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Facebook Loses Billions Of Dollars As Its Data Scandal Goes Global; Britain And Europe Set A Date For The Great British Brexit Transition; Uber Self-Driving Cars Are Off The Roads After A Deadly Crash With A Pedestrian. Aired 5-6p ET
Aired March 19, 2018 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
[17:00:00] (WALL STREET CLOSING BELL)
BIANNA GOLODRYGA, CNN HOST, QUEST MEANS BUSINESS: And that's the sound of the CLOSING BELL ringing an hour ago on a day where the Dow fell more than
300 points, it's Monday, the 19th of March.
Tonight, Facebook loses billions of dollars as its data scandal goes global.
Britain and Europe set a date for the great British Brexit transition.
And Uber self-driving cars are off the roads after a deadly crash with a pedestrian.
I am Bianna Golodryga and this is QUEST MEANS BUSINESS.
And tonight, Facebook is facing what could be the most urgent crisis in its young history. The share price is sinking. Lawmakers are circling and
some of its users are outraged. All this over a controversial firm that used information from millions of Facebook users right under the company's
nose.
Cambridge Analytica got hold of millions of people's data without their explicit consent, then they used it to try to influence voters triggering
an outcry from politicians in countries worldwide. It's a fallout that spooked Tech stocks and the broader market; the Dow has closed more than
300 points lower because of that.
The data scandal has wiped $37 billion off the company's stock value. Facebook stock closed down nearly seven percent and it's also shaved about
$5 billion off Marc Zuckerberg's net worth; the CEO holds about 400 million Facebook shares.
And tonight, the Cambridge Analytica whistleblower told CNN why users won't ask for their permission.
(BEGIN VIDEO CLIP)
CHRISTOPHER WYLIE, CO-FOUNDER OF CAMBRIDGE ANALYTICA & CAMBRIDGE ANALYTICA WHISTLEBLOWER: If you don't ask questions you won't get answers that you
don't like right so you know, we knew how the apps work. We knew that you know, when it pulls the Facebook friend data it wouldn't ask the friends if
-
GOLODRYGA: Yes.
WYLIE: - they - if they could get permission for that it just went and just pulled it and that's why it scaled so quickly.
(END VIDEO CLIP)
GOLODRYGA: The U.K.'s data protection agency (ph) is trying to get a warrant to search the offices of Cambridge Analytica.
Facebook has instructed a Digital Forensics firm to carry out a comprehensive audit of their servers.
Isa Soares now reports on how this company and Facebook found itself in a storm over privacy.
(BEGIN AUDIOTAPE)
ISA SOARES, CNN ANCHOR & CNN INTERNATIONAL CORRESPONDENT, LONDON: I first met the CEO of Cambridge Analytica, Alexander Nix nine days before the U.S.
presidential election in 2016, a man confident he could get inside the mind of American voters by predicting and then attempting to alter their
behavior.
(BEGIN VIDEO CLIP)
ALEXANDER NIX, CEO CAMBRIDGE ANALYTICA: I think the data is extremely robust and proven to be so time and again.
(APPLAUSE)
(END VIDEO CLIP)
SOARES: His data helped this man win, U.S. President Donald Trump who paid multimillion dollars for them to work their magic.
But behind their win method is more than just data-crunching, it's a massive data grab so says their former contractor, now turn whistleblower,
Chris Wylie.
(BEGIN VIDEO CLIP)
CHRISTOPHER WYLIE, CO-FOUNDER OF CAMBRIDGE ANALYTICA & CAMBRIDGE ANALYTICA WHISTLEBLOWER: We spent almost a million doing this. It wasn't some tiny
pilot project, it was the core of what Cambridge Analytica became.
It allowed us to move into the hearts and minds of American voters in a way that had never been done before.
(END VIDEO CLIP)
SOARES: And this is what Wylie says they did, Cambridge Analytica receive data from a third party, a Professor Aleksandr Kogan based at the
University of Cambridge who was able to gather data on tens of millions of Americans through Facebook.
And then using a survey placed on Facebook they asked users to take a personality test. The answers grouped people on the personality types;
they combined it with voter history, what they buy, where they shop, and what they watched on TV and that enabled them to predict the personality of
every adult in the United States and then target them with specific political ads.
But it goes further, by opting into these Facebook surveys, each user was actually giving not just their data but that of many of their Facebook
friends.
(BEGIN VIDEO CLIP)
WYLIE: It was a grossly unethical experiment because you are playing with an entire country, the psychology of an entire country without their
consent or awareness.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
ALEXANDER NIX, CEO CAMBRIDGE ANALYTICA: We are a small (INAUDIBLE) -
(END VIDEO CLIP)
SOARES: Speaking to U.K. Parliament Committee on Data Protection of Fake News back in February, Cambridge Analytica denied it violated Facebook's
term.
(BEGIN VIDEO CLIP)
NIX: We don't work with Facebook data, we don't have Facebook data. We do use Facebook as the platform to advertise as do all brands and many - most
agencies or all agencies I should say and we use Facebook as a means to gather data.
(END VIDEO CLIP)
SOARES: The attention now turns to Facebook and how it reportedly allowed a data breach on this scale.
(BEGIN VIDEO CLIP)
(APPLAUSE)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: As I have said from the beginning -
(END VIDEO CLIP)
[17:05:00] SOARES: And more importantly how it was used to reach and influence voters ahead of the 2016 presidential election.
In a statement Facebook says the claim that this is a data breach is completely false and that those involved certified they had destroyed the
data.
Meanwhile it says it's suspending the accounts of Chris Wylie, Cambridge Analytica, as well as Professor Aleksandr Kogan who did not respond to our
request for comment.
If anything, it shined the light in the dark (INAUDIBLE) a political advertising.
Isa Soares, CNN, London.
(END AUDIOTAPE)
GOLODRYGA: And our thanks to Isa for that.
Facebook is now facing the heat from regulators around the world.
In the United States senators are calling for Marc Zuckerberg to give evidence. The CEO has never appeared on Capitol Hill before.
And in the U.K. British lawmaker, Damian Collins says he would also call on Zuckerberg to give testimony.
And at the European Union headquarters in Brussels, the E.U. Justice commissioner wants an investigation while the European Parliament is to
carry out its own inquiry.
Europe's data protection rules are tougher than in the U.S. because they are coded (ph) into law.
CNN Senior Investigative Correspondent, Drew Griffin is in Atlanta. Drew we're seeing the ramifications in Facebook through its stock price; we are
not hearing from their leadership as of yet, how important is it to hear from Marc Zuckerberg and Sheryl Sandberg?
DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: Well I think they do have some explaining to do based on what these whistleblowers are coming
forward and now saying that it is Facebook that made this entire thing possible, the fact that they opened up their platform to this kind of data
mining and we're not able to contain that data mining or make sure that it promised not to intrude on people's privacy.
I think it has a long way to be explained yet by Zuckerberg and the - and the others that you speak of and now as you said this could not only become
an ethical issue but perhaps a legality issue in terms of people's privacy rights, what they are signing up for, when they sign on to Facebook.
GOLODRYGA: Yes. You're talking about the 2011 consent decree with the Federal Trade Commission.
But let me ask you about how Facebook has responded thus far, they've suspended Cambridge Analytica and Kogan, the Professor, the Doctor, who was
administering the test in the study from the platform; they're doing an audit on Cambridge Analytica right now.
But this story broke some two years ago, if I'm not mistaken, is this a little - too little too late right now that we're seeing from Facebook?
GRIFFIN: Well it seems like we're just filling in the gaps if what Facebook already knew, they - as you said they knew about this data dive a
couple of years ago, they apparently said that they were promised that this data was eliminated or erased; it apparently wasn't according to the
whistleblower Chris Wylie and was still being use.
So, Facebook may have thought they addressed it but they didn't get any proof apparently that they addressed it and it just went on and on and on.
Cambridge Analytica has said that they did not use this particular data in the 2016 U.S. presidential election, Chris Wylie doesn't believe that for
one minute, he says that Cambridge Analytica which of course was hired by the Trump campaign, had been meeting with the Trump campaign even before
there was a Trump campaign, back in 2015, prior to Donald Trump entering the presidential race.
GOLODRYGA: And of course, there's just now a reporting on "Channel 4 News," the documentary about Cambridge Analytica and some questionable
things that they did as a company as well, to try to lure in lawmakers through women who they hired for sex acts and what have you.
Let me ask you though, about the longer-term ramifications for Facebook. There'd been a lot of protests from lawmakers from both sides of the aisle
that this is a company whether intended or unintended should not be regulated as a media company, as a news company, Facebook gave a lot of
pushback, are we going to start hearing more calls for regulation now from lawmakers?
GRIFFIN: I think you're already hearing that and seeing that. Some of the letters I have seen from members of the U.S. Senate, just sending letters
to Facebook this afternoon, talking about FTC regulations and the need for privacy when people sign up for these services.
I think Facebook is going to look back on this as a severely mishandled few years in their existence but the other thing I think we need to be clear of
is the old saying that you would get from your mom, your dad, 'nothing online is private.'
GOLODRYGA: Yes.
GRIFFIN: People are getting paid millions of dollars to try and find everything they can about you and as soon as you go online, you are
exposing yourself, willingly or not to all this kind of data intrusion.
GOLODRYGA: A lot of people questioning now whether they themselves were exposed and of course you can't go back to thinking about that infamous
statement from Marc Zuckerberg where he said, it would be crazy to think that Facebook had any influence on the election. He walked those words
back but now of course he's facing a lot more questions about their role specifically the 2016 election.
[17:10:00] Drew Griffin, thank you so much for joining us.
GRIFFIN: Thank you.
GOLODRYGA: Well Facebook selloff pushed down Tech shares and the broader U.S. market and the S&P and the NASDAQ posted their worst percentage losses
since early February.
Every single sector closed in the red, the Dow closed off 336 points putting it back in negative territory for the year; Boeing was the only
stock in the Dow (INAUDIBLE) to rise.
Clare Sebastian is tracking the numbers and the causes. So, Techs really the laggard here, Clare is it all about concerns, possible regulation as
Drew just mentioned?
CLARE SEBASTIAN, CNN MONEY CORRESPONDENT: Well I think there are a lot of questions, that is one of them. Obviously, we're seeing that several
senators are now calling for Marc Zuckerberg to testify on the "Hill", there are concerns that Facebook which has been largely unregulated thus
far will now be subject to closer scrutiny, that could affect other tech companies like Alphabet for example but also trade in data, that is at the
heart of their business model.
I think this is also an existential question for Facebook you know, what they do is they package up data and sell it, well this you know, mean
advertisers are going to start to question their association with Facebook, will it mean that you know, they're going to have to restrict the ways that
they can - they can sell data to these advertisers.
And I think it's - as Drew was pointing out and as you are asking, and this is a question of leadership as well you know, Damian Collins, the British
MP said Marc Zuckerberg is hiding behind his Facebook page and I think investors are you know, are thinking are we going to get some kind of you
know, more coordinated response from Facebook leadership and that is what leading to these questions on the market today.
GOLODRYGA: And you can't help but thinking of Cheryl Sandberg, the COO who was brought in to be the quote/unquote "Adult" in the room, and the
supervisor. She had focused so much over the past few years on her "Lean In" movement right, with her book and obviously a lot of good came out of
that.
But now people may be wondering how are you holding down two jobs by starting this movement, on the other hand allowing things like this to slip
through the cracks at Facebook.
SEBASTIAN: Right. Exactly. Why aren't we hearing from either of these top figures. You know, Marc Zuckerberg you know, goes out on his Facebook
page you know, once-a-year, he has his pledge. This year his pledge was to fix Facebook, this don't forget is coming on the top of other reputational
issues that they've had in the wake of the 2016 election, they've already changed their algorithm to prioritize people's friends' content over
political advertising.
They have tried to make political advertising more transparent, that did lead to questions from shareholders about how that could affect ad revenue.
We already know that it's led to less user hours on the platform so I think this is compounding those fears about the - kind of the core business and
about the leadership.
GOLODRYGA: And their - yet their earnings continue to outperform expectations, we'll see what happens in the future but as we mentioned the
pressure on management from both sides of the Atlantic, right now, where are they more in danger from European regulators or from the U.S. Congress?
SEBASTIAN: That's the - that's a difficult one. The data laws as you were pointing out are tougher in Europe so that could be a problem for them but
here in the U.S. certainly they're going to want to - Congress is going to want to show that they are on top of it as much as Facebook needs to show
that they are on top of it so I think we could see some serious questions there on Capitol Hill.
Whether or not this will change anything though is another question. There's been a lot of corporate scandals recently. We've seen you know,
with Equifax, even you know, has anything really changed? I think they'll be questions about whether anything actually will but certainly the
pressure is mounting.
GOLODRYGA: We did end up hearing from the head of Equifax though so I think a lot more pressure now to hear from Marc Zuckerberg directly and not
just send out their corporate lawyers you know, testify before Congress.
SEBASTIAN: Yes.
GOLODRYGA: To be continued.
Claire Sebastian, great to see you. Thanks for coming on.
In Europe, a major breakthrough on Brexit, pushed the pound higher and the stocks lower, we'll be in Brussels then London to show you what's settled
and what's not.
[17:15:00] That's coming up next
(COMMERCIAL BREAK)
GOLODRYGA: We finally have a breakthrough in the Brexit negotiations. There's a little more than a year left until the U.K. formally leaves the
E.U. but today British businesses finally learn what happens next.
Negotiators have agreed on a transition period of 21 months avoiding a cliff-edge Brexit.
(BEGIN VIDEO CLIP)
DAVID DAVIS, SECRETARY OF STATE FOR EXITING THE EUROPEAN UNION - BRITISH BREXIT SECRETARY: So, when it comes to Foreign Policy and Defense
collaboration, we have set out a plan for an ambitious partnership one that goes beyond the relationship, the European Union has with any other third
country and I know this desire is shared by our European partners that we reach today (INAUDIBLE) moving to the partnership and the soonest possible
moment."
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
MICHEL BARNIER, E.U. CHIEF BREXIT NEGOTIATOR (through the translator): A decisive step, it's just that, a step. We have not reached the end of the
road, there remains a lot of important work left to be done on important topics, in particular, Ireland and another in Ireland.
(END VIDEO CLIP)
GOLODRYGA: Michel Barnier, turned up with a color-coded version of the draft transition treaty. The areas in green are the ones where the
negotiators have agreed; yellow where they have only agreed on the objectives; and white where discussions are ongoing.
Let's look at the key points. Negotiators have agreed on the transition period, that was a priority for British businesses.
The E.U. has agreement on two of its priorities as well, the rights of E.U. citizens living in the U.K. and the money the U.K. will pay to leave the
union.
Next negotiators made some progress on Irish border issues, the agreement includes a provision that will prevent a hard-border between the Republic
of Ireland and Northern Ireland but other Irish issues are not settled at all.
Finally, the areas where there is no agreement yet, they include judicial cooperation and intellectual property.
CNN is covering this from both sides, Bianca Nobilo is in London, Erin McLaughlin in is in Brussels.
Bianca, let's start with you, this was finally some progress that we've seen between the two sides, can you even call it a slight victory for the
U.K.?
BIANCA NOBILO, CNN LONDON: Well it's hard to call it a victory for the U.K. when there's definitely give-and-take on both sides. It's obviously
beneficial, the U.K. government to make progress at this junction (ph) because it's already been delayed and at the end of this week is the
critical meeting of the E.U. 27 and that's their opportunity to sign off on this treaty - and this draft document that was agreed today between the
negotiators.
So, had this been delayed any longer it would've put the entire Brexit timeline in jeopardy so yes, it's a victory but we have to contextualize
that within the framework of increasing pressure on the Brexit timeline.
But it's certainly interesting that we've heard almost nothing from the Brexiteers in the U.K. and there's several areas of this draft - this draft
legal text that they would have a problem with and chief among those would be the fact that the U.K. would essentially be a vassal state as it's being
called by Brexiteers in the U.K. during the transition period meaning it will be a rule taker but not a rule maker.
We also haven't heard from the Democratic Unionist Party that prop up Theresa May's government and they caused a problem in the negotiation
process back in December on the issues of the Irish border.
So, it is a victory for the government in that they've been able to push this through today and make progress to sign this draft text off at the end
of the week.
GOLODRYGA: Yes. The Irish border still a big sticking point -
NOBILO: It is (ph).
GOLODRYGA: - but if you take a step back I mean, we're just talking about a transition deal and this has been two years in the works as there are
concerns especially amongst the business community there that thrives on certainty and not uncertainty that what happens after 2020?
NOBILO: So that's the next part of this phase is we - we've done the divorce deal more or less, that's the financial settlement and citizens'
rights and now we're talking about the transition which is almost there, the final stages agreement on the future relationships so that's what comes
next.
[17:20:00] But the businesses in the U.K. like the CBI and the British Chamber of Commerce have warmly welcomed this statement today from both
sides saying that it gives them that certainty that they'd been looking for.
The CBI called it a victory for common sense and this is the certainty that businesses have been calling for, for many, many, months because what it
does do is it assures businesses that there will only be one set of changes, not changes when Britain leaves the E.U. in March 2019 and then
more changes at the end of the transition period but that there will be a status quo period during transition and then changes when the transition
period is over at the end of December 2020.
But Bianna, I would caution that of course this transition agreement is contingent on everything being agreed. That's the -
GOLODRYGA: Yes.
NOBILO: - phrase we keep hearing in the U.K. and indeed the E.U. that nothing is agreed until everything is agreed.
GOLODRYGA: And as we mentioned, you can't stress enough the importance of finding an agreement on the Irish border at issue -
NOBILO: Yes, exactly (ph).
GOLODRYGA: - but let's - let's go to Erin McLaughlin in Brussels because this is a fine line that the E.U. has to walk as well. They clearly have
made some inroads on a deal with the U.K. but at the same time they can't give the U.K. a better deal out of the E.U. than they had while they were
in the E.U. for no other reason than setting precedence, right?
ERIN MCLAUGHLIN, CNN CORRESPONDENT, BRUSSELS: Yes. And it certainly something that they will tackle when they begin to negotiate that future
relationship.
But for now, E.U. diplomats telling me, they're happy with the progress made so far, that the agreement that was reached today on transition is as
they expected, there are no surprises for the 27 remaining member states, they got what they wanted in terms of money, in terms of the budgetary
contributions during the transition that the U.K. will be a rule taker, not a rule maker.
One senior E.U. diplomats telling me that the main concession they made to the U.K. during the transition is to allow the U.K. to sign and ratify
trade deals during that transition period, the deals though would only go into effect after the transition period had concluded; the diplomat telling
me they felt that that was fair so they made that concession.
It was also something that Theresa May can bring back to the British political scene and point to as a victory in all of this, E.U. diplomats
are very aware of the fragile political state in which she operates and they say that she can now come to Brussels later this week for the Summit
and show a victory so to speak.
GOLODRYGA: A small victory with that color-coded document, alright we're going to leave it there Erin and Bianca. Thank you so much for joining us.
The British pound rallied as news of the agreement came out. That caused stocks to fall in London. The major European indices all ended in the red.
The transition deal comes as relief for British businesses, they have warned repeatedly about the need to avoid a so-called cliff-edge when the
U.K. formally leaves the union.
Joining me now, Edwin Morgan, is the Interim Director of Policy at the U.K.'s Institute of Directors.
Edwin thank you so much for joining us, so your reaction to this tentative agreement between the two sides?
EDWIN MORGAN, INTERIM DIRECTOR OF POLICY, INSTITUTE OF DIRECTORS: Well I think really, we can't emphasize enough just how important the transition
is. I mean it - it's worth going over this.
The point about having a transition period is it means that businesses now don't have to implement any of their contingency plans so that things like
moving staff, moving offices, taking the more extreme steps that they will have to take if they didn't know what was happening and we're facing a
sudden change from the current situation so that is a very positive and welcome set today.
Really now we have to move on through - as quickly as possible to working out where the bridge that we have is taking us to, what's - what's on the
other side.
GOLODRYGA: Is there any concern that you're going to see other companies follow Unilever suit (ph) and leave the U.K. altogether or this news today
at least temporarily -
MORGAN: Yes.
GOLODRYGA: - halt that move?
MORGAN: I mean it's too (INAUDIBLE) I don't think Unilever are leaving entirely, they're - they're changing where they're listed but -
GOLODRYGA: Right, right.
MORGAN: - I think - I think that this gives companies some certainty that up until 2020, the end of 2020 at least there'll be no change in their
terms of trading with the E.U. or the staff that they then get from the E.U. so that really helps them to plan, to know that nothing is going to be
a radical change.
And then I suppose the question is what - and at what pace does the implementation period ends and how are the things phased in like new
customs arrangements, that is - that kind of thing; this is all you know, the discussions that we need to get moving pretty quickly now.
GOLODRYGA: And this all happens with Theresa May really overseeing a weak coalition government. If these talks continue to make a progress that were
seeing today, will this boost her standing domestically?
MORGAN: I think businesses from the standpoint of you know, our members of the IOD, it's - it's very difficult when you've got politics as fractious
as this and you know, a minority government not knowing how of course this might twist things or you know, something changes the situation.
I think all in all, businesses will feel more comfortable today and feel that you know, the government has achieved something and be happy about the
place we're in, yes.
GOLODRYGA: Edwin Morgan, we appreciate your time tonight. Thank you.
MORGAN: Thank you.
GOLODRYGA: A self-driving Uber kills a pedestrian in Arizona. We'll look at the circumstances and how the company is responding to the crash.
[17:25:00] That's coming up next
(COMMERCIAL BREAK)
GOLODRYGA: Hello, I am Bianna Golodryga, coming up in the next half an hour of QUEST MEANS BUSINESS, the Saudi Crown Prince is in Washington amid
new questions about the Aramco IPO.
And it's the antitrust trial of the century, AT&T does battle with the U.S. government over its deal with CNN's parent company.
But first these are the top news headlines we're following this hour.
Facebook says it has hired a Digital Forensics Firm to find out how much user data the company Cambridge Analytica might still possess. Reports say
the company obtained Facebook profile data on tens of millions of users from an academic and allegedly used it to target voters in the 2016 U.S.
presidential election; Facebook shares tumbled Monday almost seven percent.
The U.K. has reached a milestone agreement with the European Union on a Brexit transition period. The U.K. will be able to make trade deals during
the 21-month transition after Britain officially leaves the E.U. at the end of March 2019 but Irelands' border with - but Ireland's border with
Northern Ireland remains a sticking point.
Police in Austin Texas say they are dealing with a serial bomber, following the fourth explosion Sunday night. Two men were injured in the attack
which police say may have been triggered by a trip-wire, two people were killed and two others injured in earlier attacks after opening packages.
Police in the U.K. say the investigation into the attempted murder of Sergei and Yulia Skripal likely will take many months. U.K. officials
accuse Russia of using the nerve agent, Novichok to poison the former Russian double agent and his daughter which Russia denied. Experts from
the International Chemical Weapons Convention are now in Britain collecting samples. The U.S. president Donald Trump is proposing stiffer penalties
for drug dealers including the death penalty for major dealers.
He made the comments at an event in New Hampshire, focusing on America's opioid epidemic. But some public policy experts are condemning the
proposals, saying it misses the cause of the opioid epidemic.
Uber has pulled its self-driving cars from roads after a fatal crash. Police say an Uber SUV driving in autonomous mode struck and killed a 49-
year-old woman Sunday night in Tempe, Arizona. There was a person behind the wheel of the self-driving car Sunday, a standard procedure for such
test drives.
[17:30:00] CNN's tech Samuel Burke is following Uber's response to this crash and he is joining me now from Miami. Samuel, how big of a setback is
this for Uber?
SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY CORRESPONDENT: Well, it's a huge setback in the eyes of the public. Because really the goal of self-
driving car, Bianna, as you speak to the industry leaders here.
The identity's car as many times they tell you, our goal here is to eliminate fatalities and accidents caused by humans. So any person seeing
this, whether you're Arizona, Miami or London tonight, you're looking at this and saying, this is scary.
But really, what's happened here if we step back and take a look at the facts as we know them so far is very indicative of the larger problems that
self-driving cars have. Number one, the fact that a woman Elaine Herzberg was walking her bicycle across the street according to police really speaks
to this larger problem that self-driving cars have obscene pedestrian and bicyclist.
That's why a lot of these companies have started on highways, you don't have those types of issues, so it's easier for the cars to see with their
camera and radar in those environments.
And number two, the fact that this very unfortunate incident happened in Arizona is also not surprising. That state has become a hot-bed of self-
driving car development because of the dry weather.
Again, the cars can't deal with it very well with snow and rainy conditions. So that's why Uber like so many other companies is there.
This really speaks to the larger issues facing the development of this technology --
GOLODRYGA: And the state itself has opened and welcomed its roads to these driverless cars. Obviously, Uber is not the only company in this market.
You have Google, you have Tesla also in the market.
What impact of any will this have on their ventures?
BURKE: Absolutely, Intel, GM, all these companies testing cars in Arizona, and when I've spoken to them, I've long said, listen, we've seen accidents
with buses, are you guys preparing for that moment when somebody loses their life as a result of this, and it becomes a much harder sell to the
public.
And all of the companies have always told me that they're preparing for that type of moment, exactly, the very unfortunate moment that we're seeing
now in Arizona. So people are asking, does this mean that they're going to stop these projects? Yes, Uber has put their projects on hold right now in
North America.
But it's very difficult for anybody working in this industry to see how they won't go forward. Hopefully, they will learn from this, Uber says that
they're cooperating with local authorities to try and understand what went wrong.
These types of incidents as tragic as they are can be used to help make the road safer down the line. So that neither humans no machines make these
types of terrible mistakes.
GOLODRYGA: And one life lost is one too many. But looking at just the data and statistics, when you compare what we've seen so far from these
driverless cars to human driven cars, whether it'd be drunk drivers, somebody texting, what have you, are they still safer?
BURKE: Absolutely, if you go through the data from so many organizations, the fact that they've actually been so few of these types of incidents,
whether it's a fatality or whether it's something minor like an accident, there are very few and far in-between out on the public roads.
Of course, we don't know what's happened when they're not on the public roads. So again, that's why we have a very hard time seeing that yesterday
is a terrible incident, but in probably a few weeks, Uber will be moving forward with this development, with the goal of making the roads safer.
And you hit on something so important with text messaging in cars, people using their phones in cars, we're seeing the amounts of fatalities because
if humans really soar across the world, that's why these companies hope that this technology when it's improved will help make the road safer.
Clearly, we're not quite there yet.
GOLODRYGA: A small step back, but in the longer term, this technology will continue. Sam Burke, thank you so much.
[17:35:00] We're returning to our top story, and another tech company facing a PR disaster. Facebook's value has fallen to the tune of $37
billion.
Investors are walking away after a firm with ties to the Trump campaign reportedly gained access to data-related, to $50 million people. Facebook
users in London and New York have been giving their reaction to the data scandal.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I think it's a violation of privacy, and I feel like if they're doing that, they should make it more apparent for the people
that are using it because I have Facebook and I don't even know that.
UNIDENTIFIED FEMALE: I think you kind of need to know you're on Facebook, that your situation may be used in a way that you may not be aware of.
UNIDENTIFIED MALE: I try to use it many I believe, especially when sourcing is a place for information.
UNIDENTIFIED FEMALE: But as long as it's known, you know, people have a choice to go onto Facebook and use another platform because on them, I
mean, they're going to do what they're going to do.
(END VIDEO CLIP)
GOLODRYGA: Dave King is CEO of Digitalis Reputation, a firm specializing in online reputation management. He joins me from London, welcome. So
answer the question for us, obviously a huge PR nightmare, potentially management setback for Facebook.
But when it comes to the question of is your information private when it's online, who is right? You heard from people saying once it's online, I know
it's not private, other people saying wait a minute, I wasn't informed.
DAVE KING, CHIEF EXECUTIVE OFFICER, DIGITALIS REPUTATION: Well, I think you're right, Bianna, you know, there's a lot of questions, this as you
raises, you know, first was an app with an apparent social purpose used as a front to gather data.
Second was Facebook complicit in the use of that data outside of what people thought it was going to be used for or do the third party simply go
beyond what they were entitled to do and perhaps keep data longer than they were entitled to keep it.
But the bigger question which you imply is, actually, of all that data that's been potentially abused, how much of that data anyway is out there
in the public domain. You know, people put this information online, they've spent the last 10 to 15 years documenting their lives online.
And a lot of the data that started this project, a lot of the data that was used by this company included the city where you live, the friends you've
liked, the things you've liked and all of that data for the most part is put online by people willingly, and people don't lock down their privacy
settings on Facebook.
And that means this data is out there for you or I to use. We don't have to have the clever technology of one of these companies to pick up that
data. I think we all should take a long look at what we're putting online and the risks it can bring.
Because political campaigning will definitely use this data more and more. But we also need to think about the criminals, the pedophiles, the hackers,
the extremists and others who have used this information.
Again, so for us running businesses, it's the people who have used information we leave online to challenge our reputations that we should
worry about.
GOLODRYGA: So the onus is on us in one way, but that having been said, how much responsibility does Facebook bear? Does Mark Zuckerberg, to Sheryl
Sandberg bear in this scandal?
KING: Well, Mark Zuckerberg and Sheryl Sandberg have been quiet on this right now, and we don't yet know the extent to which the Senate and the
Commons have been misled.
We don't yet know to what extent Facebook was complicit in the use of this data. We do know though that Facebook had a pretty sketchy history when it
comes to protecting users privacy. And you could argue quite rightly that their entire business model is predicated on the idea of making this much
of their data as possible public.
You know, that platform exists to host you and my personal information, and the way they generate revenue is by using that. Now of course, increasing
regulation and increasing scrutiny means they're limited increasingly the extent to which they can do that.
And I can understand why they haven't yet come out and explain in full what happened here. But irrespective, we all need to think about the amount of
information we're putting out there, and who else might be using.
So don't mind this third party data mining company that choose -- been used by a political campaign group, and who else might be using that data that
we put out there about us, about our families, about our businesses.
GOLODRYGA: So this is a learning opportunity for users and for executives, and online companies and social media companies. What is it?
KING: Well, the big learning is to think about what you put out there. You know, when we do -- and I tackled it on a high profile business
executive, we throw the web to see what's out there about -- you know, what little tip of information of family members, of friends, of secretaries put
online without thinking twice about it.
And when we piece that data together, we can often put together quite a pleasant(ph) in terms of mapping out where people are, when, where they
live or their children look like, how old they are, where they go to school.
[17:40:00] All these kinds of things. And I think when people put a single piece of information online, they don't know what to think about what part
that might play in the jigsaw of information online about you, about your business.
And we've seen in the last year of course, MPs, we've seen high profile business executives stunned by things that have been found online they
posted 10-12 years ago and now come to embarrass them when they're in a different position in a different world.
But we should also think about, you know, criminals using this information, hackers, an identity thieves using this kind of information. And
especially, if that information it might compromise our reputation and those of our businesses.
GOLODRYGA: And I guess one could say that the onus really is on executives who acknowledge that this is a key issue going forward and something that
they are 100 percent cracking down on, and not something that they found out about a few years ago, and sort of swept under the rug, but this
conversation shall be continued.
Thank you so much, we appreciate your time.
The Saudi crown prince made headlines when he detained a group of other princes and officials at the Ritz-Carlton Riyadh. And now he's heading
stake side, on the itinerary everything, from the White House to Google HQ.
(COMMERCIAL BREAK)
GOLODRYGA: Saudi Arabia's controversial crown prince is on his way to the United States. Has plans for an international IPO for the state oil
company appeared to be in doubt. He'll meet with President Trump Tuesday, part of a seven-city tour to build business and political ties.
John Defterios looks at what's at stake.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN (voice-over): He is the young heir to the throne with grand plans. The man known by initials, NBS, wants to wean Saudi Arabia
off oil and create the world's largest sovereign wealth fund.
His master plan hinges in part on a successful if slightly delayed IPO for state oil behemoth Saudi Aramco. A record $2 trillion evaluation is the
target to create the world's most valuable company.
Hong Kong, London and New York are all rolling out the red carpet to win over Aramco and the prince. But the minister of energy told me, he has
serious reservations about taking it public on Wall Street.
KHALID ALFALIH, MINISTER OF ENERGY, INDUSTRY & MINERAL RESOURCES: I would say litigation and liability are a big concern in the U.S. We've seen five
IOC companies being fooled for, you know, frivolous climate change allegations.
And quite frankly, Saudi Aramco is too big and too important for the kingdom to be subjected to that kind of risks.
DEFTERIOS: His young boss is both determined and unconventional. One week, welcoming global investors to the Ritz-Carlton hotel in Riyadh, then
turning the same gilded venue into a jail for Saudi billionaires.
[17:45:00] The forceful crackdown on corruption took down investor Prince Al-Waleed bin Talal; the former head of the National Guard and scores of
others while claim back $100 billion for the state.
Senior members of his team insists it was a necessary purge.
UNIDENTIFIED MALE: If you look at community, it's extremely positive around the crackdown. Again, friends and investors in Saudi Arabia talking
positively about it.
DEFTERIOS: Politically, MBS has forged a tight bond with U.S. president, nurtured by Donald Trump's son-in-law Jared Kushner. Saudi Arabia was the
president's first overseas trip where he signed defense contracts worth over $100 billion.
He topped it off with his ominous pose alongside the king of Saudi Arabia and the president of Egypt.
(on-camera): Now with Rex Tillerson out of the picture as secretary of state, MBS will also want to focus on his Middle East security priorities,
most notably, the isolation of Iran.
And this is where strategists suggest the crown prince and the U.S. president can aim for complete alignment. John Defterios, "CNNMONEY", Abu
Dhabi.
(END VIDEOTAPE)
GOLODRYGA: And our thanks to John. The Saudi crown prince's itinerary also includes visits to Google, Apple and Lockheed Martin. His father, the
king plans to come to the U.S. later this year.
Joining me from Washington to discuss more about the crown prince's trip is Ali Shihabi; founder of the Arabia Foundation. Ali, thank you so much for
coming on. How much --
ALI SHIHABI, FOUNDER, ARABIA FOUNDATION: Thank you --
GOLODRYGA: Is at stake, the crown prince's seven-day tour of the U.S.?
SHIHABI: Well, it's a very important visit, first of all, you know, following up on last year's visit by President Trump to Riyadh. Very
strong coordination with the administration on Iran, I think they're very much on the same page.
But maybe even more importantly, it's you know, telling the American business community that Saudi Arabia is open for business. The prince is
going to be meeting leaders of American business, Michael Bloomberg in New York, Bill Gates in Seattle, the leaders of Google and Apple, leaders of
the entertainment industry.
Saudi Arabia has been investing in those industries and those industries are -- some of them are already investing. And the crown prince wants to
encourage them to consider investing in the kingdom.
So it's very much, I think -- we are open for business and would like to talk to you about that sort of trip.
GOLODRYGA: How much of an impact if any will, the latest news that just came out today about Aramco's planned IPO, at least holding off an
international listing for now play into the crown prince's ambitious overall plans for the country going forward.
SHIHABI: No, look, the idea of Iran pull listing on the local exchange has been around, and frankly, a lot of the -- you know, knowledgeable people
who have been saying for the past 12 months that, that is going to be listed on the local exchange first.
It makes a lot of sense to list it on the Saudi exchange, the Saudi exchange is the largest in the Middle East. Today, it is opening, you
know, fully to foreign investment. So the idea of a dual listing is something that was raised and you know, very much by lawyers and investment
bankers would have made a lot of money out of it.
But I think the more people think about it, the more a local listings seems to be the primary objective. And that may be at the secondary phase if
required, although in this day and age with electronic trading and with markets opening up, I'm not even sure that the secondary listing is
required.
And the secondary listing is very complicated.
GOLODRYGA: Yes --
SHIHABI: Particularly if you do it in London or New York.
GOLODRYGA: And aside from diversifying Saudi Arabia's business operations, clearly geopolitics is going to be front and center as well, especially
with his one-on-one meeting with President Trump.
You know, President Trump and the crown prince are said to have very good relations, they --
SHIHABI: Yes --
GOLODRYGA: They get along, they see eye-to-eye on many issues, Iran in particular, the crown prince over the weekend likened the Ayatollah to
Hitler and the leadership in Iran to Hitler.
What if any do you think can come out of the president's meeting with MBS?
SHIHABI: Well, I mean, what the crown prince was trying to explain to an American audience was that Iran is an expansion estate. And that people
had underestimated Iran, very much like people had underestimated Germany in the early 1930s.
People have been downplaying Iran's expansions objectives, but Iran today controls four of our capitals. So as far as Saudi Arabia is concerned, this
is an existential threat, it has to take it very seriously, and that's why Yemen also is very important.
Because Iran has been moving into Yemen and taking over Yemen through the Houthis organization in the north. But I think that generally, as far as
Iran's expansionist behavior in the region, there's a meeting of minds with the U.S. administration.
And this administration sees the threat very much the way Saudi Arabia sees it.
GOLODRYGA: Is the crown prince's quagmire and Yemen right now his biggest weakness in your opinion?
[17:50:00] SHIHABI: Well, you know, it is not a quagmire in the sense that it is certainly on a public relations basis, it's been very damaging.
Because somehow the public relations impact has fallen heavily on Saudi Arabia even though it is not only partly responsible.
And war unfortunately causes human suffering. But beyond that, in terms of, you know, troops lost or equipment lost or daily costs, it's not as big
as people think it is. So I think it's much more sustainable for Saudi Arabia and its allies over the medium term than many observers think.
GOLODRYGA: Ali Shihabi, thank you so much for your insights --
SHIHABI: Thank you --
GOLODRYGA: It should be a very interesting tour to follow.
SHIHABI: Thank you.
GOLODRYGA: Well, the anti-trust trial of the century begins with the U.S. government on one side and AT&T on the other. This corporate court case is
about a lot more than just one merger.
(COMMERCIAL BREAK)
GOLODRYGA: Well, if there's such thing as a blockbuster anti-trust trial, this is it. A federal judge began hearing arguments Monday on U.S. efforts
to block the merger of AT&T and Time Warner.
The case has wide-ranging implications for both the media industry and corporate deal-making. The court focused Monday on what evidence should be
admissible. Opening arguments are expected Wednesday.
"CNNMONEY's" Hadas Gold is covering the trial, a highly anticipated trial. Hadas, any other circumstance and Washington, I think, we would be talking
about this first and foremost, so obviously, there's a lot of other news to get to.
We can't overstate how important this case is though, talk about why?
HADAS GOLD, REPORTER, EUROPEAN POLITICS, MEDIA & GLOBAL BUSINESS, CNN: This case is not just supporting for the companies involved because
obviously AT&T wants to buy Time Warner, which is CNN's parent company and get all of their content and use that to their advantage as they try to
compete against the Amazons, the Netflixs and the Googles.
But it's also important for other media companies and honestly, any other companies that are considering a major acquisition or a major merger
because should the Justice Department prevail and should they succeed in blocking this purchase, then they will indicate a new era of government
scrutiny on these types of giant company mergers.
And they could put a chill really on other companies who might be looking to make some big acquisitions, and especially other media companies. We're
going to see sort of a freeze on any sort of action on mergers until this trial gets worked out.
GOLODRYGA: And we have seen impressive. I mean, people pointing "Nbc" and the "Comcast" deal. What makes this different, this feel different other
than the fact that we know the president has weighed in.
GOLD: The president has obviously weighed in, but also you have to keep in mind that the new anti-trust chief at the Justice Department -- no, he
initially said that he doesn't see as much of a problem with this type of merger called the vertical merger because the two companies do not directly
compete with one another.
He prefers what I call structural remedy, and that's why the company diverse in certain part of the company such as CNN. Instead of behavioral
remedies, which is how the "Comcast"-"Nbc" Universal deal went through.
[17:55:00] They're putting these behavioral remedies pretty much promises through arbitration, so there being any sort of conflicts. AT&T was
willing to do behavioral remedies, but the new anti-trust chief and the Justice Department, he prefers structural remedies instead of behavioral
remedies and that's sort of where we're finding this conflict and that's why we have the four suits.
GOLODRYGA: And as this trial gets underway, what are some of the key points you're going to be focusing on?
GOLD: The key points we're going to be focusing on is how this judge interprets what this new media landscape looks like. How does he see? How
does he view the competition from the Amazons and the Netflixs. And also the expert testing, when we were going to hear it.
The government is going to try to argue that this merger could cause prices to go up for consumers, for cable consumers. AT&T is going to try to argue
that that's not true, and even if the government's arguments were true, the prices would go up of a negligible amount and that this is necessary for
them to compete in this new market place.
It's really sort of -- a lot of it is up to interpretation and it could really go either way.
GOLODRYGA: Well, yes, of course, we will be covering this story all the way as well, we encourage all of our viewers to be following you closely as
we do with all of your stories, Hadas, thank you so much, great to see you --
GOLD: Thanks Bianna.
GOLODRYGA: Well, shares in both Time Warner and AT&T fell more than 1 percent. Now let's remind you of how the day's trading ended. Facebook
selloff pushed down tech shares and the broader U.S. markets.
The S&P and the Nasdaq posted their worst percentage losses since early February. The Dow closed off 336 points, putting it back in the negative
territory for the year.
The major European indices all ended in the red, the British pound rallied as news of the Brexit transition deal came out. That caused stocks to fall
in London. Shares of the software company Micro Focus fell 46 percent.
The company warned of falling fails and announced its CEO has stepped down. And that's QUEST MEANS BUSINESS for tonight, I'm Bianna Golodryga, thanks
for watching.
(COMMERCIAL BREAK)
END
