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Quest Means Business
Facebook Shares Rally As Site Tweaks Data Rules; Investors Hope For Trade War Relief; Regulators Probe Facebook Over Data Privacy; UN Security Council Meets On Russia Spy Attack; Russian Ambassador Calls Poisoning Allegation Fake Storyl Larry Kudlow's Words Calms The Market, JP Morgan Chief Has Also Sent Out His Views On China Trade War In His Annual Letter; Judge Presses Witnesses In Time Warner-AT&T Trial; Ex-Russian Spy's Daughter Says She is Recovering Well; German Court Has Agreed To Release Carles Puigdemont On Bail; Brazil's Supreme Court Ruled That Former President Lula Da Silva Must Start Serving His 12-Year Prison Sentence; President Trump Says In A Tweet That The Migrant Caravan Moving Towards The US Has Largely Broken Up; London's Mayor Blames UK Government's Austerity Cuts For A Spate Of Murders In The British Capital; Judge Presses Witnesses in AT&T-Time Warner Trial; Content Piracy Costs Entertainment Industry Millions; Capital Economics Warns Bitcoin is Worthless; Modex CEO Assures that Blockchain Technology will Soon be a Part of Everyday Life; Bollywood Star Jailed for Poaching; Rebound Rally Continues as Trade War Fears Ease. Aired: 4-5p ET
Aired April 05, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: And now, ringing on Wall Street, Dow Jones Industrial having a rollicking good session. Wait,
straight out of the gate, it went up and it didn't go back again of 1 percent on top of yesterday's good strong day of a percent and so, and yes,
you know, you've only got one of those today.
Madame, there's supposed to be three of them, but don't worry, trading is now over. It is Wednesday, it's the 5th of April.
Tonight, one data setting to rule them all, Facebook says, Europe's tough rules will apply worldwide throughout the EU's data protection, on this
program, live in just a moment.
We have three straight days of triple digit gains. The Dow and the Bolts are back in forth and Russia lashes out to the United Nations and its
oligarchs face (inaudible) for business.
I am Richard Quest, live in the World's Financial Capital, New York City where of course, I mean, business.
Good evening, tonight, as Facebook promises to clean up the act, then the regulators come knocking. New investigations have been launched into the
company's use of data even as Mark Zuckerberg promises the toughest privacy laws will apply worldwide.
The company is limiting outside access to personal data and is sparking a chain reaction across the site's entire ecosystem.
Investors seem to be unfazed. Facebook shares rallied on Thursday. They're still off around 12 percent since the day the scandal began.
In a moment, I will be speaking to the European data protection supervisor. Speaking on a conference call, Mark Zuckerberg said, "The same tough
standards in Europe would apply everywhere.
(START VIDEO CLIP)
MARK ZUCKERBERG, FOUNDER, FACEBOOK: We intend to make all the same controls and settings available everywhere, not just in Europe. Is it
going to be exactly the same format? Probably not. We need to figure out what makes sense in different markets with different laws in different
places, but let me repeat this, we are going to make all the same controls and settings available everywhere, not just in Europe.
(END VIDEO CLIP)
QUEST: That is crucial. We are going to make the same data protections available everywhere, not just in Europe. Facebook is trying to stay ahead
of the regulators. The company now says, remember the Cambridge Analytica breach theft -- data breach or whatever you call it may have been 87
million users. It's far higher than early estimates.
Now, the vast majority, some 70-odd million are of course in the United States, but officials around the world are wanting answers. Australia for
example and Indonesia have launched formal investigations.
Germany's Minister of Justice is asking Facebook for more information on how personal data has been used.
Giovanni Buttarelli says the Facebook data scandal is an important test for regulators. He is the European Data Protection Supervisor. Last week, he
met with officials at the White House and the FTC to discuss it. The Director joins me now from Brussels.
Sir, thank you and you must have been very relieved, grateful, pleased, you can use the adjective for the fact that Facebook is going to use European
standards for the rest of the world.
GIOVANNI BUTTARELLI, SUPERVISOR, EUROPEAN DATA PROTECTION: Who knows? This is what we expect. Fifty days to go for the entry into full
implementation of the new regulation, which will be applicable from Europe to everybody offering goods and services remotely to the EU or profiling
people and this is the case for Facebook, for search engines.
Let me say that Cambridge Analytica and Facebook is just a peak of an iceberg. You said 87 million, who knows.
I am expecting much more news. We all, 29 data protection authorities in the EU are coordinating, cooperating, sharing information, analysis because
we want to speak with one voice and by next week, we will in a plenary make a state of play on the case.
QUEST: Director, please bear with me, stay with me. We need to go to the United Nations where the US Ambassador is speaking.
(VIDEO CLIP STARTS)
KELLEY CURRIE, US REPRESENTATIVE FOR ECONOMIC AND SOCIAL AFFAIRS TO THE UNITED NATIONS: ... are conducting state-sponsored assassinations
including previously in the United Kingdom.
High-ranking Russian officials have themselves made clear in public statements that defectors and so-called traitors are legitimate targets for
assassination.
Yesterday, Russia tried to get the OPCW to adopt a decision that would've undermined its ongoing independent investigation into the Salisbury attack
and that would have helped Russia to disguise its culpability.
The members of the OPCW Executive Council overwhelmingly rejected Russia's proposal. Now, Russia wants to try again at the Security Council, but the
truth of Russia's involvement in the Salisbury...
[16:05:16]
CURRIE: ... attack remains and the international community should remain united behind this truth.
Once again, as Ambassador Haley said, if we do not change course now on chemical weapons, we will be fast approaching a new and far more dangerous
reality for all of us. We must hold those who have used chemical weapons accountable and rebuild the global consensus that these weapons must never
be used under any circumstances.
As the Security Council, that is the goal we should be working to achieve, rather than using this chamber to undermine the truth. Thank you.
ANTONIO MANUEL DE OLIVEIRA GUTERRES, SECRETARY GENERAL, UNITED NATIONS: (Through a translator). With his statements, I now give the floor to the
representative of Ethiopia.
TEKEDA ALEMU, UN AMBASSADOR, ETHIOPIA: Thank you, Mr. President. Mr. President, our position on the use of chemical weapons is well known and we
had an opportunity to reiterate that position yesterday. One year after the conflict on chemical weapons...
QUEST: All right, so there, we'll leave the United Nations. We will have Elise Labott, a little bit later in the program to give some analysis on
exactly what the US has said and how far the US position is towards that of the UK.
Let's return to Giovanni Buttarelli on the question of the Facebook data. We will also talk about Russia and the use of hacking in just moment
because I think that's also relevant, but when the new European rules come into effect in just a few weeks' time, every company doing business with an
EU citizen pretty much will be affected.
Do you believe that the new European standard will become the global standard?
BUTTARELLI: We will like indeed to lead by example and let me say that the US at the federal level is in a splendid isolation because currently, 121
countries around the world are now kept by more than a set of provisions dealing not only with the historical right to privacy, but to data
protection, they have privacy engineers, data scientists, so it is a prevention discipline which we would like to deal with respect with the way
which we manage our entire life via smart phones, tablets, and computers.
QUEST: And to those who say that the new European rules, I mean, civilian academics that are coming in, they are very extensive. In some cases,
people say they are overkill. They do have personal privacy protection at their core, but others also say, it's a box-ticking exercise.
BUTTARELLI: We have a constitutional duty in the Lisbon Treaties to protect the newly established right, fundamental right to the protection of
personal data, which goes beyond the traditional sphere of privacy.
We are not falling in love with over prescriptive rules. The question is, on how we may reinforce data subjects rights and ensure more transparency,
allow them to be better in control and to have a free and informed choice. That's the challenge for the future.
QUEST: To be clear on this, Director, you are saying tonight that Cambridge Analytica, we don't know the full extent of -- you think, it
could be much greater and you believe there will be many more such occasions.
BUTTARELLI: This is what I said a couple of weeks ago, exactly when we were in front of the first round of rumors and two weeks after my
assumption is consolidated, so without our colleagues in EU, we see that many organizations are involved -- political parties, other apps developers
-- and this is a longer end to the story.
It started in 2008 and therefore, we believe that other data firms are to be interested. The issue is systemic. It's not a data breach. It's not a
data leak or let us say a violation of contractual clauses, this is the predominant business model. That's the issue.
QUEST: Sir, thank you. We are grateful that you gave us time and we are very glad to have you come again, please come back again, sir.
Laurie Segall is our CNN technology correspondent. You heard the director there, this is systemic. It is the business model. What he is saying
there is that this is just going to happen again and again.
LAURIE SEGALL, TECHNOLOGY CORRESPONDENT, CNN: Yes, it's interesting. I sat down with Mark Zuckerberg and I said to him, "You know, this wasn't a
data breach, what happened, what you essentially is you know, this is a breach of trust, but this was allowed to happen. So this wasn't really
anything illegal." I think that's why the fundamental question of...
[16:10:15]
SEGAL: ... the business model is you know, we're all asking about this and I think that's why you have a lot of the tech companies trying to distance
themselves from Facebook right now. They have to inherently change what their bread and butter is, which is user data.
And by the way, over the last couple of days, they have made massive changes that will have huge implications for the business.
QUEST: Now, let's talk about these changes. They have happened in the last couple of days. They happened last night. Well, if you look at what
Facebook has already limited the data that is available and it is having some effects.
For example, the company has overhauled the search and account recovery that it uses to find Facebook on e-mail and phone systems. Now, it was
widely used in some countries and abused.
Now, Facebook changes also briefly cause problems for others as well, haven't it? For example, the dating app, Tinder had issues with it. Some
were temporarily locked out. So, what Facebook has done by way of its changes has had real implications for other apps.
SEGALL: Right. I think while we had this reactive conservation, that's very important about data privacy. We also have to talk about innovation.
You've got the two kind of go hand and hand.
Now, Facebook got into trouble in the first place back when they had the ability for developers to access third-party apps and they could do a lot
on the platform. Now, as they are kind of tightening that ecosystem, it's going to be harder for developers to get certain types of information,
which is great for data privacy, but can also have other implications.
And one thing that was very notable that shouldn't be lost was that the CTO put out this blog post, and you kind of referenced it. He said most people
on Facebook may have had their public profile information scraped by malicious actors.
There are two billion people on Facebook, so they are doing these audits and they are finding out that data was used in different ways.
QUEST: Sure, on that point, Facebook is going to adopt the new European rule, the GDPR. Do you see htat new rule as being a gold standard? The US
rejected exactly something similar. The US even changed its previous data privacy rules. But do you now see, because most companies will have people
in the EU doing business there, so they will say, "Oh, for goodness sake, if that's the rule that we've got to follow, let's go to the higher
standard."
SEGALL: I think privacy advocacy groups had been calling on this for a very long time for Alphabet, Facebook, Twitter and all of these companies.
Now, they are taking it seriously because there is this understanding that we didn't know how much of our data, what we were signing on to.
So, I think the public pressure will potentially make that happen, but you do have to have the other conversation about the ecosystem and what can be
lost as well.
QUEST: Laurie, busy day, thank you. Thank you for taking time. Thank you.
Now, we were talking moments ago at the United Nations where the US was giving its account as Russia has raised the poisoning that took place in
Salisbury in England. Elise Labott is in Washington for us.
It was very, very robust and forthright from the Ambassador, the state- sponsored assassinations and the like, but did it break new ground?
ELISE LABOTT, GLOBAL AFFAIRS CORRESPONDENT, CNN: I don't think so. I mean, I think what we continue to see is this dichotomy between what the
administration is doing and some of the other people in this administration and what they are saying and President Trump's rhetoric that at the end of
the day, the US did expel 60 diplomats along with its European allies.
And I think you really need to look, yes, at the rhetoric or lack thereof about Russia from President Trump, but you do need to look at the policies
and in this case, they are pretty tough, Richard.
QUEST: All right, so what is coming out of this? The Russians have already lost the chemical warfare organization. What are they hoping to
get out of the United Nations?
LABOTT: Well, I mean, look, they have a veto at the United Nation Security Council, so I mean, clearly, you know, if this moves to the Security
Council in a sense, for a vote, they are going to be able to you know, kind of push that under the rug as they have done with you know, many other
resolutions on Syria on the use of chemical weapons.
I mean, I think you know, the United Nations where it is a permanent member of the Security Council is somewhere where it has the muscle on some of
these other organizations. They are just, you know, one country one vote. So, clearly, at the United Nation Security Council, they are a big player
and so I think, you know, that's where they can, you know, have the greatest voice.
QUEST: Have a listen, Elise to what the Russian Ambassador, you heard it earlier. Let's see what he has to say.
(START VIDEO CLIP)
VASILY NEBENZYA, RUSSIAN AMBASSADOR TO THE UNITED NATIONS: (Through a translator). Ladies and gentlemen, I don't even know what to say about
this. It's some sort of fear of the absurd. Couldn't you come up with a better fake story?
We all know what the worth of British intelligence information is based on the experience with Tony Blair.
(END VIDEO CLIP)
QUEST: So that is basically thrown everything including the kitchen sink.
[16:15:16]
QUEST: It's gone back to the dodgy dossier of the Iraq war. It has thrown fake news which is the phrase du jour. The Russians have already accused
over the last 24 hours the British of arm-twisting its allies. Anything else I am missing out?
LABOTT: No, I mean, I think that's pretty much it. And this is the kind of typical fair that you hear from the Russians anytime they are
criticized. You know, it's fake news. It's preposterous. They are not involved to anything like that.
I just think that you know, this is to be expected from the Russians. I mean, the Brits say they have incontrovertible evidence that the Russians
were involved at a senior level, and you know, the European allies and the United States felt comfortable enough with that intelligence to back them
up.
So, I mean, the Russians can, you know, continue to say that. I think it's a question of what happens next? You know, the US is looking at other
types of actions against Russia for a whole host of things, but I think on this particular issue on the nerve agent and the attack, they have lost the
battle.
QUEST: Elise Labott in Washington, thank you. As we continue on "Quest Means Business" tonight, according to a market whisperer, comments from
Donald Trump's new economic adviser did soothe the edgy nerves on the trade war and the market was up. Let's go around to spread the scarf.
The rebound rally continued. Remember, yesterday, this time you and I have seen the most extraordinary reversal of the way the day went. But over the
course of the two sessions, the Dow has made an astonishing come back.
It went over a thousand points as comments from the Trump administration eased fears of a trade war. And if you look at Europe, the markets there
faired even better closing at around 2.5 percent. The best of today though, of course, was in Frankfurt with the DAX up some 3 percent.
German stocks are the most exposed to the Chinese market, particularly automobiles, chemicals and high-end engineering. So, it shows you why the
DAX would rise the most because of soothing of fears.
The issue there for Clare Sebastian who is at the New York Stock Exchange is whether or not it was these, I suppose they were mollifying words from
the new Director of the Economic Council, Larry Kudlow.
But frankly, he didn't say much.
CLARE SEBASTIAN, CORRESPONDENT, CNN: He didn't, Richard. But what he said did seem to work. I mean, that turn around that we saw around lunch time
yesterday continues throughout the day and today and it held pretty steady.
It's not just him. The Chinese Ambassador to Washington also said that he wanted to negotiate an end to this and it takes two to tango. But Larry
Kudlow didn't stop yesterday. He was out again today speaking to reporters. Take a listen to it, Richard what he had to say.
(START VIDEO CLIP)
LAWRENCE ALAN KUDLOW, DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL: At the moment, let's see how it plays out. You know, don't forget, technically,
both countries have just proposed tariffs. There's nothing enacted. And I think that's an important point and here in the US, you know, we are going
to...
[16:20:16]
KUDLOW: ... put it up for comment for a couple of months, so I don't want to pinpoint a deadline, that's Bob Lighthizer's area, but I would just say,
there's around the corner. There is going to be a big discussion about it. Obviously, all the senators will weigh in. We welcome them.
(END VIDEO CLIP)
SEBASTIAN: There is a couple of months. Nothing around the corner. I think there is some here, Richard that have been interpreting that as
never. Larry Kudlow also said that things are going pretty well on NAFTA.
So, he really is rapidly emerging as a very effective go between the White House and the markets, but I think now that the market's attention has
really shifted away from a trade war, we are looking towards the jobs report tomorrow and some key earnings out next week.
QUEST: Clare, has anybody sort of factored into this that this is what Larry Kudlow did for a living? I mean, he was a Chief Economist, but for
the last 10 years, he has been a political -- a financial pundit on television? Therefore, he is really good at speaking in front of the
camera.
SEBASTIAN: Right, well, I think that factored in to the decision making from the President when he was hired. You know, he is a professional
talking head. But I think, it's interesting because you know, we saw the President tweet again today. He talked about Amazon and "The Washington
Post." He said that the headline was wrong, but he pretty much underlined that he is still defiant on the issue of trade.
But I think along with all the other things with that, adjusting the market still has to unpack how closely the alliance with Larry Kudlow is with the
President. Off course, Larry Kudlow is a self-confessed free trader, Richard.
QUEST: Clare Sebastian who is at the Stock Exchange, thank you, Clare. Jamie Dimon is joining the chorus of business leaders warning against a
trade war with China.
Now, the JP Morgan Chief has also sent out his views in his annual letter. Paul La Monica is with me.
PAUL LA MONICA, DIGITAL CORRESPONDENT, CNN: Thank you.
QUEST: And integration also featured in this. He is basically calling not only for no trade war, obviously, but also for an immigration deal, a
settlement.
LA MONICA: Yes, Jamie Dimon like many others I think in corporate America really wants to see some sort of deal in Washington.
I don't know if you want to call it a compromise or not. He is not saying open up the flood gates and let everyone in, but he wants there to be more
reasonable policy and an actual interesting debate, as opposed to just this in-fighting about immigration, so that people that want to come to America
and that contribute to society can actually do so as well as some of the children of immigrants that are already here. They were brought here as
kids.
QUEST: But why would anybody care what he says? I mean, yes, he is the CEO and Chairman of the largest bank, but why would he have a case, his
views -- or no?
LA MONICA: His views are none. I think people might care because there have been rumblings about whether or not Jamie Dimon has political
aspirations, even though he is going to be CEO of JP Morgan Chase for the next couple of years.
But also, let's be honest. He is the head of the largest banks in the world. He clearly has some sway on Wall Street, so I think his words
matter in the same way that Warren Buffet has.
QUEST: Yes, the American public will not be pro-immigration if we don't address these issues.
LA MONICA: Yes, I think that he really is trying to send a message to Washington that this time for all of these in-fighting and just
masculinities really needs to end, and I think that will be something that would be good for all of America.
QUEST: Paul La Monica, I want to pick up on this Larry Kudlow business. I mean, he doesn't turn to false. He does it good on camera mollifying
statement and he knows his stuff and it's largely true. What he says will be months or weeks before anything happens, but has it changed the dynamic?
Has it actually changed or is it just a rhetoric?
LA MONICA: I think things have changed in the sense that because Kudlow is so good on TV having been a veteran of CNBC, he might help you know, soothe
some of the nerves that Wall Street traders have had. He is a familiar face, but also what's important here is that, Larry Kudlow has said on
numerous occasions that he does not agree with now, his boss, President Trump on all things regarding trade.
He does not think a trade war would be good for American workers, and I think the hope is that maybe he is trying to prove to President Trump that
we have to take a softer stance with China, have a real negotiation whether or not the President will listen remains to be seen of course, but this is
not a -- Larry Kudlow is not by any stretch of the imagination Steve Bannon and that's a good thing for the markets.
QUEST: Do you believe we are in easier waters for the time being?
LA MONICA: Easier? Easier? Calmer, maybe a little bit calmer. But I don't think anything is going to be easy for the foreseeable future.
QUEST: Thank you.
LA MONICA: You're welcome, Richard.
QUEST: As we continue tonight on "Quest Means Business," the judge in the AT&T...
[16:25:15]
QUEST: ... and Time Warner trial is taking a more active role in questioning the witnesses. Now, the experts -- the legal experts are
taking this as a hint in how the judge might rule, but it's still very early days. It is "Quest Means Business," live from New York.
I am Richard Quest. There is more "Quest Means Business" in just a moment. When one of the world's richest celebrities is facing years in prison over
a poaching incident and Bitcoin may be falling further below $7, 000.00. For blockchain technology, it is still on the rage. We need to understand
blockchain and we will do during the course of the course of this program, at least, make a good-hearted effort to do so.
As we continue, this is CNN, and on this network, the facts always come first.
We are now hearing from the daughter of the former Russian spy, a month after they were poisoned with a nerve agent. In a statement released by
London police, Yulia Skripal says she regained consciousness more than a week ago and that her strength is growing daily.
UK officials believe that they were poisoned by a Russian-made nerve agent. Russia continues to deny involvement.
A German court has agreed to release Carles Puigdemont on bail while it decides whether to extradite him to Spain. The former Catalan leader was
arrested in Germany last month. The court says he cannot be extradited to Spain on rebellion charges, but he could be sent back to face corruption
allegations.
Brazil's Supreme Court has ruled that the former President Lula da Silva must start serving his 12-year prison sentence for corruption. He was
found guilty last year. Lula da Silva had hoped the top court would delay his sentence while he appeals against his conviction. He had been
considered in the frontrunner in the October election. A lower court could now issue a warrant for his arrest within days.
President Trump has said in a tweet that the migrant caravan moving towards the US has largely broken up. Thanks to Mexico's desire to, in his words,
"Not cause a scene at the border." However, the caravan is dispersing into smaller groups after it reaches Mexico City.
London's mayor is blaming the UK government's austerity cuts for a spate of murders in the British capital. London's murder rate recently surpassed
that of New York City for the first time in modern history.
Sadiq Khan says, "Police cuts are largely to blame."
[16:30:00]
The Time Warner-AT&T merger trial was already called the antitrust case of the century. The government is trying to block the tie.
Now, there's courtroom drama too. The Judge Richard Leon is getting more involved, posing more questions to the witnesses. The questions are
focused on the relationship between our parent company the "Turner Broadcasting" and its distributors.
Now, all this suggest the judge may not approve or deny the merger outright, rather instead impose conditions on the deal. Jessica Schneider
is in Washington. Jessica, the judge has already been testing over the length of this trial is going to get.
And now it sounds like he's getting his hands dirty in the questions.
JESSICA SCHNEIDER, CNN: You got it, Richard. This judge, Judge Richard Leon, he's not afraid to ask questions. And in previous cases if there's
any example, he's also not afraid to leave his fingerprint on a merger deal.
So Judge Leon, he's not only presiding over this case, the proposed merger between AT&T and "Time Warner". But he actually oversaw the settlement
agreement between Comcast, Nbcu when they merged back in 2011.
And in that case, the government wasn't trying to block that merger --
QUEST: Right --
SCHNEIDER: And said they came to an agreement. And Judge Leon actually put his fingerprints on it and made some amendment to that arbitration
agreement. So the question is, could Judge Leon do the exact same thing here?
We heard several questions from Judge Leon over the past several days, indicating that perhaps an arbitration offer that Turner had given to about
a thousand distributors.
Judge Leon asked some of the witnesses, would you be less concerned about this merger if the terms of this arbitration offer were tweaked slightly?
One of the witnesses at least said yes, that might be a possibility.
So could Judge Leon do that again? Of course, the government in this case doesn't want any settlement terms. They don't want any arbitration offer,
they want this merger blocked outright.
But you know, Richard, we've seen the government in somewhat of an uphill battle. In fact, court just got out today, this is the end of the second
full week of this trial, court will resume again until Monday.
And at the end of the day today, the government, it was a bit rocky for them. The first thing that happened toward the end of the day, they
couldn't get a lot of their evidence admitted.
They wanted several pieces of evidence admitted that spoke about AT&T's talks internally after they announced this merger in October of 2016. The
government got very little evidence, a lot of this was objected to by AT&T, and the judge agreed with AT&T, saying no, you can't bring it in.
So that was definitely a blow for the government. And then in a bit of an odd twist toward the end, the government said to the judge, hey, look, our
next witness, we're actually not going to call him. And it turned out it was an AT&T executive.
So they ended court a little bit early today, and the question is why didn't the government call that witness that they had planned to. They
didn't have another one lined up for today. I talked to the Department of Justice, so the second in command in the anti-trust division, he wouldn't
comment about this.
But you know, Richard, we saw Makan Delrahim, he is the chief of the anti- trust division. He was in court for the beginning of the day today. He still seems to express confidence in his team, he said his team is doing a
phenomenal job.
But of course, that was before a bit of the rockiness of the end of the proceedings here, again, we're about two weeks in, and as you mentioned at
the top, the judge has been pushing to move this case along and to get it all done in just the next few weeks.
QUEST: Jessica Schneider, thank you. Today's argument focused on the precarious business models that TV companies now rely on. As Andrew
Stevens explains, they face a major threat from piracy which is now easier than ever.
(BEGIN VIDEOTAPE)
ANDREW STEVENS, CNN INTERNATIONAL ASIA PACIFIC EDITOR (on camera): Welcome to the wild east. You know, a few weeks from now, this saloon is going to
be echoing to the sounds of boozing, brawling and bad girls as shooting gets underway for a new western series.
It's actually in the nation western called Greasy(ph). But behind nice scenes, another very real battle is taking place. And that's the fight
between the entertainment industry and piracy.
JONATHAN SPINK, CHIEF EXECUTIVE OFFICER & PRESIDENT, HBO ASIA: Everybody is talking about the issue now which obviously means everybody is being
imparted on them.
STEVENS (voice-over): Jonathan Spink runs "Hbo Asia", "Hbo" like Cnn is owned by "Time Warner".
SPINK: You look at some of the affiliate companies we deal around the region, you know, they are being hit, people are canceling subscriptions
because you can get a lot of stuff for free.
At the moment, it's not killing their business, but it's beginning to have a real effect on them.
STEVENS: Content piracy is a worldwide issue, but to get an idea of the impact, we've come to Singapore. Easy access to online pirated content is
starting to eat into the industry here says Vivek Cuto of research group Media Partners Asia.
[16:35:00] He estimates the paid TV subscriber base has shrunk by 15 percent in the past two years as pirate content becomes ever easier to
access. And that trend shows no sign of slowing.
VIVEK CUTO, DIRECTOR, VIVEK CUTO, MEDIA PARTNERS ASIA: The glue that holds telecoms together like pay TV and content bundles has not been growing over
the last two to three years. So that leads to also revenue for content owners, and that leads to downsizing.
STEVENS: The most common form of content piracy in Asia is either through illegal online sites or more likely through one of these, a media-streaming
box or illicit streaming device known as an ISD.
They sold openly across the region, most come with preloaded software, that when hooked up to the internet provide access to literally thousands of TV,
sports and movie channels across the world.
(on-camera): This is Sim Lim Square; it's an electronic shopping mall in Singapore. I've been told it's the easiest place in the city to buy a
media-streaming box. I want to see how true that is.
We're not allowed to take cameras in, but inside I counted at least half a dozen shops openly selling ISDs loaded with software for a one-off payment
between $100 and $300.
Well, that was very painless. I've just spent $150 U.S. on an HD streaming device. It's got 1,500 channels, they loaded it for me, it took about ten
minutes or so, all I have to do now is plug it in and play. Let's see how it works.
It was pretty much as simple as that. The box was soon streaming latest movies, English Premier League football, news including Cnn and hit U.S.
and British TV series. All content I should be paying for, so I shut it down.
(voice-over): But the industry is fighting back. Pay TV operates Singtel and StarHub and content providers Fox Networks and Premier League football,
they've taken action against two ISD sellers in the Singapore state court.
That follows successful legal action against ISD sellers in the United Kingdom, Hong Kong, Thailand and Malaysia.
UNIDENTIFIED MALE: Ready? Action.
STEVENS: But fighting piracy is likely to be a long and drawn out battle. Unlike the fight scenes these stunt men practice to this scene in
Greasy(ph), it's still not at all clear whether the law will win. Andrew Stevens, Cnn, Singapore.
(END VIDEOTAPE)
QUEST: But we're almost dealing with it. Now what a difference four months make. Back then, bitcoin beat around $20,000. Today, we're being
warned bitcoin could be worthless -- after the break.
(COMMERCIAL BREAK)
QUEST: Bitcoin quickly rallied on today's session, and yet despite the rally, it fell to go above $7,000. Capital economics is now warning it's
worthless, it will perform worst than stocks in the coming months.
[16:40:00] Now, looking back over the last 12 months, you can see it peaked last December, quite a considerable peak. Alison Korsik reports on one
part of the world where if not bitcoin, you can certainly use the local cryptocurrency to pay for coffee.
(BEGIN VIDEO CLIP)
QUEST: Over the years, bitcoin, some -- hold by the bullet and bear in the same day.
ALISON KORSIK, CNN GENERAL ASSIGNMENT CORRESPONDENT (voice-over): Bitcoin may grab all the headlines --
QUEST: Except for 1,000 percent this year alone --
UNIDENTIFIED MALE: You get a large Cappuccino to go.
KORSIK: But here in Portsmouth, New Hampshire --
UNIDENTIFIED FEMALE: It could have been 463 --
UNIDENTIFIED MALE: Absolutely, can I pay in dash?
UNIDENTIFIED FEMALE: Sure.
KORSIK: Dash is the cryptocurrency that's king.
UNIDENTIFIED MALE: When I'm out in Portsmouth, I spend dash anywhere I can. From coffee to lunch to play and go out for a night on town.
UNIDENTIFIED MALE: Just going to be 14.95.
KORSIK: Dash means digital cash and Joel Valendueller(ph) literally lives off it. He works for dash, gets paid in dash and spends it on everything
from rent to gasoline. These are transactions welcomed in a state with the motto Live Free or Die.
UNIDENTIFIED MALE: It has some of the fewest excessive regulations, it's most pretty more inter-permissive, except in climate. And so this has made
a natural place for people trying to try out different things.
KORSIK: In his grand experiment of depending solely on a digital currency, Valendueller(ph) began with bitcoin, but soon turned to dash instead.
Because with bitcoin --
UNIDENTIFIED MALE: If you're lucky, you can get your transaction confirmed and settled in ten minutes. And that's a long time for merging
(INAUDIBLE), right? It's a long time be sitting there and just waiting.
KORSIK: Each of Valendueller's(ph) purchases using dash took the same amount of time as a traditional credit card to go through. From coffee at
La Maison du Bar to Nick-Nest(ph) at the free state bitcoin shop to lunch at Bezzyworks(ph).
UNIDENTIFIED MALE: You can see from the map right here, they keep on adding new sticky like every week or so. It's definitely cashing on a lot
in local area.
KORSIK: But that's Portsmouth, New Hampshire legitimizing it as a form of payment globally is moving slower than what you're seeing here. And that
has the inevitability of regulation as wrapping up on all cryptocurrencies.
How is cryptocurrency going to survive in an environment of regulation, the very thing it was trying to stay away from.
UNIDENTIFIED MALE: Yes, I would kind of flip the question as to how is regulation going to survive in a cryptocurrency environment. If more, you
try to find the way that they work hand-in-hand with regulators rather than something where you try to -- you try to stop it.
KORSIK: For Valendueller(ph), crypto is a means of exchange, not just an asset to bravely dive into, and he sees regulation co-existing with
cryptocurrencies. To him, it's prove that crypto is anything but trendy.
UNIDENTIFIED MALE: Trendy only lasts so long if that's all it is. If it's actually value behind this, then it will be there to stay and it will be
there to take over.
KORSIK (on camera): Is there value?
UNIDENTIFIED MALE: I think so.
KORSIK: Personally, you're using it every day.
UNIDENTIFIED MALE: Yes, for me, it's provided a whole lot of value in my life. So if there's other people like me, then you can see this definitely
not going away anytime soon.
KORSIK (voice-over): Alison Korsik, Cnn, Portsmouth, New Hampshire.
(END VIDEOTAPE)
QUEST: Now, arguably, bitcoin is irrelevant in 1 cent as it struggles on, because the system which drives cryptocurrencies, blockchain is picking up
traction.
A compos on the topic begins today in Kenya. Now, over the last few months, the sheer number of headlines that we've had about blockchain and
how it can help everything from guns to control elections.
What's next, how blockchain will secure our digital lives on and on they go. While blockchain is a secure shed ledger which cannot be a change.
And supporters say could solve some of the biggest tech problems of trust transparency and security.
So Modex builds itself as the first app store for blockchain, and the chief executive Mihai Ivascu, good to see you sir.
MIHAI IVASCU, CHIEF EXECUTIVE OFFICER, MODEX: Thank you very much --
QUEST: Please, and would you -- we don't need to deal too much with bitcoin because it may or it may not survive. But the idea of a blockchain
is fundamental, isn't it? What is it?
IVASCU: I would name it as the operating system of the 21st century company. I think it's a revolutionary industry. I think it's evolution of
the internet, and we were in the era of the internet of information, now we're passing to the internet of value.
QUEST: So who will create these blockchains? Will there be several for different things, smart contracts would use -- who would create them?
IVASCU: Now there are a lot of talented developers around the world that can create those blockchains and can create applications for them. There
are various smart contracts created for some blockchains nowadays, and there are various protocols because this is how they're called, that can
succeed at three different --
QUEST: OK, but what would they be used for? What will these blockchains? You know, how will companies use them? How will individuals use them?
IVASCU: We need to push the blockchain into the smartphone, yes. So by making the blockchain invisible, we're going to push the adoption of it.
[16:45:00] QUEST: I understand that, but I'm failing to understand what use will they be? How does it help me? What do I do with it?
IVASCU: You basically have access to your own data, that's the thing. Now, we will be able to own our data, so like in the Facebook scandal, yes,
we will have access to data, and we can see on the blockchain where access that information and who is using it and what actions are being done?
So basically in this -- we're in an area where we can actually own our data. So by creating those decentralized applications and smart contracts,
that can be the underlying technology of normal apps that we use on our phone or the websites.
We can actually have more transparency and cost-efficiencies. So basically, the third parties will kind of like disappear and soon.
QUEST: Right, so blockchain as it relates to bitcoin is the underlying technology that looks at all the transactions. And algorithmic, you make
sure that they all match up and can't be altered.
IVASCU: Exactly.
QUEST: How will blockchain and smart contracts change our lives in every day ways?
IVASCU: By providing a lot of efficiencies in various segments. For example, in the property market, there are 75 percent of pieces of land
globally that cannot be used to get a loan for it.
Because there's no documentation, people don't have access to their data. So by having all this data on the blockchain, you can go to a bank and say
hello, that's a simple application.
The second one, now supermarkets for example are choosing providers only that can prove the providence of the apple for example. So we're looking
right now at companies disrupting value change by adding this blockchain as a method to verify because trust is in the new currency.
This is why I strongly believe in that. You can enable that tool, smart contract.
QUEST: Is -- I mean, true blockchain cannot be interfered. True blockchain has an integrity that is absolute. I worry though about
fraudulent fake blockchains. Things that masquerade as blockchains but actually odd and that can be manipulated.
IVASCU: Those facts can be checked easily by having access to basically down the line technology. You can easily check or you can go into my
biggest -- blockchain is a community-driven technology --
QUEST: You see that? Now the moment -- I'm sorry. The moment you've got community-driven, you have lack of regulation. The moment you have lack of
regulation, you have the possibility of scam and spam.
The moment you have those, you do not have a valid -- a valid system.
IVASCU: Yes, you can argue that. But I think right now with the underlying technologies that are being built on blockchain, you can have
full transparency on them and the regulation --
QUEST: You're holding like -- you're holding like your bank account and your -- you wouldn't let your bank to turn around and say, oh, no, well,
we're running all your records of your accounts on community-based software.
No, you would want it to be properly created, properly regulated with a government regulator standing behind, ready to deal with anybody who
doesn't.
IVASCU: Exactly, so blockchain is like a liquid (INAUDIBLE), so basically any company can take pieces of technology that have developed on the
blockchain or smart contracts and the decentralized apps.
And can revalidate them and regulate them and have them with their own products fully audited.
QUEST: Finally, are you in favor of the wild west form of blockchain bitcoin, or do you believe that governments do have a role -- monetary
authorities in cases of those that are doing transfers of money.
Regulators like in Europe, the government -- the GDP, the government does have a role in regulating blockchain.
IVASCU: I am fully for that, and I'm fully for regulation in the space because I think regulation match with the constructive approach on the
technology, I think it's super constructive for many industries.
QUEST: We've talked about blockchain and a lot, when will we -- when will we see real blockchain moving into our app life on our phones?
IVASCU: In the next months. So --
QUEST: Oh --
IVASCU: Basically, there are a lot of companies working on that --
QUEST: That's true --
IVASCU: And we as a smart contract marketplace, the first app for blockchain are collecting basically all the top reigns in the blockchain
space around the world.
QUEST: Good to see you sir, come back --
IVASCU: Thank you --
QUEST: Thank you very much indeed. Now, as we continue tonight, where it's like a movie script, and I can tell you it doesn't end well for the
staff. It's about the Hollywood-Bollywood celebrity and he's going to jail for poaching.
[16:50:00] (COMMERCIAL BREAK)
QUEST: This is QUEST MEANS BUSINESS live from New York. One of the world's richest actors could be going to prison after being convicted of
poaching. He's Salman Khan and he's household name in India and a titan of the Bollywood film industry.
He came in at number 71 on the Forbes celebrity rich list last year. If you want to know how good that is, he tied with Neymar, Bill O'Reilly,
Dolly Parton and Ed Sheeran.
Yes, Cnn's Michael Holmes has more on the rise and fall of this Bollywood superstar.
(BEGIN VIDEOTAPE)
MICHAEL HOLMES, CNN INTERNATIONAL CORRESPONDENT (voice-over): Salman Khan arrived in court on Thursday, surrounded by reporters and heavy security,
the verdict, guilty.
UNIDENTIFIED MALE (through translator): Chief judicial magistrate Dev Kumar Khatri found Salman Khan guilty under section 951 of the Wildlife
Protection Act and sentenced him to five years in prison and fined him 10,000 rupees.
HOLMES: The 52-year-old Bollywood superstar convicted of illegal poaching in a case that goes back to 1998. Prosecutors alleged that Khan killed two
black bucks, a type of antelope while working on a film.
They say he shot the animals while out driving with his co-stars. Four other actors were also charged in the case but were acquitted. Khan
pleaded not guilty and has long maintained his innocence.
But this isn't the star's first running with the law. In 2013, he was found guilty in a deadly hit-and-run accident and received a five-year
prison sentence, but that conviction was overturned due to insufficient evidence.
Khan made his movie debut in 1988 and rose to become one of India's biggest personalities. Acting in dozens of films and raking in millions of
dollars. Forbes ranked him 71st in their most recent list of the world's highest paid celebrities.
Michael Holmes, Cnn, Atlanta.
(END VIDEOTAPE)
QUEST: Now, the nature of the way the markets have been is that we really do need to take time to understand what's happening. And (INAUDIBLE), if
you come over, and you join me.
The Dow Jones Industrials today closed up 1 percent, 240, wasn't a roller coaster, but anyway it did have good gains earlier, well over 300. But
then over the last of the two course of the two sections, the Dow has made an outstanding comeback.
It's up almost 900 points since Wednesday is over. So join me at the trading post and you'll see, Rachel, we have three green, so green, please,
and there we are, green, right across the board.
No record, let's just remind ourselves. We did have 11 records on the Dow, 14 on the S&P, 15 on the Nasdaq and those are way down there. But no
records at the moment.
Comments from the Trump administration have eased widespread fears of a trade war, and -- but which is why you're seeing this remarkably strong
Dow, S&P and Nasdaq. European markets fed even better, they gained around 2 percent, the Dax was the best of the day because it was up 2.9 percent.
Largely on the back of the fact that there's German engineering car companies, chemical companies will be much better off if a trade war is
avoided because they have good -- they have high exposure to the Chinese market.
So there's where the markets are at the moment, we are as I say a long way of any form of records, that seems to be in the rear-view mirror.
[16:55:00] Although you do have to say 24,505, if there's not a trade war or at least trade war fears rescind, then one can honestly say maybe these
numbers will be revised before too long.
We'll have our profitable moment as always after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment -- Mark Zuckerberg in his telephone conference call with reporters said that Facebook would be following the
new European rules, GDPR in terms of privacy and they would do so not only in Europe, where they are of course obliged by law.
But they would follow the same standard if not format throughout the rest of the world. This is a fascinating development because the new European
standard is much higher than say here in the United States or in the vast part of the rest of the world.
It protects data from the personal point of view from the global(ph) point of view, it requires a data protection officer, it's an entire penalty of
rules and regulations.
But what Zuckerberg has done is a reflection of the reality. Any large company will already have to follow the new rules for its European citizens
and customers. It is an easier job to implement those rules for the rest of the world than to avoid and have no disobey there.
So what Europe has done probably is adopt a new goal standard that I am pretty much guessing will be followed and the rest of the world. And
that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.
As always, whatever you're up to in the hours ahead, I hope it's profitable. We will do it again tomorrow.
END
