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tv   The Communicators Scott Galloway  CSPAN  November 26, 2018 8:02am-8:34am EST

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daily. in 1979 c-span was greeted as a public service by america's cable-television companies and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court and public policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. >> host: professor scott galloway, in reading your new book "the four" the old often misquoted adage, with good project is good with country comes to mind. is that hitting? >> guest: we definitely,, there's a rhetoric or a narrative that's been fomented mostly by big tech that's what good is for technology is good for america. i think it is an apt analogy. >> host: you right in your book and the subtitle of this by the way is the hidden dna of
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apple amazon facebook and google percolate these companies are not benevolent but we invite them into the most intimate areas of our lives. >> guest: yes. if you think about who really knows you is your wife, is it your kids, , physical therapist, physical friends? i would argue entities that really know the real you is google. google knows it about to get engaged. it knows if you're contemplating divorce. google knows what elements you have, what elements you worry have expose yourself to. google isn't the real you. if there is a modern man god it is google that sees everything all of your intentions and what, how those intentions will likely translate into action. these organizations know where we are, know what we are connected with, nor, our intentions. so we've openly invited them into the brightest and darkest corners of our lives. >> host: can you help us
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figure out what you mean when you say that these companies, these four companies, have made the world a better place? yet used to refer to them as the four horsemen, referring to the apocalypse. >> guest: look, i think we are net gainers from big tech but the operative term is net. i believe we are net gainers from fossil fuels. net gain of some pesticides but that doesn't mean we should never open on the honest conversation about some of the downside of these incredible entities and what should be done. most industries we decided to regulate companies we decided they should be emission a mission standards we decided there should be limits or labeling standards on foods, but with big tech we decide that as a side window longer worship at the altar of character and kindness. we worship at the altar of innovators and builders. as a result these companies have somebody run amok. it's a key component of capitalism but these companies largely run unchecked.
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if the same scrutiny and regulation reply to the sector that has been applied to others we would not have tolerated about the behavior that's taken place. so the four of the four horsemen is meant to be a cautionary tale. i'm a fan of these companies. i'm their stocks, i use the products but it does mean we should have open and honest conversation about the downside. >> host: yet at the same time you call for them to be broken up. >> guest: i don't think there didn't can think while. i think they're bad people. i don't think people at the ma bell and 80s were bad people. i don't think people and the railroads at the turn at the 20 centura were bad people but there's a natural time when they become so powerful they start inhibiting competition killing small companies in the crib that otherwise could probably grew up to be innovative companies themselves, prematurely euthanizing a company that can it be better employers. we are at that point with this
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company will be fun company controlled vicki since on the dollar of all comers. two companies control two-thirds of all digital marketing. the market needs to be oxygenated. we should absolutely break these companies of. >> host: give us a snapshot of these four companies. how many employees, what is essentially their gdp? >> guest: combined they are about 700,000 employees which is about half 1 million of those work for amazon and most of those employees work in fulfillment or in warehouses. what would loosely be described as low to medium wage paying jobs. an organization like facebook that has 24,000 employees has a market capitalization of $600 billion. look at other companies that employ a quarter of 1 million people typically somewhere between 50-150 billion. we've never had this many are just to people with such outsized wealth concentration.
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combined these four companies market capitalization is the equivalent of the gdp of france. there's only four countries and will put up a greater gdp than the combined market capitalization of these four firms, and that's japan, china, the u.s. and germany. the wealth is staggering. these four companies comprise just a staggering amount of wealth spread across an increasingly few number of people. >> host: back to your book, "the four: the hidden dna of amazon, apple, facebook, and google." you write that disturbingly few reap the economic benefits of these companies. >> guest: we are barreling towards a society of 350 million serves serving 3 million lords. it's great if you own real estate in san francisco. it's great if you work for one of these companies but what we are seeing is, it's never been easier to be a billionaire. i teach a class of 160 kids every monday night at nyu.
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there will be a building are most likely to technology startup alternative investment. at the same time it's never been harder to be a millionaire. what do i mean? the general complex america sat on its citizens that if you work hard and play by the rules or disciplined ethic money by the time he retired you might be able to aggregate $1 billion of wealth through your home or your 401(k). it's getting harder. the opportunities have never been greater for the exceptional but the opportunities seem to be more and more difficult to come by for just the above average. we live in a lottery economy where optimist, americans optimistic we like to think we will be that one person that to luck, skill, pedigree, understanding the technology will be the one. but the majority of the people are statistically average and i would argue it's getting harder and harder when you're smaller and smaller number of company representing a a greater and greater amount of economic growth. keep in mind, amazon was
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responsible for 25% of all retail growth last year. if you talk about the cloud, digital marketing, talk about the most exciting parts of our economy creating value, there's increasingly few companies that dominate those sectors. >> host: from your book you write that of the ten biggest retailers in 1990, only two remain on the list in 2016. amazon didn't even come online until 1994. let's walk through -- go ahead. >> guest: the disruption in retail is just extraordinary. amazon, you're right there's only two companies and will likely shift again but with the more bankruptcy in retail the sure that we've seen in the previous five years. retail could he described as luxury doing well, amazon doing well, walmart holding on and everybody else is getting taken to which it.
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retail is the third-largest employer in america. there are more cashiers in the u.s. and our teachers, and about a third of them lost their jobs although they may not have known when amazon go, the stored artificial intelligence basically obfuscated cashiers went live last year. >> host: let's walk through each of the companies and going to read a line and let you expand on it. you write that apple is considered the most innovative company in the world. >> guest: they are largely credited specifically not even just apple that steve jobs the most innovative individual of the last century probably since edison. some people would argue elon musk is a new steve jobs or thomas edison. this is a company that really appeals to our need to be i think communicates sexual strength. what do i mean by that? this organization has the good headway to make people feel wealthier, more attractive and signal the world. if you own an iphone you like
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living in the city. likely part of the creative class, make a good living, you can afford to spend $1000 and an item the cost $300 $300 to buid which major piece of my disposable income. if you look at most high-margin products, at the end of the day they are expressing something good about you. that's why they're able to garner this irrational margin. with apple what we have is a company that has the margins of the ferrari. the operating margin of a luxury item that is scarcity attached to. what with the production volume of toyota. we never seen a company does profitable in history. this quarter apple will do twice the profits just in the last 90 days and amazon is registered in its entire history as a company. it is more profitable than i believe almost a third of the s&p 500 combined. we have never seen a profit generating like apple and as we evidence last week the first
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trillion dollar market capitalization company. >> host: were you surprised apple was first over amazon? >> guest: i was. i've been loud and often sing amazon would be the first. if you're going to be wrong be wrong on national tv three times a week for several years where i was preaching amazon would be the first trillion dollar company. i sort of got it right. i've been saying this since amazon was about two or 300 billion. what i should've said was amazon was going to be the first $2 trillion company. regardless, the wealth creation of the shareholder appreciation has just been exploited across all four of these companies. >> host: you write that amazon the most reputable company, whatever that means. >> guest: it's the most trusted because it hasn't been weaponized, , because they're nt in the business as much as the others dated that have filled the product. the execution is outstanding. they denigrate job great job managing the rain. amazon now according to innovate
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is the most trusted brand in the world. >> host: what do you mean by weaponized? >> guest: when you have a platform it's the ultimate trojan horse, this great story about people reaching the walls with something innovative. imagine a trojan horse the spartans paid for. this is effectively, i may have that wrong, this is what happened, the object of our affection. the most innovative thing in the last decade in terms of technology wasn't the apple watch, wasn't apple pods or amazon device. i think it was the russian intelligence or gru, weaponizing the object of our affection, facebook and blowing it up interface and infecting and centrifuging our democracy using assets that we had not only build but by the object of our affection. these platforms have absolutely been weaponized by bad actors in what's become clear is that
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there's externalities. if these comp is a regulation regulations that were never connect the dots and make investments to make sure the safety that there won't be weaponized again rhetoric coming out of facebook is the always be bad actors which is basically saying it's going to happen again. >> host: facebook is not to be the best firm to work for. >> guest: there's different surveys but facebook, the average wage, the average wage at amazon and stuff $50,000 because again of the disproportional amount of employees they have in warehouses. one in three amazon employees in arizona is on some sort of food assistance. the average wage was held at facebook is around i believe greater than $200,000. when you 24,000 people along with their investors splitting 600 billion photos, you have extraordinary wealth creation.
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i don't doubt it's a great place to work. they got a lot of resources. it's a very agile company. i would argue the crisis management has been reported in terms of some of the recent actions but by all accounts i'm sure it's a great place to work. they key is, is facebook, having this conversation, is facebook and for the country, good for the planet? >> host: but you also write facebook may be the most successful thing in the history of mankind. >> guest: share. if i think that's a man-made thing, something that we invented that wouldn't be produced organically, i would argue facebook newsfeed is the most successful thing in history, and that is it's been adopted by about 2.2 billion people, and that's more successful than capitalism, communism, it's more successful than coca-cola.
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it's difficult to find a book with the exception of google any other man-made thing that's had that sort of usage or adoption. even the number of people who you will subscribe to the church of facebook, it's greater than christianity. the only thing i could come up with is soccer. soccer has about 3 billion fans worldwide but i would argue the people engaged or facebook consumers are actively engaged on a more regular basis and fans of soccer. i would argue facebook is the most successful thing in the history of mankind. >> host: you make lots of references to religion throughout your book. why is that? >> guest: we as a species, we have a need super things. our competitive advantage of a e species of the brain. our brain is large enough to ask very robust question but not large enough to answer them. we kind of ask the unanswerable.
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in order to fill that void in the unanswerable we have manufactured 3500 super things that will compete to be the one knowing all-knowing super thanks that gives us comfort. i believe into this void a to big tactic one, google is the god. a query or a prayer is a quitter to anyone has kids has pray like to be all right? and now you trust google more insurance and a quarter or prayer in the universe trusting to be some sort of divine entity that sees every other court quk proactivity and then send you back the best most credible answer to your preferably in a modern economy with our dependence upon church or attendance in charge the client. this country has become a mortgage get more affluent we some of those dates are superheroes godlike things. in this sense apple has become
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somewhat of a a church from the religion of innovation at her modern jesus christ is steve jobs who sorted taken from his early and is referred to an almost sort of super being godlike terms, despite the fact as an individual on earth as a mortal man, he was especially in my view a pretty flawed human. i think some of this is dangerous, that would look at these companies as being somewhat superhuman. the reality is they are corporations, inanimate legal entities and corporate usual in delaware or overseas for tax purposes. they are not going to take care of us when we get older. they are for-profit entities and the less we regulate them they will do anything to increase profits to assess tobacco did come just as auto manufacturers would pour mercury into the river if elected because it would make the more profitable. we have to acknowledge these are companies. they are not super beings and we need to hold them to the same scrutiny we've held every of the
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company in our economy, do you think there's a tobacco like addiction to these companies? >> guest: absolutely. these companies are very skilled at figuring out random dopamine hits. i'm addicted to social media. i go on, i was just on msnbc and i will go on to see what kind of twitter following a response i get. i look, youtube video to cma likes to give. i'm not addicted to social media per se but i'm addicted to feedback and there is a dopamine it. i have dopamine back in my pocket called my iphone. i'm addicted to it. that's okay, i'm at least aware of it so i think i can modulate it. the fear is around the addictive nature of these companies that the actively foment and put the product and service quality or functions towards a type to promote the type of fiction. they key is come is a bad for younger people who may not be able to modulate? in the last ten years the number of teenagers who see their
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friends everyday has been cut in half. there are some good things. there's less drunk driving, last teen death by auto, less teen pregnancy but the reason why they are not having sex is because they are in the rooms on instagram fee. we are seeing a large spike in teen depression and teen suicide. we have to have an open conversation about whether or not social media really on health is good for people under the age of 18. it's an opportunity for them to seek what they are not included in, an opportunity for them to be uncivil. despite the campaign of connecting the world and this kind of blather vasily across the lens that will connect the world and make us love each other more, the reality is our species can be very tribal with a lot of uncivil activity taking place online. when you talk about young people that are not able to modulate it, you'll see a lot of very negative outcomes and we need an open conversation about what these platforms are doing to not only the developing brain but in
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terms of teen depression. >> host: let's talk about a couple of the issues that we are debating now and that includes social media and privacy in social media and censorship. do these companies have the right to censor what is on their feeds, in your view? >> guest: i think they have an obligation. these companies are media companies. just the way c-span doesn't want to give license or form for legitimacy to holocaust deniers, social media platforms have decided the best business model is to just throw up their arms and advocate a response but i'll let advertisers run free. they will wrap themselves in the first amendment blanket or so you don't want to be arbiters of truth. the reality is when people find this content on this platform to give him legitimacy. one of the unfortunate things about our species or the way we interact with information, it is the lies and falsehoods travel faster than the truth.
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in india with that terrible, terrible incidents of people that are being pulled out of cars and lynched because of false rumors, hoaxes that it is spread virally on the what's at application -- what's at -- the facebook post. their responses was when newspaper ad and limit the number of message forwards. it all of a sudden c-span started resulting in deaths because of false was spreading fast on the platform, you would absolutely take that information down. mark zuckerberg and his most recent interview said they couldn't impugn what holocaust deniers were planning on what their intentions are. i would argue history has taught us holocaust deniers are pretty intent on some pretty bad activity and that we have an obligation to take that content ten. the censorship means you are being in my view the responsible media company. there has never been firms that are more media like then google
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facebook or twitter. they warmly embraced the margins of celebrity and influence of media from producing the allergic to the responsibility. that are absolutely meaty firms and they should actually take an active role in taking objectionable content death tht could result in violence. >> host: is our responsibility as users to protect our own privacy? >> guest: i think consumers to have a responsibility to try and ensure that their participating on platforms that are behaving rationally. the sad truth is consumed as we'll talk a game about privacy and don't clear the cookies and will take us help you let anybody know where are. uber knows where you're going at what time. consumers will talk with importance of supply chain ethics and act were glad when they see a factor in bangladesh collapsed but they still want a little black dress for $9.99.
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the reason we get $.23 on the door to dollar to the government is we hope and expect them to think long-term for us. it's time to regulate these companies. this revolution will not be consumer led. the revolution against tobacco was not consumer led. it was led by the government against taxing and regulating the revolution against manufacturing of pollution was government led. these companies are not actually, they are doing the job. for-profit entities that cannot connect the dots between unfettered content and negative outcomes. we stepped in and regulate them. they're going to find the reason to employ -- our democracy will continue to be compromised and will have more and more bad things happen on these platforms which are pretty easy to weaponized. so yes, we have an obligation. i don't think obligation as consumers doesn't always follow through to action. i would argue the most effective way to foment change is to live
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up to our obligations as citizens and citizens and voters and to elect officials have hold of these companies accountable and ensure they are subject to the same scrutiny without other industries to. >> host: scott galloway, for example, google, what would you like to see done? >> guest: i like to see this company broken up. i'd like to see google broken up into possibly two or three companies, google, google youtube and maybe google cloud. the answer is we want to maintain their incredible economic velocity, they're hiring, they do create tremendous amounts of innovation. tremendous wealth. they do create jobs for the largest employer recruiter at my class at nyu is amazon. these are economic starts. it's important we have billionaires. it's important young people at something to aspire to. they are fantastic in terms of innovation. my feeling is we wouldn't shut
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the party down early. we would keep it going by breaking these companies. when we broke up ma bell in the '80s we unleashed a torrent of 30 30 years of shareholder and stakeholder growth in fiber and optic and cell phones that likely would not happen because a lot of these technologies were lying dormant in bell labs. imagine two systems, the current one and imagine another ecosystem, apple, itunes, amazon, aws, amazon fulfillment, facebook, instagram, whatsapp, messenger, google, youtube which echo system has more hiring? which has more job creation? which has a broader tax base, more vc funded startups? which echo system probably has a company that will raise its and it's a as a value proposition to advertisers try to stand out we ensure the would not be objectionable content and to
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make the requisite investments to make sure no foreign government weaponized is this platform. competition is the key. these markets have become noncompetitive. these firms are effectively monopolies in the respective sectors i believe we need to embrace full throated full body contact capitalism and break these companies of. >> host: are these monopolies more or less a natural progression just like we're down to three car companies, the big three? >> guest: sure, but you have a lot of choice. i just bought a car, and there's a lot of great cars out there. if you are unadvertised and want to drive traffic to your website you really only have two choices. you have google and you facebook. if you're a consumer, ultimately to resist, amazon is to tell because amazon has been able to reinvest 100 cents on the dollar in the consumer and have unparalleled fulfillment come selection and movies through amazon prime video.
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as result it's become almost impossible to compete with amazon. amazon can look at a company and perform at jedi mind trick that can threaten to go into drugs or into pharmaceuticals and you see that schechter shipped tens of billions of dollars in shareholder value even for amazon has gone into that sector. if you deny companies than mothers milk of growth which is access to capital you can begin coming company for you into that sector which means the company has become too powerful. these companies in my view just too concentrated. they haven't anything wrong. it doesn't mean they're good or bad pick it just means they are what they are and that is they have monopolies like power and went to oxygenate the marketplace is going to break them up just as teddy roosevelt did with the railroads. >> host: what is key algorithm? >> guest: i think it's illuminating to kind of breakdown what are the core
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components of assets or culture or competencies of the company that has shot a getting to a trillion dollars. in my book i've a chapter on the algorithm and that is one of the components that are consistent or static across all these incredible companies. use it as a means to help you start your own business or made him decide where you would look at a company want to work for. there are several. what is they're all great storytellers, they're able to obtain provision a vision and g story results of assets to cheap capital with can build the fugitives have access to so much extraordinary key capital. the majority are within a bike of world-class engineering university. there are not that many unicorns in lubbock, texas, or in el paso. you need to be near a world-class university. no offense to university of texas public school system which is a standing school system. you need to be seen as or at least i thought you need to be seen as a good citizen.
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you typically have to be vertical, control the consumer experience from beginning to end to control your brain. you have to have an incredible facility with data, whether it's artificial intelligence or just general analytics. there are a series of attributes i believe you could apply that are common across all these companies and use that as a means for identifying other great companies might be able to someday be a trillion dollar company. for example, taking the t algorithm i skin universe and i found to make companies that i thought my potential be trillion dollars companies, one was netflix and spotify. >> host: here's the book. it's called "the four: the hidden dna of amazon, apple, facebook, and google." scott galloway is the author.
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>> c-span, where history unfolds daily. in 1979 c-span was created as a public service by america's cable-television companies, and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court and public policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. >> what does it mean to the
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american? at this year's cspan's studentcam video competition question of students and the teachers from around the country are posting on social media about it.
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>> check out the postings. this year were asking middle and high school students to produce at five to six minute documentary answering the question what does it mean to be american? we are awarding $100,000 in total cash prizes including a grand prize of $5000. the deadline for entries is january 20. for more information go to >> now a discussion on new medicaid rolls of the trump administration and how states are adapting. the alliance for health policy hosts this discussion with state health officials and several health law attorneys. it's one hour and 35 minutes.


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