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First Move with Julia Chatterley
The U.S. Economy Suffering Its Worst Quarter In History; Attention Now Shifts From Antitrust To Earnings For The Big Tech Giants; The United States Launching The World's Latest Mission To Mars. Aired 9-10a ET
Aired July 30, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:01]
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.
COVID collapse. The U.S. economy suffering its worst quarter in history.
A tectonic testimony. Attention now shifts from antitrust to earnings for the Big Tech giants.
And seeing red. The United States launching the world's latest mission to Mars.
It's Thursday. Let's make a move.
Welcome to FIRST MOVE. Thank you for joining us, and I hope you're safe and well as always. Not a moment to lose. Today, where the data is both record
breaking and devastating in equal measure. Here it is.
The United States is officially in recession. Second quarter GDP falling a staggering 32.9 percent annualized. It's the worst quarterly performance
ever and of course, it follows the first quarter's five percent drop. It's a measure of the cost of economic shutdown in April, and of course this
number comes despite the early reopenings that happened in May and June.
And for that reason, it's also backward looking data, which is why the weekly jobless claims, for example, is still another critical thing to
watch, too.
A further 1.4 million Americans filing for first-time jobless benefits last week. Seventeen million people continue to collect -- and actually, that's
a substantial rise from last week, and this, of course, comes as the enhanced benefits runs out this week and talks to extend them in D.C. seem
deadlocked. We'll be talking about this throughout the show.
For now, this is the picture for U.S. futures. Softer today after solid gains yesterday. Tech stocks outperformed unfazed by criticism from
lawmakers about their power and their influence, and just like an Amazon Prime delivery, there was a whole lot to unpack. We'll have analysis coming
up for you.
But for now, I want to give you a look at the global picture, too, because that's sunk as well. Germany reporting a 10 percent drop in second quarter
growth, another worst on record reading there. While over in Japan, they saw a fourth straight month of falling retail sales. The economic costs
mount up.
The U.S. Federal Reserve repeated something that we've discussed here many times on FIRST MOVE. Yesterday, they said the only way to get fully back on
track is to defeat the virus, and until that time, policymakers need to be ready to do more, and I'll keep repeating it.
Clare Sebastian joins us now. Clare, just talk me through this historic collapse in quarterly growth on an annualized basis, let's be clear, here
in the United States.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, it's a sobering number. Those of us who lived through this past quarter sort of watched it
happen, but I think 32.9 percent, although slightly better than expected, but that's really semantic at this point. You really see the full force of
this freight train, the virus and lockdown measures plowing through the U.S. economy.
Yes, it's backward looking. Yes, it was probably at its worst in April, but we do -- if you look into the sort of detail of this build up the picture
of what exactly happened. Consumption is a big part of this. That of course, 70 percent of the U.S. economy in normal times. That dropped by
34.6 percent in the quarter within that, a 43.5 percent drop in services spending.
That's things like healthcare, food services, accommodations, recreation services. Of course, we all stayed at home. We all stopped doing anything
and that is what is impacting this number, and of course looking back, this is hopefully as bad as it's going to get, but not necessarily.
We see a resurgence of cases. We see a rolling back of some reopening measures. And of course you talked about it, what is going to happen when
stimulus runs out.
We are bumping up against those deadlines. Unemployment benefits set to expire at the end of this month. Things like support for airlines, which
could be a huge deal when it comes to unemployment expiring at the end of September.
So I think the onus given this number is now really on Congress to see what they can do to sort of bolster the economy, because again, as you said, if
you look at the initial jobless claims, that is a much more real time indicator of what is going on and this is the second straight week where
those ticked up -- Julia.
CHATTERLEY: Yes. You make some great points there. We're going to see a bounce back in the data. This number would have been so much worse if we
hadn't have seen those reopenings. The cost of course is the rising cases that we are now seeing and the real fears there that we are going to see a
stumble.
We're sputtering already as far as the economy is concerned, and you know, when I look at the continuing claims data here, the number of people that
are already collecting benefits and continue to do so, that actually rose substantially a week and a half ago, two weeks ago, which is the latest
data we have. These are warning signs.
SEBASTIAN: Yes, I think we can see this as a cautionary tale as the Federal Reserve said in its statement yesterday. This economy is going to
be dictated by the course of the virus. I think, you know, you can deduce from the fact that we're seeing these resurgences in states that it's not
seasonally impacted so it has to be impacted by what we, as citizens and consumers do, how we behave. And that of course, can have a negative impact
on the economy.
Continuing claims, of course, really important. That's people who filed for claims for more than eight weeks running. That was up 867,000 the week
ending July 18th from the prior week.
[09:05:31]
SEBASTIAN: So it's a really unnerving statistics there, Julia, and I will say that, if you look back at history, for example at the Great Depression,
it shows that consumption can be really slow to return when you're working off a fear-based situation like this.
People stuffed their new deal paychecks under their mattresses and I think people are still very nervous. You can't undo the fear that we induced in
people to get them to stay home in the second quarter.
CHATTERLEY: That's such a great point. Just because they're earning more than they were perhaps pre-COVID could argue that they weren't getting a
living or weren't getting a living wage beforehand, and if you let that go, getting it back is going to be really tough, particularly in this
environment. Clare Sebastian, thank you very much for that.
All right, the most powerful figures in tech under pressure on Capitol Hill, Wednesday, challenged on their internet dominations. The CEOs of
Apple, Facebook, Amazon and Alphabet were asked to explain their competitive practices. The Committee Chair's conclusion was clear.
(BEGIN VIDEO CLIP)
REP. DAVID CICILLINE (D-RI): This hearing has made one fact clear to me. These companies as exist today have monopoly power. Some need to be broken
up, all need to be properly regulated and held accountable.
We need to ensure the antitrust laws first written more than a century ago work in the digital age.
(END VIDEO CLIP)
CHATTERLEY: Donie O'Sullivan joins us once again. Donie, there were some deep detours. There were definitely some bites here. there were some lunch
munching. What are your conclusions?
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Yes, I mean, it was an interesting afternoon. You know, I thought as far as congressional hearings
go, there was a bit more meat on the bones in this one, but as you say, there were a lot of detours and diversions, too.
A lot of Republicans focusing on, you know, the perceived conservative bias of Silicon Valley and asking those more politically charged questions. But
this, after all, it was an antitrust hearing and I thought what the Democrats on the committee had done quite effectively was, you know, we've
got to remember that this hearing yesterday was only part of a months' long investigation by the committee where they got many documents from inside
these companies, internal e-mails, and lawmakers didn't hold back yesterday using those internal documents as evidence and putting it to the CEOs.
For instance, e-mails in 2012, internal e-mails at Facebook about the acquisition of Instagram and the Democratic representative, Jerry Nadler,
putting to Mark Zuckerberg that Facebook viewed Instagram as a threat, and rather than competing with it, it decided to buy it because it didn't think
it could compete with it.
So, you know, I think a lot of what was made public yesterday will feed into a lot of the ongoing investigations and I think, it will be
interesting to see how it all plays out, particularly when it comes to things like the acquisitions of WhatsApp and Instagram, whether anything
will actually come of it on the other hand is a different story -- Julia.
CHATTERLEY: Yes, was innovation suppressed and were consumers harmed when Facebook, Instagram and WhatsApp are all free to their users. It will
remain a question.
I want to talk about Apple as well because I think Tim Cook got off lightly here. There was one moment where he was asked about raising the costs of
the App Store, access to the App Store for developers. Listen to this exchange.
(BEGIN VIDEO CLIP)
REP. HANK JOHNSON (D-GA): What's to stop Apple from increasing its commission to 50 percent?
TIM COOK, CEO, APPLE: Sir, we have never increased commissions in the store since the first day it operated in 2008.
(END VIDEO CLIP)
CHATTERLEY: It doesn't mean you can't, though, and that's the definition of monopoly power. You can raise prices and people don't have a choice,
they still come to you.
Donie, what do we make of this?
O'SULLIVAN: Yes, I mean, the honest answer is there's nothing to stop Apple from raising their commission like that. And, you know, that's what
it's all about at the end of the day, whether it's Amazon, Apple, Facebook, or Google. It's about these walled gardens that they have created that the
app developers sort of have to play in that space. But that space is ultimately owned by these massive platforms.
So whether it's independent retailers who are trying to sell their products on Amazon and then Amazon decides to launch their own product and de-rank
that independent retailer's product and take away a lot of their business, or whether it's Google who is pulling data out of websites and putting it
in their search results.
So rather than having people go and click to go to a website that people stay within Google's search ecosystem, and of course, the same is true for
the App Store.
I mean, Apple has total control. They can pull an app. They can charge commission, whatever they want. And so really, the app developers are
totally reliant on these platforms and these companies, you know, keeping them afloat.
CHATTERLEY: Yes, at the mercy of -- Donie, very quickly, probability of some form of antitrust action as a result of what we saw yesterday? Give me
a number.
O'SULLIVAN: There's a lot of investigations. There's a lot of noise from both Republicans and Democrats. But as we've seen before, there's always --
it's very little action when it comes to tech companies. Maybe that will change after the election, maybe it won't. I can't make a prediction.
CHATTERLEY: Hedging. Closer to zero than a hundred. Donie O'Sullivan, thank you very much for that.
China's Huawei has overtaken Samsung as the top smartphone maker in the world. Market research firm, Canalys says Huawei sold nearly 56 million
phones in the second quarter, while Samsung chipped around 54 million phones. Huawei sold most of its smartphones in Mainland China.
Sherisse Pham is live in Hong Kong with all the details. Let's be clear, Sherisse, it's all about China and it's all about COVID here. How long will
this dominance last?
SHERISSE PHAM, CNN BUSINESS REPORTER: Whoa, that is the key question. Look, taking the number one spot is hugely important for Huawei. They want
to show their brand is still strong so that they can convince customers and suppliers and developers to stick with them.
But as you raised right there, the main question is how long will this last? And analysts are saying pretty unlikely, and that's because this is
only possible because of the unprecedented market situation that we're facing with COVID-19.
Huawei, as we know, we've talked about this for the better part of a year and a half, has been under a massive pressure campaign from the United
States. It is cut off from key U.S. tech, which means its latest smartphones don't have Google apps, which makes them a lot less attractive
to international buyers.
As a result, most of Huawei sales have now pivoted back to China. More than 70 percent of sales are in China. And so Huawei was able to capitalize on
the economic recovery that played out in China because, of course, the pandemic and COVID-19 hit China earlier, and as a result, their recovery
has also happened earlier.
Of course, they are also potentially facing a second wave right now. That's another conversation. So, look, will it last? Analysts saying no, because
the other thing that also boosted Huawei here, not only was it their strong performance in China, but it was also Samsung's terrible performance
everywhere else.
Huawei still saw sales decline, shipments decline, year-on-year for the quarter, six percent. Samsung saw a drop of 30 percent for smartphone
shipments for Q2.
So huawei was able to sort of eke out a gain based on the economic recovery in China and based, of course, on Samsung's stumbles.
But analysts are already saying that this is really unlikely to last.
CHATTERLEY: Yes, the catch-up is coming. Sherisse Pham, thank you so much for that.
COVID the main story here, too. Now, to Germany, Europe's largest eocnomy reporting the worst quarterly GDP drop since records began back in 1970.
The German government says its economy contracted by more than 10 percent in the second quarter compared with the prior.
Fred Pleitgen is live in Berlin with more. It's a devastating number, Fred, but it doesn't reflect the economic reality today and this is really
important, too.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I think you're absolutely right and I think it is important. The Germans have said
a couple of weeks ago that they believe there is a light at the end of the tunnel with that contraction that was going on, also because of the fact,
Julia, that the Germans were able to reopen their society and thus, also, reopen their economy as well, because the COVID numbers have been quite
good here over the past couple of months.
Of course, we know that they are going in the wrong direction at this point in time and it's actually one of the reasons why the German government is
saying, look, people really need to continue to adhere to the physical distancing and to all the other hygiene rules as well to make sure there is
not another economic lockdown and shutdown, which of course is so devastating for an export economy like the German one.
Nevertheless, the numbers of course are still quite devastating for this country, for this economy. And if you look at some of the companies that
are involved, I saw numbers came out today from Volkswagen and they are deep in the red, really not looking good at all for VW. And of course, I
don't know if you recall, but a couple of months ago, I was actually at Volkswagen as they were firing up some of their plants trying to get things
back online. They have done that, but of course, business is very slow with the entire world in a difficult economic situation.
For the Germans right now, the big question is, they do make great cars, but who is buying them at this point in time? Right now they believe that
China could help somewhat, but of course, the market in the U.S. is very difficult, and the market here in Europe very difficult as well.
[09:15:20]
PLEITGEN: And then you had numbers coming out from Deutsche Bahn, also the worst numbers that they have had since they became a privately owned
company. So things looking devastating there as well. The German machine tool sector also in big trouble.
Again, there is a light at the end of the tunnel. The German government says they believe that things are getting better, but certainly the data is
not good and they do believe also that the recovery is going to be a fairly slow one and a lot of these big industrial sectors that of course are so
important for Europe's largest economy -- Julia.
CHATTERLEY: Yes. So many challenges, not only tackling the virus at the same time and keeping that under control, but businesses of all sizes and
workers of course challenged here. Frederik, great to have that update. Thank you. Frederik Pleitgen there.
All right, let me bring you up to speed now with some of the other stories that are making headlines around the world.
Pro-democracy activists in Hong Kong are outraged after four student activists were arrested because of their social media posts under the
city's new National Security Law. Twelve pro-democracy candidates have been disqualified from upcoming legislative elections.
Zimbabwe's government has signed a $3.5 billion agreement to compensate white farmers who were evicted in the land redistribution program of the
early 2000s. The economists warn that Zimbabwe's cash-strapped government can't afford the compensation.
CNN's Eleni Giokos spoke to Zimbabwe's Finance Minister and asked whether sectors such as health will suffer.
(BEGIN VIDEOTAPE)
MTHULI NCUBE, ZIMBABWEAN FINANCE MINISTER: This year, what we're going to spend is 8 billion Zimbabwean dollars on health. That's the target.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Eight billion Zimbabwe dollars on health. I mean, I don't know which exchange rate to look at, but
if you look at the official rate, that is definitely, many would say, not enough.
NCUBE: The way to look at it is not the way we have explained it in terms of the exchange rate, but in terms of percentage of the government budget,
because we will spend from what we have.
So in terms of timing, there's no issue about timing here. What we've done with the farmers' compensation, this is a constitutional requirement. We
have to fulfill that.
(END VIDEOTAPE)
CHATTERLEY: A short time ago, NASA launched a mission to Mars looking for signs of ancient life on the Red Planet. On board the Atlas 5 rocket is a
vehicle called "Perseverance," which will scour the surface and collect soil and rock samples. It is one of three Mars missions this summer. China
and the UAE have launched as well, and we'll have more on the mission to Mars later on in the show with the company behind battery protection
technology onboard.
Also coming up on FIRST MOVE, two more of America's disastrous economic news, analysis from the former acting Labor Secretary, Seth Harris. That's
coming up. Stay with us.
(COMMERCIAL BREAK)
[09:21:06]
CHATTERLEY: Welcome back to FIRST MOVE, live from New York, where it's looking like a weak open for U.S. stocks. Futures at this moment down over
one percent. We've got an avalanche of tech earnings later today, so that's probably giving investors pause for thought.
We've also had devastating economic data from around the world, including here in the United States. Second quarter GDP falling almost 33 percent on
an annual basis. The worst-ever plunge in U.S. economic activity ever.
At the same time, jobless claims rising by another 1.4 million people. Just to give you a sense of scale, we'll do this every week, some 30 million
people, according to the latest readings, still collecting some kind of benefit assistance. That comes in at around one in five American workers.
All of this as enhanced jobless benefits for needy Americans runs out this week and the moratorium on U.S. evictions ends. Tens of millions of
Americans are in danger of losing their homes over the next few months if they can't afford rent, according to certain estimates.
Stimulus talks continue again today in Washington, but a deal does not appear close. Let's talk this through. Seth Harris joins us now. He was
acting U.S. Secretary of Labor under President Obama. Sir, fantastic to have you on the show. These numbers are pretty devastating, whichever way
you look at them.
SETH HARRIS, FORMER ACTING U.S. SECRETARY OF LABOR UNDER PRESIDENT OBAMA: There's no question, Julia, this is the picture of a devastating and very
rapid economic collapse.
I think we can expect to see some improvement in the third quarter, but the unemployment claims numbers that you cited are really deeply troubling.
The reality is that since the beginning of June, the unemployment claims numbers, which are something of a proxy for the number of people who are
losing their jobs in any given week have been flat. They haven't changed, and they are at record high levels.
And so what that tells us is that we are not on a smooth path to recovery and the small increase in unemployment claims lately suggests that perhaps
the economy is slowing again; not collapsing, but slowing down again. And the hopes of a V-shaped rapid recovery are simply silly and are gone.
CHATTERLEY: It's just tough to imagine what happens, whether it's the health crisis or just trying to get people back into the workplace assuming
that those jobs are available. Because when I look at the numbers for job openings and compare them to the sheer scale of people collecting benefits,
there's still tens of millions of people without jobs, even if you match up as many as you can.
The economics here are so challenged and they're challenged whichever way we look.
HARRIS: That's precisely right, Julia, and this is the big hole in the argument that President Trump and the Republicans in the United States
Senate are making. They are trying to make the argument that the reason that people are not going back to work is because they have given them an
additional $600.00 a week in unemployment benefits, essentially they argue incentivizing them to stay home.
But the truth is that right now in the American economy, or at least as of a few weeks ago, there are only five million job openings, and as you
noted, 30 million people out of work. So even if you keep throwing incentives at people, it's futile. There are no jobs for these people to go
back to and that's because demand in the economy has collapsed. We do not have enough economic growth going on in the economy to sustain new jobs for
those 30 million people who are collecting unemployment benefits right now.
It's a flawed and, frankly, morally bankrupt argument designed to scale back government spending when, let me tell you, the GDP numbers tell us,
the Gross Domestic Product numbers tell us that the one thing that is keeping our economy going is government spending, unemployment benefits,
food assistance, support for small businesses.
And so, if we cut that off or if we don't do enough of it, we're going to drive the American economy back down into a deep recession.
[09:25:10]
CHATTERLEY: The University of Chicago put out a study saying 68 percent of people actually are earning more now than they were earning pre-COVID. The
median amount is a third higher than they were.
So I can see that some Republicans, the more conservative ones, will look at this and go, hang on a second, perhaps we got the numbers wrong. Fine if
you want to reduce that perhaps to some degree or look at what people were earning before, but the logistical challenge of what the Republicans have
presented here, never mind anything else of trying to work out what 70 percent of what people were earning pre-COVID and trying to do that for the
coming months.
How is that possible given the challenges that we've seen even with what's already happened?
HARRIS: You're precisely right. State unemployment offices are completely overwhelmed, even now, and so if you ask them to take on a new complicated
calculation for each individual unemployment insurance check they have to cut, it's going to slow them down even further.
Estimates are that it would take two to five months to implement the system that Senate Republicans and President Trump want them to implement.
And in the meantime, lots and lots of people are going to get an inadequate amount of money. So, the most important thing to remember about
unemployment benefits is that it boosts the economy, it boosts consumer spending because there's a lot of evidence that unemployed workers, when
they get a dollar, immediately turn around and spend that dollar.
That's what keeps their local economy going, the grocery store, the gas station, their landlord. And if you take that money out of their pockets,
spending is simply going to go down.
So while there might be in a perfect world a better way to run this system, we don't live in a perfect world. We live in a technologically challenged
under resourced world and we live in a world where the economy is really struggling. We need to pump as much spending into the economy as possible
and unemployed workers are the perfect way to do that.
CHATTERLEY: Yes, there is no perfect solutions here, but pulling back the support at this moment is not the answer. Seth, fantastic to have you on
and we'll get you back soon to discuss this. It's an ongoing challenge, clearly. Seth Harris, the former acting Secretary of Labor under President
Obama.
HARRIS: Thanks, Julia.
CHATTERLEY: Sir, thank you again.
All right, the market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:30:31]
CHATTERLEY: Welcome back to FIRST MOVE and U.S. are up and running this Thursday and it's a risk off day for global markets. We've got U.S. stocks
trading lower early on in the session. As you can see, a bit of consolidation from yesterday's solid gains.
News that the U.S. GDP fell almost 33 percent in the second quarter annualized. It was expected, remember and it's backward looking. Where are
we now? I think the best is perhaps, we'll have an even easier, an even easier time ignoring it if the economy were on a stronger footing today,
but even the Fed yesterday warning that the economic bounce that we saw in late spring is fading.
Well, one of the big business is saying it's a busy day for earnings, Procter & Gamble giving upbeat guidance as consumers continue to snap up
the basics. Its stock is closing in, in fact on record highs.
What about UPS? Another company that continues to benefit from the stay-at- home trend? Its Q2 profits nearly doubling as demand for package deliveries remains strong. After the bell today, of course we're going to get some big
tech results.
But for now, it is Wednesday's antitrust hearing in Congress that takes our focus. Facebook's CEO came under fire for the company's acquisition of
Instagram. Lawmakers allege that the company copied and then bought its rival. Take a listen.
(BEGIN VIDEO CLIP)
REP. PRAMILA JAYAPAL (D-WA): Facebook cloned a popular product, approached the company you identified as a competitive threat and told them that if
they didn't let you buy them up, there would be consequences. Were there any other companies that you used this same tactic with while attempting to
buy them?
MARK ZUCKERBERG, CEO, FACEBOOK: Congresswoman, I want to respectfully disagree with the characterization. I think it was clear that this was a
space that we were going to compete in one way or another. I don't view those conversations as a threat in any way.
(END VIDEO CLIP)
CHATTERLEY: Joining us now, Roger McNamee, co-founder and Managing Partner of Elevation Partners, also the author of "Zucked: Waking up to the
Facebook Catastrophe." Roger, always great to have you on the show.
I want to just reiterate what Mark said earlier on in the hearing. He said we compete hard, we compete fairly and we try to be the best. Do you think
an antitrust line was crossed with Instagram?
ROGER MCNAMEE, CO-FOUNDER AND MANAGING PARTNER, ELEVATION PARTNERS: I think there is clear evidence of that. I mean, Julia, they produced
documents from inside senior executives at Facebook that suggest precisely that threats were conveyed and that Instagram was put in this position of
sell the company or effectively be destroyed by Facebook.
And to me, Julia, the thing that was striking about yesterday's hearing is the level of preparation, the amount of documentary evidence that that
committee already has.
To me, what was striking in the past was that Congress looked overmatched when it met with tech CEOs. That was clearly not the case yesterday. And to
be clear, the format of these hearings is terrible for the audience, right, because each Member of Congress gets only five minutes and they alternate
Democrat and Republican, and so it's all over the place.
But if you sit there and just read the evidence that they have, it is, I think, conclusive relative to both Facebook and Amazon, and at least
indicative relative to the others, relative to essentially using competitive power in ways that are a violation of antitrust.
And, you know, it's hard for me to imagine that we don't see some form of regulatory case that comes out of this. I mean, who knows when. And these
processes take years.
But it does really appear to me that this case is much further along than I think investors generally thought.
CHATTERLEY: How far along, I think, is the question, because there's a defense here and they will use the defense that was innovation suppressed?
Was the consumer hurt when WhatsApp, Instagram and Facebook are free products? There's a utility value that we've talked about and we talk about
it time and time again, that you can't quantify here.
MCNAMEE: Julia, if the only standard that's going to be applied is the price to consumers, it will be hard to prove cases for many of these
companies.
The question is whether that is standard, which is a very recent standard. It's only been in place for 40 years. In fact, it is the only one that can
be used.
Remember, the United States has a long history, more than a hundred years where it had the Sherman Antitrust Act, the Clayton Act and the Federal
Trade Commission Act from the end of the 19th Century and beginning of the 20th Century where very clearly, the goal was to promote competition. Big
was bad.
[09:35:21]
MCNAMEE: Essentially, the notion was that monopoly is something that authoritarians like, and that if you want to have democracy, capitalism is
the right model and we've gotten away from that.
Every industry in the economy is really concentrated today. Tech happens to have more power. But the same thing is true, part of the reason we see that
horrible number on GDP for the quarter is because every industry is so consolidated that you don't have the flexibility to adapt around change.
And I think that's part of why our response to COVID is so bad. We have supply lines that are great for shareholders, but those supply chains were
unable to adapt to make more PPE. They were unable to make cotton swabs. They're unable to scale testing.
I mean, all of those things are signs of an industry that is just too concentrated, and I think antitrust is one of those things that will be
good for the markets and it will be good for basically democracy. I'm hopeful that we'll see more it.
CHATTERLEY: Amazon is only stronger as a result of COVID and we'll see those results tonight. I just want to play a quick recording of Jeff Bezos
when he was asked about the use of third-party data and how that influenced their own behavior.
(BEGIN VIDEO CLIP)
JAYAPAL: Let me ask you, Mr. Bezos, does Amazon ever access and use third- party seller data when making business decisions and just a yes or no will suffice, sir.
JEFF BEZOS, CEO, AMAZON: I can't answer that question yes or no. What I can tell you is, we have a policy against using seller-specific data to aid
our private label business, but I can't guarantee you that that policy has never been violated.
(END VIDEO CLIP)
CHATTERLEY: Another one, and obviously on mute there, which is going to be infamous, I think. Roger, does Amazon have a problem here, too?
MCNAMEE: I think they do. And let us be clear, the question is not do these companies add a lot of value to the economy. The question is whether
they use their market power in ways that in aggregate harm the company by reducing innovation, by reducing the diversity of choices available to
consumers, and by undermining employment by concentrating all the power.
And I think on those issues, the tech giants are really vulnerable. Apple is in a different situation because it doesn't have the same negative
impact on, say, public health that you've seen from the other companies and it certainly doesn't have the impact on democracy that both Google and
Facebook have had.
Amazon, I think, is one of those companies that it's a victim of its own success. It has done extraordinary innovation in changing how products are
distributed and I think there's a really strong call for turning the distribution portion of Amazon into a public utility.
But the notion that amazon can run a marketplace and also participate in it with its own branded products, that violates precepts of competition that
date back more than a hundred years. And I will be very surprised if that does not lead to some kind of investigation and case against them.
CHATTERLEY: Yes. They are almost so big, you're sort of hinting at the idea of the nationalization of a company because they're now so powerful.
MCNAMEE: I wouldn't go to nationalization, but I think the idea that it becomes like an electric utility that provides that service to everyone,
and to be clear, that's been Jeff's strategy all along.
And from an investor point of view, the margins of public utility are actually higher than what they're doing in their distribution business
today.
Julia, the one point I really want to make for our viewers is people have forgotten how important antitrust has been to the growth of the tech
industry. I mean, you and I have talked about this before, beginning in 1956, an antitrust case created computers as a separate industry and put
the transistor in the public domain, which started Silicon Valley.
And then every industry thereafter: software, personal computers, data networking, the internet, each one of these things came out at least
partially as a result of an antitrust case.
Investors should be embracing antitrust as a positive thing because at this point we're going to have to rebuild our economy and entrepreneurship is
our big strength.
And when these guys say, oh you can't regulate us, you need us to compete with China, I would point out that that's a false choice, because our
competitive strength relative to China is democracy and it is the diversity of our capitalism and that we should play to those strengths, not to
companies that are little Chinas. That's never going to be a successful strategy.
CHATTERLEY: You mentioned so many great points. I think we're in a position where investors think antitrust is a negative thing and we don't
know our history well enough to understand. We will talk about this.
I also wanted to talk about their responses to China as well, and actually, we don't have time, but the difference between Mark Zuckerberg's response
to being asked about Chinese theft and everyone else was illuminating.
But, Roger, I'm going to thank you.
MCNAMEE: It is. My pleasure, Julia. You take care. We will see again soon.
[09:40:21]
CHATTERLEY: If you have a quick comment, we can do it. I'll take the shouting.
MCNAMEE: It's really simple. The China trade-off is nonsense. No one should pay attention to it. The way to beat China is to let a thousand
flowers bloom.
Let's rebuild our entrepreneurial economy and go for maximum innovation. We can do that and this is the perfect time. We have to rebuild the economy.
CHATTERLEY: We will have a conversation about this, because I completely agree. You have also written an op-ed for "Time" which is great saying
safety -- regulating the safety of these internet giants is the most important thing and we can talk about that, too.
Roger, always a pleasure. Roger McNamee, co-founder and Managing Partner of Elevation Partners. Sir, stay safe. Thank you.
All right, after the break, what is NASA's multi-billion dollar Mars rover got in common with an electric super car worth over a million dollars? It's
about keeping them cool. We'll see you after the break with the details.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show, that's NASA winging its way to Mars, a popular destination this summer, well, part of it, anyway. It's the third
launch to the Red Planet this year behind China and the UAE.
Onboard the NASA mission is a vehicle called "Perseverance," which will search for signs of life on the Red Planet. The batteries onboard include
special cooling technology made by KULR, which will also be found inside the Drako GTE, a high-performance luxury electric super car.
Joining us now Michael Mo, the CEO of KULR Technology. Wow, Michael, you've been busy. Great to have you on the show. Just talk to me and tell our
viewers how your technology is being applied on this NASA mission.
[09:45:10]
MICHAEL MO, CEO, KULR TECHNOLOGY: Yes, hi, Julia. Good to see you again. Yes, our heat sink is on the Mars rover "Perseverance." We're part of the
instrument called SHERLOC which uses laser and camera to find signs of life on Mars.
So our carbon fiber technology is used to keep the laser and the electronics on the SHERLOC instrument cool and sound to find life on Mars.
CHATTERLEY: How does it actually work, Michael? How much heat can they absorb? Because you've come on the show before and said, look, this
application is being used by NASA, but it can also be used, as we just pointed out there, in super cars to keep lithium ion batteries cool.
MO: Yes, so last year, I was on the show. We were talking about our technology on the International Space Station to keep the astronauts'
laptop batteries safe and cool.
You mentioned that we just announced a partnership with Drako GTE and this is 1,200 horsepower EV super car that goes at up to 206 miles per hour. I
think its the fastest EV on the market right now.
We're going to take the Mars rover technology and apply to their battery pack and make it even cooler. So the goal is to make the car even faster
and to make it the coolest and the fastest EV in the galaxy. So watch out, Elon Musk.
CHATTERLEY: Cool and cool there. In terms of even just the physical substance here, because I was reading about it. It's a vertical carbon
fiber architecture. It's like a wax, and it goes from solid to liquid as it absorbs the heat. This is pretty unique technology.
MO: Yes, that's a phase change. So as the wax, the paraffin, changes its form base from a solid form into a liquid form, it would absorb a lot of
energy or put out a lot of energy without changing the temperature of the actual object heat sink in itself.
So you keep a nice engine temperature for the instruments to operate on Mars and that's how you can keep the lasers and the cameras, you know, the
instruments operating well on the Mars harsh environment.
I believe that we actually have six of these heat sinks on SHERLOC, so different instruments have different temperature requirements. It's very
important to keep those temperatures very constant and nice for the instruments.
CHATTERLEY: Yes, chemistry geek in me coming out here. When we last spoke to you, you weren't profitable. Where are we today? How is the business
doing? Because this has been an incredibly challenging time for all businesses, I think. What has it meant for your company?
MO: Yes, last time we talked that we were in the growth phase. Obviously, COVID hit. We took the initiative to lower our costs earlier this year and
we announced the forecast to be the Q2 to have over 200 percent growth year-over-year. So our earning will be coming out soon, but that was
already given out as a forecast.
We lowered our cost on the operating side, you know, really hunkered down and focused on our bread and butter going after the commercial customers as
well as the government contracts.
So things have been going well and we will continue to see growth in our business.
CHATTERLEY: Will it suppress innovation, at least in the short-term? As you said, you're having to cut costs here. I believe you took a Paycheck
Protection loan as well, which is another thing for the company to handle. To what extent is it going to sort of stagger the growth that you were
hoping for here or can you circumvent that?
MO: Yes, I think that, you know, in this environment, you still have to just innovate. I think last year, we talked about what I called the KULR
1.0, which is really showcasing the space of technology on the International Space Station and now on Mars.
Now, we're on the journey for KULR 2.0, which is taking that space technology and start showing it in vertical applications like EV. Right?
Take the Mars technology, going into the fastest EV car in the world.
We also announced earlier this month that we have a partner and customer called Volta Energy, going into the energy storage space and that's
actually taking what we talked about last year about the International Space Station technology for keeping the batteries safe into energy
storage.
So the customers are going to have energy storage in medical facilities, office space. So, you know, really going to these vertical markets.
And as a natural migration, we're going to continue to innovate and invest in the technology and grow into how to combine these technology vertical
space and work with regulators about battery safety, you know, helping build our technology and our know-how into to keeping the public safer by
working with regulators, as well as working with financial institutions such as insurance companies and leasing companies and so forth, and create
the right kind of the financial and business model for the end customer.
[09:50:33]
MO: So, the natural migration is to continue to innovate and develop -- migrate the KULR business model from 1.0 to 2.0, hopefully to 3.0. So,
maybe 2021 -- yes.
CHATTERLEY: We get it. Michael, we get it. You are not standing idle. Great to chat with you. Thank you so much. Congratulations on the launch
and we will see how the technology works.
MO: Okay, thank you, Julia.
CHATTERLEY: Come back and talk to us soon. Michael Mo there, the CEO of KULR.
MO: Great, thank you so much.
CHATTERLEY: All right, in the last few minutes, President Trump suggesting an unprecedented move with fewer than 100 days until the U.S. Presidential
election, a tweet that we will discuss after this. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show. Some breaking news, President Trump suggesting on Twitter a delay to the U.S. presidential election in
November. He tweeted, and I quote, "With universal mail-in voting, not absentee voting, which is good, 2020 will be the most inaccurate and
fraudulent election in history. It will be a great embarrassment to the U.S.A. Delay the election until people can properly, securely and safely
vote?"
Joe Johns is in Washington for us. Joe, let's be clear, he doesn't have the power to delay an election, but for those that fear he will contest an
election if he loses, this is fuel on the fire.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: That's absolutely right, Julia. This is the President of the United States delegitimizing,
undermining an election yet to be held, set for November, in which he is well behind in the polls, at least right now, and since the Constitution
does not give the President the power to change the time of elections, it's left up to the Congress, he's essentially setting himself up to make the
claim after the election results are in that the election was bogus.
And, you know, that's the kind of thing that throws the United States into an uproar as it did in 2000 with Bush versus Gore.
Now, why can he do it? It's because the Constitution leaves it up to the legislature, both the House and Senate, to determine the time, place and
manner of Federal Elections.
So that's it from here. I mean, I did talk to a source up on Capitol Hill and asked, well, what about this? What are Democrats saying? What's the
important thing to know? The source says it can't be done, so why pay attention?
But the reason to pay attention, of course, the alternative view, is that the President is seeking to delegitimize this election in which polls show
he is behind. Julia, back to you.
[09:55:11]
CHATTERLEY: No coincidence, Joe, in timing, I think as well, on a day where we see the second quarter growth collapse for the United States, down
some 33 percent.
The irony here actually is that the third quarter is meant to be better and that comes just a few days before the presidential election.
JOHNS: Right, because what that shows is one of the President's biggest arguments for reelection, only about a year ago, was the state of the
economy, that he continued to take credit for.
Now, the economy clearly is in shambles and he is not going to be able to use that to run on, so it's certainly problems for him, continued problems
for the President as he sort of throws things again the wall to see what will stick.
Add to the list the question about whether to delay the elections -- Julia.
CHATTERLEY: Yes, this debate will continue, no doubt. Joe Johns, thank you so much for your context there.
Wow, that was a busy show and that just about wraps it up. You've been watching FIRST MOVE. I'm Julia Chatterley. Stay safe and I'll see you
tomorrow. Have a good day.
(COMMERCIAL BREAK)
[10:00:00]
END
