good tuesday morning and welcome to "squawk alley." i'm morgan brennan with sara eisen and deirdre bowsa live frm post nine at the new york stock exchange the women are running the show today. we begin with tech stocks, coming off a record close, and its best first half since 1998, despite trade and regulatory concerns, continuing to weigh on big tech so can this sector continue its record run up for the second half of the year joining us now is walter piezek as well as charles brazinskoi

with aerial investments. good morning to you both charles, i'll start with you tech stocks have had a very strong start to the year can that continue? >> well, full disclosure, i've been skeptical of these stocks for a long time and i've been wrong. and i think there are a couple of reasons that i cam concerned the first is they've been drive higher the s&p is dominated by these large companies. as more money goes into the s&p and index funds, these funds buy these stocks for no fundamental reason i do worry if there's a reversal in those flows, these stocks will be hit hard the second thing i worry about is regulation. there's almost nothing that republicans and democrats agree on the one thing they do agree on is that big tech companies have too much power i think there's a real risk of regulatory pressure. >> we're going to dig into that a little bit more, i'm sure. walter, if you look at what's been the best performer in the dow so far to start this week, it's been apple. how much of that is related to the u.s./china trade truce

>> a lot of it has to do with that obviously, that's been a huge concern for them, given the amount of phones that are made out of -- that are made in china and the number of products that are sold in the u.s. that could be impacted by, you know, any type of incremental tariffs from those types of products. so that's been a big positive. the other issue here for apple is, are they making some progress on services is this upgraded rate that's been really ploroviding a stiff headwind for several years now about to abate they don't have a 5g product that could be an issue in terms of helping them stimulate that rate of return into growth but this is the lowest upgrade rate people are holding on to their phones longer than they have before there might be an opportunity for that to deflect later on this year. >> walter, is there a fundamental issue over at apple. that "wall street journal" report earlier this week saying johnny ive's departure triumphs

innovation over design and questioning the innovation going forward. is that a concern? >> look, the numbers speak for themselves we've talked about this for some time back in 2012, the company spent about $3 billion on r&d and was only 2.2% of revenue since that time, the r&d budget has quadrupled and the revenue growth has only grown 60%. obviously, that's good overall growth, but they're investing a lot more in what everyone's hopeful to be new products everyone keeps saying, okay, if the iphone can grow a little bit, maybe we'll drop some new innovative product but year over year, we haven't seen anything that innovative. but you can't invest in apple on the hope that this massive r&d budget that's quadrupled since 2012 and now represents whatever, 5, 6% of revenue up from 2% of revenue, is going to deliver a product. you have to invest on the basics is the iphone replacement cycle going to stop lengthening? are service s going to resonate

with their 900 million active iphone users globally? and if they deliver something innovative, great. that will be additional gravy for investors. >> i mean, it is interesting to watch the stock at two-month highs. we're almost at the highs of the year it feels like, walter, this is a classic case of climbing the wall of worry. the skepticism is actually healthy. johnny ives, questions about innovation, questions about the next big hit, questions about the sales slowdown how many analysts have taken down their numbers on china this year, and yet the stock is at new highs? >> it's amazing -- and this has happened before, back in 2016, the last time the company had a decline in revenue, you know, the following year, grew it 5% and then 16% so i think there is a core belief that, look, this is a product where the customer retention rate is super high, 99%. customers aren't, when they upgrade their phones, they're not moving to android or samsung, they're staying with apple. so there's a belief that with

this strong user base, that the company can leverage either more sales in the future or some type of services through that customer base. and i think ultimately, that's what helps the stock gain investors, even when things look really bleak right now in terms of what's happening in china >> charles, you can make some of the same arguments about some of the other big tech names facebook, for example, up 48% since the start of the year, despite all of these looming regulatory risks and, you know, focus on privacy and how they handle misinformation, et cetera investors who weren't buying into these stocks have missed out on quite a run here. is there any reason to think that all the regulatory headlines we're getting now is going to change that >> it would have to be actual action it can't just be hearings, it can't just be elizabeth warren making angry statements. i think, i happen to believe there is a real risk that the

trump administration will get tired of the power that some of these companies are exercising some of it is about predatory pricing. some of these companies have been offering products at zero revenue and driving competitors out of business. that was the original rationale for the a&p anti-trust regulations and i do think the government can make it difficult for somebody like facebook if they decide that they're exercising too much power. i think that's a real possibility, but i admit, i predicted that last year and so far it hasn't shown up in the numbers. >> charles, when you talk about the field of f.a.a.n.g.s that are climbing that so-called walls of worry, one that is not is alphabet. you had that article talking about youtube and facebook and misinformation around medical treatments why has alphabet been the underperformer and what do you expect for the second half of the year >> this would be the name where a lot of people are angry about the policies that the company

has been following and i think it's across the political spectrum i do think people do not like media companies having centralized power. and i think that alphabet is the company that you could point to that does have the most centralized power. it is the name that people worry about the most, frankly. and so some of it is regulatory, and frankly, of course, a lot of the international issues that we've been talking about, a lot of markets are being closed off to them, places like china are amongst the most heavily censored and just don't fit the alphabet model as well as other developed western countries do >> lastly, walter, when you talk about regulatory risks, the other names that come to mind are the ridesharing companies, uber and lyft. you have buy ratings on both why? >> i mean, to us, it's a ten-year call in terms of what autonomy is going to play. i mean, this is -- self-driving cars are going to happen at some point and this is something

that's going to change our economy more than many things have in the past 50 or 100 years. and these companies, i think, are in a position. because it's not going to happen overnight. it's not our belief that waymo or tesla will all of a sudden provide us with full autonomy on day one. that it will require the networks that lyft and uber can provide. they are in a key position right now to benefit the valuation is fine in what they do today, which is basically just taxi replacement, but the true attraction for these companies is getting to that full autonomy and i think they will be able to manage through the regulatory issues that they exist in getting to autonomy and the employment issues that they have now in california, which makes them, i think, great investments for investors over the long-term. >> certainly the big long-term focus on that so-called path to profitability. walter, charles, thanks for joining us today >> thanks for having us when we return, the u.s. chip company sued by huawei over trade secrets. alan astngrmro with us on that

big win on the other side of this break stay with us dow's up 17 points ♪

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alan armstrong now, you've worked directly with huawei in your opinion, does the company pose a larger national security risk to the u.s.? >> well, you know, i'm not a politician, but what i can say is that in our case, the jury found that they had misappropriated our ap and they had a policy of posing as a customer and feeding that information into their internal chip development, which is not acceptable it's not a practice that anybody should do. in terms of their national security threat, i think i'll leave that so, you know, the professionals in the government and i'm confident that they'll do the right thing >> but, alan, from what you have seen from the company, you said that they have stolen your trade secrets. they have made the distinction that no court has ever concluded that it has engaged in malicious i.t. theft is that an important distinction? and you were not awarded any

damages, so are you happy with the outcome? >> i'm happy with the outcome. i think that there's some key discovery in this case that maybe didn't get in for a lot of legal reasons, but for us, it's just good to have this cloud of, you know, when you found a company, you don't dream of a big legal battle, but we were cleared of everything they accused us of. and they were shown to have misappropriated our ip i think the lack of damages is because we're not in production yet, we're just starting to ramp production and, you know, they were -- that was a technicality. >> alan, was there malicious intent behind it, though and you know, this is like i said, the distinction that they make do you think that that's important here because you guysaren't the onl ones, certainly, that has accused huawei of stealing trade secrets. there's a large case right now with t-mobile. >> yeah, i think, from the beginning, what this case was about was them wanting to get our ip we started almost three years

ago and the actual lawsuit happened 18 months ago and as we were fighting this, we found that they were very interested in the ip that we had and i think they tried to use the u.s. court system to get it and lucky for us, our jury system works and the jury saw through that, saw what they were trying to do and made the right decision >> alan, this conversation that we're having around ip and ip theft right now, how much of this do you think is specifically a huawei-related situation versus a broader industry, sector, state situation within china and i ask that, because it really sort of strikes the heart of these u.s./china trade talks right now. >> yeah, i don't view it as an issue. we have a lot of employees in china. there's great chinese companies that we would love to do business with that act with integrity. i think huawei is a specific case and there may be others, but i don't think this is a

country issue. i think any company can get that aggressive type of spirit of attaining technology for any reason and i think that can happen in any country. and it just needs to stop. so i think huawei was taught a hard lesson by the good people of texas, and hopefully that -- i think we were an easy fight to pick in the fact that even though we're small, we fought a hard fight and we won. that will send a pretty strong message to huawei. >> if i'm just looking at this, alan, it seems to me it has everything to do with the u.s./china trade fight huawei is literally at the center of this and has been used as a bargaining chip just this weekend in g-20. if told you me an american company was getting sued by huawei in a texas court, i would expect the american company to prevail. >> well, you know, they -- they fought a hard fight. they spent a lot of money going after us with some pretty crazy

accusations and i think we've prevailed because our jury system works, and they saw through what huawei was trying to do and they saw what huawei took from us so, you know, i -- i went into it, you know, knowing that it was a fight for our lives and we ended up prevailing. but it wasn't easy we spent a lot of money. it's not easy for a small start-up to fight a big conglomerate >> certainly, alan thanks very much for your time in coming on today alan armstrong from cnex labs. sticking with china, white house trade adviser peter navarro joined us last hour. it was his first interview since returning stateside from that g-20 have a listen to what he said. >> we'll work closely with our allies around the world to make sure that huawei 5g is not in those countries. but in the meantime, a small amount of low-level chips are going to be sold to keep systems going and that's not a bad

thing, when it gets us back to the bargaining table with china and with china committing to immediate and significant purchases of agricultural goods. and let's see if they deliver on that >> jeff moon, founder and president of china/moon strategies former u.s. trade representative to china joins us now. welcome, jeff. so the capitulation on huawei, what did it signal about the administration's approach with china right now? >> well, it signaled that the administration made an overly hasty and overly broad determination about the national security threat of huawei. mr. navarro told us that the administration believes that huawei may constitute some threat with regard to 5g. the previous is that huawei writ large was a problem. this is what happens when we make policy by tweet and the administration also, really, i think, has failed to analyze rigorously the national security, trade, and law

enforcement dimensions of this case the centuries task with regard to huawei is to define precisely what constitutes any national security threat. the trade task is to narrowly task and tailor any trade measures to address that precise national security threat and the law enforcement task is to prosecute any criminal violations whether it be violations by the cfo or otherwise and what i hear in much of the analysis and what i hear from the administration is these three issues mixed up and confused and unless we separate them out, analyze them rigorously and try to address them, we are not going to get to the bottom of the huawei case and resolve it to the benefit of both countries. >> you just hit on a lot of points, jeff, but i want to go back to the one you made at the very top of your comments right now about this idea that the original designation on huawei was hasty. how do you know it was hasty it seems to me -- and i'm playing devil's advocate here. it seems to me, you put an

overall ban on a company, you have a lot more leverage coming into those trade talks >> well, i mean, traditionally, we have talked about national security and trade in two different lanes. the president, for the first time, has linked them. and i think we're seeing the implications of that are not necessarily wise and we are setting precedents that in the long-term are going to be very problematic. so i think we really do need to define precisely as opposed to just tarring companies writ large. you know, the chinese could do the same thing with regard to american companies and we would find that equally unacceptable >> jeff, do you really believe that as navarro said this morning that it's only going to be low-level tech given exemptions in this reprieve? i mean, is the administration really going to let the qualcomms, microns, even grade school google's android operating system prevent it from working with huawei? the markets are certainly giving us mixed signals >> i think this is part of the lack of clarity that the administration needs to resolve. we have known that huawei has

been considered by many people in the national security community as a threat for pretty much a decade. there are plenty of studies and information out there and it's astounding to me that the administration was not more precise in the definitions that it gave. i'm not so sure that having low-level or cheap huawei phones with android operating systems is a threat to the u.s. national security and there may be other instances where there aren't threats to national security. but i understand that a higher level, 5g and some other technologies could be a threat but it's the task of regulators to sort all of this through and to do the right thing and address national security threats. and we should not be using this as a trade weapon. >> jeff, i want to shift gears the protests we've seen in hong kong that have been ratcheting up in terms of intensity, how does this play out for china how does this play out for business sentiment in a place like hong kong what's the long-term takeaway here in terms of the risks >> the most important point here

is that from the chinese perspective, hong kong is a sovereign territorial issue, completely an internal issue and the trade dispute, for example, is a foreign relations issue. my point is that hong kong is much more sensitive. i was involved in the hong kong negotiations in 1997, with the state department, and we worked very hard to try to preserve hong kong's special autonomy so the united states ought to try to do that we should not even think of abolishing the hong kong policy act, which preserves that separate autonomy, but we should not try to get involved in that -- in the internal issues that are at issue here, because that will be a non-starter from the chinese perspective. >> jeff moon, jeff, thank you. >> thank you coming up, what big tech and your car insurance have in common when it comes to big brother. contessa, what's after the break? >> well, so is big brother

actually the backseat driver if you download your insurance app that tracks your driving it's big business for the insurers the question is, can downloading those apps and letting someone monitor your behavior actually at ciniv a better drer th'somg up on "squawk alley. company who invented car vending machines and buying a car 100% online. now we've created a brand new way for you to sell your car. whether it's a year old or a few years old, we want to buy your car. so go to carvana and enter your license plate, answer a few questions, and our techno-wizardry calculates your car's value and gives you a real offer in seconds. when you're ready, we'll come to you, pay you on the spot, and pick up your car. that's it. so ditch the old way of selling your car, and say hello to the new way-- at carvana.

first, big tech, now, car insurance. contessa brewer is on the new jersey turnpike with big brother's latest target. and contessa, i have been seeing you report and drive all morning. that is quite a feat, but the insurance companies, if they're tracking or watching you, you've got to be getting dinged for that >> you know what i'm a mom of twins let's just say that there's a lot of multi-tasking on a regular basis. and now i can download -- you know, these tracking devices have been around for a few years, but what makes a difference is that you can just download it as an app and then put it in your car and you're ready to go. and then these apps, they monitor how fast you drive, they

monitor how hard you brake, they monitor how much you drive and what time you drive, and you're actually better off not driving at night, for instance and what it shows, we have new research that shows that people are getting automatic feedback from these apps, it's actually changing their behavior. of people who allowed their driving behavior to be monitored for 26 weeks, they saw an improvement in overall driving score. they saw 21% less hard braking and young people actually improved the most overall. but there are big privacy concerns in fact, we talked to a lot of people who said, yeah, what happens once they make this mandatory and you can't get insurance unless you download the app or your premiums go up if you don't let them monitor your driving we talked to aaa about this. they said of the 10,000 people that they sell car insurance to in rhode island, for instance, only two, two customers have allowed them to install the monitoring equipment in their

car. in part, they say, because it's like big brother and it's a little creepy. on the other hand, some people say, everything's tracking me so why not get something from it. you could save 3% if you're driving with the all-state app some could save as much as 30% >> i'm one of those consumers, my insurer wanted to install the devices in my car and i said, no way, i would rather pay the higher premiums. but in general, this gets at a bigger theme with the auto insurers right now, which is the fact that you have several years of rate increases, because you did see a lot of distracted driving not that long ago, coupled with all of this new technology that is making it safer for people behind the wheel. you've also got collision technologies, you know, avo avoidance technology, automatic braking. it seems like the insurers are

in a good spot in terms of that. >> if claims are decreasing, if you can raise premiums on people that you know are risky drivers, it's a seismic shift, because the insurers then are not assessing risk based on your history of driving, but how you actually drive you know, i'm wondering what they're going to do about this because they can see that i'm not 10 and 2, right? i'm using my hands when i talk is that going to come back and hit me >> yeah, look straight forward, contessa my premiums would be sky high. contessa brewer, thank you keep an eye on the road. european markets set to close overseas opec headlines in focus again today. crude oils down 3.75%. brian sullivan in vienna with the latest what can you tell us >> reporter: yeah, sara, thank you very much. crude oil did come down today. i think the market expected what they got, the 1.2 million barrel cut going nine months. the news was made a little bit later on we were able to land an

interview with the saudi oil minister and since the opec news was already out there in the market, we wanted to change topics and we asked him about macro issues. specifically asked him about the idea that the global economy was going to slow down and that global oil demand would fall with it. he disagreed with that thesis. listen to what he had to say >> i see it the other way. i think this stimulus steps that are being done by monetary authorities are precautionary in nature, but they're certainl going to have a positive effect in terms of fueling economic growth i think the fact that we've had soft prices for oil and energy in general is also another stimulant for global energy demand >> so he's optimistic that global demand will actually accelerate in the second half of the year, guys another topic i wanted to address was the big drop in u.s.

oil and gas stocks, because of all the fear around global debt levels, and specifically debt with energy companies, and he agreed that debt is an issue with many of the u.s. oil and gas producers. listen >> well, definitely, they have not been generating enough cash flow to their investors. and i know that's impacting the appetite for investors to continue putting money into unconventional resources so the combination of infrastructure, which has constrained the combination of service industry constraints, financial constraints, as well as the unknown constraints of geology will ultimately bring us back to reality, that there has to be a plateau and ultimate decline. >> reporter: so morgan, optimistic on global demand, but less optimistic maybe about the long-term outlook of u.s. oil and gas producers, given those high debt levels just a couple of things outside of opec's sphere that we were able to get in our interview

we'll have more tomorrow morning, but for now guys, i will send it back to you from vienna, austria. >> certainly have been generating a lot of headlines, brian. thank you. brian sullivan let's head over to sue herrera now for a news update. sue? >> good morning, morgan. good morning, everyone here's what's happening at this hour senator elizabeth warren sending a letter to former fda commissioner scott gottlieb, calling on him to resign his board of directors position at pfizer warren says his board appointment is the kind of revolving door influence peddling that causes americans to lose faith in their government south korean president moon calling the recent u.s./north korean meeting between president trump and kim jong-un the end of mutual hostility between the countries. his comments came despite skepticism that sunday's meeting was more show than it was substance. several hundred climate change activists protested outside amazon's headquarters in paris. the protesters are reportedly upset with amazon, saying the company is representative of

policies that exacerbate climate change and nasa conducting a full stress launch abort test for the orion capsules designed to carry astronauts to the moon the capsule was empty for morning demoe, which officials say appeared to be successful. nasa aims to put astronauts back on the moon by the year 2024 you're up to date. that's the news update this hour i'll send it back downtown to you guys, morgan >> that's a big test that space industry was watching, orion, which is made by lockheed martin on behalf of nasa. it's going to be a big part of that push back to the moon for humans >> it's so exciting, it really is when we return, just absurd! that's what tim cook's reaction to a report in the "wall street journal" over the reasons behind johnny ive's departure the editor in chief of the verge joins us next for his take in the meantime, speaking of global markets, what should investors be expecting in the second half? elections, geopolitics, and

trade will keep global investors on edge in the second half of the year first, the volatile and drawn-out trade discussion between the u.s. and china will push even more american companies to shift production out of china, with countries like vietnam, cambodia, and india becoming bigger destinations for many factories, retail, and technology companies. second, expect iran to become a bigger geopolitical risk further conflict between the u.s. and iran could raise tensions in the middle east, which accounts for 20% of the world's oil output any disruption to oil shipments could send prices at the pump much higher. to lessen the blow, u.s. energy companies will likely continue to build out infrastructure here, to become less dependent on the middle east for oil plenty of elections and changes to leadership expected in countries like the uk, canada, and argentina, but financial markets will focus on the race for mario draghi's job as president of the european central bank, perhaps the most powerful job in europe any departure from draghi's

vi eoper it takes approach to sangure from a recession could disappoint investors the flexible class schedules allow me to go to work full-time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we, at southern new hampshire university, are the ones who succeed. we are the ones who break through.

welcome back to "squawk alley. absurd that's what apple ceo tim cook called yesterday's report in the journal. in an email to nbc the story alleged that part of the reason that johnny ive left the company was apple's shift in design to operations citing tim cook's strategic vision as a catalyst you have thoughts on this.

i've seen them on twitter. >> i do have thoughts. >> i think the kpachange is good at the end of the day, johnny ive has been there for 20 plus years, worked really hard, designed and launched a number of world-leading world class products the view inside apple he's done a bunch of one-off projects over the years and wants to focus on those more than churning out a new iphone every year. he's going to do that. i do, however, think "the wall street journal" is a good paper. he's a good reporter a lot of the stories in that piece are things that have been floating around for years about ive being more disconnected and paying less attention and i think he reported them out and printed them and i think apple really, really takes issue with the characterization of the company changes versus hey, these are some stories floating around >> were you surprised to see that email from tim cook directly >> i was surprised apple is a major news distribution service that he

runs i think it's important for him to not take shots at journalism without backing it up with actual reputations of fact >> and not just that, but this was very different than when he refuted that bloomberg report on the chinese spy chips. he picked that apart, piece by piece. this was sort of a shorter email that just said it was a total mischaracterization. he didn't actually call for a correction or take anything specific do you think that it was done in haste or do you think this is, you know, an important thing for tim cook to do to defend his company without a whole lot of evidence >> i think the ive story is important. the bloomberg story is a national security story. i think they had to approach that a little bit differently and say, hey, you know, icloud is not affected by secret chinese chips in our servers that's a little bit of a different scale of story i think the proof here is really in the pudding apple is shifting to be a services oriented company. tim cook says it out loud. this story of, can they design

another category-leading product, i think it's time to put that to bed. there's not going to be an iphone or another ipad these things change the world. are they going to compromise the user experience of these products to push their services is the heart of the question >> the other question it raises is what the bench looks like under tim cook are there any -- is there any reason to wall street to be concerned. >> so that is a great question johnny ive was equally as famous as steve jobs. that was his voice in all of those product design videos. >> angela aarons was a rock star and she left >> and part of that "wall street journal" story is they brought in a bunch of fashion people to market the watch and that didn't work out and now it's a health and fitness device, which is where the focus has been i think they're trying to show you the bench. >> you know, you just mentioned service, but i think the whole point of this report and even the comments you're make right now, it sort of hits right at the heart of investor and industry concerns around this company, which is, what is

apple's next act, especially in this post steve jobs era, where you can make the argument, there has been a struggle to realize the full success of these newer innovations. >> i think that is always the question that apple faces. the view from inside of apple is that this has not changed. this is oni ive's design team, it's as integrated with engineering as it's ever been. i think the view from outside is, yeah, but your big idea is oprah made us a tv show. and those things have to get reconciled >> you said, there's not going to be an iphone, another ipad. i was just in shenzhen, china, with the ceo of huawei and they said they're going to create the next iphone or the next major innovation are we seeing that big disparity? are investors basically thinking that apple's, all the innovation is already there now they're going to turn to things like services is that an opening for a company like huawei, which replaced apple, by the way, as the number two smartphone seller in the world earlier this year. >> and the thing about the addressable market for

smartphones, it's everything in the world. the addressable market is every single person and that's the smartphone, that's the tablet, that's the laptop. maybe that's going on air glasses, but that's a ways away. right now you're looking attach rates for air pods, which is every iphone and a huge number but can you invent another product with an addressable market of every centennisingle ? that's a tall order. >> so here's my next question, what the next chapter for johnny ive looks like i know he's creating this new company, lovefrom, apple will be the first client, but in the long-term, where do his designs end up >> he's been making a lot of luxury products for red auctions and things like that he doesn't have to do anything he's a hundred millionaire, billionaire. he's got as many jaguars as he can afford i think he's very focused on pushing things forward that people aren't looking at he has the ability to do that. i doubt we're going to see a bunch of consumer products from

johnny ives. >> thanks for joining us today >> thanks for having me. as we head to break, tech coming off of a record close and its best day in nearly two weeks, but is a slowdown ahead the market's pulling back just a little bit here. dow's been flipping around negative and positive all session. it's down just 33 points p stff its record. de-along, cap! i've never been in one of these before, even though geico has been- ohhh. ooh ohh here we go, here we go. you got cut off there, what were you saying? oooo. oh no no. maybe that geico has been proudly serving the military for over 75 years? is that what you wanted to say? mhmmm. i have to say, you seemed a lot chattier on tv. geico. proudly serving the military for over 75 years. you ok back there, buddy?

i'm scott wapner here's what's coming up on the "halftime report" at the top of the hour the trade war with china, johnny

ive's departure and iphone sales slower than they once were they may be headwinds for apple, but are they enough to really worry about as the stock tries to return to its highs we'll debate that. and our call of the day takes on a financial stock ahead of bank earnings, and leslie picker following the money for us of one hedge fund manager who's having a great year. she'll explain at noon on the half deirdre, we'll see you in about 15 >> looking forward to it coming up on "squawk alley," why our next guest says the president's war on big tech is, quote, getting even dumber "squawk alley" returns in less than three minutes

president trump's war on big tech is getting even dumber. that's the thesis and title of our next guest's latest article, ai fellow and contributor james pethokoukis joins us now from washington what do you mean, jimmy? >> well, listen, the president is now aiding and abetting this sort of, you know, republican conspiracy theory that the big tech companies, particularly google and facebook, also twitter, are trying to suppress conservative thought by kicking people out, by sort of de-emphasizing their posts so he's been tweeting about it and now, next week, there's going to be a social media summit at the white house, where the president is going to bring a bunch of conservative bloggers and stuff to complain about big tech and probably argue that they need to be broken up, regulated, or stripped of their section 230 immunity against the

ability or not to do these posts. >> do you notthink it's a problem and an issue worth exploring, just how much free speech is too much free speech and the fact that these big tech companies can actually regulate that >> i think it would be interesting if there were any actual evidence that they're suppressing conservatives, but there isn't. and i think before i would go, if i was the president of the united states and i would go on twitter or on facebook and say, wow, these are terrible companies, we need to do something about them, i think i would want some actual evidence rather than a bunch of complaining from, you know, people on twitter or social media who may have been also tweeting some like white supremacist thought. that's what i would think. >> but, jimmy, isn't that sort of striking at the heart of the matter, which is that there hasn't been a lot of transparency for these big tech companies. it hasn't always been clear how they're regulating their own platforms or if in the past

they've even been regulating their own platforms? this is part of the reason that there's so much regulatory scrutiny on them right now anyway i mean, they have rules in place and they don't always adhere to their own rules. >> now, that's where there's like something there i think that's actually a good point. there is, obviously, a lot ther criticism about what are the rules, how they're being implemented. i think a lot more transparency and giving people some sort of way to challenge these positions, that's great. but the people complaining about this issue, i don't think they're going to be satisfied with transparency. they want an actual change in how these companies operate. and so this is a huge issue. you have senators, republican senators wanting to change the law as a result of this. so i think it's sort of moved beyond a twitter issue or a viral issue. there's something that actually may result in legislative changes. >> jim, this isn't just a republican issue, of course it's

bipartisan you have elizabeth warren on the other side calling for a breakup of big tech. so where do we go from here if the larger picture and when is regulation going to happen, what does that look like? >> folks on the left tend to have a little different take on what the real issue is they're looking at issues of election interference, corporate power. they think it's depression innovation when you have huge chunks of folks on the left and right agreeing something would be done, you would be crazy as an investor to assume nothing will ever be done whether it's duplicating europe's gdpr privacy regulatory rule, changing of section 230 rule which even some democrats have talked about because they want more moderation, you have to factor in political risk when looking at these companies >> jimmy, meantime you have this letter out from the retail industry leaders association, add to go what now seems to be a growing list of lobbyists and different companies, both tech,

retail, et cetera, coming out and forming antitrust cases against these big tech companies. how sharp are their teeth in terms of this case >> you're going to find out how many enemies these companies have but remember, the point of an antitrust law is to protect the economic and consumer welfare of consumers. not to protect competitors who can't compete. so you're right, they're going to be coming outside of woodwork they'll make a lot of cases. but it's going to be very difficult for them to prove under current antitrust doctrine since obviously, and there's a great fed study out showing the massive amount of economic welfare that these companies are providing to consumers it would be a very difficult case to make >> jimmy, how do you read the overall antitrust division of this administration? it seems like the president ran on deregulation, he implemented deregulation, and then has moved to block a lot of important

company mergers and consolidation. how should investors sort of view what this antitrust department looks like and the predictability of it >> listen, i think the core doctrine, the corps of te of the antitrust doctrine particularly as it relates to these companies, they think that's the best way to run their business they'll talk more about antitrust and investigating these companies, and i'm sure there will be investigations i have yet to see really anyone saying that they've been getting it wrong for 30 years and we need to do something different, we need to go back to the way it was in the 1960s, or we need to adopt some of these novel new theories that companies should be broken up purely because they're big or for some or reason we're still in that spot where what we've been doing for the past three decades, at least for a while we'll continue doing that >> jimmy pethokoukis, always good to hear from you, thank

you. >> you bet after the break, ea ramping up its free to play fight against fortnite we've got a live rorept from san francisco next dow is down 25 we call it the mother standard of care.

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welcome back to "squawk alley. the latest season of "apex legends" launched today. josh lipton in san francisco with the story josh, can ea regain the momentum and get all of those twitch viewers? >> reporter: that's right, deirdre. the new season of apex legends launches today, ea's free to play game. after its surprise debut in february, it quickly attracted 50 million fans. the new season includes a new character, new weapon, and new skins, in other words new gear and looks for the characters ea executives say it's the fastest growing game the company has ever had and bookings could be as much as $400 million in fiscal 2020. piper's mike olson tells me the initial fervor has in part

subsided in part because the game wasn't updated as frequently as fortnite, a giant in the space it's racked up 250 million players and nearly $4 billion in estimated revenue according to super data research. question for investors, can this new season of apex legend spur renewed interest in this game and give ea a lift more broadly, olson believes the free to pay style is here to say, he thinks empa is well-positioned to capitalize on the trend. others are too, activision could make a strong move in this market, perhaps offering some version of it popular call of duty franchise as a free to play title too, guys. back to you. >> josh lipton, thank you. moving on, cnbc can now confirm that nike is pulling sneakers featuring an early version of the american flag, often called the betsy ross flag, after "the wall street

journal" reported former nfl player colin kaepernick told the company it should not be selling a shoe with a symbol that he and others consider offensive because it harkens back to a period in american history of slavery, the company telling me, quote, nike has chosen not to release the air max 1 quick strike fourth of july as it featured an old version of the american flag. nike's shares are slightly lower. the shoes were set to be released in celebration of the fourth of july holiday they had already started shipping to retailers. so now they're going for about 2,000 -- this is crazy -- $2,000, because highest bidder on some of the sites get to drive up the prices. >> do we even know if some of the retailers were selling these shoes? >> i don't think so, they were get ready to sell them nike often does a limited edition release around fourth of july i think nike has found itself yet again as a lightning rod in the middle of a very controversial issue, clearly with a lot of especially right

wing politicians >> earlier you were talking about how it's trying to be progressive and not political, finding that a hard line to walk >> correct they would say when they had colin kaepernick do the ads, they were just saying chase your dream. obviously people interpreted it differently. >> ladies, great to have you here for the hour. that's going to do it for "squawk alley. let's get over to scott wapner and "the half. thank you, i'm scott wapner. front and center, apple leading the dow in the past month, up again today. can it get back to a new high? it's 12:00 noon. this is "the halftime report." apple's run, up 15%, but still 13% off its high set nine months ago after a big departure in the executive ranks, what will it take to get this stock higher? plus the dow is now 200 points from an all-time high are we in danger of