tech, and materials. all right. welcome back we want to thank our guest host today. she's the financial times u.s. managing editor and cnbc contributor. >> it's great to be here. >> come back soon. >> all right, folks. that does it for us today make sure you join us tomorrow right now it's time for "squawk on the street. good morning welcome to squawk on the street. i'm carl quintanilla live at the nation's capitol jim cramer and david faber at the new york to be exchange. it's a big morning in washington the senate intelligence committee hosting tech executives on the hill they're conducting a hearing on foreign influence operations use on social media platforms. set to testify jack dorsey, facebook coo cheryl sandburg and noticeably absent is google's ceo or alphabet. you may see an empty chair in

the few minutes. the senate judiciary committee is continuing the hearing for brett kavanaugh. take a look at the futures seeing some weakness this morning. as you can see the dow futures down about 77 points european markets echoing that. jim and david, here we are again. we've spent a lot of time talking about this one mark zuckerberg was on the hill in april jim, as you know, in the months following that, facebook shares rallied some 30% until that now infamous q2 call. i'm curious to know what you may happen today and the stocks as a result. >> all right i think we're going, carl, from a growth stock to a value stock. i know that's hard to believe that facebook could be a value stock. when you look at the earnings, what you have is a company with a stock that, frankly, you don't

see the estimates at all or it's become one of the cheaper stocks in the market. david, you know. when you read a piece like you told me to read this morning in the "wall street journal," thank you. what you get is a company that is capitalist. it took their eye off the ball it's not something you want to be affiliated with i find it hard to find a company that was, i think, such a rogue company. and i'm not talking about tyco rogue. i'm talking about philosophically rogue. >> interesting that's fairly significant criticism coming from you. i thought it was an interesting story. worth the read the underlining theme seems to be did they take their eye off the ball they'll talking about it in congress namely in '16 and '17. not really focussing on the platform in terms of, and admitting that zuckerberg did in the piece yesterday. admitting they were focussed on a cyber attacks on the platform,

they weren't necessarily as aware as they perhaps should have been and could have been of who was already operating on the platform in a very negative way in terms of undermining the integrity of the election. >> i want to ask carl. i think there was a perception within that company that it didn't matter. that just there's free speech everywhere and i've felt there's no free speech for racists or terrorists that's my philosophy since 1973. it was clearly not their philosophy or else they would have done something about it. >> yeah. well, jim, you don't have a company where a business model is contingent on maximizing engagement where potentially to drive that engagement you offer content that is extreme or at least marginally extreme certainly that's the position some of these companies found themselves in. i'm curious, jim, there's a big debate this morning about which of these three companies has the most liability going into today. facebook had that big downgrade

out of moffit yesterday. they said that facebook seems like the juiciest steak for regulators to sink their teeth into, if they want to set an example across the industry. on twitter, dorsey is not the skilled interviewee that cheryl sandburg is. they have new questions to answer about potentially constraining conservative content. and google, who is not even here, and whom people are wondering whether that is politically risky to play the long game. hope that today fades but the image of that empty chair may last. >> look, this is a great question because i have felt when you order these, actually, i felt jack dorsey once he recognized what was going on went all in. versus facebook there's an issue of whether they recognized it or not. i think alphabet has a lot of businesses going and they have a search business, they have, what, i don't regard them as a true content player.

jim stewart was talking about you regulate content should google and alphabet be there? why? you know, i'm not saying it's a witch hunt, but i find it very hard to try to figure out whether google did stifle anybody's speech i think google is far more of a utilitarian product and less of a content product. david, do you disagree >> no. i suppose not. i mean, it's a bit of a different animal, i suppose. you know, in terms of the way the platform is used. >> right. >> it's not communication. but search results are important in terms behalf you're looking for and what you surface and whether or not they, in some way, i mean, it's the algorithm. they'll tell you over and over agai again. >> true. facebook and alphabet are two of the most powerful companies i've ever seen. >> yes. >> and amazon. these are countries. these are unregulated countries

and there are people in washington who seek to regulate them the print media wants to regulate them. everybody, i think, to a degree, is jealous of them not twitter. jack dorsey, i think, is along for the ride i've never seen a concentration of power since standard oil. >> there's a great deal of envy, perhaps, they built their platforms by taking content from others they never had to pay for or produce on their own. and yet created an incredible amount of value, in part, as a result of the work of others [overlapping speakers] >> right the frictionless model inventoriless model of never having to touch or pay attention to let it go out the pipe and to the user i will say, jim, on google there was a twitter thread posted a few moments ago sort of if you read between the lines he wanted to ask google about the notion of building a search engine in china that's a question he wanted posed.

maybe the company thought that was out of place in the context of today's hearing but we'll see to the degree to which they publicly try to shame google for not being here today. >> what is funny, of course, google avoided this forever and they suddenly start coming in and doing it everyone is trying to get in china. there isn't a single company in this china that doesn't want to do more business with china. here is one that voluntarily took itself out of china i have a hundred companies now that are having business with china. i don't know i mean, look should they have been shown more respect to congress you have to bow down but at the same time, what did they do? i'm trying to figure it out myself. >> yeah. i think your overall point is an important one. these are the most powerful companies now. and amazon is not on that the dais there today but the fact is that facebook, not twitter, facebook, alphabet,

which is absent, and amazon are the most powerful. there's mr. dorsey [overlapping speakers] i've seen things in microsoft and azure. these are big powerful companies. nobody knows how no one knows what to do in this country with trillion dollar companies more powerful than the government many things other than the military. >> yeah. that's true. we saw dorsey and sand burg walking in together. dorsey, of course, does not have perhaps the ability to answer questions gracefully that sand bu sand burg has. he has given recent interviews and some of those he acknowledged what he says is a left-leading bias among the company's employees. so you can be surethat'll be turned into somewhat of a talking point today. by the way, guys, dorsey has not

just the senate this morning but the house this afternoon where you can bet the questioning will be even more pointed from lawmakers who may feel especially on the right that their accounts have even thwarted in search and dorsey gets granular in that. >> yeah. you know, carl, of course, when it comes to the stocks themselves, jim, does any of this matter? >> thank you, i don't want to go about the silicon valley house my strength is twitter is taking a hit here people feel they had to take down a lot of content. >> i mean, facebook and twitter come out of their last reported quarters much weaker in terms of the stock performance. >> and their expenses are going huge because suddenly they have to do policing alphabet did this already with youtube. and remember when companies were cancelling the youtube ads it doesn't happen anymore? it's the expense ratio that

bothers me carl used the word frictionless. suddenly they've got post margins that are going down. we sell companies that have gross margins going down. >> even though they have, i mean, it's desec rating growth but it's impressive growth. >> value, david. clorox trades at the same price as facebook. and we don't see clorox down there. >> anything they may see today going to change the investment perspective? >> no. >> no? >> no. >> okay. >> here is an answer, carl "no. >> i think the third "no" is definitely the tell, david. >> no. no i mean no. >> your point about organic ad revenue at facebook. look at the last few quarters. 47, 44, 42, 37 so you couple that with the accelerating costs and we know what jim is talking about. to the number of accounts that are being taken down over at

twitter, dorsey is going to go into this. they're identifying 8 to 10 million accounts per week that is three times the level they were doing in september of 2017. they've thwarted half a million suspicious log ins per day they're going to start implementing mandatory cell phone verification numbers mandatory e-mail it's going to be difficult it is more difficult now to sign up on twitter and remain completely anonymous at least to the company. and we'll see, you know, the degree to which that affects dau. as we know, their metrics aren't exactly going from the lower left to upper right. >> it's about time many of us tried to get them to do what they did i called for a service becausives so harassed they took care of me obviously, a lot of others they should take care of. they're getting serious. the business models of wall street they don't want anything to do with regulation.

they want pure, unbridled capitalism congress seems to be on the other side. >> when we come back, more tension in washington today. are we paying attention to a couple of things trade negotiations this morning between the u.s. and canada. futures in the red ahead of that, plus, big tech and the regulation question. we are awaiting dorsey and sandburg to begin their testimony on capitol hill. mark zuckerberg, of course, testified in april on the house side as we go to break, take a listen to what he had to say about the future of regulation. >> i think it's inevitable there needs to be some regulation. so my position is not there should be no regulation, but i also think that you have to be careful about what regulation you put in place for a lot of reasons that you're saying i think a lot of times regulation, by definition, is puts in place rules that a company that is larger and has resources like ours can easily comply with but that might be more difficult for a smaller

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it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. futures pointing to a down open on wall street canadian prime minister justin trudeau indicating that canada will not bend on some key demands. he told reporters, quote, there are a number of things we absolutely must see in the

renegotiated nafta no newscast draft is better than a bad nafta deal for canadians." it's an echo of something he said last week, guys it he goes on to add "that's what we're going to stay with. they've been disciplined in not negotiating this in public, jim. do you think his comments bend the trajectory in any way? >> i got to tell you, we have the employment number on friday, carl i think the president takes to twitter and just really takes it to the canadians i mean, i just think that's -- look, he deals from strength when we get good numbers, and i think we'll have a strong employment number, i think he'll say, look, our trading partners are not helpful. they rip us off every day. i hope he doesn't call trudeau a clown. my hope is trudeau is not viewed as being an -- that we would sate waitsa wait a second. they did fight with us in a couple of wars there's a great tracker now in terms of tariffs.

$157 billion in global in u.s. goods or retaliatory the key one is not canada and nafta. it's china. >> yeah. >> september 7th which is only a few days away another $200 million and they'll add $60 billion of their own you add another $260 billion on top of $157 you're getting somewhere not to mention on auto and european where we haven't moved. things seem to have been delayed but it doesn't mean the 232 negotiation, as strange as it may seem, it's a national security threat to have bmw making automobiles in the south, that's kind of where we're going to be. >> we're in a tense moment you know, autos are the key. restoration hardware they've been 30 and 40% sourcing furniture in china now they're trying to ratchet it down everyone is trying to ratchet it down this was something that a lot of companies understood that china was the place to build

it's hard to just completely switch it to reverse soquick. >> yeah. carl, of course, with canada, we have a slight deficit, i believe, when it comes to goods. we often don't discuss services which prove to be important. we have a surplus in services, i think, with canada it moves us into a surplus overall. even though we have a huge deficit, services, again is one place we're in surplus i'm not sure if that comes up as it should. it seems the administration keeps track of goods as opposed to the whole. >> yeah. >> jim, you're going to take a break from some of this, at least tomorrow, and cover some football, right? >> thank heavens okay can we talk about something that can unite people i don't know everything is controversial these days

i'm going to interview brian roberts, and i think, what can i say, it's opening night! i'm very excited it's not controversial i don't know wait a second, they didn't go to the white house. can we just say there's some things we have to just -- >> that's tonight. >> tomorrow night. >> tomorrow night. >> doug peterson -- >> what is tonight >> i'm doing a show tonight. yeah i have honeywell, by the way. >> wow that's an important discussion i'm going to tune in. >> restoration hardware from the brand new site they have. >> eagles tomorrow night. >> yeah. >> i'll be back on friday morning. i don't intend to sleep on thursday night my schedule is too jammed. >> good. i'm glad you'll be back on friday speaking of coming back, we're back after this with cramer's

mad dash we'll count you down to the opening -- oh. there's mark horner arriving >> we've got a lot of questions for these companies. i'm disappointed that google chose not to participant in -- participate in this discussion i think the other companies made some progress. i have a series of policy ideas i laid out a few weeks back. and just to get some of the comments on. [ inaudible question ] >> reporter: you said you hope to get some solutions. >> we just -- they've gotten better the companies have gotten better our government has gotten better frankly, the russians are getting better, as well. when you start to see cyber intrusions, hacking into an equifax and use the information

and convince people to open a message and the next generation of technology -- that can cause havoc not just in elections but the whole process of financial manipulation a host of others should americans have a right to know when they're contacted by a bot or a machine versus another human being? should we be able to identify where somebody said they're posting a message in washington, d.c. but it's originating in macedonia. we should have a right to know.

[ inaudible question ] >> it's going to escape the serious questions. for example, within the last 48 hours, there's been a group of researchers that tried to mask as russian trolls and using the signatures from the internet research agency and they were able to penetrate google's advertising in a series of ways. thank you so much. >> thank you, senator. >> senator mark warner, vice chair of the senate intelligence committee that will help drive the hearing today. democrat from virginia who had built a career in venture capital and telecom and understands the engineering behind tech, arguably better than most senators elon there in the hall echoing what he said this morning on

twitter in a thread asking basic questions like don't you deserve, as a user of technology, to know when you're interacting with a bot why is it so difficult to understand extremely long-term of service agreement >> and that's right. he talked about the guardrails that might need to be put in place for some of these companies as opposed to breaking them up entirely or taking some more stringent action. he sponsored legislation last fall called the honest ads act that would require some disclaimers on political advertising and something that mark zuckerberg has said he actually agrees with but one important piece here is that companies say they're complying with a lot of the policies, a lot of proposed legislation that lawmakers are putting forth. he said he'll have serious questions for these companies but we'll have to see if it translates into serious action going forward. >> elon warner told wired in an interview yesterday he was asked what would be different about

the hearing than the one we saw with mark zuckerberg in april. his argument is senators have done their homework and we'll see, somehow, ab elevated line of questioning are you getting that sense from other senators, as well? >> one of the things we've heard is there will be some focus on broad issues senator marco rubio said he's going to focus on patriotism and democracy. senator widen plans to focus on issues of national security. several of the key members are members of the senate judiciary committee. they'll be tied up in the kavanaugh hearings today we'll see how many can break-away for some questions here today and how detailed and pointed those questions will be. >> watching the members. you can see jack dorsey and cheryl sand buburg.

>> good morning. we saw cheryl sandburg and jack dorsey walk in together behind me i think it was really interesting they chose to arrive together and walk shoulder to shoulder as they headed into the hearing room which is right here on my other side i think this is very much symbolic in the fact they're collaborating and working together facebook hosted a meeting at twitter's headquarters to talk about the collaboration. >> today's hearing is talk about the solution to the problem. what is that >> it's a combination of cooperation between government, between companies, between academia, it's everybody coming together and finding solutions to the problems that have been exploited. >> you talk about cooperation but should there be legislation that tends to reign in these companies? >> well, listen, the first amendment is a tough thing to legislate around

and at the heart of this issue is the first amendment we want a robust dialogue to continue we want platforms where people can voice their opinions without any type of influence in it. but we also want to make sure that we keep the national security of the country. and and i think we've got a partnership over the last few months that has shown great progress moving forward today. is a continuation of that. thank you, guys. >> yeah. >> thank you for that. guys, jim and david, back home there's comments just now sort of echo what was said in a post yesterday when he wrote about the possibility of what he called utility-style regulation. he goes i don't believe that's the right answer given they are private entities and they are protected by the first amendment. >> it's difficult to legislate around the first amendment.

>> look, i mean, is there a clear danger yesterday on facebook we had terrorists -- terrorists talk to each other. >> why don't people turn it off? it's not like you have to look at it. but i understand the power of these companies. i think people are trying to figure out the power of these companies. they're trying to figure out what they're doing to make it so there's no false content but, yeah. they're going to have to come up with something it's better than what they've come up with so far. >> alphabet is trying to stay

away but they understand washington far better than facebook. >> it seems facebook analysts first rodeo. >> yeah. you brought up youtube earlier there are those who criticize google for a fill your to police youtube -- failure to police youtube and make sure it's a safe space, so to speak >>well, look, i think that washington is done with these companies. they want some action. but the companies finally are caught up. so here is the problem, i think, the companies recognize they did something wrong. except alphabet not being there. and they're doing their best to try to get in front of it. they can't get in front of it fast enough for congress but they are i'm not saying they didn't do wrong. i am saying they're doing their best to get in front of this but there was so much of it.

10 million accounts a week is a lot. just a note about the political theater that we might expect over the next couple of hours. alex jones of info wars, i'm told, is here. the foreign affairs minister is expected to arrive around 11:00 a.m. eastern time. so it looks like we might get at least a focus on the tech hearing by itself and worry about the u.s. canada trade a little bit later on this morning. we count down to the opening 40 seconds from now emerging markets continue to be fairly weak this morning and there's a lot of focus on nafta. whether it cansurvive.

[ applause ] [ opening bell >> may i suggest that's exactly what these executives should do. >> we'll see moments from now, of course. you heard the opening bell here. let's send it back down to carl to julia, actually, in the halls there. julia? >> they can do whatever they want the media ran a hoax and said i said things on twitter i didn't say. they can say all day jack dorsey didn't take me off twitter and you, the so-called media,

has been foaming at the mouth to get me -- i've been unable -- this is the 11th hearing they've had in the last year and a half i'm one of the main focussing. i haven't been called to testify when they say outrageous, slanderous things. when they've had the house intelligence committee, senate intelligence committee and others they'll have people point-blank from the cia who are name it who are leftists say alex jones works for the russians that's outrageous lie. when mccarthy did it, the people got to come in and confront the committee and say you have no decency. how dare you act like this this is a hundred times worse than anything owe receimccarthy >> this morning's hearing is preventing election manipulation. >> yeah, yeah. sure but every time they have the meetings they bring up info wars and claiming they're taking it down obama established with an

executive order he established with an executive order before he left office a special office that deals with foreign propaganda what it's been used to target domestic populist poplar groups. the real election meddling by facebook and google and others that are shadow manning people they're blocking conservatives involved in their own first amendment political speech there's a giant crack down that even the "new york times" calls it a crack down on conservatives. and a plan to deplatform conservatives. just like communist china. this is dangerous, authoritarianism they packaged silencing americans who are popular and well spoken. because what i say is effective and true and popular. >> alex jones there talking to our reporter about efforts to get him deplatformed from various social media outlets it gives you a sense of how complicated the questions are going to be regarding first amendment rights, the ability to

speak to an audience, the obligations these companies may or may not have. there's jack dorsey. in his remarks to the house this afternoon, will give metrics on the number of accounts they're taking out, investigating log ins they are thwarting and all of twitter was begun by a single tweet from him in 2006 when he said "setting up my twitter. hard to imagine that 12 years later we would be here on capitol hill with the lawmakers questioning some of the most powerful companies in the world. cheryl sandburg knows d.c. well. formerly working at treasury i think we might listen in here to see if chairman richard burr and mark warner bring the proceedings toorder.

>> they have to get through the hearings they get through the hearings and they're out of headline risk and people say what are the companies worth? unfortunately the gross margins are going to go down what we loved about these companies was that they -- we provided their content and they just booked advertising. that model looks like it's broken for facebook and twitter and not yet for alphabet. >> one thing for sure, guys. today we're going to learn about algorithms dorsey, in particular is going into detail about how twitter

uses behavioral signals, for instance, a user that tweets a lot about an account that does not follow them back launches a trigger and it affects the way that twitter user turns up in search, turns up in timelines. you may not know this, but in twitter you don't necessarily see every tweet that is happening. they prioritize some tweets over others when you log in you see tweets you might missed those are prioritized, as well i'm guessing that rose for senator john mccain his empty seat jon kyl will be taking his place from arizona that rose is for mccain. >> we're stuck with the notion of what happened to -- it's free speech versus the right to regulate free speech.

>> it takes legislation to do that and it's highly unlikely they would go down that road i'm trying to understand. >> it's an algorithm can they be set to detect everything the answer is no there are people who will get through something. that's not unusual the republic has been sabotaged by people from outside it was interesting alex was talking about mccarthyism. >> alex jones one of the

greatest, you know -- >> that's a serious stuff. >> our friend joins us today to help us understand what is about to happen here roger, it's good to have you back one thing i want to ask you about is how the executives might use data this time around to help make their case. dorsey and his remarks has already come armed with some stats about conservative tweets how #maga was the number three hashtag last year. 205,000 mentions per day how much will that help their argument >> i think this is a very difficult situation, carl, for facebook and twitter simply because they don't have a strong case for what is going to happen in the midterms effectively, they've asked the

country to trust them with the security of the midterm elections, and they have not been able to make internally the kinds of moves that would be necessary to protect democracy this time around and so essentially they're coming in and making a lot of promises have a lot of presumably noise none of which will matter. then we'll have the elections. if something goes wrong, they can be traced to any one of these companies. i don't know what the outcome is going to be, but it's going to be ugly. because they have not been open. they've not been transparent they've failed to cooperate with the congressional investigators. so they will deserve a very severe punishment if the election doesn't go cleanly this time around. i think that's what this is about. >> chairman burr did make a mention a moment ago about google not being here. saying we would have liked to question them. i have to ask you, what is being said in the valley about

google's decision to skip? >> i think it's clinically insane and every one of the board of directors should resign over the issue [ laughter ] >> seriously. >> really? >> this is so irresponsible. it's so irresponsible for them to sit there and go, hey, we're above this youtube is an enormous problem for democracy right now. it's an enormous problem for national security. the notion that they do not have to come because they don't feel like it, it's ridiculous and, you know, congress should cite them for contempt or something. >> you think it's -- people are wondering about -- >> they shouldn't be afraid. >> you think there's a chance they're forced to testify down the road >> i don't know. and i don't think it matters if things go wrong in the midterm. if everything goes smoothly in the midterm, then everyone is going to skate if something goes wrong that isn't attributable to the companies, what is the country

supposed to do there's no way we can go past it a second time. nor should we give them a pass these great businesses run by smart people for whatever reason they allowed their egos to get in the way of common sense they owe some civic responsibility to the country. at the moment, the folks at google don't seem to recognize that i tip my hat, facebook has made a lot of changes over the last few months some of which are helpful. >> yeah. >> they haven't done the things they really need to do to change their business model to actually protect elections. but i can see they're sincere about what they're doing what google is basically saying is none of this applies to us. >> julia, i want to get you in one last time before the statements begin we should mention that ken walker is said to be privately briefing members of the committee this week. >> reporter: yeah, it's our understanding that walker is here in washington, d.c., right

now. he's scheduled to take meetings and google offered walker to come speak to the committee and the committee said they would not accept him they wanted only executives. so we were in the room earlier there are those three chairs very much highlighting the fact that they're not here. it's indicated that the committee will truly try to hold google's feet to the fire for not being here. >> trying to talk over alex jones who continues to address reporters in that area of the hill roger, of the three, who do you think has the most to lose today? >> carl, as i said, i don't think today is going to determine much of anything unless, you know, something goes right during the midterms. if there are no issue in the midterms, today will be a lot of noise and color. i don't expect these guys to screw up under the questioning

they're smart. they're going to be really, really well prepared i think google is going to get justifiably creamed in absence ya in 60 days we'll have an election and we're depending on the security of these systems. not just against foreign actors but domestic ones, as well i mean, the reality is that russian playbook is open to everyone the cambridge analytica data set is out there people will be using it. they're going to be trying voter suppression. you know, facebook doesn't just have a problem on the core platform they have a problem on instagram because one party is in a great disadvantage with millennial's and they need to suppress votes there. i'm very, very nervous i think our election infrastructure is vulnerable and without a doubt, these platforms are vulnerable still. i think despite increasingly sincere efforts by facebook and twitter, to do things about it. >> jim, if roger is right, maybe

the real risk comes in the third quarter conference calls in, what, five weeks >> again, i mean, i think, look i valued roger's opinion the idea of board of directors alphabet should resign over this i think that's ill advised i believe that, yes, if you can link elections to these companies and find that the elections were somehow manipulated, i guess there's something that can be done but we have to keep coming back to the fact these companies have done theirbest and are doing their best now to try to police and you can say they vice president done it. what are you going to do shut them down?

>> their basic attitude is we'll do our best as long as we don't have to do anything that reduces the, you know, the viralty they don't want to touch freedom of speech in the sense they want the most volatile of voices to be well represented because it's better for their business. they'll do anything that doesn't do that. the problem is, that their business model is the cause of the problem. and i'm with jim i think their numbers will be fine i mean, if only thing that matters is the numbers on these companies, they're going to be good stocks from here. however, you know, despite lower margins, i think, there's going to be good stocks. but i think there are other things that matter more than their business model that matter more than earnings i think democracy is one of them that's the thing i'm worried about. again, my point the hyperbollic point i made about google's board is about the fact that people have to stand up for something in america we have to believe in the idea of america we have to believe in democracy. and if we value stock price more than we value democracy, there's

something really wrong with the country. >> roger, it's david you know, you keep mentioning the midterms you mentioned a couple of different things, obviously. one is the activity on the platforms twitter and facebook the other is the actual election itself and we should point out we're only two months out now. we don't know a lot, i'm sure, it seems we'll find things out after the fact it appears, at least, to jim's point, that the companies are certainly in a much higher level of policing than they were two years ago. >> i think that's definitely true of facebook definitely true of facebook. i think they're sincerely going after it they're doing everything they can. it's unable to protect the business model that got them here i'm just really worried that won't be enough. the key thing is all of us can contribute every american can go out and vote in the midterm elections. this is a year when it really matters. because a big part of what those who are trying to interfere are doing is trying to suppress

votes. they're trying to convince people that democracy doesn't work and my point here, this is what i would say to the boards of these companies, is, guys, you play a pivot -- pivotal role in democracy. i encourage them to cooperate. they waited very long to ask for the government's help in protecting the midterms. you know, they stalled they delayed they denied for over a year. now they're asking for help? that feels, to me, to be disingenuous i'm glad they're doing it. i hope that collectively these companies and the government can protect democracy. we're hanging by a head here you saw this book. this is not a good situation and, you know, we have got to try to get ourselves out of it it's not guaranteed you gate -- get a happy ending. >> a couple of minutes left until warner is expected to finish his opening remarks i guess my question is, they're

making it harder to on board, thwarting suspicious log ins, us is spendsing accounts for violating policies, implementing mandatory e-mails. what aren't they doing that they need to be doing >> i think the core issue is you have to understand that the problem will continuously morph. so they're going after the low-hanging fruit of what happened in 2016 you know, things like the cambridge analytica data set can now be used by people are not foreign actors and voter suppression on the pla platforms is relatively easy to do you can microtarget. unless you can eliminate the microtargeting of people in an election context where you find the issue that matters to them most maybe it's puppies and somehow convince them that the other candidate is against the thing they care about, that kind of microtargeting works incredibly

well it's inappropriate in a democracy. we have to have campaigns about the real issues in america not about some the fact they've been able to identify the issue and scare you that the candidates that they don't like is somehow against that issue. that's where we are today. that's a really fundamental problem. you're not going to be able to fix it with moderation. >> roger, our thanks to you. >> my pleasure. >> he's written about the issue at length. thank you. warner completes his opening remarks. to roger's point about targeting capabilities, that's what gdpr

in europe takes aim at it'll be interesting to see if the legislators sort of table ideas that are similar to that in today's hearing >>well, i think that radiolooges point -- i love him. i was surprised these companies didn't get independent investigators or law firms to come in. wells fargo had a problem, they bring in a company fox has a problem, they bring in a company. these guys have a problem, they bring in nobody. i think they would be in that much better if they had ken fineberg and said he's come in and disrupted everything but that's okay we needed disrupting the fact they never brought in an outsider, the fact that the board is finally speaking today. i mean, without an outside investigation, they are at the mercy of congress. they could say here is the 200-page report written by someone we could not buy

they were too good to buy. that's killing them. they never wanted that that's why, i think, roger has a good point they never wanted anyone from outside to come in why? hubris -- >> you werejim, you were makingt point back in march and april with cambridge analytica, i guess facebook was brought in with academiacademia >> the best academia money could buy. i'm not -- when the murdocks pull in the polls, when they were brought into fox. oh, man, i mean you can't buy those guys wells fargo was one of the most damning reports i have ever seen, you couldn't buy them. who was put in here that was so independent that they had to

shake themselves they should have done it a long time ago how many times do i have to say it >> at 9:50 this time, guys one last point from you julia. >> inside senator warner is giving his opening remarks and he just made the point, he said the wild west days of the internet are over, that he, because of his own background appreciates the innovation that we have seen out of this sector, but now it's time to make sure that's there's oversight, to make sure that there's not manipulation of these incredibly powerful platforms so he talked about the risk of false information, and that would be true for any sector, not just the internet, what

about if you had false mfed meeting minutes released early he's still just wrapping up his remarks right now, but it will be interesting to see. >> let's listen to the swearing in >> please be seated. >> ms. sandberg i would like to recognize you first, and then the floor is yours >> chairman burr, vice chairman warner, and members of the committee, thank you for giving me the opportunity to speak with you today. my written testimony goes into more details about the actions we're taking to keep -- talk about some of the steps we're

taking free and fair elections are the foundation of any democracy, as an american, they are part of our national identity. that's why it incumbent on all of us to protect our democratic process. that includes facebook at its best, facebook plays a positive role in our democracy, enabling representatives to connect with their constituents, reminding people to register and to vote, and giving people a place to freely express their opinions about the issues that matter to them however, we have also seen what can happen when our service is abused as a bipartisan report from this committee said, russia used social media as part of, and i quote, a comprehensive and multifaceted campaign to interfere in u.s. elections and

those of our allies. we were too slow to spot this, and too slow to act. that is on us. this interference was completely unacceptable it violated the values of our company and of the country we love actions taken show how determined we are to do everything we can do to stop this from happening. the threat we face is not new. america has always faced attacks from determined well funded opponents who want to undermine our democracy. what is new is the tactics they're using. to stay ahead we all need to work together. as chairman burr said, government law enforcement and experts from civil society that is why i am grateful for the work this committee is doing. at facebook, we're investing in security for the long-term

as our defenses improve, bad actors learn and improve too that's why security is never a finished job we have more than doubled the number of people we have working in safety and security and we now have more than 20,000 people and we are able to view reports in 50 languages, 24 hours a day. better machine learning and artificial intelligence have enabled us to be more pro active in finding abuse in 2017 alone, the violent content we took down or added warning labelstoo, defined our technology before it was reported these were expensive investments, but that will not stop us because we know they're critical our first line of defense is finding and shutting down inauthentic accounts authenticity matters because people need to trust that the content they're seeing is valid and they need to trust the

connections they make. we are now blocking millions of air tem attempts to register false accounts each and every day. we're getting rid of fake news, we're limiting the distribution it gets on facebook. we demote articles rated by third party fact checkers as false. we warn people who have shared them or who are about to share them and we show them related articles to give them more facts. we have also taken strong steps to decrease transparency in advertising. today on facebook, you can go on any page and see all the ads that page is running you can also see who paid for the ads, how much they spent and the demographics of the people who sold them. we are also running pages with large audiences in the united states to go through an

authorization process and confirm their identity these steps won't stop everybody who's trying to abuse the system, but they will make it a lot harder as these past few weeks and months have shown, this work is starting to pay off. in july we removed 32 pages that quoted inauthentic behavior. we removed pages from iran and russia and last week, we took down 50 pages from myanmar, many of which were posing as news organizations. we are focused as i know you are on the up coming midterms and elections around the world our elections in germany to italy to mexico show us that our investments are yielding results. we also know as chairman burr

said that we cannot stop interference by ourselves, we're working with outside partners including law enforcement to share information about threats and prevent abuse. we're getting better at finding and stopping our opponents from financially motivated troll farms to sophisticated military intelligence operations. we don't have access to the intelligence government have access to. so we don't always know exactly who is behind these attacks or motives. and that is why we're continually working with law enforcement. chairman burr, i want to thank you for your leadership. vice chairman warner, i want to thank you for your white paper, which has so many ideas on how we can work together to strengthen our defense senators, let me be clear. we are more determined than our opponents and we will keep fighting when bad actors try to use our site we will block them.

when content violates our policies, we will take it down and when our opponents use new techniques, we will share them so we can strengthen our collective efforts everyone here today knows that this is an arms race and that means we need to be ever more vigilant as chairman burr has noted, nothing less than the integrity of our democratic institutions, processes and ideals is at stake. we agree, and we will work with all of you to meet this challenge. thank you. >> mr. dorsey, the floor is yours. >> thank you, chairman burr. vice chairman warner, and the committee for the opportunity to speak on behalf of twitter, to the american people. i look forward to our conversation about the work we're doing to help protect the

integrity of u.s. elections and elections around the world i'm someone of very few words and typically pretty shy and i realize how important it is to speak up now if it's okay with all of you, i would like to read you something i personally wrote as i considered these issues, and also going to tweet this out now. first, i want to step back and share our view of twitter's role in the world we believe many people use twitter as a digital public square they gatther from all around th world and share what they see. in any public space you'll find inspired ideas and you'll find lies and deception people who want to unify and people who want to hurt others and divide what symbolizes a physical and

digital public space is greater accessibility and velocity we're extremely proud of increasing the accessibility and velocity of a simple, free and open exchange. we believe people would learn faster by being exposed to a wide range of opinions and ideas and ithelps our nation and our world feel a little bit smaller. we are proud of how that free and open exchange has been weaponized and used to addition tract and divide people and our nation we found ourselves unprepared and ill equipped for the immensities of the problems we have acknowledged. abuse, harassment, troll armies, propaganda through bots and divisive filter memos. that's not a healthy public square

a relatively small number of bad faith actors were able to gain twitter to have an outside impact if we don't find scaleable solutions to the problems we're now seeing, we lose our business, and we continue to threaten the original privilege and liberty we were given to create twitter in the first place. we weren't expecting any of this when we created twitter over 12 years ago, we acknowledge the real world consequences of what happened and we take the full responsibility to fix it we can't do this alone, and that's why this conversation is important and why i'm here we have made significant progress recently on tactical solutions. intending to artificially afternoon fartificially -- and challenging suspicious

logins and account creations we have seen positive results from our work. we're now removing over 200% more accounts for violating our policies, we're i'd firing and challenging 8 to 10 million suspicious accounts every week, and we're thwarting over half a million accounts from logging into twitter every single day. we have learned from 2016, and more recently from other nations elections how to protect the integrity of elections, better tools, stronger policy and new partnerships are already in place. we intend to understand the efficacy of these measures to continue to get better but we all have to think a lot bigger and decades pass today we must ask the question, what is twitter insecentivizing peope to do or not do and why? we're experiencing tectonic

shifts in the way our industry operates today we're committing to the people and this committee to do that work and do it openly we're here to contribute to a healthy public square, not compete to have the only one we know that's the only way our business thrives and helps us all defend against these new threats. in closing, when i think of my work, i think of my mom and dad in st. louis, a democrat and a learn. -- republican. for them twitter has always been a source of joy, something bigger than themselves they're proud of me, proud of twitter and proud of what made it all possible. what made it possible was the fact that i was born into a nation built by the people for the benefit of the people. where i could work hard to make something happen, which was bigger than me i treasure that and will do everything in my power to protect it from harm thank you.

>> jack, thank you very much for that testimony and i might add that the vice chairman and i commented as you grow older you will need a bigger device to put your notes on than the small one. we have a hard time with the small pieces with members, we will do seven-minute question rounds today. for planning purposes, we will break at approximately 10:45 for five minutes just to let our witnesses stretch and take a breath and we will limit today's hearing to one round we will try to accommodate any members who are caught in the judiciary committee who are trying to get back, but with that they have their own challenges but i will recognize myself for seven minutes. >> this question is to both of y

you. how would you define the role of this committee >> social media enables you to share what you want to share when you want to share it without asking permission from anyone and that's how we meet our mission which is giving people a voice. and i think what's more important than just the content people share is the connections they make. social media enables people to share their bit days safety check, millions of people in the worst circumstances of their lives have let their loved ones know they're safe and small businesses to grow all around the country, i meet with small businesses from a woman making dresses in her living room and selling them on instagram, to a local plumber finding customers are facebook

and hire people and helping them live the american dream. >> i think it's important to understand how the people see it we believe that the people use twitter as they would a public square, and they also have the same expectations that they would have of any public space for our part, we see our platform as hosting and serving conversations. those conversations wi s are ine public, we think there's a lot of benefit to those conversations being in the public, but obviously there's a lot of risks as well we see that news and entertainment are actually by products of public conversation. and we see our role as helping to not only serve that public conversation so that everyone can benefit, even if they don't have a twitter account but also to increase the health of that conversation as well and in order to do that, we need

to be able to measure it we need to understand what healthy participation looks like in a public square and we need to amplify that. and more importantly, we need to question a lot of the fundamentals that we started with 12 years ago, in the form of incentives. when people use our product every single day, when they open our app up, what are we incentivizing them to do not telling them to do, but what are we incentivizing them to do? that goes from the buttons we have in our service, all the way to our business model. >> one root problem that we see is that users don't truly understand the types of data that are being collected on and off your platform. how is that data shared with advertisers or others to deliver targeted advertising and what

vetting if any do you do on targeted advertising to prevent hostile actors from targeting your users for their products? >> senator, it's a really important question because it goes to the heart of our service. we sell ads and we use information that people share with us or share with third party sites so make those ads relevant to them but privacy and advertising are not at odds, in fact they go together when people share information to us, we do not give it to advertisers without their permission, we never sell data and they have control over the information we use >> again, for both of you and i'll start with you mr. dorsey wh what's your company's ability to collaborate with other social media companies in this space? >> we have a real openness to

this, and we have established a more regular cadence with our industry peers we do believe we have an opportunity to not only create more transparency, with an eye towards more accountability but also a more open way of working, and a way of working that for instance allows for a review period by the public on how we think about our policies but more so, taking some of the lessons that we have learned and benefitted from and in the open source offering space, to actually think about developing our policies, our enforcement and also our products going forward. we have been experimenting a little bit with this recently, but we would like to wherebe a company that is not only hosting an open conversation, but is also participating in that open conversation so we're more than open to more collaboration and not just with

our industry peers, but with scholars, academics and also our government partners. >> thank you, ms. sandberg >> our collaboration has greatly increased. we also work closely with law enforcement and continue to do that, and also the fbi's new task force we have always shared information with other companies but i think we are doing better and can continue to do better. you said in some of your opening remarks that some of your tips came from a private security firm in our mind that's the system working. our opponents are very well funded and they're very well organized, and we're going to get those tips from law enforcement, from each other and from private firms and the faster we collaborate, and the faster we share those tips with each other, the faster our collaboration will be. >> if a foreign influence campaign is detected on your platforms, is there a defined

process by which other platforms are alerted to the campaign that you've discovered? >> so our security teams have been in close contact and so right now when we find something, we are reaching out to our companies, other companies to do it and working more closely together. we have been talking about how there's still room for improvement there, i think we can do more to formalize the process. we have had a series of meetings and i think we can continue to work and do better >> mr. dorsey? >> this is not something we want to compete on. we hosted our company's career officers in the mast two wepasts in our company if there were undercurrents, we would immediately look to alert our peer companies, this committee and our law

enforcement partners. >> let me just say in closing, to either of you, if you see impediments that exist to notify or collaborate as it relates to nefarious actors that you'll certainly make this committee aware in case where is we can help with that, mr. vice chairman >> as i indicated in my -- i think after some initial false starts, it does really appear that you have committed to a shift in your company's culture with respect to the safety and security on your platform and obviously i have been impressed by some of the increasing efforts that you have taken. the question i have, obviously on your platform, there are a lot of automated accounts or

bots and there's nothing good or bad about an automated account. >> anyone using twitter has the right to more context not only around the accounts they're seeing but also the information. >> would that go so far as actually having a policy on your platform,indicating, not necessarily taking it down, but letting your users know that it was generated by a machine >> it becomes a lot trickier is where automation is actually scripting our website to look like a human actor

so as far as we can label and we can identify these automations, we can label them and i think that is useful context and it's an idea that we have been considering over the past few months, it's really a question of the implementation in that we are interested in >> i think giving that information to users would allow a little more judgment back in august, we had a panel of experts and they were saying in terms of political content, not in terms of political tweets, was 25 to 30 from the far left and far right, generated by foreign actors and automated accounts.

>> on twitter, the people you follow and who end up in your timeline, search, trends and also relies, that's where anyone can interject in themselves. that's where they see the most gaming of their systems. that's where we have also made the most progress in identifying these programs and shutting them down before they spread too far. that is independent of our work on automation, because we're seeing the same patterns through human coordination as well >> i appreciate your comments about the willingness to notify a user whether it's a person or a machine contacting you i think that's particularly of concern over the high volume

accounts that deserve a little more examination obviously in a digital economy, i think data increasingly represents the single greatest asset that you have. ly obviously it's part of the advertising model you've created. i think most users are actually pretty much in the dark about how much data is actually being collected on them, what is it actually worth and i think as we have seen, from other field like health care, the fact that we have such a lack of price transparency, really makes health care reform really challenges. i think that lack of price -- i would like to first of all ask, does a facebook user have a right to know what information you are collecting about that user >> yes and we really agree with you that people who use facebook understand what information is being used, how it's used and

the controls they have we have worked hard to simplify this, we have put out things like privacy shortcuts, and something called download your information where you can download your information in a portable way and be able to take it with you and see what it is >> but again, if a user has that information, he or she may not know the value would it be important to put the data that you're collecting on your user, and publish that so people actually know what their information is worth >> i think this is one of your proposals that you laid out in your white paper we don't think it's a question of whether regulation, but fair regulation. >> i think it's more price transparency is always better and i think this is something that would help users sort

through. there's another question that we have talked about in the past, and is is there anything with a willing user, are any rights or details about an individual user that they should not be able to give up or consent to being having used? >> i'm sorry i don't understand the question >> it my question is, at some point are there some pieces of personalized information that a user shouldn't be able to voluntarily give to you in an enterprise like you or twitter >> i think there are, and i think there are many ways users have control over what they do i also think there are probably corner cases of law enforcement holds or security matters where information is critically important. >> i just wonder whether, just a question of whether you can consent away all of your rights. i only have a few more seconds

you made mention in your opening testimony the fact that sometimes political actors are using the platforms, really to incent violence, you mentioned myanmar. we have obviously seen a great tragedy take place there where hundreds of thousands of rohingya are thrfleeing and in n ways the u.n. high commissioner has said that facebook accounts has incentivized that violence do you think that facebook has a moral obligation rather than a legal obligation to take down such incentives to violence? >> probably the most important thing we have done, is probably our ability to review reports in burmese. >> but do you think facebook has

a moral and legal obligation to -- >> this is the third hearing we have held over the last year -- fourth, chairman says the fourth the problem is really laid out, we have spent hours and hours and hours talking about this and what the issues are and the problems i'm still not hearing what very specifically how wie're getting after this i know there's some things being done, i tend to agree with you that no matter what's done, as long as these platforms are there, there's going to be people finding their way into it to do bad things, and obviously everybody wants to get that reduced as much as possible. and i'm glad to hear that you

and the entire industry are trying to do something about this but the entity that i serve in, there are lots of people that would love to help you run your organizations through what we call the regulatory process. i hope -- that isn't all of them obviously, and hopefully it isn't even a majority of them. but there will be -- and we have already seen efforts in that regard, but you're going to have to do things yourselves to try to get around this so that we don't have the horrible things happen that spawned that type of regulation i want to drill down a little bit. in each of your companies, that -- who sets the standards or the description of what a coordinated manipulation or inauthentic behavior is? what entity do you have in each of your companies who make these

determinations ms. sandberg if we can start with you >> our policy team is setting those and our security team is finding them we're recording behavior that's inauthentic, where people are not who they present themselves to be. they can be coordinating with authentic actors, and coordinating with inauthentic actors, both are unacceptable. >> is there a yuunanimity among them is this something that's easy to recognize? or do you wind up with debates about whether certain platforms should be shut down. >> on a variety of issues like hate speech is a broad debate. when we find an unauthentic actor, they're hard to find, but

once we find them, we know what they are >> as the chairman said in his opening statement, who sets these standards, the same committee? >> the same group of people. >> are they published so that a user can look at that and see what -- well, give me some examples of standards that are unacceptable >> in the coordinated inauthentic behavior or in general. >> in general. >> we decide what's permitted on facebook, bullying is not permitted. hate speech is not permitted language incyiting violence is not permitted. and these are posted publicly. >> mr. dorsey? >> we have a committee called trust and safety, who is responsible for designing and writing these policies, that reports up to our lead of legal

and safety and our compliance teams, which reports directly to me >> i would like to ask both of you, one of the things this committee wrestles with frequently, when it comes to privacy issues and those kinds of things, is the difference between a u.s. citizen and a non-u.s. citizen and under u.s. law, they can be treated differently, under different circumstances. do your companies make any distinction between a u.s. citizen versus a non-u.s. citizen? and i'm, i guess now i'm more focusing in on the kind of behavior we saw where elections were aelemettempted to be -- dos your company make a distinction as they're weighing the activity of certain actors? >> so for political and issue ads, we're now going through a verification process, and in

order to run those in the united states, people have to verify that they are legally able to do that so that's one area where we would distinguish. >> and what does that mean, legally able to do that? if a citizen of another country, any other country, if they decide they want to say something about a u.s. election, are they disqualified from doing that in your company >> people are allowed to talk about any issues in any country, as long as they're not crossing over into the areas that aren't allowed like hate and bullying in advertising, in u.s. elections, you have to be a u.s. citizen. >> mr. dorsey? >> we have very similar policies and we do segment them by advertising and the more organic social creation of content as well we don't always have an understanding of where an

account is located we have to infer this oftentimes, and this is where we do get a lot of help from our law enforcement partners is not only to understand where some of these threats are coming from, but also the intent. and the faster that we get that information, the faster that we can act. >> one of the concerns that i have, and i appreciate that explanation. but what we have seen on this committee, and actually seen in other contexts, is that in today's world, it is so easy to either employ or even impersonate a u.s. citizen to do something in a given context do you have difficulties in that regard >> well, finding inauthentic behavior is a challenge, and i think you'll see us putting real resources to bear and i think

that's why we're investing in innovation and technology. we' so being able to see if pel bought political ads, where they're located, to see who's running a page, these are very important to help us find, to your point are very difficult to find >> mr. dorsey? >> we have decided to focus a lot more on the behavioral patterns that we're seeing it while we can't recognize in real time where someone might be coming from or if they are representing someone who does not exist. we can see common patterns of behavior, and utilizing the network. so we have been using our developing technology to recognize quickly and also link them to accounts that have

simil simil similar -- >> i want to talk about john mccain and what is not often remembered is that john mccain wrote some of the important rules of the road for the internet and was a chairman of the committee, and it was always bipartisan, so i appreciate you all mentioning our wonderful friend john mccain and mr. dorsey, i have enjoyed visiting with you, and let me go to the question that is foremost on my mind and that is consumer privacy as a national security issue. technology companies like yours hold vast amounts of very private information about millions of americans. the prospect of that data being shared with shady businesses, hackers and foreign governments

is a massive privacy and national security concern. russians keep looking for more sophisticated ways of attacking our democracy, personal data reveals not just your personal and political leanings, but what you buy and who you date personal data is now the weapon of choice for political influence campaigns and we must not make it easier for our adversaries to seize these weapons and use these against us my view is from this point on, beefing up these protections, and controls on personal privacy must be a national security

priority yes or no, ms. sandberg? >> yes >> mr. dorsey? >> yes >> let me turn now to a question based on a lot of analysis my office has done and you all have talked to us you have reviewed facebook audit s consented by the 2011 -- when your company was found to use unfair and deceptive practices one part of the audits outlined how facebook shared information with smart phone manufacturers these included the chinese companies, huewie and samsung

will you commit this morning to making public the portion of your audits that relate to facebook's partnerships with smart phone manufacturers? >> senator, i really appreciate the question and the chance to clarify this issue because it's really important with regards to the audits, our third party auditor pwc does audits, they're given to us, we have shared them with the ftc voluntarily. i can't commit to making that public, because amount of that has sensitive information which could help people game the system but we will work with you to see what disclosures will be pertinent. >> that's a constructive answer

and i've got other things i've got to cover i'm just going to assume you're going to work with us. we understand the question of redaction of national security -- >> to me, protecting data privacy, has to be a higher tier issue in terms of national security, it's going to be the foundation of the legislation that i have talked to both of you about. that's why i feel strongly, and i think your answer is constructive and i hope we can get that quickly what i also want to get to, with you, ms. sandberg, is the issue of microtargeting, to discourage

voting, this is one of the most powerful tools in the propaganda arsenal, going after individual americans with ads and really lasering in on the ability to affect political campaigns it's certainly been used in the past with the russians to discourage minority americans from voting. would facebook's current policy prohibit using microtargeting to discourage voting? >> we feel very strongly about this, there's been a long history in this country to suppress voting rights discriminatory advertising has no place on facebook. >> so what are you doing to prohibit this microtargeting i mean what about ads that share false information about the date of the election, or the location

of a polling place or ads that tell people they can vote with a text message from their phone? you have said that it's unacceptable to target minorities and others, but i really need to drill down more deeply in knowing -- because i think this is a primary, we can get bipartisan agreement on, what do you do to deal with microtargeting >> so with everything when we're looking for abuse of our systems and our policies, we look at people reviewing ads and we have a combination of automated systems and machine learning to find them and take them down quickly. >> could i have within a week a written answer that would get into some of those specifics. >> we're going to get you answers to your questions as quickly and thoroughly as we can. >> our governmethere are ads thr

government is conducting hoaxes and misinformation do either you or your companies have any information that iran, russia or their agents have supported, coordinated with or attempted to amplify the reach of hoaxes? >> of hoaxes >> yes >> we certainly have evidence to show that they have utilized our system and gamed our system to amplify information. i'm not sure in terms of the definition of hoax in this case, but it is likely >> okay. >> ms. sandberg? >> just two weeks ago, we took down 650 pages and accounts from iran, some were tied to state owned media and some of them were pretending to be free press but they weren't free press. it depends how you define hoax,

but we're certainly dealing with misinformation campaigns. >> we have to deal with this back and forth between the public and the government. you say we need the government to also help us get toa, b, c and the government says the same thing about you, we'll want to explore that thank you for your time. >> there's an empty chair next to you from google and they're not here today, and maybe it's because their arrogant or maybe it's because there's a report that was posted at 3:36 yesterday, this report went on that purported to be kremlin link trolls. and were able to buy ads online and place them on sites like cnn, cbs this morning, huff post, daily beast, so i'm sure they don't want to be here to answer these questions but i thank you both for being

here i was happy to read in your opening statement ms. sandberg, you talk about our process, our democratic process and you talked about adversaries, clearly linking our values and the values of the country. twitter didn't go as far, you did describe yourself as a global public square, you did defer to our democracy and you did say that twitter was based on the freedom of expression this is why this is relevant because we're here today and we have learned the hard way that social media that was largely seen as a tool for incredible good, also what makes it good can be manipulated by bad actors to cause harm and we have all learned that the hard way. and i think what you have agreed to do is to use the powers you

have within your platforms to crack down on certain users who are hostile actors, who are using misinformation or disinformation or hate speech or for the purposes of sewing discord in our internal affairs, and that's a positive. but what happens when an authoritarian regime asks you do that because their version of disinformation, or what thmay t. it's going to define what your companies are. are your companies really built on these core values or are they global companies like all these other companies that come around here, who see their number one obligation to make money and therefore market access irrespective the plirice they he to pay to do so. in 2016, "new york times" was working on a program to restrict

stories showing up in their news feed based on their geography. that was being used north to potentially to get back into china, but any authoritarian government can use that tool in vietnam where you operate, there's a new law that will require you to hand over data to the government of users of anti-state activity, including information that may hurt their economy, for example -- twitter, freedom of expression by selectively blocking tweets and accounts for example one of the countries you comply with is pakistan has asked you to block sites for blasphemy. the blasphemy over a 10-year period, 50% of those cases were on nonmuslim pakistanis, one

high profile case is asia bebe who was involved in a personal dispute. they accused her of insulting the prophet. not relevant to twitter, but relative to the blasphemy laws pakistan has asked you to block over 4,000 accounts. one of them is a journalist, one of them is an nba player you complied with that one of them was a pro ukrainian account in 2014. so here's why all this is relevant in -- i guess the first question for facebook is how would these principles of our democracy, do you support them only in the united states, or are these principles that you feel obligated to support around the world? >> we support these principles around the world you mentioned vietnam, we do not have servers in vietnam, and

with minor exceptions, we have never turned over information to the vietnamese government. >> you would not agree to do so north to operate. >> we would only operate in a country where we can do so in keeping with our values. >> that would apply to china as well >> that would apply to china as well. >> how does blocking the account of journalists and an nba player be in keeping of the core of expression >> we allow for per country takedown meaning that within the boundaries of that nation, the content would not be able to be seen, but the rest of the world can see it and that's important because the world can still have a conversation around what's happening in a country like turkey and we have evidence to show that a lot of citizens in turkey access that information through proxies and whatnot as well.

we do believe -- and we have fought the government, the turkish government, consistently around their request and oftentimes won not in every case, but oftentimes have made some moves. so we would like to fight for every single person being able to speak freely. and to see everything. but we have to realize that it's going to take some bridges to get there. >> because a twitter spokesman in response to a buzzfeed article two years ago. here's a quote defending this policy many countries may have laws that govern tweet content. you would agree that there's no moral equivalency between what we're asking you to do here and what turkey has asked you to do or other county threw ries haved you to do within that same realm? >> we have been asked to comply

with the laws in each one of these nations, but our ideals are similar. >> whose ideals are similar? >> -- you're not arguing that what we're asking you to do here on disinformation against foreign efforts to interfere in our election is the same at what turkey or other authoritarian regimes have asked you to do abroad against political opponents of theirs. they're not morally equivalent, these two things >> correct >> all right, thank you. >> the chair will recognize senator heinrich for questions and members should know that we'll take a short recess, no more than five minutes and then reconve reconvene. >> thank you mr. chair and thank you both for being here, i think we have learned quite a bit over the course of the last couple of

years, i think it would be an understatement to say that we were all caught flat footed in 2016 social media platforms, the intelligence community, this committee, government as a whole, obviously we want to learn from that, and what i would like to start with is to ask each of you, since 2016, your platforms have been used throughout the course of a number of subsequent elections, elections in france, in germany, in other western allies across europe what have you learned from those consequential elections since 2016 and how has that formed your current posture in relation to this activity >> sir, i think we have learned a lot. and i think we're going to have to continue to learn, and as you

lea learn and we learn, our competitors learn as well. transparency actions in taking down bad actors. and we have seen everywhere from mexico to brazil to other places around the world, these same techniques deployed differently. and each time we see it, i think we get smarter, i think we see the new threat and connect the dots and see the new threats going forward. >> mr. dorsey? >> we have also learned a lot from elections around the world and most recently, the mexican election we have opened a new portal to cover that election that allows any journalist or government law enforcement to actually report any suspicious behavior very quickly to us so we can take more actions otherwise we have been investing in artificial intelligence and machine learning models to again

recognize the patterns of behavior because we believe this is where the greatest leverage will come, from how people will amplify information, and shutting it down before it spreads, into the shared spaces of twitter and more broadly as it applies to a tweet. >> i want to get to the basic issue of whether our incentives in this case are aligned to deal with these challenges. if your users were to lose confidence in your platforms, in the authenticity of what you, mr. dorsey, called a public square, i might call it a digital public square, i assume there would be very serious economic implications for your companies. do you think the incentives have aligned for platform providers of all types in the digital space to want to get at these issues and have a plan and be able to respond in real time

ms. sandberg and then you mr. dorsey. >> absolutely, trust is the corner stone of our business, people have to trust what they see on facebook is authentic people have to trust that this is a positive force for democracy and the things they care about this has been a huge issue for us and that's why we're here today and we're going to keep working to get ahead of these threats and make sure we can minimize all of this activity. >> our incentives are aligned, but i do believe it goes a lot deeper than just the alignment of our company incentives with our company and the american people i believe we need to question the fundamental -- every time someone opens up our service, every time someone opens s up r app, we are incentivizing them to do something or not to do something. and those answers that we get

from asking that question are going to create massive shifts in how twitter operates and also how our industry operates. so what worked 12 years ago does not work today, it has not evolved fast enough. but i think it's many, many, many layers deeper than the surface symptoms that we often find ourselves discussing. >> ms. sandberg, you mentioned a number of things that would violate your standards, for example hate speech, advocacy of violence what about when we're dealing with real people, authentic users, intentionally spreading false information and obviously there are huge free speech implications there for example, what if a real person, a u.s. citizen says that victims of the mass shootings were actually actors, for example. would that violate your

standards? and if the answer is no, how should we, and i mean by we, i mean government and industry, deal with those very real challenges >> well, let me start by saying i find claims like that like th personally unbelievably upsetting. if you have been a victim or a parent of a victim, they deserve our full support and finding a line between what is hate speech and what is an instrument for information is very, very difficult especially if you're dedicated to expressing free expression. and sometimes free expression is expressing things you strongly disagree with. in the case of misinformation, what we do is we refer it to third-party fact checkers. we don't think we should be the ash or the of what is true and false, and we think that is important. third-party fact-checkers mark it as false. then if it is false, we dramatically increase the distribution on our site we warn you if you are about to share it we warn you if you have shared it and importantly, we show related

articles next to that so people can see alternative facts. the fundamental view is that that speech can often be countered by good speech if somebody says something is not true or say it incorrectly, somebody has the opportunity to say, you're wrong, this is true. that's what we're working on through our systems. >> i think one of the things we found in 2016 is that we didn't have the transparency and the literacy to do what you just pointed out there, to counter false speech with accurate speech to understand how the speech was propagating in the digital public space what more do you think we should be doing to simply make the public more literate about the fact that this information warfare is very real, it's going on all the time, it's not fake news, it's not a hoax. it is something we all have to deal with, that our kids playing on platforms like pokemon go have to deal with as well. do either of you have a quick

opinion on that? and then my time will be expired. i apologize, mr. chair. >> i believe we need to point to where we see how the participation and clearly mark what is healthy and what is unhealthy. and also realize that not everyone is going to choose healthy participation in the short-term but how do we encourage healthy participation in order to increase their reach and also increase the value of what they're giving to that digital public square. >> this hearing stands in recess subject to the call of the chair. >> you were watching the hearing of the senate intelligence committee. sheryl sandberg, jack dorsey, testifying in front of lawmakers in which has become a difficult day for social media stocks and for tech at large. twitter, one of the worst s&p losers as $dorsey exits the room on pace for one of the worst days, if not the worst day since july, but the headlines from the

hearing essentially, in sandberg's words, we were slow to act, that's on us and dorsey's words, we found ourselves unequipped and unprepared for things like troll armies, misinformation and divisive filter bubbles. sara eisen and david back at the stock exchange >> the nasdaq is down a quarter percent led lower by the social media names. twitter getting hit the hardest of the bunch facebook is down snap is also down hitting a record low that stock down more than 50% from its 52-week high. even as it relates to some new spectacles today, the sentiment around social media is bad, even though i'm sort of surprised that there wasn't as much outrage on the part of the senators inside this hearing there were even some compliments. there was a lot of talk from

sandberg and dorsey about aligning the company's values to american values. and that seemed to appease, actually, some of the senators like marco rubio and others. >> yeah, very civil discourse on the part of twitter shareholders perhaps in terms of the statistics and the belief that over time you'll see a continued demolition in the number of users given, either fraudulent or bots or simply being barred from the platform for various reasons. interesting change there between sandberg and the senator as well on the larger issue, getting, really, they didn't mention alex jones, but it seemed to be about that how do you deal with somebody who is intentionally misleading and spreading misinformation twitter has done about it one way and facebook in another. >> absolutely. i mean, so much of the hearing to this point had been about fake news, how do you remove fake accounts, imposters pretending to be other people, people posting false content anonymously, but what do you do

when that comes from an actual person gets much cloudier here's a listen of what jack dorsey told some of the lawmakers just a few moments ago. >> our interests are aligned with the american people and this committee if we don't find scaleable solutions to the problems we're now seeing, we lose our business and we continue to threaten the original privilege and liberty we were given to create twitter in the first place >> dorsey went on to talk about, julia boorstin, as he called tack tonic shifts and how the industry operates. he was open to doing things like labeling bots, for instance, what else might he have in mind? >> it seemed like both he and sheryl sandberg were open to regulation sandberg felt like regulation was inevitability. she just wanted to make sure it was done in a way beneficial to consumers. dorsey and sandberg talking

about working together, working with governments and they are very enthusiastic about working with outside experts sandberg saying it was a tip from asecurity company that identified some bad actors on facebook, that meant their systems were working sheryl sandberg repeated they are focused and determined to make changes that would prevent any interference around the midterms take a listen. >> let me be clear, we are more determined than our opponents and we will keep fighting. when bad actors try to use our site, we will block them when content violates our policies, we will take it down and when our opponents use new techniques, we will share them to strengthen our collective efforts. >> sandberg reiterating that they are taking accountability and really focused on making changes. but i do think it is worth noting, carl, as you mentioned earlier, this hearing was specifically supposed to be about election interference. the one this afternoon in the house that jack dorsey is

testifying on, that's the one about whether or not there's bias in the way these twitter -- moderates and decides which accounts to block, but that was definitely a topic that was present here in this hearing, this idea of whether or not there's bias in the decisions to block certain users and what kind of influence and whether bias is influencing those decisions. certainly it is something to come up again. >> it will make for a long day for dorsey david, to that point, the elephant in the room or maybe the elephant not in the room is google sandberg and dorsey are working closely together you heard rubio say, maybe the reason they are here is they are arrogant, the same word warner used to describe google in "the new york times" interview today. by the way, google below the 50-day moving average. i think you have to go back to the spring, somewhere near may, to see google that far below the

50-day >> yeah, and i thought some pretty interesting comments, i guess, is the word from roger machi macknamera earlier who said the entire board should resign because nobody showed up but the stock is under pressure, more or less in line with the rest of the group, nothing to remark beyond that still up 12% year to date, carl. but interesting they could not make it. i don't quite understand myself. why they would choose not to it is an odd decision. >> i mean, i think the questions -- rubio posed a question to sandberg about working in countries that align with their values. he then went on to ask if it extends to china and questions to google being sensitive to china how serious they are about building a search engine in that

country, for instance. >> so we continue to watch the stock reaction i would note that the dow is trading better than some of the rest of the major averages largely because technology is bearing the brunt of the selling today. information technology, worse performing group in the s&p, down 1.4%. twitter, the biggest loser there, down 5% and the nasdaq getting hit by a percent. bertha coombs up at the nasdaq pointing out profit-taking from amazon and apple, which just reached new all-time highs that's been the big story. dow going positive here. groups like consumer staples, utilities and tell.com are all higher, david, so a little bit of a defensive tone to today's trade. you've got other factors out there. no question, the social media stocks are getting sold as the testimony rolls on, but merging markets continue their struggle. the stocks getting hit the currency is getting slammed, spreading to places like south africa and like indonesia, sort of all out there as people come back to the trading desks first week of september. >> yeah, i think on a different

day would be much more focused on the emerging markets you mentioned. and the continued talks between canada and the u.s. to try to iron out a new trade agreement between those two countries. but it does appear, at least there is an effect being had on investors perception of the prospects for the companies, given the testimony we have heard. we'll see if it's a one-day wonder or whether it extends at all. >> jim said margin compression >> that's been the story for facebook, carl, that we know, we have been talking about that ever since they were very much unexpected guidance from the first quarter in terms of costs going up, margins coming down as they continue to make investments for the likes of the various efforts outlined by ms. sandberg during her testimony. >> yep, moffett said the downgrade from yesterday we keep talking about, forcing the company to become more aggressive on spending, to show contrition and that's really why you saw, even after zuckerberg testified in april, guys, the stock rallied 30% from there until they finally talke