Good conscience. Bloomberg is the founder and owner of the Parent Company of bloomberg news. From bloomberg world headquarters, i am mark crumpton. Emily im emily chang and this is bloomberg west. A favorite new target eager to rein in skyhigh marketing budgets. Amazon quietly changes course on encryption. Bezos brings it back after public backlash. In his first interview since Winston Stott lost 50 of its value, i speak exclusively to jeff weiner. Another twist in the standoff between apple and the fbi. The u. S. Has appealed a brooklyn courts ruling that apple does not have to help unlock an iphone. Lawsuit shows apple did this routinely. The company has complied every time until now. In fact, apple helped open joining me now is adam, who covers apple or bloomberg news. Adam there are a lot of things in multiple coast. In california, you have the case involving the San Bernardino shooter and in new york apple is battling the government. It shows what operating system was on the phone in question. In San Bernardino, it was software called ios8. It has hefty your encryption. This one is ios 7. What the government is saying is with this software system, apple has the capabilities to do it, they have done it in the past, and they should be helping. Emily it seems the government should be changing its rhetoric because it is just this one phone they are talking about and now we know there are 12, 14, multiple phones across the country where the government is asking apple to do this. You think they are trying to point out the i dont know, the hypocrisy in apples own argument . Adam they are trying to show the inconsistencies. About howck and talk as far back in 2008, when the original iphone came out, there were some cases involving some crimes where they went to apple and asked for assistance. Apple has been providing some level of assistance to the government, but they have been ratcheting that back and putting more protections in place in the area of encryptions. That is what steers us to what is happening in california. Emily how much does this undermine apples argument that it should not do this for anyone, let alone the terrorist in San Bernardino . Adam they put it on the umbrella that the government is overreaching under the centuriesold law, which is what the government is using to ask apple for assistance. Apple is saying that that is going to far and company should not be compelled to provide this sort of assistance. Emily why did they not make a stand until now . Adam that is a good question and one they need to answer for. In the brooklyn case, the difference is that this is something judges typically sign and send the order on its way. In this case, the judge asked apple for its opinion on doing this. Apple use that as an opportunity to contest it and say they were asking too much. What changed is the judge gave apple an opening. Emily what is the timeline . We are waiting for the government to respond to apples responsively San Bernardino case. Adam you have dual tracks going on. The next thing in San Bernardino will be the governments reaction to apples reaction, and from there this thing is. Oing to get a lot of appeals if apple loses in San Bernardino, they are expected to appeal, and vice versa. This is ultimately going to bes decided by higher courts or policymakers in congress. Fory thank you so much bringing us that update. To another story that we are watching. Alibaba opening the week with a the affiliateat is raisinglipay money. That would make that violation would make alipay more valuable than uber. I want to bring in author and chang. Tracker gordon chai gordon, what you make of this news, especially given the broader news . Gordon this is good news for alibaba because it shows that in affiliate has a high valuation. The other thing that is really important is in the first round of financing, the state took 12. 4 interest through two entities. This time you have a state bank. You basically have the government taking bigger and bigger interest in the financial. I dont think that can be a good thing. Emily this is a company we have been expecting to go public at some point. I find this interesting, especially given the Business Climate in china. David i am not sure about gordons point. I would like to as gordon y eight it why it is bad. It is even possible to do it without government involvement . I think, if i were an investor, i would be reassured by that. System, ofchinas course the government has interest in your business because of what david is referring to. You get a favored position. This is really not good for china because you have a company that is involved with some of the most innovative going on in the chinese economy and now you have the dead hand of the state bank wanting to take it over. I dont find that to be a good thing. It is a lot of things about the chinese economy. Emily what is your take on how this fits into the broader climate . We have been talking a lot about valuation in the united states. This number, doesnt strike you as extremely high . David it strikes me as of certainly high. I dont understand how it could possibly be a legitimate valuation. They havent achieved it, they are just trying to get it. It does not make sense to me. Longterm, the chinese economy and ecommerce and payments in ecommerce in the chinese economy is a huge opportunity. Going back to the government versus alibaba, alibaba is a surprisingly strong counterweight to the government. As companies go, i would say it is one of the stronger ones and i think jack ma has always like to play a little to the edge. He knows that you cant really cross the government. I think they will continue to have quite a bit of authority over the company direction. Emily we are seeing another alibaba philly alibaba affiliate buying the china lottery, which is something that alibaba has stayed away from because of government regulations. What do you make of this . Gordon i dont think this is a good one, either. Alibaba has a core business. They can expand it into rural areas. They can expand it into the united states. Instead, we have seen, even before the ipo, alibaba buying into business is kind of like a scattergun shot. I think they need to concentrate on what they are best it best at. When you see at, the markets dont like this. Alibaba and stock drops every time he makes an acquisition. That is not a good sign. Emily what is a Progress Report on alibabas push into rural china . In sunniht a big stake. Is it working . Gordon it is certainly working. They have 12,000 or so rural centers. They plan on going to 100,000. I dont doubt they will make it. That will not be a material factor in the next couple of years. They have this big head start. This will be huge because there are so many people in rural china that have had no access to online shopping. This is a good thing. Emily gordon chang and David Kirkpatrick, with me for the rest of the show. Coming up, activist investors appeared to have a new favorite techtarget this year, but will they help or hurt this budding industry . Later, my in depth interview with lincoln ceo jeff weiner. How hindsight changed his thoughts on yahoo s uncertain future. Emily shares plummeted monday because late on friday, the Company Announced that its ceo and cfo had sold the majority of their personal stakes. Not a boost of confidence for investors, especially since the disclosure came after dismissing doubts about their Business Model. Just eat is the u. K. Version of grubhub and it is facing local competitors and the come additive the possibility of amazon and uber encroaching on their home turf. They have a limited window when they can legally sell shares. Investors have found a new favorite lace to circle the software market. Look at the recently disclosed technology. N space is looking increasingly attractive to activists and a big reason why is spending habits. Man deke saying joins us from new york. Also still what does is david kurt hat trick. What do you make of these trends . What happens is when you are a small Growth Company like click and cornerstone, you have two choices. Either you have to keep delivering on sales growth or you have to start proving profitability. And has happened with quick cornerstone is growth is tapering. What typically happens is you will have a bad quarter, via ua should is correct, they come down quite a bit, violations valuations correct, they come down quite a bit. The difference is with autodesk, it is a case of Business Model transition. They are transitioning from a license model to a subscription model. It is about operational improvement. I think the playbook is slightly different in case of smaller versus large companies, but it all comes down to valuations coming down, margins being lowered, what it could be, and that is a perfect setting for an activist to get involved. The software feel like a emily the software feel like a clunky sector . A lot ofthink there is innovation. Carl at autodesk has a longterm view, but maybe that is what investors dont like. I am not as familiar with the other companies. I dont see a fundamental problem in this sector, no. Usly connect the dots for about activists in software and tableau shares which have been smashed her in mandeep every six months smashed. Mandeep every six months, things change. Data Management Companies were doing exceptionally well until last year when the focus was on big ada. Now the focus is shifting towards artificial intelligence. What typically happens when growth starts to slow is these Companies Get acquired by oracle, ibm, microsoft, and this kind of consolidation has taken place in the past. Spss. Quired there was massive consolidation it while back. B. I. Was hot. Once growth started to slow, there was consolidation. Emily i spoke with the ceo of last week. Symantec they have taken a stake in symantec and subvert we have a threeyear transformation of the company and i think this is an important Inflection Point for investors saying, now it is time to get in the story. Emily a bit more optimistic there. This narrative . Mandeep with companies of that size, it is about divesting of business, making operational improvements, bringing the market margin back up to where it has potential, and these things take a while. It is possible. Time and again we have seen companies have to diverge as this is to focus on their core, which was the case with symantec , and i think will be the case with autodesk. They have divested one of their businesses. That is what i expect. Emily thanks so much. Kirkpatrick,vid you are sticking with me. With a slapping verizon 1. 35 million fine. The company failed to tell customers about a tracking technologies that fall you from website to website. The super cup your super cookies can target customers. Amazon reverses course on encryption. Why the aboutface . Plungingtflix shares 6 in trading after itt research noted the 2016 domestic streaming estimates outlook is too aggressive. Netflixicipate anticipates that streaming substitutions will increase by 1. 3 4 million. They missed their fourthquarter estimate last year. Amazon is reversing course on encryption. The ecommerce giant will restore the security option on followingevices customer backlash. They decided to remove encryption on their devices. Cory johnson has been following this story. Ptin or opt is it opt in or opt out . Ry you complain were for devices that dont get ads or pay more for ads when you login. With the existence of identity theft, this could not come at a worse time for amazon. Emily why did they do it in the first place . Cory they have not said. They have been asked and did not say. It may have been for simplicity of use. Amazon is an important player in the world tablets. They have in any given year anywhere from the top four or top seven. They sold over 19 million devices in the last three years alone. With the market share hovering in the top five, top six in the quarter, and having sold over 19 million devices, they are a very Important Company in the world of tablets and their Cyber Security approach is felt by tens of millions of users. Emily we talked about amazon at go, which could become amazon echo, which could become a another big item. They are lowering encryption on their tablets and publicly coming out and saying they support apple. David i think there is an overwhelming and somewhat surprisingly large support for apples position in the entire tech community. I think amazon clearly believes in encryption given their support of apple, but even going back to why apple is fighting the case in brooklyn earlier, i think mood has shifted and it is surprising even people in tech how many other people in tech agree with them. There is almost a uniform view that the government should not have the right to have backdoors into this product and that things should be encrypted for the safety of consumers. Emily how important is this as a branding issue . Cory it is important also as a consumer issue. Visibilityses their as a tech company. They also have Amazon Web Services as one of the most Important Services on the internet. I think that is why the corporate concern about privacy is so concerned about amazon. It is crucial for amazon when it comes to technology. Emily you also have a big series coming up this week about amazon prime video. Cory the company is going to sell over 2. 5 billion of content over the counter your. I was in hollywood last week at the premiere of a new show. I talked to some the people in hollywood and even people in hollywood are shocked by that number. Emily netflix is spending just south of 5 billion. Cory amazon doubling its spend every year. They are in a very serious they areayer very serious and important player. The competition is done by disney, hulu, showtime, hbo, amazon, and netflix. We are to look at what that means, who is leading the effort at amazon, and what that means. Emily amazon has a couple of hits on its own. This used to be netflixs game. Is it anyones game . David anyone that has multibillions to spend. If i was in hollywood, i would feel nervous because these companies are gigantic as this is and have gigantic ability to raise capital and borrow if they want to because these are the areas. I am amazed by the numbers you are talking about here. Emily David Kirkpatrick and cory johnson. Thank you both. Our exclusive interview with lincoln ceo jeff weiner. Yahoo ,is take on china, and more when we return. Find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. You are watching bloomberg west. The results of a new poll showing first exclusively first to bloomberg, the distrust that americans have for immigrants even those who enter the country legally. 61 of americans polled say continued immigration jeopardizes the u. S. , numbers were among baby boomers. Turkey has new demands for fresh concessions. The Prime Minister showed up at the summit armed with a new wish list that includes more money for asylum seekers. As part of the lastminute deals, it could be 6 million euros. The funeral for nance iowa reagan will be held on friday in california. She will be in repose for public visitation. Involving or stories sports superstars. Two super bowl championships, Denver BroncosPeyton Manning nounced his retirement and sharapova took full responsibility for what she called a huge mistake. He could face a lengthy ban. Powered by our journalists and news bureaus, from bloomberg world news headquarters. Re in new york, 10 30 in sydney. We have a look at the markets. Paul, good morning. Good morning. A mixed picture from wall treet is a mixed picture here. Here in australia, we have been open for 30 minutes and we are up over new zealand and a lot of data, expecting revised g. D. P. Figures but not expected to be great news. And the big one, chinese trade data for february expecting a decline of 12. 2 there. It will be interesting to see how that number squares away with some of the rhetoric we had from the National Peoples congress about Growth Prospects and more risk of a hard landing in china. The big talk in the morning, the stock price up, 19 , biggest gains on record and seeing australian iron ore ising 3. 4 in early trade. Emily this is bloomberg west. Is season we kick off season four. Studio 1. 0. I sit down with a c. E. O. , first interview he has done since it was slashed in half. The stocks plummeted over 40 . They are shares and down 49 . Last week, he decided to give away his entire 14 million stock bone just back to the employees. I started by asking about his reaction to the freefall. I think it was a surprise. We werent expecting that kind of response. And when you look at the core elements of our business, they remain healthy. If you look at north american el cells, growth cells has remained consistent. Sponsor updates, business line, still the Fastest Growing business. And post the launch of our reimagined and seen an acceleration on engagement. The core elements of the business. Emily you gave a speech to employees at a meeting and you said linkedinis the same company. How do you feel about this, not the c. E. O. , but you . Im not sure it stinks. There were some surprises. You want to make sure you are there for the people that matter most. Create value for our members and customers and nothing whatsoever has changed. Emily do you think you can accelerate growth . As we continue to execute, you want to address opportunities. Emily has this impacted morale at all . It brings people closer together. And the more you go through these kinds of challengeses and meet these challenges head on and successful and nothing fundamental has changed. The stronger the team becomes, the stronger we become as a company. Emily you have talked about compassion nature management. Give me an example of where you have applied it . I apply it in every interaction. Putting in the persons shoes and undering their perspectives. And you are going to disagree. They are trying to get one over on you. Its a zerosum game. And that may be the fu