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DeepSeek Sends Shockwaves through Markets; DeepSeek Stuns with AI Model; Patricia King is Interviewed about Transgender Troops; Pulitzer Prize Board Asks for Pause. Aired 9:30-10a ET
Aired January 28, 2025 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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JOHN BERMAN, CNN ANCHOR: All right, just moments ago, the opening bell on Wall Street. Investors on edge after the tech stock freefall spawned by China's new AI startup, DeepSeek. It really did raise foundational questions about the whole AI industry. American chipmaker Nvidia lost more than half a trillion dollars in market cap. That's the single biggest loss on record ever. And things just opened up this morning.
CNN's Matt Egan is with us now.
This is the Dow. What we really want to see is the Nasdaq, Matt.
MATT EGAN, CNN REPORTER: Yes, the Nasdaq because DeepSeek really caused a meltdown in the tech world, in the AI space in particular. And when we look at how the market is opening up, you can see the Nasdaq is up by half a percentage point. That is an improvement from yesterday when we saw a 3 percent drop.
But I have to say, this feels like kind of a fragile rebound. I don't know that this is all that confidence inspiring given the scale of the losses yesterday.
Now, all eyes, of course, are on Nvidia. That's the AI superstar that lost, as you mentioned, half a trillion dollars in value yesterday alone. You can see, again, it's up. The selling has stopped. But it's only up 3 percent. A little bit less than that right now. So -
BERMAN: It was down, what, 17 percent yesterday?
EGAN: Down 17 percent yesterday. So, this is really clawing back just a small fraction of the losses yesterday.
What's stunning is that Nvidia started the week as the most valuable company on the planet. But the losses yesterday, because of DeepSeek, were so great that it lost that title. It has fallen behind both Apple and Microsoft in the list of the world's largest companies, because it lost almost $600 billion yesterday.
Now, don't feel too bad for Nvidia. It's still valued at around $3 trillion, which is a ton of money, but it has fallen down in the leading - leaderboard of the world's richest companies.
And look, obviously, this DeepSeek announcement, it raised a lot of foundational questions here about how much money companies have to spend to build these leading AI models, how many of Nvidia's chips they need access to, to build those models? There are some questions, some skepticism from experts about some of the claims from DeepSeek. But clearly this set off all these shockwaves in the market.
I think we're going to expect to see volatility continue, especially as we get big tech earnings later this week from Meta and Tesla and Apple and other companies that are investing in and building AI.
And don't forget, John, while all this is happening, the Federal Reserve is meeting, as we speak, beginning their two-day meeting. A decision tomorrow afternoon on interest rates. They're not expected to move rates, but they're going to be debating when they can resume cutting interest rates.
BERMAN: Up just now 2 percent in the Nasdaq. I'm not sure this is the bounce back people were hoping for today.
EGAN: Yes, yes, a quarter of a - a quarter of a point increase. Not - not much of a - of an increase.
BERMAN: A lot of questions clearly still out there, Matt.
EGAN: Yes.
BERMAN: Thank you very much.
EGAN: Thanks, John.
BOLDUAN: Kate.
BOLDUAN: So there is the markets and then there's, what is this thing?
For more on this new disruptor in the market, Clare Duffy has been digging into this one for us.
What - what could DeepSeek mean in the tech industry? Like, what are you hearing?
CLARE DUFFY, CNN BUSINESS WRITER: Yes, I mean, this really could be a paradigm shift in how AI development happens, forcing all of the big tech companies to really rethink their plans here.
The story that Silicon Valley has told us about how AI development is going to happen is that they need billions of dollars, they need the most advanced chips, they need to be building out these massive data centers, even if they strain the environment, because that's what it's going to take to get and stay ahead. And DeepSeek really calls all of that into question because here we have this one year old Chinese startup that says it spent less than $6 million, compared to the billions of dollars that big tech companies have spent.
BOLDUAN: Yes. DUFFY: It had less advanced chips because of U.S. export restrictions and, crucially, DeepSeek's model puts less of a strain on the data center. So, every query, every question you ask it requires less power resources from the data center than the other big models. And that really calls into question whether we need these big tech companies to be building out, spending so much money, building out these massive data centers. It really could force all of them - certainly we're going to hear questions from their shareholders about why they've been spending so much money.
BOLDUAN: Yes.
DUFFY: Now, I don't think that this app in particular is necessarily going to stay on the top of the app stores, like we've seen it. DeepSeek appears to have some of the same Chinese censorship restrictions that we've seen on other Chinese platforms.
[09:35:04]
For example, yesterday I asked it about - tell me about what happened at Tiananmen Square, and it says, I can't answer that.
BOLDUAN: Oh.
DUFFY: So, I don't think we'll necessarily keep - see people staying on this particular platform. But the underlying technology -
BOLDUAN: Right.
DUFFY: Really, you know, causes big questions for Silicon Valley.
BOLDUAN: And still I'm also hearing questions of how much of what we're hearing from DeepSeek do we believe and how much can - how much has shown its - its actual at this point? I mean, the - how - the low development costs, are they really as low as they say they are?
DUFFY: It's a huge question. And I mean even the experts that I've spoken to have brought up the fact that, like, think of the high paid engineers that they have to pay to build these things. Like, those are not cheap salaries. So, certainly we expect that it is more than $6 million.
There are questions about whether, in fact, the company was able to get around some of these U.S. export restrictions and access some of these higher powered chips.
BOLDUAN: Oh.
DUFFY: We don't know the answer to that yet.
BOLDUAN: Right.
DUFFY: But I think there certainly is a question about whether this was more expensive and more intensive than they say it is.
BOLDUAN: Yes. DUFFY: But still, experts say, it is a fraction of the cost.
BOLDUAN: There's a big difference. Yes.
DUFFY: From what the big tech companies have spent.
BOLDUAN: Absolutely. And there - hasn't there been a big effort of the United States trying to, like, keep China from accessing this, like, AI technology-ness for a long time? I mean does this prove that this - that effort failed?
DUFFY: Yes, I think it does really call it into question. We've seen, even in the last week of his administration, former President Biden passing more restrictions on AI technology sales to China. And yet what you have here is either a situation where this Chinese startup got around the restrictions, or it really forced them to be more creative and come up with an alternate method that, it turns out, is much more efficient than the existing models.
But either way you have a Chinese startup that is now competing head- to-head with the big tech players. And so I think this is also going to force a rethinking from the government's perspective about how do we approach AI competition in China, and how do we make sure the U.S. companies stay ahead, because that's really what I've heard from all the U.S. companies in the last day or so is, this just proves how important it is that U.S. companies stay on top of this - this industry.
BOLDUAN: And to understand - which is understandable how - why President Trump came out so quickly saying, this is a wakeup call.
It's good to see you, Clare. Thank you very much.
DUFFY: Thank you.
BOLDUAN: John.
BERMAN: All right, overnight, President Trump signed a new executive order banning transgender troops from serving with new justifications that raise a lot of questions.
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BERMAN: All right, new overnight, President Trump signed a set of executive orders aimed at what they say is reshaping the U.S. military, one of which effectively bans transgender troops from enlisting or serving. Trump had enacted this in his first term, but it was overturned in the Biden administration. This time it really goes even further.
With us now is Patricia King, the first openly transgender infantry soldier.
Patricia, thank you so much for being with us. I want to read you from this executive order. It says, quote, "a man's
assertion that he is a woman and his requirement that others honor this falsehood is not consistent with the humility and selflessness required of a service member."
Your reaction to that?
PATRICIA KING, U.S. ARMY VETERAN AND TRANSGENDER ADVOCATE: Yes, absolutely. That language is a huge pivot from what we've seen in the past. This stops being about qualifications to serve and starts being about vilifying hardworking service members who are already doing their job right now.
BERMAN: Talk to me what you mean about a shift in this case? Because what struck me when he was calling it a falsehood is, the president, in this order, is saying, you're lying and forcing others to acknowledge your lie is what he's saying.
KING: You know, that's what I'm hearing too as I read this is questioning integrity is a step in vilifying a group of people, right? When we start suggesting that their - their honor is in question, it's easier to demonize them. And when it's easier to demonize them, it's easier to victimize them.
BERMAN: I - demonize and victimize are words that I don't think that he would necessarily approve of, but I'm sure that he has no problem suggesting this - with the suggestion that he's trying to separate transgender people in the military and say that they simply shouldn't be there.
How would you feel about that?
KING: This assertion is false. Transgender people have been serving openly for ten years. And they've been doing so with distinction. The - there's a minimal cost in transgender care. And the only person who should be helping make that decision is a person's doctor. Transgender people have served all over this planet on the front lines and are currently serving in high risk and high - jobs that require a lot of training. The average service member who's trans has between 12 and 21 years of service. That's a huge loss of institutional knowledge.
BERMAN: You know, Secretary of Defense Pete Hegseth talks about lethality in a warrior mindset. How does having transgender people in the military effect lethality?
KING: It enhances lethality. Transgender people are a segment of America.
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The only thing that makes them different is, you know, the fact that they're trans doesn't change their ability to serve. It doesn't stop them from serving on the front lines, which is what they're doing right now. It enhances unit cohesion because it looks like the America that they serve. BERMAN: In the order - again, there is the language about falsehoods,
which I found to be different than things we've seen before, even in the first Trump administration. But they also seem to equate being transgender with a health condition. They write, quote, "as a result, many mental and physical health conditions are incompatible with active duty, from conditions that require substantial medication or medical treatment, to bipolar and related disorders, eating disorders, suicidality, or prior psychiatric hospitalization."
So, what do you make of that comparison?
KING: Yes, trying to attempt to - attempting to put gender dysphoria in the same bucket as some of these other things just doesn't fit. It's been long established and well-studied precedent that gender dysphoria shouldn't stop somebody from serving, and neither should the treatment. This has nothing to do with fitness to serve. Transgender people are continuing to meet the standards in their gender across all branches of the military.
BERMAN: So you've been talking about this openly for years. And one of the things you say is that you like to have the discussion. You want people to ask you questions and to press you for answers. It's the way to push this forward. But what would your message be if you could speak directly to President Trump on this?
KING: Oh, first and foremost, I'd love to have a conversation with him about this. You know, I think that talking about people versus talking to people is what erodes empathy and erodes our understanding of one another. The reason why I'm so open, the reason why I write stories about trans service member and I talk about my story is because we're not special because were trans. We're special because of all the other things that - that set us apart, that make us amazing, just as any other person. And to boil us down to just this one thing, it's disingenuous and it's not fair to - to the American public.
BERMAN: When you see what's happening in the military - again, Secretary of Defense Hegseth claims this is about lethality and reforming the Defense Department, but also look at some of what's being said outside of the realm of defense, do you think this is just about performance, or do you think it's about something beyond that?
KING: Oooh, that's a tough thing to speculate on. What I know is that the only thing it should be about is performance. The only thing that should determine whether or not a person is qualified to serve is their fitness to serve. And transgender people have proven for well over a decade now openly that they are fit to serve.
BERMAN: All right, Patricia King, we appreciate the discussion. Thank you for coming on this morning. We'll talk to you again.
This morning, the legal argument from President Trump's own lawyers could come back to bite him in a defamation case he filed against the Pulitzer Prize Board.
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BOLDUAN: So, the Pulitzer Prize Board is hitting back now at President Trump using his own words against him. And in doing so, the board has asked a judge to pause Trump's 2020 defamation lawsuit. Donald Trump sued the board after it awarded "The New York Times" and "Washington Post" for reporting on Russian interference in the 2016 election. There's a lot around this.
CNN's Hadas Gold has been following this very closely, and she's joining us now.
So, what is going on here, Hadas?
HADAS GOLD, CNN MEDIA CORRESPONDENT: So, to be clear, Trump sued the Pulitzer board, not actually over the fact that they awarded the prizes -
BOLDUAN: Right.
GOLD: But over a statement that they issued in 2022 defending awarding the prizes.
So, after the Pulitzer board awarded these prizes in 2018 to "The New York Times," "The Washington Post," Trump repeatedly pressured them to rescind the award, saying the Mueller report exonerated him, which it did not 100 percent do. But the Pulitzer board, they issued two independent reviews. And then in 2022, they issued a statement saying that they didn't see any facts come out that discredited any of this reporting. And it was that statement that Trump sued over it.
Now, he sued them in Florida. The Pulitzer Prizes are awarded in New York, but he sued them in Florida, partly because of the district that he sued them in, and also because one of the members of the Pulitzer board happens to be a resident of Florida. So, he sues them there for defamation for this specific statement.
Now, what's interesting now is what the Pulitzer board's legal strategy has been. They are taking Trump's own legal strategy, his own words, and using them essentially against him. And that's because in several cases, including one as recently as this Friday, Trump has himself argued in other cases, in fact, in one defamation case that was brought against him, that a state court can't really hear a case against the president because of the supremacy clause, that there's constitutional issues here over what a state can do to the leader of the federal government.
I want to read you from part of this case that the Pulitzer board - the motion that the Pulitzer board brought. They say, "specifically, in his first term plaintiff argued that if a case pending against him in New York state court was not temporarily stayed, it will disrupt and impair his ability to discharge his Article II responsibilities. The effective administration of our nation provides a compelling justification to stay the action."
Now, what's interesting, in his first term, if you remember, there was a defamation case brought by a former "Apprentice" contestant against Trump for defamation. And Trump used this exact same argument in requesting a stay for that case. And after his first term was over, that case was able to proceed.
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So, essentially, the Pulitzer board is saying, we're not talking about the merits of the case right now. We just want to freeze this case until after Trump's term is over.
BERMAN: So, who gets to decide this and what happens next?
BOLDUAN: Right.
GOLD: So, right now this will go in front of the judge and they will usually respond - or they will usually call a hearing within the next two to four weeks or so. And then they will hear arguments against this.
But just this past Friday, actually, Trump's attorneys made the exact same argument for they wanted this stay in a case about Trump Media, about the investors in Trump's social media company brought a case against him. And his attorneys in Delaware literally made this argument requesting a stay, saying there's constitutional questions. It needs to be paused until the end of his term.
So, now the Pulitzer board is saying, that's your argument. We're using the exact same one. We're requesting a stay as well.
BOLDUAN: So fascinating, really.
BERMAN: Consistency is a hell of a thing, you know, it turns out.
HADAS: It's -
BOLDUAN: Who needs it.
BERMAN: Yes.
BOLDUAN: It's good to see you, Hadas. Thank you so much.
GOLD: Thank you.
BERMAN: And thank you all so much for joining us.
BOLDUAN: I think he means it.
BERMAN: And thank you so much for being here.
BOLDUAN: Thank you, sir.
BERMAN: This has been CNN NEWS CENTRAL. "CNN NEWSROOM" is up next.
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