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First Move with Julia Chatterley
Zuckerberg Complains of a Coordinated Effort to Undermine the Company; Tesla's Electrifying Stock Market Valuation; Japan's Mako Komuro Marries a Commoner and Loses Her Title. Aired 9-10a ET
Aired October 26, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[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 what you don't need to
know.
Facebook fightback. Zuckerberg complains of a coordinated effort to undermine the company.
Tesla's trillion. The car maker's electrifying stock market valuation.
And a Princess Bride no more. Japan's Mako Komuro marries a commoner and loses her title.
It's Tuesday, let's make a move.
A warm welcome to FIRST MOVE this Tuesday with Facebook under fire once again from the media, but not from investors and that remains critical. The
social media giant making profits of more than $9 billion last quarter, each month more than ever, more people than ever are using Facebook
products. We are talking 3.6 billion of us, even as accusations mount that it facilitates human trafficking, drug cartels, interference in elections
and democracy, and fuels divisions in society. And yet, take a look at this.
Facebook's stock price higher after the latest leaks. For all the bad press, it is up around half a percent premarket following earnings reported
after Monday's closing bell and it is still up 20 percent year-to-date. What Facebook numbers prove is for all the criticism, the business model
remains rock solid, as we often discuss on this show, and it means that the only way the tech giant changes its behavior is if regulators force it to
do so.
We'll discuss with early Facebook investor and former adviser to Mark Zuckerberg, Roger McNamee, who has long been calling for regulation to
tackle issues like safety, like privacy, and like competition.
Now, from Facebook woes to investment flows. The Dow and the S&P 500 set for fresh records on strong earnings and stable oil prices and bond yields.
In Europe, the German DAX is sitting at fresh six week highs, and in Asia, nice gains in Japan though some give back from Monday's gains. Over in
China, stocks pressured on news that property developer Modern Land may become the new Evergrande after it missed an international bond payment.
There are reports that Beijing is also set to roll out a pilot real estate tax for the entire nation, too. Timing, as they say, is everything, and no
time like the present to talk about Facebook.
The social media giant providing a timely reminder that it continues to rake in money even as firestorms range over how it operates. Revenues
surged to $29 billion last quarter. Profits were up 70 percent, and user numbers, as I've mentioned, grew 12 percent to 3.6 billion people, that's
around half the global population just to give you some context here.
CEO Mark Zuckerberg pushed back against the Facebook papers on the earnings call. Just take a listen to what he had to say.
(BEGIN AUDIO CLIP)
MARK ZUCKERBERG, CEO AND FOUNDER, FACEBOOK; Good faith criticism helps us get better, but my view is that what we're seeing is a coordinated effort
to selectively use leaked documents to paint a false picture of our company.
The reality is that we have an open culture where we encourage discussion and research about our work so we can make progress on many complex issues
that are not specific to just us.
(END AUDIO CLIP)
CHATTERLEY: Anna Stewart joins us now. Anna, great to have you with us. Just to be clear, they are refuting most of the evidence of their own work
and research but, you know, I had to sort of think last night for a long time about what he said on that call. And I thought you know, maybe that
would be okay if they were a startup and he is talking like they are still a micro startup and not a company that on a monthly basis, has 3.6 billion
people using their product. It's sort of worse than pushback and offense as a defense. It's almost like denial.
ANNA STEWART, CNN REPORTER: And I think that's exactly actually what Frances Haugen said yesterday. She mentioned the sort of startup culture of
Facebook and how hard it was actually to raise issues up the ranks.
Clearly, Mark Zuckerberg has refuted that they are putting profits before safety here. He also says there's a balance to strike between reducing
harmful content and keeping up values like freedom of expression.
Now he says that their AI is now picking up on 90 percent of harmful content as opposed to humans, but that certainly ignores the big issue
here, how much content are they really picking up overall?
[09:05:08]
STEWART: There are big issues and question here as to how they are picking it up, particularly when we look at different languages. I know you'll be
getting into that later in the show.
Zuckerberg once again recognizes that regulation is needed. But again, he says that is not Facebook's responsibility. He wants governments and
regulators to take a much more active role. That is nothing new.
He says Facebook is on track to spend more than $5 billion on safety and security this year, but having just turned a profit of over $9 billion,
just for one quarter, I'm sure people would like to see maybe that increased a little bit -- Julia.
CHATTERLEY: Yes. I mean, you raise some great points there. And actually, on the earnings call, it was the AI question, I think it was from Evercore
ISI that that came up and he said, look, some of the categories like hate speech have been harder because we're operating in around 150 languages
around the world and there is cultural nuance. I mean, take a look at India, 214 million users, 25, I believe official languages and they've got
moderation in five, I think, according to the Facebook Papers leak.
I mean, that's a real hotbed and a challenge here, and then I hear them talking about investing $10 billion in augmented reality and virtual
reality. How about you spend some of that $10 billion in some of the areas where you know you're challenged?
STEWART: Right, to put that into context, that's pretty much double what they're spending on safety and security, which is at the root of this
massive media storm and what Francis Haugen is saying to the U.S. Congress, the U.K. Parliament, she's going to be speaking to the E.U. Parliament next
month.
Their vision for the Metaverse was front and center of the earnings. They're breaking out their hardware division Facebook Reality Labs that
makes Oculus into a separate segment altogether, and are employing 10,000 engineers to work on the Metaverse in Europe. We found that out last week.
Frances Haugen said yesterday when she heard the news about that, she said, well, what could we have done with 10,000 engineers if they had been put to
work on safety and security?
It's been a rough few weeks. Facebook share price has, you know, tracked down a little bit in recent weeks since the beginning of September; it was
up again on these earnings. Little surprise when you look at them, profit is up 17 percent for the third quarter compared to last year, and I think
this just goes to say that investors see a company growing at a fair clip.
Chat Yes, I couldn't agree more. The reason why they're not spending the $10 billion is because they are profit maximizers, quite frankly, and none
of these issues are going to be tackled until they are forced to and actually, to Facebook's credit, they've said that, give us the rules and
we'll abide by them, but right now, it is all a gray area. Regulators have to act.
Anna Stewart, great job. Thank you. There's a lot of stuff in that.
All right, meanwhile, Facebook also has language blind spots, and we've kind of discussed it. Whistleblower, Frances Haugen says the company knew
it was being used to incite violence in non-English speaking countries like Ethiopia, but failed to stop the spread of harmful content.
(BEGIN VIDEO CLIP)
FRANCES HAUGEN, FORMER FACEBOOK PRODUCT MANAGER: The core part of why I came forward was I looked at the consequences the choices Facebook was
making, and I looked at things like the global south, and I believe situations like Ethiopia are just part of the opening chapters of a novel
that is going to be horrific to read.
(END VIDEO CLIP)
CHATTERLEY: Larry Madowo joins us once again. Larry, always great to have you on the show. She actually said they allow the temperature to get hotter
and hotter and hotter in some of these countries before they then go, okay, we perhaps have to rein this back a little bit. And in countries like
Ethiopia, devastating consequences perhaps.
LARRY MADOWO, CNN CORRESPONDENT: Absolutely, Julia, because the way Facebook works is if you have a post that is getting a lot of comments and
likes and shares, then it is shown to more people, that engagement based ranking is dangerous in situations where you have a conflict.
Ethiopia has been at war in the north of the country since November last year, and what these documents, internal documents seen by CNN indicate is
that even though Facebook ranks Ethiopia among the countries at the highest risk of conflict, its moderation efforts just fell far short of the
inflammatory content that's available on Facebook.
But even worse, another document, for instance, says that Facebook did not build automated tools to detect hate speech and misinformation. So, what
essentially is allowed is for politicians' armed groups, the bad faith actors to exploit the platform to incite ethnic violence, and to
essentially call for people to take arms against people who are opposed to ethnic minorities and the like, and that is the danger here that Facebook,
which is in major languages spoken in Ethiopia, such as Afaan Oromo and Amharic and they didn't have enough people looking at that content and
flagging it and taking down if it was problematic.
CHATTERLEY: Yes. I mean, this is a huge part of it, it is their challenge particularly where you've got cultural language issues that they have to
tackle. Larry, just to be clear, and obviously Facebook aren't here to defend themselves specifically, what is Facebook saying about this specific
issue and how many people in Ethiopia actually use Facebook?
[09:10:06]
MADOWO: So Facebook has told CNN that they have invested in Ethiopia, that they have added capacity and invested in people who speak the local
language. It is not just Afaan Oromo and Amharic that I mentioned, but also Somali and Tigrinya, which is spoken in the Tigray region, which has been
at war.
Officially, Facebook does not say how many people actually use the network anywhere outside of the U.S., so we can only go by a guesstimate. But
Facebook is an extremely popular social media platform, not just in Ethiopia, but across the continent, so many people use it.
Facebook also will not tell us how many actual people it has speaking Amharic or Afaan Oromo, or even some of the more popular languages in this
part of the world like Swahili, which has more than 20 million speakers. So, while they say they are committing more resources, we don't know how
much more.
CHATTERLEY: Yes. More context required. Larry Madowo, great to have you. Thank you.
An electrifying market cap. Tesla joining the $1 trillion club, the first car maker to do so. That's after its stock surged more than 12 percent on
Monday. Paul La Monica joins us now. Paul, great to have you with us. Two drivers of this, an analyst upgrade and they deal with Hertz. Talk us
through it.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Morgan Stanley's Adam Jonas is widely considered to be one of the most influential auto analysts on Wall
Street. So he raised his price target yesterday on Tesla that clearly helped ignite this rally. But I think you're right, Julia, the Hertz deal
might be what is even more exciting to Tesla investors.
Hertz, you know, putting in an order for 100,000 electric vehicles from Tesla, and I think that people look at that news as validation for Tesla,
that the company and its vehicles, the Model S, 3, Y, and X are really going mainstream. This is no longer just for the wealthy on the coasts that
are buying these electric vehicles, which are, you know, admittedly still a bit pricey, you know, maybe out of reach for some average consumers.
But I think that as costs come down, that's going to be less of an issue going forward.
CHATTERLEY: You know, it's fascinating, isn't it? This valuation now is a greater market cap than 11 of the largest global automakers combined. And
we've long had this debate whether it's valued as a tech company, versus a car maker company or at least should, and I think, actually, that's clear.
But actually, some of the best ways of looking at this, I think, is that they sold 500,000 cars worldwide last year. So, that's based on their
market cap currently equivalent to roughly $2 million per vehicle sold, and perhaps that's out of date. Fine. So, they are aiming to sell close to a
million cars this year. So that would equate to a valuation of more than $1 million per car sold.
But what's actually interesting to me is the sort of questions about the memeness, perhaps the froth and the interest that's in this even -- we'll
be clear -- with the Morgan Stanley valuation, $5 billion worth of call options sold according to "Forbes" in the last few weeks.
The crypto connection here with the Bitcoin on the balance sheet, and we've seen the share price of Tesla and the Bitcoin price actually track quite
closely.
Can we perhaps tie some of this to froth and excitement in other products with what we're seeing?
LA MONICA: Yes, I think it is apparent, Julia, that there is some froth and perhaps a lot of froth in Tesla's stock for some of the reasons you
mentioned that don't necessarily have anything to do with the core auto business. Also, you know, going back to the core auto business, there are
other ways to look at this stock, and how it is perhaps more crazily valued than the rest of the industry, because, you know, Toyota, which is second
globally in market cap, there are a couple of charts, I know that you have that show that Toyota's vehicle sales, overall revenue and profits dwarf
Tesla.
But this is about momentum. It's about expectations for the future. And let's be honest, it's about Elon Musk. Everyone knows who Elon Musk is.
You're going to be hard pressed to find people outside of the auto industry, hardcore car junkies and maybe Wall Street traders that know who
the CEOs of GM and Ford and Stellantis, the company that you know, is now Chrysler essentially are.
I mean, we know who Mary Barra and Jim Farley are because, you know, it's our job to do so. But everyone knows who Elon Musk is in the same way that
everyone knows who Jeff Bezos and Tim Cook are. And I think there is a certain element of a cult of personality that is driving this stock higher
and higher.
CHATTERLEY: Yes, I mean, the bears would say as well, to your point, it is about future earnings potential, but you wait until the competition of some
of the other carmakers comes in with their electric vehicle offerings.
[09:15:08]
CHATTERLEY: The problem is, it is so expensive to be wrong in this stock that they've long since thrown in the towel.
Paul La Monica, thank you so much for that.
Let me bring you up to speed now with some of the other stories making headlines around the world.
Sudan's Army Chief and coup leader says the country's Prime Minister is safe, and he is blaming the civilian government for a political deadlock
that he claimed is pushing the country towards Civil War. On Monday, the military dissolved the country's power sharing transitional government and
arrested civilian leaders.
In Brazil, lawmakers could vote today to push a report to the Attorney General which condemns President Jair Bolsonaro's handling of the COVID-19
pandemic and other charges. Mr. Bolsonaro denies wrongdoing.
Meanwhile, on Monday, YouTube joined Facebook and Instagram in removing a video Mr. Bolsonaro posted last week in which he linked the coronavirus to
AIDS.
With none of the funfair usually seen in a Royal wedding, Japan's Princess Mako married her longtime fiance a short time ago and instantly lost her
Royal title. The marriage between a commoner and a Royal has been very controversial in Japan, and the couple plans to move to America.
Still to come here on FIRST MOVE, AstraZeneca's antibody cocktail, the company's American head on what could be a breakthrough drug to prevent and
treat COVID-19.
And AI keeps on trucking. Self-driving startup Embark says its tech could be at the wheel by 2024. We've got the company CEO, and we'll talk about
IPO plans, too.
Stay with us. It's all coming up.
(COMMERCIAL BREAK)
[09:19:23]
CHATTERLEY: Welcome back to FIRST MOVE. A terrific Tuesday on tap.
The U.S. majors with the Dow and the S&P set to rise further into record territory. The NASDAQ now less than two percent away from records with
earnings on tap later today from Microsoft, Alphabet, and Twitter.
GE and UPS, the latest U.S. firms are up with their 2021 outlook and in Europe, another banking blowout. This time it's UBS giving the best
performance on a quarterly basis in six years.
Having Wall Street sentiment, too, rising hopes that corporate tax hikes won't be included in the Capitol Hill's stimulus bills as Congress tries to
hammer out an agreement by the weekend. Business also hoping the White House will delay vaccine mandates until after the Holidays to avoid end of
year staffing chaos, too.
[09:20:10]
CHATTERLEY: And in the United States, AstraZeneca is ready to roll out a new weapon to both treat and prevent COVID-19, which could become a
lifeline for people unwilling or unable to use vaccines.
In trials, the company says its antibody cocktail, called AZD-7442 cuts the risk of severe disease or death by 50 percent when given to patients within
a week of first COVID symptoms. It says protection lasts for more than six months and it could protect people without a strong enough immune system to
benefit from a vaccine.
The treatment which consists of two injections is awaiting emergency use authorization by U.S. regulator, the F.D.A.
Ruud Dobber is Executive Vice President and President of Biopharmaceuticals at AstraZeneca, and he joins us now. Sir, fantastic to have you on the
show. What caught my attention there was potentially the use for this in prevention, but also treatment. Talk us through what your late stage trials
have shown.
RUUD DOBBER, EXECUTIVE VICE PRESIDENT AND PRESIDENT OF BIOPHARMACEUTICALS, ASTRAZENECA: Yes. Thank you so much for having me. And first of all, yes,
we are excited about the potential of this long-acting antibody for two reasons.
First of all, we all know that vaccines are highly effective, but unfortunately, there is still a very large population of patients who are
unable to mount a sufficient immune response, and you need to think about patients who have cancer, who are immunocompromised, and those patients are
at higher risk in order to develop severe COVID.
So, we have done two very important trials. First of all, the trial in what is called the prevention trial. We were able to show that patients who are
immunocompromised and other patients who are at high risk are delivering a response of more than 70 percent in those patients. So, they are prevented
in order to get a severe COVID. So that's an enormous advantage for those patients.
You need to realize that in many countries, up to two percent of the population is immunocompromised. And once again, those patients are cancer
patients, blood cancer patients, but also patients with multiple sclerosis and rheumatoid arthritis. So that's one very important part.
It is long acting, and that means that we have no data for up to six months, but we truly believe that we will show data up to one year. So, one
shot of this long acting antibody will be able to prevent that.
And then your second question about the treatments. Equally in the treatment study, we have shown that patients who are at high risk of
progressing to severe disease because they have comorbid, they have cancer, diabetes, or obesity are getting protected is 50 percent, and if you do it
in the first five days after the first symptoms, you are able to see that the efficacy is increasing to 67 percent.
So overall, I think a very exciting data set in order to help so many patients around the world who are not able to mount an effective immune
response by vaccines.
CHATTERLEY: And it's tough when we're talking about using it as a preventative for COVID-19 to compare with other vaccines on the market,
including your own vaccine, but just in terms of where you've challenged and how you've challenged this antibody treatment, you have been
challenging it in an environment where delta, the delta variant is operating.
So in terms of the earlier vaccines that only we're looking at alpha versus this today, where we're dealing with the delta variant operating around the
world, this is a good sign, too.
DOBBER: Absolutely, it's a very good sign and on the basis of diversity of experiments, we have good hopes that that our long acting antibody is very
effective against all the variants of concern.
So in that sense, certainly effective against the delta variant and that will bring a lot of hope to the vulnerable populations around the world in
order also to make sure that they are safe versus a COVID-19 infection.
CHATTERLEY: Can you explain as simply as possible, she says with a smile, the difference in the science here because you have explained for those
that might be immunocompromised that this could be an alternative option, potentially if it gets the authorization.
But there are vaccine skeptics who are looking at the vaccines that have been developed around the world and saying, I'm afraid of the science, I'm
afraid of the long term consequences. How might this be a better option for those people?
DOBBER: Yes, so first of all, we have done the study because we would like to help the most vulnerable people. But for those who are reluctant in
order to get the vaccine, this could be an option because the vaccine is based on the fact that the immune system itself will produce antibodies. Of
course, you need to be relatively healthy in order to mount an immune response.
[09:25:10]
DOBBER: Well, the antibodies almost instantly give you the protection you would like to see. So there is no need to wait for a booster injection,
instantly, you will get neutralizing antibodies that will protect you from COVID-19. So it could be an option, of course for those people who are
reluctant in order to get a vaccine.
But equally, I also would like to take the opportunity that overall, the vaccines available are highly safe and very effective. And we also need to
realize that there are so many vulnerable patients in the world that they deserve, of course, this potential long acting antibody as well.
CHATTERLEY: Yes. You make a very good point. And I think it comes down to, unfortunately, cost, too. What's the relative cost of this antibody
cocktail versus we can use your vaccine as a comparison, your vaccine?
DOBBER: Yes, first of all, we have a very clear ambition to make our long acting antibody available to as many people as needed. But it's also fair
to say that you cannot compare a vaccine versus, in this case, a long acting antibody. The number of doses we can produce of the long acting
antibody are tiny compared to the enormous number of vaccines we are producing on a daily basis.
CHATTERLEY: How tiny is it?
DOBBER: Let's say you are talking about millions versus billions or hundreds of millions with the vaccine. So, we need to realize that there is
a substantial difference in the number of doses we can produce regarding the long acting antibody. But once again, for those people who are
vulnerable in order to get infected and who wants to return to a normal life, the long acting antibody can offer a very good solution.
CHATTERLEY: You didn't tell me how many multiple times the cost is of this antibody cocktail versus a vaccine, too. It is significant, I am assuming.
DOBBER: It is more expensive than the vaccine and AstraZeneca --
CHATTERLEY: How much more expensive? Can you give us any sense?
DOBBER: Yes. I'm not going to disclose because we are in active discussion with governments, including the U.S. government in order to make
arrangements, but be assured that we will make sure that everyone who needs a long acting antibody, that we will make that available to them.
CHATTERLEY: And talk to me about potential orders then. You mentioned, you're obviously in negotiations with the government. Can you give us a
sense of what you've seen already, assuming again, you get authorization on this?
DOBBER: Yes, let's start with the United States. The U.S. government has already ordered 700,000 doses upon the EUA. We are in the process of
hopefully getting the EUA in the next few weeks. There are rolling reviews underway elsewhere across the globe and we are an active discussion with
multiple governments in order to secure orders. But it's too early in order to speculate about the size of those orders.
CHATTERLEY: You mentioned safety as well, and you also mentioned safety on the vaccines, too. And I do want to get your context because I do think
this is important. The U.K. recently added an extremely rare nerve disease to the potential side effects for the AstraZeneca vaccine, and obviously in
these early stages with these vaccines, whether there is causation, correlation, no correlation at all. If there's any concerns, it will be
added to a list.
Can you provide data and context for this specific concern with regard to your vaccine, because it is important once again to address some of the
concerns and skepticism out there?
DOBBER: Yes, and an excellent question and you can be assured that for us, as a company, patient safety is clearly of the utmost importance, for
AstraZeneca, but also certainly for regulators. And overall, we are -- we are not so concerned that the side effect you are referring to is extremely
rare. Our vaccine has a similar safety profile to other vaccines, and that has been well recognized by regulators like the E.M.A., the W.H.O.
So in that sense, of course, we will have close monitoring of side effects and we continue to work with regulators around the world to closely monitor
the safety of our vaccine, but all in all, the safety aspects are important. We're monitoring that, but we're not highly concerned.
I'm always saying the side effects of COVID-19 infection are much, much worse than the side effects of what we have seen so far of our vaccine and
other vaccines.
CHATTERLEY: Yes, the comparison should be made between the vaccine and COVID. Sir, I will thank you for your time today. I will also thank you for
all your work and for all your team's work on producing these vaccines and the antibody cocktails, and please come back and talk to us when you have
news from the F.D.A.
Ruud Dobber there, Executive Vice President -- thank you, sir -- and President of Biopharmaceuticals at AstraZeneca. Thank you.
We'll be back after this. Stay with us.
(COMMERCIAL BREAK)
[09:33:21]
CHATTERLEY: Welcome back to FIRST MOVE.
U.S. stocks are up and running this Tuesday, and as expected, fresh all- time highs for the Dow and for the S&P 500 amid investor hopes that profits can rise even as economic challenges like supply chain issues, and
inflations mount. Goldman Sachs now warning that elevated shipping costs are set to last into the middle of next year, and that could put further
upward pressure on consumer prices.
Tesla shares meanwhile moving higher again after its milestone day on Monday when it became only the sixth firm in U.S. history to reach a market
cap of $1 trillion. Facebook now down around one percent. The company reporting strong overall Q3 results after Monday's closing bell even as the
firestorm of criticism over its corporate practices intensifies.
Let's just take a closer look at that Facebook earnings release. Revenue, profit, and user numbers continuing yearly growth in the double digits. The
company underlined its bet on the Metaverse for next year. We will break out the results of Facebook Reality Labs separately. Mark Zuckerberg also
mentioning that the company wants to invest more in products for younger users.
Joining us now is Roger McNamee. He is co-founder of Elevation Partners. He was an early investor in Facebook and adviser to Mark Zuckerberg. He's also
the author of "Zucked: Waking up to the Facebook Catastrophe."
Roger, always a pleasure to have you on the show. You and I can talk about the numbers, but we have the same conversation. So, I'm going to come back
to that.
I vividly remember you telling me that back in 2016, you went to Sheryl Sandberg and you went to Mark Zuckerberg and you said, guys, you've got a
problem and you have to get ahead of this. And I listened back to how Mark spoke on that conference call and earlier in the show I sort of referred to
it as denial. What do you make of his response in the face of what we've seen in the last 24 hours?
[09:35:15]
ROGER MCNAMEE, CO-FOUNDER, ELEVATION PARTNERS: Julia, I think Mark Zuckerberg has an enormous public relations problem. He has been very
successful for years at deflecting criticism by claiming a right to free speech. The problem is that the underlying business model of Facebook, we
bring three billion people onto one network with no boundaries and no safety net, then combine that with a business model that's based on
essentially promoting emotionally intense content in order to promote engagement, and then add into that the ability to target people with
extreme precision.
And the result is that an enormous number of ideas that have lived for years at the fringes of society, things like white supremacy, and anti-vax,
has suddenly been thrust into the mainstream and done huge damage.
And so there's really nowhere for Mark to go on this issue. He can attempt to deflect it, but I think the evidence that Frances Haugen provided is
unequivocal, and it is from Facebook's own internal research.
CHATTERLEY: I mean, he says -- Facebook says it's being taken out of context. To your point, and I mentioned this at the top of the show, it's
half the world. In terms of monthly active users, it's now 3.6 billion people around the world that are using one of these products, and we had
the outage of their products two weeks ago, where it felt like for small businesses, they couldn't operate.
Most of us were working at how we could call people. We had to go back to traditional forms. I mean, we've had so many examples of how powerful
Facebook have become. Are we at the point now, where for lawmakers, there is no choice?
MCNAMEE: I would like to think that's true, Julia, because the problem is not social media. The problem is this business model in the culture of
relentlessly pursuing profit at all costs. When companies like Facebook, and Google, and Amazon get to be the scale of a nation so that they act
like governments, the conflicts with democracy are unavoidable.
And we, as a country, are faced with a moment of truth. Either Congress and the courts are going to pursue their job, which is to basically protect
consumers or we're done, right? Because if you think about it, almost every major problem we have going on in this country is made worse by internet
platforms like Facebook. And we have need for something that looks like a Food and Drug Administration to ensure safety of tech products.
We need to have privacy so that people are not manipulated by corporations that know absolutely everything about them. And then obviously, as you
point out, we need some kind of competition regulation that makes sure that small businesses are not held captive to a single platform.
CHATTERLEY: Facebook just announced their earnings and said, look, we're spending $5 billion on safety measures, but we're going to spend $10
billion investing in augmented reality and that part of the business, which to me is quite fascinating. And actually investors continue to reward them,
one for monetizing in very dangerous ways, as you've pointed out with the algorithm and the way that actually eyeballs are generated, more eyeballs
are generated with extreme content.
I don't really see any sort of break here in terms of changing behavior for advertisers going to Facebook in small business cases because they have to,
because this is how they get access to consumers. Facebook, as you said, a profit maximizer in continuing to do this.
And you like to see, you will hope that this is a point where regulators step in to change things, but that takes time. It could be years, Roger.
MCNAMEE: And Julia, I think in the intro, we need the judicial system to do its job. One of the things that came clear from Frances Haugen's
releases is that Facebook has crossed some legal lines that create great jeopardy, for example.
I mean, think about it. There was a whole "Wall Street Journal" article that was about human trafficking. That is a clear felony and Facebook
knowingly allowed it to take place on its platform. There's a ton of evidence from the Frances Haugen files that Facebook knowingly did not do
everything it could have done to prevent Stop the Steal from turning into a violent insurrection.
We also know from other cases that where redactions were removed last week, that there's an antitrust case in Texas, the Attorney General of that state
is pursuing Facebook and Google for price fixing digital advertising. And the redactions seem to suggest a tremendous awareness of those two
companies that they are violating antitrust law, which is itself a violation and that is again a felony at the Federal level.
[09:40:04]
MCNAMEE: And so I think if we see the Securities and Exchange Commission pursuing the opportunities it has relative to disclosure and insider
trading, and if we see the Justice Department going after human trafficking, the insurrection, and the other aspects that have come up
there like antitrust, then I believe you're going to buy time for regulators to pass legislation to do what they need to do.
CHATTERLEY: Also the information that you provide to investors, surely, and how truthful you're being in terms of the impact that you're having
with investors. To your point, the last time we checked human trafficking, facilitating the drug trade was illegal. Does that go right up to Mark
Zuckerberg and to Sheryl Sandberg?
MCNAMEE: Well, there is a case in Delaware, where I believe six pension plans, including I think some state pension plants have sued Facebook for a
failure to properly disclose what was going on during Cambridge Analytica. The implication of which was that the stock sales made by the executives
were in fact in violation of insider trading rules.
And these things are really serious and it is incumbent upon the Securities and Exchange Commission to do an investigation, and if they find that the
evidence that has been revealed is correct, to actually pursue a case. And I do think that is, if you're going to have a rule of law, if you're going
to have a democracy, you have to enforce the laws, and you have to defend democracy and that's really the choice we're all faced with today.
CHATTERLEY: The benefit of having huge power and huge wealth, like a company like this is that you can afford to hire lobbyists. And I think
anyone who spent time in Washington, D.C. or Brussels knows the power of that kind of expenditure in the voices in ears. Care to imagine, Roger, how
much they're spending on lobbyists and how many people they've hired in Washington?
MCNAMEE: Yes. I mean, the answer is tens of millions of dollars for Facebook alone, but the industry, the Big Tech companies are the largest
spenders in Washington by a lot, and I believe that's also true in Brussels. And the one piece of advice I have for all governments outside
the United States is to pursue the aspect of this that is most appropriate for you.
So in Europe, privacy regulations, really are paramount, I think in the way people think about it. And the general data protection regulation has
proved to be grossly inadequate. They really need to think about banning the use of any kind of intimate data in third-party transactions. So think
about healthcare, location, financial, web browsing, applications use -- that kind of stuff, which is so intimate and allows manipulation.
You know, that's the kind of thing that any country can ban inside its borders. You don't need a coordinated response here. Because these
companies are so dangerous that each country has its own way of looking at it, and I would encourage them all to pursue the right course for them.
CHATTERLEY: Very quickly, as I was pouring over the information in the Facebook Papers this weekend, I was furiously texting using WhatsApp
calling my family back home using WhatsApp. The irony is not lost on me of the utility value to me personally, while I have this conversation, how do
you price those two things?
MCNAMEE: It's really hard. I mean, people ask me all the time, should I get off these things? And I say, look, if you're a small business, it's
really hard to get off of Facebook. If you're a rock and roll band, it's impossible to get off of Facebook.
And you know, WhatsApp is so important to people across borders, and the issue isn't the products themselves, it is the business model, it is the
culture of Facebook and companies like it which basically compromise the interests of the people who use their products constantly, and that's what
we have to stand up and defend.
CHATTERLEY: Yes, it is the externalities. The distinction is so important. Roger, always great to chat with you.
MCNAMEE: Thank you so much, Julia. It's always a pleasure to be on your show.
CHATTERLEY: Thank you. Roger McNamee, the former adviser to Mark Zuckerberg. Thank you.
After the break, another auto related IPO is being embarked upon, banking on an autonomous future for the truck sector propelled by shortage of
humans to get on board. The CEO of Embark is next.
(COMMERCIAL BREAK)
[09:46:48]
CHATTERLEY: Welcome back to FIRST MOVE. The world needs truckers and in the middle of a supply crunch, moves to speed up deliveries and make
logistics more efficient couldn't be more timely.
Well, these trucks are pretty unassuming on the outside, under the hood lies something quite radical. They are loaded with self-driving software
from Embark and with over 14,000 reservations on the books, it is in pole position to go public under a special purpose acquisition deal. And Alex
Rodrigues is the CEO and joins us now.
Alex, you have a lot going on. Let's start by explaining what Embark does and how the technology works.
ALEX RODRIGUES, CEO, EMBARK: Thanks. Good morning, Julia. Good morning, everybody.
Embark is a company that develops software for self-driving trucks. So, we started -- me and my co-founder, Brandon started this company back in 2016,
back when everyone was thinking about cars, and I think what Embark really does differently is bring a product that focuses on the highway driving
portion.
And so you have -- what you can think about is you have a local driver who works, for example, in Phoenix or in Houston that does the last mile into
the city center. Then you have a driverless truck that's able to operate on the freeway and operate 24/7 moving freight to do that intra city portion
that is currently so hard to fill where there's so much challenge on the demographics and the lifestyle of really finding the truckers for that
piece of the role.
CHATTERLEY: I mean, you've talked about greater safety and efficiency gains. Safety, because I'm assuming with this technology, you're hoping to,
in some way knock out human error. And I guess with efficiency, if you don't have a human in there, ultimately, you don't have to make as many
breaks, provided you've got the charge to keep going.
RODRIGUES Yes. I think the efficiency gains come from two places. The first one is simply the ability to improve sustainability and we think driverless
trucks can have about 10 percent better fuel economy from how they manage that driving. And then the second piece, and this is really significant, is
the ability to operate 24/7.
So in the U.S. today, a human driver is limited to 11 hours a day. A driverless truck can obviously operate 24, and so that ability to more than
double the uptime of our vehicles is a really unique opportunity, especially at a moment like this where a shortage of truckers is a really
key problem for the whole economy.
CHATTERLEY: How soon do you think you can have this technology on the roads?
RODRIGUES Yes. So we're moving very quickly on this. The goal is that we announced, I guess, about a week ago now, with a bunch of the largest
fleets in the United States, a reservation program with these partners where they're going to plan to roll out 14,200 trucks beginning in 2024.
And so today, we move freight, we actually have a small development fleet that operates in the U.S. Sunbelt. It moves freight for big brand names,
folks like HP or AB InBev. And sort of this next step that we're talking about now is working with some of the biggest fleets, folks like Knight-
Swift and Mesilla Valley Transportation who are putting in those orders and putting that roll out in 2024.
[09:50:06]
CHATTERLEY: So you used two terms there. You used reservations and orders. I mean, I read with their 1,400 -- sorry, 14,200 reservations, it gets you
40 percent of the way to your revenue targets for 2024, but I'm assuming that means that they convert into actual purchases, is that guaranteed?
RODRIGUES: Yes, so these are initially -- these are initially just reservations. They're not guaranteed at the outset. Really what they
represent is work that we've done with these partners where we've gone line by line through with the management teams, through the routes that they
operate. And these are partners that we are running pilots with today, and that we're moving freight for them and for their customers today.
And the next step for us and for them was really to lay out, how does this get rolled out? How many physical locations, how many trucks, how much
stuff needs to be reserved, so that we can achieve that rollout plan?
CHATTERLEY: What's the cost even per truck of applying this technology?
RODRIGUES: Yes. We believe that the incremental hardware cost ends about $50,000.00 on the truck and that's offset against there's about $600,000.00
to $800,000.00 of lifetime value by making the truck able to operate driverless.
CHATTERLEY: Yes, I was about to say that's net of wages, I'm assuming as well, if you're trying to employ several drivers to keep the vehicle going.
Interesting. So that sort of explains the reservations.
Can I ask how old you are, Alex?
RODRIGUES: I'm 26.
CHATTERLEY: How does it feel to soon become the youngest CEO on the NASDAQ? Because, you know, you started this, as you said back in 2016, you
were a relative baby and you've clearly not wasted any time. Do you even think about that? How does that feel?
RODRIGUES: I think obviously, we're really excited and I'm excited more to bring bringing Embark to the market and for the opportunity that this
represents, I think on the one hand, I'm obviously pretty young. On the other hand, I've been doing robotics for 15 years. So there really aren't
many people who've been doing robotics for longer.
And I think, it's always one of the convenient things about working in an industry that's pretty new, is that you can be very experienced pretty
early on.
CHATTERLEY: Yes. Wow is all I can say. What have I been doing with my life? I'm sure you've got a strong support team around you as well,
because, as you said, in a sort of nascent technology, you have more experience than probably the most people, but leadership is something you
grow into.
RODRIGUES: Yes. Absolutely. Right. I think actually, Embark has one of the best investor bases of anybody and an advisor group. We have folks like
Sequoia Capital who are probably the number one investor in the world right now sits on our board, the head of growth from Sequoia sits on our board,
the former Secretary of Transportation sits on our board, and we have an advisory group that includes folks like CEOs and executives from across
transportation that supports us in thinking about this stuff.
And so of course, one of the things you have to do well, in any situation, but especially when we're coming to such a brand new industry. And of
course, this will be my first time taking a company public, which I think is true for most people taking a company public, but certainly true for me.
We thought it was really important to have really excellent advisors and --
CHATTERLEY: Maybe just the first. Alex, great to chat with you. Come back and talk to us soon, please. Exciting times.
Alex Rodrigues there, the CEO of Embark. Great to chat with you.
You're watching FIRST MOVE, more to come.
(COMMERCIAL BREAK)
[09:55:53]
CHATTERLEY: And finally on FIRST MOVE, an American shapewear company that was started with $5,000.00 is now worth $1.2 billion. This, after the
private equity firm Blackstone took a stake in Spanx. She founder thanked her staff in a rather special way.
Sara Blakely gave them all first class tickets to anywhere in the world along with $10,000.00 to spend. Well, that won't put a squeeze on her new
bank account, but it was a great thought, I think, for her employees. We like that kind of leadership.
That's it for the show. Stay safe.
"Connect the World" with Becky Anderson is next, and we will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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