Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. Don't Want So what of our
Speaker 1: next guests picked this song and we'll get into why
Speaker 1: about being evil? Um, And it speaks to a bigger,
Speaker 1: broader theme this year, and it's been a theme this year,
Speaker 1: and it's no dabt going to be a theme in
Speaker 1: big tech, the regulation of it, what big tech stands for,
Speaker 1: what they're all about, how they're impacting our world. Let's
Speaker 1: get into it because Vinnie Carolino is back with us.
Speaker 1: He's chief market strategist at Starvesant Capital Management, Global investment
Speaker 1: strategist at Dafoux Redmount, and also with us is CNN
Speaker 1: Global economic analyst Rona faru Har. She is also author
Speaker 1: of the book Don't Be Evil, Hence the Evil, How
Speaker 1: Big Tech Be Traded, its founding principles and all of us.
Speaker 1: They're both in our Bloomberg Interactive Broker Studio. Nice to
Speaker 1: have you both with us, UM, Jason and I talked
Speaker 1: about this all all the time. First of all, talk
Speaker 1: to us a little bit about the premise for your book. Yeah, well, Um,
Speaker 1: you know I cover the markets and you just look
Speaker 1: at the numbers and you see that basically about eight
Speaker 1: of corporate value is living in ten percent of firms,
Speaker 1: and they're the firms that have the most data, the
Speaker 1: most intellectual property. So this is part of a massive
Speaker 1: shift that's really the industrial revolution of our time. So
Speaker 1: the economic story is there. The political story, I mean,
Speaker 1: we've been living this now for two years. The fact
Speaker 1: that the model of a Google or Facebook in particular
Speaker 1: is highly targeted advertising. It's about targeting us down to
Speaker 1: the individual. But that split society. I mean, it comes
Speaker 1: with side effects. It comes with a lot of great value,
Speaker 1: but it comes with side effects. Then there's the brain science,
Speaker 1: the social issues, and you know, to be honest, I
Speaker 1: got into this topic in some ways for a personal reason.
Speaker 1: I came home one day, I was looking at a
Speaker 1: credit card bill and there were all these tiny charges
Speaker 1: dollar ninety three dollars. I thought, my god, I've been hacked,
Speaker 1: and then I realized, my ten year old son has
Speaker 1: my passwords. Turns out he had racked up nine dollars
Speaker 1: in a supposedly free online soccer game that was tracking
Speaker 1: him and selling him in app purchases. And I thought,
Speaker 1: you know, as a mother, I was horrified, But as
Speaker 1: a as a business journalist, I thought, I want to
Speaker 1: know everything about this. Yeah, so Thenny come on in here,
Speaker 1: because as ron is so wisely noted at the top,
Speaker 1: I mean, this is a business story front and center.
Speaker 1: And for investors, what's not to love about tech? I mean,
Speaker 1: Carol just went through the numbers at the close of
Speaker 1: how well these big tech stocks have done. Investors have
Speaker 1: made a ton of money here. Fair missing out too
Speaker 1: if you don't chip on the on the investment training here. Sure, absolutely,
Speaker 1: I think I think the listeners investors should know that
Speaker 1: there is an investment paradigm here, uh, that they need
Speaker 1: to dig a little bit deeper into and understand. Ronna
Speaker 1: talks about it with the the targeted ads and the
Speaker 1: revenue streams that are coming from from this surveillance capitalism
Speaker 1: system that is going on. Uh. And it's interesting when
Speaker 1: Rona mentions about that she was hacked, she thought she
Speaker 1: might have been hacked. And as I begin to explore
Speaker 1: this area thanks to Rona, that I realized that, yeah,
Speaker 1: we're being hacked, but we're not being hacked in the
Speaker 1: manner of you know, you would ordinarily think about it
Speaker 1: that the drill down into our behavior. So you really
Speaker 1: need to understand that it on on a whole range
Speaker 1: of level. Well, we talked about the business we cover
Speaker 1: this week about Google and the generals at Google. Right.
Speaker 1: You know, for a long time, Silicon Valley wars a
Speaker 1: badge of honor, kind of Washington hating them, and now
Speaker 1: all of a sudden that their middle age. A lot
Speaker 1: of these big tech companies, especially something like a Google,
Speaker 1: you know, they want to be involved in those big
Speaker 1: government contracts and they're doing so, but they've got a
Speaker 1: lot of their employees not happy about it. This whole
Speaker 1: idea of you know, not doing evil like this was
Speaker 1: something that they held as part of their corporate culture
Speaker 1: and now things are changing. Yeah, and it was always
Speaker 1: baked into the business model, Frank, I mean, evil was
Speaker 1: part of the business model. If you think that from
Speaker 1: day one, I mean you go back to the very
Speaker 1: first paper that Larry Page and Serge Brand, founders of Google, wrote. Um.
Speaker 1: It had a section at the bottom that said, if
Speaker 1: you monetize a big search engine with targeted advertising, the
Speaker 1: interests of the users and those of the advertisers are
Speaker 1: going to come into conflict at some point. And so
Speaker 1: they actually advocated for an open search engine, maybe something
Speaker 1: in the academic sphere. But um, you know, it's interesting
Speaker 1: that he's making a fascinating point because this disruption is
Speaker 1: not just about the four or five Silicon Valley giants.
Speaker 1: It's coming to every business model. So one of the
Speaker 1: things that I find so fascinating you just look at
Speaker 1: the insurance industry. For example, you can now have sensors
Speaker 1: in your house, in your car that will give you
Speaker 1: a discount if you know, if you're taking care of
Speaker 1: your plumbing um or you're stopping quickly, but you might
Speaker 1: get a black mark if your kid is smoking weed
Speaker 1: in the bedroom. What does that do? That disrupts the
Speaker 1: entire insurance business model of pulled rit think about that.
Speaker 1: That's coming to every industry. The the implications are really profound.
Speaker 1: And so we've only got about a minute left in
Speaker 1: this first segment. We're gonna keep you around for another
Speaker 1: what's the biggest surprise to you writing this book? What
Speaker 1: jumped out? You know, in some ways the fact that
Speaker 1: it was always there, It was hiding in plain site.
Speaker 1: You know that that paper And frankly, this goes to
Speaker 1: my point. I mean, one of the side and one
Speaker 1: of the social side effects of this high speed media
Speaker 1: landscape that we're in is that people don't read as much.
Speaker 1: And I gotta think that nobody read the initial paper
Speaker 1: because we kind of would have known where we were
Speaker 1: going to be. And we want to continue our conversation
Speaker 1: still with us as Vinne Catalino, Chief market strategist of
Speaker 1: It stuff Isn't Capital Management Global investment strategist to Faux
Speaker 1: Red Mount and also still with us as ron book
Speaker 1: is Don't be Evil, how big Tech betrayed its founding
Speaker 1: principles and all of us. This is great for your
Speaker 1: stocking stuffers this holiday season because big stock that's okay,
Speaker 1: there's like this is like a must read because it
Speaker 1: does um it's the story or it is and it
Speaker 1: impact no matter what industry you said before the break.
Speaker 1: You know, one of the things we need to get
Speaker 1: into is China's role in all of this. Tell us
Speaker 1: a little bit about that, where you see how that
Speaker 1: plays in right well, this is the story, the the
Speaker 1: economy story right now, tech trade wars. This is really
Speaker 1: about China and the US going different ways in terms
Speaker 1: of how the Internet is going to be governed, in
Speaker 1: terms of strategic technologies, I keep hearing from a lot
Speaker 1: of Chinese investors that they believe they're going to have
Speaker 1: their own ecosystem. They've already got their own big tech
Speaker 1: players Ali Baba, Tencent, But I do all those, but
Speaker 1: that they are going to actually have their their own
Speaker 1: supply chains, their own consumer brands. I mean, a company
Speaker 1: like show Me is already doing better in some in
Speaker 1: some areas than Apple in China. So this is a
Speaker 1: big split coming, and it's really interesting. It's provoking some fascinating,
Speaker 1: um uh, strange bedfellows in the US. You know, you
Speaker 1: see a company like Google saying, well, you know, maybe
Speaker 1: we should be a national champion here, um, you know,
Speaker 1: teaming up with the Defense Department, uh, thinking about how
Speaker 1: to kind of ring fence the the ecosystem in the US.
Speaker 1: Same again with Amazon, they've tried to ring fence government purchasing.
Speaker 1: My worry is the overall ecosystem, though. I worry that
Speaker 1: you're going to end up with a scenario where four
Speaker 1: or five big players have the entire pie, and that
Speaker 1: doesn't work. We've got to make room for other other companies. Really,
Speaker 1: so four or five players sort of connes that there
Speaker 1: would be a monopoly Yeah, and yet we seem to
Speaker 1: need a new definition for monopoly, right, because monopoly pertains
Speaker 1: to price increases generally as a rule in an industrial economy,
Speaker 1: but in this kind of surveillance, capitalistic information economy, that's
Speaker 1: really not the case. Yeah, and you know that the
Speaker 1: point about price is so profound because you're absolutely right
Speaker 1: that the whole Chicago school, you know, as long as
Speaker 1: prices are going down, everything's fine, doesn't fit when you're
Speaker 1: you're not doing a transaction in dollars, You're doing it
Speaker 1: in data. It's a barter transaction. So that's not a
Speaker 1: that that's a very opaque market. And that's why you
Speaker 1: have this asymmetry and this kind of superstar effect with
Speaker 1: an Amazon or Google. They've got all the information. You
Speaker 1: don't have any information. So I think we are going
Speaker 1: to need some regulatory shifts to deal with that. So
Speaker 1: as you sort of finished reporting and writing this, and
Speaker 1: as you go out and talk to people, I mean,
Speaker 1: as we've been saying, we're not just saying because you're
Speaker 1: I mean, it is the story of our time. It's
Speaker 1: incredibly timely. Are you more optimistic less optimistic? Have you
Speaker 1: changed your own sort of behavior or your thoughts about
Speaker 1: this through the process. Well, I absolutely have. I mean
Speaker 1: I've done a digital detox. It was kind of actually
Speaker 1: by force that I Um, last Christmas, I dropped my
Speaker 1: cell phone on Christmas Eve was a company issued phone,
Speaker 1: and I couldn't get a replacement, and it was like,
Speaker 1: you know, going off cigarettes or something. For forty eight hours,
Speaker 1: I was twitchy. I kept reaching in my pocket. So, um,
Speaker 1: I do that regularly now. And I've actually cut down
Speaker 1: the amount of times that I check email, which, by
Speaker 1: the way, it takes you five minutes to reset every
Speaker 1: time you interrupt. So your productivity, I mean, that's a
Speaker 1: whole another topic. Lost product The productivity conundrum probably has
Speaker 1: something to do with technology and the effects of these firsts. No,
Speaker 1: I think it's a really good point, and you see
Speaker 1: more and more advice saying, you know, check your emails
Speaker 1: certainly you know a certain amount of time times to day,
Speaker 1: not constantly letting it kind of interrupt your workflow. I
Speaker 1: do wonder though, in terms of regulatory oversight, where it's
Speaker 1: all headache. Well, there's there's two big schools of thought.
Speaker 1: I mean, one is that, look, we can work within
Speaker 1: the existing system and just make some small tweaks. The
Speaker 1: other thought, and this is more of how the Europeans
Speaker 1: are going, is we're going to need a really profound reshaping.
Speaker 1: I mean, the Europeans are talking about public data banks,
Speaker 1: you know, where you would be the public sector would
Speaker 1: own this this data. But on the other hand, you've
Speaker 1: got California coming in saying, hey, maybe we need a
Speaker 1: digital Sovereign Wealth Fund, because at the end of the day,
Speaker 1: if data is the new oil, you have to make
Speaker 1: sure that that value can be shared. Well you can.
Speaker 1: I just need something run a set earlier in regards
Speaker 1: to uh, the capture of information and the and the
Speaker 1: and to a patient of what is about to occur
Speaker 1: and you know, dropping the phone, things of that sort.
Speaker 1: One of the concerns that's been expressed has been whether
Speaker 1: or not the machine learning will have accomplished so much
Speaker 1: that it knows what you're going to do and anticipation
Speaker 1: of and therefore it isn't you have free will you don't? Yeah,
Speaker 1: it really does come down to that, It really has.
Speaker 1: It has a definitely Yeah that's correct as a matrix
Speaker 1: feel to it. For sure. It's a whole other level like, yeah,
Speaker 1: I think I think we just go back and think
Speaker 1: we just went into the matrix. All right. Thank you
Speaker 1: both so much. We really really appreciate it. Rana Fuhar.
Speaker 1: The book is Don't Be Evil, how Big Tech portrayed
Speaker 1: its founding principles and all of us. Uh. It is
Speaker 1: a must read. It's incredibly thought provoking. It will spur conversations,
Speaker 1: probably spur some different behavior as well. Has given us
Speaker 1: a lot to think about our thanks as well to
Speaker 1: any Catalina cheap market strategies, first Ice Capital Management and
Speaker 1: of course global investment strategies over at defaut Red Mount