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Quest Means Business
Leaked Docs Show Facebook Struggling to Contain Toxic Influence; Erdogan Backs Off Threats to Expel Western Diplomats; Protests in Sudan after Coup, State of Emergency Declared; NBA Player's Pro-Tibet Post Sparks Backlash In China; FB Whistleblower: Regulations Could Be Good For Company; Tesla Hits $1 Trillion Market Cap After Hertz Deal. Aired 3-4p ET
Aired October 25, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:15]
ALISON KOSIK, CNN BUSINESS HOST: The Dow is on track to close at a fresh all-time high. Those are the markets and these are the main events.
Facebook under fire. Its earnings are minutes away as leaked documents pile the pressure on Mark Zuckerberg.
Tesla hits $1 trillion in market cap, thanks to a deal with Hertz.
And the NBA star, Enes Kanter says he cannot be bought as he takes China to task on Twitter.
Live from New York. It's Monday, October the 25th. I'm Alison Kosik, and this is QUEST MEANS BUSINESS.
Good evening. It's known for meticulously tracking your online existence; now, the tables are turned. Facebook is under the microscope tonight as an
avalanche of leaked documents raise serious questions about its future. And tonight, we're going to guide you through the Facebook Papers.
They say the company is struggling to maintain oversight of its own platforms, with some lawmakers saying regulation may be needed as a result.
They portray a global crisis with Facebook under fire from Ethiopia to Myanmar and Washington, D.C.
And there is debate about Mark Zuckerberg's leadership and his own future as CEO of the company. He'll face questions from investors tonight when
Facebook reports earnings just an hour from now. A consortium of 17 U.S. news organizations including CNN has begun publishing stories based on
these Facebook Papers.
They are internal company documents leaked by the whistleblower, Frances Haugen. They paint a picture of a company struggling to contain the forces
that the company itself has unleashed on society. Today, Haugen was testifying before British Parliament saying that Facebook's toxic influence
is currently spreading unchecked.
(BEGIN VIDEO CLIP)
FRANCES HAUGEN, FORMER FACEBOOK PRODUCT MANAGER: I have no doubt that the -- like the events we're seeing around the world, things like Myanmar and
Ethiopia, those are the opening chapters because engagement based ranking does two things. One, it prioritize and amplifies divisive, polarizing,
extreme content. And two, it concentrates it.
And so Facebook, comes back and says, only a tiny sliver of content on our platform is hate, or only a tiny sliver is violence. One, they can't detect
it very well. So, I don't know if I trust those numbers. But two, it gets hyper-concentrated in you know, five percent of the population, and you
only need three percent of the population on the streets to have a revolution, and that's dangerous.
(END VIDEO CLIP)
KOSIK: Facebook's problems truly go beyond borders. This is a map from the company in 2010. It shows how Facebook friendships span the world. Now, it
is becoming clear how the site's negative influence can spread the same way.
Beyond the interaction at the U.S. Capitol, CNN has reported on Facebook's role in fueling ethnic violence in Ethiopia. Francis Haugen has talked
about the same issue in Myanmar. And "The New York Times" has reported on Facebook struggling to monitor hate speech from its Indian users, and these
are just from day one of the documents being released.
I want to bring in CNN's Donie O'Sullivan. He joins me live now. Donie, you have been watching the hearing today before the British Parliament. I want
to hear what your takeaway is from Haugen's testimony and then of course, your takeaway from the documents that dropped today.
DONIE O'SULLIVAN, CNN CORRESPONDENT: Yes, that's right, Alison. I mean, I think what is really concerning for Facebook here is that Haugen is very
compelling. She is extremely articulate in how she lays out the problems the company has. And what we have seen in these documents is a focus on
placating really a lot of powerful people, a lot of powerful constituents, and people who use Facebook, particularly here in the U.S., but also around
the world. Have a watch.
(BEGIN VIDEO CLIP)
O'SULLIVAN (voice over): On January 6th, as the U.S. Capitol was being attacked, some Facebook staffers began to consider what role their company
might have played in fueling the lies that led to the insurrection.
One employee suggested Facebook had placated then President Donald Trump for too long as far back as 2015.
DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: Donald J. Trump is calling for a total and complete shutdown of Muslims entering the United
States.
O'SULLIVAN (voice over): "Never forget the day Trump called for a ban on Muslims entering the U.S.," a Facebook staffer wrote in response to a
Facebook executive on January 6th. "We determined that it violated our policies and yet we explicitly overrode the policy and didn't take the
video down. There is a straight line that can be drawn from that day to today. History will not judge us kindly."
MARK ZUCKERBERG, CEO, Facebook: We don't forget check political ads and we don't do this to help politicians, but because we think people should be
able to see for themselves what politicians are saying.
[15:05:08]
O'SULLIVAN (voice over): Facebook's CEO, Mark Zuckerberg faced intense criticism from Democrats in 2019 when he said Facebook would not fact check
politicians allowing people like Trump to pay to spread targeted lies on the platform.
Leaked internal Facebook documents revealed the company's own research showed that people trust information shared by politicians more than
regular users, making politician shared misinformation especially believable.
Facebook even ran a focus group of users in Chicago according to leaked documents, during which people told us that Facebook has a greater
responsibility for labeling the false content shared by political leaders than they do for ordinary users. But still, the company's executives stand
by their decision not to fact check politicians.
And last summer when Zuckerberg refused to act in a Trump post that threatened that looting in Minneapolis would lead to shooting, employees
pushed back, at least one person even left the company.
O'SULLIVAN (on camera): So, why did you quit?
TIM AVENI, FORMER FACEBOOK EMPLOYEE: I've seen a couple times now that Mark doesn't uphold his principles. Zuck has told us over and over that
calls to violence would not be tolerated on the platform even if they were by the President of the United States.
O'SULLIVAN (voice over): An internal Facebook memo in August 2020 noted Facebook's decision making on content policy is routinely influenced by
political considerations.
The documents were leaked by Facebook whistleblower, Frances Haugen, who first began providing documents to "The Wall Street Journal" earlier this
year. Haugen has filed a complaint about the company to the S.E.C.
O'SULLIVAN (on camera): Part of one of this whistleblower's disclosures to the S.E.C. is about this idea that the team at Facebook that works with
governments essentially, it has to keep governments onside, get involved in the content moderation decisions.
And from one of Facebook's own internal documents, an employee wrote, "Facebook's decision making on content policy is routinely influenced by
political considerations." If you could just explain this to us a little bit.
LAWRENCE LESSIG, ADVISER TO FACEBOOK WHISTLEBLOWER, FRANCES HAUGEN: This is an incredibly important issue. Facebook has engineers who are focused on
how to make the platform safe, and the public policy team will evaluate that and decide is this going to upset certain political forces? And are
they going to complain that we are trying to censor them?
And so this incredible sensitivity to the political perspective builds enormous frustration inside of the company. That's what the documents
reveal. These engineers saying, let us do our job. Stop manipulating what we're doing to keep a couple of politicians happy.
And what's astonishing here is to see the way Facebook has been played like a fiddle, especially by the conservative right.
(END VIDEOTAPE)
O'SULLIVAN (on camera): Now, Facebook, broadly is pushing back against these allegations being made by the whistleblower, Frances Haugen. They say
that the premise essentially of what she was saying that the company puts profits before safety before its users is not true. They say they are
investing billions of dollars in this and have tens of thousands of people around the world working on it.
But I mean, it is clear, Haugen here has the receipts, right? She's got the internal documents of Facebook, where the company itself, its own employees
are telling executives, there are major, major problems.
KOSIK: You know, this is the headline of just about every newscast here at CNN, and this is being called the biggest crisis yet in Facebook's history.
But the reality here, give it to us, you know, do you see anything changing at this company? Or could this be the nail in the coffin for Facebook?
O'SULLIVAN: I certainly don't think it's a nail in the coffin. I mean, I will say, we are one of the news organization of many, there are hundreds
of reporters at this point, I think looking through these documents, and there are some pretty horrific things in there, frankly.
But you know, we, many of us around the world we still use and love social media, and we know, of course Facebook, as we remembered a few weeks ago
when there was that outage for almost half a day, they also control Instagram, they also control WhatsApp, you know services, especially like
WhatsApp, which are critical parts of communication for people around the world.
So, it's not necessarily an easy thing to get away from. But we will see, I guess, you know, in these coming weeks and months if lawmakers on both
sides of the Atlantic and around the world are serious about regulating, and as they say cracking down on Facebook.
KOSIK: Okay, Donie O'Sullivan, thanks so much.
Frances Haugen says she is worried that Facebook isn't equipped to tackle problematic posts that aren't in English. She told Parliament that the
company wasn't investing enough in other languages.
(BEGIN VIDEO CLIP)
HAUGEN: I'm deeply concerned about their underinvestment in non-English languages and how they mislead the public that they are supporting them.
So, Facebook says things like we support 50 languages, when in reality, most of those languages get a tiny fraction of the safety systems that
English gets.
(END VIDEO CLIP)
[15:10:10]
KOSIK: Marietje Schaake is a former member of the European Parliament. She is now Policy Director at Stanford's Cyber Policy Center and she joins me
live. Great to see you.
MARIETJE SCHAAKE, POLICY DIRECTOR, STANFORD CYBER POLICY CENTER: Hi, good to see you.
KOSIK: So for all of Facebook's problems in the U.S., the accusations of it inciting violence, promoting hate speech, and disinformation, they are
actually much worse in the developing world. What can global policymakers do, if anything to rein in Facebook, since Facebook apparently can't police
itself?
SCHAAKE: Well, it certainly can't police itself and it is really important now with the latest revelations that a conclusion gets drawn, that we don't
wait for the next incident or scandal whether it's in the United States or elsewhere in the world, and that democratically, legitimately elected
leaders start doing their job.
It is time for accountability and for accountability to be matching the challenges of the outsized power of Facebook and other tech companies.
There needs to be more access to information and transparency.
I think one of the big takeaways of all the information that is now becoming public, thanks to the whistleblower, is how much we cannot
independently verify. And so the need for independent oversight should be a top priority for any Democratic lawmaker.
KOSIK: But will we actually see change this time? And especially, will we see change if the leadership remains the same? If Mark Zuckerberg stays at
the helm?
SCHAAKE: Well, it shouldn't depend on what the leadership of Zuckerberg or of Facebook is, frankly, it should be dependent on the leadership of
politicians. It is now time for Congress, particularly to overcome its differences and to look at the public interest of all Americans, and
indeed, as you rightfully pointed out, so many people who suffer because of this American company all over the world.
There is an under investment in making sure that there is not hate speech leading to violence in areas where English is not the main language. And so
many lessons that are now hitting home in the United States, have been seen very clearly, have been reported on, concerns have been expressed to
Facebook, and nothing has been done. I really hope that this time, it will be different.
And we should also not forget that in the European Union, there are many, many legislative steps taken. It is not like Washington is the only
legislative hub where change can come. We see Brussels taking many steps to make sure that antitrust, transparency, a gatekeeper responsibility, and
the role of tech companies in a democracy are more responsible.
KOSIK: I'm curious what you think about maybe Facebook crossing into sort of a legal question mark here, because what it is accused of, you know,
financial issues, human rights issues, incitement of war, sex trafficking, and the fact that Facebook apparently knew all these problems were
happening, but couldn't or wouldn't stop any of it, does this call into questionable legal activity now?
SCHAAKE: Oh, absolutely. And it is fundamental that the U.S. Department of Justice, the S.E.C. the F.T.C. also probe these allegations. I mean, these
are serious allegations. It's important that they get uncovered, that information that can only be obtained by these institutions, independent
institutions, is actually obtained, and that we get to the bottom of this and that there is accountability, whether it is for Facebook's executives,
whether it is in the form of fines, whether it is with the ultimate remedy of antitrust rules, through breaking up the company because there is no
competition and there has been a systematic purchasing of competitors.
There are many, many questions that deserve fundamental independent inquiry, and, of course, accountability for those who were responsible,
negligent, or just ignoring the rules, frankly. It's not like there are no rules on the book and it is important that not only the rules as they exist
get assessed, but also that we make sure that Facebook is not outside of the realm of many other sectors. You know, pharmaceuticals, cars, food, and
drinks. They're all assessed for whether these products and services respect public safety, public health, whether there is no illegal
discrimination against sensitive populations.
It is important that Facebook gets held to the same standard that frankly, we all get to.
KOSIK: All right, Marietje Schaake, thanks so much for your perspective.
And still ahead, the crisis in Sudan, world leaders denouncing the military coup that brings more instability to an already fragile nation.
(COMMERCIAL BREAK)
[15:17:20]
KOSIK: Turkey's currency has been paying a steep price after its President seemed to expel 10 Western Ambassadors. The lira fell to a record low
against the dollar Monday. It has since recovered a bit.
Over the weekend, President Erdogan said he had ordered the expulsions. The diplomats had called for the release of a jailed businessmen, an Erdogan
critic. The lira was already under extreme pressure. Banks there have been cutting interest rates even though inflation is soaring.
Ambassadors from the U.S., France, and Germany were among those declared persona non grata. But now Erdogan seems to have backed down from his
threat. CNN's Arwa Damon joins us live from Istanbul. Arwa, great to see you. I'm curious why Erdogan backed down here?
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it would seem at least from his perspective, Alison, that he is going off of tweets that
were put out by the United States and other countries that were among those 10 who signed this initial statement.
Essentially, we're seeing a potential severe diplomatic crisis being resolved over Twitter with President Erdogan stating that the tweets which
effectively said something along the lines of the countries were complying by this international convention that ensures that diplomats will not
meddle in the internal affairs of host countries. Erdogan viewing that statement as being sufficient.
He was telling other government leadership that effectively these 10 countries had been backing down and let's just take a step back as to
exactly what it was that caused this whole statement to come out in the first place.
Osman Kavala, a businessman and philanthropist detained back in 2017, accused initially of being part of the Gezi Protests that happened in 2013.
He was acquitted of those charges, released, only to be re-detained a few hours later, this time on charges alleging that he was somehow involved in
the failed 2016 coup.
Now, watchdog groups, human rights organizations have been saying that his detention is politically motivated part of the ongoing campaign by the
Erdogan government to do all that it can in its power to stem out voices of opposition and dissent, and this most certainly was not the first time that
these various different ambassadors from these 10 Western nations, including the U.S., France, and Germany have called for Kavala's release.
But it was the most public statement that was made jointly between all of them, and of course, naturally, President Erdogan, true to his character,
did bristle at that and of course, as we have been seeing repeatedly, the Turkish lira did take a hit from it.
[15:20:07]
DAMON: Because as you were mentioning there, the economy here has been struggling severely. The lira has been plummeting fairly rapidly, causing
great concern among the Turkish population, but also among international investors that have been growing increasingly wary about investing in
Turkey.
It does seem as if it has ever so slightly recovered from the impact that this potential diplomatic spat could have had on it, but it really doesn't
guarantee any sort of confidence when it comes to the Turkish economy.
Also worth remembering, Alison, that Europe is Turkey's largest trading partner. And so, when we look at it just in pure economic terms, this most
certainly is not a country that can afford any further blows to its economy. And I think a lot of people are pretty grateful tonight that it
seems like this current crisis has been resolved and that cooler heads have to a certain degree, prevailed.
KOSIK: Yes, but the unpredictability of Erdogan that could really, you know, rile the economy, obviously affecting the lira.
DAMON: Yes, that's right, and that is something that we have been seeing happening repeatedly in the past, especially when the lira has been taking
these significant dips. You know, some of the decisions that have been made, really decisions that have been pushed forward by President Erdogan,
this is very much his line of thinking when it comes to continuously cutting these interest rates, despite guidance by others, that that should
not be the move that Turkey should be undertaking.
There has also been a certain shaking in the confidence when it comes to how independent the Central Bank actually is. The Central Bank Governor has
been changed over three or four times in the last few years.
And so, Turkey is increasingly positioning itself, deliberately or not, as not necessarily being a safe investment when it comes to international
investors and the country's economy is so shaky right now that the vast majority of Turks are unable to afford today, things that they were easily
affording a year ago.
KOSIK: All right, Arwa Damon, thanks so much for all of that context.
The U.N. is condemning the military coup in Sudan that has dissolved its power sharing government and the U.S. says it's holding back $700 million
in aid unless the civilian led transitional government is restored.
Sudan's Information Ministry says the Prime Minister and other civilian leaders have been arrested. The U.N. Secretary General is demanding their
release.
Protesters in Khartoum have been denouncing the coup and the military's state of emergency. At least three protesters have been reported killed
after soldiers opened fire. This is just the latest hardship for Sudan since South Sudan gained its independence a decade ago.
Sudan lost oil revenues that were a crucial source of government income that contributed to inflation and hurt economic growth. South Sudan's Civil
War also damaged the economy and brought an influx of refugees.
CNNs Larry Madowo is in Nairobi, Kenya for us tonight. Larry, good to see you. You know this coup comes after months of mounting tensions between the
military and civilian authorities. Talk to us about how Sudan reached this point.
LARRY MADOWO, CNN CORRESPONDENT: The power sharing agreement, Alison, between the military and the civilians was always an uneasy marriage, and
it cracked very widely last month when there was an attempted coup that was blamed on forces loyal to the ousted President Omar Al Bashir.
But from the very beginning when he was kicked out of office in 2019 and this transitional arrangement came into effect, the marriage between the
military and civilians was never going to work out completely. So what they came up with is the Sovereign Council. It was led by General Abdel Fattah
al-Burhan who was the man on TV today declaring the dissolution of government, but it had some civilians in that administration, including the
Prime Minister, Abdalla Hamdok, who was a prominent economist who worked including with the I.M.F. before taking on this job, but he was under
pressure in recent days to declare -- dissolve the government and declare support for the military, and that is what eventually happened today with
the military grabbing power and taking control of Sudan, which appears to have aborted any kind of attempt to return this country to a civilian-led
democracy.
The U.S. now announcing that unless there is a return to that transition, it will be withholding $700 million that was meant to be helping midwives
development. This, a short while ago from the State Department spokesman.
[15:25:10]
(BEGIN VIDEO CLIP)
NED PRICE, STATE DEPARTMENT SPOKESPERSON: Military officials should immediately release and ensure the safety of all detained political actors,
fully restore the civilian led transitional government and refrain from any violence against protesters, including the use of live ammunition.
Any change to the transitional government by force risks assistance in our bilateral relationship more broadly.
(END VIDEO CLIP)
MADOWO: This military takeover incident today, Alison, was especially embarrassing for the U.S. because the U.S. Special Envoy for the Horn of
Africa, Jeffrey Feltman, just left the country hours before the military took over and completely went against everything they had committed to him,
their commitment to this democratic transition.
As we speak right now, we don't know the location of the Prime Minister, his wife, or many of these civilian members of the government who were
arrested this morning at the start of this coup.
KOSIK: Okay, Larry Madowo. Thanks so much for all that great reporting.
Now to the American pro-basketball player who is taking on China. Enes Kanter of the Boston Celtics is doubling down on his criticism. He wore
"Free China" shoes during a game against the Houston Rockets over the weekend. Last week, he wore a pair that said "Free Tibet," and he tweeted
"Xi Jinping, Chinese Communist Party, you cannot scare me."
Kanter has criticized Xi over Beijing's treatment of Tibet. His comments caused a TV blackout in China of all Boston Celtics games.
CNNs Patrick Snell is in Atlanta for us. You know, this is quite a predicament the NBA finds itself in, you know, having a difficult choice of
whether to censor one of its players, something that has caused backlash in the past. What are you hearing from the NBA?
PATRICK SNELL, CNN ANCHOR, WORLD SPORT: Yes, Alison, this is one that we're certainly keeping very close eye on indeed. Look, it's once again --
it's the NBA, isn't it? It is dealing with another incident involving China.
The Houston Rockets incident from a couple of years ago, that one comes instantly to mind. On that occasion, Daryl Morey, the then general manager
of the Rockets, he sparked controversy between the league and China with that tweet in support of pro-democracy protesters in Hong Kong. Morey
apologized. He then deleted the tweet, but would step down ultimately, a year later.
Now in response to that incident, just to give you some context here, at the time, we had Adam Silver, the NBA Commissioner saying in a 2019
statement, "It is inevitable that people around the world including from America and China will have different viewpoints over different issues. It
is not the role of the NBA to adjudicate those differences. The NBA will not put itself in a position of regulating what players, employees, and
team owners say or will not say on these issues. We simply could not operate that way."
Now, CNN has reached out to the NBA on this latest incident involving Kanter, no word back as yet. Just for a bit more context on the player
himself, 29 years of age, born in Switzerland, raised in Turkey, and a player, Alison who certainly used his platform before and clearly not
holding back once more again, having been vocal in the past in defense of various political causes, including criticisms of Turkey's President as
well.
KOSIK: And something tells me, this isn't going to be the last of what he has to say. But you know, it is hard to ignore that China is such an
important market for the league and at the same time, these are important issues that Kanter is speaking out about. How does the NBA balance all of
that?
SNELL: You know, they really are, Alison. You're spot on, and it's that balancing act, isn't it? The league, the sport of basketball as well, and
as you say, China is such an important market for the league dealing with that fine line between.
Here is the conundrum here, allowing social justice activism for its players and appeasing its massive and the lucrative Chinese market. I want
to get back to that Rockets issue and Daryl Morey there. What was the upshot of all that? Well, what do we have? We had several Chinese
businesses cutting ties with the rockets as a result.
The NBA coming under pressure from Chinese authorities, but overall big picture here, the league has spent years and many millions of dollars
investing in China, giving broadcasting rights away for free, bringing its stars over for preseason games as well, even helping to build courts.
But hold that thought and balance it if you like against the backlash to the Kanter situation. That backlash in China, I'll tell you what, Alison,
it was pretty much immediate, wasn't it? The Celtics official page on Weibo that was flooded with demands for the team to actually punish Kanter or
offer up a public apology, and then we had the popular Celtics fan page on the very same platform, what happened there saying, it would not be posting
updates from the team because of what they call a player's social media oversights.
All of that on top, of course, of what we're seeing now. The website for Tencent Sports indicating, no live streaming the upcoming Boston games. As
you say, this is ongoing. There's probably a lot more to come. We are following it every step of the way, of course, we are.
Back to you.
[15:30:13]
KOSIK: We will have yet another conversation very soon. Patrick Snell, thanks so much.
Facebook executives have told their staff there are more bad headlines on the way and they're also taking a swipe at traditional media companies in
the process.
(COMMERCIAL BREAK)
KOSIK: Returning to our top story. The Facebook whistleblower Frances Haugan says regulation could end up being good for the company long term.
She was speaking at a U.K. Parliament hearing on the day that several stories related to her leaked internal memos were published. She said
Facebook needed to realize that investing in safety was in its best own interest.
(BEGIN VIDEO CLIP)
FRANCES HAUGAN, FACEBOOK WHISTLEBLOWER: I think there is a view inside the company that safety is a cost -- a cost center. It's not a growth center,
which I think is very short term and thinking. Because Facebook's own research has shown that when people have worse integrity experiences on the
site they're less likely to retain. I think regulation could actually be good for Facebook's long term success because it forced Facebook back into
a place where it was more pleasant to be on Facebook.
(END VIDEO CLIP)
KOSIK: Facebook has warned its staff there will be more bad headlines in the days ahead. The company's vice president took a dig at news
organizations while defending Facebook's record. And a memo to staff, Nick Clegg said social media turns traditional top down control of information
on its head. In the past that public discourse was largely curated by established gatekeepers in the media who decided what people could read,
see and digest.
Social media has enabled people to decide for themselves, posting and sharing content directly. This is both empowering for individuals and
disruptive to those who hanker after the top down controls of the past. Our chief media correspondent Brian Stelter joins me now. What's your reaction
to that statement?
[15:35:05]
BRIAN STELTER, CNN ANCHOR: Is there a -- is there a germ of truth to the idea that traditional media has seen its business model eroded by Facebook
and Google? And are there -- are there examples of resentment and bitterness? Yes. There's a germ of truth to that. But the individual
journalists who are digging through these papers trying to learn about Facebook's impact on society, are not thinking about the advertising
structure of the business.
They are thinking about what is true and what is real. And what can they learn about what's happening inside Facebook? So I think he's mostly
presenting a diversion there. But I think it is also true to say that, yes, there have been gatekeepers in media for decades and decades. Going back to
the days of the printing press and Gutenberg. I don't think anybody's arguing that we're in a better place now where some random QAnon non-
conspiracy theorist can create an account and draw lots of attention and spread dangerous and crazy conspiracy theories.
That is not an improvement on the days of gatekeeping a media. Certainly, it is good that anyone, you know, there are benefits to this technology.
But there are also big drawbacks. And that's ultimately what these Facebook papers are about. They are showing us the drawbacks, and most importantly,
Alison, they are showing us that the internal researchers and other Facebook staffers know about the drawbacks, they know about the damage
being done. That is why this is so significant.
KOSIK: Yes. I'm with you on that. You know, and it's become with this release of these documents and all this testimony, it's really become more
evident that extremism, misinformation. They're all part of Facebook's business model. And here in the U.S., we are seeing bipartisan support to
regulate Facebook but no one's doing anything. What's stopping them from taking action?
STELTER: You know, I think a cynic would say it's Facebook's lobbying money or it's big text lobbying money. I think that the picture is complicated,
and that is a part of the picture. But it's also about gridlock in Washington, that's much bigger than about Facebook. The gridlock in
Washington, that makes it almost impossible to get any legislation through both bodies of Congress, you know, we're going to see a lot that ends up on
the floor at the -- ends up, you know, in the trash bin at the end of this congressional session.
And perhaps this will be one of them. But, you know, as you said, it is true, there is bipartisan support. So, it is within the realm of
possibility that we do see action on section 230. And on how this technology impacts kids. There's another hearing in Washington tomorrow
about -- title, protecting kids online. If there is any room where there's actually agreement and potential for progress, it's going to be around
protecting kids and teens from the ill effects of these platforms.
KOSIK: Maybe that will be their starting point. Brian Stelter, thanks so much.
STELTER: Thank you.
KOSIK: The next group of people that Mark Zuckerberg has to worry about our Facebook's investors. Earnings are out after the close in just a few
minutes. Facebook shares shrugged off some early losses, they're actually up 20 percent year to date. That doesn't necessarily mean shareholders are
happy though. Compared to Apple and Alphabet. Alphabet, Facebook has lagged its big tech rivals over the past two years.
Paul La Monica joins me now. Paul, you know, I've been watching it's stopped today. Sometimes that's a great indicator of how investors feel
when they say these -- see these news headlines come out. But it was flat and now moving higher. Is there any ramification, you know, on Wall Street
with what Facebook is going for right now?
PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes. I think it's interesting, Alison, because as you point out, Facebook earnings are coming out after
the closing bell today and they probably will be pretty good. You're looking at your potential revenue growth of nearly 20 percent. Earnings per
share growth, you know, above 40 percent. So this is definitely a company that is not struggling to grow.
The problem as you noted, Alison, as I point out my story, Facebook stock has lagged all the other fangs plus Microsoft and Tesla over the past two
years. So while it hasn't been dead money by any stretch of the imagination, you would have been better off buying Amazon or alphabet or
obviously Tesla which is hitting a trillion-dollar market cap today. So Facebook does find itself trailing all of its big tech competitors.
And I think part of that could be due to this overhang. These concerns about all the negative headlines and the control that Mark Zuckerberg
exerts over the company. There might be a case to be made that having an independent chairman or a new CEO could help Facebook but Zuckerberg
because he has such a stranglehold on those voting shares. He would have to agree probably to any big moves for them to happen.
KOSIK: OK. Quickly, I want to mention Tesla because you've mentioned it. Hitting a $1 trillion-dollar market cap on Monday after ordering 100,000
Tesla's -- after Hertz actually ordered 100,000 Tesla's to up its electric rental fleet.
LA MONICA: Yes. Very significant news for Tesla. Elon Musk, you know, worth about $250 billion on paper because of this surge in Tesla stock. Tesla
shares up around 12 percent. I think it's worth noting too that obviously the Hertz news is good, but also you have Morgan Stanley's top auto analyst
Adam Jonas, who's one of the most influential on Wall Street, he boosted his price target on Tesla, too. So I think that also, he's helping to put
everyone in a good mood when it comes to Tesla stock.
KOSIK: I'll tell you what, once Hertz adds those Teslas to that fleet, I may just rent a car just to try that thing out for a while. I haven't yet
driven a Tesla. So I'm actually excited about that. Paul La Monica, thanks so much.
And that's QUEST MEANS BUSINESS. I'm Alison Kosik. I'll be back at the top of the hour as we make a dash for the closing bell. Up next, Living Goal.
(COMMERCIAL BREAK)
[15:58:23]
KOSIK: Hello. I'm Alison Kosik. It's the dash to the closing bell and we're just two minutes away. Stocks are heading for record highs on Wall Street.
The Dow shook off some early losses and is on track for an all-time high. The S&P 500 is also heading for record. The best gains of the day are
actually on the NASDAQ which is still off its own all-time high. And we are waiting for Facebook earnings. They will be coming after the closing bell.
Mark Zuckerberg may have to feel questions about the Facebook papers. Leaked memos show the company struggling to get a grip on everything from
ethnic violence to human trafficking being orchestrated on its site. Speaking to me on QUEST MEANS BUSINESS. The former European lawmaker
Marietje Schaake said major reforms are needed.
(BEGIN VIDEO CLIP)
MARIETJE SCHAAKE, INTERNATIONAL POLICY DIRECTOR, STANFORD CYBER POLICY CENTER: It is time for accountability and for accountability to be matching
the challenges of the outsized power of Facebook and other tech companies. There needs to be more access to information and transparency. I think one
of the big takeaways of all the information that is now becoming public, thanks to the whistleblower is how much we cannot independently verified.
And so the need for independent oversight should be a top priority for any Democratic lawmaker.
(END VIDEO CLIP)
KOSIK: Tesla has hit $1 trillion in market cap. The shares are about to close at a record high. It's the first carmaker to hit that mark. It comes
after Hertz agreed to buy 100,000 Teslas for its rental fleet. That's Tesla's biggest ever order from a single buyer. And that's your dash to the
bell. I'm Alison Kosik. The closing bell is just about to ring on Wall Street. And "THE LEAD" with Jake Tapper starts now.
END
