Return to Transcripts main page
Quest Means Business
Washington Versus Silicon Valley; Senators Follow Donald Trump's Lead By Calling Out Google; Argentina Is Taking Increasingly Dramatic Measures To Rescue Its Economy; This Week, Prime Minister Justin Trudeau Accused The U.S. Of Trying To Dismantle Controls On U.S. Dairy Entering Canada; Russia's Foreign Minister Warns The West Not To Play With Fire In Syria; Nationalists' Rally In Germany Ends Peacefully; China Hits Back At Trump Tweets On U.S.-North Korean Relations; French Actor Gerard Depardieu Faces Rape Allegations In Paris; John McCain To Be Flown To Joint Base Andrews After Arizona Ceremony; Joe Biden Pays Tribute to McCain At Senator's Arizona Service; Apple To Unveil New iPhone On September 12; Apple Reportedly Working On Smart Glasses For 2020; Apple Confirms Buying Akonia Holographics; Warren Buffett's Company Buys Up More Apple Stock; Campbell Soup Ditching Fresh Foods International Brands; Kalashnikov Unveils Electric Concept Vehicle; VW Struggles To Meet New E.U. Emissions Rules; E.U.'s New Pollution Standards Come Into Effect September; E.U.: Willing To Drop Car Tariffs If The U.S. Follows Suit; Bloomberg: Trump Threatens To Pull the U.S. Out Of WTO If It Does Not "Shape Up;" Owners Of Dating App Grindr Announce IPO Plan. Aired: 4-5p ET
Aired August 30, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Oh, stop your whining, it wasn't going to last forever. The winning streak is over on Wall Street.
It's Thursday, the 30th of August. Tonight, it's Washington versus Silicon Valley. Senators follow Donald Trump's lead by calling out Google.
Argentina raises res rates to 60 percent. Yes, that number got your attention, as it faces an IMF emergency, and Grindr is looking for a match.
The gay dating app is going public. I'm Paula Newton and this is "QUEST MEANS BUSINESS."
Good evening. Donald Trump versus Google. The President is openly targeting one of the world's most powerful companies repeatedly accusing
Google of bias. Are these attacks signs of a storm brewing between Washington and Silicon Valley? We're probably about to find out. The
powerful head of the Senate Finance Committee has sent a letter of concern to Federal regulators asking them to consider the competitive effects of
Google's conduct.
Now, two other senators are fuming at Google because it's declined to send its CEO or its COO to a major hearing. Now, Facebook's Sheryl Sandberg and
Twitter's Jack Dorsey might end up sitting next to an empty chair, symbolic, with a Google name plate. Now, a new McLaughlin and associates
poll showed 65 percent of conservatives believe social media censors political ideas like theirs.
Now, a representative for some of the largest tech companies argues that's not - there's only no bias in any of this, those people actually are
provided an open platform for conservative voices other than on traditional media. Now, the Intranet Association is a trade group that lobbies on
behalf of major tech companies including Facebook, Twitter, and Google. A short time ago, I spoke to its CEO, Michael Beckerman and asked him why
there is zero transparency about how these companies prioritize the content that you and I see.
(BEGIN VIDEO TAPE)
MICHAEL BECKERMAN, CEO, INTERNET ASSOCIATION: I would say that on the internet, there's a lot more transparency on what you're seeing, why you're
seeing it, and any other form of communication or media that does that.
NEWTON: There is no transparency as to how these companies conduct themselves, whether it's Twitter, Google - Google is a particular problem.
We've asked them to come on this show. They refused to come here and actually tell us how this is done or show us how it's done. It seems to be
this big black box that no one can figure their way out of.
BECKERMAN: I disagree with that. Look, everything from TV to your newspaper, any kind of media form, you're making decisions every day on
what you're covering, how you're covering it, who's on.
On the Internet, literally anybody that wants to have their voice heard or anybody that wants to find any source of information that exists in the
world can do that very easily.
NEWTON: But that's not the point, especially when most of us have limited - not just limited time, but a lot of people have limited bandwidth. They
literally have limited speed. They are looking for the first and the easiest results on search.
BECKERMAN: And that's exactly why the Internet is a great tool for so many people and in the context of political speech, anybody who wants to have
their voice heard can reach their audience directly and particularly when you look at conservatives who for many years, and probably rightfully so,
have complained about standard corporate media entities blocking their ability to speak, they can do that on social media, particularly Twitter
and other services, where they can build audiences and have built audiences of millions and millions of people and then they're able to be picked up on
traditional media and it's been a fantastic tool, an open tool, a transparent tool for everybody.
NEWTON: But I don't think - but Michael, I don't think anyone is disputing that other than perhaps maybe the President, who, like you said, has used
the platform to win elections and then criticized the platform. Point taken. But what people want to know is the information that they get, how
is it served up to them and why and they are suspicious of the bias and now, Senator Orrin Hatch, who is close to Republicans, he is close to the
President has now - is asking the Federal Trade Commission to look into Google, at least, and perhaps that will lead to other investigations. What
do you think those investigations will find, if the Federal Trade Commission decides to take it up?
BECKERMAN: I think in particular, you will find that there's no evidence of political or conservative bias, and that the platforms that exist on the
internet are open and transparent for anybody to use on the right or the left and that's why they flourish and that's why so many millions of people
around the country and around the world have used it and you mentioned the President. He, frankly, has been one of the best users of social media to
reach his audience and he's been able to do it in an unfiltered way and certainly he's had a lot of complaints with media coverage and that's his
right to do so, but on social media, he can reach anybody that is interested in his message in an exact, precise way as he intends it, when
he intends it and without a filter and that's a very important thing for speech and democracy around the world.
NEWTON: But in criticizing the tech executives, he's really hitting a nerve. Why do you think people in general are so suspicious of the tech
companies that you represent?
[16:05:14]
BECKERMAN: Well, a couple of things. I mean, one, it is not in the business interest of any of the companies to pick one side over the other.
These platforms are for all Americans, all people around the world, and they make sure that the platforms are neutral in that way. And part of
what we're seeing here is actually a little bit ironic or interesting that people are using the platforms to complain about the platforms and so, in
the example of search and you can do a search of Trump news as he said and sometimes Fox News is the first thing, but also right up there are the
tweets complaining about the platforms and that's something that you can do on social media, you can do on the Internet, but really you can't do on
other programs or other forms of media and again that's an important distinction.
NEWTON: Okay, understood. I still would like to know why you're here representing - we're glad to have you, that you came here to represent
these companies. Why won't these companies come on programs like this more often, especially companies like Google? We did have Twitter on a couple
of weeks ago. Jack Dorsey, in fact, said that his staff was mainly left- leaning, even though he disputes the fact that his organization is in any way, shape, or form leaning left or right. But why won't these companies
come on to speak for themselves?
BECKERMAN: Look, the platforms themselves have no ideology and at any company, there are people within the companies that have right or left
leanings and that has no impact whatsoever on those companies or organizations. And you mentioned Twitter and Jack Dorsey, I mean, he's
going to be up there on Capitol Hill next week testifying in front of the Energy and Commerce Committee about this very issue, and I think that's
very important, and I applaud him for that and I applaud the committee for having him and that will shed some light on the practices of Twitter in
particular and how social media works and it's very important that we educate our policymakers and our more transparent and open about how the
platforms work and Jack Dorsey is doing that.
NEWTON: So you think it's a good thing these - this kind of a hearing, and I add that you have years of experience on Capitol Hill, and you know what
these hearings are all about.
BECKERMAN: Absolutely. And I think, you know, when you look at some of the hearings they've had over the last few months in particular, it's clear
that we, as an industry, do need to do a better job of educating policymakers and on the policymakers' standpoint, they have a lot to learn
as well about the platforms and so when Mark Zuckerberg testified, I view that as a very positive thing. Certainly it sheds to light a lot of
practices and actually, a lot of positive things that they know about.
NEWTON: I'm not sure it sheds a lot of light on anything, actually, which is why I would prefer that organizations like Google that you represent to
just take requests from media and answer some very direct questions.
BECKERMAN: Well, I'm sure your bookers do a fine job of getting people on the programs, and yes ...
NEWTON: They do indeed and still we get no, year after year, month after month. It's as if they're running some kind of secret society. I would
say to you that the viewers want to hear from Google. They want to hear from Twitter. They want to hear from Facebook more often and with more
substantive answers as to how they're doing what they're doing.
BECKERMAN: Companies have made statements on this and again, I think it is a very big stage, in particular, going up to Capitol Hill and the Energy
and Commerce Committee to talk about this issue, and I'm sure your network and many others will cover it and that's very open and people can read
about it and learn more.
(END VIDEO TAPE)
NEWTON: And we will be watching here on CNN. So, what is President Trump thinking in all of this? For some insight, Oliver Darcy has spoken to, in
fact, Steve Bannon, who is the former White House chief strategist. He advocated, in fact, to Oliver, that we should be breaking up these tech
companies. I was fascinated by your conversation with him and I guess the answer is, is this where Donald Trump is getting some of these ideas and
has been listening to Steve Bannon for months, really?
OLIVER DARCY, FORMER WHITE HOUSE STRATEGIST: It's unclear whether he's been listening to Steve Bannon recently, but we know that when Bannon was
in the White House, he was pushing these very similar policies and Bannon thinks that these companies are too big, that they are unregulated and he
wants government to come in, regulate them. He equated it to Teddy Roosevelt breaking up the trust. He says these companies are extremely
powerful, government should come in and break them up, regulate them and then he also wants to seizethe data from these private companies, put it
into a public trust run by an independent board of directors and then let people opt in and opt out of whether they share their data with this big
public trust.
NEWTON: In terms of where this will lead us, I mean, I was just saying to Michael there from the Internet Association, that Orrin Hatch has now
written a letter. Now, he's written many letters about Google and other search engines. They are very - they do not trust the tech companies. We
keep saying no. Regulation is unlikely. It's impossible, and yet, is it not a question mark for these companies right now as they appear before
Congress?
DARCY: I think it's certainly a question mark, and I think people - the investors in these companies are wondering what's going to happen in
Congress. The companies for themselves, they've been really reaching out to Republican officials ever since the new administration came into
Washington.
There was a "New York Times" article, for instance, about Google's outreach to the administration to Republicans in Washington because I think they do
realize that it is possible that there could be regulation implemented on their businesses. Whether that happens, it's unclear.
Right now, I think it's still more of a campaign issue for these guys. They know that this excites their base that gets them into a frenzy. It
brings them out to vote.
[16:10:10]
DARCY: But that could very well to regulation on their businesses and that's something that the companies are probably very worried about.
NEWTON: Yes, they should be worried about it. In the sense that investors are watching carefully. I mean, to give Facebook some credit, the
investors actually blamed them, saying Facebook has actually cut into their profits by trying to deal with this issue. Do you think, though, that all
along, this is just kind of an evolutionary thing?
I mean, Steve Bannon was going on about putting them into a trust, as I said, he's from Goldman Sachs, he was acting like he was the head of some
socialist party, talking about we need control of the data. That's what he is saying.
DARCY: But when I talked to him, he said that this is an issue that the left and right can agree on. He thinks that this is an issue that can pull
Bernie voters into the Republican Party or at least into - behind the Trump agenda and I think that's something that's key. He knows this is a
campaign issue. He says that it's not probably going to be the hot button issue during the 2018 election, but come 2020, he thinks it's going to be
a key domestic issue and he wants to position the Republican Party and the Trump administration behind being skeptical and being against, effectively,
these tech companies saying they're too powerful, they need to be reined in.
He called the executives, he specifically called the executives and said they're evil, and that there's no doubt about it. He called them liars,
and really harsh rhetoric from someone who was the chief adviser to a Republican president. It's really actually stunning to see them move
against private businesses in this way
NEWTON: Yes, he called them sociopaths. I mean, it's stunning stuff. One thing you're absolutely right about and he is, left and right, right?
They're both going to be interested in these hearings. It doesn't matter the political spectrum, the full spectrum will be listening in with us.
DARCY: And I think there are read concerns, too. People do have real concerns about these tech companies and how much power they have, what they
do with their data. I do think, though, that Bannon's rhetoric and the president's rhetoric, often not grounded in reality so there's a
conversation to be had. I'm not sure this is really the one we want to have, but ...
NEWTON: Well, it will be very good viewing. I've already got the popcorn ready next week for these hearings, appreciate it Oliver. Now, desperate
times call for desperate measures. The world's highest interest rates just got even higher by a lot. We'll discuss Argentina's growing economic
crisis and the clock is ticking in Washington for Canadian officials to reach a trade agreement. We'll hear from the country's former deputy prime
minister, John Manley.
Oh, you've got to cry, Argentina. Argentina is taking increasingly dramatic measures to rescue its economy. First, it asked the IMF to push
forward financial assistance to the tune of $50 billion - by the way, it may not be enough.
[16:15:16]
NEWTON: Which they had already agreed to earlier in the year. Now the Central Bank has also raised the key interest rate so to say it's
significant is an understatement. It was already, by far, the highest in the world at 45 percent. Now it's gone to a staggering 60 percent. It
really does leave you speechless. The local currency, the peso, hit a record low despite that against the U.S. dollar after plunging by nearly a
fifth earlier Thursday.
Now, President Mauricio Macri acknowledged the challenges ahead.
(BEGIN VIDEO CLIP)
MAURICIO MACRI, PRESIDENT OF ARGENTINA (THROUGH A TRANSLATOR): Last week, there were new expressions highlighting the lack of confidence in the
markets, especially concerning our capacity to obtain funding for 2019.
(END VIDEO CLIP)
NEWTON: I am joined now by Alberto Ramos. He is the head of Latin American Research at Goldman Sachs. We are very lucky to have you here
during such a busy time, especially for Argentina. I mean, what is at stake here now for Argentina? I mean, I said earlier today, they're not
knocking on the IMFs' door, they are now pounding on it.
ALBETO RAMOS, HEAD OF LATIN AMERICAN RESEARCH, GOLDMAN SACHS: That's right. Well, this is a fundamental and a sentimental issue. There are,
you know, key macroeconomic imbalances, the fundamentals of Argentina are weak. It's a vulnerable country, very large external funding needs. The
root of it is the large fiscal imbalance. It's also sentimental because sentiment is very weak.
The external environment facing many emerging markets has deteriorated. They went to the IMF. It doesn't seem to be enough. They are either
looking for an augmentation of the program, a front-loading disbursements, the monetary authority has responded in a very decisive way. They hiked
rates to 60 percent. They increased reserve requirement in order to deliver a liquidity squeeze, but what we need now, it's a signal, a very
clear policy response from the fiscal authorities. They need to redouble the commitment to accelerate fiscal response and relation.
NEWTON: That fiscal response will come with pain on the streets throughout Argentina. It's interesting, because the advice seems to be, you know, you
don't waste a good crisis. You're actually advising the Argentinean government to go further with a lot of this fiscal changes in policy.
RAMOS: That is right. You are also absolutely right, this is painful from an economic, from a social, from a political standpoint, but it's not the
case that we are in an economic and financial haven and in doing so, we will transition into a financial and economic hell. We are already there.
We are just choosing the option and the path that is least costly for the Argentines.
This is part of the adjustment from the legacy of the populist experiment that preceded this administration. So, we needed to adjust and not doing
so, that would not stabilize markets. That would not anchor sentiment. I can guarantee you that the recession will be much deeper in not doing the
fiscal adjustment that is so badly needed.
NEWTON: But on the streets, the Argentines, it's a hard sell and they have been through so much already. What's gone wrong here? Mauricio Macri, he
was kind of ushered into office with such hope here and seemed to not just be saying the right things, but doing the right things.
RAMOS: That is right. This is a market friendly orthodox administration. This is a legacy issue. This administration did not create the imbalances
that they are trying to manage and correct. They bet initially on a very gradual strategy of fiscal adjustment that would take several years. They
were betting on the kindness of strangers, basically in the market that would be able to continue to fund this very large fiscal deficits four
years in a row. That backfired at some point.
They went to the IMF, which is another strength at the mercy of - at the kindness of the IMF. It doesn't seem to be enough now. That's why it is
important that the IMF just funds their problem. Now they have to work on their problem. The IMF cannot solve their problem. Only the Argentines
and their authorities can solve their problem, so they have to shrink the problem. They have to shrink the fiscal deficit so that the funding needs
are smaller and then they do not rely as much as they have been relying on access to the market or funding from the IMF.
NEWTON: I hate to even use the word, if we talk about default. We're not there yet, right?
RAMOS: We're not there yet. The country is not insolvent. The country is fiscally solvent but the country is highly illiquid and it's that severe
illiquidity continues for a while, this could undermine and compromise what is today a solvent country.
It's not necessary, but it's not necessarily the case that we're not going to get there. We don't expect to be the case, but we'll see.
NEWTON: Yes, and unfortunately, politics will infect the entire situation with an election next year. Thanks so much for coming in. Really
appreciate it as we continue to follow Argentina.
Now, as that peso plunged the stocks and Argentina rallied. The MAR index closed up 5 percent. It remains, however, down more than 11 percent year
to date. Now, over here in the United States, meantime, the Dow's winning streak as I was telling you has come to an end. A Bloomberg report that
President Trump wants to slap China with even more tariffs caused a sharp fall in the afternoon. That would be $200 billion in tariffs. The NASDAQ
and the S&P meantime also came off their record highs.
Now, the Canadian Prime Minister says a deal to rewrite the NAFTA trade agreement could be reached by the end of the week and in fact, I'm still
looking at my phone, within hours, they are hoping to have some kind of deal. The country's economy is also growing faster than expected driven
higher by an increase in exports.
[16:20:12]
NEWTON: Now, Canada's latest figures say GDP grew at an annual rate of 2.9 percent, that's lower of course than the United States with the reported
4.2 percent earlier this week. Now, both economies though are growing more quickly than most of their G-7 allies and that includes the Uk, Germany,
and Grance.
As we were saying, Canada remains adamant that it will only agree to a deal that is mutually beneficial. Former Canadian Deputy Prime Minister John
Manley told me it would be really optimistic for a deal to be reached tomorrow. Take a listen.
(BEGIN VIDEO TAPE)
JOHN MANLEY, FORMER DEPUTY PRIME MINISTER OF CANADA: Well, I keep hearing that things look good, but then good is kind of in the eye of the beholder.
We know that the bilateral agreement between Mexico and the United States contained relatively few details. We haven't seen a text. We have
essentially summaries, and if you want to be really optimistic, you'll think that tonight or tomorrow, that there will be an agreement in
principle that can be disclosed with some amount of information, but certainly not detailed information.
NEWTON: You know, some people have speculated that, look, given Mr. Trump's negotiating tactics, that perhaps they worked and that Canada's
negotiating right now with a gun to its head. Do you see it that way?
MANLEY: Well, I think they do have the ability to step aside if they wish. They've created the political basis for that. Of course, in Canada, it's
always - you know, there are two big rules. One is you shouldn't get too far from the United States, but the other is, you shouldn't get too close
to the United States.
So, Mr. Trudeau, in managing this, has to be able to present to Canadians that he got a good deal for Canada, that he stood up for Canada, and that
he wasn't steam rolled, and I think Canadians would support him if he announced that he didn't have a deal and he had to walk away.
NEWTON: That's a Canadian perspective. A lot has been made about the kind of leverage that really Canada should have had with Congress, especially
when it came to those key northern states, a lot of them also happened to be swing states. Did you see them as business friendly towards Canada? I
mean, I know you speak to a lot of your American counterparts.
MANLEY: Oh, absolutely. And by the way, we haven't played the Congress card yet. We're trying to deal with the administration on this, but if Mr.
Trump were to go to Congress with a bilateral Mexican deal without Canada, he might just face some trouble in Congress.
First of all, they didn't give him authority to negotiate a bilateral deal with Mexico, and secondly, many of those Congressmen and Senators from
border states on the north would recognize that this is not good for them, and they would stand in the way of it. So, I think that card has not yet
been played.
NEWTON: John, I've known you a long time. I know you're not a betting man, but if you had to put any odds on this deal right now, I mean, let us
know, in terms of - all the I hear is optimism, something that, frankly, we have not heard in months about this deal.
MANLEY: Well, again, I'd say it's a question of optimism in the eye of the beholder. For Canada, will it be better than what we had? No. I mean,
this is a make America great again, America first deal, and the President seems to have the view that you can only have one winner in any trade
negotiation.
So I think that we have to recognize that we'll be giving some things up and we'll be getting very little for them. Is it still important to have a
North American Free Trade Area? Yes, and will we benefit from that? Absolutely. I think the tricky decision for the Canadian government is, is
it so bad that we should walk away or is it good enough that we can say, let's get some certainty, close the door, and move on.
NEWTON: The Oval Office, Donald Trump, and the people around him will be really happy to hear what you're saying, John, because it sounds like,
look, their negotiating tactics have worked.
MANLEY: Well, they've worked because we're, you know, we're good players. We're the smaller economy, and we need a deal, but I think if they think
that they can force us to do things that are manifestly against Canadian interests, or that go too far or deprive us, for example, of dispute
resolution, that they will be disappointed.
(END VIDEO TAPE)
NEWTON: Now, that dispute resolution, having a referee for these trade disputes is one major issue. Another sticking point for negotiations,
though, is agriculture. This week, Prime Minister Justin Trudeau accused the U.S. of trying to dismantle controls on U.S. dairy entering Canada.
President Trump blames high tariffs for hurting U.S. farmers and American agriculture. CNN's Gary Tuchman visited a U.S. dairy farm to try and find
out if producers believe Mr. Trump can save their business.
(BEGIN VIDEO TAPE)
GARY TUCHMAN, CNN CORRESPONDENT: It's milking time for about 350 cows here in the Wisconsin Dells. At a dairy farm that has been in the same family
for generations. The Nelson family.
[16:25:16]
TUCHMAN: Donald Nelson is 87.
(BEGIN VIDEO CLIP)
DONALD NELSON, OWNER, WISCONSIN DELLS: For 70 years, I've been farming, since I got out of high school. This is really the toughest year that
we've ever had than I've ever had in that 70 years. It's just as bad as the depression of the '30s.
(END VIDEO CLIP)
TUCHMAN: He's not the only one who feels that way and President Trump blames Canada. Blasting that country and its Prime Minister for high dairy
tariffs, which he says are hurting U.S. farmers and killing U.S. agriculture.
Nells Nelson and Sarah Lloyd are Donald Nelson's son and daughter-in-law.
(BEGIN VIDEO CLIP)
TUCHMAN: When you heard Mr. Trump bash Canada so much for the problems of dairy farmers like you, what was your initial reaction?
SARAH LLOYD, DAIRY FARMER: I said, oh, come on, that's not the problem.
TUCHMAN: How long has this farm been in your family?
NELLS NELSON, DAIRY FARMER: My grandfather bought this farm in 1889.
(END VIDEO CLIP)
TUCHMAN: Jim Goodman and his wife, Rebecca, in Juneau county, Wisconsin don't blame Canada either. They say there's a very simple reason that
they're getting 40 percent less for their dairy than just a few years ago. So why is that?
(BEGIN VIDEO CLIP)
JIM GOODMAN, DAIRY FARMER: Too much milk.
(END VIDEO CLIP)
TUCHMAN: And America's dairy farmers and their cows keep producing even more. Some say they're doing too good of a job, creating an oversupply
that is dramatically driving down prices. Another issue? Canada has instituted supply management, a quota on what dairy farmers can produce,
which keeps prices there more stable.
(BEGIN VIDEO CLIP)
REBECCA GOODMAN, DAIRY FARMER: My reaction is "Yay to Canada for supporting their dairy farmers." I wish they would support us here in this
country.
N. NELSON: Well, I would like to see a quota system or a supply management program put in place, like in Canada.
(END VIDEO CLIP)
TUCHMAN: So, what it comes down to is this. These farmers and others we talked to do say there's plenty of blame to go around. But they also say
they heap so much blame on Canada for American farmers not making money with their cows is bull.
(BEGIN VIDEO CLIP)
PAM JAHNKE, DAIRY FARMER: Most people would know me as the fabulous farm babe.
(END VIDEO CLIP)
TUCHMAN: Pam Jahnke is a well known and respected agriculture journalist.
(BEGIN VIDEO CLIP)
JAHNKE: What about dairy? Well, that is also suffering with red ink declines.
(END VIDEO CLIP)
TUCHMAN: She says the problems for dairy farmers are not black and white and that it would help for the President to be more nuanced.
(BEGIN VIDEO CLIP)
JAHNKE: The oversupply situation we've got in the United States was precipitated by really good, productive farmers, but it was confounded by
closing that market off to Canada. So yes, some of the responsibility for our oversupply situation sits with that Canada relationship.
(END VIDEO CLIP)
TUCHMAN: The Goodmans would like to retire, but the market for selling their cows is very poor. As for the Nelsons ...
(BEGIN VIDEO CLIP)
TUCHMAN: Do you feel that a time could come where you have to give up this business?
N. NELSON: Well, I think the end of this year, if we can't see something in the future that looks better, and it looks, you know, as bad as it looks
right now, I would say the end of this year, we'd take a hard look at scaling back.
(END VIDEO TAPE)
NEWTON: Wow, that was valuable insight to what is a very complicated issue and our thanks to CNN's Gary Tuchman for his reporting. Now, after the
break, as Apple prepares to release its next iPhone, the oracle of Omaha, Warren Buffett, tells CNN why he thinks Tim Cook's company can stand the
test of time.
(COMMERCIAL BREAK)
[16:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, coming up in the next half hour of QUEST MEANS BUSINESS, Apple has
set a date for its next big event. You'll hear what Warren Buffett thinks about CEO Tim Cook. And what does Apple have in common with Dyson and
Kalashnikov? It's got nothing to do with guns and vacuum cleaners.
First though, these are the top news headlines we're following on CNN. Russia's foreign minister is warning the west not to play with fire as
Syria prepares to attack -- leave the last major rebel stronghold in Syria. Now, the UN's envoy to Syria says about 10,000 tariffs are in place, but he
said a major Russian back attack cannot be justified because there are also millions of civilians there.
A nationalist rally in east Germany has just finished in contrast the scenes from earlier this week, it was in fact peaceful and that the police
officers secured it with pretty -- with pretty much as many participants of police officers. Now they protested against Chancellor Angela Merkel's
immigration policy.
China is lashing out with a series of tweets by Donald Trump that appear to blame Beijing for derailing negotiations between the U.S. and North Korea.
U.S. President implied Washington's trade dispute with China is putting tremendous pressure on Pyongyang. China's foreign ministry said that kind
of logic is beyond comprehension.
French actor Gerard Depardieu is facing allegations of rape and sexual assault involving a 22-year-old woman. Paris prosecutors confirmed they're
conducting a preliminary investigation, Depardieu's attorney confirmed his client knew the woman in question but denied any criminal wrongdoing.
The late U.S. Senator John McCain has left Arizona for the very last time. His body is now being flown to Joint Base Andrews in Maryland, just outside
Washington. Former Vice President Joe Biden led Thursday's tribute, honoring the two-time presidential candidate and war hero, marking the
second of five days of a month.
(BEGIN VIDEO CLIP)
JOE BIDEN, FORMER VICE PRESIDENT OF THE UNITED STATES: Knew John, say, he hoped he played a small part in that story. John, you did much more than
that, my friend. To paraphrase Shakespeare, "I wish I might see his like again".
(END VIDEO CLIP)
NEWTON: OK, ask Siri to save the day -- do I have to? She never listens to me, never, just like my kid --
SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY NEWS CORRESPONDENT: She doesn't understand that Canadian accent.
NEWTON: September 12 is when Apple could review its next iPhone. The company has just released a cryptic e-mail, it's always a cryptic e-mail,
teasing to a mystery event at its headquarters two weeks from now. Samuel Burke as always will tell us more -- let me guess --
BURKE: A phone?
NEWTON: No, maybe more --
BURKE: So many people ask me, why does Apple choose this date, September 12th? It's because it's the day after the Jewish new year celebration, so
they can get as many people of as many faiths as possible to come and report on this event.
Let's just put up on the screen what analysts all around the world are expecting from these devices, plural. Because they're expecting three new
models called the Xs or Xs Plus for the larger model, all three should have facial recognition -- I'm not a huge fan, I have to take off my sunglasses
when I want to use facial recognition, something I didn't have to do.
[16:35:00] Well, don't roll your eyes at my first world --
NEWTON: You're whining --
BURKE: You didn't have to do that when you had the thumbprint. Eliminate the 3D touch technology, that really kind of hold down for an extra amount
of time on an app or a button to get another menu, most people don't even know it exists, which is like your face is saying.
Or and the cheapest device would be between $800 and $900, maybe I shouldn't use the word cheap when talking about $800 and $900. Remember,
people said folks are not going to fork out $1,000 for the iPhone 10, and of course they did -- also keep in mind there's the iPhone Xe which costs
about $350.
And there's a huge gamut for price points here.
NEWTON: I'm breathless talking about all these phones, because you know then, all the speculation is going to start about, you know, revenues --
BURKE: Of course --
NEWTON: And definitely --
BURKE: People get tired of Apple, talking about them so much. And the truth is they are the third biggest smartphone maker in the world. Huawei
and Samsung are now ahead of them, so there's a lot of competition for this market.
NEWTON: Which is a huge story into itself. Another big story is where these things are going next. You were trying to explain this to me,
augmented reality, virtual reality, it seems Apple is going down the road to augmented reality maybe --
BURKE: To demonstrate this point, I brought a virtual reality headset for you to put on this time, so just --
NEWTON: It will ruin my hair --
BURKE: Yes, we finally did it. This is virtual reality, Paula --
NEWTON: It wants -- who wants it over my mouth.
(LAUGHTER)
BURKE: What you're looking at right now, that would be virtual reality where you would be immersed in it. A lot of people think that's not the
path this is all going to happen, it's too heavy, that it messes up anchor's --
NEWTON: Yes --
BURKE: Hair on television --
NEWTON: Yes --
BURKE: Instead of augmented reality. Glasses where you might have some information on top of them, but they're normal glasses. And in fact, Apple
has just purchased Akonia Holographics; a Colorado technology company, we don't know for how much, and it looks like this is the path that they're
going to take.
So imagine if you have glasses, they look normal, not like what you just had on there and you walk past a restaurant, you want to know what the
reviews are in a little normal-looking piece of glass, not just heavy thing on your head like I am wearing there at the last Consumer Electronics Show.
Imagine that tells you the information, instead of having to look at your smartphone.
NEWTON: I want to know from you though as you go to all these shows and everything, where they think this is going next, because you pointed out
that in fact has tried this, it didn't go anywhere with the glasses, I mean, are they just kind of throwing anything at the wall at this point.
Let's say that they've got a lot of cash, throwing anything they can to see what will be the next big thing.
BURKE: Absolutely, and I think there's this gamut between virtual reality, the headset that you just had on and augmented reality. But I would argue
that really, the two best examples of augmented reality already in our lives are SnapChat; the crazy filters that your daughter puts on her face
with a SnapChat app, and now with Instagram's app that's using that more often, Facebook's technology as well as Pokemon Go.
That was where people were playing a game, using their phone to see something --
NEWTON: Oh, right --
BURKE: That's really in front of them --
NEWTON: Right --
BURKE: But they augmented that reality by putting the Pokemon on top of them. It's already happening, we're already using this in our lives, maybe
not for the best purposes ever, but maybe someday it could help a doctor performing surgery.
NEWTON: And we -- how it would be to have Sanjay Gupta come and show us some of the way that's applied. I guess in terms of where this is going
next though, Apple is going to fight this --
BURKE: "Bloomberg" has reported that they could have their own goggles, Apple, in 2020. And one would assume they're using technology from this
company that they just acquired in Colorado.
NEWTON: OK, all good information even though I'm never going to wear those things. Now, Warren Buffett is another man who seems very optimistic about
Apple's big review next month. Billionaire's company already owns plenty of shares and he says he's just bought even more.
Catching up with our Poppy Harlow at a fundraiser for a homeless charity, the Glide Foundation, Buffett shared the reason why he's so bullish on
Apple.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNN ANCHOR: Is there anything that Apple is doing right now that makes you think that it won't eventually lose its dominance, the way
that IBM did?
WARREN BUFFETT, CHAIRMAN & CHIEF EXECUTIVE OFFICER, BERKSHIRE HATHAWAY: That's the question I always have. I mean, I have BlackBerry, I mean, AOL,
you can name all kind slide rules, so typewriters. That's the question, I might do it.
Any time you have a magnificent castle on a hill, people are going to come and try to take it away for good, that's the market system and I love it.
HARLOW: But you wouldn't be buying it if you thought that castle was falling apart --
BUFFETT: I thought -- I think it's a hell of a castle. And I think that the knight in charge of the castle is terrific --
HARLOW: Talking about Tim Cook.
BUFFETT: Yes.
HARLOW: Why do you like him so much, why do you think he's so effective?
BUFFETT: Well, I don't know what's in his genes, right? But he is -- he is a very good manager. I mean, people worry just because he succeeded Steve
Jobs, I mean, everybody was saying, who is this guy? He had an amazing thing. Well, we know who this guy is, and he is a very good manager.
But it is a business where you have a whole lot of people figuring how am I going to take the castle away from you?
(END VIDEO CLIP)
[16:40:00] NEWTON: All right, I can't wait to see Poppy's full interview with Warren Buffett, that would be next week, you'll hear his views on the
mid-terms, the Democrats chances in 2020 and many more topics. That will air right here, Tuesday, on QUEST MEANS BUSINESS.
Now, Warren Buffett's old company Heinz was reportedly interested in buying Campbell's Soup recently. Now, Campbell has decided its future is not in a
refrigerator aisle. Now, the company has announced plans to sell its fresh food brands, and this is all things like -- I buy these, the Bolthouse
Farms smoothies.
But it is also selling the dips company Garden Fresh. It's also getting rid of its international business, cookies like Royal Dansk, and you know
those are the favorites, they're telling me here, Tipton. Instead, Campbell will focus on its core business.
Good old-fashion soup in North America, also snack brands like what everyone is going to have and back to school, those gold fish crackers.
Campbell shares have fallen nearly 19 percent so far this year. Earlier, I spoke to senior portfolio manager for Washington Crossing Advisors Chad
Morganlander.
I asked him why he thinks the company can recover despite it's $9 billion in debt.
(BEGIN VIDEO CLIP)
CHAD MORGANLANDER, PORTFOLIO MANAGER, WASHINGTON CROSSING ADVISORS: We're expecting that there will be leverage, their balance sheet, that they'll
sell certain properties that will absolutely be one of these drags on their earnings.
Because their fresh food business is actually been a negative drag on EPS. And perhaps 36 months from now, you'll start to see a modicum of
improvement within their top-line revenue growth. This company has been beaten down so badly with the stock price of roughly about $40 to $39 a
share.
That stock price used to be around $70 a share, that you could perhaps get a modest balance within the stock over the next 36 months, a dividend that
we believe is well covered. We also though like not only Campbell Soup, but we also like many other staple companies and food companies that have
been left out of this rally.
NEWTON: They definitely have been left out of this rally, that's for sure. Just before I let you go on Campbell Soup, do you think it could be a
takeover target at this price?
MORGANLANDER: Yes, you know, that's going to be the big question about what the valuation they will get. Because of that, enormous amount of debt
on their balance sheet, it becomes less of an enticing acquisition. Companies that are acquired, many companies that are acquired are not over
levered, they don't have a lot of debt on their balance sheet.
So they need to take care of this situation first. Also the concern is that many of the properties that they do own, the ones that they're
selling, they're not going to get a very fair price for it because the revenue growth there is just not -- doesn't have to get up and go, and the
operation of it is actually, really quite terrible at this point.
So we need to still see that a 36-month time horizon on this to perhaps get a good return on our investment.
(END VIDEO CLIP)
NEWTON: European Union is set to introduce new emissions rules this weekend and that is bad news for the largest -- for the world's largest
automaker. We'll have the details next.
[16:45:00] (COMMERCIAL BREAK)
NEWTON: Three household names, they're all with one thing in common. Fee, if you can absolutely love these trivial things on QUEST MEANS BUSINESS,
first, Dyson, known for making vacuums and hand-dryers, second, Apple, known for iPhones and MacBooks is worth more than trillion dollars.
Now, third, Kalashnikov, yes, I'm talking Kalashnikov; the Russian defense manufacturer famous for of course the AK-47 assault rifle. Yes, they all
want to make cars and join the electric car future.
Dyson is now investing another $150 million in its project, building a brand new research and testing center at a former military airfield in
England. And here's the latest electric car concept vehicle from Kalashnikov.
It's based on a popular Soviet-era hatchback, one analyst called the design pretty brave, yes, it's kind of brave. Meantime, Volkswagen warns it's
struggling to keep up with the new emissions rules in the European Union.
Jack Ewing has written a book on the Volkswagen scandal and he joins me now from Skype -- on Skype from Frankfurt. I have spoken to you before and I
am happy to have you on again because you've done so much investigative work into this issue.
Volkswagen now saying look, we just can't possibly meet these standards. When I hear this, I think to myself what you had told us before. This goes
so much deeper than failing emissions test. I mean, really, it's going to have to be a ground-up revolution for the company.
JACK EWING, AUTHOR: Yes, I mean, these new casters(ph), they're supposed to be closer to reality to give a better picture of what cars are actually
emitting. And this is something that Volkswagen can't get along with all the problems that it's had with its emissions.
So there's a huge bottleneck, there's delays in delivering certain models and it's definitely causing a lot of problems for the company when they're
still struggling with the emissions crisis.
NEWTON: What's at the heart of the issue here though. I mean, we're always hearing about the famous engineering that goes into cars like
Volkswagen, and yet, consumers may be left with the impression that actually they were scammed for many years because they do not seem to get
ahead of this.
EWING: Well, I think for a long time, the automaker say they didn't really want to invest in the emissions because they didn't see that as a selling
point. It was something they had to do, but nobody went into the auto dealer, and so they want a car with the greater emissions.
They looked at other things. So the car makers paid as little attention to that as they could. And now, they're having because of the diesel scandal,
Volkswagen is having to pay a lot more attention to it, and they're sort of caught off guard even three years after this whole thing came to light.
NEWTON: What's at stake here, not just for Volkswagen, but the whole European manufacturing sector as they try -- because that we've had other
scandals from other car companies as they try and come to grip with these kinds of emissions.
EWING: Well, I think you mentioned these other companies that are trying to get into the electric car business, that's really it. Is that there's a
shift to a new technology, self-driving cars, electric cars, and that's an opening for new companies to get into the car business, and we'll see how
many of these actually succeed.
But there's no doubt that Tesla with all its problems has really put a spear into the traditional car makers and they're trying to catch up fast.
And that's another part of Volkswagen's problem because they're dealing with these -- there's no emissions process, they're trying to get on --
they're trying to invest in electric cars, they're trying to do a whole lot of things in advance and it's great difficult.
NEWTON: And Jack, I know that you follow the economics of this very closely when it comes to European car manufacturing, the E.U. in its trade
disputes with the United States is now suggesting that they may -- they may bring down the auto tariffs.
What's that work there in terms of a long-term strategy if you're looking at E.U. policy in cars.
EWING: Well, the E.U. is -- basically they're giving in to pressure from President Trump. He's threatened to put tariffs, 25 percent tariffs on
cars coming from Europe or coming from Mexico where Volkswagen builds a lot of cars.
And that would be catastrophic for the auto industry because of all the other problems we were just talking about. So even though they are very
resentful of the pressure that they're being put under, they're showing signs of giving in.
[16:50:00] And the chief, the European Trade Commissioner Cecilia Malmstrom said today that they were willing to talk about zero tariffs on cars.
NEWTON: Well, it's like you said, it's exactly what the president wanted, and that would be a game-changer for the car market in Europe. Jack,
thanks so much, really appreciate it.
Now, just some news into CNN, U.S. President Donald Trump has been speaking to "Bloomberg" again, told them that he is prepared to take the United
States out of the World Trade Organization, that is, if the WTO does not -- in his words, "shape up".
Mr. Trump also said he has no regrets over appointing J. Powell as head of the Fed. And he said Attorney General Jeff Sessions would be safe in his
job until at least the November mid-terms. And we will have much more on that as soon as we get it.
Now, Grindr is going public, what are the gay-dating app's prospects? We'll tell you all about it next.
(COMMERCIAL BREAK)
NEWTON: One of the world's most popular dating apps for gay and bisexual men is set to go public. The Chinese owners of the U.S.-based Grindr have
informed the Shenzhen Stock Exchange that the board approved a plan for an oversees listing.
Now, they didn't provide any details on an exact location or time-frame as they would rely on regulatory approval, both from China and the perspective
stock exchange. Benjamin Cohen is editor-in-chief for "PinkNews"; a competitor of Grindr's digital magazine INTO, he joins us now from London.
I mean, what does this say in terms of these kinds of investments coming into their own, in terms of recognizing both the consumer and the revenue
power that some of these companies can have.
BENJAMIN COHEN, EDITOR-IN-CHIEF, PINKNEWS: Well, look, the LGBT market is huge. We think the "PinkNews" anyway -- I'm the chief executive as well as
the other (INAUDIBLE). Now, we're talking to an audience, potentially of a billion people.
Grindr does have tens of millions of users, this is a really important -- there are really important player in the overall LGBT market. The LGBT
market itself is huge and it shouldn't be underestimated. This is really exciting, the -- you know, big players in the marketplace is looking to go
public.
NEWTON: Do you think it's taken a long time in terms of the kinds of revenues that you would see come out of these businesses? Do you think it's
kind of about time, and do you think that these kinds of IPOs will give the entire sector a new momentum?
COHEN: Well, I think is -- I'm not sure necessarily whether going public is always right for an LGBT business. There has a publicly-traded LGBT
business before which is called Planet Al(ph), it owned a dating website, owns a number of magazines including "Out" in the U.S., and it didn't work,
it collapsed, and it went bust over ten years ago.
[16:55:00] So it has been tried, I think Grindr is really interesting because it has a quite significant revenue stream from subscription revenue
as well as advertising as well as its sort of media portfolio including INTO which is a small competitor of "PinkNews".
But I think it's a really interesting time in the market.
NEWTON: I'm really interested to hear you say though that sometimes it's not always right for an LGBTQ business to go public, why not?
COHEN: Well, we're not looking at that at "PinkNews" --
NEWTON: Yes, but beyond that.
COHEN: Well, I'm not sure necessarily if it's always the right place to run a business anyway. Look, I'm the CEO of another business of a similar
number of users to Grindr, and I wouldn't be looking to go public at this point. I think that we'll be looking to -- there's an advance just to be a
private company as opposed to being a public company.
That's the case whether you're LGBT or not. Also I think that it would be very interesting to see how the market reacts to a large LGBT player.
Being that, there may still be prejudice, we don't know. It also depends on which country and which market Grindr decides to IPO at.
You know, one is guessing maybe it's in the U.S., it might be here in London with the FTSE, I'm not sure it would work if it was going public in
China.
NEWTON: Yes, that is also an interesting facet to this entire story. I have to ask you in terms of how things have changed for the kind of
business that you're in and the years that you've been doing it. How fast has been the change in terms of getting investors interested?
COHEN: Well, look, "PinkNews" has actually never raised money. We've been able to greater really, large scale without having to close the market.
Whereas it happens, we are also going to market now, not for a public listing, but we're talking to investors privately because we're looking to
expand.
Actually, the last couple of years has seen massive rapid growth and interest in the LGBT sector. That's something that Grindr has benefited
from really from an advertising company, we're also benefitting from it. Lots and lots of more brands are really interesting talking --
NEWTON: Sure --
COHEN: To our community. As I said, we look towards the LGBT market, it's potentially a billion people worldwide, that is not an insignificant number
of people for brands and others to be talking about.
NEWTON: Yes, absolutely not, especially as new markets come on stream. Benjamin, thanks so much, really appreciate it. And that is QUEST MEANS
BUSINESS, I am Paula Newton, the news continues right here on CNN.
(COMMERCIAL BREAK)
END
