Fox News Must Pay, DeSantis Doubles Down on Disney, and Dmitri Alperovitch on Discord

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[Intro music fades]

Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: How are you doing? You're calm. Why are you so calm?

Scott Galloway: I should be calm. It's five in the morning here. Or 5:30.

Kara Swisher: Where are you? On the West Coast?

Scott Galloway: Los Angeles, yeah.

Kara Swisher: You're in L.A. What are you doing in L.A.?

Scott Galloway: Oh, a bunch of stuff. I had to do an interview with Evan Spiegel yesterday.

Kara Swisher: Oh, really? I like Evan.

Scott Galloway: I have some... I'm taping a Simpsons episode. I don't know what else to say. That's what I'm doing.

Kara Swisher: That is awesome. That is literally the crowning achievement of your career.

Scott Galloway: Yeah, I'm excited. It's good. I play myself, which is what I'm good at.

Kara Swisher: Well, that's a shocker. What, they don't want you to be the nuclear power plant technician with a tool belt? Of course you're playing yourself.

Scott Galloway: I guess not. I don't know. I'm not supposed to say much, but here I am. I don't care. I mean, on some level. But I'm excited. I'm excited. It's been around for like 103 years. It's really amazing. What an amazing run for a thing.

Kara Swisher: You know, I met Matt Groening, who's a creator, many, many, many years ago when I was at the City Paper. I paid him for his column. He had a cartoon, and it was like $25 a week. This is a million years ago. And it was called Life in Hell.

Scott Galloway: Yeah, I remember that.

Kara Swisher: Yeah, so he was an independent, one of those independent newspaper cartoonists. He was amazing then. I loved Life in Hell. I wish they would make that into a series because I thought it was hysterical.

Scott Galloway: Producers originally wanted to develop Life in Hell as an animated series on the Tracy Ullman show. But Matt was worried about ownership rights to the characters, so he developed The Simpsons for it instead. That was about a multi-billion dollar decision.

Kara Swisher: Oh, did it? Life in Hell did?

Scott Galloway: Yeah.

Kara Swisher: Why do you think?

Scott Galloway: She, and then Fox grabbed the rights to it. She actually, I think, sued at some point because she got nothing of what is now a billion dollar a year annual franchise.

Kara Swisher: I bet. All the people were on it. It's just amazing. So anyway, a very L.A. trip. And then I'll head up to San Francisco.

Scott Galloway: Nice. I love L.A. I stay at the Beverly Hills Hotel. I get In-N-Out Burger. I get fucked up with my friends. I go out with actresses. I'm definitely going to be found dead in a closet from asphyxiation there. If I get really rich. I'm super excited about that.

Kara Swisher: Yeah.

Scott Galloway: If I get really rich, I'm definitely moving to L.A., buying a Porsche, trying to have sex with young actors and actresses, and dying a premature death. And you know what? I'm here for it. I'm here for it.

Kara Swisher: You know, I just like the beach. It's very pretty. That's my whole thing about L.A. It's real pretty. I do. It's so pretty. It's the light in Los Angeles. It's famous for that. I love L.A. I just love it. It's always so calming. I mean, there's a lot going on here. It's interesting. And I think people give L.A. a very hard time. And it has issues. It has issues. But I really always, I always enjoy the people of Los Angeles. Hello, Los Angeles. Anyway, very tired because it's super early in the morning.

Scott Galloway: Speaking of dying a premature death, consider this your official spoiler warning. We will probably talk about Succession or we may at some point.

Kara Swisher: I host the official Succession podcast. That's the deal. We got some emails and tweets about this. I don't know what to say. The Los Angeles Times did an obituary. So I don't feel tremendously bad speaking of Los Angeles and it's everywhere. So anyway, what else are you up to? Where are you? London, right?

Scott Galloway: Yeah, I'm in London. It's crazy. There's this alien thing in the sky today called the sun. And it's lovely. I'm wearing shorts and a short sleeves t-shirt because it's up to a sweltering like 54 degrees. I even take my dogs to work. I have friends in town. So I'm trying to pretend I'm cool, and I'm taking them to all these fancy members clubs. And yeah, I'm doing well. I'm enjoying it.

Kara Swisher: And the coronation, are you excited about that?

Scott Galloway: It's coming up. I could give a shit about it except I just like talking about it.

Kara Swisher: You're a British citizen now.

Scott Galloway: I like talking about how awful Harry and Meghan are. So I'm glad of that. I love these Instagram-loving bitches that don't get invited or do get invited to the coronation and demand their privacy on their world tour, saying they want their privacy.

Kara Swisher: Oh, well, Harry is coming. I understand. I understand Harry, but not Meghan. That's right. He got invited. She didn't, right? I have no idea what the ins and outs are, but she's staying in California. She's not far from here, up the coast, near Santa Barbara, I think is where they live. But are you doing anything coronation-wise?

Scott Galloway: Well, I celebrated by going to Chelsea versus Real Madrid.

Kara Swisher: Yeah, that's not what I'm talking about. Do you even know who the king is going to be? Do you have any idea who the king is going to be?

Scott Galloway: Oh, it's that nice guy. It's that super nice guy. Who's really well-dressed, by the way, and that's important.

Kara Swisher: Yeah, yeah. Well, and there's going to be a queen, apparently. The whole thing is going to be a big deal. It's going to mess up traffic, just so you know. There's things happening with the coronation. A lot of jewels.

Scott Galloway: Well, I identify and present as a queen.

Kara Swisher: Okay. Okay. First, you're dying in a closet. Come on. You're a queen in Britain. Okay. Let's just move on.

[Transition]

Kara Swisher: Today, Fox News will pay up in a settlement with Dominion. Ron DeSantis doubles down on his culture war and will speak with a friend of Pivot, Dmitri Alperovitch, about tech and foreign policy. But first, you can now save with Apple. The company announced an Apple Card savings account from Goldman Sachs. Accounts offer 4.15%, which is high for right now. Interest rate, no fees, and no minimum deposits. The Apple Card users can build savings accounts with cash back rewards earned from purchases. Do you like this better than the buy now, pay later thing? Talk about Apple really moving in. This is Goldman Sachs going to run this. It's not really Apple in the business of it, but that's their bank, I guess, to do this. Explain what you think of this.

Scott Galloway: Well, as big a thud as their headset is going to be, or whatever you call it, their goggles, this will be. It's the boring, unsexy stuff that moves shareholder value. As of today, Apple is technically a bank. And as of today, Apple is technically the most valuable bank in the world by market cap, as it's the most valuable company in the world.

Kara Swisher: I mean, essentially we've been talking a lot about the problems with an absence of friction that a bank run can be inspired because of distributed computing and because of email and the fact that with an app you can get an email and withdraw your funds out of a bank within five minutes or you can make really bad decisions on a public server or whatever it is. The lack of friction has a lot of downsides. But in this instance, the lack of friction, and that is you have a phone in your hand, you have a credit card on your phone in your hand, and you might get an alert saying, do you want to round up all of your purchases and begin saving at 4.2%, 10 times the average rate? Press here if you'd like to start saving for your future. That is going to be a really compelling—

Scott Galloway: It is. I was like, that's a big interest rate. It's going to force other banks to offer that, correct? Because people are draining their money out of banks with the one person, whatever the amount is right now.

Kara Swisher: But offering a higher interest rate is nothing new. Walking by a bank in a CVS, which seem to be on every corner, and they have a big poster in the window saying, two-year CD, 3.2%. And you think, oh, that's great, but what is the likelihood you're actually going to, the next day, go back during banking hours, fill out the paperwork, transfer the money in, track it, whatever it is. This is going to be the lack of friction to transfer funds to get this higher interest rate. They're going to just aggregate so much capital so quickly. And this will, you watch, my prediction is in one or two years, it's the boring shit that moves the needle. You'll start seeing in earnings reports that we continue to aggregate more capital. And everyone will assess.

Kara Swisher: But there's no money making here for them. What do they get out of it?

Scott Galloway: Oh, sure there is. Sure there is. They get, I mean, any bank, it's kind of the best business in the world. You borrow or you pay at a certain rate and you loan out at a higher rate. Because even at 4.2%, try and get a car loan or a mortgage, you can't get it at 4.2%. You're talking about 6.7. So there's 250 points of vig and margin here. So they may not make a lot of money in the short run, but Apple's cost of capital—

Kara Swisher: Because their credit card did not, sort of thinking of thuds was actually, I have their credit card, but I don't use it at all. That's been a thud. It's not been a great business for them or Goldman.

Scott Galloway: Yeah, but Apple Pay has been huge. Apple is one of the most trusted brands in the world. And trust has become much more, trust didn't matter in banks until it did. And now all of a sudden it really matters. And so the best brands in the world, JP Morgan and now Apple, are going to get a disproportionate amount of inflows. And again, the ability for them to offer you opportunities, whether it's an ability to save easily, an ability to transfer to your IRA there, your ability to say, okay, I would like to start paying down. I would like to hear about a mortgage rate from that. When you control the direct interface in a frictionless environment called the iPhone and a massive amount of trust, you're amongst the billion wealthiest people on the planet. The flywheel is literally the size of a windmill that's bigger than the rings on Saturn. I don't know how I came up with that.

Kara Swisher: Yeah, I'm surprised Amazon hasn't moved into here more significantly. They're in healthcare, obviously. I've been getting so many emails about Amazon Pharmacy, for example. So they tried it out with the stores, which aren't going as well, I guess. But I imagine, I don't know why Amazon's not in here, because I have so many financial transactions with them.

Scott Galloway: Yeah, I would. And not only that, I think their credit card has worked.

Kara Swisher: Yeah, I have their credit card. Apple is just firing right now. I mean, they're firing on so many cylinders. And Apple Pay, you were sort of early in this. I've been using Apple Pay everywhere. Everywhere. Everyone. I don't carry cash. I was getting something and I realized I need cash for a tip and I'm like, I don't have cash. And I apologized to the person. I was like, I'm so sorry. I just don't carry cash.

Scott Galloway: So this is inviting a mugging. I don't leave the house without a thousand bucks in cash. I love cash. I feel naked without it.

Kara Swisher: Oh, then I will mug you.

Scott Galloway: I don't think a man is a real man. I don't think a boy becomes a man until as he's about to leave the house, he smacks his pockets to make sure he has keys and cash. I think that's how you show you're a man. You hit your pockets.

Kara Swisher: I don't think anyone carries cash, grandpa.

Scott Galloway: My grandpa carried a big wad of cash in a rubber band. No, no, no, no. Women don't carry cash because it's up to the men to pay for tips and shit.

Kara Swisher: Oh my God. Literally, literally every woman I've ever been out with does not carry cash. She'll have four shades of lipstick, but no cash.

Scott Galloway: Oh, that's not why.

Kara Swisher: Oh, my God. Literally. Ugh. How many tropes were in that sentence? Sexism 2.0.

Scott Galloway: Oh, God. The new VR goggles from Galloway. How to be a 50s Phyllis Schlafly sexist. But seriously, whenever I go out with someone of the female gender and I like, if I don't bring money, no one's getting tipped.

Kara Swisher: No. Here's the deal. I use Apple Pay. It's not because I'm a lady. Give me a break.

Scott Galloway: But you can't tip a doorman. You can't tip a bellman with Apple Pay.

Kara Swisher: I don't have many doormen in my life. This was the first time.

Scott Galloway: Well, maybe we should be able to. Maybe we should be able to touch phones, etc. Cash is awesome. Daddy rolls in, throws some Benjamins, throws some—

Kara Swisher: Maybe I'm just more efficient than you carrying out a wad of cash.

Scott Galloway: My little, my grandfather had a rubber band around a wad of cash.

Kara Swisher: Grandpa, I'm going to call you Grandpa Galloway.

Scott Galloway: All you need to be 6'2", with a decent voice, a Panerai watch. Hey, little lady, here's a crisp $1 bill. Here you go. Flash some cash, fling the bling.

Kara Swisher: I bet strippers take Apple Pay. That's what I say. I need to speak to your kids. My kids don't carry cash.

Scott Galloway: Well, that's the problem. I'm going to coach your young men. Not only around college, but how to get a little bit more action. Lesson number one in terms of mating.

Kara Swisher: No, we're not. The extent of the Scott Galloway daddy discussions are over.

Scott Galloway: Now that Louie is 21 and he can drink, first tip for finding a mate at a bar.

Kara Swisher: Yeah, like he couldn't before.

Scott Galloway: Oh, I'm sure. That's what he said to me. I said that to him. I said, oh, now you can drink by way legally. He goes, yeah, it's been a real problem. Let me just help him out here. He goes into a bar. First thing he does is you got to right away go up to the first woman he sees. Ask her about her relationship with her father. If she says anything remotely positive, move along.

Kara Swisher: Oh, my God. That's good. That's good. Let's keep Scott. Scott Galloway's not invited to any of the graduation activities anyway.

Scott Galloway: That's from the Family Guy, which I would like a guest appearance on.

Kara Swisher: Well, it's not happening. But I will tell you about my cartoon avatar. I'll send you a picture of it. Anyway, we have to move on.

[Transition]

Kara Swisher: Welcome back to the Year of Efficiency. Someone who would probably have the exact same time as I do in L.A., Mark Zuckerberg. Meta told staff to work from home on Wednesday as it started its latest round of layoffs this week, expected to impact around 10,000 employees. Mark Zuckerberg says the round targets technical employees with business-focused staff cuts to come in May. The company's stock is up 73% for the year. It's kind of a drip, drip, drip. It gives it stock bumps, but there's all kinds of problems in morale. What do you think about this?

Scott Galloway: It's good for the stock but I asked Evan Spiegel about this and he says he'd rather make his cuts all at once for the staff. But things change, I guess, in the economy. Just as there are these stages to grief, denial, anger, acceptance, bargaining, there are different stages of what a CEO and a board go through in a down economy or when the economy, when your company is no longer growing. The first is denial. "Oh, no, we're going to raise more money at a higher valuation. This is just a blip." The second is a hiring pause. The first is a layoff. And then there's usually a second layoff. What I say on the board is skip all the way to the second layoff and go deeper than you want because every layoff is like surgery. It might be good for the health of the patient, but you don't want to go in again. You want to go in and you want to clear it all out. You want to do what you need to do. Because every time you put the patient under, anytime you open the body, it takes a toll on the body. I feel the same way about layoffs. What you want to say at a layoff is you want it to be short and violent. There's no elegant way to do it. There's all these articles about, "I found out via email." And it's like, well, there's no easier, elegant way.

Kara Swisher: Well, you can be a little nicer. You can be a tiny bit nicer, but go ahead.

Scott Galloway: I don't think there's an elegant way to fire people. You can try and be empathetic about it. But at the end of the day, firing people, especially when you have to do it in mass, is very difficult. My feeling is, it's got to be short, it's got to be violent. And then what you want to say after the firing to everyone here, you should have anxiety and stress, but it should be productive anxiety and stress. And you should know that this is it. We're done with layoffs. It happened. It was terrible. It's terrible for the people that got laid off, but there's a reason you were not laid off. You're good, you're here. And for the foreseeable future, we don't have any plans to lay off more people. Otherwise, everyone's just looking over their shoulder all the time.

Kara Swisher: Yeah, I think they said that. Now, look, things change. There's economic circumstances that shift and change and everything else. But it seems like nobody else has done the second, third round. It looks like there's three or four here. It does help the stock. It does help the stock. Like they, in my opinion, short-term stock movements, that's an indication that the market sees that Meta and these companies have gotten way too fat. But at this point, there's a ton of unproductive stress at the company. It feels like every few months they lay off another few thousand people. And so you kind of what you do is you go home and you do the math and you think, okay, in the next layoff, am I on that hit list? Am I on a list somewhere right now? And should I start returning calls? Should I start thinking about another job? It's just very stressful, right? The unknown is stressful. And the thing I've also discovered, as someone who has run companies, that sounded very pretentious, is that if you don't communicate a lot, they communicate for you. If you don't tell them exactly what's going on, they interpret it in the worst possible way. Unless you can say to them, and you're honest, we don't have any layoffs planned for the foreseeable future, they will communicate as, oh, that means we're laying off more people in about a month or 60 days. So I think you go deeper and you do it once. I don't think this is a good strategy.

Scott Galloway: Well, he had to turn around the whole Meta thing, right? Now he's all up in AI's grill, right? He made a very big bet one direction, obviously hired a lot during the pandemic too, as we've noted many times, and then is sort of course correcting really fast. And Spiegel, who's struggling too, obviously said, it's just not good. It ruins the... And he may have to at some point if there's real economic shocks continue to be and interest rates and everything else, the war. There's all kinds of ways that you might be like, oh, my business didn't recover the way I thought. But what he was leading with was new stuff they're doing there at Snapchat versus, it was interesting. It was an interesting, different thing.

Kara Swisher: I agree. I think it's a problem. I think it's a big problem and it makes people unsteady. And speaking of unsteady, let's get to our first big story.

[Transition]

Kara Swisher: Fox News lied and now will pay the price. Over $787 million dollars, Fox News and Dominion Voting Systems settled their lawsuit this week for one of the largest sums ever in a defamation case. Fox issued a statement acknowledging, I'm not going to laugh like Jake Tapper here. I'm sorry, this is going to be difficult to say with a straight face. "This settlement reflects Fox's continued commitment to the highest journalistic standards. We are hopeful that our—" Sorry. But acknowledging that certain claims about Dominion were false, but there won't be any on-air corrections or retractions as part of the settlement, which Fox News barely covered on Tuesday. What a surprise. But this isn't the end for either party. Fox still faces a similar suit from another company that makes voting systems called Smartmatic. That one seeks $2.7 billion. There's also the possibility of shareholder lawsuits. And Dominion has more lawsuits pending against Newsmax, OAN, as well as Rudy Giuliani, Sidney Powell, Mike Lindell, the CEO of MyPillow, who are at the center of a lot of this stuff. It happened on the eve. Everyone was down in Wilmington, Delaware. It's less than half of what Dominion sought. I think most people thought they were never going to get that much, and they pulled out some stuff and impact on their business's money. So people thought they'd get, if they won big, would be about this much. Of course, if they won, there'd be appeals after appeal. Fox has nearly $4.1 billion in cash on hand, according to Lachlan Murdoch, and a market cap over $17 billion. But Dominion had a strong case. Fox is going to write off part of its settlement. What do you think? What do you think of this?

Scott Galloway: So, the bottom line is this is a victory. There are winners and losers here. The winners, the biggest winners, hands down, are Rupert Murdoch. For him to be questioned under oath, he puts his hand on the Bible and he bursts into flames.

Kara Swisher: Right, that was a joke.

Scott Galloway: Yeah, Stephen Colbert. But right after that, it just would have been to have those anchors and Rupert Murdoch under oath just doesn't go well with people who consistently lie. And that, as we said before, was the motivation for Murdoch to settle or to basically give in. Now, the other big winner here is the investor, the hedge fund. State Street, something like that.

Kara Swisher: Yeah, they're going to get a 15 or 16x return on their money.

Scott Galloway: So even if Dominion wanted to pursue the case, their board and their shareholders are like, all right, we're going to pretend that we're going to pursue the case. But our obligation is to our limited partners. And we have a 15 or 20x return on our investment with certainty here. Absolutely settle. We all in the chattering class really wanted the porn of watching Laura Ingraham go on, under oath, be questioned as a witness and basically have to say in a public format what a mendacious, consistent serial liar she is and how these folks have absolutely no journalistic integrity. The other big winner here generally speaking is Fox, because for $787 million or about 20% of their cash on hand, they kind of just get to keep on trucking. I think the core Fox viewer hears about this but doesn't really care. They see the legal establishment as being so woke anyways, that this was a bunch of those New York lawyers coming after, okay, mistakes were made. I just don't think it really hurts them. Where it might hurt them is now they have established precedents for future cases.

Kara Swisher: Yeah, they have to behave a little better, right? They can't quite go this far. It's owned by Staple Street Capital, and they bought, I think, 76% or a big chunk of Dominion for $38 million just a couple of years ago, which is amazing. I mean, it's an amazing return. And everyone's all like, how dare they? I'm like, it's a lot of money. And it also says something about what Fox did. And Fox has a history of doing this, paying people off. This is a very Rupert Murdoch movie. They paid $20 million to Gretchen Carlson over sexual harassment issues, $90 million over sexual harassment issues around Roger Ailes and Bill O'Reilly in 2013. News Corp settled for $139 million over phone hacking and the London... Tidal Woods scandal. And speaking of trucking on, they kept trucking on. But they still have other things they're facing, including two things, the Smartmatic case. And of course, that's moving forward the same way. I just got to reminisce. Do you remember the Bill O'Reilly case?

Scott Galloway: Yes, yeah. They paid $30 million to settle because supposedly he used to send gay porn. And this isn't funny, but I'm going to laugh anyways.

Kara Swisher: You're laughing, Jake Tapper. Go ahead.

Scott Galloway: I absolutely love that case.

Kara Swisher: But there are these other lawsuits. And a lot of this stuff was against several, like Lou Dobbs was a big, apparently had most of the most incriminating stuff. Maria Bartiromo, I mean, the ones that are amusing, but the ones about Dobbs are just worse, if possible. So it's going to be interesting if it goes against these individuals. I don't know what they're going to do on these smaller news.

Scott Galloway: It's actually good for Fox because Newsmax and OAN can't quite pay off as much, right? Or they're going to get hurt by paying off. And those are the people that Fox was terrified of, which prompted them to behave like this because they were worried about that.

Kara Swisher: It's just, what do you think's going to happen with the other things?

Kara Swisher: And shareholder lawsuits, people, there already a couple against Fox.

Scott Galloway: Well, that's a great point. And Jeffrey Sonnenfeld, he usually has an ability to kind of cut to the key issues here. He was on... I forget if he was on CNBC. No, he was on AC3C, he was on Anderson's show. And he said that 60% of this company is owned by shareholders. And the board really demonstrated a dereliction of duty, if not oversight here, to subject shareholders to this kind of penalty and reduction in shareholder value.

Kara Swisher: What's interesting is the shares have not gone down. The fear of the settlement had been already priced into the stock.

Scott Galloway: I think the real effect here for what I think people who like to think they believe in journalism and honesty and some sort of standards here is Fox is going to keep on trucking and be the kind of entertainment organization it is, not the news organization it is. It will send a chill across the ecosystem of media organizations that play fast and loose with the truth, who don't have the capital to settle at $800 million. It gets rid of their competitors. This is good.

Kara Swisher: It's not ending for Fox either, by the way. Smartmatic, they'll have to settle with them too. And shareholders.

Scott Galloway: That's right. And I mean, what you're finding is Reid Hoffman sponsored E. Jean Carroll's lawsuit against Trump. But probably the more apt analogy is when Peter Thiel financed a lawsuit that put Gawker Media out of business. And so what you have here is that unless you kind of have $4 billion in cash on hand, you can't afford to be fast and loose with the truth. And News Corp can, because they can absorb this kind of blow.

Kara Swisher: Yeah, you know, Barry Diller said this at an event that I was at last week. He said, they're going to just keep going. It's going to cost them, and it's not good. But I think shareholder lawsuits... except he said shareholder, it could really muck them up for a while, but it gets rid of their competitors.

Scott Galloway: Last week, you said the same things, why they wanted to avoid this, besides the embarrassment. You know, the embarrassment, I think, was the biggest thing and the continued attacks on them. You know, the people, sort of not attacks, showing them for who they are, essentially. And then the money, which ultimately will add up and it will occupy their executives' time.

Kara Swisher: But last week, Fox belatedly revealed some important information that the judge wasn't happy about, that Murdoch has a role in Fox News, which was a shock. Anyone who's worked for him knows that. This week, the judge authorized still a special master to investigate Fox for its handling of discovery. It's probably a small thing but this gives people who want to sue them a cornucopia of information that's already there. And that to me is the danger. These people will be sucked up into these things for years to come and nobody will be fired but it attracts their attention and not on what they need to do, which is how to make Fox bigger. But it's doing well. Fox is doing great.

Scott Galloway: In a weird way, it reminded me a little bit of the dynamics of the game theory or the brinksmanship of Adam Neumann and SoftBank. Because he saw and he very accurately read that Masayoshi-san didn't want to lose face and didn't want to put the company into bankruptcy. And that's what would have happened if they hadn't settled with Adam and got his shares back and then had American vultures come in and there would have been all these stories about how SoftBank had screwed up and Masayoshi Son had lost out to the vagaries of the market and this grifter. So he accurately read the reputation was worth way more than the business cost here. The same thing happened here because if you look at the case, the legal scholars, I've read their views on this, is that one, this was a pretty high bar to clear to get to win the case. But they think even if they had, that $780 million, they wouldn't have got $787 million. Even if they had been awarded $1.6 billion in the appeals court, it would have been reduced substantially from that.

Kara Swisher: Yeah.

Scott Galloway: And it might have gone to the Supreme Court. Apparently, that's what the chief legal counsel of Fox, who's very influential there, had told Murdoch. But Murdoch was like, let's just get it off our plate. Let's get it the fuck off our plate. It's enough. It's enough. Their lawyers would have said, okay, there's a chance this won't, that we'll be vindicated here. There's a decent chance we won't. But if we are found guilty, this is going to be nowhere near $800 million. But Murdoch decided it is worth, call it an incremental $500, $600 million to me, to not have this Chinese water torture being forced to tell the truth on the record.

Kara Swisher: He can't go on the stand. I mean, he's also, he just can't. It just lays him bare, which I think is, he knows it's not a good thing. But the thing is conservative users, you know, a lot of liberals on Twitter were like, oh, we wanted our trial. More of it was a joke, but a lot of people were like, how dare they settle. It's not Dominion's job to do anything but for their shareholders. Sorry. I'm sorry to say that. I mean, it would be nice. And they honestly, they took it pretty far. And I appreciate that. They did take it right to the end and they played chicken with Fox and won. They took it very, everyone understand how far they took this. And they could have settled probably a lot easier. They're a private company with outside shareholders. If it had been an individual who was already wealthy, him or herself, who wanted to make a point for society, then fine. But it wasn't that. Outside investors, this was absolutely the right thing to do. And they got a lot of stuff on this company that's going to be used by others.

Scott Galloway: But conservative users on social media were not happy. They said Fox News were cowards and should have stuck it to the man or whatever man there happens to be.

Kara Swisher: They're stupid. This is the only good move for Rupert Murdoch. And he always does this. It's not something like, it's common for him to do this. I can see him saying it, like, let's just pay him off. Like, ugh. Not happy about it, but still.

Scott Galloway: It is interesting, though. You do see this. And what I've seen with lawsuits is, and unfortunately, I've never been involved personally or with one of my companies on either end of a lawsuit, which is, by the way, tempting to gods. But when I've been on boards and there are lawsuits, something I've learned is I have a sense of, I get emotional. I'm like, well, we're right. We should fight it to the end. And what cooler heads or brighter business minds ultimately decide is the cost of the distraction is worth something. So let's not talk about right and wrong here. Let's talk about what's the best thing for shareholder value. And a lot of times they just say, it's just not worth it. And unfortunately that leads to frivolous lawsuits because the plaintiff's attorneys know that they'll most likely just settle. And there are some companies that, as a general policy, will fight everything to the death, such that they send a signal to the marketplace that you should not come after us for frivolous lawsuits. But generally speaking, most companies will look at something and say, all right, let's not look at not only just the legal merits, but the distraction and the cost of fighting this. And a lot of times they just decide to pay them off.

Kara Swisher: All right, conservatives and liberals, too bad. I know it's entertaining and they're cowards, but this was the right outcome. And again, it's out there. It's not over, by the way. It's not over by a long stretch for Fox, for sure. Anyway, let's go on a quick break. And when we come back, the right is losing its war on big business. And we'll talk all things foreign policy with friend of Pivot, Dmitry Alperovitch.

[Ad Break]

Kara Swisher: Scott, we're back. The GOP candidates have a message for Ron DeSantis in his battle with Disney. Let it go. Let it go. Let it go. This week, DeSantis floated the idea of building a rival amusement park or prison on state-owned land near Walt Disney. And then he giggled, kind of. It was weird. It was a weird press conference. He giggles. It's very untoward for a man running for president. But DeSantis may not have many allies in his war on the House of Mouse. His potential 2024 rivals say he's outplayed on true social. Trump called DeSantis' move unnecessary and a stunt. And if the stunt master is calling it a stunt, do you really? It is a stunt. Chris Christie, Mike Pence, and New Hampshire Governor Chris Sununu have all taken issue with it too, meanwhile saying, are we the party of hating business? Meanwhile, the legislation that started this all, the so-called Don't Say Gay law, is getting larger. Not a surprise to Kara Swisher. The law originally applied to students in kindergarten to third grade. On Wednesday, Florida's Board of Education voted to expand the law to cover all grades, which is so confusing what they can talk about and what they can't. If the proposal passes, Florida's students won't learn about sexual orientation and gender identity. And that for straight people too unless required as a part of reproductive health class which they can choose not to take. And the parents can choose them not to take. By the way, there are a lot of students over 18 in 12th grade, just so you know. I have one of them. Let's start with Ron DeSantis, this Disney feud first. I don't know if Disney would lower its investment in Florida, but they could make it highly uncomfortable for Ron DeSantis. Truth is, Trump, who was very pragmatic about things like this, including abortion, by the way, he's been much more pragmatic than most of the Republican Party, imagines that Disney could, quote, announce a slow withdrawal or sale of certain properties or the whole thing. That would be a killer. The profit margins for Disney's park division shrunk in 2022. And, you know, it had some misses like the Star Wars Hotel. But it makes, it's a huge cash cow for Disney. So they can't easily leave. And DeSantis is threatening prisons at amusement parks. It's just stupid. Disney is central to Florida. It's its largest taxpayer, employs 75,000 people. It's probably the largest single site employer in the U.S.

Scott Galloway: Well, look, neither of us are fans of Governor DeSantis, but he is politically very astute and he has to date been very disciplined. And this is the first self-inflicted wound. And that is the Republican Party has a very strong brand around being pro-business. And it's a powerful association that they say, look, our economy is important. It pays for our taxes. And one of America's defining features is how strong we are in terms of our business. So picking a one-off fight with one company is not what—

Kara Swisher: Well, two.

Scott Galloway: Anheuser-Busch, he's also fighting them over trans. But that's political retribution. You're not supposed to do that. You're supposed to make laws. And also some of the things they're complaining about warrant scrutiny, but they should be done in a room. You know, they've gotten special tax breaks. There's a lot here. But it should be done between adults. It shouldn't be someone who says, I don't like that you tried to embarrass me, and I'm going to bring in a cultural war, and I'm going to go after a specific company. When you think about the Florida brand. And use the government to do so, to punish a business. That's totally counter to every Republican ideal. And if you think about Florida, some of the wonderful things that make Florida wonderful are, from a brand standpoint, are one, the weather. Two, the beach. Three, we have the capital of Latin America, Miami, which has a great vibe. And another thing would have to be Disney. It's such a big part of the brand, they're huge taxpayers. And what Bob Iger's gonna do, or I would bet Disney gonna do, they're not gonna say, they're not reactionary dumb people, they're not gonna, oh we're pulling out. What they're going to do, I would bet, is they will leak to the press that we are planning this new amusement park. Like they launch new products all the time, right? California Great Adventure or whatever it is. And they'll leak that, oh, we were contemplating launching it as an adjunct or in Florida, and we're now considering different locations. And the media will go crazy with this, that Florida, this governor who is fighting a cultural war to try and get attention from the far right, is now hurting our economy and our prospects for growth. That's how it's playing. And then you have Bob Iger, who wants to celebrate his LGBTQ brothers and sisters, and Ron DeSantis, who wants to build more prisons. So my view is, in sum, Bob Iger for president.

Kara Swisher: Yeah, I think Bob has got the upper hand here completely. Like, I just don't understand these targetings of the right to businesses. You know, as I said, the conservatives came for Bud Light after the brand monster transgender influencer Dylan Mulvaney. But right wing influencers called for the boycott, launched their own beer brand and posted videos of themselves shooting Bud Light cans. I just, there's nothing Dylan Mulvaney did wrong. Of course, all these laws that target trans people are just accelerating across the country. And now they're starting to come for these companies as if they're, you know, attacking Anita Bryant or something else. It just seems, I don't know who they're playing to. It's the small amount of people in the primary, presumably, or just because it makes no sense at this point. And I do think a lot of the real leaders are like, oh, no, this isn't particularly good. This doesn't get people going.

Scott Galloway: No, it's a terrible look for the party. At some point, the Orlando mayor or people in Orlando are going to go, boss, you realize you're going to hurt our economy here.

Kara Swisher: Yeah.

Scott Galloway: This isn't good business, you taking on, you having these personal wars of vendetta. You know, it's a dumb move, and it's totally contrary to what the Republican Party stands for. It's interventionist is what it is.

Kara Swisher: I mean, they're also attacking pharmaceutical companies over the abortion drugs and the attacks on the FDA. It's a war on business. It's a war. It's a really weird—it seems like that's a democratic thing to overreach and force people, companies, to do things they may or may not want to do. In this case, it's the GOP that seems to be attaching this to their brand. But one of the cores of a democratic society is once you get elected, you're not supposed to attack your political enemies using your political power. If you want a systemic solution, you want to say, okay, there's too many big businesses in Florida that have gotten too many tax breaks that get to play by a different set of rules. That's a real conversation that should be had. But if it's like, I don't like you not supporting me on something, so I'm going to go after you in a one-off, that is exactly what government is not supposed to do.

Scott Galloway: So where does he end with this? Does he stop? Because he came to Washington. All the Florida delegation is backing Trump. Half of it right now is backing Trump, which is amazing. And Trump looks reasonable. He's going to back down. And not only that, there's going to start to be a ton of articles about how DeSantis at one point was leading the Republican pack. His poll numbers are going down.

Kara Swisher: Yeah, there is. There already is. Scott Walker, part two.

Scott Galloway: Everybody's going to point to this thing in Disney, and he will slowly but surely, he's not going to apologize. He's not going to back down. He's just going to go quiet on this issue. This is a loser for him.

Kara Swisher: Is there any appeal to doing this? I don't know anyone who's particularly mad, except the very far right, is mad at any of these companies, particularly. Not beer companies, not pharmaceutical companies, not Disney. And these aren't heroes, by the way. These are big corporations. Every time you pass one of these crazy things or did one of these kind of weird cultural far right things, whether it's don't say gay or, you know, anti-trans or drag, you know, all this stuff that just made no sense. It's like, okay, this doesn't affect anybody other than you demonizing a vulnerable group. The far right loved it. I don't think the far right's going to, I think they're going to start to say, we don't love this as much. This is a bridge too far.

Scott Galloway: Well, it's not a bridge too far as I correctly predicted, Scott, and you doubted this, that they went very far with this new Florida education thing. It's cruelty is the point. This is exact, I said, this is their little game. They're going to pretend it's about kids and protecting children and then use it, they'll just keep stepping forward. It'll start moving from trans people who they found an issue with finally, who they've been trying to get at through sports or whatever it happens to be, and they're going to continue. And this is exactly what they're trying to go for and using it to say they're protecting children. And now they moved it to 12th grade. The confusion will be so vast. How do they teach about straight? You know, there's a lot of issues of gender issues with straight people too. The whole thing confuses teachers. It creates a situation where Florida is not somewhere you want to go economically, right? But I don't know. It just feels very, another mistake on their part to push it too far, which is what they always do. Thoughts?

Scott Galloway: Yeah, but there's a large breed of politicians, both on the right and the left, who are more concerned with trying to figure out what offends their constituents as opposed to what affects them. Because the reality is, and I don't take any comfort from this, this doesn't make this any less inexcusable or vile, but on a ground level, this is going to have almost no impact, I don't think. I don't think teachers know. How exactly do they comply with this law? I just don't think, all that it's done, it's like, it reminds me of the laws in the Dakotas or wherever they are saying outlawing or protecting swim meets from trans swimmers or a volleyball game. There aren't any. There aren't any. It's like, what exactly? So why don't we pass legislation against zombies? I mean, they're just, and I don't mean to equate them with zombies, but that's not a threat. That's not an issue.

Kara Swisher: Well, I think they think it is. They think it is.

Scott Galloway: Well, yeah.

Kara Swisher: Well, no, I don't even think, Kara, they think it is. I think they think it inflames and rallies their far-right crazies. In Florida, it's all these moms for liberty. They show up and start screaming at teachers all the time. They see it, they want, they have an overdue, they feel like they have a pent up gag reflex against what they see is woke political overreach. And so when they see something very aggressive like this, they salute it. But they're not really thinking about, okay, at the end of the day, let's talk about the ninth or the 10th grade. How do teachers, even if you thought this was right, how does this actually do anything but confuse people at the ground level, be totally ineffectual, even cost money for people trying to figure out what this means?

Kara Swisher: No, I think teachers will not teach things like, what do you do about Walt Whitman? What do you do about James Baldwin? It's so integral to talk about gender, sexual orientation, when you teach those writers, for example. I think teachers, I think progressive teachers or people who are teachers who are at their wits end for working their asses off and not making a lot of money and are sick of commercials calling them heroes but not paying them. People you pay well don't need to be called heroes. Anyways, I think a lot of them, and we're seeing this, might just say, I am just fed up with this. I don't need to be a political volleyball here. I am trying my hardest to teach your kids how to be functioning, good, empathetic, productive, economically viable people. I've had it.

Scott Galloway: But I don't think that they're saying this is going to make teaching, I just at a ground level, I think most principals or most headmasters are going to lead with them and go, just keep doing what you're doing and we'll deal with a problem if someone brings it up.

Kara Swisher: I don't know. There's some really manic people that show up at these schools. I don't know. They can be like, especially on the right.

Scott Galloway: Yeah, but they've been doing that for a while.

Kara Swisher: Yeah, I guess.

Scott Galloway: That's a dinner bell for mentally ill people who actually don't even have kids in the district.

Kara Swisher: I think these people mean it and they don't stop. I see these people. And, you know, they showed, Stephanie Ruhl showed a clip from Missouri where the guy said, why are we passing this? You voted against overturning a law to allow kids to marry, parents who allow their kids to marry at 12. And you're for this. And he goes, I know some people who marry at 12 and they're still, and guess what, they're still married. And like, he had to walk this thing back. Like, but still, they think this, they do. So I'm just, I think there is nothing they won't go to to shut down gay people across the country. You'll see a wave of anti-gay legislation happening, and there'll be more and more and more. And they're trying to get back marriage. They're trying to get back adoption. They're trying to get back all the things that we fought for and deserve. You'll see. This is what they do.

Scott Galloway: I don't disagree that this is an incremental step. And if we've learned anything with the passage or the signage of what is one of the most restrictive abortion laws and what was seen as a fairly moderate state, Florida, that you're right. This is all an incremental step to really, really powerfully awful things that have a real impact on people. As far as my interpretation of don't say gay, other than confusing the shit out of anybody, I don't know if it's actually having a lot of on-the-ground impact. And maybe we'll hear from teachers that say, yeah, it is impacting what's happening in the classroom. But to me, this is more about inflaming and being hateful than it is about having any actual operational change at the ground level.

Kara Swisher: Overall, in all of them, it's stuff government shouldn't be doing. This is just ridiculous. I mean, it's Republicans. Anyway, they become very meddlesome. The GOP is always like let the principal, let the parents decide, except when it comes to the most important issues, then we're going to tell you what to do.

Scott Galloway: Yeah, exactly.

Kara Swisher: Yeah, they're very meddlesome. They're very controlling. They're almost communists. Anyway, let's bring in our friend of Pivot, speaking of someone who knows a thing or two about communists. Dmitry Alperovitch is the chairman of Silverado Policy Accelerator. More importantly, he's the co-founder of the cybersecurity firm CrowdStrike and the host of Geopolitics Decanted podcast. Welcome, Dimitri.

Dmitri Alperovitch: Thanks for having me.

Kara Swisher: So, Dimitri, you and I have talked a lot at various events in Washington. You live in Washington, as I do. And you and we talked about Ukraine. I want to get into all that. But I think I have to start with the new reveals from the Discord leaks. Tell us, from your perspective, as someone who's been deeply involved in cybersecurity, founding CrowdStrike, how damaging were these leaks and what can be done? Because they were sort of in plain sight, this steal, essentially, of what happened.

Dmitri Alperovitch: Yeah, I think this was incredibly damaging on several levels. First and foremost, it was, I think, very damaging for Ukraine as it is preparing to launch this critical counteroffensive that really has to succeed. I think they're going to be in a terrible position if they fail at this counteroffensive in terms of expecting more Western aid to come in and help them launch perhaps offensives down the road. And the reality is that these leaks have described to the Russians in detail their offensive situations, the fact that they have these 12 brigades that they're planning to use for this offensive, about 40,000 to 45,000 men, which, by the way, is not a lot. They know the location of those brigades. They can track them, which means they can figure out when they're moving towards the front lines, where they're going. So they know their manning levels. They know their training. They know the equipment that they're getting. So it's a lot of detail that is very helpful for the Russians if they're going to use it to build up a defense for this offensive. So that's, first and foremost, I think, really damaging for Ukraine. The second damaging implications here is really about our collection. The fact that we have so much penetration into the Russian systems, primarily, it looks like, through signals intelligence, tapping communications and the like. Well, that's going to give the Russians some opportunities to try to shut down those collection mechanisms, even though there are no specifics about how we're doing this, because there are descriptions of specific phone calls or very specific discussions. That's going to give them insights into what we may have captured and try to shut it down.

Kara Swisher: So we talked about the ability of the spying more on a more complicated level. This leak was not complicated. And it's amazing that it doesn't happen more often. Over a million Americans have access to top secret information, according to a report from the director of national intelligence. You know, the surface area here is huge and that it hasn't happened. And this was done and a guy copied stuff and took pictures. And, you know, stuff you deal with is more complex in terms of spying. But this is very simple, essentially.

Dmitri Alperovitch: Well, let me push back just slightly because, yes, there's millions of Americans that have access to clearances. It does not mean that they have access to classified information or highly sensitive classified information. Just because you have a clearance does not mean that you're automatically going to be granted access. There's a principle that is essential in the intelligence community of need to know. If you don't need to know, you're not going to get that access no matter what your clearance levels are. And unfortunately, in this particular case, this guy, this 21-year-old, did have a need to know to some extent because he was an IT guy. His responsibility was to support senior military leaders on his base in Massachusetts that is providing intelligence services to senior Pentagon leaders. And whenever something occurs on a computer system, he was the guy who was supposed to help them and get it resolved. And the reality is that you do need access to sensitive data when you're performing those tasks. The same thing happened with Snowden. He was just an IT contractor that was moving classified documents from one system to another. Well, guess what?

Dmitri Alperovitch: He needed access to those classified documents. So there is a vulnerability with these IT people that essentially have God-mode access to the system in some of these cases. And the young, I think Scott has talked a lot about this, that these young men that may not have girlfriends, that are spending so much of their time online, getting radicalized, perhaps not in a religious sense, but certainly in an ideological sense. They do have significant accidents. And I think we have to look at that. Is a 21-year-old that is spending so much of his time online really the appropriate person to get this level of access, to get this level of clearance? And it's a balance because you want young people to come in.

Kara Swisher: Let me ask what you do, because your company CrowdStrike, you did cloud stuff, endpoint security, you did threat intelligence, you did cyber attack response services. The people who work for you when you're running these companies, or the U.S. military, or anyone who needs that kind of discretion. How do you deal with that if these are the people who do this?

Dmitri Alperovitch: It is really almost an impossible problem to solve, Kara, because the reality is the insider threat, when someone has access, legitimate access to this information, what they do with it, how do you control that? First of all, yes, you may have some technical controls. He should not have been allowed to bring his phone into a secure classified area, what's known as a SCIF. That is prohibited. But on the other hand, you're not going to strip search them anytime they go in and out of a SCIF. By the way, some of these SCIFs on some of these bases are very small. There were often no bathrooms in there, no food. So what, you're going to strip search someone every time they go on a bathroom break? That's going to be wonderful for morale, right? So you just have very limited opportunities. Once you grant them access, you kind of have to trust them. And every once in a while, you're going to have these situations. There haven't been many, thankfully. I mean, you have less than a dozen people over the course of 10 years that have participated in these leaks out of millions and millions of Americans that have security clearances. It's not a lot, but when it has happened, it has been incredibly damaging, whether it's Snowden, Chelsea Manning, this situation. It's really terrible.

Scott Galloway: It's nice to meet you, Dimitri. So there's obviously going to be a lot of discussion and I would imagine fairly crisp action around protocols, around access to classified information. What about the responsibility or the incentives around the actual platforms? And what I'm heading to is, should this renew a debate around potentially, just as we have carve-outs around sex trafficking, a carve-out around national security in terms of protection from 230 for these platforms?

Dmitri Alperovitch: Well, I don't know how you can implement that in practice. Certainly when they get responses from law enforcement today on child pornography or what have you, they take action. Similarly, Discord did take action when contacted by the government in trying to take down these documents. Of course, it was too late because they spread way too widely after that. So it's really, once they're out on these platforms, once more than a few people have seen them and have stored them on their systems, the cat is out of the bag, and I don't know what you do about it.

Scott Galloway: Was it though? My sense, Dimitri, is that the material was actually on the platform for quite a while before anyone noticed. So let me put a thesis forward. If you had a Section 230 carve-out, with all these LLMs that can write an episode of Seinfeld in the voice of Shakespeare, couldn't they have an LLM model that recognizes this type of content, flags it for human review, and in this instance, they would have said, take it down? This thing might have gone away quietly, because my understanding is it took a while before anyone noticed it and then further distributed it. They moved it to another server.

Dmitri Alperovitch: I mean, that's a good point because every one of these documents has a header on it that says "Top Secret" and various classification markings. So it's actually not that hard to look for it. Now, of course, there's lots of classified information out there that has been sort of released publicly through these leaks that are old now that I think most platforms would not take down because they've been so widely reported in the press. So would you be going down the path of trying to take down the Manning leaks from 2010? Probably not. But to your point, you could probably have a manual review where you're looking, is this something that's recent? Is this something that is highly sensitive, talking about the situation where you may get people killed? I mean, there is high likelihood that Ukrainians will die in greater numbers because of this leak, because the Russians will be more prepared for this offensive. Or spies. I mean, yeah, I agree with you what you said up front. I mean, there are some spies, there's some assets inside of Russia right now and various adversaries or even allies that are much less safe today.

Kara Swisher: What do you think of, I'm just curious to get your thoughts around, you're right at the intersection of public policy, geopolitics, and technology. I'm curious what you think about this AI pause letter and the AI pause movement?

Dmitri Alperovitch: Look, I think it's really hard to stop the progress of technology. The reality is that others in China and elsewhere are not going to pause, even if there is a voluntary pause here in the United States. And I don't know what the objective is. What are you going to decide in these six months?

Scott Galloway: So Musk can catch up, Dimitri.

Dmitri Alperovitch: There you go, right? So a few are ahead, and it's going to give an opportunity for others to catch up. The reality is that I think you're going to hit a natural wall in the exponential improvements that we've seen to these applications in recent years because you essentially went from 15 years ago almost zero dollars being spent on this on an order of magnitude level on the systems to billions of dollars now, right? A completely exponential takeoff. Well, you're not going to get to trillions of dollars. There's not enough money in the world to continue spending the way it's been so far. So the improvements that we have seen are probably going to taper off in terms of their dramatic excellence that we're seeing in these systems, probably in a year, maybe two at the most. So you're going to see some natural evolutionary improvements going forward where they're going to be much more focused on algorithms rather than throwing enormous amount of compute, because frankly, we're running out of compute as well to throw at these issues. So you have some natural limitations that are going to cause somewhat of a pause in terms of capabilities improving so dramatically.

Kara Swisher: I'm going to get back just quickly to the documents. What can the government do now? Because, speaking of everything being everywhere, with all these platforms, all this access, a lot of it in the hands of private companies. How do you do anything as a government to keep secrets? I mean, threat assessment must be impossible at this point.

Dmitri Alperovitch: Well, actually, thinking about this a little bit, I actually somewhat like Scott's idea. I don't know if you need a Section 230 carve-out, but there is this program called PhotoDNA that's been developed actually by Microsoft and voluntarily adopted by all the platforms where every image on the platform is being checked by the big platform companies against the software for child pornography databases. And it's highly, highly effective, right? So you could have a system that's being developed.

Scott Galloway: Yeah, bedspreads, right? They can tell bedspreads, they can tell all kinds of things, backgrounds and things like that.

Dmitri Alperovitch: That's right, that's right. Correct. And you could have a system like that that maybe jointly developed with the government or maybe these platforms where every image would also be checked for classified information. And you would have some sort of review of whether this is a recent leak or not and try to prevent it from going on the platform. Honestly, I think most of the platforms, if you gave them a tool like that, particularly since the pipeline already exists for child pornography, would not object to implementing it. So, I think you could get somewhere in terms of limiting scope. But of course, if someone wants to put it out there, and most of these leaks did not go on these platforms, they went directly to reporters and other release channels.

Kara Swisher: Yeah.

Dmitri Alperovitch: Put it out there. And most of these leaks did not go on these platforms. They went directly to reporters and other release channels.

Kara Swisher: Yeah, this guy was unusual. He was impressing teenagers, right?

Dmitri Alperovitch: That's right, that's right. So you're still solving a sliver of this problem. The access issue, I think, is just going to be so hard to stop because after 9/11, we decided as a country, as an intelligence community, that we're going to overshare because we don't ever want to be in a situation where someone knew something, but did not share it with the right people. And we've had enormous gains out of oversharing. We've caught bin Laden, we've had dramatic successes in predicting this war in Ukraine and helping Ukrainians get incredible intelligence on what the Russians are doing. So going back to the old pre-9/11 system would be a tragic, tragic mistake in my view, because the country would be much less safe. But on the other hand, we can't have these leaks continue to this extent. And we always have spies, right? Every decade in our country's existence, when we've had intelligence services, someone somewhere was providing intelligence to the adversaries, and that was highly damaging. But this stuff is so much more damaging because literally not one country knows about it. Everyone knows about it. And it shuts your accesses all over the place because guess what? Some of the techniques that we may use to spy on the Russians we may use in Iran, we may use in China, we may use in North Korea. And everyone is going to be responding to that.

Kara Swisher: So one of the things, in the real speaking, that Russia is developing a method for disrupting, we've talked a lot about Starlink. You and I have the internet service that the Ukrainians are using. And we already had some issues with Elon over this, of where they could use it and geofencing, et cetera. So will that change his position in the war? He's been sort of deciding on a piecemeal basis where he wants his service to be. At the same time, very generous thing to provide it. SpaceX is an American company. If Russia disrupts its service in satellites, what are the implications from a foreign policy point of view, and then the implications for Ukraine?

Dmitri Alperovitch: Well, I just want to step back and tell your listeners that if there's been one sort of game-changing technology weapon system that has been provided to the Ukrainians since the start of the war, it's really been Starlink. It is incredible in terms of the fact that it is. No other system I can think of, not the HIMARS, these long-range artillery systems, not the Turkish drones, has had the effect that Starlink has. Literally every frontline company, every brigade in Ukraine has it. They not only use it for communications, which is a standard use case, they're hooking them up to the drones that they're flying over the Russian positions, over the frontline. They're streaming the data back to their artillery systems that are many miles behind the frontline and seeing in real time what they're heading. They can correct it in real time, adjust it, minimize the number of shells they need to use to hit a target. Just absolutely incredible and game-changing for them. And look, I think that when Elon went in, in those early days of the war, because remember, there was a cyber attack that the Russians had launched that was very successful against another satellite communications provider called Viasat, an American company that used to be providing satellite communication services to the Ukrainians. And they bricked all these modems, all these terminals that were deployed in Ukraine. So the Ukrainians were really blind in many cases when it came to their communications. And Elon went in with a generous gift, provided some Starlinks, and others stepped in, both individuals and governments started buying them for the Ukrainians. But I don't think he realized that he was becoming a party to the war. He thought, hey, I'm going to be a hero here. I'm going to provide some needed services, highlight the importance and the capabilities of Starlink. It's all going to be great. Well, guess what? Now you're a target for the Russians, both in the area of operations in Ukraine, where they're trying to use electronic warfare to shut down the signals, but probably also here in the US, probably trying to hack his networks, maybe even trying to intimidate him personally, who knows. And he, I don't think, was prepared for that. But this is absolutely unprecedented, I think, in the history of warfare. We have a single individual that is not part of the government in any way that has this much influence and control, really, over the direction of this war by deciding to limit the service, by deciding to maybe shut it down. And I can't think of any other example in history where you've had this. Certainly you have defense contractors, but Lockheed or Raytheon wouldn't dream of saying no to the U.S. government and saying we're not going to provide this capability that you desperately needed in a war, right? That would just never happen. And yet you have one individual here that's very powerful, very rich that can say that because he's not solely dependent on the government. There are some dependencies obviously for SpaceX with contracts with the U.S. government, but he's got more leverage over them in that regard in some ways. He's got an incredible lift. Like where else are they going to go to send satellites into space at the rate that he can provide? There's no one else.

Kara Swisher: So what does that mean? Because, reportedly SpaceX is limiting Starlink so it can't work with Ukrainian drones. He geofenced, as you know, an event we were both at, a Ukrainian official was like, how can we get Elon to do what we want? And I was like, why are you asking me? It was sort of unprecedented, this military, he's essentially a military contractor that can do what he wants, what he feels like on any given day. It really is incredible.

Dmitri Alperovitch: I'll tell you this, I'm hearing dramatically less complaints about Starlink from the Ukrainians recently. So I'm hopeful that they're coming closer to some sort of resolution. I know that they've been asking the U.S. government to really lean in on Elon, convince him to turn off this geofence, because they're about to launch this counteroffensive, right? And if they're successful and they get far beyond the existing front lines, they're going to run out very quickly of communication range with the Starlinks. And that's going to be just devastating, right? You have these armored vehicles driving and they can't talk to anyone. And hopefully the U.S. government, the Ukrainians are getting Elon to realize the implications of what he's doing, that he's going to get people killed here and prevent the Ukrainians from achieving any successes. So, again, I'm hearing less concerns these days. I don't know if it's solved or not.

Kara Swisher: But here we are placating someone. Why isn't there more providers? Like, why can't they have other alternatives? They just can't, right?

Dmitri Alperovitch: Well, they don't exist, really. I mean, you have Viasat and some other traditional providers that are just single-dish operators that are very, very easy for the Russians to jam and really hard to operate. The beauty of Starlink is it's so easy to use. You literally take out this little antenna. You can hook it up to a car battery because you're not going to have power out in the field. And literally, it finds a satellite all on its own. It's up and running in a few minutes. You don't need to train anyone for more than a few minutes on how to use it. That's not the case with these other systems. And it's really, really hard to jam because you have all these other satellites orbiting. There is going to be other solutions in a few years. He's not going to have this monopoly for long. Amazon is building it. Some others are trying to get into this space as well. But right now he's it. And I'll tell you, it's not just an issue for Ukraine. I've had discussions with the Taiwanese government authorities on this because they are very concerned if China invades. They are an island relying on submarine cables that China may cut at any moment. And they have one satellite that they can also jam. And then what? Like, you're completely blacked out. There's no Poland to resupply you. How are you going to communicate with the outside world? It's a huge issue. And we're talking about Starlink and Elon. And they're like, well, with all the business he's got in China, can we really trust him? And this was even before the geofence debacle that appeared last fall. And even then, we were like, yeah, you may want to reconsider that.

Kara Swisher: Have you seen any indication of Chinese influence in the relationship? I mean, he impulsively insults everybody, all of us, except China. They did more than $6 billion in revenue in China in 2020. So he's definitely exposed from a business point of view with Tesla and other things.

Dmitri Alperovitch: Well, there's such a huge dependency, not only on the revenue that he has there, but also China increasingly has this monopoly on critical materials, rare earths and others that you need in battery production. So, if they shut him off, they can have massive impact on Tesla's business. So I'm sure he's very concerned about pissing them off.

Kara Swisher: Yeah. Everyone always asks me, why do you talk about him so much? I'm like, do you know how important he is geopolitically? Most powerful man in the world. Absolutely. In many ways. So, Dimitri, if you think about almost every major conflict of the 20th century, you take the amount of heavy artillery, tanks, planes, troops, and the side with the bigger number wins eventually. And what we're hoping, or I think most of us are hoping, is that that's not the case here. That this might be the first conflict where technological aptitude wins over brute force. Is that hopeful? Is that naive? What predictions do you have for this conflict over the next 12 months?

Dmitri Alperovitch: Look, the numbers actually right now are fairly even. One thing that many people don't realize is that the casualties on both sides have been so horrendous that really all of the people with combat experience are gone on the Ukrainian side and on the Russian side. They're either dead or wounded in the hospitals. So now it's become a war of the mobilized, where you have these people that have had two, three weeks of training. By the way, the Ukrainians, same thing. Yes, they're sending people to the UK and other places in Europe to train. Three or four weeks is not a lot if you had no combat experience to learn how to fight a war. So they're coming back to the front lines. And now you're facing really similar numbers on both sides, a couple hundred thousand, maybe less on the Russian side and the Ukrainian side. So they're fairly evenly matched. Equipment-wise, Ukrainians probably have an advantage. They're getting more modern equipment from the U.S. and allies, but it's not in great numbers. You're talking about a little over 100 tanks total. Just to give you a sense, the Russians have lost over 2,000, close to 3,000 tanks since this war began, right? So 100 tanks, even if they're more advanced than the Russian tanks, are not a significant number here. So the thing that the Ukrainians are going to hope for is that they can make enough progress in the south to get to a critical city called Melitopol in southern Ukraine. And if they can get there, they can keep under fire control this entire so-called land bridge to Crimea, this corridor highway that goes from Russia, hugging the coast, all the way to Crimea. And it's a critical resupply point for the Russians for Crimea because the bridge that they built after 2014 when they seized Crimea, the Kerch Bridge, has been attacked by the Ukrainians. And it's still largely inoperable. The rail link that is essential for resupplying Crimea is still damaged. They're trying to repair it. They're saying that they're going to get it back up and running this summer. And even they're limiting the number of trucks that are going through the bridge because they're concerned about car bombs being placed inside the trucks. So if the Ukrainians can stop the land bridge from being used to resupply Crimea, you essentially isolate Crimea and you have enormous leverage. Whether you take it or not or try to take it, which I think would be very difficult, Putin cannot afford for his troops, millions of people that are in Crimea to be isolated like this. So you may be able to get some concessions out of him, maybe a ceasefire, if not a peace treaty, if they get that far. If they don't, I think they're in a really tough position because even though the Russians are also exhausted, they've lost a lot of equipment, a lot of manpower, they don't really have capabilities to launch major offensives either. But you have essentially a war stalemating, not ending, but stalemating, where there's still fighting going on, but the front lines really aren't changing. And that is a terrible situation for the Ukrainians because their economy is ruined. They continue losing people. No one is going to invest in a country that is still essentially a war zone. And they really, really need to make progress in this offensive. And I fear that it might be their last chance to really change the game in this war and try to bring it to a conclusion that is going to be somewhat satisfactory for them.

Kara Swisher: Yeah, amazing. I have one last question. It's totally off the things you just mentioned. China, but TikTok ban. I'm asking everyone, necessary or useless?

Dmitri Alperovitch: No, I think it's really important. And I actually think that the debate around TikTok has been very misguided because so much of it has been focused on data. Look, this is not a privacy issue. TikTok collects very limited data about you. By the way, most of it is public. And if China wants to get access to data on you, they've got numerous ways from their cyber espionage operations or just going out and buying from data brokers that will sell you just about anything you want. So to me, it's not a privacy issue or spying on Americans issue. It is a media control issue. To me, TikTok is a media company. Yes, the content is user produced, the videos, but it's curated, curated both by the algorithms and humans. And they're deciding not just what to show to you, but what not to show in terms of the moderation. I'll give you one example. A friend of mine was telling me he was seeing a video that someone posted of a BBC clip talking about the war in Ukraine. And then when he went to check it a few hours later, it disappeared. Well, did it disappear because the user took it down, because TikTok got a copyright notice from BBC that didn't want it to be reposted? Or was it taken down because TikTok does not like to show sort of the fair view of this war? You don't know. And that's a huge problem. And look, we have media ownership rules in this country. This is not a First Amendment issue. You may recall that when Rupert Murdoch in the 80s was trying to buy the Fox network, he had to become an American citizen because even as an Australian citizen, an ally country, he was not allowed to own a major media company. We have media ownership rules in this country, even for Americans, where FCC will tell you if you want to buy a number of radio stations or TV stations in this country where you will have more than 40% of Americans viewing it, you're not going to be allowed to do that, even as an American. Well, here you have TikTok that by their own admission says that half of the country is using the platform. And it is owned by a foreign company that has enormous influence by law from the Chinese Communist Party, which is an adversary. You cannot allow that to happen. Imagine if a CCP company, a Chinese company, owned Fox News or owned CNN or owned the New York Times. We would never let that happen. So that to me is a real issue with TikTok.

Kara Swisher: So what happens? That they could use this as a ban saying foreign ownership, that's the way they should go versus First Amendment or it's very hard to do this ban.

Dmitri Alperovitch: Well, Mark Warner, who both of us know, Kara, has this RESTRICT bill in the Senate that is a bipartisan bill supported by a lot of Republicans and Democrats. And it's not targeting TikTok. It is saying that the Department of Commerce, the Secretary of Commerce can decide when you look at the four major adversary countries, Russia, China, Iran, North Korea, I think they threw Venezuela and Cuba in it as well. But if a company affiliated with those countries presents a major risk based on certain criteria that they define, they can prevent, they can't necessarily ban the app. They can't prevent Americans from going to the TikTok website and looking at videos. But what they can do is they can prevent American companies, American businesses from doing business transactions with TikTok. So Apple, Google will have to take it off their app store. Any advertisers that are paying TikTok today will no longer be able to do that. So you essentially dramatically impact their business, not just in the US, I think, but overall in Europe, because I think American advertising really drives a big chunk of their revenue from what I understand. So you're not going to have censorship, but you're going to massively impact its availability in the US and you probably will not have 150 million Americans using it. And I think that's the right process where you're not singling them out because you can apply this to Huawei, which is another big concern for us. You can apply it to Kaspersky, a Russian cybersecurity company. So you need a tool like this, which really doesn't exist today, of how do we regulate a foreign company that is tightly tied to a major adversary from having so much impact on our daily lives.

Kara Swisher: All right. This is fascinating. I could talk to you forever. It's really interesting. Anyway, Dimitri, you're fantastic. We're going to have you back again. Again, you can find more from Dimitri on his Geopolitics Decanted podcast. And I really appreciate it. You're a really good thinker. That was great, Dimitri. Thank you very much.

Dmitri Alperovitch: Thanks so much, guys.

Kara Swisher: All right, Scott. He's smart, isn't he? I nominate him to be the head of a new regulatory body regulating AI. He's also an incredibly successful technologist. He's very pragmatic, very empathetic. I really hope that guy gets a role in government. That's who you want to see in government.

Scott Galloway: Yeah, he's really interesting and also can explain it. That's what I like about him. I like Dimitri quite a lot.

Kara Swisher: Anyway, we'll have one more quick break and we'll be back for predictions.

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Okay, Scott, let's hear some predictions.

Scott Galloway: I think, Kara, the next kind of within 60 or 90 days, we're going to see some fairly prominent Democratic elected officials announce that they are running for president. And it's going to shock everybody. The party line so far has been no, President Biden is running again. And we respect that. And he's been the right guy. But I think a couple of things have happened.

The first is just the context: every one of these individuals, to put up with the shit they have to put up with, to put their families through what they put them through, has since the age of four looked in the mirror and said, "Hello, Madam President" or "Mr. President." They all believe that the sole vision of the universe is for them to be in the Oval Office. For many of them, this environment is pretty ripe in terms of a weak Republican field.

The other thing that's happened here is that RFK Jr. has announced his candidacy, and right out of the gates, he got 12 or 14% in the polls. And then the other candidate, Marianne Williamson, is already polling real numbers. Also, Representative Khanna came out and said that age is an issue, and that statement was warmly received, or there was a lot of head nodding.

So I think a combination of sheer ambition, the fact that going against the party or running against President Biden won't be seen as disloyal or ageist as it might have been seen 60 days ago... I think you're gonna see someone burst the dam here.

Kara Swisher: Give me who? I'm curious what you think.

Scott Galloway: Newsom.

Kara Swisher: Well, he's clearly running. He just hasn't announced. You don't spend money, you don't spend donors' monies to go into other states and talk about freedom unless you're running for president. There just isn't a whole lot of benefit to governing California for that. He likes to travel.

Scott Galloway: But I think it's becoming too ripe. When they see RFK Jr., who is a weird anti-vaxxer saying it's linked to autism, get 12% in the polls, I think you're going to see somebody say, "Look, I loved President Biden."

Kara Swisher: The person who's hamstrung is Kamala Harris. She can't do anything.

Scott Galloway: Well, and Mayor Pete. Vice President Harris, in my opinion, she's demonstrated that she does not have the popularity to be president. I think the person that's hamstrung in the cabinet is Mayor Pete, who would probably run a pretty good campaign. Anyways, I think you're going to see one person, and then three or four are going to pile in and say it should be an open primary.

Kara Swisher: Speaking of Newsom, I will make my prediction. Feinstein — they're going to get her to step down because the GOP now says it will block a move to temporarily replace her, which of course they would do. Democratic aides say her absence stops the committee. What a shocker that they don't want the Democrats to be able to appoint their judge.

Scott Galloway: Yeah, I know. Yeah, of course not. Honestly, I was like, good job, Mitch. You did your job.

Kara Swisher: So now they can't issue subpoenas, for example, in the possible investigation into Clarence Thomas. So she's got to go, and they got to get her out. And guess who's appointing her replacement? Gavin Newsom. So maybe he'll appoint himself. Who knows? Who do you think?

Scott Galloway: So beyond Governor Newsom, who would you say is the first big figure to do it?

Kara Swisher: Newsom. Newsom's the only one with a set that'll do it. The rest will follow quickly in his drift. That's Newsom. I can't think of another person.

Scott Galloway: Newsom.

Kara Swisher: You know, the others will. Senator Klobuchar? No. She's too much of a team player. No, he'll do it. He'll do it. And then they'll follow him immediately.

Just for some quick news, because we've got to go soon: SpaceX's Starship rocket exploded above the Gulf of Mexico on Thursday, minutes after lifting off from a launch pad in South Texas. The spacecraft failed to reach orbit, but it was not a fatal failure. This is a very complex rocket. But again, it failed to lift off in the way they needed it to, just for news sake.

Anyway, we'll talk about that maybe next week. But until then, we want to hear from you. Send us your questions about business, tech, or whatever's on your mind. Go to nymag.com slash pivot to submit a question for the show, or call 855-51-PIVOT.

Okay, Scott, that's the show. We'll be back next week for more. Today's show was produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Andretat 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.

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