>> live from new york city welcome to bloomberg west. i met dollar. cory johnson is at the facebook annual developers conference. first, want to give you a check of the bloomberg top headlines. stocks sold off for the third straight day with the nasdaq dropping the most 11 months. the semiconductor index had its worst drop in five question makers sold off demand weakening for desktop computers. one company that had a huge day was kraft foods -- those shares

soar after the company agreed to be bought by heinz. they will now invest $10 billion in a new combined company which will be called craft heinz -- kraft heinz. >> every share of craft, shareholders of kraft foods will receive one share of the kraft heinz ebony as well as one time payment of $16 per share. matt: the combination would create third-largest beverage and food company with names like macaroni and cheese and a1 sauce. french investigators a voice recordings from the black box survived the impact of the german wings crash in the french outs. here is the director of the french accident investigation office. >> we just succeeded in getting an audio file which contains

usable sounds and voices. we have not yet fully understood and worked on it to be able to say this started at this precise point in flight and ended at this precise point in flight will stop we hear such persons -- this is an ongoing work and we hope to have first rough idea in a matter of days. matt: the casings of the second black box were found but the contents of that were missing. all 150 people on board were killed. paypal has agreed to pay 7.7 million dollars to settle with u.s. regulators on sanctions violations. a unit of the treasury department announced the civil settlement, saying paypal allowed violations of sanctions against iran, cuba and sudan.

paypal said it reported questionable payments that it processed and has taken steps to improve its compliance. comcast says it expects its purchase of time warner cable to close in the middle of the year as opposed to early this year. comcast started regulatory delays as the fcc waits for a ruling in a court case. they are trying to decide whether court cases can be viewed by other parties. the fcc says those documents as art -- those documents are key to assessing the merger. now to the lead -- a big day for facebook as the company holds its developer conference in san francisco. 2500 developers are at fort mason and thousands more are watching online. facebook is opening up its messenger app as a platform to software developers. facebook will support 3-d spherical io in the news and on oculus and it will be easier to share information between apps.

cory johnson has been at the event all day and joins us now as he has spent 12 hours deciding the difference between a platform and an app. that has been the just of your work. cory: that is the just of it. so we are done. it is interesting -- it's a joke in silicon valley that no one wants to be a platform and everyone wants to be a business. the companies that actually pull it off, those are companies like apple has successfully done with their iphone. they allowed their business to gross and much faster because they are participating in 70 more ideas. i think what facebook is after is a lot bigger. matt: companies that want to disrupt the media landscape need to be platforms. cory: total turnkey providers and other insert your catchphrase here. it is hard to decipher through

the catchphrases, but that is what gives me a job. it was interesting to hear mark zuckerberg talk to this group of developers who want to find a way to profit from this 600 million users of facebook messenger. listen to what mark zuckerberg had to say. mark: today, we are introducing messenger platform. it is a new platform developers -- [applause] it is a new platform that developers can use to build apps that connect with 600 million people who use messenger as they communicate everyday. by opening up messenger as a platform, we can express how people express themselves in rich new ways and make their conversations better. there will be a lot of things we can do with messenger platform over time, but we want to start

small. the first is giving people more tools for expression. we are expanding the composer in messenger and now you can find services that help you say anything you want that are. you can discover these services right in line and they will blink to the app stores, so you can download them easily. you can create content and share in messenger. what you will see is your friends will be easily able to supply and install the apps. i sent this to our developer team who is working on a face to platform. congratulations on shipping

this. it's simple. it's fun and easy. we are excited about the new kinds of things and creative tools we can enable with messenger platforms. there is a lot more to do here, but we are excited to see what you are going to be able to do with these tools we are rolling out first. the second thing we want to talk about is making messenger a place where you can easily communicate with the businesses you care about in addition to the people you care about. if you want to get in touch with a business, most of us probably still call them. but i don't know anybody who likes to call on businesses. it definitely doesn't feel like the future. think about how useful it would he if you can just message this and get information about whatever you need, make a

reservation, by something in line, change shipping information in time. we are introducing a way for you to can indicate with businesses like messenger will stop we think the key to making the experience good is starting these conversations at the right time. right after you purchase something online if you need to change your order, you can do that right in messenger. you can receive a receipt come you can track your package helping people communicate more naturally with businesses is going to improve almost every person's life. cory: so this is a necessarily revolutionary for the world's best. yammer is incorporated in different parts of microsoft. lots of messaging services in

china do that. users push them ahead of everyone else in this arena of making messaging a core with things like jabber jabber or things that have been professionally. add to that payments that certain happen with facebook and you have a robust possibility of a platform. who better to talk to than the director of facebook platform. >> it's what on your phone, it's what you download, it's with the experience itself on the phone. the platform is what enables it to happen. the facebook that form is all about [inaudible] cory: angry birds is that happen now face book is a platform?

>> it is an opportunity to engage with that app. cory: give me an example. >> you want to share animated gi fs in the app itself. you can find and download gify and downloaded and share it with friends. cory: can you download apps without messenger? >> there is a link in the app store. cory: will those companies be able to monetize with the help of facebook? >> they should be able to build monetization models on top of that. maybe they can sell inapt purchases. cory: what about sharing in the facebook ad revenue? there's a lot of discussion about newsfeed or buzz feed or national geographic publishing directly on facebook. is that an ad sharing model or an example of a platform? >> back to the messenger. form,

gify can create content for the messenger platform and they themselves can sell upgraded content. you can get deeper content and digital goods will stop there are a lot of ways to monetize be on that. cory: ultimately everyone is doing something on facebook and not just popping in to get pictures of your grandmother. >> they spoke is not just a place to share photos. it's a place where messenger is having conversations or engaging with smaller groups of people communicating on facebook. cory: the reason facebook is doing this here is because 2500 application developers are going to think about new ways to use this messenger. this is just the beginning. we will have more on this when "bloomberg west" continues.

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matt: i matt miller and this is "both -- "bloomberg west." coming up amazon tells the faa thanks but no thanks on it latest trone permit. those stories and more, all in this hour, but first off here are some top headlines. the president of yemen has apparently fled the country is shiite rebels advance. the associated press say he left his palace by boat sailing into the gulf. this comes after his defense minister was arrested by the rebels who just captured a key airbase in southern yemen. the fbi needs to urgently update its intelligence gathering capabilities both at home and abroad. that's the conclusion of a new report ordered by congress to assess the bureau's intelligence capabilities. the review found the fbi is falling behind the curve and it

comes to keeping tabs on extremists. sales rose 7.8%, hitting a seven-year high in february. the ceo of homebuilder -- of a homebuilder enterprise. >> overall, it is a very positive trend. everyone is excited about one month data. remember that data gets revised, but what is act there it is that the trend is positive. it is springtime and that's the big housing market time. in general, the trends are positive stop matt: february is the first time -- back to the facebook developer conference. eric zuckerberg is on stage begin to 2500 developers in san francisco. cory johnson's live outside the

event and joins us now. cory: lots of adjusting things going on inside, but to really understand what goes on inside facebook the ceo of a company called whip joins me. he was a chief operating officer of facebook. i know you worked a lot on mobile when you are at facebook. when facebook looks at mobile you see these other apps popping up, what's up and this book messenger is a serious business with 500 million users. do they want to go back to all facebook or do they imagine a world with many apps and face book's platform underneath it. >> i think it is a dual proposition. i think facebook has always realize not everyone will use facebook all the time and they want to be part of any app doing anything on mobile that can help golfers build or monetize or

both. cory: does facebook think their fundamental strength is advertising and figuring out ways to monetize eyeballs? >> i think they think of themselves as a consumer company and media company. they have a strong advertising platform because they reached 70 people through their consumer products will stop fundamentally, it's driven by a popular consumer product. >> it's focused on media first and the ads will come later? >> if you look at companies like yahoo! that have lost some of their edge with consumers, the advertising dollars follow what is essentially a really large audience stop -- really large audience. cory: i wonder as it relates to advertising as a way to create a motor on that that will keep the viewers even if it can't keep

the users -- they want the revenue component the machinery of advertising revenue will be part of facebook in the same way it is that google? >> facebook was to be where people are particularly spending time on mobile. facebook realized it might not all be in the context of a single app. cory: we understand there's an interesting development around media, around maybe partnering with "new york times" and buzz feed. what do you make of that? >> it interesting. the growth of mobile has changed facebook's platform quite a bit. the basic newsfeed was the sole source of his division for a huge number of developers. the gravity has shifted with apple and android providing distribution for a lot of developers. there are rumors they are

launching a plat with their messaging product and i think they are trying to develop that kind of relationship with vertical developers that they lost with the growth of mobile app stores. cory: i want to talk about how developers think they're going to make money working with race book -- with facebook. we will be back talking about how facebook is bringing money to the rest of the world when "bloomberg west" continues. ♪

cory: welcome back. we are at the fort mason center at the face book conference. mark zuckerberg is on the stage and i'm joined right now by the ceo of quit and the ceo of

shadow puppet, both former numbers of -- former face bookers. talk about it as a platform what does it mean? >> you think about people using it to communicate with their friends and you can imagine a bunch of interactions around that. i can imagine figuring out where to go sending stickers or other content. it will be interesting to see what direction they take it. >> i wonder if there is payment or photo sharing or annotation? >> think of all of the services that are related to the conversations like planning a movie you are planning a vacation all of these things are happening when you are talking to someone will stop -- talking to someone.

>> that's how this works in china. there's a large company there that runs a pretty elaborate platform and messaging. a lot of people anticipated this because it has been so successful. the revenue sharing is hard but the fundamental value developers are getting from facebook's distribution. they are reaching 600 million people, that's a lot more than most of these developers. cory: it's more than twitter. you make an app come equipped which has become one of my favorite apps. -- you make an app, quip do you want to turn over the keys to your kingdom so they know everything you are learning about your users? >> i think of it done in an elegant way, developers will embrace it. interoperability right now is

ready bad. if you click a link, you have to go to the app store, install it and typing your password and 20 minutes later you gave up. companies like facebook are really trying to lead the charge. part of it is altruistic and part of it is so many apps distribute their content through newsfeed and if everyone feels the better about it and everyone wins. cory: one of the biggest revenue for facebook has been links to buy new apps. do you want the other apps to know where you are and what success you are having? >> i think in this crowded mobile landscape, getting the word out is one of the biggest challenges for a start up. we have an app for schools and one of the -- if facebook can

deliver targeted ads for teachers, that is great. cory: we will have more from the conference here in san francisco when "bloomberg west" continues.

matt: you are watching "bloomberg west" we focus on innovation, technology and the future of his this. the leaders of germany france and spain arrived at the site of the german wings crash today. they thanked those involved with the recovery effort. about 600 officials are searching for bodies and wreckage in remote regions in the french alps. investigators are probing the black rocks looking for clues as to why the plane went into a steep dissent. the president of afghanistan addressed a joint league of congress today. he thanked the obama

administration for its support and spoke about him of the progress afghanistan is made on human rights. >> it was illegal to educate girls. today, more than 3 million girls in primary schools across the country are learning to openly and actively participate in the future of a democratic afghanistan. [applause] matt: yesterday, president obama said the u.s. would maintain its current troop levels in afghanistan after the end of the year. he was planning on cutting that force in half stop the oil glut keeps getting bigger. the amount of crude stored in the u.s. set another record after rising for the 11th week in a row. the amount of oil being pumped into the u.s. rose as well. the united auto workers to eliminate the difference in pay between his most senior workers and new or hires. the group opposes an even lower paid group will stop for ngm are

considering to have a lower paid group of union workers. negotiations don't officially begin until july. a discrimination lawsuit by former ups driver may be headed back to court after the u.s. supreme court voted 623 two back the rights of pregnant workers. in this case, the driver had to leave her job at ups after a doctor recommended she not lift heavy items. ups has given temporary assignments to other workers recovering from on-the-job injuries. a federal appeals court had previously backed ups and thrown out the suit. now back to the facebook conference -- mark zuckerberg just finished his keynote where he announced as an as a platform for developers will stop cory johnson is outside the event and joins us now. cory: messenger is so important to the future of facebook

because of a bigger change going on. this huge change in the telecommunications industry where telecommunications companies are losing the growth text messaging once represented. sms messaging is falling, actually shrinking and replacing -- and replaced by messaging apps like what's app and facebook messenger. mark zuckerberg announcing they have 600 million monthly active users. that is a ton of people. they announced they will let those users do more than just chat with each other share other things and let application developers like the 2500 gathered here in san francisco today let them write applications to be used on messenger and derive revenues. matt: i wonder what else we are

looking forward to out of this development -- out of this developers conference? zuckerberg's old for a short time. what do you expect? cory: one of the interesting things he talked about was the facebook log. it's one of the most clever things i've seen in decades of covering technology where facebook basically said to all the companies on the internet saying knowing who your users are and keeping track of their past, we've got that for you. just let us see the data about your users. they have created a facebook log with one click, your facebook credentials will let you get into the app you want to use. facebook has used that to gather boatloads of information across the internet. they've made it a little simpler to use. listen to what mark zuckerberg had to say about the adoption of those changes. mark: since making those

changes apps are requesting 50% fewer permissions and seeing more than 10% increases in the rate of people logging in. over the next month, more apps will migrate over to the new login and these changes will make people feel more comfortable and make the ecosystem a lot healthier overall. >> --cory: ecosystem is probably a good word -- inspire developers to do stuff on facebook and inspire companies to let facebook run their logins, inspire media logins to publish on the facebook form so that facebook is the center of the computing universe. matt: we will get back to you covering this story throughout the hour. right now, amazon says the real for drug testing is too little too late. the companies public policy chief told a senate subcommittee the drone model approved by the faa for testing is no longer

being used will stop he's as amazon is testing grounds in countries with looser regulations that encourage more innovation. joining us is the ceo of the association of unmanned vehicle systems international. thank you for joining us. how much of a disappointment is this as far as the slow pace of u.s. your craddock regulations is concerned? >> this has been going on for some time now. amazon is emblematic of this challenge where we are trying to move forward with this technology in the marketplace. it's very exciting for many user industries that want to use it that were being slowed down by regulations. matt: amazon would rather test new technology in places like europe or asia. i'm surprised europe will have

faster innovation encouraging regulations. how did that come about? >> that's a great question. we want to field this technology as quickly as we can. the key is harmonization and even across e there is variability on how it is being allowed and implemented. in montreal yesterday, i was at the civil aviation organization symposium trying to figure out how to get this harmonized around the world and it's a real challenge. matt: are the safety concerns what is holding us back? that's what the associate director in charge has said. the safety concerns are paramount. >> some things are not complex.

for being able to fly under 500 feet within line of sight, daytime operations, that unlocks a huge number of potential applications in value. we need to be working on more complex business like flying beyond visual line of sight, flying in urban areas and things like that. it's going to try to catch up with the technology. matt: where do you think this technology is going to take off first? china, europe? where do you see the best case for innovation and forward motion? >> i think it's going to land differently in different markets. i don't think that's going to be as much to do with the civil aviation authorities as much as

how people use the technology. we just got done having a good discussion on capitol hill with many agricultural corporations. farmers want to use this so arguably we would like to think the u.s. is going to be the place this will move the quickest and not just for farmers, but for the consumer as well. matt: if amazon or any other company tests this in other markets, do they use suppliers that are fundamental to those other markets? >> potentially. probably the most important thing is amazon has a huge business opportunity in the u.s. as do many other cargo suppliers and many other industries. this is essentially the largest market. we want to do this on a global

basis and harmonize it as well. when we can fly, we can test these technologies improve how safe it can be. matt: thank you so much for joining us. we're going to take a quick break and come back more -- come back with more from the facebook developers conference. ♪

matt: coming up, how facebook makes money. we will debate digital ads on the social network. plus dick costolo is in india. that story is later this hour. back to the facebook developers conference. cory johnson is back with us from outside the event and this time we are talking about video ads. cory: and why not?

my guest joins me now -- my guests join me now. when you look at what has been done around the deal adds, what are the underlying trends? >> up and up. a split is getting more traction in video and it's building an interesting platform for marketers to use. mark zuckerberg today said a few years ago we'll used text on facebook and now we are transitioning to images and now to video and making it more of a platform for advertisers. cory: i always hear yahoo! and others talking about it -- is this an avenue where the cpm's are higher? >> they can be for sure. video in general does and is a good thing for facebook. the more video revenue they can

sell, the better. cory: what do you wish they could do better? >> video is a higher cpm but it's a proven format. we are in a post -- in a post broadcast world where you can aggregate huge audiences without needing to be in prime time television. what i would like to see, i think facebook is figuring out how big their reach is and how to price it. is it equal or better in its effectiveness versus television? that's the next place to go for video online. >> it seems like from the earliest days of the internet will we were talking about these issues like wouldn't it be great if you could measure advertising because you will know exactly

who you are reaching. every time advertising is measured, cpm's go down. are we going to see that with the same in video -- maybe facebook won't have the same video, television advertising rate will collapse? >> it's possible. we've talked about theater nabbing being the most measurable medium for years thanks in large part to what facebook is doing. they know who you are, what you like, what you are interested in and they can target ads to that and measure the effectiveness on the backend. if you saw an ad for a car and ended up buying the car, they might know if the ad helped trigger that. i think that would be more valuable. cory: are there tools they spoke can offer? i think the ways ads are being served up to consumers, we watch madmen and we see a bunch of guys -- this

ability to real-time auction, to put ads of with the time and place and person viewing them, what kinds of tools does facebook have that are unique? >> there's a countertrend happening where it did hit a bottom but with the right tracking and value association, the trends are up. on the video side, -- cory: what makes facebook unique? >> they've worked with data logic which powers a royalty backend with grocery stores so they can tie behaviors back to your ad at the personal level. that has been a really powerful tool for them. cory: they will be able to see i

saw a heinz ketchup ad and then went and brought it -- went and bought it? >> we have been experimenting with that as an agency, talking to facebook dance. >> i think that is true. going back to my point about wanting to know whether the advertising is effect of by being able to target people precisely with advertising and letting the advertiser know whether someone actually viewed the added is pretty revolutionary. not just video advertising, but advertising in general. that is exciting. >> there are e-commerce plays and you can track this through a digital connection. now as we have these tools were we have walmart and amazon, we are seeing what we used to call brand advertising tied to a

revenue event with much more fidelity. >> we saw this news yesterday with the new york times and buzz feed turning over and publishing on that platform only. it's potentially idiotic and i got an e-mail from a company i won't name. he said idiotic is right. i wonder if the risk is just so apparent why someone would do something like this? >> it shows how powerful. talk about the media shift to a mobile world where content is accessed by apps and you talk about 600 million in messenger that is the power facebook has and fear that the traditional publishers have where they are going to find people on mobile. mark just talked in the keynote about every time there's a splintering there are ways to

access something and many of them won't be good in the best one won't be used. it really powerful and it is something even somebody like the new york times will have a hard time competing with will stop cory: good to see you both. thank you very much. matt: we're going to give you a check on bloomberg's top headlines will stop twitter is expanding its india development team. >> we are constantly investing in the languages we cover and provide port for. because india is one of the fastest growing countries from a user growth perspective, i expect to invest in where we are seeing growth will stop matt: 16 government accounts, including the army will be able to send their tweets to indian listens

to stop in the apostle largest suv maker is in talks to buy 10 and farina the designer behind the ferrari testarossa and the 250 gt. negotiations could still fall apart that investors seem to like the idea. shares of the italian company rose as much as 10% today. christie's is banking on this picasso to fetch the highest price ever in an art auction, asking at least $140 million for the 1995 painting. the seller is anonymous. the current record is paid by steve when or his wife for a francis bacon painting. we're going to head back to the facebook developers conference in san francisco. ♪

matt: this is bloomberg west. i'm matt miller. the bwest byte is where we focus on one number that tells a whole lot stop cory johnson is back from the facebook conference. you've got the bite. cory: how about 10%? 10% of all voice over ip calls are made using facebook. it's a way to route voice calls using packet as opposed to copper wires. 10% of those calls are made on facebook. facebook has great aims to use a spoke for a lot of things including making phone calls, they've already commanded 10% of that market. that's a huge shot at a rapidly

growing market. matt: i do a lot of face time, which is an apple thing. but voice over internet, the quality never seems to be quite up there with regular phone calls. is that improving? >> you probably make a lot of voice calls and you don't even know it. a lot of calls you make can be connected through a network. the quality is improving and a lot of calls are regarded that way that you don't know about all stop it gets interesting for this company, because there's another way they are captioning -- capturing the time users are doing it. >> i have a new favorite acronym. matt: thank you very much. you can get the latest headlines all the time on your phone tablet and on bloomberg.com and

on bloomberg radio. see you tomorrow. ♪