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First Move with Julia Chatterley
Bezos, Cook, Zuckerberg, and Pichai Defending Their Firms In D.C.; Boeing, GM and General Electric Takes Earnings Hit Due To Coronavirus; Kodak CEO Talks Trump, Fresh Funding And Re-Invention. Aired 9-10a ET
Aired July 29, 2020 - 09:00 ET
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[09:00:24]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE, and here is your need-to-know.
Big Tech, bigger questions. Bezos, Cook, Zuckerberg, and Pichai defending their firms in D.C.
COVID cost Boeing, GM and General Electric taking an earnings hit.
And a Kodak moment. The company's CEO talks Trump, fresh funding and re- invention.
It's Wednesday. Let's make a move.
Welcome once again to FIRST MOVE. Great to be with you, wherever you are joining us from in the world. Today, I can tell you we have a lot of F
words. Steady, stay with me.
We've got the Fed. Its policy statement is out later today. We've got the FAANGs, too. The heads of Facebook, Apple, Amazon and Alphabet appearing
before a house antitrust hearing, and of course we've got the fiscal drama playing out on Capitol Hill. Lawmakers still at odds while millions of
Americans begin losing crucial benefits this week.
The outlook may be fraught, but futures are higher, as you can see guidance from the likes of Starbucks and chipmaker AMD helping to offset yesterday's
weakening results from McDonald's and 3M. We've also got shares of Boeing and GM higher premarket, too. A wider than expected $2.4 billion loss for
Boeing. GM's loss narrower in fact than feared, but revenues there missed, too.
We've got all the details coming up in the show. It's simply a tough time to be a carmaker. Let's be clear. To Japan now where Nissan's stock
plummeted more than 10 percent after the company warned of a record annual loss of $4.5 billion. The entire Japanese index weaker today, in fact.
Meanwhile in Hong Kong, they're reporting its fourth straight quarter of falling growth, down some nine percent in the second quarter. A marked
contrast, and I'll give it to you, to China's 3.2 percent expansion in the same period.
Tough to compare these two numbers, but the direction, perhaps, is important most of all. All of this coming at a time when Hong Kong is
battling a surge in COVID-19 cases. We'll be heading to Hong Kong for the latest shortly.
For now though, the new COVID communication reality will be at play in Washington today, too. The nation's biggest tech titans testifying via
WebEx to the House antitrust subcommittee. Even with social distancing, expect Congress to bear its fangs at the FAANGs.
All right, let's get more on this in the drivers. Donie O'Sullivan joins us now. Donie, great to have you with us. This is no ordinary hearing, let's
be clear. In the past when we've seen this kind of thing, it's been vaguely cringe worthy with lawmakers not really understanding what these tech
titans do.
This comes after months of investigation. They may have fangs, but will it have bite?
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Yes. Absolutely. Today is going to be fascinating. It's really a historic hearing, a historic day for
Silicon Valley.
The last time there was an antitrust hearing about this in the technology space was when Bill Gates appeared before Congress about 22 years ago.
And you're right, this committee is very, very well briefed. Today really is sort of just the cherry on the top of an investigation that has been
going on for months.
The Committee has picked up more than, I think 1.5 million documents and has done hundreds of hours of interviews already. And the CEOs of Apple,
Facebook, and -- Apple, Facebook, excuse me, Julia, sorry, I am losing track, but the only CEO who has not appeared before Congress is Jeff Bezos.
So while the other guys might have a bit of experience in this space, the world's richest man, it's going to be fascinating to hear from him today.
We don't see him under pressure in interviews a lot either, so it is really going to be quite interesting to see how Bezos performs -- Julia.
CHATTERLEY: Yes. We've never seen him in front of Congress. We rarely see him in interviews, too, and it was Google that was alluding you there. It's
tough to keep track of all of these names. At least, I had it typed in front of me earlier.
Amazon should come under scrutiny though, even just the last few weeks, we have seen the rise in Amazon's power. We have seen the need and the
necessity of things like smart phones for Apple.
The key question for these lawmakers is, do they help ultimately consumers and small businesses, or do they hurt them? Because the defense that we're
going to hear from these big shots is, look, we're actually net good for society, you need to promote American innovation, not restrict it.
[09:05:17]
O'SULLIVAN: Absolutely. And unsurprisingly, you know, we've seen the opening testimony of some of these CEOs and they all make that point. They
say that America is a better country because of them, that they are drivers of employment, et cetera.
Look, I mean, I think for each company, for Amazon, a lot of this there will be questions about, you know, how it uses data from third-party
companies that sell on its website to then develop products or to acquire companies to sell products that could then undercut some of the independent
retailers that sell on Amazon.
When it comes to Apple, there's going to be a lot of questions about the App Store. And when it comes to Google, the search ranking. That's
obviously a big issue we've seen it in Europe, too.
When it comes to Facebook, I guess, perhaps the company that's under the most scrutiny here is obviously, there will be questions about their
acquisitions of Instagram, of WhatsApp and now GIPHY, but you know, I do think that today will go much further beyond just the sort of merger and
acquisition questions, too, really about the true power that companies, especially Facebook have, in speech and in the election here in the United
States and the role they have at controlling what the public and voters see and do not see.
So I think it's going to be a fascinating few hours. I think you're right. A lot of the people on this committee are extremely well-briefed. But no
doubt, we'll also see a lot of partisan questions, too, particularly after Donald Trump, Jr. was briefly suspended from tweeting on Twitter yesterday
after sharing COVID-19 misinformation, so there will be lots of those regular questions about perceived anti-conservative bias on the part of
Silicon Valley.
So, it should be a fun few hours, not probably too fun for the CEO, though -- Julia.
CHATTERLEY: Yes, probably more fun than being there in person, actually. At least, they've got a bit of distance due to the COVID concerns, of
course. They're sort of dialing in rather than anything else.
Your points though are critical, whichever way you look at this, is it too much power ultimately in too few hands? Donie, how do we go from here to
lawmakers going, okay, we've got all this information now, do we need to take action or don't we? Because it does seem to be Democrats and
Republicans that are on board. It's a bipartisan effort here, perhaps to regulate these, however that looks.
O'SULLIVAN: Yes, it's possible. I mean, look, there have now been different tech hearings for a few years, especially since the 2016 election
and Cambridge Analytica, and really we've seen very little or no legislation, frankly, that really affects these companies in a major way.
But it is a bipartisan issue that both Republicans and Democrats want to crack down on these companies, but sometimes they want to crack down on
them in different ways.
Also, you know, an important role here is the role of the Attorney Generals in individual states, many of which have individual investigations in each
state into some of these companies around antitrust.
So, you know, I think it is going to be a big leap to go from this hearing and all of these hearings to whether we actually see new laws on the books
and you know, whether Republicans and Democrats come together on some issues around this, despite having very different motivations for doing so,
well, that's going to be one of the big issues, I think, that the lobbyists for these four companies are going to be working very, very hard on in the
coming months -- Julia.
CHATTERLEY: I'm so glad you mentioned the lobbyists. Yes, a lot of pushback and working behind-the-scenes to prevent anything that really does
have bite. Donie, great to have you with us. It's going to be a fascinating day. Donie O'Sullivan there, thank you.
O'SULLIVAN: Thank you.
CHATTERLEY: All right, to Hong Kong now, which is on high alert. Chief Executive Carrie Lam warning the city is quote, "on the verge of a large
scale community outbreak of the virus." Meanwhile, Mainland China reports the single highest day jump since early April, with more than 100 new
coronavirus cases.
Will Ripley is live in Hong Kong with all the details. Will, let's start in Hong Kong where you are. It's a dramatic phrase when we're hearing this
from Carrie Lam. Give us context. What are we talking about in terms of outbreak numbers? What are we looking at?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: We're not seeing, Julia, an exponential explosion in terms of the daily infection rate. It's held
steady for the last eight days at more than 100. Today, it was 118.
While that is obviously is concerning, you have to put it in context. There are seven million people who live here in Hong Kong and the social
distancing measures, the strictest so far this pandemic are now in effect here.
You have restaurants closed completely for dine-in service. Mask wearing is mandatory whenever you step outside your home basically. You get a big
fine.
The beaches are closed. People can only gather in groups of two even throughout, you know, exercising or you know, walking having a coffee, only
two people can be together at any one time.
So, the city is hoping that the numbers will continue to stabilize and then go down. But the concern is, is that a lot of these local cases, and most
of these 118 are community spread, they still can't trace them. They don't know where they're coming from.
[09:10:17]
RIPLEY: And you have a healthcare system that every time you get a patient of a certain age or has a pre-existing condition, that takes up one more
bed and this city is really running low on beds.
China has actually volunteered to come in and build a field hospital at the Expo Center near the airport, similar to one that they built in Wuhan. That
could be open early next month and that would be for patients with mild symptoms.
The more serious patients would need those precious beds at hospitals.
CHATTERLEY: Wow. That's interesting, Will, and just very quickly on that, what are people saying about the prospect of China lending help here?
RIPLEY: You know, people are just starting to hear about it. Obviously, the city says that they requested China's assistance. Is this an attempt to
use soft power to try to win over hearts and minds? We'll see if it works.
I mean, there are certainly plenty of people here in Hong Kong who are happy to have -- to be a part of China and then there are obviously, as we
saw with the protests that are no longer happening in large part because of the pandemic, and also the National Security Law, many people aren't. But
we haven't heard a whole lot of chatter about it, Julia.
China, by the way, 101 cases reported today, that is the biggest number they've had since April. Most of those cases in Xinjiang, which you might
recognize because that's the home of the Uighur Muslims where China is accused of running essentially reeducation camps, 89 of those 101 were in
that far kind of western province.
But this does -- this obviously is a concerning trend for China to have their biggest number since April, but 1.4 billion people there, 101 cases
reported in the last 24 hours -- Julia.
CHATTERLEY: Yes, you know, our minds work exactly the same way, whether it's China's help as far as Hong Kong is concerned or the relative numbers
here. A hundred cases versus 1.4 billion population. Yes. Will Ripley, thank you so much for that.
All right, let me bring you up to speed with some of the other stories making headlines around the world. Turning now to a CNN exclusive in what
is being described as a Sputnik moment for Russia.
Moscow says it is working to approve a coronavirus vaccine in less than two weeks. We're just learning there are plans for mass production this autumn.
But the push for the vaccine so quickly is raising serious safety concerns at the same time.
CNN's Matthew Chance joins us now from Moscow. This announcement took a lot of people, I think, by surprise. What do we know, Matthew, in terms of
data, in terms of steps and processes that are being followed and where they are in terms of phases here of trialing this vaccine?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, you're right, Julia, first of all. I think it has taken a lot of people off guard,
but actually this production or this move to approve the Russian vaccine has been in the pipeline for some time.
What Russian officials confirmed to us yesterday is that at the 10th of August, which is not very long from now, is the date which they're aiming
for, but it could be approved, they say, even before then. So that's like with staggering speed with which the Russians have deployed vast resources
in their state to try and develop a vaccine, seem to have got there.
Of course there's lots of skepticism about how effective this vaccine would be, how safe it will be. What the Russians say is the reason it's got there
so quickly is because the technology they've used to manufacture or create this vaccine is technology they've used in the past successfully. They've
got lots of clinical data on it.
They've simply taken an old vaccine, to simplify it, and adjusted it to make it relevant to coronavirus. That's what the Russians say.
But of course you can't dismiss the whole idea that Russia has basically ignored the conventions when it comes to human trials. I mean, the
scientists that developed this vaccine in Russia, they were injecting it into themselves and their staff members before human trials formally began
and then soldiers were used in the first round of testing and we learned yesterday as well that the third phase of human trials, which is crucial
because it sort of looks at the overall safety and overall effectiveness of any vaccine, that will only be done in parallel to the inoculation or the
vaccination of people in vulnerable categories, particularly frontline medical workers.
So they're going to approve it and carry out the final phase of human trials sort of in parallel with each other, which is sort of unprecedented,
perhaps, or at least extremely unusual. And of course it's fueled this idea that this virus may not be all it seems and may not be as effective as the
Russians like to put across.
Part of the problem with that, just to answer the second part of your question, is that the data that the Russians have accumulated throughout
the trials that they've done so far has not been made public. It's not been subject to peer review.
I'm told, you know, over the past 24 hours that that's going to change by the first week of August. They're going to make the results public. They're
going to publish them. They are going to open them to peer review.
So I expect there's going to be a lot of scrutiny here in Russia and around the world to see how effective those results have really been and that
vaccine really is -- Julia.
[09:15:18]
CHATTERLEY: I mean, we have to wait and see what the data says, to your point, Matthew, exactly, but I can't help but remember that we've also had
a conversation on this show about at least accusations of potential theft or at least trying to tap in and access information about vaccine research
from other nations, directed from Russia.
CHANCE: Yes, I mean, this is the other part of the sort of concern and the skepticism that surrounds the progress that Russia says it has made with
this vaccine.
I mean, first of all, you've got enormous pressure from the Kremlin, political pressure. It sees this as a sort of prestige project it wants to
do. Putin wants it -- Vladimir Putin, the Russian President wants to be the first. He wants to be able to say, look, Russia has stepped in and saved
the world from this global pandemic. And I think that's one of the drivers for them cutting corners in the way that they have.
And then in addition, there have been these other allegations, which in fairness, have been categorically denied by the Kremlin, that Russian spies
have been hacking into research labs in the United States, in Canada, and in Britain, to try and steal research vaccine secrets.
Now, whether or not that contributed to the position that Russia is in now in terms of its vaccine, we don't know. Certainly the Russians say that it
definitely hasn't contributed to it.
But nevertheless, it adds to that sort of cloud of skepticism that hangs over this apparent progress in the Russian vaccine.
CHATTERLEY: Yes, they want this to be, as you pointed out, a Sputnik moment. The question, is it? We'll wait and see. The data matters. Matthew
Chance in Moscow, thank you so much for that.
The Haj underway in Mecca, but it is dramatically different this year. Muslims are circling their holiest site wearing masks walking along
socially distant paths. Saudi Arabia is allowing only a tiny fraction of the usual number of participants because of the coronavirus pandemic.
All right, we're going to take a break here on FIRST MOVE. But still to come, tales of a fabled manufacturer's earnings from Boeing's and General
Motors, and Kodak's chemical comeback. We will put you in the picture with the CEO.
It's all coming up. Stay with us.
(COMMERCIAL BREAK)
[09:20:26]
CHATTERLEY: Welcome back to FIRST MOVE, live from New York, where we're still on target for a higher open this Wednesday on what could be a
challenging day for investors. Let's call it that.
We've got the Federal Reserve releasing its latest policy statement later today. Jay Powell and company, certain to promise more monetary muscle if
necessary, especially with so much uncertainty over the size of the next fiscal package coming from Congress. What does he have to say? We shall
see.
Meanwhile, FAANGs stocks are higher premarket. Little fear it seems ahead of a historic congressional antitrust hearing today featuring the heads of
Apple, Amazon, Facebook and Alphabet. That said, take a look at the big swings in tech over the past four trading sessions alone. There's
definitely uncertainty over the path forward after the NASDAQ's spectacular 16 percent run-up so far this year. It could just be consolidation.
Hey, this action anything but normal. That we agree.
A deluge of tech earnings comes out tomorrow after the closing bell, too. Today, we've got results from two of America's most fabled manufacturers
Boeing and GM. Clare Sebastian joins me now. Clare, what can you tell us?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, it was a pretty miserable quarter, Julia, I think by any measure and I think the question
that you get from both of these companies given that they saw prolonged production stoppages, huge drops in demand, is this as bad as it's going to
get? Was the second quarter the worst that we're going to see during this pandemic?
So let's take a look at Boeing to begin with. They reported a net loss of $2.4 billion. Revenues are down 25 percent year-on-year. Bear in mind that
even last year, things were not that great because of the 737 MAX, which continues to impact them.
They only delivered, Julia, 20 aircraft during the quarter. That led to a 65 percent drop in commercial airplanes revenue, which is their biggest
segment so that they are scaling back. They are preparing for a future where they have to be smaller.
Production is coming down pretty much across all of their major aircraft lines, the 737 line that necessarily won't come up in 2022. That's a year
behind what they had scheduled in the past quarter, cuts for the 777 and 777X. Cuts for the 787.
They confirmed as well that the 747, that production will end the iconic Jumbo Jet in 2022. And we know already that Boeing has announced a 10
percent workforce reduction, that's about 16,000 jobs.
In a letter to staff today, the CEO, David Calhoun, said that more could be coming as the demand continues to come down and they might have to reassess
their workforce even further -- Julia.
CHATTERLEY: And Clare, very quickly, on GM as well. We knew it was going to be a devastating quarter in terms of sales, also cash burn for these
concerning. Very quickly, give us the top lines here.
SEBASTIAN: Yes, we knew it was bad. Sales were down 34 percent on the quarter. Having said that, it wasn't quite as bad as people had feared.
They lost $800 million in the quarter. That was not add bad as people worried about, and that despite, Julia, an eight-week production stoppage,
eight weeks out of 13 weeks production was impacted.
So they are saying that the business is resilient. They are used to austerity and making cost cut and they believe they are positioned well
going forward.
CHATTERLEY: The question is what comes forward? Clare Sebastian, thank you so much for that.
To Europe now, showing signs of getting a grip on coronavirus just as they were. Fresh outbreaks now sweeping across the continent. Germany has seen a
spike in cases and in Britain, the Prime Minister says there are signs a second wave may be coming.
Here in the United States, as the tally of coronavirus deaths approaches 150,000, the President had this to say.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: You can look at large portions of our country, it's corona free.
(END VIDEO CLIP)
CHATTERLEY: As you can see, and I can give you a look, deaths are still increasing in 29 states. Meanwhile, much attention has also been paid to a
doctor, one specific doctor among others as we discussed on the show yesterday, and again on Twitter on Monday night.
(BEGIN VIDEO CLIP)
TRUMP: She said that she has had tremendous success with hundreds of different patients and I thought her voice was an important voice.
(END VIDEO CLIP)
CHATTERLEY: He was talking about Stella Immanuel, a pediatrician and preacher from Houston. She's known for touting highly unconventional
theories involving alien DNA, demons and the unproven drug, hydroxychloroquine.
(BEGIN VIDEO CLIP)
DR. STELLA IMMANUEL, PEDIATRICIAN AND PREACHER: This virus has a cure. It is called hydroxychloroquine, zinc and Zithromax. I know people want to
talk about masks? Hello? You don't need masks.
(END VIDEO CLIP)
CHATTERLEY: Wow. We've got a lot to discuss. Elizabeth Cohen joins us now from CNN Health. Elizabeth, always great to have you on the show. Let's
just do a setup. Where are we in terms of cases, in terms of death rate, just in the United States? Let's hone in there.
[09:25:15]
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know, the cases -- the case numbers, sorry, Julia, continue to climb. We continue to have hot
spots such as California, Florida, Texas. Many areas are suffering shortages of hospital beds, especially ICU beds. So this continues to be a
problem.
Now, the death rate, we have improved the death rate since the beginning of this outbreak because doctors have gotten better about learning how to
treat these patients. But obviously when you have more than 100,000 deaths, that still is obviously a huge issue and there are forecasts that these
deaths will continue and that we're going in the wrong direction in the United States. That's probably the best way to put it.
CHATTERLEY: Yes, the cleanest way to put it. The other question, and it keeps coming up and we have discussed it many times, hydroxychloroquine. I
just want to play something very quickly. Dr. Fauci was asked about this yesterday. This is what he had to say.
(BEGIN VIDEO CLIP)
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: I go along with the F.D.A. The overwhelming prevailing clinical
trials that have looked at the efficacy of hydroxychloroquine have indicated that it is not effective in coronavirus disease.
(END VIDEO CLIP)
CHATTERLEY: Elizabeth, the doctor that we were just playing earlier was saying look, I've had hundreds of patients recover, talking about it as a
cure.
What does the data, the trials, the randomized data trials that we have tell us about the effectiveness of hydroxychloroquine as a treatment, a
cure, I use the word carefully, for COVID?
COHEN: It shows that it doesn't work. There have now been multiple random clinical trials where people, some people were given hydroxychloroquine and
others given a placebo and they showed that hydroxychloroquine did not work to treat COVID or to prevent COVID.
In the beginning we weren't sure and that's why they did these trials. They did them in the U.K., in the United States and other places, and they
showed over and over again that not only didn't they work, but that there seems to be the possibility that hydroxychloroquine actually hurts some
people because hydroxychloroquine has been known for many years to have possible cardiac problems.
Now, Julia, you brought up that critics say, wait a minute, I used it on my patients and it worked or look at this study over here. They used it on
this group of patients and they got better.
Julia, I'm going to bring you back to the chocolate chip cookie analogy that you and I have talked about many times. If you have a cold and I give
you a chocolate chip cookie and a few days later you're better, you might say, oh, must have been that cookie. It wasn't the cookie. It's because
most people get better.
It's the same thing with COVID. Obviously people die from COVID, but most people do get better. You can't credit the hydroxychloroquine for getting
them better.
They might have gotten better all by themselves. That's why you do these randomized controlled clinical trials. You give some people
hydroxychloroquine, you give some people a placebo and you see if there is a difference. What they have shown is there is not a difference.
It is incredibly disingenuous for a doctor to say I gave my patients hydroxychloroquine and, look, they got better. Anybody, a third grader,
should know that this is incredibly false logic.
CHATTERLEY: Yes, unless you have a control, you can't tell whether they would have recovered with or without a specific drug, and that's the bottom
line. Elizabeth Cohen, thank you very much. Thank you for a reminder of my cookie. Thank you.
All right, we are counting down the market open. Stay with us.
(COMMERCIAL BREAK)
[09:31:52]
CHATTERLEY: Welcome back to FIRST MOVE and the U.S. stock markets are open for the third session today and I can give you a look at what we're seeing
in terms of price action.
The NASDAQ as you can see, outperforming, up some seven tenths of one percent. Taking back around half of yesterday's losses. We're awaiting the
Federal Reserve's policy statement later today.
Jay Powell's press conference, of course, too. What does he say about the economic outlook? Meanwhile, chipmaker AMD, one of the biggest gainers on
the NASDAQ after raising its guidance. Right now, it's up more than 10 percent. We also hope to have an update on stimulus talks later today.
The Democrats and the Republicans seemingly still far apart in the early innings of those negotiations. The bottom line is new aid may take a while
to get to some needy Americans.
Also in D.C., CEOs from some of the most powerful and influential tech companies will be the focus of a historic antitrust hearing, the first of
its kind by the U.S. Congress in more than 20 years. The heads of Google parent, Alphabet, Apple, Amazon, and Facebook will face questions about
their dominance of the tech economy. Clare Sebastian has all the details.
(BEGIN VIDEOTAPE)
SEBASTIAN (voice over): When these four CEOs come before Congress, albeit remotely, it will be hard to know who is the most powerful in the room.
(BEGIN VIDEO CLIP)
REP. DAVID CICILLINE (D-RI): Google controls nearly all the search market in the United States. Amazon controls nearly half of all online commerce in
the United States. Facebook has approximately 2.7 billion monthly active users across its platforms.
And finally, Apple is under increasing scrutiny for abusing its role as a player and referee in the App Store.
(END VIDEO CLIP)
SEBASTIAN (voice over): A year-long congressional investigation is looking for ways to check the power in what experts say will require a new
understanding of U.S. Competition Law.
(BEGIN VIDEO CLIP)
WILLIAM KOVACIC, FORMER CHAIRMAN, FEDERAL TRADE COMMISSION: The major point of these hearings is to move away from a conception of competition
law and focusing on the well-being of citizens as purchasers of goods and services and to adopt a broader conception that looks at the citizen as an
employee, as a resident of a community, as a consumer of news.
(END VIDEO CLIP)
SEBASTIAN (voice over): The four companies have all denied anticompetitive behavior.
(BEGIN VIDEO CLIP)
NATHAN SUTTON, ASSOCIATE GENERAL COUNSEL, AMAZON: We do not use any seller data to compete with them.
(BEGIN VIDEO CLIP)
SEBASTIAN: (voice over): Apple even commissioning a study last week that found its App Store commission rates were in line with others.
Several have also voiced concerns that regulation might make them less competitive globally.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I worry that if you regulate for the sake of regulating it, does a lot of unintended consequences. If you take a technology like
artificial intelligence, you know, it will have implications for our national security and how -- or for other important areas of society.
(END VIDEO CLIP)
SEBASTIAN (voice over): And yet, even as the COVID-19 pandemic has made these companies ever more essential and more valuable, they have been
facing growing backlash.
Protests over safety at Amazon and an advertiser boycott at Facebook over hate speech.
(BEGIN VIDEO CLIP)
KOVACIC: I think they come into the hearing not with a halo, but with great concerns about exactly whose side they're on and that should be a
matter of concern.
Again, you look at the mood of the Congress, you look at how Republicans join Democrats today in scolding these companies. That's a combustible
environment for the leading enterprises.
(END VIDEO CLIP)
[09:35:12]
SEBASTIAN (voice over): The House investigation is expected to lead to a recommendation for new legislation, perhaps bringing greater scrutiny of
tech acquisitions.
Deals like Facebook's purchases of WhatsApp and Instagram and google buying YouTube and Fitbit. It could also ramp up the pressure on other ongoing
investigations.
A delicate moment for these titans of tech.
Clare Sebastian, CNN, New York.
(END VIDEOTAPE)
CHATTERLEY: All right, let's talk this through. Scott Galloway is Professor of Marketing at NYU Stern School of Business. Scott, always great
to have you on the show.
You've already written the questions for these lawmakers, so they should be great when they perform today. But you say Big Tech is going to walk away
the winner anyway. Why?
SCOTT GALLOWAY, PROFESSOR OF MARKETING, NYU STERN SCHOOL OF BUSINESS: Well, I think, just as most wars are won or lost before you step on the
field, I think this confrontation has already been won because Big Tech showing up as a group means it will be difficult to focus or go very deep
on any one. I think there is safety in numbers.
Also, Julia, I don't think you can ignore that the remote nature of this hearing means that the most -- you know, the odds for kind of an unscripted
real moment that changes public view is less likely. I think it's easier for them to control the environment.
And essentially these companies are very good at delaying weapons of mass distraction and that is they'll play slow ball, they'll delay, and I think
there's going to be different treatment of the four.
And also the antitrust concerns for Apple are much different than the antitrust concerns for Facebook. So one demanding that they all testify
together and also keeping it remote, I think it plays to the advantage of the Big Tech firms.
CHATTERLEY: I'm trying to remember back in 2018 when Mark Zuckerberg testified and he said he would get back to lawmakers, I think 46 times, if
not more, "I'll get back to you."
Why does public opinion matter and why does today and what they say actually matter if they've done a year of investigation to decide whether
or not individually these companies need tackling?
GALLOWAY: Well, every one of the people questioning them is up for re- election and I think this is an opportunity for them to put forward some assertions after a lot of the work they've done that these firms are bad
for the economy, bad for the tax base, bad for our elections, bad for teen depression, and then they will get a crisp response from the American
public.
Effectively what this is, no decisions are going to be made today, but they'll get a gauge on sentiment around one thing, and that is as a
congressperson, is my likelihood to claim power more likely if I, in fact, begin to go after these guys or put pressure on the D.O.J. or the F.T.C. to
begin antitrust action.
To date, there have been very few elected representatives who really take the time to develop the domain expertise and push for the breakup. Other
than Senator Warren, it is difficult, no senator or congressperson has really taken up this issue.
So this is an opportunity to gauge sentiment and build a base for whether or not there should be a big issue -- and all of these folks run again in
November.
CHATTERLEY: Yes. Net-net, is the public harmed? Do they even know they're harmed or do they see greater value in the utility value of being on
Facebook, or particularly what we've seen in the last few weeks, the ability to go to somewhere like Amazon and shop when you can't go in store?
GALLOWAY: That's a correct question, and current antitrust law is based on consumer harm and you have a difficult time saying that you're incurring
consumer harm or prices are increasing when the product is free.
I would argue that the prices we pay as parents when our teen depression is up and self-harm among young girls is up 120 percent because Facebook has
no incentives to put in place any safeguards against teen depression, I would argue that your small business person in the fastest growing parts of
our economy have absolutely been cauterized because they're controlled by duopolies, whether it is search, whether it is hardware, whether it is
social.
There hasn't been a major social network in America that started since 2011 with Pinterest, whether you are a tax payer, your costs have gotten higher
because Big Tech does not pay their fair share of taxes.
I would argue, Julia that the costs incurred on citizens, on parents, and on entrepreneurs has skyrocketed at the hand of these firms. We have a
proud legacy of antitrust where we go in and oxygenate the market by breaking up these firms, encouraging competition and encouraging them to
behave better, and the price we are paying as a commonwealth and as citizens has skyrocketed.
So yes, I think this can play a critical role in helping consumers and voters understand that our economy is suffering, our commonwealth is
suffering at the concentration -- increasing concentration of power across fewer and fewer firms.
CHATTERLEY: Jeff Bezos, he is the unknown quantity. We all get a sense of how powerful Amazon is in terms of -- what -- a 40 percent, probably more
now share now of the e-commerce market, far smaller, admittedly growing fraction of the overall retail market.
But we've never really heard from him and we've certainly never seen him on D.C., in the Capitol. What do you think we get from him today?
[09:40:16]
GALLOWAY: Well, you brought up a critical point. Expect Jeff Bezos to talk about the fact that they are only four percent or five percent of retail,
you know, how can we be a threat? But that's not really the right metric.
In a five-week period coming out of the depths of the market in March, Amazon was able to add -- add the value to their market capitalization of
the world's largest company, Walmart. This is a company that has more soft power, I think than any other entity in the world with the exception of
China.
He owns "The Washington Post," which plays a big role in reelecting or not these individuals. He also has more lobbyists. Amazon has more lobbyists,
get this, Julia, in Washington than there are sitting U.S. senators. So there is tremendous soft power.
A lot of eyes on Mr. Bezos because it's the first time he has testified, but you're talking about an individual that commands the wealth and the GDP
of Luxembourg and Kuwait combined, but what a lot of people would argue is paying a lower tax rate than anybody on the stage or any of us.
So there is going to be, I think -- it will very interesting to see what kind of -- if he gets fire or if he gets fawning. He's very likable, and
let's be honest, this is -- a lot of this comes down to likability. Expect Tim Cook to have an auburn college football helmet in his screen shot,
expect Jeff Bezos to talk about his mother who gave birth to him at the age of 17. This will be an attempt to be likable and to deflect any real
questions.
But you're right, everyone is going to be focused on the wealthiest man in the world, Jeff Bezos.
CHATTERLEY: You also make the point that Amazon paid $162 million in Federal tax last year, Walmart paid almost $3 million. Someone should
definitely pull that one out as well, Scott, but in their statements -- in their opening statements, they're going to point that they are American
businesses. They actually foster innovation.
They need to be protected from foreign interference at a time when everybody is looking around the world and going actually, we do need to
strengthen our own assets and our own innovation.
Does any of this fly? Particularly to your point about lawmakers caring about re-election, what message does sell to voters at this moment?
GALLOWAY: That's a correct question, Julia. So you expect, especially Mark Zuckerberg to wrap himself in an American flag and create a nationalist
argument that we need Facebook and we need someone of that size to fend off the Chinese apps that are coming for our children.
And what we've found throughout history is, depending on a national champion, whether it's Air France or trying to prop up NTT, the Japanese
telco, it almost never works.
Now, if and when you spin a company, for example, when eBay spun PayPal, PayPal was a more robust competitor against other payment companies
domestic and abroad than they were as a larger conglomerate.
So this notion -- you're going to hear two words from Mark Zuckerberg over and over, Tik and Tok. So, the correct question is, how can America remain
competitive?
Typically, when we break these companies up, it unlocks tremendous innovation. It unlocks tremendous upside and antitrust is one of the
things, Julia that we always get right that typically taxpayers win, entrepreneurs win. The shareholders of the company win.
Can you imagine the valuation on AWS as an independent company? There is no peer play way to play the Cloud right now.
So the bottom line is, we don't break them up because they're bad people or some sort of punishment, we break them up because we want to expand our tax
base and we want the markets to keep roaring upward.
There's only one party that loses in a breakup traditionally and that's the CEO who wants to be on the iron throne of all the Westeros, just not one of
the realms.
So this is good for the company and we break them up because we're capitalists, Julia.
CHATTERLEY: Yes, in this case, not better together. Scott Galloway, thank you so much for that. Professor of Marketing at NYU Stern School of
Business. Always great to chat with you, sir. Thank you.
All right, coming up after the break, Kodak's big moment. One of the most recognizable brands pivot towards pharmaceuticals. The CEO live, next.
(COMMERCIAL BREAK)
[09:47:14]
CHATTERLEY: Kodak, one of the world's most recognizable brands is having its moment to quote one of its old slogans.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Life is filled with moments just waiting to be taken.
(END VIDEO CLIP)
CHATTERLEY: Kodak struggled to adapt to the digital revolution, well, now it's being handed a $765 million loan under the U.S. Defense Production
Act. Kodak will now make pharmaceutical ingredients, reducing America's dependency on foreign drug makers.
Picture this. Kodak's stock soared 200 percent on Tuesday, thanks to that deal. Right now, it's up another 150 percent. Its legacy of handling film
puts it in a good position to work with chemicals just like its rival Fuji Film did years ago.
Jim Continenza is CEO and Executive Chairman of Kodak, and he joins us now. Jim, fantastic to have you on the show. I don't think anyone was surprised
by the decision to try and sure up supply chains for pharmaceuticals, but people saw the name Kodak and thought, hang on a second, why are you best
placed to do this?
JIM CONTINENZA, CEO AND EXECUTIVE CHAIRMAN, KODAK: Well, you know, Kodak has been in the chemical business for well over a hundred years. It's the
foundation of who we are. We currently today are making unregulated key starting materials for some other pharmaceuticals. So we're in this
business, just not in a large way, and this is a chance for us to expand.
And then we look at Eastman Business Park, we have 1,200 acres, we have several facilities that we will be putting into this entity as we build out
to help lower the cost. We have our own power, steam, rail, waste treatment, chemical treatment. It's just utilizing the park which lowers
the cost greatly and it's doing something that's in our DNA. We've been doing it for a hundred years.
CHATTERLEY: The White House Trade Adviser, Peter Navarro said, by the time this thing ramps up, 25 percent of the active pharmaceutical ingredients
for generics we need in the United States are going to be right at this facility. That's incredible. How quickly can you do that?
CONTINENZA: Well, it usually takes about three years to build out, approximately three to three and a half years. But during this time, we'll
still be manufacturing. We'll be manufacturing in batch manufacturing, moving to continuous manufacturing. So it will be a combination of two
items.
CHATTERLEY: And where do you see the biggest bottlenecks?
CONTINENZA: You know, again, it will be in the buildout when we transition over from the batch to the continuous. That will probably be our biggest
bottleneck. But we're prepared for it, and then from there, we'll innovate and continue to get more efficiencies out of it.
CHATTERLEY: So there are a number of companies in the United States that perhaps could have handled this, too. What about your relationship with the
U.S. administration? Why do you think they specifically came to you guys and said, look, we're going to rely on you to build this out.
[09:50:12]
CONTINENZA: Okay, I mean, I think we're in the best position to do it. Again, find another company that has been chemicals for over a hundred
years that has the facilities sitting there and ready to go and is doing it today. I would say we're probably the best suited.
I know they looked at several. We weren't the only one, I can guarantee that. And again, you heard Dr. Navarro yesterday state how they made this
decision. They looked at others and we are the most suited and best suited to do this.
CHATTERLEY: How many people are you going to have to hire, Jim?
CONTINENZA: Now, approximately 300 up in the greater area of New York, and then about 30 to 50 in Minneapolis and approximately about 1,200 indirect
jobs. So, we're excited to bring those jobs back to New York. It's a great area. It's a great park. We're bringing those jobs back to upstate New York
and it's been phenomenal.
And Governor Cuomo has been a huge supporter over the years and one reason that park is even there is because of the support he has given it over the
years.
CHATTERLEY: And just talk to me about what happened in light of COVID as well. Because I know you were looking at making masks, you were looking at
the screens as well. You sort of talked about the bipartisan push that took place here to try and help you do that. I think this is important for
people to understand as well.
CONTINENZA: I can tell you, I'm not political, I'm a businessman. We run a company. And never once, and I mean never once did Adam Bohler's group, the
DFC ever want to bring up a party, bring up anything. This is a necessity. We need to get this done.
Dr. Navarro did the same. Governor Cuomo, how can I help? What can we do to be helpful? Again, this park exists because of the help of Senator Schumer
and Governor Cuomo over the years, and then obviously, you know, Dr. Navarro and Adam.
It was just, let's get this done for the American people. You're best positioned to do this. We need to shore up this and we need to do it quick.
As Dr. Navarro calls everything, Trump time and that means you do 30 days' worth of work in four days.
CHATTERLEY: Well, I like the sound of that and that idea is exactly how this Defense Production Act should be used, so we will watch your progress.
Great to have you on, sir. Thank you so much.
CONTINENZA: Thank you so much.
CHATTERLEY: Jim Continenza, CEO and Executive Chairman there of Kodak.
All right, a new achievement for the United States' top soldier in the fight against COVID-19, a run on Dr. Anthony Fauci's baseball card is
proving his status as an American icon. We'll take a look after this break.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Dr. Fauci has risen to cult status here in the United States. Well, now, he has even been pictured on his very
own baseball card. It's become the bestselling card ever for Top's limited edition series.
The card shows him mid pitch during that terrible -- I'm not judging -- throw before the Washington Nationals season opener. But his fans clearly
don't care how bad that was.
They snatched up more than 51,000 of his cards in just 24 hours. Yes, better than I could do. That's all I can say.
[09:55:05]
CHATTERLEY: All right, in two hours' time, the CEOs of Apple, Facebook, Alphabet and Amazon will testify to Congress on their dominance of the tech
industry via video conference.
We should expect fireworks. Amazon's CEO, Jeff Bezos has never testified to lawmakers before. Facebook continually under fire over fact checking and
hate speech ahead of the presidential election here in the United States.
Apple and Alphabet both stand accused of exercising monopolistic powers -- all four companies will argue that they play a key role in the U.S. economy
and represent American values in the face of rising Chinese competition.
Stay with CNN for full coverage of this historic event across all platforms coming up from 12:00 Eastern.
And that's it for the show. You've been watching FIRST MOVE. I'm Julia Chatterley. Stay safe and I'll see you tomorrow.
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