The obamas gave her a photo album that chronicles her visits with president s and first ladies. They visited Kensington Palace for a small dinner with the duke and duchess of cambridge and prince harry. I am mark crumpton. Bloomberg west is next. Emily i am emily chang, and this is bloomberg west. Ubers breathing easier after striking a deal with california drivers. What does this mean for the larger gig economy . We break it down. Apple is not immune to china. Chinese regulators shut down itunes movies. We will dig into the larger implications. After a busy week in technology earnings, the main takeaways as we go into yet another busy week. What you need to know ahead of apple, twitter, and amazon all reporting next week. First, a developing story. First round bidders for yahoo could find out as early as next week whether they made it into the next round. Yahoo s advisors will spend the weekend narrowing down the field of bidders after receiving more than 10 initial offers for the internet company, ranging from 4 billion to 8 billion. Sources say advisors will narrow the list to seven finalists. The bidders include verizon, yp, and and a group led by bain vista equity. Paul kedrosky joins me from san diego. Paul, how does the Search Committee and the board begin to narrow this down . Where do they start . Paul so, in the parlance of the banking industry, this is kind of a takeoff. The idea is you try to figure out obviously the highest value is who carries the most weight. But there really is a clear highest value. People always are often offering a company should of cash, stock, other securities, different structures with respect to what they do. It is not always possible to do a straight of comparison. They are trying to put everything on an even footing and say, who is putting of the most cash, who has the other things tied to the offer . Emily how important is the overall price . Thats the crucial piece here, because obviously the realization on that is what people are looking for, the idea of, what is the maximum value you can get for yahoo , separating the company from the Alibaba Holdings . People who are interested on the alibaba side, it is important the separation be made, so any complex bid will fall by the wayside. Any emerged to you as more attractive . Paul there seems to be a sentiment that verizon is the most attractive, just because it is a combination of a financial buyer, but they also have strategic interest in the property itself and have enough cash to put together an attractive offer. Put those pieces together, and that will make a lot of sense to people at yahoo . You may be able to get a higher total number at some places, maybe even higher cash component, but in terms of overall fit and least likelihood of a dismemberment of the company, that is the closest. Emily a developing story. We will continue to follow it. Yahoo has more than 10 firstround bids, and they will work to narrow the field to seven next week. I want to move on to uber, dissolving the biggest threat potentially to its business. It settled with drivers suing to be treated more like traditional workers, in a move that could have broad ranging implications for all companies in the sharing economy. Uber will pay as much as 100 million to drivers in california and massachusetts, allowing them to solicit tips from riders by keeping them classified as contractors instead of formal employees. The story is far from over. Representatives of the Teamsters Union notified uber of their intent to form an association of workers for californias ridesharing industry. What does the settlement mean for uber, drivers, riders . Founder of a the Talent Agency for tech freelancers, and also a business professor at nyu who wrote a new book called the sharing economy, as well as Paul Kedrosky still with us. What do you make of this news with regard to teamsters, and potentially uber drivers forming a union . This is sort of an emerging market space. There is a natural giveandtake. I think the announcement today, the settlement is a winwin, a good step in the right direction. Uber saying, well do more to selfregulate. I do think the market has fits and starts, but this is an overall win for uber. Emily uber and Travis Kalanik said that drivers but you flex ability despite this lawsuit. But a lawyer for the drivers said that no court had decided whether uber drivers are employers or independent contractors, and the debate will not end here. Sternse stands as a warning to companies that play fast and loose with classifying their workers as independent contractors who do not receive protections. They had just settled this, but no court has made the decision here. Professor, what do you make of the broader implications for the sharing economy and uber Going Forward . Well, as far as uber is concerned this is a big win for them. As you pointed out, ubers biggest source of valuation risk is uncertainty around worker classification. This is a big step in the direction of uber being able to put that issue aside, and as consequence i think the 100 million, they will make up multi fold through increase in valuation. Overall this is good for the sharing economy. I am sure there are situations in which it makes sense to classify sharing economy providers as employees, but with uber drivers and lyft drivers i dont think this is one of those cases. I do think its really important that we start to think about a way in which we can fund benefits for these drivers and other providers in the sharing economy. It is not going to come all from uber. It is not all going to come from the government. It is not all going to come from the drivers themselves. There has to be a partnership model. When we look back on this case, we are not going to remember the details of the settlement. But we are going to see it as the event that triggered this conversation about the need to protect the workforce of the future, which will be largely freelance. Emily one of the interesting parts of the settlement is that , tipss can now say, hey are not required or expected, but are much appreciated. One of the great things about the uber experience has been to press a button, get in and get out, and not have to worry about a tip or anything else. Paul, could that significant we change the uber experience . People have a newly ingrained habit of just ubering. They like the idea that it just shows up like a teleporter whenever they hit the app on their phone. But at the same time, that is not an insignificant issue. We all liked the idea, that it took away this end of right decisionmaking that what i have to do with respect to a tip. Now the problem is, having reinstituted that, what happens if i dont tip . Does that mean i as a messenger get a bad rating, that the next time i call for uber it doesnt come and get me because i did not tip last time . It introduces uncertainty, because you are backdoor reintroducing this thing we thought we got rid of, this nasty sort of subjective business of tipping ca cab riders. Emily rishon, what have you heard from drivers . Do they even want to put themselves out like that . Rishon i talked to a couple drivers. I think everyone is happy to get tips, obviously. It is a great extra source of income, and it sort of shows the recognition and appreciation for the work they are doing. I do think that uber and lyft will probably have to integrate or iterate their product in order to accommodate that. How they choose to do it, whether at the point when you leave the car or the point when the receipt comes back and you can see the total, that remains to be seen. But im sure drivers will be happy tohow they choose to do ir added. Emily it is clear that laws still need to change in order to accommodate the sharing economy. What are some hurdles Going Forward for uber and other sharing Economy Companies . Arun was really going to create an opportunity for uber and lyft and other sharing economy platforms is if we successfully create a safe harbor in which they can demonstrate that they are willing to participate in sort of providing a safety net for the drivers, if there is not the threat of this kind of classaction lawsuit. So, i dont see the case as having eliminated the threat of, like, additional costs that may come from different worker classifications. But i do see it as laying the foundation, being able to say that, now lets go ahead, lets create a safe harbor, lets show you we are willing to sort of pay for part of the benefits that these drivers, the face of our brand, the providers fighting with each other to give them space to offer them the things they want as a retention strategy. Companies have done this all the time with employees, so it is important that we sort of create the space for the sharing economy platforms to be able to sort of do the same kind of thing. Emily arun of nyu business, rishon blumberg, cofounder of 10x. Pocket rusty, you are sticking Paul Kedrosky, you are sticking with me. Microsoft and google are making up after fighting for more than a decade, dropping pending regulatory complaints against one another. In a statement today, google said that our Companies Compete vigorously, but we want to do so on the merits of our products, not legal proceedings. Microsoft was once the most powerful force in lobbying the eu to investigate Google Search practices. Coming up, chinese regulators deal a surprise blow to apples business in the region. We discuss whether this is a sign of more trouble to comfort and cook trouble to come for tim cook. Emily china has shut down and ibooksnes, services. For years, apple was one of the few western companies allowed to expand without major restrictions in china, selling phones and computers in years and recently introducing apple pay. Beijing allowed them to roll out itunes movies and books, but in a surprise aboutface regulators shut it down. Apple released a statement saying, we hope to make books and movies available again to customers in china as soon as possible. Reasons for the decision are not clear, but it is possible the government took issue with content offered on the entertainment platform. Is this a sign of trouble ahead for apples china ambitions . Alex webb and Paul Kedrosky alex, i will start with you. How big a blow is this . A huge part of apples business . Alex it is a very small part. A wholeices business as is 19 billion of 230 billion. Cricket further into books and movies, just in china. Its not very big. Emily does it signal something about their future in china . Alex sort of. It is sort of a statement from china, saying remember who is boss here. We are the people controlling the internet in our country, and you have got to be careful. To n mind that you have if we want you to. Emily would you echo that . Paul this is more of a flexing of muscles than something that will go straight to apples bottom line, given the relative size of that operation. This extends beyond movies in the long run, to Security Issues and the encryption debate were having in the u. S. China is prepared to tell apple what to do. The question is, what is apple prepared to do in response . Emily Apple Earnings are coming up. What are we expecting . China is a huge part of their business Going Forward, but so far mostly for hardware sales. Alex the possible implication of this kind of thing, these are part of the Services Business, and that Services Business makes iphones stickier, making sure that customers keep buying iphone products. I have my music on itunes, so i dont want to check of us that by trying to port to end android an android. Apple is trying to build out services revenue, using the iphones and scrubber base to generate a further Stable Revenue stream. Emily so apple has made huge investments in china. Tim cook made many trips to china. Of course, Mark Zuckerberg has been learning mandarin. Hes on the board of beijings university. Do you see a point in the future when the Chinese Government will ever change its attitude towards u. S. Technology companies . Paul not in the near future. Not even probably in the mediumterm future. Its really not in their interest to, because while they are happy to have these Companies Selling product, at the same time they would love to see a domestic industry grow up, with companies at least as powerful and profitable as facebook and apple, so they will always ride the fine line. There is a tension between allowing companies to export products into the chinese market, and allowing Domestic Companies to innovate and imitate on top of what those companies are doing so they can build a larger and stronger Domestic Technology industry. Thats not going to go away until china is truly a first world economy. Emily alex, what are you watching for in Apple Earnings . We talked about production cuts, about sales declining for the first time in a decade. How do you eect to see these play out . Alex iphone sales will drop. The question is, how much . If it is in line with expectations, that could be positive for shares. No news is good news in this instance. Emily we see other big tech giants missing. We will of course be watching closely. I know you will be bringing us the update, alex webb. Thanks so much. Paul kedrosky, you are sticking with me. Coming up, a lackluster earnings week in text comes to a close. Which company was a Silver Lining for the industry . We will break down the winners and the laggards. Towe had to break head break, how about the tesla effect . Shares of Lithium Companies boosting by about a third since tesla increased its outlook for february. These cars rely on batteries using lithium. Production of lithium may travel over triple over the next 15 years. More bloomberg west continues next. Bloomberg west tech earnings fell short of investor hopes this week. Reports from microsoft and netflix missed estimates. One company had a positive note, amd. Shares soared the most in 35 years after it said it is Licensing Technology to a Chinese State backed joint venture. Back with me is Paul Kedrosky. Start with alphabet, which has been on this incredible ride. Do you think this is a speed bump . Paul i think it largely is. The concerning thing for me in the numbers was that there was a bit of a capex acceleration and issues with margins. The fundamental story, google has not changed much with respect to the transition from desktop to mobile, so that story seems to be proceeding at pace. Theres no sign of a letup in spending with respect to supporting the cloud side of the business, in the face of really heavy spending at microsoft and amazon. So that pressure will not go away. But the transition, the fundamental issue, seems to be going ok. Not like they are ahead of plan, but seems to be going ok. Emily before we go to microsoft, the cfo talked about hiring, saying that they are growing more quickly when it comes to new hires, in places like googlex, and the other parts of velvet alphabet. Headcount at the end of the quarter was 64,115, up approximately 2300 from last quarter. The vast majority of new hires continue to be engineers and product managers in areas where we have prioritized investment, such as cloud and apps. On a numbers basis, we are adding more headcount, and on a percentage basis we are growing faster in other bets. Emily some analysts are optimistic that these other bets like self driving cars will become moneymakers. How optimistic are you . Paul not very. Not that they wont ever be. Obviously, who knows five years out. But in terms of meaning they contribute into the point where you feel this needs to be discounted into the current share price because there are reasonable earnings prospects in the near future not at all. There are a lot of signs of a real growing problem inside of some of those groups, in particularly in nest, where there has been a report of real engineer of people in the company. Theres a feeling that the Senior Management in nest is not being receptive to what needs to be done, Holding People to unfair scheduled. These are anecdotal reports, so take them as you will, but this is troubling given that there has been a real slowdown in the pace of products from that specific group. They are underperforming. Emily what about microsoft . We sell revenue from the cloud is going strong. This is the main area of growth, and is supposed to be the future of microsoft. But is it enough to be the entire future of microsoft . Paul well, heres the thing. Its enough to be the entire future, but it is nowhere like the margins microsoft investors historically enjoyed. It is a platform business. In some sense, it is equivalent to the old Windows Business, but it will never have the margins the old Windows Business date, given did, given Competitive Pressure against ibm, amazon, apple, google. Theres an awful lot of people seeing cloud as a platform business, which is microsofts central focus in terms of growth. It will be a great topline, but margins will be under continuous pressure as far as you look. Emily netflix also. All three companies took a big hit this week, with subscribers in the United States not growing as fast as people would like. At what point does netflix have to worry about the bottom line, making sure that these billions of dollars they are investing in original programming are actually going to pay off . Paul i think its coming pretty quickly. You see what netflix is doing. There is a story this week that was really interesting about a crackdown on vpn, virtual private networks, the mechanism by which people who because of their geography cannot access the entire Netflix Library can access it as if they were in the u. S. Netflix doesnt like that very much, because they dont