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QUEST MEANS BUSINESS
Facebook Co-Founder Calls To Break Up Company; Khodorkovsky Says That Kremlin Meddles In Elections Wherever It Can; Trump Welcomes Boston Red Sox To The White House. Aired 3-4p ET
Aired May 9, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: ... of trading left. We're in the last hour on Wall Street. A very poor middle
of the day, but a strong rally, I don't think -- well, I was going to say, I don't think we'll have a repeat of yesterday and get a little bit
positive, but you never know because look at the breakdown.
There's a reason why Chevron is the highest. We will tell you in a second. The rest, all sort of moderate to middling sort of losses, and it's all
because of China. Those are the markets and these are the reasons why.
A last minute message to the White House. President Xi's beautiful letter to Donald Trump. That's what giving stocks something of a boost. Name
your price. Uber is about to put the finishing touches to its epic IPO. And Facebook fights back over the cofounder's calls for the breakup of the
We are live in the world's financial capital, New York City, it is Thursday. It is May 9th. I am Richard Quest. I mean business.
Good evening. We begin with China and love. Donald Trump has received a beautiful letter from President Xi, and it happens is the Chinese trade
negotiators arrived in Washington. Merely hours ago, U.S. stocks was seeing some of the worst losses so far of the week.
The Dow was off more than 500 points and the questions were swirling about, would President Trump even meet the Chinese delegation? The mood changed
noticeably after President Trump revealed that Xi Jinping had sent him an 11th hour message.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I have no idea what's going to happen. I did get last night a very beautiful letter from
President Xi. Let's work together. Let's see if we can get something done. But they renegotiated the deal. I mean, they took -- whether it's
intellectual property theft, they took many, many parts of that deal, and they renegotiate it. You can't do that.
(END VIDEO CLIP)
QUEST: Negotiations are set to begin in just two hours from now. CNN's Kevin Liptak joins me from Washington. Kevin, the President has been quite
clear on this. One can't accuse him vacillating or not being understood.
The moment the Chinese seemed to roll back on their commitments, the President basically went to war.
KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, that's right. And of course, the President is emboldened by strong jobs numbers in the United States.
He feels like he has leeway to put the pressure on China to get him the deal that he thinks is the best for the United States.
Now, the President has always been eager to secure this kind of trade deal with China. He thinks it will boost markets. He thinks that will be good
for him politically. The question is whether or not that deal will come today before those tariffs go into effect.
Of course, U.S. businesses oppose those tariffs. The people who actually pay those tariffs are American consumers. Now, according to the President,
Xi Jinping actually had a rather optimistic message in that letter saying, we want to work together, we want to get together to get kind some kind of
deal. The question is whether or not that was too little too late before these tariffs go into effect.
QUEST: Is there a feeling though that the President -- that the administration and the President will take the heat if the deal doesn't
happen and he is perceived to be the reason why?
LIPTAK: Well, I think in the President's view, there is no -- there is no downside to walking away from a deal. The President has been accused in
the past of being overly thirsty to get this kind of agreement done. In his view, if he walks away from a deal that isn't the best deal he can
secure for the United States, there is no downside to that.
And in reality, the truth is the markets will probably react for a few days to that kind of news that there is no deal reached. But in the end, the
American economy remains very strong and the President will reap the benefits from that going forward and he will be able to tell his base
voters coming up in this 2020 reelection bid that he secured either the best deal he could for the United States or he walked away from that what
would have been a bad deal for the United States which is what he has always accused his predecessors of negotiating with China and other
QUEST: Kevin, thank you. There are signs that President Trump's mission to narrow the trade deficit with China is starting to bear fruit. Now I
want you to come and look at the way the numbers are moving.
[15:05:12] QUEST: It's not a straightforward as that. You see here, you can see the gap gradually narrowing as hostilities on trade keep ratcheting
up. If you just go to Q1 of last year, a deficit -- trade deficit of $104 billion, then you go down to $95 billion. And then you go back up to $106
billion, then you go up to $112 billion. And then you start to see it narrowing again.
And it's very much of a mixed picture, and that's only by the way, the trade deficit. You've got to actually look at, of course, at the current
account. And you've got to look at things like the invisibles that also go into it.
John Bozzella is CEO of Global Automakers. He represents major car companies and joins me from Washington. Good to have you, sir.
JOHN BOZZELLA, CEO, GLOBAL AUTOMAKERS: Thank you.
QUEST: What are you actually seeing? Because I saw it in terms of numbers -- because I saw some numbers this morning that suggest Chinese imports are
down and U.S. exports are just about holding up.
BOZZELLA: Yes, so Richard, you know, when you look at the broad trend here, since we've been going through this tit-for-tat tariff battle between
the United States and China, we've seen actually U.S. exports to China from the United States of cars actually go down as when the tariff retaliation
But let me start by saying it's really important that we resolve these market access issues. It's important for the U.S. auto industry that we
have control of our intellectual property, and that we can protect against forced technology transfer. So the issues are important. But you know,
the tariffs are really hurting the industry.
QUEST: Now, let me get you on this. You can't have your argument both ways. And by the way, you're not the only one, we had the head of the
apparel lobbyists who was here the other day, and we've had numerous -- you all say the same thing that the issue is extremely important, but the
tariffs are damaging and hurting.
But surely, the President knows that and he is basically saying to you, in the most respectful way, shut up about the tariffs, let me get on with
causing some pain, take the pain in the long run, it will be better.
BOZZELLA: The bottom line is we need to get to the long run more quickly. It's really important that we resolve these issues, but the tariffs are
doing damage to American consumers and American auto workers right now, so let's get this resolved and move on.
But tariffs as a tool, there are other tools in the toolbox, Richard and I think it's important that that we bring all of those to bear to resolve
trading issues and create more trade opportunities for the U.S. industry to export around the world.
QUEST: On the tariff point, what are you actually seeing from those imports that are tariffed, especially the parts that are being brought in,
for example, are most manufacturers eating the tariff? Or are they passing it on?
BOZZELLA: You know, this is a great question. And I think you're seeing both things, there's only two things that can happen. Either prices go up,
or margins go down. And I think in the case of the tariffs, you're seeing some of both, this is certainly true of steel and aluminum tariffs that
have been imposed, cost of building a car and truck in the United States has gone up billions of dollars since those were imposed.
So some of that is resulting in price increases, and by the way, the average transaction price of a car in the United States is at an all-time
high. Prices are going up and margins are coming down.
QUEST: Assuming for the purposes of this question that they do not do a deal, just assume, the President will ratchet up the tariffs. But what
would your preference be? If they don't get a deal? Let's say for whatever reason, the Chinese are not ready to dance, what would your
BOZZELLA: I think it's very important that we continue to work not only between the United States and China, but with our other trading partners
around the world who believe in in this type of approach a rules based trading system to try and bring pressure on China to get the results we
QUEST: You talk about other countries around the world, of course, it begs the question, why would anybody out the U.S. since the U.S. is tariffing
them at the same time? But on that point, how concerned are you that the next move of the administration will be to introduce tariffs on European
automakers and countries that he has threatened so far, but are in abeyance?
BOZZELLA: I'm very concerned. It's important, again, that we have good outcome to the U.S.-E.U. negotiations and the U.S.-Japan negotiations, but
if tariffs are imposed, the price -- the average price of a vehicle could go up by as much as $7,000.00 here in the United States, bad for consumers
and bad for those European and Japanese companies who have invested here and now employ millions of Americans.
QUEST: But those cars, I suppose you get into really difficult and highfaluting arguments of whether a car made by a Japanese manufacturer in
the United States is tariffed as a foreign car, also, it is tariffed of course because the steel coming in, it becomes burden-ably complicated.
[15:10:19] BOZZELLA: Well, it's actually pretty straightforward and simple with respect, Richard, every car built in America will go up in price
because every car built in America will have a tariff associated with it. It's as simple as that, because parts come in from out of the United
States, even on highly American cars.
QUEST: Good to see you, sir. We will talk more about it. We very much appreciate you giving us time. Always good to have you. Thank you.
BOZZELLA: Thank you.
QUEST: Now, investors are awaiting the outcome of those high level trade talks and it's been a tough week on Wall Street. It's rolling on. Today
is a very peculiar day. Bearing in mind what happened yesterday, remember, when you and I were together yesterday, the market was down and then in
that last half hour, it rallied. I think we closed off just two points.
But today's stock slid at the open and they were very low at 1130. And this is all about the time that the talks are not going well and are they,
will they, won't they -- then the President speaks and you do see a resurgence and a rally that has evaporated again at three o'clock.
The momentum is what is moving this market. It is trading, Alison Kosik -- it is trading on the may win and mention of whatever is next.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Absolutely, you know, he stood in front of the mic and he said one thing and he caused, you know stocks to
go ahead and bounce off the lows and now we see them kind of coming back because that worry is starting to creep in, "Hey, we're almost to that
deadline when those tariffs go into effect."
And that's really what investors are worried about because if those tariffs do go into effect, they're worried that it's going to increase the cost of
QUEST: Number -- I am looking at the Dow 30. The number one stock is Chevron, up two and a half percent. It's interesting, why would Chevron be
up when it lost in the battle for Anadarko?
KOSIK: So what you see here is Wall Street basically praising Chevron, Richard, for knowing when to walk away from a deal, so it didn't get into
this bidding war to get Anadarko, it didn't get into this bidding war with Occidental so it said, "You know what, I'll go ahead and collect my $1
billion breakup fee from Anadarko. We will possibly put that money into buying another driller in the Permian Basin," and then the cherry on top,
the reason why you're seeing the stock as the only stock higher in the Dow, shareholders pleasantly surprised that Chevron announced that it is still
planning to raise its share buyback program by $1 billion to $5 billion per year.
That $1 billion, notice that amount. That is the amount of that breakup fee that Anadarko is paying.
QUEST: Now, we know where the money is going. Good to see you. Thank you, Alison Kosik. At the close of business, we will have in just about half an
hour -- 45 minutes from now.
European markets are feeling the fallout for those U.S.-China trade tensions. They're all in the red. Look at the worst of the day is the
Zurich SMI. Auto stocks lost big falling around 3 percent.
Victory Day in Russia. Moscow is resplendent with a full military parade. We have an exclusive interview with Mikhail Khodorkovsky who tells me, the
Kremlin will continue to interfere in any election, wherever it can around the world.
And what you get by adding Ford's market cap with GM's -- just over $90 billion. That could be Uber when it goes public tomorrow, not bad for a
company that's never made a profit. It's that crazy old world.
[15:16:20] QUEST: Uber is minutes away from pricing the largest U.S. IPO in years. The ridesharing pioneer upended the global taxi industry caused
huge amounts of problems wherever you look. It's going to list on Friday on the stock exchange, and it will price in the next couple of hours.
All of this you need to bear in mind one really important point. Uber has never actually made a profit and its annual losses are in the billions of
dollars. Samuel Burke tries to answer the question, when or perhaps more importantly, will Uber ever be profitable?
SAMUEL BURKE, CNN BUSINESS TECHNOLOGY CORRESPONDENT (voice over): No profits, no problem. That's the message from Uber's managers ahead of this
week's initial public offering. Burning cash, the company says necessary to build out its future business.
(BEGIN VIDEO CLIP)
DARA KHOSROWSHAHI, CEO, UBER: What we're looking to build out Uber is essentially your A to B platform for anyone wanting to get from one place
within an urban destination to another place.
(END VIDEO CLIP)
BURKE (on camera): Uber wants to be the Amazon of driving platforms offering everything from on-demand food delivery and freight services to
micro mobility like e-bikes and e-scooters.
BURKE (voice over): It's also spending heavily on self-driving car technology, envisioning a future where individuals no longer own cars and
turn even more to Uber for rides in its automated taxi fleet.
(BEGIN VIDEO CLIP)
KHOSROWSHAHI: Just like Amazon was able to build this extraordinary infrastructure first on the back of books and they went into additional
categories. You're going to see the same thing coming from Uber.
(END VIDEO CLIP)
BURKE (voice over): An expansive vision Uber hopes will make investors overlook the company's slowing growth.
Uber had an estimated net loss more than a billion dollars in the first quarter of 2019. Losses aren't the only problem the company will face.
Uber's future depends on the gig economy, and some of its workers earn below the poverty line.
While the IPO will mean a new batch of millionaire and billionaire executives and investors, the company's most prolific drivers will receive
stock with no more than $10,000.00. Samuel Burke, CNN, London
QUEST: Daniel Ives is here. He is the managing director at Wedbush Securities. Let's get to the numbers before we get to the reasons. What
price do you -- between 44 and 50, where would you price it?
DANIEL IVES, MANAGING DIRECTOR, WEDBUSH SECURITIES: I think it's probably 45 to 46 is where we see a pricing.
QUEST: Well and truly at the lower end.
IVES: Yes, definitely in the lower in the range. I think part of that is just the whiff train wreck has definitely been factored in terms of what we
saw whiff coming out of the gates, but also just the choppy U.S. tech market right here with the China headwinds. And I think right now, that's
where we see that stock pricing.
QUEST: Okay, so price is at 44 and we're at 44 to 45 to 46. And we were talking -- we'll talk about this in a moment as to why you want to get --
you want to pop on the price, but you don't want to leave too much money behind.
IVES: Look, that's the balancing act. Because for Uber right now, and I think you've seen with -- the sort of a case study what happened if you get
too egregious, you want to see the stock obviously move higher. You don't want to leave too much money on the table, but fundamentally, for $100
billion valuation, these are some of the balancing acts.
QUEST: These -- were just talking about losses. How does it company, it maybe 101 to you, but help me understand, how does it company stay in
business when it doesn't make a profit?
IVES: Well, look, in the main part, this is one of the most well-funded tech private companies out there, right. So in terms of how funded they
were at the start just given what type of opportunity they had, I think that really enabled them. That gave them the fuel to invest in this
[15:20:18] QUEST: But they were still losing a billion a year plus, and they've got eats, and they got freight and all these other things. At what
point legitimately does an investor say, "Would you please make some money?"
IVES: Look, I think right now, and I think Amazon is sort of the blueprint for this. And that's why Uber, I view is kind of the Amazon in
transportation. It comes down to when you look at the three-head value monster, in terms of eats, freight, ride sharing, investors are focused
right now in growth, given what today's what? Ninety million consumers. That's the focus.
QUEST: But I think, to use the horrible phrase from the 1990s, that you will remember, the path to profitability, you do want to see a path to
Now, let's take the rides, they're ubiquitous. They're losing money on them. The competition is there, can they ever make money on rides?
IVES: We do believe. We believe --
IVES: The main way that they're going to make money on rides over time is, when you look at eat and freight, those are key in terms of cross sell, but
fundamentally, autonomous is going to be a key -- autonomous over the long term is going to be a key value prop.
But in terms of ride sharing, and call it, five, six years, they could start to turn a profit on rides, especially globally, given with the path
QUEST: We'll see the stock 44 or 45, whatever. You'll see it maybe go up to 60 or 70. What's your long term target?
IVES: So we're at 65, we believe $100 billion valuation is on the horizon for Uber. It's the sum of the parts. And fundamentally, you have to
really view it that right now they're going to be the one that kind of capitalizes on the $7 trillion market opportunity. That's where we're
right now. We'd be buying Uber tomorrow morning.
QUEST: You will be?
QUEST: Even if it -- so let's say, IPO is at 45. You'll still be buying if it opens at 60?
IVES: In our opinion, this is 65, just for starters, you could rationalize this $75.00 to $80.00 stock given where we see the market going.
QUEST: We'll talk about that in a moment. Come back again. We do need to talk about this a lot more. Now, while Uber's IPO maybe the biggest since
Facebook, plenty of tech unicorns have stampeded to the market recently and it does create a very different results, the varied responses, how an IPO
Look at Uber's chief competitor, Lyft. Right? Remember Lyft. So Lyft priced too high. The IPO was at 72. Two days later, it's a 27 percent
lower, so it opens it goes whoosh, and then it falls way back.
And you've got the other side Beyond Meat. Now the IPO price there is at 25. It trades at 46, closes at 65. It's up 163 percent. That is clearly
There's an arguable difference between the two, but they both have competitors. They both came to the market in difficult times. They both
had a raison d'etre that could be called into question.
Pricing an IPO correctly is challenging. Finding the sweet spot between what buyers and sellers want is the key. My next guest calls it the
Goldilocks zone. It is Rett Wallace, who's the CEO of Triton. Good to see you, Brett. How are you? Nice to see you. Make yourself comfortable.
RETT WALLACE, CEO, TRITON Thank you.
QUEST: Now. Let's take the two examples that we've just been talking about.
WALLACE: Sure. And we are talking about Lyft and Beyond Meat.
QUEST: Lyft and Beyond Meat.
WALLACE: Okay. Two totally not comparable companies in any way.
QUEST: They're not comparable, no, they're not comparable in any way, except they should follow the same principles of IPO-ing.
WALLACE: Well, look, people like to complain about investment bankers. But this is where we see that investment bankers have a very difficult job.
Because if you're too low, then you've done it wrong. And if you're too high, you've done it wrong.
So the Goldilocks zone is actually very difficult to achieve, especially when you're doing it for a company like Lyft or especially Uber, which is
so big, so broadly held, so controversial, loses so much money, but has so much promise and $10 billion is going to change hands.
WALLACE: So getting that right is very, very hard when you have so many different constituencies to please and they have different interests.
QUEST: When I started in all of this, we used to say on an IPO or an offering, if you've got a nice 10 percent to 15 percent bump, everybody
QUEST: That you'd agree with me?
WALLACE: If you can hold it there, right. Lyft had a nice bump, but they could not hold it.
QUEST: They had a huge one.
WALLACE: Right. Right. So the bump has to be sustainable.
QUEST: You don't want it to break its IPO, that's devastating.
WALLACE: Correct. But even to give up the bump, I think is painful, right, to come back to the IPO price in short order.
QUEST: Every week, I do the program, "The Express" from the exchange and I talk to IPO -- I talk to CEOs of just IPOs. Now those who sort of go down
or those who rise quite sharply, I always say, but left money behind.
[15:25:12] WALLACE: They left a little money, but it's also important to know that these companies are only selling 10 percent of themselves, right,
and they'll do follow on offerings. The employee stock will all be priced based on these things.
So setting the tone correctly is much more important than a few dollars of proceeds. This is again, where the Uber situation is interesting, because
for every dollar of price, you know, we hear it's 45 to 46, just like everyone is hearing, well, that's $150 million of difference in terms of
cash in the till.
QUEST: Whose shares will lose out because in this -- in the Uber case, is it fresh stock coming in with existing holders to divesting?
WALLACE: So the primary deal is the principal deal that we all hear about, the green shoe, the over-allotment option is all secondary. And we'll see
if that gets done. Right? Lyft, I don't think was able to deploy its green shoe.
QUEST: The green shoe, explain.
WALLACE: So to stabilize the stock, the underwriters have the option to overlap or to buy an extra 15 percent of the deal from the company and sell
it, and so that's when a deal is successful. You're able to exercise your over-allotment option, right, and sell additional stock into the market at
the IPO price.
QUEST: Right. And that comes from the existing --
WALLACE: In this case, its secondary sellers.
QUEST: Yes. So let's just look at this. Tomorrow, you'll see -- we have some experience on this program, by the way with Snap.
WALLACE: My favorite.
WALLACE: I love Snap.
QUEST: We bought Snap.
WALLACE: How to get it all wrong in every direction.
QUEST: We bought snap at 27. And we've never seen anything like it since.
WALLACE: No, terrible, but totally predictable, right, unfortunately.
QUEST: Right. So tomorrow when we see the stock open, let's say it prices tonight at 45 to 46. It opens tomorrow, I don't know, 55 to 60 maybe 40.
WALLACE: If it goes into the 60s, that's scary.
QUEST: If it opens up 40 -- say it opens at 50?
QUEST: And it trades round 50 to 55 at the close of the day, that's reasonable.
WALLACE: That's a home run. Morgan Stanley gets high fives all around, and everyone is happy. And then it has to stay there through all this
China stuff for the next couple of weeks. And then it's a win.
QUEST: At what point does the QUEST MEANS BUSINESS buyer decide, I think I should have a punt on this.
WALLACE: So that's a really interesting question because the thing about Uber that makes it a very difficult decision for very serious investors
right now is that as big as Uber is, I mean Uber sells $50 billion volume a year. It's a gigantic company. But it's still early. Right? We still
don't really know what the long term business model looks like.
If the autonomous driving effort is successful, then all of these problems with striking drivers and things like that, as well as the cost of paying
drivers will go away. Who is going to own the cars, right? It's not clear.
So there's a lot that we still have to learn about this business before it's something that you would say is a totally safe thing to put in your
kid's college fund.
QUEST: Great to have you with us today.
WALLACE: Thank you.
QUEST: Thank you very much indeed. Time to break up Facebook. It's a call from someone who helped build it. Extraordinary Chris Hughes is
worried Mark Zuckerberg and the platform have too much power. It really does beg the question whether there's a sour grapes and friendships gone
wrong. Anyway, we will talk about it as we continue along with the news.
RICHARD QUEST, CNN QUEST MEANS BUSINESS: Hello, I'm Richard Quest. A lot more Quest Means Business tonight.
Mikhail Khordorkovsky tells me what information the Kremlin might have on Donald Trump? An exclusive interview with the Russia tycoon who went to
prison for a long time. And your phones, where's mine? It is here, yes. And go to cnn.com/join. One of Mark Zuckerberg's oldest allies says it's
time to break up Facebook. As we continue, this is CNN, and here on this network, the facts always come first.
Trade negotiators from the U.S. and China will be sitting down for talks in less than two hours in Washington. President Trump has threatened to slap
new tariffs on China Friday. That could be delayed if the talks go well.
The U.S. has seized a North Korean ship, claiming it's being used to violate economic sanctions. The U.S. says the ship was transporting coal
and heavy machinery. It comes as North Korea's ramped up tensions in the region with recent missile tests.
Pope Francis has issued a new set of rules for reporting sex abuse in the Catholic Church. The rules mandate systems (ph) reporting cases and
protections for whistleblowers. They also set time limits for investigations. The church has been accused of mishandling allegations for
15 years ago, Chris Hughes helped Mark Zuckerberg get Facebook off the ground. They were roommates in the same dorm. Now, Hughes says it's time
to break up the company. Published an op-ed in The New York Times where Hughes says Facebook is so powerful, it threatens American democracy. Look
at what he actually says. We are a nation with a tradition of reining in monopolies, no matter well intentioned the leaders of these companies may
be. Mark's power is unprecedented and un-American.
Hughes spoke out against Facebook's leadership on this program last December.
(BEGIN VIDEO CLIP)
CHRIS HUGHES, CO-FOUNDER, FACEBOOK: There has to be accountability. I mean, this idea that no one can be held accountable in the long run, not
just for the issues that have crept up recently with privacy, but also for the election meddling that happened in 2016. They're making a lot of
efforts to change things, but the problem is the message that they're sending is getting transformed by the fact that there are these new
revelations every single day.
(END VIDEO CLIP)
QUEST: Okay. Now, join in the conversation. Get out your phones and go to cnn.com/join. Should Facebook be broken up? Remember, it's Instagram,
it's WhatsApp, it's Facebook. And the argument is that all three of them, put everything else together as well, and you've got this mega monopoly.
Why should they be broken up? Yes or no, up or down, straightforward vote, and we will see the results on your screen.
Hughes's answer to check Facebook's power is to split aside its assets. Divide Facebook, Instagram and WhatsApp into distinct companies with more
federal oversight, create an agency to regulate tech companies, strong, privacy legislation, acceptable guidelines on speech on social media.
Facebook has responded. Facebook says, Facebook accepts that with success comes accountability. But you don't enforce accountability by calling for
the breakup of a successful American company. Ironically, the statement comes from Nick Clegg, who is Facebook's Vice President of Global Affairs
and Communications, who did used the Deputy Prime Minister of Great Britain.
My next guest worked out the FTC's investigation into Facebook. - is a former Chief Technologist at the FTC.
He's with me from Oakland, California. A simple question, is Hughes right? Should Facebook be broken up?
ASHKAN SOLTANI, FORMER CHIEF TECHNOLOGIST, FTC: So I think that's one approach, although, personally, I don't think that will matter all that
much, right? So Facebook has 2.3 billion users. WhatsApp and Instragram have -- I'm sorry. WhatsApp and Messenger and Instagram all have just over
a billion. But there's a lot of overlap in those users.
So breakup is one, although it won't prevent Facebook from creating copycats of emerging social networking services, from using its, basically,
dominance in the social graph and social ability to target users. So I don't think that's the right question.
QUEST: It's not (INAUDIBLE) from Hughes, is it? I mean, it sort of sticks in the claw that you set the thing up, he's extremely wealthy as a result.
I'm all right, Zuck, Now, break the thing apart. Criticizes -- including criticizing Mark Zuckerberg, who I'm sure there's no love lost between the
SOLTANI: I'm not disagreeing with Hughes. I think, absolutely, there needs to be oversight. And what I think is the more important piece is
injunctions around the company's practices from using its dominance to copy other competitors and grow and squash competitors at a rate that's kind of
anti-competitive in the marketplace, which we've seen. So I don't think breakup will --
QUEST: Right, right. The issues of privacy, the issues of -- as you say, I remember when WhatsApp and Instagram started using some of the same
things that Snapchat did. Everybody said all they've done is steal the clothes and squash the competition. Do you think they're still at that?
SOLTANI: Absolutely. And I think one thing that they have is the ability to suddenly push a new product or service to 2.3 billion users and have it
grow virally without anything to do the same (INAUDIBLE) or same outlay as a competitor would. So the next -- whatever the next competitor, they can
grow instantly with their 2.3 billion users. Those are the same thing we saw in Microsoft in `90s, right, in the 2000.
QUEST: Microsoft, of course, changed itself, arguably. It didn't become necessarily less monopolistic. Others came along and it made it less
relevant. But they reinvented themselves with a -- sorry, go ahead.
SOLTANI: Well, no, right? So there was also a requirement, for example, to debundle the browser in Europe and allow others to play on the same
playing field, right, which was other people could play on Windows. The questions of inoperability, as well as injunctions on the company are, I
think, more critical than talking about break up, right? It's hard to unscramble the egg, really.
QUEST: So, finally, do you see Facebook, and to paraphrase the Goldman Sachs days, as the great vampire squid, as it continues to morph, that it
hasn't learned really the lessons and that best is involved in damage limitation rather than actually fundamental changing of modus operandi?
SOLTANI: I think it's not the vampire squid. I think it's the judo warrior, right? Facebook is leveraging things like GDPR, incoming privacy
regulation, incoming pushes for counts of moderation (ph), to really focus itself on how to best monetize and best position itself for the future,
right? All this incoming regulation will actually help Facebook in some sense, right? It will allow the company to better know its users, to
better provide services by end-to-end encryption without having any accountability for what happens on the platform, therefore, improving even
its ROI. It currently makes something like $800,000 per employee, which is something like which is something like for XBook (ph), Google mix, Alfabet
mix, and about 10x anyone underneath them, right? And so it's going to even increase those margins further by leveraging incoming regulation to
allow it to do what it does on a greater scale.
QUEST: And it has the money and expertise to do so where others do not. Very kind of you for giving us time to talk us through this tonight. I
really appreciate it. Thank you, sir.
SOLTANI: Happy to. Thank you. Thank you for for having me.
QUEST: From oil tycoon to prison to champion of democracy. Mikhail Khordorkovsky takes us inside the mind of the Kremlin and explains why
Russia is determined to interfere in the elections around the world.
QUEST: Mikhail Khordorkovsky says the Kremlin will continue to try to influence elections around the world whenever and wherever it can. The
goal he says is to weaken governments and make it easier to negotiate with them on the global stage.
Just today, amid the victory day celebrations in Moscow, the United Kingdom called out Russia for undermining European democracy. And it follows after
two Russian agents were found guilty for a 2016 attempt to start a coup in Montenegro.
Now, Mikhail Khordorkovsky was once Russia's greatest oil tycoon. Look at the pictures. In 2003, when he started to challenge President Putin's
authority, he was put into prison for ten years. Since then, he founded Open Russia and works to promote democracy in the country. Of course, he
lives in exile at the moment.
In our exclusive interview, I asked him Mikhail Khordorkovsky what he makes of the relationship between Donald Trump and Vladamir Putin.
MIKHAIL KHORDORKOVSKY, FOUNDER, OPEN RUSSIA: I don't think they've had any relations, but there was an attempt by the Kremlin to have some sort of
influence on the election in order to create provocations.
QUEST: How well-known in Russia, in Russian circles, how well known is it that Russia influences or attempts to interfere in other country's
KHORDORKOVSKY: Until recent times, until this whole scandal blew up, the Kremlin was trying to show quite the opposite, to show Russian society how
much it has had an influence on the American elections. I mean, they weren't doing it so directly, but they were saying -- they were trying to
make it like, we elected Trump.
DONALD TRUMP, U.S. PRESIDENT: Russia, if you're listening, I hope you're able to find the 30,000 emails that are missing.
It could be Russia or but it could also be China. It could also be lots of other people. It also could be somebody sitting on their bed that weighs
I have President Putin. He just said it's not Russia. I will say this, I don't see any reason why it would be.
QUEST: Do you believe that Russia interferes in the British elections, the French presidential elections, the European elections that are taking place
at the moment, the U.K. referendum? I mean, are they up for all elections, the Russians, into -- are they up for interfering wherever they can?
KHORDORKOVSKY: First of all, I wouldn't say Russia. 145 million people in Russia couldn't care less about elections, even if their own country. But
the Kremlin, yes, is trying to create situations wherever it can. Elections are just one of the types of situations that it creates.
QUEST: To what end?
KHORDORKOVSKY: To weaken governments in order to make it easier to negotiate with them and reach those goals that Putin has set for himself.
TRUMP: Putin said Trump is brilliant.
And I like him because he called me a genius. He said Trump is the new real leader. Trump should be the leader and he's a total genius and he got
out of the piper (ph). So he called me a genius.
You know, it wouldn't be bad to get along with Russia, right? It wouldn't be bad.
Trade, we intend to do a lot of trade with Russia. We do some right now. It's up a little bit. But he would like to do trade, and we would like to
QUEST: The old divide and rule concept. But is there any evidence that it's working, all that they are doing?
KHORDORKOVSKY: No doubt there, it does have an impact. I can see the positions of many European leaders, political leaders, I mean. I'm seeing
that they're starting to get a little scared of the Kremlin, get a little scared to speak out against the Kremlin, because they understand that the
Kremlin can do something nasty to them. So, yes, in that sense, there is an effect.
TRUMP: That was a democrat hoax.
It's a witch hunt.
Phony witch hunts.
I think it was a hoax.
It's like a witch hunt.
It's like a witch hunt.
This is a hoax.
The witch hunt continues.
I call it the Russian hoax.
QUEST: Again, to Donald Trump, we've read so much about a supposed relationship, this idea of Putin pulling the strings, holding incriminating
evidence. You've heard these stories. You know them better than I do. What authority should I give them?
KHORDORKOVSKY: It's hard for me to imagine that Putin has some sort of compromising material on Mr. Trump, material that, on the one hand, the FBI
wouldn't already know about, and on the other hand, would present a danger to Mr. Trump. If it's money, if it's serious money, then the FBI would
have already known about this and would have said something. If it's women, then, for Mr. Trump, as far as I understand it, women aren't
QUEST: You can see more of the interview, our interview with Mikhail Khordorkovsky on Friday night's program. And it concludes why any CEO
should be careful when doing business with Moscow and how he plans to play a role in the new Russia.
Donald Trump is speaking, as we've been talking. He's welcoming the World Series Champions, the Boston Red Sox, to the White House. Let's listen in
for a second.
TRUMP: We've got a lot of fans over here. That's a lot of fans they have. In the playoffs, you bested your archrival, the Yankees.
QUEST: Right. What he's doing -- he's still on the spot. I am pretty certain at some point he will get to other matters. When he does, we'll
monitor for you and we'll come back to report.
It's akin to putting a man in the moon. The Transcontinental Railroad, which turns 150, a century-and-a-half since it linked the East coast to the
West, the great outdoors west. We'll talk to Union Pacific's CEO next. All aboard.
QUEST: Let's go back to the White House and the President.
TRUMP: He's doing well this year. When it counts, he really does well. Those are the ones we really like. Followed by three RBIs in the 9th, the
Red Sox won nine to six and never looked back. Chris Sale then returned to the mound for the final game with two outs, and a one and two count in the
bottom of the 9th against a great hitter. Sale stared down the batter, wound up and delivered an amazing slider. Was that a slider? You gave up
the fastball? And the batter went down swinging. And the Red Sox won the World Series.
In 2004, the Red Sox achieved their first World Series victory in 86 years. You quickly won two more in 2007, 2013 with your victory over the Dodgers.
You now have won more World Series than any other team in the century. That's pretty good. Must be the ownership too, I don't know. I know these
owners are great.
In the same period, Boston teams have won six Super Bowls, as well as an NBA and NHL Championship, and this has to be a great time for Boston. If
you think of it, what Boston has done in a short period of time is pretty amazing in a lot of ways, but in sports, certainly. Congratulations.
Each Red Sox player is a shining example of excellence, living out an American sporting tradition that goes back many generations. From the open
fields of our rich farmlands to the playgrounds and the vacant lots of our great cities, kids everywhere learn to catch fly balls, swing for the
fences and race to home plate. Baseball is truly America's pastime. I love it. I don't know. I guess everyone out there loves it. You wouldn't
be here if you didn't. But I love it. It's a special game, a special sport.
I played at a slightly different level in high school, a little different level. But every spring, I loved it, the smell in the air, right? Does
that make sense? The smell in the air, right, it's an amazing feeling.
Through every pitch inning game and series, the 2018 Red Sox never gave up and never backed down. You always played like champions. This is a great
champion right here too. This is some champion. I want to congratulate you all on your spectacular victory, and I just want to have Chris Sale and
J.D. Martinez, two outstanding players and athletes and people, come up and say a few words.
And then after that, I'm going to take -- unless the team doesn't want to do it. They never get to see the Lincoln bedroom. It's like sort of
you're not supposed to be showing it. So if the press, the media doesn't report me for this, I'm going to take them up and show them the Lincoln
bedroom. They wanted to see the Lincoln. So I'm going to give the tour myself, okay.
But, J.D., if you and Chris would come up and say a few words, thank you. Thank you very much.
CHRIS SALE, BASEBALL PITCHER, RED SOX: Well, Mr. President, on behalf of the Boston Red Sox organization, we would like to thank you for having us
here to celebrate our 2018 World Series championship team. We would like to thank our --
QUEST: The markets, the final few minutes of trade on Wall Street. The Dow, as you can see, has rallied somewhat. Intel is the lowest, down 5
percent. Chevron is up some 3 percent. Chevron on the back of the -- the fact that it has backed out of (INAUDIBLE) 3 percent, exactly 3 percent,
from Anadarko, which will go to Occidental. And as for the rest, well, it is pretty much as you see it, holding at its own, it's down 140, the worst
of the day which was just about 11:30.
That was when there was all the talk whether the trade talks would succeed, would not, what would happen when the chief negotiator arrived. And we
just sort of drifted back up towards the close.
With the closing bell rings, an hour from the start of those high level trade talks in Washington, the market is down in the red. But I think the
difference it is -- there's sort of a base underneath it. It is not uncontrolled. There is no feeling that, at the moment, it's going to tip
over. However, of course, if those talks go badly, it's a different game. (INAUDIBLE) next.
QUEST: Tonight's profitable moment, an hour from now and the talks are due to begin, the talks that is between the trade negotiators from China and
the U.S. So much is vested in these talks, which have actually been going on for several months at great detail, but seem to have rather foolishly
all coalesced down to one particular meeting in Washington, because dependent upon this is whether or not Donald Trump, overnight, imposes
fresh or deeper tariffs and sanctions. It's ludicrous between you and me.
These talks are extremely complicated, very detailed and there will be starts and stops. What appears to have happened is the American president
has taken unabridged (ph) to one of the negotiating strategies and has started to play hard. But the markets are almost child-like, seemingly
unable to grasp that this might just be part of the process, and we are a long way from seeing a final fruition. And so you and I will have to wait
and worry will these talks succeed or will they not. And if they don't, what will the market do? We'll deal with all of that on another day.
And that is Quest Means Business for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
The bell is ringing, the Dow is down, the day is done.