All Eyes Swivel To Washington As Trump Tweets, Ryan To Exit

in November. We are expecting to hear comments from him. He's going to make a statement and we will be clearing that live as well as the question and answer session after that. Here to give us a sense of what the context is around Paul Ryan's uh decision not to seek reelection is Marty Shanker, chief content officer for Bloomberg. Marty put this in a perspective to us, why now, Well,

it's interesting timing. About a month ago there was a Politico magazine piece which suggested that Ryan was not going to stand for re election, which the people around him vigorously denied. And so now a month later it's true. Um, I think Paul Ryan has basically decided that this is a I mean, you never wanted the speaker job to begin with. You sort of took it out of uh dedication to the Republican Party. And it's a very really tough job. He's by a lot of measures, he's done

a really good job, especially in fundraising. A lot of people were concerned about his ability to raise funds for Republicans in the context of his predecessor Bayner, but he's actually outraised him by quite a bit. Okay, I just want to push back a little bit because a lot of people are suggesting that Paul Ryan is not going to seek reelection because his chances of winning are increasingly slim, and that this sort of is a harbinger moment for the Republican Party and sort of seeks uh sort of

sets the stage for a Democratic win in the midterms. Well, one of the UH inside Washington prognosticators right after Ryan's announcement this morning, moved the district Paul Ryan's district in Wisconsin too likely Republican from solid Republican, So at least in that view, UH, he he may have had a more difficult time, but he will still expected to be re elected, and now his departure makes it less likely

that's going to remain a Republican seat. So you know, yeah, he may have he may have had a more difficult time, but he won by I think a seventy percent margin last time around, and I think it was pretty safe seat if he wanted to take to keep it. Hey, Marty, I want to pick up on something having to do with the Republican Party. And you mentioned, you know, his success at fundraising for the Republican Party. What kind of Republican party does he leave behind for his successor to manage, well,

like it or not, it's a Trump Republican Party. And as you know, I mean, many people both in the moderate wing of the Republican Party and Democrats certainly have been very critical the leadership of the Republicans for not being more vocal in their opposition to some of the policies that Donald Trump is pursuing. Um. That said, they're inexcellably tied to this president, and UM it becomes even more interesting in the context of the Mueller investigation. That's

exactly where I wanted to go with this. I mean, one speculation is that how speaker Ryan is stepping aside, or at least announcing his plans to do so, in order to take a harder stance on President Trump. Do you think that there's any merit to that? No? Okay, great, and asked an answer, Um, no, but I really don't think I you know, Uh, Paul Ryan has said that the Special Prosecutor Mueller should be kept in the job and complete his his inquiry. Um. He hasn't had a

full throated criticism of Donald Trump's comments on it. Uh. Probably, you know, Democrats would like him to be more vocal. But I do not think he's making this decision so that he's now free to talk about it. I don't think you'll be seeing any real profiles and courage out of this guy. Um. That said, this has coming at an interesting point. It's an inflection point in the Mueller investigation and certainly in President Trump's anger toward Mueller as

well as uh Rod Rosenstein. And I'm just wondering, you know, does this sort of have implications for the GOP's willingness to push forward or criticize, or say censure President Trump for any consequences that might emerge from firing Rosenstein. Well as a very practical matter of the fact that he's not running for re election means that if Donald Trump were to fire Rosenstein, Mueller, Sessions, etcetera. It would if

it did, and it would create a constitutional crisis. Paul Ryan could just basically throw away any political implications to a stance on that move. Uh So it would as a practical matter, free him from many political considerations. Then it would just become essentially a moral, conscious decision on his part of what standy takes um in in the

constitutional crisis that wouldn't ensue from that. We're speaking with Marty Schenker, he is our chief content officer for Bloomberg as we await comments and a statement from Paul Ryan, current Speaker of the House, representative of the Wisconsin First and he will be announcing that he will not seek a re election for that position. We're also going to be bringing you live cover to Mark Zuckerberg, chief executive of Facebook, second day of his two day testimony before Congress.

Um and Marty, I'm sorry to keep harping on the Republican Party because that you know, they're the ones who are going to be left after Paul Ryan exits in January, UM, the rating for the president has actually gone up, right. I mean we're talking about his favorable rating has climbed

eight percentage points since before the election. Uh, in terms of Republicans, and I'm wondering what positions we can expect the Republicans to take as a result that the Speaker Ryan is no longer going to be there to put on the brakes or even add any kind of institutional or traditional Republican UH perspective. Well, you still have Mitch McConnell as a Senate leader, and he in some ways

speaks for the Republican Party. And in Congress in general, you have McCarthy and Scalise who are still the you know, the whip and the number two person in the House who has been maybe going to take Speaker Ryan's position if the working theory is that McCarthy will try to do that. Actually he sought that position before Ryan, uh and could not garner enough votes, and then that's when they turned to Paul Ryan as a unifying force for the Republican Party. So it's probably he's the front runner,

but he's by no means a short thing. And there are very fervent Trump supporters in the House who may think that it's time for a truly pro Trump Republican to take the leadership in the House. Don't forget the mid terms are in November, well before Paul Ryan leeds office. So um, it'll be a completely different context when the decision it will have to be made, whether in fact it will be majority leader or minority leader of the House when that time comes. All right, So we're right

now completely focused on Paul Ry. In about a half an hour ago, we were completely focused on the relationship between the US and Russia over Syria and some kind of impending missile attack that President Trump is promising via Twitter on Syria in response to the chemical attacks. Where are we with that? Has everybody just simply forgotten about that? Has this sort of turmoil complicate matters if at all? Well?

I don't. I don't know that the political elements of Paul Ryan's decision not to run for re election has any impact at all on Syria, But the markets certainly haven't forgotten about it. Um, it's interesting that the markets haven't actually gone cataclysmically panicked over this. There's obviously a negative reaction, but it's not hug Why is that surprising

to you. Well, I mean, you know, when you have a president of the United States via Twitter essentially saying we're going to take military action in an area of the world where the Russians and the Iranians personnel who have warned a ends doing that, it's could be very unsettled. You'd wonder why the SMP down only four tens of a percent, why it's down only ten points, and why

oil is only up less than less. My theory is that the markets are looking at this in some ways like the tariffs issue, that yes, there's a lot of bluster and a lot of strong talk, but ultimately that he might walk this back. My own personal theory is that there are there could very likely be a conversation between Donald Trump and Vlader air Putin. They spoke very recently in the last couple of weeks that might actually bring bring us back from the brink of military action.

I mean, that would be consistent with the way Donald Trump likes to operate. Threaten, gets concessions, and back off. You know, there's sort of an interesting twist here with the United Kingdom coming out and saying that they're not sure that the Syrian government did wage a chemical attack at all, and that they're not going to cooperate with

the u US until they have better evidence. How does that factor into that, Well, that's pretty interesting coming from the UK, who are not even sure that the nerve agent that was used to attack the UK espionage victim uh was really from Russian origin. So, you know, I just think that's political rhetoric. But it might just be

political rhetoric. But that means that the US does not have the UK on its side, and any kind of altercation in Syria, even as France says that they're going to go alongside the US, that from a strategic standpoint is significant. Yes, it makes it much less politically acceptable. I guess in a global context for Donald Trump to take union ladder reaction in Syria, Um, I think the

real danger is the Russian response. Right, If the US was to take military action and in some way involves Russian troops that are on the ground, it could escalate in a way that no one really wants but no one can control. So it's a very dangerous situation in Syria. And if Donald Trump decides to go forward without allies,

it becomes even more dangerous. Well, in the danger also becomes as you mentioned, that Iran has proxies if indeed it does have actual military forces in Syria, and that Moscow and Vladimir putin visiting with the head of Iran in Turkey just last week, I believe in Turkey and ally of the United States. Yes, it's very complicated, um as we all know. And there's also a report from ap earlier this morning that a high level delegation of

Russian officials have arrived in Syria. Now is that a kind of shield situation or it's suggestive of the Russians are really doubling down on their commitment to a side, you know. And and just to sort of add a complication to this whole backdrop are the sanctions that the US has placed on Russia, Russia calling it uh ageing economic war on them. And you are seeing the assets in Russia plunge, the ruble continuing to lose value versus

the dollar. Uh. You saw you know, bond yield spike up, and they canceled a bond auction because they didn't want to try to raise money in this environment. Not just wondering, I mean how much does that sort of up the anti here and sort of raise the possibility of military conflict. Well, you know, I do think that when in the context of the world stage, the way the US can truly pressure Russia is not through foreign diplomacy, not through the UN,

but on economic sanctions. Um Vladimir Putin enjoys great popularity within the among the Russian people, but a weakening ruble, if it's over an extended period of time, will cause real economic pain, and that is the way to get

Russians change their behavior. Most foreign policy experts say sanctions are the really only effective way of changing their baby and taking a look at, for example, of the my Sex ten, which is the stock exchange in Russia actually higher today, up about nine tenths of a percent adjusted, and indeed, right, yeah, trying to get your money out, that's a different, different story. Let's bring in Billy House, a congressional reporter for Bloomberg News. Billy, I want to

just touch on that first. Did that strike you as well as sort of the most noteworthy thing he said? That was very noteworthy, especially when you have some of his own House Republican colleagues, led by Devin Junior as the House Intelligence Chairman, working right now to try to hold both Uh rosen Stain and Sessions in contempt. So, uh, Paul Ryan can say that, and he said he's had assurances that Mueller would not be attacked or fired by the White House. Let's let's see what happens. Though he's

a lame duck. Now, what does this? What? What does this due to the race for his position? And given that we've got the mid terms between now and when the next Congress takes take session, that's a good question. I mean, right now it's been all whispers between the number two House Republican and Kevin McCarthy and the number three Steve Scalise. But with Paul Ryan leaving this early

are announcing he will be leaving this early on. I think only Tip O'Neill, ever, UH was the last one to not be forced out or to go out in some scandal um. It leaves a lot of other potential candidates time to start seeing what kind of chips they could collect or call in, and so perhaps names like House Freedom coccas Chairman Mark Meadows, a friend of Trump's or even Jim Jordan's or others who may be more moderate might have time to build some sort of coalitions.

I think a lot of people on Wall Street are trying to figure out, Okay, well, how does this affect policy? How will this directly feed into implications for any cutbacks in social programs to reduce the deficit, or any ability to pass infrastructure planning? Can do you have any insight into that? I think, first of all, that was gonna

all be very difficult anyway in an election year. Uh, the Republicans have lost special elections dating back to two thousand eleven on just stating they wanted to vouchize Medicare and that sort of thing. But now that we have a lame duck speaker and he may think there is a lot of good will that would help him get that those policies through, I'm more inclined to believe that he's now a lame lame duck and none of that

will happen. So who emerges the leader during this period between the now and the election of a new one. I think we have uh multiheaded monster for the next few months where nobody's actually leading. All right, Billy House, thank you so much for joining us, and good luck with all the future coverage as we continue to monitor who is going to take over house speaker Paul Ryan's position, as well as the implications for policy and the ongoing

Moler investigation. Thank you here just give us a sense of what we should be focused on from what we've heard so far. As Paul Sweeney, US director of Research and senior Media and Internet analyst for Bloomberg Intelligence, Paul, how, how is Mark Zuckerberg fired on day two? I think he's generally doing a pretty good job here. You know, over at past a couple of days, the stock is actually traded fairly well, So I think, uh, he hasn't

done any damage here. And um, you know, I think the big challenge for Mark here over these two days is too you know. Number one, you know clearly acknowledge that Facebook now has a handle on the full scope of what the issues are here as it relates to data. And I think you know, that realization didn't really occur really into the last couple of months, I think in terms of the scope of their responsibility here. Um, So I think he needs to get that across. I think

he is getting that issue across. And then the second issue, maybe more importantly is that Facebook is equipped um to deal with these issues. Um, And you know. Most importantly that they do not need to uh incur regulatory oversight by Congress or any other body. I think that's one of the big issues that Facebook and you know, tech and social media and the internet, um, you know, trying to forcedall as long as possible. Paul Swiney, this shares

a Facebook. They're down about six tenths of a percent. What a reference in particular report that was put together by Deloitte, and they worked with Facebook in order to do this. This goes back to two thousand and fourteen. But for reference, uh, they said that Facebook has enabled more than two hundred billion dollars of economic activity and four and a half million jobs around the world. Can

you like in Facebook to the Internet itself? And that perhaps that is why this is such a interesting and focused piece of information, because so many businesses live on

Facebook as if Facebook were the Internet. Yeah, it's um, you know again, Facebook has over two billion users on a monthly basis on a global scale there obviously everywhere, with the notable exception of China, uh, you know, and so they are truly you know, touching you know, so many households, so many lives in so many different ways that the social media hum of which Facebook is a larger social media platform, has really become one of the

main um utilities of the Internet at large. It used to be simply, uh, you know, search was probably the utility that people utilize the most on the Internet. Um, but it's really I think social has become you know, kind of the key aspect. And so I guess I was getting out here with the economic effect is it's not just sharing you know, family photos and details of

what you did on your vacation. It is perhaps two people who do not know each other enjoying, let's say, playing bridge online and through an app that they join through Facebook. They then are able to play bridge with each other. That becomes an economic relationship for not only Facebook, but also for the companies that are building those specific apps. And Mark Zuckerberg reference Zinga for example, the online game creator.

Is that an accurate description? It is? It is an accurate description, and and so you know, and it's something

that you know, I'm not sure. Um. A lot of the regulators, a lot of the politicians, the folks asking the congressman, asking the questions over the past few days, a couple of days, you know, fully appreciate that, and I think that is one of the reasons that whenever there's discussion about, uh, you know, a regulation of the Internet coming from Congress, uh, that is what people that is one of the main pushbacks, which is the Internet and social media have created so much opportunity for people

and so many jobs and so much uh economic growth that you know, this is the last thing this industry needs is regulatory oversight. But now what's happened in the last couple of months is just the privacy issue has really reared. It's it's u ugly head here. And we've seen privacy regulations out of the EU over the years, and they're getting stricter and stricter all the time, affecting companies like Facebook, and Facebook wants to forestall anything like

that happening here in the States. All right, thank you very much of Paul as Sweeney. Paul Sweeney our director of North American research for Bloomberg Intelligence. So we've been listening to Mark Zuckerberg testified before the House Energy and

Commerce Committee. He was answering questions from A. Doris Matsui, the congresswoman of Democratic congresswoman from California representing Sacramento, and one of the issues had to do obviously with the privacy controls that are afforded to people who actually use a Facebook and the ability of commercial organizations, whether they be businesses or indeed political organizations, to actually access that information and then target information that would be directed to

to specific interests that they might have. I want to bring in our own Shia ovid Are Bloomberg Technology Gadfly columnists to give us a little bit more detail about the congressional hearings, and as Shira, I just want to note that I believe that there is a quote from uh from one of the gad fly commists meaning you yes, that says Facebook will keep failing users trust as long as its business is based on unrestrained hoover ng of as much user data as possible. UM does anything that

Mark Zuckerberg said that you heard contradict that. I don't think so, and in part because he rather gracefully avoided directly tackling that question. So what Mark now been saying for two days is essentially, UM, people own all the data that they put out there on Facebook, and they have complete control over where and how it's shared, which

is not really true. So, look, the business model of Facebook is based on um collecting information from what people voluntarily put on their Facebook pages and things that people are not really aware that Facebook is also getting from you, including um, almost every web page you visit, the apps on your phone, the location as you carry your phone with you across the world, UM, information on what you purchase in stores that advertisers are taking with them to

target ads. And this it also includes. And this was interesting because Doris Matt suey Uh, the congressman from California, mentioned what happens afterwards. In other words, you may own your data, but once your data is used by a commercial interest, you really don't have any It's it's a canard,

this issue about ad ownership. Nothing that has happened to Facebook in the last two days or three weeks of controversy has changed its ability and willingness to collect large amounts of activity and information on Americans and you and people around the world and use that to target auts. And that's the central problem with Facebook is that it's business model is dependent on its ability to have relatively unrestrained data collection. Okay, so on a scale from one

to ten, ten being best and one being worst. How would you grade yesterday's performance of Mark Zuckerberg and I'm sorry, ten is the best? Yeah, ten's the best. I would say it was about an eight. What about today? It's it's less good today. It seems like a the questions are more partisan and pointed today and they're a little less polite. Um. And Zuckerberg looks visibly tired, which is

probably reasonable given the day he had six hours. Yeah, he took the break, now, you know that's sorry, Right, we waved off the break yesterday. Today he took it. Um. You know. One thing that I'm struck by is as this is going on, and some might call political theater, others might call it, you know, an informational session, whatever

you want to however you want to characterize it. With the tip of both headlines, Cross saying that the European Union privacy head said that we are at a start of a new data privacy era and that European Union watchdogs are creating a social media working group and data rights in some ways, Is this the side show to what's really happening, which is probably really led by Europe

right now. Look, I think it's been true for a long time and continues to be true that European regulators and European consumers two are much more skeptical about data collection of Internet companies, including Facebook and Google and others, and the European regulators have taken the lead on all this.

They are very informed. Um, they are very harsh critics, and yeah, I do think they are leading the world and leading their colleagues in Congress, who today UM asked several times about this new European data protection rule and whether and how Facebook would implement that in the United States, which I think was interesting that they're looking to Europe

as kind of a model. Can we just maybe just go, you know, go one step deeper on that, because having said that, is that because the governments in Europe already have all of the data they want and more on their citizens, the ability to uh, basically enforce the carrying

of identity cards or registration and local police stations. I mean, you know, you go and you try to live in any kind of municipality in the European Union, or indeed in any European country outside the European Union, and you're gonna end up in some governmental office pretty quick, pretty quickly. Rather um, that identifies who you are, where you are, what you do, why you're there, on what job you have.

So it's not as if they are doing this out of some ultra degreason for personal privacy, but it may be because the government doesn't want any competition when it comes to Facebook. Yeah, that's a fair question. I don't think I know enough about the data collection policies of

European governments to answer that question confidently. I do think though, there is genuine concern among European regulators about commercial entities and um what information they get from their citizens, and some of it may be trying to protect European companies from competition from American companies Internet companies. You know, there is no really big and powerful global internet companies based

in Europe with you. Yeah, it's a little bit of a different animal, but yeah, there is no sort of Facebook or Google of Europe, or at least not the size of Facebook and Google. So there may be some some competitive issues at play here, But mostly I think it is genuine concern on the part of European regulators and governments to protect their citizens. So aside from what we've talked about so far, what are the highlights to

you until now. Um, Look, I I think the highlights to me are that there is now general agreement, although the devils and the details, from both Facebook and lawmakers both Republican and Democratic, that there needs to be some more regulation of Facebook or other internet and social media companies. And look, I don't I'm skeptical that anything will happen, but the fact that again all of those sides Democrats, Republicans, and Facebook itself have acknowledged the vague need for regulation

that feels like a watershed moment. Okay, So then who is going to be responsible for that, because it's not going to be Congress, right, Yeah, I don't know. I mean, look, um, this is this is a mid term election year. It seems hard to imagine that anything will get substantive, will get past this year. And then, honestly, Facebook maybe just hoping to play out the clock that by next year

Congress will have moved on to something else. Shira the Uh the consent decree that the that the Federal Trade Commission has with Facebook was referenced several times, and several times Mark Zuckerberg didn't seem to have any detailed knowledge of that consent decree. Uh does that surprise you. Yeah, it was a little bit strange. I suspect he was probably trying to avoid getting himself trapped in some line

of questioning that he couldn't control. Um, but yes, it did seem odd that, For example, he he was asked whether Facebook had to pay a financial fine from the FTC in two thousand eleven, which they did not. The FTC does not really have the ability to do that in the case that happened to Facebook, and it was weird that he couldn't answer that. So what are the

implications here for the other big social media companies? I mean, I'm a little bit horns So on the one hand, um, the other Internet companies like Google and Twitter have kind of gotten a past the last few weeks as the world's attention has focused on Facebook's crisis, But they have almost exactly the same basic issue issues as Facebook, which is their business models are dependent on harvesting data and

using that data about people to target ads. They have also faced numerous questions about whether they strike the right balance between um, uh, you know, creating a free and open exchange of ideas online and making sure that people aren't being harassed incited into violence or otherwise abused on their platforms. And again, Facebook, Google and Twitter and others all have those same issues, and they, at least for now,

haven't had to tackle those. Sure O, thank you very much for being with us our Bloomberg Gadfly columnists for all things technology, great columns on Facebook and great coverage of Facebook. And of course we're always following you on Twitter at shira Ovi Tape. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox.

I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio