad for anybody yet. All we have is a proposal. Theave not even seen specific proposal. Who could this be good and bad for . Wayhis proposal vote the they voted today ends up final. It will not really change things dramatically for anybody, frankly. Content providers or isps. It is really a rewrite of the last set of rules. Why are people protesting so much . I dont know. There has been a tremendous amount of misinformation. Some of it is selfinterested. Some of it may be leaked out by the fcc. Theres a lot of political agendas going on. Why are people protesting this . Millions of people have already taken action to raise their voices and demand strong, open internet protection because they recognize that this proposal does endanger the openness of the internet, and it thattens the vibrancy has made the internet transformative platform for Free Expression and organization online. The truth is this does take us. Own a very bad road there have been no enforceable fcc rules, and yet, we have trillions of dollars of investment, all the apps we got, america leading innovation. The fcc really does not have a role to play here. It may in the future, but so far, there have just not been the problems that required it. What about netflix, which before percent of internet at the times . If you had true open internet rules the said nobody gets any priority, you think your netflix a forms that now, in where everyone has equal speeds, it will get even worse. I would argue that in terms of internet speeds, there are dozens of countries that have. Aster Internet Connections i wonder if that is part of the debate. People want a faster internet connection. The United States does lag the rest of the world, our global competitors in the developed world in terms of level of conductivity and in terms of the price we pay, and all of this is because we have allowed companies, major industry players to write their own rules of the game and right competition and Consumer Protection out of the business. It is worth noting that for a time, we did have stronger protections. Better time, we had Consumer Protections and open internet protections. And jobs both increased. As soon as we took those away and allowed the emergence of local cable monopolies, consumers suffered. Innovation has suffered. It was with strong open internet protections that an ovation has flourished and that the platform for selfexpression and online organizing in a place where voters inform themselves and were so much democratic discourse takes place. It was with these protections that all these have flourished. If we start closing the open internet, all that is jeopardized. Paint a Bigger Picture for us. Comcast is trying to buy Time Warner Cable. At t is potentially buying directv. All this Net Neutrality stuff is happening at the same time. It is all related, right . Obviously, what is happening is as Technology Gets better and cheaper at the same time, the content industries, Communication Industries are going through a chaotic form of what we call creative disruption , and we are seeing all kinds of Business Models emerge. Not surprisingly, we see companies trying to use the regulatory process and lawmaking as a way of protecting their incumbency or trying to give themselves a leg up as that chaos ensues, but the truth is the technology is what is driving the change here. Why should private companies or publicly traded Companies Like comcast, time warner why should they bear the cost of providing highspeed access from every business in the world . That is not what this is about. This is about allowing Companies Like comcast or Time Warner Cable to be innovative about new ways to pad their bottom line. Providerve a preferred a fast lane on line allowing them to route around congestion and route around traffic online. You have created a perverse incentive for a Network Operator to allow congestion to build up. That is anticompetitive. It also introduces the opportunity for content providers and carriers to favor their own content over those of their competitors so that a company like comcast might be tended to favor its own videoondemand service over competing online video services. That is sort of collusive behavior and anticompetitive behavior that does not help. Nyway anyone no proposal that allows fast lanes is open internet. No proposal that allows fast lanes is Net Neutrality. Tom wheeler says theres not going to be slow lanes, just fast lanes. Is that really possible . The fast lanes will certainly be faster than the not fast lanes, right . We keep upping the ante. Speeds continue to improve. Mostly because the technology is that her and cheaper to doing so, so the possibility of having the public internet be fast and still being able to offer Specialized Services and content by which all things weve had for the last 10 years that has worked, and i do not in this proposal that would take that away, and if he could, believe me, we would all suffer. I agree we would all suffer if we have fast lanes online. It is a slow lane for everyone else. Im not so worried about whether the Biggest Companies in america would be able to afford a fast lan online. I am worried about whether alternative, independent, diverse, or dissenting voices will be able to afford priority access. All this is supposed to happen reasonablecially basis, but what does that even mean . Fromefinition might change one fcc chairman to the next. It does not give innovators or entrepreneurs the regulatory certainty they need. Usthanks so much for joining. Thank you both, obviously, a debate that is far from over. Will continue, at least for the next 100 days. Still ahead, new technology from paypal lets you shop at Retail Stores without even taking out your wallet. Will this move the needle for mobile payment . Welcome back to bloomberg west. Im emily chang. Howre focusing on technology is changing the retail business. Paypal is focusing on a small device that can make a big difference to brickandmortar retailers. It takes handsfree payments to the next level. Jon erlichman is with us now from l. A. You look at how businesses are putting this to work. How . Ebay, the that company that controls paypal both of those companies are obsessed with the idea of mobile commerce, facilitating that commerce, but its easier said than done to go to stores and pay without pulling out your wallet. Thats why they have been pushing beacon. Here is more on how it works. The process for making parisian macaroons has not changed much since the 18th century, but inside this palo alto store, there is a hightech revolution. We are a very traditionalbased business, a small business, so Technology Allows us to be very competitive. Paypal is turning to a group of Small Businesses like this one to help test beacon, its new handsfree payments system. We are trying to make payments disappear for people who want them to disappear. About the size of a pack of gum, it offers smooth features for retailers that can send messages to customers who use the paypal app when they come near a store, like a special offer or sale. If you opt into the handsfree mode, you do not even have to take out your wallet. Just walk right into the store, focus on what you want to buy, and when you are ready to pay, your name and face just appears in the pointofsale system of the retailer, and they just charge your paypal account. When the customer comes in, you do not have to exchange any more credit cards, and that allows us to save a lot of time and focus more on the Customer Service. Paypal hopes macaroons are just the beginning. They are currently testing with a wider rollout planned for later this year. Know that there are a lot of players interested in this area. Square would be another. I think it comes down to ease of use. Can you do this very seamlessly. Does it not take a lot of power out of your phone when you are trying to make it all come together . There are indeed a lot of players trying to get into mobile payments and when this market. Thank you. Chinese smartphone maker xiaomi is breaking into the tablet marker. What does this mean for Major Players like apple and samsung . That is coming up. You can watch a streaming on your tablet, your phone, bloomberg. Com, apple tv, and amazon fire tv. Time now for Bloomberg Television on the markets. Im julie hyman. We did see a selloff. It did come back a little bit by the end of the day, but really triggered in the morning by a worse than estimated in Industrial Production report sending shares down sharply. I want to point out the selloff we saw in small cap stocks as well. 9 ,russell 2000 now down 10 off the highs it saw in march. You are watching bloomberg innovation,we cover technology, and the future of business. Im emily chang. Outurn out to a big story of beijing. Chinese smartphone maker xiaomi is releasing a tablet next month as it escalates its competition with apple and samsung. It will have a seveninch screen like apples ipad mini and will use googles android software. I know the ceo of xiaomi always gets a rockstar welcome, sort of like steve jobs got at apple conferences. What was the reaction in the room when he came on stage and unveiled this . Good morning to you. You can imagine the kind of reception he got. Its kind of odd to call this a classic xiaomi event for a company that is only four years old, but it was. Beijing hall was packed , filled withty cheers for every new product new tv, a new router, and the big product was mi pad. He hates to be compared to steve jobs, but you know what . Xiaomi is clearly taking a page from apple in leveraging its growing own user base to sell tablets. Already, it sells more phones in china than apple. It has risen to number three, apple is number four. I caught up to the man who is in charge of the International Push for xiaomi, including taking the mi pad overseas. We are going to launch in , make sure everything is ok. Then we are going to start probably in Southeast Asia and taken to the other markets we are exploring like india, latin america, and so on. What kind of timeframe . This year as well or see how it does in the china market . Timeframe is determined by our manufacturing capacity. We have to see how quickly we can wrap, but certainly hope we. O that this year the tablet market is pretty much dominated by one if not two players, apple and samsung. Can you get to be global number three . Bar in thisy a high market. We know that for certain. We have spent four years working up to the point where we thought we had the right hardware design and also Software Capabilities to build a worldclass tablet. We think we are there finally, so we think we will help change this market without a doubt. How important is it for your Product Portfolio to go international, to have a tablet . Also, this new television, the new router, the whole portfolio of different products, not just phones, for the