British Student Sentenced to Life for “Spying” in UAE; Jeremy Hunt: U.K. will not Halt Weapons Sales to Saudi Arabia; Theresa May to Return to
<Show: QUEST MEANS BUSINESS>
<Date: November 21, 2018>
<Head: British Student Sentenced to Life for “Spying” in UAE; Jeremy Hunt:
U.K. will not Halt Weapons Sales to Saudi Arabia; Theresa May to Return to
Brussels Ahead of EU Summit; Gibraltar Emerges as Sticking Point in Brexit
Negotiations; Zuckerberg Tells CNN, He is not Stepping Down as Chairman of
Facebook Amid Growing Calls for Him to Step Down; NHK: Nissan May Face
Criminal Charges in Japan; Trump Thanks Saudi Arabia for Falling Oil
Prices; Italy Faces Sanctions After EU Rejects its Budget; Tech Stocks
Rebound as Facebook CEO Goes on Defensive; CNN’s Matt Rivers Takes a Look
Inside China’s “Silicon Valley”; Market Rally Fades in Final Hour of Wall
Street Trade. Aired 4-5p ET - Part 1>
<Sect: News; International>
<Byline: Paula Newton, John Defterios, Laurie Segall, Samuel Burke, Matt
<Guest: Mark Zuckerberg, Mark Grant, Laurence Boone>
<High: British student sentenced to life for “spying” in UAE. Jeremy Hunt
cites the U.K. will not halt weapons sales to Saudi Arabia. Theresa May to
return to Brussels ahead of EU Summit. Gibraltar emerges as sticking point
in Brexit negotiations. Zuckerberg tells CNN that he is not stepping down
as chairman of Facebook amid growing calls for him to step down. NHK
reports Nissan may face criminal charges in Japan. Trump thanks Saudi
Arabia for falling oil prices. Italy faces sanctions after EU rejects its
budget. Tech stocks rebound as Facebook CEO goes on defensive. CNN’s Matt
Rivers takes a look inside China’s “Silicon Valley”. Market rally fades in
final hour of Wall Street trade.>
<Spec: Matthew Hedges; Jeremy Hunt; Saudi Arabia; Theresa May; EU Summit;
Gibraltar; Brexit; Mark Zuckerberg; Nissan; Donald Trump; Oil; Italy; Tech
Stocks; Huaqiangbei; Wall Street>
PAULA NEWTON, CORRESPONDENT, CNN: Okay, so it is a decent bounce. Can we hang on? Join me all together then. This is what’s driving the day on Wednesday, November 21st.
Mark Zuckerberg tells CNN he’s not planning to quit as Facebook chairman. Our exclusive interview with the man of the moment. Wall Street gives thanks, yes, thanks, for an end to that stock market selling and Italy’s budget gets blocked by Brussels. You’ll hear Europe’s economics commissioner coming up.
I’m Paula Newton and this is “Quest Means Business.”
Good evening, tonight, in a CNN business exclusive interview, Mark Zuckerberg says he has no plans to step down as Facebook chairman, Even as his company faces a storm of criticism and of course a tumbling share price.
Zuckerberg and his Chief Operating Officer, Cheryl Sandberg have been under fire for their handling of multiple crisis everything from data privacy to of course that election meddling. Tonight, he tells our Laurie Segall that he hopes to work with Sandberg for decades to come and as for his own position as Chairman, he says he isn’t going anywhere.
(BEGIN VIDEO CLIP)
LAURIE SEGALL, SENIOR TECHNOLOGY CORRESPONDENT, CNN: So you are not stepping down as Chairman.
MARK ZUCKERBERG, CEO AND CHAIRMAN, FACEBOOK: That’s not the plan.
SEGALL: That’s not the plan. Would anything change that?
ZUCKERBERG: I mean, like eventually over time. I mean, I’m not going to be doing this forever. But I certainly - I’m not currently thinking that that makes sense.
(END VIDEO CLIP)
NEWTON: 2018 has been the most turbulent year of Facebook’s short life. Now the last 12 months have brought accusations of aiding fake news and Russian election meddling; headline grabbing security and privacy breaches, most notably involving UK data company, Cambridge Analytica; and in just the last week, outrage, of course, after a child bride in South Sudan was auctioned off on his platform.
Facebook shares are up today, but down more than 20% for the year. Now with investors questioning the company’s very future, Laurie Segall asked Mark Zuckerberg if the future of his Chief Operating Officer Cheryl Sandberg is in jeopardy.
(BEGIN VIDEO TAPE)
ZUCKERBERG: Look Cheryl is a really important part of this company and is leading a lot of the efforts to address a lot of the biggest issues that we have. So when you look at a lot of the progress that we’ve made over the last 12 to 18 months on issues around elections or content or security, Cheryl is leading a lot of that work and she’s been an important partner for me for ten years and I’m really proud of the work that we’ve done together and I hope that we work together for decades more to come.
SEGALL; But will that role change at all? Are you going to make any changes, not even looking at this crisis, but looking at a lot of the different ones over the last year, are you making any changes in your top leadership? I know there’s been a lot of folks who have left. Many people say Facebook as it was has gotten to this point, but it needs a new leadership team to get to the next point, what kind of changes are you going to make?
ZUCKERBERG: Well, if you look at the management team at the end of 2018, it’s quite different from what it was at the beginning of the year. On the product and engineering side, I completely restructured things so now we have a group that’s focused on all the apps that we have. We have extra focus on security and a lot of the infrastructure that we’re trying to build and that reflects the issues that we’re facing in the world.
On the business side, a lot of the team has turned over. We have new folks in place. We just hired Nick Clegg, the former Deputy Prime Minister of Britain to come in and run all of our global affairs and policy, so he’s certainly going to bring a fresh and outside perspective to the work that we’re doing there, and we’ve also gotten new leaders in places like partnerships and marketing and comms and a number of these really important areas as well. So I think we’re leaving this year with a much stronger team in place.
SEGALL: You are CEO, you get this question all the time, but I’ve got to ask you all the time because it’s always in the news, but you are CEO and Chairman of Facebook. That’s an extraordinary amount of power given that you rule a kingdom of two billion people digitally essentially, shouldn’t your power be checked?
ZUCKERBERG: Yes. I think that ultimately the issues that we’re working on here, you know, things like preventing interference in elections from other countries, finding the balance between giving people a voice and keeping people safe, these are not issues that any one company can address, right, so when I talk about addressing these, I always talk about how we need to partner with governments around the world and other companies and nonprofits and other sectors.
So, yes, I don’t think fundamentally that we’re going to be able to address all these issues by ourselves. They’re too big for society.
SEGALL: So you’re not stepping down as Chairman?
ZUCKERBERG: That’s not the plan.
SEGALL: That’s not the plan.
SEGALL: Would anything change that?
ZUCKERBERG: I mean - eventually, over time. I mean, I’m not going to be doing this forever, but I certainly - I’m not currently thinking that that makes sense.
SEGALL: This idea of transparency is important and we keep hearing it, but then you have these reports coming out that say something otherwise. So, you know - how, and I guess I ask it again, how do you ensure that you do win back public trust? I think this is an incredibly pivotal point for the company and for you as a leader, because it certainly seems over the last year, we haven’t stopped hearing about, you know, one thing after the next that shows otherwise that the company hasn’t been as transparent.
ZUCKERBERG: Yes, well, look, there are always going to be issues. But if you’re serving a community of more than two billion people, there’s going to be someone who is posting something that is problematic, that gets through the systems that we have in place no matter how advanced the systems are.
We, are unfortunately in the position where you have these foreign nation- state adversaries who are actively using sophisticated attempts to try to interfere and do different things. So I don’t think that the right expectation is that there aren’t going to be issues. I think the question is how do we address them?
At the same time, I do think that there is a bigger picture at play, which is what we believe in in the world is giving everyone a voice, giving everyone the ability to share their experience and connect with the people who they want. And I think by and large a lot of the criticism around the biggest issues has been fair, but I do think that if we’re going to be real, there is this bigger picture as well, which is that we have a different world view than some of the folks who are covering this and --
SEGALL: But if we’ve given the world a voice, look at what’s happened in the last year? You’ve had elections in the last year, the election was manipulated, hate speech that’s gone viral and turned offline. It certainly seems like this mission has been accomplished in many ways and there’s a whole new set of problems that, perhaps, you guys didn’t foresee and now we’re in a very complicated place where there’s not an easy solution.
ZUCKERBERG: Yes, these are complex issues that you can’t fix. You manage them on an ongoing basis, but, look, do you think that the world is better with everyone having a voice and having the ability to express their opinion and being able to connect to who they want? I don’t think we’re going back to a world where there were just a handful of gatekeepers who got to control what ideas got expressed and even if we could --
SEGALL: But Facebook is a new gatekeeper.
ZUCKERBERG: I’m trying to make it so we’re not. I mean, that’s why I’m making it so that we’re building this independent governance mechanisms and things like that are really important and that’s work that I really care about. But I think that the world will keep on moving in this direction.
People will - more people will keep on getting a voice. I think that that’s good, and I think there is certainly going to be issues that we need to work through over time, but I think that while we are doing that, we can’t lose sight of all of the really positive things that are happening here as well.
Not just in terms of communities and people being able to connect with groups that are really meaningful to them whether it’s around a disease or community around veterans that they wouldn’t be able to connect to otherwise, but even if you just think about the economic impact of what we’re doing.
You know, we serve 80 million small businesses around the world. About half of them have told us that they’re hiring people because of using our tools and that without Facebook and the tools that we provide that their business would be significantly smaller and they wouldn’t be hiring as many people as they are.
So a study came out, the US economy added about 4.5 million jobs over the last year. If you just look at like what people are telling us, the small businesses who use our tools, we’ve directly been able to contribute to creating many more jobs than that across the world.
So I think that this is the power of giving people a voice, giving small businesses, giving communities and giving everyone everywhere the ability to connect with the people who they care about and get their opinion across and giving everyday people the power that previously only big companies would have had.
So the world is going to go more in that direction and I think by and large that’s a good thing. So I’m really proud of the work we’re doing on this. There are big issues and I’m not trying to say that there aren’t, that we need to work through, but I do think that sometimes you can get the flavor from a lot of this - from some of the coverage that -that that’s all there is and I don’t think that that’s right either.
We need to make sure that we address these questions. These are really big and important things for the future of our society and the future of internet, but we also need to keep pushing in the direction of empowering more people because that’s good.
SEGALL: I mean, it certainly seems like we all know Facebook has done great things. If we look at, you know - and I think the last couple years is where we’re grappling with the unintended consequences. And I think there is a lot of weight to that. It’s not just media coverage.
After Cambridge Analytica, you made some strong statements that you said the buck stops with you, so you’re ultimately responsible. So what message does it send to employees or investors or the public that no one in Facebook C-suite has been held accountable in what’s been you could argue a year of crisis?
ZUCKERBERG: Well, I’m not sure what you mean by no one has been held accountable.
SEGALL: Well, have you had --
ZUCKERBERG: If you meant haven’t publicly blamed someone else, I mean, that’s just not the kind of person I am.
SEGALL; Or have people lost their jobs? Have people lost their jobs?
ZUCKERBERG: On an ongoing basis, I manage performance inside the company. I mean that’s not - this isn’t like, okay, an issue comes up I’m going to publicly go blame someone. I don’t think that that’s the right way to be, but yeah, my job on an ongoing basis is to make sure we have the best team that is going to be able to address the challenges that we face and the challenges evolve over time.
So I mean, you’ve seen us do a big reorganization of how our product efforts worked to be able to really focus on all the apps and to focus even more on security because of some of the issues that we’re grappling with that needs to be a bigger focus and on the business side, we’ve changed a lot of the leaders.
So, I think that it’s pretty difficult to look at the team and the way we’re organized at the end of 2018 and to say it is the same as the beginning of the year.
(END VIDEO TAPE)
NEWTON: And Laurie Segall joins us now. Thank you so much. It is quite an exclusive look inside, really, his head right now and where he’s at. You know, I could be completely wrong, Laurie. I look at that interview and I think, great, he’s very forthcoming at the same time he does look tired. He does look rattled. You’ve known him for many, many years.
In terms of just that whole perspective, where is his head at right now?
SEGALL: You know, it’s funny because there was a report that come out that said he talked to his colleagues and said we’re at war right now because everybody is kind of looking at Facebook with a critical eye and they are dealing with adversaries and nation-states trying to manipulate democracy.
And I think that’s a mindset that’s inside of Facebook, but also when you look at that interview, you’ve got to remember, the last time I interviewed Mark Zuckerberg, he said this to me. It was during the Cambridge Analytica scandal, he said, “I hate doing these, I know I have to do more,” and I think - of course he has to do more. He is the CEO of a company with two billion users and I think he is trying to be more public facing. He’s a very behind the scenes kind of guy. It’s not second nature for him to do these things but that’s not really an excuse.
I think he’s really trying to learn how to communicate, ironically being the CEO of Facebook, he’s trying to learn how to communicate, I think better and be more forthcoming because I think a lot of folks are wondering if they can trust Facebook.
NEWTON: All right, and he’s still the leader. He’s still --
NEWTON: Very much associated with being the trust factor in that organization. I was so interested in the fact that, you know, he said to you, these are complex issues that you can’t fix. You have to manage them. I mean, is he trying to say that, look, it’s like cars, right? We all have cars in the road, they’re as safe as they can be and they’re regulated, but we still have accidents, people still die in car accidents because that’s going to be a big shift in thinking if he wants people to get there.
SEGALL: And I think that’s what Facebook wants. I think Facebook wants people to understand that whether it’s Russian interference or another - or if it’s in China, that this is going to be a problem and that this is something that is inevitable because this is a platform. It’s like - cars or the telephone or radio and all of this type of thing and I think that’s a shift in mindset and hard for people to grapple with given that Facebook was really slow to get on top of it and has made too many apologies and not gotten in front of it.
But I do think they’re trying to shift the public perception of Facebook as thinking they’re going to get on top of it. He says it many, many times. This is an ongoing war.
NEWTON: In terms of him trying to fight this battle, this is really his - one of his first salvos, this sit-down with you. This isn’t just a sit down. You spent a lot of time at Facebook in the last few weeks. What’s it like kind of inside and then them really trying to get outside of their bubble to understand what all this criticism is about because I have to be honest, Laurie, looking at your interview, I still don’t think he quite gets it.
SEGALL: Yes, I think folks when they look at it sometimes think, there needs to be more humility. I think if you look at Facebook. Maybe the tech industry in general over the last decade, there’s been quite a bit of hubris. We are moving fast and breaking things, Facebook’s old motto. We are changing the world, we’re making it better, more open and connected and then now, we’re in this really complicated time in this era of unintended consequences.
And I think Facebook has suffered. Spending some time there, you know, it’s not like these are bad people who want to do bad things. There are a lot of engineers and a lot of folks working at this company who really believe in connecting the whole world.
But I think, you know, there has been a blind spot and there’s been a very big blind spot for humanity and understanding the bad things people will do on these platforms and I think that’s something that Facebook is grappling with.
SEGALL: I don’t think they got there quick enough. And I think that’s something, if anything, they suffer from being in their own filter bubble, where people on the outside think one thing. You’ll hear Facebook and folks at Facebook say that we really do great things, we connect small businesses, we do all this, we help people grow their companies, we’re connecting people around the world and you want to say, of course, people know that.
But, you know, we’re in a really unique and scary time with this platform that has gone for so long unregulated without the right structure around it to help protect democracy and help protect our mental health. That’s a big question of, is Facebook even good for our brains, and our minds and our children.
And so, I think it’s a complicated time and I think they’ve got to burst their filter bubble quite a bit in order to take it on.
NEWTON: Yes, it’s an evolutionary process and we still don’t know actually if they have enough time to get their hands around it yet. A lot more controversy to come. You, as I said, have been spending weeks and weeks. It’s not just a sit-down interview and this is one exclusive, but Laurie has others. Her new series, “The Human Code,” she sits down with the most influential leaders in Silicon Valley talking about technology and as Laurie was just saying right now, how it affects our lives. We want everyone to check it out at cnnbusiness.com.
Now switching gears here, you can bet investors are giving thanks for tomorrow’s Thanksgiving holiday in the US. Not everybody needs that breather. The S&P 500 is having its worst fourth quarter since 2008.
Up next, a look at today’s very ever so light touch really on Wall Street.
Hey, it’s not the biggest of rallies, but, hey, we’ll take what we can get. US stocks are trying to find their way back in positive territory one day before America’s Thanksgiving holiday. You see it there. Not quite as high as it was earlier but still up a good half percentage points. Shares are recovering from what we noted here was a brutal two day selloff.
The Dow though still in negative territory for the year, ever so slightly. Investors are looking at those latest US jobless claims. They climbed to a four and a half month high of 224,000 and that’s adding to worries about growth. Mark Grant is the chief global strategist at investment bank B. Riley FBR, he is in the warm sunny climate of Fort Lauderdale, Florida, I’m not even going to bother to tell you how cold it is going to be in New York tomorrow, but oh, well, I am not sure if this will mimic the mood on the market or not.
NEWTON: Listen, Mark, you’ve got to tell us, everybody --
MARK GRANT, CHIEF GLOBAL STRATEGIST, INVESTMENT BANK B. RILEY FBR: It’s about 80 here, Paula.
NEWTON: I know, don’t rub it in. Seriously, you had to go there, didn’t you? So, listen, everybody wants to know is this the bottom because people there - were some bargain hunters in there, but you know as well as I do, its not like the major players were coming in for a buying fest today.
GRANT: No, I don’t think we’re at the bottom. I think, as a matter of fact, and I’m without question a very conservative investor. You’ve got to wait and see in here. One day’s bounce does not make a bottom and we have a number of both national and international themes, if you will, that are seriously affecting the markets now.
NEWTON: When we talk about those international themes, I notice you’re kind of really have your eyes on the Fed and you hope that, you know, Jay Powell’s recent comments that perhaps they’re not going to be as hawkish in 2019, you hope they’re listening, why? Because some people would say, “Look, historically when you look at interest rates, they’re not that high.”
GRANT: Well, historically they’re not, but it depends on how far you want to go back. The truth is for the last ten years since the Lehman bankruptcy, we’ve had low interest rates and we’ve had very good reason for doing that which has been trying to climb out of the debacle that was created by the financial crisis of 2008 and 2009.
We also had the four major central banks of the world create an economy, if you will, that was just the size of the United States GDP right around $21 trillion, that because it’s a free cash flow economy, it’s around $100 trillion to $120 trillion and so we’re trying to climb out of this hole.
The United States Congress and the President have done everything they can in terms of tax cuts and cutting back on regulations to grow the economy. The Federal Reserve was created by the Federal Reserve Act of 1913. It was created by Congress and the notion that a Congressman, a Senator, the President shouldn’t be able to hold up their hand and say, “One moment, please,” is ridiculous. They’re independent. They can make their own judgments. They’re elected for 14-year offices.
NEWTON: Okay, but Mark, but they’re looking at data and it’s a Fed committee at the end of the day, it’s not just one guy. What do you see that should worry us that Jay Powell clearly doesn’t and the committee, I might add?
GRANT: Jay Powell and the FOMC committee keep talking about a return to normalcy. My point is that we’ve had no normalcy for ten years. We have low inflation. We have good numbers on unemployment and why should they keep rocking the boat by raising and raising interest rates
I make this point, the country’s debt, the United States’ debt is about $21 trillion, every point or 1% that they raise the interest rates means that we have to pay - the United States’ citizens have to pay another $210 billion and I don’t see any point in this and I think they’re making a tremendous mistake that could drive us back into a recession.
NEWTON: And I have to go here, mark, and I will leave you to your sunny Thanksgiving, but your point is the Fed could still screw this up, you think?
GRANT: That’s correct. That’s my point.
NEWTON: Got you, Mark, enjoy that sunshine, enjoy your Thanksgiving and we’ll see you on the other end.
GRANT: Thank you. Happy Thanksgiving.
NEWTON: Thank you very much. We’ll see you on the other end. See if these markets can actually crawl out of this at this time. Mark, appreciate it. Now a global economic watch dog is out with a new warning.
The Organization for Economic Cooperation and Development says growth is past its peak. The OECD keeps an eye on many of the world’s richest economies so I asked the Chief Economist, Laurence Boone if she sees any of those risks of inflation, especially in Europe in the near future.
(BEGIN VIDEO TAPE)
LAURENCE BOONE, CHIEF ECONOMIST, ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT: What we’re seeing is really growth has peaked and looking ahead and also because tension on budgeting, but also because the support that was provided by monetary and budgetary stimulus is fading throughout 2019 and a little more in 2020. What we are projecting is a soft landing.
Growth should go at a global level from 3.7 to 3.5 which is still pretty healthy.
NEWTON: You know, there’s an ongoing debate even now in Europe about austerity budgets versus growth, where does the OECD come in at that point? What do you advice?
BOONE: So as long as growth continues at a brisk pace that I have just been discussing with you, our advice is build up for the good time, look to the medium term when you use the budget, please do that for investing in the future and also targeting the poorest population.
BOONE: Now, if something, some of those risks were to materialize, if we had a more significant slowdown than what we are projecting at the moment, then our advice is for government to get around the table and coordinate a budgetary stimulus at the global or European level depending on where it happens.
NEWTON: I was really interested in the forecast as it pertains to China. You definitely see growth slowing there, but interesting as well, you point out that the shipping traffic growth at container ports, you say, it’s 80% really of all that trade, that the growth will fall to below 3% when it was 6% in 2017. This is a leading indicator as far as you’re concerned, right? The fact that those trade disputes are really having an impact on the global economy.
BOONE: Well, that’s right. We really worry about trade. You were mentioning content airport traffic. Let me just give you one number. It has slowed so much that they’re about - that there will be about 25 million less containers that we could have had if it had to continue to grow at the same pace as the one we were observing last year. That’s a big, big number.
NEWTON: It certainly is. And as I said, when you look at it as a leading indicator, it definitely would raise alarm. The other point I wanted to make on Brexit, you say no matter what, soft Brexit, hard Brexit, it doesn’t matter, it will impact growth in the UK at least in the short-term?
BOONE: So what we are assuming in this projection is actually a soft Brexit, that the agreement that’s on the table goes through, that the negotiation will end up happily with a transition period until the end of 2020, but what we have observed is that investment has slowed already and it’s obviously taking a toll on trend growth.
Now conversely, if there was to be a hard Brexit, which is a possibility even if it’s not our central scenario, then the UK as it stands is supposed to grow by about 2.5% accumulated over the next two years, such a shock would make it down to 0.5% only. So that would take a bigger toll.
(END VIDEO TAPE)
NEWTON: US President Trump has warm words for Saudi Arabia when it comes to oil. We discuss what his strategy is when we come back.
[15:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I’m Paula Newton, coming up in the next half hour of QUEST MEANS BUSINESS, Europe’s Economic Commissioner tells me why he can’t let Italy have its own way on its budget. And we’ll take a tour of one of China’s busiest gadget markets where ordinary tech entrepreneurs are trying to take on the big boys.
First though, these are the headlines on Cnn at this hour. The UAE’s Attorney General says the life sentence handed to a British PHD student can be appealed. Matthew Hedges was found guilty of being a British spy, a charge both he and the British government strongly deny. He was jailed after a hearing that lasted just five minutes.