>> live from pier 3 in san "bloombergwelcome to west." i am emily chang. we are covering breaking news out of ukraine. there's a meeting of the eu foreign ministers and the council has approved sanctions on ukraine which include the set travel bans and the freezing of bank accounts. this is after a day when the death toll has risen to 64. ourmore, we will speak with bloomberg news reporter on the ground in kiev. the lead story is facebook striking a deal to buy whatsapp for $19 billion.

this is a company with 450 million users in the 70% of those are daily users that send 18 billion messages per day. that is nearly the equivalent of all of the text message is sent around the world combined. the ceo is joining the facebook ward. this is a guy who grew up on food stamps and was so poor he could not afford to call his family back home in the ukraine. his cofounder got turned down for jobs at facebook and twitter. the result is the two of them after leaving yahoo! started a messaging service that anyone could afford and just a zico, he found himself eating chocolate covered strawberries at the home of mark zuckerberg on valentine's day, striking a deal that will make him and his 50 employees very rich. us onlichman is joining this from l.a. a and christinalesci is in new york. >> you made it sound like a very

romantic courtship. you are right, these are two people who know each other pretty well. mark zuckerberg has a huge amount of respect for this platform. we now have a better understanding of the roadmap that facebook has been working on. one of the distractions in this whole story was that we know facebook was interested in another hot service in snap chat. the storyline that emerged as we talked about that one was that facebook wants to stay relevant. chat are teams using snap and facebook wants to cater to that audience and not lose the younger people to other services. with this deal, you very much understand that facebook is stepping back and saying there are lots of people that will continue to use facebook and we made these huge efforts to shift in people using facebook on their computer to using it on their phones. as one part of the story and the other part is the reality that people will have different

groups of people they want to communicate with in different ways. the communication on instagram is different than the communication on facebook and the way you are communicating on whatsapp is different. in all cases, you have these parallels. there will be photos and words that will be part of all of these different scenarios. facebook is setting the stage for this and maybe more of this down the road. >> christina, let's talk about the number, $19 billion. is it worth it? >> that's a very tricky question. a lot of analysts are trying to get their head around this valuation. chocolate covered strawberries, this is an unusual way for a deal to come about. usually, when you talk about the public company acquiring another company whether it be private or public, there is a lot of back-and-forth with the board and a lot of formal advisors that are playing into this. this did not seem very much like

a deal that was negotiated between two people. one source said davidebersman was very much involved but it really was mark zuckerberg andajn working on this deal, three people to pull it off. that is quite unusual. about how most analysts are looking at this. how do you value all of the social media companies especially when maybe there is some revenue or maybe not as much in the way of profits. you look at how much each user is valued. in facebook's case, it is about $140 per user. in twitter, it is $130 but let's not forget those are high numbers. in this deal, it turns out that these users on whatsapp are valued at $42 but these numbers are all over the place. week, aook at last

social messaging site was purchased and that was a three dollar per user acquisition. these metrics are not very useful. what i can tell you is that facebook really needs this acquisition or at least the valuation would suggest it believes it needs this. there may be overlap between the users on facebook and the users thatatsapp which means facebook is willing to pay just to keep people on one of its products. it's not even necessarily about growing the user base. it's about keeping people on its products and maybe even keeping competitors away from whatsapp. there are some discussions that google did -- may have approached or may have had him formal discussions with whatsapp. >> thank you. i want to get back to the breaking news out of ukraine.

the death toll has risen to 64. are bloomberg news reporter is on the ground in kiev and is joining us on the phone and we are looking at live pictures of the central square. what is the latest? what are you seeing there? squaresituation on the has calmed down somewhat after the shooting nearby the square this morning. dozens of people seem to have died as a result. at the moment, there's not much movement on either side. the security forces have lined up on one side and the protesters have fortified the barricades again. moment, all eyes are on the meeting of the european union foreign ministers. they had a long meeting this afternoon, almost six hours with

yanukovich. they had a break in the middle so he could touch base with moscow and see what they were proposing and if it would be agreeable with moscow. the foreign ministers are meeting with opposition leaders. they seem to be staying overnight. >> we are coming out of a short-lived truce and the government has authorized police to use live ammunition. 24 hours ago, you told me that we could be in the opening hours of the civil war. what do you think now? >> that's hard to tell. is trying tokovich keep his options open. the interior minister was on tv and toldof hours ago the nation that handguns and firearms, rifles, have been handed out to the police forces.

we could see early this morning when no one was really expecting another escalation that things could turn very bad very quickly. at this hour, it seems relatively quiet on the streets. we know some of the western regions in the ukraine have effectively said they are no from theking orders yanukovich government. i think we are still on the brink of a civil war breaking out if the situation continues for much longer. >> when it comes to technology, it has been used on both sides of these protests. there is a big and fast-growing tech amenity in ukraine. it's a place where u.s. companies outsource work. thanks for giving us that update from the ground.

we will continue to cover the situation there as it develops. we will be back with more of "bloomberg west." we will talk about whatsapp and facebook. ♪

>> you are watching "bloomberg west." facebook but whatsapp. how will this impact the dat mar -- the market. me toxt guests are with talk about this. thank you for being with us because you are two of the foremost thinkers on what's going on in mobile. i have to ask a question about the numbers -- 19 ilya and dollars, 11% of the facebook market cap or it >> it's a bit like the instagram acquisition. was instagram worth $1 billion? zuckerbergn for mark is around maintaining share engagement and share of social activity. whatsapp has 450 million active

users come a 75% of them active every day. that is a significant advantage of they spoke users. -- of facebook users. they are taking a big chunk of people who should have been using facebook and they are using facebook first. do you just sit and compete with that? they have been looking at facebook message for the last year or so and that has not stopped the clock. you might say this is a great mobile conversation and that should be part of facebook. >> looking at the landscape of mobile messaging apps, you are in taiwan and you have seen the rise of wichat and others. do you think this is worth it? >> i tend to think it is. i think the price per user is very reasonable. the growth is fantastic. viber big difference with

which had plateaued. it's not a great comparison. the three that matter are whatsapp wichat and line. from that respective it's reasonable. iat they are driving at -- don't know if there is a price that is too high. i don't know that a particularly destined that it particularly matter to mark zuckerberg because he felt it was a threat. it was the same with snap chat. there is an area of private messaging that facebook has a brand but does not have permission to go into. people are scared to put stuff on facebook that is private. the best way to get into that is to buy in. at this point, everything is very expensive. >> does it matter that facebook is eyeing versus building innovation? >> not especially. trendsthe interesting here that you can see with

instagram is how difficult it is to forecast the successes in advance. you could have launched 10 apps that look exactly like instagram under a different name. one of them would get to what instagram got. the other nine might not have. it's hard to stay to the degree of luck. spectacularlyse growing businesses. the driving dynamics here is on the desktop, there are really strong interfaces around social. when you go to mobile, most of them fall away. these apps can use your address look. -- address book. they all get an icon. all of the friction around using multiple networks on desktop has fallen away on mobile. there are anything up to 50 of these apps that have more than one million downloads.

>> it is kind of messy. >> the ones that break through the noise and explode, trying to replicate that again is a fools errand. if you see a rocket ship, you need to grab the rocketship, not build your own. >> if it's not winner take all come how many social networks messaging apps and my managing in the future? around degree, this is borrowing the address book. then again, there is the network effect that the best network for me is the one my friends are on. what you are seeing and will continue to see is this being fought out on a country by country basis. only uses line where i have four or five. >> you are a unique use case. friends arepp

mostly abroad. wichat with things in china and think that's how you will see these going down. you see these big marketing things with wechat and that goes country by country. >> it could play out the way facebook later at which means there were local champions that got squashed by facebook on the desktop. it could play out that there was a local winner in each country on mobile. i think there is another way of looking at this which is when you get your smartphone out-of-the-box, it's already got free social apps -- i hesitate to predict that there will be one more. what all of these guys are doing is un bundling different arts of your social's communications experience. you can choose how you can speak to your boss. how am i going to speak to this person?

do i want to post a picture? do i want to share a bunch of baby photos with grandparents? there is a systemic plurality of options. -- i'm notessarily necessarily sure it will collapse into one. one of the ways of looking at what has happened to facebook is kind of what has happened to yahoo! or aol. you have really strong benefits to having all of your stuff in one place. time, there is a black hole that pulls more and more things into it and it collapses onto your its own weight. -- under its own weight. you think that you don't have to do all of your things in one place. i can go straight to use other services. >> mark zuckerberg has insisted it will remain separate. down the line, does whatsapp change and add stickers or the dreadeda-word even though they don't want to?

do they want to turn this into more of a platform or try to integrate it into facebook overall? >> i think it will remain separate for the foreseeable future. that is the biggest benefit of whatsapp. if there were a big benefit to being called facebook, then facebook would not have bought them. i think something like stickers makes sense. i love stickers and i admit to that. once you use them, you cannot go back. as far as ads, i don't think you need ads in messaging. there are fascinating does ms. cases of it being a direct marketing channel. stickers,through people give brands permissions to add them as a direct channel or they are pushing apps which is very effective and monetizing with the other apps.

there is a lot of interesting ways to monetize through messaging apps. facebook does not need to. facebook's monetization is going very well. they have the luxury, i think, of continuing to push app growth and come back to it when they need to. i don't think they need to for quite a while. >> what is the biggest risk that facebook has right now? you can make a case that says that facebook is playing whack-a-mole. they bought instagram and i thought problems solved and that was clearly not the case. whatsapp uses more photos being pace of everyday. -- being pasted every day. the question for facebook is -- is the opportunity so big that they don't need to have all of

it? 60%t ok for facebook to be of your smartphone socializing activity? what will be the next big thing they buy? they bought instagram and that was a great deal in i financial sense that it did not do anything. it just got them a good photo properly and there are 50 others. them 450on has gotten million users. what happens next? this game't presume is over, the elemental thing in is thehim a one thing web issue was settled in 1995. that's not change for 20 years. everybody -- everything was the web and when you go to mobile, you have a more complex environment how people engage.

year, it'snd last messaging. i cannot give you a reasonable forecast as to what i will be doing on my smart phone in four or five years time. i've got no sense of how we will discover that in five years. >> is it worth paying $19 billion for if we don't know in five years if we are still using this? >> what if google had bought this instead? if twitter had bought instagram, you would argue that twitter would be in a different place now. facebook might have a different problem. it comes back to aggression. watching facebook and google is how aggressive and ruthless they are in reacting to disruption and jettisoning previous assumptions about what their business was supposed to be. facebook transition to mobile and that's different from what

other companies were doing 10-15 years ago. mark zuckerberg would say i have no idea what facebook will be in five years time. >> thank you both for being with us. i'm sure this discussion will continue on "bloomberg west." ♪

>> we have the latest developments in ukraine -- we are hearing from an aide to president obama that he is still considering his response to the violence in ukraine. he is considering a range of options for some sort of ukrainian response. the european union has today

agreed to impose sanctions on ukraine as a result of the deadly clashes that are going on in kiev. we will bring you the latest developments as the day goes on.

>> you are watching "bloomberg west." first win for broadcasters, utah judge has blocked streaming tv company aerio from operating in several western states until the u.s. supreme court takes up a related case in april. broadcasters have argued that televisionstealing shows. has plans to unveil the first of three wearable devices next week. a smart watch prototype will be previewed exclusively for

carriers at the mobile world congress in barcelona next week. the company has no plans to show it to the public and htc is developing a watch that plays music. winklevoss brothers announced new financial index for bitcoin. it will provide a regularly updated figure for the rights of a virtual currency. the news was announced in a regular three filing to the sec in connection with a bitcoin etf they have been looking to create since last summer. the big story we are following today is the facebook buying whatsapp and that deal valued as much as $19 billion. whatsapp is one of many new apps that allows people to connect around the world. someone who knows what the power of these technologies is is harper reed. he built a team of developers

from tech companies and they used big data in social media to help president obama's reelection in 2012. he is now the ceo of modest. he joins us now from new york. i have to ask you about whatsapp . in washington, how do people viber?se whatsapp, vine, >> i'm not totally sure how to use it in washington. i know this is a great technology for trying to interact with constituents. there is a lot of excitement about how you connect with people. that's something we try to do a bit on the campaign. all of these life forms allow us to have more of a one-on-one conversation with these people out there. that is really important. >> one thing we have learned is how quickly the social media landscape changes. we know what you did in 2012.

what would you do with the president if you are involved with him in 2016 or the next candidate? there is a lot that is changing in the landscape of tech. with the emergence ofline and whatsapp, messaging has been taken off the big platforms. there is this really interesting aspect of privacy and control were some people are very interested in trying to solve this. i'm excited to see what happens in 2016 and will the same things in 2012 work? will people be more skeptical? do they want to have more understanding of how we made the decisions in 2012 with e-mail targeting or whatnot. >> is privacy a fair expectation? >> i think it is a fair expectation. i also think that many people don't really care about it in the same way that people

thinking about academically care about it. i worried that we will have a problem in the gap to 22. i think it's an expectation. mark zuckerberg cause biggest ambition is to connect the world. he is now trying to bring internet access to everyone in the world. how does something like whatsapp further those objectives, the more political objectives we have seen from him when it comes to internet.org and immigration? >> i think this is the most important part about the whatsapp acquisition. their penetration in many countries that are not united states is really important. when you think about feature or ones that are not supported by regular chat applications, this is a great way to hit the people that don't have the privilege we have in the united states with internet access and give them an opportunity to communicate with their friends and peers. from there, being able to push for messaging to them from brown's, etc.

we keep talking about ads. i don't know if that matters as much as making sure it works and continues to work. >> we have seen some great examples of washington using technology in the 2012 presidential campaign. what about examples were they have used it poorly when it comes to health care,gov? what will it take for washington to catch up? care.gov was a very large project and there were per chairman issues. -- procurement issues. it's not a matter of using the technology poorly, it was just a large product that was difficult. -- i say weave to because it's not just washington, it's everyone who has to pay attention to what the cutting edge is and listen to the users and what they want.

in thing that i worry is if 2016 if we just follow the playbook from 2012, we will fail. we constantly have to have our ears to the ground. forn't have a good answer why or how we can make sure they do things better in washington but i know that continuing this conversation will hopefully push those leaders to make good decisions. >> what will define the race in 2016 when it comes to technology? >> i think it will be more about hitting key consulting groups and. i'm excited about my friends in inis consulting group chicago who are building political technology to help them out. republican software is another way of doing this where there are building a platform based on what we did in 2012. that will be the defining characteristic. we will not have enough time.

we will only have a couple of months because we will not have the 18 month we had in 2012 so it will be interesting to see which of these technology firms jump and run. >> before you go, tell us more about what you're doing at modest. >> we are trying to make the future of commerce better. we are worried about the direction we have been going and we think we can make it better. that means making it easier to buy things on mobile devices and making it to you don't have to enter your credit card and other fun stuff. when i want to purchase a pair of shoes on a tray, how do i make it so that happens? ofharper reed, former cpo obama for america, thank you for being with us. still ahead, will this whatsapp acquisition bring teens back to facebook? we will talk to the expert insight team's mind when it comes to social networking next on "bloomberg west." ♪

will teens come back to facebook after the acquisition of whatsapp? dana boyd is with us. she is on "time" magazine's most minds in technology. you have been crisscrossing the country for the last seven or eight years talking to teenagers. how does whatsapp compared to instagram, snap chat, facebook, twitter? >> teens are using different applications for different purposes. we have seen the messaging emerged as a way to talk with a smaller group of friends. it's a way of sharing messages and photos and videos. in many ways, it builds off of sms.

everywhere ultimate world, it has been around a long time. and united states, texting has been relatively new. it is consummate think it but it's not quite the same as what we see around the globe. for thedoes this mean snap chat sub world? young people are using these services differently. we are seeing a proliferation of different tools used by different friendships for different purposes. the same teens that use snap chat make something ephemeral or make a joke or make it right now and are turning to messaging apps like whatsapp to talk with a larger group of people but they are using multiple tools and still taking photos and putting them on instagram which are different than facebook. it's a funny moment because rather than a one-size-fits-all tool, we are seeing tools proliferate in ways that allow for new kinds of opportunities

to interact with new groups of people. nowhat's what's happening but what happens five years from now? what we will do is try to find ways to communicate one-on-one with people we care about in small groups and with larger audiences. we will communicate interests we are passionate about whether it is one direction or the latest video we see on youtube. a rare era where everything was consolidated into one service. i think the more obvious way going forward is that it will be tons of different services, many of which will be mobile first. >> what about some secret apps? there was news about gwyneth paltrow. >> it is the desire to pay attention to gossip and see what is going on, the idea that your and my tell you something but you're not sure who it is. the secret type apps are an

extension of what we saw previously with services like assetfm where you want to know what is going on in your world and hear the things that nobody will share. do it through thre anonymity. you know it is somebody close to you and that's what makes a delightful. it's also a fun place to game. people are posting things that may or may not be real and that's part of the fun. >> are teenagers really using these apps? >> they are experimenting. there is not a one size fits all. even with messaging, we are seeing whatsapp but we also see kick and all these different services being explored and experimented with not just by country but also by teen groups. the same is true for photo sharing apps or communication secret tools. they are using them but it's not like it's everyone. >> does facebook have a teen problem?

>> it's like saying does e-mail have an adult problem? there was a day when you got mail was an exciting moment. you are really passionate about what might appear in your mail. teens, they think of facebook is the passionate place for the hangout with their friends. it's the place where they get the contact number of their friend from school. or they figure out how to share a photo they want everyone to see or the contact an adult with in the school context. they are still using it but it's not like the passion play. >> in your book, what surprised you most? you know this more than anyone but what surprised you? me -- ihing that amazed thought the internet was going to magically transform so many aspects of teen life. the ground talking to teens, i realized they were

doing the same things they always were. what ends up happening is they got inflected in different ways. it became more visible. as a result, adults spent time looking at what they could see and panicking. i thought it was interesting to figure out how to tell the story of young people to show what they were doing was the same thing they have always been doing, hanging out, socializing, gossiping, flirting. attack when iic think about growing up in a world where facebook exists. down the line, a few years from now, what do you think teens are going to be using? will it be vastly different? >> i think we will see iterations of new technology. i don't think we are near done. certain things are here to stay. like the ability to use a device that is in your pocket to connect with your friends. the ability to hang out with your friends wherever you go, that will stay. i don't know what exact tool

they will be using but the bigger question is -- how do we fit it in within the broader than amex of teen sociability? we told teens they cannot hang out in public places and as a result, they are using social media to fill that yeah so how do we make certain they get back into the physical world and have the freedoms we hope they would have to be a part of outlook life? the author of "it's complicated." we will be right back. ♪

>> welcome back. california has been suffering from a severe drought. 2013 was the driest year on record. erik schatzker has spent the week on our coast. he joins us now. you went to mammoth mountain earlier this week, how bad is it?

>> i know you like to get your kicks in lake tahoe which is closer to san francisco but jon erlichman gets his vague thrill at mammoth mountain because it is closer to los angeles. most of the traffic that mammoth debts, one point 6 million skiers per year, comes from los angeles. rusty gregory is the ceo of mammoth mountain and chairman of the board and he has a unique perspective on the drought as he sits on top of the sierra snowpack. there is not a whole lot of it this year but he has a window into the future and can see the timebomb that will blow up this summer when california begins to run dry. >> in the west, water is a big deal. in the valley here where mammoth is on the rim, it's a heavily agriculturally dependent area and it's the headwaters of the l.a. aqueduct which supplies southern california with the best majority of its water.

the politics of california starts here during droughts. governor brown declared a drought emergency a few weeks ago. summertime, we will see a lot of debate over what california will do with a lack of water resources unless mother nature changes significantly. me that water is such a divisive issue that it starts and ithts --bar fights can pit brother against brother depending on what kind of allocation you have or where your source of water is whether it is a state or federal source. it can get really bitter down here. >> about a week and a half ago, we got a ton of rain in california. it was more than 50% of the rain we got all of last year over a few days and it has dried up but did that rain help? >> it helped a little bit.

if you go to mammoth mountain, you will see that there's snow. half pipe forl the snowboarders so there is snow on the mountain but it is less than half of what they would have at this point of the year. they are looking into the future and they are not confident they will get further rainfall. it will have a real financial impact. he told the that mammoth typically gets around 150 million dollars per year in a good year in revenue. inthat, $45 million operating income. those are healthy margins for any business. he would not think that skiing is a good but the problem is that it is so variable and subject to mother nature that this year he is anticipating they will lose at least 25% of their revenue and at least 30% of their ibita. the impact is not and at mammoth mountain because mammoth employs a lot of people. let's hear him described the multiplier in the little owens

valley ski resort economy. >> snowmaking reduces the impact on visitation and revenue, it also has a higher cost to it. it costs about $2000 per hour of labor and electricity to run a snowmaking system. expensive than having mother nature provided for us. the alternative is pretty bad. without snowmaking on a year like this, we got snow recently but early on, it looked like the gobi desert. to hedge against a bad year is in agriculture -- financial product. it is a well honed the financial it'snism for agriculture, really hit or miss in the ski industry. when there is extra money in the insurance business, some broker comes out with the snow policy and every time we have had one of those and try to collect, we ended up in litigation.

we look at it every year but it's not something we spend a lot of money on. see, short of making snow which clearly is not ideal for a ski resort, you would rather have the natural stuff, places like mammoth have few options. i am at a vineyard, they have no water either. this drought is the worst in a century affecting the state of california. thanks for bringing us that view from paso robles and welcome to the states. we are focusing on one number that tells a whole lot. as in one1, superstar, fiancé, who recently teamed up --beyonce who teamed up with box for the itunes album she secretly revealed to the world recently. i spoke yesterday to the ceo of

box and he explained the situation without using her name. >> there was a somewhat popular release of a new album that happened by surprise recently. one of the reasons why it was kept in secret so well is because box was the platform used for managing that content. they were able to decide to reveal the information at a time when they wanted to and they could keep all of the security and control in one place in the meantime. >> he told us all that but he would not say beyonce's name or if they are technically going public. >> box has never been so cool. what else did he tell you? >> we will talk more about it entertainment is a big market for even a company like box. we will have the details on "bloomberg west" tomorrow. >> thanks for watching, we will

see you later. ♪

>> from bloomberg world headquarters in new york, i mark dump-in. this is "bottom line." -- i'm mark crumpton. the european union agrees on targeted sanctions against ukraine. severe drought is hurting its economy. a new computer mapping tool could help save the world's rain forests. to our viewers in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines. erik schatzker reports on t