♪ >> live from. three in san francisco, welcome to "bloomberg west." i'm emily chang. a check of your top headlines. stocks are surging after a tumultuous week. the dow, nasdaq, and s&p posting gains of about 1.5% to help trim weekly losses. european shares ended an eight-game losing streak as the european central bank says it was dark -- what is start purchasing assets. president obama has named ron kline to coordinate the u.s.

response to ebola. he is a former chief of staff of joe biden and al gore. the first nurse infected with ebola has been moved to the national institutes of health in maryland. >> we fully intend to have this patient walk out of this hospital, and we will do everything we possibly can to make that happen. >> the other nurse who contracted ebola is at emory hospital in atlanta. president obama has signed an executive order to improve security for government credit and debit cards. they will be equipped with so-called emv technology, with a security chip instead of the strip. >> we are launching an initiative called "buy dsesecur" you should be able to buy the things you need without risking your identity, credit score, or savings. >> the president urged the private sector to follow suit.

former google lawyer michelle runhas been nominated to the u.s. patent and trademark office. she has been serving as deputy director of the agency. her nomination is subject to senate confirmation. the patents office has been without a permanent director for nearly two years. is google still a major growth company? the third-quarter earnings report shows growth is starting to slow down at the search giant. were down from the prior quarter. google is dealing with cheaper ad prices and more consumers accessing the site via mobile. and while growth slows, google is spending 50% more on research and development as it pursues self driving like cars and delivery drones. does google need to change its business model? editor at large cory johnson is with ourhe studio

guests. are these results from google alarming? >> there are two ways to look at it. one way, mobile is real. google used to be the first stop for everything. the second thing has to do with, look at facebook before it went public. everyone said mobile would doom it, and now it is making it even more powerful. it goes both ways. >> we don't know how the split goes with google, right? >> we don't. we think 60% is desktop. the balance would be mobile. it has been increasing materially over the last few years, and we think they are much further along in monetizing mobile. there was a huge gap two or three years ago. ak thiss margins were we quarter. what do you make of that? >> this company is spending more

than it should. gross margins, they had a one-time charge, a legal charge, gross margins are relatively similar to the last couple quarters. we see a big increase in r&d spending. that is where a company like google should be spending. >> but balloons and drones? >> you are right, balloons and drones, maybe not. wearable devices, absolutely. i'me two major moonshots interested in. wearable devices and google in the car. the next two or three years, youtube, google for the enterprise, google play. if you have huge margins, take profits and put them into three-year plays anbd five to 10 year moonshots. >> the former head of google x

said the capital they are spending is a drop in the bucket. they can spend a little money and potentially get all this runway out of it. but is it all really a drop in the bucket? >> $2.5 billion in capex every quarter, no. yes, but one heck of a buckety. ,. . [laughter] >> i want to know from the mobile perspective how the prospect is given for advertisers. do you more out of mobile ads on facebook versus google? >> one part is where the audience is. when users go to google on the desktop, advertisers have to go to google. but when they don't go to google on the phone, google does not have that ability to monetize. but when they go to google, they are still valuable. they type in what they are looking for, and it is all. relative to facebook, it is a question. click declined only 2%. it was the smallest decline we

have seen in some time. what's going on in the ad business, where you see price compression slowing down? >> the trend is reversing. mobile clicks, for our clients mobile clicks have traditionally been hard to monetize. advertisers don't know how to turn that into real money. >> it doesn't seem like a long-term business to me. >> you and i have different opinions about the way the mobile ecosystem works. i would say advertisers struggled for a long time to monetize mobile traffic, but they are learning how to do that. as they learn how to do that, the value of the clicks is going up. the trend is reversing, to knowing what they are doing and the traffic comes more and more valuable. you will see a reversal over the next couple years. >> eric schmidt, executive chairman of google, says he

thinks amazon is google's biggest rival in search. when you agree? >> absolutely. the most profitable part of google search is retail, and if you are not searching on google for products you're probably going to amazon. that said, 80% of retail sales globally occur away from amazon, so there is plenty of fragmentation. you don't need to worry, google. >> thank you both, as always. coming up, airbnb's so-called joining us.l be you can watch us streaming on your tablet, phone, bloomberg tv, and amazon fire. ♪

this ismily chang, and "bloomberg west." over 140,000 people descended on e's annual

conference. many travel here to san francisco just to hear ceo marc benioff give the keynote among other speakers like hillary clinton, mark andreessen, and al gore. for adown with benioff special edition of "studio 1.0." i spoke about his early career, and his vision for the future of salesforce. ytoou started a company when you were 15, then worked under steve jobs. what was the most important thing you learn from him? >> passion. steve jobs was one of the most passionate people i ever met, and i still remember, in 1984i was programming assembly language, the language at the core of the microprocessor at apple headquarters. we were writing the first software that did assembly on the macintosh. steve jobs came storming down

the halls, motivating the developers. his energy was infectious, and everyone went to work as hard as they could, because he was there, and he was working so hard. i learned you have to be all-in. that's something i try to bring to salesforce. >> how confident are you in the future of apple under tim cook? >> i think tim is doing a great job. we saw some great new project -- products with the new iphones. i have one in my pocket right now. apple is a great company, the greatest story in american business. look, steve was the greatest of the greatest, we all know that. being the follow-on will be tough new matter what. makes steve at success. >> how were larry ellison and steve jobs different as bosses? >> both were phenomenal

visionaries, able to have a feeling for where the industry is going and work hard with their teams to create that reality. where they are different, larry was maybe eight more of a suit and tie kind of person. steve was in his jeans and black turtleneck. remarkably there same. that is why they got along. >> in what way? >> it gets back to that passion. they were very passionate, dedicated, focused people. the number one issue for both of them, the business. nothing was more important to steve than apple. nothing is more important to larry than oracle. there is a message in that. if you want to put everything above everything else, you will achieve that. whatever you focus on, you are going to get. and for both of them, the number one thing in their lives was their work. you tweeted, there has been and always will be one ceo at oracle.

what do you mean about that? how optimistic are you about the co-ceo's? >> i'm sure they will continue to do a good job, just as they have the last two years. but we all know that larry ellison is a force of nature, and what larry ellison wants, larry ellison is going to get. so whoever is the ceo will have to bend to his desires. >> larry gave you money to start salesforce. >> he did. he was our first investor. >> and salesforce has become a competitor of oracle -- >> that might be true. >> what did salesforce do write that oracle has done wrong? >> we got focused on a vision of the cloud. google or yahoo! do. but instead of delivering books or search results or something the cat, we deliver business functionality. we stay focused and dedicated to that idea for 15 years, and

because of that singular focus we have be able to achieve great success. there is a message in that, which is you have to be dedicated. >> is there another message that oracle missed the cloud? >> oracle has a different business. the chairman, who just retired, took me into his office and said, good thing you are leaving oracle. i said, why is that? he said, it will be hard for us to do a brand-new technology model and a brand-new business model, because everything from the way you deliver the software to the way you recognize the revenue is completely different in cloud computing. >> u.n. larry ellison had a rivalry over the years, and more recently a partnership. what is your relationship really like behind the scenes? >> larry and i have a great relationship. we are always hugging and kissing. [laughter] >> frenemies? >> we have been friends for 30 years. that has been exciting. look, i had some great mentors

in my life, people i have been thrilled to have. my parents, grandparents, but also like you mentioned, steve jobs, colin powell. i don't think anyone influenced me more than larry ellison. i would not be the ceo i am today. salesforce would not be the company it is, not just because of his money, but because of everything he continues to teach me. >> so vague -- bih tech companies are splitting up. why is that happening, and are we going to see more of it? >> there is a lot of different reasons why that's happening. one thing, these companies might be too big. they've become unmanageable, and you want them to be smaller, easier to manage. in an organization like h-p, t hey will have one for each, and

that will be a great strategy with two ceo's. the same thing as a great strategy for you. >> is horrible of those companies -- oracle one of those companies? >> it is hard to do. the most important thing, portal has to innovate at a higher rate. that's all we have not seen in the last decade. >> how he continue to buy companies without losing focus? >> acquisitions are hard. after doing 25 acquisitions over the last five years, acquisitions are hard. but you can transform your company through acquisitions. the other thing acquisitions do, they bring all these incredible people into your company. if you can nurture those people, you end up with phenomenal results. >> what you do to overcome the hard part, the challenges when

you buy a company? >> as ceo, you have to choose which one you will be in. it will dramatically increase the success of it. sonly have so much time, where i spend my time is super important. i divide my time into four quadrants. drant, thein qua transformation quadrant, is where i spend most of my time. the things that i know, if i don't do them they will not get done. there are other things a run operating the business, nurturing things for two to five years from now, things around efficiency, that i don't have to be as involved in. i still have to be involved in some level, but the transformational things, i have to pick and choose carefully, then i can really deliver. >> marc benioff, ceo and chairman of salesforce. eastern on00 p.m.

bloomberg television. the chinese government may be helping hackers steal u.s. trade secrets. find out what the fbi knows, next. ♪

>> welcome back to "bloomberg west." i'm emily chang. u.s. tech companies, beware. the fbi is warning about hackers sponsored by the chinese government. the agents say they have use customize malicious code that security experts could not attacked. the u.s. government accused

china of widespread economic espionage, indicting five chinese military officials in may. our security reporter is with me in the studio, with more. the fbi says they have even more capabilities than the hackers of a year ago that we were concerned about. >> that's right. just as the u.s. gets better at hacking other countries, one thing about foreign adversaries, they are getting better all the time. the threats you saw, that's one of the things that makes the security industry such a dynamic space, it is evolving. >> any specific reason this is happening, or is it a continual escalation? >> a lot of it is standard industrial espionage that happens between the u.s. and china. but also, we have ramped up pressure on china in the u.s. ashave called them out

intellectual property theft perpetrators, so there is added incentive. there are very few consequences for this in china, if you are caught hacking u.s. companies, so there are very few reasons not to improve your capabilities. >> the fbi is asking companies like apple and google to be more cooperative and give them a front door to information on our smartphones. of course, apple and google recently ratcheted up security, making that supposedly more difficult. why would apple and google want to help the fbi? >> it's an interesting mission. fbi and law enforcement are saying, if you make it harder for us to pull data off of devices, our criminal investigations will be stymied. the thing left out of this organization, all that data can still be accessed through standard, legitimate warrants. apple and google says, if you own our device and it gets stolen or gets into the hands of

law-enforcement, the device will be harder to crack, but every other investigative tool available to the fbi and nsa, this does not change that. it's a contentious issue. apple and google are saying they are protecting their users. >> general keith alexander, former head of the nsa, i asked him if this lack of trust between tech companies and the government can ever be repaired. he said, tech companies will do whatever the government asked them to do, because they have to. >> we learned only recently what the consequences are two companies that resist the nsa's commands for data. yahoo! was facing fines of $250,000 that would multiply every week they resisted. they are not backbreaking, but still potentially huge financial penalties for resisting government requests for information. what apple and google are proposing, they say we don't

even have access to the information, so we cannot give it up. it is good for users. someone said, logistically it reduces a lot of burdens on the companies from responding to law enforcement requests. >> are cyber security reporter, thanks so much. we will continue to follow all this. as marc benioff told me yesterday, there is no finish line when it comes to security. own --ing secret of its is whisper sharing information with the federal government? that is next. >> bloomberg television is "on the markets." i am mia saini. as you can see, we have green across the board after a couple roller coaster sessions earlier this week. a couple individual movers. morgan stanley shares rising by the most in northern three

months -- more than three months. trading revenue rose at the fastest pace on wall street. carnival shares falling after an ebola scare. we will be "on the markets" again in 30 minutes. ♪

>> this is "bloomberg west," where we focus on innovation, technology, and the future of business. billionaire investor mark cuban is hot on netflix. with the massive fall this week, perhaps in relation to disappointing subscriber numbers, shares of netflix are falling again after driving 19% yesterday, the more than -- the more in less than two years. q been tweeted, i am buying netflix at a small percentage of major media companies.

take a listen -- >> in the future, it is either if you want to watch something you just google it and go straight to it or youtube and go straight to it, or netflix, if you are going to buy netflix stock, i would not recommend it, but on a day it is down 25% i might recommend it. netflix could have one billion subscribers by the early 2020's. >> seems they are at the same page. at anonymous social media whisper faces claims it has been tracking the location of users who share their most intimate secrets on the platform. "the guardian" detail the data collection they witnessed while visiting the company's l.a. headquarters. they claim to be the safest pace -- place on earth and are allegedly sharing information.

cory johnson and paul kedrosky. what do you make of the story? >> it is pretty bad for them. i tried to go through this. i am sensitive to problems of making privacy and anonymity work online, because it is very difficult. based on what we saw in the "guardian" story that came out, there are actual screenshots of this thing. they seem to show the incredible level of detail with respect to tracking people's physical presence. that makes it tricky whenever you say, give the example of some quotes from somebody who seemed to be located somewhere in the white house proximity and said something about how people -- if people only knew what was going on. it is remarkable stuff. >> i was also amazed when it was said there are 2.4 million messages every day on whisper. there is clearly a demand for this service.

but to put things up anonymously , is this over for whisper? >> i think it is deal over in a broad sense for a lot of people claiming true anonymity. we saw a little of this with snapchat. the whole notion of being able to protect people's data is up in the air. when it comes down to it, if you read comments from the company, the cto was responding to complaints people were making. it boiled down to, we have the data, we just don't use the data. so now rather than protecting information by not collecting it, now we say trust us, we have it but we will not use it. . -- i don'tt a lot of think that is what a lot of people sign up for. if things are going to change, they have to change dramatically. >> i spoke to the ceo of whisper at sxsw, and he championed the anonymity. take a listen.

>> anonymity is a very powerful tool. there is a spiderman quote "with great power comes great responsibility." >> i know that one. >> we view anonymity in the same way. >> paul, would you say they are not practicing what they preach? >> it might mean something different than what i mean by anonymity. there is a story today, they did some forensics on the data collected by the whisper at, -- app, and there are unique user id's that stay with you for the life of the account. falsify identity and location, it is not borne out by the facts. >> whisper came out with a five-page response, saying we do not track or follow our

users. we will continue to follow this story. ahead, the top law enforcement official in the state of new york says 70% of airbnb rooms are breaking the law. statet, we speak to senator liz krueger. ♪

>> welcome back. i'm emily chang. fromb is taking some blows new york state attorney general eric tiedemann. a report from his office says nearly three quarters of their listings in new york city are illegal. the company told us that the report relies on incomplete and outdated information. the findings do not account for the more than 2000 listings we already removed from our -- from new york. seems to be a never-ending battle. matt miller has been looking into this.

what is your take? >> clearly we all know a lot of people offering their homes via airbnb are doing something illegal in one form or another. if you ever lived in new york, you have probably rented an apartment and realized you are not really allowed to sublet that apartment. that doesn't stop a lot of people from doing it. these spokeswoman for airbnb who talked about the money she made, she turned out to have been sued by her landlord for doing it. that's a concern, but not so much of a concern to attorney general schneiderman. he is more worried about commercial participants on the airbnb website. a concern for him is the risk of a flophouse or hostel, renting out your rooms to dozens of people at a time. also tax evasion. the attorney general estimates $34 million during the period

the survey was taken was avoided in taxes by people using airbnb. you're supposed to charge a 6% hotel tax when you rent out your room. a lot of people are not doing that. airbnb is saying, maybe we will start charging tax to the people doing this, setting up a system that makes that possible. they have apparently taken 2000 people off the list they have, but only since june. not like they had taken them off for years. say,are trying to, they work together with government officials to create a better framework for a sharing economy. although it does not appear they are working with any government agencies. they just put that forward is a possibility. the statement was pretty corny they issued. they want to move forward while they continue to make money off the system they created. inhang on, i want to bring

editor at large cory johnson, and also on the phone liz krueger, to new york state senator representing district 28, the east side of manhattan from below union square to 96th street. why are you so against airbnb? >> i have had constituents, whole sections of communities in my district, coming to me with thatand more complaints residential buildings where they live, where the grandparents and children live, are being overrun by strangers with luggage who have keys to the building, who have no respect for the private rights of the neighbors. everyone says airbnb can be great for the hosts and guests, but in new york city people live in big apartment complexes. it is never your home alone.

it is everybody around you. so my actions have been consistently driven by protecting the residents of the city of new york and protecting our desperate shortage of affordable housing units from being taken off the market for residents of the city of new york and turned into a legal hotel rooms. illegal hotel rooms. >> i wonder what the effect is of changing a residential housing unit into a hotel unit on the city? not wanting someone in your hallway you don't know is one thing, but i wonder if the character of a neighborhood can be changed by this? >> absolutely. if you look at europe, where this is also going on, a whole s longerof berlin is no available as a residential community. they didn't set the right laws in place and didn't protect

tenancy of neighborhoods. amsterdam has passed laws that allow some things to take place. they have 11 full-time employees doing enforcement to make sure rules are followed. they report the employees are overwhelmed and cannot keep up with violations of the rules and are having a very negative impact on the city. community, but heavily urban, residential dense areas with housing shortages see a norm his problems, likely in new york city. i talked to people from around the world regularly. >> i recently spoke with the ceo working withurt regulators. war,hey triying to wage a or partner with them? take a listen -- >> we work with them.

we show them it enriches the city economically. a city like new york or london, we can generate over $1 billion for the city in the next year. bringing people from 190 countries together. you can win people over, but they have to understand you, and you have to understand them. >> that was in san francisco. how would you respond to that? >> they are spending $30 million k to market and advertise and convince people they are the best thing since sliced bread. we know from a recent story out of san francisco that their investors have spent over $500,000 to influence the outcome of an election, trying the anti-airbnb person loses and the pro-airbnb person wins. statement is his

completely accurate or since there. to be talking absolute nonsense earlier, beyond your typical corporate marketing spin. how is he bringing 190 companies together -- countries together?i don't think it takes airbnb to do that in new york city. i want to ask you, the idea you are somehow protecting the affordable it he of housing. i understand if i lived in a building in new york, i would not want my neighbors to let people in. but why is it somehow protecting affordability? wooden airbnb in fact increase affordability? >> no, just the opposite. it is taking units out of the residential market. >> you say using units com mercially. can't afford to pay $1700 for a one bedroom and occasionally goes home to the parents and rent out the apartment on the weekends to

better afford incredible high new york city rents? >> the attorney general's report airbnb2% of units on in new york city were in violation of the law. ande to 30% are legal, that's what you are doing, or if you are staying in your department while you rent out a room, that's not what the law i worked to pass says is illegal. >> only 36% were commercial isting, so the lion's share people like you and me renting out a room to make homes more affordable. >> the 36%, if you look at it, could be someone with many, many units they have taken off the markets permanently and turned into illegal rentals.

sometimes landlords themselves are doing it, sometimes in dividual entrepreneurs. the city of new york just today announced enforcement against two buildings that had been converted almost exclusively into full-time illegal hotel rooms. happenede until that residential affordable units in the city of new york that disappeared. i have been tracking any number of those examples. they also harass tenants out in some cases. the other case, people are violating leases, and that has nothing to do with state or city law. their landlord can use their use basisse websites as a to evict them.

the apartments might be really for a significant increased cost. taking that unit out of affordability forever, and that person, who may have unintentionally broken families out there without a home to live in. >> new york state senator liz krueger, certainly not a problem we will sell today. appreciate you sharing your views. and matt miller in new york. mark crumpton is standing right in new york with a preview of what is coming up on "bottom line." >> on the customer as we his the top-- one of stories we're following his housing. more home building in september. will that give the u.s. and offer against any of the economic slowdown? see you at the company now. back to you in san francisco, home to the national league champion giants.

>> yes! code giants -- go giants! thank you. awesome game yesterday. the giants going to the world series. >> third time in five years. >> corey and i were at a restaurant in 2010, he did these like was kind of jumping jacks. >> synchronized swimming on land. i was excited. >> we will talk about sports, coming up. more on "bloomberg west." ♪

>> travis ishikawa hits one into right! the giants win the pennant! arehe san francisco giants heading to the world series on that dramatic walkoff home run. the giants will face the kansas city royals. everybody is buzzing about it.

our editor at large cory johnson has more from the newsroom. imovie tear here in 2010, and since then they have gone to the world series three times. i think i'm the lucky charm. >> three times in five years, has to be you. nothing to do with bruce bochy, i'm sure. the question of what the future of media, it is interesting in the world of sports. the ceo of sportsblog.com, i love this story. tell me how your business works. >> we recognized that blogging has been formed, and there's tremendous change in how people are consuming and creating media. our approach was to harness the power of crowdsourcing. so we developed our own bloggins platform,- blogging

and quickly had 10,000 people sign up. it is 20,000 now in the last year. >> how many users or viewers do you have? >> averaging 30 million a month. >> that is huge. >> the trend is growing quickly. >> what's interesting about for, i used to wirite "sports illustrated." media,nt tentpoles of what you have done is build a business about the long tail. 30 million users. what's the most on one site? >> some of our individual blogs see 5 million page views. >> what is the average, the median? >> tens of thousands a month. for fan blogs. some professional athletes blogging, hundreds of them, cans see even more. >> one interesting thing, people

are timeshifting viewing and not seeing commercials. issue the -- affect the value of advertising online? >> people are going to blogs f or sports. 21ste the 12st largest -- largest sports media site online. that is viable to advertisers who want to connect with our influencers. 18-35 are males frequenting one of our sportsblog.com sites. >> a fascinating answer to the question of the future of media. appreciate your time. >> it is time for the bwest byte, where focus on one number that tells a whole lot. you better have something giants-related for us. >> how about 6-3?

that was the score last night, though jake peavy nearly put an end to that. the starting pitcher ran out on the field after he hit the homerun, because he thought it was only a double. he has to run the bases for it to count. the famous incident where he didn't hit home plate. none of that for travis ishikawa. exciting to see the giants so well. >> wish i could have been there yesterday when they won. >> more jumping jacks. >> an exciting series. thank you all for watching this edition of " bloomberg west." all the latest headlines all the time on your phone, tablet, and bloomberg.com.

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>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line" -- the intersection of business and economics with a mean streak perspective -- main street perspective. to our viewers here in the united states, and to those of you joining us from around the world, welcome. we have full coverage of the stocks and the stories making headlines. why lower oil prices are not good news for venezuela. shelby