Return to Transcripts main page
Quest Means Business
Search Underway for Missing Titanic Submersible; Hunter Biden to Plead Guilty to Federal Tax Charges; Paris 2024 Headquarters Raided by Police; Desperate Search for Tour Sub as Oxygen Dwindles; White House Laying Groundwork for AI Policy Actions; China Cuts Key Lending Rate; Retailers Battle for Market Dominance. Aired 3-4p ET
Aired June 20, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:29]
RAHEL SOLOMON, CNN BUSINESS HOST: Stocks take a step back from the recent rally. Taking a look at the Dow, you can see the Dow is off a total of 190
points or about half a percent. Those are the markets and these are the main events.
More vessels race to join the search for the missing sub. US Coast Guard estimates the vessel has about 40 hours of breathable air left.
China lowers interest rates to try to support its struggling economy.
And French Police raid the offices of the Olympic organizers. Investigation now underway into potential corruption.
Live from New York, it is Tuesday, June 20th. I'm Rahel Solomon, in for Richard Quest, and this is QUEST MEANS BUSINESS.
Tonight, just about 40 hours of oxygen left. That is the grim assessment of the situation on board a submersible missing in the depths of the North
Atlantic. The small craft lost contact Sunday morning while diving to the wreckage of the Titanic. It was carrying the pilot and four other people.
US and Canadian rescue crews scanning the area now with planes and ships, and now they have the capability to search underwater. And here is where
they're looking, it is an area more than 900 miles east of Boston, Massachusetts, and about 3,800 meters deep.
The US Coast Guard gave this update a couple of hours ago.
(BEGIN VIDEO CLIP)
CAPT. JAMIE FREDERICK, US COAST GUARD: We know there's about there's about 40 hours of breathable air left based on that initial report. Again, that
was just the initial report based on 96 hours from when the vessel --
We will do everything in our power to effect a rescue. Again, it's going to depend on -- if the ROV finds something, it is going to depend on what they
find, what needs to be -- what steps need to be taken next, and really that is for the experts within the unified command to take a look at it and then
decide what the best course of action is.
(END VIDEO CLIP)
SOLOMON: The five-person crew onboard the Titan are French maritime expert, Paul Henry Nargeolet; British businessman and explorer, Hamish
Harding, a British father and son from a prominent Pakistani family and Stockton Rush, the founder and CEO of OceanGate, the company that actually
owns the submersible.
Now a friend of Hamish Harding spoke to CNN earlier about what she fears may have happened to him and the others.
Jannicke Mikkelsen is a fellow explorer, she had this to say.
(BEGIN VIDEO CLIP)
JANNICKE MIKKELSEN, FRIEND OF HAMISH HARDING: My biggest concern is that Hamish and the rest of the crew aboard the Titan are trapped in a metal can
at the bottom of the ocean, where the atmospheric pressure is 400 times that of here at ground level. There is no way we could possibly have a
manned rescue with that sort of depth.
My fear is that they cannot self-rescue and appear to the surface by themselves --
POPPY HARLOW, CNN ANCHOR: Because of the conditions that deep. We just asked the rear admiral of the Coast Guard who is leading this search,
what's the plan if you find it? And he essentially said, we're not -- you know, we're not there yet.
Is there any way you know of that something this deep, could be brought to the surface if you can't do a manned rescue?
MIKKELSEN: So this submersible, as I understood it from what Hamish told me is that it is a self-rescue vessel. It is built with seven different
systems of unloading its ballast, so it can drop weight and therefore then ascend to the surface by itself.
The only way couldn't do that is if it was trapped, for instance, in the wreck of Titanic, or maybe something as simple as a fishing net. And I hope
it's something simple so an ROV could come and rescue them, and therefore they'd be able to self-rescue and ascend on their own.
(END VIDEO CLIP)
SOLOMON: France, meantime, also sending a ship with an underwater robot to help with the search.
So here is what the crews are up against. They are searching waters 3,800 meters deep, and at the bottom of the ocean lies the wreck of the Titanic,
and that is where the sub was heading.
Joining me now is Dr. Simon Boxall, he is an oceanographer at the University of Southampton. He joins me from Southampton, England.
Doctor, welcome to the program. Great to have you.
I'm not sure if you just heard that interview there, but the friend saying that her biggest concern is that her friend is trapped in a metal can at
the bottom of the ocean. Do you share that concern? What's your biggest concern right now?
[15:05:07]
DR. SIMON BOXALL, OCEANOGRAPHER, UNIVERSITY OF SOUTHAMPTON: I'd say, certainly. I mean, the first thing we need to do is find out where the can,
the submersible is.
And the Navy are quite right -- the Coast Guard is saying, look, let's find it first, and then we'll worry about what's next and you know, time is
ticking very quickly. They've got to find it, locate it first.
They're still looking at quite a wide area. We can't see through the ocean. We can't communicate using radio sequencing things or radar through the
ocean, so it is a sort of a painstaking process and it takes a while to get the equipment needed to do that on site.
You know, this is in the middle of nowhere. Equipment isn't sitting on shelves. It has to be shipped out to location. My understanding is that a
cable, they are working out there now but just join the search that has some of the equipment they need, but it is still limited on depth.
You know, if it is sitting right at the bottom, their cameras are right at the limit of their capability. So you know, we still have a vast job here
to try and track it down.
SOLOMON: Is it clear whether any distress signal went out?
BOXALL: I heard a rumor, and I've not seen any sort of confirmation that would distract any sort of issue with an emergency signal. All I know is
that the thing sends out an acoustic pulse. I think it is wrong to say it communicates with the ship. It is sending out a very simple pulse to sort
of confirm it is there.
They lost track a bit less than two hours into the journey, not uncommon. You know, equipment failure or problems with acoustics in the ocean and it
was a while before they realized there was a problem and that they hadn't come back to the surface.
I don't think we can say they are at the surface. I think, you know, if they have managed to instigate the sort of auto-float systems, then they
should have been at the surface by now.
You know, there are two options really. One is that they are trapped. The other is which is unthinkable that the sub has got crushed.
SOLOMON: Both are just really awful to think about.
Simon, help us understand how this sub is constructed and let us assume for a moment that they are still in this sub and okay. What are they looking
at? What are they seeing? How big is that space?
BOXALL: They are going to -- if you can imagine a small van, a very small van, and you've got five people crammed into that, absolutely fine if
you're going down for a journey, an exciting journey for maybe four or five, even eight hours, that becomes less comfortable if you're down there
for days. You know, we are heading towards days now.
There are no other resources down there. They have air. There is emergency oxygen down there to help them breathe, but as has been said, you know,
that's going to run out sometime on Thursday with five of them on board.
If they're panicking they're going to use the oxygen even quicker. Let's hope they're not, but I mean, let's face it, if you're stuck down there,
you would be.
You know, there is nothing there. There are just -- they are reliant now on being rescued, and if they've lost power, you've got no light down there.
There's no natural light that depth.
So you know, they are in dire straits at the moment.
SOLOMON: Absolutely. Is it clear how dangerous these type of missions are? I mean, this is not the type of mission that most people would be able to
afford, $250,000.00 per person.
How dangerous are trips like this? Expeditions like this?
BOXALL: Very, the short answer. As an oceanographer, I've worked in the oceans for over 40 years. You wouldn't let me down on one of those in that
sort of depth, and I think I'd rather go up in a spacecraft than down to those depths.
The problem is, if you've got an error down there, then, you know, it's virtually impossible to recover in the timescales we're talking about a
vessel from that sort of depth. I hope that they will find it eventually and recover it. But of course, time is not on their side at the moment.
SOLOMON: Time is of the essence with as we said about 39 to 40 hours of breathable oxygen left.
Simon, last question. Is it clear once this is ultimately located, and of course, we hope that it happens sooner rather than later. What would
retrieval look like?
BOXALL: If they've got a robot system capable of going to those depths, and they're not that many in the world today, and the question of getting
one to them in the timescale, most robotic systems we use for underwater use are sort of for relatively shallow water.
If they can get one there, then the answer will be to try and tether a cable to the underwater unit, but actually even then, you know, you're
looking at a huge cable, you're looking at sort of five kilometers of cable to get to that sort of depth. It's not going to be just a straight cable,
and then hopefully to be able to bring it back to the surface. But you know, we're looking at really testing the engineering limits of what we can
do today in the ocean floor.
SOLOMON: Dr. Simon Boxall, thank you for being on the program today. He is an oceanographer at the University of Southampton. Thank you for the time.
BOXALL: Thank you.
SOLOMON: And Paula Newton now joins me from Ottawa. Paula, you've been watching the story now for a few days. The latest update was 39 to 40
hours. Search becoming more dire. Give us a sense of what the search is entailing now.
[15:10:10]
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Well, Rahel, you just had an incredibly sobering interview with your expert there, and if you listen
in on what he says, then that makes sense in terms of what is happening now and what's going on, not only do they have this vessel, right, the deep
energy vessel, which thankfully is a cable laying vessel. It has this remote control vehicle that is now going to hit the depths of where they
believe the submersible might be at this hour.
The problem is, as your guest was just saying is, how do you then lift it to the surface if you do find it. So, that is what Canadian and American
officials are working on right now. They are already pre-positioning, Rahel, health equipment that they need. Again, the expertise that they
need, trying to get it in place, either on the waters of the North Atlantic or first re-position it in St. Johns Newfoundland, to make sure that if
they spot it, that they are ready to bring it to the surface.
What was a bit disheartening about the Coast Guard press conference, Rahel, was that, you know, I had been saying having been in these waters before
that it takes a long time, and a lot of resource to just search the surface of the water.
Having said that, they explained they have already searched 76,000 square miles. It is unlikely given the capacity of this submersible that they
would find it just floating on the surface right now, whether it had communication or not, and I think that's what's most disheartening. They
knew all along that it would likely have to be retrieved from the deep sea and that is what is proving so difficult this hour.
And as you said, I mean, two hours ago, they said it was 40 hours, right? So we're at 38. I will add, though at least two of the people on board have
expertise in these deep sea missions, which means they know how to preserve oxygen, right? They know what to do in order to tell everyone on that
submersible to use their oxygen sparingly. So that's why certainly, Canadian officials are not giving up hope at this hour.
SOLOMON: You know, one thing, Paula, our guest just told us is that he shares the concern that they may be trapped down there. In terms of what
officials are saying in Canada, are they managing expectations?
NEWTON: They're not, and the reason is that they wouldn't have launched this kind of search and rescue effort unless they thought it was possible.
They've looked at their options. They're, again, pre-positioning equipment. And for right now, they are thinking they have perhaps 40 hours, maybe a
little bit more.
I think the issue here is they need to find it first, and after that, they will do everything they can and that includes personally some engineering
feats that they've told me about that they will see what they can do.
Certainly, we all know about submarine accidents in the military and those are very grave situations. Perhaps as your expert just said, this is even
riskier than that.
You are talking about global resources, both from governments and commercially being brought to bear to try and save these five people, but
certainly the people I'm speaking with are going to give it a shot.
SOLOMON: Paula Newton live for us in Ottawa. Thank you, Paula.
US President Joe Biden's son, Hunter will plead guilty to federal tax charges and has struck a deal with federal prosecutors to resolve a felony
gun charge.
All of the details coming up, next.
(COMMERCIAL BREAK)
[15:15:58]
SOLOMON: Welcome back.
The son of US President Joe Biden will plead guilty to two tax crimes. That's according to court filings from the Department of Justice. The two
counts are both misdemeanors.
Hunter Biden has also struck a deal to resolve a felony gun charge. He has been under federal investigation since at least 2018.
Paula Reid joins me now from Washington, DC.
Paula, as I just said, this is an investigation that has stretched years. Remind us what exactly Hunter Biden is now admitting to.
PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT: That's right.
This investigation has been going on for about five years, and during that time, prosecutors have looked at a variety of potential crimes including
foreign lobbying violations, money laundering, and also these potential tax crimes and this one gun-related crime.
Now last summer, CNN reported that the potential charges had been narrowed down to tax crimes and the one outstanding gun charge.
Then in April, Biden's lawyers demanded a meeting with the Justice Department. Seven months had gone by since that CNN story saying the case
had narrowed, but nothing had happened, and during that meeting with the Trump-appointed US attorney, David Weiss and other career officials,
Biden's team, they made their pitch about why their client shouldn't be charged.
But then in the subsequent weeks, there was a lot of negotiating back and forth. We're told that it really ramped up in recent weeks trying to
resolve this case, and that's how they landed on his plea deal.
As part of his plea deal, Biden will plead guilty to two misdemeanor tax offenses. Prosecutors allege in court filings today that Biden failed to
pay his taxes that he owed for 2017 and 2018. He owed about $100,000.00 in each of those years.
Now, we will note, he has subsequently paid those back, plus fees and penalties, but he'll plead guilty to that, and we're told by our sources,
the Justice Department will recommend probation for the sentence, but ultimately, it'll be up to the judge.
Now, there is also one other felony gun-related charge, but he is not pleading guilty to that. If he can follow through with some court
requirements that we expect will have to do with not owning firearms and also staying clean from drugs, that will likely be expunged. But again,
this is all up to a judge, and as of right now, they don't have a date on the calendar for Hunter Biden's first hearing, for his arraignment.
But that's what we will likely learn more about what exactly the judge thinks of this deal.
SOLOMON: Paula, what's reaction been like so far today? How are top Republicans reacting to this?
REID: Well, Hunter Biden has been a real focus, as you know, for Republicans. They mostly looked into his foreign business dealings, making
accusations about unscrupulous deals, but the Justice Department isn't charging anything like that today, but that hasn't stopped Republicans from
criticizing this deal, making questionable comparisons to the charges filed against former President Trump.
What I have to say is that the charges filed against former President Trump also come out of an investigation that's being handled by special counsel,
Hunter's is being handled by a Trump appointed US attorney, so these are independent prosecutors looking at this, but the Trump investigation was
much broader in scope, in scale, and the nature of the crimes that are being investigated, I mean, pretty much everyone who work for former
President Trump testified in that probe.
The Hunter Biden case, some of these potential questions are much more serious, but it appears the Justice Department didn't believe that they
could bring a broader case successfully, which is why this resulted in a plea deal.
So Republicans are trying to argue including House Speaker Kevin McCarthy that there is some sort of two-tiered justice system, but it does appear if
former President Trump had listened to his lawyers and been honest with them earlier in the process of returning those documents to the government,
he too may have been able to get a plea deal or no charges at all.
SOLOMON: That is certainly something that we have heard, some who used to be in his circle say in the last week or so.
Paula Reid, great to see you. Thank you. Live for us in Washington.
Well, turning to France, police in France raided the offices of the Paris 2024 Olympic organizing committee. Searches were also carried out at the
headquarters of SOLIDEO, a public entity responsible for construction linked to the games.
French authorities say it is part of two corruption investigations involving contracts and public funds. The organizing committee says that it
is cooperating fully.
Melissa Bell is live for us in Paris.
[15:20:08]
Melissa, what more do we know about what prompted these raids?
MELISSA BELL, CNN CORRESPONDENT: Well, these two investigations carried out by two separate units of French police, Rahel. One, the French Anti-
Corruption Unit; another, another part of the financial police system here in France. One launched in 2017, the other launched in 2020, both relating
to things like illegal conflicts of interest, things like embezzlement of funds for the one launched in 2017.
But also, all to do with contracts really, that were giving out favoritism is another of the allegations being looked at as part of both those probes.
So what you're looking at here are the contracts that were given out, both by the organizing committee of the 2024 Paris bid, but also by the public
company that is charged with the building projects, the infrastructure that even now is going up on the outskirts of Paris ahead of the games that are
due to start on the 26th of July next year.
So what we understand is that it was early this morning that raids were carried out in several locations, several of the buildings that belong to
the organizing committee and to this public company, they came as a surprise to them.
They were launched without announcement, of course, as the financial police tried to get their hands on the documents they were looking for, and they
went on for most of the day. In fact, they only wrapped up just a little while ago this evening.
We don't know more about the specifics of the allegations, what contracts, what companies they are involved. We don't know either what documents have
been seized. That will take some time, but certainly what this does indicate is that this early period, when we were going to start to look at
the publicity ahead of these 2024 games, a lot of the buildup, the excitement, the enthusiasm is likely to be overshadowed over the coming
weeks as a result of these investigations, and as we get more details of exactly whom is accused of what.
SOLOMON: There is certainly more to come , but Melissa, just in terms of context here. I mean, the Olympic Games have certainly faced concerns and
criticism about misconduct before. In fact, Paris as I believe, it was the first Olympics to have an anti-corruption policy.
So depending on how this all turns out, depending on what is found here, I mean, this could really be a blackeye for Paris.
BELL: That's right. It is all the harsher I think in terms of news for the organizers, Rahel, that the man at the helm of the organizing committee,
Tony Estanguet himself, three times French Olympic champion had said at the very outset, these games will be exemplary because of course, as you
suggest, for so many years, over several decades, there have been so many allegations, and indeed investigations broad in terms of the bids of
various countries, the organization of the games and others.
There is a history here. What you're looking at is essentially whenever a country goes to bid, or certainly when a country gets these games,
extremely large infrastructure projects going up very quickly. A lot of that public money in the hands of a select few people who may be tempted at
times, to hand out the contracts to friends, or certainly go about giving out the in ways that are not as transparent as they should be.
Certainly, the temptation is there. Hence, that announcement by Tony Estanguet that these games would be different. And yet here we are, Rahel,
with just over a year to go before the start of them and these very serious allegations being brought not just against one of the organizations
involved, but the two main organizations at the helm of getting these games up and running.
So no doubt, we'll have to wait a few weeks to find out more about just how serious they are, how high up they go, but certainly a very auspicious
start to the organization of games that were meant to be exemplary -- Rahel.
SOLOMON: I certainly will wait to see what the investigators find.
Melissa Bell, live for us in Paris. Thank you.
Coming up after the break, we will have the latest on the tourist submersible missing in the North Atlantic.
We'll be right back.
(COMMERCIAL BREAK)
[15:27:01]
SOLOMON: Welcome back. I'm Rahel Solomon.
There is more QUEST MEANS BUSINESS in a moment when we'll take a closer look at these submersible lost at the bottom of the ocean as time runs out
to find the missing crew.
And President Biden is meeting with experts in artificial intelligence as his administration tries to get ahead of the technology.
Before that, the other headlines we're following this hour.
The Ukrainian military reported 35 clashes with Russian troops over the last day in eastern Ukraine. It says that Russia is focusing its efforts
around the Donetsk region, but describes the Russian attacks as "unsuccessful."
Palestinian gunmen have killed at least four Israelis in the West Bank and wounded several others. This video here shows some of the incident which
took place near a restaurant and a gas station.
Israel says that the attackers are dead. The militant group, Hamas, has claimed responsibility for the shooting.
And influencer, Andrew Tate has been indicted in Romania on charges of rape and human trafficking. The former kickboxer was arrested in Bucharest six
months ago along with his brother, Tristan. Andrew Tate gained notoriety by promoting male dominance and female submission. Attorneys for the two
brothers say they will fight the charges.
Returning now to our top story. Time is running out to find a missing submersible near the wreck of the Titanic. The US and Canada searching by
air and by sea and France has also sent a search ship as well.
Retired US admiral, Mike Mullen spoke to Christiane Amanpour earlier, he says in this effort, every second counts.
(BEGIN VIDEO CLIP)
ADM. MIKE MULLEN (RET), US NAVY: Time is incredibly relevant and obviously, in a way, the enemy. So the longer it takes, the less likely
that a positive outcome will occur. I'm sure, I mean, you've seen the US Coast Guard in charge of this, the US Navy is flying airplanes, I'm sure
there was -- there are many, many people moving as many assets in place as possible to try to find it as soon as possible, but it's very deep and it's
a very tough submersible to make contact with certainly at this point.
(END VIDEO CLIP)
SOLOMON: And as we covered, onboard the missing submersible are several high-profile passengers. There are multiple billionaires on board, as well
as the founder and CEO of OceanGate. That's the company that actually runs the tour.
No surprise, of course, the group is wealthy. A ticket to go see the Titanic cost about a quarter million dollars.
CBS News correspondent, David Pogue interviewed the CEO and founder of OceanGate, Stockton rush, who is on board the missing submersible. He
interviewed him in November and here's with his reporting on how the vessel was built.
(BEGIN VIDEO CLIP)
DAVID POGUE, CBS NEWS CORRESPONDENT: And yet, I couldn't help noticing how many pieces of this sub seemed improvised.
STOCKTON RUSH, CEO AND FOUNDER, OCEANGATE EXPEDITIONS: We can use these off the shelf components.
I got these from Camper World. We run the whole thing with this game controller.
(END VIDEO CLIP)
SOLOMON: CNN'S Tom Foreman joins me now.
Tom, this is a type of trip most people would not be able to afford, as we said $250,000.00 per person. So tell us a bit from your reporting, what we
know about what the inside of the Titan looks like? How big is it? What are they seeing -- that sort of thing?
[15:30:22]
TOM FOREMAN, CNN CORRESPONDENT: Fairly cramped quarters; we talked to a man who went two years ago. He said it's not really that uncomfortable. But
it is close quarters. You can't really stretch out a whole lot.
He said it is hot when you are near the surface and the deeper you get, it gets cold because it is virtually freezing outside. So people can carry
jackets down with them.
Inside the controls are very limited. Now a lot has been made about the controller that seemed to be from a PlayStation or an Xbox or whatever it
was. But he made the point of saying that that is a controller, yes. But if that were to fail, there is a way to reach out and touch the other controls
that are wired and hardwired and control it that way.
That said, the communications service are very minimal once they are down. It is a type of texting every 15 minutes, which they also use for guidance
because GPS and all the things you would rely on don't work down there.
And most importantly, most importantly, there is this question of how you get back to the surface. He talked about how it is all based on these
weights on the outside, which they shed by rocking the vehicle back and forth to knock them off, where it will automatically float up.
And, if they can't knock them off that way, they have these pneumatic jacks that they can hit, that should knock the waves off and allow it to come
back to the surface. But none of that completely explains why it's not back to the surface.
It doesn't explain why it hasn't been able to communicate or seemingly not back to the surface and what may have happened down there after being in
the water for an hour and 45 minutes and then suddenly going dark.
SOLOMON: Yes, so many questions.
Tom, is it clear whether any sort of distress signal went out?
I spoke with an oceanographer and he wasn't sure either.
FOREMAN: I have heard no confirmation that there is any kind of distress signal that came out of there. I will say, if you had some sort of
catastrophic collapse of this carbon fiber and titanium hull, which the company says is fully tested and has survived several of these trips
already.
If you had a catastrophic collapse at that level, I talked to a man who involved in ocean rescue. He said that would be virtually instantaneous.
There is so much pressure down there, that, if something's wrong, it is likely the whole vessel would fail very, very quickly. There would be no
time to send out any kind of warning.
One of the features of this vehicle, though, that is really quite interesting is that, when you are inside, you are bolted in from the
outside by all accounts. There is no way to release from the inside.
So if you did float to the surface and you were not spotted or you could not get a beacon to be recognized, where people would come to you, the
truth is that you would still be on the surface of the ocean but trapped by only the air you had inside.
You would have no other way to rescue yourself until you are found. That's why, when you were talking a minute ago about the idea of every minute
counts, the problem right now is that this is so remote and they are so deep, even when they are found, there would be a tremendous rush to try to
get the try to kind of assets you need to bring it up from that depth.
I don't think you are doing it with cable and neither did this ocean rescue guy I talked about.
The cable for, this 2.5 miles of cable?
That could be 3,000- 5,000 pounds of cable alone to reach the craft. And then, you would have to have a robot to somehow attach it to the craft, to
start pulling it up. That is really, really hard. All bets would be basically on trying to get some kind of buoyancy system to it.
And again, do you have the system?
Do you have the robotics to get it down there?
Can you get them in place and can you raise it with that clock tick-tick- ticking?
SOLOMON: Yes, it is a great point, Tom, because, obviously, there are two phases to. This obviously, you have to locate the submersible first.
But then it becomes a really critical question of then, how do you retrieve the five people?
Tom, before I let you go, as I said, these are not missions that many people can take.
But do we know how dangerous missions like this are?
Clearly, something went wrong here.
But even on a good day, how dangerous are missions like this?
FOREMAN: There is a reason there aren't a whole lot of these with human probes. There are robotic probes that are sent to this depth and often they
are sent because, look. You lose a robotic probe, that's a big loss but that's just all there is to. It
There really aren't a whole lot of these going on, precisely because it is difficult. It is dark and it is cold and many of the systems you would
normally rely on are not there.
And those who do it, those who believe in this say there is so much to be learned on the ocean floors, it is so important to scientific understanding
that we go down there and we find out, it is worth it for the risk.
[15:35:00]
FOREMAN: Others will look at it and say, well, this is such a hazardous environment, you need an incredibly high level of fail-safe measures in
place.
And they will be looking at whatever has happened here to say, OK, were the right measures in place?
And did something still go wrong or could there have been better measures to begin with?
SOLOMON: Tom Foreman, thank you.
FOREMAN: Good talking.
SOLOMON: Yes, likewise.
Coming up, Joe Biden is in California, where he is set to meet with artificial intelligence experts in San Francisco, as his team is urgently
preparing policy actions. We will explain.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
SOLOMON: In the next hour, President Biden is set to meet in San Francisco with experts in artificial intelligence. The subject has become a priority
for his administration, since the president tried out ChatGPT in April.
Earlier this month, the White House had a meeting of leading AI CEOs. Officials they say they're urgently working toward policy actions.
Priscilla Alvarez is in San Francisco.
So Priscilla, we know this has become a bit of a top priority for Biden and his administration.
What are we expecting in terms of this event?
PRISCILLA ALVAREZ, CNN WHITE HOUSE CORRESPONDENT: A top priority and an urgent one. President Biden, in a few minutes, will be meeting with AI
experts to discuss this intelligence and trying to get their arms around it.
It is part of a series of engagements that the White House has had on this issue, including last month, when the White House unveiled a comprehensive
AI plan and Vice President Harris met with AI CEOs.
And some of the actions that the administration is likely to highlight and ones that President Biden will talk about, include $360 million in
investments to establish institutes on this, partnering with AI developers, as well as releasing an AI R&D plan. So clearly, a lot of resources going
behind this, as this remains a top issue of discussion.
Now the White House chief of staff is among those who is leading these actions and, really working on a path forward here. We know, from
officials, that they have been meeting or White House principals have been meeting 2-3 times a week. So really, all of that really tells you just how
important of an issue this is for the administration.
Now President Biden, we should note, is meeting specifically with non industry perspectives. So essentially experts and academics. And what this
will do is allow conversation on what the risks are and opportunities are with artificial intelligence.
[15:40:00]
ALVAREZ: We have already been seeing this, as a concern with other departments, including the Department of Homeland Security, which is
looking at this through also a national security perspective as well as in the political space.
With deepfakes and misinformation using some of this technology, so all of this coming full circle as President Biden, in the next hour, will meet
with these AI experts to talk about all of this and what the path forward really looks. Like
SOLOMON: And Priscilla, in terms of tools at his disposal I, mean there is legislation. And of course, we are in a divided government these days. And
there is also executive orders.
Any sense of what tools he might be tapping, in terms of getting some of these policies across?
ALVAREZ: We do expect that there will be policy actions and more of them unveiled over the course of the summer. Of course, this always tends to
come back to regulation. And that would be in the hands of Congress and what they can do to regulate this emerging technology and intelligence.
But I know that and I have talked with, for example, the Homeland Security secretary, who has said that they are establishing a task force. So what
the administration is really doing now is identifying the different issues, identifying the risks as well as the opportunities when it comes to. This
And then taking actions based upon that. So we will expect more announcements in the weeks and months to come. But it will also-- we will
also see that focus on Congress and what they can do to regulate. This
SOLOMON: Priscilla Alvarez, live for us in San Francisco, thank you, Priscilla.
Antony Blinken says that he made very clear that the U.S. would have concerns about Chinese military activity in Cuba. Speaking alongside his
British counterpart, the U.S. secretary of state gave details about his trip to China and his meeting with president Xi.
Now the trip did not lead to any significant breakthroughs. But both sides said they made progress. Now China, would benefit from increasing economic
cooperation. Earlier today, it cut its key interest rates for the first time in nearly a year. It is trying to boost its economy after its
reopening boom faded and faded quickly. It comes after Goldman Sachs cut its forecast for GDP growth.
Its analysts now say that the country will grow by 5.4 percent. Yukon Huang is a senior fellow at the Carnegie Asia Program. He is also the former
country director for the (INAUDIBLE) China at the World Bank.
Yukon, welcome to the program, great to have you. So let's just go over a few things. China's economy right now, it slowed. Property values are down.
Youth unemployment, very high.
What is going on?
YUKON HUANG, SENIOR FELLOW, CARNEGIE ASIA PROGRAM: Well, if you look at the month to month indicators, the economy is stagnating and in some cases
declining. It cannot rely on the old growth forces of the past -- property market, infrastructure, exports.
It hasn't been able to develop resources to growth. And consumption has not picked up as rapidly as one would expect. So many analysts are saying that
the Chinese economy is likely to actually decline both next year compared to this year.
This year, numbers are likely to be high because last year's base was so low, so exaggerated by the performance.
SOLOMON: In terms of youth unemployment, walk me through what's happening there. And also, this issue of youth unemployment.
Does this then create a bit of a confidence issue for Chinese leadership?
HUANG: This is a big issue because, unrest among the graduates is a major, possibly politically destabilizing factor. We have a number of combination
of rapid increases to college graduates and a slowed down in what I call the service sectors, which tends to do much of the hiring.
If you take, for example, the internet digital areas, where the government has actually been quite restrictive for the last five or six months, so job
growth has not been as rapid as one would hope for.
SOLOMON: Help me understand, if you are a multinational with a presence in China, how nervous are you feeling these days about policies around data,
intellectual property, national security?
HUANG: Well, intellectual property restrictions, honoring of the foreign interests in terms of the capital of knowledge has always been a concern. I
don't think the problem has gotten any worse. But sensitivities have actually increased.
So you have these U.S.-China tensions in terms of being told to leave Chinese -- and many of them are. China, its own party becoming what I call
more self sufficient, its increases, for example in high tech exports, has actually increased steadily over the last four or five years.
But foreign companies' share of those experts has been declining. And so in some ways, China's reacted to the restrictions by becoming more self
sufficient. So China's shares, for example, of global exports have soared. At the same time, the companies, foreign companies are leaving China.
So there's a question as to whether or not you would have what I would call decoupling and how negative an impact it is on the world. And how negative
is the impact upon China.
SOLOMON: I take your point that the policies aren't necessarily new. Maybe, the sensitivities seems to be heightened.
But is enforcement, does enforcement seem to be a bit more heightened as well these days?
[15:45:00]
HUANG: Well, in terms of the general policy toward protection of intellectual property, China's courts over the last three or four or five
years is in major cities. So now, you find what I call better enforcement.
But nevertheless, the ad hoc enforcement of intellectual property rights, the clampdown on foreign companies, particularly consulting forums, over
the last several months, has basically heightened tensions, making foreign companies potentially targeted as part of what I would call more political
activism rather than what I call commercial dealings normally.
SOLOMON: You know, one thing that got a lot of attention, rightfully so, was Secretary Blinken's trip to China and that then meeting with his
counterpart but also Xi Jinping because of how sour relations had turned.
Less attentions was paid to the amount of American CEOs and business leaders who have recently been to China. Bill Gates, Elon Musk, Jamie
Dimon. I mean, if you are a business leader and you clearly see the value in the market there. But it is a bit of a tightrope.
HUANG: It is a tightrope, because businesses don't have the same political clout that they had 10 years ago. And that's why I think, part of the
change in the U.S.' position for China, major financial firms, internet firms, digital giants, 10 years ago, they were very much interested in
increasing their exposure in China.
And in some, ways Washington supported that. But that has completely changed. Washington today is much more concerned about technology transfer.
It's much more concerned about security. It's less concerned about the business prospects of Wall Street or Silicon Valley.
And I think this is probably one of the reasons why relations have actually become much worse.
SOLOMON: Yukon, I hear you say that China has become more self sufficient.
Do you find that it is still putting a lot of emphasis on being hospitable to foreign companies?
HUANG: It has increased its messages in terms of welcoming foreign companies. But at the same time, there are many ad hoc actions that are
taken independently by the business community. So China is welcoming more foreign investment but also at the same time trying to become more
independent.
After all, its access to high tech part lines in the United States have been severely curbed. Therefore, it has tried to develop these lines
itself. This is a very expensive undertaking and quite risky in fact for China.
SOLOMON: Certainly fascinating to watch. And great to have your insight. Yukon Huang, thank you.
HUANG: Thank you.
SOLOMON: And coming up, it is World Refugee Day. We will hear from an Amazon vice president about the company's plans to hire thousands of
refugees in Europe coming up next.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:50:00]
(MUSIC PLAYING)
SOLOMON: Welcome back. It is World Refugee Day. And some big names are vowing to help people who have fled their homeland.
Amazon has committed to hiring 5,000 refugees in Europe over the next three years. It expands on a similar program already underway in the U.S. One of
the Amazon VPs behind the program spoke to CNN's Julia Chatterley earlier and he told her why they developed the program.
(BEGIN VIDEO CLIP)
OFORI AGBOKA, VICE PRESIDENT OF PEOPLE EXPERIENCE AND TECHNOLOGY FOR GLOBAL OPERATIONS, AMAZON: We are doing, it number one, because it is the right
thing to do. We recognize as a company, that there is a community out there and we have an opportunity to lean in and to help.
We have an opportunity to lean into our leadership principles, success and scale brings about broad responsibility. And then, lastly, we really
believe in a strong, diverse workforce. Diversity makes us stronger.
(END VIDEO CLIP)
SOLOMON: And the move comes as Amazon battles for retail dominance. Its biggest rival, of course, Walmart. The battle between Amazon and Walmart,
one of the biggest in corporate America. And from an investor's perspective, it looks like Amazon is getting a bit of a leg up. Its shares
are up almost 50 percent year to date.
Our next guest is business journalist Jason Del Ray. His book on the Amazon-Walmart rivalry is called the "Winner Sells All: Amazon, Walmart
and the Battle for Our Wallets."
Jason, welcome to the program. So I'm looking at the book now and I've read a few excerpts. It certainly got my attention. The book is meant to be a
bit of a front row to this rivalry between Walmart and Amazon, 25 years. It seems like Amazon won, as we said.
How did it happen?
How did Amazon get here?
JASON DEL RAY, BUSINESS JOURNALIST: I think, it's in many cases, a big case of the innovators' dilemma at Walmart. They had these profitable Super
Centers, printing cash and this little side business growing on, that they paid a little bit of attention to but not much.
And all along, Amazon is just investing for the long haul, getting a lease from Wall Street got, not to print profits right away. And 25 years later,
we look and Amazon's market share in online retail in the U.S. is about six or seven times of Walmart's.
SOLOMON: So what did Walmart critically, fatally get wrong?
Let's circle back to maybe -- let's go back to maybe 1999 or early 2000. If you had to point to one specific decision or one hiring decision that
Walmart really missed the boat, what was?
It
DEL RAY: I have a great anecdote in the book about an early tech employee at Walmart, who was leading a team that was experimenting in online retail.
Walmart had an online shop.
And he went into the CEOs office asking for just a little bit more of a commitment. This was in 1998. And the response was, essentially, this
business will never be bigger than one of our Sam's Club store's annual sales.
And you know, easy to laugh now but kind of understand the skepticism at the time.
He packed up his bags -- his name is Robert Davis -- went to Amazon, spent over a decade there and helped their early years of Amazon's growth, using
a lot of the insights and learnings from Walmart in the process.
SOLOMON: Jason, I'll go back to Amazon in just a moment.
But for business leaders watching this, having written this book and having done the research -- what's the message for the business community in terms
of innovating, in terms of when it might be too late, when you might have missed the boat?
DEL RAY: Yes, I had a couple of key takeaways from reporting on this book. One is may be, obvious but incentives in business matter. And how they
interact across different divisions of a company matter.
What I mean by that?
Even in recent years, Walmart's e-commerce leaders were incentivized to grow and not worry about profits. Store leaders, incentivize to print
profits and worry about the bottom line.
That led to a lot of internal conflict and essentially lack of speed in execution, that they are still trying to make up and they're doing a better
job in recent years.
Another one is, just storytelling in business narratives matter. And the narrative for a very long time, that Walmart did not really help go
against, was that they are all about physical. They are not hiring the best technical talent.
Just in the last few years, they have had to invest heavily through acquisitions and hirings to make up the ground they ceded for a couple of
decades.
SOLOMON: Well, Jason, one thing you lay out is that Amazon did innovate, innovate, innovate. But the flip side of that is that also comes at great
expense sometimes. Amazon, present day, certainly as large as it has ever been.
[15:55:00]
SOLOMON: But also, going through some challenges. It just laid off about 5 percent of its corporate workforce. Critics would argue it hasn't innovated
or created a new product in a meaningful way in several years.
Is this just to be expected, in terms of just a maturing face?
Or has Amazon lost its edge?
DEL RAY: That's a great question. This is absolutely, in my opinion, an inflection point for the company. A new CEO in the last two years, Andy
Jassy, led the layoffs, led cost cutting in Alexa, shut down a health care initiative.
And, as we talked about, 27,000 corporate layoffs. It is unclear to me but we should know in the next year whether this is a normal evolution of the
company from what Jeff Bezos used to call day one into a mature day two company, that just doesn't innovate or grow as quickly as it once did.
Or whether this is just resetting company expectations and discipline in investments and spending, leading to the next phase of growth. You know, my
bet is that Amazon is not going anywhere but its morale is not great inside the company right. Now
SOLOMON: Jason, I only have about 15-20 seconds left.
If Jeff Bezos was the innovator of Amazon, Andy Jassy is the what?
What will he be remembered as?
DEL RAY: Ooh. Well, we hope he's -- he should hope it's not just the cost cutter. I would say, Amazonians are hoping that he is the reinventor.
SOLOMON: He's the -- I'm sorry?
DEL RAY: Reinventor.
SOLOMON: Reinventor. Well, only time will tell. Jason Del Ray, great to have you on the program. Thank you for your time.
DEL RAY: Thanks so much.
SOLOMON: And we have just moments left to trade on Wall Street. We will have the final numbers and the closing bell, right after this.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
SOLOMON: Welcome back. And there are just moments left to trade on Wall Street. Let's take a look.
The Dow has been pretty much lower all day. You can see it is now up off 227 points. Let's call it two-thirds of a point off session lows but not by
much. Let's take a look at the other U.S. averages.
It doesn't seem like they've done much better. S&P is off 0.3 percent, the Nasdaq off not so much, about 0.1 percent. We'll call it flat for. Now
Homemaker DR4 (ph) is up on a strong housing report. Let's take a look at DR4 in just a moment. And Southwest led badly, though, Intel is off about
4 percent lower.
And that is QUEST MEANS BUSINESS. It has been a pleasure to be with you today. I'm Rahel Solomon. The closing bell is ringing on Wall Street. And
"AMANPOUR" starts right now.
END
