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QUEST MEANS BUSINESS
East/West Divisions Set Down; What EU/US Sanctions Mean; MICEX Took Hit; US Markets Up Over Week; Search for MH370; Breaking News: "Telegraph" Releases MH370 Transcript; Challenges of Tracking Airliners Mid-flight; Venezuela Protests
Aired March 21, 2014 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: It was a down day at the close, even though Amber Road was ringing the closing bell. For the week overall, the Dow and the S&P roughly up by 1 percent when all was said and done. Hit the hammer. It was Friday, the 21st of March.
Tonight, history is made with the stroke of a pen. Two visions for you to look at. Russia officially takes control of Crimea, the EU forges closer ties with Ukraine. And all at the stroke of the pen.
From takeoff to the final "All right, good night." Final communications with MH370 revealed, according to a report. If it's released within our hour, we'll tell you about it.
And Turkey's president takes to Twitter to protest against the blot of the site in his own country by his own prime minister.
I'm Richard Quest. It may be Friday, but of course, I mean business.
Good evening. The pen, they've always said, is mightier than the sword. Well, today, the pen did its own business, both in Russia and in Brussels. Because divisions have been set down and with pens signed off. The leaders of Russia and Ukraine signed two legal documents that will enter the history books.
In Brussels, the Ukrainian prime minister, Arseniy Yatsenyuk, signed a trade pact with the European Union. That's the picture on the left of your screen. On the right, you have President Putin in Moscow. He's finalizing the Russian annexation of Crimea and the port city of Sevastopol.
And in the background, the EU extended its list of Russians targeted by sanctions. Our correspondent Nina Dos Santos was at the European Commission headquarters and followed the developments of the day and sent this dispatch from Brussels.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): With a stroke of their pens, EU leaders forged closer ties with Ukraine. With another, they severed links with more members of Vladimir Putin's inner circle, upping the pressure to withdraw from Crimea.
DAVID CAMERON, PRIME MINISTER OF BRITAIN: A sham and illegal referendum has taken place at the barrel of a Kalashnikov, and Russia has sought to annex Crimea. This is a flagrant breach of international law and something we will not recognize. This behavior belongs to the Europe of the last century, not this one.
DOS SANTOS: Facing urgent calls to prevent Russia from claiming more land in the east, Europe targeted another 12 individuals with asset freezes and visa bans, bringing the tally so far to 33.
Among those earmarked, the speaker of Russia's upper house, a deputy prime minister, a famous broadcaster, and two commanders of the Black Sea Fleet, all key to the Kremlin, but many already blacklisted in the United States, and no heads of industry.
DOS SANTOS (on camera): How far will the European Union go?
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I cannot pre- judge now at this moment. But I can tell you, based on my experience and also in the active participation in all these meetings, is that I saw strong determination all member states. It is true, to be honest, that among 28 countries, there are different sensitivities.
DOS SANTOS (voice-over): What's next for Europe? Well, sources say more moves by Russia could prompt an arms embargo and broader financial sanctions, not to mention a major push to reduce the EU's dependence on Russian gas.
DALIA GRYBAUSKAITE, PRESIDENT OF LITHUANIA: I think that we probably are heading towards some kind of elements of Cold War. I do not think we are yet threatened by the military war, but some economic elements of economic sanctions, economic disturbances, trade barriers, probably will be used.
DOS SANTOS: For now, Europe is still looking for a diplomatic road map to peace, while Russia redraws its borders. And though the talk is getting tougher by the day, so too, it seems, are the decisions.
Nina Dos Santos, CNN, Brussels.
QUEST: The actions announced so far, we have the list of names, and now, these are how the sanctions actually work. They are the key elements for both the EU and the US in their arsenal, which were agreed, particularly by the European Union and member states.
First of all, we have the travel ban, and specifically, it's an agreement, in the words of the rules and the legislation, "to prevent entry into or transit through" -- excuse me -- "persons responsible for actions which undermine or threaten the integrity, sovereignty, and independence of Ukraine."
It goes on to include those associated with those people. There are exemptions. They would include things like humanitarian visits, inter- governmental meetings, if you're going somewhere for a United Nations.
Then you have the asset freezes. It allows the EU to freeze, in the words of the rules, "all funds and economic resources belonging to, owned, held, or controlled by people or companies deemed to be undermining or threatening Ukraine and their associates." Some money can be released to meet basic needs. That includes families, rent, mortgages, medicines, and so forth.
So, you've got a travel ban. You've got asset freezes. The agreement encourages other countries to adopt similar measures, and there's the expiry date on these, which is the 17th of September.
Put them all together and you have a series of actions, bans, freezes, expiries and third states, which will hit those people who are on the annexed list at the back of the rules.
Russia as the most to lose, according to Western analysts. Fitch and Standards & Poor's say that growth could fall all the way below 1 percent this year. Some of those on the list have been affected as well.
Now, first of all, you have Arkady Rotenberg, billionaire businessman in the energy and construction industries. The US says Rotenberg and his brother, Boris, who's also on the list, received about $7 billion from contracts for the Sochi Olympics. He also has an interest in a firm called Mostotrest. Its shares fell nearly 2.5 percent today.
Then, bring on the next one. Yuri Kovalchuk. He is the Rossiya single biggest shareholder in the bank. The US describes him as Putin's personal banker. The bank itself now finds itself without the services of Visa or MasterCard.
In a statement to QUEST MEANS BUSINESS, Visa said, "Visa is required to suspend access to the Visa network for these sanctioned entities." The banks affected include Bank Rossiya, Sobinbank, SMP Bank, and Invest Capital Bank.
Put it all together. So, you've got banks, you've got individuals, you've got inability to access Visa and MasterCard, things are starting to tighten up. Earlier today, President Putin promised to help to protect Rossiya Bank.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): There is also a financial institution. As it definitely has no relation to these events, and the bank has clients, we should obviously not only protect but also help in all possible ways to prevent both the financial institution and its clients from negative consequences.
As I have already said, I plan to open a personal account there, and more than that, will order to transfer my wages there.
(END VIDEO CLIP)
QUEST: Nothing like thumbing your nose at somebody who's just done something. The president of Russia saying never mind the sanctions, he's now going to have his salary paid into Rossiya Bank, even though it's sanctioned. I guess it means that Mr. Putin won't be able to transfer the money to his foreign bank accounts if he had any.
Russian stocks took a hit on Friday. Investors are worried about the impact. The MICEX index fell 1 percent, the index down more than 13 percent so far this year.
US markets, different story. Stocks soared when it opened. The S&P briefly hit a record in early trading. The Dow finished up 1.1 percent over the week.
Every word said between the pilots of the missing Malaysian airliner and ground control. That's what Britain's "Telegraph" newspaper says it has a transcript of. I'll have the details when we come back in a moment.
QUEST: It's been two weeks since the disappearance of Malaysia Airlines Flight 370, and still no sign of the missing airliner and those onboard. Here's the latest.
The British newspaper "The Telegraph" says it's obtained a transcript of the plane's cockpit communications, every word spoken from push back and taxi until the plane vanished after the words "All right, good night." We've not been able to independently confirm the transcript is genuine.
Daylight searching operations are to resume in Australia. Planes are trying to find the debris spotted by satellite some days ago in the remote southern Indian Ocean. Two days of searching has failed to find the objects.
To Perth, now, in western Australia for the latest. Kyung Lah is live for us and joins us. Kyung, ten past 5:00. I was hearing you in previous hours. You said sort of the planes take off about, what, 6:15, 6:30? So there's some time before they'll get into the air.
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: We anticipate that. We're not getting any confirmation from the military this morning in Australia. They're tending to not tell us until the planes are already in the air and on the way to the actual search, which is four hours away from here.
They are certainly looking at a lot of logistical problems that they had throughout all of this, and they're anticipating that today as well. Yesterday had quite good weather. Today, day three, this will be the third day that these planes would be taking off from the military.
And we're getting this update just a short time ago from the Australian military saying that they will now have three Australian P-3 Orions in the air, one P-3 Orion from New Zealand and two civilian ultra- long civilian planes.
These are contracted planes that the Australian military has with civilians, and they're going to be helping in the search. And there are also six merchant ships in the area that have been searching throughout the night.
So, they are putting as many resources in as possible. And one thing I did notice on the release, Richard, is that they're trying to expand the amount of sea that the cover today. They're hoping to cover 36,000 square kilometers. That would be up from 23,000 yesterday. Richard?
QUEST: Kyung, the Australian prime minister said in the morning Australia time that they would keep finding -- they would keep searching. He -- we'll do whatever it takes, he basically said. And if there's something there, we will find it.
He sort of committed himself there, hasn't he? Because there's really only two ways this goes. You keep searching until you find it, or you have to admit you've -- there's nothing there.
LAH: I'm having a little trouble hearing you, Richard. I think you're asking me about the Australian prime minister and how he seems to be saying that --
LAH: -- basically, we're going to find it. We're putting all our eggs in, we're going to go right after it. It certainly seems like there is a commitment there, they're going to put as many resources in as possible. You can sense that there certainly does seem to be passion on the part of the Australian government to try to find whatever it is that they saw in the satellite.
The thing you may notice, though, in every public statement that they make, they also sort of couch it. They say, OK, look. Yes, we have this passion, we're going to find it. We want to give an answer to these families. But they also say, we're not sure.
Because they're not sure. And the satellite images that we've been seeing for the last couple of days, it certainly looks like something. But until you get it, until you get that flight data recorder, until you see something definitive, it is really hard to know.
And that's why you're hearing the Australians saying yes, we're going to throw everything to it. We have hope that we're going to find something.
LAH: But at the same time, they understand it's just a lead.
QUEST: Kyung Lah joining us from Perth, western Australia. When there's more to report from Perth, please come straight back. Some breaking news, now, that I need to bring to your attention. We told you at the beginning of the program that "The Daily Telegraph" was -- in the UK - - was to release their view and their version of the transcript of the last 54 minutes of Flight 370.
Well, I can tell you now, because it's on my computer screen in front of me. Just looking at what "The Daily Telegraph" has said. Let me emphasize absolutely, CNN cannot, has not yet independently confirmed the source of what this is. All right? So, I'm just telling you know what's on "The Telegraph's" website.
It is a list of air traffic control instructions. I'll give you the gist and the feel for them. "Air Traffic Control, Malaysia 370, position confirmed. Flight altitude 180. Follow the command and turn right. Target Igari waypoint."
"MH370, all right, altitude 180, direction Igari waypoint, MH370 copies that." You get the idea. It is a long list of instructions.
But the bit that they're talking about comes at 01-0 -- basically one minute past midnight, or round about the midnight. And it goes as follows: "MH370, this is MH370, flight altitude 350." That means flight altitude 35,000. And that same is repeated again six minutes later, which "The Telegraph" says is unusual. I'm not sure I agree with them on that.
And then you get the final bit, which is at 1:19 -- bear with me with this, please -- 1:19. "Air Traffic Control, Malaysian, please contact Ho Chi Minh City, 120.9. Good night."
And the response, "All right, good night."
Now, arguably, that response should have been -- should have been -- "Contacting Ho Chin Minh City 120.9" or just "120.9, MH370, all right, good night."
Nothing so far that I can see in that transcript that gives anybody cause for interest or concern about what happened. It seems perfectly normal.
The disappearance of the Malaysian jetliner has exposed the challenges of tracking aircraft in mid flight. Let's bring in Matt Desch to talk about this. He's the chief executive of Iridium, the satellite communications firm. He joins me now from Washington.
I want to divide our conversation very firmly into two areas, Matt. The first, what we know, and the second, your views on how things can be improved in the future. So, let's start with the first. The ability to track this aircraft and -- by the pings that they've done. It's -- I understand this is the extremity of our knowledge of how to do these things.
MATT DESCH, CEO, IRIDIUM COMMUNICATIONS: Well, it is. Let give a little quick primer on satellite communication. When aircraft are over ground, they're tracked by radar. And that's all being upgraded across the world to a GPS location transmitted out of the aircraft and to ground transmitters on the ground.
But when they go out over the ocean, there's a couple of things that they can do. They can either report it manually by the pilot every ten or fifteen minutes saying where they are to a controller over a radio. That's what was happening here.
They can also be upgraded to have a data link on there. And that data link can go across satellites. There's two satellite companies that provide that work, both ourselves, Iridium Communication, as well as Inmarsat, which was the brand if satellite radio that was on this particular aircraft. It was not turned on. It was not being used for automatic --
DESCH: -- position location, and it didn't need to be, frankly.
QUEST: But the ability of the satellite to say, basically -- and forgive me, I'm going to simplify -- for the satellite to say, I see a plane, who are you, where are you, what are doing?
And the plane not really responding but it saying, "Yes, I am a plane, and I am here," and the so-called "handshake" that we've talked about. It seems incredible that we're having to base this entire search on such tenuous information.
DESCH: Oh, I totally agree. I mean, actually, I give them credit, because the system that they're using right now was never designed to be tracked down to a location. They assume that the pilot would say where they were and everything would be fine.
The way that they're pining and everything is actually just a residual effect of the old technology that they have on that airplane, and they're using it to the best of their ability to say where they are.
Now, I think that's going to change in the future because aircraft are sending their position out, that aircraft had a certain kind --
DESCH: -- of transponder, which was sending its information out. It just wasn't being picked up by anything on the ground.
QUEST: One issue that's risen, and I'm not inviting you necessarily to comment on one of your competitors or other satellite, but the time it took from the moment they got the information or the moment Inmarsat saw the information, dealt with it, sent it to Malaysia, Malaysia sent it to the United States, who sent it back for further review, who sent -- does there -- are you worried that it took three or four days for that process to take place?
DESCH: Oh, absolutely. It's unacceptable for aircraft to be missing in general. They should -- you should know within seconds, literally, where every aircraft is. Unfortunately, that isn't the way the system has been designed today.
Today, when you fly over oceans, it's been a surprise to people that that's called procedural airspace. It means procedures take over to keep aircraft from running into each other. So, people are kept very far away. It's not meant to track literally to every mile --
DESCH: -- an aircraft is.
QUEST: So, what's your plan? What have you got that might -- God forbid we ever end up in this situation again, but what have you got? What's the next development that you're working on?
DESCH: Well, right now, today, airlines can upgrade to a satellite communication that will send their position every ten minutes. And that's helpful, because that will keep track of where you are within about 50 to 60 miles. And that would be better, and people could use that. They could subscribe to that today.
But what's really -- what we're working on right now is a new system on our new satellites that we're launching between -- that will be completed in 2017 that will listen for those transponders from every aircraft, everywhere in the world at all times, and keep track of them.
DESCH: Literally second by second. So, we will know within ten seconds where an aircraft is, as long as that box is not turned off. As long as that transponder is not turned off.
QUEST: But isn't --
DESCH: Which is a problem, which I think needs to be fixed.
QUEST: That's the weak point. That is the weak point in it.
DESCH: It is, and I think that's easily fixable. And frankly, maybe that will be one of the things that comes out of this. You have to protect the cockpit if there's a short in a radio so that you can actually turn it off or pull the circuit breaker, but there can always be a backup transponder somewhere in the aircraft that if you had to do that, could broadcast your position. I really think that's a low-cost fix.
DESCH: And frankly, will work very well with the system that we'll have that will automatically track aircraft.
QUEST: Finally and briefly, because we're very honored that you're here to talk about these things and give us your insight, so I'm very grateful. But finally and briefly, will the airlines spend the money for the extra data link, the extra bandwidth, the extra comms costs, to make a more robust system? Because at the end of the day, sir, money's behind it.
DESCH: Of course. I really do think airlines operate on very thin margins, and so they like to make money. So far, there is actually an economic benefit to putting on satellite communications on. It's not just about safety, it's actually about getting better service, especially on very busy routes, like over the North Atlantic or busy routes over the Pacific.
DESCH: So they are upgrading. They're putting them on so that they can put aircraft closer, they can have direct routes, and they can save a lot of fuel. That new system we're going to have by 2017 literally takes the problem off the table because they don't have to invest in satellite communications. They just have to broadcast --
QUEST: All right.
DESCH: -- their position, and we'll pick it up.
QUEST: And when that satellite comes into use, I -- please, sir, invite me along to come and see how it actually operates. I'd be grateful.
DESCH: We'll have you to the launch.
QUEST: Thank you -- I'll be there. You have me there, and I'll be there. Thank you, sir, for joining us.
When we come back after the break, violent unrest in Venezuela. It's claimed the lives of dozens of people. Now the government is making accusations against opposition lawmakers. In a moment, QUEST MEANS BUSINESS, it's Friday.
QUEST: Venezuela's interior minister says at least 31 people have been killed in clashes over the past month. He says more than 1800 people have been detained over unrest between opposition demonstrators and government forces. Now the government is going after the face of the opposition, Maria Corina Machado, over her ties to Washington. Our correspondent, CNN's Rafael Romo reports.
(WOMAN SHOUTING IN SPANISH)
RAFAEL ROMO, CNN LATIN AMERICAN AFFAIRS EDITOR (voice-over): A fiery speaker that has galvanized the Venezuelan opposition. Opposition lawmaker Maria Corina Machado says the government of Nicolas Maduro has Venezuela in ruins, while the president accuses her of being an undemocratic leader bent on inciting violence and promoting a coup.
MARIA CORINA MACHADO, VENEZUELAN OPPOSITION LAWMAKER: (inaudible) a regime that persecutes, that has repression, that tortures students and the censorship of the press. How is that (inaudible)? It's a dictatorship.
ROMO: The 46-year-old lawmaker has countless followers throughout Venezuela.
ROMO (on camera): All of these people say they're tired of the government of President Nicolas Maduro. In fact, they're blaming him personally for the insecurity, shortages, blackouts, and other problems that Venezuela is currently experiencing.
ROMO (voice-over): Machado denounced the arrest of former presidential candidate Leopoldo Lopez last month. And now, she's the one being targeted by the Venezuelan government and accused of inciting violent anti-government protests that have left more than 30 people dead in just over a month.
ROMO: The National Assembly is seeking to strip Machado of her parliamentary immunity and charge her with multiple crimes.
DIOSDADO CABELLO, VENEZUELAN NATIONAL ASSEMBLY PRESIDENT (through translator): Inciting crime, treason against the motherland, terrorism, murder, and calling for violence in an irresponsible way.
ROMO (on camera): Are you afraid that you're going to be targeted by the government and end up in jail?
MACHADO: What I'm afraid of, that our country could keep on going through this way of destruction, of tears, of blood, of violence that this regime has brought.
ROMO (voice-over): Government loyalists say it is Machado who is an enemy of democracy. They point to the fact that she signed a document in support of Pedro Carmona, a businessman who took power during a coup that briefly ousted Hugo Chavez from the presidency in 2002.
They're also highly critical of Machado's close ties to Washington. She received more than $100,000 from the US government in 2005 for her political action committee, and $31,000 the year before from the National Endowment for Democracy.
TANIA DIAZ, VENEZUELAN LAWMAKER (through translator): It's not about fighting against shortages, no sir. It's not even about getting the president to resign. What she's looking for is civil war.
ROMO: Machado remains unfazed by the threats, convinced, she says, that what she's fighting for is bigger than herself and the opposition she's leading.
Rafael Romo, CNN, Caracas.
QUEST: Still to come on QUEST MEANS BUSINESS, Turkish prime minister follows through on his vow to eradicate Twitter. His attempts don't have the desired effect, in a moment.
QUEST: Hello, I'm Richard Quest and there's more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes first. It was signed into history today - Vladimir Putin finalized the law allowing the joining of Crimea to Russia on the same day in Brussels the Ukrainian prime minister agreed and signed the political part of a trade deal with Europe. It had been ditched by the ousted Ukrainian Viktor Yanukovych in favor of closer ties with Russia. The E.U. has extended its list of Russian figures to be sanctioned and the new procedures.
The British newspaper "The Telegraph" has just released what it claims is the transcript of the plane's cockpit communications - every word spoken from taxi until the plane vanished in concluded (ph) with the words "All right, good night." CNN's not independently confirmed the transcript is genuine. From a brief and preliminary reading of that which is there, there doesn't initially seem to be anything particularly new although minor details are added but fundamentally nothing is added to our understanding of what went wrong.
There's growing outrage in Turkey about the Turkish prime minister's vow to shot down Twitter. The government has at least partially blocked the social media site. The prime minister Erdogan accused it of violating a court order. We'll be discussing this in just a moment.
The first lady of the United States spent the second day of her visit to China with a Chinese counterpart visiting students on trip billed as a people to people diplomacy. Michelle Obama tried a hand at calligraphy and ping pong. Later the two first ladies toured the Forbidden City in the heart of Beijing.
Twitter users in Turkey including the president of the country are defying a government ban. Managing to post millions of tweets on the site even though official it's blocked in Turkey. Access to Twitter was officially denied on Thursday night after the Prime Minister Recep Tayyip Erdogan vowed in his words to "eradicate it." Now, Erdogan's facing a corruption scandal which has been fueled by embarrassing leaks on social media and Twitter. Today Mr. Erdogan said - when - today when Mr. Erdogan said 'freedom schmeedom.' He doesn't care that Turks are angry about the ban.
RECEP TAYYIP ERDOGAN, TURKISH PRIME MINISTER, VIA TRANSLATOR: Can you imagine there are international conspiracies ?- Twitter-witter. We have a court order now. We will wipe out all of these. The international community can say this, can say that, I don't care at all. Everyone will see how powerful the Republic of Turkey is.
QUEST: Twitter says anyone in Turkey can still tweet via SMS - text in other words. Many are reportedly using a service provided by Google to get around the block. Turkey - the Twitter users in Turkey may actually increased since the government cracked down. On Thursday - have a look at the numbers. On Thursday there were 138 percent more tweets from Turkey than on the day before according to the analytics firm Brandwatch. Some users have posted parody images such as this in response to the block - the Twitter user Tibe Blues (ph) shared this picture of the Twitter bird escaping the jaws of a Turkish Pac Man. Earlier I spoke to Umur Birand, a journalist from Istanbul, and I asked him whether the prime minister had taken the decision to ban Twitter enthusiastically. Even though he had to do it legally, did he do so with enthusiasm and gusto or reluctance and regret?
UMUR BIRAND, JOURNALIST, KANAL D: Well to be honest with you, there was not only one ruling, there was five court rulings of which - to no avail - Twitter did not actually do anything about them. On the other hand, I don't think that the prime minister was willing, was happy to do so because he knew the consequences that was going to happen and he knew what the international media - the European Union and the United States - would say. More or less he knew or he was told by his advisers. But unfortunately, he had no other choice because Twitter did not respond to any of their rulings. They didn't take away the links, they didn't erase those users - those Twitter users - and therefore he had no other choice but to a permanent - not permanent ban - but to put a ban on -
BIRAND: -- on Twitter. And I don't think he's very, very happy about it.
QUEST: Would we be right to think of this as being something he had to do? It's not a political move by the prime minister to do this in a sort of Draconian anti-press freedom way. I'm trying to understand.
BIRAND: Well, to be - actually, no. To - according to the Turkish government officials, you know, Twitter has been used to distribute these alleged tapes and - doctored tapes - that actually put the government in a very bad situation. And the prime minister is using other court rulings and these ones - and these allegations - these fake wire taps - and putting them all into one bag and basically saying that, you know, I'm doing this for - because of my own courts. My courts have decision and there's nobody on the other side whose actually doing anything. If my court decide that they should -- Twitter should take away something from there, Twitter should erase a certain link, then they should because these are my courts - my courts are independent enough for them to do so. Unfortunately, there's no entity in Turkey.
QUEST: The White House says it's deeply concerned by Turkey's block on Twitter. Barack Obama is meeting with tech chief execs right now at the White House. Alec Ross is a former senior adviser for innovation for the former Secretary of State Hillary Clinton. He joins me now from Baltimore in Maryland. Mr. Ross, as you may have just then there is a - there's both a top line that the courts have ruled against Twitter and therefore the prime minister's only interpreting it. But arguably, the courts were only ruling on something that he didn't like in the first place. So, your gut feeling on this case.
ALEC ROSS, FORMER SENIOR ADVISER FOR INNOVATION TO HILLARY CLINTON: My gut feeling is that the 21st century is a terrible time to be a control freak, and Erdogan's a control freak. He does not like the voices of a lot of his citizens, and so he's trying to muffle them. He's really come out of this looking absolutely horribly, and the premise that this is some - that he somehow is just enforcing what his courts have ordered is a little silly. It comes off as disingenuous.
QUEST: This is an interesting point about - on the wider issue for government, isn't it? Because --
QUEST: -- where you have - the British discovered this in "Spycatcher" in the 1980s. When you try and - oh, they tried to ban Gerry Adams from being on television in the 1990s. Where you have a rule that can be easily be easily circumvented with technology. All you do is end up looking stupid.
ROSS: Oh, they just made this so much worse. In the last 24 hours, there've been 27,000 downloads of something called Hotspot Shield which basically allows people to stay private and keep themselves away from the spying eyes of the government. Every minute there are 17,000 Tweets being sent from -
ROSS: -- inside Turkey. So what Erdogan has done, is he's made this so much worse for himself.
QUEST: You talk about to avoid being spied on by government, when Barack Obama's meeting the chief execs of tech companies now, he's going to get an ear bashing, isn't he? Because when you get Eric Schmidt and you get Mark Zuckerberg, and you get all these people saying 'Well actually, he comes to this table doesn't come with clean hands.'
ROSS: Well, I'll tell you, Mark Zuckerberg I think has been the most outspoken out of that group that's meeting with the President today. And I have a feeling that the President is going to probably hear it, and hear it pretty loudly today. I have a feeling that they're going to be talking about more than just that which has been revealed by Edward Snowden. But the big point here is that that people don't want the Internet to be controlled by their governments, they don't want it to be an instrument of control. Citizens don't like it, corporations don't like it, and governments are going to have to get used to it.
QUEST: And the United States as a direct result of the Snowden allegations and revelations has had to give up control of the Internet. I know -- domain names, for example, by handing over its part of -
ROSS: Well I don't - I actually don't - I actually - I actually don't agree with that. I mean, that was years long in the planning. I think it was accelerated by Edward Snowden, but I think it's actually a good thing for countries other than just the United States to have something to do with Internet governance. But no, that had actually been planned for years I think.
QUEST: Would you agree that what we are seeing here is inherent tensions - and you talked about Erdogan being what - in your words a control freak -- but even the governments that aren't control freaks, even the governments that just don't like handing over any form of control -
QUEST: -- because they've - until now - they've had it all their own way. So where, sir, do you stand on this?
ROSS: Look, I try to advise, whether it's a CEO, a president, a prime minister or foreign minister - I tell them, you may not like everything you see on the Internet, but you'd better get used to it or don't listen because it's not going away, and your ability to control everything that everybody says there is diminished to near nothing these days. And so I do think that for older generations in particular who just aren't used to such an outspoken and empowered public, this is something very difficult to reconcile themselves toward. I do think that people who are -
ROSS: -- growing up digital - people in their 20s and 30s - when they become presidents in their 40s, 50s and 60s, I think they'll be more accustomed to it.
QUEST: I think it's worth a bell there (RINGS BELL). Enough of the older generations, if you don't mind, Mr. Ross. Enough of that, thank you. Good to see you. Alec Ross joining us -
QUEST: -- from Baltimore in Maryland. Still to come, -- older generations, nothing wrong with the older generation not much anyway, no, nothing that a bit of medication wouldn't put right -- in just a moment, we'll bring you an exclusive interview with the chief exec of Rakuten, Japan's most popular e-commerce site. It's "Quest Means Business." It's a Friday and we're delighted (inaudible).
QUEST: Alibaba has joined the mobile messaging race as it prepares for its own IPO - initial public offering - here in New York. In other words, when launches on the stock market. On Thursday, the Chinese e-commerce giant paid $250 million -- 215 million - to own part of the messaging app Tango. Now these sort of apps are in big demand at the moment. Any form of messaging service. A few weeks ago Facebook said it would pay WhatsApp $19 billion and that was a week after Japan's Rakuten picked up Viber for $900 million. One $19 billion, one 900. Samuel Burke sat down with its chief exec - the Rakuten chief exec - with exclusive interview and asked why companies are paying so much for these messaging apps.
SAMUEL BURKE, BUSINESS CORRESPONDENT: He's a self-made billionaire you could think of as Japan's Jeff Bezos. His name -Hiroshi Mikitani, the co- founder and CEO of Rakuten, Japan's most popular e-commerce site. Mikitani's net worth -- $9 billion. But that success has not dimmed his thirst for deal-making. I sat down with him on his birthday --
BURKE: Happy birthday.
BURKE: -- to talk about his recent acquisition of phone messaging app Viber. He says it's crucial to his company's strategy.
BURKE: Hiroshi Mikitani, thank you for joining us at the Landmark Restaurant in Manhattan.
MIKITANI: Thank you very much for inviting me.
BURKE: When you paid $900 million for Viber, a lot of jaws dropped. Then just a little bit of time later, $19 billion for WhatsApp. So looking back, did you get a really good deal on Viber?
HIROSHI MIKITANI, CEO AND FOUNDER, RAKUTEN: Both of them are messaging app but it's very different.
MIKITANI: All right. Viber is the combination of voice and messaging, so I think it's very difficult to compare. The business model will be very different. WhatsApp promised to just charge $1 per user per year. We are more trying to pursue various way of, you know, providing services.
BURKE: When you heard the news that Mark Zuckerberg was paying $19 billion for WhatsApp, were you surprised?
MIKITANI: No, I'm not surprised.
BURKE: Not surprised by $19 billion?
MIKITANI: No, I mean I'm not surprised, but maybe they have their way of thinking it.
BURKE: How did you decide that Viber was worth $900 million to you? How can you justify that price tag?
MIKITANI: Well, it's very difficult to come up with the very scientific rationale -
MIKITANI: -- but if you think about Viber has already 300 million user, --
MIKITANI: -- we are now currently adding about one million user per day, - -
MIKITANI: -- so, we're talking about $3 per user, right? So I think it's quite justifiable.
BURKE: But so many people look at all of these apps and say barely any revenue. Viber had barely any revenue to it, so what do you plan to do with it? You must have some big plans for it.
MIKITANI: Of course, of course. Probably we will start selling our e-book through Viber, we will --
BURKE: Yes. Your e-book?
MIKITANI: -- e-book -- Kobo --
MIKITANI: -- through Viber. So this is a funnel (ph) to do it.
BURKE: So you're going to sell e-books on Viber. You want to turn Viber into an e-commerce platform then?
MIKITANI: We're going to sell everything. We're going to sell e-book, we're going to sell content, we're going to do game, we're going - as fast as users want. E-commerce is entering into what I call humanization stage. We're not trying to become a gigantic vending machine, we are trying to duplicate face-to-face human transaction using the information technology.
BURKE: When people hear almost a billion dollars like you paid for Viber, $19 billion for WhatsApp, some of the incredible valuations happening including Pinterest - some people say we're in a tech bubble. Do you think we are?
MIKITANI: It depends on the country - the company. As a macro basis, aggregation or market cap is not a bubble, but it's going to be a winner and loser.
QUEST: We've been talking earlier in the program about the search zone. You heard from Perth that the planes are going to be going up soon. Remind you - let me just very briefly remind you what they're looking at. There's Perth - two and a half - just over 2.3 - thousand kilometers out to the search zone. So what does it all mean? What will they find when they get there in terms of the weather? Jenny Harrison is at the World Weather Center Jenny, you're going to give us a full weekend forecast for Europe in just a moment. But please, do start - it was fair weather yesterday - what are they going to expect today?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: You know what, Richard? It's actually deteriorating. And interestingly enough, I've got current conditions in Perth but also for the Pearce Air Force Base because they're actually quite a distance apart. So, we have got some rather different weather conditions for those two locations. This is showing you the go through the weekend on through Sunday into to Monday. So this is the search area, and you can see quite clearly there's a lot of cloud around in this area over the next couple of days. There's a line of rain showers and potential thunderstorms coming through at the same time. The winds will be on the increase. The amount of rain that's actually going to accumulate isn't really that heavy, and in fact it does stay mostly to the south of this particular area. But the winds certainly could have an impact over the next 48 hours. You can see for the most part again, so just to the south of the search area, but even so, we could be seeing winds and feeling the winds at about 60, maybe 70 kilometers an hour. So, that is strong certainly when you're on this sort of mission that these aircraft are on.
Now, these are the current conditions in Perth. Given the time of day - it's coming up to 6 o'clock in the morning in Perth. Not long now, literally almost minutes until the official start for sunrise. But you can see the winds coming from the east at 22 kilometers an hour, good visibility but to the north of those, actually the Air Force base that these planes are setting off from and coming back to. And in fact the winds here as we go through the weekend are likely to get quite strong. We could have some gusts at around 50 kilometers an hour, really the same as well for Perth. And you can see we've got this rain in the forecast - not really rain for either location, but the winds are going to be quite strong and also it's going to be fairly cloudy despite the fact we've got some strong winds. So, a lot there to contend with certainly when we get out to search those open waters. There is that weather coming through.
I also want to just show you this - now, it's well to the north of the search area in the Indian Ocean, but I didn't want to just ignore it because this is actually what was at one point a Cyclone Gillian, and then reemerged and reformed. And you can see it's taking a southern route. It is not expected to get as far south as that search area, but just so you're aware of what is out there, that's what I wanted to show you.
Meanwhile in Europe, a very windy weekend here as well. It's been windy for the last couple of days, at times getting dry (ph) and 80 kilometers an hour to some of these locations in the north and the west. The winds spreading across much of central and mainland Europe. It's going to cool off in France (ph), certainly more snow to the mountains. A much cooler weekend that it has been throughout much of the week. But there are still some locations that are seeing a very, very nice Friday. I mean, look at this - 22 in Berlin, 22 in Warsaw, 13 degrees up the average. It will cool off - that system is pushing in some cooler air. You can see that coming through. And also it's fairly unsettled (ph) across much of central and western Europe. So, quite a lot of rain showers, Richard, as well as feeling a little bit cooler.
QUEST: Jenny, thank you. Have a lovely weekend yourself and -
HARRISON: You too, thank you.
QUEST: -- come back to us on Monday. Now, with no sign of the missing Malaysian plane, the government in Kuala Lumpur - the response there has been under the spotlight. We're going to get the Malaysian view from Kuala Lumpur after the break. This is "Quest Means Business." Good evening, it's Friday.
QUEST: In Malaysia, pressure is mounting on the authorities to provide answers. Will Ripley has more from Kuala Lumpur on the reaction there to how it's going.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT BASED IN TOKYO: In Kuala Lumpur, a day of prayer. On the minds of so many, the mystery of Malaysia Airlines flight 370.
GRACE CHEN, LAW STUDENT: All of us are so concerned about whereabouts of the plane and the people on the plane, but there has no information about it.
RIPLEY: Law student Grace Chen and Rachel Lau believe the Malaysian government is keeping some of the facts from its own people despite regular news conferences and government insistence that it's being transparent.
RACHEL LAU, LAW STUDENT: Maybe they're keeping information from us because of other reasons like nation and ratey (ph) reasons.
RIPLEY: For many, a painful past two weeks. A plane and 239 people on board vanished. Their family is growing so desperate, relatives made an anguished plea to the press Wednesday to get answers from the government. It was an emotional protest. Malaysia's acting transport minister later expressed regret for the incident, and the government has vowed to keep families informed. Those dramatic moments were shown repeatedly on CNN and other networks around the world. But the Malaysian media mostly ignored the emotional outburst with barely a mention in the local papers. Have you seen that video?
AZRIN ZAKARIA, CONSULTANT: Yes, I've seen it from the Internet, from YouTube and also from Facebook, that we share with our friends.
RIPLEY: Not the local news?
ZAKARIA: Not local news.
RIPLEY: Business consultant Azrin Zakaria believes the Malaysian press uses restraint while the international media sometimes goes too far.
Male: Move it, move it!
RIPLEY: Reporters swarmed the Malaysian acting transport manager before Friday's press briefing in what's become a familiar sight as reporters push for more information.
ZAKARIA: Some of the media deliver the information that has not been confirmed. So, it may - it might contribute into the (spinate) scenario.
RIPLEY: A feeling shared by Fardy Bunga, a reporter from Malaysian daily newspaper, "Harian Metro."
FARDY BUNGA, JOURNALIST, HARION METRO: Foreign media, they are going too fast on this really since I believe they get the information from - maybe from a U.S. and SRS (ph), so they get it very fast.
RIPLEY: The eyes of the world are trained on a nation not used to this much scrutiny or such strong demands for answers. Will Ripley, CNN, Kuala Lumpur.
QUEST: Tonight's "Profitable Moment." History was made today. Those are the pictures that show President Putin annexing Crimea into Russia, the E.U. signing its deal with the European Union. People will look back on this day and say a little bit of history changed. It was done at the stroke of a pen. Guns were not used, not yet. But even so, history was made. You make your own judgment what you think about it. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you again on Monday.