1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,800 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let's 5 00:00:33,840 --> 00:00:36,600 Speaker 1: find out if, indeed the back and forth between bulls 6 00:00:36,600 --> 00:00:40,160 Speaker 1: and bears, whether this volatility is expressed in the economy. 7 00:00:40,240 --> 00:00:43,200 Speaker 1: I want to bring in Megan green MANU Life Asset 8 00:00:43,280 --> 00:00:47,640 Speaker 1: Management Global Chief Economist. Megan, thanks very much for being 9 00:00:47,800 --> 00:00:51,800 Speaker 1: with us. Is the economy as volatile as the stock 10 00:00:51,880 --> 00:00:56,240 Speaker 1: market would have people believe? No, I don't think that 11 00:00:56,320 --> 00:00:59,040 Speaker 1: it is. I think um that the market volatility that 12 00:00:59,080 --> 00:01:02,560 Speaker 1: we've seen isn't really a macro story. Um. If you 13 00:01:02,640 --> 00:01:05,280 Speaker 1: look at the fundamentals for the US, they actually look 14 00:01:05,319 --> 00:01:08,840 Speaker 1: pretty decent. Um. So there are a few signs of 15 00:01:08,959 --> 00:01:11,680 Speaker 1: an actual overheating, which you would normally see at this 16 00:01:11,760 --> 00:01:14,240 Speaker 1: late stage is a business cycle. There are a few 17 00:01:14,240 --> 00:01:17,000 Speaker 1: signs of a late cycle surgeon inflation as well, which 18 00:01:17,080 --> 00:01:19,560 Speaker 1: means that the Fed doesn't have to hike aggressively to 19 00:01:19,640 --> 00:01:24,480 Speaker 1: catch up. Um. The labor markets really tight. Um. You know, 20 00:01:24,560 --> 00:01:28,800 Speaker 1: the incident data is if it's pretty decent. So we're 21 00:01:28,840 --> 00:01:32,520 Speaker 1: definitely slowing down UM now that the sugar hit of 22 00:01:32,600 --> 00:01:35,880 Speaker 1: the tax bill and the spending bill are feeding through 23 00:01:35,880 --> 00:01:38,920 Speaker 1: the system UM, and we'll have kind of finished hit 24 00:01:39,600 --> 00:01:43,200 Speaker 1: finished hitting the economy by the second half of next year. UM. 25 00:01:43,880 --> 00:01:46,160 Speaker 1: The economy will slow down, but it's slowing down from 26 00:01:46,200 --> 00:01:49,320 Speaker 1: well above potential GDP growth, So we should have growth 27 00:01:49,320 --> 00:01:53,800 Speaker 1: of around three Potential is under two percent, so it's 28 00:01:53,840 --> 00:01:57,280 Speaker 1: around one percent, and I think by we'll get to 29 00:01:58,040 --> 00:02:01,000 Speaker 1: roughly two percent growth UM. Next year we should have 30 00:02:01,000 --> 00:02:03,120 Speaker 1: two and a half percent, So that's bill about potential. 31 00:02:03,200 --> 00:02:05,800 Speaker 1: So it's not it's not a terrible story, and I 32 00:02:05,800 --> 00:02:08,440 Speaker 1: think the markets aren't reflecting that at all. Well, if 33 00:02:08,440 --> 00:02:11,360 Speaker 1: the markets aren't reflecting that, what do you believe the 34 00:02:11,400 --> 00:02:16,320 Speaker 1: markets are reflecting? So I think, UM, some of the 35 00:02:16,400 --> 00:02:19,640 Speaker 1: market moves can be explained with technicals, but I think 36 00:02:20,160 --> 00:02:22,680 Speaker 1: more importantly UM, a lot of the market moves can 37 00:02:22,720 --> 00:02:26,320 Speaker 1: be explained by market structure. So on an average day, 38 00:02:27,160 --> 00:02:30,600 Speaker 1: equity trades are done by passes funds UM, and that 39 00:02:30,639 --> 00:02:33,480 Speaker 1: means that things get over bought on the way up UM, 40 00:02:33,520 --> 00:02:36,280 Speaker 1: but it also probably means that things will be oversold 41 00:02:36,320 --> 00:02:39,000 Speaker 1: in a bear market. UM. And that hasn't been tested 42 00:02:39,040 --> 00:02:42,280 Speaker 1: really yet, UM, but we're seeing indications of that, and 43 00:02:42,320 --> 00:02:45,520 Speaker 1: I think over the past week in particular, UM, there's 44 00:02:45,600 --> 00:02:51,320 Speaker 1: been pretty thin volumes UM, and you've gotten most traders 45 00:02:51,360 --> 00:02:55,480 Speaker 1: on vacations, so that might amplify UM the bought aspect 46 00:02:55,520 --> 00:02:57,520 Speaker 1: of market structure, and so I think that's playing a 47 00:02:57,560 --> 00:03:00,760 Speaker 1: huge piece of it. Megan, good morning. It's a guy 48 00:03:00,800 --> 00:03:02,720 Speaker 1: in London. UM. We've probably got a bit of year 49 00:03:02,800 --> 00:03:04,840 Speaker 1: end rebalancing going on as well, which is probably a 50 00:03:04,840 --> 00:03:06,959 Speaker 1: factor as people shift out of bonds into equity, is 51 00:03:07,000 --> 00:03:09,720 Speaker 1: just to kind of make those balances work within their portfolios. 52 00:03:09,960 --> 00:03:12,880 Speaker 1: Let's talk about a little bit about the shutdown. UM. 53 00:03:13,400 --> 00:03:16,080 Speaker 1: It's a partial shutdown. It looks like it's going to 54 00:03:16,120 --> 00:03:19,000 Speaker 1: carry on for a while. Is this a real story 55 00:03:19,040 --> 00:03:22,480 Speaker 1: for the U S economy? No, it's not a huge 56 00:03:22,520 --> 00:03:24,960 Speaker 1: story for the U. S economy. UM. You know, it's 57 00:03:25,000 --> 00:03:28,800 Speaker 1: a partial shutdown, but it's visible, so people know it's happening. 58 00:03:28,880 --> 00:03:31,000 Speaker 1: That could cause a little bit of alatility, But in 59 00:03:31,080 --> 00:03:35,680 Speaker 1: terms of actual implications for the economy, UM, they're not huge. UM, 60 00:03:35,720 --> 00:03:38,560 Speaker 1: And certainly not if this last another month, for example, 61 00:03:38,640 --> 00:03:42,160 Speaker 1: or so UM. One win which the shutdown could affect 62 00:03:42,200 --> 00:03:45,720 Speaker 1: the economy, though, is that some of the departments that 63 00:03:45,760 --> 00:03:49,400 Speaker 1: are producing our economic statistics are shutdown, and so um, 64 00:03:49,480 --> 00:03:52,840 Speaker 1: we're all flying with less information. UM. The BLS, the 65 00:03:53,080 --> 00:03:57,080 Speaker 1: THROW which covers kind of jobs data. UM, they'll be open, 66 00:03:57,160 --> 00:04:00,640 Speaker 1: so we'll get the jobs reports, we'll get inflation data, um. 67 00:04:00,640 --> 00:04:03,720 Speaker 1: But the d A, UM, the Bureau of Economic Analysis, 68 00:04:03,760 --> 00:04:06,360 Speaker 1: the and the Census will be shut which means some 69 00:04:06,400 --> 00:04:09,000 Speaker 1: of the trade data won't come out on time. Now 70 00:04:09,000 --> 00:04:12,160 Speaker 1: it's trade data for Q three in particular, which is 71 00:04:12,200 --> 00:04:16,160 Speaker 1: backward looking and so not huge. But of course trade 72 00:04:16,200 --> 00:04:18,560 Speaker 1: is one of the biggest uncertainties in the economy. Though 73 00:04:18,600 --> 00:04:21,960 Speaker 1: it's not helpful that we don't have that granularity, um, 74 00:04:22,040 --> 00:04:26,040 Speaker 1: particularly given the market volatility that we've been seeing. View 75 00:04:26,080 --> 00:04:27,640 Speaker 1: of the Fed chair, what do you want to meeting 76 00:04:27,640 --> 00:04:31,080 Speaker 1: in the White House right now? What I want a 77 00:04:31,120 --> 00:04:32,960 Speaker 1: meeting in the White House? You want to go to 78 00:04:33,000 --> 00:04:34,120 Speaker 1: meet the president? What do you want to have a 79 00:04:34,160 --> 00:04:38,360 Speaker 1: little chatside of this? Honestly, if I were the FED chair, 80 00:04:38,640 --> 00:04:40,960 Speaker 1: it would be neither here nor there for me, um, 81 00:04:41,000 --> 00:04:44,239 Speaker 1: And I think chair pal feels the same way. UM. 82 00:04:44,920 --> 00:04:47,360 Speaker 1: So you know I know that Trump has been speaking 83 00:04:47,360 --> 00:04:50,040 Speaker 1: about what the FED chair should do, is even talked 84 00:04:50,080 --> 00:04:52,520 Speaker 1: about removing him from his role. It's it's really not 85 00:04:52,600 --> 00:04:55,039 Speaker 1: clear that he can do that, even if he wants to. 86 00:04:55,600 --> 00:04:59,120 Speaker 1: But I think that chair pal is largely ignoring what 87 00:04:58,839 --> 00:05:01,080 Speaker 1: the what the president's and saying. I think if it 88 00:05:01,160 --> 00:05:04,080 Speaker 1: were more members of Congress taking on this call that 89 00:05:04,200 --> 00:05:07,680 Speaker 1: the Fed's acting irresponsibly and we need lower rates, the 90 00:05:07,800 --> 00:05:10,720 Speaker 1: FED might pay attention, because of course Congress gave the 91 00:05:10,760 --> 00:05:13,200 Speaker 1: FED it's independence, so they could take it away as well. 92 00:05:13,480 --> 00:05:16,480 Speaker 1: But as long as it's really just the president, UM, 93 00:05:16,520 --> 00:05:19,000 Speaker 1: I don't think the FED worries. Also, if the media 94 00:05:19,040 --> 00:05:21,480 Speaker 1: were to take this on as a battle cry, then 95 00:05:21,520 --> 00:05:23,680 Speaker 1: I think the FED would feel some pressure, but so 96 00:05:23,720 --> 00:05:26,279 Speaker 1: far it doesn't seem like that's happening. Megan, talk to 97 00:05:26,360 --> 00:05:31,200 Speaker 1: us about the thread that runs through corporate profits, trade negotiations, 98 00:05:31,400 --> 00:05:36,839 Speaker 1: and business cycles. What do you expect for so, I 99 00:05:36,839 --> 00:05:39,040 Speaker 1: think we can expect corporate profits to grow a lot 100 00:05:39,120 --> 00:05:41,640 Speaker 1: less than we've seen last year, and we've already seen 101 00:05:41,640 --> 00:05:45,000 Speaker 1: that happen as input prices have been taking up slowly. 102 00:05:45,400 --> 00:05:49,240 Speaker 1: UM in terms of first trade will bite into that, 103 00:05:49,440 --> 00:05:52,440 Speaker 1: and so it contributes to higher input costs for a 104 00:05:52,440 --> 00:05:56,840 Speaker 1: lot of companies. UM. A lot of what our outlooks 105 00:05:56,839 --> 00:06:00,479 Speaker 1: look like for nineteen rest on trade, and I fully 106 00:06:00,520 --> 00:06:04,880 Speaker 1: expect a re escalation of trade wars with China. It's 107 00:06:04,960 --> 00:06:08,000 Speaker 1: nice that we've had this detant, but the Dayton doesn't 108 00:06:08,000 --> 00:06:10,680 Speaker 1: fundamentally deal with the issue of you know, who's going 109 00:06:10,680 --> 00:06:15,280 Speaker 1: to be the biggest economy based on excellence in artificial intelligence, 110 00:06:15,279 --> 00:06:18,800 Speaker 1: machine learning, quantum computing, these high tech fields, and so 111 00:06:18,880 --> 00:06:20,440 Speaker 1: as long as we haven't dealt with that, we haven't 112 00:06:20,480 --> 00:06:22,479 Speaker 1: dealt with the issue. UM. So I think the trade 113 00:06:22,480 --> 00:06:26,560 Speaker 1: war will be reignited next year UM, and then that 114 00:06:26,680 --> 00:06:30,240 Speaker 1: will have huge implications UM, both for growth because if 115 00:06:30,279 --> 00:06:34,360 Speaker 1: we finally implement UM a final round of Harris on, 116 00:06:34,480 --> 00:06:37,640 Speaker 1: China will be imposing carras and roughly everything we import 117 00:06:37,680 --> 00:06:41,719 Speaker 1: for China, So that will materially affect the Chinese economy UM. 118 00:06:41,760 --> 00:06:44,240 Speaker 1: But also I think China will retaliate in a ways 119 00:06:44,279 --> 00:06:48,000 Speaker 1: that extend far beyond trade, particularly with the currency. So 120 00:06:48,040 --> 00:06:50,240 Speaker 1: that could send the U s Dollar higher, and that 121 00:06:50,240 --> 00:06:53,200 Speaker 1: would put a massive squeeze on emerging markets that have 122 00:06:53,240 --> 00:06:56,240 Speaker 1: borrowed in US dollar denominated debt and that are invoicing 123 00:06:56,279 --> 00:06:58,320 Speaker 1: a lot of their trade in U S dollars as well, 124 00:06:58,520 --> 00:07:00,840 Speaker 1: So it's hard to see what could be a circuit 125 00:07:00,839 --> 00:07:03,480 Speaker 1: breaker for that kind of pressure in e M. So 126 00:07:03,560 --> 00:07:05,599 Speaker 1: I think that's a huge risk going into next year. 127 00:07:06,680 --> 00:07:10,520 Speaker 1: Germany gonna have a technical recession next year. No, I 128 00:07:10,560 --> 00:07:12,880 Speaker 1: don't think Germany is going to have a technical recession. UM. 129 00:07:12,920 --> 00:07:14,840 Speaker 1: They had a contraction in Q three. I think a 130 00:07:14,880 --> 00:07:17,360 Speaker 1: lot of that, to be fair, really was auto related, 131 00:07:17,440 --> 00:07:20,600 Speaker 1: as as German automakers got up to speed UM with 132 00:07:20,680 --> 00:07:25,280 Speaker 1: new environmental standards and norms UM. That being said, in 133 00:07:25,440 --> 00:07:28,640 Speaker 1: Q four, the data hasn't was like it's been fantastic. 134 00:07:28,680 --> 00:07:31,480 Speaker 1: It hasn't shown a dramatic snap back. And so I 135 00:07:31,520 --> 00:07:34,720 Speaker 1: do think that we can expect Germany to to grow 136 00:07:34,840 --> 00:07:38,400 Speaker 1: more slowly UM in Q four and going into next 137 00:07:38,480 --> 00:07:41,360 Speaker 1: year UM. And that makes sense. Germany hasn't implemented as 138 00:07:41,400 --> 00:07:46,280 Speaker 1: a single structural reform since Gadad Schroeder UM, so you know, 139 00:07:46,360 --> 00:07:49,800 Speaker 1: we should expect the German economy to structurally slow down. 140 00:07:49,800 --> 00:07:52,080 Speaker 1: It's just a problem for a year given Germany has 141 00:07:52,120 --> 00:07:55,480 Speaker 1: been the growth engine for the entire region. And and 142 00:07:55,600 --> 00:07:58,880 Speaker 1: so I think as UM global growth will slow down 143 00:07:58,920 --> 00:08:02,400 Speaker 1: next year. UM, Germany and the rest of Europe certainly 144 00:08:02,440 --> 00:08:07,320 Speaker 1: won't be spared from that. Tell us about Brexit and 145 00:08:07,360 --> 00:08:11,040 Speaker 1: what you believe the implications for Brexit are in the 146 00:08:11,120 --> 00:08:16,480 Speaker 1: United States, but also for Europe. Sure so, Um, Really 147 00:08:16,520 --> 00:08:18,840 Speaker 1: Brexit is to choose your own adventure. At this point, 148 00:08:18,920 --> 00:08:23,200 Speaker 1: anything can happen. Um. I think it will happen, of course. UM. 149 00:08:23,280 --> 00:08:26,240 Speaker 1: I don't think it can be avoid unfortunately, UM. And 150 00:08:26,240 --> 00:08:28,800 Speaker 1: I say unfortunately as a UK citizen and voted in 151 00:08:28,800 --> 00:08:32,880 Speaker 1: the referendum, UM, so I think the UK will have UM, 152 00:08:33,000 --> 00:08:35,480 Speaker 1: a Brexit that involves leaving the Single Market and the 153 00:08:35,480 --> 00:08:39,199 Speaker 1: Customs Union. In terms of implications for the US, however, 154 00:08:39,360 --> 00:08:42,920 Speaker 1: I'm hard pressed to really say there will be significant ones. Um. 155 00:08:43,840 --> 00:08:46,360 Speaker 1: You know, I think the biggest implications could come in 156 00:08:46,440 --> 00:08:49,960 Speaker 1: terms of financial volatility, and particularly if the UK crashes 157 00:08:50,040 --> 00:08:52,880 Speaker 1: out of the EU. It's unclear what exactly will happen 158 00:08:52,960 --> 00:08:57,199 Speaker 1: to payment settlement systems, clearing houses, so the the financial 159 00:08:57,240 --> 00:09:01,000 Speaker 1: plumbing behind the city of London. Um. So that would 160 00:09:01,040 --> 00:09:03,560 Speaker 1: have implications for the US. But other than that, I 161 00:09:03,559 --> 00:09:07,600 Speaker 1: don't think that the US will be significantly impacted by Brexit. UM. 162 00:09:07,679 --> 00:09:10,559 Speaker 1: The EU, of course could be UM. And of course 163 00:09:10,640 --> 00:09:13,760 Speaker 1: that again depends on the choreography of Brexit. If there 164 00:09:13,800 --> 00:09:15,719 Speaker 1: were a crash out, it would have a you know, 165 00:09:15,800 --> 00:09:17,760 Speaker 1: a bigger impact on the EU growth. But there is 166 00:09:17,800 --> 00:09:20,080 Speaker 1: one area in which I think the EU will be 167 00:09:20,120 --> 00:09:24,800 Speaker 1: significant regardless of choreography, and that's that a capital markets 168 00:09:24,840 --> 00:09:27,920 Speaker 1: union won't happen, which could help the Euro turn into 169 00:09:28,080 --> 00:09:31,720 Speaker 1: an optimal currency union. Many thanks, always a pleasure, Megan 170 00:09:31,800 --> 00:09:36,080 Speaker 1: Green joining US Global Chief Economist MANU Life Asset Management 171 00:09:47,120 --> 00:09:50,480 Speaker 1: well Guy Johnson in London. I note, for example, that 172 00:09:50,600 --> 00:09:54,360 Speaker 1: the price of petrol is probably about three to four 173 00:09:54,480 --> 00:09:58,560 Speaker 1: times the price that most Americans pay at the pump. 174 00:09:58,679 --> 00:10:02,800 Speaker 1: Obviously it is due to a variety of factors. Much 175 00:10:02,840 --> 00:10:06,240 Speaker 1: of it is taxes. But nevertheless, with a decline in 176 00:10:06,360 --> 00:10:10,640 Speaker 1: crude prices down to forty four dollars on the nimax 177 00:10:10,840 --> 00:10:15,120 Speaker 1: and a concurrent fall in the price of Brent oil, 178 00:10:15,559 --> 00:10:18,760 Speaker 1: you have to wonder when that will feed into the 179 00:10:18,800 --> 00:10:22,559 Speaker 1: real economy, when that will put more money into people's pockets. Well, 180 00:10:22,559 --> 00:10:26,199 Speaker 1: we you make the good points him that basically UM 181 00:10:26,360 --> 00:10:28,360 Speaker 1: we pay a lot of tax when it comes to 182 00:10:29,320 --> 00:10:32,959 Speaker 1: UM petrol and diesel prices, and the effectively there is 183 00:10:32,960 --> 00:10:35,600 Speaker 1: a tax on that that then pays theoretically for the 184 00:10:35,679 --> 00:10:39,920 Speaker 1: upkeep of the roads. However, this has the advantage of 185 00:10:40,440 --> 00:10:43,320 Speaker 1: dampening down volatility. You don't get the same feed through 186 00:10:43,400 --> 00:10:46,560 Speaker 1: because as a as as a as a Brent moves 187 00:10:46,600 --> 00:10:49,280 Speaker 1: by a buck either way, you don't see that feeding 188 00:10:49,320 --> 00:10:51,640 Speaker 1: through into the into the percentage change in the price 189 00:10:51,800 --> 00:10:53,960 Speaker 1: of what you see at the petrol pumps or the 190 00:10:54,000 --> 00:10:56,200 Speaker 1: diesel pumps, and as a result of which you don't 191 00:10:56,200 --> 00:10:59,559 Speaker 1: get these kind of big swings in petrol and diesel 192 00:10:59,600 --> 00:11:02,240 Speaker 1: prices that you guys see over there in the United States, right, 193 00:11:02,240 --> 00:11:04,280 Speaker 1: And I'll just give you the number about We'll do 194 00:11:04,320 --> 00:11:08,400 Speaker 1: it by leader, because that's more global expression. Seventy cents 195 00:11:08,480 --> 00:11:12,000 Speaker 1: per leader in the United States, a dollar fifty for 196 00:11:12,360 --> 00:11:15,640 Speaker 1: a leader in the u K. Let's bring in an 197 00:11:15,640 --> 00:11:18,560 Speaker 1: expert to find out where the price of oil will 198 00:11:18,600 --> 00:11:20,520 Speaker 1: trade in the future. It's no good knowing it now. 199 00:11:20,559 --> 00:11:24,040 Speaker 1: It's forty four dollars. Everybody knows that. John Swaki Nakas 200 00:11:24,240 --> 00:11:27,840 Speaker 1: is the director of economics research for the Gulf Research 201 00:11:28,040 --> 00:11:32,120 Speaker 1: Center Foundation. He formally served as an advisor for Saudi 202 00:11:32,160 --> 00:11:36,920 Speaker 1: Arabia's Ministry of Economy and Planning. John Swaki Nakas, thank 203 00:11:36,960 --> 00:11:39,880 Speaker 1: you very much for being with us. Begin by telling 204 00:11:39,960 --> 00:11:44,240 Speaker 1: us about changes in the government of Saudi Arabia and 205 00:11:44,360 --> 00:11:49,000 Speaker 1: how you think that will implicate or change people's perception 206 00:11:49,240 --> 00:11:55,400 Speaker 1: of oil prices. Well, thank you. Well, we had the 207 00:11:55,760 --> 00:12:01,520 Speaker 1: big shuffle yesterday. It's the largest have seen or the 208 00:12:01,559 --> 00:12:05,440 Speaker 1: first one we have actually seen since the Kashobi affair. 209 00:12:06,240 --> 00:12:09,160 Speaker 1: And definitely we have seen changes at the level of 210 00:12:09,240 --> 00:12:13,200 Speaker 1: foreign ministry, but it's not a demotion for the Foreign minister. 211 00:12:13,559 --> 00:12:15,840 Speaker 1: It's just that the Ministry of Foreign Affairs is going 212 00:12:15,880 --> 00:12:18,719 Speaker 1: to go through a structure in phase. So we will 213 00:12:18,800 --> 00:12:22,920 Speaker 1: have effectively one foreign ministry dealing with political affairs and 214 00:12:23,040 --> 00:12:25,960 Speaker 1: that Sather Tobar, and then the other one with the 215 00:12:26,080 --> 00:12:30,080 Speaker 1: former Foreign Finance Minister of sauth Abia who is going 216 00:12:30,120 --> 00:12:34,840 Speaker 1: to be responsible for instructure internally the Ministry of Foreign Affairs. 217 00:12:34,880 --> 00:12:38,040 Speaker 1: And then we had some changes in friends of um 218 00:12:38,679 --> 00:12:42,760 Speaker 1: princes who took up new positions in government. But basically 219 00:12:42,800 --> 00:12:47,040 Speaker 1: the messages that the Saudi government is being reformed and 220 00:12:47,120 --> 00:12:49,800 Speaker 1: they want to see change on the back of what 221 00:12:49,840 --> 00:12:52,000 Speaker 1: they have been doing over the last few years, which 222 00:12:52,080 --> 00:12:56,120 Speaker 1: is really revolutionary changes for Saudi Arabia and for the 223 00:12:56,120 --> 00:12:59,000 Speaker 1: people of Saudi Arabia have never before having seen such 224 00:12:59,080 --> 00:13:02,160 Speaker 1: changes and in the span of three years, so very 225 00:13:02,240 --> 00:13:06,040 Speaker 1: much we are in a very transformed, transformative says and 226 00:13:06,160 --> 00:13:09,880 Speaker 1: what we've seen is unique for Saudi Arabia. John, Do 227 00:13:09,920 --> 00:13:13,840 Speaker 1: you believe that Saudi Arabia still views oil as a 228 00:13:13,880 --> 00:13:20,120 Speaker 1: strategic weapon? I don't believe so. I don't believe That's 229 00:13:20,160 --> 00:13:24,520 Speaker 1: Arabia considers oil as a weapon to be used against 230 00:13:24,520 --> 00:13:27,480 Speaker 1: the West, against the world, should the world go against 231 00:13:27,520 --> 00:13:30,319 Speaker 1: them in some sort of ways. No. I think they 232 00:13:30,400 --> 00:13:34,679 Speaker 1: believe that there are responsible producers and they want to 233 00:13:34,679 --> 00:13:41,040 Speaker 1: see people other producers behavior responsibly and if anybody else, 234 00:13:41,120 --> 00:13:43,959 Speaker 1: it's auth Arabia to leave the pack. I don't believe 235 00:13:44,000 --> 00:13:47,319 Speaker 1: that Save Arabia is in any shape and form to 236 00:13:47,720 --> 00:13:50,760 Speaker 1: conduct foreign policy that is aggressive and do what they 237 00:13:50,800 --> 00:13:55,080 Speaker 1: did back in the nine in the ninetes seventiece, John, 238 00:13:55,080 --> 00:13:58,840 Speaker 1: it's going in London? Is OPEC now redundant? It seems 239 00:13:58,840 --> 00:14:01,080 Speaker 1: that we have three countries set the price of crude, 240 00:14:01,320 --> 00:14:05,600 Speaker 1: the United States, Russia and Saudi Arabia. Everybody else doesn't 241 00:14:05,640 --> 00:14:12,000 Speaker 1: really matter. Yes, I agree with that you very much. 242 00:14:12,480 --> 00:14:16,040 Speaker 1: We are in a new paradigm where where Saudi Arabia 243 00:14:16,440 --> 00:14:19,680 Speaker 1: worth Russia. Without the Russians coming in, we wouldn't have 244 00:14:19,760 --> 00:14:24,360 Speaker 1: seen or going back to the eighties in two thousand 245 00:14:24,400 --> 00:14:27,600 Speaker 1: and seventeen and parts of forming a team. And now 246 00:14:27,720 --> 00:14:30,920 Speaker 1: they need to get their act together and address the 247 00:14:30,920 --> 00:14:33,440 Speaker 1: issue of supply. We have too much oil. And as 248 00:14:33,440 --> 00:14:36,880 Speaker 1: you said quite rightly, Texas Texas plays a big role 249 00:14:37,200 --> 00:14:39,840 Speaker 1: in shale oil in the US plays a very big 250 00:14:39,920 --> 00:14:43,240 Speaker 1: role in this. It's no longer Russia and Saudi, It's 251 00:14:43,320 --> 00:14:46,200 Speaker 1: now the three of them. So I think you're going 252 00:14:46,280 --> 00:14:50,080 Speaker 1: forward as we have seen now oil prices tumbling. I 253 00:14:50,080 --> 00:14:53,360 Speaker 1: think it's on on the exaggerated side. I think that 254 00:14:53,560 --> 00:14:56,680 Speaker 1: very much like equities were being in a in a 255 00:14:56,800 --> 00:14:59,040 Speaker 1: sell off phase, we're going to go back in the 256 00:14:59,080 --> 00:15:01,640 Speaker 1: first quarter and is gonna see prices and that it 257 00:15:01,880 --> 00:15:05,080 Speaker 1: is ransomed back to more reasonable levels. And what is 258 00:15:05,120 --> 00:15:07,960 Speaker 1: a reasonable price level for all I think in the 259 00:15:08,200 --> 00:15:12,600 Speaker 1: sixties much more than where we have it now for 260 00:15:12,840 --> 00:15:17,120 Speaker 1: the something and around that fifty something. Okay, two of 261 00:15:17,160 --> 00:15:20,480 Speaker 1: those two countries we've talked about see I T I, 262 00:15:20,680 --> 00:15:23,480 Speaker 1: or where the price of crew should be. The United 263 00:15:23,520 --> 00:15:26,840 Speaker 1: States is a completely different kettle of fish um and 264 00:15:26,880 --> 00:15:29,080 Speaker 1: we find ourselves in the situation where if Saudi and 265 00:15:29,160 --> 00:15:32,280 Speaker 1: Russia decide to cut, and we see these cuts coming 266 00:15:32,280 --> 00:15:34,840 Speaker 1: through that we talked about a few weeks back the 267 00:15:34,880 --> 00:15:38,200 Speaker 1: OPEC plus meeting in Vienna, we're just going to see 268 00:15:38,240 --> 00:15:40,680 Speaker 1: the United States filling the gap that has been left behind. 269 00:15:41,240 --> 00:15:47,080 Speaker 1: Has can Saudi control the price anymore? Given that phenomenon, 270 00:15:50,240 --> 00:15:53,760 Speaker 1: I don't think that Saudi Arabia really really controlled the 271 00:15:53,840 --> 00:15:57,200 Speaker 1: price of royal in a significant way. I think that 272 00:15:58,000 --> 00:16:01,560 Speaker 1: market forces played out themselves, and as we were in 273 00:16:01,600 --> 00:16:05,680 Speaker 1: an economic boom globally over the last few years, oil 274 00:16:05,760 --> 00:16:09,680 Speaker 1: prices um were on this on the most part on 275 00:16:09,760 --> 00:16:12,800 Speaker 1: the upside. But I think that if all goes to 276 00:16:13,040 --> 00:16:16,200 Speaker 1: forty and that is Brent, because again for Saudi Arabia, 277 00:16:16,600 --> 00:16:20,080 Speaker 1: Brent is really the benchmark. So whenever we look at Brent, 278 00:16:20,600 --> 00:16:24,840 Speaker 1: take out a couple of dollars and that's what Saudi 279 00:16:25,040 --> 00:16:28,600 Speaker 1: sells for oil each day. UM. If we're going to 280 00:16:28,720 --> 00:16:31,840 Speaker 1: the forties, I think Saudi Arabia will take action and 281 00:16:31,880 --> 00:16:35,600 Speaker 1: they will look at the supply side given market forces, 282 00:16:35,920 --> 00:16:38,560 Speaker 1: and I think that Sabia, yes, it has a role 283 00:16:38,640 --> 00:16:41,520 Speaker 1: to play. I don't think that OPEC has disappeared it 284 00:16:41,640 --> 00:16:45,680 Speaker 1: has been reconstructed. Reconstructed them very much. Russia, I would 285 00:16:45,720 --> 00:16:50,120 Speaker 1: say another number of epic although officially they're not so. Yes, 286 00:16:50,200 --> 00:16:52,400 Speaker 1: I did believe that Saudi has a all to play 287 00:16:52,400 --> 00:16:55,080 Speaker 1: and also for share I don't think that the share 288 00:16:55,120 --> 00:16:58,680 Speaker 1: producers are happy to see oil at forty and thirty. 289 00:16:58,720 --> 00:17:02,560 Speaker 1: The great even is going to disturbed. I want to 290 00:17:02,600 --> 00:17:05,199 Speaker 1: thank you very much. John Swaki Nakas. He is the 291 00:17:05,240 --> 00:17:08,919 Speaker 1: director of economics research for the Golf Research Center Foundation 292 00:17:09,359 --> 00:17:12,479 Speaker 1: for Joining US. John Swaki Nakas formerly served as an 293 00:17:12,480 --> 00:17:25,560 Speaker 1: advisor for Saudi Arabia's Ministry of Economy and Planning. The 294 00:17:25,640 --> 00:17:28,000 Speaker 1: parts of the Middle East that certainly feel the hottest 295 00:17:28,040 --> 00:17:29,960 Speaker 1: at the moments are probably ones that aren't affected by 296 00:17:30,000 --> 00:17:32,679 Speaker 1: the price of crude. Syria and obvious case in points 297 00:17:32,680 --> 00:17:35,679 Speaker 1: as to what's happening there and the president's decision to 298 00:17:35,760 --> 00:17:38,119 Speaker 1: withdraw the US from that theater. I think he's going 299 00:17:38,160 --> 00:17:43,280 Speaker 1: to have significant impact, a significant implications into twenty nineteen 300 00:17:43,320 --> 00:17:46,000 Speaker 1: in the way that Israel reacts to that, how the 301 00:17:46,040 --> 00:17:49,880 Speaker 1: Turks react to that story, how Iran reacts to that story, 302 00:17:49,880 --> 00:17:52,440 Speaker 1: and again maybe you're right, that then feeds back into 303 00:17:52,440 --> 00:17:55,440 Speaker 1: the oil story. Well, let's find out from our expert 304 00:17:55,520 --> 00:17:58,800 Speaker 1: we have at Martin and Dickie is the former Ambassador 305 00:17:58,920 --> 00:18:03,240 Speaker 1: to Israel, special assistant to President Bill Clinton. He is 306 00:18:03,280 --> 00:18:06,680 Speaker 1: a Council of Foreign Relations Distinguished Fellow and the director 307 00:18:06,840 --> 00:18:11,560 Speaker 1: of their Education Executive Education Middle East Program. Ambassador Indic, 308 00:18:11,680 --> 00:18:14,040 Speaker 1: thank you very much for being with us. First, just 309 00:18:14,080 --> 00:18:18,720 Speaker 1: give us your reaction to President Donald Trump's announcement of 310 00:18:18,720 --> 00:18:23,359 Speaker 1: the withdrawal of US military forces from Syria. Thanks for 311 00:18:23,400 --> 00:18:25,840 Speaker 1: having me, pamm Well, there was gob stopping from me, 312 00:18:26,960 --> 00:18:32,639 Speaker 1: partly because his closest advisors, National Security Advisor John Bolton 313 00:18:32,720 --> 00:18:40,320 Speaker 1: and Secretary State Like Pompeio, rather repeatedly as making clear 314 00:18:40,440 --> 00:18:43,760 Speaker 1: that not only was the United States and Syria for 315 00:18:43,840 --> 00:18:48,440 Speaker 1: the log hall, but its objective was to push Iran 316 00:18:48,680 --> 00:18:54,200 Speaker 1: out of Syria. Fairly grandiose objective, but nevertheless declared so 317 00:18:54,400 --> 00:18:58,679 Speaker 1: by his closest advisors, and suddenly poof, with one tweet, 318 00:18:59,520 --> 00:19:03,320 Speaker 1: We're out there. So I think it came as a 319 00:19:03,359 --> 00:19:10,160 Speaker 1: real shock to particularly Israel, but also even to Turkey, 320 00:19:10,200 --> 00:19:13,920 Speaker 1: which is happy with the moves, and and I think 321 00:19:14,000 --> 00:19:19,040 Speaker 1: had a broader repercussions for the image of a lot 322 00:19:21,960 --> 00:19:25,639 Speaker 1: which is critical in that part of the world. All right, okay, 323 00:19:25,640 --> 00:19:28,200 Speaker 1: But having said that that that is and and and 324 00:19:28,280 --> 00:19:30,840 Speaker 1: to give your do that is a strategic view of 325 00:19:30,880 --> 00:19:35,560 Speaker 1: the region. Was there ever a specific case made for 326 00:19:35,720 --> 00:19:41,160 Speaker 1: why US military forces were in Syria for the long term, 327 00:19:41,280 --> 00:19:45,920 Speaker 1: What would they physically accomplish there? Well, I think it's 328 00:19:45,960 --> 00:19:51,280 Speaker 1: important to remember two things. First of all, Syria itself 329 00:19:51,480 --> 00:19:54,880 Speaker 1: is not a vital strategic importance to the United States, 330 00:19:55,560 --> 00:19:57,960 Speaker 1: and partly as a consequence of that, we only had 331 00:19:58,080 --> 00:20:03,240 Speaker 1: two thousand troops there, had a very small military presence, 332 00:20:04,080 --> 00:20:09,800 Speaker 1: but it was being leveraged to considerable effect because together 333 00:20:09,920 --> 00:20:14,960 Speaker 1: with Syrian Kurdish allies, we were controlling one third of 334 00:20:15,000 --> 00:20:19,200 Speaker 1: the country, most of the Syrious oil supplies, and we 335 00:20:19,320 --> 00:20:24,439 Speaker 1: also had a critical strategic outpost on the southern border 336 00:20:24,880 --> 00:20:28,520 Speaker 1: with Iraq, which was making things difficult for Iran in 337 00:20:28,600 --> 00:20:33,520 Speaker 1: terms of its ambitions there. So we already lost two 338 00:20:33,840 --> 00:20:38,800 Speaker 1: soldiers in two years, and so the cost was actually 339 00:20:38,920 --> 00:20:41,520 Speaker 1: very low, and the game was considerable in terms of 340 00:20:41,560 --> 00:20:45,520 Speaker 1: the leverage it gave us over the future of that 341 00:20:45,600 --> 00:20:50,800 Speaker 1: country and in particular over the battle to finish off 342 00:20:50,880 --> 00:20:55,040 Speaker 1: isis there. Can I ask you a question about looking 343 00:20:55,040 --> 00:20:58,200 Speaker 1: at this from from an Israel angle. We have elections 344 00:20:58,240 --> 00:21:01,440 Speaker 1: coming up, and I'm kind of wondering what this means 345 00:21:01,520 --> 00:21:05,000 Speaker 1: for the region. If if it as it appears unlikely, 346 00:21:05,280 --> 00:21:06,679 Speaker 1: it probably will happen. But let me just ask you 347 00:21:06,720 --> 00:21:09,360 Speaker 1: the question, what happens it BB loses. What happens if 348 00:21:09,359 --> 00:21:11,800 Speaker 1: we if the next Prime Minister of Israel is not 349 00:21:11,960 --> 00:21:17,520 Speaker 1: Netan Yahoo? What would that mean for regional stability? Well, 350 00:21:17,600 --> 00:21:19,679 Speaker 1: it's very hard for me to conceive of that as 351 00:21:19,720 --> 00:21:23,280 Speaker 1: an outcome. He's writing very high in the polls. His 352 00:21:23,440 --> 00:21:27,639 Speaker 1: biggest threat is an indictment by the Attorney General, but 353 00:21:27,720 --> 00:21:31,399 Speaker 1: he's clear he's not he's not going to resign because 354 00:21:31,440 --> 00:21:36,119 Speaker 1: of that, and legally he's not required to. And so 355 00:21:36,359 --> 00:21:39,760 Speaker 1: you know, it's hard to envisage who would replace him. 356 00:21:40,160 --> 00:21:44,320 Speaker 1: But I think, you know, having said that, there's nobody, 357 00:21:44,400 --> 00:21:49,399 Speaker 1: there's no Donald Trump in Israel, there's nobody who is 358 00:21:49,520 --> 00:21:53,840 Speaker 1: going to be a disruptive force. There will be I think, 359 00:21:54,359 --> 00:22:00,720 Speaker 1: much more continuity in Israeli policy towards the region, regardless 360 00:22:00,720 --> 00:22:04,560 Speaker 1: of who is as the leader there. But if we 361 00:22:04,560 --> 00:22:07,280 Speaker 1: were okay, let's let's seem that that that he does 362 00:22:07,359 --> 00:22:11,280 Speaker 1: win and we see the United States withdrawing Syria, just 363 00:22:11,280 --> 00:22:16,480 Speaker 1: looks increasingly like a proxy war between between Iran and Israel. 364 00:22:16,680 --> 00:22:19,040 Speaker 1: Is that how it's likely to evolve, and what role 365 00:22:19,080 --> 00:22:23,120 Speaker 1: with Turkey play in that scenario. Yes, I think that's 366 00:22:23,200 --> 00:22:26,480 Speaker 1: precisely the way it will evolved. We saw a glimpse 367 00:22:26,520 --> 00:22:29,560 Speaker 1: of the future yesterday or the day before yesterday, when 368 00:22:29,640 --> 00:22:35,920 Speaker 1: Israel took kinetic action against Iranian positions in Syria, bombing them. 369 00:22:36,160 --> 00:22:38,840 Speaker 1: We've had a bit of a lull in that, partly 370 00:22:38,880 --> 00:22:42,560 Speaker 1: because of Russia's intervention to quiet it down and partly 371 00:22:42,560 --> 00:22:47,200 Speaker 1: because Iranians had lowered their their profile and activity there. 372 00:22:47,280 --> 00:22:50,880 Speaker 1: But now after Trump's decisions, like all bets are off. 373 00:22:52,040 --> 00:22:57,639 Speaker 1: The Israeli is now determined to prevent Iran from taking 374 00:22:57,680 --> 00:23:02,920 Speaker 1: advantage of the situation to move it's proxy forces to 375 00:23:03,000 --> 00:23:06,240 Speaker 1: the border with Israel and the Golm Heights, and to 376 00:23:06,359 --> 00:23:10,040 Speaker 1: prevent Iran from using Syria as a staging area for 377 00:23:10,280 --> 00:23:14,520 Speaker 1: arming Hezbollah in Lebanon. So I think that that that 378 00:23:14,800 --> 00:23:19,120 Speaker 1: is definitely one part of the kind of fiction that 379 00:23:19,320 --> 00:23:22,440 Speaker 1: is likely to escalate next year coming out of Syria 380 00:23:22,800 --> 00:23:26,640 Speaker 1: to a larger conflictus that we've essentially had a cold 381 00:23:26,640 --> 00:23:31,040 Speaker 1: war between Iran and Israel, with with occasional strikes in Syria. 382 00:23:31,040 --> 00:23:33,520 Speaker 1: I think we're going to see it warming up considerably 383 00:23:33,520 --> 00:23:36,840 Speaker 1: in another Turkish dimension. To this is also important the 384 00:23:36,880 --> 00:23:40,120 Speaker 1: relationship between Bertawuan and nets and Ya who is very 385 00:23:40,840 --> 00:23:47,680 Speaker 1: bad toxic. I would say they are real adversaries. They 386 00:23:47,800 --> 00:23:52,240 Speaker 1: don't bump up against each other in Syria per se, 387 00:23:52,320 --> 00:23:55,679 Speaker 1: because the Turks are operating in the northeastern part of 388 00:23:55,720 --> 00:23:59,359 Speaker 1: Syria and Israel and is operating in the southwestern part 389 00:23:59,440 --> 00:24:03,720 Speaker 1: of the up to Damascus. So m there's not likely 390 00:24:03,760 --> 00:24:07,240 Speaker 1: to be a military confrontation, but there's no doubt that 391 00:24:07,280 --> 00:24:10,200 Speaker 1: Turkey is going to be seeking to take advantage of 392 00:24:10,240 --> 00:24:14,880 Speaker 1: the situation. Turkey hasn't fairly good relationship with Iran. It's 393 00:24:14,920 --> 00:24:18,120 Speaker 1: not going to be countering Iran's activities there. It group 394 00:24:18,280 --> 00:24:21,240 Speaker 1: more likely turning blind either them and cooperating with them 395 00:24:21,240 --> 00:24:25,800 Speaker 1: in the southeast. So I think that Israel's situation becomes 396 00:24:25,800 --> 00:24:33,400 Speaker 1: more complicated as Turkey's position of influence improved. The ambassador indicted, 397 00:24:33,640 --> 00:24:36,840 Speaker 1: just your thoughts on the the sort of strategic importance 398 00:24:36,920 --> 00:24:41,159 Speaker 1: of oil and energy shipments Israel, Cypress, Greece, Italy. They 399 00:24:41,200 --> 00:24:44,520 Speaker 1: have all signed the memorandum of understanding that would end 400 00:24:44,560 --> 00:24:48,439 Speaker 1: up creating the world's largest underwater pipeline in order to 401 00:24:48,520 --> 00:24:52,240 Speaker 1: export gas from the Eastern Mediterranean to Europe. Do you 402 00:24:52,280 --> 00:24:55,679 Speaker 1: believe that that is part of the reason why the 403 00:24:55,840 --> 00:24:58,920 Speaker 1: Russians are in Syria and why they want to preserve 404 00:24:59,280 --> 00:25:03,479 Speaker 1: their specific dominance when it comes to exports of natural 405 00:25:03,520 --> 00:25:08,760 Speaker 1: gas to Europe. Well, it's it's one factor. I wouldn't 406 00:25:09,080 --> 00:25:12,880 Speaker 1: rate it as the most important. I think the more 407 00:25:12,960 --> 00:25:19,520 Speaker 1: important strategic calculations for Russia relative the port that it 408 00:25:19,560 --> 00:25:22,560 Speaker 1: has access to their air basis and has access to 409 00:25:23,000 --> 00:25:27,879 Speaker 1: which enables it to project its hard power into the 410 00:25:27,920 --> 00:25:31,679 Speaker 1: Middle East, and that makes it a player player that 411 00:25:31,760 --> 00:25:35,560 Speaker 1: it hasn't been since it moved into Syria in support 412 00:25:35,600 --> 00:25:38,920 Speaker 1: of the Assa regime. Essentially, we have to go back 413 00:25:38,960 --> 00:25:42,960 Speaker 1: to the nineties seventies when the United States under Richard 414 00:25:43,040 --> 00:25:47,600 Speaker 1: Nixon Henry Kissinger worked with each ship to push Russia 415 00:25:47,760 --> 00:25:50,960 Speaker 1: out of the Middle East and did so very effectively, 416 00:25:51,000 --> 00:25:54,280 Speaker 1: and that was the beginning of the packs Americana, the 417 00:25:54,320 --> 00:25:58,160 Speaker 1: age of American dominance in the region. That era is over, 418 00:25:58,520 --> 00:26:05,639 Speaker 1: and Russia is the opportunity now to essentially play a 419 00:26:05,680 --> 00:26:09,280 Speaker 1: dominant role in the region as as the outside Palace. 420 00:26:09,359 --> 00:26:13,240 Speaker 1: So yes, guests is always going to be critically important 421 00:26:13,680 --> 00:26:17,600 Speaker 1: to Russia, but it has larger ambitions in the region, 422 00:26:18,080 --> 00:26:21,080 Speaker 1: and I would say a good chance of achieving them 423 00:26:21,119 --> 00:26:26,240 Speaker 1: because Donald camp has decided essentially to see the territory 424 00:26:26,320 --> 00:26:29,000 Speaker 1: to the to the Russians. I want to thank you 425 00:26:29,119 --> 00:26:32,679 Speaker 1: very much for being with US. Ambassador Martin Indeck. He 426 00:26:32,880 --> 00:26:37,040 Speaker 1: is a former US Ambassador to Israel. He also served 427 00:26:37,040 --> 00:26:41,480 Speaker 1: as the U s Special Envoy for Israeli Palestinian negotiations 428 00:26:41,560 --> 00:26:46,080 Speaker 1: from twenty fourteen, and he is a Distinguished Fellow at 429 00:26:46,080 --> 00:26:50,280 Speaker 1: the Council on Foreign Relations as well as the executive 430 00:26:50,560 --> 00:26:55,320 Speaker 1: director of the Education Program for the Council on Foreign 431 00:26:55,320 --> 00:27:10,439 Speaker 1: Relations Middle East Program. If you're an investor in technology stocks, 432 00:27:10,440 --> 00:27:12,320 Speaker 1: there's no need to tell you that it has been 433 00:27:12,359 --> 00:27:15,680 Speaker 1: a challenging quarter to say the least. Here to help 434 00:27:15,720 --> 00:27:18,440 Speaker 1: us understand what is happening in the world of technology 435 00:27:18,480 --> 00:27:21,479 Speaker 1: is David Kirkpatrick. He is the chief executive and the 436 00:27:21,520 --> 00:27:27,240 Speaker 1: founder of Techonomy. David Kirkpatrick always a pleasure. Merry Christmas, Mary, 437 00:27:27,320 --> 00:27:29,879 Speaker 1: Post Christmas Boxing Day, and Happy New Year to you. 438 00:27:30,160 --> 00:27:32,160 Speaker 1: Do you believe that it's going to be a happier 439 00:27:32,440 --> 00:27:39,760 Speaker 1: new year for tech investors. Wow, what a question. Um, 440 00:27:39,760 --> 00:27:44,000 Speaker 1: Probably it will be in many ways because it was 441 00:27:44,240 --> 00:27:46,639 Speaker 1: in many ways an awful year. I mean, it was 442 00:27:46,680 --> 00:27:48,840 Speaker 1: a great year in some respects. It was a kind 443 00:27:48,840 --> 00:27:53,680 Speaker 1: of constantly rising year, and then so many negative surface 444 00:27:53,880 --> 00:27:59,800 Speaker 1: during eighteen that we are all still processing about, particularly 445 00:27:59,840 --> 00:28:04,760 Speaker 1: the largest tech companies. But I do think the bottom 446 00:28:04,800 --> 00:28:08,879 Speaker 1: line is that the amount of value being created both 447 00:28:09,000 --> 00:28:14,680 Speaker 1: for their shareholders, for their and for society by many, many, 448 00:28:14,760 --> 00:28:18,440 Speaker 1: many of the major tech companies is huge, and that 449 00:28:18,600 --> 00:28:22,199 Speaker 1: value deserves to be recognized by the markets, and it 450 00:28:22,280 --> 00:28:25,240 Speaker 1: probably will be. So from the standpoint of investors, I 451 00:28:25,240 --> 00:28:29,000 Speaker 1: would say, you know, things are going to remain rocky, 452 00:28:29,119 --> 00:28:34,120 Speaker 1: there's no question. I mean, there's un palatable revelations almost 453 00:28:34,200 --> 00:28:38,120 Speaker 1: daily about the biggest companies. That's probably going to continue. 454 00:28:38,840 --> 00:28:41,840 Speaker 1: But you know, from a valuation point of view, if 455 00:28:41,960 --> 00:28:45,280 Speaker 1: these companies can get a handle on their problems, you 456 00:28:45,320 --> 00:28:48,960 Speaker 1: know there's still a huge upside. Well, you know, David, 457 00:28:49,080 --> 00:28:51,520 Speaker 1: one of the things that I think is worth noting 458 00:28:51,720 --> 00:28:54,920 Speaker 1: is that it is not a homogeneous environment. There are 459 00:28:55,080 --> 00:28:59,800 Speaker 1: company specifics which drive valuations. And I'll just throw out 460 00:29:00,080 --> 00:29:02,920 Speaker 1: four examples and you can kind of pick which one 461 00:29:03,240 --> 00:29:05,360 Speaker 1: you want in order to jump off from, because you 462 00:29:05,360 --> 00:29:07,960 Speaker 1: know Facebook, of course I know that, you know. We 463 00:29:08,000 --> 00:29:11,840 Speaker 1: should mention that David Kirkpatrick knows all about Facebook because 464 00:29:11,840 --> 00:29:14,360 Speaker 1: he is the author of the best selling book The 465 00:29:14,440 --> 00:29:17,360 Speaker 1: Facebook Effect, The Inside Story of the Company that is 466 00:29:17,400 --> 00:29:23,000 Speaker 1: Connecting the World. Facebook shares down twenty three this year, 467 00:29:23,320 --> 00:29:27,160 Speaker 1: Apple shares down seven percent. But if you happen to 468 00:29:27,200 --> 00:29:31,440 Speaker 1: be a technology investor who selected Microsoft, you're up nearly 469 00:29:31,520 --> 00:29:37,040 Speaker 1: twenty and Amazon investors have seen their stock price rise. 470 00:29:38,840 --> 00:29:42,840 Speaker 1: What does that tell you? Well, again, it tells you 471 00:29:42,880 --> 00:29:46,720 Speaker 1: that these companies have secured a in each case a 472 00:29:46,880 --> 00:29:52,400 Speaker 1: unique market and societal position from which they still have 473 00:29:52,880 --> 00:29:58,120 Speaker 1: enormous potential to profit. Particularly Amazon. I mean, Amazon is 474 00:29:58,400 --> 00:30:02,640 Speaker 1: on almost bizarre story of a company that has achieved 475 00:30:02,960 --> 00:30:07,280 Speaker 1: such spectacular sort of you'd call it social positioning as 476 00:30:07,800 --> 00:30:14,360 Speaker 1: the de facto online commerce king uh and and increasingly 477 00:30:14,560 --> 00:30:19,160 Speaker 1: on a global basis um and and the scale that 478 00:30:19,240 --> 00:30:24,120 Speaker 1: Amazon has achieved and the logistics uh mastery that the 479 00:30:24,200 --> 00:30:29,680 Speaker 1: company has has has achieved gives it an advantage. You know, 480 00:30:29,680 --> 00:30:32,520 Speaker 1: there's you have, you have the network effects. You know, 481 00:30:32,720 --> 00:30:35,840 Speaker 1: more people mean more more people and more success. But 482 00:30:36,400 --> 00:30:41,480 Speaker 1: the sheer executional and operational excellence of Amazon just gives 483 00:30:41,480 --> 00:30:43,760 Speaker 1: them more and more opportunity. And at the same time 484 00:30:43,840 --> 00:30:48,400 Speaker 1: that's very scary because one company is getting into a 485 00:30:48,720 --> 00:30:52,680 Speaker 1: bizarrely powerful position, and yet we all still use it 486 00:30:52,680 --> 00:30:55,200 Speaker 1: and wanted to succeed in in another part of ourselves 487 00:30:55,280 --> 00:30:57,840 Speaker 1: because it saves us money. Even the federal government is 488 00:30:57,880 --> 00:31:01,960 Speaker 1: increasingly reliant on Amazon, and governments in many countries are 489 00:31:01,960 --> 00:31:05,520 Speaker 1: going to increasingly be reliant on Amazon. But you know, 490 00:31:05,600 --> 00:31:10,000 Speaker 1: what you end up with is this unusual, absolutely unprecedented 491 00:31:10,040 --> 00:31:15,880 Speaker 1: synthesis of business power and and governmental weakness. That is, 492 00:31:16,440 --> 00:31:18,600 Speaker 1: I think is something we have to really figure out. 493 00:31:18,640 --> 00:31:20,680 Speaker 1: And I think a lot of what's going to happen 494 00:31:20,680 --> 00:31:27,320 Speaker 1: in is extensive discussion of how do we deal with 495 00:31:27,480 --> 00:31:31,360 Speaker 1: the sheer scale of these platforms for good and for ill. 496 00:31:31,400 --> 00:31:33,600 Speaker 1: I mean, we've heard a lot about the negatives lately. 497 00:31:33,880 --> 00:31:37,160 Speaker 1: There's plenty of good about the scale of these platforms, 498 00:31:37,160 --> 00:31:41,960 Speaker 1: but we have to somehow have a mechanism and society 499 00:31:41,960 --> 00:31:45,280 Speaker 1: to oversee them, to to regulate them, uh, and to 500 00:31:45,400 --> 00:31:50,880 Speaker 1: understand them better. Well, you've written most recently about responsible growth, right, 501 00:31:50,920 --> 00:31:55,720 Speaker 1: that's your theme for Yeah, Well, I think that has 502 00:31:55,760 --> 00:31:59,320 Speaker 1: to be everybody's theme from from now going forward. I mean, 503 00:32:00,280 --> 00:32:02,800 Speaker 1: when looking at that, it's more than a checkpoint, it's 504 00:32:02,840 --> 00:32:05,040 Speaker 1: really a business point as a question of the role 505 00:32:05,080 --> 00:32:07,280 Speaker 1: of business in society, which is something that we have 506 00:32:07,400 --> 00:32:11,440 Speaker 1: Techonomy are deeply interested in, and that our conferences in 507 00:32:11,520 --> 00:32:15,120 Speaker 1: twenty nineteen are going to focus on very closely, because 508 00:32:15,320 --> 00:32:17,560 Speaker 1: you know, I mean, just look for example, at what 509 00:32:17,720 --> 00:32:20,120 Speaker 1: may be the biggest challenge facing the world, which is 510 00:32:20,160 --> 00:32:24,520 Speaker 1: migration and refugees. This is this is driven by economic 511 00:32:25,600 --> 00:32:28,920 Speaker 1: unhappiness and ineffectiveness in many regions of the world. People 512 00:32:28,960 --> 00:32:31,360 Speaker 1: are just not going to stay where they are if 513 00:32:31,400 --> 00:32:35,720 Speaker 1: they can't live, and especially wars and climate change exacerbate 514 00:32:35,800 --> 00:32:39,080 Speaker 1: this further. But you know, business really, in a way, 515 00:32:39,120 --> 00:32:42,880 Speaker 1: for its own sake, has to start thinking about these 516 00:32:42,920 --> 00:32:46,280 Speaker 1: problems or we are all going to suffer. And and 517 00:32:46,360 --> 00:32:50,800 Speaker 1: unfortunately we're at a moment when governments almost globally are 518 00:32:50,840 --> 00:32:55,640 Speaker 1: approving unusually ineffective at addressing the big problems that the 519 00:32:55,640 --> 00:32:58,080 Speaker 1: world faces. So business, a lot of it goes back 520 00:32:58,120 --> 00:33:00,880 Speaker 1: on the on business because business does of a bottom line, 521 00:33:01,200 --> 00:33:03,920 Speaker 1: Business does see the long term consequences of things if 522 00:33:03,920 --> 00:33:08,320 Speaker 1: they think it through. So responsible growth is is not 523 00:33:08,440 --> 00:33:12,200 Speaker 1: just a sort of philanthropic mindset, it's really a sort 524 00:33:12,240 --> 00:33:15,600 Speaker 1: of selfish mindset that just takes a longer term view 525 00:33:15,960 --> 00:33:18,560 Speaker 1: that we're all in this together and business has to 526 00:33:18,680 --> 00:33:21,600 Speaker 1: somehow put its shoulder to the wheel. Well, I'd just 527 00:33:21,680 --> 00:33:26,600 Speaker 1: like to mention the fall issue of Techonomy because on 528 00:33:26,640 --> 00:33:32,320 Speaker 1: the cover, the story is facing Facebook's failures, and when 529 00:33:32,360 --> 00:33:37,680 Speaker 1: you open the magazine you see stories having to do 530 00:33:37,840 --> 00:33:41,600 Speaker 1: with social media and human rights. For example, you write 531 00:33:41,600 --> 00:33:47,440 Speaker 1: about Iranian rights campaign and social media that is something 532 00:33:47,480 --> 00:33:53,560 Speaker 1: that is not necessarily controllable at all levels of the society. Well, 533 00:33:53,600 --> 00:33:56,080 Speaker 1: that story is a very interesting one in our Techonomy 534 00:33:56,120 --> 00:33:58,880 Speaker 1: magazine and it's on on our website at Techonomy also, 535 00:33:59,000 --> 00:34:03,040 Speaker 1: And there's a story that you know, basically explains how 536 00:34:03,520 --> 00:34:06,920 Speaker 1: the most some of the most prominent human rights activists 537 00:34:06,960 --> 00:34:11,759 Speaker 1: in Iran use Facebook and social media generally too tremendously 538 00:34:11,840 --> 00:34:15,360 Speaker 1: positive effect to get their message out. And the story 539 00:34:15,480 --> 00:34:19,520 Speaker 1: is particularly about a movement to not wear a he 540 00:34:19,760 --> 00:34:22,520 Speaker 1: job in public and to show that women are are 541 00:34:22,680 --> 00:34:25,800 Speaker 1: entitled to have control over their own bodies, etcetera. And 542 00:34:25,840 --> 00:34:30,520 Speaker 1: it's a very popular um group on Facebook and popular 543 00:34:30,560 --> 00:34:33,640 Speaker 1: in Iran. So on the one hand that has gotten 544 00:34:33,680 --> 00:34:38,880 Speaker 1: tremendous popular support and demonstrated a sort of subcurrent of 545 00:34:39,360 --> 00:34:43,640 Speaker 1: dissidents and and and independence in Iran. My guest is 546 00:34:43,719 --> 00:34:47,520 Speaker 1: David Kirkpatrick. He is the author of The Facebook Effect, 547 00:34:47,560 --> 00:34:51,360 Speaker 1: The Inside Story of the company that is connecting the World. 548 00:34:51,680 --> 00:34:54,160 Speaker 1: He is, of course also the chief executive and the 549 00:34:54,200 --> 00:34:58,479 Speaker 1: founder of Teconomy. David Kirkpatrick, I'm wondering if you could 550 00:34:58,520 --> 00:35:02,440 Speaker 1: just speak about a specific, thick example of Facebook's what 551 00:35:02,560 --> 00:35:09,160 Speaker 1: you describe as ungoverned platform and how it has harms society. 552 00:35:09,600 --> 00:35:12,319 Speaker 1: You give an example in the most recent issue of 553 00:35:12,360 --> 00:35:16,600 Speaker 1: Techonomy about something that happened in Sri Lanka, and while 554 00:35:16,640 --> 00:35:19,120 Speaker 1: many people may be hard pressed to even find it 555 00:35:19,160 --> 00:35:22,560 Speaker 1: on the map, I think it's worth you describing what 556 00:35:22,960 --> 00:35:28,080 Speaker 1: happened and what was Facebook's role. Thanks pim Um, and 557 00:35:28,400 --> 00:35:30,160 Speaker 1: before I was just trying to use it on as 558 00:35:30,200 --> 00:35:32,839 Speaker 1: an example that it's a great platform for a lot 559 00:35:32,920 --> 00:35:35,439 Speaker 1: of things, but when something goes wrong, the company won't 560 00:35:35,440 --> 00:35:38,319 Speaker 1: fix it, and that's often the case, and that's what 561 00:35:38,440 --> 00:35:41,440 Speaker 1: happened in Sri Lanka as well. I mean basically the 562 00:35:41,520 --> 00:35:43,960 Speaker 1: simple story, and if there's not a simple story, because 563 00:35:44,000 --> 00:35:46,759 Speaker 1: it involves a lot of violence and death. But in 564 00:35:46,840 --> 00:35:51,160 Speaker 1: Sri Lanka, Facebook is essentially z predominant platform for communication. 565 00:35:51,239 --> 00:35:54,280 Speaker 1: I mean that's not an exaggeration of WhatsApp is also important, 566 00:35:54,320 --> 00:35:57,600 Speaker 1: which is owned by Facebook. So in effects, Facebook controls 567 00:35:57,880 --> 00:36:01,680 Speaker 1: the primary means of communication and media in this country 568 00:36:01,680 --> 00:36:05,360 Speaker 1: which used to be called Ceylon, and they've had a 569 00:36:05,400 --> 00:36:08,200 Speaker 1: civil war and a lot of ethnic hatred, and a 570 00:36:08,239 --> 00:36:11,480 Speaker 1: lot of people, in the interests of their political advantage, 571 00:36:11,600 --> 00:36:14,800 Speaker 1: abused this platform to try to arouse their followers to 572 00:36:14,920 --> 00:36:17,960 Speaker 1: anger and activism, and in the course of doing that, 573 00:36:18,000 --> 00:36:20,000 Speaker 1: there were a lot of calls for the death of 574 00:36:20,120 --> 00:36:23,520 Speaker 1: people of the other ethnic group, the minority groups, and 575 00:36:23,719 --> 00:36:28,080 Speaker 1: um Facebook failed to stop that and people died. That's 576 00:36:28,080 --> 00:36:32,120 Speaker 1: the simple story. And activists in Sri Lanka are outraged 577 00:36:32,280 --> 00:36:35,200 Speaker 1: because for years it just happens that in that country, 578 00:36:35,239 --> 00:36:38,759 Speaker 1: they've studied this really carefully, and they've been telling Facebook 579 00:36:38,880 --> 00:36:42,480 Speaker 1: for years that this was going on, and nothing happened 580 00:36:42,760 --> 00:36:46,880 Speaker 1: for years and years, probably four years before Facebook actually 581 00:36:46,880 --> 00:36:49,960 Speaker 1: took action. And it was only in twenty eighteen that 582 00:36:50,040 --> 00:36:52,759 Speaker 1: Facebook finally started owning up to the way that its 583 00:36:52,760 --> 00:36:56,680 Speaker 1: systems were distorting politics and leading to death and violence 584 00:36:56,680 --> 00:37:00,680 Speaker 1: in Sri Lanka. Now, can you make the case that 585 00:37:00,920 --> 00:37:04,920 Speaker 1: Facebook is in a sense providing the paper it used 586 00:37:04,960 --> 00:37:08,960 Speaker 1: to be newspapers is providing the paper, and that, given 587 00:37:09,000 --> 00:37:12,120 Speaker 1: the fact that there may not be any censorship or 588 00:37:12,160 --> 00:37:15,799 Speaker 1: controls on what people write and express, that it is 589 00:37:15,840 --> 00:37:23,480 Speaker 1: not Facebook's responsibility to monitor what is written on the paper. Well, 590 00:37:23,520 --> 00:37:25,880 Speaker 1: that's a that's a fascinating way to put it. And 591 00:37:25,960 --> 00:37:30,480 Speaker 1: in fact, Facebook is the town squares, how I often 592 00:37:30,520 --> 00:37:33,640 Speaker 1: say it, for the entire planet, and is also the 593 00:37:33,760 --> 00:37:38,120 Speaker 1: number one media in almost every country. Um, the question 594 00:37:38,239 --> 00:37:41,919 Speaker 1: is should they be responsible to control what's on there? 595 00:37:41,960 --> 00:37:45,000 Speaker 1: And if they are, how should they do so? In fact, 596 00:37:45,440 --> 00:37:48,840 Speaker 1: Today's New York Times has a long article about how 597 00:37:48,920 --> 00:37:53,040 Speaker 1: Facebook has these guidelines for its monitors, all of monitors 598 00:37:53,080 --> 00:37:57,560 Speaker 1: all over the world, and they're highly inconsistent. They are 599 00:37:57,719 --> 00:38:02,520 Speaker 1: unbelievably complicated, and um, there's a lot of question even 600 00:38:02,520 --> 00:38:05,200 Speaker 1: in that article about whether one company ought to be 601 00:38:05,239 --> 00:38:08,239 Speaker 1: in the position of deciding what's acceptable to say in 602 00:38:08,360 --> 00:38:12,640 Speaker 1: public period. And that's what Facebook the position Facebook's in. 603 00:38:13,200 --> 00:38:15,279 Speaker 1: So you know, this is again going back to one 604 00:38:15,280 --> 00:38:18,759 Speaker 1: of my earlier points. If society doesn't come up with 605 00:38:18,800 --> 00:38:22,920 Speaker 1: a new contract with these companies. The companies are just 606 00:38:22,960 --> 00:38:25,520 Speaker 1: going to gain more and more power and act in 607 00:38:25,640 --> 00:38:28,720 Speaker 1: ways that are more and more ungoverned and in many 608 00:38:28,760 --> 00:38:32,960 Speaker 1: cases very unacceptably, and and things are going to go 609 00:38:33,040 --> 00:38:35,319 Speaker 1: off the rails. That's going to hurt investors as well 610 00:38:35,360 --> 00:38:38,920 Speaker 1: as society because you've seen how much the controversies over 611 00:38:39,000 --> 00:38:41,880 Speaker 1: privacy and political manipulation and things like what happened in 612 00:38:41,880 --> 00:38:45,319 Speaker 1: Sri Lanka. I've heard Facebook stock in eighteen it's one 613 00:38:45,360 --> 00:38:47,919 Speaker 1: of the main reasons Facebook stock went down so much, 614 00:38:47,920 --> 00:38:51,520 Speaker 1: And I happen to believe that pulled down the fangs 615 00:38:51,560 --> 00:38:53,880 Speaker 1: that helped pull down the whole market. So in some ways, 616 00:38:53,920 --> 00:38:58,000 Speaker 1: Facebook's misbehavior as it was exposed in is one of 617 00:38:58,040 --> 00:39:01,279 Speaker 1: the major reasons we've had to bear market for much 618 00:39:01,320 --> 00:39:03,439 Speaker 1: not a bear market, but close to it, a very 619 00:39:03,440 --> 00:39:06,880 Speaker 1: negative market for the last few months. Um But but 620 00:39:06,960 --> 00:39:09,360 Speaker 1: we don't really have good ideas out there in public 621 00:39:09,360 --> 00:39:11,359 Speaker 1: about how to manage this, and the company is not 622 00:39:11,440 --> 00:39:14,880 Speaker 1: being forthright and not really coming and asking society to 623 00:39:14,920 --> 00:39:18,080 Speaker 1: help them. It's a very challenging problem. Is it worth 624 00:39:18,200 --> 00:39:22,600 Speaker 1: noting that what happened in Sri Lanka and continues to 625 00:39:22,719 --> 00:39:27,000 Speaker 1: happen with the Facebook platform in other countries such as 626 00:39:27,120 --> 00:39:32,680 Speaker 1: Hungary or Turkey or the Philippines, that tool a different extent. 627 00:39:33,440 --> 00:39:37,800 Speaker 1: It has happened in the United States, and congressional investigations 628 00:39:37,920 --> 00:39:45,200 Speaker 1: continue to how Russian actors or Russian government actors were 629 00:39:45,280 --> 00:39:51,280 Speaker 1: responsible for injecting false and misleading information into the political 630 00:39:51,360 --> 00:39:56,680 Speaker 1: discourse during the twenty sixteen presidential election. Yes, I mean 631 00:39:56,800 --> 00:39:59,560 Speaker 1: it hasn't led to death and destruction in the United States, 632 00:39:59,560 --> 00:40:03,360 Speaker 1: but the same phenomena have happened here. What the Russians 633 00:40:03,400 --> 00:40:07,920 Speaker 1: did by using Facebook ads and Facebook groups to distort 634 00:40:08,239 --> 00:40:12,400 Speaker 1: the results of the of the election and are continuing 635 00:40:12,440 --> 00:40:15,000 Speaker 1: to try to do in pretty much every major election 636 00:40:15,040 --> 00:40:18,600 Speaker 1: in the United States. Um, those techniques have been used 637 00:40:18,640 --> 00:40:22,040 Speaker 1: around the world, in some places with much more you know, 638 00:40:22,239 --> 00:40:25,600 Speaker 1: disastrous effect, like in the Philippines, where a lot of 639 00:40:25,640 --> 00:40:28,600 Speaker 1: death and destruction has resulted in. The government itself is 640 00:40:28,640 --> 00:40:31,839 Speaker 1: a huge abuser of Facebook, and Facebook doesn't know how 641 00:40:31,840 --> 00:40:34,200 Speaker 1: to manage that. So, you know, again, if you have 642 00:40:34,320 --> 00:40:37,040 Speaker 1: these systems, and in the United States it's not quite 643 00:40:37,040 --> 00:40:40,839 Speaker 1: as obvious, but in almost all these countries, again, Facebook 644 00:40:41,080 --> 00:40:44,760 Speaker 1: is the number one media platform, so that gives everybody 645 00:40:44,800 --> 00:40:48,640 Speaker 1: an incentive to game it, including in places like Philippines, 646 00:40:48,640 --> 00:40:51,600 Speaker 1: the government and when you have countries like Russia that 647 00:40:51,640 --> 00:40:53,920 Speaker 1: are willing to do anything, you know, it's sort of 648 00:40:53,960 --> 00:40:57,239 Speaker 1: a new form of warfare that is conducted on Facebook, 649 00:40:57,719 --> 00:41:00,560 Speaker 1: among the other problems, and that's what we saw in 650 00:41:00,760 --> 00:41:05,520 Speaker 1: electoral manipulation. Unfortunately, Facebook tries hard, and they're trying harder 651 00:41:05,600 --> 00:41:08,799 Speaker 1: every day to control abuse of their platform. But when 652 00:41:08,840 --> 00:41:11,399 Speaker 1: you have two and a half billion people on all 653 00:41:11,400 --> 00:41:14,359 Speaker 1: of their systems, uh, you know, that's a pretty hard 654 00:41:14,400 --> 00:41:17,640 Speaker 1: thing for one company to regulate clearly. And it is 655 00:41:17,680 --> 00:41:21,640 Speaker 1: also a platform that advertisers still love because it doesn't 656 00:41:21,640 --> 00:41:25,520 Speaker 1: seem to be that there's a viable alternative correct right, 657 00:41:25,600 --> 00:41:28,839 Speaker 1: And and this is one of the real contradictions that's 658 00:41:28,840 --> 00:41:32,040 Speaker 1: so complicated and makes figuring out what to do about 659 00:41:32,080 --> 00:41:35,120 Speaker 1: these Internet platforms so challenging. You know, I don't want 660 00:41:35,120 --> 00:41:38,520 Speaker 1: to see Facebook go away. Facebook needs to figure out 661 00:41:38,520 --> 00:41:41,520 Speaker 1: a way working with society to do a better job 662 00:41:42,040 --> 00:41:45,000 Speaker 1: of regulating content. But if it did go away, small 663 00:41:45,040 --> 00:41:48,239 Speaker 1: businesses in particular would be very badly hurt. There has 664 00:41:48,320 --> 00:41:51,640 Speaker 1: never been a better platform for small businesses to target 665 00:41:51,680 --> 00:41:55,000 Speaker 1: advertising to their communities and make more money and do 666 00:41:55,080 --> 00:41:59,640 Speaker 1: well than Facebook. Facebook is a spectacularly effective platform for that. 667 00:42:00,080 --> 00:42:04,000 Speaker 1: Small businesses around the world do tremendously better because of 668 00:42:04,040 --> 00:42:08,000 Speaker 1: Facebook's existence. There's all kinds of things that we want 669 00:42:08,080 --> 00:42:11,239 Speaker 1: Facebook to be able to do. Um, you know I 670 00:42:11,440 --> 00:42:13,760 Speaker 1: I don't want to see these these systems go away. 671 00:42:13,800 --> 00:42:17,400 Speaker 1: Facebook's targetability is unlike any platform that we've ever seen. 672 00:42:17,800 --> 00:42:20,600 Speaker 1: Google is extremely good at that too, but Facebook has 673 00:42:20,640 --> 00:42:26,160 Speaker 1: more exactitude. And that's why advertisers, particularly local advertisers, love 674 00:42:26,200 --> 00:42:27,960 Speaker 1: it so much, and it's one of the reasons it's 675 00:42:28,000 --> 00:42:30,680 Speaker 1: so profitable. Now, I'm just going to turn your attention 676 00:42:30,719 --> 00:42:34,720 Speaker 1: to something much more prosaic, and I don't mean to 677 00:42:34,800 --> 00:42:38,120 Speaker 1: highlight the distance between one story and another, but the 678 00:42:38,239 --> 00:42:42,800 Speaker 1: success of Fortnite as a game a hundred and twenty 679 00:42:42,800 --> 00:42:45,600 Speaker 1: five million players. Of course, it doesn't come close to 680 00:42:45,640 --> 00:42:49,400 Speaker 1: the more than two billion Facebook users. But do you 681 00:42:49,440 --> 00:42:54,040 Speaker 1: see some of the same driving forces of technology at 682 00:42:54,080 --> 00:42:57,480 Speaker 1: work when it comes to Fortnight that we see with 683 00:42:57,600 --> 00:43:00,920 Speaker 1: social media. Well, in some way, if there's a close 684 00:43:01,000 --> 00:43:03,880 Speaker 1: relationship in the you know what, we have our digital 685 00:43:03,960 --> 00:43:07,920 Speaker 1: systems that, through one means or another, succeed in commanding 686 00:43:07,960 --> 00:43:11,640 Speaker 1: the attention of millions of people and Fortnite has done 687 00:43:11,680 --> 00:43:14,839 Speaker 1: an amazing job, particularly with teeth you know, people from 688 00:43:14,920 --> 00:43:19,200 Speaker 1: like age ten to age sixteen, and and but many 689 00:43:19,239 --> 00:43:22,919 Speaker 1: others as well who are using it for far more 690 00:43:22,960 --> 00:43:26,799 Speaker 1: hours a day than than almost anybody uses Facebook or 691 00:43:27,200 --> 00:43:30,759 Speaker 1: or other social platforms. And in a way, Fortnite and 692 00:43:30,840 --> 00:43:34,400 Speaker 1: some of the other massive online games are becoming a 693 00:43:34,520 --> 00:43:37,160 Speaker 1: kind of new social network. That's it's a new kind 694 00:43:37,160 --> 00:43:40,160 Speaker 1: of observation that people are making that the amount of 695 00:43:40,200 --> 00:43:43,040 Speaker 1: time people spend in the way they interact there, they're 696 00:43:43,120 --> 00:43:47,400 Speaker 1: kind of living inside these games. It's it's a little 697 00:43:47,400 --> 00:43:49,919 Speaker 1: bit like Second Life, if you remember that one, only 698 00:43:50,000 --> 00:43:52,480 Speaker 1: on a much much larger scale and with a lot 699 00:43:52,520 --> 00:43:55,400 Speaker 1: more violence inside the game, by the way, but people 700 00:43:55,480 --> 00:43:58,000 Speaker 1: lived inside Second Life, and that was a precursor to 701 00:43:58,040 --> 00:44:00,440 Speaker 1: what we saw on Facebook in a way, so went away. 702 00:44:00,480 --> 00:44:02,640 Speaker 1: This is you know, we have these questions. Are people 703 00:44:02,680 --> 00:44:05,440 Speaker 1: addicted to technology? What about our smartphones? Do we use 704 00:44:05,480 --> 00:44:07,840 Speaker 1: them too much? All these things bring it all together. 705 00:44:08,120 --> 00:44:10,200 Speaker 1: Thanks very much for being with us. You help us 706 00:44:10,200 --> 00:44:13,480 Speaker 1: bring it all together. David Kirkpatrick. He is the author 707 00:44:13,520 --> 00:44:16,280 Speaker 1: of The Facebook Effect, The inside story of the company 708 00:44:16,320 --> 00:44:19,000 Speaker 1: that is connecting the world. He is also the chief 709 00:44:19,040 --> 00:44:37,640 Speaker 1: executive and the founder of Techonomy. Thanks for listening to 710 00:44:37,719 --> 00:44:42,239 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 711 00:44:42,280 --> 00:44:48,120 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 712 00:44:48,160 --> 00:44:51,480 Speaker 1: on Twitter at Tom Keane before the podcast. You can 713 00:44:51,520 --> 00:45:02,120 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.