Big Tech Testifies, California v. Amazon, and Patagonia for the Climate

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Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher, and I'm wearing Scott's clothes because I'm staying in his apartment in New York, and I didn't bring a sweater with me. And he kindly gave me one, and I'm never giving it back. Which means we're going steady.

Scott Galloway: We're going steady. I'm wearing his very—his shirt is probably more expensive than my car at this point. What else did I do for the jungle cat who's staying in my place last night?

Kara Swisher: He left a chocolate on my pillow, which was very nice of him. It's the little things. I thought it was one of your staff. And then when you said it was you, I thought, oh, my God, did he lace it with something? That's my first thought as I was like, oh, shit.

Scott Galloway: Are you feeling better about yourself and the world right now? That's all I have to add.

Kara Swisher: I always feel good about myself in the world. But that was nice. He had a chocolate. It was a Lindt. He went really big.

Scott Galloway: That's right.

Kara Swisher: And then I borrowed his shirt. We had a lovely chat last night as we watched cable television. This is nice. I'm glad to see you, Scott. It's really nice to see you.

Scott Galloway: I'm glad to see you, Kara. Anyway, speaking of Scott Galloway, what are you fondling in your hand there?

Kara Swisher: Well, don't write. Oh, you mean the book. Excuse me. Yes, the book. I'm trying to help you sell your book.

Scott Galloway: Yeah, the book is big. Anyways, I have my book, *Adrift: America in 100 Charts*, and it's my attempt to highlight some of the things that ail us, but also to talk about how much achievement has gotten us here and that there's absolutely nothing wrong with America that can't be fixed with what's right with it. And I try to tell the story through narrative and charts. I'm fascinated by charts. I've always thought, we've had the alphabet for 1,500 years, but we've been interpreting images for tens of thousands. So a chart, a picture can be absorbed mentally 60 to 70 times faster than words. So I'm trying to go graphic.

Kara Swisher: Right. So it's a book for Donald Trump. You wrote the book for it because he loves charts.

Scott Galloway: That's right. Lots of pictures. This is a beautiful coffee table book. And also it's my fourth book in five years.

Kara Swisher: Oh, really? Wow, you're amazing. I can't even finish one. Why do you call it *Adrift* if it's anything that can be fixed with America? *Adrift* feels not good.

Scott Galloway: Well, that's right. I didn't say *Lost in America*. I said *Adrift*. I think that land is there. I think we could absolutely get back to land, get back to being a place that loves the middle class, get back to a place that makes these huge forward-leaning investments in technology and loves the unremarkable. And we can see land. We're just a little bit unmoored right now. I thought a lot about the title. Mostly on edibles.

Kara Swisher: Do you have a favorite chart?

Scott Galloway: The chart that really has always hit me, kind of hit me in the gut is, I mean, there's a few things. One, there's some data. 54% of Democrats are worried about their kid marrying a Republican, which I find ridiculous.

Kara Swisher: Oh, hi. Nice to meet you. But go ahead. Have you met Kara? My son was dating someone, met someone, and she's from Texas. And I literally at first thought, oh, gosh.

Scott Galloway: You're like, Texas or Austin?

Kara Swisher: Texas or Austin? Exactly. And I did. But it did go through my mind. Look, if he wanted to marry someone who's conservative, that's fine or whatever. Go out with someone. But it did go through my mind. But go ahead. Keep going.

Scott Galloway: But the chart that really struck me, because I think a lot about young men, is that when you walk down the avenue that is America, a third of men under the age of 30 haven't had sex in over a year. And I think the elemental foundation of any society is relationships and that sex and physical intimacy are a key component of that. And while sex gets a bad name and people's neurons fire a different way, I think we need more economically and emotionally viable men who can attract mates. And I don't know if you saw, there's a chart that came out today that is just staggeringly disappointing, and that is marriage rates have been cut in half. And I'm not saying marriage is the only means to a productive relationship, but I worry that young people aren't establishing the most rewarding thing in life, and that is finding a partner to build a life with, build economic security with, and maybe even have kids with. The number of people going to church, joining the Boy or Girl Scouts, even saying hello to their neighbors. The number of kids that see their friends every day has been cut in half. We're a social species. We need to touch, smell, and feel each other. So I think that's really worrisome.

Kara Swisher: Yeah. And it also, young men especially, they need guardrails. They need somebody in their life, whether it's a girlfriend or someone else, saying, stop smoking dope during the week. Put on a clean shirt. I find your success interesting and hopeful. I want you to be more thoughtful and responsible about what it means to be in a relationship. Get a job.

Scott Galloway: I think young men need guardrails and I think that relationships—

Kara Swisher: Well, the only thing I would push back on is like, well, why do we have to coddle young men? Like in terms of they need guardrails but women don't get the same support kind of thing. How do you think about that? Because I understand that a lot of these cultures that have way too many young men and they get radicalized, et cetera, it's always men have the stuff we have to clean up after really is what you're saying. But at some point there was—I think about a lot when someone said, oh, you don't want to dress that way because men will do this. And I'm like, can they not control themselves? Because women control themselves all the time, right, in that way. Or that they manage rage better over time because they have to deal with it more. So that's the only thing I sort of am like, oh, they need guardrails like this if there is some bumper car.

Scott Galloway: I think it's fair. Women are as entitled to and in as much need of mentorship, maybe even more than men. Biologically, men's prefrontal cortex does not develop as fast, and they make really stupid decisions, and they're much more risk-aggressive. Men who are left alone are much more prone to find misogynistic content acceptable, not believe in climate change. And a lot of their behaviors, whether it's aggressiveness or inability to focus, are not the kinds of behaviors that colleges welcome. And women from a very early age are more championed and get more mentorship in elementary and high school. 70 to 80 percent of elementary school teachers are women and 7 to 10 high school valedictorians are girls. And get this, in the next five years, the ratio of women graduating from college to men is going to be 2 to 1. So I think there's a certain feeling that women are finally getting their due, and I think it's wonderful. And I'm actually not a fan of affirmative action for men. I think we need a massive investment in young people generally. So the question is, what are we going to do? And my answer is, rather than politicize it and get into the long argument around the 400-year head start men have had and whether they really need affirmative action, what we need to do is have more women, more people of color, and a lot more men in colleges. We need to dramatically expand freshman admission rates. We need to dramatically expand opportunities for vocational certification and stop fetishizing the traditional four-year degree.

Kara Swisher: Well, *Adrift*. We're going to find our way, Scott. But I'm happy your son has a girlfriend. I think it's great.

Scott Galloway: Yes. Well, he's happy, too.

Kara Swisher: Anyway, today, some revealing testimony from tech execs on the Hill, also a new milestone for Apple. But first, speaking of good men, the founder of outdoor apparel company Patagonia, very soft fleece man, is giving away his $3 billion company to help fight climate crisis. Yvon Chouinard and his family transferred ownership to a trust in a nonprofit organization created to fight climate change. Patagonia will continue to be a for-profit business. Profits that don't go back to the business will go to the nonprofit. The company's website now reads "Earth is our only shareholder." They've already done this over and over and over again, this group of this company. I've interviewed the former CEO who wasn't the owner. This guy controls everything. And they've always done sort of in-your-face things either by suing the Trump administration and been very clear with their customers. It's been a good brand attribute for them. But it's kind of an interesting—it's a very interesting company, I think.

Scott Galloway: Yeah, and it's also a uniquely capitalist and a uniquely Western thing. In northern Europe and in the U.S., families get very wealthy and then decide to turn their wealth into a social good. And that is pretty much unique just to a few countries in Europe and the U.S. especially. A wonderful man, academic, Dr. Bose, who was an acoustical engineer at MIT and started a company called Bose, gave one voting share. He taught my ex-wife, just so you know.

Kara Swisher: Oh, really?

Scott Galloway: Mm-hmm. Gave one voting share to his wife. So she controls the company, but all other shares were given to MIT. So MIT gets $100 or $200 million in free cash flow every year. There's a lot of companies in the U.S. that do this. It's on brand for Patagonia. It's very on brand. It's wonderful. And I think you'll see more companies. And it works for them and it works for their people who use it.

Kara Swisher: They do a lot of things. Like my son had a Patagonia jacket and we sent it back and they fixed it. It had a hole in it. It's a great company. One might have thrown it out, but it was $5. You know, L.L. Bean does that. Others do. But I think increasingly you're going to see people sort of lean into what their image is, what their brand is in a way that's very substantive rather than just PR. Anyway, this will be interesting. We'll see if others follow suit. Did you watch the Emmys?

Scott Galloway: I didn't. I watched them on Twitter, I guess, little pieces of them.

Kara Swisher: Did you?

Scott Galloway: Well, no, I didn't watch them, but I like you. The numbers are down like crazy. Like people are watching. Okay, get this. The numbers were down 20 or 30 percent. But I just want to, I don't know what the committee is or the Academy or who votes. I loved their picks. I think the guy from *Succession* won, Jennifer Coolidge from *White Lotus*, who has one of the best monologues she's talking about. She gets a boyfriend and she starts freaking out. She's like, "When does he get to the core and find out I'm an insecure and raging alcoholic? When does he get to the core?" That's like one of the best. And then the *Abbott Elementary* group, too, was amazing.

Kara Swisher: Oh, yeah.

Scott Galloway: I thought their picks were just so spot on. The best series *Succession*.

Kara Swisher: You know, it was interesting because TV's never been better, really, in tons of areas, which is interesting, including reality show, everything else. But the numbers are down. No one cares about these dumb award shows, which I think they are—I hate award shows. I hate all award stuff.

Scott Galloway: Well, why watch it? You just read it the next morning.

Kara Swisher: Yeah, and I read clips and the Coolidge clips, the people from *Abbott* and I liked seeing that, that they make them short. That's how I'd like to see the whole thing. But I think the whole thing is silly. And what was really interesting is Warner Brothers Discovery cut 100 employees from their ad sales division after winning quite a lot.

Scott Galloway: They're all going to cut, Kara. It's overinvested, right?

Kara Swisher: Yeah, I know. That's why. So people are like, oh, we won. Oh, goodbye. I'll see you later. And so did, by the way, Goldman Sachs cut jobs. Everyone's starting to really cut, which you had, let me just say, talked about quite a bit a couple months ago, this that everyone's going to cut. Everyone in streaming media is going to cut because you said there's so much great TV on.

Scott Galloway: It's even broader than that. I believe that in 100 years, the defining art form of our generation is absolutely scripted television just based on resources. Think about how much money is going into modern art or sculpture or painting or music. We're talking about hundreds of millions or maybe billions. Billions. Scripted television, somewhere between $120 and $240 billion.

Kara Swisher: Yeah.

Scott Galloway: I mean, not every drop of talent, but anything that shows real inspiration gets a shot at scripted television right now. It is hoovering up the creative forces from the four corners of the globe to go into scripted television.

Kara Swisher: Again, a lot of people who work in it talk to me about things not getting picked up and a lot of people you'd think get picked up not getting picked up. I think there's definitely a contraction coming in terms of too much content.

Scott Galloway: Oh, 100%. It's overinvested. It's just overinvested.

Kara Swisher: Yeah.

Scott Galloway: And then you talked about Goldman and J.P. Morgan. And one of the wonderful things about the banking business is that they can dial up or dial down their expenses really easily because all of their expenses are compensation or specifically people. And that business has been on a kind of an incredible bull market run with the market. So it makes sense that they're paring and trimming.

Kara Swisher: Yeah. It's an interesting time. I mean, it'll be interesting. There was a good article in *The Times* today saying that the job market is really strong and yet there's going to be contractions. Inflation is higher and yet it's not as high as it was. It's kind of a weird *Adrift*, speaking of *Adrift*, economy.

Scott Galloway: *Adrift* by Scott Galloway. Thank you.

Kara Swisher: Charts, charts, charts. It'll be easy to read, all you people. And so it's a really interesting time. And I think a lot of people, I think, are smarter, really saying it's coming, it's coming, it's coming, right? This recession is coming. It isn't here yet though. So people feel good and are spending but they're not spending too much. It's a really interesting moment in this history. And I think it does reflect in whether it's Hollywood, which really saw especially in TV saw sort of very fat times essentially. And now, even if they stopped right now, there's so much to watch. There's so much crazy amount. So we'll see where it goes. But it's definitely an interesting time. And speaking of people who've created a lot of content for these people, Fyre Festival founder Billy McFarland is officially free again and wants to work in tech. So just so you know, I've hired him to be my host. I'm firing you. Speaking of firing.

Scott Galloway: I'm kidding. I'm kidding. Where did that come from?

Kara Swisher: I'm teasing. I'm teasing. Look at that. You're already insecure. Like literally I'm going to hire the guy from Fyre Festival to replace you?

Scott Galloway: Hold on. Hold on. Let's talk about insecure. Last night you texted me. I had the entire team. You got angry at me because I bailed out of our team dinner last night. You did. Because I got a chance to go on with Stephanie Ruhle and prostitute my book. And you're like, "This is bad. We need the team." And I'm like, Kara, I took the team out for dinner and drinks like three times. I've seen the team at Code more than I've seen my kids. And then you come back with, "Well, why wasn't I invited?"

Kara Swisher: No, I was not. I was pissed. And just so you know, it's because—

Scott Galloway: That is such a lie. I did not say that. Step seven in my 27-step plan to incrementally do a slow, creeping takeover of Pivot and then have Roxane Gay as my co-host. You're out.

Kara Swisher: I mean, you're literally like, "Why wasn't I invited?" I don't know. Maybe because you were prepping for 80 interviews, including Tim Cook. I did not say "why wasn't I invited" because you invited me. This is such a lie.

Scott Galloway: Oh, Daddy got a big suite, entertained some people.

Kara Swisher: I know that. I'm saying I was doing the work, as women tend to do, and you were having—

Scott Galloway: Doing the work.

Kara Swisher: Yeah. The men were enjoying the time.

Scott Galloway: We're all there just to entertain the Swishers. It's like, have you said hi to Lucky yet? Where's Dr. Swisher?

Kara Swisher: In any case, let's get to our first big story. A big week on the Hill for tech companies. TikTok's American CEO, Vanessa Pappas, testified for the Senate's Homeland Security Committee. It went a little rocky. Pappas fielded questions about the app's security and relationship with China. She said that TikTok never sent data to the Chinese Communist Party, promised the app would never cave to demands from the Chinese government, and confusingly said that ByteDance isn't headquartered in China because the company doesn't have headquarters. It was not good. It was not a really particularly good showing for her. And actually, Josh Hawley really took her to town. Let me read from Casey Newton's email. "Are there members of the Chinese Communist Party employed by TikTok or ByteDance or no?" snarled the insurrectionist Josh Hawley of Missouri, who fashioned himself as an anti-tech crusader. Pappas's answer that no person who makes strategic decisions at the platform is a CCP member. But with respect to the rest of the app staff, she said the company does not vet employees based on their political affiliations. She noted that no other tech platform president at the hearing asks employees what political parties they belong to. And then Hawley said, "Would it surprise you to learn that Forbes magazine recently reported at least 300 current TikTok or ByteDance employees were members of the Chinese state media?" Pappas reiterated the company did not look at political affiliations of individuals. Visibly frustrated, Hawley said, "Your company has a lot to hide. You're a walking security nightmare. And for every American who uses this app, I'm concerned."

Scott Galloway: Well, it's a very interesting thing because there's so many Chinese Communist Party members. It doesn't mean they're working for the government, but they are pressured in that way. It was not a good—the pressure on TikTok, as you have talked about, is really increasing. This is one of those moments where because I said it should be banned on TikTok and said it at your conference. Until it becomes not part of China, correct? That's your feeling?

Kara Swisher: Well, I'll circle back to it. But I've heard from three separate, fairly senior people at TikTok all saying, you know, they all do the same thing. "You must get this every goddamn day. We want to update you on our thinking." And I'm always conflicted. I'm not a journalist. I don't need to hear both sides. My problem is when I talk to them, I get biased towards them because I like them. They're always nice people.

Scott Galloway: And by the way, I know some people who've worked with Vanessa Pappas, is it?

Kara Swisher: Pappas, yeah.

Scott Galloway: And they all universally say she's a wonderful person and manager. Former Google executive, very competent. And everyone I know there, I think, is doing God's work to try and build a healthy, productive platform. And she really, in my opinion, was poorly coached yesterday because, I mean, I had a couple thoughts watching those videos. The first is I wish Josh Hawley was on our side. I think he's very good. I think he's very smart. But just some—and then he just goes—anyways. I went to Harvard, but go ahead. He's a very impressive young man, and he has great presence. He just channels it towards just some crazy wrong things. But anyways, his questioning of her, she refused to answer the question directly. And all she needed to say was, like a lot of American corporations, we have a lot of people who work in China, including Apple, who, by the way, has more employees in China now than in America. And it would be impossible to state that any decent number of employees in China aren't affiliated with the Communist Party. Just the same way it would be impossible to say any American is not affiliated with the Democratic or Republican Party. And instead, she just danced around it and kept saying, "We have secured." It came across as so Zuckerbergian and Sandbergian or Cleggian. She's not like that either. And she just should have said, "100%, I'm sure we have a lot of employees. We recognize this, and we've put in place security measures to ensure the platform isn't weaponized, as many of the other platforms in America have been." This is getting very interesting.

Kara Swisher: She could have said, if she wanted to tweak Hawley, she could have said, "We're not checking to see who went to January 6th or maybe pumped his fist at them about the insurrection." She could have done a lot of things that sort of tweaked him if she really wanted to go back at him. But she should have tweaked him. He's also such a hypocrite that you could tweak him in a lot of ways. But she's obviously not going to pick a fight with him because he's—

Scott Galloway: She shouldn't have tweaked him. She should have tweaked the other platforms and said, "We are committed and have evidence that cements this notion that we are achieving the following. We aim to be the most productive, the least toxic platform in America. And point, we have never organized an insurrection. We take teen depression very, very seriously." Because here's the thing. I think they are doing their level best. It's just a question around, one, can you have a company with their corporate structure? For example, they kept asking where she was headquartered. And she said, and this is my favorite, "We have no headquarters. We're a distributed company." And I'm like, oh, Jesus Christ, what $1,200 an hour PR executive came up with that? They're, of course, headquartered in the Cayman Islands.

Kara Swisher: By the way, I love this idea of a distributed company. It's a new class of company called Disco. I think it's Singapore.

Scott Galloway: Right?

Kara Swisher: I think it's in Singapore, but go ahead.

Scott Galloway: Well, they're furiously trying to say that, I mean, they'll wrap themselves on any flag right now except one that's red. But they could have—I think if they were going to go on offense, they would say, "We have never had any organization of an insurrection on our platform." I mean, she could do—she could say a lot. The question is, with their corporate structure, will they be able to put in place an effective Chinese wall that satisfies security risks? And the other issue is, and it was talked a lot about with Trump, but it isn't being talked about in the context of these security concerns, is just on a trade level, should a company like that have totally unfettered access to U.S. markets when we haven't had access to Chinese markets? But the nuance in between, is there a way, a set of standards, a spin, security protocols around data? They're doing that with Oracle and others, and the Committee on Foreign Investment in the United States is conducting the security review of the app. And Pappas has talked about that, the CFIUS review, and that they're closer towards an agreement that will put these questions to rest. Although the question is, does anything come to rest without the spinoff and a sale, essentially?

Kara Swisher: Casey wrote a really good point. TikTok's task is impossible because to earn the senators' trust fully, it must prove the negative that China has never sought to use the app for influence operations or surveillance purposes, never will and never could. Even if they try, the company swears up and down that nothing of the sort could ever take place. But the claims seem risible only because we know that what happens to Chinese executives when they resist government, you talked about this at Code, reporters keep finding smoke around what might actually be fire, that Americans' data has been repeatedly accessed in China. ByteDance instructs staffers to promote pro-China content, and it's now a defunct news app called Top Buzz. And Chinese government inquired about joining TikTok to spread propaganda. I agree. Even if there is all kinds of trouble at these American companies, and it's devastating, the fact that it's another government that could have this influence, even if it's not, you know, they keep saying it's not happening, but they do have to prove a negative. But that it could happen is they've got to spin off. I don't know what they can do other than that, and I'm not sure China will allow that.

Scott Galloway: And Pappas wasn't the only tech insider on the Hill this week. Twitter whistleblower Peter "Mudge" Zatko testified before the Senate this week. He expanded upon his earlier claims about lax security of the company. Let's listen to a clip.

[Clip plays] Peter Zatko: You can think of it this way, which is it doesn't matter who has keys if you don't have any locks on the doors. And this kind of vulnerability is not in the abstract. It's not far-fetched to say that an employee inside the company could take over the accounts of all of the senators in this room. [Clip ends]

Kara Swisher: You know, I don't think it hit as big as, say, the TikTok one, this one. I don't think everyone was like, oh, my God, you're kidding. Tech companies are unsafe. Mudge said that Twitter had at least one Chinese spy on its payroll. And for good measure, he ripped into the FTC saying that the agency was, quote, "in over its head." No shit, Sherlock. And one big takeaway from the hearing was Senator Lindsey Graham says he's working with Elizabeth Warren to create a new regulator for big tech companies. That was interesting. But I don't know if he—I don't think it landed. I just don't think it landed because it comes off as two things. It comes off as a bit cooked, the timing, just as Musk. This, I can't, it just feels like retribution against the CEO who fired him. The timing, the security. And they happen to not do a good job on security. This company doesn't.

Scott Galloway: Well, when over 50% of your employees have access to account information, that means you don't have the right security protocols. But it would be argued in the pushback I'm getting around my comments on TikTok is, "Scott, you're distracting from the important conversation around privacy for all platforms." No, it's not a zero-sum game. We can walk and chew gum at the same time. But Twitter, I mean, this is what we take away from all of this when we shift the lens back. Twitter comes out of this process with a guy who it was his idea to do all this shit. They come out of this deeply damaged because, and some of that damage is well-deserved, a lack of security protocols. The bots, I think the bots are way more than 5%, but Elon knew that and has weaponized them to benefit his own stock price. But it comes out of this regardless, so deeply damaged. It either ends up with an owner that doesn't want to own it and employees who don't want to be owned by this guy, or it comes away just so wounded and distracted from this process.

Kara Swisher: Yeah. And again, I've always said this, unless it's his core companies of SpaceX or Tesla or the Boring Company, Musk brings volatility, not value. Whether it's talking about our elected representatives, whether it's talking about a cave diver, whether it's getting involved in other companies, whether it's promoting or pumping a cryptocurrency, it's "I can bring volatility and attention to anything. So I will because I have this weird need to be in the news every day." And then he leaves this shit damaged. It's very Trumpian, right?

Kara Swisher: These people are not better off for having had contact with Elon. No, but let me just say, Peter Zatko has a great reputation for this. But he sounds – someone was like he sounds like every security guy ever about the companies they work for. Oh, no. Or every movie. You know, Alex Stamos did this at Facebook and he was correct and they did a better job because they had more resources.

Scott Galloway: One thing that you should get clear from this is if you think your tech companies are secure, they're just not. They're just not.

Kara Swisher: They're just not. And I assume people are spying on my DMs on Twitter. I don't know, but I assume. I assume because they can. Someone will. And I think about it that way and I never think they're safe. I don't think they're safe in any way. And he's pointing out somewhat of the obvious. That's why I don't think it landed.

Scott Galloway: There was a piece by Ronan Farrow also about people looking for secrets about him. It was apparently some research firms. It wasn't linked to Twitter. Oh, this happens right away. Every time I filed a 13D and announced to the public that I own more than 5% of a company and perhaps was going to advocate for change or change management of the board, they would hire a firm. And old work associates and girlfriends would start getting calls from a company trying to find dirt on me. And I can't imagine the amount of dirt that they are trying to find on Hemrite. That's just part of the game. And it's really upsetting. It's really unseemly. And it happens everywhere.

Kara Swisher: And the other thing, when he said that there's a Chinese spy at Twitter and at least one Indian spy, that is absolutely wrong. There are dozens of people engaged in corporate espionage at every one of them. And we do the same to them and they do the same to us. By the way, there are Israeli spies. We have allies that have spies planted in these companies. And they view it as citizenship.

Scott Galloway: The person, Katie Tour, my co-host while you were out. Katie, I love Katie Tour, by the way. I love Katie Tour.

Kara Swisher: Oh my gosh. Smart. Smart, nice, bold with her emotions.

Scott Galloway: Anyways, she's much more in touch with her emotions than my current co-host. But anyways, she said something that I thought was really insightful. She said, the person doing espionage doesn't think they're conducting espionage. And I imagine a kid who gets brought up in China and shows real potential. And she's amazing at math. And she's amazing at science. And gets scholarships and says, you know what? We're going to send you to a Western college and we're going to give you a scholarship. They stay in touch with her. They're supportive of her. Maybe even they help her family out, get good jobs. And then they say, we can help you get a job at Google. We know people there. And then they call her and say, we want to put you on a council to help advise us on technology policy. And slowly but surely, the ask becomes, well, you know what? We can put you on the AI team. Don't worry. We'll get you on the AI team because they have other people there. And then they start calling and saying, what is their approach to technology in the cloud around AI? And they ask it increasingly. And I got to be – if that were me, I would do it.

Kara Swisher: Yeah. Why wouldn't they demonstrate the same loyalty and patriotism that a lot of wonderful Americans demonstrate overseas? Yeah, 100 percent. He also warned about the instability of Twitter's back end in his initial complaint. One of Twitter's data centers in California had to shut down because of the extreme heat wave. But some of it was like, no shit, Sherlock. Really? You're kidding. And it's funny when regular people who don't know the inside just assume it. And everyone's like, oh, like I remember saying, I'm sure it's like a sieve. And I remember all these companies being a sieve. And they're like, oh, Karen. I'm like, no, they got to be. They are. They got to be or whatever. And I don't know. I just don't think it hit as big as the TikTok one. I thought that was much more interesting.

Scott Galloway: All right, Scott, let's go on a quick break. When we come back, we'll talk about California's attorney general suing Amazon, a listener question about the change in the automotive industry you might've missed, that's coming up.

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Kara Swisher: Scott, we're back with our second big story. After 14 years on the market, the iPhone is finally the most popular smartphone in America. Remember when they were just a struggling little company? That's the first for the gadget. Traditionally, Android devices have eclipsed the market share in the U.S. That's still true around the world, obviously. Globally, Android devices make up 70% of the market. It's still huge around the world, but where the money is spent, it is higher. iPhones haven't gotten any cheaper, while there are plenty of affordable Androids. So talk to me. Is it the appeal of privacy? What do you think?

Scott Galloway: The whole world is bifurcated into Tiffany or Walmart, iOS or Android, Emirates Airlines or EasyJet. The best positioning is either a luxury high-end positioning or a value positioning. It's either Toyota or Tesla. Not the muddy middle. The way we process information is zero and one. And from a consumer standpoint, understanding the high-end and the low-end, it's just anything in the middle of JCPenney's, of Sears. I remember this from retail. It's so hard to conduct the trade-off in your head that it's just easier to go, you know what, I'm going to go to Walmart and every once in a while, I'm going to go into Vitan or Supreme. And that's where all of retail and all of consumer has had.

What's just so striking about iOS though, I think iOS basically says when you have an iPhone or you have AirPods, which are in my view, the most successful piece of jewelry in history, I now wear them as ambient. I just have them in my ears all the time. And the AirPod Max, those headphones. Unbelievable. The most under-hyped tech product of the last 10 years, with Oculus being the most over-hyped. But what you have with iOS is it says to the world when you have an iPhone or AirPods in, I'm part of the billion wealthiest, most aspirational, best storytelling people in the world. I'm part of the upper 14%. It immediately says that. And they have created... They also just work a lot better. They just work.

Kara Swisher: Android works pretty well. I mean –

Scott Galloway: It does, but not like –

Kara Swisher: Not as elegant. I use both.

Scott Galloway: It just isn't. I sit there for a second. I have so many recollections of when they introduced it. Google people are like, well, it's obvious. And I'm like, no, it's not obvious. It's not obvious.

Kara Swisher: Like there was the stacks they used to have and I was using an AirPod Max headphones. And it just – I just put them on and it worked. Like it was just like I had no – I was thinking how the seamlessness of it was really interesting. And I sometimes don't like that word seamless or friction-free. But it's more than that. It just works. And I think it's not that it's just a luxury product. It's that it's beautifully made and it works beautifully. And I think people, if they can afford it and something they use every day, like an iPhone, that it's a critical – like a mobile phone, they want to afford the nicer one, right? The one that really works.

Scott Galloway: Well, it's a signal. Your car, in California growing up, your car was your biggest signal of your mating potential as a dude. And then as you get older, it's sort of your house or your clothes or where you work in terms of signaling how aspirational you are. There's no easier way or more seamless way to signal your aspirational value than your phone. And credit card American Express tapped into this in terms of signaling value. Sure, with the brand. But what people don't appreciate, everyone said that the biggest shoes to fill were going to be Steve Jobs. Now, hands down, the biggest shoes to fill in the world professionally will be whoever has to try and replace Tim Cook. Because what has he done? He's taken this unbelievable device that has the billion wealthiest people on it, and he's seamlessly bridged into payments. Apple Pay is fantastic. And to music, Apple Music is the fastest growing service in the US, or was at least. It's not as good as Spotify, but it's really strong. They've streamed into media. They've gone, I mean, and their services business.

Kara Swisher: And beautifully.

Scott Galloway: Yeah, and their services business has a 70% margin rate. And by the way, I can get to Ted Lasso on my iPhone in two clicks. It takes 17 to get to Stranger Things on Netflix. And I'm sure it's deliberate. But what he has accomplished, do you realize he has tripled the revenue and increased the market cap of the company by like eightfold? I mean, it's just extraordinary what they've accomplished.

Kara Swisher: Yeah, that's where it's going to get them into trouble, where they cross this 50 percent mark. Regulators are preparing cases against them in the App Store. And so that's where it's going to get into trouble for them. It is amazing if you've lived through it how much on the ropes this company was and then it wasn't. It just isn't. I think one of the things they also need to stop thinking of themselves that way. Like, oh, we're pirates. I'm like, you're not pirates.

Scott Galloway: Oh, no.

Kara Swisher: They're the Death Star. They've got a nice Death Star wrapped in cashmere, but they're the Death Star. They have to start thinking in the South. This is not going to be good for them from a regulatory point of view.

Scott Galloway: California's attorney general sued Amazon this week, accusing the company of uncompetitive behavior in its dealings with third-party merchants. This is their thing, their wart. If successful, the AG could join a slew of international governments who have levied heavy fines on tech companies. South Korea, Ireland, and the EU have fined Meta and Google recently, sometimes for billions of dollars. I mean, it may be the cost of doing business, but it's moving towards regulation, even though Amy Klobuchar is getting kicked for doing a lot, not getting these things through. They may move to fines rather than the more onerous thing of doing regulations, I suspect.

Kara Swisher: I find that it's sort of a consolation prize, and that is we don't have – we are so divided in government. We have such a lack of understanding or domain expertise around these very complicated issues to write elegant legislation that we just moved to fines.

Scott Galloway: And by the way, they don't fight us as hard on fines because the fines levied against Google are literally two hours of revenue. And I like these fines. The only thing that's missing from all of these fines is one thing, it's a zero. They should add a zero to every fine.

Kara Swisher: Well, they also are taking the court when they disagree with this stuff. That's the thing, these fines can then go to court. But I would agree, when they paid that $5 billion on that, when they violated Facebook's thing, I said add a zero. I said, because it's a parking ticket.

Scott Galloway: Not only add a zero, but part of the agreement and the fine was they are immediately exonerated from any wrongdoing up until that point. So at that time, Facebook had a $500 billion market cap. If someone showed up to the Swisher household and said, I'll write you an insurance policy that exonerates you from all previous activity for 1% of your net worth, wouldn't you say that's the greatest umbrella insurance policy in history? So the FTC has turned into an insurance company as opposed to a regulator.

Kara Swisher: Yeah. It'll be interesting because they can't get legislation passed. And this idea that Lindsey Graham and Elizabeth Warren about a national tech regulator, that should be me, don't you think? A tech regulator? T-reg? T-reg. T-rex. T-reg. I'll call myself T-reg. That would be good.

Scott Galloway: No, I don't think you'd be successful.

Kara Swisher: I don't have any legal background or government background whatsoever, so that makes me totally qualified for it. Anyway, we'll see what happens here. It's going to be a long, long process before any of these regulators get these tech companies into any kind of prone position, I think. But we'll see.

Scott Galloway: Actually, I think that's a certainty.

Kara Swisher: Okay, Scott, let's pivot to a listener question. You've got – I can't believe I'm going to be a mailman. You've got mail.

[Listener voicemail] Rachel: Hey, Kara and Scott. My name is Rachel, and I'm calling from Los Angeles. Big fan over here. Incidentally, I've had erotic dreams about both of you. Separately, I should say. Anyway, I've got a softball question. I feel like we could all use something lightweight at the moment. And that is, why is no one talking about the Kia rebrand? And secondly, is Kia sexy now? [End voicemail]

Scott Galloway: Oh, my God. I'm so glad she didn't have it with both of us. I literally heard nothing she said after erotic dreams. I have no idea what she had.

Kara Swisher: You have to take this. I'm so glad she said separately, I should say. You have to take this. I can't believe this. Kia, of course Kia is sexy. Kara Swisher drives a Kia Sorento. Of course Kia is sexy. I was totally onto this. They are, I love my Kia. I love my frigging Kia. I love it. I think it's sexy in its unsexiness. They did have a rebrand. They make a great car. They have a new logo they unveiled in early 2021, but drivers are seeing it for the first time. I have the old logo on my car, I believe. It dropped motors from its name. They're pivoting to electric vehicles. I have a hybrid. And so, yes, yes. I don't know why no one's talking about it because I talk about my Kia all the time and no one pays attention. And me in the Kia, you should have an erotic dream about that. That's all I have to say.

Scott Galloway: Jesus Christ. I don't think I've ever been this not turned on in my life. Literally roll up in a Kia, throw down a Discover card, and talk about how into magic you are. And I can guarantee you will never conceive another child.

Kara Swisher: I'm doing great. She's having erotic dreams about us, Scott. I have a cute. I just want to know what I'm wearing in her erotic dream. And do I need ED medication in her dreams to her standard?

Scott Galloway: Jesus Christ. Just tell her thank you. Would she like a signed book of Adrift? This literally has made my day.

Kara Swisher: I think you're naked reading Adrift. That's what I think.

Scott Galloway: Well, you know, naked I look 56.

Kara Swisher: You look good. I have to say, Scott looks good.

Scott Galloway: Thank you for saying that.

Kara Swisher: Oh, my God. I can say definitively I've never had erotic dreams about you, Scott. I can't definitively say that. Back to her question. Is Kia sexy? I would have to say, let me think. No. Yes. No, it's not sexy. He's wrong.

Scott Galloway: Actually, there's a lot of news. Supposedly Kia's really easy to steal.

Kara Swisher: Are they? Oh, good to know. Did I tell you my car theft story?

Scott Galloway: Back to me. Okay. So my first Halloween in New York, I dress up as Starship Commander Jean-Luc Picard. Huge crowd pleaser. Okay. Huge crowd pleaser. I get home. I'm totally fucked up at 2 a.m. I had just bought a brand new BMW 7 Series because I'm single and want to impress people. And I hear it start up. I'm on the second floor. I like to buy second floor apartments because that way the fire and get down the stairs. And I like the view of the city.

Kara Swisher: I know. I was wondering why you're on the second floor. But go ahead.

Scott Galloway: Best view in the city is either the penthouse or the second floor, Kara. Plus, you always want to take the stairs. You never want to take elevators. I'm so worried about a fire. I can't even believe it. Go ahead. Anyway, so I hear my car start up. And I look out the window and I see someone who is not me in my brand new 7 Series. I go running down with my phaser.

Kara Swisher: Right.

Scott Galloway: And this guy takes off down 15th Street and I start chasing him. My testosterone takes over. Dressed like Jean-Luc Picard. Starship commander Jean-Luc Picard is chasing a BMW down. True story, 15th Street. He hits a red light. I catch up to him. And all this bullshit, stupid ideas, I start thinking. And I see one of those big steel trash cans in the corner. And I'm like, I'm going to grab this thing, put it through the window.

Kara Swisher: What are you, Charles Bronson?

Scott Galloway: Well, no, I'm fucking stupid. And then I for a moment have a moment of sanity. And I'm like, what if he has a gun?

Kara Swisher: Yeah.

Scott Galloway: And I just sat there and I waited till the light turned green. This guy was freaking out in the car. And I just waved goodbye and he took off. And about nine months later, my car was recovered. And you know what it obviously was? BMW only gave me one key. And they said they couldn't find the second. These things are literally, I talked to a bunch of people at BMW, they're literally impossible to steal unless someone has one of those keys. And so I called BMW and I said, you clearly have organized crime at one of your dealerships. And anyways, I got into a big tiff with BMW. These are just literally the most privileged problems in the world.

Kara Swisher: I know, this is rich people's problems. But I do like the image of Jean-Luc Picard in a Kia. That's what she should dream about in her dream.

Scott Galloway: Hello, Star Trek.

Kara Swisher: That's right. Not you, Jean-Luc Picard. Incredible. That's right. That's who you should dream about. Anyway.

Scott Galloway: Erotic dreams. I know. I can't believe it separately, I may add. That's what I like.

Kara Swisher: Anyway, if you've got a question of your own you'd like answered, send it our way. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. All right, Scott, one more quick break. We'll be back for predictions.

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Kara Swisher: Okay, Scott, let's hear some predictions. I'm going to start, actually. Let me just say, I predict Ruben Rondock's going to sue me, and here's why. I wrote a series of texts about Link Rot. It's called Link Rot, where when we left News Corp, we wanted to buy the archive and feed of All Things D. And they wouldn't sell it to us because they wanted to, but then Rupert said no. Actually, they went in to ask him and wouldn't do it. We were going to give him a lot of money. And one of the things we were worried about is the links dying, right? That this amazing body of work and videos with all the young moguls of the time were on there. And they promised to keep the links from rotting. And it wasn't that I thought they were necessarily malevolent. It's that when you replatform all the time, things get broken, links get broken. And so I was very, very worried at the time, made a lot of noise. We insisted. And the other thing that I was mad about is they kept pushing whenever they went to All Things D, they went to WSJ tech sites. And I'm like, they didn't ask for that. They asked for All Things D. It's disingenuous when people want something and then they get pushed somewhere else. And I thought it was really disingenuous.

Anyway, it's a real problem for everyone. And there's a 2013 study that found almost half of the links cited in the Supreme Court decisions were dead, didn't lead anywhere. And so my archive is gone. And there's lots of solutions like there's archive.org, there's blockchain pitches and things like that. But I have some of these videos, which are historical as far as I'm concerned, some of them on my computer. I might just load them all up. Like Taylor Swift does own her songs. I might just load them up and just say, I'll put them everywhere and sue me. Like I don't know what else to say because it's really astonishing.

Scott Galloway: You will get sued though, Kara.

Kara Swisher: I know that. But they made an agreement to keep it up. And this is his – it's not that it's better than anyone else, but it's not that it's out of all things. D really was there.

Scott Galloway: Do you have a signed legal agreement that they have to keep these things up?

Kara Swisher: I've got to find it now. This is where you sound up.

Scott Galloway: Yeah. You sound like Sylvester Stallone that just pitches and moans that he doesn't own Rocky. And the bottom line, he was an adult and he signed it over to someone.

Kara Swisher: I did. But it was also an agreement that said they were going to keep it and not do the kind of creepy things they were doing with it. That was part of the agreement.

Scott Galloway: When you say creepy things, you mean you want them to keep it, keep those things up and live?

Kara Swisher: No, no. I wanted them to archive them. So when you click the link, it would go to them separately. I was worried about this very thing. And they agreed to do that. I have emails upon emails of them agreeing to do that after I yelled and yelled and yelled. Now they're not there. And those people probably are gone that agreed to it. And so we've got to have a better solution to all these things just disappearing. And I'm not – I know what we sold. We did try to buy it. Then we got them to agree to do it and then they didn't. And we have no recourse at this point at all. There's no recourse whatsoever. And I'm not bitching and moaning.

Scott Galloway: I think that ranks right up there with your BMW being stolen.

Kara Swisher: No, no, no.

Scott Galloway: Oh, no, you're bitching and moaning.

Kara Swisher: No, no, I'm bitching and moaning because this is stuff that is gone now. And it happens all over the internet and who owns it. And besides the fact that they tried to use it as a marketing opportunity for themselves, which is gross. Fine, whatever. It's still gross.

Scott Galloway: You mean capitalist? Oh, my God. I can't believe they do that. No, no. That's the least gross thing News Corp will do today, Kara.

Kara Swisher: No. When you search for something, you should go to it with disclosure like we've taken it over and we want to push you over here. Come on. They yell at tech companies for doing these things and then do it themselves. Anyway, it's really disappointing. Sorry. That's my prediction is we're going to get some sort of wrangle with them in some fashion. Thank you.

Scott Galloway: Some sort of wrangle?

Kara Swisher: You'd be mad if seven years of your work got disappeared. But go ahead.

Scott Galloway: I agree with you. And not only that, there is some what I'll call historic value to those interviews, especially Mark Zuckerberg sweating.

Kara Swisher: Oh, that's still up, but go ahead.

Scott Galloway: My prediction is that on TikTok, I think there's so much money on the line here. And you have big American VC firms involved. I think Sequoia's an investor. I think General Atlantic Partners. Anyways, there's so much money on the line here because TikTok is the most ascendant tech platform likely ever. It's probably worth right now, if you try to put a value on it, somewhere between half a trillion and a trillion dollars, maybe even more because the metrics are just so staggering. There's so much money here that one of two things is going to happen. They're either going to figure out some sort of – you summarized it perfectly in our last episode. You said we have to separate ownership from the product. And that is, it's an amazing product, but we're probably justifiably, in my view, never going to be very comfortable with this type of product and its level of success with the current ownership.

Kara Swisher: That's correct.

Scott Galloway: I think they're going to do something fairly dramatic here, either a spin or American investors or American entities will be sold a majority stake or, quote unquote, the ownership will be expunged from parties or entities linked to China. If they don't do that because there's so much money on the line, it means they couldn't and we should be worried. And you're probably going to see, for some of the right and quite frankly, some of the wrong reasons, American regulators use it as a punching bag to come in and do something very heavy handed, which I would argue is probably not the right thing. And I think there's been some good discussion online. We'll distract from some of the privacy issues that continue to plague us around the other platforms. But there's going to be in the next 90 days, we're either going to see a fairly dramatic change in ownership structure, or we're going to see regulation proposed that is Trump-like. It says, we're not down with you being here in the United States.

Kara Swisher: Yeah. Trump certainly had highlighted this, but the way he did it was wrong. And it made it a laughable thing when it was a very – at the time, I said this is a very serious issue and the clown show is pushing it, which is a problem in a clown show way. But I agree with you. I think this is going to be a real problem for them. And I don't – Well, you think it might get acquired.

Scott Galloway: Yeah.

Kara Swisher: I don't think the Chinese government will – unless they think the jig is entirely up, they are not going to let their hands off of this. I just don't see that. It's too good. And maybe they think they can wear us down to just not pay attention.

Scott Galloway: Well, you know what kind of solves all problems? Is if Microsoft acquires it.

Kara Swisher: Well, that was tried, right? Remember, Trump wanted a Vig. Well, no, they weren't acquiring it. Trump was carving it up like birthday cake, deciding who got what. And there's laws against that. But Oracle can't afford it, I don't think. Oracle doesn't have the market cap because this thing is worth $500 billion to a trillion dollars. But I don't think Facebook could do it. I'm not sure Google could do it for any trust concerns. But if Microsoft came in and said, look, we're very good at technology. We have a history of working with our defense departments. We understand your security concerns.

Scott Galloway: What about Apple?

Kara Swisher: I don't think Apple wants to be in that business. Well, I know. They are not – I wouldn't say they're not a good acquirer, but I think they have decided that unless it's a perfect seamless fit, we don't acquire companies because our culture is so powerful. I'm just saying that they have talent in China. But that would kind of solve the problem here. And not only that, give the economic reward to some incredibly creative people who deserve that economic reward.

Scott Galloway: That's a big lift for Microsoft. For the most ascendant platform in history, I would take that risk.

Kara Swisher: Okay. All right. I would take that risk. I think you and I should buy it. Let's find some money. Let's do that.

Scott Galloway: That's always your solution.

Kara Swisher: After your stint as FCC commissioner?

Scott Galloway: No, not FCC. It's a whole new thing. The Department of Information.

Kara Swisher: I'd make it scary looking. I'd wear severe black clothing, and I'd call myself T-Rag. You know all the reporters would write features. It just staggers the imagination people have erotic dreams about either of us when you talk that way.

Scott Galloway: T-Rag. Even though you are wearing my clothes.

Kara Swisher: I'm enjoying your clothing. This is so not coming back to you. It's really just, I just am warning you right now. Anyway, read us out, Scott. That's the show. We'll be back on Tuesday with more Pivot. I will be home soon, honey. Read us out.

Scott Galloway: Today's show was produced by Lara Neiman, Evan Engel, and Taylor Griffin. Ben Woods engineered this episode. Thanks also to Drew Burrows and Neil Silverio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business. Put a chocolate on a friend's pillow when they're staying with you. It's the little things, Kara. It's the little things.