Pivot - Regulators are cracking down on tech, and Friends of Pivot Sheera Frenkel and Cecilia Kang on Facebook's leadership

Episode Date: July 13, 2021

Kara and Scott talk about Biden's broad executive order aimed at stirring competition and limiting corporate dominance. They also discuss the regulations coming out of China that specifically call for data-rich companies to undergo security reviews before listing overseas. Then we are joined by NYT journalists, Sheera Frenkel and Cecilia Kang, to hear about their new book, "An Ugly Truth: Inside Facebook’s Battle for Domination." Learn more about your ad choices. Visit podcastchoices.com/adchoices

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tells you which leads are worth knowing, and makes writing blogs, creating videos, and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Hi, everyone. Get started at HubSpot.com slash marketers. No icy in Iceland and no green in Greenland, but go ahead. Have you been to Iceland? No, I have not, but Amanda has. But go ahead. Do you like it? Oh, it's a stunning country.

You feel as if you're in one giant Game of Thrones scene. And just every valley you come over, it's another natural wonder that people are friendly. I love it here. I've been here several times, and I'm here with my boys. And every time I'm here, it cements, A, how beautiful it is, B, how important it is to spend time with your kids and see how much I hate the outdoors it's like just so you're in a hotel room finally got to spend some time indoors yesterday and watch the final of the Euro Cup but anyways I'm in Iceland good good fantastic well I am here in New York City I'm sorry I was a little late today I was getting some food for Louis Swisher you were late down in little Italy and I the

subway is the first time I've been on a subway in two years, I think, or a year and a half at least. It was interesting. It was really weird to be back to sort of normal-ish, I guess I would say that. Everyone's wearing masks here still in New York. So let's go through a couple of things very quickly. Richard Branson and five crewmates from the Virgin Galactic Space Tourism Company successfully made it to and from space ahead of Jeff Bezos' July 20th departure on Blue Origin.

It got up 54 miles, three or four minutes of weightlessness, and Blue Origin is going to go 66 miles. So, any thoughts? He came back down safely, Richard Branson. I've been trying to figure out why I find this whole thing so gross. Yeah, you really do. Is it because I'm jealous of these guys? No. Is it because, you know, it's not going to do good for the world?

I don't know. I'm trying to figure out what is it about this that bothers me so much. And I think it comes down to, first off, there was a space race. Yuri Gagarin and Shepard. Was it Andrew Shepard? That was a space race. Alan Shepard. A woman who doesn't get a lot of attention is the first woman in space, Valentina Tershkova.

I mean, these people accomplished the same or more 60 years ago. Yeah. Yes, they did. So, you think this is kind of just like a ridiculous thing by billionaire men. Well, I think it reflects something. I think, quite frankly, I just think it reflects something unhealthy. And that is, okay, we've had the first Japanese citizen in space. We've had the first woman in space.

We've had the first teacher in space. But we've decided that, no, we need a race. They call it a race. A race gets segmented by nationality, sometimes by weight class, sometimes by country. And we've decided, no no a distinct cohort we should track with awe is billionaires yeah

it does feel a little untoward but at the same time you know the idea that we should be a space faring civilization I'm not against that idea at all

because then I'd be the person who was standing on the shore in Spain saying what is that Columbus guy up to right you know I mean you just don't want to be that person

or you know someone on the beach at Kitty Hawk and saying oh it only got two feet off the ground. It'll never work. No, two feet? What's that? What the heck is that? And then I would go back to my, you know, large weird bicycle and drive away. I just, you want to be sort of leaning forward into exploration. I always do. But at the same time, this version, you know, maybe it felt like that back in the old exporters. Yeah, but it shouldn't be scientific exploration, not what I'll call space tourism bullshit, where the day after a successful—and congratulations, they did it successfully.

They didn't get quite to the Kármán line. They didn't do anything Chuck Yeager did 50 years ago with cooler uniforms. Yep, yep. And Chuck Yeager is cool. What do you know, Kara? What? 18 hours after the successful launch, they announced a $500 million stock issuance. By the way, the stock's off 15% today.

Yeah, yeah. I just find, it's like, okay, why have we decided billionaires in space is some sort of human victory? Yeah, I would agree. I don't get it. All right, well, here we go. Speaking of which, there's a continued momentum for the global minimum corporate tax rate of 15% over the weekend. Leaders in the 20 of the largest top economies endorsed a proposal to impose new taxes on large, profitable multinational corporations. This comes after more than 130 countries approved it earlier this month.

So, you know, they can go as long as they pay their taxes, I guess. What do you think? Yeah. This is a great thing. This is a great thing. Global cooperation. Yeah. I feel like we've kind of killed this story.

I love us getting together. I can't wait till we finally set our sights on Ireland and say, look, Ireland. Look, Ireland. You're charming. You're charming as you are. Yeah, yeah. It's interesting. As much fun as you are.

You know, it is true. I think this is a really big move. A lot of these, we're going to be talking later with authors of the book on Facebook. And, you know, the stuff that's happening in Washington suddenly feels very cooperative or more cooperative, even though, you know, if you watch CPAC this weekend, you literally hate the human race. But in any case, it's a really interesting time. So we'll see what happens. So we're going to start now with the big story, of course, which is related. interesting time. So we'll see what happens. So we're going to start now with the big story,

of course, which is related. President Joe Biden signed a broad executive order aimed at stirring competition and limiting corporate dominance. The White House is targeting sectors beyond big tech, although big tech is certainly in its crosshairs. The administration wants to go after industries, including agriculture, healthcare, shipping, and transportation. The order comes after months of negotiations between White House officials, the DOG and the FTC. Tim Wu, who serves as Biden's aide for technology and competition policy in the White House, National Economic Council, was a key player, which means it was a lot thought about tech, of course. It also deals with net neutrality rules

and whether there's going to be successful antitrust efforts and how quickly government agencies push to implement policies which are likely to face court challenges, as we talked about. What do you think of this? This was a stunning piece of executive order after years of Trump-Dodo executive orders, which were badly written and full of mistakes. This was really quite sweeping.

What do you think? As absolutely uninspiring as the billionaire space race is, I find this really moving. uninspiring is the billionaire space race is I find this really moving. And that is the son of a British Canadian immunologist and a Taiwanese independence activist who goes to law school, Tim Wu, is teaching at law school, becomes the premier thought leader on antitrust, is drafted into the administration. And literally six weeks later, if you go back to the podcast, The Pivot, where we interviewed Tim Wu, he basically laid this out word by word. He said, when we asked him about big tech, you know, me blathering on him, I'll break up big

tech. And he goes, Scott, it's not just big tech, it's big ag, it's big health, it's big shipping. Senator Klobuchar talked about us, too. Remember? She was talking about caskets and things like that. But, I mean, this is literally Tim Wu putting on a – I mean, this guy has gone gangster. I read this thing, and I'm like, oh, my God. I think it's just inspiring that we draft these incredibly impressive people into the government, and within six weeks, they can be outlining such incredibly impactful legislation. They had this ready.

They were – the good thing about the Obama administration – I mean, excuse me, the Biden administration is they got things ready. You know what I mean? I think Tim has been thinking about this for a very long time, along with a lot of people, and they've just been waiting for the opportunity. But it's quite – it's really – it's across the board. It's quite breathtaking in its scope. So, what pushbacks do you see coming? Of course, because that's the inevitable thing is how they drive. These things, they soar up and then, you know, people take a shotgun to it and they soar back down.

Housing prices in the D.C. area continue to skyrocket because every lawyer in America is going to get, every decent law firm in America is going to be working for one of these industries. This is really smart because instead of this becoming an argument around whether tech is good or bad, and there is an ideology of technology, it's whether competition is good or bad. And the majority of Americans will come down on the side of competition and say, well, they're not going to. They're smart to broaden the argument for big tech and trying to decide whether you like Amazon because the majority of consumers like Amazon to whether or not you know what one manufacturer manufactures 70 of all chicken and your chicken prices are too high and the study just came out pharma is another bigger that's right

and a study just came out saying the lack of competition in the u.s costs every u.s household an additional five thousand dollars a year because they have too much pricing power yeah yeah so like everything like everything i just think people in the Biden administration, they're very smart, thoughtful, you know, shrewd people. Yeah, but, you know, tech is still going to be the sharp end of the stick. Tech is going to be the place that's going to go first because I think this is something most people agree on.

We'll see how far it gets and whether things get pushed back in courts as we've talked about over and over again. But it certainly was a breathtaking move, especially when they're in the middle of the infrastructure bill at the same time. The amount of surface area this group has is really interesting. You love that term, surface area. You love that term.

That's because I'm a general. That's your gestalt. That's my gestalt. The gestalt of your surface area. You don't have words. Boom, et cetera. Yeah, I love them. Chipotle, penis, things like that.

I love them. That's great. At least I pick a better word. Where'd that come from? Coming Yeah, I love them. Chipotle, penis, things like that. That's great. At least I pick up better. Where'd that come from? Coming out, Kara Swisher. It was hot in the subway. It was sweaty. I was carrying prosciutto for a long time for my son.

You were on the subway. I like that. I have not been in the subway for a long time. They're masking. They're masking in the subway. Everyone's masked in the subway, but it was hot. It's a hot day here in New York. Anyway, let's go on a quick break, and we'll be back to talk about the regulations coming out of China

and a friend of Pivot's with New York Times journalists Shira Frankel and Cecilia Kong to hear about their new book, An Ugly Truth, inside Facebook's battle for domination. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time, we have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore.

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What learnings have shifted their career trajectories? And how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Okay, Scott, we're back. China, again, we talked about this briefly last week, is cracking down on tech and calling for data-rich companies to undergo security reviews for listing overseas. Earlier this month,

just two days after Didi, the Chinese ride-hailing service, IPO, Chinese regulators announced an investigation of data security concerns and did all kinds of manner of things to slow them down. The goal of the investigation was, quote, to protect the national security and public interest. As of Monday, ByteDance, the Chinese company that owns TikTok,

announced that it's putting off its IPO intentions because of the country's heightened attention on data security risks. This is their, among other things, location, data, things when people are uploading this and that, and it especially worries about it being leaked to the U.S., to U.S. government people. In addition to this, Chinese Ministry of Industry and Information Technology released a three-year plan draft to develop the country's cybersecurity industry, saying the sector may be worth roughly $40 billion by 2023. So, anyway, it's a big crackdown. According to now Ferguson's reporting, there are currently 244 U.S.-listed Chinese firms with total market capitalization around $1.8 trillion. That's the equivalent of around 4% of the capitalization of the U.S. stock market.

What do you think is going on here? I've just written a column about this, but it's not out yet. But tell me what you think. So there's what I think is going on and then what I think the opportunity is. I would rather you take what you think is going on and I'll talk about what I think the opportunity is. Well, you know, obviously,

we talked about this a little last week. There's the issues around whether you're an investor or near investment in China, which has always been difficult for U.S. companies to get in there, period, and then difficult for U.S. investors, but they've been in there pretty, and certain companies like Apple have real exposure in China. So there's many, not Facebook, not Google, but some others in tech. I think this idea, as we've talked about it, it's sort of as if you took Josh Hawley and Amy Klobuchar and gave them

unlimited power and made them insane, kind of. And I think it's really, they've just decided that these companies are, they're not going to be more powerful than the government. They did the same thing with Bitcoin. They've, as you said, I think quite intelligently that they saw what's happening here and they're not going to let it happen there in China, which is a much more autocratic thing.

And the last thing is that autocracy is really important to this company, to keep it under, this country, to keep it under control. And I think it was some enormous amount of money spent on internal security within China. They have to keep a lid on that country. And so the government has to keep the lid on.

And they're not going to let tech companies have the power that they feel they should have to be running this country. So I keep saying company. It's so interesting. Go ahead, Scott. Yeah, it's, I mean, you want to talk about people whose hair is on fire right now. There are so many venture capital firms that are worried that they've invested

literally billions in Chinese companies that are trapped. Yeah, you must have heard from them. Because there's a chill around the prospects of any Chinese company going public on U.S. exchanges. It's like, okay, is that debt equity? How do I get that money out? How do I monetize it? I think this is an incredible opportunity as an investor. And I went through for our predictions episode. For our predictions episode, I went through all the stocks we've talked about, and I found five stocks that I've recommended over the last year. I found Restoration Hardware, Sonos, Twitter, Alibaba, and Peloton.

And four of the five are way up. The only one that's down is Alibaba. And if you look at Alibaba... Yeah, they've sidelined Jack Ma for those who runs that, but go ahead. But Alibaba in the last 24 months, its revenue is up 144%, and has much higher margins than Amazon because it relies more on its third-party marketplace. Its cloud business is up 34%.

It has an incredibly robust payment. Amazon's up 58%, their top line revenue. And get this, Amazon's stock has doubled and Alibaba's is up 26%, resulting in a PE ratio of Amazon at 60 and a PE, 4P ratio of Alibaba at 20. I think Alibaba just looks incredible. Can I ask you a question? Let me go. Go ahead. Let me go. It's incredibly cheap and it's all around this one question and that is, do the Chinese, is this, okay, they've gotten angry, they've punished the kid, the kid has learned its lesson, and now everything's fine, or is this a new China? And I think it's the former,

because I don't think China can meet its ambitions around sustaining a middle class and the economic growth it needs to without supporting its global champions. And these are its global champions. So, I actually think this is an incredible buying opportunity. Interesting that you said that, because last night, what did I do? Text you and ask you from stock opportunities, because I'm testing some apps, and you said buy low and sell high. That is the only tip you gave me, and now you're giving a tip right here, just quite freely to the people. Just pointing out. Well, if you look at Alibaba, I mean, I just look at Alibaba, and I don't own any Alibaba,

but the question is, the geopolitical risk here is so severe and shocking. It is, indeed. That the market is running for it. But if you look at Alibaba just next to Amazon on a valuation level, Alibaba is basically Amazon for 70% to 80% off. All right. What else? In terms of the stock. What else in terms of opportunity then?

So, Alibaba and the others, even though they're sort of under the scrutiny of this country. I hate ride-hailing. But there's a ton of great companies. There's Tencent. I mean, everything, every major internet company in China has experienced this chill. And I just can't imagine. I think this is literally historically, we have a precedent for this, and it's what happened in Saudi Arabia when they sat everyone down and said, just FYI, we're in charge. And everyone said, okay.

And they left and got back to some sense of normalcy. I can't imagine China's going to decide to prohibit their internet companies from going global. I can't imagine they're not going to decide to let these companies access the equity markets in the US. I think they've made their point. I think they've made it a very pointed point here. But I can't imagine they've decided, all right, we're going to go inward and start kneecapping our best companies. No, you're correct. And I think you're right. I think this, we're in charge here, is the kind of thing they're doing.

And so, this report about the cybersecurity industry, and of course, the U.S. has been wracked by ransomware attacks across the globe, by the way, not just in the U.S. And I think they've decided this is a really important area for them to protect their country and at the same time to dominate. And that's dangerous for our country. We really do need to be out front of cybersecurity, period. Period.

You know, because with China, with the facial recognition and everything else, this is not a country I want to be excelling in cybersecurity over our capabilities. And that's my nervousness. And I think this is, they do. They do these planning draft release things, and we've got to have one. We've got some very smart people in the U.S. government, like Ann Neuberger and many others

working on these things, but they're putting out fires, you know, very, very severe cybersecurity fires. So, this is a, that's a really smart thing. That's a very, Ali Baba, you're right. But, you know, it'll be interesting to see when you first see Jack Ma, you know, reappear. That'll be,

I'd love to talk to him. He's, but you'll see, I'd love to see his mood. Oh, he's not going to say anything. He used to. He used to say a lot.

Like, all of them did. So did the Deedee, the Deedee, Jean Lou, and they all did. I've, you know,

they were. When you get disappeared for two weeks, I think you come out with a different view of the world. I would agree. Anyway, it'll be interesting to see. He will emerge, but we'll see how he emerges

and that'll be interesting. Okay, Scott, next up, let's bring on our friends of Pivot. Shira Frankel and Cecilia Kong are journalists at the New York Times

and co-authors of An Ugly Truth Inside Facebook's Battle for Domination, which is out this week. You may have heard of it. There's a huge excerpt in the Times, and everybody is talking about it. Shira covers cybersecurity, and Cecilia covers technology and regulatory policy. Welcome to Pivot. Thanks for having us.

We're excited to have you here. Scott is in Iceland, as we've said before, but he will have lots and lots of questions. But first, I'd love you to, we want to walk us through the book to start with, but why don't you read a section to get us all prepped? And I think you picked the section I would agree with. So this is a chapter called Company Over Country. Oh, fuck. How did we miss this? Zuckerberg asks, looking around at the somber faces in the aquarium. In silence, the group of nearly a dozen executives stared at Alex Stamos, hoping he had the answer. Stamos, clutching his knees as he perched on the end of Zuckerberg's couch, was perspiring in his Merino wool sweater. It was the morning of December 6, 2016, and the group had gathered to hear a briefing by Stamos outlining everything the Facebook security team

knew about Russian meddling on the platform. Due to security concerns, Stamos outlining everything the Facebook security team knew about Russian meddling on the platform. Due to security concerns, Stamos had not emailed his findings to the attendees ahead of time. Instead, he printed out handouts for each person in the room. We assess, the summary read, with moderate to high confidence that Russian state-sponsored actors are using Facebook in attempt to influence the broader political discourse via the deliberate spread of questionable news articles, the spread of information from data breaches intended to discredit and actively engage with journalists

to spread said stolen information. Okay. So, OFAC, how did they miss it? Because a lot of people did notice these things going on. I remember having very vividly a conversation with Sheryl Sandberg about the issues. And Hillary Clinton was depicted as a lizard person on Facebook, and my relatives reads and stuff like that in their feeds. So tell me, each of you, first starting with you, Cecilia, how did they miss it? Well, in fact, the security team had been warning them for some time, and they found out some of this information much earlier than had been reported.

And we interestingly had the same experience. Shira and myself, when we were talking to Facebook at the time, they were really downplaying what was happening. They will say that they were looking for conventional sort of cybersecurity problems at the time, like phishing attempts, hacking in the most conventional ways, and they weren't looking for foreign interference. But Shira can talk a little bit about how much they actually knew so much earlier on than previously disclosed. The reports were there. The security team had been filing reports. They'd been sending them up the chain.

They didn't miss it. They just didn't look. Mark Zuckerberg himself was just not very interested in what the security team was doing. Had he asked at any point for an update, he would have been told, yes, we are seeing Russian activity on the platform. We are seeing things that are concerning to us. And the Russians are, in fact, getting ready to do something ahead of the elections. Now, one of the things he said at one of the interviews with David Kirkpatrick, I think, was that nothing, there was no, I forget the date of that, but he was sort of saying there was zero. I think zero is the word he used. And I recall writing them saying, how do you know this? Do you have statistics? Can you give them to reporters? How do you know

the number zero? So talk about why they were sort of actively pushing against it for a while. You know, in the days right after the election, when it really came out, Facebook understood that Trump had won. They understood that there was going to be a backlash against them as a company. Mark Zuckerberg asked his own executives to come up with statistics for him. And he said, you know, we know it's tiny. It's got to be less than 1%. Whatever fake news, conspiracies, it must be less than 1%. And they couldn't because they weren't even quantifying it at the time.

They were running in and out of conference rooms. And they're going back to him and they're saying, look, even if we tell the public it's 0.5%, we're talking about millions of pieces of information. It's not going to go over well with the public that we missed even that. Right. And not just that, but how did they come up with a number? I was like, don't come up with a number if you don't know it, if you don't actively know it and know exactly what it is. So, Scott, question? Sure. First off, Cecilia and Sherry, congratulations. I'm seeing this everywhere. You've pulled off what every author wants,

and that's regardless of the content, everyone wants your book. And I'm sure it's fantastic, but they pay you to market the thing, not to write it, and you're earning your money. Anyway. Thank you. Look, I'm famous for bringing all these questions back to me. I wrote a book on big tech, and it started out as a love letter, and it ended as a cautionary tale as I got to know these folks, I would just love to know how your view of Facebook and specifically of the leadership evolved or didn't through the course of writing this book. You know, there was a lot that surprised us in this process, and we discovered a lot about Mark Zuckerberg and Sheryl Sandberg through the process. And one thing that really should not have surprised us,

but that we really were able to get quite in detail, was how important Sheryl Sandberg was to really creating this business model of behavioral advertising and growing it and scaling it and how integral she was to the success of Facebook and how that partnership for so many years was such a sort of yin and yang, if you will, where they needed each other, Mark Zuckerberg and Sheryl Sandberg. And how the relationship, I hate to say it, but it's kind of like a marriage. It's really evolved and how as Mark Zuckerberg took more control of the company and the aspects of the business that he previously didn't care that much about, that their relationship changed. So we got up really close to the executives and talking to people who are close to them as well. And I think in some ways we found

that they are very human, but they also displayed quite a pattern of ignoring warnings, of being very concerned about their PR message and not fixing necessarily problems that they're warned about. So in a lot of ways, we discovered and were surprised to see that patterns was really a big theme in this book and the patterns of this leadership. Sure. You've both written books, so you know, you go into writing a book and you're like, I'm going to figure out the deeper thought process. I'm going to find what the real thing was that was motivating them and uncover all that. And as a writer, it was startling to both of us to find how ad hoc so many of these decisions were. You want to think that Facebook, now a trillion dollar company, has got some really sophisticated,

nuanced thinking behind every decision they make. And no, they don't. No, I don't think they do. And that's what our book shows. And 400 interviews later, 400 people, multiple interviews with many of them, they don't. So why is that from a perspective? Because this is very serious business. And one of the things that they tended to do, I think, in all our experience is downplay everything and call you whiny, annoying. You know what I mean? It's a really interesting.

And you just mentioned focus on the press. Like focus on not just press, but PR and how it looks. Can you talk a little bit about the difficulty of writing a book like this? When there's so much written about this company, a lot of it is out there and some of it, some of it is unfair, very little, I think, but some of it, some of it is, you know, used to be sort of slatheringly positive about it. And I'd love to know how you think about how you cover them fairly and what you think about the kind of things they should be focusing on over PR.

There's this perception in Facebook, I think, that we only spoke to people that are disenfranchised or who left the company or disgruntled or whatever. We didn't. I mean, I'd say the majority of those people that we spoke to still work at Facebook and love Facebook. And those were the people we wanted to hear from most because these were people that were speaking to us not from a point of view of disgruntlement or anger, but, you know, sadness. A lot of the times they wanted to make the company

better. They were disappointed in something they themselves had done or something they had seen with their own eyes. I had multiple people who in interviews said, well, God, this feels like therapy. This feels like I can finally get off my chest what I've been feeling and what I've been thinking and the things that have bothered me. And I hope my own executives read this book because I don't know that they've fully come to terms with what we did and the mistakes we made. So can I ask a question? And then Scott can jump in because this is something he and I argue about.

I often say Mark gets most of the responsibility. Now, you mentioned Cheryl did build it, and Cheryl worked at Google is where she came from. And before Cheryl, there was a series of men that Mark kept leaving, if you want to keep the marriage thing going. And then he settled on Cheryl, and that became a really important relationship. I feel like as much as she deserves the blame here, he deserves the most blame. And Scott and I go back and forth, but he talks about that. He and I talk about that a lot. When you think about that, talk about this structure of who, not who's to blame particularly, but who is the one that's created the most problem here in terms of solving problems.

I mean, this should be no surprise to people who have followed, like yourself, who have followed and Scott who have followed Facebook closely. Mark is in control. He is absolutely the king of the castle there. And our reporting only confirmed that even more and with really great detail that when it came to really tough decisions, like after Mark said on your podcast that Holocaust denial should be accepted, that really, really upset Cheryl. And there is little that she could do. It actually showed the limits of not just her power, but anyone else's influence within the company.

She could leave. She could leave, absolutely. So if anything, we think that her story is much more complicated. And we see an evolution of her as a business leader and her power waning towards the end. But more importantly, we see Mark seizing more control, and more recently, even more control. find, based on what I know, and I want you to push back, that these two, as a husband and wife, are less menacing than Woody Harrelson or Julia Lewis in Natural Born Killers that we have. And let's just talk about him. I'll put forward a thesis and you tell me, you nullify or validate it. Mark Zuckerberg is the most dangerous person in the world. Your thoughts?

But Mark Zuckerberg is the most dangerous person in the world. Your thoughts? If power equals danger, then there may be truth to what you said. Mark Zuckerberg is one of the most powerful people in the world because he's created a company in which there's no real oversight of his power. There's no oversight of his control. It's all at his will and his discretion. And rather than as he ages and matures, perhaps seeing that that's not wise, that in life, we all need checks and balances. We all need someone who can tell us, hey,

you really messed that up. You're not qualified to make a decision on this thing because you're not a thought leader in it and you're not an expert in it. And this is a time to bring in someone else who is. Rather than that, as we document in our book, he becomes a wartime leader. He seizes more control. Yeah, he's obsessed with a godfather. He is. I've had discussions with him about it. Oh, you have? Yeah, I happen to be obsessed with a godfather, but it's also a movie, Mark.

It's a fictional movie. Go ahead. I want to press you on that point. It's obvious that it's an incredibly powerful platform. I'm arguing that a sociopath, the wrong person, is running this very powerful platform. Did you find that? Or am I being incendiary and not thoughtful?

I don't know if he, well, you know what we're seeing? We are seeing, we have watched, all of us have watched Mark Zuckerberg grow up in front of our eyes. From somebody in their early 20s to somebody who's now not a young guy anymore. He's in his late 30s. And we are all just watching him make ad hoc decisions. We're watching him grow up and

figure out the world in front of our eyes. That could be dangerous. I think people within our book would say that, and they have said that. There's nobody on the board who really holds him to account. There's nobody on the board who really holds him to account. There's nobody in government that really necessarily holds him to account. There is no regulatory pressure on the company right now as well. So there is, and I know we'll get to that as well. But as far as who he is, we're watching a boy grow up into a man who's making huge decisions on the exchange of information. Yeah, I think so. I mean, that was my first column for The Times is the expense of education of Mark Zuckerberg. I didn't mean for his expense. It was at our expense, which is interesting.

I wonder whether a big problem here isn't just the entire Silicon Valley ethos, which is the founder is king and worship the founder. And he has, you know, he came to Silicon Valley in his early 20s. And he was immediately told that he was a boy wonder and a genius. And no one really tells him otherwise to this day. He is surrounded by people who fawn over him and his inner circle. Talk about that. Talk about the inner circle because it's really very one of the things they we had Cheryl and Shrepp on stage, Mike Shrepp. And he they were bragging about we've been together 10 years.

And I said, I don't think that's a good thing. I think that's a bad thing. I said, you need irritants in the system to create good quality. But they celebrated it, that they know each other so well and they're pals and they socialize. And I was like, that's sound. They vacation together. They send their kids to the same summer camps together. So talk about that.

Who is in the circle now? Yeah, I mean, isn't it unusual, even in Silicon Valley, to have two people there for more than a decade in the top two positions? I mean, I think in many companies you see the CEOs. But it's more than that. There's some people you don't know beyond them. Exactly. There's Chris Cox, who left for a little while and came back. There is Andrew Bosworth.

He is a very trusted ally of Mark Zuckerberg. There's Schrepp, Michael Schreffer, who is the CTO, and he's been there for a long time. Justin Osofsky, who's in head of advertising business. And there are some people who have left recently, like David Fisher, who was in charge of ads, as well as Carolyn Everson. Also from Google. That's another thing to add. So that's just on Mark's side that I was – let's take out David Fisher. The other people who I just mentioned are all on Mark's side of the business, the Mark team, let's call them.

Fisher. The other people who I just mentioned are all on Mark's side of the business, the Mark team, let's call them. Then Team Cheryl are people who, as we have well known, are known as friends of Sheryl Sandberg, Fosses. There includes Marnie Levine, who has a very similar resume to Sheryl, coming from Washington, working for Larry Summers as well in the Obama administration. And she is surrounded by, she was by Carolyn Everson and David Fisher until recently. And- Elliot Schrag.

And Elliot Schrag, who until 2000, and I guess he eventually left in 2019, but he announced his retirement in 2018, had been a very, very close lieutenant and advisor. Cheryl also has what's known as all these, I think people call them her little cabinet that surrounds her, people who are paid from the outside, who have a lot of political expertise, who give her advice. They've all created kind of like one ad executive described. Exactly, courts. They're in these, one ad executive described it as like these hermetically sealed boxes of agreement of the people that they surround themselves with. I would also mention that they all are very similar in background, demographics, and experience. To Scott's question about Mark, one thing that I think is really important to understand is he's

not lived a lot of life outside of Facebook. He went from Dobbs Ferry, Upper Westchester County, to Exeter, to Harvard for a few years, to Silicon Valley, to funding. And not a lot of life experience. And he runs a global platform. And I think that that is, to your question about danger, is what a lot of people find dangerous, is that he doesn't have a real sort of natural impulse to think about. He doesn't have the experience. He doesn't have the education. When he was giving that famous speech at Georgetown, which he's now gone back on, I literally almost ran into the stage and said, stop, I need to explain the First Amendment to you

and then you can continue, sir. It was kind of fascinating and everyone was sort of lapping it up, which is interesting. So let's talk about, speaking of Washington, the regulatory environment for what's happening now. Now, since you were writing this book, and it must've been like a moving target,

like a crazy moving target, right? So the Trump decision, talk a little bit about, that was fascinating because they tried to push it off, which is what the thing they tend to do is try to be, take away responsibility from themselves and push it onto someone else. The Facebook board, which we call the UN, pushed it back at them. And then, so talk about that a little bit. It was a really smart move on the part of the Facebook board. It was the equivalent of the Supreme Court saying, how do you want us to decide a case

when you haven't given us laws, when you haven't even formed the foundation of an understanding on which we can make a decision? The Facebook oversight board said, we're not going to be your fig leaf. We're not going to make a decision for you. You have to go back and actually craft policies and create policies to justify why you, A, kept Trump on

the platform when he repeatedly broke your rules, and then B, finally decided to boot him off. Because right now, what we're looking at is arbitrary. And I think that was really difficult for Facebook because they know that it was- Why did they sidle up to Trump so much? It depends who you ask. I think if you ask, you know, the PR line is going to be that, you know, Trump is a public figure and that it's important for the public discourse to hear what Trump has to say and we're a neutral platform which has to give everyone a voice. I think that there are people within the company who admit that also it was good politics and it was good business. Trump had almost 30 million followers by the time he was booted off Facebook.

There are people who went to Facebook multiple times a day and joined Facebook and joined groups because they liked Trump and they wanted to be there for him. And it was great keeping Facebook in the news. It was great to not have to deal with pressure from, you know, Trump tweeting out, ban Facebook and I'm going to boot. Like with Amazon. Exactly. I haven't heard any of them, by the way. It hasn't, but Facebook didn't want into that fracas. What do you think?

I think a lot of this started with this thing called trending topics in 2016 when there was a Gizmodo story that landed that showed that there was bias, or at least alleged anti-conservative bias, in what was then known as sort of this curated list of stories that Facebook would put out. Facebook internally was completely frightened about the reaction to this because a lot of conservatives pointed to that as evidence that they're still out there. Exactly. And they could see that that would snowball, that this sort of claim of anti-conservative bias would snowball. And it has, as you know, right now in Washington, whether even though it's completely debunked, the idea of anti-conservative bias and censoring and shadow banning or whatever you call it, but they knew that this would be a political force, that there would be a huge problem for them. And so that's why you have people in Congress right now running on this plank that big tech is censoring us. I don't know if they saw that far out that that would happen,

but it was for the first time, it was a completely terrifying new environment for them to have political pressure. Because remember, before that, during the Obama administration, Facebook was a darling, as well as a lot of big tech companies. So it was a complete shock for them. The irony here, and we've all written about this so much, is that Facebook keeps bending over backwards to appease conservatives and to not look as though they have any kind of liberal bias. We documented in the book and in New York Times reporting how just before the elections, when they banned militia groups, when they banned people on the far right and QAnon, Joel Kaplan and his policy team sent the group back and said, you've got to also ban Antifa. We can't ban one without the other. Otherwise, the conservatives will jump on it. And the Facebook team is sitting there scratching their heads and saying, great, now we've got to go find some Antifa groups we can also ban Antifa. We can't ban one without the other. Otherwise, the conservatives will jump on it. And the Facebook team is sitting there scratching their heads and saying, great, now

we've got to go find some Antifa groups we can also ban and drag this out for another couple weeks just so that we can look even-handed. It's ridiculous. It's ridiculous. Scott, we have a couple more questions. Yeah, just I think I've come around to more Kara's point of view. I look at, I 100% agree with you. Mark Zuckerberg's in control. point of view, I look at, I 100% agree with you, Mark Zuckerberg's in control. From a governance standpoint, he has the voting shares. And really thoughtful people come on this board with tremendous gravitas and character that we keep hoping are going to help, you know, level up Mark's character. And within several months or early, they all leave. So, it seems to me you brought up Trump that, and I'm curious,

again, if you saw evidence of this or evidence against it, that Mark Zuckerberg, like Trump, is outstanding at sort of sucking the life force and reputation out of people, using them as his heat shield. And when they're no longer an effective heat shield, you know, they leave. My sense is he's very Trumpian, very good at throwing other people to the wolves. Your thoughts? You know, it's interesting. Mark Zuckerberg always wanted to be a historical figure. He was, as we've, you know, people have talked about his fascination. Augustus. Augustus, exactly.

Augustus Caesar. For those who don't know, he loves Augustus Caesar. But, I mean, if I was going to pick an emperor, I suppose that's the one I would pick, but go ahead. But how scary. Maximus Carusus. Yes. He sees himself as needing a place in history, wanting a place in history. And if that's your point of view, if that's your jumping off point, what is a little human sacrifice? Oh, dear.

You just answered your question, I believe. Boom. Go ahead. I think Shira answered it well. That's a good one. All right. So I'm going to ask, I have two more questions. One is going forward, what is, you know, there's a consumer part, there's a stock part that's

never done better, right? It's doing really well. It dominates, it dominates. Where is it now, Cecilia, like you just start in Washington and then I'd love you to talk about product and technology and security because we're getting hit with ransomware attacks. So first start with the regulatory environment right now. Obviously, in China, they've just decided to go all like they're just going to Tencent today.

Yeah, Tencent is where they went today and ByteDance. So what is going to happen here? What is going to happen here? And what is the strength of the, I guess, the opposition to Facebook, at least the regulatory opposition? You have Lena Kahn, you've got Tim Wu, you've got this executive order. Give us like a little sense of where it's going to go and how it's going to affect them. So, I mean, I've been covering this for a long time, regulatory policy, and I've never seen the kind of energy that I've seen right now, that I'm seeing right now in Washington. There's

so much interest in regulating and reining in Facebook and big tech. That said, we are seeing the limits of laws right now. We're seeing the limits of how far enforcement action could go with the court recently throwing out the federal trade commissions and the lawsuit also by more than 40 state attorneys general recently to try to break up Facebook. So, I mean, it's going to take some time. There's a lot of energy. I think Biden administration's pick of Lena Kahn to run the FTC and already the action she's taken place, she's trying to actually create regulations in some ways at the FTC. And you're seeing a whole suite of antitrust bills going

through Congress and passing. They're really tough. I think in two years ago, one year ago even, they wouldn't have passed. There's a lot of energy. But okay, this is where my covering Washington for so long has gotten to me. I feel like it could take a really long time and it's hard for me to get too excited about it. I think there's going to be a lot of other action for other tech companies as well. But definitely, I think you're going to see the FTC, they're not going to roll over after that court decision. They're going to refile, I imagine. I mean, how could they not? And so there's a lot of energy. I think that they're figuring out what actually how to execute that and the nuts and bolts of that is really the question going forward. What about you from a product and, you know, look, stock is,

all the tech companies have done very well in the pandemic. What do you from a product and, you know, look, stock is, all the tech companies have done very well in the pandemic. What do you imagine is going to happen from a product and technology point of view for this? Because, you know, I wrote a book on AOL. It was ascendant and then it was not. Is that what happens here? I think they actually, it's very hard to get them out of ascendancy at this point. Yeah. I mean, I think that's what scares Mark Zuckerberg more than anything else, that he's not the hot new it boy anymore. I mean, you've seen him try to— He never was, but go ahead.

Whenever I used to go see him, I'd go, that MySpace guy is handsome. I've been hot in a different way. No, I think that, you know, he— I feel triggered. I'm sorry. Go ahead. HR. I think Mark is terrified of TikTok.

I mean, we've seen Instagram obviously try to clone TikTok. I would say it doesn't seem to have worked. I don't know many people that are using the Instagram version of TikTok. We're seeing him look at other companies on the horizon and realize that he's not able to put his finger on the pulse the way he once was. And he can't make those big acquisitions perhaps the way he once did. And that's incredibly threatening for him. That being said, in much of the rest of the world, Facebook, Instagram, WhatsApp, hugely dominant, hugely successful.

Right. And so he knows he can rely on that. He knows he can rely on being first, on being global. It's like Microsoft. It's a Microsoftian kind of attitude. Right. And does it become as boring as Microsoft is at some point? But the most valuable company in the world is Microsoft and Apple. Microsoft-ian kind of attitude. Right. And does it become as boring as Microsoft is at some point? Mm-hmm.

But the most valuable company in the world is Microsoft and Apple, you know, I mean, or Amazon and Apple. So it's an interesting thing. So what do you imagine is next, each of you? And then Scott will ask a final question. I think, well, on the personal level, it'd be really interesting to see what happens with executive leadership. I can imagine Mark Zuckerberg wanting to continue to stay at the helm of the company and to introduce new technologies. And he's very competitive and he wants to stay ahead.

So not pull a Bezos. But he also really admires Bill Gates. And I think he's really interested in the Chan Zuckerberg initiative and taking more of a role in that so we can see that as well. I think there's a lot of questions as to, I mean, look, when you think about the future of Facebook, there are some things that are so core, that are so part of its DNA. One of it is the structure and Mark Zuckerberg's leadership. And the other is how the technology functions and how it surfaces emotive and engagement and prioritizes engagement in the newsfeed. Until some of these core things change, I can't see the trajectory really changing at all in the company.

Yeah, I find them very un-innovative. I mean, you just saw the executive who left for Instacart, who is really interesting. There's a lot of interesting, a lot of people are leaving. It's a very Google-like situation that happened to them too. What do you think? You know, I think as we show in our book, Mark Zuckerberg and Sheryl Sandberg have drifted apart and her relevancy and importance in the

company has been called into question. I'm curious to see what happens next for her. And I'm curious to see what happens next in terms of who ascends to be the next Mark at some point. Anyone? Give me a name. You know, Chris Cox probably came back for a reason. I can't imagine that that wasn't part of the discussions with Chris Cox when he decided to return to the company. Hamlet. So Hamlet's going to take over. I once had Scott, a coffee with him, that literally he's like, I feel bad and yet good.

I was like, oh my. People see him as this, they call him the moral compass of the company. I would point out that while he is certainly very thoughtful about these things, many of the problems happened under his watch. That is correct. He was the head of News Feed when News Feed made— Love you, Chris. Right. He made those decisions.

His own employees—we have this in the book—were coming to him and they were saying, what's going on with News Feed? Why is all this crazy stuff about Hillary Clinton being in a secret coma? Why is this at the top of News Feed? And he kind of patted on the back and did that Facebook thing of, I hear you. I hear you. I hear what you're saying. I'm sure that made the employee feel really great, but it didn't change anything when it came to American democracy. All right. Last question, Scott. Moral compass. That's a pretty fucking rusty compass. Look, well, let me ask you this. The Biden administration called you and said,

the two of you are thoughtful people. You've seen a lot of companies. You know this one as well as any outsider right now, at least for a moment. What should we do? Is it regulation? Do things not change unless management leaves? Is it severe punishment? Magic Wand, what would you do to make Facebook a healthier part of our ecosystem?

I would say your problem is not Facebook. Your problem is social media. Your problem is that Americans don't know how to use the Internet, despite probably we should be better than any other country. We should be able to teach our kids media literacy. We should be able to teach Americans how to find valid sources of information online. We're not doing that. There are countries all over the world, including Singapore, Estonia, that are doubling down and saying our democracy is going to break down unless we start teaching people media literacy. America is not doing any of that. And I would tell the Biden administration,

this is not a Facebook problem. This is a problem that is going to persist. It's going to get worse. Deep fakes and AI are going to make it worse for all of us. And unless you do something now, where does democracy sit in 20 years, 30 years time? federal government of enforcing our own laws. And there are so many examples of violations from Facebook and other companies, but let's just stick on Facebook for a second. They say that, you know, the privacy settlement of 2019 was so long overdue. There are so many other examples of violations. I mean, this is what I'm hearing from people in Washington is that there needs to actually be a real cop on the beat. I mean, they've, the federal government allowed more than a thousand mergers by big tech companies over the last decade, and they never challenged any of them. So, I think that what I'm hearing from them themselves is that we actually have to be bolder. I'm sorry, I have one more last question. Joel Kaplan, will he stay?

Yeah, he's curious. This is the guy who did a lot of the Trump petting, I would say. From everything we know, he is absolutely in Mark's inner circle. And Cheryl absolutely trusts him. And remember, Cheryl brought him in, and Mark has brought him into his circle. So he is incredibly powerful. He's still powerful. He's incredibly powerful post-Trump as well, even with the Democratic administration.

I think people really value, especially Mark, his political instincts. He apparently gets along really well with newcomers like Nick Clegg. So as far as whether he wants to stay, I don't know. Whether he is endangered of leaving, of being kicked out, no way. No, no. All right. Okay. Well, this is a great book. Everybody should read it. They're going to be all over the media, but you should read the book anyway. It's called An Ugly Truth, Inside Facebook's Battle for Domination. Shira, Cecilia, thank you so much. Thank you for having us. Thank you.

Congratulations. Thank you. Thanks so much, Scott. All right, Scott, one more quick break. That was fascinating. Did you find them fascinating? They're fascinating ladies. They're thoughtful, interesting people.

I got the sense you're all good friends. By the way, you're having a book party without me. No, I did you purposely do it while I'm in Iceland. Okay. All right. So let's get we'll be back with wins and fails. Do you feel like your leads never lead anywhere and you're making content that no one sees and it takes forever to build a campaign well that's why we built HubSpot it's an AI powered customer platform that builds

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there's a great story in the New York Times today about how much Rupert Murdoch, that Uncle Satan, that toxic man is doing stuff around anti-vax stuff about this door-to-door stuff. They continue to double down on ruining this country. I don't know what else to say. And it's a great story about this, about what they've been doing.

They did the same thing at the beginning of COVID. Now they're doing it at the end. This group of people just really, I don't know how they wake. I know how they go to sleep at night. They have no soul. Anyway, go ahead. Sorry. That's my fail. Well, I mentioned it. So I'll know how they wake. I know how they go to sleep at night. They have no soul. Anyway, go ahead. Sorry. That's my fail.

Well, I mentioned it, so I'll start with my fail. My fail is, I think, I do think this quote-unquote billionaire space race diminishes the bravery of people like Yuri Gagarin and Alan Shepard and the Apollo programs. I also think it diminishes. Do you realize that in the space station, it keeps six people alive? There was this incredible tweet storm from a woman. God, we'll look up next time. Just talking about how basically space wants to kill you. Yes, yes. That was one of the people up there.

I think her first name is Jen. Anyways, but for six people in the space station, it takes a thousand people on the ground to keep them alive. And when you think about what we accomplished and what other nations accomplished and the risks that people took

50 or 60 years ago, and now we have a billionaire showing up and saying, hey, watch me. I just, it just, again, strikes me of

our priorities seem to be all all fucked up. My win is, my win is, again, strikes me of our priorities seem to be all fucked up. My win is, again, we adore and there's this incredible idolatry of American universities, American athletes, American companies, but there isn't enough respect afforded to our government and our public servants. And my win, and this fits in with your lost round vaccine hesitation, is Jen Psaki. Is that how you mean? Psaki, yes. Jen Psaki. And here's a woman. Okay, so parents, Polish and Greek immigrants, or I'm sorry, Polish and Greek descent. I don't know if she's second generation. She's a competitive swimmer at William & Mary, and she decides to go to work in the government. At the age of 31, she's a deputy press secretary for the Obama administration, and then 10 years later, she's the press secretary.

forcefully yet dignified. And what I'd like to do is I'd like to play a clip where she responds to a question about their attempts to educate people around vaccine hesitancy in South Carolina. The failure to provide accurate public health information, including the efficacy of vaccines and the accessibility of them to people across the country, including South Carolina, is literally killing people. So, maybe they should consider that. Okay. So, I find it just heartening that such impressive people, we talked about Professor Wu, but Jen Psaki, I hear her and I think I contrast that with four years ago, Sean Spicer. Oh, God. Yeah, that guy. And I'm like, my God, America has some of the most talented people in the world who want to do something and realize that greatness is in the agency of others.

And they decide to join the most impressive noble organization in the world, and that is the U.S. government. So, my win is Jen Psaki. I think she's fantastic. And I think this government, I think there are a lot of heroes here. She's good. She's good. She's fantastic. Anyway, she's my win.

That's good. She's my win She's fantastic. Anyway, she's my win. That's good. My win, I'm going to give a win, is I go between, you know, this recent thing where Nicole Hannah-Jones was going to go to UNC and then they wouldn't give her tenure and then they did. And then she went off to Howard University with a donation which is in part by tech people, I think,

and some others. And also Ta-Nehisi Coates is going there too. I would say Wayne Frederick, who we've talked to, who is the head of Howard. I think I'm hoping to interview him soon on Sway. At some point, we've interviewed him on Pivot. I think what he's doing there at Howard is really, you know, another doctor who we talked to him about COVID.

And I just think I love what he's doing there. I think what a win this week to get those two there to teach those students. And I just wish I love what he's doing there. I think what a win this week to get those two there to teach those students. And I just wish him all the best. I think that was really a great win for them to get these people to teach their wonderful students there. So I would give them a win. Okay, Scott, that's the show. We'll be back Friday for more.

Go to nymag.com slash pivot to submit your question for the Pivot podcast. The link is also in our show notes. Scott, enjoy Iceland. I will see you soon. Yeah, I look forward to it. So today's episode was produced by Caroline Shagrin. Ernie Endertide engineered this episode. Thanks also to Whitney Jones and Drew Burrows.

Make sure you subscribe to the show on Apple Podcasts or if you're an Android user, check us out on Spotify or, frankly, wherever you listen to podcasts. If you liked our show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. A big shout out.

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