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Amazon Shortlists 20 Cities for HQ2; U.S. Government Staring at Shutdown; Niall Ferguson on Power and Social Networks; Nigel Sheinwald Says EU is Waiting for Clarity from U.K. Government;

Aired January 18, 2018 - 16:00   ET


[16:00:00] RICHARD QUEST, CNN HOST: Tonight, the closing bell ringing on Wall Street, no records on any of the major market. The Nasdaq just gone

negative. The Dow is off the best part of a hundred points. It's been a down day right the way through, but a small-ish losses overall to -- there

we go. The man in the nice blue suit gave a firm gavel to bring trading to a close, Thursday, the 18th of January.

Tonight, 20 prime locations. Amazon approves its list for HQ2. And I'll speak to the mayor of Dallas. The city is still in the mix. You can call

it shutdown eve in Washington. There's no sign of a breakthrough on the funding for the U.S. government. And we're going to learn the true power

of the social network. Niall Ferguson will be live in the C suite. We've a busy hour together. I'm Richard Quest live in the world's financial

capital, New York City, where I mean business.

Good evening. Tonight, more than 200 cities applied, only 20 remain. Amazon has unveiled its short list of cities still under consideration for

its big prize headquarters 2. HQ2. Join me at the super screens and you'll see where they are, from out West in Los Angeles -- only one out

there. But most of the finalists are in the Midwest, Indianapolis, Columbus, Chicago, maybe down to the south of it, Nashville, Tennessee.

And then over, of course, on the eastern seaboard, New York, Washington and all of the way down to Miami and Atlanta, as well, but it's all of the way,

nothing up there. Look at that, Pacific Northwest, nothing up there. Because Seattle, of course, is where the headquarters, the headquarters 1.

There's one in Canada. Toronto has joined in. There's none in Mexico. And I think really the key area that people are looking at are what's known

as the corridor, Boston, New York and Washington.

Remember the criteria. It had to be a city larger than 1 million people. It had to be suitable with building sites and an international airport

needed to be nearby and they needed to have tax incentives. Mayors from all over North America made bids | behalf of their cities.


UNIDENTIFIED MALE: Hey, Alexa, where should Amazon locate HQ2?

ALEXA: Hmmm, in Frisco, Texas.

ALEXA: Obviously, Washington, D.C.

ALEXA: Danbury, Connecticut.


ALEXA: You know who would love this city in Jeff Bezos.

UNIDENTIFIED MALE: Does that mean you're going to make the call?

ALEXA: Sorry, big guy, but I cannot make any promises.


QUEST: Why? Why do they want Amazon? The fact that it's the number one online retailer but look at the way the share price has risen just over the

last five years. Down here at 269. Today the best part of 1300 just off the all-time high. And it has been -- perhaps the one single bit of an

exception, it's been a solid and consistent rise throughout. Clare Sebastian has been monitoring this ever since Amazon has said they were

looking for it. It's an interesting selection of cities.

CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Yes, and as you say, very much skews towards the Midwest and the East Coast. Which makes sense for

Amazon. Their current hub, of course, is in Seattle, so it would make sense they would want something on a different side of the country. There

is one West Coast city, Los Angeles, a nod to the West Coast there. And then one Toronto in Canada. But no Mexican cities and there were some

Mexicans that applied. But a bit of a spread there, Richard, although obviously, it's a skewed toward the Midwest, the South and the East Coast.

QUEST: If you are just going for straight geographic difference, you would go to Northeast as opposed to Northwest, or you go somewhere sort of

Southeast-ish. You would necessarily go in the middle.

SEBASTIAN: Not necessarily. But then the geography is not all that they're looking for here. They're looking for somewhere that makes sense

and has good transport links, has good talent. To somewhere potentially with universities. They're looking for somewhere that's frankly going to

roll out the red carpet for them, Richard. That was in their request for proposals.

[16:05:00] Their original document that they sent out asking for these bids saying they were looking for tax incentives. They were pretty open about

that. And one of the biggest, interestingly, is coming from New Jersey, the state and city of Newark say that they'll offer $7 billion in state and

local tax credits. And that is certainly that is something that Amazon is going to be looking for as it moves to this final phase of making its


QUEST: Amazon h different facilities across the United States. What's the significance of this? Because the headquarters are still going to be in


SEBASTIAN: Well, they say this will be a full equal to the Seattle headquarters.


SEBASTIAN: There are 40,000 people that work in Seattle. This they say will be 50,000 people. Obviously, that's not immediate and it will happen

over the next ten to 15 years. But they do say it's going to be a full equal. And these are high-paying jobs, Richard. I think it's worth

comparing with what Apple announced the new campus which is going to be customer, technical support. That's not going to be $100,000 jobs. This

is going to be 50,000 jobs paying more than $100,000. That is a huge economic development project.

QUEST: We need to point out when we talk about Amazon these days, we are not necessarily just talking about the bit that delivers packages, are we?

It's Amazon web services, AWS, which is huge. It is Amazon the media company. It is the movie studios.

SEBASTIAN: It's all kinds of companies now, Richard, its gone so far beyond just being an e-commerce company. It's a logistics company. It's a

media company.

QUEST: Whole Foods.

SEBASTIAN: As you say, Whole Foods, it's expanding into all different areas. It's turned the U.S. retail sector up on its head and I think

that's one of the reason why this story is so significant. Because once again, it throws the power of this company into sharp focus. We still have

this nationwide beauty contest between cities and they still have a lot more to do, these 20 on the short list to try and attract Amazon.

QUEST: Good to see you, thank you.

Amazon says HQ1 in Seattle generated $38 billion for the city's economy. Critics say it came with brutal traffic, skyrocketing housing prices and

gentrification. The host of major companies' headquarters have been on the move recently. Now GE went from Fairfield, Connecticut, to Boston. That

was designed to create a high-tech feel for Silicon East. Caterpillar went from Peoria to Chicago, Illinois, to attract talent. And Toyota USA went

from California to Plano, Texas.

Joining me now is Michael Rawlings, the Mayor of Dallas which is on Amazon's short list. Congratulation, Mr. Mayor. Congratulations for

making the short list. How significant is it for you to attend or to get Amazon into Dallas?

MICHAEL RAWLINGS, MAYOR OF DALLAS, TEXAS: It would be a great win for us. But we've just made it into the playoffs at this point, so we've got a lot

of work to do between here and there. But as we talked about, the economic benefits are significant. Dallas has grown faster than any market in the

United States, much like Amazon. And we've got a lot of room to expand and grow with them. So, I think we're a good fit.

QUEST: How far are you prepared to go in the -- for want of a better -- forgive me, for the less tactical phrase, in the sweetness necessary to

encourage Amazon to look your way, bearing in mind, of course, that every other city is doing the same?

RAWLINGS: Yes, look, I don't think that ultimately that will be the driving factor, but where going to be as rich as anybody else. We're going

to make sure that we don't let money get in the way of this. One of the economic benefits we have is the cost of doing business here in the Dallas

area significantly less, 10 percent to 12 percent less than the average of the United States. So, when you talk about those other cities, they can

save a lot of money just by moving their headquarters here.

QUEST: There are numerous moments when any city like yourselves does go into bid. It must be a very tense moment for everybody in your economic

development organization. Do you get a feeling as the bidding process goes along whether one's making up the numbers or seriously in the running?

RAWLINGS: You know, we felt that we were seriously in the running from the very beginning. "The Wall Street Journal" did a run about all of the

things that Amazon wanted and made the Dallas area number one. So, we knew we had the facts and figures for them. Ultimately, the question is the

strategy going to be the place. It's exciting growing a city. When Toyota moved here to the Dallas area, it was a major win. It changed the

dynamics. And Amazon would do the same. It would continue to grow our history of technology starting with Texas Instruments and EDS and now AT&T

and so many technology companies that are here, and I think we're a good match for them.

[16:10:10] QUEST: Where, though, on questions of social policy and on those sort of issues, where you might have a company like Amazon whose

boss, Jeff Bezos, I don't think we're revealing secret if we say, well he's on the more liberal side. And certainly, if you look at the donations, for

example, that he and his wife gave recently on the DACA -- to send DACA students to university. If you look at him on LGBT issues. How then does

then a state like Texas compete when you may have issues of bathroom bills. You may have had equality issues in the past?

RAWLINGS: Well, I think that the city of Dallas stands up very good. We've got 100 percent on the LGBT municipal index score. We are a

terrifically open city for immigrants and everything that they believe in we believe here in Dallas. The state of Texas is open for business, and

they're going to be aggressive with incentive, as well. And I think that we've got a blue city here in a red state, which is a nice combination.

Because we keep the cost of business low and the social progressive issues up there.

QUEST: Will you be nervous, sir, over the next few weeks? How do you just take it in your stride?

RAWLINGS: Well, first of all, we're very blessed here. We have grown so fast, and so I can't complain about anything. The key is not about us.

The key is what's going to be right for Amazon. I want them to pick the right partner. And if we can be that right partner, then both of us win

and the rest will take care of itself.

QUEST: Mr. Mayor, we look forward to seeing you in Dallas. Thank you very much indeed, sir, for joining us.

RAWLINGS: Come visit.

QUEST: We will. Thank you.

The Dow fell on yesterday's record close. No records on the S&P 500 or the Nasdaq or in Europe. In fact, it was a red day overall. However,

Emirates, Emirates Airlines has flown to the rescue of the A-380 the super jumbo. The Middle Eastern carrier has 101 of the planes and has now

decided to buy 36 more. Without it Airbus had been quite clear the future of the double decker plane was in jeopardy. Now Emirates' A-380 -- the 380

has become the signature aircraft right down to the way it paints the name of the airline.

The planes ordered would be worth around $16 billion. At this price, each one of these is worth $445 million. I guarantee you -- guarantee they did

not pay anything like $445 million per plane. We'll never know how much. Jim Clark will never reveal that number, but they didn't pay that. Now

they go buy 36 more of them. That makes up 20 firm orders, options on 16 further. Emirates is not the only operator for 380s. In all, there are 13

airlines around the world that fly the 380.

No U.S. carrier, their largest plane is the 777 300er. They're going for frequency over size. But if you look at the hubs where they fly to, this

is not exclusive, but the major hub, the major hubs where most 380s go to, are obviously, Dubai because of Emirates. London, Heathrow, because

everybody sends their 380s into Heathrow. Sydney has quite a lot, as well. And over at Singapore for Singapore Airlines. Miles O'Brien is with me,

CNN's aviation analyst. Good to see you, Miles.

MILES O'BRIEN, CNN AVIATION ANALYST: Good to see you, Richard.

QUEST: The 380, a technological achievement, and amazing aircraft and an economic disaster for Airbus. Is that fair? I think that's fair, Richard.

I think you were on one of the first flights, Singapore Airlines, and on that particular 380 they turned it back in after its lease expired after a

decade. It's been a bit of a turkey. It's possible for an aircraft to be behind the times and ahead of its time at the same time and I would say

that is the Airbus A-380. It seemed like a great idea to build a big 500- seat plane to go to these big hubs. The airlines were fast and furious building these hubs and spoke systems like we saw in the '90s into the

early 2000s. But what happened along the way was Boeing came up with a very fuel-efficient alternative, and a smaller aircraft, the 787 which

allowed the airlines to go from smaller cities point-to-point. And passengers happen to like that very much.

[16:15:00] QUEST: So, with Emirates, I mean without us getting too deep into the weeds of the protectionist allegations about how the company, how

the airline allegedly may or may not. I mean, at the end of the day they have made it their trademark. Other airlines say they can -- their 380s

and British Airway, for example, say the 380s are very specific for routes like Los Angeles, Hong Kong, but Emirates seems to have made a success of


O'BRIEN: They have a structure of city pairs and traffic volume that works for them. The problem is something as big as the A-380 and even Emirates,

as successful as it is, has to have other airlines flying it. And has to have a production line open in Toulouse, France building more A-380s,

otherwise the residual value on these aircraft goes to practically nil and it becomes very difficult for them to justify it on a business level.

So, part of the deal was a guarantee, they insisted -- Emirates insisted that Airbus promised it would keep its production line going for at least

ten years on the hope that other airlines will buy in eventually. That the industry patterns will change. Air travel is, after all, going up and

their hope is that they're just a little early to the show even though they're also a little late in some respects.

QUEST: What do you think he paid for each one of them while the latest 36? $445 million?

O'BRIEN: Why don't you and I get together and write a check, and we could probably get one.

QUEST: Miles O'Brien with the best idea of the day. Thank you very much, indeed. You put in most of it and I'll just give you the little pence bit

of the end.

As we continue talking about the large checks. The checks stop from the U.S. government as of the weekend and that's because the shutdown is upon



QUEST: Donald Trump says there very could be a U.S. government shutdown and the deadline is midnight on Friday. Republicans in Congress are

chasing down the votes for another short-term budget resolution, and while Paul Ryan in the House is looking for a majority Democrat are digging in

their heels there, too. Opposing Republican demands on immigration, defense spending and welfare. Now across over in the Senate, Mitch

McConnell's Republicans need 60 votes. Democrats say they're growing angrier over the entire short-term budget process. There have been 18

government shutdowns in U.S. history. Some have lasted just a few hours. The longest was 21 days. In the past the shutdowns have been over issues

such as abortion, aircraft carriers, missile programs, foreign aid, civil rights, public debt issues.

[16:20:03] The two parties fiercely have disagreed. Phil Mattingly is on Capitol Hill. You've witnessed politics at its most venal before. Is it

your feeling, Phil, that this is getting seriously close?

PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes. I think it is fair to say at this moment based on what's going on in the House and what's

going on in the Senate, Richard, that we are well on our way to the 19th shutdown. I think right now House Republican leaders feel like they have

the votes to move their short-term funding bill forward. That's not a sure thing yet, but they feel like they're in a good place. That vote should be

in a couple of hours.

But over in the Senate one thing is completely clear, Senator Mitch McConnell will not get 60 votes for the current short-term funding plan.

Democrats are almost unified in their opposition to it. If Mitch McConnell does not have Democratic support, he only controls 51 seats. He needs at

least nine, probably more than that. Because Republicans, some Republicans are opposed as well. Things are headed toward a shutdown. The big

question now, is obviously, the shutdown doesn't start in eight hours, it starts in more than 24. So, can they figure something out in the meantime?

But right now, that's the state of play.

QUEST: I mean, the shutdown is one thing, that's just a straight, forward logistical issue to re-authorize government expenditures. It's the

question of what's attached, the price for avoiding the shutdown, as I understand it. It is how much will you give me for my vote -- or what will

you give me for my vote to keep the government open. Is that it in a nutshell?

MATTINGLY: Yes. I mean, look, it's twofold, right? There's obviously the policy prescription that one side wants that they hope they can get.

Sometimes it doesn't always work. It didn't work in 2013 when Republicans shut down the government over Obamacare defunding. Obviously, that never

happened. What changed there and what can often change and kind of shift the dynamic on this is how the public feels about it. If one side ends up

getting bludgeoned publicly to blame for whatever the issue is, often that shortens the duration of these things.

When you talk about a policy, the clear issue that Democrats want to address is some solution to the deferred action program, the DACA issue.

There's not one in the works right not. So, I think the big question now is a lot of times, Richard, you know as well, where you know what the deal

is. They're going to kind of fight it out for a little bit until they actually reach to that point. I'm talking to Republicans and Democrats

particularly in the Senate right now, who don't know what the deal is. Don't know where the endgame actually is here. And I think that's why

there's a lot of concern that not only is it real right now, but it's going to be real for a couple of days, at least.

QUEST: Phil Mattingly, thank you.

And one of the reasons is Donald Trump insists there's no deal without the wall. The president's now pushing back against claims from his own chief

of staff who said Mr. Trump's attitude on the wall has changed. Now the president says the wall is the wall and it has never changed or evolved.

CNN's Jeff Zeleny is at the White House. I am confused here. It seems to me that already the president has said the wall is more expensive than he

promised during the campaign. It is now $18 to 20 billion, but it was 10 to 12 during the campaign. It's not going to be a wall from sea to shining

sea. In some part it'll just be a fence or a barrier or nothing at all. And anyway, Mexico is not going to pay for the wall directly and that's

something else. So, he has evolved.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: There's no question, Richard, that he's evolved, and the reality is during the campaign the wall

became something of a soundtrack, if you will, a message, a metaphor for something larger on immigration. There's no question on this and many

other matters the president has evolved. That doesn't make him unique necessarily in terms of presidents. They learn in office.

But he has not acknowledged that he's evolved. His own chief of staff though, John Kelly, a retired Four-Star Marine General he had a bit of

honesty yesterday when he was up on Capitol Hill talking to some of the lawmakers and he said the president was not fully informed during his

campaign, and then he said on Fox that he has evolved. Well that, we are told, angered the president somewhat because he does not like to be

corrected in public, at least. So, the president publicly said he thinks the chief of staff is doing a great job. That does not always mean what he

says. So, at the end of the day here, the wall is one of the sticking points in this government potential shutdown that Phil was just talking

about, but there are many more things involved in this, as well, Richard.

QUEST: The president has been in Pennsylvania giving a rousing speech on tax, the tax cuts. And as I was listening to it, it struck me that there's

a huge gap now between what America is hearing from the president and what it likes and what it sees, and Martin Savidge reported this from Ohio, and

the way Washington is viewing what's going on at the moment between the president or the Congress and between the president and his chief of staff.

There are large parts of the country that seem to be absolutely in favor of the policies particularly, for example, the tax cuts.

[16:25:00] ZELENY: I mean, the president clearly is still trying to frame what those tax cuts are. Most presidents do this before they sign a bill

into law. They try to gather support for a piece of legislation. That is something this president really didn't do. He didn't go out and sell the

plan beforehand. Now he's trying to sell it afterward and boy, it would take a while to fact check everything that he said in that Pennsylvania

speech. Because, Richard, the reality is he can say people are going to get a tax cut as many times as he wants, but the reality is that massive

piece of legislation, a sweeping overhaul was a much better deal for corporations than average people.

That said, there are a lot of companies that are, indeed investing more. Apple, of course, the prime example. And the president acknowledged. He

called Tim Cook, the CEO of Apple, and thanked him for that. So, the president using the shame approach in one respect, to try and get some

companies to pony up, if you will. That is going to increase the approval rating of the tax cut plan, but we'll see what happens in the years to come

when people realize it was likely probably just a short-term high for them and a long-term gain for companies.

QUEST: Jeff, good to see you, sir, thank you. It looks like it's a good day. It's a clear day at least, maybe cold in Washington. I appreciate


Zeleny: Thanks, Richard.

QUEST: Russia is denying allegations by Donald Trump that the Kremlin is helping North Korea to dodge sanctions. Steve Hall is CNN's national

security analyst, joins me from Tucson. Are they? What's the truth here?

STEVE HALL, CNN NATIONAL SECURITY ANALYST: Well Richard, if I had to bet after having dealt with Russians for a lot of years, this would be

absolutely consistent with what the Russians would want to do. And the reason is this. The Russians really like to put themselves in a position

hereby they're the only ones who can help the rest of the world fix something. So, whether it's Syria or whether it's in this case, North

Korea, Russia strives for that great power status. They really want a seat at the table.

So, it wouldn't surprise me at all if the Russians were actually helping the North Koreans. So that when the rest of the world and the United

States come and say, wait a second, somebody's got to -- we have to somehow fix this. The Russians are now in a position to be able to say, wow, we

can work with you on that because we can withhold some oil or something along those lines. So, this is right out of Vladimir Putin's playbook --


QUEST: In talking about Vladimir Putin and talking about the relationship between Washington and Moscow, it's difficult to know whether -- it's

difficult to know how bad it is at time when clearly the two leaders are trying to appear that it's not.

HALL: It's been an interesting year and certainly for everybody, but Vladimir Putin is not exempt from that. He started out the year thinking

OK, you know, my guy got the presidency. I would have much rather have preferred him to Putin as opposed to Clinton. But in an interesting sort

of turn of events, and this sometimes happens when you are doing a covert action or active measures -- as the Russians like to call it -- sometimes

you don't always control all the outcome. And so now you got the situation where the president of the United States is domestically bound due to

domestic politics, not to appear too pro-Russian, or too pro-Putin, because of the whole Russian probe. It's funny because, you know, Putin's got what

he wanted. But by the same token the guy that he wanted in the office Donald Trump can't really produce all of the things that Vladimir Putin

hoped that he would. So, it's been sort of a conundrum for him.

QUEST: I think it's worth just pointing out that whereas Donald Trump is - - I use the phrase slightly advisedly -- beleaguered in terms of the level of criticism coming in different directions. No such constraints are on

Vladimir Putin as he faces his electorate later in the year. Is that correct?

HALL: Yes. Safe to say that Vladimir Putin probably doesn't spend a whole lot of sleepless nights wondering whether he will win or frankly, spending

too much time thinking about how he's going to be most effective Vladivostok, or you know, Tuva or some things like that. There really are

no free and fair elections in Russia. It's a closed society. It's autocracy. So, Putin will win. It's just a matter of somebody other

underlying political things happening with guy like --

QUEST: I just had a thought of a quick question for almost yes or no. Do you think North Korea's Kim and Donald Trump have ever actually spoken?

HALL: Boy, that's a good question. I don't know is what I'm going to have to say. I'll bet not, though.

QUEST: All right, we'll allow you that, sir. An unfair question. Good to see you, Steve Hall, joining me from the beautiful state from Tucson,


As we continue tonight. We tend to think of Facebook is straight out of the modern age. My next guest tells us about social network of old and why

it's time to revisit our view of history. Come and join me, sir.

NIALL FERGUSON, AUTHOR, "THE SQUARE AND THE TOWER": It's a pleasure to see you, my friend

[16:30:00] QUEST: Come and join me in the C suite. We polished it up just for you.

FERGUSON: I'm impressed. You've come up in the world, Richard.


QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. As we continue this evening, this is CNN, and on this

network the facts always come first.

A deadly winter storm is roaring across Europe. At least eight people have been killed and dozens of people have been injured. 150-kilometer winds

toppled trees and tore off roofs. Amsterdam's International airport, Schiphol, all was shut down, and Germany's long-distance train service, the

ICE, was suspended on Thursday.

California authorities are disclosing further information about the parents accused of torturing their children while keeping them captive. The

children have severe cognitive impairment. They were only allowed to shower once a year and the 29-year-old daughter weighed 40 kilograms.

Criminal charges have been filed against the couple.

Russia is adamantly denying allegations by the Trump administration and it's helping North Korea dodge sanctions. The Russian foreign ministry

called the claims unfounded. On Wednesday, the U.S. president said Russia is not helping us at all with the North. Moscow's been accused of

supplying it with fuel.

It was a match made in heaven or certainly close as you're going to get. Pope Francis married two flight attendants aboard a plane heading across

Chile. The couple were chatting with the Pope in flight and they told him that they were married civilly, but never had a church ceremony. The Pope

didn't want to waste a moment, asked them if they were sure and then married them -- to each other that is -- there and then.

Prince Harry and his fiancee, Meghan Markle, have made their first official visit to Wales, while hundreds of people were there to get a glimpse of a

couple. They were in the capital, the Welsh capital, to shine a spotlight on Welsh heritage and culture. They were at Cardiff Castle and then

traveled to a leisure center to see sport and how it improves the lives of children.

Facebook says almost every small business now uses digital technology to reach consumers and customers, and its study shows 84 percent use at least

one major digital platform. We tend to think of social networks as a modern phenomenon.

[16:35:04] My next guest, the author, Niall Ferguson, says they're nothing new. This is his new book, "The Square and the Tower." He says from the

printing press to the preachers, it was networkers who disrupted the older order, and today the computer has replaced the printing press. The

professor is with me here in the C suite.

FERGUSON: Pleasure to be with you, Richard.

QUEST: The similarity between a printing press, Randolph Hearst, Maxwell, if you like, they had a point of view that they promulgated, and they went



QUEST: Their publication, Lord Rothermere said this is what the "Daily Mail" will say. Facebook doesn't have that.

FERGUSON: Or does it? After all, we don't quite know who tweaks the algorithm or how the tweak is. Facebook's a very remarkable thing. It's

the biggest content publisher in all of history. Producing vastly more content with a much bigger market share than any of the people you

mentioned in the heyday of newspapers. Mark Zuckerberg's a much more influential figure actually than William Randolph Hurst. But there's no

editor as you rightly say. And what there is an algorithm deciding what gets into your news feed. And up until what I'll call the great crisis of

the 2016 election, that algorithm basically gave you more of what you engaged with. And so, it created a skewed news feed designed to satisfy

your interests and we gave you more of what you liked.

QUEST: Accepting that to be the case and obviously, the change in the algorithm to get rid of less corporate, less publishing and to give you

more of community.

FERGUSON: Right. More stuff by your friends and family. That's the big proposition that Mark Zuckerberg has unveiled as a way to fix, quote,

unquote, Facebook after the really very horrific revelations from the vantage point of Silicon Valley that Facebook had been crucial to the rise

of Donald Trump. This was definitely not the plan when Facebook was created, but it became the single most powerful reason for Donald Trump's

victory in 2016.

QUEST: I suppose the point is it did it by accident? I mean, the algorithm wasn't by accident, but the effect wasn't unintended.

FERGUSON: Correct.

QUEST: Unlike the previous publications or the person who invented the printing press never intended it to be.

FERGUSON: But Johannes couldn't have definitely intended to produce "The Sun" newspaper to give just one example.

QUEST: Right.

FERGUSON: The law of unintended consequences is pretty much the only law of history, and I think it applies here. I don't think when Facebook was

designed Mark Zuckerberg had any intention to become a publisher of online content on this scale. But that's what happened.

QUEST: So, now he is, and the truth of it can't be denied. And whether it's Twitter carrying the tweets of Theresa May, Donald Trump and anybody

else. Or if it is Instagram or whatever it is, what role and responsibility do you believe society must now impose upon them?

FERGUSON: We need to recognize that the public sphere has fundamentally altered when 45 percent of Americans get their news from Facebook. And we

also need to recognize that the social media, not just Facebook and Twitter, too, have led to a tremendous polarization of politics. And

that's because they incentivize, not just fake news, because extreme views. Because extreme views get engagement. And I think the key issue here --

let me focus one point, Richard -- is that they are an anomaly. Right now, Facebook and Google, all of the network platforms are regulated differently

from media publishers. They are regulated as if they are not content publishers. As if they are just technology platforms. I think that's an

anomaly because it means there isn't a level playing field.

QUEST: We talked about this earlier in the week when we showed how those companies are now Morgan Stanley's investment index has moved those

companies into a new brand called communications companies. So, are you I favor, libertarian that you are, are you in favor in some ways of a strong,

regulatory regime?

FERGUSON: Well, I think when it comes to something like political advertising, only a crazy person would say, it's OK for Russians to take

out 3,000 advertisements without revealing that the Russian in origin. So, it clearly needs to have the same regulatory framework that already exists

on television when it comes to politics. And I think that's not something that the libertarians should be against. Anybody who believes in democracy

wants the public sphere not to be contaminated by fake news. Especially fake news generated by Russian intelligence. So, I think this is simply a

matter of creating a level playing field so that all content, particularly political content is subject to the same rules.

QUEST: Are you prepared to accept that this is all so new and that it's happening in front of our eyes as we go along. That mistakes clearly are -

- unintended consequences and mistakes are going to be made and it could get a great deal messier before it gets better.

FERGUSON: I think that's quite likely. Because at the moment, essentially, we are being told don't worry, we'll fix Facebook. Nobody

needs to change anything. So, it's the old self-regulation story. Which is Silicon Valley's model of operation. Will look after ourselves don't

regulate us. Please leave us alone.

[16:40:00] Of course, if you are making billions of dollars every quarter from advertising revenue, you don't rely on the game to change.

QUEST: Should Zuckerberg be forced to give more evidence, to give more press conferences and I can't remember the last time he's actually stood in

front of people and said exactly and answer questions.

FERGUSON: Mark Zuckerberg makes a great deal of public statements, commencement addresses. It's not like he's the invisible man. But I think

the question that interests me is twofold. One, will Facebook accept that it is a content publisher just the same as news corp. And that therefore

it should be liable for all of the content that appears on its platform? That's number one.

Number two is let's face it, Facebook now knows more about citizens than the federal government, than any government. It knows more about the

citizens that citizens themselves know, and I think there is a problem there. That doesn't seem like a sustainable state of affairs. I'm not

saying that Facebook needs to give us back our data, though we must wish we hadn't give it away for free the way we did. But I do think this has given

Facebook enormous power and we need to recognize that that power was misused and abused in 2016 and may well be misused and abused in elections

this year in Brazil, in Mexico, in Italy.

Don't think that there won't be populists in those countries trying to use the same tactics that were used by the Trump campaign so successfully.

Also by the Brexit campaign in the U.K. And nothing has really fundamentally changed in that respect. Facebook is the most powerful tool

for advertising, including political advertising in the world today. And we can't, I think, it seems to me, continue to treat it like a tech start-

up that should be exempt from most liabilities.

QUEST: I am fascinated to know why you decided to go on this search.

FERGUSON: I'll tell you.

QUEST: This is an entire different area, in many ways from your previous writings.

FERGUSON: Richard, you know, ten years ago I published the book called "The Ascent of Money," which is inspired by a sense that Wall Street was

entirely diluted, and a massive financial crisis was coming. I moved to Stanford a year and a half ago and it was right next to Silicon Valley.

Tried to talk about history with people there, and was told history began with the Google IPO. All that you know is irrelevant. And I guess that

made me a little bit cranky. So, the point of the book is to teach some history to Silicon Valley and maybe to teach them network science to people

who are interested in history.

QUEST: And to come a talk to us whenever you're in New York.

FERGUSON: My pleasure.

QUEST: Good to see you, sir.

FERGUSON: Thank you.

QUEST: Now, Niall is going to be very lucky. He's not going up the Swiss mountain next week.

Unfortunately, I cannot claim the same privilege, but thankfully for you, we will be live from Davos every day at the usual time. A raft of guests,

and maybe a couple of ways of keeping warm. Well it's not supposed to be too cold next week. We'll have more. It's QUEST MEANS BUSINESS live from

New York.


QUEST: A California couple are appearing in court accused of torturing their children while keeping them captive. Paul Vercammen joins me now

from Riverside, California. What have we heard? What do we know?

PAUL VERCAMMEN, CNN CORRESPONDENT: Richard, the district attorney outlined a series of counts that are mind-boggling. 38 counts against David and

Louise Turpin that include all forms of torture, abuse, even holing a dependent adult against their will and one count even of a lewd act against

a minor child using fear or force. As the district attorney unfurled the sordid tale we learned the following. He said these children basically

slept all day and came out at night. They were kept captive, if you will, in this home in the small town of Perris, California.

Very few people on the outside having contact with them. One of the 17- year-old children hatched a plan starting two years ago and she would escape through a window, use a cell phone and call 911. She had brought

another one of her siblings with her. That sibling in effect, got scared and returned to the house. Among the things they say that this couple did,

they would strangle their kids when they were upset. They would beat their children. The children were horribly malnourished. Apparently the 17-

year-old looked like 10-year-old, and one of the children in their 20s only weighed something like 80-something pounds. So, they seemed much younger

than they were. The district attorney also outlined that some of these children had cognitive problems and one of them didn't even know who or

what a police officer was -- Richard.

QUEST: Paul, the question is begged looking at the house where they lived, and we don't see sort of neighbors or how big it is, but in previous cases

of these, how did the neighbors not have an inkling, bearing in mind that there are pictures that we're seeing now, of this family outside, Disney

and elsewhere, did nobody think it was strange? I mean, that's got to be a core question, surely.

VERCAMMEN: It absolutely is, and one of the things that the district attorney alluded to is the sense of making them nocturnal. So, when there

would be these brushes with neighbors during the day these children were asleep. He said the timeline went something like this, they would stay up

until 4:00 or 5:00 in the morning and then go to bed and frankly, they just weren't allowed to leave. Some of them literally chained to their beds or

ropes were used previously and the abuse intensified so they had no chance to get out and very little interaction with the neighbors in this very

small town here in riverside county, Richard.

QUEST: Paul, horrific stuff. Thank you very much, indeed for that. As we continue tonight, President Emmanuel Macron upon France is in the U.K. and

he is with there may and willing to lend Britain one of the most famous tapestries in the world.


QUEST: A story told in the Bayeux tapestry is one of cross-channel conflict and conquest. The invasion of England launched from France 1066

and all that. Day the latest powerful Frenchmen to set foot on English soil came under different circumstances. President Emmanuel Macron even

promised to lend the famous tapestry to his neighbors and it's the first time that's happened in its 950-year history. He was speaking alongside

the Prime Minister Theresa May and President Macron spoke of a new border treaty and defense assures covering operations from Eastern Europe to West

Africa. Britain's former ambassador to the EU says a strong Anglo-French relationship is key to Brexit negotiations. I asked Nigel, how the talks

are progressing with some countries taking a harder line against Britain.

NIGEL SHEINWALD, FORMER BRITISH AMBASSADOR TO THE EU: The first thing for the U.K. to do is to be clear about what it wants, and I think the rest of

the EU is waiting for Theresa May's government to be clear about its vision for the future relationship. That's the first thing. The second thing is

that there is a wide spectrum of opinion, but even those who of the U.K. to have a very, very close and tariff-free trade relationship with the EU.

Nevertheless, don't want us to cherry pick and they don't want us in the words one politician used to have our cake and eat it, and they want us to

abide by essentially the same rules as they do in the single market and otherwise we'll undercut them, they fear, and this is quite a delicate

balancing act for them to get right.

And I don't think they can just set themselves forth on a completely new path regardless of Europe, and nevertheless, hope to have a frictionless

and really effective trade relationship with the rest of Europe.

QUEST: You talk about a delicate path. Nowhere is that delicacy more obvious than in the transatlantic relationship with a president who seems

to be souring, if not on the special relationship at least for the time being on his relationship with the U.K. Now this is very dangerous

territory for Britain, hoping for an early trade deal.

SHEINWALD: No, I agree. It's a great shame what's been said in the last few weeks. Britain needs America. Britain needs America more than ever

after Brexit and we'll need a trade deal. I think we need to be realistic about a trade deal, about the length of time it takes to negotiate one and

how easy it will be to do that, in any event, but I very much hope that the two governments can get this back on track. It would be ridiculous if of

all countries, President Trump were not to visit the U.K. because of some prejudice that he's got about it. So, I very much hope we can get this

back on track.

QUEST: Let me jump in there, though, but how do you get it back on track with arguably a sensitive president who will take any criticism as a slight

and a difficulty where, you know, the British government literally damned if they do and damned if they don't?

SHEINWALD: I think the reality is that there are differences. There always have been differences between British and American governments.

It's not as though there's always been absolutely perfect harmony. You're right. Some presidents are more personally sensitive than others, but I

think the president, I hope, will have a moment to reflect on how important the U.K. is, how useful to have a trade, economic, security and cultural

relationship with us.

Those are the things which have propelled our relationship in decades gone by and of course, there is some criticism of some of the things that he

said there, but people in the U.K. know the importance of the U.S. and they know it's important for our government to have a decent relationship with

him, and there's criticism in France and there's criticism in Germany that hasn't prevented him going there. So, I think we can't get ourselves in

the position where of all of the relationships it's the U.K.- U.S. one which doesn't get looked after by this administration.

[16:55:00] QUEST: The U.K. ambassador to Washington, that just happened, American Express has just posted its first loss in a quarter of a century.

Now, we know the reason why. It's quite clear. A $2.6 billion charge related to the changing tax rate for U.S. companies on its tax credits.

Remember, they've had to write down those tax credits against losses. The car payment giant is suspending its stock buyback plan and let's see how

that continues once the benefits of the lower corporate tax rates start to flow through. Quickly to the Dow Jones, it did close down only a hundred

or so off the course of the session and the day was sort of a miserable sort of day and bearing in mind the gains that we've seen over recent days.

We will have our Profitable Moment after the break.


QUEST: Tonight's Profitable Moment, addressing this question of the U.S. economy and how far Donald Trump can take credit for the great way it seems

to be performing. Certainly, in his speech today he was talking about the tax cuts, the low unemployment and low inflation. There's a lot of truth

in what he says in that regard. Yes, Barack Obama and Janet Yellen, the previous administration's policies lay a solid ground for what we're seeing

today, but the confidence boost cannot be denied, and you've seen it particularly in the tax cut. Apple bringing back $38 billion -- or paying

$38 billion in taxes and bringing many billions more back.

Donald Trump did manage to solve the problem of the expatriated money and get it back and that is to his credit and we can argue backwards and

forwards about what it means for the future and its deficit, but as most companies announce greater investments like Amazon's done with its

headquarters, and then I think you have to at least give the president credit for some of the recovery and some of the growth that's taking place

now in the U.S. economy, all of which will be discussed in Davos.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable.

I'll see you in Davos next week.