It warm welcome to those just waking up in the United States. This is the pulse. Live from london. Ferraris facebook fight. We will look at the fallout. The tech titans are on a mission to increase your product. Facebook is seeking to deliver the Internet Access you want through drones and satellites. Jonathan ferro is here on that story. Microsoft wants to give you access to Office Software on any device, starting with an ipad. Has the details. I need both. What is facebook buying . Facebook is buying a 20 Million Drone maker here in the u. K. It is tiny. It has five employees. Longrones they make are endurance drones. It is something that hangs in the air for up to two months. You send this out to a geographic location. Somewhere with very poor infrastructure. No access to the internet. This drone can provide Internet Access. What is the potential . There is a question mark there. There is sunshine above the clouds, i have been told. We are starting to see a whole series of acquisitions being made here and you are creating a universe. They look at Mark Zuckerberg becoming the next stage of omaha. Creating a loose constellation of businesses. Could this fit into that . You can try to make sense of it to a certain extent. Whatsapp and instagram beefedup their mobile offering. This acquisition increases business. That makes sense. To some extent. A bit tangential. The deal everyone is talking about is oculus, the 2 billion virtual headwear maker. Let me tell you what investors think of it. Facebook is having a pretty bad week with investors. Investors are questioning what facebook is up to. They have spent over 20 billion since their ipo and it looks like the money is going here, there, and everywhere. The strategy might be to become a conglomerate. But get to manus. Microsoft is saying, we want all of our products to be accessible. This is trying to win over the business customer. I think win back the business customer. One billion people use Microsoft Office to do their work at home. You, if young to want to execute your business at home, we are not going to play catchup. Theyre also taking the first step in the public, delivering office on the ipad. They made it very clear. This is not a tradeoff. This is about putting the customer first. When it comes to office, the vision is straightforward. To make sure that the one billion office users can have access to the high fidelity Office Experience on every device they love to use. Office on the ipad. Marks onenouncement more step in that direction. His dream is enterprise, the business customer, that is the dominant force within microsoft. Consumers like you and are worth about 3. 7 billion. To the cloudccess and offering access to the cloud. It is mobile and the cloud. He wants to push into mobile. Is whatting thing he is saying is that you can read word documents, you cannot edit them. If you want to edit them, you have to pay for them. Reaction so far . It isnsumer so far whether you can convert. You actually want to be able to adjust the documents. Were are so used to acquiring ass online that are not expensive as 99, but if it is a business, it will probably convert. Revenueserwhelming that are generated and coming to the tech sector come from the enterprise sector, it comes from corporate sector. Reallysumer does not even feature. To generate that kind of revenue, look at what people are doing. Theyre working off the tablet on the train, at home. Look at microsoft. They are not competitive with the tablet. They have to come up with a product which is better than the surface. That is more port and for the windows story important for the windows story than the office story. Downloads, have they been good . Exciting stuff. Thank you. We will talk more about microsoft later, as well as facebook. Lets turn to turkey. The crackdown on social media continues. We have the developments. The turkish government is backing down. It is not backing down. It is becoming angrier and more aggressive in terms of its crackdown on social media. There has been a whole slew of revelations, leaks onto youtube and facebook, in particular, implicating the government and the Prime Minister in this massive Corruption Scandal in turkey. This latest video on youtube reportedly showing the foreign minister discussing potential military action inside of syria, that seems to have been the final straw for the government, which is already not very happy with social media. It has moved to block youtube. Thisoreign minister said was a despicable attack on national security. They are not denying the meeting actually took place. They are not denying that. They are talking about what they would do in the event that this ottoman shrine, 30 kilometers inside syria in a turkish enclave, they were discussing what they would do in the event that that came under attack from islamist insurgents who have encircled that area. They said the tape was doctored. They have been saying that about a lot of the leaks that have been coming out over the last few months with regard to the Corruption Scandal. Where will it end . This is a good question. I suppose the end of this chapter ought to be the local elections on sunday. The Prime Minister wants to use those as a springboard to run for the presidency in august. This latest video has clearly rankled the government. What are these anonymous people posting these videos and , what have they got left in reserve between now and sunday . Could there be another explosive revelation . Perhaps on facebook, youtube, perhaps a more else. Is somethingat that everyone will be watching out for. As we have seen with the twitter block, it is very hard to stop these kind of revelations coming out. They will just appear somewhere else. Thank you very much indeed. Our middle east editor. In addition to the turkish elections, we will be watching the upcoming indian elections, which are just 10 days away. Than 800 million eligible voters, the worlds biggest ballot we will be live from there with full coverage. A busy, busy time for the ballot box. Another day, another red carpet for the chinese president. He is in berlin. David tweed is following the visit. Relationship between china and berlin is described as a special one. We see the economic closeness between the two. It is also something more. It is. Only two years ago, the European Council on Foreign Relations used that description, special relationship, which usually refers to the United States and the united kingdom, and it was controversial. It is now accepted. It is special for a couple of reasons. Political. The premier of china was here last year and they had a full Cabinet Meeting with germany. That will be relieved and again repeated again later this year. Visitllor merkel will china later this year. At isher area to look just the overwhelming economic area. 140 billion euros worth of trade between germany and china last year. Yes, it is a very special relationship. She was in france and there were a slew of contracts find signed their. Re. What has germany got . It will not be so much in terms of the value of the contracts, but there are a couple of things that germany has been lobbying for. To sign an agreement with the bank in frankfurt so that it can clear chinese currency. They have signed similar agreements in london. That theyresting should choose frankfurt as well, given the amount of trade that is taking place here. It is possible that quite a lot of that currency trading could come to frankfurt. The other interesting point is that it really is a snub for paris. Yesterday, the french finance minister was tweeting that he would like to see paris become a eurozone center for trading the chinese currency. Thank you very much indeed, david. Will talk more about germany and chinas special relationship with the china director at trusted sources. What else are we watching today . The hunt for the missing malaysia and jet malaysian jet is occupying a new area. Authorities say this is the most credible lead for where the debris may be look voted located. We will bring you any headlines. The euro is falling. Insumer Price Inflation germanys saxon region slowed this month saxony region slowed this month. It was the first decline since october 2009. Speculation is still in place that the ecb will need to implement further measures when it meets next week. Kevins basie is lobbying real lawmakers in the u. S. Kevin spacey is lobbying real lawmakers in the u. S. They are seeking millions of dollars in tax breaks and exchange firs in exchange for filming house of cards. We are live with radio free mobile founder after the break. Now, lets talk tech. Facebook has just bought a u. K. Aerospace company to deliver Internet Services to underserved areas by drones and satellites. We are definitely going futuristic. Microsoft is testing out new partnerships. They have unveiled office for the ipad. Nadella wants to expand the market share to an even larger audience and different operating systems. Joining us now is radio free mobile founder richard windsor. Good morning. They have got to do this. They have got to make sure that they get this product, office, out to a new audience. Yes, it does. A couple of years ago i think it was a bit more of a question. The question is, have you cannibalized windows sales . Now the market is better defined and it is pretty clear that people who have got ipads are not going to buy a laptop anyway. That user is effectively lost unless you put office onto the ipad. That is really what is going on here. Spreadrosoft to its applications across other platforms. Experienceke the much more rounded for everyone who uses a range of devices. It is not going to move revenues in any direction at all, but at the generated bit more loyalty. Generate a bit more loyalty. How do you price these apps . That you is proposing basically downloaded for free, you can look at the documents, but to change them, to write in a word document, you would get charged. Is that the best model . I think it absolutely is. You only have to look at top revenue grossing apps on itunes and youll will see that all of them are free to download with in app purchasing. It is the freemium model. To read it, it is fine. You can use it to make presentations. That is helpful to push the use of office into the free segment. Also, to edit, obviously, that is if are you ball fairly of technology. They have made the right choice. What does this mean for Companies Like ever note . Obviously, it is greater competition for Companies Like ever note. Then again, the ever note comeback is going to be that we offer you more functionality for free and are paid option is going to be less than 99 per year. I expect that will be there response. What do you make of the Acquisition Strategy at facebook . They were buying up companies to integrate them into facebook and now it feels more and more like they are almost trying to have a hedge. The latest acquisition for the drones does it make sense to you . Yes, it makes a lot more sense than oculus does, to be honest with you. What is facebooks biggest challenge . They would like to have one billion more users. Penetration toet spread much further down through emerging markets. You can see exactly how the purchase of a Drone Company can help to achieve that. Switch gears to oculus and to be honest with you, i am still scratching my head and wondering how this is going to help the facebook proposition. How is it actually going to generate any value for facebook shareholders when they have just paid 2 billion for it . Is anything fair game now . Is anything in the tech landscape fair game . We have seen the buy a satellite company, a Drone Company, oculus , is there anything they wont touch . It is about producing a conglomerate . I hope there is. I hope they will look at their share price falling by 10 this week and take notice that the shareholders are voting with their feet, in terms of what their Acquisition Strategy is. This highlights one of the biggest problems you have with facebook and google. The voting interest of these companies are not aligned with the economic interest. That means that the founders of the companies who still control them have got a checkbook to spend other peoples money, but no comeback or checks or balances. Are you concerned that the facebook strategy will not work in the longterm . At the moment, i think things are going ok. Whatsapp does how make sense for facebook. From that point of view, the drone acquisition, the whatsapp acquisition, they do fit into the picture that facebook must build for itself if it is going to be a major player over the next 510 years. The i hope for is that oculus acquisition is a bit of an anomaly and the facebook Acquisition Strategy will be adjusted to make sure that everything fits into what this company is going to be over a 10 year timeframe. Thank you so much for that. Thank you. You dont often hear about the teenage mutant Ninja Turtles on bloomberg. A trailer for the new film has just been released. It has one million views on youtube. It is produced by michael bay. He produced armageddon and bad boys. He also produced the transformers series. Megan fox stars in this one as well. This is such a blast from the past. Welcome back. Lets see how the european markets are trading. Manus cranny is that the touchscreen with your check. About sumslar just up the issues of the european markets. At 8 00 a. M. This morning, spain told the market that deflation was the issue for them. This is europes fourthlargest economy. That is a critical issue. These guys have had inflation months. 5 for 78 german data is a little bit disappointing in terms of inflation. Two big countries, one big issue. See more mean we will easing or qe from the ecb . Investors are holding more cash. That is the news from bank of America Merrill lynch. They are holding the most cash since 2012. Theres a bit of a shift in markets. We are looking at a rise in u. S. Equity futures. Des at 18. 36. Back to you. We will take a break. Up next, the banks of told you not to worry. This could be the new y2k. We will investigate the new threat to the worlds atms. Welcome back to the pulse. Live from london. These are the Bloomberg Top headlines. The latest briefing on the missing malaysia and jet malaysian jet has just started. Radar now indicates that the plane probably flew a shorter distance than earlier estimated. Authorities say that this is the most critical lead us to where the debris may be located. We will be monitoring the News Conference and bringing you the headlines from it. The United NationsGeneral Assembly passed a nonbinding resolution saying the crimean resolution to join russia has no validity. Obligedountries are not to abide by the resolution. New ceo is on a mission to get Office Programs on all devices. That having office on ipad will change the name of the game. The world is not going to be defined by the factors that we know and love today, but by the variety of factors that we will come to deal with in the coming years. If you think about the core evolution of hardware systems and software, there will be many new form factors at a rapid pace and that will make computing ubiquitous. Lets stay with microsoft. It software powers the majority of atms. It is not pulling the technology. The threat to your money. Of gettinggest fear robbed at the atm is the person queuing behind you, its in my ba hacker sitting behind a computer. Nearly all the worlds cash machines are operated by Microsoft Windows xp, the same software that runs on many computers. It is also 12 years old. On the eighth of april, microsoft is pulling its Atm Technology in favor of newer programs. This could mean a higher risk of digital attacks for those customers which have not entered into special contracts. Microsoft would not tell us how many have not. One atm maker said the cost to upgrade could be in the thousands of dollars per machine. The question is whether an atm operator will put a price on your security . Forever. Been around constant updates. Fixing holes in the software. It has been a big part of everybodys life. I still have a computer that runs on it, a very old laptop. Chinas first Rare Earth Exchange started trading today. Jonathan ferro has the latest. First of all, give us a sense, this is about the market becoming more transparent. China has come under much more scrutiny over the last 34 years. It has. You have the president over in europe playing happy families with germany and france. It is coming back their way as well. On Global Institutional levels, there has been a test over rare earths for the last couple of years. This is a mineral world that china dominates. 90 of Global Production comes out of that country and they have done two things. They have cut the mining of it. They have justified this by saying, we need to contain the supplies of this. We need to look at addressing the threat from pollution. The wto is not buying it. They are siding with the eu, japan, the u. S. U. S. Companies are paying much more for this than the likes of chinese companies. That is why you are seeing them putting it on the exchanges and say, were going to be more transparent about the way this is priced. Brings a freemarket discipline to the equation. How does this evolve from here . They have 60 days to respond. Or go through the dispute mechanism at the wto. Deflecta step to try to criticism and bring more transparency into it. This is an ongoing problem on many, many levels. This is an ongoing problem with a whole host of things. Thank you very much. The very latest on this rare earth story. What to the worlds biggest Seed Companies have in common . Apart from the obvious, theyre all partners with an israeli company. We have been finding out why. These may be small, but they are model plants. Genetically modified by echo gene. Evo the seeds are identified by using computer algorithms from one of the most asked than save extensive databases in the business. A deep understanding of plant science and cuttingedge technology. We integrate them together and create a synergy that helps us to understand how the plant is operated on the genomic level so we can leverage this understanding of torch in order to improve the productivity in the field itself. Aroundmarket is worth 19 billion. s nongm seedse and it could be raking in over 200 million in sales by 2020. Identifying the genes in crops takes time and money. Even with the sophisticated algorithms, there will not be any major crops on the market until 2019. In the meantime, it aims to start selling higher yield seeds by 2016. It is looking to use its algorithms to get into the 50 billion market for Crop Protection chemicals and herbicides. More branches to an increasingly diversified business. What makes the story unique is the fact that their success is not entirely contingent on one product or one collaborative agreement. That significantly diversifies the risk. The potential at commercialization of a few of their products in the pipeline, the potential value of that significantly exceeds the near and intermediate term risk. They are convinced they can turn the computer algorithms into super corn or wheat or canola. Investors are keeping with them too, for now. Bloomberg, israel. It is amazing how all of these algorithms affect our daily lives without us really knowing it. We use themhem, every day, but we do not realize it. Agriculture and tech is just going and going now. We have been getting great packages on this. This is going to be a huge space and pretty important. Uber is expanding in asia. To lulu chens get in hong kong. Uber is joining the festive mood in hong kong, as the city kicks off over the weekend. The company is introducing a threeday trial starting today. This is all part of a bigger asia. Ion plan for uber in beijing, hong kong are just some of the top cities that the company is looking to expand to in asia this year. It has managed to increase its presence in more than 20 cities this year in asia within the year. It is not the only kid on the block. Plenty of other companies will be competing. Definitely. There is already at big presence for car booking apps and china already. Uber is taking a slightly different approach. They are catering to customers who are willing to pay the extra fares versus a taxi fee. They will partner with fivestar hotels, check out who are providing services, and then offer to the general public. Thank you so much. What a great story. We will continue to track this. It is time for todays hotshots. Drivers gearla one up for the malaysian grand prix. Ferrari, red bull, struggling to adapt to new regulations being put in place. This pilot got spectators pulses racing. He performed an incredible feat of flying and risky aero tricks as he sped down a canal in greece. It is only 21 meters wide. I have been there, it is pretty narrow. I would not want to fly a plane through it. More mud, sweat, and broken by chains and south africa bike chains in south africa. Particularlycluded tough climbs, loose rocky , surfaces surfaces and some challenging downhill bits as well. Yellow, retaining the sweatshirt in this. Indicating that they are leading. Highly visible, as well. Up next, flashy car meets flashy lawsuit. A battle between sports car maker and a 21yearold fan. Welcome back to the pulse. Ari fanenagers ferr page started out simply enough. He has now found himself in the middle of a legal battle with his favorite italian sports car maker. Hans nichols joins us from berlin. This is a cautionary tale of what not to do if you are a company and you have some fans who are passionate about you. It begins innocently enough with a 15yearold creating a facebook age for ferrari. He gets over 500,000 users. Ferrari steps in and says, we want to control this, we want to curate it, and we should probably do it for legal reasons. Father initially agreed to it. They spent 5500 hours working on it, they say. Then ferrari takes away their administrator rights. Lawsuithas filed a asking for 11 million for lost compensation for all of the work they put into it. You have this nasty situation where a company is suing their fan. I threw it back to you guys. If someone created a page for the pulse and you got to 500,000 lights and then you stepped in and tried to take it over, what would be your next move . Would you nurture that fan would you try to control them . What would the guy johnson, Francine Lacqua move be . More course, we would be than happy for that to happen because we are not a big corporation. If anyone wants to do that, we are well up for it. But we dont need the pictures. [laughter] the bigger the brand, the more control they want over this. Rightly or wrongly. Yes. It. Is one way to do cocacola faced a similar situation and they hire the fan and said, build the page out. What you do not want to do is ask youtube to block a video. This is what happened to nestle and greenpeace. Greenpeace was trying to make a point that nestle uses some source material where orangutans live. What happens if the video gets viral . It gets 1. 5 million views because it was shut down. It does not mean it was shut down elsewhere. Companies will be dealing with this in the future on how you control your online image, especially when you have some pretty dedicated fans and they might not be on the same page on everything with you, but they have the passion. Passion goes a long way. Thank you so much. Lets continue the conversation and talk about this. Lets talk to a social media expert. We are joined by such a man. It is not good for ferrari. What are they doing wrong . They have taken someone who is passionate about their brand and the cars they make, who has been so excited about it and so interested, devoted lots of his time and effort and own life to create a Community Around their product, and they have decided that they do not like that. They would rather he stopped and they want to retain control of their own brand themselves. This is a mistake. Philosophically, this is not nice. This is also a mistake in the way that we use social media. I opened it Instagram Account three days ago. I did not want to follow any of the corporate. Because it is boring. This is business, basically. They are losing out. You do not want to hear it from the company because it is always the same message in pictures. At exactly. If you look at the opportunity for brands in social media, there is a recent study that found that, contrary to popular belief, two thirds of conversation about brands is highly positive. There is a misperception that people are talking really negatively about brands, when really when people talk, it is mostly in a positive context. When we think about highly influential conversations that , nielsen found that recommendations from people you know and consumer opinions posted online where the two most influential factors when it came to consumers taking action about actually buying products when using services. I was thinking about this this morning. What occurred to me was that for two ferrari is in different businesses. Highend sports cars. They are also in the business of merchandising. Most people can buy some for ari ferrari merchandising. Is ferrari different than nestle . They make a lot of money off selling sports cars which very few people can buy. Is it different to the test for this company . For this company . Atthere are differences, but the end of the day they have people who love their products. It is the desire to own one and whether or not they can afford to buy one. It makes people that have one feel cool because everyone else wants to drive one. It forces the exclusivity thing. Whereas if you take an example nutella, a tele, woman said she would like to see world nutella day become every day is world nutella da y. Has really built this. Last year, someone at nutellas legal team, as part of a normal process, issued a ceaseanddesist order to stop world nutella day. They very quickly realized that that was probably not the right way to approach it. They should be celebrating the fact that she wants to celebrate it. They very quickly stopped doing that. By the way, the fifth of february. Dont forget that. Ofs is symptomatic corporations, companies, established companies trying to get their head around social media. This scares them in many cases. Yes. There was a feeling of a loss of control potentially that corporations are experiencing. It. E used to controlling they are used to controlling it. That has always been the case. People have always talked about brands, we have always talked about them, and now they can do it in the age of social media, online, and the conversation spreads much quicker and it takes place on a much greater scale. They can get involved in it and celebrate the fact that people want to celebrate their bands brands. Thank you so much. What day is it . 362 days from the teleday nutella day. [laughter] i made that up. The very latest in wearable tech. We will see if the smart watches will stand the test of time. In the last Dealer Survey that i saw, it puts the expected first liftoff into mid2015 or later. For rates to rise . For rates to rise. I think it would be appropriate to hold longer than that. It will depend on how quickly inflation moves toward our target. That was the Federal Reserve bank of chicago president Charles Evans speaking to betty liu in hong kong. We will have more of that interview throughout the day on bloomberg tv. Now time for what to watch. Were joined by Jonathan Ferro here in the studio. David tweed in berlin, as well. Fourthquarter earnings, 1 billion range. Me isteresting thing for whatsapp was 19 billion. The market cap for this company is 4 billion. What a missed opportunity. Which is missed valued . Misvalued . That is a good question. Whatsapp, i am not going there. [laughter] bbm dominated it. This has been a recent crisis in this newsroom. Timestsapp is worth four as much than the market cap for the company. I mean, come on. Bbm is great if you have a blackberry, otherwise, it is useless. Tofrankfurt will be able become a center for the settlement of the clearing of yuan trades, which would let frankfurt become the center of the eurozone. Compete tos to become a major harbor for trading the chinese currency, but it is still a step in the right direction. Thank you very much indeed. Pay attention. Turkish local elections. You would not normally Pay Attention to this, but the scandal will have a big effect. Banned and youtube twitter band. Banned. This is bloomberg surveillance. The malaysia air searches is shifting to warmer waters. General motors finishes a gruesome first quarter. We will speak to their new safety czar. The ipo friendly continues frenzy continues to read spotify takes the bait. Good morning, everyone. It this is bloomberg surveillance. Joining me come a scarlet fu and adam johnson. Busy friday, here you go. Japans finance minister cautions consumers on their slower spending. The government may have to increase the Stimulus Program ahead of the 8 april tax hike. Spanish Consumer Prices dropped unexpectedly. One quarter of the spanish workforce is not working. Imagine if it were like that here in the u. S. Later this morning, air force one will be landing in saudi arabia. President obama will