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First Move with Julia Chatterley

Microsoft Makes Its Play For The Chinese Video App, TikTok; Millions Of Americans Lose Benefits As Lawmakers Search For A Deal, An Entirely New Business Model Opens Up For Space Travel. Aired 9-10a ET

Aired August 03, 2020 - 09:00   ET

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


[09:00:20]

JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I am Julia Chatterley. This is FIRST MOVE and here is your need-to-know.

TikTok tie-up. Microsoft makes its play for the Chinese video app.

Stimulus setback. Millions of Americans lose benefits as lawmakers search for a deal.

And a splash down success. An entirely new business model opens up for space travel. We hear from NASA's chief this hour.

It's Monday, let's make a move.

Welcome once again to FIRST MOVE. Welcome to the start of a brand new month together. One where the clock is clearly ticking today at least, on a deal

to save TikTok's U.S. operations, and of course to get a stimulus deal agreed in Washington.

Science also clearly racing against the clock. This is what White House health officials warn that a new phase in the COVID crisis has begun with

cases now, quote, "extraordinarily widespread."

Minneapolis Fed President, Neel Kashkari hinted that another one-month lockdown might be in the best interest of the long-term economy. Ouch.

That said, we've got promising signs that the crisis is easing in some hard hit states. More on what we're seeing around the world and analysis coming

up very shortly.

For now, let me give you a look at futures. We are higher. The tech rally is set to an after a near seven percent rise for the month of July. The

fearless FAANGs, let's call them that, among last week's strongest gainers with earnings for the most part FAANG-tastic, too.

The ones to watch for me, Alphabet with revenues falling for the first time ever, as advertising income slumped eight percent. Can anyone stop

Facebook's dominance here? We'll be discussing that, too.

But I have to say, my personal favorite of the weekend, Apple now bigger than Saudi Aramco. That's Saudi Arabia's national oil giant. Wow.

To Asia now. It's a tale of two halves. Good news from China overnight. The private Asian survey showing the biggest jump, the monthly jump in

manufacturing activity in nine years; and the bad news, HSBC warning it could see loan losses of up to $13 billion this year amid what they called

heightened geopolitical risk.

Well, there's no better illustration of that at the moment than our first driver. Let's get to it.

Microsoft confirming it's in talks to buy parts of the Chinese app, TikTok, this, after its CEO discussed the possibility of a deal with President

Trump. The President had threatened to ban the app over the weekend, but has now reportedly allowed time for talks.

Donie O'Sullivan joins us now. Donie, a 45-day stay of execution it seems for TikTok. Talk us through the details here. What do we know?

DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Yes, Julia. It was like following a game of ping-pong this weekend. On Friday evening, we heard that the

President -- it was to be recommended to President Trump that TikTok should be sold, then later on Friday night, Trump said no, he is just going to

totally ban TikTok from the United States through Executive Order.

And then last night, Microsoft came out with a blog post on its website saying that it had discussions with President Trump and it's trying to

reassure about its potential acquisition of TikTok. It said it would move all American's data to the U.S., and it said that it would try and acquire

the app in the United States, Canada, Australia, And New Zealand, which would also be quite interesting in terms of how that would work from a user

perspective.

Would it be -- you know, would people in the United Kingdom and Europe and Africa be on the same app, but it would be one app with two different

owners or how that would all play out? It would be really interesting to see how they manage that one.

CHATTERLEY: I've got so many questions on this, I could spend the whole show talking about it, Donie.

The first thing, TikTok is valued at approximately -- what -- $50 billion? What is TikTok U.S., even if we take this in isolation worth, when the

alternative here is being banned from the United States?

And another question, where does the innovation come from? Is it Bytedance? Does separating TikTok here mean Microsoft is sitting on something that

they then have to work out how to handle and monetize going forward? This one is not easy for many reasons, never mind the security risks here

potentially, too.

O'SULLIVAN: Yes, no, not at all. I mean, it really is -- I think they would have to get very creative in terms about how Bytedance, the Chinese

company and Microsoft could actually work together on TikTok and also keep the President and national security concerns at bay here in the U.S.

[09:05:12]

O'SULLIVAN: TikTok says they have a hundred million users in the United States, which I think is even more than most folks realized. And you know,

if you've been on the app, it's incredibly addictive.

People spend a very, very long time on it because there's such great content on there. And of course TikTok is pointing out, really pointing to

Mark Zuckerberg and Facebook's sort of supposed closeness with the Trump administration, claiming last night its parent company, Bytedance saying

that Facebook had basically tried to sabotage TikTok and Bytedance and of course, TikTok -- Facebook is launching what TikTok is describing as a

TikTok clone, launching a product globally called Reels.

So I mean, it really is fascinating. Who would have thought a video app where mostly teenagers are posting videos of themselves dancing and memes

could be in the center of this sort of geopolitical tech industry complex. It's incredible.

CHATTERLEY: Yes, and some of those are big teenagers, too, like grown adults that could potentially vote as well. So, the political ramifications

here, the security ramifications here, endless. We're going to have fun talking about this, I can think. Forty five days, Donie. Get warmed up.

Great to have you with us.

O'SULLIVAN: Thanks, Julia.

CHATTERLEY: Thank you for that. All right, meanwhile, China hitting back at the United States, threatening to ban its apps. This after U.S.

Secretary of State, Mike Pompeo said some day that Chinese social media apps represent a national security threat. Ivan Watson joins us now.

Ivan, the Chinese here saying, hey, what's your evidence?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's right, and the Chinese Foreign Ministry is saying that they're opposed to this threat

coming from the U.S. government, going on to say that this exposes double standards and violates W.T.O. principles of openness, saying that this

company has been judged without any chance of proving its innocence, and that the U.S. is stretching the concept of national security.

And kind of making an appeal to consumers in the U.S. to try to speak up against this move by the Trump administration.

Meanwhile, the owner of TikTok, Bytedance, they've come out trying to say they're trying to be a global company; that they abide by all laws in every

country where they operate.

But there's kind of an elephant in the room here and whether or not the Trump administration's move is justified, look at the Chinese government's

track record when it comes to social media apps from American companies operating or not allowed to operate for years in China.

If you drive 20 miles roughly north of where I am right now into Mainland China -- Instagram, Twitter, Facebook, Google -- none of these things are

allowed to operate behind the great Chinese firewall and they haven't been able to operate there for years.

So the Chinese government's complaints about double standards, well, this could be the pot calling the kettle black -- Julia.

CHATTERLEY: Ivan, you make such an interesting point there. I mean, this deal could actually pave the way for now Chinese companies could perhaps

operate where data of international people is concerned. This is how you evolve to have the ethical standards, the data privacy standards of the

west, perhaps.

But the reverse also has to hold true, too, and if we don't have access, people at Facebook don't have access to China, then what are we ultimately

achieving here?

WATSON: Well, and so there could be some retaliatory years after the fact moves on the part of the Trump administration by going after TikTok in this

way.

But there's clearly an imbalance, so to speak, though I think Beijing would argue that the U.S. tech companies aren't abiding by Chinese laws, which

are to allow strict censorship, which is what takes place in China, and to force data to be handed over, and those are the reasons that these

companies aren't allowed to operate within China.

But ultimately that also comes down to the national security argument, which is what the Trump administration is using, in this case, against

TikTok.

CHATTERLEY: Yes. It's going to be fascinating to see. I'm sure Apple is watching this very closely, too, because if there's going to be retaliation

if this deal doesn't work, then surely Apple is in the firing line as far as the Chinese are concerned, too. Some great points.

Thank you, Ivan. Great to have you with us. Ivan Watson.

All right, to Washington now where time has clearly run out for Democrats and Republicans who are still stuck on how much support to give unemployed

Americans. This, as the $600.00 a week enhanced benefits program officially has run out.

[09:10:11]

CHATTERLEY: Christine Romans joins us now. Christine, it's easier to talk about areas where the Democrats and the Republicans agree, because there's

far more areas, it seems, and critically important ones where they disagree, specifically on extra benefits.

CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, here we are. We hit that brick wall. We knew it was there and Congress has, you

know, driven the car right into it. This brick wall, the end of those benefits.

These benefits were, to keep the metaphor going here, a shock absorber for millions and millions of families who found themselves out of work during

the pandemic. Now, there's this debate among some Republicans that these unemployment benefits were simply too rich for many people, that many

people were getting more money than they would have normally received in their pay to be out of work and that's some sort of a disincentive to going

back to work.

I would posit this, sure, in normal times you argue about what level of unemployment benefits compensate people and dis-incentivize people, but

these are not normal times.

The economy has gone off a cliff here and these people don't have jobs to go back to. There are millions and millions of jobs lost over the past few

months, and only a few million created in its wake, and we still don't know what the recovery is going to look like.

I know we have a jobs report this week that will likely show jobs growth, but we have a recovery that has been in fits and starts and we have a virus

that's spreading to rural areas and resurging in the Midwest.

So there are a lot of uncertainties here and you've got Republicans in particular in Congress who are saying, let's pare back those benefits for

working families at a time when I think the crisis is still raging.

CHATTERLEY: Yes, I feel like the Republicans are operating like the crisis is over. The emergency is over, compared to when we were negotiating

financial aid several months ago and it is simply not over.

I just want to play what the Treasury Secretary had to say about the disincentive effects of these unemployment benefits.

(BEGIN VIDEO CLIP)

STEVEN MNUCHIN, U.S. TREASURY SECRETARY: I think on the concept, we absolutely great on enhanced unemployment. We want to fix the issue where

in some cases, people are overpaid and we want to make sure there's the right incentives.

But again, let me just emphasize, we put on the table a proposal. Let's extend it for one week at the same rate while we negotiate so we don't hurt

the American public.

(END VIDEO CLIP)

CHATTERLEY: The American public is already hurting, Christine. We have 13 million people according to the last count collecting benefits, 5.5 million

job openings. There aren't jobs available and I'm not lucky enough to be a parent, but you are.

We've also got millions of parents who can't go back to work because they're looking after their children.

ROMANS: Right. When I hear some of these arguments that people don't want to go back to work because they are making too much money on unemployment,

I mean, there are four or five things ahead of that why I think a lot of people are cautious about going back to work.

One, they want to make sure they are in a safe environment. They don't bring the virus home to their families. Two, they live in multi-

generational households and they have to care for people in this disruptive time. Three, their kids are not back to school and will not be back to

school full-time, and so somebody is going to have to manage the child care and the schooling at home, liaising with the school districts.

There are a lot of reasons why people are maybe cautious to head back into the labor market. But first and foremost, there just aren't the jobs. You

laid out the numbers, 30 million on one side, five million on the other. There is a huge, huge chiasm there and until the virus is under control and

we get on the other side of this pandemic, that's when people will be able to go back to work in big, big numbers, I think, and get back to normal.

CHATTERLEY: Yes, tie these benefits to the unemployment rate. When it's coming down --

ROMANS: That's right.

CHATTERLEY: We're in a recovery, arguably, and then you can bring those things down, not before. Christine Romans, thank you for that.

ROMANS: Nice to see you.

CHATTERLEY: All right, these are some of the other stories making headlines around the world. The Australian state of Victoria has declared a

state of emergency after a sudden rise in COVID-19 infections.

Strict new lockdown rules include an overnight curfew and the closing of shops and industry for the next six weeks. The state is home to Melbourne,

the country's second biggest city.

The German government has blasted a demonstration against coronavirus restrictions. As you can see, not many people there wearing masks. Germany

has seen a sharp rise in new cases after initially bringing the pandemic under control. All this, as children return to school in some states.

Fred Pleitgen has the latest.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well here in Germany, the government continues to deal with and struggle with a growing

number of coronavirus infections.

In fact, on Friday, there were 955 new infections, which is the most this country has seen since the middle of May. There's another challenge that

Germany faces as well, as this week, school goes back into session in some states.

Germany has a Federal system that's similar to that of the United States, and so every state actually has their own system of how they're going to

bring students back into class.

Berlin, for instance, will make students wear masks when they come back into classrooms. At the same time, the government is urging people to

strictly adhere to the anti-pandemic measures that have been put in place. Of course, those have remained the same the entire time -- physical

distancing, sanitizing and wearing a mask where physical distancing isn't possible.

However, this weekend, Berlin saw a giant demonstration of around 17,000 people who came out to this very area, to the Brandenburg Gate. Many of

them were anti-vaxxers and conspiracy theorists, but also people from the far right and the far left. The police actually had to stop that

demonstration because the folks who went there simply weren't adhering to the measures.

Almost no one there was wearing a mask and physical distancing also wasn't happening as well.

Fred Pleitgen, CNN, Berlin.

(END VIDEOTAPE)

CHATTERLEY: All right, we're going to take a break here, but coming up on FIRST MOVE, targeting TikTok, how the social media standoff between China

and the United States could reshape the tech landscape.

And mission accomplished, a Sunday splash down marks the successful end of a historic SpaceX voyage. We'll get the inside story and what next from the

head of NASA.

Stay with us.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE, where U.S. stocks are set to kick off the new week and the new month with gains. It's a continuation of last

week's mostly positive price action, better than expected factory data from both Europe and China is helping lift sentiment here.

U.S. factory data is out later today. It is expected to show a second straight month of expansion, too. What about the U.S. dollar as well?

Whatever else is going on in other asset classes, on the rise today after suffering its worst monthly fall in almost ten years. It was down more than

four percent in July. So something else to keep an eye on.

In the meantime, news about COVID-19 treatments also in focus. Eli Lilly shares higher premarket on news of its beginning late stage trials of a

treatment for patients in nursing homes, AbbVie, Takeda and Amgen are now enrolling patients in three COVID treatments, too.

This comes as the U.S. now has more than 4.6 million known coronavirus cases. Roughly a quarter of the world's total, more than 154,000 Americans

have now lost their lives.

COVID related deaths are still up in 30 states and the C.D.C. is now forecasting 173,000 deaths by August 22nd. The White House Coronavirus

Taskforce coordinator, Dr. Deborah Birx, says the fight against the pandemic has now entered a new phase.

[09:20:28]

(BEGIN VIDEO CLIP)

DR. DEBORAH BIRX, WHITE HOUSE CORONAVIRUS RESPONSE COORDINATOR I think the Federal government reset about five to six weeks ago when we saw this

starting to happen across the south.

This epidemic right now is different and it's more widespread and it's both rural and urban.

We've gone to very specific state and local, city by city, county by count, showing out which counties and which cities are under a particular threat

and what mitigation has to be done.

(END VIDEO CLIP)

CHATTERLEY: Let's talk this through. Joining us now is Dr. Tom Frieden. He is President and CEO of Resolve to Save Lives and a former Director of the

C.D.C.

Sir, great to have you on the show. You were listening there to what Dr. Deborah Birx just said. Do you share her concern about what we're seeing

around the states?

DR. TOM FRIEDEN, FORMER DIRECTOR OF C.D.C.: Well, it's the same virus, but it's spreading widely around the U.S., particularly in the southern states,

also increasingly in the Midwest and the west.

The virus currently has the upper hand in the U.S., and until we get a better handle on the data to track both where it is and how we're doing

fighting it, we will not get ahead of it.

CHATTERLEY: You went on a data hunt across all 50 states. You were trying to get a sense of the level of testing that was being done, the time to get

test results back, how much of that was tied to contact tracing of people who have been exposed to COVID-19. What did you find?

FRIEDEN: It was really disappointing and a reflection of the failure of the Federal government to establish clear standards and support states to

report.

We saw a lot of creative work in different states, hard work, people trying, but the fundamental information we need to manage the outbreak

wasn't there. And as we all know, what gets measured can get managed. And especially what gets measured publicly.

It's not enough for the Federal government to have quiet talks with governors, saying what's happening in their state and what they need to do.

We all need to see that information so we can all be part of the solution, and that includes very fundamental information, like what proportion of

tests are coming back within 24 to 48 hours? What proportion of people are isolated within 48 hours of a test? What proportion of today's cases were

among contacts who were quarantined so that the infection stopped with them?

CHATTERLEY: What was the average, Tom? Did you even get a sense of how long it's taking to get test results back? Because I know you've been

quoted as saying, if it takes longer than two to three days, we are the point where it's kind of irrelevant doing the test.

FRIEDEN: We don't have that information. I think the average is probably three to four days in many places, but it varies. There's some quick tests

coming back in very useful time periods and I'm hopeful for some of the newer technologies that may bring more of those tests to more people.

But the commercial labs in particular are taking seven, ten, 14 days. I have a friend of the family who got sick. He is young. He is healthy. He

had to stay home. His test still hadn't come back 14 days after it was taken.

That's pointless. In fact, I don't feel that we should be paying for tests that come back in more than 72 hours, because it's just not responsible for

labs to have the charade that they're going to do a test that's useful when they can't do it.

If they can't keep up with the volume, stop accepting tests beyond a certain number. Don't pretend you're doing something that's making a

difference.

But information like that can make a big difference because in most states around the country, what we're seeing is really hard work, but flying blind

in terms of what's needed to manage the outbreak.

CHATTERLEY: So we just showed a heat map across vast swathes of the United States, the case rises look stable. Is that something that we can trust as

a result of everything that you've just said? Because if we're talking about -- what -- 47,000 new daily cases, how many are we actually talking

about, given the quality of our ability to collect the data and analyze it?

FRIEDEN: Well, Julia, first, remember that for every diagnosed case, there's somewhere between three and ten undiagnosed cases.

So focusing on the number of cases is not particularly instructive. The percentage of tests that are positive is a useful indicator. It's not

perfect, but it's useful. And we're seeing in some parts of the south is a gradual decline in that number. That's going in the right direction, but

we're still idling at a very high rate.

We're seeing huge numbers and that number needs to come down dramatically. What you're seeing in New York, Vermont. Parts of the Northeast and

elsewhere are positivity rates of one percent or below and that's the kind of number you'd like to see.

[09:25:09]

FRIEDEN: So it's great if it came down from 25 percent to 22 percent. That's the right direction, but it's nowhere near the league it needs to be

in.

And one other thing, Julia, is vaccines. Very important we recognize it is the most important thing we can do, but it's not going to make this go away

overnight. We need to know whether the vaccines work, whether they're safe and whether we can get them to people so that we can tamp down the

pandemic.

It's more a question of chipping away with medications and making a big step forward with a vaccine if we have one, but the pandemic is likely to

be with us for a long time to come.

CHATTERLEY: Tom, you've mentioned some points, the first is a failure of the national government to see a coordinated plan coordinated plan to

control the virus. The second thing is the all eggs in one basket feel about Operation Warp Speed and the need to get a vaccine.

How concerned are you that the political pressure, in addition to the desire and the need for everybody simply to get back to normal, is being

placed on the process that we're seeing for vaccine development?

How many times do we need do we get to Phase 3 and decide that the vaccine is not good enough?

FRIEDEN: Well, most vaccines generally don't make it to the market, so most fail along the way. I do think the Federal government is doing the

right thing to focus on trying to get a vaccine as soon as possible.

We just have to make sure that there are no corners cut on safety, and that means being completely transparent about all of the results as they come

back.

Not all vaccines work and they may not work the same for all people. We don't even know whether infection with COVID results in immunity, and

usually the natural immunity that we get from a natural infection is the ceiling of what a vaccine can do.

So we don't know whether it will be protective and if so, for how long. We also don't know if it will be completely safe and that's something we can't

cut corners on and beyond that, even if we have an effective and safe vaccine, we have to maintain trust by being completely transparent about

information on the vaccine so that people will be willing to line up and take it.

CHATTERLEY: Tom, I have about 30 seconds. If a vaccine comes to market, can we trust it given all the political pressure, all the noise, all the

mixed messages, can we trust it?

FRIEDEN: If we have open, objective information from the F.D.A. and the C.D.C. advisory committees with all of the information, including the

safety information public, and those committees without any pressure approve it and recommend it for Americans, then yes, we'll be able to trust

it. But that's a big if.

CHATTERLEY: Yes, I was about to say, there were a lot of ifs there. So many, I lost count. Tom, great to have you with us. We'll continue to chat

about this, I'm sure. Tom Frieden there, former C.D.C. Director, great to have you with us.

FRIEDEN: Thank you.

CHATTERLEY: All right, the opening bell is next. Stay with us.

(COMMERCIAL BREAK)

[09:31:07]

CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running for the first day of trading in August and that's a historically volatile month

for the markets. That said, we are kicking the month off with gains. The NASDAQ is the best performer and back in record territory once again.

Stocks rising, despite the ongoing stalemate in U.S. stimulus talks. We've got the reduction, of course, in benefits for people and that's going to

hit on things like retail sales. So there will be an economic impact if this goes on much longer. There's also deal making going on, multibillion

dollar deals in fact.

Marathon Petroleum spelling its Speedway gas station chain to the parent company of 7-Eleven for some $21 billion. The health unit of Germany's

Siemens is buying U.S.-based cancer research firm, Varian for more than $16 billion. Varian shares are up more than 20 percent in early trading. And

ADT shares soaring over 50 percent. They're partnering with Google to create Smart Home Security Systems. Google set to sink some $450 million in

ADT as part of that deal.

What about to financials now? HSBC's net profit dropping 65 percent in the first half of the year, compared to the same period last year. The CEO of

HSBC says, quote, "Our first half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risks and

heightened levels of market volatility."

Paul La Monica has more. Paul, that has the sound of a perfect storm for HSBC. Whichever way you look, they were under pressure.

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes. Definitely. Obviously, Julia, HBCS is not the only global financial institution to feel these pressures,

but they have so many challenges right now, warning the potential for $13 billion in credit losses as a result of the COVID-19 crisis and the

resulting hit to the bank's earnings and balance sheet.

This is a company that really is struggling. They have been hit hard in the U.K. and geopolitical tensions, I think that is a not so thinly veiled code

for U.S. and China are starting to, once again, have increased fractures and that is something that I think could be very problematic for HSBC if

the U.S. and China wind up having their trade wars ratchet up once again.

CHATTERLEY: You make some great points and I spotted that, too, in the U.K., 40 percent of the provisions against future losses that they've made

are for their U.K. business and the concerns about what happens there with loan quality and potential defaults.

But they were in the process of pivoting more towards the Asian business, moving away from Europe, move away from the United States. In light of all

the concerns that you just mentioned there and the geopolitical risks, do they accelerate that or do they rethink it? Did they have anything to say

on the call?

LA MONICA: I doubt that they will rethink their restructuring efforts, I think, if anything, you would imagine that HSBC will want to further pivot

away from the U.K. and some of the more slow growth developed markets and really look at Asia.

But obviously, there are going to be challenges no matter where they are looking to focus, because of COVID-19 not going away any time soon,

unfortunately, without a vaccine probably, and then the U.S.-china trade relations, saying, unless they want to play the long game and wait and see

what happens until after November, maybe HSBC can hope that a potential President Biden might have less of a hard line stance with China than

President Trump.

But President Trump could get re-elected, so it's a bold bet for a bank and governments to be taking, and clearly there's a lot of concern right now

about those U.S.-China economic relations. I mean, just over what's happening with Microsoft.

[09:35:11]

CHATTERLEY: Yes. That's exactly where we're going next, so the perfect tee-off there. Paul La Monica, thank you so much for that.

As Paul mentioned there, back to our top story, the proposed acquisition of TikTok U.S. by Microsoft, shares of the U.S. tech giant are trading higher.

The purchase could have significant ramifications for the global social media market. Let's talk through some of this.

Dan Ives is the Managing Director at Equity Research at Wedbush Securities, and he joins us now. Dan, fantastic to have you with us. You see a 75 to 80

percent chance of a deal going through here. What kind of deal are you talking about and why are you so optimistic?

DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: At this point, if you look at Bytedance, their back is against the wall. I

mean, in terms of TikTok, given what we saw from the Trump administration in terms of potentially pulling the plug, there's only one white knight and

it's Microsoft.

So, at this point, I believe 75 to 80 percent that could be conservative in terms of this deal likely to happen and for Microsoft, it's a huge

opportunity where all the FAANG tech stalwarts are right now in regulatory crosshairs, they could go after this asset.

CHATTERLEY: There's a lot to discuss there. Okay, so you're saying that Microsoft is the only white knight here. We're talking about a global

company, TikTok, with a valuation of assumed estimated to be the around $50 billion.

If TikTok U.S. doesn't have an alternative here, what's the value of it? What should Microsoft even be paying for this based on the fact they're

going to have to scale up in terms of their Cloud infrastructure? It's going to initially cost them money. How do you monetize TikTok U.S. in

isolation?

IVES: Well, and also, if you think about it from a negotiation standpoint, Microsoft knows they're the only game in town and that's why we continue to

think $40 billion potentially is the size of the deal.

And look, when you look at Microsoft, it has $35 billion in cash, and I think that's why they continue to be firmly well positioned, especially

after getting the green light from the White House.

CHATTERLEY: Where do you think the innovation comes from, Dan? Because if they take, let's say TikTok U.S. in isolation, do they still have the

benefit of Bytedance's innovation hereto, or is it down to Microsoft? Because that's another question that Microsoft has to be asking themselves

here is, huge of an opportunity perhaps as Cloud represents in this regard and in this deal, what about the product itself?

IVES: Yes, I mean, look, I don't think they tinker too much with the product. I do think it's a slippery slope in terms of the Bytedance piece

and I think that's the reason they're going to have to navigate, especially in the Beltway.

But if you look at LinkedIn, that was a phenomenal acquisition for them. So I think it's down the same path and I think this is going to have some more

twists and turns ahead. But I can tell you right now when you look at all the FAANG, large Facebook, Google, Amazon, Apple, they can't go after this.

Microsoft knows they're the only game in town.

CHATTERLEY: And for an advertiser here, if you're looking at perhaps one advertising on TikTok, do you want to have the global TikTok opportunity or

do you just go, you know what, it's a simpler conversation to give all my ad money to Facebook the way I'm doing now, rather than negotiate with

different pieces of TikTok around the world depending on who the owner is?

This is something else that Microsoft has to consider here, too. Should they push for global business?

IVES: Yes, that is. And I think that's going to be tough. When you're just thinking about the U.S. versus the non-U.S. piece, right, but I think

anything from down in Microsoft, everything they've touched has really turned to gold on Cloud and on the other opportunities. And this is really

a decade-long type bet in terms of the social media side.

But I do think from a U.S. perspective, especially when you look at 100 million consumers, I mean, this continues to be just something that

essentially fell into Microsoft's lap.

CHATTERLEY: You just mentioned the 100 million users. There's a political angle here, too. Firstly, because you don't want to upset 100 million

people right before an election during a pandemic when this is how a lot of people are entertaining themselves.

The other thing, of course, is that Facebook is in the cross-hairs here politically. Is this potentially a challenger to Facebook? The last thing

you want to do is chuck them out of the country at this moment.

IVES: I think Microsoft owning TikTok makes them on day one just a legitimate competitor. Just given what you've seen in the innovation. Now,

on the other hand, some argue why does Microsoft even want to insert themselves into this social media cross-hairs given regulatory and others?

But it just comes down to like, if can buy an asset at a discount that's a unique asset in the world where they're essentially the only one that could

buy them, I think they recognize, they're going to look in the mirror and they're go after this.

[09:40:04]

CHATTERLEY: On this point, but slightly as a tangent, was there anything that worried you on what we saw from Alphabet and Google with the drop in

ad revenues? Fine, we're in a pandemic, we are in an economic slowdown, so you would expect perhaps ad revenues to take a hit.

But just in terms of the power play between the challenge that Facebook represents in sucking in this ad money, and again how Microsoft values this

deal.

IVES: Again, digital advertisers are under pressure here, but I think when you look at it, I do think it's more of two to three-quarters rather than a

longer-term, just given eventually from a gravitational pull, you're going to have to be on those platforms.

That's how Microsoft looks at it. Like their enterprise strategy is locked up, if you look at Cloud and that path. Consumers basically have been on a

treadmill and I think now, they look at it and this is a bet Nadella wants to make.

CHATTERLEY: Fascinating and it doesn't also have to be all about advertising on this platform. What about the e-commerce opportunities, too.

It's going to be interesting to watch. Dan Ives of Wedbush Securities.

IVES: Thank you.

CHATTERLEY: Great to get your context. Thank you.

All right, coming up, after a splash down from the space station success, what next for NASA and SpaceX? Well, the Chief of NASA joins us next to

tell us. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Splash down.

UNIDENTIFIED MALE: As you can see on your screen, we have visual confirmation of the splash down.

(END VIDEO CLIP)

CHATTERLEY: Wow. You're watching the SpaceX Crew Dragon capsule safely splash down in the Gulf of Mexico. Two NASA astronauts emerged from the

craft, proving the first-ever manned commercial flight to the International Space Station was a success. SpaceX is planning more such missions in

what's being held as a new era in space flight and public private sector cooperation to get there.

NASA Administrator Jim Bridenstine joins us from the Johnson Space Center in Houston, Texas. Jim, always fantastic to have you on the show. This was

historic for many reasons, the partnership with SpaceX, the fact that we've not done this for almost a decade. You must be elated.

[09:45:13]

JIM BRIDENSTINE, NASA ADMINISTRATOR: We are very thrilled, and I'll tell you one of the things that has us the most thrilled is not just the success

of the first test flight of commercial crew with the SpaceX Dragon Crew capsule, but now we get to open up this new era of human space flight as

you said, but we get to do it with our international partners.

So the very next flight that we are going to take next month, as a matter of fact is going to have a Japanese astronaut, Soichi San and then the next

flight early in 2021 is in fact going to have two international astronauts, a French astronaut who is with the European Space Agency and then also

another Japanese astronaut.

So, it's a great day for the United States of America for sure, but it is also a great day for our international partners that have been great

supporters on the international space station.

CHATTERLEY: It is also going to have the wife of course, Megan McArthur in the spring of 2021 of one of the astronauts that just touched down here,

too, so keeping it in the family, which must be pretty momentum for them as well.

BRIDENSTINE: Absolutely. Megan McArthur is an amazing astronaut and human being and in fact, she is going to fly in the same capsule that Bob

Behnken, her husband flew in. We're going to refurbish that spacecraft and we're going to relaunch it and Megan McArthur will go to the International

Space Station and continue to do amazing work with our international partners.

CHATTERLEY: I mean, what this has done is change the business model of space travel, rather than you providing the services at NASA, you're just

buying in those services from a company like SpaceX and that's, we hope, freeing up the budget to work on things like getting astronauts to the moon

and to Mars.

Can you just give us a sense of the financials here? How much cheaper was this flight per astronaut than utilizing the Russian resources in the past

to get astronauts to the space station?

BRIDENSTINE: Yes, it is significantly cheaper than flying the space shuttles for sure. The development process was about $3.5 billion, American

taxpayer investment. But the goal is, as you said, NASA has a vision to be one customer of many customers in a very robust commercial marketplace in

lower Earth orbit, but also to have numerous providers that are competing against each other on cost and innovation, bringing down costs, increasing

access and in fact, competing on safety even.

So the more we can commercialize these activities, the lower the costs go and then, as you said, we can focus taxpayer resources on going to the

moon, always with an intent to commercialize, and then in fact go to Mars.

CHATTERLEY: How much cheaper was this flight per astronaut than going with the Russians, for example? I mean, I've read from the cost per passenger of

this test flight was $55 million. It's more like $80 million to $85 million using the Russians. I mean, just to give people the sense of a cost savings

here of using a company like SpaceX.

BRIDENSTINE: Right, so where we have been so far is in development. Now we're going to transition to operations. And of course the more you use the

vehicle, the lower the cost per seat to space becomes. And of course, all of that is beneficial.

So the more we use it, the cost will come down. But yes, our estimates are that it will be about $55 million per seat and at this point, when we fly

in a Russian Soyuz rocket, for example, it's $90 million per seat, and so this is a significant cost savings over the long-term.

Make no mistake, it was a big investment to get to where we are, but over the long-term, this is going to have huge dividends for the American

taxpayer and for our international partners.

CHATTERLEY: I'm sold. I am a huge space fan and I love anything to do with this. But there will be people watching going, we're in a pandemic. There

are people that are losing benefits here in the United States. Can we justify the cost of what we're doing here with space travel versus the

challenges here on the ground? Jim, how do you explain to people why this is important?

BRIDENSTINE: Well, it is so important. When we do space exploration, yes, we want to get science, we want to make discoveries, but it's also

important to remember that right now, you and I are communicating via satellite communication networks.

If people receive DirecTV or Dish Network or internet broadband from space, which I come from rural Oklahoma, a lot of Oklahomans get broadband from

space. We think about XM Radio for example.

So the way we do communications, the way we do navigation with GPS and other NASA-born technology, the way produce food, NASA is increasing crop

yields while reducing water usage by 25 percent because of what we can do from space.

The way we produce energy, cleanly that's good for the environment, the way we do national security and disaster relief, predict weather, NASA builds

all of our weather satellites. The way we understand the environment and the climate and how it's changing.

[09:50:29]

BRIDENSTINE: All of these things are critically important to all of us in humanity. You know, right now, I'm talking into a camera and we look at the

cameras in our cell phones. The cameras in your cell phones, that was a technology that was designed for a Mars rover back in the 1990s, first

licensed by Nokia and now every cell phone has a camera in it.

So these are capabilities that are transformational for all of humanity, and yes, in the midst of a pandemic, we do need to protect these very

important capabilities.

CHATTERLEY: Yes, it's so important. This is not just about going to the moon or going to Mars. This is about innovation and technology that changes

our lives on a daily basis. I would just like to put my hand up and say, as always, Jim, when we have these conversations, I remind you, I'd love to go

to space. So if you ever need a journalist up there, you let me know.

NASA administrator there, Jim Bridenstine. Sir, congratulations once again.

Okay. We're going to take a break. A tropical storm barrels up the East Coast of the United States, forecasts show it is strengthening into a

hurricane as it nears the Carolinas. We'll have the latest developments for you next. Stay with us.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE. Tropical storm Isaias is strengthening and bearing down on the U.S. East Coast where it's forecast

to become a hurricane in the coming hours. It's taking aim at the Carolinas right now and expected to make landfall tonight.

Meteorologist Chad Myers is tracking the storm for us and has the details. Chad, great to have you with us. What can we expect?

CHAD MYERS, CNN METEOROLOGIST: We can expect, Julia, that this storm will make landfall somewhere between 8:00 p.m. local time and midnight local

time and will do quite a bit of beach erosion, quite a bit of damage to the dunes, also a lot of flooding and wind.

And that wind and flooding will knock down trees and bring down power lines. We do have the hurricane warnings in effect right now, even tropical

storm warnings all the way up to New York City. So, this is going to travel from the southwest to the northeast.

It is a 110 kph storm right now, forecast to go to 120. Now, 120 is not an Earth-shattering Category 3, or Super Typhoon, it is the lowest level of a

hurricane you can actually get. But it will make landfall in a fairly populated area probably somewhere around the town of Myrtle Beach, it could

be a little bit east or west of there, but you kind of get the idea.

And then travel right across upstate New York with winds still at almost 90 to 100 kph. Very old trees sitting in very muddy dirt will fall down.

That's why we're going to see so many of these power outages, 1.5 meter storm surge on top of a meter high tide because of the full moon that we're

having right now. So that will cause inland flooding, likely the town of Charleston will have water in streets, saltwater in the streets.

And then it is going to rain on top of there, and then try to wash all of the saltwater back out to the ocean.

Charleston is a very low-lying city, very long, long live city. It's been there a very long time and it was built close to the ocean and that's its

problem now -- Julia.

[09:55:38]

CHATTERLEY: Yes, absolutely. And of course, all during a pandemic. Chad, we wish the people there well. Thank you for that update there.

All right, let's move on. Have you ever heard of a space butterfly? Well, it was captured by the European Space Observatory's very large telescope

from thousands of light years away. It is actually the planetary nebula called -- wait for it -- NGC 2899. I really could have done better than

that.

They then named it Space Butterfly because it is prettier, but also because that's what it looks like along with its brilliant purples and blues.

And in case you are wondering, a planetary nebula is a giant cloud of gas that forms around an ancient star that has yet to explode.

All right, that's it for the show. I'm Julia Chatterley. Stay safe and we'll see you tomorrow.

(COMMERCIAL BREAK)

[10:00:00]

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