Inflation hits a new 40-year high of 9.1%, but President Biden insists things are not as bad as they seem. Plus, Elon Musk is being sued in Delaware by the government for a billion-dollar deal they want him to complete. We're joined by David Sachs, a venture capitalist who runs Kraft Ventures and is co-host of the tech podcast All In.
00:02:08.800Energy alone comprised nearly half of the monthly increase in inflation.
00:02:13.180And this data doesn't reflect the full impact of nearly 30 days of decreases in gas prices, says the president, also pointing out that other commodities like wheat have fallen sharply since this report.
00:02:26.140And then goes on, of course, to say other countries are suffering from inflation and battling, quote, this COVID-related challenge made worse by Putin's unconscionable aggression.
00:02:53.020I remember a couple of months ago, the belief was that inflation would have peaked by now because inflation is measured on a year-over-year basis.
00:03:02.160And so, as you start to lap bigger and bigger numbers from last year, then you would expect the inflation rate to go down.
00:04:32.060You're talking about 8%, roughly, inflation numbers.
00:04:36.000I think you can depend on between now and the November election.
00:04:40.080So, the numbers just aren't going to get good enough, fast enough to help the administration.
00:04:44.560I think that they've got a big problem here coming into November.
00:04:48.320It's, of course, so you have Biden coming out today and saying, out of date, out of date.
00:04:53.220But what we've been told, even in the face of the 8.8 number last month, is really not to believe our lion eyes.
00:05:00.240In addition to the Putin price hike stuff that he keeps saying.
00:05:04.860Here was the White House press secretary just a couple of days ago on how strong our economy is at SOT1.
00:05:10.980When you look at inflation, when we look at where we are economically, and we are in a strong, we are stronger economically than we have been in history.
00:05:21.480When you look at the unemployment numbers at 3.6%, when you look at the jobs numbers, more than 8.7 million of new jobs created.
00:05:32.700Stronger than we've been in history, and citing the unemployment rate, which is, I mean, it's just such cherry picking and lacking context.
00:05:40.400In any fair press, we'd have an immediate fact check.
00:05:43.280But since it's the Biden White House, we won't.
00:05:46.460Yeah, I mean, the unemployment rate, as it stands today, is low.
00:05:49.920But the labor participation rate is also low.
00:05:52.200We've got millions of people who haven't gone back to work, and that's not really counted in the unemployment number.
00:05:57.300The other thing that the administration should be really worried about is the economy is slowing down really fast.
00:06:01.920And this is a result of the rate increases that the Fed is now having to push in response to inflation.
00:06:08.740So I think that we're very – you already saw in Q1, we had a negative growth rate for GDP.
00:06:17.760In another couple of weeks, we'll get the growth rate for Q2.
00:06:21.060If that number is negative, we will officially be in a recession.
00:06:25.120But regardless of whether that number is technically negative or not, if you poll most Americans right now, most Americans already believe we're in a recession.
00:06:33.480So they are feeling the pinch from this inflation.
00:06:36.920I think that you're seeing companies slam on the brakes in response to the Fed rate increases.
00:06:44.160And so the economy is definitely slowing down.
00:06:46.560And I think there's a pretty good chance that if we're not in recession by the end of this month, we will be by the end of this year.
00:06:52.880So it's a weird recession in a way because I remember the recession of 1991.
00:06:58.020I was in college and, you know, the graduating class a year or two ahead of me, they were all struggling to find work.
00:07:05.760You know, I mean, when you think of recession, you think about a tough job market.
00:07:09.560As you point out, this is a low – this is not a tough job market.
00:07:13.480You can find a job in this job market.
00:07:15.880It's just the question of when you get your salary and you take it home, what can you buy?
00:07:20.440And how does it compare to what you could have bought with the same number 12 months ago?
00:07:25.860But this unemployment rate is very interesting and it's kind of frustrating.
00:07:30.800I mean, I'll tell you, I've experienced it myself personally.
00:07:32.940I've read accounts of other people who are going through the same thing.
00:07:35.740We come to New Jersey during the summer months.
00:07:38.580And you cannot go out to a restaurant here because there's no staff.
00:07:43.560Like, all of these restaurant owners are begging for the college students, for anybody who can work, to apply for a chef or a cook job, for a waiter or waitressing job, for, you know, a bar back or a, you know, busboy type job.
00:07:58.860They can't – I mentioned this guy before.
00:08:01.520He's clearly a Republican here at the Jersey Shore.
00:08:04.500I was kind of laughing because on the Upper West Side you have AOC action figures and Dr. Fauci superhero dolls.
00:08:10.700And here on the Jersey Shore, where it's a little redder, you got this guy who posted in his – he runs like a mall, like a strip mall kind of place.
00:08:24.640Hopefully, the government will soon cease in their endeavor to enslave people through handouts and crush small businesses, hopefully, but don't hold your breath.
00:08:33.940So this guy's basically saying you can't get staff.
00:08:37.240And I think people are feeling this all over the country where you go and you can't get service because they just can't find employees.
00:08:42.520So why – how can we both be in a recession and have a shortage of workers?
00:08:47.220Well, we have a very low, by historical standards, labor participation rate.
00:08:53.260And so a lot of workers have not gone back into the workforce.
00:08:57.000And you could lay some of the blame for that at the $2 trillion – that last $2 trillion of stimulus that Biden passed last year, the American Rescue Plan, along straight party lines.
00:09:07.120And the Republicans were accused of being cold-hearted when they pointed out that the stimmy checks and the super-extended unemployment insurance would encourage people not to go back to work or delay them from going back to work.
00:09:18.100And so I think we're still seeing the residual effect of all of the stimulus money flowing through the economy.
00:09:24.800There are – the technical unemployment rate is low, but there's a lot of unfilled jobs.
00:09:30.480There's a lot of people not participating in the economy.
00:09:33.480I think what you're going to see now, though, is that the unemployment rate is going to start to rise.
00:09:39.340There's no question that the economy is slowing down.
00:09:42.120And it's – I think most analysts now believe it's just a matter of time before we're in a recession.
00:09:47.000So I think you are actually going to see a lot of increased joblessness claims over the next six months or so.
00:09:54.000And you're going to start to see these things normalize and behave more like you'd expect.
00:09:58.900Remember, the unemployment rate is really a lagging indicator of economic success.
00:10:03.900And so, you know, it's still reflecting the economy we had last year.
00:10:07.840I think that the number will change over the next year or so.
00:10:11.060Yeah, because haven't these checks stopped?
00:10:12.660I mean, when you say it's a residual effect, it's like people saved up.
00:10:15.400They put their stimulus checks in the bank, and now they're still living on mom's couch, just, you know, enjoying the remnants of those checks.
00:10:22.820I mean, they were big, and they were unnecessarily large and generous for a portion of the population.
00:10:37.040I mean, it's a residual effect that's lagging.
00:10:39.740I mean, people are using up those savings, but Americans still have, I think, quite a bit of excess savings stored up.
00:10:45.400You also had a lot of things around eviction moratoriums, rent abatement, things like that, which is most people's number one expense is their rent.
00:10:51.960So if you don't have to pay rent, you can basically live off those to me checks for a lot longer.
00:10:57.800Look, I don't think this is the predominant thing happening in the economy, but this is one variable at the margins that is creating that feeling that you described of not being able to staff up some of these service jobs.
00:11:11.500I wonder about it, too, because it's like part of me wondered whether, you know, the teenagers who used to fill these jobs, like, where are they?
00:11:20.980But part of it is I feel like there's so much pressure on young people today to like you have to be in 10 clubs and you have to be the president or the captain of four sports.
00:11:30.060They have to they're doing stupid model UN as if that's going to prepare them for life, you know, instead of like doing the things that would probably cause a David Sachs to want to hire them, like working, shoveling fish guts for a summer and figuring out what it's like to get your fingernails dirty, you know, for a living.
00:11:45.440Yeah, I mean, I haven't searched for anyone with fish gut experience, but I would I would value that, I guess, if someone's willing to do that.
00:12:34.700And number one, why is tech getting it so bad?
00:12:36.780Why are they sort of the leader on all these rollbacks?
00:12:39.420Well, startups in particular are kind of the canary in the coal mine.
00:12:42.160So that's why I've been warning on your show for months now that we are seeing a slowdown.
00:12:46.800What basically happened is that if you look, if you go back to November of last year, the stock market, specifically growth stocks, peaked in November last year.
00:12:55.160That's when the Fed finally got serious about inflation, admitted it wasn't transitory, and started projecting a regime of interest rate increases.
00:13:04.660Those expected rate hikes then caused growth stocks to go down.
00:13:08.660And we've seen a huge decrease in the stock market.
00:13:12.760But if you look in particular at the growth stocks and the new listings, the SPACs, the IPOs, they're down 60%, 70%, 80%.
00:13:19.340So what happened is over the last six months, venture investors obviously started noticing that the public markets and the valuations are set in the public markets are the exit for all of us.
00:13:31.540And so we realized that valuations were way off, and that caused a constriction in the amount of venture capital that was available.
00:13:39.480That's been happening over the last six months.
00:13:41.640And founders are seeing that it's hard to raise money.
00:13:44.840The valuations are lower, so raising money is more dilutive.
00:13:47.720In any event, all these forces basically cause startup founders to burn money more gradually.
00:14:08.800So that was sort of, again, the canaries in the coal mine are these startups.
00:14:11.700But now it's now spread to these big tech companies, and then it will then spread to other kinds of companies.
00:14:19.700And I just think it's based on how sensitive they are to economic changes in the economy.
00:14:26.400Startups are the most sensitive, then tech, then sort of the more traditional value companies.
00:14:31.840You know, switching it to politics for a minute, the New York Times slash Siena College came out with really shocking polling this week about President Biden's very low approval rating, 33 percent now.
00:14:42.780And the fact that some 63 percent of the Democratic Party wants a different nominee for a second time around, they don't want him for a second term and how low his rating has fallen with independence with the white working class.
00:14:58.060Even his core base, which The New York Times describes as black voters, more of the black voting base would prefer a different candidate other than Joe Biden on the Democratic ticket.
00:15:07.620So it's not good news for him. But today on their daily podcast, they called The Daily, they were pointing out another side of this poll showing that when it comes to the congressional midterms, the Democrats are doing a little better than they were and better than expected.
00:15:24.040You know, if you looked at these polls three months ago, it was predicted bloodbath.
00:15:28.440And now it's getting tighter in the wake of Roe being overturned, in the wake of some of these mass shootings and some Supreme Court decisions on guns.
00:15:36.860And they they believe in the wake of the January 6th hearings, which may not be really pulling the heartstrings of a ton of Republican voters, but some of them, but certainly seems to be amping up the Democratic base, which was, I think, in part their purpose.
00:15:50.500So what do you make of that possibility? They're saying now Democrats have a one point lead on the generic congressional midterm ballot among registered voters, and they have a one point deficit on likely voters.
00:16:04.400So pretty tight. I mean, surprisingly tight, given these economic numbers.
00:16:10.200Well, I think that if you look at the House, I mean, everyone's forecasting that Republicans are going to win back the House.
00:16:14.640I think the question is the Senate. And there is you could call it a candidate quality issue there in a few races or Republicans haven't necessarily fielded the best candidates.
00:16:24.360And so that matters quite a bit at the margins. I do think that this should be a red wave in November.
00:16:30.920If you look at if you poll likely voters on what are the top issues that they care about, number one and two are inflation in the economy.
00:16:38.160It's true that Roe is an issue for especially for the Democratic base, but for voters as a whole, it's something like a five percent issue.
00:16:47.260So, you know, the Democrats are going to go out with the best issues that they have.
00:16:51.540But I think that the paramount issues for most voters can be the economy and inflation.
00:16:56.180And I don't see a big positive change happening in those numbers before November.
00:17:01.700In fact, overall, it could get worse. So I would expect Republicans to do very well in November.
00:17:05.520One of the things they were pointing out, again, this is The New York Times talking about this issue within the Democratic Party is something that you've been pointing out as well, which is the Democratic Party is now a party of college educated white elite people, elite so-called elites.
00:17:22.040Right. Meaning well educated, you know, well off. And that the working class has switched, has switched.
00:17:31.040They're now Republicans and people of color have migrated to the Republican Party in numbers never seen before.
00:17:39.800They are in no way a reliable voting bloc as they used to be Hispanics.
00:17:45.200And as I pointed out, even he's losing support amongst black voters.
00:17:49.060So it's it's really shocking. And you've been on to it. You've been pointing it out.
00:17:52.420A lot of people have. But I know you've seen it in a way a lot of others haven't.
00:17:56.720So what do you make of that sort of this switch and who represents the elites and who represents the working class?
00:18:03.000Well, I've been on to this trend for a while because I read Roy Tushara, who is a Democratic political scientist.
00:18:11.320He back 20 years ago, he wrote a book called The Emerging Democratic Majority, in which he argued that demographic trends were working in the Democrats favor and would basically create Democratic majorities and Democratic presidents as far as the eye can see.
00:18:23.720And he and he was basically hailed as a prophet when Obama got elected in 2008, based largely on the coalition that he was talking about, basically young voters, women, people of color.
00:18:36.540But for the last few years, Tushara has been warning that the Democrats, that demographics are no longer working in favor of the Democrats, that they are losing their historic base because of what he calls.
00:18:47.320He calls it basically professional class hegemony, that the Democratic Party is basically catering to the college graduate elites who run the think tanks and the foundations and the big woke tech companies and the Fortune 500.
00:19:02.600And they are catering to that narrow group of voters and the issues they care about.
00:19:06.360And they've lost sight of what matters to the average working class voter.
00:19:10.520And that's why you saw in that special election in Texas, Maya Flores got elected a Republican for the first time by a largely Hispanic district that I think went 18 points for Biden, and then they just voted her in by a huge majority.
00:19:25.980So you can see now that working class voters of all races are migrating from the Democrats to the Republican Party because the Republican Party is speaking to their concerns about economic issues, inflation, and so on, whereas the Democrats are really, you know, they are focused on these sort of elitist, progressive, woke policies.
00:19:49.420You know, the Democrats are very wedded to this progressive agenda of deprosecution and defunding the police and allowing rampant homelessness.
00:20:00.320And the average working class parent, they don't want their kids to have to get off the school bus and walk through a phalanx of drug addicts and junkies and homeless on campus to get to their school.
00:20:10.340So, you know, these are ordinary quality of life issues that are motivating the electorate and they're motivating the working class to move to the Republican Party.
00:20:21.060That video out of San Francisco, we played some of that yesterday.
00:20:23.720It was just horrifying of these young kids getting off the bus and having to walk through exactly that in this so-called progressive city that claims to care about the homeless.
00:20:34.000And then, yeah, we've seen we've seen that in place after place, especially a lot of a lot of families of color, Hispanic families and black families standing up saying we don't want this CRT nonsense in our schools.
00:20:46.300Don't tell us we're second class or our kids arrive here, you know, with the behind the eight ball just because of their skin color.
00:20:52.900We don't accept any of your presumptions about our children based on their melanin.
00:20:57.580And I do think it's pissing people off and it's it's causing a shift, especially with these economic numbers.
00:21:04.000To lure us over like which what are you selling?
00:21:07.220And in the meantime, you get messaging from Joe Biden as they, you know, go play almost five dollars at the pump of this is this is an amazing opportunity.
00:21:25.800And this is why I think Biden does bear substantial responsibility for the inflation, the economic mess we're in, is he basically baked this cake last year.
00:21:33.780Remember, his first day in office, he cancels the Keystone Pipeline.
00:21:36.580He made it harder to drill and transport energy.
00:21:39.780So, you know, number one, you know, he basically contributes to the higher gas prices we have this year.
00:21:45.360He also pushed for this extra four trillion in stimulus last year, deficit spending.
00:21:51.580Again, we mentioned the the two trillion American rescue plan, which was stimulus that we didn't need.
00:21:56.520COVID was basically winding down, at least as an economic issue.
00:21:59.480You had economists like Larry Summers and his own party warning that if you pass this ARP, it could create inflation.
00:22:09.140And then, you know, let's talk about this Putin price hike idea.
00:22:11.940Biden took throughout all of 2021, he basically took a very tough on Russia position in which he would not use diplomacy to try and find an off ramp to this Ukraine crisis.
00:22:23.280As a result, earlier this year, we had a war.
00:22:25.540Now, we could debate whether that was a wise foreign policy.
00:22:28.980I personally don't think it was, but even if you do, even if you want to take a tough on Russia stance, why would you alienate the Saudis?
00:22:37.180Why would you cancel America's energy independence?
00:22:39.700If you knew you're going to be taking on Putin in the year 2022, you would want to use 2021 to create an energy glut.
00:22:53.880And he's basically having to beg for forgiveness to get the Saudis to pump more after he basically said last year he's going to treat him like pariahs.
00:23:00.920So there was no overall grand strategy or coherence to this administration's policies.
00:23:07.140If they want to get tough on Russia, they should have maintained good relationships with the Saudis and they should have basically encouraged domestic energy production.
00:23:44.480The Europeans need to be energy independent.
00:23:45.940What's happening in Europe right now is that the Russians are actually restricting the flow of gas from the Nord 1 pipeline.
00:23:53.480And they're really showing the Europeans who's Putin is showing the Europeans who's boss right now.
00:23:57.440And I think there is a significant chance that come this winter, when the Europeans need to heat their homes, that is when the Western alliance on Ukraine may fracture.
00:24:07.080I think this is what Putin is betting on.
00:24:09.520And so we've seen now, again, you cannot be secure as a country unless your source of energy is secure.
00:24:15.840And I think the Europeans are learning that the hard way, and we're learning it the hard way.
00:24:20.140It's so crazy because we were, you know, we were energy independent under Donald Trump, and he gave it away.
00:24:26.460We're seeing something similar, you know, because of his green energy policies and his his.
00:24:30.860He's too beholden to the elite, super green faction of his own party that makes huge donations, unlike the working class members who used to be part of his party,
00:24:42.740who are going to get hit by these policies of making us not energy independent and dependent on wind and solar, which doesn't work nearly as well.
00:24:51.260And that's why what's happening in the Netherlands is interesting, because it's it's a parallel.
00:24:56.700We have these farmers who are about to get hit by these attempted green policies severely out there protesting.
00:25:04.820I mean, we never talk about the Netherlands.
00:25:06.300In fact, the Netherlands confuses me because my my husband's Dutch and it always just can be like, what is the Netherlands?
00:25:11.940What is Dutch? Why aren't you considered Netherlandian?
00:25:15.300Why are you Dutch? Anyway, I could go on, David.
00:25:18.420But yeah, for the viewers who haven't been following this.
00:25:23.080So farmers are protesting around the Netherlands over the government's new policy, which would see the country slash nitrogen oxide and ammonia emissions by 50 percent, 50 by 2030.
00:25:34.260This is in an attempt to go more green.
00:25:37.020All right. And this all of this means they have to reduce their livestock numbers.
00:25:41.000They it could force some farms to shut. They have to use less fertilizer in a very short time.
00:25:46.260And they're saying this demand by the government is totally unfeasible.
00:25:49.640And what it's going to what's going to happen is now the government's going to try to buy up all the farms.
00:25:56.040So they're protesting. They're they're burning bales of hay.
00:25:59.760They're kind of doing what the Canadian truckers did in a way and fighting back.
00:26:03.780And it's somewhat inspirational to see them pushing back on this government overreach where their government's trying to do them what Joe Biden's kind of doing us.
00:26:13.500I mean, the Dutch farmers are the new Canadian truckers.
00:26:16.620These are working class folks who are basically being punished and they're basically being legislated out of existence by their own government.
00:26:25.060I mean, basically, some bureaucrat in Brussels had the bright idea that we're going to cut this type of emission by 50 percent by 2030.
00:26:31.920Those are suspiciously round numbers to me.
00:26:34.100I'd like them to prove why 50 percent is the number and why 2030 is the number.
00:26:39.860I mean, these things, it doesn't really make sense.
00:26:42.140Right. They've just kind of picked these numbers arbitrarily out of thin air.
00:26:45.480And then what happens is the Dutch legislators say, oh, we have to implement this new directive from Brussels.
00:26:50.060They start confiscating these farms and banning a way of making a living that these farmers have been, you know, have been engaged in for generations.
00:26:59.460So, you know, it's it is very similar to what's happened with energy, which is the Europeans adopted a policy towards energy that made them dependent on Russia for their energy because they refused to use nuclear or develop other or develop their own gas for environmental reasons.
00:27:18.340They're about to do the same thing with food, which is make themselves dependent on other people's food because they refuse to produce themselves, even though they have an enormous natural advantage.
00:27:29.880The Netherlands is actually the number two agricultural exporter in the world.
00:29:20.000Now, on the housing market, I think the issue there is that if you look at some of these charts showing the ratio of housing prices to median income, what you see is that the ratio has never been this high since around 2006, right before we had that sort of the global financial crisis driven by the real estate crash.
00:29:43.880So essentially what that means is that people cannot afford home prices as they stand today based on their current income levels.
00:29:53.240And now that interest rates have gone up so much, mortgage prices are rising rapidly.
00:29:59.360So, you know, your typical home mortgage has gone from, call it roughly 3% to almost 6% in just the last few months.
00:30:06.300So that is also creating a huge amount of pressure on the real estate market because people simply cannot afford as much house as they could just a few months ago because they can't borrow as much.
00:30:17.040So, you know, I think we are due for some sort of big correction in the housing market.
00:30:21.380What tends to happen first is that inventories build up.
00:30:24.280You get illiquidity in the market because sellers don't want to drop their prices.
00:30:28.480Eventually they capitulate and then we see a price decrease in the housing market.
00:30:37.200Elon has officially been sued now by Twitter, which is seeking to force specific performance of his promise to buy Twitter at $44 billion.
00:30:46.420He says they materially breached the deal first by not disclosing all of the information on how many bots are actually on Twitter and perhaps in other ways.
00:30:56.280CNBC analysts predicting Elon may go to jail if he loses this case.
00:31:02.840That was a ridiculous comment about Elon going to jail.
00:31:06.060Even Jim Cramer, who's not exactly known for, let's say, not making hyperbolic statements, laughed out loud at that.
00:31:12.240But the worst thing that could happen to Elon, although I would consider it to be a good thing, is that he could be ordered by Delaware Chancellery Court to actually consummate the acquisition.
00:31:21.180He could be ordered to basically perform.
00:31:23.080Or alternately, he could end up having to pay damages, a kill fee, basically.
00:31:27.360So that's the risk to Elon, and that's what Twitter is seeking.
00:31:31.960What Elon has to show is that there was a material adverse effect related to this bot problem, that basically the fake accounts, the bots were massively understated by Twitter's public filings.
00:31:44.080They wouldn't give him the information, and that basically permanently impaired the business, and it meant that their revenue would be much lower.
00:31:53.440And so I think what Elon has going for him is that the discovery around this for Twitter, I think, is going to be very messy.
00:32:00.400The question very quickly is going to become, what do Twitter executives know, and when do they know it with regard to this bot, fake account problem?
00:32:09.060Is there an email anywhere in the company in which executives are saying, well, gee, do we really want to pursue this vigorously when we know it may decrease our revenue?
00:32:15.920I mean, I'm not saying that email exists, but if it does, it's going to be very messy and embarrassing for them.
00:32:20.460So I was a little surprised at Twitter before this because I don't think they're going to like the discovery.
00:32:25.840On the other hand, you know, the battle for Elon is he's got to show this material adverse effect, which traditionally that's a pretty tough thing to show in Delaware court.
00:32:36.640So that's sort of the base of the balance there.
00:33:53.980And up next, we are digging much more into the Elon Musk lawsuit with a lawyer who had a fascinating piece in The Wall Street Journal today,
00:34:01.300which he's got a very different take than the one you're going to hear on the mainstream.
00:34:11.060Twitter now officially at war with Elon Musk, but who will prevail?
00:34:15.660My next guest just co-authored a piece in The Wall Street Journal that says,
00:36:13.260Let me address your question, which is, you know, they've asked him, they said, basically, you promised to buy us.
00:36:23.040And now that you've backed out, we're going to make you buy us.
00:36:26.500And, you know, you went to law school, Megan, and so you were in a first-year contracts class.
00:36:32.680And pretty much the first thing we teach our idealistic, you know, change the world students when they come to law school is not every wrong has a remedy.
00:36:42.200And that the rule in contracts generally is not promise and you have to do it or we send you to jail, like these crazy analysts think.
00:36:53.560That's the kind of general principle that animates our piece.
00:36:58.760And so if he backs away and, you know, breaches the contract in the technical sense, and I understand, you know, you were talking with David about these bots and whatever.
00:37:07.320We can talk about that, whether he is actually breaching or whether they breach.
00:37:10.820But let's just imagine he just walks away and says, you know what, I changed my mind.
00:37:14.000In that situation, probably the worst thing that could happen to him is that he would have to pay damages.
00:37:20.260And, of course, there's a question of what those damages would be.
00:37:23.660Some have suggested, you know, Matt Levine at Bloomberg has suggested those damages are the damages to the shareholders.
00:37:29.660But as we point out in the piece, shareholders are not part of this contract.
00:37:33.280They can't sue through Twitter to get their damages.
00:37:36.860It's only the damage that Twitter has.
00:37:39.000So I don't think the courts will make him buy it.
00:37:42.120And I think for reasons we can talk about, that would be a disaster if we forced people to do things they don't want to do.
00:37:47.980And the damages to Twitter are probably a lot less than a billion dollars.
00:37:51.120All right. So let's get to that, because that was an interesting piece that you raised about Hearst Castle in California as an example of what what happens if they act.
00:38:01.340If the court in Delaware says Elon Musk, you must buy Twitter now.
00:38:11.480How does that affect shareholder value?
00:38:13.660Like, who wants to force a reluctant owner into running a several billion dollar company?
00:38:21.340Yeah, I think it's it's as we as we allude to in the piece, I think it's irresponsible of Twitter's board.
00:38:28.100Twitter's board has fiduciary duties to Twitter as an entity.
00:38:31.980That means they have to put the interest of Twitter as an entity above anything else.
00:38:38.480And forcing someone who doesn't want to run the company or own the company to buy the company seems antithetical to their obligation to do the best thing for Twitter.
00:38:48.300You want someone to buy it, if you're selling your house, you want someone to buy your house that's going to be taking care of it, not someone that's going to want to, you know, would never cut the grass and let it fall apart or whatever.
00:39:01.540And that's the obligation the board of directors has.
00:39:04.620And so I think, you know, forcing a reluctant owner is a really bad idea.
00:39:09.080You know, we point out, we use the analogy in the in the piece that if you contract with someone to paint your house and they back out and say, you know what, I got a better deal.
00:39:21.360I promised to charge you five hundred dollars.
00:39:23.960Someone else down the street is going to pay me a thousand dollars.
00:39:27.180You don't want to go to court and compel that house painter to paint your house because they'll do a bad job.
00:39:35.080Yeah, they'll shirk and they'll be lazy and maybe in ways that it's very hard for you to detect.
00:39:40.920And for courts, this raises another problem, which is imagine that the court does order the person to paint your house or must to buy Twitter.
00:39:49.900And then he kind of does it does a bad job.
00:39:55.080He's not using a really high quality paint or in this case, Musk sort of slow walks the funding with the banks and, you know, delays the acquisition, keeping Twitter in legal limbo.
00:40:05.860Then Twitter is going to run back into court and say, look, he's not fulfilling.
00:40:10.340He's not doing the best job he could closing the deal or running the company, whatever it is.
00:40:15.620And that would be in sort of the mashing the court in a continuing obligation to make sure that the order to specifically perform to do the job, that they're actually doing it right.
00:40:25.160Because to think that the court is going to snap its fingers and say, you do it.
00:40:29.500And then Musk will say, oh, sure, I'll do the best I possibly can, I think is naive in the extreme.
00:40:34.680And people need to keep the real world in mind here.
00:40:37.040I mean, they sued Elon in Delaware, I presume, because Twitter is a Delaware based incorporated in Delaware, like virtually every corporation.
00:40:46.520But that's a good thing for Elon, too, because these this court deals with basically nothing but business disputes and understands the realities of his own power, whoever is going to decide it and of how businesses work.
00:40:58.760So, yes and no. Can I can I agree with you about everything in the in the premise you said and then sort of push back a little bit in one sense?
00:41:10.640The Delaware Transit Court judges are experts and they will understand the what I just described and the limits of specific performance and those things.
00:41:20.340They do, however, have a kind of, you know, we're in charge of business disputes.
00:41:26.300We're worried that if we let Musk back out of this, the kind of ramifications that have for other deals and they have, because of their expertise, a little bit of an arrogance and a willingness to sort of hold people to deals in ways that don't reflect the economic efficiencies or or maybe what the right market conditions would be.
00:41:47.440So I think that's a point in my favor. That's that's a point in my favor, because because I think the arrogance will make them not want to get in a position where they're ordering Elon Musk, the richest man in the world to do something he's not going to do.
00:42:01.120Yeah, we say in the piece, there's a little bit of a game of chicken that could go on.
00:42:07.440I mean, first of all, the fundamental problem here is something, again, that we teach and you learn in law school, which is the layperson sees Musk agreed to buy Twitter.
00:42:18.500Well, that's not what happened. The contract or the merger agreement was structured in a particular way. Musk created some separate entities, X Holdings 1 and X Holdings 2.
00:42:32.420They agreed to be funded. Twitter agreed to cancel the shares of its shareholders and give them certificates and they could show up at these separate entities and exchange those certificates for cash.
00:42:44.140That particular structure was not Musk himself promising to pay each Twitter shareholder $54.20.
00:42:52.640And that structural difference really matters. The lawyers could have struck this deal in a way that really did bind Musk, that made him accountable for the promise that he made to the shareholders effectively and could have been liable for the difference between the $33 stock price today and the $54.
00:43:10.580But the lawyers did not structure it that way. But the lawyers did not structure it that way. And they're kind of stuck with the structure that they have, which what it does is forces Twitter in the first instance to sue these shell companies, X Holdings 1 and X Holdings 2, to force them to do something.
00:43:27.620And as we point out there, there's no them really. You can't put them, you can't put X Holdings 1 in jail.
00:43:35.520The agreement does require Musk to do his best efforts to get those entities to fulfill their obligations, but it's a kind of second order thing. And I cannot see the Delaware courts holding Musk in contempt.
00:43:50.780And it just shows a little bit of the limitations of law here in holding people to deals.
00:43:58.540So what do you think is likely to happen? Yeah, I know you end your piece with a good line. You say they could have structured it that way, but either Mr. Musk's lawyers were too smart for that or Twitter's weren't smart enough to structure it in a way that would have really required accountability on his part to the shareholders.
00:44:12.240Twitter, of course, is saying we were injured. You know, he's blown up the company. He's damaged our reputation. He's created doubt amongst advertisers and our customer base about, you know, how many real accounts we have and so on.
00:44:24.280So he's he came in, he damaged us. He left. So we want to be made whole. And maybe the wholeness is the difference between thirty three dollars a share and fifty four.
00:44:32.620Who knows? But what are you knowing there? Both sides arguments. What do you predict? And I won't hold you to it is likely to happen.
00:44:39.600Yeah. So, yeah. So the first thing is on the lawyering, just that's a plug for law for my students. Lawyering really matters.
00:44:46.380And it seems like it, you know, just they agree to this deal. Lawyering really matters. And that's a point we want to get across in the piece.
00:44:52.400As for predictions, I mean, I'm a law professor and so I'm not a prognosticator as such. And so, you know, with with that caveat, you know, I think the the the at the end of the day,
00:45:06.500the court is going to want to not force the sale of a forty four billion dollar company to somebody who doesn't want it.
00:45:14.540And I think the stock market, as I said, reflects that that reality. Musk agreed to pay this billion dollar breakup fee.
00:45:22.380And so that's the cleanest way out of this. There is a question we raise in the piece whether or not that is actually Twitter's damages.
00:45:28.600What pundits are doing by pointing to the shareholders and the fifty four dollars is just completely mistaken.
00:45:34.880The shareholders are not a party to this contract. The lawyers could have made them a party to the contract and brought their damages onto Musk.
00:45:42.780They didn't do that. Twitter is the part of the contract. And so only Twitter can sue for its damages.
00:45:48.580And you mentioned some things like their reputational harms or things like that. Great.
00:45:54.500If Twitter can go into court and prove that it is worth less today and make a causal link between that reduction and its value, reduced profits, reduced asset value, market value.
00:46:07.080And Mr. Musk's behavior, then they could they could get those damages.
00:46:12.940But I haven't seen any evidence that Twitter is less profitable today than it was before Mr. Musk made his offer.
00:46:22.140And that's what they'd have to prove. And Twitter took a dive along with it.
00:46:26.100Yeah, that's going to be a really tough standard. So why don't you think, though, and only have a short time, that they'll make him pay the billion bucks, the breakup fee?
00:46:34.020Well, I won't say they may do that. And that seems like the cleanest way out.
00:46:41.020And for Musk, I think, you know, a billion dollars, that's couch change for him.
00:46:44.580And so I don't think that's a real I think that's a win for him if he can walk away here with with just paying a billion dollars.
00:46:50.700The reason I'm a little bit cautious about that is because breakup fees are supposed to reflect the actual estimate of the damages.
00:46:59.020So imagine you're buying a house, something everybody your listeners are all probably pretty familiar with.
00:47:03.680You put up some earnest money, the earnest money when you put up a house and walk away or try to buy a house.
00:47:08.720That's what you lose. You can't put in a contract, buy this house or pay me a billion dollars.
00:47:14.180That's not the way it works. The damages, the billion is supposed to be an estimate of Twitter's losses.
00:47:19.020I don't think they're a billion dollars. And the courts are reluctant to enforce penalties.
00:47:23.280Fascinating. This is like totally different than what, you know, the people who hate Elon Musk, who control the rest of the media, say.
00:47:31.920I appreciate the honest, straightforward analysis.
00:47:40.740Coming up, the bots angle to this story from a person who knows she's an expert in how many bots there are and how they're manipulating you right now.
00:47:53.980Joining us now is someone who kind of studies bots for a living.
00:47:57.860So she knows a lot about what Elon Musk says is his problem with the Twitter situation, though Twitter says it's a ruse.
00:48:05.960She has also studied social media disinformation campaigns for years.
00:48:10.540And believe it or not, you have been a victim of a social media disinformation campaign.
00:48:18.040And she can tell you some of the signs of, let's say, the Twitter account or the LinkedIn account that you may be interacting with that you have no idea is fake.
00:49:22.800Well, so not in the so I read the filing as, you know, the lawsuit filing.
00:49:28.720And I'm not a lawyer, but I was very interested in the technical aspects of it.
00:49:31.640And there's a couple of things in play here.
00:49:34.060So, first of all, there's a strong public perception that bots are a huge problem on Twitter.
00:49:38.460And we can talk about the history of that, why that is, you know, some of the dynamics in 2015 when they were particularly impactful.
00:49:46.000Twitter actually did take a lot of steps to minimize the impact of bots after 2015, around 2017, 2018 timeframe.
00:49:54.480But the first thing I'll say is that bots are not an evenly distributed problem on Twitter.
00:49:59.080Meaning if you're a person like Elon Musk and you are famous, you have millions of followers, you're active in spaces where, like, cryptocurrency, where scams are abundant, you're going to see a lot more bot activity in part because people make impersonation bots of you.
00:50:17.060And then they try to kind of dredge in your replies, to manipulate your followers, to pump cryptocurrency scams.
00:50:23.660So Elon no doubt sees a whole lot more of this stuff than the average person who's engaging on Twitter does.
00:50:29.080So I think that perception is one thing that's really key here.
00:50:32.160He has, my team's telling me he has 100 million followers right now.
00:50:34.920So, I mean, yes, so he's got a lot of incoming.
00:50:48.140What winds up happening, meaning a person doesn't sit there typing content into the, you know, into the user interface.
00:50:54.700Instead, what's happening is the content is kind of pushed out at set time intervals or when a famous person like Elon tweets, you have bots that will see that his tweet has come out and will immediately reply to it.
00:51:08.880This happens, again, with many, many famous accounts because people kind of want to get the reply in first.
00:51:14.180Under Donald Trump, you used to see people selling, like, liberal tears mugs.
00:51:17.740You know, just a form of spam, right, economic spam.
00:51:21.240And so this is, again, this is not an uncommon problem.
00:51:24.280The question is, in this context, per this legal filing, Twitter is claiming that 5% of its monetizable daily active users, so MDALs, are, that fewer, that 5% or less are these spam bots.
00:51:41.020That is different than just number of users on site.
00:51:44.300And so Twitter, in its calculation of MDALs, is theoretically already filtering out these spam bots that we all do know are on the platform.
00:51:53.020Elon is saying, again, per my understanding of these filings, that Twitter is misrepresenting that number.
00:51:58.800And so in response, what he asked for was access to, first, an understanding of Twitter's methodology, which it's my understanding they provided.
00:52:06.280And I know in mid-May, the CEO, Parag, was tweeting about this methodology.
00:52:15.120It's almost impossible for an outsider, even a researcher like me, to concretely say that someone or something is a bot, is an automated account, or is a fake account.
00:52:25.340Oftentimes, what people see is, for example, a bunch of accounts posting the same content over and over again.
00:53:17.720But again, you can't verify that those are automated accounts, unfortunately, and you can't verify that they are have not already been filtered out of this monthly, sorry, monetizable daily active users.
00:53:31.500Wait, so that makes it sound to me like you might give Elon the point that he was not provided with satisfactory information in order to be able to tell what percentage of the monetizable daily accounts are bots.
00:53:49.260So there's the data that he was given, which I'm saying is not particularly useful for answering the question that he wants answered.
00:53:54.740But then what Twitter says in its lawsuit is that they did provide extensive briefings detailing their methodology of how they arrive at MDAO and where their sampling happens and the processes by which they go and they check that background data to understand if this is a real account.
00:54:10.460But not the actual data, not the underlying data.
00:54:12.440That's where he's going to try to wiggle.
00:54:49.460So I, you know, it's until you just said that, I never really asked myself exactly what is a bot.
00:54:54.960I just kind of assumed it was a computer generated, like a human generated at some point program that sent out a bunch of annoying messages to us all on various forms of social media.
00:55:11.200But colloquially, it really has taken on a meaning where I think bot and troll are often used quite interchangeably.
00:55:18.600You know, people's experience of Twitter, of course, everybody has the experience where some, you know, we used to call them egg accounts, like the old egg profile picture.
00:55:33.920As public awareness about bots increased, particularly in the 2016, 2017 time frame, when there was a lot of conversation about fake news, about small groups of accounts, you know, kind of trying to make things go viral,
00:55:47.540about manipulation, using fake accounts to make hashtags trend, just kind of political shenanigans.
00:55:54.220There started to be quite a lot of academic research on bots that had actually gone back several years prior to it really coming to public awareness.
00:56:01.680But once it came to public awareness, there was this interesting phenomenon by which the more people learned that there were such things as bots on Twitter,
00:56:09.400the more they started to actually kind of immediately dismiss people who would reply to them with like a nasty or snarky response.
00:56:17.980You know, this was particularly as the kind of polarization on Twitter really heated up and anybody who waded into any vaguely political topic,
00:56:25.260which now is, you know, much of Twitter, would get this response back and they would decide, oh, that's a right wing bot.
00:56:47.080So and I definitely want to get to like your experiences with identifying the fake ones.
00:56:52.240And, you know, there are some tells which could be useful to our listeners and our viewers.
00:56:56.820But I one of the reasons I think this is so important, what you do is I remember before I went over to interview Vladimir Putin the first time I had a big briefing at NBC,
00:57:07.160like behind closed doors with FBI, CIA, like all sorts of top intel analysts and legit guys, you know, not hard partisans like, you know, we've some seen in some corners.
00:57:18.860But I mean, legit guys would have taken a hard look at this and they showed me on a graph not just how like the sort of Russians had been manipulating conversation in America leading up to the election,
00:57:29.740but even how I've been targeted, they they could pull sort of the the bot activity around my own name,
00:57:36.380especially after I got in the crosshairs of Donald Trump and how it was amplified, like how, you know, negative tweets were amplified in different pockets of the world.
00:57:44.500It was crazy. I mean, like the way that it can be seen if you care to actually know what you're doing like you do.
00:57:49.880It's all right there. It's like right there. It's very traceable, or at least it was back then.
00:57:54.300And so this is the point I try to make to my audience a lot, Renee, which is you don't you can 100 percent if you so believe you can you can say that Donald Trump won the 2016 election fairly.
00:58:07.880And you can even believe that he won the 2020 election. You can be, you know, sort of one of the people who believes his claim that that election was stolen from him.
00:58:15.140But I'm telling you, the Russians interfered with the 2016 election and they they've interfered with our national dialogue for years prior to that and after.
00:58:25.220And and they definitely were pro Trump, but their agenda is so much bigger than that.
00:58:28.780They were pro Trump to the extent they didn't like Hillary. But what they really want is division in America.
00:58:32.840They want us weakened. They want us fighting with one another.
00:58:35.280They'll take both sides of the Black Lives Matter issue or get whatever issue and just try to make us fight.
00:58:40.320That's true. That really happened. And you you know that firsthand.
00:58:44.080Yeah. Well, and that's something that I tried to emphasize, actually, in my own work.
00:58:48.780Also, I think, you know, I led one of the teams for the Senate Intelligence Committee in 2018.
00:58:55.640So there were tech hearings in 2017 as the public, you know, as investigations began to show that Russian interference in the election had happened.
00:59:04.000Again, many people in the Obama administration knew about that in advance.
00:59:07.480I think there's been a number of books written on this topic.
00:59:09.500Like the FBI had been observing GRU, which is Russian military intelligence activities.
00:59:15.240There was an excellent article in mid 2015 in The New York Times by a reporter named Adrian Chen.
00:59:21.980I believe it was called The Agency. And it talked about the Internet Research Agency, the Russian troll factory,
00:59:26.960which was really kind of put to use first very domestically, actually, to try to justify the Russian invasion of Crimea.
00:59:33.420Of course, this kind of harkens back to the interesting dynamic that we're in with the current Russian invasion.
00:59:38.460But what was happening there was they realized that propaganda had changed.
00:59:44.960And there was there's this very old Cold War phenomenon called the agent of influence.
00:59:48.920Right. And and this was if you've ever seen the TV show The Americans, that's what they are.
00:59:53.720So they're these kind of like deep cover agents.
00:59:56.180You know, they put them there and they recruit assets.
00:59:58.480And you see in the narrative of the Americans, they recruit this this black man.
01:00:03.740I think talking about civil rights issues.
01:00:06.760And that phenomenon of agents of influence, you have to actually like put someone physically in country to go and infiltrate an activist movement and nudge things in a particular direction.
01:00:17.440Or you started front media organizations that required a whole lot of effort to have front journalism.
01:00:23.940You had to pay people. You know, there was a took multiple years at times for false news to go viral back then.
01:00:30.920You know, viral was quite different in the in the age of just broadcast media and print.
01:00:34.960But what the Russians realized is that you could actually pretend to be somebody else online quite easily.
01:00:40.920And more than that, you could ingratiate yourself in online communities quite easily.
01:00:45.300And so this was where, you know, it was it was just sort of an evolution of that tactic.
01:00:50.060It wasn't that propaganda was new. It wasn't that Russian interference in elections was new or interference in American politics.
01:00:55.820It was that social media had put us into these online factions where we were already telegraphing certain aspects of our identity.
01:01:04.980Right. If we were joining a Texas secessionist group or a Black Lives Matter group, we were saying this is a belief that I hold.
01:01:11.520Right. And so when they decided that this destabilization effort was worth going for, what they did was they didn't use fake news.
01:01:20.880Actually, that was kind of a wholly separate thing that that military intelligence, the GRU was doing, but just staying focused on the Internet Research Agency, the Troll Factory.
01:01:28.720What they started to do was create pages and just repurpose content from hyperpartisan and identity based American media that already existed or even just kind of memes that were very identity based.
01:01:41.800And they created dozens and dozens of these pages in which they really got very, very deep down into what it meant to be an American and who America was for and these kind of existential questions.
01:01:52.720And, you know, they had extraordinarily niche. They really did their research. If you were a person with an incarcerated spouse, there was a page for you.
01:02:03.700If you were a Texas secessionist, there was a page for you. There was a page for for Chicanos, you know, just all of these different facets of American identity, Muslims, feminists, you know, liberals.
01:02:14.940They just kind of ran the gamut. Lots and lots of conservative and Black Lives Matter pages.
01:02:19.580So those were the two that they really wanted to to pit in opposition.
01:02:23.300And by pretending to speak as a member of that community, the person who receives the message is much more receptive to it.
01:02:30.560They don't think, oh, I'm getting some incentivized, you know, political propaganda piece from some random news site I've never heard of.
01:02:37.320Instead, they see like commentary on Twitter that looks like it's coming from a Black woman that says, as Black women, we shouldn't do this.
01:02:44.100We shouldn't vote for Hillary Clinton. As Texas secessionists, we need to rally at this park on this date at this time to preserve our Texas identity.
01:02:53.060You know, and so it was it was always framed very much as like we are a member of your community sharing your views.
01:02:59.400And that was how it was really done. It was really entrenching people, creating pride, deep pride in their identities and then pitting those identities as inherently in opposition to each other because of this question of who is America for.
01:03:13.020It's so scary, manipulative. And you don't know how many times it's happened to you.
01:03:20.360What what genuinely held belief do you have right now that's been planted there by somebody else intentionally in an effort to manipulate your vote or undermine our country?
01:03:33.320It's scary to think about. And you've also pointed out that it's not just Vladimir Putin.
01:03:39.060You know, it's he kind of worked in a way hand in hand with the social media companies in two ways.
01:03:45.060Tell me what you think of this in the first way that stuff did get on social media with absolutely no gatekeeping for a long time.
01:03:54.600And in the second way. They, too, are trying to manipulate us, you know, you were in the social dilemma like that by Tristan Harris, who's been on the show.
01:04:04.280So that's one of the points that the film makes, you know, that the social media companies want to stoke outrage, want to fire us up, want to divide us.
01:04:14.020My feed on Twitter or Facebook, whatever, will look totally different from my neighbors and my news consumption will be completely manipulated based on my prior likes and so on.
01:04:22.120It's not just about like giving you what's in the news today.
01:04:24.840It's about trying to collate results that they think will fire you up or outrage you in particular.
01:04:30.760And then when we all sit back and we ask, why are we so divided?
01:04:34.800Why? Why don't we feel patriotic anymore?
01:04:50.700There's a business model incentive to social media, which is to keep you on site, because most of these companies are ad based, which means that in order to serve you an ad, you have to be there to see it.
01:05:00.760This creates a kind of perverse incentive where they're constantly gathering data to try to make sure that they're serving you content that you're interested in so that you stay on site.
01:05:10.960And what starts to happen is that, you know, they want to show you content that you're going to engage with.
01:05:16.920So if you join groups, they're going to show you a lot of posts from those groups.
01:05:20.760If you follow friends and you engage with, you know, baby pictures and wedding pictures, you know, that's always going to be kind of pushed into your feed because people love baby pictures and wedding pictures.
01:05:29.020So it's not so much a deliberate intent to say, like, we want to rile people up.
01:05:36.080But the problem is that the intersection of social media dynamics with human nature and with the polarization that does exist creates an unfortunate feedback loop where the user does have agency.
01:05:49.800You know, we can decide what to click on, we can decide what to share, but we're picking what to click on and what to share from content that's been curated for us or recommended to us.
01:05:59.960So that's where the kind of agency intersects with the algorithm. Right.
01:06:04.000And then we have these tools that we've been given to be propagators.
01:06:07.460And one of the things that social science regularly shows is that people tend to propagate messages that are, you know, they have a strong what's called signaling factor.
01:06:16.220I am a member of this political tribe. I am a member of this American identity.
01:06:20.460You know, I am a member of this particular group. And oftentimes people really respond to language of like moral righteousness. Right.
01:06:28.140And so you're saying I am outraged about this story and I think the world needs to know.
01:06:35.520And so I am going to click that share button. Again, this is content that's been curated for and recommended to me.
01:06:41.700I do have the decision and what I want to do with it. But in that moment, because of the norms and the behaviors that we've kind of come to embody on social media,
01:06:50.620the way that that online behavior, you know, particularly on Twitter, which is really like the arena, the way that that's evolved,
01:06:58.060we do tend to share the stuff that has the strong component, the strong moral component where we're saying, you know, as a as a good Democrat,
01:07:05.600I am very outraged about this particular political decision that these other guys did.
01:07:10.860And so I am going to share along that story that makes them look terrible, which is then going to continue to propagate.
01:07:16.880It's it's a challenge because you do want social media to serve as as an amplifier, as a way to call attention to to speak.
01:07:27.700This is where we can talk about the Elon that what he's actually asking for in the free speech kind of debate is actually a really interesting,
01:07:33.100interesting thing to interrogate. But we are using them increasingly as like kind of factional battles for attention,
01:07:40.420ways to activate political tribes, again, fundamentally in opposition to each other.
01:07:46.120And so just to kind of connect it back to Russia, there are these and China and Iran.
01:07:50.840And I mean, every every nation state has these accounts at this point. It's not new anymore.
01:07:56.200It's not novel. Most of them are not particularly impactful.
01:07:59.320That is one thing I really do want to caveat. You know, there are hundreds of thousands of Chinese people.
01:08:03.100They just don't get much engagement. So you have these these things that are throwing, you know, accelerants on the fire.
01:08:09.620But the fire is really domestic at this point. It's really domestic American influencers, domestic, highly activist crowds constantly,
01:08:17.480you know, fighting in this particular environment again through this this sort of the unintended consequences of the business model incentive structure,
01:08:26.120the curation and recommendation tools that were the algorithms that were developed.
01:08:30.960But you say unintended. That may have been true originally. But now that it's been called to their attention, you can't say that anymore.
01:08:37.840They know what they're doing. They don't care. I mean, look at the whistleblower, you know, from Instagram and Facebook.
01:08:42.940They know they don't care. Their money is more important to them than the wellness of the country.
01:08:47.440I think that I mean, I'm not going to dispute that. I think that there's a lot of really horrible stuff that came out in the whistleblower thing.
01:08:52.660But there's one thing that has been really interesting, which is this question of once those networks have been established,
01:08:58.860meaning once we've all kind of self-sorted over the last seven years into these very highly fact of it, you know, highly activist online factions,
01:09:06.040it's really hard to know what to do next. So even when the platforms decide, hey, you know,
01:09:11.540oh, we recommended QAnon to these hundreds of thousands of people. What do you do after that?
01:09:17.560Right. This is where we're I kind of feel like we're like we're like paying debt, you know, the debt accrued from maybe they could just leave us alone decisions that were made.
01:09:25.020Maybe the answer is not in the curating. It's in the obsessive, you know, need to make us part of their feed every two minutes,
01:09:32.840you know, all the notifications. And like maybe that's the answer.
01:09:35.460Now you've created this monster by feeding us all this disinformation and trying to shove us into these groups that are highly partisan or what have you.
01:09:42.060Maybe the answer is, since you can't undo it, leave us alone. Let us let us go on Facebook.
01:09:45.800If we want to go on Facebook, stop tapping us on the shoulder all day and having the computer think about how to get into our heads.
01:09:52.200You know, this is where I think the I have I've had Twitter notifications.
01:09:55.900Twitter is my favorite my favorite social media platform. It's the one I spend the most time on.
01:09:59.680You know, despite all the, you know, all the critiques, all the disasters,
01:10:03.800I really do find it an interesting place for like, you know, hearing novel things that I wouldn't hear otherwise and seeing people's perspectives.
01:10:10.320I like Twitter, but I did turn off notifications about five years ago.
01:10:13.880And I think that it means that I open it on my terms as opposed to getting some kind of push notification.
01:10:22.060You know, I think Tristan talks about this a lot in The Social Dilemma.
01:10:24.560And we're starting to see Apple kind of come in.
01:10:27.780You know, you might notice if you get a lot of notifications from a particular app,
01:10:31.660Apple will actually kind of pop up a prompt if you have an iPhone asking, do you want to receive these?
01:10:35.620Right. And so it's constantly saying, you know, how do we avoid, you know,
01:10:39.280it's almost like the device manufacturers sort of like serves as the gating function against the the excessive push notifications.
01:10:45.960But I get them from, you know, media apps.
01:10:48.500It's just everything is a constant battle for attention.
01:10:51.480And so whether that's social media or even, again, unfortunately, like media properties,
01:10:56.720media apps needing to compete for attention, wanting to drive people directly to their apps.
01:11:01.840This this phenomenon of like the constant, incessant push notification constantly.
01:11:07.680And look, I'll be the first to tell you that cable news is based on outrage and they want you to be on their websites as much as anybody else.
01:11:13.740But they're not like they don't have the access to so much personal information about you in the way that your phone does.
01:11:20.580That's what's so dangerous about the social media companies.
01:11:22.760You know, they they can see everything and they use it.