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QUEST MEANS BUSINESS

National Day of Mourning in Russia for Fire Victims; Mysterious Train Leaves Beijing with No Confirmation North Korea`s Kim Jong-un was Aboard; Holocaust Survivor Murdered in Possible Hate Crime; Israeli Prime Minister Taken to Hospital; Waymo and Jaguar Unveil Self-Driving Electric SUV; Arizona Suspends Uber`s Self-Driving Car Tests; GE Rallies on Rumors of Warren Buffett Stake; Spotify Predicts 200 Million Users By the End of 2018; SoundCloud CEO: We Focus on Creators First; Sponsors Slam Australian Cricketers for Cheating. Aired 4-5p ET

Aired March 27, 2018 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:00:00]

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RICHARD QUEST, CNN HOST: The closing bell on Wall Street, the season starts on Thursday, opening day is Thursday and the market is down, which is

perhaps is not an auspicious omen if it`s possible.

But, oh, look at that, one, two. Yes. Now that`s the sort of gavel you expect from The Met that`s brought trading to a close.

On Tuesday, it`s the 27th of March. A sudden selloff on Wall Street late in the day. The Dow has plunged more than 300 points.

A CNN exclusive: Facebook`s Mark Zuckerberg will testify on Capitol Hill.

And Angela Merkel and Donald Trump promised to team up against China on trade. We`ll analyze what that means.

I`m Richard Quest, live from the world`s financial capital, New York City, where, even on a down day for the Dow, I mean business.

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QUEST: Good evening. The Dow has plunged more than 300 points during the last hour of trade. The Dow is now officially at a correction. And you look

at what happened, it was a tech selloff that took the market lower.

But look closely, all day it`s been pretty much up by several hundred points. In the early afternoon, that dwindled. You get a couple of bumps

and then late, just before 3 o`clock, the selloff begins. Investors are worried about regulation and the technology and the huge amount of

government borrowing.

Facebook closed down nearly 5 percent on worries of what`s happening to the stock. We`ll talk about Mark Zuckerberg giving testimony.

Tesla fell by 8 percent over worries over what is happening there. The Vida (ph) by a similar amount and Twitter closed down 11 percent after an

investor shorted the stock, believing its short price was $25 a share.

Alison Kosik is at the New York Stock Exchange for us at the moment.

Alison, we look at the graph of what happened to the Dow and it really is a simple question to begin with.

What happened just before 3 o`clock that turned the market sour?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I think what you`re seeing is a market, Richard, that`s really being headline driven. And I think all of

the things that were bothering the market over the past several weeks, all of those things haven`t gone away.

Trade fears, yes, an all-out trade war, those fears have rested. But the reality is the situation isn`t over yet. Facebook still has its credibility

issue despite Zuckerberg going and saying that he`s going to go testify to Congress.

Those rising interest rates, rising inflation, that is heavy on investors` minds, especially because the government is looking to borrow $300 billion

this weekend as it would have to pay a lot more money for it.

So the reality is an already anxious market is made to feel more anxious when you have these big names, big companies coming out with bad headlines.

I haven`t even mentioned Nvidia.

QUEST: Right. But the interesting thing about this, Alison, is that the market has spent all session higher and then it is the suddenness -- which

I understand is the volatility that we expect at the moment.

But that suddenness can put investors firmly on the wrong side of the trade.

KOSIK: Right. So if you look at how the trade happened today, we saw that - - let`s talk about the Dow. The Dow`s not -- the S&P but let`s talk about the Dow. The Dow got as high as 200 points but it couldn`t hold there. We

saw it sort of churn and move lower and lower.

And then it just hit a level and there you go, sentiment over Facebook really rattled the market. Tech stocks across the board were hit. It was

sort of sudden and it really is a tech sector issue today that really moved the market lower as a whole -- Richard.

QUEST: Thank you, Alison Kosik, thank you.

Before we move on to our next story, let`s look again at that chart of the Dow 30 because earlier in the session, it was a complete reversal. It was

all green except and then as the day moved on, it completely turned around to the point.

Some statistics to give you an idea of just what a day it was. The point swing was 737 points. It was as much high as 243 higher, down as much as

493 with a similar point swing, obviously at the lower levels on the S&P 500.

Facebook shares were down even before the broader market turned red. Facebook closed off 5 percent on Tuesday and it brings the losses over the

last month to 18 percent. The steepness of the decline is what is disconcerting.

Now sources are telling CNN that Facebook`s --

[16:05:00]

QUEST: -- chief executive, Mark Zuckerberg, has decided to testify before Congress in the next few weeks. The same sources believed this willingness

will put pressure on the chief execs of Google and Twitter to do the same.

Zuckerberg won`t, though, be going to the U.K. to speak to Parliament. Facebook plans to send two senior executives instead. All as we learn about

the scandal.

Chris Wylie, the Cambridge Analytica whistleblower says his firm gave other companies access to Facebook`s user data. Clamantier (ph), one of the

companies Wylie named, has denied this.

So coming developments on both sides of the Atlantic. Dylan Byers is in Los Angeles; Samuel Burke is in London.

Dylan, to your first. On the decision to testify before the Judiciary Committee or whichever committee, trade and commerce committee, whichever

one it turns out to be, did Zuckerberg really have any choice?

DYLAN BYERS, CNN CORRESPONDENT: No. By the time this scandal metastasized to the point it has gotten to, absolutely not. There was a hope by

Zuckerberg and by other executives at Facebook that by going out and addressing the Cambridge Analytica scandal, as he did in an interview with

CNN last week, that maybe he could stem the tide.

He said at the time, you know, if needed, I will come forward and testify but he was hoping that that would have been enough to stem the damage.

Obviously it is not. The calls from lawmakers, the media, the public to get Mark Zuckerberg to go to Capitol Hill, to appear before Congress and to

account for all of the abuse of user data, that has happened over the course of recent weeks, that we now know about, that pressure became too

much for Mark Zuckerberg to ignore this problem.

QUEST: So, Samuel Burke in London, I hesitate to use the word but I will -- snubbing or shunning Parliament in favor of Congress.

SAMUEL BURKE, CNN CORRESPONDENT: For now. Right now, we`re just a few hours before Dylan broke the news that Mark Zuckerberg will testify before

Congress, he did snub the U.K. Parliament but the head of the committee that has been investigating all this has been very persistent, time and

time again, coming back to these executives, coming back to these companies, not letting go.

Let us just take a listen to what this MP, Damian Collins (ph), said after Mark Zuckerberg had rejected his invitation.

(BEGIN VIDEO CLIP)

DAMIAN COLLINS, BRITISH MP: We believe, given the serious nature of the allegations that have been made around the access and use of Facebook user

data that is it appropriate that Mark Zuckerberg should give evidence to the committee.

(END VIDEO CLIP)

BURKE: After everything that Christopher Wylie told that committee today, even more pressure for Zuckerberg to testify, I think it is less likely the

whole pond to separate him here. I do not think that they are not going to give up and trying to make him do it here as well.

QUEST: But Dylan, surely -- obviously Facebook, U.S. company registered in the U.S., only U.S. markets, it makes sense to testify before Congress

because, if you go down the road of the Parliament and the French parliament wants you, the Australian parliament wants you, the bundestag

wants you, and before long, everybody is saying, well, you did them, why aren`t you are talking to us?

BYERS: Richard, what you are saying is exactly what Facebook sources were telling me this morning and last night. That is the issue. At the end of

the day, Facebook is a California company. If Mark Zuckerberg is going to come forward anywhere, he is going to come forward here in the United

States.

Once he goes to London, he opens himself up to going everywhere. There is also a feeling here that any of the questions that U.S. regulators will

have, U.S. lawmakers will have, will satisfy the demands of London, of others. Obviously, Sam Burke knows a lot more about that. I would --

(CROSSTALK)

BURKE: -- if you let me jump in there, Richard, I just have to say they are so much more stringent about data restriction on this side of the Atlantic

that they would certainly say we have many more questions for Mark Zuckerberg than they ever could over on your guys` side of the pond.

QUEST: Quick answer, in a sentence from both of you, Samuel first, then to you, Dylan.

Samuel, how much -- how much further has this scandal got to go?

How much more does the tech community believe is out there waiting to be discovered?

Samuel first, then Dylan.

BURKE: A lot more and Twitter might be much more vulnerable than Facebook. That is why their stock went down 12 percent today. They sell a lot of

data.

BYERS: Richard, I would just say and I mean this sincerely, this is a never-ending problem for Facebook, for Google, for Twitter and the reason

is simple. Data sharing, harvesting user data and passing it onto others is caked into the DNA of what these companies do.

This is a never-ending problem for these companies. The second they stop having this problem is the second they stop being companies.

QUEST: Gentlemen in the Pacific and in London, thank you.

And you ought to subscribe --

[16:10:00]

QUEST: to Dylan`s newsletter and there`s absolutely no reason why you wouldn`t want to -- cnnpacific.com, Pacific with Dylan Byers, absolutely it

must be read.

You saw in the markets today the data scandal is catching up with Silicon Valley`s biggest companies. Samuel was just talking about it. Now let`s

just remind ourselves about the gravity and the seriousness of the situation.

You`ve got Facebook, which has been sued by civil rights groups. It claims Facebook used data to target ads and discriminate. You`ve then got, if you

get rid of Facebook and you look at Twitter, Twitter, as we`re talking about, the shares down 12 percent partly because they could be vulnerable

as well.

But then the research companies that Twitter is most vulnerable to privacy regulation as Samuel was saying and you`ve got the shorting of the stock

because of the idea of it being $25.

So there`s a lot -- there`s a short out there, a sizable short out there that is weighing down on the market.

So who takes advantage of this? Well, arguably, Apple takes advantage of this. Apple takes advantage with the execs highlighting Facebook`s

weakness, trying to show Apple as ethical. Today it`s unveiled education tools. It is a highly risky strategy when you stop playing yourself off as

being white to the white against the others because you never know what comes next.

Scott Galloway is the marketing professor at the New York University and the author of "The Hidden DNA of Amazon, Apple, Facebook and Google."

Good to see you, Scott, as always. And the machinations now of the situation we are in with these four and with this situation, how much worse

does it get?

SCOTT GALLOWAY, NYU: Oh, we know that is the only thing we know for certain, Richard, is that it`s going to get worse. This is the underlying

business model of the Internet and that`s to gather data as seamlessly as possible and then to distribute it to advertisers so that they can

understand how to target you better.

This is -- this is the underlying business of the Internet. When you get a product for free, it means you are the product.

QUEST: And when we`re talking about the data -- I understand people get very het up about this. But if you are just talking about your name, your

age, where you happen to live or log in from, isn`t that just a given that we all expect that to be bandied around?

Or are we talking about a much deeper level of information?

GALLOWAY: That is the correct point, Richard, because basically consumers have voted with their activities by saying we are willing to give up

privacy for utility. But there are some nuance here.

If you`re served an ad for an Adele album because you are at an Adele concert and the Facebook ambient noise listening technology is taking

advantage of that and serving you a relevant ad, that might be a little bit creepy but you do not mind.

But when it comes to things such as religion or politics or health or sexual orientation, we are not comfortable with our data or our friends`

data being mined such that it can be used.

And even more than that, we`re really uncomfortable that Facebook especially seems to put -- have put up no safeguards, no guardrails

whatsoever, such that their platform, which is now a community greater than the -- greater than the size of Christianity can be weaponized by bad

actors.

QUEST: So who is most vulnerable?

Facebook is clearly in an existential crisis at the moment.

But what about Twitter?

Instagram?

What about, for example, Google, which, if anybody has marketed to perfection and developed to perfection the amortization of material and

data, it has to be Alphabet and Google.

GALLOWAY: The top three most vulnerable are Facebook, Facebook and Facebook. Mark Zuckerberg has become the unwitting poster boy for

everything bad about the attack; they are -- we are in the midst of a textbook case study in how not to handle a crisis.

They have refused to acknowledge the issue; the top guy or gal seem to be allergic to preparing. They`ve retreated to what appear to be the caves of

Kandahar when this crisis broke out and the key to any crisis is overcorrecting.

You talk about Uber, that the terrible death down in Arizona, the CEO immediately stopped all self-test -- self-driving tests. Facebook has

really said nothing but the platform will continue to be weaponized by bad actors.

We`re in the midst of what will go down as the worst handled crisis in history.

QUEST: So let me postulate you that there actually is not much they could do. The speed with which this has grown, the nature, $2 billion in just a

decade or so, no organization, no government would be able to be put in place the systems necessary for the full protection of information --

[16:15:00]

QUEST: -- advertising, the monitoring of advertising that goes on the site. It is just not possible.

GALLOWAY: I think you are exactly carrying the narrative the Big Techs want you to carry, Richard. If CNN can protect us from being weaponized by the

intelligence unit of the Russian government with a few hundred million in free cash flow, then Facebook can figure it out with 20 billion in free

cash flow.

The argument that we are so profitable and have so many advertisers, 5 million, and there`s so much free content being served up that we can run

those ads against, make it impossible for us to regulate or screen this content, is nonsense.

Every media company in the world has figured this out except for Big Tech, which for some reason we provide the mother of all hall passes to. This

isn`t the world we live in. This is the world we make of it.

And for some reason, we have decided that these innovators are not subject to the same scrutiny. It is just not true that they could not stop this.

QUEST: Scott, next time you`re around, we want you here, talk more about it on the set. Thank you very much, sir. Good to see you.

GALLOWAY: Thank you.

QUEST: Later in the program we are going to talk about the Uber story and what has happened with that. And you`re also going to hear from the

Weymouth (ph) chief executive, who is pressing on with drivers technology despite recent scares in that sector. Before Wall Street`s world got turned

upside down, there was, as you saw from the chart, a surging of stocks. And investors think a trade war might be averted.

The former German economy minister is not so sure. It`s after the break. It`s QUEST MEANS BUSINESS live from New York.

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(COMMERCIAL BREAK)

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QUEST: Welcome back.

Markets in Europe plowed high on Tuesday. Now they fed off the Monday rally and they had seen arguably the best of the New York opening session. Look

at the best gains in London and in Zurich.

And the reason was of course talk of a trade war appear to be diminishing. President Trump`s tariffs look like they`ll be applied more with a scalpel

than a sledgehammer. Speaking of Beijing, Blackstone`s chief executive, Stephen Schwarzman (ph), who`s close to the president, told Chinese

television nobody wants a trade war.

(BEGIN VIDEO CLIP)

STEPHEN SCHWARZMAN, BLACKSTONE CEO: It`s not in anyone`s long-term interest and I think there is a lot of opportunity to do something that`s

productive. I like to have win-win outcomes. And I believe you can have this in this scenario.

I think you have to look through sort of the current noise and concentrate on what does it take to reset in a productive way.

(END VIDEO CLIP)

QUEST: There are (INAUDIBLE) at work in the White House under President Obama, Bush 43 and the senior counsel to the U.S. trade representative. He

joins me from London.

Good to see you, sir. The reality is so far it`s a promise or a hope --

[16:20:00]

QUEST: -- or the prospect that there won`t be a trade war.

For example, the conversations that have taken place between the U.S. and China, or between the U.S., Germany and France, but nobody suggested that

the U.S. is going to roll back on the Chinese sanctions or tariffs.

ROD HUNTER, FORMER SENIOR COUNSEL, U.S. TRADE REPRESENTATIVE: Well, that is right we are still very early in this process. We had last year, where it

was essentially a phony war, the president, the administration said a lot of things about trade, often very critical.

And only the last couple of months have we actually had concrete measures with real effect on private individuals.

And this past week was perhaps the most dramatic.

QUEST: But there is an acceptance by all seemingly except the Chinese that the Chinese have cheated, the Chinese have dumped steel and aluminum, hence

the tariffs there, and that they`ve stolen I.P;, hence the tariffs there.

The issue is not what they have done but the measures necessary to remedy it.

HUNTER: All that is right, of course. The Chinese, perhaps, have a different view of their situation and this administration and indeed even

the Obama administration began to raise serious concerns about the Chinese practices.

I think what is unusual here with this administration -- I am sorry?

QUEST: No, no, no, I was just going to jump in on that. But they need to remember --

(CROSSTALK)

HUNTER: I think what is unusual about this administration -- I am sorry. I can`t hear you.

QUEST: Fine, so forgive me; it`s me. I jumped in there. I thought you`d finished. But let me ask the next question.

I think what is interesting about this administration is that they need to also ensure that the Chinese continue to purchase U.S. government bonds.

(CROSSTALK)

QUEST: We appear to have lost the line to London there and we`ll come back to Rod in just a moment. I thought he -- difficulties there, some

difficulties. We`ll sort that out.

Now when they first met last March, President Trump refused to shake Angela Merkel`s hand. Now relations between president and the Bundeskanzler appear

to be warming. They`ve been speaking on the phone today. And both sides that they wanted a cooperative relationship.

The White House says the pair discussed joining forces to counter China`s unfair trade practices, including the stealing of intellectual property.

On tariffs, they talked about leveling the playing field. Germany says Ms. Merkel called for dialogue and wants new trade rules. They also discussed

North Korea and Russia.

Karl-Theodor zu Guttenberg is former economy minister of Germany and defense minister, joins me now.

Good to see you, sir.

KARL-THEODOR ZU GUTTENBERG, FORMER GERMANY ECONOMY MINISTER: Lovely to see you.

QUEST: Is there really common ground between Germany and the U.S. on this?

GUTTENBERG: Isn`t it bizarre that we have to talk about this after so many years of cooperation and actually friendship and it`s not but a corporate

relationship.

So there is some common ground when it comes to China. This is what I think. We have a shared interest here. And if this administration starts to

understand that it is worthwhile to align forces and to be more efficient if you work together with Germany or the European Union on China, that`s

really a step forward.

I am still very cautious on the --

(CROSSTALK)

QUEST: How can they all work together when, in the one breath -- and we`ll come to Rod Hunter, who`s in London, to join in this discussions in just a

second, if we have him back -- how can -- how can you have common cause when you`ve threatened the Germans only two weeks previously on steel and

aluminum?

GUTTENBERG: And that, Richard, is exactly why I still have my serious doubt that this president overnight more or less got rid of his zero-sum

mentality he has shown for so many weeks and months.

On the other hand he is obviously approaching some kind of a deadlock here. He`s not coming further with what he has promised to his electorate and he

needs partners. And he might have understood, to a certain extent, that the Chinese only win if they separate and if they diverge the so-called Western

unity.

And they have exactly done.

But Rod Hunter in London, the question I ask you is how can you have an agreement with China but at the same time you do require China to continue

funding your debt, your ever growing deficit, through the purchase of bonds?

HUNTER: Well, the United States is China`s biggest customer and so China has an interest in finding a solution that works. And though cooperating

with Europeans, of course, would be very important to a sitting thing that happened is in fact as a consequence of these steel and aluminum tariffs.

QUEST: The reality is -- I`m pausing just to collect my thoughts -- in the space of three months gone from tariffs on steel and aluminum, tariffs on

intellectual property. We have got the WTO --

[16:25:00]

QUEST: -- almost on its last legs. We`ve got NAFTA breathing its last over renegotiation. The TPP has been refashioned.

GUTTENBERG: Right. TTIP is buried.

QUEST: TTIP, I`d forgotten about that. That never got out the gate.

The reality is, what does Germany want from this administration?

GUTTENBERG: Well, I think it was a quite clever approach by the chancellor after six months of being entirely silent, trying to form a coalition in

Germany, to step up. Somehow (INAUDIBLE) step up, reach out now to President Trump and (INAUDIBLE).

You need to work with us, otherwise you will not achieve what you would like to achieve with China, first point.

Second point, it is an entry gate for us, Germany, to renegotiate with you what we would like to see on the horizon on trade issues coming together

with Europe.

So she might even push him into some kind of renegotiating TTIP approach. And I think -- yes, of course, I would do the same thing since I would be

from the U.K. in that regard.

But I think that is behind the whole thing.

QUEST: All right.

But, Rod, is there strategy behind this or is this, as the -- as you see -- as you see, is there strategy behind any of this?

Or is this just making it up as they go along?

We`ll put it to you.

GUTTENBERG: Well, I rarely see anything that comes close to strategy coming from the White House. The only strategy is more or less tweeted ever single

morning and then retweeted maybe at this or that point.

From a German different perspective, I do see a strategy. The strategy is not to slide entirely into a trade war scenario but actually keep talking

to someone, to someone who still somehow listens at least to the German chancellor.

QUEST: But how damaged -- not damaged, wrong word -- weakened is the chancellor?

She has got her fourth term but it is her last term to all intents and purposes, you are smiling. It is her last term --

(CROSSTALK)

GUTTENBERG: -- will be a surprise, yes.

QUEST: And she is not in full command.

GUTTENBERG: She would at least pretend to be in full command and I see her in command of a another grand coalition, of struggling with the term

"grand," of course, in this context.

But she is one of the few in Europe who still has some leverage around the globe. Do not forget that. And there are still some Americans who believe

she is the last woman standing in this regard.

Is she damaged after last year to a certain extent, yes.

QUEST: Good to have you on this side, sir.

(CROSSTALK)

QUEST: Thank you very much.

So General Electric was one of the first companies to be put on the Dow Jones Industrial Average that still has its same name and its same form.

It`ll lucky to remain there much longer even with a 6 percent gain today.

(COMMERCIAL BREAK)

[16:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: I am Richard Quest. And there`s a lot more QUEST MEANS BUSINESS of course in just a moment.

When the crumbling tech is not only Facebook, we`ll show you why Tesla lost 7 percent and the media shared almost 10 percent, we`ll discuss that in a

moment.

And all of a sudden, while civilized cricket is rocked by a cheating scandal that really beg us belief. You`re watching Cnn, and on this

network, we guarantee you that the facts will always come first.

Wednesday is a day of national mourning in Russia as the country remembers the victims of Sunday`s deadly mall fire in Siberia. The fire at the

shopping center killed at least 64 people, 41 of them were children.

President of Russia, Vladimir Putin blames criminal negligence and carelessness for the fire. Four people have so far being detained after

serious violations have been discovered including locked doors and fire alarms that didn`t work.

South Korea and officials says it`s extremely or highly likely that the mysterious train that left Beijing on Tuesday carried Kim Jong-un. China

won`t confirm that, but if true, will be the North Korean leader`s first trip abroad since taking power.

It`s believed he may be consulting China about possible talks with President Trump. Authorities in Paris are investigating the murder of a

holocaust survivor as a suspected anti-Semitic attack. Police found the body of 85-year-old Mireille Knoll on Friday, she was dead in her

apartment, she had been stabbed 11 times and her home had been set on fire.

Two suspects had been arrested and the attack has triggered cause for protests. Israel`s Prime Minister Benjamin Netanyahu who has been admitted

to a hospital because of a high fever and a bad cough.

The Prime Minister fell ill with the flu two weeks ago, a statement from his office says his doctors think Mr. Netanyahu did not get enough rest to

fully recover.

And we told you earlier how many videos shares dropped as it suspended self-driving car tests, now one of Uber`s rivals is pressing ahead with new

driver`s technology. Waymo is Alphabet`s autonomous car division.

Waymo plans to turn the Jaguar I-PACE into a self-driving luxury taxi. Testing is due to begin this year, Waymo and CEO insists it will go ahead

even after an Uber self-driving car struck and killed a pedestrian.

(BEGIN VIDEO CLIP)

JOHN KRAFCIK, CHIEF EXECUTIVE OFFICER, WAYMO INCORPORATED: Well, it was a tragic accident, and you know, it`s sort of when you think about it, one of

the reasons that we`re here, and why we`ve been working on this technology for so long.

We`ve been at it for more than nine years, we started as the Google self- driving car project, we`ve now driven over 5 million miles on autonomous road -- in autonomous mode on public roads, and we`ve tested our software

and our sensing through lots of different scenario testing and are proven.

We have over 20,000 challenging tasks that we put our cars and our technology through, and we validate all that through the virtual world, 5

billion miles of simulation where we test the cars in a really challenging environment just to make sure everything is safe.

Our confidence springs from the fact that we`ve been working on this for so long, and we`ve been focused throughout this mission on ensuring the safety

of the cars and the technology.

(END VIDEO CLIP)

QUEST: Arguably we would say the same thing. Waymo testing its services in Arizona, Clare Sebastian is here. Remind us what happened in the Uber case.

CLARE SEBASTIAN, CNN: Well, sir, 18th of March, there was the first, what we know to be the first fatal accident involving a pedestrian with one of

Uber`s cars. And last night, the governor of Arizona sent a letter to Uber CEO which he shared with the media where he said, basically, you know, you

can`t do it anymore.

Just Uber, that is not Waymo, not GM, not any of the other ones, he said you can`t test your autonomous cars on the roads of Arizona anymore.

QUEST: What have they discovered about Uber that leads them to that conclusion other than the fact that something did happen that went wrong. I

mean, you know, is this the case, is this believed to be a case that Uber has done something wrong or is it all of them?

SEBASTIAN: Well, again, it`s just -- it`s just Uber that Arizona is specifically targeting. Uber`s response was that we proactively pull all of

autonomous cars out of all the cities where we`ve been testing. And that`s four cities in North America.

But I actually -- I wanted to find out -- to answer that question myself, so I went back to the governor of Arizona`s office, and I said, well, what

precipitated this? You know, it`s a week or so or more, more than now since the crash happened.

The latter seems to suggest that it was the police video that was dash-cam video showing the moment when this happened. But they simply said, you

know, the governor has been consistent in his view that public safety should be a top priority.

And he -- you know, the accident raises questions about Uber`s ability to continue testing. Now, let`s say he called it an unquestionable failure by

Uber to comply with his expectation that public safety should be at the forefront of this.

[16:35:00] But this is a huge turnaround --

QUEST: Right, so now Uber has been banned in this way or at least suspended. Other companies have done what?

SEBASTIAN: Well, so they -- as you saw with the CEO --

QUEST: Yes --

SEBASTIAN: Of Waymo, very dramatically distancing himself from this. Playing on the idea that they have more experience, they`ve got more

testing -- that`s the same thing we`ve heard from a company called Mobile-i which is owned by Intel.

They also do a driverless car technology. They came out and informed press and said, look, you know, the new players and listen, you need to watch

them, we are the experienced players.

So this is an industry in transition, you know, and --

QUEST: But it`s going to happen. Autonomous vehicles -- you know, I mean, I feel sympathy in terms of the dreadfulness of what took place. But we are

at the beginning of a nation`s revolution in transportation.

I`m sure when people started flying, there were these sort of incidents, but it didn`t stop us moving forward to build aeroplanes, rockets and go to

the moon.

SEBASTIAN: No, but it`s still very important how the companies handle it. As we get particularly a company like Uber which is under so much scrutiny

for the way it`s handled, you know, scandals in the past.

So I think that is the key --

QUEST: But Clare, is there any suggestion at the moment that Uber has done something wrong or done something different other than the natural

vicissitudes of this testing that when something failed.

SEBASTIAN: We don`t know. The NTSB which is the body that investigates air crash is investigating this, so is the National Highway Transportation

Authority, so is the police in Tempe, Arizona.

That -- the result of that investigation or what everyone is waiting for, including the governor of Arizona or to reinstate testing.

QUEST: Here we go, thank you. Now, as we move on. The company, the slogan used to be, we bring good things to life, GE`s stock finally came back to

life. I wish we would perhaps have had a drum roll today.

Remember yesterday when the market was up 600 and something points, and GE was the only stock that was down -- so fast, tiger, we`re going up here.

There we go because GE is -- was the best performer amongst the Dow.

The stock rose 4 percent, it had actually been up some 6.5 percent earlier in the session after being the only loser on a huge rally. Rumor has it, as

a buyer, possibly Warren Buffett who could start hovering up shares at a discount.

Now the stock has been cut in half in the last year. And it was one of the drops of the Dow, and even in the beginning of this year, when it looked

like it might be about to benefit from having -- but now, but no, it went down even further, and it`s down at 30, now 44.

We haven`t seen these prices since 2008 and `09. Time to look forward to New York Stock Exchange, GE has left traders scratching their heads.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: At some point, you know, you can`t kick a dead horse anymore. But I think the question for GE is how much patience do you have

and how long will it take?

You know, even if broken clock is right twice a day, and sooner or later, the stock probably should stabilize and do better. Let`s hope. Let`s hope.

(END VIDEO CLIP)

QUEST: Jim Corridore is the director of Industrials Equity Research at CFRA, he joins me from New York. No matter what GE does, the stock goes

down arguably with exception of today. What`s gone wrong?

JIM CORRIDORE, DIRECTOR, INDUSTRIALS EQUITY RESEARCH, CFRA: Well, GE has had transformation after transformation, restructuring charge after charge.

And there`s been a lot of shoes to drop on the company.

Every time they have an earnings call, they announce a new charge, most recently, the $6.5 billion insurance write-offs and the $15 billion reserve

that they had set up for future claims against -- and a business that they haven`t been in 20 years.

So every time that investors start to think that maybe this stock is bottomed-out and things are going to start to improve, there seems to be

another charge --

QUEST: Right --

CORRIDORE: And that it`s gotten in the way of the stock.

QUEST: All right, but if we look at the core businesses of GE, now they got rid of so many of them, but it`s now medical services, high tech type of

stuff, they moved to research, they moved to headquarters.

Is the firm fundamentally solid on its product base?

CORRIDORE: We think that they are the leader in many of its business segments like you mentioned aerospace, they`re great in oil and gas,

they`re great in medical, they have very good technological advantages in a lot of businesses they operate in.

But the problem is the balance sheet is at risk, these charges that keep happening make investors very weary, and there has to be some issue as to

what kind of violation do you attach to a stock that hasn`t risen earnings in a generation.

QUEST: OK, in that situation, all we -- and I know that this -- the new CEO has said that a full review of the portfolio is warranted.

[16:40:00] Do you see the breakup value being greater than some of the polls?

CORRIDORE: No, it`s our view that the company is more valuable as a conglomerate, that these pieces do share a common R&D, common sourcing of

materials and common customers that you may not expect, that does allow it to generate synergies from being together that would not be there if they

were apart.

Also if you broke up a company, it`s important to note that the capital division, the financial services arm of the company, a lot of debt that is

attached to that division would go to the individual units, making those units less valuable than they appear to be.

QUEST: Right, but if you`re right, sir, then eventually, the balance sheet woes of the capital and then the insurance losses will dwindle out and the

company does have a strong, sustainable profitable business.

But we`re just not seeing any evidence of that.

CORRIDORE: Well, Wall Street is very impatient right, so the new CEO John Flannery came into place in August, in November, he announces latest

restructuring action. These things take some time to work.

So he is the new CEO, he needs a little bit of time in fact to do it. So we need to see a year or so. Wall Street is interested in the next quarter, in

the next day, they keep -- starting it`s not been the stock, and obviously as things don`t come to fruition, the stock goes lower each time.

QUEST: All right --

CORRIDORE: So we need to see one to two quarters of the company hitting targets, media expectations and then the stock can move from there.

QUEST: The rumor today was that Warren Buffett is taking a stake, and that`s what raised -- talking about 6 percent. The other story of course is

that if it carries on like this, the ratio of the stock price for the rest of the Dow components means it gets kicked out of the Dow.

So take either of those two rumors, which one do you like and which one don`t you? Warren Buffett or kicked out the Dow.

CORRIDORE: Yes, first of all, I would be very surprised if Warren Buffett wants to wade into the complexity that is GE. I could certainly see him

being interested in buying one of the assets, GE has many fine divisions that`s running profitably.

If GE is interested in divesting, I think Buffett would be a big player there. But to buy the entire company, I think that`s a false --

QUEST: Right --

CORRIDORE: Rumor. In terms of being kicked out of the Dow, I think that`s more likely.

QUEST: Good to see you, sir, thank you for joining us, I appreciate it, thank you.

CORRIDORE: Thank you.

QUEST: As it prepares to go public, Spotify is making big promises about user growth after online pirating nearly killed the music industry

streaming, breathing new life into it. I`ll be speaking to the chief executive of SoundCloud coming up next.

(COMMERCIAL BREAK)

QUEST: The music streaming service Spotify is closing in on a 100 million paid subscribers. Those who listen to the free version could reach double

less number by the end of the year. And it comes as music sales are enjoying a renaissance.

Sales in the U.S. grew by 17 percent, nearly $9 billion according to the Recording Industry Association of America. It`s streaming and downloads

that are the driving force of growth.

[16:45:00] Kerry Trainor of the SoundCloud which calls itself the world`s largest music and audio platform. It`s really good to see you, sir.

KERRY TRAINOR, CHIEF EXECUTIVE OFFICER, SOUNDCLOUD: Likewise, thanks so much for having me.

QUEST: Every -- you have watched others come --

TRAINOR: Yes --

QUEST: And go.

TRAINOR: Yes.

QUEST: You have watched the MySpaces rise and fall, the Spotifys be challenged by the Googles and the Apples and stuff. But you continue to

stick to what you do, which is both firmly designed around the music industry.

Is that the secret of the success?

TRAINOR: It is, and you know, for SoundCloud, we focus on the creator first. Right, we are -- we are an open consistent where any creator can use

our tools to share their work with the world. That gives us a very unique catalogue of content that creates a great experience for listeners.

But for us, the focus is on the creators outward. Right, we are not just a one-way system delivering streaming, we are a platform for creators to use,

where they come first to upload their work, build their audience and because of that, we have over 175 million tracks in our catalogue.

As compared with less than 50, even less than 40 or some of the major services.

QUEST: OK, but the risk and the danger is always -- you`ve been asked this a gazillion times, is that somebody else tries and succeeds in doing a me

too and it takes off.

Because you only have one string to pull from the barn(ph) to the bow.

TRAINOR: Well, no, actually, I think that we uniquely have both strings to the bow as you say, which is that because we just come out of it from the

creator first. Right, because we serve the creator so well, we have a differentiated catalogue of content.

In fact, we are the only streaming service with de facto exclusive content becoming -- coming directly from creators, in addition to that, it comes

from major labels.

QUEST: Now tell me, you`ve had your fair bit of old copyright issues and difficulties which creates a byzantine complexity which the only people who

seem to make money out of are your lawyers.

TRAINOR: Well, but the music industry is historically quite complex in terms of the way the rights were, and you know, now the exciting thing is,

there is a model for the consumption of music and that uses our pain from music again, I think puts us in an exciting place to rebase line.

But for us, who we focus on most again is that creator who wants to share their work directly with the world.

QUEST: It would be remissive if I didn`t take you straight into the depths of the current issue over privacy.

TRAINOR: Yes --

QUEST: Now, you talk about the creators are your starting and finish line. You also have a lot of data on people --

TRAINOR: We do --

QUEST: And you will in no doubt tell me as Mark Zuckerberg would have told me six weeks ago, nothing more important than protecting the data, and look

where we are with Facebook.

Do you -- what do you take from the Facebook fiasco of a data?

TRAINOR: Look, I think data absolutely must be taken seriously and we do as a company, and I think the consumers are out demanding more of the services

they use. We as a company that ultimately, it was incubated and grew up in the EU.

We -- our headquarters remains in Berlin, so as you may know, there`s a new standard that`s rolling out, the GDP our standard, which we will of course

be adhering to. And so it`s something that we take seriously and we`ll continue to take seriously.

QUEST: Do you think that difference, the new European standard which is extremely tight, very difficult and arguably exceptionally complicated --

TRAINOR: Yes --

QUEST: To follow them. Do you think that creates a different mindset for tech companies in Europe versus those here in the United States?

TRAINOR: Look, I think it potentially does, and this is one of those areas, it`s just -- we`re seeing this evolve in real time, right? And I think that

now people`s expectations are going to be catching up to the realities of how far the technology`s come.

And I think we`re going to see government in the EU and it sounds like likely in the United States potentially take a firmer hand here.

QUEST: Good to see you sir --

TRAINOR: Likewise --

QUEST: I visited the SoundCloud offices in Berlin, an extremely --

TRAINOR: Well, we`d love to have you back, then come on --

QUEST: No, that`s an invitation --

TRAINOR: Will you?

QUEST: Thank you very much. As we continue tonight, it`s QUEST MEANS BUSINESS. A bull-tampering scandal has left Australia`s cricket sponsors

scratching their heads. Just from everyone, from the prime minister downwards has attacked the national team because it was the most

extraordinary plot to cheat.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Welcome back. As you`re getting the view of the day as you can see, it`s truly been a very busy day, and we do need to update you on some

business -- on the move.

All right, so if we take a look at those -- starting off with GSK and Nevada steel, it`s a $13 billion deal where pills have been put together

and makes for all a great deal of interest.

Heineken has a sex scandal that has been brewing for the beer company, the company says but it didn`t mean to appeal against a racism route when it

came forward with the kind of beer.

And to Australia where the cricket scandal, the sponsor Qantas, now says it is bemused and can`t quite understand exactly what happened when the

cricket ball was described as terribly disappointing. Fast business on the move.

Jim Callinan from "Fox Sports", he`s Australian, joins me for more on the cheating scandal form Sydney. It does beg a belief what happened and the

way it happened. And arguably, the brazenness of what happened.

JIM CALLINAN, FOX SPORTS, AUSTRALIA: Just extraordinary is it, we`re all trying to get our heads around it on this side of the globe as well as you

would well know from your background, Richard.

This is how true national sport where you hold the position of captain of the Australian cricket saying it`s high if not perhaps high than that about

Prime Minister. So when they`re involved in something of this nature, it is gravest of scenes when it comes to the sporting world.

As we now know, the captain or former captain, should I say, he`s deputy David Warner and batsman Cameron Bancroft are on the next flight back to

Australia to really face the music. They are going to face significant sanctions after they were found to and admitted to tampering the ball.

Which as you and I both know, in the world of cricket, it`s tantamount to out-loud cheating.

QUEST: It is out-loud cheating, why do they do it? That`s the key point. I mean, it was brazen, it was obvious, it was clearly against the rules and

it was cheating. Every time somebody has tampered with the ball in such a pattern, they usually get caught out, why do they do it?

CALLINAN: You`re getting comical to that, wasn`t it? The scenes that we saw in Cape Town were just extraordinary after yes, they had some suspicions

over what they were doing in previous tests and therefore were heavily scrutinized by cameras.

And then it was -- they were playing to see exactly what played that. Just exactly why did they do it, Richard? Well, that is the million-dollar

question. Until we hear from those three again now with the cold blood of day, and no really no desperation --

QUEST: Right --

CALLINAN: Cheating. I think they had the three probably points behind it all, and now, they are facing reputations tarnished for the rest of their

careers, and now you would have imagined lengthy suspensions that are also going to hit them firmly in the heat pockets.

Dave, Smith and thus --

QUEST: Right --

CALLINAN: Warner both play in the IPO on 2.4 million deals, safe to say both those deals now very much in question.

[16:55:00] QUEST: Good to see you sir, thank you very much indeed. Extraordinary story, one of cheating. As we continue on QUEST MEANS

BUSINESS, we`ll have our profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight`s profitable moment, it`s worth just pausing for a moment and just looking at the way the market moved throughout the course of the

day. And as we consider what it is that took place and how a market that had gone up maybe 300 points then suddenly fell 300 at the close.

Volatility, yes, is back, but let`s also go underneath this and look at the undercurrents. You`ve got the aluminium and steel tariffs issue. You`ve got

the China and the intellectual property tariffs on the horizon.

You`ve got a president that is mired in a sex scandal over who did what, when and why? You`ve got trade talks that may or may not be taking place.

You`ve got extremely difficult issues of growth in some part of the world, rising interest rates in the United States.

The withdrawal of QE in Europe. Let`s be clear about this, what we have shown you tonight is that there are many strands at the moment, difficult,

complicated and anyone of which can derail the market.

The only thing that we can say with any degree of certainty is that the volatility that we saw in February has returned and there were 100-point

moves by the minute during the course of the day.

And one economists say that it won`t continue for the foreseeable future. And that`s QUEST MEANS BUSINESS for tonight, I`m Richard Quest in New York.

Whatever you`re up to in the hours ahead, hope it`s profitable. We`ll do it again tomorrow.

END