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Quest Means Business
Jeff Bezos Reveals Extraordinary Claims Of Extortion; Amazon Is Reconsidering Its New Headquarters In New York; Shares Of Tata Motors Plunged As Much As 30% On Friday; A No-Deal Brexit Situation Could Spell Disaster For The U.K.'s Continental Cousins In The Netherlands; Deadly Fire Sweeps Brazil Football Club Youth Center; Thai King Denounces Sister's Bid for Prime Minister; U.S. Acting Attorney General Says He Has Not Talked to Trump About Russia Investigation; Bezos Accuses National Enquirer of Blackmail and Extortion; UN Investigator: Saudis Planned and Perpetrated the Killing of Khashoggi; Woody Allen Sues Amazon Studios for $68 Million; Ex-Facebook Employee Describes Atmosphere at Facebook's HQ As Cult-Like; Dow Trades Lower Amid Trade Tensions with China. Aired: 3-4p ET
Aired February 08, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, ANCHOR, CNN: And there is not even a sliver, not even a sliver of green on that board on the last trading day of the week. The Dow is
down triple digits; already, fears that the U.S.-China trade war certainly shows no sign of going away. This is what is moving the markets on Friday,
the 8th of February.
Amazon shares are falling and as Jeff Bezos reveals extraordinary claims of extortion and my friends, it does not stop there. Amazon is now thinking
twice about moving right here to New York. I am going to be speaking to a state senator who actually wants them gone and whether it's U.S. market or
Indian earnings trouble with China is upsetting investors.
Hello, everyone, I am Zain Asher, in for my colleague, Richard Quest, and this, my friends, is "Quest Means Business."
All right, good evening, everyone. I am Zain Asher. Tonight, the world's richest man at the center of the known universe has accused America's most
recognizable tabloid of blackmail. His plans for expansion in New York City are reportedly in doubt. His company's stock is falling. Although
investors say they are not worried about it and his production studio is being sued by a famous Hollywood director. I am talking about Jeff Bezos,
billionaire, CEO of Amazon, owner of "The Washington Post" and of course, very recently, famous enemy of Donald Trump.
He has he has spent years dodging the headlines. In fact, a lot of people don't even know what his voice sounds like. Now, he is simply everywhere
at once. We start with new developments in the story that has it all. Celebrity affair, private investigators, nude photos, sex, White House
politics, Saudi Arabia and of course, you guessed, it, Jeff Bezos himself at the center of it all.
You've already heard how Bezos claimed the supermarket tabloid "The National Enquirer" tried to blackmail him. Bezos posted e-mails from the
"Enquirer's" publisher but appeared to offer let's say a quid pro quo that the "National Enquirer" would quash embarrassing pictures of him. In
exchange, Bezos would publicly deny the tabloid's coverage of him was politically motivated.
Today, the "Enquirer's" publisher, American Media, AMI, says, it acted lawfully. American Media CEO, David Pecker became a public name because of
his association with Donald Trump himself. CNN's chief media correspondent, Brian Stelter explains how Bezos' accusations could go all
the way to the White House.
(BEGIN VIDEO CLIP)
BRIAN STELTER, CHIEF MEDIA CORRESPONDENT, CNN: We wonder now that we've heard about Bezos and this story is whether "The Enquirer" and Pecker were
trying to get back in President Trump's good graces, were trying to investigate one of Trump's enemies, Jeff Bezos in order to show Trump that
they had his back because that is part of what is going on here.
Bezos and Trump, there's been a back and forth for years. Trump hate the fact that Bezos owns "The Washington Post." So you have to wonder about
the Trump connection in this story, especially given Bezos' hints about that in his blog post.
(END VIDEO CLIP)
ASHER: All right, question for all of you at home. I want you to get out your phones and go to cnn.com/join. Tonight, we're asking you a very
simple question. What would you have done if you were in the same situation as Bezos and let's say a media empire try to blackmail you, what
would you do? Would you give in? Would you fight back? Ignore it or call the police? Ignore it, fight back, give in, or call the police. For your
answers, just go to cnn.com/join. Vote now and you're going to be seeing the results very shortly on your screen. Paul Callan is here. He is a CNN
analyst. Paul, what would you do?
PAUL CALLAN, ANALYST, CNN: Call the cops. So --
ASHER: Everybody likes to say or see themselves as somebody who would fight back, but its' very difficult when you're in the situation.
CALLAN: There's a heavy risk involved because obviously, whenever there's extortion or blackmail, something extremely embarrassing and humiliating is
being threatened as against you -- nude pictures of you having sex with your mistress, which obviously could destroy your company, maybe destroy
your marriage, maybe destroy your life unless you do something.
So a lot of people will make the deal and walk away, but it is a crime depending upon the facts and circumstances of the case.
ASHER: So who technically owns the photographs? I mean, I can't even believe I'm asking this on live TV. Who owns the photographs of Jeff Bezos
nude? Is it he either owns them or does the "National Enquirer" have any - - I mean, just legally, from a legal perspective, he talked about it in his blogpost that he owns them, so they have no right to them.
CALLAN: Yes, I think he does he them and he owns they until he publishes them to somebody else. So if he published the pictures to let's say a
hypothetical mistress. She would have an ownership right in them because they were sent to her phone and he would.
[15:05:01]
CALLAN: But the "National Enquirer" wouldn't own them and AMI wouldn't own them and I wanted to add one other thing on that string of things that you
said were newsworthy about this case. I'll give another thing that's newsworthy about this case.
It may link back to the Mueller investigation because AMI and David Pecker made a deal with Mueller and got immunity in the case and it can sometimes
be a violation of your immunity agreement --
ASHER: Just to remind our viewers, the case sort of linking back to Stormy Daniels' alleged affair?
CALLAN: That's right. The Stormy Daniels case -- all of that that came out, AMI, David Pecker were heavily involved in the facts and circumstances
of that case. They got a deal to testify with immunity, in other words, not to be charged with a crime of an election law violation involving the
President.
If they now commit a crime involving Bezos that could be a violation of their immunity agreement and they could be brought up on charges for that.
So that's another --
ASHER: The deal is listen, we might have you covered now, we might give you immunity now, but you can't commit any more crimes?
CALLAN: Well, usually, these agreements, at least for two years after the immunity agreement is made, you're under scrutiny by the Feds. So I think
that's something that AMI was very, very worried about here that if that was exposed or if crimes were exposed by a "Washington Post" investigation
because Bezos owns "The Washington Post," they wanted any investigation of AMI to stop dead in its tracks.
Bezos and "The Washington Post" weren't going to stop and so this threat then was made allegedly by AMI to publish these nude pictures involving
Bezos.
ASHER: Very interesting. So about 10 or 15 minutes before the show started, you and I were just in the next room and I actually brought up a
case that I would say is kind of sort of parallel to this case and that is what happened with Gawker Media when Hulk Hogan sued them for publishing a
sex tape.
Had the "National Enquirer" decided to go ahead and publish nude photographs of Jeff Bezos, could Bezos have done the same in terms of suing
them for privacy invasion and emotional distress just like Hulk Hogan did?
CALLAN: Well, I think you have a great idea there. It's as we, lawyers, would say it's a strong precedent. And that was a Florida case. A Florida
jury returned a $110 million verdict in the case against the entity, of course, Gawker that published the sex tape.
Eventually the case was settled, as I recall, for about $30 million. But it is very, very similar to this because that sex tape involving Hulk Hogan
was essentially a private tape, never intended to be seen publicly, and it was published and they made money through the publication, Gawker, and
Florida and the jury upheld the principle that that was an invasion of his privacy.
Now, does Bezos have the same case? That will depend what state he can bring his case in because like a lot of -- he is the richest man in the
world, so he owns a home every place, so probably, there are a lot of states --
ASHER: See, I would have thought of Washington State but, yes, you were saying that --
CALLAN: Well, it could be. You would think Washington State because that's where Amazon is and I would think you're probably right. Probably
the law of Washington State will govern here as to whether he has an invasion of privacy and a similar case to Hulk Hogan's case.
ASHER: This is so interesting.
CALLAN: It's fascinating stuff.
ASHER: And at the same time, producers literally like, you know, Jeff Bezos is someone that we virtually knew almost nothing about, not like
other sort of high profile CEOs and executives and owners of companies, and now all at once, his private life is on national TV. We're learning too
much information about him.
CALLAN: The richest man in the world, but spare me the nude photos. I just don't want to see them, I'm sorry.
ASHER: You and me both. Paul Callan, thank you so much.
CALLAN: Always good seeing you.
ASHER: Thank you so much, appreciate that. So according to those of you voting on cnn.com/join. Most of you would say that you would have fought
back. Interesting. You would have actually fought back if you were in Jeff Bezos' position. Interesting.
So let's return to reports that Amazon is reconsidering its new headquarters in New York. In a statement, Amazon says, it's focused on
engaging with its new neighbors. Many of those neighbors have been vocal. They don't want Amazon in their neighborhood. Among them, New York State
Senator, Michael Gianaris who is going to be joining me in literally 30 seconds.
He now sits on the board that could block Amazon's plan. Back in November, he told us Amazon conned the city and the state into handing over
incentives that the company simply does not need. Take a listen.
(BEGIN VIDEO CLIP)
MICHAEL GIANARIS, NEW YORK STATE SENATOR: We're taking scarce public resources and giving it to a company that doesn't need. The conversation
has been flipped on its head. I understand why Amazon wants to come here, this is a great neighborhood. But if they want to come here, we should be
talking to them about how they are going to subsidize our community, not how we're going to be giving them our scarce public dollars.
(END VIDEO CLIP)
ASHER: State Senator Michael Gianaris joins us now. So here is the thing, there are certain cities in the United States in this United States that
would have bent over backwards for Amazon to be in their city. You're not one of those politicians who would. Tell us why?
[15:10:05]
GIANARIS: Absolutely not. Because look, we are dealing with an unprecedented moment in our country's history. Corporate power is
concentrated more than ever and the public is losing out.
Amazon dares to dictate to us whether our government can even talk to us about what these deals are as they are unfolding. That has made the state
sign a secrecy agreement. Lo and behold, when the agreement is known, it's horrible. We're supposed to give them $3 billion. That kind of trickle-
down economics has been discredited in this country for decades.
Ronald Reagan would be happy with a deal like this. The idea that we're going to give our taxpayer dollars, and lots of them, to the wealthiest
corporation we have and hope that they grace us enough with their presence and spend some of it in our communities is not the way to do economic
development policy.
We can't find two nickels who rub together to make the subways run on time or to build affordable housing or to build enough schools of our kids in
this very neighborhood, mind you. And yet, we are showering Jeff Bezos with all of this money that he clearly doesn't need. And that's why we've
stood up and finally, the people are being heard at a point where, more and more, ever since the citizens united decision by the Supreme Court years
ago, the power has been concentrated more and more in the hands of private wealthy corporations and this is a moment for the people to stand up and
say we've had enough of that and we're going to turn the tide.
ASHER: One person who disagrees with you is obviously, Governor Andrew Cuomo. Guys ddo we have the sound bite from Andrew? Okay, let's play it.
(BEGIN VIDEO CLIP)
ANDREW CUOMO, GOVERNOR OF NEW YORK: $27 billion in revenue. They get $3 billion back. We get 27, they get $3 billion back. I would do that all
day long.
(END VIDEO CLIP)
ASHER: So here's the thing. Governor Andrew Cuomo, he actually called you out. He referred to you as a flip-flopper because initially, you and loads
of others New York politicians signed the letter a year and a half ago saying, "Dear Amazon, we'd love for you to come." Now, here's my question
to you, if Amazon and Governor Cuomo renegotiated that $3 billion subsidy that the city is giving them, would you change your mind? Would you still
welcome Amazon in the city?
GIANARIS: First, let me very clear that initial letter said nothing about subsidies.
ASHER: Of course, of course.
GIANARIS: It had no concept of what kind of horrible deal we were going to reach and because Amazon insisted and then Governor Cuomo agreed, all the
negotiations were conducted in absolute secrecy. I couldn't even get a phone call returned by our Economic Development Agency over the course of
the last year until they publicly announced this thing. So let's just be clear about what that is.
Now, Andrew Cuomo is facing the wrath of the people who realized that this was a horrible deal he made. If he wants someone to blame, he should look
in the mirror and blame himself for reaching a bad deal in secret that the people didn't want. Now that it's falling apart, he's looking for someone
else to blame and no one going to fall for it.
ASHER: So let me just ask you this. There are reports out there that Amazon, they haven't started building a location or anything like that. So
there are reports they're just reconsidering New York City altogether, is that what you want or do you want just the deal to be negotiated?
GIANARIS: I want them to reconsider coming here if they're insisting on --
ASHER: Completely, even if the subsidies were off the table?
GIANARIS: It's very clear to me that this deal is falling apart, that Amazon has no interest in anything other than getting things the way they
want them and there's no real reason to believe there would be any basis for a productive conversation with them at this point.
ASHER: What are the locals in your district saying in line with the city, are there some people -- I mean, listen, there are a lot of people that
agree with you, you have a point in terms of the subsidies. They are the wealthiest company. He is the richest man in the world, why would they
need an extra $3 billion especially when you talk about -- I mean, I can't even get a seat on the subway.
But here's the thing, when they talk about 25,000 jobs being added, and the amount of -- what that means in terms of wages, in terms of spending, in
terms of economic growth in the area, can you see that side of it as well?
GIANARIS: No one is against job creation. It is a matter of what do you get with it? And if we're paying money to make it, and if we're not doing
anything and have the infrastructure, the community to absorb it, we're going to turn into two cities that I love, Seattle and San Francisco but
who have a series of problems because big tech has taken over their cities.
The street homelessness in Seattle has gone up over 160% in the last five years. And when the city council there dared to say they want to raise
some revenues to provide homeless services, Amazon flexed its muscle and beat them back.
That is not what we want here in New York. We already have problems with the housing affordability. We already have problems with our mass transit.
I don't need a company here that's going to be making things worse and not interested in making it better. And let's just talk about big tech for a
second because there are some signs that some of the players in the industry are beginning to get it.
Microsoft just announced they are investing $500 million in Seattle for affordable house. There's someone who is realizing they're doing so well,
they are profoundly changing these communities.
ASHER: That's what you want. You want investment in the subway system and affordable housing and that sort of thing.
GIANARIS: I want these tech companies to say, if we're going to come to your community and devastate it by sheer volume, then at least we're going
to invest some of our riches to help you handle that. And Amazon is doing the opposite. They're trying to take, take, take, and then when he don't
get what they want like a crying child, they threaten to leave. Well, maybe they should leave then.
ASHER: Okay, Michael Gianaris, thank you so much. Appreciate you coming on the show.
GIANARIS: Thank you.
[15:15:08]
ASHER: Okay, Amazon shares have actually fallen in today's trade. Let's take a look. Stocks are lower down, 1.8%, nearly 2%. That's in line
pretty much with the board of market. The Dow has -- as I showed you at the top of the show, there we have it, been in the red pretty much all day,
down triple digits.
One portfolio manager told our Julia Chatterley that we could be reaching the end of a market cycle. Take a listen.
(BEGIN VIDEO CLIP)
JOHN PETRIDES, MANAGING DIRECTOR, POINT VIEW WEALTH MANAGEMENT: There's no question that we are nearing the top of the cycle, margins are peaking, we
are getting into more deals. Companies that are buying back more stock at this point are figuring out how do you grow your earnings? So all of those
things just bake into the cake, meaning that we're at the top of the cycle or near the end of the cycle.
(END VIDEO CLIP)
ASHER: And here's someone that I always love to see. Paul La Monica.
PAUL LA MONICA, CORRESPONDENT, CNN: Likewise.
ASHER: Thank you. So let's see, guys, so what is Amazon shares doing right now? Down about 1.8% or so. I mean, it hasn't really got anything
to do with Bezos' private life, really, right?
LA MONICA: Yes, I don't really think it does.
ASHER: Do they care? Does anyone care?
LA MONICA: Yes, I spoke to a couple of analysts and a fund manager today for a story on CNN Business, and yes, Amazon stock is down today, but it's
been down for the past few weeks because here, there are concerns about the amount of money that they investing, fear for future growth, whether or not
that's going to hurt profit margins, sales starting to slow, not just on the online side, but also dropping in some of their physical stores.
So I think that's why the stock is down lately. This soap opera, if you will, doesn't have much to do with why Amazon is suddenly falling.
ASHER: Do you know what, though, Paul, I did actually hear one analyst basically say that this could actually be a distraction. He's got -- his
personal life is being unraveled on television and in the media or in tabloids all across the country. He could be distracted. Is that utter
rubbish?
LA MONICA: I don't know if it's rubbish completely, Zain, but I think most --
ASHER: I love hearing Americans say the word "rubbish." It sounds so unnatural.
LA MONICA: It's trash. It's total garbage. Most people feel that Amazon is a company that it's so big now, it doesn't necessarily manage itself
obviously, but it's much bigger than just Jeff Bezos. And remember, Bezos is a guy who has had other distractions, more positive ones like owning
"The Washington Post" personally, trying to compete with SpaceX, with Blue Origin, his rocket company.
So Bezos has always been spread thin, if you will. This battle with the "National Enquirer," the divorce proceedings he's going to have with his
wife, MacKenzie, which by all accounts sound like they are going to be pretty amicable. Yes, maybe that could be a distraction.
But Amazon, even though a lot of people don't think of Amazon the way that Facebook, Mark Zuckerberg has Sheryl Sandberg, whose Jeff Bezos' bench, so
to speak. People I spoke to said that the head of Amazon Web Services could probably come in and run all of Amazon and that's really the profit
driver for the company anyway, so --
ASHER: I read that in your story.
LA MONICA: People aren't that worried about what would happen if for some reason Bezos had to step aside.
ASHER: Okay. So I mean, how often do you see shares tanking? Not that Amazon is tanking obviously, but how often do you shares results falling as
a result of what happens in an executive's personal life? Is it really -- I mean, I see only with something very dramatic like an illness, but is
there any other reason why you might see, just in general, not even speaking about Jeff Bezos per se, but personal life affecting investors'
perspectives.
LA MONICA: Yes, I think if you've had scandals and I don't think that this is a scandal. I think this is sadly for Jeff and his wife, MacKenzie, they
obviously had a falling apart like many couples do, unfortunately.
ASHER: It's sad actually.
LA MONICA: And now, he is with someone else and that's part of his private life. This is not by any accounts a #MeToo story. This isn't Les Moonves
and what happened with CBS. So I think that is where CEOs get into trouble for relationships that shouldn't have happened in the first place. This is
by all accounts a consensual relationship that just happens to be outside of his marriage and that's why he and his wife are probably splitting.
ASHER: I'd never imagine that we would be talking about this.
LA MONICA: 2019, outside is America --
ASHER: Paula La Monica, I can't even say your name, I am laughing, I am sorry. Paul La Monica, live for us there. Thank you so much. Okay, so we
have a lot more on Amazon and Jeff Bezos to come. Almost enough to pretty much fill the entire show, right, Paul?
We're going to be digging into the Saudi connection that Jeff Bezos mentioned in his blogpost. I encourage all of you to read it. It is on
"Medium," as well as the "National Enquirer's" links to Donald Trump as well and we are going to be talking about lawsuit now facing Amazon Studios
from one of the world's most famous directors.
Later in the show, Brexit will have an impact on many parts of Britons' lives. We will show you how the imports of blooms could be hit by a no-
deal. It might leave the Brits lamenting where have all the flowers gone? That's next.
[15:20:00]
ASHER: Welcome back, everybody. Shares of Tata Motors plunged as much as 30% on Friday. Tata is of course the parent company of Jaguar and Land
Rover. They reported the biggest quarterly loss in Indian corporate history.
The company blamed the slowdown in China calling demand for diesel vehicles and uncertainty around Brexit. Anna Stewart is following. Anna is live
from London.
So Anna, I mean, gosh, I mean, we've talked a lot about the slowdown in China and how that's affecting not just Tata Motors, but obviously,
companies look Apple as well. What can car companies like Tata do to shield themselves from the slowdown in China, do you think?
ANNA STEWART, REPORTER, CNN: Well, it's incredibly difficult, and if you look at the week we've had, there have been some been seriously dire
reports from various car makers. We had Toyota, Daimler, Fiat-Chrysler -- all of them downgrading their profit expectations, Volvo warned of a tough
2019.
A Chinese slowdown is hitting some of these companies hard, but the key is how exposed they are and Jaguar Land Rover unfortunately is very exposed to
China. It really relies on that market for a lot of its growth and sales in January were down 40% compared to the year before.
ASHER: And just in terms of Brexit that's also an issue affecting Jaguar and Land Rover as well, walk us through that.
STEWART: Yes, I mean, there's a whole hotbed of issues here for Jaguar Land Rover as there are for all of these are companies. It's the China
slowdown, it's the diesel sales in Europe and there's Brexit and that is a particularly difficult one for Jaguar Land Rover because the U.K. is one of
their biggest manufacturing hubs.
Interestingly, in its earnings report, we had something of an update on Brexit. We know that they are stockpiling. We knew that they are going to
offline some of their factories directly after the Brexit date at the end of March. They are doing that sooner than they usually do each year and
they are extending it for longest. That will be costly.
But also, they are looking now at no-deal Brexit preparations and one of the things I was looking at in the report was the suggestion that if there
are tariffs on cars. They are looking to pass that cost on to the consumer.
ASHER: And for Tata Motors, just in general, I mean, one of their issues of course, cost. I mean, you talked about cost just a second ago. But
just trying to keep the cost down, I mean, they have been investing heavily or trying to keep up when it comes to investing in hybrid vehicles,
electric vehicles, self-driving cars, that's where the car industry is going. They have to keep up. How do they keep the cost from getting out
of control?
STEWART: Well, that is a really good question. And some analysts I spoke said a lot of it has to do with the product range, both the Jaguar Land
Rover, which is actually a much smaller car company compared to the likes of Toyota or General Motors.
[15:25:04]
STEWART: It is quite small, but with a huge product range, perhaps, too broad a range. Same for Tata Motors. Does it need to reduce the range of
cars it currently makes? For instance, it had a bit of a flop with the Nano, I am not sure if you remember this car. It was launched in India as
the world's cheapest car and it's been a total flop. It's failed to take off.
So some analysts suggesting that in terms of getting cost down, that already reducing staff and cost and things like this, but perhaps they
should actually be looking at reducing the range of vehicles that they have.
ASHER: All right, Anna Stewart. Live for us there in London. Thank you so much. Appreciate that. Okay, so over in Europe, the markets closed.
Let's take a look -- lower, amid renewed U.S.-China trade tensions. Germany bore the brunt of the losses there, down about 1% or so. The FTSE
closed down over a third of one percent as well.
Talking of Britain and a no-deal Brexit situation could spell disaster for the U.K.'s continental cousins in the Netherlands. With Valentine's Day
just around the corner, they're concerned about the impact of border checks on the flower industry. Here is our Simon Cullen with more.
(BEGIN VIDEO TAPE)
SIMON CULLEN, FIELD PRODUCER, CNN (voice over): This is the largest flower distribution center in the world. Every day the fresh blooms are carefully
sorted, packed and inspected before being shipped around the globe from this bulking warehouse near the Amsterdam's Schiphol airport. The Dutch
flower industry is a multibillion dollar exporter and a crucial supply hub for British florists.
DAAN VAN DER KNAAP, DUTCH QUALITY FLOWERS: We buy your stock in Holland and we transport it to England and then we sell it.
CULLEN (on camera): According to British wholesalers, about 80% of the fresh flowers sold in the U.K. are shipped in from the Netherlands. Under
the existing arrangements, the trucks pass unhindered through the ports ensuring the flowers arrive here quickly.
But if the U.K. and E.U. can't resolve their messy divorce, good like this could be the subject of tariffs and delays at the border.
DER KNAAP: If we have to wait a day to get our flowers into the country, then it will definitely affect the freshness of the flowers.
CULLEN (voice over): For an industry that relies on a quick turnaround of goods, any shock to the supply chain will cause difficulties.
LOUISE BERMINGHAM, WILD THINGS FLOWERS: We can order from Holland up until 4:00 in the evening and it's here first thing in the morning and then we
process it and deliver it. But obviously, that's not going to happen.
CULLEN (voice over): Exporters in the Netherlands are already game planning what might happen under different Brexit scenarios. But until
there's a deal, there is no way of knowing exactly what will happen at the ports and what the costs will be.
MICHEL VAN VEEN, OPERATIONS AND SUPPLY CHAIN DIRECTOR, ROYAL LEMKES: There is still a very much uncertainty that we need to cope with and so that's
giving bad feeling at the moment.
CULLEN (voice over): For those whose livelihoods rely on the flower trade, the road ahead could prove to be a bumpy ride. Simon Cullen, CNN, London.
(END VIDEO TAPE)
ASHER: All right, still to come here, the world's richest man takes up blogging. Why the accusations Jeff Bezos made against "National Enquirer"
may actually be just beginning, next.
(COMMERCIAL BREAK)
[15:30:00]
ZAIN ASHER, HOST, QUEST MEANS BUSINESS: Hello everyone, I'm Zain Asher, coming up in the next half hour of QUEST MEANS BUSINESS, Woody Allen is
suing Amazon of the claims it breached a big contract.
And we'll go inside the so-called cult of Facebook as the company launches its 15th birthday. But first though, these are the headlines we are
following for you at this hour. A deadly fire has struck the Youth Team Center for one of Brazil's biggest football clubs.
According to state-run media, fire tore through dormitory as players were sleeping at the training ground for the Flamengo Football Club. At least,
ten people were killed and three others are injured. The cause of the fire is under investigation.
Thailand's king has denounced his oldest sister's candidacy for prime minister, he calls the 67-year-old princess' run for office extremely
inappropriate and against Thai world traditions. Her bid to become prime minister could upend a political landscape in the country.
A fiery hearing just wrapped up on Capitol Hill. Donald Trump's acting Attorney General was grilled by a House Committee for many questions
focusing on his oversight of the Russia investigation. He testified he hasn't spoken to the president about the probe, but wouldn't answer if he
agrees with Mr. Trump that it's a witch-hunt.
All right, let's return now to our top story. Jeff Bezos' extraordinary accusations against the "National Enquirer", its parent company "AMI" and
its CEO David Pecker. Bezos say he won't participate in AMI's blackmail, corruption or political favors.
Instead, the world's richest man says I prefer to stand up, roll this log over and see what crawls out. Here's what he's uncovered so far. First,
potential connections between Saudi Arabia and AMI. Jeff Bezos says an investigation into those links seemed to hit a particular nerve with Mr.
Pecker.
Second, connections to President Trump, we already knew President Trump was a long-time friend of David Pecker and a beneficiary of AMI's coverage. In
the e-mails that Mr. Bezos published, AMI's counsel demanded that Bezos deny that AMI's coverage was influenced by political forces.
And third, other targets of blackmail by AMI. The journalist Ronan Farrow said "AMI" tried to blackmail him in an effort to stop him from reporting
on links between "AMI" and President Trump. And this is all happening, of course, in the wake of the murder of that Saudi journalist Jamal Khashoggi.
Alex Marquardt is in Washington for us, Michelle Kosinski is there as well. So Alex, just walk us through the extent for us in detail. What exactly is
the connection between "AMI" and the Saudis?
ALEX MARQUARDT, CNN SENIOR CORRESPONDENT: Well, this is part of the allegation that what Pecker and "AMI" did here was part of a political
attack. And so essentially, it has two parts. And what is being alleged here by Bezos is that, one, that because Trump and the Saudis are so
closely aligned, that they would carry -- they would do an expose like this.
And the second part is he's alleging that Pecker has close ties with the Saudis because they -- he needed funding. And one example that he gave is
there was a White House dinner and he brought a high-level of Saudi who had connections to the royal family. So this is part of his larger allegation
that this huge expose that "The National Enquirer" ran about Bezos' affair was part of -- was politically motivated.
And if you go -- if you play that out, and he doesn't actually put this in his lengthy block post, you can see evidence of those very close ties
between "AMI" and the Saudis.
[15:35:00] For example, last year, when Mohammad Bin Salman; the Crown Prince was coming to the U.S. for the first time, they put out a 97-page,
essentially promotional magazine that was just fawning all over the Crown Prince and his vision for Saudi Arabia.
Now the Saudis denied of course that they had any connection to that. But the "Associated Press" has reported that, in fact, embassy officials here
in D.C. got advanced copies.
And then there's the Khashoggi situation where the "Washington Post" which Jeff Bezos obviously owns has not only lost one of its -- one of its star
columnist, but it has gone on to accuse as has the rest of the mainstream media including Cnn of reporting that the CIA and other intelligence
agencies believe that, that was done at the behest of Crown Prince Mohammad Bin Salman.
So essentially, Zain, what's being alleged here by Bezos is that the -- that "AMI" has cushy ties with the Saudis for their own reasons, but also
because the Trump administration is very much in bed with the Saudis. And there's this long history between Trump and AMI.
Now, we have heard from Adel al-Jubeir, who is the State Minister for Foreign Affairs, who is in D.C. today. He said that there was no evidence
of any sort of connection between the Saudis and "AMI" or that they put any sort of pressure on "AMI" to put out pro Saudi stories -- Zain.
ASHER: Alex Marquardt, stand by, I want to bring in Michelle Kosinski. Michelle, something interesting happened today. The White House is
actually supposed to submit a report to Congress about the killing and the murder of Jamal Khashoggi. And now they're not doing that, why not?
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Right, well, they say that they have the discretion to do that, which legally is true. But
you look at the pressure that's been on them here. I mean, Congress can't force the White House to do certain things like issue sanctions.
There is a separation of powers under the American constitution. So yes, there is a division there. Congress can't say, generally to the White
House, you must do this even when there's a law that exists, that says something to that effect. But the point of it is, it can certainly
pressure the White House to the point that everyone looking at this says, well, why not?
You have the CIA determining that the Crown Prince ordered the murder of journalist Jamal Khashoggi. You have the Senate voting unanimously that
they condemn the Crown Prince for this murder, and they're urging the White House to take a look at this.
So Congress introduced this law calling the Global Magnitsky Act, the White House within 120 days is supposed to submit a report, even just saying yes
or no, we believe the Crown Prince committed a human rights violation here in this murder.
And yes or no, we're going to sanction him and why? But the White House has said, well, we reserve the right to decline to do this when appropriate.
Now, that is the same kind of language that President Obama used when he signed this very law into effect.
So, he himself disagreed with the constitutionality of Congress, forcing the White House to issue a report like this. So, yes, there are legal
issues with that aspect of it, it seems like the White House is in its right to decline. But there's this big question mark hanging over it.
If the CIA believes that the Crown Prince was behind this murder, why does the White House so much not want to say the same thing?
ASHER: And that's a very interesting question a lot of people are asking that. Michelle Kosinski live for us, Alex Marquardt, appreciate you both
coming on, thank you. So add all of this to the pile of Jeff Bezos' problems, Woody Allen is suing Amazon as well.
There's QUEST MEANS BUSINESS, next.
[15:40:00] (COMMERCIAL BREAK)
ASHER: Welcome back, everybody. It is very rare that one man and his companies can dominate the headlines, dominate an entire new show for so
many different reasons. So add to all of the headaches that Jeff Bezos is going through right now.
Woody Allen; famous director is actually suing Amazon Studios, also of course owned by Jeff Bezos, for $68 million. Allen is saying that they
backed out of a four-picture deal and refused to release one of his completed films over in his words, i.e. what Woody Allen is calling 25-
year-old baseless allegations.
Chloe Melas is joining us live now. So Chloe, here's the thing. Is there some hypocrisy here only because it is true that Amazon Studios would have
known about the allegations surrounding Woody Allen for many years. So why -- if they were so outraged and upset and apoplectic about what he's
alleged to have done with his daughter Dylan Farrow, why did they agree to make a movie with him in the first place?
CHLOE MELAS, CNN ENTERTAINMENT REPORTER: Now, that's the thing, that was all pre-Me Too movement, right? The Me Too movement changed everything for
everyone. And whether it was rumors or allegations studios and film companies take things a lot more seriously now.
Now, it will be interesting to see if Wy Allen and his team can prevail in this $68 million lawsuit. Because I don't know if Amazon had an out-
clause, and you would think that they would have something in there. So Woody Allen had completed a movie with them called "A Rainy Day in New
York". They shelved that movie, the movie was done, so he has a right to be upset about it.
And he also had this four-year -- four-part multi picture deal with them --
ASHER: Initially, they were just going to delay the movie, and then they decided, you know what? We don't want to touch this at all.
MELAS: Exactly, and so, Woody Allen claims that his movies, his you know, bit catalogue of films actually was what helped Amazon in the first place
become a power house when it came to films. And he also claims in this lawsuit that they promised to be the home for all of his movies in the
future, really for the rest of his career. So he was really banking on making money from Amazon.
And this really is a big blow to his pocket books. But again, Amazon has said anything yet, we don't know how this is all going to play out.
Remember, these allegations are from over 20 years ago of his daughter Dylan Farrow, mother Mia Farrow claiming that her father allegedly molested
her when she was a little girl.
But those were dismissed, like right? I mean, he was never found guilty of that in a court of law, but remember who her brother is, her brother is
Dylan -- I mean, Ronan Farrow --
ASHER: Right --
MELAS: Ronan Farrow is the one that broke the story on Harvey Weinstein. He is the one that's been leading this --
ASHER: Spear-headed the whole Me Too movement --
MELAS: Exactly --
ASHER: Instantly.
MELAS: And Woody Allen is kind of connected to all of that in a way.
ASHER: Yes --
MELAS: Given the fact he is as far as we know Ronan's father, unless he believes the rumors of Frank Sinatra is the stat --
ASHER: He doesn't like Frank Sinatra, doesn't he?
MELAS: He doesn't like Frank Sinatra.
ASHER: So, is Woody Allen's career completely over at this point?
MELAS: You know, this, the Me Too movement and these allegations have resurfaced for years, have not been good for him, but pre-Me Too, there
were a lot of celebrities that continue to work with him.
Post-Me Too, a lot of those celebrities have come out and said, I regret working with him, I will work with him again, and it has hurt his career.
So the Me Too movement has not been kind to Woody Allen.
[15:45:00] And I don't see his career being revived at all. And I think that this situation with Amazon is the first of many situations that he's
going to be in.
ASHER: Honestly, you could argue with Harvey Weinstein that people didn't know. Some people say they didn't know, whereas with Woody Allen,
everybody kind of knew the allegations against Woody Allen. So there's an element of hypocrisy there, sorry.
MELAS: I think though, that there was a moment of pause for people to go back and reflect and to look back, I think. So it's almost like with Kevin
Hart, he said these things, we knew he said these things about making homophobic remarks and the comments that he made about the LGBT community.
And now, people have re-evaluated those tweets, and said, you know, look, we don't want you on the Oscar's stage --
ASHER: Yes --
MELAS: Hosting. So I think that we can find a little bit of parallels between a lot of these situations.
ASHER: Yes, I'm actually curious to see what happens with a host at the Oscar's for the first time in my 20 years. I'm being told I have to go --
MELAS: Move off the rails --
ASHER: I've got to go, I've got to go, I've got to go. Chloe live for us, thank you so much, appreciate that. Executives at Facebook hold a huge
amount of power over your digital life and the spread of information around the world. Company insiders tell Cnn, there's a cult-like atmosphere,
cult-like atmosphere inside the building, inside Facebook's headquarters. You'll hear from them after the break.
(COMMERCIAL BREAK)
ASHER: Returning now to our top story, "AMI" is not just known for the national inquiry -- or "National Enquirer" rather, although it may be its
most notorious publication. "American Media" titles include "Touch Men's Journal", "Muscle & Fitness" and teen titles like "J-14".
But the "Enquirer" is also known for its ties to President Trump as well. Cnn Senior Media reporter Oliver Darcy joins us live now. So Oliver,
here's my question to you. What we're seeing with this battle between Jeff Bezos and "AMI" and the "National Enquirer", is this a watershed moment in
tabloid journalism to seeing the world's richest man stand up to being blackmailed and allegedly extorted as well?
OLIVER DARCY, CNN SENIOR MEDIA REPORTER: Right, if this isn't the watershed moment, I don't know what would be. I mean, this story is
absolutely explosive. Jeff Bezos of course started it yesterday when he published a 2,000-word blog post detailing blackmail allegations against
"National Enquirer's" parent company, "American Media, Inc.", and it's been going on since then.
The "American Media, Inc."; the parent company of "National Enquirer" denies basically any legal wrongdoing in a statement. But they said
they're going to investigate Bezos' allegations. But this really started when the "National Enquirer" published a story a few weeks ago to telling
and reviewing that Bezos had been involved in an extra-marital affair.
[15:50:00] In that story, there were text messages that they obtained between Bezos and his mistress. Bezos wanted to know how they got those
text messages, and so he launched an investigation into this.
And from the e-mails that Bezos published in his blog post yesterday, "AMI" basically was saying, if you do not stop your investigation, if you don't
cease this investigation, we're going to release more risque photos of you. We have these photos of you in compromising positions and we're going to
release those.
And that's what Bezos said. In his blog post, he said he's not going to give into, and he sort of blackmailed and he published the post, and now
here we are.
ASHER: Good, I mean, honestly, good for him. We actually polled our audience and asked them, what would you do if you were in the same
situation, most people saying that they would do what Bezos is doing, which is standing up and fighting.
My question to you is from a journalist perspective, just in terms of "AMI's" argument, is there any -- or could there ever be any news
worthiness in publishing nude pictures of the world's richest man? That is what "AMI" is saying.
DARCY: I mean, I can't imagine. The National Tabloid" -- the "National Enquirer" of course traffics in tabloid gossip and things like that. So
maybe they would argue that this is, you know, relative to their arguments. But they've already published a lot of things about Bezos.
And I think at this point, it was clear -- at least, seemingly clear in the e-mails that Bezos published from the "National Enquirer" to him, that they
were basically saying, we have these photos and we're asking you nicely to cease your investigation to say that there was no political motivation for
us publishing that story.
And if you don't -- by the way, we have these photos and it might come out. It seemed clear what they were trying to do, and Bezos put a very black and
white term, saying it was blackmail and extortion.
ASHER: He was very smart in how he responded actually. Oliver Darcy live for us, thank you so much, appreciate that --
DARCY: Thank you.
ASHER: So working at Facebook apparently is like being in a cult or in "Game of Thrones", that's according to current and former company insider
speaking with Cnn. For the past year, we've been telling you about all of the myriad problems plaguing Facebook and how top leadership have responded
as Facebook turns 15.
Laurie Segall goes inside to understand the culture in the C-Suite.
(BEGIN VIDEOTAPE)
ALEX STAMOS, FORMER CHIEF SECURITY OFFICER, FACEBOOK: The truth is there is a bit of "Game of Thrones" culture among the executives. And one of the
problems about having a really tight-knit set of people making all these decisions, if you keep the same people in the same places, it's just very
difficult to admit you were wrong, right?
LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT (voice-over): The company is powerful, and after spending time behind Facebook's walls,
there's another thing that emerged, folks who had something to say, but were afraid to say it.
UNIDENTIFIED MALE: Working at Facebook can feel a little bit like being part of a cult.
SEGALL: This former employee asked us to protect their identity.
UNIDENTIFIED MALE: Speaking out against the company is not welcome. There is a career impact where you might get blacklisted, and you're not going to
get hired.
SEGALL: Ironically, in a place that's connected billions, this home employee cites a disconnect with them.
UNIDENTIFIED MALE: People aren't really encouraged to bring bad news to Mark because generally Mark doesn't handle bad news well. In public
setting, he politely argues against it. In private setting, he's more likely to really, aggressively go against that information or challenge the
source, to challenge the assumptions, to honestly not believe the bad news.
SEGALL: Facebook is in transition, many executives have left over rumor disputes about the company's direction including the founders of Instagram
and WhatsApp. And they saw the controversy, there's been speculation. Should Zuckerberg who is CEO, Chairman and the majority shareholder in
Facebook step aside?
MARK ZUCKERBERG, FOUNDER, CHAIRMAN & CHIEF EXECUTIVE OFFICER, FACEBOOK: That's not the plan?
SEGALL: That's not the plan. Would anything change that?
ZUCKERBERG: I mean, if I could eventually over time, I mean, I'm not going to -- I'm not going to be doing this forever.
(END VIDEOTAPE)
ASHER: Not going to be doing this forever, interesting. Laurie Segall is joining us live. So Laurie, it's interesting because it's not just privacy
and fake news that Facebook has to deal with, but it's also their own culture. They have to clean house themselves.
How does a company like Facebook --
SEGALL: Yes --
ASHER: Go inside and change culture.
SEGALL: I think that's what they're dealing with now, I think it's been a tumultuous time for the company. And in all fairness, you know, not every
employee feels this way. But you know, there was this pattern because we shot this documentary over six or seven months.
You know, in talking to, a lot of former employees who want to speak a little bit more openly. Maybe not even saying terrible things about
Facebook, but having a more nuance conversation about some of the challenges that the company is facing.
They were too afraid to go on the record, they just said it wasn't worth it for the career impact in Silicon Valley. This is a close-knit place and
you know, I think that's part of the problem. And I think at this time at Facebook, where these -- you know, these problems need to come out in the
open, there need to be a lot of debate over them.
[15:55:00] That's an issue, you know, I know there have been a lot of changes internally with a lot of these executives leaving, but that group,
that closer group next to Mark Zuckerberg is still very much intact in there.
ASHER: It's interesting. So we've seen how the company has evolved over the first 15 years. Where do you see it going over the next 15 years? Will
Facebook still -- when my son is 15 years old, will Facebook still be around in the same format as it is now?
SEGALL: I think it's always evolving. Mark Zuckerberg was very smart here, he had a lot of foresight when he bought Instagram, and he bought
WhatsApp because I think in many ways, a lot of these acquisitions he believed would be the future of Facebook.
So your son might be using Instagram, and Instagram is owned by Facebook, and I can see a lot more innovation coming in that room. I know they've
focused on virtual reality, and that could be something kind of down the pipeline.
And Mark Zuckerberg's mission which we covered a lot in this documentary is to connect the world, and that is not slowing down. You know, he plans to
do that in every way, shape or form, which will mean a whole new set of problems that will come along with that. And I think it will be up to
Facebook to better anticipate those problems and get on top of them quicker than they have in the last couple of years.
ASHER: All right, Laurie Segall, thank you -- and speaking of my son, there's going to be a social media ban in my house --
SEGALL: I can only imagine --
ASHER: For sure. Laurie Segall, thank you so much --
SEGALL: Thank you --
ASHER: Appreciate that. OK, so be sure to set your DVR for Laurie's special report, "FACEBOOK AT 15: It's Complicated", that airs Sunday at
9:00 p.m., that is U.S. East Coast time, and by the way, that's 10:00 a.m. Monday morning in Hong Kong only on Cnn.
After the break, we are in a dying minutes for trade in a Friday afternoon right here in New York, we're going to check those markets in a moment.
(COMMERCIAL BREAK)
ASHER: All right, welcome back, everybody. Let's update you on the last few minutes of trade on Wall Street. The Dow is already down 107 points
or so. It's certainly off session lows, but there's so much fear out there, so much concern about slower global growth, what's happening with
the U.S. trade war with China and concern that Donald Trump is not going to be meeting Xi Jinping before March after all.
Let's look specifically, though, at the Dow components. Healthcare stocks are at the bottom of the stack, you see there at the bottom of the screen,
Walgreens and United Health. Well, United Health down 3 percent, Walgreens down 1.5 percent, those two are the worst performers so far.
All right, everyone, that is QUEST MEANS BUSINESS, there's the round of applause at the end of the trading day, I am Zain Asher, that's the closing
bell ringing, "THE LEAD" with Jake Tapper starts --
(BELL RINGING)
END
