>> live from pier three in said mrs. o welcome to "bloomberg west." i am emily chang. we are moments away from mark zuckerberg taking the stage at mobile world congress in barcelona, the biggest gathering of the world's top mobile players. we will have his full conversation live for you right here with instant analysis. this is just days after he struck a deal to buy what's at

--whatsapp. this puts them in greater competition with skype here at >> i was on the app this morning. it was interesting. i missed all the fun last week. it is minor but it looks bad. what is interesting is the disruptive factor. i do not know if it is good business. causing is as really big deal. the mobile war congress health push it along. zuckerberg wants to get up there and say to the rest of the world, this thing will disrupt your business. class we have a great group of guests to talk about what will happen today. in barcelona, our bloomberg

contributing editor is with us as well as the coo of message me. i want to get straight to barcelona and two caroline hyde, joining us there live. with the on save whatsapp ceo. what does he have to tell you about why facebook? >> i was so fortunate. the rockstar of the mobile world, he joined me for a panel and digging to the root of what whatsapp is. nothing will change. that is his key message. we are remaining 50 people. they might expand 150 people but that is it. they say that -- they will remain independent.

he is ukrainian brought up in the ussr. privacy.m is with as everybody smartphone to have it. in an attempt at monetization. still no gimmick. they are sticking to their roots. was like towhat it debate and discuss and, again, and he said, it was fun. best friends, they hiked together all the time. on valentine's day, they were hammering out the deal. leave very much whatsapp would remain. >> i believe strawberries were intended for mark zuckerberg's wife. i want to push back on what will change. will anything be different under facebook?

there has to be a point where they talk about integrating the .wo businesses somehow >> i asked whether privacy would be an issue. --whatsapp is much more personal. facebook is a most the -- antithesis, putting your statements out to the world tubes or 400 friends to look at. they are at opposite ends but it seems as though they really want to remain totally independent. it is more about facebook and what facebook wants from whatsapp when it wants to understand mayor going to ca migration. they want wondering people to be on it, tapping in to that -- they are setting themselves up to a sea change as we see more more people not wanting to say

everything on facebook and their life on social media and twitter, but go more personal and communicate one-on-one with independent friends. $19 billion, most of that in stock. passionate about what it is really. >> i will have to leave it there. mark zuckerberg has just taken the stage. i will let you get to that conversation. our own bloomberg contributing editor, let's take a listen. class people love using whatsapp for messaging. it is the most engaging app we have ever seen that exists on mobile alibi far. about 70% of people who use it use it every day. that blows away everything else out there. path tot is on a connecting more than one billion people. there are very few services in the world that could

reach that level and they are incredibly valuable. to be a part of this journey, i was really excited to help him realize his dream of connecting a lot more people. in terms of fit for facebook, when we first met and started we reallyout this, started talking about what it would be like to connect everyone in the world. of the vision for internet.org, that is what i want to take the time to focus on today. it was not till we got aligned on that vision that we started talking about numbers and started to make a deal. vision that makes the company such a great fit. to helpe shared goal connect everyone in the world. today, what i want to focus on is internet.org and how we can build a model for the industry

that can deliver the internet to ultimately everyone in the world , and, in doing so, build what will be a more profitable model with more subscribers per carrier and get everyone on the internet in a much time -- a shorter time. the video you are showing said we would detect another billion people by 2020. i hope we can do a lot better than that. >> you planned to come here a lot -- a long time before. you're saying the thing that was this vision. tell us come why is internet.org so important to facebook and what does it mean to the audience? do it and whyo are you here to talk about? thing, it is easy to take for granted that most people in the world do not have access to the internet at all. it is only one third of people who have any access to the

internet. 2.7 billion people today. it is growing slower than you imagine. people often talk about how there are 5 billion phones in the world. that is pretty quickly transitioning. in five or 10 years, most of those will be upgraded to smart phones and that carries an assumption that as that happens, people will have access to the internet. it is just not true. the most expensive part about owning a smartphone and being connected to the internet is not the smart phone. it is the data connection. if you are owning an iphone for two years, it costs about $2000 in the u.s.. five hundred dollars, 1500 is the data plan. really on a path to connect everyone, unless something pretty dramatic changes. that is something that, after facebook -- facebook reaches this milestone of connecting one billion

people, we took a step back and said, what problem in the world can we help to solve next. try tonot come here to connect 1/7 of the world. it is to try to connect everyone appeared in order to do that, we need to form partnerships because no one company can change the way the internet works by itself. it is an important problem. the reason i care about it is it is not the connectivity by itself as an end in itself. it is the things it brings. when you have access to the internet, you have a lot of people for the first time having access to things like a sick financial services second get credits to start a business, or to basicr access health information so they can understand conditions their family might have or help bring up their children more healthfully, access to basic education materials. there is a study that just came out today or yesterday that showed if you increase the number of people in emerging markets, you could easily create

more than 100 million jobs and bring that many people more out of haverty. could decrease the child mortality rate and save millions of lives by giving people access to that information. it is a really important problem to work on. istalk about what exactly internet.org. >> it is a partnership. an industry coalition working to make delivering the internet, all the different parts of it, more efficient. and make it so everyone in the world can have access to some bacon -- basic service on the internet. wayhink we can do this in a that gets people access to basic services while increasing the overall number of subscribers and profits for the overall industry so people can invest more building out this infrastructure even more. the thing a lot of people miss is more than 80% of people in the world already live in an

area where there is two g access or three g access. some people talk about satellites or balloons, technology to be able to connect everyone. it is true that will be necessary for the last few percent of people who live in wirral areas, where the researcher does not exist. for the rest of people, the things that, if you do not have internet, for the next few billion, there are only a couple of reasons why. even necessarily the main reason. most of them end up eating -- they actually have a few dollars to spend on this. the bigger question is why they should spend one or two or three take tothat it would get data access on this. if you did not grow up with access to the internet, you may not know the answer to why you would want a data plan. >> they would not even know why they want the internet. >> yes. you're caught in a cap -- text

-- catch-22. you could buy an internet data plan but you do not know what you would get with that because you never had access to it. a lot of the goal we have is to create an on ramp for the internet. is -- the models we have with a fixed land phone, you can phone in the u.s. and model one and get free access to basic services. emergency, a health you could always get help. if there is a fire, you could get help. crime, you can get help. we create a similar type of dial phone for the dashed out over the internet. there are a set of basic services that should exist, whether it is messaging or whether you want to know what the food price is, or wikipedia, basic search, basil -- basic social networking, that i think these are just a sick services people should be able to access. they all have a couple of things in common. way moreternet has

potential than dialing a number on the phone. >> yes. all the basic services have a couple of things in common. the first is that they're all text ace. low bandwidth and cheap to is a, offering for cheap reasonable business proposition. of second is that a lot them, especially things like messaging and social networking and search, are portals to more content. you will never have things like high resmed he or streaming -- beat basic services in a model like this, but a lot of what people do is discover things like news they would want to read or visit -- videos they would want to watch or apps they would want to download, reasons why you would consume more data that people would not otherwise know. if you have access to these services, that answers this question and makes it clear to folks, here is why it is completely reasonable and why should spend my dollar or two on getting a data plan and fuel ine than -- more investment

the whole industry to build up more infrastructure and make it so more folks could get online. one thing is that this is not entirely theoretical. we have been working with a bunch of partners for the last year building out a lot of infrastructure. we already have promising results. in the philippines, for example, we have been working with globe. [applause] they go. thank you for your partnership. we have seen in the philippines the number of people using internet and data doubled. subscribers have grown by 25%. is goingome run and really well. >> what did you do to achieve that? >> we deliver this product and are basically in partnership with them. there is free basic services. > using facebook is free? >> yes.

we're starting off with facebook and master. because facebook is so much of what people use and so much of the data, or at least the time they are spending, once we can make a profitable model that can work for folks, we think it will be an easy problem to solve to add other services, like whether or food prices or wikipedia or things like that that also do of concern -- consume a lot data. we wanted to start with facebook because we control it and can work on it at her. global is the only company we are working with. we have been working with to go and they have also seen the number of people using data in the internet grow by 50% over the course of the partnership and the number of people using data on a daily basis is even more. it is more than 70%. it is really early. i do not want to say we have all the answers on this yet.

early results are extremely promising. to bes what i'm excited here talking about. we are at the point where we have proved to ourselves the model can work. what we want to do is try to find maybe three or five more partners who can work for the next year to deliver this and deliver the package of all basic services for free, the on-ramp to the internet, and hopefully, if we can do that, we will be back to the year after that and after that. works is you give customers who otherwise might not be able to afford it essentially free access to facebook and other services like wikipedia, basic service web information, etc. how do they make money for that? it sounds like a great thing for people who want to use it. i can see why they would come on board. what is the long-term promise for the operator? why would they want to partner with you? >> it goes back to the question of, why did the next

two or 3 billion people who will get access to the internet, wire they not on the internet today? it is not because carriers are not in their zones. 80% of people or more live in areas where there is two g coverage. the reason they are not on is because even though a lot of them have the money to afford it, they do not know why they would afford access to it. there are some services people know. people know facebook and and you asked them, do you want a data plan and they do not know why they should spend their disposable income on that, if you say, do you want facebook, they say yes. once people have those things for cheap or free, as than through those services, apps and different media -- >> it is a gateway drug. >> we think of it as an on-ramp. the point is, it leads to

further consumption. >> yes. the important thing is it shows people why it is rational and spend thehem to limited money they have on the internet. which i really believe, it is actually the rational thing for them to do. all the data and studies we have shown showed not only will the increased opportunities to find jobs and education and health, but it makes the economy better. if we do it as an industry, it will also increase traffic of all the different countries and invest more in building out the infrastructure to bring better internet to people a lot sooner. we are on the way. we have been doing this for only a few months now and that makes it more impressive number of people using data and the internet in the philippines has in juston their network

three or four months that we have. of work tove a bit do, but we are very early in this. he will spend more than you are making up front. from what we're seeing and the rate of improvement, we are highly confident. specific with what you want from carriers. you have got the right audience. what do you want them to do if they were to work with you and what would it be like to work with you and what can you do for them, specifically? >> right now, i just want to get people to think about this. we do not have capacity to work with a large number of partners at this point but we want to work with more. maybe three or five more partners. it is the first step, testing just a couple of basic services.

what we want to try over the next year is the full vision. all of the different services we spoke about with all the different kinds of cells and things we think we have the with a to do if we work carrier deeply and plug into their systems deeply to make all of these efficient and make the knowledge we have with customers that both we and the carrier have. you basically, a lot of the arrangements, we will test things out for a couple of months at a time. we have been lucky with that there have been longer-term partnerships that have given us the ability to test them. even if they do not work in the first month, to keep on pushing and getting them to work over a five-month time. of having a year-long time when we are really diving into get it with a couple of posts, to see how far we can push this and make this model work. my goal would be to show the model works in full over the

next year, and then to be back here next year or the year after with a systematic program we could roll out to everyone who wants to work with us. next year, we are just looking to work it -- with three or five companies really serious about trying to connect everyone in their country using services. >> they are giving free access to facebook, that is good for you and you can make good money from that. is this just a way for facebook to make more money? what is the reason why facebook is doing this? >> over the long term, i hope. one of the unfair economic --lities is that people of with the vast majority of the wealth in the world are the billions of people already on facebook. when i spoke with my board of erectors and put a budget in front of them to spend billions of dollars and trying to get this vision to work, they asked me, how will this be profitable

in the near term i cannot construct a model that will add up in the near-term. the ad markets in these countries, they do not really exist in a huge way yet that will make us break even on this. for any we typically make investments. but i believe in this because first of all, this is why i started facebook area i bill the product originally because i wanted to get out of harvard, to it -- the vision was someday help connect everyone in the world. reaching one billion people ourselves was a moment for us when we took a step back as a company and said, what we really here to do? if we could help connect one billion people, are we going to spend the next few and 1.211ing to 1.1 point three? we will do that on the way to something else. there has got to be something bigger. for us, it is the vision of connecting the world. ,hen i think about the vision even though i think we will lose

money on this for quite a while, all the different things we're reason i'm optimistic is just like social networking early on, the reason we did it, even though all of these loggers and folks were saying, this is just a fat, or some people are using this but it will never make money, i never really cared about that. i believe it was an important thing. i could not connect all the dots going forward. i did not know about the world are business enough to do so, but i felt that it was important and if we do something good for the world, eventually, we will find a way to benefit from that in some way. i feel like that around internet.org as well. there is no clear plan i can say today, this will be good for facebook. it is clearly good for the world you're in every metric is good for the economy and the global health and people in these countries and everything. you can see that. over time, if we can deliver this, it will probably be good for us as well. qwest is your work completely cool with that? >> yes.

they're on our board because they believe in our mission. companyu are an unusual because of the scope globally. it is an unusual position to be in where it's internet access increases, you benefit because such a large percentage of the internet uses your service. wet kind of trajectory would see this on? how long do you think it will be the we could potentially -- say everything went right and all of partnerships work and you really got what you wanted, how long before everyone could have basic services and not streaming and weatherikipedia information? >> what i hope is andan prove the model works then get to a place where we can work with a larger number of carrier partners within the next two or three years. is when i think a lot of the hard work will begin of rolling it out and working with the carriers to do that, which is really when i

think you would start to see many more folks get on the internet. is a long-term thing for us. it is not something where we think, well, we will figure something out and in six months, we will start to see internet numbers grow dramatically. if we can do this well as an industry, within five years, i hope the number of people we are connecting is a lot more than the billion someone put in the video that played right before you and i, p are. i would hope in the next 10 years, we could make progress connecting most of the world, whether that is to a half or 3 billion people. qwest let's go back to the subject we started with. in said it was primarily order to help fulfill a vision. you paid $19 billion for it. i am trying to put myself in the head of your board here. they probably agree with you that long-term, making the world more connected and open is great. but then, a lot of them are

numbers people. that is a huge investment just made and it sounds a bit return is very long term is it really the right way to think of whatsapp? it is not the way it has been discussed in the media. a connect to the world sort of tool. >> there are two pieces to think about. company bys, it is a itself and what it will be worth. then there is strategic value and what we could do together. i think by itself, it is worth more than $19 billion. it is hard to exactly make the case today because they have so little revenue compared to that number, but the reality is there are few services that reach one billion people in the world and they are all incredibly valuable, much more valuable than that. i could be wrong. there is some chance this is the one service that gets to one billion people and ends up not being all that valuable. i do not think i am. you can look at other messaging

apps out there that are already monetizing at a level of two or three dollars a person in early efforts. it shows we can do a pretty good to grow,lping whatsapp this could be a huge business. incidentally, it is a good bet. the question is, why were we excited students together? i was excited because of the internet.org vision to help connect everyone in the world. clearly, we can do a lot for working together on that. the other pieces by being a part of facebook, it makes it so they can focus for the next five years or so purely on connecting more people. if they did this as an independent company, they will have to focus more on -- on billing out the model. they will of course do that. their subscription model is very promising. but i think is the bigger opportunity is rather than focusing on that, for them to go out and connect 3 billion more

people in the next however long that will take. if we could do that, we will be well on our way to both realizing the vision of trying to connect everyone and on our way to helping to achieve the internet.org vision. that is what we want to focus on. >> you think of messaging as part of the basic services that ought to be available to everybody long before they could download video. a human fairness issue, something you want to help make happen, and also would benefit facebook in the long run. clear, basically, we invest in a model that could help them get more subscribers and invested more people. it is up to them which services they want to put into basic services for free. there are certain things people really want and will want to include in their. our model and what we're trying to build is proof that building an on ramp is better for the

internet and for our partners. we are on our way to proving that. over time, when people want to welude -- it is something could work out and something they will have a lot of choice over. >> also, it reminds me a little bit of the open computer project you have, a way of taking software you have developed in your own data center, one of largest in the world, and making that freely available to the rest of the internet industry, bringing these to others. talk about specifically how you will be able to make efficiencies that allow them to make money, even though they are giving away these services for free. are three pillars we are really focused on in terms of efficiency. the first is decreasing the overall cost of all of the infrastructure that goes into delivering the internet. the second is decreasing the amount of data used so that when

you're not utilizing most of the infrastructure for these basic services. the third is increasing the efficiency of all the upsell's and things we can increase revenue for these folks. i think there is improvement in each of those that if you could promise together, it adds up to about 1000 improvement and affordably of some of the services, and if we can deliver that, we will be on our way to making the model profitable for folks, and something i think folks will want to use. of it is also allowing apps like facebook and other apps to simply use less data while delivering the same capability. >> yes. >> you did that with your own android app. >> let me go through all the pillars. the first one, decreasing the cost of the overall internet, you get open computer and there, making it so that servers and switches and things people need with infrastructure are cheaper

to use by making the stuff open source. you get policy work to make it so you can use different parts of the spectrum and licensing fees are less overall. there is work going to help make smartphones cheaper. all of those things are things widely going on across the industry. >> $25 smartphones. >> this is a lot what we are working with. folks like samsung and media tech who are internet.org founding partners, they're trying to do. that is delivering the internet more affordably. the second pillar is using data more efficiently. this is where we have actually gotten all the way there toward the kind of improvement i was talking about. a year ago, the basic facebook app, the average person used about 14 megabytes of data a day. we have not optimized the

quality of the photos to be optimal for different folks and just a lot of things that were fairly wasteful. already down to two megabytes on that any clear plan to get to one. the expensehanging it all, just optimizing and focusing on that. we bought this company which does compression. to rival the person their internet traffic through them and make it so that they can save in some cases 50% of the data cost. it is not just apply to facebook services. is everything. there are other things like the snap to platform we have, providing efficient lowlands -- features on apps that we can use as a platform for other apps as well. i will be a big thing here the makes it so we can increase the amount of upsell's two subscriptions for the services.

more onseen maybe even that piece already. the thing that is most promising -- talk more about how well would work. i do not understand. >> an example is you are using your facebook feed and you come to your link for something and not included in the basic services package and you click -- a and there is a really pop-up that shows up right there that says, if you want to consume this, you could buy a data plan and make it one tactic is it is tied directly into the carrier's system. the more friction we could take out of the process, the easier it is and the more people will want to pay by data through things like that. >> they will actually be delivering less data for the same quality of service. talk a little bit about the lab

you just announced today where you will have a lab on the campus of facebook to help other apps to this. >> yes. one of the things we want other developers to do is feel empathy for high data consumption experiences they are creating. we did this recently. companies other great were there. spotify, ebay, twitter. what ericsson did is they build an infrastructure. they brought it so that developers can simulate running their apps on all kinds of different conditions. when you feel that, you really get a feel for, i have to take a lot of data use out of this because it is unusable. once the people running these companies have first-hand experiences. sing their app in that condition, which a lot of folks in the u.s. in silicon valley have never traveled around and seen apps in those environments, you come away with empathy from what you're sick jesting the

what a bad experience that can be. it really incentivizes you to , which ofre efficient course saves money all around for consumers and carriers. >> some of her people were in africa and went to a store and bought some things and try to use facebook and found it was a much more difficult experience than they expected. >> yes. we had a rotational project manager program. a lot of folks were coming out of college. they rotate around the company and get exposure to different things. we sent all of the rotational p.m.'s to the immersion market -- emerging market. things we were messing up the need to do a better job on to deliver as well. empathyternalizing the that will enable us to get the push to get these things as efficient as they need to be. role, the way you are

describing it, you are drawn together all of these community spirit you just announced something today in row one that where the government -- government over wanda is involved. nokia will sell especially cheap phones to students so they can get free access to educational information. is this a role you think facebook will play more and more, to be a convener or a systems integrator of all these parties so they could make it happen together? >> i do not think facebook should get that much credit for that. one of the things i want to be really clear about. i do not think i could make this point strongly enough, internet.org is a big coalition across the industry. we are playing one role in it. facebook has unique perspective building the most used app in the world, and that gives us some position to be able to really understand what we need to do to deliver these things but no oneently,

worked -- no one company can do all this by themselves. .t is a partnership folksl be all of these having to come together to make this possible. there is no way facebook could do this by ourselves. if we came away today with a feeling this is somehow my vision or we were doing this, that would be completely wrong. >> the range of partners will grow considerably. i have got to ask you one thing. there has been so much talk about the impact the snowden revelations will have on internet companies. you are one of the premier internet talking -- companies talking about more global -- there is concern the u.s. government has a weird relationship. could this potentially be a problem for the success of facebook in the future overseas, globally, generally?

issue, i think it is a real issue especially for american internet companies. trust is such an important thing when you're thinking about using any service where you will share important and personal information. we continue to work to make sure we could share everything the government is asking with us. recently, we got the permission to share a lot more content in terms of what people were asking. that is helpful because it showed the number in the thousands and not the millions or tens of millions like people had feared. knownternet.org, i do not why that would have a huge impact. if anything, my guess is the issues with the nsa actually had the industry working together better than i've ever seen it work and get it before. we have historically had issues working with some of our on policy issues. >> so collectively angry, is

that it? >> what i was going to say was in the past, we have had issues because of a competitive aligning on policy issues that even help the whole industry, things around internet policy issues. now, i think it is an important thing because of how extreme some of the nsa revelations were, but now i feel like a lot of the industry is a lot more aligned. then being able to work together on things like internet.org, once you are already working together on other things, it actually comes -- becomes easier then other things. >> connection the planet, it must make you angry because certainly, the government's behavior has undermined trust in these american services. >> yes. not often. i do not have much new to say now. what i have said is the government blew it on us.

the government's all right -- -- have a responsibility they were way over the line in not being transparent enough about him as they are doing. now they're getting there because of the pressure and a lot of the work internet companies are doing to push. they are only now starting to get to the range of where they should've been. i think the whole thing was avoidable and would have been a lot better for the internet. >> ok. we have time to take a few questions. we have my candler's. -- mike handlers. if you questions at once and then mark will answer them. i do not have time appear so i'm not clear how much time i have. any help i could get in that would be useful. let's start right here. identify yourself and state your question. i am also from the bay area.

a quick question. i love your vision. but what is the role of literacy in all of this? >> thank you for that one. we will take one or two more. right here in the front row. some light right here? please identify yourself. the yuan broadband commission. i am hearing in the tone of this conversation, there is a lot of .ollaborative conversation collective innovation. i have not -- it sounds like ais will be the essence -- in couple of hours, as you know, the investor of the u.n. will introduce her own facebook reaching out to about one billion or so. i'm sure you will be joining from here. ngosabout the role of the and the government being able to participate, making a public-private partnership -- collaborative innovation.

>> is a great one. >> i am a journalist from the netherlands. i have a question about whatsapp . it has a lot of content and data in the messages. currently, not really used, at least not in the way facebook uses lot of the data. are there any plans to change that? the role ofrt with ngo's in government. that is a key question i was eager to hear you talk more about anyway. class i think -- the internet is not something anyone company or ,ven one sector of companies organizations, works on. will something where there be carriers and infrastructure providers and governments and ngos and a lot of different types of folks. facebook's role in this -- we are not organizing all the connections between the spirit a lot of the collaboration going

on, what we have tried to do is help to create this internet.org umbrella framework that aligns the mission. a lot of the work the folks were trying to do and say, these are the kinds of companies doing this work. it has enabled a lot of different conversations that would not have otherwise happened. see forhe things we folks trying to build new kinds of infrastructure, they often need partners to help the plate and get it out to different places, whether that is companies were ngos working on that. there is april -- a wide variety of options. there are a handful of things now -- i do not know what is public yet so i probably do not have as good as the manager -- answer is i should. there will be a number of things pretty soon that show a pretty good partnerships. >> a lot of people in northern europe in particular would ask the kind of question the dutch journalist asked about. change attitude going to from the attitude they have historically had?

what would you say echo >> the answer is it lastly not change. one of the important pillars of the deal is whatsapp will continue to operate completely autonomously. they will use services from facebook, whether that helps scaling in different tools or different infrastructure or help using different people at the company to grow different functions for the organization. whatever he wants to use, he will have the ability to peer the vision is to keep the service the same. know, what'sly apt, not only did they not use any of the content, they did not even store it. if you sent a message to someone , that message is deleted from their servers almost as soon as it is delivered to them. almost all the photos and things you are sending, it is not even storing. they're just building an infrastructure to deliver it efficiently and reliably. that is the most in four -- important thing.

that is the service people want. we would be silly to get in the way. isss the literacy thing, that some you care about that you think would really help? >> yes. gohave a long while to before we are running up against people who are not literate, the next internet users. in addition to typing and go before we are running up against reading, there are other mechanisms, whether it is using even iftes, or photos, they are not super high rest, they are universal forms of communication i think you're just starting to see more and more, even in highly literate populations, so they're just more efficient a lot of the time. class very -- very good. time for a couple more. go ahead. the mike is coming. i will go to you next. then to you.

>> mark zuckerberg speaking. an interesting conversation ande about buying whatsapp internet.org. we have a great group of deaf group of guests coming out to speak with us as soon as that is over in barcelona. in the studio, the former facebook employee and also now the coo of "message me. and the bloomberg contributing editor editor and cory johnson, our editor at large. it has been fascinating listening to you throughout the conversation and your commentary throughout. on what mark based zuckerberg had to say. tell us what the big picture is. why did facebook by -- buy whatsapp for $90 million? class

i cannot comment on that, but growing bought a large, network of mobile users, people communicating on their product. if you look at the mobile landscape today, we are at a point where discovery and search is fairly constrained by two big players. apple with their app store and google's play store. you heard mark talk a little bit about this. in some waysesents a portal. it is a 460 million and growing network of people engaging via this portal. every day. the opportunity to introduce these services, whether their facebook or other services, this acquisition. i cannot really comment on the in termst certainly, of what the opportunity represents for face book in a large and growing mobile network

, in a very interesting stage of acceleration of mobile and smart phones and the way in which all of us will be searching for an consuming and discovering content is very interesting. >> are you -- are people using -- to discover anything else from their friends? yes, they are on it, but they're not finding new apps and downloading. actually, whatsapp does enable richer and more contextual discovery is enabled by these. you can send a photo and a link. you via theshed to itpany but users are doing themselves. they are taking a picture and share an opportunity.

they are taking a link from a mobile web. class it is user generated. >> you are right. there are other applications. a socialmore of network. -->> whatsapp will run into challenges because they demonstrate asia. quest that is correct. in terms of growth, both of these companies you mentioned have significant strongholds in the world which have a lot of people moving onto smartphones and doing things on those two products that whatsapp does not offer yet. things like buying coins to play games, buying sticker packs. they are more of a social network in what they offer currently. coulds not mean whatsapp

not go there. in terms of growing into those regions, that will be a challenge. >> i know you do not want to touch the price, but paul, how about you? mark zuckerberg is saying it is worth more than $19 billion. you think echo -- think -- what do you think? -- it is badetty enough he made them over at instagram feel badly for not holding on at a higher price. he is doing it and saying, wait a minute, we are willing to pay more. quite a statement. i will assume he meant it will be much more valuable in the future, not, we pulled a wall over these guys eyes. that is more a statement, i hope of strategic intent. the opportunities to make it produce revenues, and therefore this will be a worth a lot more an examplere, it is

of the statement probably left better unsaid. >> just how hands-off will facebook the when it comes to this? >> that is hard to say. you have to imagine they paid $19 billion for certain rights, for all the rights to the ip. they also bought a great team from what i know. leadershiprs and the quite special. i think there will be a place and a point in time where it makes sense for face of to think about usage and the users of the product and make some connections to the information they have. >> you're talking about the data. they will know, when i am messaging someone, and what i'm saying. >> yes, in all likelihood, they will have a profile of you connected with so many of their other services. in all likelihood, there is a fair amount of connection

probably between users. i use both products. facebook has information on both my usage of whatsapp. they know i am a user of it and helfrich only i use the app. i have to imagine that is probably likelihood in the future. ask paul about this. one of the things i was looking at with these numbers is where is it strong? their number one in brazil and mexico and indonesia. nowhere in china, just like facebook. >> yes. it is convenient in some ways, back to the original point. they have not run into the strongest holdings of some of their largest competitors. they are free -- what is google's social network in brazil? they are free to beat up on people not going far. the deeper question and the one i was thinking about over the weekend is that, for me, one of growthsons of whatsapp's

it hasis part of what done. i am not going out and finding people -- it suggests we are likely to see not just one of these, but a whole bunch of services emerging and growing to half a billion or one billion users in three or four or five years. as a facebook shareholder, you have to ask yourself if this is something you're in for for a regular basis. i do not see what would prevent someone else from doing something, not because it is easy to produce, but because of the notion of building the network is undermining the addressed book. it is likely we will see these kinds of acquisitions over and over as face protects it. class r you expecting to see? you work through many of the acquisitions during your time there. when it comes to facebook's biggest challenges, what are they and how will they address

them in the next two years? >> one of the ways they're trying to address them is internet.org you're the true vision of facebook is allow people to be more connected, they have to be deaf bring people onto the internet and therefore their services. that is a challenge you heard mark talk about. there is a lack of infrastructure in a lot of parts of the world that they will need partnerships with other types of topanies to enable access their services, be at instagram or whatsapp or the facebook core services. if you do not have internet or internet access three phone, you will not represent a valuable user for them. that is a challenge area china might be a challenge at some point for facebook. you have heard them acknowledge publicly that younger people are not getting onto the facebook service as much and getting that thosegoing again -- numbers are very strong for

whatsapp. >> go ahead. >> i do not know of else thought, but there is a good piece over the weekend making the argument kind of along this point of what is happening with young people -- the point is there is an opportunity for facebook to almost accidentally fall into a strategy where you have a bunch of overlapping, that different constituencies pick up. a lot of people probably have no idea than that i drive a bunch of kids to his -- to school in a car this morning. that is really interesting, the are good to migrating to that kind of strategy, whether on purpose or by accident. >> whether the building of whatsapp comes nowhere in five years, it might end up being very temporal because the finger created so quickly, it can go away so quickly.

it was hotter than the sun a year ago. class you are a whatsapp competitor. >> sure. is,answer to the question it added tremendous value to essentially taking out sms. we can credit them with that. growth will now be around conversations, the conversation economy where people are actually able to talk about content, finding things in searching for things, and have conversations around richer and more contextual content going forward. if whatsapp transitions to that, i do not think it would be ephemeral. network with a terrific communication product, it can be very powerful. that's all right. me, everybody, stick around and we will continue this conversation after

a quick break. more talking about facebook. ♪ . .

♪ >> live from pier three in san francisco, welcome to "bloomberg west yuriko netflix has agreed to pay for more direct access to comcast's broadband network to help improve the speed and reliability for their streaming customers. we will talk about that more later in the show. we are live in barcelona where samsung's compact five event is about to