WEBVTT - Is China's BYD the Un-Tesla? 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes, Tim Stanobeck. We're here every day bringing 0:00:07.280 --> 0:00:09.840 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. 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Jim Ellis is Assistant Managing editor of Bloomberg 0:00:56.840 --> 0:00:59.000 Business Week. He's with us right now in the Bloomberg 0:00:59.040 --> 0:01:02.200 Interactive Broke Studio. Jim, how do how do when you 0:01:02.240 --> 0:01:03.960 think about a story like this, how does it come together? 0:01:04.000 --> 0:01:06.120 And we should note that UM it's available in the 0:01:06.200 --> 0:01:08.640 upcoming issue of Bloomberg Business Week Matters. I mean this 0:01:08.680 --> 0:01:12.479 came together because there was a lot of interest in UM. 0:01:12.560 --> 0:01:14.320 You know, there's obviously a lot of interest in e 0:01:14.400 --> 0:01:17.840 v S, a lot of interest in in Tesla and UM. 0:01:17.880 --> 0:01:19.840 You know, most people sort of think that the way 0:01:19.880 --> 0:01:23.040 Tesla has sort of developed itself is the is the 0:01:23.120 --> 0:01:26.240 model for UM, you know, auto companies of the future, 0:01:26.600 --> 0:01:29.520 and by D sort of stands in as an example 0:01:29.600 --> 0:01:31.760 of it doesn't have to be that way. I mean, 0:01:31.800 --> 0:01:34.880 b b D is not just a startup, and it's 0:01:34.880 --> 0:01:38.080 a very successful company. It's the largest EV maker in China. 0:01:38.480 --> 0:01:43.240 It's also the third most valuable by market cap auto 0:01:43.240 --> 0:01:46.800 company in the world, after Tesla and Toyota. But a 0:01:46.800 --> 0:01:49.120 lot of people here probably don't know it much other 0:01:49.200 --> 0:01:53.200 than that it's a big investment by who else, Warren Buffett, 0:01:53.600 --> 0:01:57.560 who bought into this company back in the you know, 0:01:57.680 --> 0:02:01.880 early two thousands and put in with two million dollars. 0:02:01.880 --> 0:02:05.440 It's now a stake worth eight billion dollars and um, 0:02:05.440 --> 0:02:08.440 this is a company very that believes in vertical integration. 0:02:08.600 --> 0:02:11.280 They've come in and they've said, you know, everybody's talking 0:02:11.320 --> 0:02:14.480 about chips shortages, and everybody's talking about battery deals. I mean, 0:02:14.639 --> 0:02:17.200 they make their own batteries. They're now the third largest 0:02:17.280 --> 0:02:20.560 maker of EV batteries in the world. They also make 0:02:20.720 --> 0:02:23.079 their own chips. They use them in their cars. They 0:02:23.080 --> 0:02:25.880 are probably going to be a battery supplier to Tesla. 0:02:26.080 --> 0:02:29.320 They're already a battery supplier to Toyota. I mean, this 0:02:29.480 --> 0:02:33.280 is a true, you know, vision of we should make this. 0:02:33.360 --> 0:02:36.240 They also, um, you know now have invested in lithium, minds, 0:02:36.280 --> 0:02:39.200 all the things you need for batteries. They are just 0:02:39.480 --> 0:02:42.320 very different. The other thing that's really different is that 0:02:43.280 --> 0:02:46.800 they are making cars for the sort of middle class 0:02:46.880 --> 0:02:50.519 person and that's that's a big market. But it's a 0:02:50.600 --> 0:02:53.320 very different approach. With the Tesla tests that came in 0:02:53.400 --> 0:02:56.639 and Tesla said they were doing Model three at what 0:02:56.800 --> 0:02:59.880 thirty k, right, and the average price for that it's 0:03:00.040 --> 0:03:03.919 now about forty six. So what would it be y 0:03:04.000 --> 0:03:06.040 D set you back? Right now? You can get one 0:03:06.040 --> 0:03:07.399 and you can't get one in the you can't get 0:03:07.400 --> 0:03:10.200 one in the US but it would probably be about 0:03:11.080 --> 0:03:16.080 a third less than comparable Tesla in China where they 0:03:16.120 --> 0:03:18.840 sell hit to hit UM. You know, it goes to 0:03:19.440 --> 0:03:24.200 the Their Auto three UM is about half the price 0:03:24.400 --> 0:03:28.720 of the Tesla model. Why which would be comparable? It 0:03:28.800 --> 0:03:32.240 should be sort of e V or it's um UM. 0:03:32.240 --> 0:03:35.720 You know. It's a different marketplace though, because when you're 0:03:35.760 --> 0:03:39.200 saying I'm going to make cars for Middle I don't 0:03:39.200 --> 0:03:43.480 wanna call it Middle America. It's Middle China, Middle uh Asia. UM. 0:03:43.600 --> 0:03:46.400 You're not going to be able to charge as much, 0:03:46.400 --> 0:03:48.160 but you're also not going to be able to have 0:03:48.240 --> 0:03:52.040 the same sort of level of profitability. And right now, 0:03:52.080 --> 0:03:55.440 about two percent of every you know of revenues goes 0:03:55.480 --> 0:03:57.920 to profit at b y D, about ten percent of 0:03:57.960 --> 0:04:01.920 profit goes to UM. You know a revenue goes to 0:04:01.960 --> 0:04:05.000 profit at Tesla. Is this a company I think about 0:04:05.040 --> 0:04:07.440 you know President g and he talked about, you know, 0:04:07.480 --> 0:04:09.760 wanting to get into higher tech or you know, high 0:04:09.760 --> 0:04:12.600 tech markets UM and sell to the world and not 0:04:12.640 --> 0:04:14.520 be the manufacturer of the world. And I do wonder 0:04:14.680 --> 0:04:16.960 is this ultimately will will be able to get these 0:04:17.000 --> 0:04:19.480 cars in the United States? And and I do think 0:04:19.480 --> 0:04:23.520 about what that means for some of the competition and specifically, yeah, 0:04:23.520 --> 0:04:25.760 I mean that that is the goal there. I mean 0:04:25.800 --> 0:04:28.840 one of the big things about the ideas it's been 0:04:28.880 --> 0:04:32.280 expanding global. It means in Australia now they're they've got 0:04:32.320 --> 0:04:36.520 deals now for Germany. UM, I mean they view themselves 0:04:36.720 --> 0:04:39.400 as a global company. They just got then they're going 0:04:39.440 --> 0:04:42.560 to use this period now when everybody wants to have 0:04:42.640 --> 0:04:46.839 evs but everybody doesn't have the capacity to produce enough evs. 0:04:46.960 --> 0:04:48.760 They're using that as an opportunity to sort of build 0:04:48.760 --> 0:04:52.120 into the market also. Um, they have UM, you know, 0:04:52.160 --> 0:04:54.599 they're they're doing something that China wants to do, which 0:04:54.680 --> 0:04:57.520 is to become more of a producer, global producer of 0:04:57.560 --> 0:05:01.480 autos and um. Just this morning, UM, the Chinese Premier 0:05:01.960 --> 0:05:05.560 Leko King went to be at b y d s 0:05:05.640 --> 0:05:08.760 headquarters and to say, you guys, hey at a boy 0:05:08.839 --> 0:05:10.479 you know, get out there and you know, sort of 0:05:10.520 --> 0:05:12.520 do this for us for the future. I mean, they 0:05:12.600 --> 0:05:17.160 view that as one of the big potential consumer products 0:05:17.200 --> 0:05:19.560 of the future and China must have a much bigger 0:05:19.560 --> 0:05:21.560 piece of that, and a company like b y D 0:05:21.800 --> 0:05:24.320 gives them a beachhet in that. And I just want 0:05:24.360 --> 0:05:26.200 to point out. I mean, the ad rs do trade 0:05:26.240 --> 0:05:28.120 on the New York Stock Exchange. They're up for the 0:05:28.200 --> 0:05:30.520 year just shy of ten percent. But I do think about, 0:05:30.960 --> 0:05:33.520 you know, the access for investors ultimately, especially when you're 0:05:33.560 --> 0:05:37.120 President ge it feels like, you know, really honing in, 0:05:37.440 --> 0:05:40.960 homing in on certain industries and either restricting what they 0:05:41.000 --> 0:05:42.480 can do or whether they can be listed on the 0:05:42.520 --> 0:05:44.880 New York Stock you know, on US exchanges. And I 0:05:44.920 --> 0:05:48.000 do wonder what the futures are how investors ultimately will 0:05:48.040 --> 0:05:50.240 continue to be able to tap into this well, I mean, 0:05:50.320 --> 0:05:54.440 the the idea at least the Chinese would like, um, 0:05:54.480 --> 0:05:55.880 you know, the rest of the world to be able 0:05:55.920 --> 0:05:59.800 to help them fund the transition, but um, a lot 0:05:59.839 --> 0:06:03.719 of countries increasingly reviewing, you know, sort of the auto 0:06:03.760 --> 0:06:07.479 business as it's a potentially protected industry something because it's 0:06:07.480 --> 0:06:10.400 going to be one of the biggest consumer products forever. 0:06:10.480 --> 0:06:13.280 I mean, it's it's trans Transit is just that, and 0:06:13.360 --> 0:06:16.560 so's it'll be interesting to see just how dependent do 0:06:16.640 --> 0:06:20.320 we want to become on foreign automakers who aren't German 0:06:20.839 --> 0:06:23.760 or Japanese, right exactly, Jim to me, it's also a 0:06:23.800 --> 0:06:26.520 story about how Tesla is increasingly not the only game 0:06:26.520 --> 0:06:29.000 in town when it comes to e vs. Not to 0:06:29.040 --> 0:06:31.159 mention you know the companies that you mentioned, but also 0:06:31.480 --> 0:06:35.200 the US rivals Ford and the US and Ford and GM. 0:06:35.240 --> 0:06:37.400 I mean Tesla made what I consider to be a 0:06:37.400 --> 0:06:40.800 strategic mistake in not pushing ahead with the truck business. 0:06:41.120 --> 0:06:43.400 I mean they have left you know, they sort of 0:06:43.560 --> 0:06:46.719 left an open lane for both UM, you know, Ford 0:06:46.880 --> 0:06:50.280 and GM in here one fift lightning. They cannot make 0:06:50.320 --> 0:06:52.400 it fast enough in order to it. They just stopped 0:06:52.400 --> 0:06:56.760 taking orders because how can you not jump into that market. 0:06:56.760 --> 0:07:00.720 I mean, the the regular gasoline powered forward one is 0:07:01.040 --> 0:07:05.000 the most sold vehicle, single vehicle in the United States. 0:07:05.360 --> 0:07:08.080 It is a hugely profitable piece. It is the reason 0:07:08.120 --> 0:07:11.960 there is still four and to allow that, you know, 0:07:12.080 --> 0:07:15.000 to happen where they say the cyberstruck will get around 0:07:15.040 --> 0:07:17.640 to it. No, this was a mistake and I had 0:07:17.680 --> 0:07:19.240 a filling in two or three years. People are going 0:07:19.320 --> 0:07:22.440 to be saying Tesla could have had this market to itself, 0:07:22.880 --> 0:07:25.960 didn't and it it gave a lifeline to Ford. It's 0:07:26.000 --> 0:07:29.560 gonna mean also that GM, with UM you know, its 0:07:29.600 --> 0:07:31.920 own evs you know trucks is going to also have 0:07:32.240 --> 0:07:34.840 a way to compete against Tesla long term, and that's 0:07:34.840 --> 0:07:37.840 a very profitable part of the market. Jim really quickly, 0:07:37.840 --> 0:07:40.000 just about twenty five seconds, is b y D also 0:07:40.000 --> 0:07:43.440 potentially have an advantage in terms of um. China has 0:07:43.440 --> 0:07:46.360 been on such a mission to line up lithium, cobalt, nicols, 0:07:46.440 --> 0:07:48.560 some these key minerals for e V batteries. Is that 0:07:48.560 --> 0:07:51.239 going to give them maybe potentially an advantage going ahead, 0:07:51.280 --> 0:07:53.520 just quickly at least short term. It it will mean 0:07:53.600 --> 0:07:57.080 simply because it's been so difficult to line up those resources, 0:07:57.080 --> 0:07:59.280 and so they'll have the ability to do it not 0:07:59.400 --> 0:08:02.960 only from resources in China but also in places in 0:08:03.000 --> 0:08:06.480 South America where China also has influence. Great story, and 0:08:06.520 --> 0:08:08.560 it is the international cover story. It'll be hitting the 0:08:08.560 --> 0:08:11.240 Bloomberg terminal at five pm Wall Street time, so be 0:08:11.280 --> 0:08:14.239 sure to check it out. Jim Ellis come back more often. 0:08:14.320 --> 0:08:16.640 Thank you, We love, We love. Jim Ellis Assistant managing 0:08:16.640 --> 0:08:19.840 at a Bloomberg Business Week. You're listening to Bloomberg Business 0:08:19.880 --> 0:08:23.720 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic 0:08:24.160 --> 0:08:26.680 on Bloomberg Radio. We want to get to one of 0:08:26.680 --> 0:08:28.920 the most read stories on the Bloomberg Today, it's about 0:08:28.960 --> 0:08:32.080 the recent CEO drama at the private equity from Carlisle Group. 0:08:32.440 --> 0:08:34.960 The drama, of course, you know Carli's CEO, Kusan Lee, 0:08:35.160 --> 0:08:38.520 abruptly pushed out the door by the company's board. Earlier 0:08:38.559 --> 0:08:42.280 today on Bloomberg Surveillance. Carlisle Group co chairman and co 0:08:42.360 --> 0:08:45.160 founder and host a peer to peer conversations on Bloomberg, 0:08:45.240 --> 0:08:49.000 David Rubinstein address the situation on how you get ready 0:08:49.000 --> 0:08:52.880 for the next generation of leaders. There's no perfect model. 0:08:53.120 --> 0:08:55.400 Each of the firms have gone through it in different ways. 0:08:55.679 --> 0:08:57.240 I think a good thing to do is to have 0:08:57.240 --> 0:08:59.000 somebody who's been at a firm for a long time 0:08:59.080 --> 0:09:02.240 part of the culture. They know the ethos of the organization, 0:09:02.480 --> 0:09:04.840 and gradually they come in and take over control and 0:09:04.840 --> 0:09:07.800 the founders step back. But it's more complicated than a 0:09:07.840 --> 0:09:10.880 typical situation. So let's suppose you're lou Gerstner. You're the 0:09:10.920 --> 0:09:14.160 CEO of IBM, and you retire. When you retire, you 0:09:14.240 --> 0:09:17.040 don't own twenty or thirty percent of the company still, 0:09:17.320 --> 0:09:20.160 and you're not still you know, a major investor in 0:09:20.200 --> 0:09:22.920 the funds. It's a different situation. You're not a founder 0:09:23.240 --> 0:09:25.839 so all the founders of the large private equity firms 0:09:25.840 --> 0:09:29.640 are still involved, uh largely with some exceptions, still involved 0:09:29.880 --> 0:09:33.559 in as owners, investment committee members and as big shareholders. 0:09:33.600 --> 0:09:35.840 And it's a little different than the lou Gersner situation 0:09:35.920 --> 0:09:38.280 or Jack Well situation when they retire and they don't 0:09:38.280 --> 0:09:41.679 really control the company through the owner ownership, there's large 0:09:41.720 --> 0:09:44.720 shares shares in the company. That was Carlisle Group founder 0:09:44.720 --> 0:09:47.679 and co executive chairman David Rubinstein, also the post of 0:09:47.679 --> 0:09:50.679 Bloomberg Wealth with David Rubinstein on Bloomberg TV. That was 0:09:50.760 --> 0:09:52.960 him earlier on Bloomberg Surveillance. I want to bring in 0:09:53.000 --> 0:09:55.920 Heather purl Burg. She's private equity reporter for Bloomberg near. 0:09:56.000 --> 0:09:57.839 She joined us on the phone from Washington, d C. 0:09:58.320 --> 0:10:01.120 And she's the co author along Don Limb, of one 0:10:01.160 --> 0:10:03.200 of the most read stories on the Bloomberg terminal, all 0:10:03.240 --> 0:10:06.679 about the CEO drama at Carlisle Group and what we're 0:10:06.720 --> 0:10:09.240 learning about that transition as we speak. They're good to 0:10:09.280 --> 0:10:11.600 have you with us. So how did this all go 0:10:11.679 --> 0:10:15.680 down at Carlisle Group a few weeks ago? Well, let's 0:10:15.720 --> 0:10:18.840 say this hole debacle was not managed the way you'd 0:10:18.880 --> 0:10:21.720 expect from a top tier firm like Carlyle. I mean, 0:10:21.880 --> 0:10:25.959 even comparing it to Glenn Younkin's exit the last CEO, 0:10:26.120 --> 0:10:30.880 which was telegraphed from a public relations perspective, really well managed. 0:10:31.400 --> 0:10:34.559 This was kind of a mess. Um. You know, we're 0:10:34.600 --> 0:10:38.360 talking about ten pm press release on a Sunday night. 0:10:38.480 --> 0:10:41.480 Took everyone on Wall Street by surprise, and people have 0:10:41.559 --> 0:10:46.840 been kind of trying to unpack it ever since. So yeah, 0:10:46.960 --> 0:10:49.240 so what as we've as you guys too, have been 0:10:49.320 --> 0:10:53.400 unpacking it and writing about it. What more have we 0:10:53.559 --> 0:10:57.680 kind of learned about how this is playing out? Well? 0:10:57.760 --> 0:11:01.800 It sounds like what happened is a big conflict between 0:11:01.880 --> 0:11:04.920 q Sun Lee the CEO, and the founders was really 0:11:04.960 --> 0:11:08.000 at the heart of it. Uh, The board sort of 0:11:08.160 --> 0:11:12.680 leaned towards David Rubinstein on the side of the founders 0:11:12.720 --> 0:11:17.480 and essentially pushed Lee out. Um. You know, he has 0:11:17.520 --> 0:11:21.160 been the CEO for about six years. He started with 0:11:21.200 --> 0:11:25.600 Glenn Youngcan, who ironically he himself kind of pushed out 0:11:25.960 --> 0:11:27.760 a few years ago. Young Can went on to be 0:11:27.840 --> 0:11:31.200 the Governor of Virginia, and Lee was making a lot 0:11:31.200 --> 0:11:34.959 of changes which people would say was necessary, um, going 0:11:35.000 --> 0:11:38.880 into new businesses, making Carlyle more competitive, but sort of 0:11:39.160 --> 0:11:42.000 icing out the founders and changing the culture in a 0:11:42.040 --> 0:11:45.760 way that was really controversial. So where does where does 0:11:45.800 --> 0:11:47.959 Carlisle go from here? And what do we know about 0:11:48.160 --> 0:11:51.080 how they're going to bring in somebody? You know, there's 0:11:51.080 --> 0:11:54.040 a search going on, is you right? What's the direction 0:11:54.040 --> 0:11:57.240 that they need to move in? Well, Carlisle has kind 0:11:57.280 --> 0:12:00.839 of bigger underlying issues at this point, I mean this 0:12:00.960 --> 0:12:04.160 identity crisis as we called it. Where they really got 0:12:04.200 --> 0:12:07.320 their footing is a buyout shop, but they've had to 0:12:07.400 --> 0:12:10.720 push into new businesses to compete with Blackstone, KKR and 0:12:10.760 --> 0:12:15.480 the others. Now they have credit insurance, retail, and they've 0:12:15.520 --> 0:12:18.000 expanded in New York, but they're still based in DC. 0:12:18.679 --> 0:12:21.760 They kind of made their name doing defense related investments, 0:12:21.800 --> 0:12:24.760 but now they've had to pivot to technology and healthcare. 0:12:25.360 --> 0:12:28.600 They really need someone who's gonna kind of keep pushing 0:12:28.640 --> 0:12:33.120 them in a new and competitive direction. But who knows 0:12:33.160 --> 0:12:37.079 that the founders really loom large. I mean Rubenstein said 0:12:37.080 --> 0:12:40.440 it himself. They have a huge percentage of ownership in 0:12:40.440 --> 0:12:44.760 the company. I think it's collectively of the stock between 0:12:44.760 --> 0:12:48.000 the three founders, so a large portion of their own 0:12:48.120 --> 0:12:51.400 wealth is tied up in this company, and they generally 0:12:51.440 --> 0:12:56.280 control the boards. They have institutional relationships and knowledge, and 0:12:56.640 --> 0:12:59.080 they don't want to be completely iced out and pushed 0:12:59.080 --> 0:13:01.720 to the side. There. I would have thought the founders, 0:13:01.960 --> 0:13:05.400 who uh do wield a lot of influence, would have 0:13:05.440 --> 0:13:09.760 been swayed by just the share price of Carlisle alone, 0:13:09.760 --> 0:13:13.040 which you include in your reporting. Carlisle shares have advanced 0:13:13.040 --> 0:13:16.720 more than fifty percent since Lee became Seal CEO, even 0:13:16.720 --> 0:13:18.920 including the recent sell off. That compares with a four 0:13:18.960 --> 0:13:21.679 percent gain from the time of the company's IPO back 0:13:21.679 --> 0:13:25.840 in twenty twelve to Januar, when the founders seeded control. 0:13:26.320 --> 0:13:29.120 Typically that would have been enough. And I do wonder 0:13:29.160 --> 0:13:31.640 if ultimately, longer term Carlyle is going to end up 0:13:31.679 --> 0:13:34.240 going back towards some of the things that Lee was 0:13:34.280 --> 0:13:39.160 pressing for or moving towards. I think that that is true. 0:13:39.240 --> 0:13:43.360 The stock prices had done significantly better, but compared to 0:13:43.440 --> 0:13:47.800 a black Stone or KKR Apollo, it was still really lagging. 0:13:47.840 --> 0:13:49.920 I mean, some of these other firms were up a 0:13:50.040 --> 0:13:54.920 hundred percent two percent um, and it really Carlisle really 0:13:55.000 --> 0:13:58.719 just wasn't keeping up. There's also other issues as far 0:13:58.760 --> 0:14:02.280 as fundraising gos. They just couldn't really get as much 0:14:02.320 --> 0:14:06.200 ground raising money for their new funds, their flagship private 0:14:06.200 --> 0:14:10.000 equity fund and they're seeing a lot of high profile exits, 0:14:10.080 --> 0:14:14.079 which is concerning to the founders and two investors of 0:14:14.160 --> 0:14:16.480 these you know, all of these private equity firms. They're 0:14:16.480 --> 0:14:18.520 looking at things like that when they make decisions on 0:14:18.520 --> 0:14:21.000 where to put their money. Hey, just got about fifteen seconds. 0:14:21.000 --> 0:14:24.680 But sometimes, you know, observers will say the old guard 0:14:24.720 --> 0:14:26.320 has to let the new guard find their way. Are 0:14:26.320 --> 0:14:30.800 people saying that and just very quickly. I think there's 0:14:30.280 --> 0:14:35.160 a mixed feeling going on. Careed Rubenstein and the others. No, 0:14:35.360 --> 0:14:38.240 they need to make way for you know, new leaders, 0:14:38.320 --> 0:14:41.320 but they don't want the firm to go down and flame. Alright, 0:14:41.320 --> 0:14:43.600 Heather pearl Burk, thank you so much, great reporting. Private 0:14:43.600 --> 0:14:46.160 equity reporter AP Bloomberg News on the phone in d C. 0:14:48.920 --> 0:14:52.960 This is Bloomberg Business Week with Carol Masser and Bloomberg 0:14:53.040 --> 0:14:57.400 Quick Takes. Tim Stinovic on Bloomberg Radio. All right, um, 0:14:57.440 --> 0:14:58.760 one thing we do all get a lot of his 0:14:58.880 --> 0:15:01.760 social media did have a batch of primaries around the 0:15:01.760 --> 0:15:04.200 country today. I'll make the connection with that in mind. 0:15:04.400 --> 0:15:06.440 A story in our top Tech menu in the Bloomberg 0:15:06.760 --> 0:15:08.680 checks into what TikTok is up to as it gets 0:15:08.680 --> 0:15:11.200 ready for the round of mid terms. Come to Vampire, 0:15:11.280 --> 0:15:14.480 the story by Alex brinca technology reporter for Bloomberg New 0:15:14.600 --> 0:15:16.400 She joins us this afternoon on the phone from our 0:15:16.400 --> 0:15:19.920 Los Angeles bureau. So, Alex, what is TikTok doing to 0:15:19.960 --> 0:15:23.120 try to keep its platform quote unquote safe ahead of 0:15:23.320 --> 0:15:25.640 mid terms here in the US? And I think, actually, 0:15:25.680 --> 0:15:27.560 you know what, I'm sorry, I have to just you know, 0:15:27.640 --> 0:15:30.400 ask with the context of who owns TikTok and why 0:15:30.400 --> 0:15:33.680 this is so important and all level set there. So 0:15:33.720 --> 0:15:37.120 Bite Dance is a Chinese company UM that owns TikTok, 0:15:37.160 --> 0:15:39.480 which operates here in the US. UM it's a that 0:15:39.560 --> 0:15:42.840 short form video app where UM where content can go 0:15:43.040 --> 0:15:45.840 viral in a matter of seconds, and a lot of 0:15:46.280 --> 0:15:48.800 US users are spending much of their time on these days, 0:15:48.960 --> 0:15:51.600 and so when it comes to where people are spending time, 0:15:51.920 --> 0:15:55.960 you're guaranteed to see political information, especially before US election. 0:15:56.400 --> 0:15:59.600 For this round, TikTok is doing what we've seen a 0:15:59.600 --> 0:16:02.200 lot of the UM social media companies do and basically 0:16:02.600 --> 0:16:05.480 trying to shore itself up against that kind of term. 0:16:05.520 --> 0:16:08.480 We hear a lot misleading information. UM. There are a 0:16:08.480 --> 0:16:12.360 few things specifically that UM TikTok is doing. For one, 0:16:12.480 --> 0:16:16.160 they're really leaning into this ban on political advertisements that 0:16:16.240 --> 0:16:20.880 they put in place before the election that they're continuing 0:16:20.960 --> 0:16:25.240 through UM this cycle. And specifically UM, they are banning 0:16:25.320 --> 0:16:29.440 influencers from posting paid political content. Now, in the past, 0:16:29.600 --> 0:16:33.680 influencers were UM kind of looped into this blanket ban UM, 0:16:33.720 --> 0:16:36.080 but they saw some challenges with some of that paid 0:16:36.120 --> 0:16:40.800 content UM, where organizations were paying content creators to make 0:16:40.920 --> 0:16:45.640 videos supporting political campaigns or political issues. UM. And now 0:16:45.680 --> 0:16:48.560 they are making sure that that ban is really enforced 0:16:48.600 --> 0:16:52.320 this year. They're also launching something called a kind of 0:16:52.360 --> 0:16:56.400 elections center. They're saying, look, if we see misinformation on 0:16:56.440 --> 0:17:00.600 the platform, we can redirect people that direction. Now, the 0:17:00.680 --> 0:17:03.640 last thing I'll point out that is very TikTok ESK. 0:17:03.760 --> 0:17:05.840 If you've never been on the app, when you open 0:17:05.920 --> 0:17:10.800 it up, that main page is called the four you feed, Yeah, 0:17:10.840 --> 0:17:14.040 the f hashtag f yp UM. It's the place that 0:17:14.440 --> 0:17:16.320 you know, videos go viral. It's a place that a 0:17:16.320 --> 0:17:18.879 lot of people spend their time. UM. It's also the 0:17:18.880 --> 0:17:22.280 place that you know, garners the most views on videos. 0:17:22.320 --> 0:17:24.639 For any post that anyone posts that is kind of 0:17:24.640 --> 0:17:29.120 flagged by their technology algorithms or by human moderators, if 0:17:29.160 --> 0:17:31.880 it has any misleading information, it will be pulled from 0:17:31.880 --> 0:17:35.360 the platform. But if it has also information that's not verified, 0:17:35.760 --> 0:17:38.760 it will be basically tagged to disallow it from getting 0:17:38.800 --> 0:17:41.359 on that f yp so bottom line is here no 0:17:41.480 --> 0:17:46.040 political advertisements, and they're basically trying to suppress anything that 0:17:46.240 --> 0:17:48.720 is bad info on the platform. All right. We also 0:17:48.760 --> 0:17:51.560 heard this week um Alex from Meta, you know, putting 0:17:51.560 --> 0:17:54.880 out their playbook in advance of elections. So what you're 0:17:54.920 --> 0:17:56.760 telling me is that we're all set, We're all only 0:17:56.760 --> 0:18:00.679 going to get truth, no misinformation on social media or not. 0:18:01.760 --> 0:18:03.679 But this is this is where you know, by colleague 0:18:03.720 --> 0:18:05.320 Kurt Wagner and I had a chance to chat to 0:18:05.640 --> 0:18:09.680 um metas policy boss called Nick clegg Um. He basically 0:18:09.720 --> 0:18:12.400 came out and said, look, we think we have a playbook, 0:18:12.400 --> 0:18:15.000 but that doesn't mean we're being complacent. Um, you know, 0:18:15.480 --> 0:18:18.399 there will always be folks who are posting misinformation on 0:18:18.400 --> 0:18:20.720 the platform. Carol, I will say, no, I'm sure I'm 0:18:20.720 --> 0:18:23.199 going to see some stuff that um it would not 0:18:23.359 --> 0:18:25.520 fly through the fact checkers that a lot of these 0:18:25.520 --> 0:18:28.760 companies work with. UM. That being said, you know, it's 0:18:28.800 --> 0:18:32.400 been what six years since Metta in particular has come 0:18:32.480 --> 0:18:36.439 under fire for how it hosts information and political ads 0:18:36.480 --> 0:18:39.520 on its platform. So the company says like, look, we 0:18:39.640 --> 0:18:42.000 think we have a playbook that is working from the 0:18:42.080 --> 0:18:45.840 last general election. UM. That company does allow ads, and 0:18:45.880 --> 0:18:48.640 those ads will need to be vetted. Uh. They also 0:18:48.680 --> 0:18:51.480 will not allow any changes to adds in the week 0:18:51.600 --> 0:18:55.160 prior to UM the closing of voting to make sure 0:18:55.200 --> 0:18:57.399 that they can catch anything. But you know, if I 0:18:57.440 --> 0:19:00.080 were a betting woman, I would probably guess we're to 0:19:00.200 --> 0:19:02.640 see some things pop up. Okay, So that's that's the question, Alex, 0:19:02.680 --> 0:19:04.119 And we'll have a minute left. But how is it 0:19:04.280 --> 0:19:07.400 a platform like TikTok going to verify if somebody's being 0:19:07.440 --> 0:19:12.120 paid for doing some sort of post versus just expressing 0:19:12.119 --> 0:19:14.760 their support for a certain candidate. Yeah, And their tactics 0:19:14.760 --> 0:19:17.960 here are basically to try to educate creators in advance 0:19:18.160 --> 0:19:21.679 and expect that they'll uh, you know, go along with 0:19:21.760 --> 0:19:24.480 the rules that are expected by the FTC in terms 0:19:24.520 --> 0:19:26.960 of tagging things as an ad. If they see something 0:19:27.040 --> 0:19:28.959 that's been tagged as an ad that um, you know, 0:19:29.160 --> 0:19:31.879 does have political information in it, they will take it down. 0:19:32.040 --> 0:19:34.600 But that is a point there that you know, you 0:19:34.680 --> 0:19:37.480 have to hope that content creators will also be good 0:19:37.520 --> 0:19:40.159 actors and make sure that they're following the rules that 0:19:40.200 --> 0:19:44.120 TikTok is trying to share quite a bit in advance 0:19:44.200 --> 0:19:46.480 to make sure that they can head off anything like that. Alright, 0:19:46.520 --> 0:19:48.199 great update on what's going on in the world of 0:19:48.240 --> 0:19:51.080 social media, especially when it comes to those upcoming elections 0:19:51.080 --> 0:19:54.480 here on this primary day. Alex Barenka sis Technology Report 0:19:54.520 --> 0:19:56.639 up Bloomberg News on the phone from her l A bureau. 0:19:56.720 --> 0:20:00.840 I mean politicians, right, candidates, they know how fluential and 0:20:01.040 --> 0:20:04.040 how persuasive social media can. But you're smiling. TikTok is 0:20:04.119 --> 0:20:06.880 so addictive, Carol. Just do yourself a favor. Just don't 0:20:06.920 --> 0:20:16.440 download it. I'm roc journal. Yeah, but you let me drive? No, no, no, 0:20:18.920 --> 0:20:26.320 all right, please, I want to drive. It's good question. 0:20:27.000 --> 0:20:34.840 D This is the drive to the clothes well down 0:20:35.240 --> 0:20:37.879 on Bluebird Radio. All Right, we've got about ten minutes 0:20:37.920 --> 0:20:41.520 left in today's trading session. Stocks have been bouncing around 0:20:41.600 --> 0:20:43.920 here off our highs and loads of this session, Tech 0:20:44.560 --> 0:20:48.159 the biggest underperformer. And we did see some market reactions, 0:20:48.160 --> 0:20:50.280 sending stocks a bit higher and rates a bit lower 0:20:50.720 --> 0:20:54.760 following those FED minutes. Some interpretation maybe that the FED 0:20:56.240 --> 0:20:59.880 was thinking about maybe slowing rate moves or making small 0:21:00.000 --> 0:21:01.800 are ones. But I'm reading a lot of analysis and 0:21:01.840 --> 0:21:03.760 they said, folks, the FETE is still going to continue 0:21:03.880 --> 0:21:05.920 raising rates, so just get just get used to it, 0:21:06.040 --> 0:21:08.200 all right, buckle up. Well, let's see what Rebecca Corbyn 0:21:08.280 --> 0:21:10.320 has to think about this. She's founder and CEO of 0:21:10.400 --> 0:21:13.760 Corbin Advisors. She joined us on the phone from Farmington, Connecticut. Rebecca, 0:21:13.800 --> 0:21:15.200 it's good to have you back with us. How are you. 0:21:16.080 --> 0:21:18.600 I'm doing great, Thank you for having me and have 0:21:18.760 --> 0:21:23.320 the August. This August is a little bit busier than 0:21:23.440 --> 0:21:26.639 last year, which is an indication of nuts. What's happening 0:21:26.680 --> 0:21:29.840 on Walster. It doesn't seem like everyone's on vacation, right, No, 0:21:30.119 --> 0:21:32.600