U.S. Markets closed

Sen. Mark Warner speaks with Yahoo Finance [TRANSCRIPT]

Yahoo Finance
Associate Contributor

Below is Yahoo Finance’s interview with Sen. Mark Warner (D) Virginia from the “All Markets Summit: America’s Financial Future.

ANDY SERWER: Good afternoon, everyone.

SENATOR MARK WARNER: Hold on, it– it’s still–

ANDY SERWER: It’s still morning?

SENATOR MARK WARNER: It’s still morning–

ANDY SERWER: Good gravy, it’s been a nice, long day already. (LAUGH) I’m Andy Serwer. That’s Senator Mark Warner, by the way, for those of you who don’t know. Senator, welcome. Great to see you.


ANDY SERWER: So I wanna start off by– talkin’ about the news– this morning in Virginia, in the great state of Virginia, and that is that, holy smokes, Amazon has announced the Crystal City is going to be– one of the HQ2s. And I’ve been following you here on Twitter, Senator, and thank you for following me on Twitter as well– that– you’ve announ– you’ve put out a couple tweets on it.

And one is– says, “We welcome Amazon’s new investment in Virginia. And we must commit to implementing this announcement in a way that will benefit the whole region and all the Commonwealth.” I mean, so does that speak to the fact that there are some tax breaks here and you wanna make sure that there’s a good return for the state?

SENATOR MARK WARNER: Absolutely. And– you know, this process– is probably the most unique kind of economic development, wherein the whole country is chasing it. I remember in my days as governor, you putting these packages together. I think– we took– speak to this in two– areas.

One, on the region’s basis– there’s been a business group called the Greater Washington Partnership, that kind of takes CEOs from Baltimore to Richmond, to see if the private sector can be really helpful. And they’ve been very helpful on this pursuit with Amazon.

Secondly– it really is a win for the whole region. While the physical location is gonna be in Virginia– the– the district is gonna benefit. There’s going to be benefits to Maryland. One of the things we’re trying to work on is a regional housing authority.

Because that issue– obviously people love to have Amazon come. They’re concerned about the affordability on housing. And the– the fact that the three jurisdictions may work together on that is important. My– my focus as well has been to make sure that at least some of the subcontracting jobs I would love to see if we can put in more remote communities in Virginia.

When I was governor we brought about 400 good, solid, hi-tech jobs to a company named CGI to far southwest Virginia, a little town called Lebanon in Russell County. My feeling with this Amazon announcement, if we do it right, there may be some of the subs who support Amazon. that we could populate some of these jobs in more rural communities.

ANDY SERWER: And you didn’t have to give away the store to get this HQ2?

SENATOR MARK WARNER: Well, I– I’ve not actually gone through all the particulars of– of the– announcement. I’m sure Amazon extracted a– good deal for themselves. But the spin-off this will take place– it’s not just these immediate jobs, but the enormous amount of spin-offs, what I think will do to spur further economic act– or entrepreneurial activity. And so, not to kinda jump the gun, but I think Virginia Tech will be making a major announcement as well, in terms of an innovation– campus that could actually leverage off the Amazon announcement.

ANDY SERWER: All right. A lot goin’ on in Virginia. Let me shift gears and ask you about the Senate Intelligence Committee. You’re the ranking Democratic member. When are you guys going to release your report, Senator? And why didn’t you do it before the election?

SENATOR MARK WARNER: Well, we actually respect the notion that people shouldn’t interfere in elections 60 days beforehand, which is I think also what Mueller– I– I believe his– his process. Remember our report will have five portions. And four of those portions we’re already done with. Let me very quickly go through– first was unanimously we basically– validated the intelligence community’s findings that Russia attacked us through hacking in cyber– warfare.

They attacked 21 of our state’s electoral systems. They manipulated social media. And they did it an effort to help Trump and hurt Clinton. We came out with that announcement and report early in the year. The second is that we said our election systems are not fully secure enough.

So we came out with recommendations there. We actually have, led by James Lankford, you know, very conservative Senator from Oklahoma, broad-based election security– legislation that would make sure that every state has some level of a paper trail, to be able to make sure that if they– you were hacked into– ’cause the bad guys don’t have to actually change results.

They just have to see distrust in our system. And it’s been very disappointing that this White House, you know, did not support this legislation, which I think will get 90 votes. But we had s– election security. Third was the whole question about what the Obama administration did right.

And frankly there were mistakes made. And we’re still working through language. But I think we’ve got basic agreement. The fourth– and this is an area that I think we will be working on for some time on our committee, almost by default, but that’s what are the guardrails around social media.

And I’ve got a lotta ideas there that I think oughta be part of the debate. And then obviously the big enchilada, which is was there collusion. And what’s holding us back– I want this to be finished. But there are a number of the key witnesses– that were people that were also involved with Bob Mueller.

And we didn’t wanna– we didn’t wanna deal with them c– to get crosswise with Mueller. Because, you know, they didn’t wanna talk to us until they’d finished the formal legal proceedings. So we’ve got a number of those still to get– to get– interviewed.

My hope is– you know, towards the end of the year– we can, you know, continue to try to make progress. No guaranteed date. Because almost everyth– every time we’ve gone down one of these paths, you go down thinking it’s meeting X. And then it– it feels like I’m– I– on one of those crime TV shows, where you’ve got the– you know, the lines going in every direction. Every incident led to other– other stories to be d– to be– disclosure shortly, hopefully.

ANDY SERWER: Well, there is a lot to unpack there. I wanna loop back. But let me just ask about witnesses you talked about. We had Steve Bannon her earlier. And there was a report that you guys were looking to interview Steve Bannon coming up. Have you set a date to interview Steve Bannon yet?

SENATOR MARK WARNER: You know, we’ve not got into– we’ve tried to be– you know, unlike some of our other counterparts in the Senate and the House, we wanna keep being bipartisan. And we wanna do it in a fairly thorough way. I believe– obviously Mr. Bannon– will be somebody we’ll be talking to.

But there are a number of other folks, Michael Cohen, Paul Manafort, you know, even a Rick Gates, who spoke early, but this is before we cooperated with the government. We still got– major figures that we have to see. And obviously Mr. Bannon– is one of those individuals, particularly with the intersection with Roger Stone and the possibility of– of how Russia– but basically weaponized the hacked information, and what were the distribution methodologies that they used?

ANDY SERWER: All right. I want to– get to the social media giants. But before I do that, what– why did we miss the collusion? I mean, back in 2015 there was a great story in the New York Times— magazine by Adrian Chen about the Russians coming in and doing all sorts of– terrible things on social media. What– where was the FBI, the NSA, the CIA, our security apparatus? And how come we missed this?

SENATOR MARK WARNER: Very fair question. And– and let me preface it with two quick answers. One, basically what Russia did to us in 2016 they’d already done to the Baltic States. They’d already used these tactics as kind of the warm-up before they came to us.

And if we would’ve simply looked at the Russian equivalent of their chairman of joint chiefs of staff, a gentleman named General Gerasimov, he wrote as– as l– long ago– it was 2011, where he said, “Russia cannot compete with the west in tanks and planes and guns. But in two arenas, cyber and misinformation, they are our peers, if not better.”

And just to again, put a perspective, America just spent $716 billion on our defense budget. Russia’s spending $70. And in those areas of disinformation, misinformation they’re our peers. China spends about $165. China’s been more focused on cyber inpro– intrusions.

But if you look at the difference between what we spend and China spends, that $500 billion delta China’s investing in artificial intelligence, next generation 5G wireless, quantum computing and a host of areas which, through most of my lifetime, America was the lead.

Now all that being said– I think we were not– you know, countries do spy on each other. But the weaponization of information the way the Russians used, the hacked emails, was something we had not– we were not fully ready on. And on social media– the companies, the government, you know, kind of across the board, we were all asleep at the switch.

And, you know, this– this was an air– arena where we’d not seen the dark underbelly. You had this normal, you know, Republican reluctance– about any regulatory environment. And Democrats frankly were a little bit enamored with these tech companies.

And the tech companies themselves I think did a pretty dreadful job. They’ve gotten better now, about trying to expose or kick off not even just hate speech, but frankly just fake identities being created– in ways that were– again, both useful and powerful.

One last comment then– we’ve seen Russia intervention in our country. We saw it in the French presidential elections, when Facebook was much more aggressive, working with the French government, took down over 30,000 accounts. We’ve now got the Brits acknowledging they were– Russia was very involved in Brexit.

And the irony is, if you spent– add up all the money the Russians spent in America, France and Britain, it’s less than the cost of one U.S. F-35 airplane. So not only are these tools effective, but they’re remarkably cheap– in a 21st century conflict domain.

Sen. Mark Warner of Virginia

ANDY SERWER: Do Republicans believe what you’re saying?

SENATOR MARK WARNER: On the committee, absolutely. And– and– the evidence– is so overwhelming. The intelligence professionals have such a unanimous view. Now, you know, where we stand on the collusion issue, and that’s why we’ve put that to the last, because that could be where there’s– where there’s– disagreement.

But-but everything else– before that, those other four domains, so far we’re– we’re– we’re unanimous. And we’ve got Ron Wyden and Kamala Harris on one end and, you know, Tom Cotton and John Cornyn on the other. So we’ve gotta– about as broad a range of views on the committee as– in the whole United States Senate.

ANDY SERWER: All right. Let’s talk about those social media companies. And we’re talking primarily about Facebook, Google and Twitter, right–


ANDY SERWER: I mean, those are the big ones. Those are the real players here. Where do things stand right now? How much interaction do you have with those companies on a daily or weekly or monthly basis? How much improvement have they made, Senator?

SENATOR MARK WARNER: Well, couple things. One is at first they were– frankly irresponsible, in terms of being on guard. And for the first eight months, almost nine months after the 2016 election, Facebook and– in particular kinda denied any culpability at all.

That’s changed. And what we’ve seen is– Senator Klobuchar and I and late Senator McCain had what we thought should’ve been the lowest-hanging fruit, a legislation called Honest Ads Act that said if you politically advertise on the internet, you oughta have the same disclosure rules as if you do it on TV and radio.

Because the White House and Senator McConnell doesn’t wanna do anything on campaign finance, we– that legislation has not passed. Again, I think you’ll– get 90 votes. Facebook and Twitter and Google, to a lesser extent, have made some progress in this area, where they’re– they will disclose if you’re actually supporting an individual candidate.

But if it’s an issue-related ad, they– they are– it’s– it’s more in agree– a gray area. And while they’ve made improvement, I thought one of the most interesting things we saw, just in the last ten days– there was– I think it was BuzzFeed or one of the entities went out and basically placed political ads in the name of all hundred senators.

And Facebook’s control system didn’t pick any of that up. So I think it’s good that the companies have moved. But the notion that they’re gonna be able to self-regulate themselves out of this just doesn’t cut it. Because we focused on the big three.

You know, there’s been lesser focus on, like, Reddit and Medium. But as we saw with the horrible tragedy in Pittsburgh, you know– the bad guys can migrate to a different platform. This was Gab, the– you know, one of the– more– eclectic ones. But we are gonna need some rules of the road here. And if we get into questions, I’ve got at least a way I think to think about some of those restrictions.

ANDY SERWER: Yeah. I mean, you put out a white paper over the summer, where you laid some of that out. I wanna ask you about that specifically. But these companies, just say those three, for instance, I mean, there are a lot of others, as you suggest. But, you know, they’re giant employers. They’re hugely powerful in California and nationally of course.

And then there’s– there– your shareholders as well. I– let me just ask you that. We’ll get into some more– ideas of yours. But if you’re a tech shareholder, if you’re an investor in one of these firms– should you be concerned? Would you be a shareholder in one of those companies?

SENATOR MARK WARNER: You know, luckily I put all my stuff in a blind trust, so I don’t know. But I imagine I had been a shareholder at one point or another. You know, and listen, they are huge, enormously great success stories. I– I would point out two things though.

People– ’cause I have real concerns about our market being much too focused on short-term returns versus long-term value creation. And I would argue that these companies have been able to be as successful as they have because they don’t face the same kind of short-term pressure from– from activist shareholders.

Because the founders in each one of these companies either continue to own enough of a block of stock or they have a different class of stock. So they’re immune to some of the kind of outside pressures. And I’d also point w– there was a great statistic I saw just recently that if– if you look at Microsoft, which back in the ’90s we all thought as the behemoth, you know, that we had to be concerned about, Microsoft (NOISE) did a great job at least of spreading the wealth.

The number of millionaires and successful people created out of Microsoft is huge. And it’s, like, 50x the amount of– of kind of widely-distributed profits that come out of Google and Facebook in particular, where so much of the ownership was concentrated at the very top. And they became so valuable, so quickly, that wealth that– that– that’s helped their shareholders. But their stakeholders, their employees and communities, you know, not so much.

ANDY SERWER: Right. Right. So your ideas on what to do. And, I mean, how much should we really expect out of these companies anyway? And how much of it should be the role of the government, which I think speaks to your ideas. I mean, should we do GDPR? Are the Europeans right? All those remedies–

SENATOR MARK WARNER: Let’s first of all acknowledge– and I’ll be the first, as somebody who spent longer as an entrepreneur and a tech guy than I have in business, government oftentimes moves in–

ANDY SERWER: In politics you mean? You spend more time in–

SENATOR MARK WARNER: Government moves very slowly. And in a realm where technology is moving so quickly around the regulatory field, how do you go through a whole regulatory process? And by the time you put the regulation passed– in place, technology’s leapt frog.

So what I tried to lay out are three buckets where we could at least start thinking about policy prescriptions. One is this whole question around privacy. What is your ability to kind of know how much information, to kinda– your right to be forgotten, GDPR, where the Europeans have taken the lead.

You know, there’s some good parts of that. But it’s a fairly blunt instrument and fairly clunky. So, you know, there are eight or ten different sub-proposals in that, that we could– we could look at. So– privacy is one bucket. The second bucket, and one that is less intrusive, but I think would be helpful as more and more people question what they’re reading on the internet, and this is around identity validation.

So let me give you three quick– three quick ideas. One of the areas I’ve found with most all of my senators agreeing in both parties is should you have a right to know when you’re being contacted, whether that contact is originating with a human being versus a bot or an automated account.

There’s nothing inherently wrong with a machine talking to you. But should you at least have that knowledge that might pop up on your– on your post, that would say, “This is– this is not a human being. This is an automated account.” Which, again, would– might just lead you to say, “Well, how do I– how much of this do I wanna believe?”

As second level, that is harder when you deal with the Cloud, but is still– I think a possibility, somebody says they’re, you know, bill posting from Washington, D.C. But the post is originating out of St. Petersburg, Russia. That could be a g– geocode that would post and say, “This person says they’re from here. But it’s actually being posted from abroad. You make your own judgment.”

And then there are certain– third, and this is– goes further, and frankly was the original premise around Facebook, that it’s– it’s– a community of known individuals that really go to identity validation, so that you– because I– I– people love the internet, with this kind of unfettered anonymity.

But when that anonymity allows you to promote hate speech or allows you to frankly manipulate the web, there– there oughta be a discussion here around– validation. And there are countries like Estonia, w– which had so much Russian interference that they basically decided they were not gonna be able to have an anonymous web anymore. You had to be able to put some marker on you, so that you would know you were actually an Estonian citizenship.

ANDY SERWER: Right. Well, then do we get too much like China?

SENATOR MARK WARNER: Well, but you get too much like the– well, there’s the one end is the China, where they listen in. But ident– there’s identity validation that wouldn’t have to mean– wouldn’t have to mean actually spying. Let me put to the third category, where I actually think there’s– maybe potentially the most possibility.

First would be I’m– I’m an old telecom guy. That used to be really hard when you moved from one telco to another, until Congress mandated number portability. So as you move from AT&T to Verizon to T-Mobile, you can take your number with you.

And– and the carriers need to move all your records easily. Could we introduce that same concept of data portability, so that you could move all of your history on Facebook, including your cat videos, to a new platform, if that new platform might have different rules of engagement.

A second– a second level of kind of pro-competition means, because these three companies have so dominated the market, it’s really hard for new companies to come in. And that would be data transparency. So shouldn’t we have a right to know how many actual pieces of information these companies have on us?

Most Americans believe these are free services. There’s nothing free about ’em. They are milking information out of us, data out of us in– in a world where data’s the new oil. These are the only enterprises that, every time we deal with ’em, we give them more oil. We give them more– more– data on us. But if we did data transparency, combined–

Along with pricing transparency, if we knew– if you knew how much your– your data was worth to Facebook, on a monthly basis, if it’s $18 a month or my data’s worth $22 a month, I think that might actually create a market incentive for new enterprises to come in and, in a sense, disaggregate between the user and the platform, to provide that kind of level for secretary.

There might be market-based mechanisms if they could pea– take a s– slice of– of that retinue. Matter of fact, in California there’s– legislation gonna be put up which would send a shiver down the spine of the platform companies. They’re gonna call it You Are The Product, that said no matter how many times you click “I agree,” you retain basic rights to (they’re arguing) 25% of all the value of that data coming back to you in payment.

ANDY SERWER: There’s a ton more to talk about. I wanna ask you just a question– another question, another subject. The Khashoggi tape. Is the Senate Intelligence Committee going to get that? Are you going to be hearing that–

SENATOR MARK WARNER: We will– we will be fully briefed on– on that heinous act. And– it’s pretty remarkable h– that– to see the Saudi government continue to change. And this is one of the areas where, again, I don’t think Donald Trump understands that words matter, especially the words of an American president.

I do not believe that a so-called ally like Saudi Arabia would’ve taken such a brazen act under a Reagan administration or a Clinton administration or a Bush administration or an Obama administration. Because they would’ve been afraid that American protection of a free press, and basic respect for human life, that they would get too much push back.

But because this president– again, whether it’s the Vladimir Putin or put– to the Saudi leadership seems to kowtow, it’s– it’s pretty brazen where a country would sent 15 killer, slash, assassinations (SLURS), slash, security people to commit this brutal crime– in, you know, frankly inside a consulate in a foreign country. It’s– it’s pretty remarkable.

ANDY SERWER: Well, there is so much more to talk about. But we have run out of time. Please join me in thanking Senator Mark Warner. Senator, thank you.