live from. three in san francisco, welcome to "bloomberg west." i'm emily chang. we are waiting for president obama to deliver from remarks on ukraine. secretary of state john kerry is in rome. he will be speaking about what is going on in ukraine. withdramatic developments the voting out of the parliament in crimea. first, cory johnson. we have two of the biggest

newsmakers in the world. not just in technology, but in the world. inyahu- net and y in silicon valley, trying to make better connections with technology companies. we spoke to him exclusively. it was an interesting conversation we had about that. an interview with eric schmidt. with eric schmidt, the executive chairman of google and jericho and. cohen.jericho we started by talking about what is happened the last -- what has happened in the last year. the paperback is out this week.

since they wrote the original , i asked if anything had changed their conclusions are predictions. >> if he read the book a year ago and you read this version and you look at the epilogue, a lot of things we talked about is happening. he talked about the dangers and issues around old leaking. that has occurred. most interesting thing has been the unpredictability up local change because of technology. at the time we wrote the book, we really do were unsure that the revolution in egypt would produce a pseudo-democratic government. we are back to square zero. if you look at ukraine today, no one has a proposal for how to do it. what we have learned is there is some kind of limit to technological optimism. you can empower people -- that's

our position. ultimately, the gun kills peace. i was just on the syrian border about three weeks ago. one of the things we had written about in the book is, governments in the midst of conflict will become so concerned about empowered citizens that they will literally set up check winds to complicate phones or see what's on them. from my i hear friends and syria? the government has set up checkpoints and they ask you for your phone. if you are not going to give them your password, they hold a gun to your head and ask you about it. checkpoint sawhe post on his wall that was sympathetic to the revolution and the signal came from the checkpoint up to the rooftop of a nearby building which then resulted in him getting shot in the head. this is very real. re areot just that they

cyber security issues. are ine citizens that virtual and physical crossfire. there are videos coming out. it what eric was saying come ultimately, the world is still governed by militaries. the country is not willing to step up and intervene and the situation will continue. >> we are entering an era of uncertainty. we are in a beautiful spot that's very peaceful. a few kilometers north bus, between a horrific town -- involving 35 people killed and houses being burned. horrific stuff. we are reading about this. theur view of the world, internet should be a moderator and allow you to say, we understand your culture and we

are more accepting of you. the internet was used exactly for the wrong reasons. it was used to inflame the passions on both sides. we are in a danger zone in countries that don't have proper societal tolerance or educational systems or rule of law where the stuff can be misused. >> technologies used on all sides. by government and protesters and hackers. how does that play out? >> in the early days of the protests in ukraine, the first instance in which it was spelling trouble for yanukovych was when he made the decision to shut down channel five. he cannot do anything to stop social media. all it did was give people an additional thing to complain about in the various microblogs. once he lost the information environment, he lost the military. with an explosion of grievances against the autocratic regime --

>> we do have breaking news. president obama speaking about -- at the white house. the sovereignty and territorial integrity of the ukraine. or for stealing the assets of the ukrainian people. according to my guidance him of the state department has put in place restrictions on the travel of certain individuals and officials. these decisions continue our efforts to impose a cost on russia. those responsible for the situation in crimea. they also give us the flexibility to adjust our response going forward based on russia's actions. we took the steps in" nation with our european allies. i've spoken to several of our closest friends around the world and i'm pleased that our international unity is on display at this important moment. readye moved together all to announce substantial assistance for the government in kiev. in brussels, our allies took some steps to impose costs on

russia. i'm confident that we are moving forward together. united in our determination to oppose actions that violate international law. and he's a poor the government and people of ukraine. that includes standing up the for the principle of state sovereignty. wouldture of crimea violate the ukrainian constitution and violate international law. any discussion about the future of ukraine must include the legitimate government of ukraine . in 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders. while we take the steps, i want to be clear that there is a way to resolve this the interestsrves of the russian federation and ukraine people. ensure the rights of all ukrainians being respected,

including ethnic russians. confrontations between the russia and ukraine. russia will maintain its base in crimea provided by its agreements to respect their sovereignty and territorial integrity. support the people at ukraine as they move to elections in may. that is the path of the escalation. kerry is involved in talks with all parties to discuss those acts. with this violation of international law, the result will be the united states and our allies and the international community -- it will remain firm. we have taken steps to reaffirm our commitment to the security and democracy of our allies in eastern europe. and to support the people of ukraine. one last point, there's been a in congress about

these issues. i'm calling on them to follow-up on these words of action. specifically to support the imf's capacity to lend resources to the ukraine and provide american assistance for the ukrainian government so they can ilizeer the storm and stab their economy, providing a smooth the pathway for the elections that have already been scheduled in may. today, the world can see that the united states is united with our allies in upholding a -- international law. that is what we will continue to do in the days to come until we have seen the resolution. thank you very much. >> president obama speaking at the white house, pushing for a diplomatic solution in ukraine. to our washington

correspondent. what do you make of the president foster their? points here two key was tried to touch on today. the sanctions and visa bans that were put in place by the administration this morning. he signed executive order this morning. what the u.s. did with that was took the lead. shortly after the u.s., the eu started following as well. when it is -- there is a visa ban on russian citizens with visas that were anyway involved in what is going on right now in crimea. they are proved -- they approved a sanctions regime that will be put in place raided the president made very clear -- the reason for his public remarks today -- the referendum by the russias about joining and leaving ukraine entirely. the government in kiev has already said that this is ridiculous.

ceu and the u.s. have come out and said absolutely not. you cannot undercut your own central government. this referendum that is in place upon the folks in crimea to leave the ukraine, that is the big issue right now. it is causing concern. they have made it very clear moscow doesn'tat response would be considered legitimate unless it has the signoff of kiev. you will hear more and more in the days ahead about the fact that this is something that needs to de-escalate. to move over into russia would be considered an escalation. that is why the sanctions regime was set up and approved today. russiaimposing costs on -- without using the word mean we wills that see sanctions escalate your? >> i think that's the threat. that is the hammer they have right now. the point it ministration

officials have made is, look, there will be punishment for what has happened already. that is where you see the visa bans. the citizens that were involved in what's going on increment a right now. the sanctions are not in place yet. -- in what's going on in crimea rainout. -- in crimea right now. >> at the white house, thanks so much. it john kerry about to speak in rome. we will be following that as well. we will be right back with more after this quick break. ♪

>> this is "bloomberg west." back with an interview with eric cohen.t and jared the most important topic we discussed, nsa and edward snowden.

what is the state of google's relationship with the nsa? >> what relationship? [laughter] they didn't knock. they didn't call. they didn't send a letter. they just visited. [laughter] >> the latest revelations from towdon that the nsa colluded intercept and save images in yahoo! video chat. what are the chances that happened to google video chat? >> we look forward to more disclosures from the nsa on this matter. you guys, facebook -- have gotten together with different technology companies to petition changes in washington. confident are you that they will do that? >> there is section 215 -- through a series of legal arguments, it allows

the recording of metadata of american phone calls, roughly 350 million american phone calls. every call you make recorded in these databases to target 56 people of watch one was a suspected terrorist. if that isdetermine an appropriate use of government power and so forth, that is what they were doing. the group that google was a part off took the position that this made that -- metadata collection was not appropriate. this issue is problematic. because of the possibility of things of future leaking. the president announced in january a committee which i am actually on to try to figure out what to do. he said to the nsa that he does not want them to keep the data but he wants others to keep the data. we are working on what the choices are. i'll take the president's word again. he is sincerely trying to address this in the balance of

interests. in the book, we say quite a bit about this. in particular, we say that democracy will have this debate. now that we know it is going on and you will find the right balance of this interest. and i askedaround the question, what rights or privacy would an american give up if there were a terrific terrorist attack once a year? me,average american says to i'm fine with that. you ask the same question in germany and the answer is, we are not fine with it. you ask the same question in britain and they say, what's the problem? you ask the question to israel and they say, what when it or lane and are you on? in the book, we say that

governments have to have this debate and find that balance. there was no cilantro. recount a 5.5, we interview -- a 5.5 hour interview. he was under house arrest in the u.k. come wearing the ankle bracelet and everything. the conclusion we came away with was that bulk leaking will continue. made ithe arguments we is, who appointed these individuals to the role of determining what should be public and what should not be echoed this is particularly complicated because who can possibly read through 1.2 million documents and make that determination? >> they pointed themselves. >> is not a good idea to have random people to decide to leak large months of data without some kind of oversight. >> is he a traitor or hero? let's say this was a large

collection of health care data. a large collection of tax data. it's also in databases that could be impacted in late. you are better off in a democracy having a system which allows whistleblower behavior that does not ultimately cause to beta permanently revoked. once it has been made available to everyone, you can. people could actually be harmed. >> more common next. ♪

>> welcome back. more of my interview with google executive chairman eric schmidt and jared cohen. schmidt, of all the

things google is working on, what is the most important thing? take a listen. >> i think the biggest thing that will change is the development of more generalized artificial intelligence. because of the amount of competition that we can now assemble -- millions of computers to work on your behalf -- we can begin to transition from you asking questions to making suggestions that are quite relevant to you. the ability to do generalized knowledge means that we can not only discover facts by looking at them up, but figure out the things that you care about. we talk about this in the book. the evolution of this -- today come on your tablet or phone, you ask a question and you get an answer. he evolution of this is a device that will be this infinitely intelligent personal assistant that travels with you and helps you figure out what you need to

do today and what you should know and briefs you ahead of time and make suggestions and keeps you entertained. all of that is possible with today's technology with enough hardware scale. >> it's a better form of search were i don't have to ask a question? >> we suggest things that you might be interested in based on the context of what you are doing. this is all often. -- this is all opt in. you wake up and you are in your -- and itu determine determines which minute to wake you up. has the coffeemaker working and so forth. you look at the wall and you say, do i need to get up? the wall looks back at you and says, no. it calculates that you needed the sleep and you get 19 more minutes subject to the rem cycle. will you use that service? you bet.

you want that 19 minutes more. how do i feel about that? people will use that. >> google is buying a lot of robot companies. what are you doing with them ? >> we are experiencing with what automation can lead to. will becomerobots much more presence in our lives. it in a good way. they will help us with this and that. they will replace a lot of repetitive activities that people are tired of doing. much of manufacturing has been icized.f si est?ow about nast ♪

>> you are watching bloomberg west where we focus on technology in the future of business. i am emily chang. has the man behind the coin finally been found? a magazine has concluded that 64-year-old wrote the initial bitcoin paperback in 2009 under a pseudonym. he then reportedly created the software that serves as the backbone of a virtual currency system. he was a former defense industry and government employee. broadcast companies like sinclair and nexstar broadcasting group be forced to give up tv stations under a new proposal from the fcc.

the chairman wants to ban some arrangements that allows companies to own more than one tv station in a local broadcast market. companies would have two years to comply to the change should it be approved. is music streaming service spotify going public? in the u.s., the sweden-based company is talking with goldman sachs about obtaining a new credit facility, according to people with knowledge of the matter. spotify has acquired a company that analyzes listening behavior. yesterday i spoke with google executive chairman eric schmidt and the director of google ideas. more of that conversation now. we talked about mobile and the future of self-driving cars, as well as the google plan to bring broadband to places around the world. >> there are more than 1.1 billion users, and we activate something like 1.5 million a

day. that number is growing dramatically. it is a huge life form success. it is free and is extraordinary. you now have a battle between the iphone and the android phone , and that fight is producing enormous cost-savings and volume-savings. on the cell five and driving cars or the driver-assisted cars -- on the self-driving cars, it is much more likely that you'll be driving the car, but the car will be smarter. it will be a long time before cars are going to be driving around without anybody in them. >> i have been in a google self-driving car, and it is an estimate -- and it is fascinating. do you have any idea when this could be made mainstream? >> it depends on the level of bugness. it is important that these cars not have a lot of bugs in them. [laughter] yeah, we are very close.

but that last little bit is hard. >> speaking of connecting the world, why didn't google team up with facebook for internet.org? >> you're asking an industry question again. i think facebook and google agree on the goals of getting the world wired together. no disagreement on that. >> google is working on broadband balloon. tell me about that. facebook is reportedly buying a drone company which could also bring broadband to earth. but it is this idea of giving people access -- >> we have a product called google x which is doing very interesting new development. we invented a technique where you have high-altitude balloons or provide data services am a but they are moving in the stratosphere. we have demonstrated this work when we had a number launched. it is important you have permission of the countries when

the balloons go over them. that signal has to terminate somewhere. it is in the research stage. >> what about google fiber? talking about connecting the united states -- you have had success and a couple places and challenges elsewhere. comcast is buying time warner cable. the landscape is changing. do you see this as being a potential for the business? >> it seems to me that everybody here would enjoy having that kind of internet connection. provide it,es not your competitors should provided. win with increases in bandwidth around the country in the world. it is a very good business, but we benefit when people have very high speed connections. it is in our interest as a company and your interest as a consumer. >> we went to provo, utah to cover the fiber rollout there. everybody is very excited, but there are big challenges ahead.

how do you overcome those challenges? it is a very established infrastructure. i believe at&t is trying to prevent you guys from using their poles in austin. >> those are workable problems. the simple answer to regulators is you want to say to a regulator -- is there a true it for your tra consumer? if the regulator produces only one player, that is probably the wrong approach. figure out what is preventing a second entrance, whether it is pole attachments or frequency issues. the history of incumbents writing the rules is in favor, and it is important for the competitive market. you look at internet been with globally, it is competitive -- it is approachable, fast in places where there is either absolute commitment to have high-speed or where there is a competitive market. in many parts of america, there is not a competitive market.

>> is the goal to have all the u.s. on google fiber? >> we will see. when announced 13 more cities. talking a lot about future products. it is interesting when i asked what the most important thing that google is working on, and one of the things he said to me was -- in what category? it is like google is working on so many different things, so what is the most important? that is when he came up with artificial intelligence and the future of search being more personalized. >> the answer could be search and advertising. >> and they talked about google shareholders and whether we can be confident about what they are doing with our money. there were also questions about apple and the state of innovation at apple. listen -- very well-run company. i am sure whatever issues they are facing, they will solve.

very, very smart. i was on the board for a long time. at google, the simple model is first running the company and growing it. and you have a commitment to excellence, and you just do not accept anything less. >> the ideas how to avoid entropy is a big technology company. from appearances, we see google making big bets. buying companies that matter. people want to work there. from the outside, we are not seeing that from apple. they are not buying companies. we do not know what they're working on. >> i love the imagery of the new apple headquarters which is sort of doughnut-shaped and you cannot see what is going on on the inside of it. i think that is sort of the way apple does things. google goes back and forth between being open and not being open. having open source software on the android side and then the closed search algorithms. i can see that struggle. but the fact he went out answer

the question of the most important thing they are working on -- >> heated answer but not right away. rightdid answer but not away. the question i ended on was -- what did google look like -- what does google look like 10 years from now? he said it is hard to say. imagine just a few years ago when we did not have android and we do not have the iphone. you know what i said at the end? >> bank you? >> i said thank you and i asked if we could take a selfie. on stage.n ellen we had a bit of a discussion sponsoring the oscars and the amazing product placement in that moment. >> again, you log some frequent flyer miles taking some of the team down there. >> and you spoke with benjamin netanyahu.

>> i started with ben horowitz on the east coast. and then benjamin netanyahu on the west coast. we had an interesting weston and silicon valley -- we had a very interesting conversation about israel and silicon valley. ♪

>> welcome back here and i am emily chang with cory johnson who spoke with israeli prime minister benjamin netanyahu yesterday while he was visiting silicon valley. >> the governor of california is striking a strategic deal to make a better relationship with companies. ceo. with the whatsup my hebrew was tested yesterday. it was interesting. he also met with the executives of a number of companies, even visiting apple.

let's hear what he had to say about that. there are so many technology companies coming out of israel. you were at apple earlier today, yes? what did you learn? like i learned that they are in israel and for good reason. of applications and a lot of ideas. right now, the future he wants to those who can innovate. the future will belong to those who can innovate even more. -- a lot ofmpanies is really smart companies are here. i want to make sure that cooperation increases, because i a competitivey is advantage. >> you struck a deal today with governor jerry brown to have a more formal relationship to try to -- do what? anytime you have bureaucracies on either side that are holding back development, let's first help

them by not interfering with them. second, there are things we can do. california, i hear, has a big water problem. in israel, we do not have a water problem. how is that possible? >> that would seem difficult. >> and our rainfall has dropped the 65 years of israel's existence. our population and economy has grown. how can we have a water problem? because we use technology to battle that. the technologies can be used by the state of california to in a minute its chronic drought problem. >> desalination has been controversial. >> you can use the sun, solar energy. that is what we are doing. expect to get?

i would like to get the venture capitalists, the investors, the technologists to come to israel and see how they can find -- [inaudible] entrepreneurs and technologies to cooperate. you do not insulate yourself or close yourself up in this global world. you open up, preferably to the smartest brains on the planet. that is what i think we have in israel. we know there are other places like that. california and israel erred to draw the greatest -- aren't two the greatest -- california and israel are two the greatest hubs for technology. >> a lot of the companies coming out of israel, the founders started in the military and they have learned a lot about telecommunications. i wonder about the newfound ands on spying by the nsa

distrust of government, is there something you can do to reassure people that the equipment they buy from is really technology companies will not be used for a spying program? >> we are going the opposite route. my point is to build, in israel, a global center for cyber security. thether words, to prevent spying. to prevent sabotage. bankll be to project accounts and electricity grids, protect traffic systems. aviation systems. all of these can be, both individually and national and for structure, they could be in herald by cyber attacks -- they cyberbe in peril by attacks. we need to protect individuals and countries. we have that capability in israel. i think we are among the top in

the world. i have actually made it easier for israel he startups. we have hundreds of startups in cyber security. i have made it easier for them to join other companies by relaxing the limitations on propriety and knowledge. i think this is a fantastic business opportunity. >> i think the legitimate some israelit companies making crucial pieces of telecommunications infrastructure is when the founders come directly from the israeli military. but there's also a lot of strength because they have that expertise. it is an interesting conflict. >> interesting to see the investments they are making. we will watch part two that interview next on bloomberg west. ♪

"bloombergback to west." i am emily chang here with cory johnson.

more with regimen that no who coming up. interesting to look at the fact that they stood, google, and apple have all bought is really technology companies, startups in the last few years. >> and for a lot of money. cross-and lot of investment going on. some interesting things about not just the telecommunications companies which are focused on cyber security, but something about the nature of the israeli tech scene. take a look at what netanyahu had to say. i wonder if the hostility we have seen in the ukraine am a we have not and hence -- we have gotten hints that there have been telecommunication attacks. do you know about that? >> i do not. >> is there something particularly israeli about working together and mission-oriented tasks for startups?

>> time to market is a lot shorter. we do not have time. we do not have a choice. people working in small teams, they have good results. once they finished their military service, they take that tradition out to the marketplace. they are very brazen. they are not limited by conventional thinking. that is something that we encourage in the military, out-of-the-box thinking. you would think it would be the opposite, but that is the laboratory for ingenuity and innovation. cutting corners, sometimes you had to cut corners. get the result. get me the outcome. that is the important thing. i think that is a very valuable -- plus, we also get very smart people. from most of the population. we select young men and women and put them through a few years on the information highway. they come out and you are

looking at a 21-year-old kid with technological experience that is hard to match, even in the big companies that you see here. that comes out later in being either knowledge workers or knowledge entrepreneurs or both. >> we have seen a lot of little companies get acquired before they get to any size. is that good or bad? when you imagine your economic goals for these technology companies, where do you like them to be? giant like google or some thing? >> small googles, that will be fine. that requires marketing reach. you bring people and they develop these startups. it used to be that if we sail at $100 million, they were wildly successful. now it can be a few billion dollars. i not sure there is a cure for that. i'm not going to legislate and tell them you cannot do that.

it seems to be our lot to keep on producing these mushrooms. but if somebody else takes the mushrooms, that is ok. to develop our marketing reach eventually of big companies. it has happened with several of our companies. overall, israel is the laboratory of the world, i would say. the laboratory of innovation. >> is there a concern about currency issues as the acquisitions get bigger and bigger? do you think about that as former finance minister? >> yeah, you just make the gdp a lot bigger. >> you're well on your way to that. thank you very much. >> what was your biggest take away from that interview? >> you know, i think numbers of how big this tech scene is given the small size of the country and given the other concerns, the existential concerns that the country has more than any

other, arguably. i think the focus on technology is really interesting. storiestimes we get about the silicon valley of arizona. >> i have been getting a lot of requests to talk about the technology seen in israel. people want to hear more about what is going on there. revenues like fiber are coming out of israel and people do not understand what it is about the start up being there that can create such success. >> i think there is a life or occasion of the kinds of companies. there have been companies that become big is -- big things. there is part of israel were they call it download valley. trouble getting rid of publicly traded companies like babylon that sort of exist around the internet and may be are not companies that will

survive for a long time. >> time for the number that tells a whole lot. >> 720 million -- the trade between california, silicon valley, and israel. 720 million dollars in technology goods shipped to california. the governor said california is technologyargest partner. toy are already very close muscle they should accelerate goes. >> another country that invests heavily in israeli technology is china. there have been questions about the nature of that relationship. >> a whole other issue about the expertise, israeli security, and that -- and what that can mean for a world power. >> great interview. >> great interview with eric schmidt. >> thank you for watching the show. we will see you later. ♪

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>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." toay, crimea is scheduled vote on whether to join russia. then republican conservatives gather for their annual meeting. we will examine the high-security business of storing copper. 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 today. pure cook reports on congresses step toward