Happy friday and welcome to squawk alley. Working on her fourth hour of television. Its friday luckily. It is friday. First up today tired of shelling out hundreds of dollars a year to rent that cable box . Federal regulators seeking to increase competition and choice. Voting to adopt a proposal that will let people swap out those boxes for cheaper apps for Companies Like google. Its good to have you back. Good morning to you. Good morning. Party lines really didnt surprise anybody. But what was the remedy in your view. The descenting view. Its not to introduce a number of boxes into consumers homes. And get rid of the box entirely and let an app convert any tablet or laptop or smartphone into a navigation device. Thats the future to me. Right now though, the situation at home is clunky, its cumbersome. Your view it seems is hey this problem is solving itself. This will take three years to actually hash it out. I dont like having the cable box and the apple tv box and the amazon Fire Tv Stick and all of this stuff under there. I want one of those manufacturers to compete to put it all in one great interface. Whats wrong with that . A couple of things is first of all we take a number of years to come to fruition. Essentially they delegated this issue. The likelyhood that theyre going to come to a consensus is low. Didnt the fcc shoot this down five or six years ago in 2010. Then we have it now. The industry has really evolved greatly since then. There was no such thing as the Google Chromecast or the amazon Fire Tv Stick. Three years from now the industry is going to be very, very different so i would rather go down an app based environment as opposed to doubling down on yesterdays technology. With just the cost argument though, commissioner, cant you accept that a Consumer Spending over 200 a year on a box is a little bit excessive given that theres still paying for the service itself. Both as a commissioner and a paid tv consumer and thats why i think apps are the way of the future. An app costs between 0 and 5. This new generation of bosses is going to be introduced into peoples homes and layer an additional 100 or 200 peoples bills. We need App Technology thats more efficient for consumers. The other side, seem to frame the issue. For everybody to use. It wasnt the result of years of innovation and capital expenditure. I just wonder if any of this is a disincentive to create something new down the road. Its important to remember the state that were in is entirely due to federal regulation. In 1996, Congress Told the fcc to set up a regulatory system for the boxes and the reason why the marketplace is not as competitive as it could be is because the fcc is highly regulated the set top marketplace and unsurprisingly that regulation has failed. I would much rather have a market based approach to allow companies to experiment through using apps so that we dont end up funneling all of these consumers through this technology that doesnt reflect the way that people younger people access video. So you dont understand correctly your opposition is to the method involved that the fcc is going through. Not the end. Do you think that manufactures like apple and like a google. Like tivo that does the new cable card should be able to really create the equivalent and you can have like 4k. Not having to worry about streaming quality, et cetera. Do you believe there should be an environment where the outside manufacturer versus the freedom to create that. My own goal is to get rid of the box entirely. Most consumers are there. So while in theory it might sound great to be able to say well introduce more manufacturers into the marketplace and have even more to compete ultimately i dont think thats where the video environment is morphing. Secondly, even if that would be a good thing, all of these people have to get together and reach a consensus. This is going to be like the state department saying were going to have middle east peace and well come up with a solution. Its very difficult to see with any confidence how thats going to happen in the near term and thats why i think its going to micromanage the marketplace. Were going to see what the Public Comments bring. Thanks again. Fcc commissioner. We do have some breaking news. Imf executive board to survey second term as managing director. Meantime to the high stakes standoff between apple and the fbi. The deadline has been extended. They have until the 26th of february to respond to that encryption breaking technology. Joining us on the phone is apples senior director of information security. Now vp and chief Security Officer with code 42. Rick, its good to talk to you. Good morning. Good morning. Thanks for having me. Along with the legal debate here is a technological debate about what is feasible if the court were to demand a certain remedy that could isolate the specifics of this case. Can you talk about what can be done in your view at apple. We look at the apple keys. Any time a company has to slide in the back door it basically means that all the best hackers in the world are going to know that and theyre going to go pursue that. It was that they dont have the current capability. But right now that simply does not exist. There seems to be confusion over whether this capability existed in the past and past operating systems and you were at apple until 2014. Im wondering if you can set the record state on this issue. So did not exist for prior ios operating systems. Did not exist in prior models of the iphone. When you look at the current ones they have today theres many, many versions past that. So i think that it increased their security postjurors within the software and its more and more difficult to do that and then it ends up into the discussion about introducing back doors for encryption. Is part of the problem that the government publicly requested this work around . This hack, in effect. There were some reporting that apple had wanted them to request this under seal. Now that its open that apple is being pushed to do this, apple is publicly resisting. How much of this has to do with the precedent, you think, not just in the u. S. For other cases that might come up but also internationally so that other governments dont come asking apple to hack various pieces of software meant to keep users secure . Yeah, you bring up a very good point. The way i see that is if the case exists then apple or any company for that matter opens themselves up to orders from every federal, state and Law Enforcement agency. Once the capability is bill many can come after them and compel them this to the do this. They could end up with hundreds if not thousands of requests. Do you think that sit right for any company to create a technology that is a black box in some ways . We talk about snapchat which is the messaging platform where as a user you think that your messages spontaneously come bust but in a court of law with a subpoena you can still retrieve the messages. Do you they technology should be retrievable with a court order . I think some technologies should and theres hacks and work arounds for applications like snapchat but i think that you introduce four technologies. So you consider having a phone something thats core to our society and if you have a Core Technology and you are forced to introduce the known back door for a hack. That is the weakness of all things internet. This would essentially reduce Digital Security to physical security, if Law Enforcement gets their hands on something and they have a warrant to search it, its normally pretty straightforward unless its an unbreakable sale. They would still have to get their hands physically on the phone. Have it in their possession to use the sort of software were talking about, right . So its reducing Digital Security to the same limits as physical security. But there are still limits. Yeah. Thats a really great point. If you take a look at a Security Program where youre trying to secure it, it all starts really with a physical layer, right . Thats why Companies Put their servers and machines and data centers, right . So ensure that nobody can get physical access. If a hacker or somebody can get access to hardware they have the absolute best chance and likelihood of being able to break into it. One last question. I hate to ask you to predict but is it your view that there is a work around here . Some way to thread this needle . Or is this the Security Dynamics mean that you think this will probably go all the way to the ultimate court . I believe that the Security Dynamics for this will take it to the ultimate court. It is a core fundamental issue that people want their data secured and we don want to be introducing capabilities that we can across the entire internet. I appreciate your insight on that. An angle were all trying to get our arms around. Thank you very much. Code 42. Formerly of apple. I was going to say i guess nothing to stop apple from putting a selfdestruct feature in the phone to physically blow it up in all else fails. Mission impossible. Meanwhile the markets are still in negative territory. The dow is down about 7 period 5 points. Theyve been that way throughout the morning. Its up ever so slightly. But major averages still on track for the best weekly gain of the year. Thanks to a strong dollar and stock is down 3. 5 . It also expects another challenging year ahead. Nordstrom falling after missing earnings and revenue. Heavily discounting and unseasonably warm weather. And its going to be a tough day for the Retail Sector at large. Front page headline on the wall street journal and last years debut below the price and well talk about that. And two years ago today facebook bought whatsapp and then yahoo moving closer to a possible sell. Sarah will tell us next when squawk alley continues in a moment. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. 70 of last years ipo trade below their opening price. What does this mean for the tech sector and private Companies Going forward. Partner and blue run and its not every day this topic has the front page treatment at the wall street journal. Why do you think we should be focussing on what the ideal market is telling us about the market more broadly . I think its another cycle. You know . Were obviously in a new news cycle and its a negative news cycle and it makes sense they would put it on the front page. What does this mean for companies trying to issue more stock because they went public and they have very small float for private companies that are considering a Public Offering at some time . Is the market just completely chilled or are there still discussions going on behind the scenes . Well, im an early stage investor so i always have to take a longterm view. So i dont really ghetto cussed on the shortterm market ups and downs. In this case a down. Clearly access to capital could be an issue for those companies that are thinly capitalized but really i think the standard for going public has been seasonably held over the last four or five years but theres ample cash in most of those companies. Tell us about the environment in Silicon Valley right now. From commercial real estate to the mind set of early stage investors. The sort of valuations that they expect and demand. How much of a shift do you see taking place over the last weeks and months as the market has shifted. Thats what is really interesting and different about this place. Its the best environment to invest in when it comes out of the market and you actually hit on it. One of our bigger limiters is real estate. It starts to cost a lot of money to start a company here. Too much. Now you start to see things get more reasonable. To start a company its easier. Its also a lot easier to recruit. In the past when youre in a more heady market its very difficult to keep people and recruit new people. Particularly when youre competing with a facebook or a google but now suddenly, even people working at google are look around and thinking maybe my prospects are better off. So ironically in this environment its actually the best time to Start Companies and some of my best companies were actually started in troughs. Interesting because the Big Companies would argue its a good time for them. All the people in the companies that are facing series a where your equity comp is very questionable now. Maybe its better to go to a larger safer firm with more liquidity. Why is that wrong . You know, if you are somebody thats worried about safety, i dont think you should go into a start up. If youre looking to make a difference. If youre looking to see, have an impact but also have an impact on your own balance overtime. I think youre willing to take that risk and thats the point. The people who should take the risk dont go away in the valley. The people that shouldnt take the risk do go away. So those people that are timid or risk adverse for whatever reason and they would normally avert to a bigger company, i encourage them to go there. I was with paypal, all of those companies were started in difficult times and thats when you really find the extremely smart driven people. We got to a point, john, not even a year ago where engineers were hiring agents to find them jobs and companies were assigning ten year leases because they were worried that they wouldnt be able to find corporate real estate. Are you seeing froth across the board settle out . Or do you think that theres still some pockets where there should be corrections and some behaviors should be corrected . I try to keep it real. I dont really get caught up in the buzz cycle of things. I havent seen that many things. I will say to you that real estate is a lot more reasonable. And thats a big limiter. Just because were a small place. Also salaries have come down. Its definitely easy to recruit people today. Its much easier to build a company today. Well, perhaps that is a good sign. At least for now and for those that are trying to hire we appreciate your time this morning. Thanks for having me. And up next, its kind of hard to believe but its been two years since book bought whats app for over 20 billion. How far both companies have come when it comes to users, when it comes to market cap when we come right back. Book bought whats app in a deal that ended up worth over 20 billion. Zuckerberg promised the ceo a board seat and independence for whats app and help growing to a billion users. And today the company has more than a billion monthly hackers. And the stock is up more than 50 in that time. It probably doesnt hurt that zuckerberg picked a winner. Company with potential to grow to the billion user scale he was thinking of. Not twitter but well see if they can monetize it. That deal started on the private side. If theyre worth 20 billion then what is my Company Worth if we have a quarter of the users. You wouldnt argue its anywhere near as good of a purchase as snapchat. As instagram. It remains to be seen. Arguably that was the last billion scale start up available that could have threatened facebooks dominance. Ill also point out that i was wrong when i picked that purchase as the peak of valuations for consumer tech. Went a little bit further than that. You are right in your heart. Snapchat waiting in the wings. When we come back yahoo meantime moving closer to its next act. With the Company Announcing the committee to explore it. The latest on that when we return. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 heres your cnbc news update at this hour. The supreme courts scalia will have president and mrs. Obama come to pay their respects. Pope francis says donald trump was not christian was not a personal attack. It was simply an affirmation of the popes belief that migrants should be helped rather than shut off behind walls. Kim jong un attended a ceremony and bestowed awards upon scientists and technicians that contributed to the launch of a new satellite. And harper letha wrote to kill a mockingbird has died according to her publisher harper collins. 25 years ago the sequel was also published. She was 89. Thats your cnbc news update at this hour. Lets get back to squawk alley. Europe is closing for the final time of the week. Simon back here looking at a lot of red. We have deepened the losses heading into the close there at europe. It just takes the edge off of what could be a good week. You have a look at where we traded for the week overall. The gain is about 4 for european stock 600 which means that for the year theyre now down about 11 . Still a gain of 4 overall. And its what is happening in brussels. U. K. Prime minister David Cameron is struggling to do a deal to renegotiate the united kingdoms membership of the eu. The normal business of the summit with 28 leaders has been suspended. What you see here is him going to a series of bilateral meetings to try to remove critical snags to him get a deal. This is very important. He needs to go back to the u. K. To argue that the u. K. Should stay within the European Union in advance of a referendum he promised this summer. Its a distinct possibility that they could lead the European Union. And thats a lot of assets related to the u. K. Not least the pound sterling. The drum beat is across the euro zone, it continues toward the European Central bank which means that the sovereign debt continues to rally on the belief