tv The Communicators Scott Galloway CSPAN November 24, 2018 6:29pm-7:00pm EST
investigation. now more than ever, all of congress needs to stand firm in support of rule of law. thank you. new congress starts in january there will be more than 100 new house and senate members. the democrats will control the house. the republicans the senate. new congress, new leaders. watch the process unfold on c-span. >> 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.
host: professor scott galloway book, "theyour new adage the off miss quoted what is good for gm's good for the country comes to mind. dr. galloway: there is a rhetoric that's been fomented that what is good for technology is good for america's. yes, i think it's an apt analogy. host: you write in your book and dnasubtitle is "the hidden of amazon, apple, facebook and google." you write these companies are not benevolent things but we invite them into the most into many areas of our lives. -- most internet areas of -- most internet areas -- intimate areas of our life. dr. galloway: who knows you? google knows if you're about to
getting gauge, it knows if you are contemplating divorce. google knows what ailments you have. gogogle is the real you. if there is a modern man god it is google that sees everything, and all your intentions and how those intentions will translate into action. so, these organizations where we are, -- know where we are, no our feelings, no our intention. we have openly invited them into the brightest and darkest corners of our lives. host: can you help us figure out what you mean when you say that these companies, these four companies, have made the world a better place, yet you still refer to them as the four horsemen referring to the apocalypse? dr. galloway: look, i think we're net gainers from tech. the operative term is net. we are net gainers from fossil fuels and testifies but that does not mean we should not have an honest conversation around
some of the downsides of these incredible entities and what should be done. most industries we have decided to regulate -- we decided there should be a missions -- emissions standards and there should be limits or labeling standards on food. tech, we decided as a decided we no longer worship at the altar of character and kindness, we worship at the altar of billionaires and as a result these companies have run amok. in a capitalist societies we it entities but these companies have largely run ounchecked. if the same scrutiny were provide to this sector as it applied to others we would not have tolerated a lot of behavior that is taken place here. the four of the four horsemen is meant to be a cautionary tale. these companies, i own their stocks but that does not mean we should not have an open and honest conversation around the downsides. host: yet, at the same time, you call for them to be broken up. dr. galloway: yeah.
i don't think they have done anything wrong. i do not think the people in ma 1980's were bad people, the people at the railroads at the turn of the 20th century were bad people, but there is a natural point in the economic cycle when one or a group of companies become so powerful that they start inhibiting competition and killing small companies in the crib that would otherwise grow up into innovative companies. prematurely euthanizing big companies that tend to be better employers. we are at this point at this company where we have one company controlling 50 cnetents on the dollars are all -- of all e-commerce. the market needs to be oxygenated. host: scott galloway, give us a snapshot of these four companies. how many employees? what is their gdp? dr. galloway: sure. so, combine there about
which ismployees bu misleading because half of those work for amazon and most of them work in while houses in what woul -- in warehouses which would be described as low to medium wage jobs. an organization like facebook with 24,000 and ploys has a market capitalization of $600 billion. you look at auto companies that employ a quarter of a million people, they have somewhere between 50 and $150 billion. we have never had this many or this few people -- combined, these four companies market capitalization is the equivalent of the gdp of france. there's only four countries in the world a have a greater gdp than the combined market capitalization of these four firms, and that is japan, china, the u.s. and germany. the welfare is just staggering. these companies comprise 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 " disturbingly few reach the economic -- reap the economic benefits of these companies." dr. galloway: yeah. we're barreling towards a society of 350 million -- it is great if you own real estate in san francisco and great if you work for one of these companies but what we are seeing is it is never -- has never been easier to be a billionaire. a teacher class every monday night at nyu. in my class that will be a throughire, most likely technology startup, at the same time it is never been harder to be a millionaire. compactthe general america has had with its citizens that if you work hard and play by the rules and save money by the time you retire you will be able to aggregate $1 million in wealth. it's getting harder. the opportunities have never been greater for the exceptional. but the opportunity seem to be
more and more difficult to come by for just the above average. we live in a lottery economy where america's are optimists. we like to think we will be that one person. digree, understanding technology will be the person to make the jump to lightspeed but the majority of people are statistically average. i would argue it is getting harder and harder, we have a smaller and smaller number of companies representing a greater amount of economic growth. keep in mind, amazon was responsible for 25% of all retail growth last year. if you talk about the cloud, digital marketing, you talk about the most exciting parts of our economy creating value, there's increasingly few companies that dominate those sectors. host: and from your book, you write of the 10 biggest retailers in 1990, only two remain on the list in 2016. amazon did not even come online
till 1994. let's walk through -- go ahead. dr. galloway: yeah. the destruction of retail has been just extraordinary. and amazon, you're right, there are only two companies -- we're going to see more bankruptcies in retail this year than we have seen in the previous five years. so, retail could be described as luxury doing well. amazon doing well. walmart holding on. and everybody else's getting taken to the wood shed. largests the third employer in america. there are more cashiers then there are teachers. about a third of them lost their jobs, although they may not have known that when amazon go, the store with artificial intelligence went live last year. throught's walk each of the companies and i'm going to read aline. "apple is considered the most
innovative company in the world." they'reoway: yeah, largely credited, not even just apple but steve jobs being the most innovative individual of the last century since edison. some people would argue that elon musk is the new steve jobs are thomas edison. but this is a company that has really appeal to our need to be i think communicate sexual strength. what do i mean by that? this organization has figure out a way to make people feel wealthier and more attractive and signaled are worth as a mte. if you and own -- as a mate. if you own an iphone, you live in the city, make a good living, you can afford to spend $1000 on an item that costs $300. it's kind of the easiest way to signal your worthiness as a mate. one of the most high-margin -- products, it says something good about you. with apple what we have is a
company that has the market of a ferrari. the operating margins of a luxury item. with the production volumes of toyota. so, we've never seen a company this profitable in history. in this court apple will do twice the profits in 90 days, that amazon has registered in its entire history as a company. more profitable than i believe almost 1/3 of the s&p 500 combined. we have never seen a profit generating machine like apple. the first trillion dollars market capitalization company. host: were you surprised that apple was first over amazon? dr. galloway: i was. i have been loud and often saying that 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 that amazon would be the first trillion dollar company. i sort of got it right. i've been saying that since amazon was that $200 billion. what i should've said was that amazon was going to be the first
$2 trillion company. but regardless, the wealth accretion and the shareholder appreciation has just been extraordinary acrossall four companies. host: amazon is the most rapidly company whatever that means. -- most reputable company, whatever that means. dr. galloway: because it has not been weaponize. because they are not in the business as much as the other data that build a product. their execution is outstanding. they have done a great job of managing their brand. amazon right now, according to -- is the most trusted brand in the world. host: what you mean by weaponized? dr. galloway: well, when you have a platform, it is the ultimate trojan horse. this great story around people reaching the -- breaching the walls with something innovative. imagine the trojan horse the spartans paid for. this is effectively what happened here. the most innovative thing over
the last decade in my view in terms of technology wasn't the apple watch it wasn't amazon's echo device it was the russian intelligence, the gre intelligence arm of the russian government weaponizing the object of our affections, facebook and literally blowing it up in our face and impacting our democracy using assets that we had not only built but are kind of the object of our affections. so, these platforms have absolutely been weaponize by bad actors. what's become clear is that there is externalities. if these companies do not have regulation they will never connect the dots -- to ensure the safety do will not be weaponize again. the rhetoric coming out of facebook is that there will always be bad actors which is basically saying it is going to happen again. host: facebook is thought to be the best from to work for. -- firm to work for." dr. galloway: there are buterent surveys,
facebook, the average ways it amazon is $50,000 because again, the disproportionate amount of employees that have -- they have in warehouses. one and three at amazon employees in arizona is on some sort of food stamps. the average wage or salary at facebook is around, i believe, greater than $200,000. so, this is when you have 24,000 people, along with investors splitting $600 billion, you have extraordinary wealth creation. i don't doubt it is a great place to work. they have got a lot of resources. agile company. i would argue that crisis management has been pretty poor in terms of the recent actions but by all accounts, i'm sure it is a great place to work. the key is is facebook, is facebook good for the country, good for the planet? host: but you also write that
facebook may be the most successful thing in the history of mankind. dr. galloway: sure. so, if we're talking about, if a thing is a man-made thing, something that we invented that wouldn't be produced organically, i would argue the facebook newsfeed is the most successful thing in history, and that is it has been adopted by 2.1 billion people. and that's more successful than capitalism, communism, more successful than coca-cola. it's difficult to find, made the exception google, any other man-made thing that has had that sort of usage or adoption. even the number of people who, if you will, subscribe to the church of facebook -- the only thing i could come up with is soccer. soccer has about 3 billion fans. but i would argue that the people engaged, facebook's
consumers, are more actively engage on a regular basis. i would argue that facebook is the most successful thing in the history of mankind. host: scott galloway, you make lots of references to religion throughout your book. why is that? dr. galloway: yeah, so, we -- for species, we have a need super things, our brain -- we're literally expelled from the body prematurely. our brain is large enough to ask robust questions for not large enough to answer them. we kind ask the unanswerable and in order to fill that void, we have manufactured 3500 super bings that compete to be the one all knowing super bing that gives us comfort around some of the unanswerable. into this void, has stepped big tech. google is is a god. a prayer is a query. will my kid be all right?
something comes off the rail with one of your kids and you start praying. you trust google more in terms of sending a query -- there will be some sort of divine intervention from an entity that sees every other query and then send you back the best, most credible answer to your prayers. in a modern economy, where our dependence upon church or attendance at church and dependence on religion declines, which it does as countries become more educated and affluent, we have the need for superheroes and god like things apple has become the church of the religion of innovation. our modern jesus christ is steve jobs, who was taken from as early and is referred to in super bing or god like terms, despite the fact is an individual on earth, as a mortal man, he was especially a pretty flawed human. i think some of this is actually dangerous that we look at these company as being somewhat superhuman.
the reality is they are corporations, they are in animate legal entities, delawareted in delh overseas. they are not concerned with the conditions of our souls. they are for-profit entities. theys we regulate them, will do anything to increase profits just as tobacco did, as auto manufacturers would throw mercury into the river if we let them. we have to acknowledge these are companies. and ween't super beings need to hold them to the same scrutiny we held every other company in our economy. host: do you think there is a tobacco like addiction to these companies? dr. galloway: oh, absolutely. these companies are very skilled at figuring out random -- hits. i'm addicted to social media. on. i was just on msnbc and i will go on to see what kind of twitter following or response i get to it i look on my youtube videos to see how many lights i -- likes i get.
i'm addicted to feedback. there is a dopamine hit. i have a dopamine bag called my iphone. i am absolutely addicted to it. i'm at least aware of it so i think i can modulated. the fear -- they actively foment and foot their product or function to promote that type of addiction. forkey is is it bad younger people who may not be up to modulate? thehe last 10 years, number of teams that sees their friends every day has been cut in half. there is an good things -- there is less drunk driving and less teen pregnancy -- but there was reason why teens are not having sex is that that they are in their rooms on their instagram feed we've seen a large spike in teen suicide we have to have a conversation around whether or not social media is good for people under the age of 18. it is an opportunity for them to see what they are not included
in. it is an opportunity for them to the uncivil. despite the campaign of connecting the world, and this vaseline across the lens of social media, that social media will connect the world, but the reality is our species can be very tribal. there is a lot of uncivil activity taking place online. talk aboutart young people, you see a lot of negative outcomes. we need to have an open thesrsation about what platforms are doinge to not only the developing brain but in terms of teen depression. host: let's talk about a couple of the issues that we are debating right now, and that includes social media and privacy an social media and censorshipd. do these companies have the right to censor what is on their feeds? dr. galloway: i think they have an obligation to. these companies are media companies, in a way to c-span
does not want to give legitimacy to holocaust deniers, social media platforms decided the best business model is to just drop your arms and abdicate all responsibility. et advertises run free. that is the best business model. they will wrap themselves in the first amendment blanket. but the reality is when people platform,is on this it gives them legitimacy. one of the unfortunate things about our species or about the way we interact with information is that lies and falsehoods travel much faster than the truth. in india, we have had some terrible, terrible incidents of people literally being pulled out of cars and lynched because of false rumors, hoaxes, that have been spread virally on what's app. the facebook owns. and their response is to run newspaper ads tand to limit the number of message forwards. i would argue that if c-span
started resulting in death because of false information spreading fast from a platform, you would absolutely take that information down. mark zuckerberg and his most recent interview said they could whatn june -- impugn holocaust and nyers were planning on. i would argue that holocaust deniers are pretty intent on activity and we have an obligation to take that content down. censorship means we are being, in my view, a responsible media company. and there has never been firms that are more media like than google, facebook or twitter. they have warmly embraced the modern -- celebrity and the influence of media firms but they are allergic to responsibility. they should absolutely take an active role in taking objectionable contact down that can result in violent. host: is it our responsibility as users of these copies to protect our own privacy? these companies to protect
our own privacy? dr. galloway: users have responsibility to ensure they are participating and platforms behaving rational. consumers will talk a big game about privacy. and don't clear the cookies. and will take a selfie. uber knows where you were going at what time. consumers would talk about the importance of supply chain access and act horrified when they see a factor in bangladesh collapse. but they want that little black dress for $9.99. 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 who began taxing and regulating. the revolution against manufacturing and pollution was government led. they companies in my mind,
are doing our jobs, they are for-profit entities that will not connect the dots between unfettered advertising and negative outcomes. until we step in and regulate them, they are going to find a reason to delay and obsidian -- fuscation. our democracy will continue to be compromised and there will be more bad things happening on this plant finds. -- these platforms. or obligations do not seem to follow through with action. i would argue that the most effective way to foment change is to live up to our obligations as citizens and citizens and voters and to elect officials that will hold these companies accountable and ensure the subject -- they are subject to the same scrutiny we held other industries to. host: scott galloway, for example, google, what would you like to see done? dr. galloway: i would like to see these companies broken up. i would like to see google broken up into two or three
companies. the answer to all of this is we want to maintain our incredible economic this gossipy, they are hiring. they do create tremendous amount of innovation and tremendous wealth. they do create jobs. the largest employer, recruiter out of my class at nyu is amaz on. these are economic stars. it is important we have billionaires. it is important that young people have something to aspire to. ofy are fantastic in terms innovation. my feeling, though, is that we thed have, we wouldn't shut party down early, we would keep it going by breaking these companies up. when we broke up ma bell in the 1980's, we unleash a torrent of stakeholder growth in fiber and optics and cell phones. that likely would not happen because a lot of these technologies were dromant in bell -- dormant in bell labs.
amazon, facebook and google and imagine apple, itunes, amazon, aws, amazon fulfillment, facebook instagram. and youtube.ogle which in ecosystem has more job creation, which has a broader tech space, more v.c. funded startups, which ecosystem has a that will raise attendance has a value added to advertiser trying to stand out and ensure we do not have objectionable content and we will make the investment to make sure that no foreign government weaponize is this platform. competition is the key here. markets have become noncompetitive. these firms are monopolies in their sectors. i believe we need to embrace full throated, full body contact capitalism and break these companies up. host: but aren't these monopolies more or less a natural progression, just like we are down to three car companies, the big three? dr. galloway: sure, but you have
a lot of choice. i just bought a car. there's a lot of great cars out there. now, if you are an advertiser and you want to drive traffic to your website, you really only have two choices. you have google and you have facebook. if you're a consumer, ultimately to resist amazon is feudal because amazon has been able to reinvent -- 100 cents on the consumer and has unparalleled selection and movies through amazon prime videos. as a result it has become almost impossible to compete with amazon. amazon can look at a company and perform a jedi mind trick and go into drugs and pharmaceutical and you see that shed tens of billions of dollars before amazon has gone into that sector.
it means the company has become too powerful. so, these companies, in my view, just too concentrated have not done anything wrong. it is not mean they are good or bad. they are what they are and that is they have monopoly like power. the way to oxygenate the marketplaces to break them up. just as republican teddy roosevelt did with the railroads. host: what is the key all the rhythm? dr. galloway: so, i think it is eliminating to kind of breakdown what are the core components and andts our culture competencies of companies that has a shot of getting to $1 trillion. the componentse that are consistent or static of these incredible companies. as helping start your own business or decide what kind of company you want to work for. i know several here. they are all great
storytellers. and access to cheap r they can build their future because they have access to so much extraordinary, cheap capital. the majority of them are usually within a bike ride of a world-class engineering university. there are not that many unicorns in lubbock, texas, or el paso. you need to be near a world-class university, no offense to university of texas. an outstanding school system. roma at to be seen as least i thought you need to be seen as a good citizen. you typically have to be vertical, you have to control the consumer experience from control yourend to brand. you have to have an incredible facility with data, whether it eneralificial or just g analytics, but there are a series of patches i -- of attributes i believe you can apply that are common across all these companies and use that as a means of identifying other great companies that might be able to someday be a trillion
dollar company. ourexample, taking the te them, i scanned the universe and i found to companies that might be potentially $1 trillion company. the one identified in 2017 with netflix and my fifth horseman thet i think -- fits algorithm and 2018 is spotify. host: here is the book, called "the four: the hidden dna of amazon, apple, facebook, and google." scott galloway is the author. [captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] c-span, where history unfolds daily. 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
announcer: this week on real america on american history tv, the 1967 special news series, a cbs news inquiry, the warren report, anchored by walter con te con kite, investigating the assassination of john f. kennedy. >> and then in full sight of millions of television viewers, a man named jack rudy surges through the crowd and croots swallowed dead. >> watch it tonight at 10:00 eastern on american history tv on c-span 3. announcer: what does it mean to be american? that is this year's c-span student cam competition. students and teachers around the country