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Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason

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Speaker 1: Kelly on Bloomberg Radio. Don't Want So what of our

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Speaker 1: next guests picked this song and we'll get into why

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Speaker 1: about being evil? Um, And it speaks to a bigger,

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Speaker 1: broader theme this year, and it's been a theme this year,

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Speaker 1: and it's no dabt going to be a theme in

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Speaker 1: big tech, the regulation of it, what big tech stands for,

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Speaker 1: what they're all about, how they're impacting our world. Let's

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Speaker 1: get into it because Vinnie Carolino is back with us.

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Speaker 1: He's chief market strategist at Starvesant Capital Management, Global investment

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Speaker 1: strategist at Dafoux Redmount, and also with us is CNN

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Speaker 1: Global economic analyst Rona faru Har. She is also author

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Speaker 1: of the book Don't Be Evil, Hence the Evil, How

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Speaker 1: Big Tech Be Traded, its founding principles and all of us.

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Speaker 1: They're both in our Bloomberg Interactive Broker Studio. Nice to

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Speaker 1: have you both with us, UM, Jason and I talked

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Speaker 1: about this all all the time. First of all, talk

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Speaker 1: to us a little bit about the premise for your book. Yeah, well, Um,

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Speaker 1: you know I cover the markets and you just look

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Speaker 1: at the numbers and you see that basically about eight

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Speaker 1: of corporate value is living in ten percent of firms,

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Speaker 1: and they're the firms that have the most data, the

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Speaker 1: most intellectual property. So this is part of a massive

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Speaker 1: shift that's really the industrial revolution of our time. So

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Speaker 1: the economic story is there. The political story, I mean,

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Speaker 1: we've been living this now for two years. The fact

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Speaker 1: that the model of a Google or Facebook in particular

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Speaker 1: is highly targeted advertising. It's about targeting us down to

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Speaker 1: the individual. But that split society. I mean, it comes

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Speaker 1: with side effects. It comes with a lot of great value,

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Speaker 1: but it comes with side effects. Then there's the brain science,

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Speaker 1: the social issues, and you know, to be honest, I

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Speaker 1: got into this topic in some ways for a personal reason.

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Speaker 1: I came home one day, I was looking at a

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Speaker 1: credit card bill and there were all these tiny charges

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Speaker 1: dollar ninety three dollars. I thought, my god, I've been hacked,

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Speaker 1: and then I realized, my ten year old son has

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Speaker 1: my passwords. Turns out he had racked up nine dollars

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Speaker 1: in a supposedly free online soccer game that was tracking

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Speaker 1: him and selling him in app purchases. And I thought,

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Speaker 1: you know, as a mother, I was horrified, But as

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Speaker 1: a as a business journalist, I thought, I want to

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Speaker 1: know everything about this. Yeah, so Thenny come on in here,

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Speaker 1: because as ron is so wisely noted at the top,

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Speaker 1: I mean, this is a business story front and center.

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Speaker 1: And for investors, what's not to love about tech? I mean,

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Speaker 1: Carol just went through the numbers at the close of

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Speaker 1: how well these big tech stocks have done. Investors have

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Speaker 1: made a ton of money here. Fair missing out too

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Speaker 1: if you don't chip on the on the investment training here. Sure, absolutely,

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Speaker 1: I think I think the listeners investors should know that

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Speaker 1: there is an investment paradigm here, uh, that they need

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Speaker 1: to dig a little bit deeper into and understand. Ronna

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Speaker 1: talks about it with the the targeted ads and the

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Speaker 1: revenue streams that are coming from from this surveillance capitalism

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Speaker 1: system that is going on. Uh. And it's interesting when

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Speaker 1: Rona mentions about that she was hacked, she thought she

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Speaker 1: might have been hacked. And as I begin to explore

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Speaker 1: this area thanks to Rona, that I realized that, yeah,

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Speaker 1: we're being hacked, but we're not being hacked in the

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Speaker 1: manner of you know, you would ordinarily think about it

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Speaker 1: that the drill down into our behavior. So you really

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Speaker 1: need to understand that it on on a whole range

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Speaker 1: of level. Well, we talked about the business we cover

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Speaker 1: this week about Google and the generals at Google. Right.

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Speaker 1: You know, for a long time, Silicon Valley wars a

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Speaker 1: badge of honor, kind of Washington hating them, and now

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Speaker 1: all of a sudden that their middle age. A lot

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Speaker 1: of these big tech companies, especially something like a Google,

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Speaker 1: you know, they want to be involved in those big

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Speaker 1: government contracts and they're doing so, but they've got a

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Speaker 1: lot of their employees not happy about it. This whole

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Speaker 1: idea of you know, not doing evil like this was

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Speaker 1: something that they held as part of their corporate culture

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Speaker 1: and now things are changing. Yeah, and it was always

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Speaker 1: baked into the business model, Frank, I mean, evil was

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Speaker 1: part of the business model. If you think that from

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Speaker 1: day one, I mean you go back to the very

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Speaker 1: first paper that Larry Page and Serge Brand, founders of Google, wrote. Um.

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Speaker 1: It had a section at the bottom that said, if

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Speaker 1: you monetize a big search engine with targeted advertising, the

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Speaker 1: interests of the users and those of the advertisers are

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Speaker 1: going to come into conflict at some point. And so

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Speaker 1: they actually advocated for an open search engine, maybe something

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Speaker 1: in the academic sphere. But um, you know, it's interesting

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Speaker 1: that he's making a fascinating point because this disruption is

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Speaker 1: not just about the four or five Silicon Valley giants.

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Speaker 1: It's coming to every business model. So one of the

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Speaker 1: things that I find so fascinating you just look at

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Speaker 1: the insurance industry. For example, you can now have sensors

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Speaker 1: in your house, in your car that will give you

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Speaker 1: a discount if you know, if you're taking care of

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Speaker 1: your plumbing um or you're stopping quickly, but you might

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Speaker 1: get a black mark if your kid is smoking weed

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Speaker 1: in the bedroom. What does that do? That disrupts the

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Speaker 1: entire insurance business model of pulled rit think about that.

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Speaker 1: That's coming to every industry. The the implications are really profound.

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Speaker 1: And so we've only got about a minute left in

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Speaker 1: this first segment. We're gonna keep you around for another

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Speaker 1: what's the biggest surprise to you writing this book? What

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Speaker 1: jumped out? You know, in some ways the fact that

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Speaker 1: it was always there, It was hiding in plain site.

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Speaker 1: You know that that paper And frankly, this goes to

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Speaker 1: my point. I mean, one of the side and one

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Speaker 1: of the social side effects of this high speed media

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Speaker 1: landscape that we're in is that people don't read as much.

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Speaker 1: And I gotta think that nobody read the initial paper

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Speaker 1: because we kind of would have known where we were

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Speaker 1: going to be. And we want to continue our conversation

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Speaker 1: still with us as Vinne Catalino, Chief market strategist of

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Speaker 1: It stuff Isn't Capital Management Global investment strategist to Faux

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Speaker 1: Red Mount and also still with us as ron book

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Speaker 1: is Don't be Evil, how big Tech betrayed its founding

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Speaker 1: principles and all of us. This is great for your

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Speaker 1: stocking stuffers this holiday season because big stock that's okay,

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Speaker 1: there's like this is like a must read because it

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Speaker 1: does um it's the story or it is and it

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Speaker 1: impact no matter what industry you said before the break.

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Speaker 1: You know, one of the things we need to get

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Speaker 1: into is China's role in all of this. Tell us

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Speaker 1: a little bit about that, where you see how that

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Speaker 1: plays in right well, this is the story, the the

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Speaker 1: economy story right now, tech trade wars. This is really

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Speaker 1: about China and the US going different ways in terms

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Speaker 1: of how the Internet is going to be governed, in

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Speaker 1: terms of strategic technologies, I keep hearing from a lot

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Speaker 1: of Chinese investors that they believe they're going to have

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Speaker 1: their own ecosystem. They've already got their own big tech

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Speaker 1: players Ali Baba, Tencent, But I do all those, but

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Speaker 1: that they are going to actually have their their own

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Speaker 1: supply chains, their own consumer brands. I mean, a company

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Speaker 1: like show Me is already doing better in some in

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Speaker 1: some areas than Apple in China. So this is a

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Speaker 1: big split coming, and it's really interesting. It's provoking some fascinating,

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Speaker 1: um uh, strange bedfellows in the US. You know, you

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Speaker 1: see a company like Google saying, well, you know, maybe

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Speaker 1: we should be a national champion here, um, you know,

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Speaker 1: teaming up with the Defense Department, uh, thinking about how

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Speaker 1: to kind of ring fence the the ecosystem in the US.

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Speaker 1: Same again with Amazon, they've tried to ring fence government purchasing.

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Speaker 1: My worry is the overall ecosystem, though. I worry that

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Speaker 1: you're going to end up with a scenario where four

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Speaker 1: or five big players have the entire pie, and that

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Speaker 1: doesn't work. We've got to make room for other other companies. Really,

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Speaker 1: so four or five players sort of connes that there

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Speaker 1: would be a monopoly Yeah, and yet we seem to

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Speaker 1: need a new definition for monopoly, right, because monopoly pertains

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Speaker 1: to price increases generally as a rule in an industrial economy,

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Speaker 1: but in this kind of surveillance, capitalistic information economy, that's

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Speaker 1: really not the case. Yeah, and you know that the

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Speaker 1: point about price is so profound because you're absolutely right

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Speaker 1: that the whole Chicago school, you know, as long as

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Speaker 1: prices are going down, everything's fine, doesn't fit when you're

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Speaker 1: you're not doing a transaction in dollars, You're doing it

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Speaker 1: in data. It's a barter transaction. So that's not a

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Speaker 1: that that's a very opaque market. And that's why you

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Speaker 1: have this asymmetry and this kind of superstar effect with

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Speaker 1: an Amazon or Google. They've got all the information. You

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Speaker 1: don't have any information. So I think we are going

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Speaker 1: to need some regulatory shifts to deal with that. So

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Speaker 1: as you sort of finished reporting and writing this, and

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Speaker 1: as you go out and talk to people, I mean,

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Speaker 1: as we've been saying, we're not just saying because you're

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Speaker 1: I mean, it is the story of our time. It's

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Speaker 1: incredibly timely. Are you more optimistic less optimistic? Have you

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Speaker 1: changed your own sort of behavior or your thoughts about

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Speaker 1: this through the process. Well, I absolutely have. I mean

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Speaker 1: I've done a digital detox. It was kind of actually

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Speaker 1: by force that I Um, last Christmas, I dropped my

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Speaker 1: cell phone on Christmas Eve was a company issued phone,

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Speaker 1: and I couldn't get a replacement, and it was like,

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Speaker 1: you know, going off cigarettes or something. For forty eight hours,

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Speaker 1: I was twitchy. I kept reaching in my pocket. So, um,

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Speaker 1: I do that regularly now. And I've actually cut down

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Speaker 1: the amount of times that I check email, which, by

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Speaker 1: the way, it takes you five minutes to reset every

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Speaker 1: time you interrupt. So your productivity, I mean, that's a

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Speaker 1: whole another topic. Lost product The productivity conundrum probably has

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Speaker 1: something to do with technology and the effects of these firsts. No,

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Speaker 1: I think it's a really good point, and you see

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Speaker 1: more and more advice saying, you know, check your emails

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Speaker 1: certainly you know a certain amount of time times to day,

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Speaker 1: not constantly letting it kind of interrupt your workflow. I

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Speaker 1: do wonder though, in terms of regulatory oversight, where it's

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Speaker 1: all headache. Well, there's there's two big schools of thought.

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Speaker 1: I mean, one is that, look, we can work within

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Speaker 1: the existing system and just make some small tweaks. The

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Speaker 1: other thought, and this is more of how the Europeans

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Speaker 1: are going, is we're going to need a really profound reshaping.

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Speaker 1: I mean, the Europeans are talking about public data banks,

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Speaker 1: you know, where you would be the public sector would

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Speaker 1: own this this data. But on the other hand, you've

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Speaker 1: got California coming in saying, hey, maybe we need a

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Speaker 1: digital Sovereign Wealth Fund, because at the end of the day,

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Speaker 1: if data is the new oil, you have to make

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Speaker 1: sure that that value can be shared. Well you can.

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Speaker 1: I just need something run a set earlier in regards

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Speaker 1: to uh, the capture of information and the and the

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Speaker 1: and to a patient of what is about to occur

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Speaker 1: and you know, dropping the phone, things of that sort.

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Speaker 1: One of the concerns that's been expressed has been whether

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Speaker 1: or not the machine learning will have accomplished so much

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Speaker 1: that it knows what you're going to do and anticipation

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Speaker 1: of and therefore it isn't you have free will you don't? Yeah,

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Speaker 1: it really does come down to that, It really has.

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Speaker 1: It has a definitely Yeah that's correct as a matrix

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Speaker 1: feel to it. For sure. It's a whole other level like, yeah,

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Speaker 1: I think I think we just go back and think

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Speaker 1: we just went into the matrix. All right. Thank you

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Speaker 1: both so much. We really really appreciate it. Rana Fuhar.

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Speaker 1: The book is Don't Be Evil, how Big Tech portrayed

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Speaker 1: its founding principles and all of us. Uh. It is

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Speaker 1: a must read. It's incredibly thought provoking. It will spur conversations,

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Speaker 1: probably spur some different behavior as well. Has given us

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Speaker 1: a lot to think about our thanks as well to

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Speaker 1: any Catalina cheap market strategies, first Ice Capital Management and

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Speaker 1: of course global investment strategies over at defaut Red Mount