>> live from pier three in san this is "bloomberg west." i am emily chang. ipo in theh spotlight -- we have the so-called twitter of china filing to go public while alibaba says it will ipo in the united states. ono, apple makes a big bet college sports as march madness gets ready to go but first a check of your bloomberg top headlines. apple cofounder steve jobs apparently told executives he

had no plans to release an apple tv set months before he died. steve jobs told apple executives that " tv is a terrible business and they don't turnover and the margins sock." he says the apple tv streaming box would remain a hobby. microsoft is offering a new way for customers to access office 365. the program is designed for an individual allowing one pc and one tablet to connect to the service and a subtraction will cost $70 per year or seven dollars per month and rolls out in the spring. the los angeles man who newsweek claims invented bitcoin has hired a lawyer to prove he did not create the digital currency. unconditionally denies the report and says he has difficulty finding a job.

he has no experience or knowledge of cvarotgraphy or virtual currencies. chinese e-commerce giant alibaba is starting the ipo process saying it will file in the united states. they have not filed yet. there was much discussion of them filing and hong kong. the rumblings have been going on. they are getting ready so they are moving down the process. >> they have had talks with about six different banks and could be talking potential valuations as high as $200 billion. this could be the largest tech ipo in history. >> if it is $200 billion and offer 12% of the shares, the math tells us that may be the biggest ipo of any kind at all. >> we should probably ask lame

about what this is. alibaba has a number of different kinds of businesses. they have been referred to the amazon of china. >> i want to go with the match game. ofbaba is the blank china. it's a little bit of the amazon and ebay and the google of china. it's a little bit twitter of china which owns 19% of weibo which filed for an ipo on friday. >> it's got business to business businesses, b to c where they do high-end luxury brands, it's got c to c which is like ebay but it's not an auction. the chinese people get their everyday items there. >> they've got a massive scale, 800 million registered users for their alipay business alone. those numbers are incredible. >> let's talk more about how

significant this offering will be. at's bring in craig yu, former google executive. he joins us from bloomberg industries in new york. how significant is it that alibaba is going public in the united states? anticipatingen their announcement of a filing for some time. it pays back yahoo! has a big stake in the company. the second thing is that they have been on acquisitions. going public will provide more currency for them to make more acquisitions. >> what kind of acquisitions? >> they have spent $1 billion on acquisitions in the last year in different purchases as well as minority stake. we heard that it took a stake in aibo and it took a stake in video and movie production company and it has been launching a lot of stuff in the

mobile area. do you kind of numbers expect to see with this filing and what do you need to seek for it to support the $200 billion valuations? numbers arehe staggering but i think investors will start with the over all chinese market and the growth opportunity there. there is over 600 million registered internet users in china and that is growing dramatically. e-commerce is a bigger part of the bigger overall sales environment in china than it is in the u.s. or much of western -- and the western world. it is a company in the sweet spot of tea categories in the chinese economy. the chinese economy is becoming more consumer oriented. that is a big base and investors will want to see some serious topline and bottom-line growth to support the valuation of $200 billion. >> isn't the alibaba sales growth rate slowing down? >> we think so but we have not

seen actual numbers. you expect a slowdown but how much? is the growth organic? they have done a lot of acquisitions but is it a situation like sales first were most of the growth is through acquisitions or is the business truly growing? that thee concerns is tier one cities in china have seen a lot of growth for e-commerce online social media businesses. after you pass those cities, there is not a lot of growth in china. it could be limiting their growth potential because not all of china is available to them. >> weibo says their growth is slowing down. to us a little about the significance of both alibaba and weibo looking to go public at the same time. what advantages thereof doing this right now in the united states? the capital markets in the u.s. is a little better for shares, for controlling the company.

moreover, this shows that for alibaba to grow and get that big, they have to start to look for other growth areas like international. there is speculation that they will start to look at u.s. markets and u.s. businesses very selectively. is this a business set up to do business in the u.s. particularly given the infrastructure -- you see amazon, you see ebay -- building up a physical infrastructure, can alabama get into that damon the u.s.? >> i think it can do so selectively. alibaba has been focusing on cross-border growth. it started that way to take chinese merchant goods international. that's their business model and they can do it for b to c. for the luxury brands going into china and goods from china exporting to the u.s. >> alibaba has quite an

operation in the united states but we don't talk about it a lot. alibaba.com u.s. businesses get their goods through that website. it might be a random ingredient to a special lotion they cannot get in the united states. maybe it comes from the heating. t --ahiti. what do you think about the extent of the alabama -- alibaba potential to grow more locally and further infiltrate the u.s. and other markets? >> one of the reasons for the u.s. offering was simply control. ma and his partners want to maintain control even though he only on 7.4% of the stock. that is the key reason they are listing in the u.s. versus hong kong. the other benefit is to make this company, maybe to introduce alibaba -- people don't know it outside of china. this u.s. offering, this global

offering is a way to introduce it to other parts of the world, investors and other potential partners. even though the growth outlook in china is extraordinary and considered to be a long-term growth story, alibaba wants to look globally in the u.s. and the rest of the world but it will be more competitive than and their core chinese market. >> paul sweeney a bloomberg industries and chid yu we will continue this conversation and the twitter ceo is in china this week as well and we will talk more about that. also, the facebook purchase of has many wondering what exactly mark zuckerberg will do with the messaging service. one of the top former developers of facebook joins us later. ♪

>> welcome back.

alibabaalking about planning to go public in the united states and weibo filing to go public in the united states, two big potential tech ipos. a formers crid yu executive of google in china and paul sweeney. let's talk about the regulatory issues and corporate governance. a lot of discussion between alibaba and hong kong executives about whether they could list in hong kong or the united states and decided to go in the united states, why? >> listing in the u.s. allowsjack ma controls even with a minority stake. that is the primary reason. >> talk to us about the stock and what jack ma is looking for? i've never seen a company

where they want to have partners and name certain board members. fundamentally, the shareholders don't get to sit on the board. what's amazing is the u.s. securities law will allow this in hong kong has better protections in the u.s. the u.s. will get the listing and get $1 billion likely and fees from the lawyers and the exchanges and investment banks. let me put this to you, paul, w filinge with theeibo, -- let me read this to you from the weibo filing. you're actually buying a cayman islands holding company instead of holdingweibo. they are practically saying that your fewer a u.s. investor and

buy stock, tough luck if there is a problem. is that every problem? china is front and center for global investors. we have seen it before and with! had a big issue allie babb over some governance issues a couple of years ago. for the alibaba filing, the structure allows jack ma and his partnership group to have preferential appointment of board members giving his group control. that is unusual. the way we typically see minority shareholders exert influence over u.s. companies like in the media industry is through super voting stock. it gives the founders maybe 10 votes where public shareholders might have one vote. that is a typical structure here and jack ma and his group are choosing a different structure. that is a structure that did not get approved in hong kong. it's more typical in the u.s. and the u.s. will less and

that's how it will happen. >> it's quite confusing. costelo is ceo deck in china. he wants to get twitter into china but the characters are different. any likelihood that twitter will be unblocked in china? >> it's possible but it's very difficult for what a western company to be able to work into the chinese media. that's because there are so many different types of relationships with the government in different agencies at all levels. >> twitter has said this is a her small visit to speak with universities and he is trying to find out more about what they are thinking and how they work. i want you to describe the differences in the services and the competition between weibo and wechat which is owned by 10

cent and how many people actually use twitter. talk to us about that landscape. there were some features of weibo that predated twitter and twitter adopted. >> absolutely, the first thing that many people don't realize is that messaging and mobile is not just messaging. that means messaging is the back bone for a lot of mobile user activity. think how much we use messaging. these services are critical to companies like alibaba because it allows them to lay services on top of them like commerce which is the backbone. >> let me ask you about accounting issues. weibo warns in their filing that there have been a lot of accounting issues with chinese companies and their accountants might not be able to examine the books because of chinese

securities law. is that going to weigh against either of the ipos? >> it is certainly something investors will look at. what investors have noticed over the last few years is that the risk section in ipo documentation have gotten more robust and gotten much more verbose and there are more risks being illuminated for shareholders. when you invest in a china domiciled company even though it will be listed in the u.s., there are clearly accounting issues and regulatory issues and country risk issues that investors generally have to get comfortable with. we have a couple of companies that have been in the u.s. market a while. this is something that investors are pretty comfortable taking a look at and assessing that risk. yu,aul sweeney and crid thank you both so much. next up, what makes a great leader in technology? we will look at the do's and

don'ts. ♪

live ops waseo of replaced, the new ceo had big shoes to fill. he wanted to take the public service platform to the cloud but along the way, he learned a lot about how to be a leader in tech. >> as part of that transition, marty help to integrate how live ops works. as a result of the changes, the company is seeing interesting growth. whatliveopsabout

is. >> it's a cloud situation for customer service. inare helping people coming through voice or twitter or facebook or any channel looking for help from companies and our platform helps them get that help. .> you took over as leader the former ceo is kind of full of it? i want to get your take on what it's like to take over for someone like that and how you decided to take your own course. >> coming in with somebody like maynard who created an amazing culture was a huge advantage for may. i saw a huge opportunity to give at the company in a different direction with full support from maynard and the rest of the board in that direction capitalized on mobile and social and everything impacting other parts of technology but now it is starting to impact customer service. >> how did you use those things

and customer service? i feel like you see these businesses react to social media complaints. the notion that you can stand in line with an airline company and you get better service when you tweet seems ridiculous to me. >> companies realize that all of us are using more than one channel. contact centers, customer service centers are optimized for voice. and europephone call put in line and you wait for somebody but the world has changed. people are now tweeting and posting on facebook and it could be the same person who has made a call or an e-mail. we have realize the reality of the weight we are conducting business and looking for help. liveops said we can make is better. >> describe what the optimal customer service reaction is now given this new year a? to au -- when you get

person coming want the person to know who you are. they've got an understanding of what your interactions have been previously. they know about you and know what your relationship with the company is and they are better able to help you so you get an agent that's happier because they have the full view of the customer and you get a customer happier because they know who you are. they know you have tweeted and they know what kind of help you're looking for. this knowledge is now able to come together more quickly than it was in the past. therefore, the agent helping you is better informed and happier and you are happier and it's a better experience. >> is making that kind of change in an organization difficult for a company that is still kind of new? >> it is, you have to embrace the new channels as professionally as you would voice and decide you will treat twitter like you would voice. is an important channel, it's new and it's important to hear customers so you need to treat it professionally. >> how do you do this internally? >> you need to show the value.

someone tweeted thank you and that was awesome help. wouldn't that be great? >> thank you very much. up, what is mark zuckerberg thinking? we will talk to a former facebook executive who knows what goes inside his head when it comes to whatsapp. you can watch us on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪ >> bloomberg tv is "on the markets." let's get you caught up. stocks are rising and the dow was up more than one percent. the nasdaq is up one percent and the s&p 500 is up 9/10 of one percent after factory production rose the most since august. a couple of individual movers -- the first is chesapeake, the energy company has filed

paperwork to possibly spin off its oilfield services unit. ceospinoff comes as the cuts capital spending, trying to close a $1 billion funding gap for this year. we will be back in 30 minutes. ♪

>> you are watching "bloomberg west." recently made a huge forisition buying whatsapp 19 billion dollars. people are wondering what mark zuckerberg is thinking and what to they plan to do with whatsapp . i sat down with the former facebook developer, a former head of facebook for android and the spearhead are of the facebook home project. about marky asking zuckerberg buying whatsapp. >> it shows that market is really everything i hope he

continues to be for a long time which is making it bets, proving that he has the ability to pull them off and getting the deal done in one month and not backing down afterwards. >> is $19 billion worth of? >> only time will tell but certainly if you look at some of the different active user comps opportunity, it could replace communications on mobile. that is worth a lot. the mobile communication industry is one dollars trillion. -- is $1 trillion. >> when you are at facebook, were you aware of whatsapp? when do you think they started following it closely? >>that's a good question -- i think we were always aware of it given the global perspective. 80% of facebook users are outside of the state that we are aware of other companies -- they are aware of other companies.

i think it was a serious observation based on the whole category. you had different applications. there is a phenomena going on and that's why i think they created messenger brand. they realize the right way to win in this market was to acquire whatsapp. >> give us an idea of what you think mark was thinking. why did he buy this for this much money and what does he plan to do with it? >> the reason he bought it for this much money is he got the deal done. when you want to do something fast which is a hallmark of facebook, you have to give them something, you have to make the deal compelling. i think rice was clearly very compelling in this case. - i think price was worth very compelling in this case. you have to know what your plan is and stick to it. thrivent to let whatsapp

independently and grow and overtime, the way a couple months facebook will be like instagram. facebook put itself in a position to have the must-have communication and social applications on mobile. that is a huge franchise to own and leverage. >> do you think there will be advertising? do you think there will be stickers? where does whatsapp go from here with an facebook? clearly doesn is not believe that stuff and i'm sure he and marquette a real see serious conversation. i expect them to monetize through subscriptions or directly charging the carriers. it is notdels, advertising and not stickers or distribution. >> does this dwarf instagram in any way? >> i don't think so. kevin is on the board and is not. >> when instagram was richest it was earlier and had 30 million

active and when it closed it was closer to $100 million. whatsapp is about half of facebook. it's a different time and different scope of acquisition. i think both of them will be equally important. >> what do you think of the idea of facebook working on more standalone apps? aper looks great when it came out but people have already forgotten about it, it seems. >> one of the challenges with a portfolio of app strategy is getting engagement. there is not a lot of mobile apps that people open every day. that is what i saw when i was at facebook. on the flipside, the design usable behind mobile are tapping into my experience building mobile apps and seeing the data on facebook. single-purpose apps are really powerful. people want to go to an app to do a specific task and then go to another. dictatingbehavior is

the facebook strategy. do what customers want and that's how you ultimately succeed. i think they are adapting their strategy and there is other challenges they are taking on. you don't get distribution automatically by taking on the big app. they will have to learn to reactivate users. >> the morocco managing director. with me now is cory johnson and we will talk a little bit about apple tv coming up. it's interesting to hear from bubba who was at facebook for a long time. he had interesting observations about how mark zuckerberg works. history of the internet is brief so we tend to think of companies adding products and services and you think of ebay plotgpaypal is a claimant that as a payment platform. or yahoo! as sports but we don't

think of the standalone world of apps. the facebook image might not be change coming to facebook, it might be other products is set around facebook and then interconnections we cannot even see as users. it's a different way to think about the future of this business. >> how successful is that strategy going to be? whatsapp already has a ton of users. facebook's paper disappeared after it came out. it was number one for a while and now nobody is using it. the same thing happened with facebook messaging which is why they ended up buying whatsapp. how successful can that strategy be? it is nice to know that mark zuckerberg can change his thinking on certain things. andou talk to investors other executives in technology, they admire him so much because he is willing to say maybe i was wrong. >> after shoveling millions of dollars into these efforts -- it's interesting to note that

instagram was successful without advertising. you can only have so many products without revenue. they might be sucking the oxygen out of the room for their competitors. if whatsapp can still the text messaging revenue from the carriers, that makes them a more valuable place to be on facebook. ultimately, there will have to be some revenue and profits associated with this. facebook is anonymously profitable. his businesses they are acquiring do not have that problem. >> we will be watching and we will talk about march madness and apple tv coming up. you can get the games on apple tv. >> nothing on the brackets? >> all i know is harvard. they made it. ♪

>> welcome back. apps likesecret

whisper and secret let you share subjects anonymously but not everyone is a fan including venture capitalist mark andreessen. he tweeted -- last week, the whisper ceo told me the company has a strict policy and what can be posted and he feels he is giving users of voice who may be felt they did not have one. apple tv is getting into the march madness mix. the atlantic conference is host to the blue devils. they are going to apple tv streaming. jon erlichman is in l.a. with more details. as i understand it, they are not offering full games but game

highlights? exactly, the broadcasting rights are locked up for a long time. want tore apple and you grow something like apple tv, what are your options? one option is to cut deal specifically with conferences that have big fan bases like the duke fan base that want constant analysis and highlights. one mainstream is the company that built this app. the ceo joins us now. let's talk more about this tricky world of rights. why is it that these apps can be created when you have these monster deals that the broadcasters have signed for the live streaming rights? you pointed out, a lot of these rights are locked up and it takes years to look at these multiyear agreements. it's not always easy to want to do something and do it soon

thereafter. we are seeing the first wave of what is possible. on a digital device. , streaming device. the other way to think about it is digital devices have an advantage over maybe what the live channel might have on traditional tv. that would cater to the fan base if you are a school fan. these are the type of things i think that are looking better. >> those who follow apple closely may know that the ceo, tim cook, is a fan of duke basketball and eddie cue is also a big fan. saw espn gravitate toward apple tv relatively early. are these signals that more sports, maybe more basketball will eventually make their way to apple tv? >> i hope so. ago where that long

the consumers reception -- perception of what was possible on a streaming device was cap videos and kids falling off their skateboards. we have gone from that to streaming movies thanks to some very large streaming service providers like netflix and hulu and now we are starting to see sports and i think that's where it the importance is that we are starting to see the broadening of content on streaming platforms. ultimately, that makes this a very exciting next few years to look forward to. >> what ultimately is the real game changer? there have been discussions that google might want to require nfl sunday ticket and that did not happen but it seems like you have to see a very pricey deal cut between some sports league and some technology player like apple or google for everyone to really shift their focus. >> yes, sports rights are ordinarily expensive.

it's not quite possible to walk and be ableosystem to do live games like you expect to see on tv. i don't expect that to change anytime soon. if you look outside the united states, we are seeing evidence of that happening more and more. sports rights in various forms of video sports rights which can be quite compelling are starting to make their way onto digital devices within a few minutes, within a small change in time relative to what's on air. yes, i think it will take someone with really deep pockets to try to change the way the economics work and i'm not really sure how big that will be? >> and terms of what you do at one mainstream, this is an apt you built in a relatively short amount of time, a few weeks, what does that say about your technology? we have always had content

companies try to focus on content in the old way of doing things. with digital having come about, we are starting to face this unfortunate rusher from content companies to develop technology capabilities and we started as a to say to content companies that you focus on content and users in marketing and editorial and work with us as the technology partner so that we can take care of all of the underlying underpinnings of what it takes to have a successful online experience. that's what we are here to do. lots more to watch for, thank you so much. >> thank you. you know what else you can get on apple tv? "bloomberg west." there is a whole bloomberg experience there. we will be right back with more "bloomberg west." ♪

>> this is "bloomberg west." advertising company ray in one is preparing for an ipo and other online ad companies have seen shares soar since they went public. what powers the data from ad companies? about this stuff, big data and data centers and the cloud and it sounds kind of squishy. centersce is 150 data in 50 companies. equinox joins me right now. into one ofill down the things you do which is enabling ad networks to throw ads in front of webpages.

talk to me about the technology behind that. what we are doing is enabling real-time bidding. it's up to roughly 20% of digital advertising today done and these auction like bidding environments. we enable these companies to come in and form communities of groups of companies to take advantage of the network density we have in our data centers and it can move ads quickly around the world. >> when i think of open bidding, i think of eyes on the commodities floor trading in chicago. something is offered and lots of hands go up to buy or maybe sell and that is happening behind every kind of webpage but what is it about your technology that makes that more efficacious? our advantage is similar to

stock exchanges which moved toward electronic. that happened because we have hundreds of networks that enable ultralow latency like flash trading or high-frequency trading. you can move stuff very quickly across multiple networks. >> because they are the same kind of facility? >> we have 900 75 networks connected around the world to you can choose the fastest route to move information or trade or an ad. >> fundamentally, does that mean that an advertiser is able to reach the potential purchaser of the product in a more real-time basis? >> yes, media buyers whether it is video or mobile or print, they can move ads and buy and sell ads quicker than they could in any other environment. today it is 20% of the digital advertising world and it's supposed to triple over the next few years. >> will that change the notion

of advertising? we think of advertising as frogs and at wiser. -- and budweiser. this changes? >> it absolutely changes because it is real-time. it is being bid in these auctions. they are reducing up to 50% of the time to be able to buy a move out around. it is very economical and high-performance for these guys to do this so it is a new ecosystem. >> it also seems like it is commoditized. some of these companies have had financial results and have struggled because it is a race to the bottom in terms of margin. amazon does not seem to care about profits. >> that is a little different. they are putting a lot of pressure because of the price reductions and we enable a lot of that work, too.

even though a company like amazon build big storage farms all over the world, they use equinix in the cities where the connections are dense. things to me about the you can do to spur the kind of growth that involves the changing of the entire advertising agency. >> it is a a little bit of following the money. you mentioned bright role so once you get a critical matching engine like them, people have to get right next to it. it is the engine that moves the ads around. the buyers and sellers get next to that engine and that phenomenon grows and grows. it typically goes east coast/west coast or enables it in singapore or asia or amsterdam. it is starting to go global. >> what are the results like? it could be up to 50% improvement in their budget and reliability and speed to get advertising which is connected

to the right venue. >> thank you very much. >> thank you, cory. numberime for the bwest -- weibo had an operating profit last quarter. accounting and unwinding of liabilities ultimately gave them a $21 million net profit in the fourth quarter but either way, it was the financial results from them and they have one thing twitter does not which is profitability. profitable for one quarter and twitter has never been profitable. interesting comparison between these two businesses. they are very different? >> yes, the video you showed was robert downey junior. at thaties have to look platform the same way they look at twitter. they usually team up with

partners who can do the equivalent of tweeting on their behalf. that is a huge way that hollywood ends up using these platforms to get the word out about what they are doing. >> hollywood and celebrities and china, millions of followers. platformcome a huge for them in china just like twitter is a platform here in the united states. >> when i went through the filing, one of the interesting things is how many ways weibo's numbers really mirror twitter. you wonder how much of twitter is them staring at other people on twitter. and you think of weibo it seems like more of a sustainable cultural trend. >> you can fit more into one post on weibo, either way we will follow his road to ipo. if you offer watching this edition of "bloomberg west." ♪

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>> i am mark crumpton, this is bottom line, the intersection of business at economics with a main street perspective. russia is hit with u.s. and eu sanctions following crimea's a session vote. malaysian officials investigate possible pilot suicides in the disappearance of flights 370. and we will look at the largest supplier of tram cars. to our viewers in the united states and those of you joining us from around the world, welcome. we