live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. let's get straight to the rundown. derek schmidt, marissa mayer, and other execs sit down with barack obama to discuss surveillance and what wrong with healthcare.gov. facebook is rolling out video ads in some newsfeeds as part of an effort to convince advertisers that the social network can be more effective

than television. and uber faces some angry customers after prices surge during a snowstorm. some of the biggest names in technology were at the white house today, telling president obama about their views on hot button issues full among those in attendance, apple ceo tim cook, yahoo! ceo marissa mayer, sheryl sandberg, reed hastings and dick costolo. they sent a letter to the white house and congress, urging them to reform surveillance practices. a judge says that the nsa collection of phone records is probably unconstitutional. phil mattingly joins us from washington. i am dying to know what happened at this meeting.

what happened? >> it was almost all about surveillance. about two hours long. these executives met with the president. the key points were what came out in a joint statement last week. one of the key point to those principles, they do not believe that bulk collection should be allowed anymore. that is at the core of what the nsa has been allowed to do. they are worried not only about international low back, but the business implications of this. they are talking about billions of dollars lost for these companies because of mistrust that consumers running away. the president plans to make some changes and they wanted to be real, not just something that happens on the surface. >> we were told that president obama wanted to meet these executives to talk about healthcare.gov. they said they would come, but only if they can talk about the

nsa as well. yesterday a federal judge ruled that the collection of phone records was probably unconstitutional. how do companies like google, facebook, fit into what is going through the legal system? >> it is an interesting thing. there are a couple ways of looking at it. these companies have their own legal case is going on right now against the government. they are not looking at what the fisa court is doing. they are trying to disclose more information and the justice department is saying no. this is the first case to question what has been a cornerstone of the surveillance program. it does not violate the fourth amendment. as these companies push for more information to be released and for the u.s. government to put more curbs on it, looking at this case and breaking down the barrier here on the cornerstone of these programs, i think these companies and focus on this and

use it to plead their cases going forward. >> phil mattingly in washington, thanks so much. what exactly with-with the healthcare.gov troubles? compuware which provides management to companies like amazon and facebook conducted an independent study of what went wrong with the launch of the government health exchange. for more on that story and what they found, i am joined by michael smith, the vice president of engineering at compuware. you guys have done some of your own performance surveys. you found it is not working out that well. what exactly are you testing? >> we are running tests from different computers around the united states. we are measuring the response time that those computers are experiencing. we are seeing that there are still quite a few locations where the response time is unacceptable.

>> where are you seeing this? what particular geographical location? >> it seems to be varying. it depends on perhaps the time of day or other factors. one of the things to note is that when we are testing these commuters, these are real computers over a wi-fi connection. they may be on a hard wire connection. the performance can actually change over the course of time. >> when you are looking at these problems, why are they happening? >> we did an initial analysis and we observed that there were some inefficiencies in the way the website was designed. there were also some components that come from outside sources. a typical website today encompasses content and components from not just the main website, but third parties as we call them, such as a facebook "like" button.

there were some third-party components in the healthcare.gov website that had some trouble early on, especially with performance response time. >> what sites are you talking about? >> i cannot name specific sites. but there were several of them involved. >> so the government has tried to fix the problem, but how much progress has the government made so far? >> from what i can tell, the focus has been heavily on certain systems where the integration to the states' exchanges has occurred. maybe with other federal databases. we are still seeing slower performance at the end-user computer because although some improvements have been made in

terms of optimization, there is still room for improvement. >> look in white house do to improve this? what are some specific things they can do? >> we should be testing from the end-user computer so they can get an understanding of what is the response time under different conditions and with different kinds of operating systems or browsers. then they can observe how some of the website design behaves under those conditions. they can optimize or reduce the number of objects that are transferred out to those end- users. more importantly, they can work with those third parties to ensure that they can scale and handle the website. >> a former microsoft executive, who has been on this show during his time at microsoft, and will now be in charge of this

website, also president obama was meeting with those tech ceos in washington, how much do you think that their leadership is going to help in this kind of situation? >> certainly leadership with experience and in implementing large e-commerce site is important. it is a different world when you are dealing with the consumer. they expect a quick response time, and we call it the google effect, where we expect pages to load in less than two seconds. it is important that we see with those end-users are experiencing an measure from this point of utilization. >> michael smith, compuware vice president of engineering. thank you for sharing your findings here on "bloomberg west." what is facebook doing to appeal to marketers and keep advertisers happy? that is next on "bloomberg

west." ♪ >> welcome back, i'm emily

chang. facebook is about to start testing video ads. they will be 15 seconds long and they will play automatically in the newsfeed. they will play without sound, just like videos from friends play now. the sound comes on if you click on the ad. cory johnson is in new york with more on my facebook is making this move. cory, this is a long-awaited move. we have been talking about this for months, why now? >> there are 44 billion reasons facebook is doing that.

they want that video advertising. if you look at everything that has gone on a facebook over the last year, with a stock chart really reflects is optimism that they will figure out new ways to gain revenue at their user growth slows down. fundamentally, the way these video ads will work, i think they will seldom is a high ticket item. one day possible so that will garner as much as $1 million-$2 million in revenue for faith. it is a 15 second ad. we will get a much more measured response than television ads typically received. they will know who is looking at the ads and they will know something about that user. >> let's take a look at how facebook's ad revenue has grown since its ipo. mobile has become a bigger piece of the pipe. how does this change things? >> facebook ad revenue was $1.8 million in the last quarter. that is an incredibly big number.

there has been aggressive growth in revenue over the adoption of mobile. that has happened in the last year. the notion that they will further their growth -- they are already growing at 60% year- over-year. they have to do it in a way that the user will not get alienated or turned off by using it on a mobile device because they get annoyed by the feature. >> a television ad market is more than $66 billion, so how much of that could facebook's night? our advertisers going to consider it the same thing? >> in the early days, it will be a tiny piece of that $44 billion. it will help you get to its ultimate goal which is higher revenue per user. as facebook starts to re-sync and reach the outer boundaries of how many people they could have on the internet, the only

way they can grow is by charging more for the ads. they need to get more revenue opportunities for their users. now they want additional things like payments for games and video ads could be a way to jumpstart growth once again. >> cory johnson, our editor-at- large, thank you. people familiar with the matter told bloomberg that mark zuckerberg pushed back the start of video ads twice. facebook says it will continue to refine this new wave of brands to tell stories about facebook to ensure the best experience. i want to bring in a ceo of a platform for advertisers to bid on digital advertising in real time. facebook to ensure the best it is used by sony pictures and mlb.com. we also have a facebook exchange partner who helps advertisers reach potential customers on the social network. let's talk about the user

experience. it found like they're trying to make it as smooth as possible. it has to be absolutely perfect for this to not be annoying. you deal with live video online every day, can they do that? >> they can do that. we are trying to figure with the right format is. the team works incredibly hard to get it right. they will be able to find that over time. they will be distracted by it, and it will be used to it, and they will get it right. >> if you look at what twitter just did, they did a fundamental change to all of twitter. they added photos to the feed. lex i'm still getting used to it. ask people got used to it very quickly. it made it more interesting and exciting. changes good false facebook playing videos in their feed is something comparable. they will make a lot of money. >> how does the video as compared to other ads on facebook? will it be gold for them? >> the idea of motion to tell a story, to communicate an

emotional component, narrative, it is so powerful. if you add sound to that when you click on it, you can build amazing brands. >> how much of the ad pie is going to steal from other video advertisers? >> most of our clients are major broadcasters. they have true video content and their ads are video in video. it is a td-like experience. with facebook, it is video ads within tax. i think what separates them is the display of the advertising. banner advertising will continue. advertisers will move to this new environment. >> do you expect to see this kind of pressure? >> advertisers can target video advertising to exactly who they want to reach. i was watching monday night football last night and watching

out for pickup trucks. i am looking to buy a pickup truck. why was i shown ads for a pickup truck? >> are they going to watch them? they can just scroll past. i television, it is more difficult. >> we will wait and see. >> one of the first video ads that they're going to show is for "divergent." is not a sign of things to come? >> i think it will be relevant to their users. they want content that will be geared towards their users. it may skew a little younger. the movie trailer environment is mixing the line between content and advertising. trailers have always done that. people watch them for length. >> why are there video ads on instagram yet? >> instagram is growing incredibly fast. if you are facebook, you want to let them keep growing. >> but they started video ads. >> slowly.

they are not in a rush. they are taking their time. >> how is facebook now compared to the other options out there? >> facebook and twitter are the future. everyone recognizes that. 20 years ago, we all watched the same tv show at the same time and saw the same commercial. in the future, we consume content when we want to watch it on whatever device we have. the ad should be the same. they should be delivered on a personal level. >> i think what is interesting is that advertisers are seeing the value of video advertising to tell rich stories. >> didn't they know that already? >> you get that targeting on top. they have not had that combination. >> is it worth it? it is expensive. >> i don't think so. compared to television advertising, it is a good value. for one day, it is very hard to

reach that many people. one billion users, you cannot reach that many people. you cannot reach 70 users in one day. next we will be watching to see how it plays out. thank you both for weighing in having this conversation with us today. still ahead, the breaking bad is not "better call saul," is coming to amc, but first we catch up with that sleazy lawyer himself. he will tell us alive all about it coming up on this hour. ♪ >> who can i do? ♪ >> welcome back.

i'm emily chang. now to a major deal in hollywood. silver lake management has agreed to pay $2.3 billion to acquire talent agency img. they are doing the deal on behalf of william morris endeavor entertainment. why are william morris and silver lake making this deal? >> i have some exciting news.

this has a lot to do with professional sports. this is a business that represent pop music talent. you just awesome images of taylor swift. but you are also seeing images of peyton manning, an img client. there is a real battle to being big in sports and hollywood. caa, one of the rival agencies, rd has a big sports arm. they were in bidding for the img business. real relativity also has a big sports arm. sports is when of the biggest names on television. that is why people keep watching television. it has a lot to do with wme expanding its empire. >> ari emanuel runs william morris endeavor, what can you tell us about him?

>> fans of a show like entourage know the character of ari gold. it is based in part on emanuel. he sees the opportunity to expand the reach of what william morris endeavor is. there is a little bit of crossover between these two worlds already. the price tag has been a little rich for some. his firm has financial backing from an influential name and private equity, silver lake. >> all right, jon erlichman in los angeles. thank you. some riders were made very angry this weekend. we have an uber investor next. ♪ >> welcome back to "bloomberg

west." uber is catching some heat from riders. some on the east coast paid more than 3-4 times the normal rate when a storm battered east coast. riders pay more when the weather is bad. this pricing helps get more cars on the road when demand outstrips supply, helping to guarantee the uber reliability. r