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QUEST MEANS BUSINESS
Hope Fades for Greece to Make Debt Deal; European Markets Lower; Dow Low Most of the Day; Goldman Sachs Beats Expectations; Netflix Shares Surge to New Record; Etsy Market Debut; Adultery Dating Website Seeks Investors; Tomorrow Transformed: House That Powers Itself; Google and EU
Aired April 16, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: A bit of a dithering sort of session on Wall street -- down and up, then down again as trading moved throughout the
course of the day. When all is said and done, the man hits the gavel.
QUEST: Oh, it's medium gavel with a loss of around 4 points for the Dow on the 16th of April.
Tonight, the IMF wants rules, reform, and repayment. Greece wants extra time. We're live from the IMF spring meeting.
Stacks of cash. Goldman Sachs' profits jump sharply.
And making a profit out of glue, glitter, and guts. Etsy goes public.
I'm Richard Quest. I mean business.
Good evening. If the flowers are in bloom in Washington, it can only mean one thing: it's the annual IMF-World Bank meetings in Washington.
One of the biggest economic events of the year that brings together the world's top finance officials. The spring meetings.
Looming over the event is the prospect of a Greek default. Hope is fading for a deal, and the Greeks are scrambling to scrape the money
together and meet their debt payment deadlines.
QUEST: Officials from Athens are looking for any way to avoid becoming the first developed economy to miss a payment and repayment to the
IMF. The finance minister, Yanis Varoufakis said negotiations must succeed.
(BEGIN VIDEO CLIP)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: We need to convince our partners, especially in Northern Europe, that this government is not about
going back to the profligacy of yesteryear. And they need to convince us that they are serious about rebooting a series of measures, programs, a
fiscal consolidation plan that has failed. This negotiation must succeed.
(END VIDEO CLIP)
QUEST: The Greeks deny that they've made any approach to the IMF about postponing their next loan repayment. Speaking at the Fund's spring
meeting in Washington, Christine Lagarde told them to get on with reforms. And whether they'd requested a delay, she ruled out allowing any payment
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Payment delays have not been granted by the board of the IMF in the last 30
years. But it was eventually granted to a couple of developing countries, and that delay was actually not followed by very productive results.
(END VIDEO CLIP)
QUEST: Christine Lagarde. Now, meanwhile, S&P has downgraded Greece's credit rating, calling its debt "unsustainable." And in Athens,
bond yields are surging once again. Investors are trading in fear of default.
It all seems to have gone wrong rather rapidly, but how are they going to find a way out of it, and what can we expect? Maggie Lake is in
Washington at the spring meeting. Maggie, Greece once again -- there must be many people at the IMF headquarters who had hoped that they'd put this
to bed some time ago.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Absolutely, there is a growing sense of frustration. And Richard, you're right, there is a
growing sense of urgency. There is a feeling that after all of these months of really hearing the back and forth rhetoric that this is coming to
But I have to tell you, there is also a sense of principle. The Europeans feel united. They feel that they are right in insisting to the
terms of the bailout. And they are willing to play hardball, as I found out from the Belgian finance minister. Have a listen.
JOHAN VAN OVERTVELDT, BELGIAN FINANCE MINISTER: We all agree.
LAKE: What do you agree on?
OVERTVELDT: We all agree in terms of the euro group of ministers of finance that we cannot give in to certain elements of what the Greek
government is asking. The basic point of reference remains, the program as it has been negotiated months ago between the Greek government, the three
institutions formerly known as the Troika, and the European Union, or better, the eurozone area authorities.
That remains the basic point. And the Greek government, of course, has the liberty to try to renegotiate certain aspects, and that is possible
for us. What is not possible is to discuss the basic issues.
They need to privatize. They need to get their budget in order. They need to do something with respect to their pension schemes, and something
substantial. They need to make their labor markets much more flexible than they are today. And we don't want promises. There have been so many
promises in the past. We need hard facts and figures.
[16:05:04] LAKE: Help us understand what is at risk by giving them breathing room. What are you concerned about?
VAN OVERTVELDT: Well, what has been a little bit of problem for the past years that a lot of things have been agreed upon that, but there has
been no delivery, or at least insufficient delivery from the point of view of the Greek government.
And I am, as you know, relatively new in this eurogroup of ministers of finance. I'm in there since October of last year. And what I felt
immediately was a lack of confidence. The Greek authorities really have to realize that they have to rebuild confidence.
There have been made too many promises that have not been fulfilled afterwards. So, we have to build confidence, we have to be sure that what
the Greek government is promising will also be put in operation.
LAKE: There seems to be a stalemate. It's not even clear if this is going to be on the agenda on April 24th. If nothing happens, they will
default, they will be forced out of the euro. The US Treasury secretary has expressed concerns about what that would do to a fragile global
Are you concerned that even if you don't want it, if they're forced out, that there will be serious economic repercussions?
VAN OVERTVELDT: Well, we are very well aware, at least I myself am, that if we let the crisis just roll along, there will be consequences,
inevitably. But that is not the purpose. We will try to get to a deal with Greece, but we have to keep the priorities right.
And there can be no question of throwing money at something for which no structural problems have been put in operation. And that's something
that I have the impression is a little bit hard to understand for the Greek government, but --
LAKE: Is a Grexit manageable for Europe?
VAN OVERTVELDT: There are always risks when you consider that kind of scenario. What I am very sure about is that the risks today are less than
they were in 2011, 2012, when the infrastructure, if I may put it that way, of the monetary union was still somewhat weaker than it is today.
LAKE: I want to ask you two things we're asking everyone here. What keeps you up at night? What are you most worried about?
VAN OVERTVELDT: I think the Greek situation is very worrying. It keeps me thinking a lot about what can be the solution, how we have to deal
with this. All the circumstances surrounding this issue, it's very important, it's very important for the future of the people of Europe, it's
very important for those lovely Greek people, because they are very lovely. And it's a sad story.
LAKE: Richard, two things really stood out to me there. One, they are talking about the risk being less of an exit than they would have been.
But I did not get the sense that they were as complacent or, sorry, he was as complacent as I think some of these press articles have made a Grexit
sound. Oh, we can handle it. I got the sense that there was true concern there.
The other thing is that you heard him say there is a lack of confidence, a lack of trust. That is fundamental. These two sides are so
far apart, they need to have a breakthrough, or they need to find someone to help them achieve a breakthrough if there's going to be a deal.
QUEST: OK. It's all -- every politician in Europe says that they are prepared to work with Greece. They are prepared to meet some of the
requirements that Greece is asking, Maggie, for some form of restructuring.
But then it always seems to fall apart when they actually have to do that deal. So, help me understand what's the problem. If they say they're
willing to go some of the way, where is this gulf?
LAKE: Yes, I keep asking them this, too, and I think it's really frustrating from all of us on the outside. And this seems like a matter of
timing. The Europeans say we want you to do it first, and then we'll give you the money.
The Greeks say, we need the money now. Our economy's imploding. We need help now, and then we'll give you the reforms. We need to buy some
time. They can't get past that.
LAKE: And that's what I say. Isn't there someone who can have a solution where they can have it happen simultaneously and save face for
everybody? They are fundamentally, ideologically separated on this. They want to be right. They want them to reform and say you were right, and
then we'll give you the money.
And the Greeks seem unable or unwilling or unprepared to be able to do that. They want something more. It is a very difficult situation,
QUEST: Maggie, good to have you at the IMF at the spring meetings. Thank you very much. Thanos Vamvakidis is the managing director and head
of European G10 Foreign Exchange at the Bank of America Merrill Lynch Global Research, joins me from London. Good to see you, sir. We need your
THANOS VAMVAKIDIS, MANAGING DIRECTOR, BANK OF AMERICA MERRILL LYNCH GLOBAL RESEARCH: Good to see you, Richard.
QUEST: Same question to you that you heard me ask Maggie. The European politicians, there's a formula when you ask them these questions.
They say, yes, we understand Greece's problems and we are prepared to work with them to restructure and change. And then we end up in this mess. So,
what's falling between the cracks here?
[16:10:08] VAMVAKIDIS: Well, we know that to have a positive scenario in Greece, we need more official funding. To have more official
loans, we need agreement on a program. To have agreement on a program, we need agreement and implementation on reforms. So far, they have failed to
agree on the specific reforms that have to take place and the exact timetable.
QUEST: Right. OK. Let me --
VAMVAKIDIS: They keep discussing the same issues.
QUEST: Right, but let me jump in here, because Greece says we are making reforms. Greece says, however, those reforms have to be done
differently than they were before. The Europeans say, well, we understand that there has to be a difference. So, I don't understand this disconnect.
VAMVAKIDIS: Well, no reforms have been implemented yet. There was an agreement on a reform list back in February --
VAMVAKIDIS: -- from the Greek side was to come up with the procedures of how they will implement these reforms. However, it seems that they have
not been able within the Greek government to agree on the specifics.
In the meantime, the government is running out of cash, and when you think about the maturities looking forward, there is a very high
probability that Greece might miss a payment within the next few weeks.
QUEST: You look at this very closely indeed, perhaps even more so than many of the politicians who sort of dip in and out. So, sir, are you
more pessimistic now than you have been?
VAMVAKIDIS: Yes, because although I strongly believe that both sides want to reach an agreement, they are taking too much time. And at that
point, I was expecting that at least we would have reached a broad understanding on how a program will look like, and we're not even there.
Based on the official statements, it is very unlikely that in the eurogroup meeting next week, we will reach an agreement. There are
substantial maturities ahead. Greece needs to pay about $1 billion to the IMF in early May. There is a concern for (inaudible) here --
VAMVAKIDIS: -- if there is not a deal very soon.
QUEST: Sir, thank you for helping us understand. We'll need you back many times between now and then to guide us through the choppy waters --
VAMVAKIDIS: Thank you.
QUEST: -- of this deal. Thank you very much.
Greece pushed the European markets lower. The FTSE was down half a percent. The Xetra DAX in Germany down nearly 2 percent. The CAC 40 was
down half a percent. Greek stocks are up more than 1 percent.
As to the US, well, the day starts off badly. It's low for most -- we have these little blips, which I never quite understand in this new era of
trading, these little blips where the market suddenly goes positive. But in the afternoon, in the early afternoon, shortly during lunch, up it goes.
And then it all tails away.
Goldman Sachs has reported its best quarterly profits in four years, easily beating expectations, and that might have been one of the factors.
Paul La Monica joins me. How good to see you, Paul.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Good to see you as well.
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: What goes on at this sort of point in the day when for no obvious reason, a market that's been down suddenly rises and then
LA MONICA: It's -- yes, it's very mystifying. I think volatility really is back, that has clearly been kind of the buzzword for 2015. The
one thing you've got to keep in mind here is that --
LA MONICA: -- pretty much all day we were on one side of flat. We really didn't have any dramatic --
LA MONICA: It looks a little bit more dramatic than it is when we just swung from slightly down to slightly up.
LA MONICA: Goldman had a phenomenal quarter, and their bonuses are back. They're now paying on average $130,000 per employee to set aside --
QUEST: How much?
LA MONICA: -- in just the first quarter, $130,000. Nice work if you can get it.
QUEST: Right. Now, it's $130,000 on average.
LA MONICA: On average. That's actually down almost $100 grand from the peak. 2007, people were making almost $227,000.
LA MONICA: Where did Goldman make the money? Is it propriety? Is it fixed income? Is it equity? Where's the money?
LA MONICA: The equity trading was one of the big places where they had a boom. Investment banking as well. There's been a lot of M&A, a lot
of IPOs. We had three high-profile initial public offerings today, for example.
LA MONICA: So, it's business as usual, and it's booming again on Wall Street for Goldman. That's why they did so well.
QUEST: Netflix -- last night, before -- when we were talking here on this program, we had the early numbers, and the subscriber numbers were
sharply up. The Street liked it.
LA MONICA: Yes, that's a massive understatement, I think. The stocks --
QUEST: What did the stock do?
LA MONICA: It hit an all-time high today. It is now -- to put this in perspective, Netflix is now worth more than both CBS and Viacom. So,
Sumner Redstone must be scratching his head wondering how this newfangled digital media company is worth more than his two old media companies.
[16:15:03] It really is about content. Netflix had been criticized for not having the content that people wanted, other than maybe "House of
Cards" and "Orange is the New Black," but now they have a lot more new shows. Millennials in particular, they're cutting the cord. They're
watching things on Netflix. They're watching old shows.
QUEST: Right. I and what Netflix is doing is taking other people's and making it available, but it's not being purely parasitic. It's
creating its own content as well.
LA MONICA: Definitely, and it's award-winning content. It's stuff that people really like. And they're riding the Disney train now with
Marvel. "Daredevil" seems to be a big hit. That's part of the Marvel franchise.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: Thank you very much.
A meeting of the markets. The craft seller Etsy has made its debut and outside the NASDAQ. But what arts and crafts can they make in a
market? QUEST MEANS BUSINESS.
QUEST: Ah, you never know what you can find in the old workshop. Welcome to the QUEST MEANS BUSINESS workshop. The internet craft seller
Etsy celebrated its market debut today with a marketplace of its own. And there was plenty to celebrate. The stocks soared on the first day, closing
more than 85 percent higher. It opened at $31. Etsy priced its IPO at $16 a share on Wednesday night.
Now, if you want to know about Etsy, well, of course, the firm set up shop outside the NASDAQ in New York's Times Square. Sellers offered
crafted items in an open-air version of Etsy's online experience.
(BEGIN VIDEO CLIP)
CHAD DICKERSON, CEO, ETSY: Etsy's a place where a creative person can open a shop and reach buyers all around the world, whether you're a curator
and you curate vintage items, you're a maker, you make furniture, you're a photographer. Huge variety of creative people are able to sell things on
Etsy and do it in a way that's very fulfilling and very personal.
(END VIDEO CLIP)
QUEST: Ah, you're a craftsman, you're an artist, you're a furniture maker. Etsy was founded in 2005 by Robert Kalin. The craftsters and the
artists selling handmade and vintage goods. And this has grown. People in their workshops making little things and items. Now it's a community of
1.4 million sellers. It earns revenue, of course, from ads, payments, processing, and shipping labels.
The question, of course, is has it got longevity? Henry Blodget joins me now. We need to put some context into this. Good to see you, sir.
HENRY BLODGET, CEO AND EDITOR-IN-CHIEF, "BUSINESS INSIDER": Great to see you.
QUEST: Co-founder, CEO, and editor-in-chief of "Business Insider." Etsy.
QUEST: What's the magic of Etsy? What's --
BLODGET: Well, it's basically a new --
BLODGET: -- kind of eBay --
BLODGET: -- focused on a very tight community, very strong community. They found ways for folks who make small things and crafts to sell them to
a global audience, so it's working very well.
QUEST: Right, but here's the point about it. Since there is an eBay, which is obviously larger and more powerful, why do these craftsters choose
to go to Etsy rather than the larger market of eBay?
BLODGET: Because Etsy has done a fantastic job of figuring out how to serve just that particular community, which was much more difficult, eBay
got so big, it was hard without huge products that people knew. It was easier to sell things that were well-known and you could describe.
[16:20:05] So, Etsy did a very good job of that. And the real question -- and this gets to your larger question -- is how big is that
community, and how big can the company get? Or will they expand out beyond the craft community?
QUEST: And, of course, there's a B category where they are -- they have this commitment -- enshrined commitment to doing good. How do you
balance that? It's fine when you're a private company, or even if you're a closely-held company, but the moment you have shareholders in the market, I
wonder whether you can still remain true to your ethics?
BLODGET: That's right. There's no question that they will have a lot of pressure some shareholders to grow faster. They're growing 50 percent a
year, which is very respectable. But eBay grew at 100, 200, 300 percent in the early years.
Why aren't you growing faster will always be a question about them. People will say, can you attack bigger markets? Are there adjacencies that
you can go after. So, they'll have to pressure that. But I don't think they need to change the fundamental ethics of the company. It's a very
Right. But it raises the interesting question. People always said about Murdoch, when you buy into News Corp in the old days, you were buying
into a Murdoch enterprise. You knew what you were getting. If you buy into Etsy, the argument is, you know what you're getting. You're getting a
lower rate of growth, but maybe a more ethical situation.
BLODGET: Maybe. You're certainly --
QUEST: You don't give credence to that?
BLODGET: You're certainly buying into what they say, the same way you buy into Amazon. Amazon made the statement when they went public in 1997,
we are going to be very aggressive, we're not managing for profits. They have never managed for that. You either accept that as an investor or you
don't, and it drives some investors crazy.
So, Etsy, like Google, like a lot of other tech companies, specified in their letter, this is where -- what we are about. If you don't like it,
there are 6,000 other stocks you can buy.
QUEST: Do you give credence that it holds?
BLODGET: Oh, I think so. I think whether it holds comes down to can they continue to deliver good growth. There will be an acquisition
candidate, so we shall see what happens over a couple of years. Great to see you.
QUEST: Good of you to -- how great of you to come in, thank you, and make us -- and help us understand it.
BLODGET: Great to be here.
QUEST: Much appreciated. Now, while Etsy comes to market with wholesome handmade crafts, another proposed IPO is trying to lure investors
even as it raises eyebrows. Ashley Madison, a website for married individuals seeking affairs -- this is the opposite, from the savory to the
-- some would suggest --
QUEST: -- unsavory, where it's -- but there again, it is the world's second-largest dating website. Now, as Clare Sebastian explains with
fidelity, it hopes to find some open-minded investors looking for something on the side.
CLARE SEBASTIAN, CNN PRODUCER (voice-over): First comes the bride, then the work colleague.
SEBASTIAN: -- with the unashamedly rebranding the whole concept of adultery.
NOEL BIDERMAN, CEO, ASHLEYMADISON.COM: Infidelity does save marriages. I think people have affairs because they don't want to divorce.
SEBASTIAN: The CEO, Canadian former lawyer Noel Biderman is not shy about his quest, regularly appearing in promotions for the site to book on
why cheating is good.
BIDERMAN: Their joint economic situation, their joint household, extended families. Those are all things they cherish and want to continue
with. What they don't want to continue with is what or doesn't happen in their bedroom.
SEBASTIAN: Tackling the satisfaction in the bedroom has brought much satisfaction in the boardroom. The company generated $115 million in 2014
by selling so-called credits for users to make contacts. It now has 34 million users worldwide.
SEBASTIAN (on camera): It's clear Ashley Madison will be looking for a long-term partner when it launches its IPO. The parent company, Avid
Life Media, says London is just one of the paths it's pursuing. It says there at the London Stock Exchange has a global perspective and it believes
investors here will be, quote, "comfortable" with what they're offering.
SEBASTIAN (voice-over): Michael Jarman, head of equity strategy at H2O Markets is one of the people they'll need to convince.
MICHAEL JARMAN, HEAD OF EQUITY STRATEGY, H2O MARKETS: I don't know whether investor appetite is going to want to support a company that
promotes, effectively, extra-marital affairs. To be able to compete and to continue to grow the business, they would probably need to restructure
their philosophy and maybe brand themselves as a more reputable dating house.
SEBASTIAN: The challenge ahead: how to stop courting controversy and start courting investors.
QUEST: -- me, we've gone from Etsy to Ashley Madison. Talk about two opposite ends of the tree.
BLODGET: Oh, boy. This is a very funny one. We used to write about this on "Business Insider," and it was one of those companies where you go,
that's a little bit too edgy, it's not straight business, they're encouraging affairs.
And yet, it was, of course, something that everybody wanted to read about right away. And that's what you can see in digital, you can see the
articles that attract the most interest, and when we wrote about this, you'd see huge interest in it. And very interesting to see that they're
thinking about going public.
[16:25:00] And this to your other question, this will definitely be, if it goes public, a company that will be -- cause some questions about
anybody who owns it, I would say.
QUEST: Good to see you, sir. Thank you.
BLODGET: Great to be here.
QUEST: We'll need you again to help us through it. Take a look at this house.
QUEST: It may look normal from the outside. On the inside, it's -- well, it's unique. It's Net Zero. It costs you nothing to run. We'll
explain after the break. QUEST MEANS BUSINESS.
QUEST: Ah, now, welcome to our living room. It might be a little old and dusty, but it's still very cozy, and it has all the typical amenities.
We've got the lights switched on, a nice, cozy fireplace. And a television.
It all comes at a cost. In the US state of Maryland, powering a typical house can set you back an estimated $4400 a year. That does need
re-tuning? Not so in this particular house. Here the energy is a big fat zero. So, how can it be so cheap to heat, light, and enjoy living here?
You need to go inside and take a peak.
QUEST (voice-over): Over the years, we've all increased the amount of technology in our homes. And that's meant increased demands on the
electric grid. So, we turn to solar and wind power, as renewables became all the rage.
QUEST (on camera): Being energy efficient is just the start. Imagine if your home provided all its own energy. For instance, the heat from your
television powers your coffeemaker.
QUEST (voice-over): This house can do just that. On the outside, it looks like any other home in suburban Washington, DC. On the inside, it's
HUNTER FANNEY, NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY: We take over 500 readings a day, about every minute.
QUEST: The National Institute of Standards and Technology, or NIST for short, built this house to prove that Net Zero is possible.
FANNEY: So, a net zero energy home is a home that over the course of a year produces as much energy as it consumed. We have a virtual family
that lives here, and they perform all the same functions that you would with your own family.
So, we have devices, for example, that emulate a toaster, a blender, a hand mixer. And all of these devices operate at a precise time according
to a schedule so that the home is occupied as a home normally would be.
QUEST: In the first year, the house went way beyond net zero. It actually produced a surplus. Enough energy was left over to drive an
electric vehicle 1400 miles.
QUEST: Tomorrow Transformed.
The commissioner decided to take on the mighty Google. After the break, I speak to Europe's competition commissioner about the antitrust
charges that she brought. QUEST MEANS BUSINESS.
[16:29:48] (COMMERCIAL BREAK)
[16:32:05] RICHARD QUEST, CNN HOST: Hello. I'm Richard Quest. There's more Quest Means Business in a moment. You're going to hear from the EU
Competition Commissioner and she tells me why she's taking on Google.
And the Eurostar chief executive on his profits were affected by Charlie Hebdo attacks.
Before that, this is CNN and on this network, the news will always come first.
Italian police have arrested 15 African migrants who allegedly threw fellow passengers overboard during a voyage from Libya. Alarming police said the
suspects are Muslim. The trial people thrown overboard were Christian. The suspects have been charged with aggravated murder motivated by
Italian Coast Guards has been struggling to keep up with a massive influx of migrants from Africa. An EU spokeswoman says the problem will only get
worse in the weeks and months ahead.
(BEGIN VIDEO CLIP)
NATASHA BERTAUD, EUROPEAN COMMISSION SPOKESWOMAN: The European Commission cannot alone do it all. Yes, we are putting all our energy into developing
a new comprehensive approach on managing migration which I've re-said many times. We will be coming forward within May and move up from July. But
no, we do not have a silver bullets or and you kind of see that is it going to make the situation go away like that. And no amount of finger pointing
is going to change that.
(END VIDEO CLIP)
QUEST: Hundreds have died making the powerless journey to Europe. So people coming off the boats say they're willing to risk their lives.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Our family, they don't have (inaudible) they are poor people.
UNIDENTIFIED MALE: I was scared. I was scared. I was taking risk here, a big risk either I into Europe or I die.
(END VIDEO CLIP)
QUEST: Thousands of people took (ph) to the streets of Durban in South Africa to voice their anger over the recent wave of deadly anti-immigrant
violence, the sheriff (ph) support comes days after months with machetes attacked immigrants in Durban. In those attacks, five people were killed.
Russia's President says his country's economy could return to growth in just two years. Vladimir Putin spent four hours answering questions from
the public in an annual broadcast session. And said there were reasons to be optimistic about the country's economy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: With the good dynamics in the market because especially as far as assets in the banks are concerned of the banking system.
(inaudible) the first time this exceeded the GDP of the country that shows the reliability and instability of the Russian system.
(END VIDEO CLIP)
QUEST: South Korea is remembering the victims of the Sewol ferry disaster, one year anniversary is tend with anger and grief Many of family members
still don't have the bodies of their loved ones to bury, 304 people, most of them high school student died from the ferry's act.
[16:35:19] Europe's Competition Commissioner Margrethe Vestager now tells me the European Union is not anti-American. It comes out the EU charged
Google with the violating antitrust rules in another high profile case against a U.S. company during business in Europe.
The commission alleges that the tech firm distorts search results and in doing so, favors its own business. Google is facing a fine up to $6
billion. Google incidentally has denied the accusation.
The commissioner joined me a short while ago and I asked her. Frankly, it seems or at least the perception is the attack against Google is personal.
(BEGIN VIDEO CLIP)
MARGRETHE VESTAGER, EUROPEAN COMMISSIONER FOR COMPETITION: We have no grudge against any company. What we of course is looking at is a certain
conduct, a certain behavior which may be issues of a very, very dominant position.
QUEST: Is there any indication that the Americans agree with your fundamental point that there is something that needs to be investigated and
something that needs to be addressed because they haven't taken similar action against Google over this.
VESTAGER: Well, I think you'll find a number of very, very different views and probably you will also find somebody in Europe who would disagree with
the view that we have outlined in our statement of objection.
I think that's the way a democracy works that you disagree. But my role is to enforce our competition law in Europe. And what I see is a very
successful, very innovative company. And I think everyone should congratulate Google on that. But also a very, very dominant position in
And in our preliminary view, what we see is that this dominant decision has been used to favor Google's own services in a neighboring market. And that
of course is not a good conduct.
QUEST: Five years of negotiations, of objections, of discussions between your predecessor and Google, failed to resolve this they came very close on
So how do you think this resolves this in a timely fashion and doesn't drag on to say five or seven years?
VESTAGER: Well, first of all, I agree with you that it would be much better to get this solved within a reasonable time span. Of course we can
never sort of sacrifice justice and fairness on the alter of speed. But I think that this approach may help us to move forward much quicker.
I have updated the files so we have the information which is fresh. I have spoken first with formal complainants and informal complainants and of
course Google themselves. And I hope that this can move the case forward of course for the benefit of consumers and of the innovations.
QUEST: I covered the U.S. antitrust action against Microsoft all those years ago. And they went on for years and of course came to a very poor
resolution on the U.S. side. It was really left to the Europeans with a $2 billion fines to actually railroad something through.
Are you hopeful you will be successful here where others have failed, and why?
VESTAGER: Well, I don't see it, that's the question of where others have failed because each case has its own sort of personality, its own story,
its own background. What I hope to achieve here is of course that for consumers to experience that they get very good choice for other companies,
the ability to show their innovative solutions so that we all side with competition and with consumer. And that, if I can achieve that I think a
lot were being achieved not from you personal, but for consumers in general.
QUEST: There is one perceptive perception question and you're well aware of this commissioner and it is that you are either playing favorites in
terms of what European companies or at least attacking American companies.
Now, rightly or wrongly that is a perception. And if we look for example, not you personally obviously but the commissions view, you know, attack
against Amazon, an attack against Apple, now an attack against Google. Whatever the rights and wrongs, the perception is Europe is anti-American.
VESTAGER: Yeah, well, but that perception is wrong. I personally come from a country where we love anything American. And I admire the company
is that you mentioned I think they are successful, I think they are innovative.
[16:40:06] I think what's important is of course when we see a conduct, behavior which is not by the book as we see it. Well then we have to put
that on the table of the question. And then take the answers in and then take it from there.
And I think basically that shows not only our values but also how much we appreciate the rule of law and of course a lot of phase will be set but it
will be set here and we will be set in Europe. And I think, one just have to let go of that and then focus on law enforcement and to be based on
(END VIDEO CLIP)
QUEST: The European commissioner for competition.
There's been a revenue slow down in Eurostar at the beginning of the year. The reckless start first quarter was for one very specific reason.
The chief executive will tell us why after the break.
QUEST: Eurostar saw revenues fall in the first quarter of the year. And that was a very straight forward reasons. Sales faulted in the wake of the
Paris terror attacks on Charlie Hebdo.
The Railcard reported ticket sales took a 6 percent drop in the first quarter of this year compared to the same time last year.
Now it wasn't only because of the upholding terrorist attack which of course put people off traveling between London and Paris.
Eurostar also says there were delays and cancelations because of that fire that took part place in the channel tunnel in January. Add into other
factors there's a recent strength of sterling against Euro. And remember of course Eurostar being France to London or London to Paris it makes its
money in a pound sterling but ultimately it has to convert into Euros.
Total number of passengers remain steady at 2.3 million. Booking have now rebounded for Easter travel. And as the summer gets ever closer the travel
Also one of the point to bare in mind that Eurostar is about next month to launch its first major new route in years.
Eurostar will be going from London down to the south of France, down to Nancy stopping at various places on the way.
I spoke to Eurostar Chief Executive Nicolas Petrovic and ask him how the company it handles. The awfulness of the setback in the first quarter
because of the terror attacks.
(BEGIN VIDEO CLIP)
NICOLAS PETROVIC, CEO EUROSTAR INTERNATIONAL: It was a, I would say also the combination of the twibbons (ph) in a few weeks really had an impact on
our sales which in a ways to be expected. I mean we've had in the past when there, we always tax in London a few years ago things like that.
[16:45:01] So, yeah we always very exposed to that. What's important is how we call that relief (ph) and actually we've -- we think to say is on
relation on market have recovered quite quickly design and we can that the booking for the silver are very strong so, that's was the good news but yes
we always very exposed to internationally events.
QUEST: Did you find after the event that you had to plan any promotional activity or is it just one of these things that you wait for wheel parking
(ph) about to turn.
PETROVIC: No, no we did plan some activities to react to that and I would say two things the first one is obviously to put back in Thai's (ph)
destination or the London destination on the map, you know, just to because actually they're very exciting destinations. And to just say there are lot
of things to do.
And also publishing our activities just to our leading price just to feed up with all the trains because of the twibbons (ph) the fire and the
attacks we missed the big pair of sales, you know, generates a ways of big payer to says he gets for the following three months. So we have to do
QUEST: You're also susceptible to obviously the price differential in the foreign exchange between the pound and the Euro. And I'm wondering baring
in mind at the end of the day, your sales divide them pounds and Euros how you have a managed a hedge or sort that out so that you would not the win
of a foreign currency shift.
PETROVIC: But, so, you know, so the way we deal with that because it's very, very important is that we actually looking - not just talking about.
Now of course in Euro and now revenue in Euro more or less matched which means that it's a natural hedge for us. We are buying, you know, we can
earn the Euro we spend.
So on the bottom line we have no impact that saves lumber number or look back at the moment because the Euro has gone down against the sterling but
would not affect our bottom line.
QUEST: And finally a very exciting time may the first coming run in your first longer distance train to the south France the numbers are looking
good. How will judge the success of this decision?
PETROVIC: So we have to win. But so far so good the advantages are very strong compared to what we were on budgeting. And we have our first train
to the south of France on May 1st.
And actually we are very surprised by the strength of the demand for (inaudible) which is at the end of the journey, and which we've been
sitting very well.
So the next test we did the operation as we've just done some test trains a few weeks ago which went very well. So we are ready.
(END VIDEO CLIP)
QUEST: So chief executive of Eurostar Nicolas Petrovic joining me from London.
Virtual reality promises to up end (ph) the gaming and then (inaudible) industries. Now the same technology is being used to design cars.
The special set of goggles that allowing engineers to see where they've be seen before. Next.
[16:50:07] QUEST: The Tribeca Film Festival kicked off last night in New York.
Occulus, the virtual reality company that Facebook bought last year for $2 billion is on hand showing off how its headsets could be used to make
The Director Steven Spielberg and Ridley Scott have already been thought to create some of the first Hollywood virtual reality content.
The industrial world now doesn't want to get left behind because it's all about merging and virtual, the design of everything from cars to the
factories upon which they're built. Rosie Tomkins goes inside Jaguar's cave for a closer look.
(BEGIN VIDEO CLIP)
ROSIE TOMKINS, CNN CORRESPONDENT: We're capturing many people's imagination of the fact today is virtual reality and it may surprise you to
know that increasingly this is becoming a pillar of design in industrial manufacturing.
We went to visit Jaguar Land Rover in the UK to see what happens when a car company use a technology like this.
21st century car design at Jaguar Land Rover involves venturing inside the cave.
UNIDENTIFIED MALE: If you could imagine a designer who wants to see his concept, he can come down here. He can understand the lines. He can
understand the shape of the car.
TOMKINS: This state of the art innovation center is where concepts -- cars in a virtual world before a single piece of metal to be curved.
UNIDENTIFIED MALE: Traditionally, it would all be done physically. We would have to wait around until we got prototypes to understand how the
things would go together.
TOMKINS: And once I've got (inaudible) I'm controlling, everything that happens.
UNIDENTIFIED MALE: Yeah, the immerse way you couldn't do it in a real world and this really gives our engineers a great advantage because you
could put your head anywhere within this vehicle.
TOMKINS: In the ergonomic lab, technology more familiar to the world of gaming and entertainment is being used to design factories. A motion
capture suit fitted with 19 senses propels me on to a virtual production line.
UNIDENTIFIED MALE: Sensors so you can track each as the joints move, simply display place on the head mounted display and that will present each
eye with a different image.
TOMKINS: Then I can make my way over to my station.
UNIDENTIFIED MALE: And free to interact. It's a visor that when something happens so they've got the ability to go in tensioning and fix things
without the lines to them.
TOMKINS: It's all about optimizing the productivity of the plant.
This is a really clever use of technology to test the ergonomics of something early in the design process. What it allows is to make your
mistakes in the virtual world so that you don't have to build a car let alone an entire faculty only to discover it doesn't work as well as you
would have liked.
UNIDENTIFIED MALE: Anything where a human has to interact, it can be done in the virtual world.
If we want to change a line which is an existing property, we can use it in the virtual world and understand how that line is set off and how that
vehicle will move down that line. And also the efficiency of that site, so we could mimic their supplies, supplies move into the site and understand
the logistics of that site working, so it really just come down to like a whole part of this.
TOMKINS: From the virtual world to the reality of the factory floor.
UNIDENTIFIED MALE: The actual layout of the facility is optimized for its flow and its flexibility.
TOMKINS: Here as the company's new $750 million engine plant, the challenge is to get the factory pairing as sweetly as the engine it
Factory design is of course absolutely crucial to efficiency putting together incredibly complex engines still requires quite a lot of manual
labor and that is why here, it's all about making most of man, machine, and robotic interaction.
That interaction involves choreographing the production of an engine made up of around 250 separate parts.
UNIDENTIFIED MALE: It's not just automation. It's not just robots. There's a lot of IT infrastructure as well that actually niche all of these
together. And it's a very flexible manufacturing facility. It's a lot of machines we can actually move to do other manufacturing.
TOMKINS: From designing cars to creating the best environment to make them in, virtual design tools are becoming a significant driving force behind --
more efficient production lines.
(END VIDEO CLIP)
QUEST: Using the (inaudible). Now, a piece of news (inaudible). We've been getting some results. American Express at the credit card or charged
card company is blaming the strong dollar for cutting into its revenues and starts 6.3 percent increase in revenue.
So that did come about because of highest spending which allowed it to raise its first quarter profits above what was expected. But if you take
the bigger picture, then the shares are down more than 1 percent in after I was trading which is a much more realistic approach would be like on what
[16:55:03] Also Mattel reported it's six straight full in quarterly worldwide sales. Mattel is focusing on turning around the business in
launching toys. It's got to make up for the shop full demand for Bobby is down.
And that's why Mattel is now looking at its cartoon character, its marvels and the like as well. To the market zone that you'll just get an idea of
exactly how the Dow Jones traded, it was down but traded around the middle just over the course of launch.
But then a strong gain in the early afternoon which evaporated when trading came to a close. The market was off six at the end.
Profitable Moment is next.
QUEST: Tonight's Profitable Moments in our program this evening we brought you two companies (inaudible) the crafters and marketplace with its high
values and ethics design for artisans where the goal is to do no harm and to create a marketplace for those in the artist world.
And then you got Ashley Madison which is goal is life is too short have an affair. Ashley Madison is looking for a place to have an IPO never mind
have a lay down in an early night.
Ashley Madison can't continue New York so it's trying to do it in London instead. What's, this is a question about morals. Let's face it, it's
about the stock market, we left talking about morals would be left outside. But it is an interesting indication that there is a vehicle for every
If you want the great and gold or the little in the night then that's actually for you, if you want something perhaps little less savory but
maybe more juiced up, well you've got Ashley Madison. It's all available for you on the stock market. Just make sure you don't loss your shirt in
either of them.
Now, that's Quest Means Business for tonight.
I'm Richard Quest in New York. Whatever you're up between the hours ahead I hope its profitable now, I'm going up stairs.