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First Move with Julia Chatterley
China's Cyber Crackdown Sends DiDi's U.S. Shares Below Their IPO Price; Oil Prices Rise after Supply Talks are Abandoned; Another Big Ransomware Attack, a $70 Million Ransom Demand. Aired 9-10a ET
Aired July 06, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:01:00]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York. I am Julia Chatterley. This is FIRST MOVE, and here is your need-to-know.
DiDi dumped. China's cyber crackdown sends U.S. shares below their IPO price.
OPEC ordeal. Oil prices rise after supply talks are abandoned.
And cyber shock. Another big ransomware attack, a $70 million ransom demand.
It's Tuesday. Let's make a move.
Welcome to FIRST MOVE. Great to be back with you on a tumultuous Tuesday. Oil prices spiking up the OPEC's failure to agree on supply. China,
expanding its cyber probe triggering an investor outcry, and Wall Street wakes up to it all post Fourth of July.
A bit of consolidation globally as investors eye OPEC's historic standoff and how it might impact growth and inflation expectations going forward.
That said, we begin the trading week on Wall Street at fresh records at or around after Friday's robust June jobs jump.
Europe in the meantime lower with new data showing German factory orders falling on continued supply disruptions. Even Mercedes Benz warning today
that chip shortages will weigh on second half earnings.
Speaking of weighing, Chinese stocks softer in Tuesday's session, too, an overhang, I think from Monday's service sector data showing activity
falling to 14-month lows. Also, uncertainty with the message I think from China's cyber crackdown that China's own national security supersedes its
tech giant's ability to raise money abroad and many other things, too. And China is willing to burn international investors in the process.
That message, I can tell you, heard loud and clear in the United States with Chinese ride-hailing giant DiDi set to tumble some 20 percent in
trading today. That's the premarket after China blocked the mobility giant's app downloads, shares set to fall as you can see well below that
$14.00 level where DiDi went public just last week.
And get this, reports that China's equivalent to Twitter, social media platform Weibo may decide to go private, aka delist. We've had rumors like
this before. That stock though, was up some 40 percent on those rumors. Now, the reports the company is denying it, the stock up just -- and they
say just -- 12 percent. Wow, we are seeing some volatility in some of these Chinese names.
Let's get to the latest on all of this in our drivers. David Culver joins us live from Shanghai. David, great to have you with us on this story.
Let's hone in on what we've seen from DiDi because it felt like from the reports over the weekend that DiDi was sort of caught in the middle to some
degree with investors pushing for them to list and to IPO, and on the other side, sort of a warning or a suggestion from regulators that that
challenges were coming. What do we know?
DAVID CULVER, CNN CORRESPONDENT: You're absolutely right. Julia. I've been eager to talk through this one with you seeing it play out over the
weekend.
The two different combatting sides that you mentioned here, you've got the pressure, the mounting pressure at that from investors, this desire to
start to see the cash flow in. And then on the other side, the suggestion that came from "The Wall Street Journal" and according to sources familiar
with the company as they cite them, that perhaps regulators were saying hold off on that IPO, don't go so quickly.
As we know, DiDi went ahead with that. Now, there are suggestions that perhaps it was mixed messages that the company was receiving. Nonetheless,
as they went public on Wednesday, the next day, you and I, Julia were having a conversation about what was a major event here in China and that
was the 100th Anniversary of the Chinese Communist Party.
The reason I mention that is because no action was taken on that day against DiDi, but the following day, the first of two punches.
[09:05:10]
CULVER: The first, they were told to stop adding new users. The second, over the weekend, they were told to come off the App Stores. They were
banned there.
DiDi is massive, 377 million users here in Mainland China alone. They're also a big employer here. You've got roughly 15 million drivers that rely
heavily on getting their income from their work with DiDi, and so whilst many folks who we've spoken with, some of the analysts suggest it's not
likely that China is going to halt them altogether, this is a strong move from Beijing and showing who is boss, Julia. They are moving ahead with
this and there is a strong, also nationalistic reaction here. Some considerate, some patriotic pushback.
Nonetheless, it is being clearly stated that DiDi needs to reel itself in, do this thorough self-evaluation, if you will, review its national security
data, and then perhaps once it rights its wrongs, it can move forward -- Julia.
CHATTERLEY: I mean, there will be investors here that are incredibly angry as they see themselves now losing money, if you look at the share price
premarket, and they will perhaps believe that DiDi knew this was coming that they should never have IPO'd, and also that they should never have
IPO'd in the United States.
And there is a bigger challenge here, David, and we can talk about this, which is, and you've sort of raised the point already that if you're a big
company in China, you have access to lots of data, data that the Chinese government believes is potentially a national security threat now or at
some point down the road, if you list in the United States, you have to make that data to some degree, accessible to regulators here.
I can kind of understand why China would go, hang on a second, we need to make sure that everything is secure here.
CULVER: And that's been echoed by analysts I've spoken with, too. There is a part of this that perhaps is validated by how the Chinese government has
moved forward with this, the Cyberspace Administration in particular, but then when you use that term "national security," and we've seen it used by
the U.S., China certainly likes to use it, especially since they've imposed their National Security Law in Hong Kong a year ago. It's vague. There's
not a lot of specifics that go along with it.
But they are certainly citing it often, and they are citing it in this case. And you're right, it is not just DiDi, they've moved ahead with other
tech companies that they've gone after. But those tech companies have something in common.
For one, they've recently IPO'd in the U.S., and two, as you point out, Julia, they've got a lot of user data, including a truck-hailing company,
and an online recruitment app. All of these things that have aggregated a lot of Chinese data in particular, and has been increasingly concerning for
folks who have voiced their concerns online, in particular here on Chinese social media, and suggesting that those companies, in many ways have gone
against China's values and need to be taught a lesson.
That's certainly what's been echoed in state media, and on Chinese social media. But there are other realities. And that is, there's a lot of money
at stake here -- Julia.
CHATTERLEY: Yes. One hundred percent, and to your point, as well, it is far broader than just one company. And a great point also that you
mentioned, same language that the United States used over companies like Huawei, too, the wall, Chinese wall, or otherwise, it is building up
between these two nations.
It gets ever larger where I just, I'm not sure companies will risk listing anywhere other than China in the future. Maybe that's the point. David
Culver, great to have your insight as always. Thank you.
CULVER: Thanks, Julia.
CHATTERLEY: All right, let's move on. Brent crude is trading at its highest in level in nearly three years, and you have to go all the way back
to 2014 to find U.S. crude, or WTI as it is known at today's levels, all because crisis talks at OPEC and OPEC+ on a new output deal were called off
with no resolution in sight.
Anna Stewart joins me now. Anna, clearly, alarm building here, and I sort of see two opposite and opposing routes here, and the worst case scenarios
that they continue to produce at current levels, that demand continues to increase in terms of oil, and you see the price rising or the opposite,
that this schism that we see becomes a real fracture and everybody pumps oil at whatever rate they choose to. Talk us through the likelihood here.
Yes.
ANNA STEWART, CNN REPORTER: Binary options, Julia, and neither looks particularly good, does it? Either you have a situation now as you say, no
agreement, but demand keeps rising and output remains the same. That market already very tight gets even tighter and prices as you can see marching
towards the $80.00 a barrel mark, and could go higher.
But as you say, on the flip side, the other way around, if you look at it, the UAE, if it decides to go ahead and just produce the oil it wants to, up
its own capacity and other members do the same, you've got a bit of a free for all, oil flooding the market and you've got a price crash. Exactly what
OPEC was designed to avoid.
Neither scenario good, and the meeting yesterday was cancelled, and I think the starkest part really, the statement was about that no date has been set
for another meeting. I think we can hope though and assume that talks are ongoing behind closed doors, behind the scenes, and hopefully talks between
de facto leader Saudi Arabia and the UAE -- Julia.
[09:10:10]
CHATTERLEY: Yes, and it is about way more than just oil prices, let's be clear. It is the geopolitics and a power play between the two nations that
is also filtering surely into these discussions.
STEWART: Absolutely. And first off, let's look at this, it is not just OPEC, it is OPEC+, which means Russia is at the table. That will have
changed the dynamic considerably over the last few months, and then you've got the relationship between Saudi Arabia and the UAE, staunch allies for
decades. But you know what, they're kind of on divergent paths and have been for the last couple of years.
Whether we look at the different relationships they have with other countries in the region -- Qatar, Israel -- but we look at the situation in
Yemen, the UAE pulling its forces out in 2019, leaving Saudi Arabia alone, whether we look even at the pandemic, right now, Saudi Arabia has a ban on
citizens arriving from the UAE due to the delta variant. So, all of this is playing in around these talks. You can never really divorce the oil talks
from the rest of geopolitics -- Julia.
CHATTERLEY: Anna Stewart, we'll watch and see what happens, and maybe they can come back together and reach some kind of agreement. We'll see. Anna
Stewart, great to have you with us.
To Israel now, where scientists are saying the efficacy rate for the Pfizer-BioNTech vaccine is much lower when it is challenged by the delta
variant. Senior medical correspondent, Elizabeth Cohen joins us now with all the details.
My sense on this, Elizabeth, you basically have a one in three chance of getting the delta variant of COVID if you're exposed, and you've been
vaccinated, but the protection against hospitalization remains incredibly high and actually, we should talk about that, too.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: That's right, Julia. And that really is the bottom line, and before we talk about these Israel
numbers, I want to add a caveat here, the Israeli Ministry of Health just put these numbers out there.
They did not explain how they arrived at them. So, we can't go to other experts and say, hey, does this look right to you or not? Because they just
put the numbers out without any kind of study, without any kind of information, which many scientists would say is really quite irresponsible.
But let's take a look at what they put out with that caveat.
So, what they found is that when you look at the effectiveness of the Pfizer vaccine now, now that the delta variant is out there in such huge
numbers, it's only 64 percent effective at preventing infection -- at preventing infection -- but to your point, Julia, it is 93 percent
effective at preventing severe disease or hospitalization. That means that the vaccine wins.
A vaccine researcher in the U.S., Dr. Paul Offit once said to me, the purpose of a vaccine, Elizabeth, is to keep you out of the hospital and out
of the morgue. In other words, if you just get infected, maybe you get a little bit of sick, maybe you miss a few days of work. That's a win. You
didn't end up in the hospital and you didn't end up dead -- Julia.
CHATTERLEY: Yes. Elizabeth, thank you so much for that context. And to your point, no peer review here. So, we have to be very, very careful.
Elizabeth Cohen --
COHEN: No study even. Yes.
CHATTERLEY: No study. Yes. No review. No study, just --
COHEN: Nothing.
CHATTERLEY: Just headlines.
COHEN: Right.
CHATTERLEY: Thank you, as always.
COHEN: Thanks.
CHATTERLEY: All right, let's bring you up to speed now with some of the other stories making headlines around the world.
Florida is bracing for storm surge, damaging winds, and possible tornadoes as Tropical Storm Elsa approaches the state. Forecasters say it could grow
stronger over the next 24 hours. Elsa tore through Cuba and the Cayman Islands on Monday, bringing heavy rain, strong winds, and causing
landslides.
Hong Kong Police have arrested nine people including six secondary students in what they say was a suspected bomb plot. Authorities say the suspects
were part of the city's Independence Movement and we're building explosives. CNN's Kristie Lu stout reports.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: Police in Hong Kong say that they have thwarted a suspected terror plot after arresting nine people
including high school students on suspicion of terrorist offences under the National Security Law.
A police say they rented a hostel in the Kowloon area of Hong Kong to make homemade bombs and allegedly planned to target public facilities including
courts, public transit, and cross harbor tunnels in the city.
Now, police also say they found an operation manual, which had plans for an attack in early July.
During the investigation police said they also picked up weaponry, chemicals, communication devices, and SIM cards. No bombs were made police
confirmed.
Among the nine arrested, five are male, four are female, six are high school students. Their ages range from 15 to 39. A police say they belong
to a Hong Kong independence group called Returning Valiant. Here's Steve Li, senior superintendent of the Hong Kong Police Force.
STEVE LI, SENIOR SUPERINTENDENT, HONG KONG POLICE FORCE (through translator): To establish a homemade lab, to manufacture improvised
explosive devices in the middle of a busy city is very insane. I think everyone would agree with that. It's very irresponsible.
It's very painful to see young people getting involved. It's a heinous act to lure young people into participating in this kind of activity.
[09:15:04]
LU STOUT: The arrest coincides with claims by officials that the threat of terrorism remains despite the National Security Law. In fact, earlier
today, Hong Kong's top leader, Carrie Lam warned of underground terrorist activity. She blamed external and domestic influences.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
CHATTERLEY: All right, still ahead here on FIRST MOVE. Two of Indonesia's biggest startups tie up to form Go-To to turn pandemic problems into
possibilities, but will it be a go-to for investors also?
And delivering on what truly matters, the CEO of Zipline talk to us about using drones to fight COVID-19 and ramping up investments.
Stay with us. That's coming up.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE live from New York where it is looking like a quiet open after the long holiday weekend. Wall Street
begins the week with all the major indexes at all-time highs, the S&P 500 coming off its seventh record close in a row.
Call it a pre-Fourth of July fireworks though with tech, the big winner last week, up almost two percent. Investors applauding the robust June jobs
report and setting aside concerns for now. The stronger U.S. growth could force the Federal Reserve to tighten up policy faster.
Now, the pandemic has created new unique challenges for businesses all around the world, but also opportunities to consolidate or to diversify.
Step forward Indonesia's two largest startups. I'm talking about Gojek, which started as a motorcycle ride-hailing firm, and Tokopedia, an e-
commerce platform. They completed their merger in May to form GoTo, a behemoth that accounts for around two percent of Indonesia's entire GDP.
It allows you to order rides, food, make payments, buy items, and much more. And the next step for GoTo could be of huge interest to investors,
too, a potential dual listing in Jakarta and New York at least according to the rumors.
Patrick Cao was the president of Tokopedia and is now President of GoTo, and he joins us from Singapore.
Patrick, fantastic to have you on the show. Very excited to talk to you. Let's just take a step back, because these were two huge businesses in
their own right that you decided to combine. Just explain the moment you all as individuals and founders decided that you were better together.
[09:20:00]
PATRICK CAO, PRESIDENT, GOTO: Thank you, Julia, for having me. I feel like it was a long time in the making. We actually pioneered the idea of ride-
hailing companies delivering e-commerce packages back in 2015. And then fast forward last year to the start of the pandemic, we were working with
each other to deliver essential goods and services to all of Indonesia and support the government with a lot of their initiatives as well.
So when William Andre, Kevin, and I got together right before Christmas and we started talking about, you know, that very difficult journey in 2020
about our principles and values and what we wanted to accomplish, we realized that, you know, we're really out looking to do the same thing. And
as we compared the product roadmaps, you know, they almost overlapped identically.
And so we felt that it was the right time to sort of get married amongst close friends, and put the businesses together, where, you know, one plus
one plus one would be greater than three. So, you know, we were able to accomplish that and approached our Boards on Christmas Eve, and then, you
know, less than five months later, you know, we're married now raising a family of thousands.
So we're very busy, we're very excited. But there's a lot of work to be done, especially to support our customers during this next wave of the
pandemic.
CHATTERLEY: Yes, I mean, the pandemic has accelerated many things, including something like this, and I can only imagine the integration
excitement and challenges, too. Just to give our viewers a sense of the numbers, and you can update me here if it's been added to, we're talking
about 100 million monthly active users, more than 11 million merchants on the platform, over two million drivers in the ecosystem. Am I up to date on
the numbers? Because that gives my viewers the sense of scale that you have.
CAO: That's about right, Julia. And what's amazing is, that's all being done largely out of one country. So, we have the benefit of starting and
building our business out of Indonesia. You know, just for the audience's benefit, you know, we're the fourth largest population in the world. You
know, one of the youngest very rapid digital adoption.
So, the demographics and the size really present a massive opportunity for any business, especially for technology businesses like ours. And what
we've been able to do with the merger is really accelerate, you know, our ability to execute on any of the use cases that you mentioned previously.
So in particular, for commerce, you know, you can imagine, during the pandemic, it's very hard to get access to, you know, grocery, essential
goods, and services, or even traditionally, Indonesians, you know, like, when I was growing up, you know, we'd have to go and walk to a bank branch
to pay our bills, but because of GoTo, you know, all of the food grocery, and services can be done hyper-locally, Julia.
So it's fast, it's convenient, and it really solves a huge pain point during this time that allows, you know, not just for customers like
ourselves, to be able to sort of maintain a semblance of normalcy, but also to provide business continuity for our merchants, and you know, consistent
income for all the drivers and couriers that rely on us and our platform.
CHATTERLEY: You know, I've done a bit of traveling in Indonesia, phenomenal country. But what I do recognize and I think this ties to the
growth opportunities is, it's okay building this kind of business, and you talked about it being localized in in urban environments, but how do you
serve, I think it was an estimated -- what -- 120 million people that live outside of those urban environments? And of course, it's a nation of
islands, too. What kind of challenges does that present?
CAO: Great question. I mean, Indonesia is the largest archipelago country in the world.
CHATTERLEY: Right.
CAO: Two hundred sixty million population, and you're right, you know, very spread out. And so the idea for GoTo is to provide anyone across
Indonesia the same experience that we would get in the capital city of Jakarta.
So across our ecosystem, we serve about 98 percent of the country, Julia, and two-thirds of our orders are delivered next day. And so what GoTo is
able to do is we can take Gojek's two million bikers, and whether you know, you're using our fulfillment center, you're doing offline to online as a
retailer, or you know, a hyperlocal SME or entrepreneur, then we can leverage those bikes to get the goods from the merchant closer to you, the
customer.
And you know, whenever you need it, we can deliver it to you very quickly. So, that's one of the many ways that you know, we can create value and
service customers during this time, but also because of the complexity of the country, and that's a very different approach because we're the most
hyper local platforms.
That's not how our other peers who are from abroad have operated, and I think that makes us, you know, uniquely Indonesian, but also it's the
reason why you know, we're the market leaders and the national champions.
Another interesting, I think value add that we provide is around the payment side as well. So, because Indonesia is largely a cash economy, GoTo
allows us to unlock the power of cash. You know, you can top up your wallet by any number of means, which is the widest in Indonesia.
But in terms of the use cases, you can pay for almost anything. And so that serves us very well in terms of digital payments adoption, especially
during COVID, and also helps us compound the effects of financial services, especially around lending, when you know, the country needs it the most and
because we have the richest data, we can also score customers the best as well.
CHATTERLEY: It's funny, you're answering my questions before I've even asked them, because I was looking at the data on this, 47 million adults
who lack access to mainstream financial services, 92 million people who've never used a bank, and I feel very passionately about tackling the unbanked
if you have a sort of super app that can provide financial services to people as well, that clearly is another huge growth opportunity.
You're going to have to come back and talk to me about that entirely separately, because we're going to run out of time.
Neither side of the business is profitable. How are you thinking about -- I know, you're in growth phase, so it is an interesting conversation to have
in itself, but in terms of timing of the necessity of profitability before you perhaps look at going public, dual listing or otherwise, talk me
through the thinking on these things?
CAO: Yes, it's a great question. I think we hit a massive inflection point during COVID, where, you know, there was a lot of needs based demand. So,
you can see across the business of massive improvement in unit economics, but you're right, you know, in terms of the expectation, in terms of the
opportunity, any one of our on-demand e-commerce or financial services use cases is still in the low single digits penetration.
So, with that kind of opportunity, with that kind of market sizing in terms of Indonesia and our other markets, it makes a lot of sense to just invest
in growth. And so you know, throughout the pandemic, but especially with GoTo, you know, the combination of that ecosystem play allows us to create
a lot of stickiness in terms of retention, in terms of how much people spend per transaction, and in terms of frequency. So that's increased a
lot.
And on the cost side, you can imagine that, you know, with every dollar of marketing and promotion, Julia, we can grow multiple businesses. So as an
example, you know, very recently, I bought a package on Tokopedia. Right? It was, well, actually, it was this shirt, and then I paid for it with
Gopay, it was delivered by Gojek using a pay later product, and I had insurance coverage for both the delivery and the good.
So you know, you can imagine the kind of ways that you know, we can incorporate the ecosystem to serve customers, but also because we're a
technology platform, you know, we are able to build a lot of network effects and economies of scale.
CHATTERLEY: And congratulations because I love the shirt, and that was very efficient in terms of your order of getting it to you. You didn't
mention anything about potential IPO timing. Patrick, I have 30 seconds, what can you tell me?
CAO: Sure. I mean, it accelerated our plans a lot in terms of size, in terms of scale, in terms of impacts. I think we're well on track for both
our pre-IPO and our IPO.
CHATTERLEY: This year?
CAO: I think we're on track. I think you know, you'll hear a lot more about it during our next catch up with you.
CHATTERLEY: Come back and speak to you soon, please. Loads more to discuss.
CAO: That's good.
CHATTERLEY: Great to have you on. Thank you for your time. Patrick Cao there.
CAO: Thank you so much.
CHATTERLEY: President of GoTo. No, thank you.
The market opens next. Stay with us.
(COMMERCIAL BREAK)\
[09:31:01]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running for the first trading day of this holiday shortened week, a pretty calm picture
in early trading after the Fourth of July firework festivities, but tech rising to fresh records and popular Chinese app firms that trade in the
United States are the main focus of attention on Wall Street here. Those figures belie the turbulence below.
Shares of ride-hailing giant DiDi Global tumbling after being yanked from Chinese App Stores on Beijing's data security concerns. Weibo, meanwhile,
shares remain higher on conflicting reports that the Chairman of the social media platform is in talks to take the firm private. We have had these
rumors over the past year crop up before. Reports say Weibo is now denying that a private listing is on the cards.
All this, as the Chinese Cabinet announces that the country will further increase regulation of all of its overseas listed companies. They're
challenging the United States for the crackdown there, too.
And yet another major ransomware attack is rattling the world. A Russian based cyber-criminal group that's also allegedly behind the recent attack
on JBS Meats now demanding $70 million after targeting many small and medium-sized businesses.
Software vendor, Kaseya says fewer than 1,500 businesses have been affected. Clare Sebastian joins us now with all the details. Fewer than
1,500 is still 1,500 it seems and these attackers think that they've certainly created some havoc because they're asking $70 million to decrypt
what they've created here -- Clare.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, this is interesting, Julia, as we watched the sort of evolving tactics of these ransomware
attackers. This was an attack that sort of hitched a ride on IT management software. So, the original sort of attack was on Kaseya, which has this
management software that it distributes to clients and distributes updates over that software.
These clients then in turn, have their own clients who they use that software to sort of help manage their IT operations. So, if you think of it
sort of like a waterfall effect, a trickle down through these different customers. The latest update, we got from Kaseya said that 50 of their
direct customers was affected, and that then in turn affected no more than 1,500 of their customers, what they call downstream customers.
But these are small businesses, the likes of sort of restaurants, dentist office, people with less than 30 employees who can really not afford to
deal with the mitigation that this kind of attack brings. But overall, this is the big picture. We've seen a huge surge in ransomware throughout the
pandemic over the last year and a half, and these tactics continue to evolve, Julia, in ways that in some cases are pretty scary.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: I'd like to notify you that we've downloaded 500 gigabytes of your data from your servers.
SEBASTIAN (voice over): The voice sounds like something out of a hostage movie, except here, the hostage is data.
KAREN SPRENGER, COO AND CHIEF RANSOMWARE NEGOTIATOR, LMB SECURITY: Attackers are getting more aggressive in terms of they're doing their
research and finding out who the key players are at the company that they've compromised, and then they are reaching out to them.
SEBASTIAN (voice over): Cyber security expert, Karen Sprenger says the voicemail was left for the CEO of a client of hers, a large American
company hit by a ransomware attack last October.
SPRENGER: They hadn't reached out to the attacker yet, and so, that was just the attacker's push on them to try and get them to contact them.
UNIDENTIFIED MALE: If you're planning to just restore your data without paying for decryption, we'll sell your company's private data on dark net.
SEBASTIAN (on camera): The threats worked, Sprenger says the company paid a ransom of several hundred thousand dollars and the attackers provided a
decryptor tool which successfully restored their data without it being published on the dark web.
SEBASTIAN (voice over): In 2020, according to blockchain analytics company, Chainalysis, ransomware victims are known to have paid the
equivalent of at least $400 million in ransom payments, more than four times the known 2019 level.
Those numbers continue to climb as more payments come to light.
[09:35:01]
SPRENGER: The criminals using it don't even need to have any technical experience. They can go on the dark web and they can purchase or lease
access to software that allows them to release ransomware on a company's network.
SEBASTIAN (voice over): Then if the victim decides to pay, some attackers will negotiate.
In this e-mail chain from late May, Sprenger says she is negotiating on behalf of another client, a small healthcare provider on the U.S. East
Coast. The attackers opening demand one Bitcoin, then worth around $36,000.00.
Sprenger who uses a different e-mail account and pseudonym for each negotiation tells the attacker her client has insurance, but it will only
cover a small portion of the ransom, a detail she says a hacker who had infiltrated a company's network might already know.
SPRENGER: We're starting to see, too where the attackers go through the data and look for cyber insurance policies to see what the deductible is
and to understand how much coverage they have.
SEBASTIAN (voice over): They eventually settle on a little less than half the original demand.
SEBASTIAN (on camera): The currency of choice for ransomware attackers is, experts say, overwhelmingly Bitcoin because of its perceived anonymity and
widespread usage. And so to help victims navigate this process, cybersecurity experts say a common feature of the ransomware experience
includes some kind of call it, customer support.
JESSE SPIRO, CHIEF GOVERNMENT AFFAIRS OFFICER, CHAINALYSIS: They all set up some kind of communication and then step by step tell them you know how
to access an exchange, how to set up a wallet, you know, the kind of cryptocurrency that they want the payment to be made within and in fact,
they even help troubleshoot.
SEBASTIAN (voice over): And yet, because Bitcoin transactions are stored on a public blockchain, they are traceable.
UNIDENTIFIED FEMALE: The old adage follow the money still applies.
SEBASTIAN (voice over): The Colonial Pipeline case showed how law enforcement was able to track and seize cryptocurrency worth $2.3 million.
In a similar success story in January, the Department of Justice seized almost half a million dollars' worth of cryptocurrency from ransom payments
associated with NetWalker, another prolific ransomware strain.
They did that with the help of blockchain forensics tools from Chainalysis.
SPIRO: It provides unprecedented insights into the supply chain for these groups. You know, what they are doing with the cryptocurrency, how they are
moving it, identifying its affiliates and additional connectivity, how they are laundering the money.
SEBASTIAN (voice over): The F.B.I. says private sector partnerships are one of its biggest tools against the cyber threat.
For companies, it's about stepping up their cyber defenses to avoid being next.
UNIDENTIFIED MALE: If we leak that data your business will be as good as gone.
(END VIDEOTAPE)
SEBASTIAN (on camera): And Julia, don't underestimate the impact that attacks like this can have on businesses. There's not only the cost of
mitigation, assuming they manage to restore their data without paying a ransom, there is the cost of lost business days.
Look at that Swedish supermarket that had to close hundreds of stores over the weekend because it was affected by the ransomware attack on Kaseya.
They say most of their stores have now reopened. But what about all that food that they might have not been able to sell?
And then of course, you have reputational damage. This is why you see Kaseya coming out with regular updates, trying to get in front of this,
trying to rebuild trust in their product.
CHATTERLEY: I mean, fantastic report, phenomenal report. I hadn't even thought about the insurance implications, but also what we saw with the
payment that was made, the ransom that was paid in recent weeks where the value of Bitcoin had dropped and so, what was recovered was just over half
of what was initially paid.
Clare, do we know if Kaseya actually paid the ransom? Have they said anything?
SEBASTIAN: The CEO did do an interview, Julia, with Reuters where he said he does not want to comment on anything around what he called negotiation
with terrorists. Obviously, as I said, this is a reputational issue.
Companies really don't want to be seen to be a victim of ransomware attacks, because of course, it shows that there was a vulnerability in
their systems. And even more than that, they don't want to be seen to be -- to having had to have paid because that shows that that was their only
choice to restore their data.
This is a really, really tricky issue when it comes to payment of ransoms. Of course, the F.B.I. doesn't encourage it because it provides an incentive
to these criminals. That's why we've seen such an uptick in recent months.
But many companies find themselves in a position where they feel that they don't have any choice because it's not only about the locking of the data,
in many cases with these ransomware attacks, you have a threat that they might actually leak the data, and that is just a step too far for many
companies.
CHATTERLEY: Yes. And it's ramping up to your point. Great report, Clare. Thank you so much for that.
Okay, and from the dark side of tech to the lifesaving side, we speak to the CEO of drone delivery company, Zipline about their new partnerships,
raising money and growth plans for the future. Stay with us.
(COMMERCIAL BREAK)
[09:42:24]
CHATTERLEY: Welcome back to FIRST MOVE.
Drone delivery company, Zipline made its name carrying vital medical supplies to remote destinations across Africa. It's already played an
important role in combating COVID-19, partnering with firms like UPS and Pfizer and aims to deliver more than two million vaccine doses by the end
of the year.
And now, they've just raised a further $250 million from investors taking Zipline's valuation to more than $.25 billion.
Zipline CEO, Keller Rinaudo joins us now with more. Keller, fantastic to have you on the show as always. Wow. You guys have been busy and
congratulations on the funding round raising more money. You're clearly growing incredibly quickly.
KELLER RINAUDO, CEO, ZIPLINE: Thanks for having me, Julia.
CHATTERLEY: Talk to me about the investment raise, the money raised. What are you planning to do with the money?
RINAUDO: Yes, of course, really, the thing that precipitated us raising more money from investors was the growth that we saw last year. Obviously,
the pandemic created a really challenging situation for healthcare systems across the world.
We really saw two primary changes. One was in the East and West African countries that Zipline currently operates in, we operate at national scale
in Rwanda and Ghana, serving about 2,500 hospitals and health facilities across both countries.
When COVID began, we really thought that so many of these healthcare systems had to transform the way they were working and serving patients. So
for example, in the first month of quarantine, we actually -- a lot of traditional supply chains for EPI vaccines, which is traditional vaccines
actually stopped working. And we saw demand for those normal childhood vaccines go up by about 10x through Zipline's network.
So, over the last eight months, Zipline has delivered over three million doses of vaccine to rural suburban primary care facilities and hospitals
making it possible for kids to get vaccinated during a pandemic when they otherwise wouldn't.
We also played a role in delivering COVID-19 samples from rural areas to national testing labs, and then finally, once the COVID-19 vaccine was
available, we were able to use Zipline to deliver that vaccine to the rural hospitals and health facilities to vaccinate people as quickly as those in
urban centers.
So, we've really seen so many of these developing world health systems use automated logistics and autonomous logistics to make healthcare available
to all.
[09:45:06]
RINAUDO: And then toward the second half of the pandemic, we saw a lot of health systems in the U.S. starting to go down that exact same path,
particularly hospital systems that are trying to figure out ways of delivering care closer where patients live.
So, I think a lot of them are really seeing instant logistics as the other half of telepresence, both of which are really, really important parts of
running a health system during a pandemic.
CHATTERLEY: You know, this is such an important point. And I talk a lot, sort of behind the scenes and are fair about how transformative
telemedicine has been not just for COVID, but will be going forward whether you're in the West or you're on the continent of Africa.
But your point there, I think is critical. Once you've Zoomed a doctor and ascertained that you need a prescription of some sort, how do you then get
that prescription to somebody? You're saying, this is the second piece of that, and they go hand in hand?
RINAUDO: Exactly right.
CHATTERLEY: How quickly can you scale up? Because you've said that you sort of tested the technology, and I remember the last time you came on,
you said actually, at times, we had to go back to the drawing board with the operations that you had in places like Rwanda.
Now, if you try and export some of that experience, I've seen comments that you want to be able to serve the majority of single family detached homes
across the United States over the coming three years or so. That's ambitious, Keller.
RINAUDO: You know, Zipline began operating at multinational scale about five years ago, and so to be honest, when we started serving, when we
served the first 21 hospitals that Zipline ever served, we actually took years figuring out ways of, well, basically evolving the system, iterating,
improving every aspect of the technology, the ordering systems of the software that doctors and nurses will use to place orders with Zipline.
Also figuring out ways and making the system reliable enough that today 25 million people and their kids can depend on it with their lives.
So, the good news is we've actually had five years to improve the reliability and just dependability of the system. So, it actually is ready
to scale. And we believe very, very strongly, there's a moral imperative to do this.
And if countries like Rwanda and Ghana can lead the world and can get to the point where they put every single one of their citizens within a 15 to
25-minute delivery of any essential medical product, then every country on Earth can do this.
So, you know, absolutely, it is ambitious to think that, you know, possibly in the next 10 years, we could put every human on Earth within a 15 to 25-
minute delivery of any essential medical product. But we think that it's about time that humanity tackle that project and technology, you know, the
technology exists to make it possible to do so.
CHATTERLEY: Yes, nothing modest about that ambition. But to your point, it's going to save lives in the process.
What do you think about competition? I mean, in the United States, for example, you're coming up against sort of Alphabet, Amazon, UPS, who I
know, you've partnered within in parts of the world as well. They're sort of back to efforts. And in some cases, they have F.A.A. certification
already, because that's one of the big challenges here is, you know, the questions that you and I've talked about in the past, safety, if you've got
drones zipping around. How do you think about that and the challenge that that represents?
RINAUDO: You know, Zipline focuses a lot more on our customers who are health systems that we serve and the patients who depend on us. Zipline is
the only company in the world that operates -- today, we operate the largest commercial autonomous system on Earth. And it's the only autonomous
delivery system of this kind operating at scale.
So certainly, there are a lot of big companies that are investing huge amounts of money into the space and into the industry in order to provide
these kinds of services. But over the last five years, it's actually more felt like Zipline is alone in providing this kind of a service.
I think, the other thing I would say is, you know, this mission is -- it's more -- it's bigger than one company. You know, there's a huge amount of
room, we would actually welcome more companies providing these kinds of services, especially in the countries that that you know, depend on them or
need them the most.
So, I actually would love if more kind of companies were doing this rather than fewer.
CHATTERLEY: Talk to me about the partnership with Walmart.
RINAUDO: So, mid last year, we announced that Walmart was partnering with Zipline in order to build the first kinds of automated logistics for
pharmaceutical products, as well as health and wellness products across the United States. And we're starting in in Bentonville, Arkansas, which is,
you know, the home of Walmart.
So we've been building that first automated distribution center and from -- and we basically connect directly with their infrastructure and their
stores.
[09:50:10]
RINAUDO: So, their goal is to put every single Walmart customer within range of a 15 to 25-minute delivery of any pharmaceutical product or health
and wellness product that that person might need.
So obviously, you know, really, really relevant project during the pandemic, but something that we see extending, hopefully to every home in
the United States, as you mentioned. You know, if someone is you know, not feeling well or if your kid is feeling sick, you ought to be able to pull
out a phone, press a button on the phone and have the product to be delivered, 10 or 25 minutes later, without needing to leave your home.
CHATTERLEY: A drone eye view of the future, perhaps. Keller, it's great to have you on and yes, your focus on improving outcomes, I think for people
and encouraging competition is rewarding to hear.
The CEO of Zipline, always a pleasure to chat with you. Thank you so much for joining us and congratulations on the money raise.
RINAUDO: Thank you.
CHATTERLEY: All right, more FIRST MOVE after the break. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. The drama filled story of DiDi remains one of our top stories this Tuesday. DiDi Global and other U.S.-
listed Chinese apps are getting thwacked.
As Beijing ramps up its cybersecurity crackdown, shares of Chinese social media platform, Weibo also actively traded in the session.
Paul La Monica is here. Wow. Paul, I'll tell you what, story aside, if you're a U.S. investor looking at a Chinese company, never mind today, just
I think over the last year if you bring in Luckin Coffee, for example, as well, you have to be incredibly cautious now about these Chinese names.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think investors have learned the hard way that despite the fact that there is a lot of promise and
potential with the Chinese economy and all of these digital firms that are native to China that are growing extremely rapidly and adding users, you
have the threat at any given time that Beijing was just going to wag its finger and say no, we see something that we don't like and maybe it's
accounting, maybe it's a founder who is talking a little too much in a critical way like Jack Ma with Alibaba. And then there's this big crackdown
and you see these stocks are plunging.
DiDi just went public last week with great fanfare and the stock has come tumbling down because of these concerns about cybersecurity and the fact
that Beijing is now looking into and suspending you know, new users for the company.
CHATTERLEY: Yes, and big questions over who knew what when, in terms of the timing of this, Paul, as well. Very quickly, Weibo all over the place.
Some investors looking at a juicy potentially going private option for this company. The company now denying it, I believe, formally denying it.
LA MONICA: Yes. Weibo, China's Twitter, the stock was up more than 40 percent premarket because of some reports saying that, you know the
company's founder and others were looking to take it private, but Weibo put out a press release just before the market opened saying, not so fast we're
not having any discussions.
[09:55:11]
LA MONICA: Stock is still up, but it is about only 12 percent or 13 percent now, a far cry from where it was earlier this morning when there
were hopes that maybe a deal to go private will be imminent.
CHATTERLEY: Yes, you know, you don't know whether to sell these stocks or buy them quite frankly if they are going to be delisted and just take away
some of the threat for international investors and the volatility or they go down because they are in, you know, center of a dart board here for
Chinese regulators. Tough to trade.
Paul La Monica, thank you very much for that.
All right, and finally on FIRST MOVE, as the Dalai Lama celebrates his 86th birthday, an unusual portrait of him has been sold for top dollar. A French
artist known as Invader made a mosaic out of 225 Rubik's cubes to depict the Buddhist leader. It sold for $550,000.00 at auction in Paris on Monday.
Last year's Invader interpretation of the Monalisa also made out of Rubik's cubes also sold for more than half a million dollars. Where is her eyes?
Yes, I am not sure about that. It's okay with the art, my question is, did he actually have to solve the Rubik's cubes first because that could have
taken a while.
All right, that's it for the show. If you've missed any of our interviews today, they will be on my social media @jchatterleyCNN.
In the meantime stay safe. "Connect the World" with Becky Anderson is next.
We'll see you tomorrow.
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[10:00:00]
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