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Quest Means Business
Italy's Political Crisis; Future of Europe's Economy; European Stock Markets Flat; Comcast Buys Time-Warner Cable; Publicis Working to Buy Omnicom; US Stocks Close Up; Make, Create, Innovate: 3D Printing; UK Flooding Misery
Aired February 13, 2014 - 16:00 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)
PAULA NEWTON, HOST: And the close of markets in New York. The "Sports Illustrated" swimsuit models not wearing swimsuits on this bitterly cold day in New York. It was a lukewarm day on the markets, let's call it that. We have reached the end of the trading day. It's Thursday, February the 13th.
Italy's prime minister is out, accused of a lack of action on the economy and unemployment.
Hooking up with Comcast. Time-Warner's cable surprise tie-up.
And US snowboarder Jamie Anderson has revealed that a particular dating app is distracting Olympic athletes. I'll be speaking to the CEO of Tinder.
I'm Paula Newton, and this is QUEST MEANS BUSINESS.
Good evening. Political turmoil has erupted in the eurozone's third- largest economy. Italy's prime minister says he will resign on Friday after a bruising power struggle within his own party.
The Democratic Party dumped Enrico Letta after just ten months in office. During that time, he's faced growing criticism over his handling of the country's struggling economy and the slow pace of economic reforms.
Now, the PD has instead thrown its support behind this man. Matteo Renzi is the 39-year-old mayor of Florence. He's the lawmaker most likely to take the helm of Italy's third government in less than a year. He's already said he'll push for political reform, including changes to the country's constitution. Renzi addressed reporters earlier today.
(BEGIN VIDEO CLIP)
MATTEO RENZI, MAYOR OF FLORENCE (through translator): We are facing a crossroad. On one side, there is a clear option to immediately dissolve this government and go to elections. On the other side is the option to transfer this government into a government that can carry out reforms.
(END VIDEO CLIP)
NEWTON: Now, to talk about why take this political risk, we're bringing in Sandro Gozi. He's an Italian MP with the Democratic Party, and he joins me now, live from Rome. Mr. Gozi, from your own party's perspective, you called this a risk. Why take it now, especially when the economy is in such a fragile position?
SANDRO GOZI, ITALIAN MP, DEMOCRATIC PARTY: Exactly for the reason you mentioned, because we cannot stay in this stalemate. We have to relaunch the action of this government because our country badly needs constitutional reform and badly needs a much bolder action to tackle the economic and social crisis.
And we don't want to go to an election. We want to use the for years behind us to really reform this country.
NEWTON: It's beginning to look like a blood sport, though, in your party. There's been more intrigue than in a Shakespearean play. Doesn't this all distract from the task at hand? Italians must be worried at this point in terms of if you will have that power to actually get these reforms moving.
GOZI: Well, I would leave Shakespeare aside. The Letta cabinet did what it could. It was an emergency cabinet, a cabinet which came out after an election where there wasn't a clear majority.
Now, we have to open a new phase, and this new phase needs not a simple reshuffle in the Italian cabinet, but a bold new government, which confirms the current majority and which strides to open dialogue, also, with the forces which at the moment are the opposition.
And notably, I will say, that has a long-term perspective. Because only with the perspective of the whole legislature we can be credible and we can be effective in carrying out the reforms we need.
NEWTON: I hate to put it this way, but many people have looked at Italian politics as being largely irrelevant. No one even knows how the markets will respond today, because it's as if you guys can do nothing. You're ineffectual. What's going to be different this time?
GOZI: Well, we haven't done nothing or at least too few for the last 20 years, apart from short experience, notably, of the government in 96.
And if we are there and if we, the new generation, if you want, of the Democratic Party are there, and the force to follow is Matteo Renzi, he's going to be prime minister next week, is exactly because we are fed up of the politics which doesn't do what this country needs to be done. So, the critics to the old political class is absolutely right, and we share it. We want to turn the page.
NEWTON: Mr. Gozi, on behalf of all the Italian people beleaguered there in that country, we wish you the best of luck, and we'll wait to see what new government is formed, hopefully, in the coming days in Italy. Appreciate your time tonight.
Now, Italy was one of the countries hit hardest by the eurozone crisis, and guess what, it's still struggling to recover. Its economic growth lags behind its peers, like Germany and Ireland. Italy was the only advanced economy to have its forecast cut by the International Monetary Fund last month.
Unemployment is close to record highs. The country's jobless rate sits at 12.7 percent. But get this: youth unemployment is more than 41 percent. Now, corruption is believed to be rife in Italy, according to a recent EU study. That hasn't been addressed in part due to the lack of reforms from Letta's government, a lot of those reforms that Mr. Gozi was just talking to us about.
Now, earlier, I spoke with global economist Bronwyn Curtis, and I asked her if the political turmoil in Italy will shake Europe.
(BEGIN VIDEOTAPE)
BRONWYN CURTIS, GLOBAL ECONOMIST: No, I don't think it will make any difference. This is the fourth government, I think, in two years, and if you look at what's happened in the markets, in fact, Italy was able to borrow just in the last auction yesterday or the day before at sort of record levels. So, it really, really isn't affecting the markets at all. Perhaps it should be, but it isn't.
NEWTON: In terms of what that means, though, for Europe going forward, I feel like we continually talk about the politics in Italy not having any effect on the market.
But then again, given how large that economy is in Europe, it is not basically firing on all cylinders. How could it be with this kind of political mess? Is there nothing in Italy that will allow it to really become more of an economic engine in Italy -- in Europe at this point?
CURTIS: Well, what you really need is reform, structural reform in Italy, and with such a fragmented political system, it's really difficult to do that. I mean, there's 2 trillion euros of debt. They've got the highest youth unemployment on record. They're -- because they're so big in Europe, they can't be ignored, but the economy has recovered a bit.
So, we're looking at growth this year of something, still not good, but say 0.4 percent, that sort of level. Maybe a bit higher next year. I think just seeing that little bit of growth coming through, not just in Italy, but in Europe, that that's made people sort of stop looking at the politics and think, well, the crisis is over, now we can get on with life. But it's not going to be like that, because really, this debt is still there. Italy still has real problems.
NEWTON: What will it take? Is there any danger that you see ahead where we will be taking a much closer look at Italian politics to the point where it does infect the economy?
CURTIS: Well, it really hasn't even right through the crisis. It's been all about the peripheral countries: Spain, Greece, Cyprus, that sort of thing, rather than Italy. And Italy has done what it's always done, and that is muddle through.
I think the problem we have right now in Europe is that we saw at the European Central Bank's meeting this week that really what they're concerned about now is that inflation is really low, and perhaps getting lower.
And that is a problem for all those countries, and particularly a country like Italy, where you really want to stimulate some domestic demand, the same as in Germany, that sort of thing, and that's not going to come through.
But it does mean that the European Central Bank might eases monetary policy again. And of course, that would help Italy and all of the peripheral countries.
(END VIDEOTAPE)
NEWTON: Now, as you heard there, Ms. Curtis was telling us she doesn't expect too much of a shake-up on European markets tomorrow because of this. Now, European markets were closed before Letta's resignation was announced. Milan's FTSE-MIB was basically flat at the close, as were most major European markets.
America's two largest cable companies are tying the knot. What the media mega-merger could look like. That's when we return.
(COMMERCIAL BREAK)
NEWTON: There's been quite a buzz around this deal today. America's two largest cable companies are becoming one in a mega media merger. Comcast has agreed to buy Time-Warner for $45 billion. Regulators will look into how this could impact consumers, however, the deal is expected to go through.
Now, just to clarify: Time-Warner Cable is not related to Time- Warner, which is the parent company of CNN.
Now, I want you to take a look at Comcast. It currently has about 23 million subscribers, that's right across the United States. Time-Warner Cable, meantime, has about 11 million. Now, the combined company is expected to have about 30 million customers.
Comcast has agreed to sell the rights to markets that serve about 3 million people. Now, that's to quell concerns the deal won't be good for consumers.
Now, costs for broadband TV and phone packages are already higher in American cities than in many others. A look at some of the lower-cost plans in different cities. New York, $75 a month. San Francisco, $99.
Compare that, though, with London: $38. Seoul just $15. Now, cable companies, of course, are hoping customers won't cut the cord and drop cable plans altogether for streaming services like Netflix and Hulu.
Now, Brian Stelter is CNN's senior media correspondent. Thank goodness he joins me now. There has been so much buzz, as I say, around this merger today. Depending on who you listen to, some people say of course this will get regulatory approval.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Right.
NEWTON: And yet, other people saying how can it possibly get that? Because all it's going to do is make life worse for customers, and we just looked at the comparison --
STELTER: You're making me wish that we were in South Korea.
(LAUGHTER)
NEWTON: Yes --
STELTER: That's amazing.
NEWTON: And you know what? It's fast there. I'm telling you.
STELTER: Right.
NEWTON: It's buzzing.
STELTER: People always say the internet is slower here than in many other countries. There's a lot of reasons for that in the United States. It's a more rural country, it's more spread out. But the fact of the matter is, the country doesn't seem as competitive when it comes to internet or television as many others. And this deal reminds us of that.
NEWTON: It reminds us of it, and yet it's not going to do anything to address it. Of course, if you listen --
STELTER: Right.
NEWTON: -- to the CEOs today, they deny that. They say, look, we're at the cutting edge of technology here. But are they? And can they hope to bring that to consumers at reasonable prices?
STELTER: There was a revealing moment on their conference calls where they've been doing press all day, of course, trying to drum up support for this deal. There was a revealing moment when they said, it's not like this is going to lower prices. You shouldn't expect a decrease in your cable bill because of this.
(LAUGHTER)
STELTER: Now, people's cable bills continue to increase for other reasons. They continue to increase because channels like CNN and ESPN and Disney want higher and higher fees. And I don't see that ending anytime soon.
But you're right. This deal isn't going to change that. In fact, this deal may exacerbate that because Comcast, once it has 12 million more subscribers or 8 million more subscribers if they shed a few million like you mention, will have even more negotiating power.
NEWTON: Now, this is quite a tremor, though, in that entire earthquake that's going on right now in terms of how you and I get those signals --
(CROSSTALK)
STELTER: That's a good point --
NEWTON: -- onto our -- yes.
STELTER: This is one tremor, that's right. That's right.
NEWTON: In terms of how it's all going to shake out, though, what's at play here? You're talking about broadband and the regulatory commission is going to be looking at this and saying is it good for consumers?
But then, we've got so many other players out there. I know that you take a close look at what's going on with the mobile providers, with the wireless.
STELTER: Increasingly, Comcast is competing against companies that it didn't have to worry about ten years ago. Comcast piped cable into your home, and that was the end of that. But now, those same people that have Comcast also have AT&T or Verizon. They also are getting wireless service, which in some cases is even faster than their broadband. It's getting better and better all the time.
I think a lot of the motivations for Comcast in trying to get bigger and trying to be nationwide across the United States, is they've got to compete better with AT&T and with Verizon.
Now, for example, here in New York, there's already a lot of wifi hotspots from Time-Warner Cable and Comcast. They want to blanket cities like New York with more of those hotspots so that you're not so dependent on AT&T and Verizon.
This is part of that larger chess game that's being played about who'd going to control the pipes or the air space that's going to send you data, that send you movies, that send you media, and to send you everything that we rely on from the internet.
NEWTON: Yes, and I can't help thinking that if they like this market model and it makes them -- that Europe and Asia will be looking closely, depending on how this works out for them in the next few years, and it will take that long. Brian, thanks so much. And --
STELTER: Thank you.
NEWTON: -- I want you to listen to what I'm going to say next, because it won't come as any surprise to you that earlier, when I spoke with Maurice Levy, he's the CEO of Publicis, the advertising agency, announced today it fell short of its growth target for the year due to slowdown in emerging markets in the fourth quarter.
Now, Publicis is working on a merger of its own. The company is buying its US rival, Omnicom, which would create the world's largest ad company. Sound familiar? We talked about this move. First, I wanted to know why he thought Comcast's acquisition of Time-Warner Cable was what he called "a necessity."
(BEGIN VIDEOTAPE)
MAURICE LEVY, CEO, PUBLICIS: Simply because we are in a world where there is no border anymore, and there is a necessity for consolidation. And we see that the platforms are becoming extremely important and bigger. So it is very important for the media to consolidate themselves and to gain size, which will help them investing and developing.
So, I think that getting bigger is something which is extremely positive today. And it's not only because I'm doing the merging with Omnicom, because I think that these are the trends of the market, and it is extremely useful for the viewers as well as for all the participants to the game.
NEWTON: But in terms of this consolidation -- and you did mention your merger with Omnicom, that's delayed a bit, it's not going to happen as soon as the company was hoping -- I think from a market point of view, though, this consolidation certainly is going to be positive in any light for the revenue of your company after this merger goes through.
LEVY: What is important is to see what this merger will bring. And when you look at the two companies and what they have published recently, on the one hand, Omnicom with a very good organic growth, Publicis with a less-good organic growth, but with better margin, you see that the combination makes sense.
And on top of this, the fact that we have assets which are complementing each other extremely well, this will go for the benefit of our clients, and I think it is a very good operation.
NEWTON: Given the shake-up, though, in the industry, and the fact that it is taking you longer than you predicted to get this merger onboard, how will your company and the new merged company be in place to really deal with a lot of these disruptions, which do come from companies like Google, like Facebook, which is adding an entirely new dimension to that ad buy?
LEVY: The fact that we are taking more time is not a distraction, because the people who are working on the deal are mostly in the administrative aspect, and all the operational people continue to best serve our clients. So, this is not creating any major issue.
The fact that it is taking more time vis-a-vis the platform, the Google, the Facebook, and the like, is not also an issue, because we are already partnering extremely well with them and taking one or two more months is not a real problem.
(END VIDEOTAPE)
NEWTON: Now, US stocks kind of surprised me today. They were down until mid-morning, down about 80 points, and yet, they closed up 63 points, as you can see that now. A batch of bad economic data and lackluster earnings apparently didn't keep investors from buying in.
This still seems to be a bull market, and that was despite the fact that retail sales came in lower than expected in January. And you can bet that was probably due to some of the weather.
Now, he's the man who creates dreams in 3D. We meet the unlikely inventor behind the latest printing technology.
(COMMERCIAL BREAK)
NEWTON: 3D printing is the next big thing in manufacturing, and it could transform the way we live. Now, the technique has produced some unusual things since its creation: 3D printed fashion appeared first, and yes, OK, it may not be the tastiest, especially for Valentine's Day, but 3D candy was next. And inventors even managed to build a 3D printed gun. Now, Nick Glass meets Chuck Hull, the brains behind the idea.
(BEGIN VIDEOTAPE)
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT: 3D printing is changing the way we make things, some people believe revolutionizing them. I'm here at a trade fair in Frankfurt to meet the man who invented it.
CHUCK HULL, INVENTOR, 3D PRINTING: The first invention was called stereo-lithography, and it's the first 3D printing technology. And it established the basis for all 3D printing as we know it today.
GLASS (voice-over): At 74, Chuck Hull is still working hard as an engineer. Quiet and unassuming, he's the almost-anonymous star of 3D printing.
GLASS (on camera): There must've been a few moments where you've gone and met fellow engineers and you've had to own up, I'm the guy --
(LAUGHTER)
GLASS: -- who invented 3D printing.
GLASS (voice-over): He made his breakthrough in 1983 working in his spare time. This is the world's first-ever 3D printed object: a small vessel or cup intended as an eyewash.
GLASS (on camera): Who was the first person you showed?
HULL: My wife. Yes.
(LAUGHTER)
HULL: I got a good part, and called her up, got her out of her pajamas --
(LAUGHTER)
HULL: -- and told her to come down to the lab and see this.
GLASS: What did she say?
HULL: She said, "This had better be good."
(LAUGHTER)
GLASS (voice-over): Hull began with a 3D model on a computer, and then printed it, basically a special laser outlined the design, turning liquid plastic into a solid. The 3D object emerged gradually, layer by layer.
HULL: This is a stereo-lithography machine, and it's based on kind of the same technology, same principles as the original stereo-lithography machine 30 years ago.
GLASS (on camera): So, what's exactly happening inside?
HULL: Well, the laser beam projecting down from the top that's --
GLASS: You can see it just --
HULL: There you can see, just dancing around there, and that's -- every place that touches, it's converting the liquid into a solid.
GLASS: Is that how it was in the beginning, back in 83?
HULL: I didn't dance quite as fast, but it's --
(LAUGHTER)
GLASS (voice-over): Here at the trade fair in Frankfurt, there were multiple printers on display, and just as many applications: medical implants, musical instruments, the blades of an airplane engine, all 3D printed.
HULL: Well, it's really blossomed just in the last few years. The -- there's lots of things that contributed to that. The -- certainly the maker movement of low-cost machines and hobbyists interested in inventing and building using 3D printing.
GLASS: The 3D printing market will be worth, Hull predicts, a whopping $4.5 billion by 2018. Hull's company, the market leader 3D Systems, has triple turnover in the last four years alone.
The latest bit of kit can scan a 3D image of pretty much anything or anyone, even a CNN correspondent. Just stand still, they said, and we'll scan you for a sculpture.
Walking around with Chuck was like hanging out with a proud dad. This fair, this booming industry, just wouldn't exist but for his original ingenuity.
GLASS (on camera): So, you made your discovery 30 years ago. How have you felt along this long 30 years?
HULL: I think maybe a way to describe it is I'm old enough I should have retired long ago, but it's so interesting that I don't.
GLASS: So, here's the moment I haven't exactly been waiting for. Ooh -- oh dear! Look at that! Honey, I shrunk the correspondent.
(END VIDEOTAPE)
NEWTON: Thanks for that, Nick. Here in the US, tens of thousands are without power, and on the other side of the Atlantic, hundreds of homes are underwater. As you can see, sandbags aren't helping. Coming up, more flooding misery is on the way for storm-hit Britain.
(COMMERCIAL BREAK)
NEWTON: Welcome back, I'm Paula Newton. These are the main headlines this hour. The Italian prime minister, Enrico Letta, is resigning after losing the support of his own party. He has been in the post for just ten months. Party leader Matteo Renzi, who has been vocal about the need for change, is expected to replace him.
Belgium has become the first country to pass a bill allowing euthanasia for terminally-ill children, and that's without any age limit. There are strict regulations, though. Parents, doctors, and psychiatrists will have to agree before a decision is made, and the measure now goes to the king, who is expected to sign it into law.
A huge winter storm has reached the East Coast of the United States, dumping huge amounts of snow on Washington, New York, and Baltimore. Thousands of flights have been grounded and parts of the government are shut down. The powerful storm has already crippled much of the South.
Comcast has confirmed it is buying Time-Warner Cable for $45 billion. The deal creates a company that could control three quarters of the US cable industry. It will, however, come in for scrutiny by regulators.
Britain is already bracing for a fresh bout of high winds and heavy rain following Wednesday's wild weather. Now, parts of the country remain underwater, and there is more to come, with further storms expected to rage across Wales and the south in the next few days. Jim Boulden reports from badly-hit Staines-upon-Thames.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: We've come to the town of Staines-upon-Thames, and as the name suggests, it is near the River Thames, but the residents here tell me that this water is not from the river. This is groundwater and rainwater. And of course, the drains have not been able to handle the sheer amount of rain that we have seen since early January.
So, you take a look at these sandbags, completely and utterly useless. Could do nothing because the water continues to come up from the ground. It hasn't rained on this day, but more rain is expected. Now, I did speak to one resident earlier, who told me about his worries about this water.
You look at that, it's a beautiful garden. That's a lot of water.
UNIDENTIFIED MALE: Absolutely.
BOULDEN: An enormous amount.
UNIDENTIFIED MALE: And the time that's going to take to go down, it's going to be a long time, and also, if we get this other bad weather that they're forecasting, then we'll all sort of -- that's why we can't do anything. We won't be doing anything for at least two, three weeks, I don't think.
BOULDEN: Yes.
This is the Thames Club. It is eerily silent, there's no one here. It's, of course, not open because of the flooding. And you can see how much there is here in the parking lot. There should be people working out, people coming after work and people wanting to use these facilities. It's hard to imagine that this club will be open anytime soon.
We've now made it to the back of the Thames Club, and this is the home of Staines town football club. It's a lower league club based outside London. Look at this pitch. It is a lake for the vast majority of this side of the pitch. You can see the goals in the distance.
It is hard to imagine how many days it will take for this water to recede, and then for the ground to dry enough in order for this lower league club to play again.
These kind of clubs rely so much on the income they get from their supporters on the day. It's such a shame that we're in the middle of the season, and you can see here, Staines will have to either find another place to play or just wait until this pitch dries out.
Jim Boulden, CNN, Staines, England.
(END VIDEOTAPE)
NEWTON: Right now while some of the U.K. is underwater, a winter storm which is battering the east coast in the United States -- it's really shut down a lot across this country. Trading floors are empty, government buildings are deserted, and get this, 6,300 flights have been grounded by this supersized snowfall. That's very close to a record. Maria Santana is in White Plains, New York. Maria, I can actually see you which I have to say is an improvement. People have been buried with snow. Are we getting to the end of this, and I feel like -- you know -- it's winter, why are we whining about winter weather. But it has been extraordinary, hasn't it?
MARIA SANTANA, CORRESPONDENT FOR CNN EN ESPANOL: It has been. I mean, we've gotten one storm right after the other. This is actually the fourth storm that has hit this area in about a week. So people are just desperate -- they're fed up with this weather -- they want to move to warmer climates at this point. It's been very, very difficult, it's turned into a nightmare not only for residents of the country, but also for passengers like you said. Today has actually turned out to be the worst day for passengers and airlines this winter. Many of the airports -- the major airports of the United States here in the Northeast and down South being affected by these winter storms. So, definitely something that you know -- right now people are saying it's like we're getting used to being buried under all this snow. It's becoming the norm. And you know I just want to show you what's happening over here because we're in a lull right now because it was raining a little while ago, now it has stopped, but we're not done with this yet. This is going to turn back into snow in a couple of hours. And here we are already seeing about 12 inches or 30 centimeters of snow on the ground, and we're going to add more overnight in the overnight hours. Authorities here are saying they're trying to send out as many plows as possible, trying to clear the streets, but they're going to send out the salt -- the salt trucks again to try to de-ice the streets once it starts snowing again, and they're going to concentrate on just trying to get the roads ready for the morning commute trying to get people back to work in the morning. Many government offices and buildings have been closed today, schools have been closed as well and people, you know -- while this is difficult -- in a good mood. A lot of people in this neighborhood coming up to us offering us food, coffee, so, you know, we lucked out on that a little bit.
NEWTON: Well I think people in a good mood as long as they can stay home. Maria, tanks for being out there for us.
SANTANA: Yes.
NEWTON: Appreciate it.
SANTANA: Thank you.
NEWTON: And now we go to Jenny Harrison who's at the CNN International Weather Center. Jenny, you have told us before and we've been hearing here on CNN that this storm actually has a kick to it at the end. We are not out of the woods yet here.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: No, absolutely not although as you can see, things are looking quite nice now, and we've seen a bit more evidence of that. But let me just start by just going back over some of these figures actually, Paula, for the actual cancellations. Because it has been not just a phenomenal week but quite a season so far. And I'll come onto that -- we can see here the number of flights as you said -- over 6,000 -- and that's 80 percent of the flights in or out of Washington, 60 percent of flights in or out of Philadelphia, New York and Charlotte. And of course don't forget, significant impacts eventually up into Boston, Raleigh, North Carolina and also Atlanta down in the Southeast. Because just beginning to recover from what happened here of course over the last couple of days.
But look at the numbers -- this storm just this week so far there have been over 10,000 canceled flights, over 4,000 delays, but then when you add those numbers to this year so far -- and what is it the 13th of February -- and so far there have been over 71,000 canceled flights. The costs to the airlines of course keeps going up -- $150 billion so far, so not surprising this is indeed a bit of a record. Now, this is the last few hours across the South -- some heavy amounts of snow. Twenty-five centimeters over in Alabama in Cullman and the storm of course working its way up the East Coast. Now, you see this little map here which is just beginning to affect Washington, D.C., well that is likely of course to work its way eastward. So there is indeed more to come. It'll continue into the early hours of Friday morning. In terms of how much snow has come down already, here are some of the numbers in Virginia. Some of the highest -- 38 centimeters both in Christiansburg and also Roanoke as you can see there. This pink line is the line for below zero temperatures, but you'll notice there's another wave coming through. Once this one's gone through, this map here -- this is coming through Saturday into Sunday. So, not as heavy as now, but again, be prepared for that meanwhile. As I say, the next 48 hours there's still more to come -- maybe another 11 centimeters in New York and 10 up in Boston.
Heading across to Europe, that big storm which really impacted the U.K. 24 hours ago petering off, still some showers, even some snow flurries in there as well. In the past 24 hours you can see some of the rain that's been coming down, all of it on top of that saturated ground. Paula, we'll continue to talk about this unfortunately for days if not weeks to come because it is going to be a long, long time before we get out of this weather pattern. And if we do -- at some point we hope we do -- before those waters begin to recede.
NEWTON: Yes, we heard from Jim Boulden there in his Wellies firmly attached there, Jenny, we can relate to that.
HARRISON: Yes.
NEWTON: Appreciate the update. Thanks, Jenny. Now, a 'zap ka-pow' - - I want you to picture Batman and all those captions that go over his head. Yes, it's not something that you would usually put together with Europe's booming app industry, but, yes, it's been compared to a comic super hero as revenues soar. More on that up next.
(COMMERCIAL BREAK)
NEWTON: The European Commission says the E.U.'s app economy has gone from zero to digital super hero -- and that's just in a matter of years. Now, revenues for the industry for this year are estimated to be nearly $23 billion, but take a look at this -- an E.U. report says in just four years those revenues could be more than $86 billion. Now, that could employ potentially up to 4.8 million people. Earlier I spoke with Neelie Kroes, the European Commission vice president responsible for the digital addenda. She says every single citizen needs to get on board with the E.U.'s digital program. I asked her if there was a skill gap holding back the European Union.
(BEGIN VIDEOCLIP)
NEELIE KROES, EUROPEAN COMMISSION VICE PRESIDENT: Absolutely -- my line is 'every European digital." So, no digital virgins -- that can't be tolerated for we want to include everybody. And that makes sense where you are talking about, for example, in the digitization of the economy, also for health and for environment and for energy. It's all connected with the (East) so to say, and that is creating jobs too and that is making a lot of sense that there won't be a gap between those who don't have the opportunities for using internet and those who haven't. So, it should be open, free internet and no blocking or (snorkeling). And my proposal on the telecom single market is specifically on those issues -- getting rid of roaming, getting rid of blocking or throttling -- giving opportunities for open and free internet. And giving more information to the consumer. And if you are not getting what you are paying for, you can just switch to another operator.
(END VIDEOCLIP)
NEWTON: Now, the E.U. faces stiff competition from the might of Silicon Valley apps. One of those -- yes, is Tinder. It's a widely popular GPS app that makes meeting new people apparently virtually instant. Now, this is how it works, stay with me. First of all, you have to have Facebook to even use Tinder. Once you download the app, you get set -- you set your agenda -- your age and your proximity preferences. Now, based on that information Tinder then locates eligible users and provides you with their profile pictures. Now, this is where it all gets very interesting. You swipe "Right" if you don't like them, "Left" -- sorry, let's try that again. You go -- clearly I wouldn't do well with this app. "Right" if you like them, "Left" if you don't like them. Don't worry about what's going on extreme -- it is my right hand and my left hand. If somebody -- I really would never be able to do this. If somebody you like happens to like you back, Tinder connects you with them right within the app. It's one of the fastest-growing dating apps in the world, and the firm says it never gives away the amount of Tinder users. Now, Tinder does say everyday there are some -- get this -- 600 million profile ratings or swipes, making over six million new matches -- that is extraordinary. Now, joining me live from Los Angeles is Sean Rad. He's co-founder and CEO of Tinder, but before I start, Sean, I want to show you what some of your users are saying about your app. I'm sure you've heard it but let's review it. This is what the U.S. Olympic snowboarder -- this is an Olympic snowboarder who has more important things to worry about -- but apparently Jamie Anderson told "Us Magazine" from the Sochi Games -- "Tinder in the Olympic Village is the next level. There was a point where I had to be like OK, this is way too distracting, and so I deleted my account to focus on the Olympics." I want to add there that she did say there were some cuties in the village, which is why she was all over that app.
(LAUGHTER)
NEWTON: What I really want to talk to you about here -- I know it's taken off, but is this just -
SEAN RAD, FOUNDER AND CEO OF TINDER: Yes.
NEWTON: -- plain a hookup. I mean, what is redeeming about this app? Because many people are just calling it -- it's a lot easier to hook up. Why? And are you comfortable with that?
RAD: So, we all want to form new relationships in our lives, and forming new relationships is challenging. And Tinder is all about helping you meet interesting people around you, and the easiest way and making that fun and -- it's all about connecting you with people and letting you define what you want to do with those relationships. When you walk into a restaurant or a bar, you know, you sort of throw out these signals of -- around your interests in people in the room, and if those signals are reciprocated, then you just walk over and have a conversation. And what ensues from there is up to you and the individual, and that's exactly how Tinder works. It's meant to mimic real life, and not to create an alternative reality. So, it really is -- the users are really defining how Tinder works and how Tinder is being used.
NEWTON: So, forget about locking eyes across the bar naturally or at a park or wherever. (LAUGHTER). But your app is doing that in a virtual world. I going to ask you a personal question, Sean -- you put yourself out there right now -
RAD: Sure.
NEWTON: What has this app done for your live life?
RAD: I've met my girlfriend on Tinder -
NEWTON: You're kidding? You met your girlfriend on Tinder -- on the app?
RAD: Yes, I have. Yes, and I have a lot of friends who've met their girlfriends/boyfriends on Tinder. And it's been a -- it's massively changed my life and it's changed the lives of a lot of my peers around me and, you know, it's overwhelming because you know we hear from all over the world that people are leveraging Tinder in interesting ways. You know, even Olympians are leveraging Tinder. It's to sort of form new relationships, and it's solving problems and it's -- I think -- bringing the world a little closer together.
NEWTON: Sean, there's no doubt that it's popular, and I agree in terms of when I've looked -- when I researched this today, just seeing it's bringing people closer together. But aren't you worried at the end of the day, it's a bit shallow? You're literally flicking left and right to see whether or not you are interested in someone? It just seems so brutal?
RAD: I don't think Tinder's shallow at all. You know, Tinder's about a first impression, and when you think about a first impression in the real world, that happens based on limited information -- somebody's appearance. But on Tinder the photo actually says a lot about a person, and a series of photos and your bio and what you choose to express to others, says to me a lot about a person -- are you on a ski slope? Are you an Olympian? These are all signals I can pick up very quickly from your photo. But not only that, we take your common social -- we take your social graph to make smart recommendations on who we think you should know. So we're not randomly suggesting people to you that are around you. We're actually taking information we have about you and making smart recommendations on who we think you should know. You know, there are marriages happening everyday as a result of Tinder, friendships, all kinds of relationships, and believe me, we're on the -- we're on -- on our side of it, we hear all the feedback, we -- we're growing faster than, you know, many of the apps out there and that is not a result of a shallow value proposition. I think that is a result of a meaningful thing that is changing people's lives.
NEWTON: Well, Sean, I'll give you this -- you're well-spoken for Tinder and as well -- you are right -- that first impression as much as we all want to deny it, is very important. We'll continue to follow what goes on with that app.
RAD: Thank you.
NEWTON: Apparently we've got a follow up at the Olympic Village too. Thanks so much, Sean, appreciate it.
RAD: Thank you.
NEWTON: Now, from one kind of swiping to another. I wasn't very good with the last swiping. So, in a moment, why the cards in your wallet could affect the safety of your money.
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NEWTON: U.S. banks and retail groups will be joining together to step up the fight against cyber-attacks and data breaches. Now, the new partnership announced Thursday will focus on sharing information about threats and collaborating on new technology, including new credit card technology. Now, the recent data breaches at U.S. retailers -- Target and Neiman Marcus -- prompted calls for faster reform of the U.S. credit card system. Now, Target is investing they say $100 million in chip-based credit card technology, a technology we should say that's been around a long time, and Visa and MasterCard have set October 2015 as a key deadline for the switchover. Now, it can't come soon enough, this map shows how widespread the chip card technology is globally. Now, the light blue area of Western Europe has the highest rate of over 80 percent cards. I mean, I was using them in Europe seven years ago. And you can see from this gray area that there's no data at all for the United States. I mean, that's stunning. No data at all. And when it comes to credit cards, the hand you're dealt can make all the difference. As Jim Boulden in London and Maggie Lake in New York found out.
(BEGIN VIDEOCLIP)
BOULDEN: Maggie, you may not realize it but every time you use a credit card, you're taking a gamble. Fraud is on the rise, and just like in poker, somebody often loses.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: That's the risk, Jim. The trick is having the right cards in your hand. Here in the U.S., almost all cards use the magnetic stripe, so when I go to get my morning coffee, all I do is hand them the card -
Male: Thank you. And you're all set.
LAKE: -- they swipe, and I'm good to go. I might be good to go, but so is my personal data.
RANDY VANDERHOOF, EXECUTIVE DIRECTOR, SMART CARD ALLIANCE: The information that's on that card can be easily copied and then counterfeited or cloned into another duplicate card which the fraudsters can then use to make fraudulent transactions.
LAKE: Jim, I'm laying my cards on the table and I'm not even going to attempt a poker face. They're all magnetic strip and signature.
BOULDEN: Maggie, I'll see your magnetic strip and I'll raise you my chip and PIN. Here in the U.K., chip and PIN was introduced in 2004.
ANDREW KEMSHALL, CO-FOUNDER, SECURENVOY: The initial deployment of the reader devices obviously had some cost, but (inaudible) other ways that the -- there is no need to check signatures, so ongoing transactionally, I would argue it's considerably cheaper than using old-fashioned swipe and sign system.
BOULDEN: And the results speak for themselves. The UK Cards Association estimates losses at retailers has fallen by 67 percent since the cards came in.
LAKE: So the question here in the U.S. -- what's taking so long?
VANDERHOOF: The U.S. market is the largest and most complex market in the world, so it's a significant investment for both the issuers as well as the merchants to move to this new secured chip technology.
LAKE: What happened at Target, etcetera over the last couple of months -- do you think that's going to speed the process up, and is that a good thing?
VANDERHOOF: I think it is a good thing that we now have a sense of urgency together that we have to solve this problem.
LAKE: So, Jim, the stakes are pretty high, but I'm willing to bet that my cards will improve here in the U.S.
BOULDEN: Maggie, I'll take that bet but I'm going to have to raise you a little more. The U.K. is already raising a contact list card technology for purchases under 20 pounds. So if you dash into the shop and don't want to use cash, just come up to the till -- hello. Touchless? Is that OK? Doesn't even have to touch the machine, it approved and off I go. More than 35 million of these cards are already in circulation.
KEMSHALL: Where you're touching something and there's no PIN component, that means if someone steals the device, I would say they're going to easily steal your money. So I think touchless combined with a PIN is a good thing.
BOULDEN: So, Maggie, it looks like I've got a full house -- chip and PIN and touchless.
LAKE: Jim, I'm not folding. You and I both know, no matter what your card, you're money's never totally safe.
(END VIDEOCLIP)
NEWTON: Sorry, Maggie, I'm with Jim on that one. I've seen it work. Now, as that game showed us -- chip and PIN -- is helping to cut down on fraud at retailers, and that's at the so-called point of sale fraud. But now the latest data from the UK Cards Association showed fraud on so-called card not present fraud, where the physical card is not used -- now that rose 11 percent in 2012, and that's probably not surprising to many. Most of that of course took place online. Now, as Jim was just telling us, contactless payments is a growing trend in the U.K., and this week MasterCard announced it's creating a contactless pay system for mobile phone users. Now, it's teaming up with Weve, a joint venture with UK Mobile Operators. Now earlier, I spoke to Weve's CEO David Sear and I asked him how his company can make it simpler to pay with your Smartphone.
DAVID SEAR, CEO, WEVE: The whole problem with mobile payments is that consumers actually really want them -- 70 percent of the consumers Weve talked to has -- have actually said that is something they would really see as a great addition to their mobile handset. But the technology to make it happen has been so complicated and expensive for banks that we got together with MasterCard because we represent 80 percent of the public in terms of the mobile operators that have come together in our company. And Weve and MasterCard together -- MasterCard obviously have a significant set of relationships with banks, we think we can create a simple capability at the heart of the industry that really stops all this complication and allows consumers to get on with doing what they want to do.
NEWTON: In terms of who's going to be able to take part in this, though -- this is a straight yes or no answer -- will it work with an iPhone?
SEAR: No, not at the moment if Apple don't change what their view of the strategy is. So, that's a no, unfortunately. But we'd very much like them to move our way and of course 80 percent of the market here is not iPhone, and they're very much involved in the NFC proposition.
NEWTON: But it is still huge -- you know -- part of that market that won't be able to take place. I want to address though something else in terms of security. We've heard a lot about this. What can you do in terms of putting consumers' minds at ease that this will be completely secure? But what they're looking for is a view to payments that is more secure than what they're doing now.
SEAR: Well, it will be actually because we've now got 36 million consumers in the U.K. using cards and tapping them at points of sale. So, that physical card placed against a reader at a point of sale. And that's actually extending rapidly across the economy. The way in which you mobilize that is to place that card details -- which are at the moment visible on the card, they can be seen by anybody behind you in the queue -- right inside the phone and locked behind the security that's wrapped in the inside of your phone. And of course your PIN number to enter into your phone or your fingerprint if you've got biometric access into it. So, it is significantly more secure to have that data right inside your phone, rather than in your wallet where obviously anybody can steal it or indeed out in your hand where anybody can see it.
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NEWTON: Whether it's floods in Europe or snow in the United States, many people have been canceling their plans in favor of staying indoors and maybe catching up on some of that TV now which makes it especially frustrating for fans of House of Cards because season two doesn't come out until Friday -- so much lost time in binging. I mean, you're just sitting there twiddling your thumbs at home. It's simply too long to wait. Fans have an answer -- they launched an online petition to persuade Netflix to release it a day early. I can tell you, it didn't work. The company's not giving in, forget about it. The film reviewer Charles Thorp tweeted this: "So, Netflix deciding to not give us what we want when we want it, isn't that their whole business model?" Now, in their defense, a Netflix spokesperson came up with a suggestion of his own, and he's cheeky here, I'll warn you. "Hunker down and re-watch season one so you are good and ready." And I would call that Netflix's "Profitable Moment." That's "Quest Means Business," I'm Paula Newton in New York. I'll see you back here tomorrow.
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