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Quest Means Business
Senate Majority Leader Mitch McConnell Debunks Allegations that President Trump is a Racist; Facebook, Apple, Amazon, Google Testify in Antitrust Probe; U.K. to Deploy Additional Warship and Tanker to Gulf. Aired 3-4p ET
Aired July 16, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: The last hour of trade before the closing bell, 60 minutes still to go, and what a day.
All over the map, but the good news has been, the movements have been relatively muted. Small numbers except at this point here, and that's all
about a presidential tweet that we will explain during the course of the program.
The market looks like it's down. These are the reasons why. Tech hearings on the Hill. Social media executives are being grilled by senators on a
wide variety of subjects. Bank earnings coming thick and fast, setting the stage for the earnings season. And Boeing 737 MAX crisis. Ryanair is
making cuts because there aren't enough planes.
Tonight, live from London on Tuesday, July the 16th. I'm Richard Quest here in London, of course, I mean business.
Good evening, tonight a day of reckoning across a variety of issues for Silicon Valley. Over the course of three hearings in Washington, U.S.
lawmakers are trying to determine how much power tech companies should have.
Two more hearings are about to get underway. First, the House Judiciary Committee where executives are being asked about antitrust fears in the
tech sector and the second in the Senate, where lawmakers will question Google over alleged censorship in search engines.
Perhaps though, the most significant came earlier in the day on Facebook's cryptocurrency, the new one that it's announced, Libra. Republicans a Big
Tech is stifling conservative speech. Democrats are threatening to break up its antitrust, and everyone is worried about Libra.
(BEGIN VIDEO CLIP)
SEN. SHERROD BROWN (D-OH): Now, Facebook asks people to trust them with their hard earned paychecks, it takes a breathtaking amount of arrogance, a
breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next? You know what we ought to do
next? Let's run our own bank and our own for profit version of the Federal Reserve and let's do it for the whole world.
SEN. TOM COTTON (R-AR): What confidence can people who have center right news have that Libra is going to be available to them on an equal basis as
those who want to shutdown gun retailers or shutdown oil pipelines or government contractors who are working with Immigrations and Customs
Enforcement?
SEN. JOHN KENNEDY (R-LA): Isn't it true -- I really want your opinion that Facebook has chosen to advance a set of values and which truthful reporting
has been displaced by flagrant display as a [bleep].
DAVID MARCUS, VICE PRESIDENT OF MESSAGING PRODUCTS, FACEBOOK: I don't have to answer that question, sir.
KENNEDY: Okay.
(END VIDEO CLIP)
QUEST: Yes, It's called Libra. Some people are calling it Zuck bucks. And Facebook really doesn't like that. But this is Libra. And to
understand this, and it's really worth taking a moment or two to explain it because it's going to be here for some time, and it's going to get bigger.
There are two parts to Libra. The first is Libra, the cryptocurrency itself and the network to move it and manage it. It's not managed by
Facebook. It's managed by these 28 partners, all of whom have signed up.
So you've got Uber, you've got Visa, you've got -- PayPal is involved, E- bay -- they've all signed up to go along with this crypto currency called Libra. Now that's the currency. Then you've got Calibra, which is
Facebook's own Libra wallet.
But remember, all these other partners can also have a wallet as well. The difference is Facebook's got 2.4 billion members and the Facebook or the
wallet is how you'll use Libra, whether it's through Facebook, Instagram, or WhatsApp. And that's the frightening part in the views of the critics
because Facebook controls these other companies and will use their own software to send money from Facebook wallets to other wallets.
We want you to join the conversation, get out your phones and go to -- or digital devices perhaps, cnn.com/join. The question is simple. Do you
trust Facebook to run a cryptocurrency? Do you trust Facebook to run a cryptocurrency? Vote now at cnn.com/join.
Cryptocurrencies are going to be here to stay. Clare Sebastian is in New York. She followed the hearing. How surprised were you at the animus
displayed against Facebook and Libra?
[15:05:04] CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Not too surprise, Richard is because this really follows a barrage of criticism that we've
seen towards the Facebook project. It has come from the President. It has come from the Federal Reserve Chair. He says he has serious concerns about
this. They don't know yet how it's going to be regulated.
And we heard yesterday from the Treasury Secretary, Steven Mnunchin who said that he also has serious concerns and is worried about how the
regulation is going to work as well. So everyone is concerned about it. It's united people on both sides of the aisle.
But what I was interested see, Richard is how deep they went into this. These lawmakers who have been criticized in the past for perhaps not
understanding how Big Tech works very well have really read into this and have gone very deep into it. And one of the key concerns is how Facebook
will handle user data.
I want to play this exchange between Senator Menendez and David Marcus. Take a listen.
(BEGIN VIDEO CLIP)
SEN. BOB MENENDEZ (D-NJ): How specifically are you going to keep the data separate?
MARCUS: So the way that we keep the Calibra data separate from the rest of Facebook is that actually within our infrastructure, we have separated the
data from the rest of Facebook's infrastructure and data in order for it not to get commingled with the rest of the data.
MENENDEZ: Even though in your user agreement, you say that you're going to may very well share aggregate data with Facebook.
MARCUS: Aggregate data that we may use on the Culebra, wallet side, non- identifiable data --
(END VIDEO CLIP)
QUEST: Clare, there are two issues here. The first is the data as you rightly point out, but the second is what one might describes as the
macroeconomic, the monetary policy side of it, and you need fiat currency to get into Libra. So you'd have to take dollars, euros, lira or whatever
to get into the Libra. But once there if you have two and a half billion people exchanging money outside of the traditional monetary circles, what
could that mean?
SEBASTIAN: You know, it could have serious monetary policy implications, Richard and not just because of what they call the on and off ramps, the
ability to move in and out of fiat currency. But because this is what's called a stable coin, so it's backed one to one Facebook says, or it will
be by a Reserve, which they say it's going to be made up of developed world currencies. They are the stable ones like the dollar, yen, euro, and other
things like Central Bank deposits and things like that.
So Facebook has to ramp up that reserve, the more people are using this currency that really could have an impact on the money supply. And of
course, then the question is who is going to be in reserve? Who is going to be regulating it? They're going to have to be trading it to keep it
stable.
There are a lot of questions about how this is going to work from a technical standpoint. And I think that is going to inform how it's going
to be regulated going forward. As yet, the situation is that Facebook doesn't exactly know how it's going to be regulated and the regulators
don't know either.
QUEST: Clare Sebastian in New York watching that, as we speak, the summer grilling for tech continues in the House of Representatives. Facebook
there has been joined by executives from Google, Amazon and Apple. This time, it's antitrust.
Democrats have lined up witnesses who say the tech companies have become too large and their power needs to be checked.
Ashkan Soltani is the former Chief Technologist at the Federal Trade Commission. He's in San Francisco. Good to see you, sir. Thank you.
What is the solution, though? If you don't -- I mean, you don't want to break them up? The way it was put to me the other day by a guest, you
don't want to take the sledgehammer, like we did Standard Oil, or AT&T, American Business Network years ago. So what do you want to do?
ASKAN SOLTANI, FORMER CHIEF TECHNOLOGIST, FEDERAL TRADE COMMISSION: Well, so the first question is, what do we have issue with? And one of I think
the key concerns that Congress, which is echoing the public's concern is the size and dominance of these companies, both in terms of our everyday
lives, but also in terms of the market and market power, right?
The ability to, for example, using Libra, which you were just talking about, have insights as to market trends and acquire or purchase
competitors, would-be competitors, or uprising kind of upstarts before they get huge, right?
And so I think the goal -- one goal would be to prevent that kind of anti- competitive market behavior. And to do that, breaking them up simply wouldn't be sufficient, because they could just simply join back up again
or grow those parts of their business using the dominant firm.
So I think what -- go ahead, I'm sorry.
QUEST: After you.
SOLTANI: One of the interesting pieces, I think, has to do with the fact that it is antitrust and privacy that are intermixed. The ability of the
companies to have so much insight as to both individualized behavior, as well as macro behavior in the marketplace, and then leverage those insights
to basically outmaneuver, outcompete or disadvantage their competitors and I think the policy needs to be both around antitrust and competition, but
also around consumer protection and privacy in order to be effective.
[15:10:10] QUEST: Thank you. Apologies for the interruptions there, because it is between -- the distance between San Francisco and London, and
the so called digital delay.
Look, back on Libra and what we were talking about there, how realistic are these fears about somehow Facebook running parallel currency that could
rise and grow to the scale where it could threaten or at least challenge fiat currencies?
SOLTANI: Well, look, we have a body that's able to both influence people's behaviors and outcomes, as well as have its own currency. Right? If we
add a military, they basically own probably one of the largest nations in the world.
So I think some of the fears are legitimate, and particularly since what Facebook is really good at is reducing friction, that's the term they use
internally, which is getting people to do things and behave a certain way, using their platform rather than anyone else's platform.
And so while the architecture of the system, Libra is generally is open source, and open to all, likely the behaviors are going to be promoted
using the platform on Facebook, and therefore they will have the dominance in terms of a wallet provider and interactions.
QUEST: Is Big Tech in trouble here? But not just with Libra or whatever. But with all these investigations. I can't really get to understand, are
they looking at an existential crisis, or are we looking at politicians merely with noise and hot air?
SOLTANI: I mean, I think there is a convergence of issues at play, as I said, data privacy, antitrust, censorship, free speech, all kind of all
arising one from the power of platforms, and two from the corrosive business models around kind of surveillance economy or surveillance
capitalism.
And so what I suspect is we will see some intervention soon from Congress. We have one in the U.S. here in California, we passed the law, Consumer
Privacy Law; you, in Europe have the GDPR. We will probably see something in the next two years to help curb some of this dominance by large tech,
how effective that will be still remains to be seen.
QUEST: Good to see you, sir. Thank you. Again, apologies for the digital delay.
SOLTANI: No, thank you.
QUEST: Now, according to those of you voting at cnn.com/join, most of you do not trust Facebook, not even by a small measure. If I squint, I can see
80 percent of you say you do not trust Facebook to manage a cryptocurrency and arguably that could be their biggest problem as they move forward with
all of this.
It is QUEST MEANS BUSINESS tonight from London. As President Trump calls for the Fed to count rate, banks are warning about the impact of cuts on
their business. Wall Street has a wave of bank results and they make fascinating reading, in a moment.
(COMMERCIAL BREAK)
[15:15:41] QUEST: The final hour of trading on Wall Street and the Dow is struggling for a new record. It may make it, it may not. Did it just in
the last -- yes, we're at a record at the moment, up 3.4 or five, but it has been see-sawing all day.
Well, it began with earnings as the Dow fell into the afternoon. And it was very, very simply that large fall was Donald Trump saying quote, "It is
a long way to go on trade talks with China, a long way to go."
Solid bank earnings provided the early lift with Morgan, Citi and Wells Fargo beating expectations. Morgan and Wells Fargo are worried about a Fed
interest rate cut, and Wells Fargo struggling anyway. Look at that, down three percent. Those three numbers.
Matt Egan, those three numbers tell the story, don't they? Morgan and GS are higher, and Wells Fargo lower, tell me why. Tell me why lower interest
rates hit the banks bearing in mind that they'll pay less to savers.
MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Richard. So the problem is that this big decline that we've seen in interest rates and the
potential for the Fed to lower rates even further is hurting net interest margins.
So we've seen JPMorgan it actually dimmed its outlook for net interest margins and said it may have go even further lower if the Fed cuts two or
three times which is what the market is pricing in. Wells Fargo suffered a decline in net interest margin. And we also Citigroup, their margins were
under pressure as well.
And so the issue is that the Fed rate cuts have actually made it harder for banks to make money on the difference between what they pay out to deposit
holders on interest and what they charge to lenders.
Now, the other interesting point here is that Wells Fargo actually said that its deposit costs came up very significantly over the past year and
they actually blamed fed rate hikes. That's because there's been this lagging impact from Fed rate hikes. So in some ways, the banks are kind of
getting hit on both sides from all the swings and the volatility in the Fed.
QUEST: Right. But the banks have also been able to park and continue to park large numbers of reserves, gaining interest on those.
EGAN: Right, absolutely. And I think with really interesting is that the banks themselves, there's so much uncertainty about what happens next, you
know, every conference call, all the banks were asked, "Well, how many rate cuts are you expecting? How many times do you think the Fed will move?"
And clearly they don't know.
We saw range of forecast between one and three and Wells Fargo flat out said during a press call that they're just not sure what's going to happen.
So you can see how this does make things a little bit difficult for banks when it comes to planning.
But you know, Richard, the bright spot really continues to be the U.S. consumer. JPMorgan reported double digit increases for credit card sales
and merchant processing. JPMorgan had a record profit and Jamie Dimon sounds very bullish on the U.S. consumer.
QUEST: Matt Egan in New York. Thank you. Major changes at the top of key European institutions. A short time ago, Ursula van der Leyen won the
European Parliament's backing to be President of the Commission. It was a slim margin. And of all the abstentions that voted against, she should
have lost.
Van der Leyen is currently the German Defense Minister. She succeeds Jean- Claude Juncker.
(BEGIN VIDEO CLIP)
URSULA VAN DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: The task ahead of us humbles me. It's a big responsibility and my work starts now. But my
message to all of you is, let us work together constructively because the endeavor is a united and strong Europe.
(END VIDEO CLIP)
QUEST: Christine Lagarde is also resigned at the IMF, to take over the ECB. The appointments go a little way to evening up the gender balance in
the top European jobs.
The motion to confirm van der Leyen as President passed by nine votes. Erin McLaughlin, she nearly didn't get it.
ERIN MCLAUGHLIN, CNN CORRESPONDENT: Yes, that's right, and it's to the surprise to a lot of my sources, many of them texting me the words, "not
good."
QUEST: Why?
[15:20:00] MCLAUGHLIN: Because nine is a very slim majority. She got -- keep in mind, 374 votes required for majority, she got 383. You compare
that to Jean-Claude Juncker in 2014, he had a majority of 56 votes, and even then, that was only seen as a 56 percent majority. So this is a very
slim margin.
The other sort of compounding factor in the story is that this was a secret ballot. So who voted for van der Leyen? Is her majority comprised of far
left? Far right? Then there's the whole question about the U.K.'s MEPs. It's thought that some of the U.K.'s MEPs and Tories, some Labour voted for
her as well.
In the events of Brexit, those MEPs lose their jobs, they go away. So what happens to her majority then? She was asked that question in a press
conference following the vote itself, she said she's not going to have another vote. At this point, her priority is working with pro-E.U. parties
to try and build stable majorities.
QUEST: Isn't the reality, though, that this is a bit of a -- not a bit of it, it's a total fix?
MCLAUGHLIN: Obviously not because she barely got by compared to so many.
QUEST: No, what I mean is -- sorry, I understand. No, what I mean is, even her going for the job. Out of nowhere, she wasn't even a candidate.
She had not even put down a marker. She didn't campaign. She wasn't one of the spritz leading candidates, and out of nowhere she gets the job.
MCLAUGHLIN: And that is being seen even by herself as the fundamental problem. She is the ultimate dark horse candidate in the view of many.
QUEST: She hasn't been a Prime Minister.
MCLAUGHLIN: That's right. She was the Defense Minister in Germany.
QUEST: She is the Defense Minister, yes.
MCLAUGHLIN: She recently stood down, but she is a member of the EPP, which is seen as one of the key reasons why she got the job in the first place
with the nomination from the European Council.
But many are holding exception to the fact that the Council took the decision to scrap the lead candidate process and this is the product of
that, a very, very slim majority and now she is having to work overtime to try and make up for it.
QUEST: Let's assume, clearly, she is competent, and she is able to do the job. She is qualified to do the job. But we do end up with a situation
where we have van der Leyen at the Commission. We've got Christine Legarde at the ECBI and remind me, the Council is --
MCLAUGHLIN: Charles Michel, the former Belgium Prime Minister.
QUEST: The former -- who is most certainly qualified to do that. But again, none of them really came out of anywhere.
MCLAUGHLIN: And again, that is --
QUEST: I mean, the Europeans are entitled -- hang on -- when was the campaigning? Where was the noise? Where was the people who wanted the
people?
MCLAUGHLIN: But someone like Ursula van der Leyen would likely reply to that saying that the Parliament, it was beholden to the Parliament to come
up with the majority for one of their lead candidates. After weeks, they were unable to do so.
So some would argue that it was the Council that had no choice then to put forward their pick, which was a finely tuned balance of various parties and
various geographic interests, the gender balance, also in consideration and then put it on Parliament to decide well, here's van der Leyen, are you
going to really vote down the first nominee -- female nominee -- for the European Commission President? The answer was no, but by a very slim
majority.
QUEST: And the others go through. Christine Legarde has now resigned as head of the IMF effective beginning of September and she is going to get
the job obviously.
MCLAUGHLIN: Well, that is because the head of the ECB, as well as who is the president of the European Council is determined by the European Council
Parliament. Their big chip in all of this to play, the big card was the top job for the E.U. which is Commission President because keep in mind,
the Commission President, the Commission puts forward all the legislation that needs to make the --
QUEST: She takes on -- when is that to happen?
MCLAUGHLIN: November, November. After the Brexit cliff edge October 31st.
QUEST: So Juncker still does that?
MCLAUGHLIN: Yes.
QUEST: Good to see you. Thank you. The British pound is coming under pressure, hitting a 27-month low over worries over a disorderly Brexit.
They are intensifying. Boris Johnson and Jeremy Hunt are both vowing to renegotiate Theresa May's E.U. withdrawal package with Brussels.
They won't accept the so-called Irish backstop and the two men are in the running to become the next British Prime Minister.
Tom Newton Dunn is the political editor from "The Sun." He joins me now from London. Good to see you, sir. Your debate with the two men, widely
praised but for shedding light -- more light than heat, but the issue is, is it going to be from your understanding, is it going to be Boris Johnson?
TOM NEWTON DUNN, POLITICAL EDITOR, "THE SUN": I think it almost certainly is, yes. He is a country mile ahead of Jeremy Hunt, if you believe a;l the
Tory MPs I've spoken to and everyone else has spoken to on actually both sides of the campaign.
[15:25:06] DUNN: I think Jeremy Hunt had a good campaign. He's out passed expectations of him which weren't particularly high. He was seen as very
bland. Some suggestions that Boris Johnson managed to cook the books to make sure it was Jeremy Hunt he faced rather than someone traditionally a
bit more charismatic than Michael Gove. But I didn't think he's going to be able to catch him at all. It might be closer than we think, but almost
certainly now, Boris Johnson.
QUEST: Tom, what makes either man think that van der Leyen is going to -- and new Council President, former Belgium Prime Minister is going to
renegotiate this deal. I've read their statements. They've talked about getting rid of the backstop. But the reality is, Tom, it's no different
than it was when you and I were on Abington Green in March.
DUNN: We've had these conversations before, haven't we, Richard? And I think we are going to have a few more pretty similar to these as well.
The answer is, they would say -- they were certainly saying to me in our debate last night, bluff, very straightforward. This time, E.U.
Commission, whoever you may be, Miss van der Leyen or Mr. Juncker, we mean it. Theresa May never meant it. That's why you called her bluff. We're
going to call your bluff and unless you give us a proper deal that we want, which means no backstop straight onto a nice big fat trade deal, and we get
everything we want, then we will walk out without a deal and we will cause economic chaos to Europe.
Now, that the classic guideline goes which has been the Brexiteers' argument all along, Europe needs British trade more than British these
European trade.
QUEST: Right. Does anyone know all of this? We saw -- yes, well, yes, absolutely. But during the shenanigans in March, we also saw Parliament if
it was the only thing they did finally coalesce around is that they wouldn't agree to a no-deal Brexit.
So again, I mean, I've heard talk about Boris is going to provoke Parliament and all these things. He is going to face exactly the same
issues with ducks come October.
DUNN: He is. There's no two ways about it. Nothing materially were changed at all since May the 29th when Theresa May failed to get her even
softer deal through than the one they're proposing through the House of Commons. So what's going on?
Well, we're slightly scratching our heads all day long. I must admit when Boris Johnson gave me the reply to that question, that he wouldn't accept a
time limit to the backstop, a five-year time limit, which is you if you talk to the most optimistic people in Brussels, they suggest that might
just be possible.
I was stunned because I really thought that might be Boris Johnson's way out of all this kind, cut a quick deal, do marginally better than Theresa
May and bobs your ankle. There is another theory that I'm beginning to subscribe to which is this isn't just basically driving the car into the
brick wall or thinking you can do a no deal Brexit when you've got the House of Commons, you are going to try very hard to block it.
And that is Boris Johnson is saying the classic trick of all politicians, and he is campaigning in poetry and he intends to govern in prose.
You've heard that one before, too. That basically means he knows the House of Commons are going to block his no-deal Brexit so he can quite frankly,
say whatever he likes to all forms of Tory Party members who want to hear this. They want to hear this other stuff.
And then he will come up to you and will say, "Well, do you know what, folks, I'm really sorry. I tried my best. I couldn't get it through.
We're just going to have to crack the steel that nobody wanted in the first place."
QUEST: You cynic. You political cynic.
DUNN: I know, it's terrible.
QUEST: I'll subscribe to it as well.
DUNN: I have become cynical.
QUEST: Never. Good to see you, as always, Tom. Much appreciate you taking time tonight on a busy day. Thank you.
As you and I continue tonight as Ryanair is cutting its 2020 flight schedule. It says the Boeing 737 crisis is leaving short of planes and
investors are now looking on the bright side. It's an interesting read when they like the fact that airline is shrinking. In a moment.
(COMMERCIAL BREAK)
[15:30:00]
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, good evening to you, I'm Richard Quest, more QUEST MEANS BUSINESS in just a moment. The
Trump administration is looking into unsubstantiated claims that Google has links to the Chinese state.
And as the "Lion King" is re-made for a new generation, a billionaire is warning, the real lion population continues to decline. As you and I
continue tonight, this is CNN and here, the facts always come first. The top Republican in the U.S. Senate insists that President Donald Trump is
not a racist.
Mitch McConnell was asked about Mr. Trump's recent tweets that targeted several Democratic Congresswomen. The Senate leader said everyone needed
to calm down their rhetoric and focus on the issues instead. The House of Representatives is debating a resolution on whether to condemn Mr. Trump
for his comments.
Executives from Facebook, Google, Amazon and Apple are testifying in Washington. It's part of -- second part of the House of Representatives
anti-trust probe looking into competition in Silicon Valley. Earlier, the Senate, Facebook faced a bipartisan grilling over its plans to launch
Libra; a global cryptocurrency.
Britain's Royal Navy is sending in additional warship and tanker to the gulf. The tanker will deploy next month, the warship later this year. It
will replace another warship the HMS Duncan which you can see here. It was recently deployed to the region after the Iranian boats reportedly tried to
seize a British oil tanker.
Exactly 50 years ago, Apollo 11 took off from Cape Canaveral in Florida for the first mission where men walked on the moon. The commemorations and
celebrations began today, culminate on Saturday, that is the 50th anniversary, of course, of the moon landing.
U.S. Democratic presidential candidate Joe Biden is warning Donald Trump he might want to think twice before attacking his age or questioning his
mental faculties. Biden says if that happens on a debate stage, he'll challenge the president to a push-up contest right there and then.
President Trump says his administration will look into unsubstantiated claims that Google is collaborating with the Chinese government. Now, the
president is responding to accusations made by Peter Thiel; the tech entrepreneur and prominent Trump supporter. Thiel is alleging Chinese
intelligence has infiltrated Google's senior management, and says Google should be investigated for treason.
[15:35:00] Thiel hasn't provided any evidence for this claim, and Google insists the allegations simply are not true. Ahiza Garcia is in San
Francisco. So upon what basis is this extraordinary claim made other than a wing and a prayer?
AHIZA GARCIA, CNN BUSINESS WRITER: It's entirely unclear why Thiel is making these allegations right now. I mean, unless he knows something that
the rest of the general public does not in which case he should, you know, bring forward and elaborate on what he knows.
But as of right now, it's entirely unclear why he's making these claims, and in fact, you know, Larry Kudlow; the director of the National Economic
Council and an adviser to President Trump has said that he has not seen anything to really support this. So, you know, those --
QUEST: Right --
GARCIA: Claims seem to be largely unfounded as of right now.
QUEST: Yes, but the president deciding to say he'll look into it, that adds a veneer of legitimacy to these. Do we know how they're going to look
into it? Are they bringing in federal agencies and the like?
GARCIA: It's unclear at the moment. Thiel has said that the FBI and the CIA should be investigating this. But I think it's important to put this
into context, right? Right now, Big Tech is facing a lot of scrutiny. As you mentioned earlier, they are -- you know, there are hearings ongoing
right now about how big these tech companies have gotten.
And one thing that's important to remember is that Peter Thiel is on the board of directors of Facebook, and Facebook has been under a lot of
scrutiny right now. But with these allegations, a lot of that has -- a lot of that attention has shifted and now --
QUEST: Right --
GARCIA: Google is leading the -- you know, he's leading headlines.
QUEST: Good opportunity since you're in San Francisco and you're part of our digital team there covering Silicon Valley. Just to get your
perspective and assessment, does Silicon Valley feel under threat as Washington investigates every nook and cranny. When you go out to the bars
and restaurants and talk to people in the business, what do they think?
GARCIA: I mean, I think Silicon Valley is largely quite insulated, to be quite honest. The people that I speak to seem to, you know, it's business
as usual. Of course, there is increased scrutiny, and what's interesting is that, you know, for some of that scrutiny to becoming from Peter Thiel
who is a major player here in Silicon Valley, and is also one of the more outspoken proponents of President Trump among the tech world.
It's a really interesting position to be in, but I think that on the ground, you know, for the most part, while there is a sense of this, you
know, increased pressure and scrutiny, I think for most of the workers, there are, you know, other concerns such as, you know, treatment within
these organizations, and you know, there have been strikes and protests.
QUEST: Yes --
GARCIA: So, I think the focus is less for the workers on the scrutiny facing big tech.
QUEST: Good to see you. Please, we need you on more on QUEST MEANS BUSINESS to bring us the stories and the inside of what's going on in
Silicon Valley. Thank you. Now, the Boeing 737 Max crisis you and I have talked about many times continues to impact airlines.
We'll talk about it a lot more. For Ryanair, which is Europe's largest carrier, it's having to scale back plans for next year. It says with
Boeing's 737 Maxs grounded, it won't have enough planes to serve all destinations. So, it's reducing flights to some airports, closing some
bases completely.
It hasn't decided which it'll go. Anna Stewart, how much of this is just opportunism? Right, there's too much capacity in Europe -- Ryanair, I don't
doubt. You know, the 7 -- the Maxs are grounded, they're not getting new ones, they haven't got capacity, but that's a good thing at the moment.
ANNA STEWART, CNN BUSINESS REPORTER: It's a bit of both, and Amazon, I spoke to today were certainly rather cynical because yes, this will reduce
their growth rate by half next year, they wanted to have 58 planes from Boeing initially for next Summer, they'll only have 30. But as you say,
overcapacity is a massive problem at the moment.
So, this is not necessarily a particularly bad thing. And looking around our share price frankly and its rivals, everyone is looking for maybe
higher fares next Summer.
QUEST: Right, higher -- well, I'm so into the rest of the year and beyond, but we've had a profits warning from Lufthansa. We've had --
STEWART: Two from Ryanair.
QUEST: Two from Ryanair. We know that there's too many airlines chasing too few passengers in Europe, hence, while some -- or quite a few of them
have gone out of business and more are likely to go.
STEWART: Yes, AMI, what it really -- Berlin, Munich, yes, this is a bigger problem, and I think for Ryanair, this crusty will come on, they will be
buying these planes. But what I was hoping I think in the last earnings report from Michael O'Leary --
QUEST: Yes --
STEWART: Is they'll shake out more competition, and they are doing that. The longer they can keep on going --
QUEST: But --
STEWART: And for them it's worth profits and it's worth lower fares.
QUEST: Yes, but they shake out competition, they were able to do by lower fares and more capacity. If they're taking out capacity, it's good for
them. But arguably, I suppose is it good for the competition or do they just continue ramping --
[15:40:00] STEWART: Well, as long as they could always be slightly lower in the competition, right? That's the game that they play. It's a risky
one.
QUEST: Right, the 737 Max is hitting all airlines who've got it, but particularly Ryanair.
STEWART: Yes, and it's because of also the fact that the 737 Max 200, which is a slightly different variation of the 737 Max. This is the one
that will have slightly more capacity and as a result, they don't expect this one to work or to come on to be certified and to be up in the air
until January or February once the other ones gone through the systems. So, that's why we're seeing more of a delay for Ryanair.
QUEST: OK, the industry overall, we've seen Joon go, which was the Air France -- I was going to say long haul, low cost, but I'm never quite sure
what it was. Eurowings --
STEWART: Just no more --
QUEST: No, it's no more -- well, it wasn't very big, it was three planes and a dog. And then -- but Eurowings is no longer going low cost, long
haul. We have got this problem with the low cost with Ryanair, we've got IAG still with level playing around with that --
STEWART: Oh, but analysts have down-rated it, frankly, you know, HSBC came and said that this sector in Europe is on -- its biggest decline since the
financial crisis and it therefore downgraded a whole load -- this was after a Lufthansa profit --
QUEST: Right, but you have got oil prices deadly setting --
STEWART: They are flattening. They are --
QUEST: Yes --
STEWART: They are flattening out, there's some hope here, but there are still too many seats for too few passengers.
QUEST: Which is a good way for me to say thank you very much for joining us. Thank you. Coming up after the break, the Burberry balance. The
great British brand now comes with a distinctly Italian twist, investors are loving it, the share price is roaring ahead. But what happens to the
traditional trench coat? That's what I want to know.
(COMMERCIAL BREAK)
QUEST: Burberry's new Creative Director Riccardo Tisci is transforming the fashion brand. Now, his collections are a far cry from a classic look that
we've grown to love, know, and ironically, that is a good thing. Burberry says sales for the latest quarter up 4 percent from a year ago, comfortably
ahead of expectations.
And here's how the shares have reacted, up some 14 percent which for a company and a brand that's been struggling to find direction is really
quite an achievement. North Korea's leaders won't let Strip International sanctions stand between them and luxury goods like Burberry.
[15:45:00] They -- U.S. think-tank thinks it's analyzed an array of data to show how 90 countries have helped to supply high-end items to Pyongyang.
CNN's Paula Hancocks is in Hong Kong.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: It's no secret that North Korean leaders and those closest to them like luxury goods. Kim Jong-un;
the current leader and his father, the late Kim Jong-il certainly liked the finer things in life.
Now, these things of course are subject to the strongest international sanctions in the country's history. In a report published on Tuesday from
Washington-based center for advanced defense studies, they show how they believe that Pyongyang is bypassing these sanctions. Take cars, for
example.
The report says that Pyongyang imported 803 luxury vehicles from 2015 to 2017. The majority it says originating from Russian state-owned companies.
The group gives the example of two armored Mercedes Maybach S600 vehicles, similar to those used to drive world leaders through the streets of
Pyongyang worth around half a million dollars each.
Scouring customs records, shipping data, open source documents. The group tracked the vehicles from the Dutch port of Rotterdam through China, Japan,
South Korea, Russia, they then believed they were flown to their final destination of North Korea.
CNN has not independently verified the reporting of C4ADS. Now, we're talking about luxury goods, and you may think there are far more pressing
concerns when it comes to North Korea. But the group believes that by understanding the root that luxury goods take to reach North Korea, then it
could help law enforcement trying to stop Pyongyang obtaining more dangerous items with military applications. Paula Hancocks, CNN, Hong
Kong.
(END VIDEOTAPE)
QUEST: So, let's update the markets and how they closed in Europe. Crossed higher across the board on Tuesday, good gains with the best being
seen just over there in Paris. All the major markets are at the highest point of the week.
Burberry of course, 14 percent helped the FTSE quite nicely, whilst in France, it was the LVMH carrying -- and amazed that boosted the CAC 40, so
luxury was the key story of the day in Europe. The last few moments of trade on Wall Street, it's far -- are we going to get a record? Are we
going to get a record?
Well, we were definitely at a record throughout the course of the morning, and then the president tweeted about China trade was not going well and
that took the market down. And we have hovered around this area ever since. You've got numerous undercurrents going on, not least of which it
is sort of Summer and people don't want to take positions until there's a little bit more certainty, and they are waiting for the Fed to move.
So, you're going to bounce around this sort of level until there is some sort of direction within the market. Of course, U.S. banks posting better-
than-expected earnings, Johnson and Johnson is down. If you look at the Dow over all, you've got Intel at the bottom, you've got the Dow itself,
the company at the top.
That's the way the market -- that's the way the 30 looks predominantly lower, but not by much. As we continue, after the break, the "Lion King"
makes a comeback, real lions, far from making a comeback. Look, and steep decline, the billionaire philanthropist Thomas Kaplan will be with me next.
He has a plan to help and it's an interesting one after the break.
[15:50:00] (COMMERCIAL BREAK)
QUEST: When it comes to Disney moments, it really doesn't get any better than this. Twenty five years since Simba made his mark, and as the new
"Lion King" movie opens on Friday, serious and stark reminder. But in the real world, big cats remain seriously under threat.
The number of African lions is halved since 1994. Only 20,000 remaining in the wild. Thomas Kaplan is with me; the chairman of Panthera, the wild cat
conservation organization. Good to see you sir, thank you for joining us tonight from Paris. The link-up between yourselves and the ability -- and
Disney and the way in which you can draw attention to this. How significant is this?
THOMAS KAPLAN, CHAIRMAN, PANTHERA: Well, this is a monumental moment for lions. And we've had one other viral moment in lion conservation, and that
was unfortunately accompanied by the death of the very famous Cecil in Zimbabwe.
This occasion, hopefully, will be a more up-beat way to be able to point out what is -- as you rightly mentioned a very sad state of affairs for
lions. It's a fact that over the last century, the lion population has plunged from 200,000 to approximately 20,000 today. Lion range has
retreated to only 5 percent of their historic range.
QUEST: Right --
KAPLAN: I've come to call the lion the big cat that's disappearing in plain sight, and unfortunately, that's really the case.
QUEST: How do you think you can bring your business into philanthropic experience to bear on this? Because if there's one thing we learned from
Bill Gates, it's bringing a corporate mentality and an entrepreneurial spirit into philanthropy can be successful, very successful. How do you
propose to do it here?
KAPLAN: Well, we've been working on big cat conservation for the past 12 years. And the reality is that when we began Panthera, you could have
considered it to be a venture capital start-up. Now, we are in fact the leading cat conservation organization in the world with a footprint across
all 40 species of wildcats.
The combination --
QUEST: Right --
KAPLAN: Is very much the application of business principles, giving off resources and surround yourself with the very best in breed of management
and let them run with it. On occasion --
QUEST: But --
KAPLAN: They'll fail. But it's much more important to know that we're trying than that we're failing, and our successes have allowed us to be
able to score some very big wins across the world.
QUEST: How do you remain motivated when you have the sort of numbers that you've talked about tonight. I appreciate the success is in the work, and
that you're managing, but a sheer look at the numbers suggests a losing trajectory. So how do you remain motivated?
KAPLAN: You remain motivated by winning. Wildlife needs wins, and that's the kind of thing that we try to focus on. We know that the big cats are
under pressure. We know that a cat population that can't thrive is a sign that the entire eco-system is in jeopardy. But when you look at some of
the things which we've been able to accomplish, just in lions --
[15:55:00] QUEST: Right --
KAPLAN: You have to say that despite the bad news, there's hope.
QUEST: All right --
KAPLAN: Let me give you an example. We have a project in Zambia called the Clause Project. It's an anti-poaching project. It has brought 70 --
QUEST: Right --
KAPLAN: Wildlife security people into the field, and we have managed to arrest dozens of poachers. We've eradicated poaching bases. We've
eliminated snares. It used to be that on average, three lions a year were taken by snares. Now, last year, only one was taken.
These are the kinds of wins that we're looking for. I'll give you an even better example in lions --
QUEST: Right --
KAPLAN: In Namibia, where we've been working in the Zambezi. The lion populations were decimated --
QUEST: Right --
KAPLAN: Almost by half between 2012 and 2013. As a consequence of the work which we've been doing with local communities, and putting in what are
called Bomas or Corrals in order to prevent --
QUEST: All right, sir --
KAPLAN: Lion, livestock, human conflict. We've seen lion populations double. We've seen livestock depredation fall by 80 percent, and 95
percent fewer lion casualties. So, we can have wins if you have the right people, if you have the right partners on the ground, you can score the
kind of wins that nature needs.
QUEST: Thomas, we'll have to leave it there, thank you for joining us, I appreciate your time tonight from Paris. We'll take a profitable moment in
just a moment.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. To hear Thomas Kaplan describing how an entrepreneur, how a businessman brings business principles to
philanthropy is fascinating, particularly when you talk about big cats and you know that the numbers are not good, but get the wins that you need to
keep the motivation to move forward and you use those principles of business to ensure the results eventually come through.
And that is QUEST MEANS BUSINESS for tonight on a very busy day. Don't think we've seen any records tonight on the Dow, I am Richard Quest in
London. Whatever you're up to in the hours ahead, I hope it is profitable.
(BELL RINGING)
The bell is ringing, the Dow is down, the day is done.
END
END
