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All Eyes Swivel To Washington As Trump Tweets, Ryan To Exit · Bloomberg Intelligence

0:05
Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim
0:08
Speaker 1: Fox along with my co host Lisa Bramowitz. Each day
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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com.
0:33
Speaker 1: All Eyes on Washington, d C. On a number of fronts,
0:37
Speaker 1: I want to start with the latest House Speaker Paul
0:39
Speaker 1: Ryan has announced that he will not seek re election
0:42
Speaker 1: in November. We are expecting to hear comments from him.
0:46
Speaker 1: He's going to make a statement and we will be
0:49
Speaker 1: clearing that live as well as the question and answer
0:52
Speaker 1: session after that. Here to give us a sense of
0:56
Speaker 1: what the context is around Paul Ryan's uh decision not
1:00
Speaker 1: to seek reelection is Marty Shanker, chief content officer for Bloomberg.
1:05
Speaker 1: Marty put this in a perspective to us, why now, Well,
1:09
Speaker 1: it's interesting timing. About a month ago there was a
1:12
Speaker 1: Politico magazine piece which suggested that Ryan was not going
1:15
Speaker 1: to stand for re election, which the people around him
1:18
Speaker 1: vigorously denied. And so now a month later it's true. Um,
1:24
Speaker 1: I think Paul Ryan has basically decided that this is
1:26
Speaker 1: a I mean, you never wanted the speaker job to
1:29
Speaker 1: begin with. You sort of took it out of uh
1:32
Speaker 1: dedication to the Republican Party. And it's a very really
1:35
Speaker 1: tough job. He's by a lot of measures, he's done
1:38
Speaker 1: a really good job, especially in fundraising. A lot of
1:41
Speaker 1: people were concerned about his ability to raise funds for
1:44
Speaker 1: Republicans in the context of his predecessor Bayner, but he's
1:49
Speaker 1: actually outraised him by quite a bit. Okay, I just
1:53
Speaker 1: want to push back a little bit because a lot
1:55
Speaker 1: of people are suggesting that Paul Ryan is not going
2:00
Speaker 1: to seek reelection because his chances of winning are increasingly slim,
2:05
Speaker 1: and that this sort of is a harbinger moment for
2:08
Speaker 1: the Republican Party and sort of seeks uh sort of
2:11
Speaker 1: sets the stage for a Democratic win in the midterms. Well,
2:15
Speaker 1: one of the UH inside Washington prognosticators right after Ryan's
2:20
Speaker 1: announcement this morning, moved the district Paul Ryan's district in
2:24
Speaker 1: Wisconsin too likely Republican from solid Republican, So at least
2:30
Speaker 1: in that view, UH, he he may have had a
2:34
Speaker 1: more difficult time, but he will still expected to be
2:36
Speaker 1: re elected, and now his departure makes it less likely
2:40
Speaker 1: that's going to remain a Republican seat. So you know, yeah,
2:44
Speaker 1: he may have he may have had a more difficult time,
2:47
Speaker 1: but he won by I think a seventy percent margin
2:51
Speaker 1: last time around, and I think it was pretty safe
2:53
Speaker 1: seat if he wanted to take to keep it. Hey, Marty,
2:56
Speaker 1: I want to pick up on something having to do
2:57
Speaker 1: with the Republican Party. And you mentioned, you know, his
3:01
Speaker 1: success at fundraising for the Republican Party. What kind of
3:05
Speaker 1: Republican party does he leave behind for his successor to manage, well,
3:11
Speaker 1: like it or not, it's a Trump Republican Party. And
3:15
Speaker 1: as you know, I mean, many people both in the
3:19
Speaker 1: moderate wing of the Republican Party and Democrats certainly have
3:23
Speaker 1: been very critical the leadership of the Republicans for not
3:26
Speaker 1: being more vocal in their opposition to some of the
3:29
Speaker 1: policies that Donald Trump is pursuing. Um. That said, they're
3:33
Speaker 1: inexcellably tied to this president, and UM it becomes even
3:38
Speaker 1: more interesting in the context of the Mueller investigation. That's
3:41
Speaker 1: exactly where I wanted to go with this. I mean,
3:44
Speaker 1: one speculation is that how speaker Ryan is stepping aside,
3:49
Speaker 1: or at least announcing his plans to do so, in
3:52
Speaker 1: order to take a harder stance on President Trump. Do
3:55
Speaker 1: you think that there's any merit to that? No? Okay, great,
3:58
Speaker 1: and asked an answer, Um, no, but I really don't
4:02
Speaker 1: think I you know, Uh, Paul Ryan has said that
4:07
Speaker 1: the Special Prosecutor Mueller should be kept in the job
4:10
Speaker 1: and complete his his inquiry. Um. He hasn't had a
4:14
Speaker 1: full throated criticism of Donald Trump's comments on it. Uh. Probably,
4:20
Speaker 1: you know, Democrats would like him to be more vocal.
4:22
Speaker 1: But I do not think he's making this decision so
4:25
Speaker 1: that he's now free to talk about it. I don't
4:27
Speaker 1: think you'll be seeing any real profiles and courage out
4:31
Speaker 1: of this guy. Um. That said, this has coming at
4:35
Speaker 1: an interesting point. It's an inflection point in the Mueller
4:38
Speaker 1: investigation and certainly in President Trump's anger toward Mueller as
4:42
Speaker 1: well as uh Rod Rosenstein. And I'm just wondering, you know,
4:47
Speaker 1: does this sort of have implications for the GOP's willingness
4:51
Speaker 1: to push forward or criticize, or say censure President Trump
4:56
Speaker 1: for any consequences that might emerge from firing Rosenstein. Well
5:00
Speaker 1: as a very practical matter of the fact that he's
5:03
Speaker 1: not running for re election means that if Donald Trump
5:07
Speaker 1: were to fire Rosenstein, Mueller, Sessions, etcetera. It would if
5:12
Speaker 1: it did, and it would create a constitutional crisis. Paul
5:17
Speaker 1: Ryan could just basically throw away any political implications to
5:20
Speaker 1: a stance on that move. Uh So it would as
5:24
Speaker 1: a practical matter, free him from many political considerations. Then
5:28
Speaker 1: it would just become essentially a moral, conscious decision on
5:32
Speaker 1: his part of what standy takes um in in the
5:36
Speaker 1: constitutional crisis that wouldn't ensue from that. We're speaking with
5:41
Speaker 1: Marty Schenker, he is our chief content officer for Bloomberg
5:44
Speaker 1: as we await comments and a statement from Paul Ryan,
5:48
Speaker 1: current Speaker of the House, representative of the Wisconsin First
5:52
Speaker 1: and he will be announcing that he will not seek
5:55
Speaker 1: a re election for that position. We're also going to
5:58
Speaker 1: be bringing you live cover to Mark Zuckerberg, chief executive
6:02
Speaker 1: of Facebook, second day of his two day testimony before Congress.
6:06
Speaker 1: Um and Marty, I'm sorry to keep harping on the
6:08
Speaker 1: Republican Party because that you know, they're the ones who
6:10
Speaker 1: are going to be left after Paul Ryan exits in January, UM,
6:15
Speaker 1: the rating for the president has actually gone up, right.
6:18
Speaker 1: I mean we're talking about his favorable rating has climbed
6:21
Speaker 1: eight percentage points since before the election. Uh, in terms
6:28
Speaker 1: of Republicans, and I'm wondering what positions we can expect
6:32
Speaker 1: the Republicans to take as a result that the Speaker
6:37
Speaker 1: Ryan is no longer going to be there to put
6:39
Speaker 1: on the brakes or even add any kind of institutional
6:42
Speaker 1: or traditional Republican UH perspective. Well, you still have Mitch
6:47
Speaker 1: McConnell as a Senate leader, and he in some ways
6:50
Speaker 1: speaks for the Republican Party. And in Congress in general,
6:55
Speaker 1: you have McCarthy and Scalise who are still the you know,
6:58
Speaker 1: the whip and the number two person in the House
7:01
Speaker 1: who has been maybe going to take Speaker Ryan's position
7:04
Speaker 1: if the working theory is that McCarthy will try to
7:09
Speaker 1: do that. Actually he sought that position before Ryan, uh
7:13
Speaker 1: and could not garner enough votes, and then that's when
7:17
Speaker 1: they turned to Paul Ryan as a unifying force for
7:19
Speaker 1: the Republican Party. So it's probably he's the front runner,
7:24
Speaker 1: but he's by no means a short thing. And there
7:27
Speaker 1: are very fervent Trump supporters in the House who may
7:31
Speaker 1: think that it's time for a truly pro Trump Republican
7:37
Speaker 1: to take the leadership in the House. Don't forget the
7:40
Speaker 1: mid terms are in November, well before Paul Ryan leeds office.
7:44
Speaker 1: So um, it'll be a completely different context when the
7:48
Speaker 1: decision it will have to be made, whether in fact
7:51
Speaker 1: it will be majority leader or minority leader of the
7:54
Speaker 1: House when that time comes. All right, So we're right
7:57
Speaker 1: now completely focused on Paul Ry. In about a half
8:01
Speaker 1: an hour ago, we were completely focused on the relationship
8:05
Speaker 1: between the US and Russia over Syria and some kind
8:09
Speaker 1: of impending missile attack that President Trump is promising via
8:13
Speaker 1: Twitter on Syria in response to the chemical attacks. Where
8:17
Speaker 1: are we with that? Has everybody just simply forgotten about that?
8:20
Speaker 1: Has this sort of turmoil complicate matters if at all? Well?
8:23
Speaker 1: I don't. I don't know that the political elements of
8:26
Speaker 1: Paul Ryan's decision not to run for re election has
8:28
Speaker 1: any impact at all on Syria, But the markets certainly
8:32
Speaker 1: haven't forgotten about it. Um, it's interesting that the markets
8:37
Speaker 1: haven't actually gone cataclysmically panicked over this. There's obviously a
8:43
Speaker 1: negative reaction, but it's not hug Why is that surprising
8:46
Speaker 1: to you. Well, I mean, you know, when you have
8:49
Speaker 1: a president of the United States via Twitter essentially saying
8:53
Speaker 1: we're going to take military action in an area of
8:55
Speaker 1: the world where the Russians and the Iranians personnel who
8:59
Speaker 1: have warned a ends doing that, it's could be very unsettled.
9:03
Speaker 1: You'd wonder why the SMP down only four tens of
9:06
Speaker 1: a percent, why it's down only ten points, and why
9:09
Speaker 1: oil is only up less than less. My theory is
9:12
Speaker 1: that the markets are looking at this in some ways
9:15
Speaker 1: like the tariffs issue, that yes, there's a lot of
9:19
Speaker 1: bluster and a lot of strong talk, but ultimately that
9:22
Speaker 1: he might walk this back. My own personal theory is
9:25
Speaker 1: that there are there could very likely be a conversation
9:30
Speaker 1: between Donald Trump and Vlader air Putin. They spoke very
9:32
Speaker 1: recently in the last couple of weeks that might actually
9:36
Speaker 1: bring bring us back from the brink of military action.
9:40
Speaker 1: I mean, that would be consistent with the way Donald
9:44
Speaker 1: Trump likes to operate. Threaten, gets concessions, and back off.
9:48
Speaker 1: You know, there's sort of an interesting twist here with
9:50
Speaker 1: the United Kingdom coming out and saying that they're not
9:52
Speaker 1: sure that the Syrian government did wage a chemical attack
9:57
Speaker 1: at all, and that they're not going to cooperate with
9:59
Speaker 1: the u US until they have better evidence. How does
10:02
Speaker 1: that factor into that, Well, that's pretty interesting coming from
10:04
Speaker 1: the UK, who are not even sure that the nerve
10:07
Speaker 1: agent that was used to attack the UK espionage victim
10:15
Speaker 1: uh was really from Russian origin. So, you know, I
10:20
Speaker 1: just think that's political rhetoric. But it might just be
10:23
Speaker 1: political rhetoric. But that means that the US does not
10:25
Speaker 1: have the UK on its side, and any kind of
10:28
Speaker 1: altercation in Syria, even as France says that they're going
10:31
Speaker 1: to go alongside the US, that from a strategic standpoint
10:34
Speaker 1: is significant. Yes, it makes it much less politically acceptable.
10:38
Speaker 1: I guess in a global context for Donald Trump to
10:41
Speaker 1: take union ladder reaction in Syria, Um, I think the
10:45
Speaker 1: real danger is the Russian response. Right, If the US
10:50
Speaker 1: was to take military action and in some way involves
10:54
Speaker 1: Russian troops that are on the ground, it could escalate
10:57
Speaker 1: in a way that no one really wants but no
10:59
Speaker 1: one can control. So it's a very dangerous situation in Syria.
11:04
Speaker 1: And if Donald Trump decides to go forward without allies,
11:08
Speaker 1: it becomes even more dangerous. Well, in the danger also
11:11
Speaker 1: becomes as you mentioned, that Iran has proxies if indeed
11:15
Speaker 1: it does have actual military forces in Syria, and that
11:20
Speaker 1: Moscow and Vladimir putin visiting with the head of Iran
11:25
Speaker 1: in Turkey just last week, I believe in Turkey and
11:30
Speaker 1: ally of the United States. Yes, it's very complicated, um
11:35
Speaker 1: as we all know. And there's also a report from
11:38
Speaker 1: ap earlier this morning that a high level delegation of
11:41
Speaker 1: Russian officials have arrived in Syria. Now is that a
11:46
Speaker 1: kind of shield situation or it's suggestive of the Russians
11:51
Speaker 1: are really doubling down on their commitment to a side,
11:54
Speaker 1: you know. And and just to sort of add a
11:56
Speaker 1: complication to this whole backdrop are the sanctions that the
11:59
Speaker 1: US has placed on Russia, Russia calling it uh ageing
12:03
Speaker 1: economic war on them. And you are seeing the assets
12:06
Speaker 1: in Russia plunge, the ruble continuing to lose value versus
12:10
Speaker 1: the dollar. Uh. You saw you know, bond yield spike up,
12:14
Speaker 1: and they canceled a bond auction because they didn't want
12:17
Speaker 1: to try to raise money in this environment. Not just wondering,
12:20
Speaker 1: I mean how much does that sort of up the
12:23
Speaker 1: anti here and sort of raise the possibility of military conflict. Well,
12:29
Speaker 1: you know, I do think that when in the context
12:31
Speaker 1: of the world stage, the way the US can truly
12:36
Speaker 1: pressure Russia is not through foreign diplomacy, not through the UN,
12:40
Speaker 1: but on economic sanctions. Um Vladimir Putin enjoys great popularity
12:46
Speaker 1: within the among the Russian people, but a weakening ruble,
12:50
Speaker 1: if it's over an extended period of time, will cause
12:54
Speaker 1: real economic pain, and that is the way to get
12:58
Speaker 1: Russians change their behavior. Most foreign policy experts say sanctions
13:02
Speaker 1: are the really only effective way of changing their baby
13:07
Speaker 1: and taking a look at, for example, of the my
13:09
Speaker 1: Sex ten, which is the stock exchange in Russia actually
13:14
Speaker 1: higher today, up about nine tenths of a percent adjusted,
13:18
Speaker 1: and indeed, right, yeah, trying to get your money out,
13:21
Speaker 1: that's a different, different story. Let's bring in Billy House,
13:37
Speaker 1: a congressional reporter for Bloomberg News. Billy, I want to
13:41
Speaker 1: just touch on that first. Did that strike you as
13:44
Speaker 1: well as sort of the most noteworthy thing he said?
13:47
Speaker 1: That was very noteworthy, especially when you have some of
13:50
Speaker 1: his own House Republican colleagues, led by Devin Junior as
13:53
Speaker 1: the House Intelligence Chairman, working right now to try to
13:56
Speaker 1: hold both Uh rosen Stain and Sessions in contempt. So, uh,
14:02
Speaker 1: Paul Ryan can say that, and he said he's had
14:04
Speaker 1: assurances that Mueller would not be attacked or fired by
14:07
Speaker 1: the White House. Let's let's see what happens. Though he's
14:10
Speaker 1: a lame duck. Now, what does this? What? What does
14:14
Speaker 1: this due to the race for his position? And given
14:18
Speaker 1: that we've got the mid terms between now and when
14:20
Speaker 1: the next Congress takes take session, that's a good question.
14:24
Speaker 1: I mean, right now it's been all whispers between the
14:28
Speaker 1: number two House Republican and Kevin McCarthy and the number
14:31
Speaker 1: three Steve Scalise. But with Paul Ryan leaving this early
14:35
Speaker 1: are announcing he will be leaving this early on. I
14:38
Speaker 1: think only Tip O'Neill, ever, UH was the last one
14:41
Speaker 1: to not be forced out or to go out in
14:44
Speaker 1: some scandal um. It leaves a lot of other potential
14:48
Speaker 1: candidates time to start seeing what kind of chips they
14:52
Speaker 1: could collect or call in, and so perhaps names like
14:55
Speaker 1: House Freedom coccas Chairman Mark Meadows, a friend of Trump's
15:00
Speaker 1: or even Jim Jordan's or others who may be more
15:03
Speaker 1: moderate might have time to build some sort of coalitions.
15:06
Speaker 1: I think a lot of people on Wall Street are
15:08
Speaker 1: trying to figure out, Okay, well, how does this affect policy?
15:12
Speaker 1: How will this directly feed into implications for any cutbacks
15:17
Speaker 1: in social programs to reduce the deficit, or any ability
15:21
Speaker 1: to pass infrastructure planning? Can do you have any insight
15:24
Speaker 1: into that? I think, first of all, that was gonna
15:28
Speaker 1: all be very difficult anyway in an election year. Uh,
15:32
Speaker 1: the Republicans have lost special elections dating back to two
15:36
Speaker 1: thousand eleven on just stating they wanted to vouchize Medicare
15:40
Speaker 1: and that sort of thing. But now that we have
15:42
Speaker 1: a lame duck speaker and he may think there is
15:46
Speaker 1: a lot of good will that would help him get
15:48
Speaker 1: that those policies through, I'm more inclined to believe that
15:52
Speaker 1: he's now a lame lame duck and none of that
15:55
Speaker 1: will happen. So who emerges the leader during this period
16:00
Speaker 1: between the now and the election of a new one.
16:04
Speaker 1: I think we have uh multiheaded monster for the next
16:09
Speaker 1: few months where nobody's actually leading. All right, Billy House,
16:13
Speaker 1: thank you so much for joining us, and good luck
16:14
Speaker 1: with all the future coverage as we continue to monitor
16:18
Speaker 1: who is going to take over house speaker Paul Ryan's position,
16:22
Speaker 1: as well as the implications for policy and the ongoing
16:26
Speaker 1: Moler investigation. Thank you here just give us a sense
16:44
Speaker 1: of what we should be focused on from what we've
16:46
Speaker 1: heard so far. As Paul Sweeney, US director of Research
16:48
Speaker 1: and senior Media and Internet analyst for Bloomberg Intelligence, Paul, how,
16:53
Speaker 1: how is Mark Zuckerberg fired on day two? I think
16:56
Speaker 1: he's generally doing a pretty good job here. You know,
16:59
Speaker 1: over at past a couple of days, the stock is
17:01
Speaker 1: actually traded fairly well, So I think, uh, he hasn't
17:04
Speaker 1: done any damage here. And um, you know, I think
17:06
Speaker 1: the big challenge for Mark here over these two days
17:10
Speaker 1: is too you know. Number one, you know clearly acknowledge
17:13
Speaker 1: that Facebook now has a handle on the full scope
17:16
Speaker 1: of what the issues are here as it relates to data.
17:18
Speaker 1: And I think you know, that realization didn't really occur
17:21
Speaker 1: really into the last couple of months, I think in
17:23
Speaker 1: terms of the scope of their responsibility here. Um, So
17:27
Speaker 1: I think he needs to get that across. I think
17:29
Speaker 1: he is getting that issue across. And then the second issue,
17:31
Speaker 1: maybe more importantly is that Facebook is equipped um to
17:36
Speaker 1: deal with these issues. Um, And you know. Most importantly
17:40
Speaker 1: that they do not need to uh incur regulatory oversight
17:44
Speaker 1: by Congress or any other body. I think that's one
17:47
Speaker 1: of the big issues that Facebook and you know, tech
17:50
Speaker 1: and social media and the internet, um, you know, trying
17:53
Speaker 1: to forcedall as long as possible. Paul Swiney, this shares
17:56
Speaker 1: a Facebook. They're down about six tenths of a percent.
17:58
Speaker 1: What a reference in particular report that was put together
18:01
Speaker 1: by Deloitte, and they worked with Facebook in order to
18:04
Speaker 1: do this. This goes back to two thousand and fourteen.
18:06
Speaker 1: But for reference, uh, they said that Facebook has enabled
18:11
Speaker 1: more than two hundred billion dollars of economic activity and
18:16
Speaker 1: four and a half million jobs around the world. Can
18:20
Speaker 1: you like in Facebook to the Internet itself? And that
18:25
Speaker 1: perhaps that is why this is such a interesting and
18:29
Speaker 1: focused piece of information, because so many businesses live on
18:35
Speaker 1: Facebook as if Facebook were the Internet. Yeah, it's um,
18:39
Speaker 1: you know again, Facebook has over two billion users on
18:43
Speaker 1: a monthly basis on a global scale there obviously everywhere,
18:46
Speaker 1: with the notable exception of China, uh, you know, and
18:51
Speaker 1: so they are truly you know, touching you know, so
18:53
Speaker 1: many households, so many lives in so many different ways
18:56
Speaker 1: that the social media hum of which Facebook is a
19:00
Speaker 1: larger social media platform, has really become one of the
19:03
Speaker 1: main um utilities of the Internet at large. It used
19:07
Speaker 1: to be simply, uh, you know, search was probably the
19:10
Speaker 1: utility that people utilize the most on the Internet. Um,
19:14
Speaker 1: but it's really I think social has become you know,
19:17
Speaker 1: kind of the key aspect. And so I guess I
19:19
Speaker 1: was getting out here with the economic effect is it's
19:21
Speaker 1: not just sharing you know, family photos and details of
19:24
Speaker 1: what you did on your vacation. It is perhaps two
19:28
Speaker 1: people who do not know each other enjoying, let's say,
19:32
Speaker 1: playing bridge online and through an app that they join
19:36
Speaker 1: through Facebook. They then are able to play bridge with
19:40
Speaker 1: each other. That becomes an economic relationship for not only Facebook,
19:47
Speaker 1: but also for the companies that are building those specific apps.
19:50
Speaker 1: And Mark Zuckerberg reference Zinga for example, the online game creator.
19:55
Speaker 1: Is that an accurate description? It is? It is an
19:58
Speaker 1: accurate description, and and so you know, and it's something
20:01
Speaker 1: that you know, I'm not sure. Um. A lot of
20:04
Speaker 1: the regulators, a lot of the politicians, the folks asking
20:06
Speaker 1: the congressman, asking the questions over the past few days,
20:09
Speaker 1: a couple of days, you know, fully appreciate that, and
20:12
Speaker 1: I think that is one of the reasons that whenever
20:15
Speaker 1: there's discussion about, uh, you know, a regulation of the
20:19
Speaker 1: Internet coming from Congress, uh, that is what people that
20:22
Speaker 1: is one of the main pushbacks, which is the Internet
20:24
Speaker 1: and social media have created so much opportunity for people
20:27
Speaker 1: and so many jobs and so much uh economic growth
20:31
Speaker 1: that you know, this is the last thing this industry
20:33
Speaker 1: needs is regulatory oversight. But now what's happened in the
20:36
Speaker 1: last couple of months is just the privacy issue has
20:40
Speaker 1: really reared. It's it's u ugly head here. And we've
20:42
Speaker 1: seen privacy regulations out of the EU over the years,
20:45
Speaker 1: and they're getting stricter and stricter all the time, affecting
20:48
Speaker 1: companies like Facebook, and Facebook wants to forestall anything like
20:51
Speaker 1: that happening here in the States. All right, thank you
20:53
Speaker 1: very much of Paul as Sweeney. Paul Sweeney our director
20:57
Speaker 1: of North American research for Bloomberg Intelligence. So we've been
21:16
Speaker 1: listening to Mark Zuckerberg testified before the House Energy and
21:19
Speaker 1: Commerce Committee. He was answering questions from A. Doris Matsui,
21:23
Speaker 1: the congresswoman of Democratic congresswoman from California representing Sacramento, and
21:30
Speaker 1: one of the issues had to do obviously with the
21:33
Speaker 1: privacy controls that are afforded to people who actually use
21:37
Speaker 1: a Facebook and the ability of commercial organizations, whether they
21:41
Speaker 1: be businesses or indeed political organizations, to actually access that
21:46
Speaker 1: information and then target information that would be directed to
21:51
Speaker 1: to specific interests that they might have. I want to
21:55
Speaker 1: bring in our own Shia ovid Are Bloomberg Technology Gadfly
21:59
Speaker 1: columnists to give us a little bit more detail about
22:03
Speaker 1: the congressional hearings, and as Shira, I just want to
22:06
Speaker 1: note that I believe that there is a quote from
22:10
Speaker 1: uh from one of the gad fly commists meaning you yes,
22:17
Speaker 1: that says Facebook will keep failing users trust as long
22:22
Speaker 1: as its business is based on unrestrained hoover ng of
22:27
Speaker 1: as much user data as possible. UM does anything that
22:34
Speaker 1: Mark Zuckerberg said that you heard contradict that. I don't
22:40
Speaker 1: think so, and in part because he rather gracefully avoided
22:45
Speaker 1: directly tackling that question. So what Mark now been saying
22:50
Speaker 1: for two days is essentially, UM, people own all the
22:55
Speaker 1: data that they put out there on Facebook, and they
22:57
Speaker 1: have complete control over where and how it's shared, which
23:02
Speaker 1: is not really true. So, look, the business model of
23:05
Speaker 1: Facebook is based on um collecting information from what people
23:13
Speaker 1: voluntarily put on their Facebook pages and things that people
23:17
Speaker 1: are not really aware that Facebook is also getting from you,
23:20
Speaker 1: including um, almost every web page you visit, the apps
23:24
Speaker 1: on your phone, the location as you carry your phone
23:27
Speaker 1: with you across the world, UM, information on what you
23:31
Speaker 1: purchase in stores that advertisers are taking with them to
23:35
Speaker 1: target ads. And this it also includes. And this was
23:38
Speaker 1: interesting because Doris Matt suey Uh, the congressman from California,
23:42
Speaker 1: mentioned what happens afterwards. In other words, you may own
23:47
Speaker 1: your data, but once your data is used by a
23:51
Speaker 1: commercial interest, you really don't have any It's it's a canard,
23:55
Speaker 1: this issue about ad ownership. Nothing that has happened to
23:58
Speaker 1: Facebook in the last two days or three weeks of
24:01
Speaker 1: controversy has changed its ability and willingness to collect large
24:08
Speaker 1: amounts of activity and information on Americans and you and
24:13
Speaker 1: people around the world and use that to target auts.
24:15
Speaker 1: And that's the central problem with Facebook is that it's
24:18
Speaker 1: business model is dependent on its ability to have relatively
24:22
Speaker 1: unrestrained data collection. Okay, so on a scale from one
24:25
Speaker 1: to ten, ten being best and one being worst. How
24:28
Speaker 1: would you grade yesterday's performance of Mark Zuckerberg and I'm sorry,
24:32
Speaker 1: ten is the best? Yeah, ten's the best. I would
24:35
Speaker 1: say it was about an eight. What about today? It's
24:38
Speaker 1: it's less good today. It seems like a the questions
24:42
Speaker 1: are more partisan and pointed today and they're a little
24:45
Speaker 1: less polite. Um. And Zuckerberg looks visibly tired, which is
24:50
Speaker 1: probably reasonable given the day he had six hours. Yeah,
24:53
Speaker 1: he took the break, now, you know that's sorry, Right,
24:56
Speaker 1: we waved off the break yesterday. Today he took it. Um.
25:00
Speaker 1: You know. One thing that I'm struck by is as
25:02
Speaker 1: this is going on, and some might call political theater,
25:05
Speaker 1: others might call it, you know, an informational session, whatever
25:07
Speaker 1: you want to however you want to characterize it. With
25:09
Speaker 1: the tip of both headlines, Cross saying that the European
25:13
Speaker 1: Union privacy head said that we are at a start
25:16
Speaker 1: of a new data privacy era and that European Union
25:20
Speaker 1: watchdogs are creating a social media working group and data
25:24
Speaker 1: rights in some ways, Is this the side show to
25:27
Speaker 1: what's really happening, which is probably really led by Europe
25:30
Speaker 1: right now. Look, I think it's been true for a
25:33
Speaker 1: long time and continues to be true that European regulators
25:36
Speaker 1: and European consumers two are much more skeptical about data
25:41
Speaker 1: collection of Internet companies, including Facebook and Google and others,
25:45
Speaker 1: and the European regulators have taken the lead on all this.
25:49
Speaker 1: They are very informed. Um, they are very harsh critics,
25:55
Speaker 1: and yeah, I do think they are leading the world
25:57
Speaker 1: and leading their colleagues in Congress, who today UM asked
26:01
Speaker 1: several times about this new European data protection rule and
26:06
Speaker 1: whether and how Facebook would implement that in the United States,
26:09
Speaker 1: which I think was interesting that they're looking to Europe
26:11
Speaker 1: as kind of a model. Can we just maybe just go,
26:15
Speaker 1: you know, go one step deeper on that, because having
26:18
Speaker 1: said that, is that because the governments in Europe already
26:22
Speaker 1: have all of the data they want and more on
26:25
Speaker 1: their citizens, the ability to uh, basically enforce the carrying
26:32
Speaker 1: of identity cards or registration and local police stations. I mean,
26:37
Speaker 1: you know, you go and you try to live in
26:38
Speaker 1: any kind of municipality in the European Union, or indeed
26:42
Speaker 1: in any European country outside the European Union, and you're
26:45
Speaker 1: gonna end up in some governmental office pretty quick, pretty quickly.
26:49
Speaker 1: Rather um, that identifies who you are, where you are,
26:53
Speaker 1: what you do, why you're there, on what job you have.
26:56
Speaker 1: So it's not as if they are doing this out
26:59
Speaker 1: of some ultra degreason for personal privacy, but it may
27:02
Speaker 1: be because the government doesn't want any competition when it
27:06
Speaker 1: comes to Facebook. Yeah, that's a fair question. I don't
27:08
Speaker 1: think I know enough about the data collection policies of
27:11
Speaker 1: European governments to answer that question confidently. I do think though,
27:16
Speaker 1: there is genuine concern among European regulators about commercial entities
27:22
Speaker 1: and um what information they get from their citizens, and
27:27
Speaker 1: some of it may be trying to protect European companies
27:31
Speaker 1: from competition from American companies Internet companies. You know, there
27:35
Speaker 1: is no really big and powerful global internet companies based
27:40
Speaker 1: in Europe with you. Yeah, it's a little bit of
27:43
Speaker 1: a different animal, but yeah, there is no sort of
27:45
Speaker 1: Facebook or Google of Europe, or at least not the
27:48
Speaker 1: size of Facebook and Google. So there may be some
27:52
Speaker 1: some competitive issues at play here, But mostly I think
27:55
Speaker 1: it is genuine concern on the part of European regulators
27:58
Speaker 1: and governments to protect their citizens. So aside from what
28:01
Speaker 1: we've talked about so far, what are the highlights to
28:03
Speaker 1: you until now. Um, Look, I I think the highlights
28:09
Speaker 1: to me are that there is now general agreement, although
28:13
Speaker 1: the devils and the details, from both Facebook and lawmakers
28:18
Speaker 1: both Republican and Democratic, that there needs to be some
28:22
Speaker 1: more regulation of Facebook or other internet and social media companies.
28:27
Speaker 1: And look, I don't I'm skeptical that anything will happen,
28:29
Speaker 1: but the fact that again all of those sides Democrats, Republicans,
28:34
Speaker 1: and Facebook itself have acknowledged the vague need for regulation
28:38
Speaker 1: that feels like a watershed moment. Okay, So then who
28:42
Speaker 1: is going to be responsible for that, because it's not
28:43
Speaker 1: going to be Congress, right, Yeah, I don't know. I mean, look, um,
28:48
Speaker 1: this is this is a mid term election year. It
28:52
Speaker 1: seems hard to imagine that anything will get substantive, will
28:55
Speaker 1: get past this year. And then, honestly, Facebook maybe just
28:58
Speaker 1: hoping to play out the clock that by next year
29:01
Speaker 1: Congress will have moved on to something else. Shira the
29:06
Speaker 1: Uh the consent decree that the that the Federal Trade
29:11
Speaker 1: Commission has with Facebook was referenced several times, and several
29:17
Speaker 1: times Mark Zuckerberg didn't seem to have any detailed knowledge
29:22
Speaker 1: of that consent decree. Uh does that surprise you. Yeah,
29:27
Speaker 1: it was a little bit strange. I suspect he was
29:29
Speaker 1: probably trying to avoid getting himself trapped in some line
29:32
Speaker 1: of questioning that he couldn't control. Um, but yes, it
29:36
Speaker 1: did seem odd that, For example, he he was asked
29:39
Speaker 1: whether Facebook had to pay a financial fine from the
29:42
Speaker 1: FTC in two thousand eleven, which they did not. The
29:44
Speaker 1: FTC does not really have the ability to do that
29:47
Speaker 1: in the case that happened to Facebook, and it was
29:49
Speaker 1: weird that he couldn't answer that. So what are the
29:53
Speaker 1: implications here for the other big social media companies? I mean,
29:59
Speaker 1: I'm a little bit horns So on the one hand, um,
30:02
Speaker 1: the other Internet companies like Google and Twitter have kind
30:05
Speaker 1: of gotten a past the last few weeks as the
30:08
Speaker 1: world's attention has focused on Facebook's crisis, But they have
30:13
Speaker 1: almost exactly the same basic issue issues as Facebook, which
30:16
Speaker 1: is their business models are dependent on harvesting data and
30:21
Speaker 1: using that data about people to target ads. They have
30:24
Speaker 1: also faced numerous questions about whether they strike the right
30:27
Speaker 1: balance between um, uh, you know, creating a free and
30:32
Speaker 1: open exchange of ideas online and making sure that people
30:36
Speaker 1: aren't being harassed incited into violence or otherwise abused on
30:40
Speaker 1: their platforms. And again, Facebook, Google and Twitter and others
30:44
Speaker 1: all have those same issues, and they, at least for now,
30:46
Speaker 1: haven't had to tackle those. Sure O, thank you very
30:49
Speaker 1: much for being with us our Bloomberg Gadfly columnists for
30:51
Speaker 1: all things technology, great columns on Facebook and great coverage
30:55
Speaker 1: of Facebook. And of course we're always following you on
30:58
Speaker 1: Twitter at shira Ovi Tape. Thanks for listening to the
31:04
Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
31:07
Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
31:11
Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox.
31:15
Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
31:19
Speaker 1: You can always catch us worldwide on Bloomberg Radio