Teddy takes the Spotify questions while Kurt tackles the Facebook stuff.

On this episode of Too Embarrassed to Ask, Recoders Kara Swisher, Teddy Schleifer and Kurt Wagner discuss the news of the week and answer listener questions. First, Teddy outlines how the Spotify IPO worked, and in the second half Kurt talks about Facebook’s Cambridge Analytica data privacy scandal and what happens next for the social network.

You can read a write-up of the interview here or listen to the whole thing in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Too Embarrassed to Ask on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.


Kara Swisher: Without Lauren Goode here, I am sad, and at the same time, good riddance, Lauren Goode. All joking aside, I am really hoping I never have to talk about wearables as long as I live.

Today on Too Embarrassed to Ask I can talk about anything I want, and we’re going to have a series of rotating hosts, co-hosts with me, and we’ll have various guests over the weeks, and we’re trying to do something a little different. We’re going to go through two of the biggest tech stories this week and explain some things that may be confusing about them by talking to the reporters who have covered them. Later in the show I’ll talk to Recode Senior Social Editor Kurt Wagner about the latest developments in the Facebook Cambridge Analytica scandal, which continues to go on. They made a lot of changes today and over the last week.

First, I’m here with our senior finance editor, Teddy Schleifer. We’re recording this on Tuesday, April 3rd, the day that Spotify had just gone public. We’re going to talk about that. We’re also going to talk about the shooting at YouTube, which Teddy and I just wrote about. Teddy, welcome to Too Embarrassed to Ask.

Teddy Schleifer: Hey, I am not Lauren Goode, but …

You are not Lauren Goode.

Glad to fill in.

I won’t make fun of you unless you make ridiculous dad jokes, and then you’re finished. We’re going to talk about Spotify first, but we just covered the YouTube shooting, which seems to be a personal thing, but it still is really scary for people in Silicon Valley who have not really had this happen to them before.

Yeah, has this sort of thing ever …

No, not in my memory.

Obviously, we always watch these things happening from afar, and a lot of these happen at public spaces. Things happening in movie theaters. That’s where Aurora started.

Schools.

Schools, but now you have it happening at a private company theoretically that’s off limits to outsiders, but obviously not.

Silicon Valley offices have always been open and accessible more than most offices. Most offices you badge in. It’s usually in an office park. There’s not people milling around. At Silicon Valley companies, there’s an open campus. They’re meant to keep the idea fun for their employees. Sometimes there’s a volleyball court that Google will ride out. There’s a pool. There’s food outside. There’s always some activity going, so it feels like fun for the employees. YouTube, which is separate from Google and is up in San Bruno, which is closer to San Francisco, it’s still a pretty open plan.

Sure. I think this is going to obviously raise some questions about security of these facilities. The same way that, I remember after Aurora when everyone always thought movie theaters are safe spaces. No one had ever gone into a movie theater, and then afterward there was a national conversation about not just theaters, but dance clubs and concert halls.

With the Pulse dance club.

Yeah. After every one of these incidents, there’s always a natural question about …

It couldn’t happen here.

Yeah. I think the alternate scenario or with the argument made against these things is, well, a shooting can happen anywhere. Does every single place need to be protected and insulated against catastrophe? I don’t know, it’s a legitimate debate.

Apparently it does. One of the things that’s interesting is Silicon Valley has been recently really dragged into politics, really dragged into issues around the NRA, all kinds of things. I don’t think this shooting has anything to do with that, but it’s being dragged into the world in a way it hasn’t been. It has been in a bubble, and these campuses sort of represent that from a visual point of view. Any one that you go to is, again, copious food. It’s almost juvenile. It’s almost like a Neverland for the employees there.

Yeah. I’ll be interested to know more about it. We’re recording this just hours after it happened, but obviously the motive will be something that will be really fascinating. Is this an incident that was … why was this person targeting YouTube? Were they targeting YouTube at all? We’ll want to know more about it.

It doesn’t sound like it, but it certainly opens people’s minds, a place they never thought it would happen. We’ll be reporting more on that and about these campuses and how they’re done. It could change the way Silicon Valley works because the way people work here is part of what they make, too. I’ve been to pretty much all the campuses, from Apple’s new campus, their circular ring, to Twitter’s to Uber’s to all others. They have to be thinking hard. I do know they have security that you don’t see as much, but maybe they’re going to have to have more visible security at a lot of these places. They do try to create an atmosphere of openness, again, as I said.

Let’s talk about Spotify, which happened earlier in the day. A couple weeks ago, you wrote in February that Spotify had to go public this year. Let’s talk about why that is. What led up to this? Then talk about the unusual IPO.

Sure. This is an unusual story. Most IPOs aren’t particularly exciting. There’s questions about how the company will perform on the stock market, but that’s very inside baseball and fun for us, but the story with Spotify, originally the reason they had to go public this year was they got into this pretty messy situation with two of their investors who had a convertible debt note — which is basically they issued a loan to the company that at some point said that if Spotify didn’t go public this year, I think by this July, they would basically be back in debt to some of the early investors. There’s two firms. TPG is one of them, it’s somewhat well known. They were under pressure from their investor, like every company is under pressure from their investors, to go public soon.

They’ve been private for a long time.

Yeah, this is a pretty old company. Ultimately, the IPO here is a fascinating story, not just for, again, the inside baseballs of how IPOs work, but there’s this broader power struggle that’s been going on for a long time between the Wall Street types who are in Silicon Valley and the more entrepreneur founder types.

There were also questions about his business plan, whether they could make money. They certainly are the leading music delivery service. I know my kids use it and will not use anything else. They have pressure from Apple, which initially that music service was not well received, but now it is, and others. There’s so many others that Google has been trying with YouTube and some others. Even though they’re the leading one, one of the issues, would they get bought? Well, being bought was certainly speculated for a long time.

Yeah, even until recently.

By YouTube or Google, too.

Yeah, they’re obviously a huge company, so it has to be an even bigger one that would buy them. Certainly there’s always some speculation about Spotify being acquired, and I was hearing speculation about that even three or four months ago.

Yeah, and the thing is if you knew the founder, that wasn’t going to happen. He was someone who really did want to take this public, Daniel Ek. He’s from Sweden. He’s got a certain … the executives there have been together for a long time.

Not from Switzerland.

Not from Switzerland. Explain that. Explain that, and then we’ll talk about the unusual IPO.

This morning the New York Stock Exchange, in an effort to satisfy and humor probably the Swedish-born Daniel Ek, floated what they thought was the Swedish flag on the front of the New York Stock Exchange building, but it was the other European country that begins with SW. It was a Swiss flag.

Oh no. They’re very different flags too.

I guess Swedish flag is blue and yellow. I think the Stock Exchange laughed it off.

They’re real different flags.

They laughed it off as, “Well, we’re a neutral party and that’s why we’re Swiss and it was all intentional.” No, they played into it, but I don’t think they were that upset.

Yeah. Anyway, talk about the IPO, the unusualness of the IPO.

Sure. The usual IPO is, there are these investors who buy shares early — who are Wall Street types who are not you and I — who have special access to Spotify shares early. What Spotify did is they basically listed their existing shares on the stock market for anybody to buy as soon as they went public. Again, what that effectively did is it was an end run around bankers who have long traditionally been power brokers in Silicon Valley. They can make the right relationships. They can introduce you to the right people.

I think for a long time here there was an alliance between the entrepreneurs and bankers, not because they necessarily are cut from the same cloth as people, because they’re not, but they needed each other. Bankers needed the money, entrepreneurs needed to do an IPO. I think that ultimately the bigger-picture question here is how does this reset the power and balance between the two. Do more entrepreneurs think, “Hey, I don’t need bankers”?

Yeah. They’ve been thinking it for a while, that’s something.

Yeah.

Explain the process.

Sure. Basically, ordinarily shares are sold the day before the IPO to these mutual funds or other public market investors.

Right, they do the wander around and see them and visit them.

Yeah, there’s the road show and the pomp and circumstance. It’s a thing. It’s a process.

It’s expensive.

Generally people think it’s annoying. There’s definitely room for innovation there. Spotify, basically, they just listed their shares on the Stock Exchange and just said mom-and-pop buyers can go at home on Robinhood or whatever and buy your shares of Spotify yourself. You don’t need to buy it from these Wall Street types. Maybe it’s a Swedish thing, but they see it as democratizing the process.

Right. The idea is you knew for sure how many people would own it, and you put it in the hands of people that aren’t crazy, essentially.

Right.

That wouldn’t manipulate your stock or short sell it or something bad.

Right.

Then you also would support the price, that it had a support level.

Right, and the risk of course was that … There are several bankers I know who are privately rooting against Spotify’s success because they wanted to see it …

Because they get fees.

Yeah, and they see it not inaccurately as an existential threat on their business model.

Sure. Well, Blockchain is that. All these things, all these different ways of raising money.

Bankers are an incumbent, right?

Right.

They have power. This is a threat. If it’s widely adopted, it’s a threat.

Right. Google had an unusual IPO a long time ago and didn’t really catch on.

Yeah. No, there’s obviously … we’ve talked on other podcasts about what Chamath [Palihapitiya]has been doing with his SPAC.

Right. He said he has 18 months, right?

We reported there was some early conversations between the Chamath SPAC and Spotify. Not that that is that interesting because everybody talks to Silicon Valley, but I think it speaks to how there’s a movement from different angles about how to do this process different.

How to fund this. If you want to go public at all, right?

Right.

That’s also a big question. Uber’s sitting out there and not being public. I think probably Airbnb will be going public. Dropbox just did.

There’s a lot of kindred spirits around. There’s definitely demand to do something different and I think one of the questions will be ultimately today with Spotify, it was a pretty unremarkable day, which in my opinion is a win.

Let’s talk about what happened today.

Sure, yeah.

How did they do? Is the market still open?

No, it’s not.

No, okay. What happened?

Spotify shares dropped about 10 percent by the end of the day.

What did they sell for to start with?

I think they sold at about $165, they were down to like $150. It wasn’t the doomsday scenario that some people imagined. It definitely cleared the bar of acceptable outcomes. In my opinion, that’s a win for the direct listing because it wasn’t a catastrophe like some people thought it would be.

It didn’t have institutional support. That’s the way they put it.

Right. Could it have been better in an alternate scenario? Maybe.

Did they have any side deals like for Fidelity to jump in?

I don’t know. That’s a good question.

You can see them doing that. What do these big companies think, the Fidelitys of the world that do these buying, these giant …

Well ultimately they’re still going to buy in at some point, they just don’t have the early access to the company.

Right. Where you get …

I think that the question is if I was a Fidelity, I would be worried if other companies started doing this more and more and more. The bigger picture here is there a set of Wall Street types that have been granted early access theoretically because of their …

For their clients.

Their clients, their stability, their wisdom, yada, yada, yada. Spotify is arguing that maybe that’s overvalued.

I remember one person who went on one of them early, and that person was like, “I think I’m paying for all the donuts and I think they’re $4 each.” You know what I mean? I was like, “You are paying for all that. You’re paying for the private planes and you’re paying for, it’s all in the fees,” which they keep charging you and then you have a dinner. I remember going to AOL’s when they moved from the one stock exchange. I can’t remember if they moved to the New York Stock Exchange from Nasdaq. This was on Nasdaq, correct?

This is on New York Stock Exchange.

New York Stock Exchange. They moved there and there was this fantastic dinner right afterwards that the head of the New York Stock Exchange at the time had for Steve Case and the AOL people. I went because I was writing a book on them, and it was very heady to be there and to be on the stock exchange where — even though nothing happens on the actual stock exchange — but it was heady to be down there and have a little party and stuff. After it was over, I walked out with Steve Case and everyone had gone and one of the other executives had taken all the limos. We were stuck in the middle of Wall Street with no limo, no cabs. I was like, “Well that was exciting. Aren’t you fancy?”

No Uber then.

No Uber. Oh, no, no, no. It was an interesting time. It’s a pretty good outcome for them, correct?

Yeah, it wasn’t bad. That’s what I think ultimately will be remembered here. If it’s an equal outcome, then there’s at least another option.

How rich is Daniel Ek?

Pretty rich. I need to crunch the numbers on that, but he’s doing well.

Yeah, he’s doing well. Then some of the other people, you talked to them about the CFO Barry McCarthy.

Yeah.

Talk about … you said he’s a guy that got them and why has he been so important. Talk a little bit about that story.

Sure. Usually in Silicon Valley there’s the older No. 2 who’s the more conservative, like I’m the adult in the room. Let’s color inside the lines.

Let’s just end that “adult in the room.”

That’s the pitch.

I hate it.

McCarthy’s the guy here who’s 30 years older than Daniel Ek who basically, he’s the CFO of the company who is encouraging the CEO to do the wilder thing — the wilder thing at least in terms of Wall Street — and do this direct listing. He’s the former CFO of Netflix. He’s a big deal in the financial world.

The question I had going to this profile of McCarthy was is he some guy who is at home making these speeches privately about how terrible Wall Street is and how he hates it and how this is some mission to tear them down? Ultimately I basically found that no, he’s not some zealot against the bankers. He just thought that this was the right call to make for Spotify because of the five or six conditions that the company met at this moment in time.

Right. Which were?

That they need to raise money right now. They have had a long history of shareholders selling shares to each other privately. You get the impression that if he was the CFO of some other company he wouldn’t have done a direct listing. Again, when he was at Netflix, he did a pretty normal IPO. He’s just an interesting guy because he’s such a big deal and a major league player, but he’s also trying to …

A CFO is critical.

… overthrow the system. The question I had was is this an ideological quest or is this just like …

Google’s was. They certainly made a lot of speeches about it when they did it. I forget the process. It was an auction.

Yeah, an auction, right.

Auction. I forgot it the minute I wrote about it when Google did that. When you think about what happens here, what happens next for, let’s finish up talking about what happens next for Spotify as a business, as a public company. How does it change? Then is it business as usual? Then overall Silicon Valley, where it’s going, because you write about venture capitalists, where they all do want a public offering or some way to cash out.

Right. Ultimately now Spotify investors, there’s also no lockup here, so shareholders, 90 percent of shareholders, if Daniel Ek wanted to sell his shares tomorrow he could. Ultimately now this is a company …

There’s no lockup.

There’s no lockup, except for Tencent, but that’s just a special circumstance.

The Chinese company.

Right.

Why did they have a special circumstance?

They cut a deal with Spotify three months ago and it was part of that. Ultimately now, I think a lot of other venture capitalists and board members are going to look at this and see it as a real option. Again, in the past …

Explain a lockup. They have to have a lockup, allegedly. Chaos.

Basically the idea is that if you were Evan Spiegel and you were taking Snap public, you have to hold onto your shares for a certain amount of time, so you can’t dump all your shares as soon as you’re rich and call it a day. It’s another way to keep the company afloat. Ultimately I think the longer-term impact of this is that there are going to be a lot of venture capitalists that now know they have a second option when considering the menu of things that are in front of them, and that in itself, the fact that we’ve been discussing this I think as a legitimate idea, something they can do …

In this case was it the investors or Daniel and Barry?

It was mostly Barry. The investors, for them, either way it’s an exit. I guess they can sell earlier because of the lack of a lockup. Ultimately, IPOs are hard to do. It’s hard for them to go well, and Spotify is now a $30 billion company.

Does it change the way they do business? Now they’re under more scrutiny.

Yeah, obviously they’ll have to report earnings and ultimately it’s going to be … They’re still under threat from Apple. That’s not gone.

Right. 100 percent, and others, and Google and others.

Right.

They do … It’s fascinating. I was watching my kids use them, and they use Spotify 100 percent. I was like, “What about Apple Music?” He was saying some of our friends are trying it because it’s so integrated.

It’s weird to remember what it was like to download music before Spotify.

Oh I remember. I remember. I had albums. I just found my albums. I bought a record player the other day, Teddy.

Don’t know what that is.

Yeah, okay. It’s the thing that goes around and you put a little needle. It’s very exciting. It’s very exciting and the scene of many memories in this lexicon.

Last question. What about going public, everybody else? There’s others. Who’s next? Dropbox is one. Spotify.

Yeah, I think April was obviously a big month. I think the big question for the second half of the year is going to be Lyft.

Lyft has to go before Uber, right?

Right.

Explain why that is.

Sure. The idea would be that Lyft would be able to go first and have the public goodwill and have the early investors excited about their company rather than it being constantly compared to Uber, which is still valued at …

$60 million.

… four or five times higher than Lyft’s valuation. Uber has publicly said they’re going public in 2019. There’s certainly been conversations heating up within Lyft investors about whether or not this is something they want to do. That’s going to be the big question for the second half of the year, at least on the companies that listeners have heard of.

The first half was definitely … Dropbox and Spotify were back to back. Lyft will be a big question. The other highly valued companies, some of them there are questions about whether they’ll ever go public, like Palantir or SpaceX, two companies that are very defined by their founder and you can’t really see them wanting to take on all these public market investors. Airbnb and Uber are probably both 2019 plays. I think the second half of the year, the speculation will be about Lyft and whether or not they’re ready for it. They certainly want to go before Uber. I guess they could go early 2019.

Right, in that January time.

Yeah, but then you’re risking … I don’t know how good Lyft’s market intel is on Uber.

Right.

Who knows?

Uber’s just trying to recover itself. They still have had a lot of problems lately.

Sure.

You think the IPO is back? Backish?

Yeah, bankers will always say the IPO is back. It’s their self-interest. We’ve now, over the last two months, had a $10 billion company in Dropbox and a $30 billion company in Spotify go public in back-to-back weeks, and that’s pretty rare. Certainly there’s some momentum. I think a lot of this is generally just people speculating.

Did Donald Trump tweet about either of them in some insulting way?

People can’t really read markets. It’s a lot of guesswork.

No, they can’t. No tweets from Donald Trump? “This Spotify is riding on the internet that the government built.”

Is Trump aware of Spotify versus Apple Music? I don’t know.

He knows about Twitter.

It was great news, so you should do it.

Yeah. Terrific. Thank you, Teddy Schleifer from Recode. In a minute I’ll be back with Kurt Wagner to talk about the Facebook privacy story that will never end, but first we’re going to take a quick break from a word from our sponsors. Teddy, one last thing before you go. Can you please give me your best reading of the line “hashtag money.”

Hashtag money.

Oh, I like it. Nice. Well done. Thanks, Teddy.

That’ll be $5.

[ad]

We’re back, and I’ve traded one Recode reporter for another. They are interchangeable because they’re so good.

Kurt Wagner: Slightly disagree, but yes.

I’m here with Kurt Wagner, the sassy person who’s been writing about Facebook, Cambridge Analytica, all kinds of crap going down at Facebook. Mark Zuckerberg has been on a chitty chat tour.

Yeah, he’s been chatty.

I just noted a Reuters interview.

We felt special for about a day, right?

We did, for a minute. We got one of the first ones.

We were like, “Oh man, we got to talk to Mark,” and then everybody got to talk to Mark. He was on TV a few times. He did a podcast with Ezra Klein.

From Vox.com.

Vox.com.

He just was on Reuters talking about something else.

He gave an interview to Reuters today, I think, or I saw it today.

Yeah. Why is he doing this? What’s the plan with Mark? Calling the Mark out.

I don’t know how you feel. I think they kind of screwed up at the beginning. They announced on a Friday night that this Cambridge Analytica thing happened. Then we found out Saturday morning from the New York Times that it really happened and we got more details. Then all of a sudden Facebook looked like they were trying to jump in front of it, which they were I guess, jump in front of the news story.

Then you didn’t hear from Mark specifically for five days, and everyone was saying, “Where’s Mark Zuckerberg? We want to hear from Mark Zuckerberg.” Now they’re course correcting: They’re making sure everybody hears from Mark Zuckerberg. That’s I think why you’re seeing this.

One of the issues around … and they’re seeing pressure from Congress. Mark’s going to speak in front of Congress.

Yeah. Unofficial, but it will happen.

Unofficial, but soon. Then he’s going to have to keep talking, I think. Now one of the things he did talk about was an interview I had with Tim Cook, which he took issue with. Tim essentially said Facebook screwed up. When I asked him what would you do if you were Mark Zuckerberg, he said, “I wouldn’t be in the situation in the first place.” It was quite a cut …

It was great.

… from the head of Apple. They are partners. They are longtime partners. Facebook is a big app on the Apple platform.

Sure. It’s hard to imagine, how would Apple feel if Facebook and Instagram weren’t on …

Yeah, and vice versa.

Yeah, of course.

I suspect Apple would be just fine.

I think this is an opportunistic time. If you’re the CEO of Apple, in this case you’re running a business that isn’t advertising, and so it’s an opportunity to show how amazing your high-end phone market business is. And then if you’re Mark Zuckerberg, you come back and you say, “Oh at least our business isn’t for just rich people.”

That was quite an interesting play. What did you think of it? Someone who’s four times as rich as Tim Cook, it was an interesting play.

Right.

Who did you think [won]? I thought it was advantage Apple because Apple does have a really good record of privacy in the United States. There was some issues in China.

Or remember the iPhone after the San Bernardino shooting. You couldn’t even break into the iPhone. I don’t know. I think that …

I think Mark should have said nothing.

Yeah, I know. I thought this was way more fun, though.

For us.

Yeah, it was way more fun for us. Honestly, I didn’t have a problem with him pushing back. He’s super rich, and so for him to point out that, “Hey, our service …”

Why that way? Why did he push back that way? He’s trying to throw dirt in their direction on their issues versus talking about his own. That’s the issue I have.

Exactly. He spoke to us for 25 minutes and all he did was talk about his own issues. My guess is he was sick of defending himself.

Tired.

He jumped at the chance to …

It’s funny because I’m arguing with someone at Facebook about something. They said, I’m not going to say who it is, but, “Tim just drives me nuts as to the hypocrisy of the tech media in love with their Apple gadgets.” Oh my god. They’re so defensive at Facebook. Victim is not a good look today, I think.

No. They played that card a lot. I don’t think they’re a victim anyway.

Yeah, they have. They literally are always thinking they’re under siege. It’s so typical of this executive talking this way because they’ve been on Twitter, “Oh we’re not as bad as you think.” They’re under this impression that they didn’t do anything wrong, and why are people yelling at them.

Right. As you pointed out, to go way back to the Cambridge Analytica thing that started all this, the data was ultimately collected in the way Facebook intended. Yeah, they can come out and say, “Hey, these were bad actors,” but Facebook wrote the rules that enabled this to happen, at least initially. They’ve changed those rules since — and that’s what they would tell you immediately if they heard this podcast — but the fact of the matter is, for a long time the rules they had in place were not meant to help their general users, they were meant to help the businesses that wanted …

I think they built this monster, they should control this monster.

Exactly.

Stop blaming everybody else or pointing to other people. You can point to every single person, but to blame, of course Tim Cook’s going to criticize. I actually like that someone actually prominent said something because everybody gets the omerta in Silicon Valley when things are going on. It’s fine if they don’t, to show that these companies are different at Silicon Valley.

By the way, all this Facebook stuff has a real impact on Apple and Microsoft and others who have nothing to do with it. It has a contagion effect of regulation, which Tim called for.

My favorite, not to just talk about rich people bashing other rich people, but Elon Musk. Did you see him?

Oh Musk did too, yeah.

Pulled down the Tesla and SpaceX Facebook pages and it was so hilarious because it was on Twitter and people said, “Hey, what about your Facebook page?” He was like “Yeah, that looks kind of lame. I’m going to take that down.” Boom. It was gone within 30 minutes.

He’s like that.

He was funny.

Let’s talk about their meaningful actions. Let me just say, Kara Swisher is exhausted by Facebook’s victimization of itself. I’m like, enough, you people. Just sit in the corner and take it for a little while. Too bad. If they have to take it for 15 minutes they get annoyed, which is I think irritating. Then we’ll get some questions. What have they done meaningfully? They announced several things and they’re doing things. They did stop people from sharing that data way back a while ago, but it was mostly in their interests.

Let’s say the most meaningful thing that was done to this specific scenario was actually done three years ago, which was that they said from now on if you’re a business and someone uses their Facebook account to log in to your app, you can only take their data. You can’t take the data of all of their friends.

Friends, right.

We’ll say that that’s the most meaningful thing that they did, three years ago.

Which they had done three years before that, right? Three or four years.

Well, they had announced it the year before, took a year to allow it, whatever.

2008 is when I think it is.

Let’s talk about the last three weeks. I think the most meaningful stuff is primarily a collection of a lot of small things that most people probably will have no idea it even happened, which is that they are cutting down on, for example, the businesses that want to use Instagram’s API. All of a sudden, a bunch of people who were pulling data from Instagram all the time, all day every day, don’t have access to the API. They’re coming out and saying, “Hey, we’re going to limit — if you use your Facebook account to log in on a third-party app, we’re going to limit the amount of data that company can actually collect about you.”

These are small things that on their own all seem way underwhelming and not really up to what you would expect. When, I think, you add them all up, or what I’m hoping is, three weeks from now when we add them all up, we’ll say, “Oh okay, it looks like they made some changes.”

They were pretty sloppy by not having done these things.

Sure.

I think from the beginning, maybe it was Mossberg was texting me, he’s like, This is what they were like when they started. This is what they’re like now.” I think he’s right in some sense. This is from Facemash to now, it’s the same kind of behaviors.

You and I, I think, agree, because we talked about it last time, that we kind of like Mark. We’ve talked to him.

Personally, yeah.

Yeah, personally. We think he seems to be earnest about trying to solve these things. At the same time, it’s pretty remarkable that none of this ever happens until there’s drama.

Drama. It’s the same type of thing.

It’s not very proactive.

It’s the overuse of data. Let’s get some questions from our readers and listeners since your last appearance. First, here is one from Maria Petrova: “Is it accurate to say that Facebook sells your data versus for a price gives advertisers access to your data?”

That’s inaccurate to say Facebook sells your data.

Okay, how does it do?

You could say that Facebook basically, I kind of like the way she put it. They sell access to you. They don’t even really sell access to your data because they don’t ever get it. What they do get is your attention. Facebook keeps the data, but they know who you are, and as a result they go to the advertiser and say, “Well, we can put your ad in front of people that match this criteria. We’re not going to tell you who those people are. All we can tell you is that they’re males between 18 to 30 who live in San Francisco.”

Right.

Boom. There you go. The reason they don’t sell your data is because they’d lose that whole competitive edge if someone else had it.

Right. Absolutely. Their business is advertising, which is to sell you as the product.

Right. They sell your attention.

Yeah. A couple rapid-fire ones from regular question-asker Liz Weeks: “How many of Facebook’s remediation steps are organic versus complying with the May 2018 EU privacy law deadlines? Will Facebook take action against Cambridge for breaching their legally binding document, and when will Zuck do a formal interview with Kara Swisher?” I’m trying on the last one. I have asked him to the Code Conference. I’ve asked him for a major slot there, and we’ll see if he says yes.

No one ever asks when he’s going to do the long-form interview with Kurt Wagner, though. It’s too bad.

You know what? They will, Kurt.

Yeah, they just forget about that.

I think because I made him sweat last time. That’s what it is.

Yeah, I know.

That’s what it is.

Someday.

It’s the sweat thing. Will there be Sweat II, essentially, a sequel?

Let’s hope so.

Sweatier. He’s going to wear a head thing.

Two questions, one was …

How many of them maybe are organic, the remediation steps?

I think what we saw when Facebook came out was some kind of changes around the language of its privacy settings. They put them all into the same place, they made them easier to find. I think a lot of that was already in the works because of the EU stuff. At the same time, I’m not really sure about “organic” being the term that was used there. I think this is stuff they would have probably done after this situation. They in a weird way lucked out because they were already preparing for the EU and now they can package it for two things. “Hey, we’re not only complying with these new rules,” but it comes right after this big dramatic scandal they had, so it looks as if they’re acting really quickly. I think it’s a lot of EU-related stuff.

Will they take action against Cambridge?

I don’t know.

Let’s ask them.

They’ve turned over their audit to, I think, regulators.

British authorities.

Yeah, British authorities.

Yeah, they’re in a mess of trouble, Cambridge Analytica.

I’m sure they could sue them.

I feel so sorry for Steve Bannon and the Mercers.

Yeah, I’m sure you feel really choked up about it.

I don’t feel at all. I think Thiel is in there too. I’m not sure. Is he in there? I forget. Chris, I can’t pronounce his name, Ndungu, @xtoffah, asks, “How much data of users outside the U.S. did Cambridge Analytica mine, considering Cambridge Analytica has clients across the globe?”

We don’t know who was involved. We don’t know how many were from the U.S. versus abroad. We don’t know who they were yet, but Facebook has said it’s going to create a service that would let people basically log in and find out was my data part of that group. When they do that, we’ll hopefully have a much better idea.

Who’s to say what they do with it, right, once again?

Yeah, exactly. Who’s to say that this was the only batch of data that they got their hands on. I think there’s a … I would guarantee that it’s not all data from U.S. users. We just don’t know the breakdown yet.

I think the issue is they let it out the door and they don’t know what happened, and Mark said that to us.

Yeah, once it goes out the door and it’s on someone else’s servers …

They can do whatever they want.

… it’s out of touch.

Goodbye. It’s old data, but still it’s data nonetheless. Here’s another question. “What’s the middle ground between surveillance capitalism (effective but predatory) and TV advertising (ineffective)?” Surveillance? This word’s, just using our data more responsibly it seems. Talk about surveillance capitalism, this word that has gotten around.

I imagine that must mean what Facebook does, which is that they target us based on all the data that they’re collecting.

It’s effective.

I guess a middle ground would be, what, a subscription.

TV. Spray and pray.

What about that, right? Hey, we have all this video about you so we can personalize your service and make it hopefully better for you, but we’re not going to make money from that.

What could they give us? Would you pay for Facebook? I would not pay.

I thought about paying for Twitter. There was that whole conversation a while back …

I’d pay for Twitter.

Would you pay $1 a month for Twitter? Are there enough people who would? I’m sure they would.

Yeah, I’d pay it for Twitter.

That’s not nearly the business model that …

What do you pay for online, Kurt?

I have Spotify.

Spotify?

And the New York Times.

I have those two things, too. I have the Washington Post. Do you know democracy dies in darkness?

That’s what I’ve heard.

You should buy that.

Those are my only consistent subscriptions.

Give money to Jeff Bezos because he needs it. He’s not quite rich enough.

I’ve heard.

Anyway, that’s the three things I buy.

There’s two more. “On the side effects of this privacy scare, they say that people are downloading the data Facebook has about them and finding things they don’t like. Can you talk about what’s been going on with the Android phones?”

Yeah, so there was some revelations that when people were downloading all of their Facebook data, they were realizing that Facebook had been collecting call and text interactions that were not within the Facebook app. These are not Facebook Messenger conversations. These are actual text messages they were sending. The way that Android’s app permissions work is that some developers are actually able to call that information. We don’t know why Facebook was collecting it because they haven’t come out and said yet why, but it’s definitely people were opting in to do this, first of all. They were technically granting Facebook permission, even though they didn’t realize they were, but at the same time, it’s like why do they need to know I made a phone call to my mom and whatever?

It’s like Google. I used to call Google the Borg because they just want it, they just want to eat.

It makes sense if they came out and said, “Hey, we’re using this and because we know you were calling this person, all of a sudden,we recommended that you friend them on Facebook,” but they claim they didn’t use it for that. It’s like, well, what were you using it for?

They just want it, Kurt. They just want it. They’re the Borg.

They just want it. I don’t know.

You ever watch those episodes of “Star Trek”?

I don’t watch “Star Trek.”

The Borg just eats. It doesn’t have any reason to eat. It just eats. It wants it all. It wants to assimilate.

Well, people don’t like that.

No, they don’t.

Now they’re realizing it.

This is Borg II, the Borg.

First there was what, Sweaty II, and now there’s Borg II.

You need to watch that movie with the Borg. That was a great film. Picard was almost taken away.

I’m pretty poorly cultured when it comes to movies and stuff like that.

You should watch it. It’s a fine movie, and Jean-Luc Picard is fantastic.

In any case, they want to use this information and they want to collect it, and their business is about collecting this information. Instead of being mad at Tim Cook, they should focus on themselves. They have all kinds of problems. The battery thing was appalling at Apple and the China stuff is disturbing. Nobody’s distinguishing themselves in China, for sure.

Well they better not come out with any kind of targeted advertising business some time soon.

Yes. Where’s the kid thing? The kid Facebook or whatever, the Messenger?

Oh, Messenger Kids? It still exists.

They got to get rid of that.

You didn’t like that?

I just don’t think so.

Messenger but for your 6 year old.

No. They should not be in that beeswax, I’ll tell you that.

I don’t have kids. Yeah, it seems unnecessary. I think the whole point of it, quite frankly, was for parents and kids to talk, but it’s too weird coming from Facebook. Someone else should come up with that product. They shouldn’t have don’t that. Just because it feels icky.

I can barely let Uber pick up my 16 year old without having a problem with it. I’m okay with that, actually. I don’t know if that’s legal, actually. Anyway, it’s a question of trust.

Here’s the last question. “If we called Mark Zuckerberg back up right now,” I do not have his cellphone, I should get it. Next time I see him, I’m going to make him give me his cellphone. “What would you want to ask him?” You have one question, Kurt. Mark’s on the phone right now. “Mark?” “Right. How you doing?”

Man, I had read that question before.

I can’t even do his voice.

One single question.

He’s going to hang up soon.

Yeah, I know this is bad. Whatever I say, I’m going to regret later.

Just pick one.

I’d want it to be newsy because I’d want to be able to come out and actually have some news from it. I’d probably ask something along the lines of about his testimony.

The congressional testimony?

Yeah, because he’s never testified before. I guess I’d want to know how are you preparing for your congressional appaearance, who’s preparing you? What questions?

There’s several committees that want him, apparently.

Yeah. Who’s preparing you? What are you preparing for? Are you nervous? That’s more than one question, but I’d want to know about that because that’s timely. What about you? You interviewed him.

Ask him?

Yeah.

I’d ask him, “This seems to be a pattern, Mark.” I’d ask the bigger question. These things pass. Those stories pass, but this seems to be a bit of a pattern. You seem to be evolving, but it seems it’s the same issue that you have. I might ask him about that. I would ask him about how he feels running this. Why does he keep running away from the responsibility of what he created. He’s always like, “I don’t want to sit at my desk.” I’d plow through that a little bit more. Why does he keep saying that? It’s a strange thing.” I don’t want the responsibly from my desk.” Why’d you build it? For your entertainment, and then you leave it? I’d like to understand that further.

I’d like to understand the lack of irritants in that system. Why does he not get in good?

Too many people …

That agree.

… agree. They don’t want to rock the boat.

Yeah. I think a couple of things.

You just gave away all the good questions for Code Conference.

I can save …

That was my fault.

We’d open up by going, “What is wrong with you?” Right? No?

That’s kind of fun.

I think I did that with Susan Wojcicki from YouTube, which now I feel bad about after the shooting this week. I said, “When are you going to get that vile person off of YouTube?” I like to open with a good one like that.

That’s good. Put them on the spot.

Mark’s more delicate. Susan can take it, but you have to be careful with him. You got to ease him into a conversation.

Like you said, you wanted Sweaty II.

No, I do not want Sweaty II. I never want Sweaty again, thank you very much. Also, it was interesting, this week, one of the stories that broke was the Boz memo.

Oh yeah.

It does reveal their attitudes, doesn’t it?

Well, I’ve talked to a bunch of people since that came out, and the explanation at the time was, hey …

I know, it’s an ethical debate, like they’re on a college ethics board.

Yeah, we present these really tough questions so that it spurs debate and whatever. I think there’s some truth to that, but there’s a lot of people who I’ve spoken to who think that there’s a lot more people who actually believe that mindset …

I think they think that.

… than whatever Foley …

The texts I’m getting are exactly like that. They think that, and they feel victimized. I’m telling you, one of the things I’m getting is, “Why can’t we say what we think?” I’m like, “You know, the people at ExxonMobil don’t get to mouth off the way you people do. You’re a big company. You’re going to have to learn.”

It didn’t look good, that’s for sure.

They think it makes them less innovative. I don’t. I think that’s a crock.

We had this conversation in our Slack when that story happened. I think he’d be okay with me saying this. I think it was Jason Del Rey who pointed it out. A side effect of this thing is that we suddenly know Facebook is certainly aware of its consequences because there’s also been the criticism, “Oh, Facebook does all this stuff and it doesn’t even think of the consequences.”

They don’t care.

Well now we know at the very least they’ve thought through some of the consequences. The question is, do they care about it? I legitimately think some of these challenges are legit. I think building these products and having two billion people use them and making sure all of them behave and follow the rules is impossible, so I get the challenge. It’s just a matter of the finger-pointing that when things go wrong, oftentimes it’s like someone else screwed up.

Strap in Mark, it’s going to be a bumpy year. That’s what I say. Who knows what’s coming next?

Recode – All Go to Source
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