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Quest Means Business
At Least 15 Killed After Funicular Railway Derails in Lisbon; U.S.: Strike on Alleged Venezuelan Drug Boat Kills 11; Trade Tensions
Aired September 03, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:28]
PAULA NEWTON, CNN INTERNATIONAL HOST: And good evening, everyone. I am Paula Newton in New York.
We begin with the breaking news. At least 15 people were killed in Lisbon after a Funicular Railway derailed. Emergency teams, you see them there are
at the site where some people remain trapped at this hour.
Now, officials say about two dozen people were injured, nine of whom are now in serious condition. Now, the Gloria Funicular can carry up to 42
people and, of course, is popular with tourists given where it is. We should also note that it is more than a century old. It first opened in
1885 and of course has had a lot of upgrades since then.
Isa Soares is with us in London, and Isa, I mean, please describe what happened here, what we know so far and what authorities are telling you.
ISA SOARES, CNN ANCHOR AND CORRESPONDENT: It is still very early stages at this moment from what we are hearing from authorities as to what exactly
happened, Paula.
Let me bring our viewers up-to-date with what we do know from authorities. Youve seen the scene at the moment. We have many services now trying to pay
attention, trying to investigate what exactly has happened to the Funicular de Gloria, one of the most iconic Funiculars course of Lisbon, for those,
of course, who have been to Lisbon.
This is what authorities have said to us, 18 -- we know at least 15 killed, at least 15 killed, 18 injured, Paula, five in serious condition, 13
lightly injured we've been told, slightly injured. And of those 13, one includes a three-year-old girl. As to what exactly happened, we do not
know. We are hearing reports that a cable snapped, came loose, of course, and then it hit a building. This would have been 6:00 roughly in Portugal,
being incredibly busy in Lisbon, and this funicular goes from downtown of Lisbon, all the way up to one of the most iconic views of Lisbon, of
course, up the alleyway.
It is a very short route, but is incredibly busy. This part of Lisbon specifically at this time, not just with tourists, by the way, but with
locals.
So now we are seeing incredibly heartbreaking images coming out of Lisbon as authorities try to get to exactly what has occurred here, Paula. It
seems that what they are looking at right now is trying to better help the families of those in the ground. We know three days of national mourning
have been declared, but there is so much we do not know and that's what authorities are trying to get to the bottom of at this hour.
NEWTON: And Isa, can you fill us in here? Just in terms of the steepness of this Funicular, as you said, it is very short, but it really is alarming
when you say that perhaps a cable snapped and then hit a building.
SOARES: It is one, the route that it takes, Paula, and this would help. Those who have been to Lisbon know how old Lisbon, right? How steep it is.
Those cobblestones, how hard it is trying to get to the top of those hills.
The Funicular, one of the oldest, has a very short route. It is about 275 meters, roughly, and it takes about three minutes from the top to the
bottom, but it is incredibly steep.
So you can only imagine that if something like this happened. If it did, if it was indeed a cable coming undone and snapping, the impact this would
have had to try and stabilize this funicular and preventing it from hitting not just people on the very busy streets, because this is downtown Lisbon,
but also some of the properties, some of the businesses.
This is not, Paula, separate from the City Center. This is right bang on in the City Center to the right, to the left of you would be tourists, would
be Portuguese nationals as well going back to and from business, there will be hotels. There will be restaurants.
Nightlife in Portugal is centered around this area, so it will be packed. It would have been very much packed around that time. And so that gives you
the sense of just how busy potentially it would have been at 6:00, potentially in that time, and really, the casualties, of course, that would
explain why we are seeing so many casualties if it was indeed a cable snapping.
And then of course, not having control as it derailed in those steep, steep hills -- Paula.
NEWTON: Yes, and as we say, perhaps rescue efforts still underway at this hour.
SOARES: Very much so.
[16:05:01]
NEWTON: Yes, and Isa, you know, if you know someone who is in Lisbon at this hour as a tourist, if you have a family member who is in that downtown
area right now, you are fairly concerned, right? Because as you said, it is something that people are using all the time in that historic area.
SOARES: Absolutely. Look, I haven't used it because I grew up in Lisbon, so I am used to seeing it. I know it is very popular with tourists, but it is
also very popular with elderly people who cannot make the journey to the top of the hill.
My grandmother used to love the Funiculars. It was a staple, of course of Lisbon life. It is so iconic.
Now, it carries about 42 people and the majority of times, it wouldn't have been packed. It is not a commuting -- a busy commuting route, but it is
used by locals and indeed by tourists and this is the beginning of September. It would still be very warm. It would still be packed with
tourists.
I was there, what -- three weeks ago, Lisbon was full of life, really and this center of Lisbon would have been particularly so but that connects you
to all the tourist attractions, indeed, the historical sites up the top of the hill.
NEWTON: Isa, stay with me here as we continue to look at some of the pictures coming in, and we are going to watch these together, I apologize
in advance if these -- I don't know if these are going to be graphic pictures, but we want to have a sense of what happened.
This is in the immediate aftermath of this accident, and we are watching it together here and you can see, Isa, obviously people panicked and trying to
get out from those windows. You obviously see what seems like quite a catastrophe here in terms of the derailment itself.
I mean, look at it, Isa. It has just completely fallen apart there from the crash.
SOARES: And as you can see that plume, I don't know if we can rewind it, we could see that plume of smoke, and we don't see the continuation of that
video. But what I had heard also as well is people talking. You can hear some of the screaming. Let me just be silent for a second.
(SOCIAL MEDIA FROM LISBON, PORTUGAL VIDEO CLIP PLAYS)
SOARES: So you can hear the screeches, Paula, the panic in peoples' voices there. What is not clear is as that Funicular came crashing down, whether
it caught people under it, right? Were people trapped under this? Because remember, we are talking about at least 15 killed, five in serious
condition. Many, of course, were inside, able to come out. But as it hit, as it derailed, were people trapped underneath? And that is the big
question at this hour.
We also don't know, as we look at those horrible images, of course, coming out of Lisbon, we don't know the nationalities of those who have been
killed at this hour, and this is something we will have to hear from the mayor, who is due to speak, but also from local authorities -- Paula.
NEWTON: And Isa, can you just let us know? I mean, I believe we have heard from those in the government in Portugal, and obviously they must be
concerned because as I understand it, there are other Funiculars there in operation in the city, likely they would have halted those.
SOARES: Yes, I am not hearing at this hour whether that's the case, three days of national mourning. The President is calling for an investigation on
this. We have also heard from other European leaders, including Ursula von der Leyen, sharing her sentiment in Portuguese on X.
But this, I know this is something they already said, authorities said they will be investigating seriously. We know that this Funicular de Gloria is
one of the oldest. There are other, I think there are two others, Paula, from what I can remember, that potentially not as old as the Gloria, but
also use very popular, and this is something I am sure they will try to see whether this could happen again.
This is the first time I am hearing of something like this happening with these funiculars, given, of course, how old they are. You were giving us a
bit of context, a bit of history there. They have been upgraded. They've been, you know -- at one point they went full steam, but they are very
reliable in the majority of times, right? People use them day in, day out.
So this is something I am sure the authorities will try to investigate to get a better picture. And I would assume your point is quite right, Paula,
I would assume that they would put a halt in the use of the other Funiculars across Lisbon for the time being.
NEWTON: Yes, Isa Soares, grateful to you. You will stand by as we continue to get in more information from authorities and also from our affiliates in
Portugal. Thanks again, Isa.
Now, an attack on an alleged drug boat has become the latest flashpoint between the United States and Venezuela. The White House says it launched a
strike on a vessel carrying drugs from Venezuela, killing 11 people. Now, it says the attack was carried out in international waters in the Southern
Caribbean, and the boat was linked to the Tren de Aragua criminal group. The U.S. labels it a terrorist organization.
Stefano Pozzebon is in Caracas on the ground for us and has this report.
[16:10:01]
(BEGIN VIDEOTAPE)
STEFANO POZZEBON, CNN CONTRIBUTOR: There are still a lot of questions unanswered around the news that was broken by the President of the United
States, saying that the United States took out or blew up a speedboat with 11 alleged drug traffickers that was traveling from Venezuela, and we
understand that the strike occurred on international waters.
We are in a country that has seen, of course, growing U.S. pressures in the last few weeks. We are talking about at least seven warships, as well as
one nuclear powered submarine that are roaming around the Southern Caribbean sea in in front of the Coast of Venezuela.
But if you come here to Caracas, you don't really feel like this is a country in high tension. You can see that we are in a suburb that is quite
actually close to the Caribbean Sea, and life goes on as usual. Of course, it is a country that is still dealing with a deep economic crisis, and it
is still a country that is working under an anti-democratic government.
However, it doesn't feel like that war is exploding or is coming to these streets and that is also the message that I think the Maduro's government
is trying to put out, not just to its own people, but to the international community as well.
That is why even here, you can see, it is a normal day with people coming in and out of the auto-buses, the buses. There is trade going on. There is,
of course, the big geopolitical element of the country standing up to the United States and we have seen that over the last 20 years, frankly, as you
and I.
But here, it doesn't feel like any invasion is approaching. Of course, that said, it remains a dramatic escalation from the other side, taking out of
course 11 alleged drug traffickers as well. That is something that we have not seen before.
(END VIDEOTAPE)
NEWTON: Our thanks to Stefano there.
Now, President Trump addressed the strike while hosting his Polish counterpart at The White House. He accused Venezuela of being, in his
words, a very bad actor and said that the military strike will send a message to drug gangs.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: On the boat, you had massive amounts of drugs. We have tapes of them speaking. It was
massive amounts of drugs coming into our country to kill a lot of people, and everybody fully understands that.
In fact, you see it. You see the bags of drugs all over the boat. And they were hit. Obviously, they won't be doing it again. And I think a lot of
other people won't be doing it again when they watch that tape.
They're going to say, let's not do this. We have to protect our country and were going to. Venezuela has been a very bad actor. They've been, as you
know, they've been sending millions of people into our country, many of them Tren de Aragua.
(END VIDEO CLIP)
NEWTON: Betsy Klein has been following this story from Washington. You know, Betsy, it is interesting that he says the President that he hopes
others get a message from this, and he just really sought to portray this as a big win against drug trafficking.
BETSY KLEIN, CNN SENIOR WHITE HOUSE REPORTER AND WRITER: Certainly, President Trump heralding what is a very significant and likely
unprecedented operation as the U.S. escalates against a drug cartel operating in the Caribbean. We saw that very dramatic video released by the
Trump administration on Tuesday. It shows the moment that that alleged drug vessel was lethally struck by the U.S. military with 11 people, alleged
drug traffickers on board.
Now, the Trump administration says that this boat was tied to the Venezuelan criminal organization Tren de Aragua, and President Trump, we
have seen consistently since taking office in January, taking significant steps to crack down on that gang, including steps by his administration to
designate Tren de Aragua as a criminal terrorist organization.
The President said in a post to social media shortly after this strike that Tren de Aragua operates under the control of Venezuelan President Nicolas
Maduro. He says that it is responsible for mass murder, drug trafficking, sex trafficking, and acts of violence. But the President was asked
Wednesday why he authorized this strike, why not just capture the boat and the drugs and people on board? He says that he is trying to send a broader
message of deterrence.
He says that Venezuela is a bad actor, and what he said, and you saw that clip just there, that people will watch this clip and say, okay, we won't
do this again. So clearly trying to send a very clear signal, but in a very unprecedented escalation by the U.S. government. And we also heard from
Secretary of State Marco Rubio earlier today, he is traveling in Mexico City, speaking to reporters, was asked, why not just interdict this ship
like the U.S. has done in the past? He said they have done that in the past, but it clearly hasn't worked.
He went on to say that what will stop them is when you blow them up. So, echoing the President there. He also said that this strike was specifically
authorized by the President, on the President's orders.
[16:15:10]
But reacting to the strike on Tuesday, Maduro said that the U.S. poses an extravagant threat to his country. All of this, of course, could have major
implications for the region.
NEWTON: Yes, and also pertinent, of course, is the reaction from Mexico, even though Marco Rubio has been saying that Mexico has been cooperating on
this. Again, it took place in international waters. We will see what the administration says about this in the coming days and weeks.
Betsy Klein, for us, thanks so much.
And we will be right back with more on the tragedy in Lisbon when we return.
(COMMERCIAL BREAK)
NEWTON: And we do continue with our breaking news here at CNN.
At least 15 people were killed in Lisbon after a Funicular Railway derailed. The video we are about to show you of the scene is disturbing. We
will watch together here, you can see the chaos after the crash with people trying to get out of that rail car and the severe damage, especially as we
look to more of the video. You can see this damage right there.
Now, emergency teams are at the site where some people remain trapped. The Gloria Funicular can carry up to 42 people at one time. And keep this in
mind, it is century old, having first opened in 1885, but of course has had a lot of upgrades since then.
Mary Schiavo is in Charleston for us, and when you see this accident, Mary, I am wondering about your thoughts. This is a very safe mode of travel. It
is not a very long trip. It is easy for officials to continually inspect it.
What strikes out to you?
MARY SCHIAVO, CNN AVIATION ANALYST: Well, again, what you said, traditionally, I mean, it has got a century of operation. There are
Funiculars in other parts of the world. There are some in the United States. And of course, if you look at it, statistically, it is very safe.
How rare is it that this happens?
But then the flip side is the age and it is very difficult, maintenance is going to be the key, maintenance and inspection. You know, it operates on
an entirely different kind of transport method than what you think about today for streetcar lines or subways or something like that. A Funicular
has a cable system on which the cars, you know, depend and attach. And so I think the investigation will probably look at the inspections.
What was the inspection regime and really what was the maintenance and replacement parts? Because it is very difficult to get all the different
kinds of parts, et cetera because of the age of these. But they are immensely popular wherever they are.
[16:20:08]
They're popular in the U.S., they are popular elsewhere because they can fit in such short spaces. And you know, all people love very steep
inclines. So tragic and heartbreaking, but we will come down to when was it last inspected and the maintenance.
NEWTON: And Mary, I have to ask you, whenever I see accidents like this, I think to myself, you know, where was the redundancy in the system? This was
-- it must be a catastrophic failure, meaning there would have been, you know, other precautions taken along the way, other safety features that
just also failed here.
SCHIAVO: Right, all accidents, all transportation accidents are usually a combination of factors. There is never just one thing. So, you know, they
will be looking at, you know, every possible factor. They will be checking the latching mechanisms for the car, the you know, the maintenance, et
cetera. But there is usually more than one thing, particularly in a mode of transportation, which this is, a mode of transportation that has served the
public for a century.
And in most places where they have this kind of travel -- tram, car -- they've been in operation for literally decades or centuries.
NEWTON: Yes, and when we are looking at these pictures, I mean, we don't have an update yet from authorities, but obviously the risk is that people
were trapped. I mean, given the wreckage that we are looking at, right?
SCHIAVO: Well, and in any transportation accident, first and foremost is trying to find the survivors and recover everyone who can be recovered. And
it is always tragic, whether it is a train, a funicular, a plane, et cetera., that the first order of business is a survivors before they even
launch into what went wrong.
And, you know, sadly, often they do uncover more people as the investigation goes on. But, you know, hopefully not. And then the other car
that was operating, apparently people jumped from that car as the crash happened, being concerned that their car was at risk, too. And so they will
have to be checking on those people as well. So not just the people in the accident car, but in the other one as well.
And, you know, there is a big investigation, you know, to come. And obviously whether it can be reopened will be part of that investigation.
But the first and foremost duty is the injured, the survivors, the recovery of those who did not, and so that's what they will be attuned to right now.
NEWTON: Yes, and Mary, grateful to you to explain that because what were actually looking at are two different scenes, right? We had people
scrambling out of a funicular that did not crash, and then we actually had the crash scene itself. It was followed up and, you know, apologies to the
viewers, we are just trying to understand exactly what we are seeing here.
But you could see that those people were dealing with a funicular that was still intact, and obviously they were panicked trying to get out.
Mary Schiavo, for us, again, grateful to you.
Now coming up for us, a major legal victory for Google sent shares in its parent company soaring. We will discuss after the break.
(COMMERCIAL BREAK)
NEWTON: Hello, I am Paula Newton, and there is more QUEST MEANS BUSINESS in a moment when well tell you about a legal dispute in the right wing media
sphere, as Newsmax accuses Fox News of stifling competition and American Eagle just reported its first earnings since its controversial ad, with
Sydney Sweeney. We will break down the numbers and the company's response.
Before that, though, the stories we are following this hour.
At least 15 people were killed after a Funicular Railway derailed in Lisbon, Portugal. Rescuers are at the scene at this hour trying to reach
anyone still trapped in the wreckage. Authorities say about two dozen people were hurt in the crash. The cause is still under investigation.
A show of authoritarian solidarity at China's massive military parade. Chinese leader, Xi Jinping stood side by side with Russia's Vladimir Putin
and North Korea's Kim Jong-un in Beijing. They were on hand to commemorate the 80th anniversary of the end of World War Two, with a show of China's
military might.
Florida plans to end all state vaccine mandates. About a half dozen vaccines are involved, including vaccines for schoolchildren, according to
the Florida Surgeon General. He said requiring people to get vaccines is wrong and immoral. Critics say allowing children to go to school
unvaccinated is frightening.
So U.S. President Trump said tariffs are vital as he vows to fight for their legality at the Supreme Court. Now, speaking alongside the Polish
President, Mr. Trump said his duties are bringing duties, taxes, tariffs are bringing in significant revenue and that getting rid of them would have
severe consequences.
(BEGIN VIDEO CLIP)
TRUMP: If we didn't have tariffs, we would be a very poor nation and we would be taken advantage of by every other nation in the world, friend and
foe, we are not going to let that happen. And we have a very, very big case in the Supreme Court.
I can only say this: Our country has a chance to be unbelievably rich again, but it can also be unbelievably poor again if we don't -- if we
don't win that case, our country is going to suffer so greatly.
(END VIDEO CLIP)
NEWTON: The home furnishings company, Bedrooms & More tells us a different story. The family owned firm says tariffs forced it to stop carrying
certain items during President Trump's first term. It estimates that policy cost them hundreds of thousands of dollars in sales.
Now, the current uncertainty around tariffs is driving up costs again.
Blake Garfield is the President of Bedrooms & More and he joins me now.
Good to have you kind of really understand the effect of this on medium and small businesses. You say it is driving up costs, do you believe it will
drive up prices for consumers as well?
BLAKE GARFIELD, PRESIDENT, BEDROOMS & MORE: Well, it already has in a pretty meaningful way. And you know, we are both a company that imports and
designs and sells our own products and have our wholesale line, but we also buy from suppliers that are domestic suppliers. So we work with an Amish
company even they raised their prices because that's how they stay competitive. They have to keep their margins and they might have
internationally sourced hardware or something like that.
And it is pretty challenging to know what something is even going to cost when we decide that we are going to buy it by the time it is time to pay
for it.
NEWTON: And I want to ask you about that uncertainty, because that's a lot of what people are pointing to as well. What got my attention from what
your company is dealing, you say you were averaging three containers every year on things like bedding. You're now down to one. But that the
uncertainty of the tariff, not knowing what it is going to be, is almost as bad as the tariff itself.
GARFIELD: Yes, it is really challenging. You know, we have some containers that we get from Vietnam where those are going to be tariffed at some level
at, you know, but when we buy it, if it is going to be 20 percent, if it is going to be 20 percent on top of what their tariff already would be, and
there is no alternative supplier that would be available domestically, rubber trees only grow within ten degrees of the equator, so it is going to
be an internationally sourced item regardless.
But for us to try and shift what country we buy it from to try and get it at a lower tariff amount, it is impossible. We are too small to matter to
those large suppliers where they can get promised a hundred containers a month from someone huge where we are like, well, we might do ten a year,
tops.
It is really especially hard for a small business.
[16:30:51]
NEWTON: And I do want to get to that issue of a too small to matter. But, you know, you were just talking about rubber trees. You're talking about
latex, I believe. Right? And you've had trouble. President Trump thinks you can just, you know, reshore, bring more of the manufacturing to the United
States, source more of it from the United States.
GARFIELD: That sounds great if you could all of a sudden make it so rubber trees grew in the U.S. It's just not a viable option. The reality of it is,
is that there are some products that you can't get domestically, and even if by some miracle, you could figure out a way to do it, it's not something
where you can do it in 90 days or even, you know, nine years. It's something that would be a very, very long build-up and trying to adjust
your supply chain. It isn't something that you can do without a lot of planning and many years to prepare.
NEWTON: You know, President Trump says he really wants to strengthen small and medium sized businesses. But do you worry that this will mean, as you
just indicated, that the big retailers, they will have the advantage on price here? I mean, what do the next two or three quarters look like for
you in terms of sales, but also in terms of prices that you're going to have to charge your customers?
GARFIELD: Well, for us, I know that the prices have to go up. And we tried to do everything that we could to kind of work around the tariffs and to,
you know, source things alternatively or simply, you know, try and tighten our belts. But I'm responsible for the livelihoods of, you know, 36
families. And for me, maintaining a viable business requires kind of careful planning and everything, everything has gotten more expensive.
And I don't see it being something that applies only to small businesses, but it just makes navigating it that more tenuous.
NEWTON: Right. More difficult.
Blake Garfield, I appreciate your perspective. As you've been speaking, we've been showing some of your products. They do look comfortable. It
looks like you all take a nice nap. I thank you for speaking to us and giving us some insight into what the smaller retailers are going through.
Appreciate it.
GARFIELD: Appreciate you. Thank you.
NEWTON: Now, the pro-Trump news outlet Newsmax is taking FOX to court. Newsmax is accusing its competitor of being a monopoly that bullies other
right-wing networks. We'll have more on that after the break.
(COMMERCIAL BREAK)
[16:36:22]
NEWTON: So A.I.'s growing role in our lives is raising some big environmental questions. The International Energy Agency warns that A.I.
data centers will use more electricity than the entire nation of Japan by 2030. That's only five years away.
Clare Duffy looked at whether there are more ways to use A.I., more responsibly.
CLARE DUFFY, CNN TECH CORRESPONDENT: Yes, Paula. This is something I think a lot of people might not realize when they're chatting with Meta A.I. or
ChatGPT. A lot of the mainstream A.I. models require significant energy and other natural resources to run. But as I learned, there are some tips and
tricks for individuals who are looking to lessen the environmental impact of their A.I. use. Take a listen.
(BEGIN VIDEOTAPE)
SASHA LUCCIONI, CLIMATE AND A.I. RESEARCHER: The whole pipeline, the whole life cycle of A.I. requires a lot of energy. And the amounts of energy are
truly phenomenal. The hyperscale data centers, like the ones that have a lot of A.I. running on them, can use as much energy as a town essentially.
DUFFY (voice-over): The data centers answering your A.I. questions are pulling a whole lot of electricity from local grids and a ton of water to
stay cool, and the computers inside are made from rare earth metals that have to be mined out of the ground.
There's limited data out there, but some big A.I. companies have given us at least some indication of the resources their A.I. systems use. In its
latest environmental report, Google said the electricity consumed by its data centers grew 27 percent in 2024 compared to the year prior, although
it said emissions were falling thanks to investments in clean energy and making its technology more efficient.
OpenAI CEO Sam Altman has written that one ChatGPT query uses just about 0.34 watt hours, about what a high efficiency light bulb uses in a couple
of minutes. But OpenAI also says that more than 2.5 billion messages are sent to ChatGPT daily. So if you do the math, every day ChatGPT is using
enough energy to keep that light bulb running for more than 9,500 years.
Google estimates the average text question to its chatbot Gemini uses slightly less, about 0.24 watt hours.
Part of the challenge is that A.I. systems demand a lot more resources than earlier computing models.
LUCCIONI: According to the studies that I ran on open source models, it's 30 times more energy for a generative model compared to an old school like
traditional model for a task like Web search.
We're still using Google. We're still using Bing. But the fact that we're switching out tasks that were traditionally done in a much more kind of
efficient way with generative A.I., and then multiplied by the amount of people that uses these tools every day, that's what really worries me,
because the interfaces are the same, but the backend is so much more energy and resource intensive, and we don't see that.
DUFFY: So for consumers out there who are trying to be mindful about the impact of their A.I. usage, how do you go about that?
LUCCIONI: I think that by default, a lot of A.I. models are quite verbose. So just like being very specific about what I'm looking for is like a
single number or a single fact can be really useful. If you're having this long conversation and then at the end you say, thank you, you're
essentially asking it to take all of the context that came before and then just like one small token, and then it responds, you're welcome.
Use specific tools for specific tasks. So use a cookbook or recipe Web site. Don't use ChatGPT. ChatGPT uses probably like 10,000 times more
energy than a calculator or your phone. Same thing with a book or a simple Web search.
[16:40:03]
A good rule of thumb, if a model does a single task, it's going to use a lot less energy. For a lot of people, it's become ChatGPT for just about
anything, and that's where environmental costs add up. We should be using multiple platforms, multiple tools, and I think that that's a healthy
practice to have as a user.
(END VIDEOTAPE)
DUFFY (on-camera): Now, I do think it's important to note that addressing the environmental impact of A.I. is going to require more than just
individual action. More than anything, it's going to depend on how and where companies decide to build and run their A.I. data centers.
And Paula, this is of course important as Silicon Valley is spending tens of billions of dollars each year to build out this A.I. infrastructure.
NEWTON: They indeed are. Thanks to Clare Duffy there.
Now conflict is brewing in the right-wing media sphere, with Newsmax accusing FOX News of stifling competition. Its lawsuit claims that FOX
coerces distributors to keep other right-wing networks off the air. Newsmax founder Christopher Ruddy says the lawsuit is about restoring fairness to
the market. FOX says Newsmax is chasing headlines to make up for a lack of viewers.
Brian Stelter has been on this story.
Quite a move. And I want to quote from the lawsuit now, quote, "FOX leverages this market power to coerce distributors into not caring or into
marginalizing other right-leaning news channels, including Newsmax."
Is the message to Newsmax prove it?
BRIAN STELTER, CNN CHIEF MEDIA ANALYST: Right. Newsmax certainly is alleging hardball tactics in the cable business. And that's true. I know
that having written about and covered FOX News for years, yes, Rupert Murdoch's media empire plays hardball in its cable negotiations. But so do
all of FOX's rivals. So do all of the major media companies.
What's alleged in this lawsuit is essentially how the cable business has worked for decades. Does any of it rise to the level of illegality? Will
Newsmax actually be able to prove that a crime is being broken here? That is a very open question.
From my reading of this lawsuit today, Newsmax is certainly seeking a lot of publicity. It is certainly seeking to avenge what it believes is a
wrong. But what I see in this lawsuit so far is a description of the hardball techniques of the cable industry.
It is true that Newsmax is very, very small compared to FOX News. It has about a 10th of the audience of FOX News. Now, is that because of FOX's
misconduct? I don't see much evidence of that. FOX puts out a very high quality product. Whether you love or hate FOX News, they know how to
produce great television. That's a big reason why FOX News has been so successful.
They were able to find a niche in the marketplace. Conservative American audiences, and really deliver to that audience for about 30 years. Newsmax
is a much newer startup challenger. Newsmax went public, you know, in a number of months ago. The stock took off like a meme stock and then went
right back down to earth.
So to me, this lawsuit might be an attempt to juice the stock. If it was, though, it didn't work today. And it very much remains to be seen if
Newsmax has a compelling case here.
NEWTON: And given, you know, the proliferation of more right-wing channels and not just channels, right? Influencers and everything else, is there a
political backstory here between Newsmax and FOX?
STELTER: Well, certainly FOX and Newsmax and other right-wing channels like OANN, they're always competing to be the Trump friendliest, to be the most
appealing to the MAGA media universe.
We do know that Chris Ruddy, who runs and controls Newsmax, he has a close relationship with President Trump. He's been at Mar-a-Lago frequently over
the years. So I do wonder if this is partly an attempt to get on Trump's radar because we know that from time to time, Trump challenges FOX, he
complains about FOX. He's suing Rupert Murdoch over Murdoch's "Wall Street Journal" right now.
So this may be, in part, a way to cozy up to President Trump. If so, that's not the first time Ruddy and Newsmax have tried to do so. But the reality
of the situation is that FOX News is a dominant force on the right in the United States. It dominates the right-wing TV marketplace. And that's not
just because of hardball tactics in the distribution negotiations. It's also because, as I said, they put out a really compelling product.
They've been around for a very long time. They have all the biggest stars in right-wing media. So FOX has a lot going for it. And this lawsuit in
some ways reads as a kind of sour grapes, but it will be notable if Newsmax makes progress because it will expose how the cable distribution
marketplace works.
And even though this industry is under tremendous pressure, it's shrinking in many ways, it is still a very profitable industry. And Newsmax could
ultimately reveal a lot about how the sausage is made in the cable business.
NEWTON: Yes, it will be interesting to see how this develops through the courts.
Brian Stelter, really good to see you. Appreciate it.
Now, shares in American Eagle are soaring in after-hours trading on its latest results. The company raised its sales outlook for the current
quarter, sending shares -- get this -- more than 20 percent higher. It says same store sales will be flat compared to a year ago, defying estimates of
a slowdown.
[16:45:04]
CEO Jay Schottenstein touted American Eagle's marketing strategy, including this ad with Sydney Sweeney that sparked the controversy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Sydney Sweeney has great jeans.
(END VIDEO CLIP)
NEWTON: Hitha Herzog is the chief research officer of H Squared, and she joins -- H Squared Research, and she joins us now.
OK. Did the success of this campaign surprise you? And I'm wondering, what does it say about retail branding more generally right now?
HITHA HERZOG, CHIEF RESEARCH OFFICER, H SQUARED RESEARCH: I think we're seeing a real shift in the way that retail -- retailers and fashion brands
are branding themselves. And we started seeing that a little bit prior to the pandemic, and now it's really coming full force, and it's really taking
a cue of what they're seeing culturally, which is this real opposite extreme of attitude, whether it's very polarizing.
And we saw this with the Sydney Sweeney ad, even though they claimed that they didn't mean to make it polarizing. We just saw this sort of, you know,
just crowd around, you know, the community kind of rallying around a certain sort of take. And then we saw ads coming out from GAP that almost
took the opposite end of the spectrum. But as the CEO was saying, this was extremely successful.
We saw an EPS beat. They certainly got new customers coming in. And as we all know, this launched prior to the back-to-school season. And so, the
jeans are selling out and even the Sydney Sweeney branded jeans, those are selling out as well. So if it's any indication, this campaign was very
successful for the brand.
NEWTON: Very successful. And like you said, leaning in really to those cultural crosswinds, they have apparently now signed Travis Kelce, it
doesn't get much bigger than that. But also perhaps polarizing because of his fiance Taylor Swift. So when you say that there has been a shift,
especially when you have a retailer like you mentioned GAP as well, but then we saw the -- it all backfire, right, on Target in the last year or
two as well.
To me, this just seems like a minefield. Do we not go back to conventional wisdom and say, you have to stay away from this?
HERZOG: You would think, but as we've seen play out in the political sphere we are really, you know, everyone is, brands especially, are really
responding to this polarization. It's all about the way that communities are built and driven. And as we are seeing, brands are really relying on
the communities that they associate themselves with.
Now, where does that line become? Where is it drawn? As we saw with Target, you know, they were in a specific camp. And they did, you know, they did
what they thought was correct. They merchandised in that instance according to what they thought their customer base was going to buy. In that
instance, they realized that in their more -- their stores that were in, you know, in the southern states and other places in the United States,
that customer base was not responding correctly.
But in this case, American Eagle Outfitters realized that their customer base maybe didn't want to necessarily become so polarizing, I guess, in the
sense of where they wanted to be more -- I don't want to misspeak, but, you know, they wanted to just kind of focus on a beautiful actress who really
resonates with their community and their, you know, their ways in, of, you know, of living.
NEWTON: It is so difficult to really understand, you know, kind of when and how a brand takes off or, in this case, resurrects.
I really want to try and get your insight on the broader retail market. It is very difficult to understand right now and navigate obviously for
retailers. We've got this specter of the tariffs. We also have brands that are normally in malls, you know, really having a hard time.
Where do you see things going as we get, you know, leading up to the holiday season?
HERZOG: Well, I noted the pandemic and how we saw everything change post pandemic. And I think what we're seeing, especially brands that had anchor
stores in malls, is really changed their strategy because the consumer is changing the way that they spend. It's not to say that people aren't going
into malls. They are. But the mall sphere is going to look very different than what it looked like when I was hanging out there in the '80s.
So now we're going to start seeing other sort of entertainment venues and people going there for lunches and dinners and more of an entertainment
base, as opposed to going there for shopping. That's not to say that retail is dead, that stores are going to go away. It's just a shift in the way
that retailers are putting out their merchandise and responding again to the way that the consumer wants to spend.
And let's be honest, we're talking about holiday and Black Friday. Do we really want to be driving around on Black Friday at 10:00 at night, looking
at stuff?
[16:50:01]
I certainly don't. I've been there before, covering, buying. It's -- you just want to be home shopping on your computer. And I think retailers know
that.
NEWTON: Yes. And Hitha, I was right at that mall with you, and no longer. I agree.
HERZOG: We were together.
NEWTON: Hitha Herzog, good to see you. Thanks so much.
HERZOG: Good to see you.
NEWTON: Now coming up, the American Eagle, yes, not the only stock soaring today. Look at that. Alphabet, up 9 percent now. Google parent Alphabet.
We'll tell you why.
(COMMERCIAL BREAK)
NEWTON: So this just in. A federal judge has handed Harvard a major legal win, ruling that the White House unlawfully canceled more than $2 billion
in grants. The court ruled that the Trump administration could no longer cut off Harvard's research funding. The White House has targeted Harvard
over accusations of antisemitism on campus.
Now, Google shares surged after a major antitrust victory for the tech giant. A federal judge ruled it will not need to sell off its Chrome
browser or Android operating system. This avoids the most severe outcomes from a case that found Google was operating an illegal online search
monopoly. The stock, you can see it there, closed up 9 percent. Still, the judge said Google must share its search results and some data to
competitors, and it can no longer pay to be the exclusive search engine on Web browsers and smartphones.
CNN media analyst Sara Fischer is with me now.
Big tech is dead. Long live big tech. Or let's see where this takes us, right? Can you break this down for us? Because this was not just a break
for Google, but for Apple as well.
SARA FISCHER, CNN MEDIA ANALYST: This was a huge win for big tech for two reasons. One, it signaled that the Trump administration is not going to go
after the most aggressive sort of regulatory fines and penalties against big tech. And that matters because Google isn't the only company facing
investigations right now. The FTC is also targeting Meta and other big companies like Apple and Microsoft have been probed.
Two, this is a very clear decision that ensures that Google will continue to have market share in not only search, but also forthcoming in A.I. That
matters for big tech because there was an opportunity for competitors if Google was to be penalized heavily here, that they could come in and sweep
up some dominance.
Now there are some small concessions that Google is going to have to make.
[16:55:02]
You mentioned it can't have exclusive contracts with device makers to ensure that Chrome is the default browser on some of those devices, but the
fact that it doesn't have to divest its Chrome browser or its Android operating system, it just means this is a massive, massive win for Google.
NEWTON: And Sara, I want to ask you, because there's been so much debate about whether or not this court case means anything anymore. I said, again,
search is dead. Long live search. I was fascinated by putting this into Gemini, which is Google's A.I. chatbot, and it tells me that A.I. is a
major factor here. The judge noting that the new technology already poses a competitive threat to the traditional internet search.
So how do you think all of this is going to play out now? And what does it say about any kind of future illegality that the -- that these courts might
have to rule on, even when it comes to things like A.I.?
FISCHER: OK. Great question. If you take a look at these big A.I. companies, think about, you know, Anthropic or OpenAI or even Amazon, a lot
of them have been striking deals with content owners because they're worried about regulatory scrutiny for illegally, possibly scraping their
content. What's one company that has not struck any of those deals or many deals? Google. And the reason is because they have this massive dominant
search platform that they can use as a lever to be able to have leverage over these major content companies.
And so when I think about the judge's decision here, him saying, well, I'm not going to go after Google because we're in this new frontier of A.I.,
critics would argue that they are all intertwined, that Google's search dominance is, in part, what's going to allow it to get away with creating
an A.I. platform that doesn't have to necessarily broker deals with publishers to pay them out, right, because it has leverage over them in
traditional search.
So it's a very complicated situation. I'm surprised in some ways by the judge's decision. But again, this comes -- sort of comes to show what the
status is going to be moving forward for regulation of big tech in Washington. The fact that Google is getting off with a scratch says a lot.
NEWTON: Yes. You make such a good point because this was what I was saying. The remedy here really has implications or lack thereof, some would say,
has implications down the road.
Sara, you did a great job explaining that to us. I am forever grateful. Good to see you.
And that was QUEST MEANS BUSINESS for us. I'm Paula Newton. "THE LEAD WITH JAKE TAPPER" starts now.
(COMMERCIAL BREAK)
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