WEBVTT - Bloomberg Businessweek Weekend - September 2, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week Inside from the reporters and 0:00:05.600 --> 0:00:09.160 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.200 global business, finance and tech news as it happened. Bloomberg 0:00:13.240 --> 0:00:16.759 Business Week with Carol Messier and Bloomberg Quick Takes. Tim 0:00:16.800 --> 0:00:21.520 Stinovic on Bloomberg Radio. Hi, everyone, welcome to the weekend 0:00:21.640 --> 0:00:24.520 edition of Bloomberg Business Week. We've got a double issue 0:00:24.520 --> 0:00:27.520 of the magazine as we head into the Labor Day holiday, 0:00:27.640 --> 0:00:30.800 and Tim the unofficial official start to fall. It's getting 0:00:30.840 --> 0:00:33.360 cooler in this city. It's getting cooler. Still feels like 0:00:33.760 --> 0:00:36.440 a little bit summer weather. I'm not ready to get 0:00:36.479 --> 0:00:40.120 the pumpkin spice lodge case and the sweaters out quite yet. Sure, Yeah, 0:00:40.159 --> 0:00:42.919 I'm sure. I do love fall, though we can't say 0:00:42.920 --> 0:00:44.839 good by the summer. No, I agree with you. Well, 0:00:44.840 --> 0:00:47.200 we've got a great program coming up. Bloomberg's Mark Bergen 0:00:47.360 --> 0:00:50.599 is joining us on YouTube's content moderation policy and why 0:00:50.600 --> 0:00:53.680 the company has struggled to crackdown on white extremism. It's 0:00:53.720 --> 0:00:56.920 all in his new book, It's called Like Comments Subscribe 0:00:57.000 --> 0:01:00.600 Inside YouTube's chaotic rise to world domination. Him and yes, 0:01:00.640 --> 0:01:02.760 of course, the countdown to the next FED meeting. It 0:01:02.920 --> 0:01:05.399 is on, but investors and corporate leaders are still sorting 0:01:05.440 --> 0:01:09.199 through FED Chairman j Powell's hawk ish message at Jackson Hole. 0:01:09.600 --> 0:01:11.880 Weighing in on that with his front row seat on 0:01:11.880 --> 0:01:15.360 global supply chains, we checked in with Paul Lunstrom, CFO 0:01:15.440 --> 0:01:19.199 of global manufacturing company Flex, and later on women's ongoing 0:01:19.200 --> 0:01:23.360 struggle for equality. Fitting timing too, as August marked the 0:01:24.040 --> 0:01:27.640 second anniversary of the certification of the Nineteenth Amendment that 0:01:27.720 --> 0:01:31.120 was passed back in nineteen twenty. Alright, full equality, folks. 0:01:31.160 --> 0:01:33.040 I'm just gonna say, we're still waiting. Yeah, we are. 0:01:33.080 --> 0:01:35.160 It's been more than a hundred years. Yep. All of 0:01:35.200 --> 0:01:37.280 that to come. We begin with this week's remarks in 0:01:37.319 --> 0:01:40.639 the magazine, which also happened to be the Issues cover story. 0:01:40.959 --> 0:01:44.440 President Biden recently announced a sweeping package of student debt relief, 0:01:44.440 --> 0:01:47.400 you know that, for giving as much as twenty dollars 0:01:47.400 --> 0:01:50.960 in loans for some recipients. Bloomberg Opinion editor Remesh rotten 0:01:50.960 --> 0:01:54.360 Bazaar says that the bailout doesn't address the fundamental problem. 0:01:54.400 --> 0:01:57.280 Too many college students are getting a bad return on 0:01:57.320 --> 0:02:00.600 their investments. We spoke to remesh for is take on 0:02:00.760 --> 0:02:04.240 what Biden got wrong. I don't want to understate, um, 0:02:04.280 --> 0:02:06.760 you know, the impact that loan forgiveness is going to 0:02:06.880 --> 0:02:10.040 have for you know, a lot of Americans. You know, 0:02:10.120 --> 0:02:13.440 particularly you know the people who um, you know, we're 0:02:13.480 --> 0:02:15.760 on pell grants, received pell grants. So these are low 0:02:15.840 --> 0:02:20.800 middle income UH students you know, who are in many 0:02:20.800 --> 0:02:23.280 cases going to see their their debts completely wiped out. 0:02:23.320 --> 0:02:25.880 That's life changing for a lot of them. But you know, 0:02:25.960 --> 0:02:30.680 the the underlying issue remains, which is, um, we have 0:02:30.760 --> 0:02:34.120 a system in which, you know, in order to have 0:02:34.200 --> 0:02:37.919 a good paying career, um, you know, people feel they 0:02:37.960 --> 0:02:41.359 need to go to college, whether that's two years for 0:02:41.520 --> 0:02:46.639 four years, um. And for an increasing number of those people, 0:02:47.320 --> 0:02:51.480 the gains of going to college just don't match the 0:02:51.600 --> 0:02:54.320 costs of doing so. And that's what's putting them in 0:02:54.320 --> 0:02:57.359 a position where they are leaving with debt that they 0:02:57.400 --> 0:03:00.320 can't repay. You know, that's what's caused this bigger cists. 0:03:00.360 --> 0:03:03.240 So forgiving debts, it's going to help some people, it 0:03:03.320 --> 0:03:06.240 doesn't really solve the problem. How did we get here? 0:03:06.240 --> 0:03:07.880 Because schools say, well, wait a minute, we've got to 0:03:07.880 --> 0:03:10.519 attract teachers, We've got to attract facilities. I want my 0:03:10.600 --> 0:03:12.280 daughter to learn. I don't really care if it's the 0:03:12.320 --> 0:03:15.000 newest gym that she's playing in. There are a lot 0:03:15.000 --> 0:03:21.480 of factors. Certainly, there's been under investment in public institutions 0:03:21.520 --> 0:03:25.919 really beginning with the Great Recession. The bargain has flipped. 0:03:25.960 --> 0:03:30.359 Whereas government for a long time basically picked up most 0:03:30.360 --> 0:03:32.600 of the tab of the cost of college, now that's 0:03:32.639 --> 0:03:37.040 been basically flipped over to families. The student loan system 0:03:37.480 --> 0:03:42.480 exacerbates the problem because basically it provides a subsidy to 0:03:43.160 --> 0:03:47.080 institutions and removes any incentive for them to lower tuition 0:03:47.160 --> 0:03:49.520 so that people can afford it, because you can just 0:03:49.560 --> 0:03:54.120 take out federal student loans with federal government covers and UM. Institutions, 0:03:54.240 --> 0:03:56.680 you know, colleges don't really have to have no skin 0:03:56.720 --> 0:03:59.160 in the game. UM. And what we have seen, yes, 0:03:59.240 --> 0:04:03.680 but in order to to attract students, they have invested 0:04:03.720 --> 0:04:06.320 a lot of money and you know, improving the student 0:04:06.320 --> 0:04:11.240 experience and amenities facilities, not necessarily instruction and research UM. 0:04:11.320 --> 0:04:14.960 And that's all contributed to driving up these costs to 0:04:15.120 --> 0:04:18.720 the levels that we're seeing. What's the justification for tuition 0:04:18.760 --> 0:04:23.000 costs and college costs, you know, outpacing inflation by a mile. Yeah, 0:04:23.120 --> 0:04:26.840 I mean basically, you know, outpacing virtually every other service 0:04:27.040 --> 0:04:29.280 in our economy. You know. I think one thing that's 0:04:29.279 --> 0:04:32.120 important point out is that for students who attend the 0:04:32.120 --> 0:04:36.440 most selective colleges, colleges that that accept less than fifty 0:04:36.800 --> 0:04:39.760 of applicants, um, but it's a very small percentage of 0:04:39.760 --> 0:04:43.640 the overall student population. The return on investment over your 0:04:43.680 --> 0:04:47.920 lifetime is still pretty good. It's still probably gonna be 0:04:47.920 --> 0:04:50.760 worth your while if you get a degree from one 0:04:50.800 --> 0:04:53.840 of those institutions. The problem is that's not where most 0:04:53.880 --> 0:04:57.240 people are going to school. And um, what you have 0:04:57.440 --> 0:05:00.400 is the vast majority of Americans who are are going 0:05:00.440 --> 0:05:05.799 to colleges in programs that just are not delivering that return. 0:05:05.920 --> 0:05:09.000 And even worse, a lot of a third of people 0:05:09.040 --> 0:05:12.360 who enroll in college never get their degree to begin with. 0:05:12.839 --> 0:05:15.800 And it's really that cohort that is sort of the 0:05:16.160 --> 0:05:19.360 at the heart of the crisis of of student loaned 0:05:19.400 --> 0:05:21.360 at we'll re meastion. What I really like about your 0:05:21.400 --> 0:05:24.039 piece is that it ends on you know, I don't 0:05:24.080 --> 0:05:27.680 necessarily want to say optimistic, because there's a lot that 0:05:27.680 --> 0:05:29.359 has to get done for this to improve. But the 0:05:29.360 --> 0:05:34.359 word you use as aspirational, and let's say that members 0:05:34.360 --> 0:05:36.719 of Congress got along with one another and that everyone's 0:05:36.760 --> 0:05:38.560 on the same page when it came to higher education. 0:05:38.920 --> 0:05:41.600 If you could wave a magic wand and fix this, 0:05:42.120 --> 0:05:44.599 what would that look like? What's that aspirational element that 0:05:44.640 --> 0:05:47.680 you thought you write about. I think the big thing 0:05:47.720 --> 0:05:49.320 that needs to happen as there needs to be more 0:05:49.360 --> 0:05:52.960 innovation in the system. Consumers need more choices. The old 0:05:53.080 --> 0:05:59.880 traditional model is just not working for enough students, and 0:06:00.440 --> 0:06:03.440 so you know, we are way behind other countries when 0:06:03.440 --> 0:06:08.640 it terms comes to apprenticeships. UM, you know, work based 0:06:08.640 --> 0:06:12.280 training programs, the kinds of things that give people an 0:06:12.279 --> 0:06:18.080 alternative to having to go to four year universities try 0:06:18.160 --> 0:06:22.520 to get a bachelor's degree of unclear value. Um, we 0:06:22.640 --> 0:06:27.480 need more post secondary programs that are really geared towards 0:06:27.960 --> 0:06:30.480 giving people's skills that they can take to the marketplace. 0:06:30.680 --> 0:06:33.360 That was Bloomberg Opinion editor Remesh rotten Tasar with this 0:06:33.400 --> 0:06:36.040 week's cover story. You can read the full issue online 0:06:36.240 --> 0:06:38.920 on the Bloomberg terminal and out on news stands. Now. 0:06:43.520 --> 0:06:47.480 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:06:47.560 --> 0:06:52.680 Quick Takes. Tim Spinovik from Bloomberg Radio. China continues to 0:06:52.720 --> 0:06:55.720 amp up its stimulus measures to help out its slowing economy. 0:06:55.839 --> 0:06:58.400 Might recall just over a week ago, China apping up 0:06:58.400 --> 0:07:00.880 that stimulus by another a truly in yuan or a 0:07:00.960 --> 0:07:04.920 hundred and forty six billion dollars US funding largely focused 0:07:04.960 --> 0:07:08.760 once again, tim on infrastructure spending. That support, though likely 0:07:08.800 --> 0:07:11.240 won't go far enough to counter the damage from repeated 0:07:11.240 --> 0:07:14.120 COVID lockdowns and a property market slump. Yeah, I just 0:07:14.160 --> 0:07:16.240 can't get ahead of that. To help us make sense 0:07:16.240 --> 0:07:18.760 of the situation, Bloomberg's Paul Sweeney and I spoke with 0:07:18.840 --> 0:07:22.400 David Redal, president and founder of Retal Research Group. We 0:07:22.440 --> 0:07:26.000 started by asking what China's stimulus can do, especially if 0:07:26.040 --> 0:07:28.680 the country keeps opening and closing. We keep seeing the 0:07:28.680 --> 0:07:31.280 pressure caused by COVID. Yeah, that's a real concern. I 0:07:31.280 --> 0:07:34.000 think people have been a little bit naive ignoring some 0:07:34.040 --> 0:07:37.640 of the big issues that headwinds that China is facing 0:07:37.680 --> 0:07:40.920 these days. You talked about regulatory oversight. We, of course, 0:07:40.920 --> 0:07:42.920 in the last couple of years, had big crackdowns on 0:07:43.000 --> 0:07:47.160 big tech and data integrity and things in China which 0:07:47.160 --> 0:07:48.880 had a big negative impact on some of the a 0:07:48.960 --> 0:07:53.320 d rs. We've heard about COVID, the zero policy really 0:07:53.360 --> 0:07:56.400 being a hamstring in the economy. Of course, the property 0:07:56.440 --> 0:07:59.040 market overhang. The one thing I think people are really 0:07:59.080 --> 0:08:03.000 ignoring is a historic drought taking place in China. Food 0:08:03.040 --> 0:08:05.560 security is a big, big deal to Beijing, and this 0:08:05.640 --> 0:08:07.400 drought is a real threat. I have to say. We 0:08:07.440 --> 0:08:10.080 actually talked about it yesterday on air and talking about 0:08:10.520 --> 0:08:14.320 UM the Three Gorges, Damn and just what's happening in 0:08:14.440 --> 0:08:17.160 terms of the importance of water when it comes to 0:08:17.240 --> 0:08:20.760 powering UH facilities throughout China. Talk to us a little 0:08:20.760 --> 0:08:22.680 bit more about what you're hearing. I'm curious. I don't 0:08:22.680 --> 0:08:25.440 know whether you've been traveling back and forth yet from 0:08:25.480 --> 0:08:27.960 Asiana you often do. But tell us what you're hearing 0:08:27.960 --> 0:08:32.280 about this UH and it's impact on China specifically. Yeah, 0:08:32.320 --> 0:08:34.319 I haven't been to China itself for a while. I 0:08:34.320 --> 0:08:37.079 haven't been nearby but not in China for some time. 0:08:37.120 --> 0:08:39.000 But we have people on the ground there and they're 0:08:39.000 --> 0:08:43.120 saying it's just unprecedented seeing how how small the Yangsee 0:08:43.200 --> 0:08:45.280 River is. We're hearing a lot about the Rhine and 0:08:45.679 --> 0:08:49.400 the dramatic weather in Europe. We're just not hearing it 0:08:49.520 --> 0:08:52.439 as much about China, and it's a big deal. I mean, 0:08:53.280 --> 0:08:56.679 of their power comes from hydro power that's really under threat. 0:08:57.000 --> 0:08:59.000 If they have to replace that, they have to replace 0:08:59.000 --> 0:09:01.600 it with coal fired ants, which also consume a lot 0:09:01.640 --> 0:09:04.880 of water. They're arable land is really under threat from 0:09:04.880 --> 0:09:07.960 a drought that's impacting their bread basket, and the Beijing 0:09:08.120 --> 0:09:11.280 really wants to keep the impact away from individual homes, 0:09:11.600 --> 0:09:15.520 so they're turning off power to Tesla, to Apple, to Toyota, 0:09:15.720 --> 0:09:17.880 and that's just in the last ten days. This of 0:09:17.920 --> 0:09:20.040 course is at a time when they're really ramping up 0:09:20.320 --> 0:09:23.560 for US holiday Christmas season demand, and so this could 0:09:23.559 --> 0:09:26.319 be a real problem for supply chains. We've all learned 0:09:26.320 --> 0:09:30.640 a lot about how big of a farm exporter the 0:09:30.800 --> 0:09:34.079 Ukraine is um and how much you know, how much 0:09:34.080 --> 0:09:37.040 how big they really are in the global agricultural business, 0:09:37.040 --> 0:09:40.280 But how talk to us about the North China plane. 0:09:40.559 --> 0:09:43.600 How big is that? Yeah, it's shocking. I mean, their 0:09:43.760 --> 0:09:48.520 their production of corn and wheat is tremendous. Their production 0:09:48.679 --> 0:09:52.280 is about on par of wheat, about in par with Russia, 0:09:52.640 --> 0:09:56.600 and their corn is three times the production coming out 0:09:56.600 --> 0:10:00.000 of the Ukraine. So if they have a big drought Argentine, 0:10:00.000 --> 0:10:02.120 you had a big one just six months ago. It 0:10:02.160 --> 0:10:05.679 impacted their corn production by thirty three. If China has 0:10:05.760 --> 0:10:08.440 anything like that, they're going to be in the global 0:10:08.480 --> 0:10:13.080 markets buying a tremendous amount of corn and wheat. Those shortcomings, 0:10:13.080 --> 0:10:15.600 some analysis has shown, could mean they could be out 0:10:15.640 --> 0:10:19.800 there looking to purchase of the corn that's traded worldwide 0:10:20.040 --> 0:10:24.840 and of the wheat. Imagine the impact on North Africa, 0:10:25.160 --> 0:10:27.160 the rest of Africa, in the Middle East, which is 0:10:27.200 --> 0:10:30.040 already suffering from shortages of grain, and the impact on 0:10:30.160 --> 0:10:33.000 hunger and food prices around the world. It's really quite 0:10:33.200 --> 0:10:35.240 quite frightening. You know. We talked about I think about 0:10:35.320 --> 0:10:37.200 years ago when E. S. G. First Scott you know, 0:10:37.440 --> 0:10:40.160 was was up and running and people started talking about it, 0:10:40.200 --> 0:10:42.240 money flowing into it. David. You know, we talked about 0:10:42.240 --> 0:10:46.240 the material impact, uh financial, material impact on companies as 0:10:46.280 --> 0:10:49.840 a result of climate change in the environment. You know, 0:10:49.880 --> 0:10:52.199 we're not just talking about material impact. We're talking about 0:10:52.280 --> 0:10:54.760 you know, existence. I mean things we all take for 0:10:54.880 --> 0:10:59.560 granted globally, food, water, if you will, Um, these things 0:10:59.559 --> 0:11:03.160 are really threatened. Yeah. Absolutely. You know, people talked about 0:11:03.240 --> 0:11:05.559 rare earths about ten years ago and how China was 0:11:05.600 --> 0:11:08.160 really cornering the world market on rare earths. Rare earths 0:11:08.200 --> 0:11:11.160 are not that rare, they're they're ubiquitous. But China is 0:11:11.200 --> 0:11:13.400 the only country that's had the willingness to take the 0:11:13.520 --> 0:11:17.000 environmental hit to mine aggressively rare earths. Do you know what? 0:11:17.120 --> 0:11:21.000 Mining rare earth takes a lot of water. Tremendous amount 0:11:21.000 --> 0:11:23.400 of water to to to rinse those those ores and 0:11:23.440 --> 0:11:28.640 concentrate those rare earths. That goes into everything chips, microphones, speakers, 0:11:28.720 --> 0:11:32.640 displays of every sort. China is the world's source of 0:11:32.720 --> 0:11:36.439 something like a year of many of these rare earths. Now, 0:11:36.480 --> 0:11:39.840 if they're running low on water, they're certainly not gonna 0:11:39.920 --> 0:11:43.240 producing those rare earths for export, and that could really 0:11:43.280 --> 0:11:46.960 be a supply Chaine disruption. I am trying to make sense. 0:11:47.000 --> 0:11:50.520 There's delistings, there's regulatory you're talking about the water catastrophe. 0:11:50.840 --> 0:11:53.120 Let's just stick with the water story. How do you 0:11:53.240 --> 0:11:57.960 think this ultimately plays out longer term? Well, I think 0:11:58.040 --> 0:12:00.000 China is going to have to be much more efficient 0:12:00.120 --> 0:12:03.600 with their use of water. UM of their water consumption 0:12:03.720 --> 0:12:07.560 is industrials industrial consumption, so that on top of that 0:12:07.760 --> 0:12:10.840 is agriculture, and on top of that is residential. So 0:12:11.080 --> 0:12:15.640 clearly China has long been the inexpensive workshop of the world, 0:12:15.720 --> 0:12:19.240 being able to mobilize very large workforces very efficiently and 0:12:19.240 --> 0:12:22.400 effectively to build companies like Fox, Coon and so on 0:12:22.760 --> 0:12:27.160 that can be very responsive to develop world needs. Given 0:12:27.160 --> 0:12:29.840 the aging population, giving the pressure, given the pressures on 0:12:29.840 --> 0:12:32.880 their environment, including water, I think that's something the world 0:12:32.920 --> 0:12:35.560 can't count on in the next ten years the same 0:12:35.559 --> 0:12:37.719 way they did in the last ten years. So I 0:12:37.880 --> 0:12:41.679 worry about them exporting inflation the same way that they 0:12:41.679 --> 0:12:45.520 may have exported deflation in recent years. They can't make 0:12:45.600 --> 0:12:47.960 more water. You can print more money, you can't print 0:12:48.000 --> 0:12:50.280 more water. So they really need to be careful with 0:12:50.320 --> 0:12:52.280 the resource that they have. I think they're going to 0:12:52.360 --> 0:12:55.280 have to dial back usage. You know, David, with all 0:12:55.280 --> 0:12:59.920 the challenges that investing in China has been presented with 0:13:00.000 --> 0:13:03.240 over the last couple of years, of talking regulatory challenges, COVID, 0:13:03.280 --> 0:13:06.160 in their response to COVID their policies, there now some 0:13:06.200 --> 0:13:09.319 of these resource issues that you're highlighting. I have to 0:13:09.360 --> 0:13:12.760 ask the question of every e M investor that I 0:13:12.800 --> 0:13:17.280 talked to, is China even investable? China cannot be ignored 0:13:17.480 --> 0:13:19.920 from an investment point of view, second largest economy in 0:13:19.960 --> 0:13:24.360 the world, largest grow, fastest growing consumer market in the world. 0:13:24.880 --> 0:13:28.680 Really uh, the tail that wags the dog in terms 0:13:28.679 --> 0:13:31.160 of demand for commodities and all kinds of things. But 0:13:31.240 --> 0:13:34.520 I think smart investors are trying to find other unique 0:13:34.520 --> 0:13:37.840 ways to play it. Perhaps there are domestically listed plays 0:13:37.880 --> 0:13:42.439 that cover unique aspects of water treatment and water supply 0:13:42.520 --> 0:13:44.920 and so and so forth that provided an opportunity to 0:13:45.000 --> 0:13:48.040 benefit from the changes in the water landscape. Maybe there's 0:13:48.120 --> 0:13:51.920 regional players or other countries around the world that benefit 0:13:52.040 --> 0:13:55.400 from from China's current challenges. We've been talking to our 0:13:55.440 --> 0:13:58.840 clients a lot about Mexico as an alternative for supply 0:13:58.960 --> 0:14:01.040 change of China's under rusher. A big thank you to 0:14:01.120 --> 0:14:04.400 David Redal, President and founder of Retal Research Group. Still 0:14:04.440 --> 0:14:08.480 ahead on Bloomberg Business Week YouTube's effective yet uneven formula 0:14:08.600 --> 0:14:19.640 for fighting extremism. This is Bloomberg Veterans. Whatever you're going through, 0:14:20.000 --> 0:14:23.840 don't wait, reach out, find resources at v A dot gov, 0:14:23.960 --> 0:14:28.240 slash reach Dot's v A dot gov slash Reach brought 0:14:28.240 --> 0:14:31.000 to you by the United States Department of Veterans Affairs, 0:14:31.080 --> 0:14:35.240 and they add Council broadcasting from the financial capital of 0:14:35.280 --> 0:14:39.040 the World Bloomberg eleven Frio in New York to Washington, 0:14:39.120 --> 0:14:43.200 d C. Bloomberg to Boston, Bloomberg one O six one 0:14:43.320 --> 0:14:46.800 to San Francisco, Bloomberg nine sixty to the country Sirius 0:14:46.920 --> 0:14:50.120 XM Chado one nine and around the globe, the Bloomberg 0:14:50.120 --> 0:14:54.520 Business app and Bloomberg Radio dot com. This is Bloomberg 0:14:54.560 --> 0:14:58.640 Business Week. For years, everyone was welcome on YouTube, no 0:14:58.680 --> 0:15:01.280 matter how extream their view us. But as the social 0:15:01.320 --> 0:15:03.920 giant became one of the most visited sites on the Internet, 0:15:04.160 --> 0:15:07.680 the company has consistently struggled to adjust, and some staff 0:15:07.760 --> 0:15:09.720 say they kept a double standard when it came to 0:15:09.800 --> 0:15:12.600 moderating extremism on the platform. It's interesting, I feel like 0:15:12.600 --> 0:15:15.640 we've heard this before with social media platforms in general. Well, 0:15:15.640 --> 0:15:18.359 this is the subject though of Mark Bergen of Bloomberg 0:15:18.600 --> 0:15:23.680 his upcoming book the title Like Comments Subscribe Inside YouTube's 0:15:23.720 --> 0:15:26.640 Chaotic rise to World domination. An excerpt of the book 0:15:26.720 --> 0:15:29.480 is featured in this week's edition of Bloomberg Business Week magazine. 0:15:29.840 --> 0:15:32.080 Market business Week editor Joe Weber spoke with me and 0:15:32.120 --> 0:15:35.560 Bloomberg senior markets reporter Katie Greifeld. Joell started by asking 0:15:35.560 --> 0:15:38.920 why YouTube has worked to combat extremism but not all 0:15:39.000 --> 0:15:43.160 types of extremism. It does get this like very fascinating dilemma, 0:15:43.200 --> 0:15:45.400 but it's not just YouTube. It's always it, I think 0:15:45.440 --> 0:15:47.920 more than any of the company, just given its size, 0:15:48.760 --> 0:15:50.520 but it's something that it's effect at all all major 0:15:50.560 --> 0:15:53.760 Internet platforms. And partly I think there's there's a couple 0:15:53.760 --> 0:15:57.360 different reasons. One is just the nature of the way 0:15:57.400 --> 0:15:59.720 the government's work as that there there's been a lot 0:15:59.720 --> 0:16:03.000 more and Western governments pressure and willingness to sort of 0:16:03.040 --> 0:16:07.920 tackle Island Islamness extremism. Uh. And we saw like there 0:16:07.920 --> 0:16:11.520 are sort of tech collaborations that in mind. There are repositories, 0:16:11.560 --> 0:16:14.280 there are sorry, there are lists of like known terrorists 0:16:14.280 --> 0:16:17.680 that that YouTube uses and they can ban these certain figures. 0:16:18.000 --> 0:16:21.120 There's YouTube is a is a gigantic digital advertising is 0:16:21.200 --> 0:16:24.680 very responsive to its advertisers. Part of the book's opening 0:16:24.680 --> 0:16:28.280 scene is is this is June and seen when they're 0:16:28.320 --> 0:16:31.440 in middle of this major boycott over videos, some of 0:16:31.480 --> 0:16:34.960 which were like isis allies that you know, household brands 0:16:34.960 --> 0:16:38.400 were sponsoring, and these advertisers put pressure on YouTube and 0:16:38.480 --> 0:16:39.760 kind of force them to act in a way that 0:16:39.800 --> 0:16:42.480 they hadn't before. UM. And then once they were able 0:16:42.480 --> 0:16:44.440 to kind of clean up the system to make it 0:16:44.800 --> 0:16:48.240 amenable to the the these ads when like weren't sponsoring 0:16:48.320 --> 0:16:51.560 videos that marketers wanted, there was less pressure for them. 0:16:51.960 --> 0:16:54.320 So I think there's a combination where it was very 0:16:54.320 --> 0:16:58.920 easy politically addressing white nationalism is a more complicated, especially 0:16:58.960 --> 0:17:03.320 in the US contemporary of politics problem in the thread, 0:17:03.520 --> 0:17:07.959 and there was less pressure from regulators and advertisers at 0:17:07.960 --> 0:17:11.359 the time. How do people and machines do this? There's 0:17:11.400 --> 0:17:14.040 a passage from your book and indeed from this excerpt 0:17:14.560 --> 0:17:18.680 in the magazine that includes the phrase use your judgment 0:17:18.960 --> 0:17:24.960 when talking content moderation. That's not necessarily prescript rule. Right, Yeah, 0:17:25.000 --> 0:17:27.000 I thought that was So this was YouTube was really 0:17:27.680 --> 0:17:29.399 it's hard for us to appreciate, but this was in 0:17:29.720 --> 0:17:32.480 This was in two dozen six starting towards and five 0:17:32.600 --> 0:17:34.639 does and sixes, And I think when that this is 0:17:34.680 --> 0:17:36.879 they ran, like UM, some of their first sort of 0:17:36.920 --> 0:17:41.520 policy frameworks, and this was really before content moderation existed 0:17:41.560 --> 0:17:44.000 at the size and the internet and YouTube had a 0:17:44.080 --> 0:17:48.080 problem that Facebook and other sort of text based didn't have, 0:17:48.160 --> 0:17:50.120 which is they have video and they have moving images, 0:17:50.160 --> 0:17:52.719 and they have like complications and and all that brings 0:17:52.760 --> 0:17:55.840 and so I you know, this was a team that 0:17:56.000 --> 0:18:00.000 was pretty scrappy and sort of inventing this on the fly. Um, 0:18:00.200 --> 0:18:01.800 like a lot of them are pretty well versed in 0:18:01.840 --> 0:18:04.480 the like weird dark recesses of the Internet, and so 0:18:04.720 --> 0:18:07.679 use your judgment was there were at the time a 0:18:07.720 --> 0:18:10.200 lot more of a like humans sort of you can 0:18:10.240 --> 0:18:14.480 call it editorial perspective and judgment about where the lines withdrawal. 0:18:14.560 --> 0:18:18.480 And this was they sort of viewed YouTube as this 0:18:18.520 --> 0:18:22.360 was a community of users and video broadcasters and they 0:18:22.760 --> 0:18:25.840 they sort of wanted videos to fit within the boundaries 0:18:25.840 --> 0:18:27.879 of the community. You know, fast forward a few years 0:18:27.880 --> 0:18:31.520 that they've become this global platform and moderation is this 0:18:31.880 --> 0:18:35.439 very complicated process. So it's a complicated process where the 0:18:35.440 --> 0:18:39.280 company increasingly wants to rely on machine learning systems as 0:18:39.320 --> 0:18:42.000 much as possible, in part because machine learning systems can 0:18:42.040 --> 0:18:45.760 just process so much video better faster than humans. They're 0:18:45.800 --> 0:18:49.360 they're impartial, and they're less you know, the Google cannot 0:18:49.359 --> 0:18:52.400 be accused of biaus more if if they can point 0:18:52.400 --> 0:18:54.240 and say, like, listen, we have a we have a 0:18:54.240 --> 0:18:56.560 policy rulebook. Can we have machine systems we don't have 0:18:56.640 --> 0:18:59.720 humans with with biases making news, scysions decisions. One of 0:18:59.760 --> 0:19:03.240 the things that YouTube Ofpton says is that dealing with 0:19:04.520 --> 0:19:09.400 the threat of like Islamist extremism on the platform proved 0:19:09.680 --> 0:19:13.959 easier because you know, multiple governments agree on those standards, right, 0:19:13.960 --> 0:19:19.000 whereas with white nationalism there there isn't that same unanimity. 0:19:19.520 --> 0:19:21.919 So I'm I'm wondering where does that Where does that 0:19:22.000 --> 0:19:25.000 leave things? Because it means that there's more reliance on 0:19:25.480 --> 0:19:28.240 AI and the code. You know, ultimately the code is 0:19:28.359 --> 0:19:31.760 what what runs everything here? Uh? Where does that really 0:19:31.840 --> 0:19:34.399 leave things? As as you know, society continues to have 0:19:34.480 --> 0:19:36.800 these massive flare ups. Yeah, I think, I mean, I 0:19:36.800 --> 0:19:39.760 think that they've made some significant changes, and partially because 0:19:39.760 --> 0:19:42.880 of some tragedies that they witnessed christlike shooting. We talked 0:19:42.880 --> 0:19:46.000 about the story even the most recently Buffalo shooting. Like 0:19:46.040 --> 0:19:48.880 every time there is an incident like this um that 0:19:49.040 --> 0:19:52.560 is like often sometimes these events are like live stiment 0:19:52.680 --> 0:19:54.879 live stream on on YouTube. So they have taken action 0:19:55.240 --> 0:19:58.000 because of like pressure from their employee base and from 0:19:58.040 --> 0:20:00.919 politicians and from some of these big moment moment that 0:20:00.960 --> 0:20:03.719 was Bloomberg Technology reporter Mark Berg in his book Like 0:20:04.040 --> 0:20:08.439 Comments Subscribe Inside YouTube's chaotic rise to world domination. It 0:20:08.560 --> 0:20:16.520 hits shelves on September six. You're listening to Bloomberg Business 0:20:16.560 --> 0:20:20.280 Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovich 0:20:20.560 --> 0:20:25.160 from Bloomberg Radio. Companies really the world at large, you 0:20:25.200 --> 0:20:28.040 meet Tim. Everybody continue to send more and more data 0:20:28.080 --> 0:20:30.560 into the cloud. That's been great for one service provider. 0:20:30.600 --> 0:20:33.360 We're talking about net App. The company recently reported earnings 0:20:33.359 --> 0:20:35.879 and sales that beat Wall Street estimates. That is, the 0:20:35.920 --> 0:20:39.960 storage and data management company saw continued demand across segments 0:20:40.000 --> 0:20:43.720 that defied supply chain and currency challenges. Net Up CEO 0:20:43.840 --> 0:20:46.280 George Curry and joined me and Bloomberg's Paul Sweeney to 0:20:46.280 --> 0:20:48.760 talk about the latest quarter as well as look ahead 0:20:48.840 --> 0:20:51.600 at what's next for the company. We're excited. We're off 0:20:51.600 --> 0:20:54.440 to a great start to our new fiscal year. We 0:20:54.560 --> 0:20:58.320 just completed the first uh fiscal quarter of the year 0:20:58.440 --> 0:21:03.159 and saw broad base demand and strength across all our geographies. 0:21:03.800 --> 0:21:06.760 We have set record highs pretty much across the board 0:21:06.760 --> 0:21:12.000 in terms of revenue, billings, gross margin dollars, operating margin dollars, 0:21:12.000 --> 0:21:15.200 and EPs for Q one. So I'm really pleased. It's 0:21:15.240 --> 0:21:17.119 always good to get off to a good start in 0:21:17.160 --> 0:21:19.719 the year. Yeah. Absolutely, that's a great way better than 0:21:19.760 --> 0:21:23.040 the alternative. Um Paul did break down some of your numbers. 0:21:23.080 --> 0:21:26.840 Your customer base has included the likes of Amazon, Microsoft, Alphabet, 0:21:27.200 --> 0:21:31.040 hits Hachi, Intel, Tata. It's global in nature. It really 0:21:31.119 --> 0:21:33.160 gives us a good clue in terms of what's going 0:21:33.160 --> 0:21:36.120 on in the economy. How would you describe in terms 0:21:36.119 --> 0:21:38.600 of more color demand for your core products from your 0:21:38.600 --> 0:21:44.840 big customers. We're involved in helping our customers store, protect, 0:21:44.920 --> 0:21:49.200 and use their data for business advantage. We do that 0:21:49.320 --> 0:21:53.280 not only with data center equipment for their data centers, 0:21:53.359 --> 0:21:57.360 but as you mentioned, with cloud based services that are 0:21:57.440 --> 0:22:02.080 deeply integrated into the world's leading cloud providers Amazon, Microsoft, Google, 0:22:02.520 --> 0:22:06.200 IBM and others. And we saw a really good portfolio 0:22:06.359 --> 0:22:11.080 balance across all of our geographies and customer segments. Data, 0:22:11.160 --> 0:22:16.080 as you know, is foundational to competitive advantage, Understanding customers, 0:22:16.280 --> 0:22:19.560 working with your supply chain, UH and so on and 0:22:19.640 --> 0:22:23.920 so we continue to see demand strong and we've had 0:22:23.960 --> 0:22:27.080 to work really hard to have all the supply to 0:22:27.200 --> 0:22:30.080 meet it, and we continue to do that work. Taugh 0:22:30.119 --> 0:22:32.280 to us about the supply chain, it's it's been such 0:22:32.280 --> 0:22:35.280 an issue for so many businesses across so many parts 0:22:35.280 --> 0:22:37.479 of the economy, and and and it's a global issue here. 0:22:37.520 --> 0:22:41.000