good morning it is 8:00 a.m. at apple headquarters and 11:00 a.m. on wall street. "squawk alley" is live

♪ good wednesday morning welcome to "squawk alley." i'm john for the with caro quintanilla and julia borstin we'll start with apple, a cost cut for small developers josh lipton breaks down the news for us. >> here is how the new program is going to work it's called the app store small business program it launches on january 1st and it does represent a big change here. developers earning up to $1 million during the previous year will now be eligible for a commission of 15% on paid apps and in-app purchases, and that

is half of apple's standard commission apple says the new program will impact what it says is the vast majority of developers selling digital goods and services on the store. tim cook saying in a statement the app store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea for investors this change is also important remember, the app store is critical for apple it accounts for an estimated 25% of that faster growing higher margin services segment, but it doesn't look like this change will have a big impact on apple's bottom line. yes, this change is going to effect about 98% of businesses that pay apple a commission. that's according the sensor tower, but the smaller developers account for less than 5% of app store revenue. meanwhile, the bigger developers will have to pay the standard 30% cut and some of the big developers have been very

unhappy with apple, like base camp, spotify and fortnite maker epic games, all publicly criticizing app store policies but it's hard to wage war without soldiers and apple clearly bets that this new change is going to pay dividends over the long term, motivating its army of 28 million developers to keep creating apps that generate revenue for the store and help breathe life into apple products carl, back to you. >> josh, speaking of base camp, our next guest was behind the tweets that essentially got this whole fight started between apple and the developers on the app store. the base camp co-founder david hansen joins us this morning welcome back it's good to see you again. >> thanks for having me again. >> you've been pretty vocal on twitter, even today. you called the company corrupt and evil why aren't you giving them any credit for this discount >> i wish i could. i wish this was a moment of celebration and we could see there was some fundamental

change coming that was really going to change how things are working on the app store unfortunately it is not. as the math just showed, this doesn't change anything for apple. this applies to 5% of the revenue and it is marketed as a mail-in rebate that you have to apply for. so even if 100% of developers were eligible or applied for it, it would only result in an impact on 2.5% of the revenue that goes into the app store so that tells you the magnitude of this change, which is very little at all. and the change here really is much more of a employ to try to split the developer base by throwing away some cheap concessions for apple to a large number, not even so much small developers, as tiny developers or individuals when they say this applies to 98%, they're talking in many cases about single developers making an app just as one person they're not talking about small businesses this cap at a million dollars, how big of a company can you run

on a million dollars of revenue? not very big at all. if you're running even a small company of six people, you might very well have expenses that run upwards of a million dollars and you will be paying apple $150,000, even after the concession, just to process credit cards on the app store. that's obscene but it becomes more obscene the minute you go a dollar over the million dollars. that concession or that commission is going to jump from $150,000 to $300,000 you're going to have to fire people at your small company just as it's taking off. >> so i understand your point, although i've also seen it characterized today as the biggest change to the app store since 2008 and although the changes might not be large enough to satisfy you now, i wonder if this might be the crack that opens for broader concessions. >> i think this shows that apple is indeed sweating and they're not doing this because they just

feel like, oh, this would be wonderful for developers they're doing this because of all the pressure that's on them from being named as one of the main perpetrators in the new congressional anti-trust report, page after page of their anti-trust abuses. apple is clearly feeling the heat so that's good it's good that they're sweating. but the drops that they're dropping right now are insignificant. so the worst thing we could possibly do is to take this as like, oh, we won, everything is great now. it's not great apple is just as abusive as it's always been and this employ to split the opposition to the abusive tactics in the app store is actually just worse it's more of the same. it's not fundamental change and fundamental change is what we need >> if you were to be negotiating with apple now, once they've made this one concession, what would you go back to them and say, okay, here's what i think you should do. first i'm wondering if you think this 15% is fair for under a million dollars in revenue

would you consider some sort of graded system, would you say that 15% is a fair cut for companies of any size? what would be your negotiation with apple right now >> the problem is i can't negotiate with apple because apple has all the leverage and that's exactly the problem for us to have a proper negotiation with apple, there needs to be choice if apple actually had to compete with their payment processing system against the rest of the industry like every other payment platform has to do, the tune would be completely different. when we negotiate with our payment processors, they're talking about basis point differences because the rates are so much lower. we pay around 2% or 2.5% at most so apple needs to give developers the choice. you can either choose to use the apple payment system and you get all the wonderful benefits that that brings, consumers already have their credit cards in the system, it's very easy to use, there's very little friction it has benefits. but unless there's real competition, we don't get to

choose that. so give us the choice, let us process payments directly ourselves just as it's possible to do on the web and then let us tell consumers about it. the other thing is that apple gags consumers -- sorry, developers from telling consumers if they're using another system if you open netflix today, you just got a new phone and you install netflix on it and you're excited to sign up, it will give you a locked, cryptic screen that says you can't use netflix right now. we know it's a bummer, but when you're a member, come back what does that mean? where am i supposed to go? >> it's hard to ask you to negotiate with yourself here, but i'm trying to go down this road that you appear to be painting and see how it might work you seem to be saying let there be a parallel app store that's not endorsed or owned by apple that lives on ios that they don't control the payment system, maybe the security is

somebody else. otherwise, apple has to do the security and they're providing value where they're going to want a cut that part is like being in a retail store so are you saying provide us with a parallel app store that we can market and handle discoverability and kind of knee cap your services revenue that way? is that the ask? >> no, that's not the ask at all. apple has been extremely successful at muddling this issue by tying the validity of security checks and protection against malware to the fact that they have a payment processing system that they want everyone to use because that's profitable for them these two things do not have to go together. on the mac you can install software without using apple's payment system and you still get all the benefits so these things can be completely divorced and they should be. secondly, developers are already paying apple for these services. it costs $99 a year to be part of the apple developer program

and 85% of developers don't pay apple anything more than that. that includes developers like facebook facebook is making billions of dollars off the apps they have in the app store and they only pay apple $99. we're simply asking for the opportunity to have the same privileges at an apple or any other company that doesn't have to give a huge cut of their revenue to apple. >> would you be okay if they shifted their model from a share of revenue for the services that they believe that they're providing and, instead, change the developers fees on the back end even if they're one-time fees and maybe they're based on the amount of resources that developers are consuming, the amount of updates that they're putting through, how they want their app site if apple wants to make more money on that end but gives up some on the revenue side, are you okay with that >> that would be a much more fair model if i had to pay the same as facebook would pay for the use of their resources

but also, let's just take a step back here. apple is a $2 trillion company that sells $1,000 phones to consumers who have bought those devices and want to use the best apps they can get access to. apple is not some small company that's really hurting for revenue. apple already makes hundreds of millions of dollars off the app store off developer fees they can already cover the vast majority of all the expenses they should have and apple derives incredible value and profits from the fact that they have millions of apps in the app store. apple needs to flip this around and say, wait a minute, actually, these developers are selling our phones people want to buy an iphone because there are all these great apps on the phone. we should be paying them for the privilege of being here, right, rather than see them as yet another revenue tree that they need to shake as hard as possible this whole premise is completely bust apple is over $2 trillion.

they don't need to shake down $1 million software companies, preventing them from being able to hire new employees or taking $300,000 cuts of $1 million in revenue. it's obscene. >> i guess that's a shorter way of saying that you have all but given up hope that there will be a true rival ecosystem, rival phone base, rival app store for other developers to migrate to, right? that's just not in the cards >> well, i like to look at yesterday's weather and for the past decade we have had a duopoly in the operating systems that looks like it has no end in sight. microsoft tried a $1 trillion company and they failed. if microsoft can't crack it, what hope is there that anyone else can crack it? this is exactly why we need regulators and enforcement and antitrust action because the market is not going to correct itself the market has to be corrected from outside and i wish we had

more choice. i wish i could just say, you know what, apple, i don't like your deal, i'm going to go somewhere else that is the problem with monopolies, you can't say no >> it's certainly one of the things we'll keep an eye on from a regulatory standpoint into the next few years it's a big story today we always love getting your take on it. thanks >> any time. thank you. meantime, pfizer announcing it has concluded phase three of its covid-19 vaccine trial with results showing a 95% efficacy rate meg terrell has the latest on that very important news >> so pfizer hitting that milestone just a week after it presented the first interim look at its phase three results that was just the interim look so that's why we're seeing the numbers change from more than 90% efficacy to 95% efficacy the reason is they now have enough cases in the trial to conclude that efficacy look and

the breakdown of cases between the placebo group and the vaccine arm is to the tune of 95% protection against cases of covid-19 now, the company also saying they hit a safety milestone of two months follow-up for half the people in their trial to have been fully vaccinated that's what the fda required for them to seek emergency use authorization. they say the vaccine is well tolerated, no serious safety concerns they plan to seek fda authorization within days. and of course, guys, on monday we heard from moderna that its interim look was almost 95% effective as well. so both of these companies are headed toward the fda soon and we've also learned today that the fda has asked its vaccine advisory committee to hold the dates of december 8th, 9th and 10th to potentially have a meeting to discuss clearance of the vaccines so they might discuss both of these vaccines and this is a key step ahead of potential authorization. so this is the time we are potentially looking at for clearance of the first covid-19

vaccines to hit the market in the u.s., but there are several more behind them, including johnson & johnson and astrazeneca. they talked about why they're testing one shot and two shot. they're the only ones to have a one-dose regimen here's what he said about that. >> it has an impact on the number of vaccine shots that would be available, particularly during the course of 2021, so those are the different things that are being evaluated and we think ultimately it would have a very significant impact on compliance and just the administrative challenge of vaccinating so many people with a single dose versus two doses >> so, guys, a lot of news to come we are nearing the final weeks from the fda might decide on these first two shots and a lot more coming behind that. julia. >> meg, very reassuring news

we look forward to getting more good news on the vaccine front thanks so much for bringing that to us. shares of boeing boosting the dow after the faa approved the return of the boeing 737 max jet. american will be the first airline to put max commercial flights back on its schedule for december the shares up 2% and watch delta as well announcing it will continue blocking the middle seats until march 30th, unlike some of its a t ls lomore "squawk alley" is still ahead, so stay with us ♪ you can go your own way

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going to the movies may never be the same due to covid-19 as theatres evaluate new ways to accommodate social distancing and safety take a look. >> imagine walking into a theatre that looks like something from star wars galactic senate. this concept from a french design firm, which plans to open its first theatre next year in paris, totally re-imagines theatres' layout with vertical pods to accommodate for social distancing. >> there's a feeling of being in this small pod with a limited number of seats. we are able to provide services to avoid the crowd. >> tk architects, which has designed theatres in the u.s. and across the globe, is thinking about a next generation drive-in with multi levels like

a parking garage before the investment in those entirely new approaches, there are some smaller steps the company and others are taking to redesign existing theatres as consumers begin to think about going back to the movies. >> people will come back and socialize. people are already over-anxious to do that. >> to make existing theatres safer, tk architects can exploring tweaks such as flexible seating to accommodate families and put space between them. >> we have a number of ideas with reconfigurable seats or moveable seats that you can adjust to different performances or different kinds of content. >> and changing the way lobbies are designed can enable people to keep a safe distance while buying tickets, picking up concessions and reading movie times. >> with that look at what the future of movie going may look like, we're joined by the ceo of one of the larger cinema chains, who is going to talk to us about

not just operating theatres during the pandemic but also sin a mark's new deal. thanks for being with us today. >> glad to be here thank you. >> mark, this is a pretty big deal you're partnering with universal, which is of course cnbc's sister company, to have a potentially, as short as a 17-day wind oh between when films can be released in your theatres and when they could be available video on demand. i'm wondering what you see as the financial advantage for you, what kind of cut you're going to get from those premium video on demand sales, during what used to be the theatrical window. >> thanks for the question i think it's important to realize and one of the reasons that we did this deal, one of the key reasons, is that a selected franchise films have been carved out with a minimum of 31 days, and i emphasize a minimum. so that's five weekends. and when you go back and you look at the big pictures over the last couple of years, at

least 50% of the box office were coming from those big pictures so in addition to those selected franchise films, any movie that grosses over $50 million again will have a minimum of 31 days and it's clearly in universal's interest to want to play movies as long as they continue to generate significant box office in the theatres. so we're very happy with the deal and we're also very happy with the back end of the deal. there were some financial incentives that universal put forward with us. i'm not going to be specific about what those are i feel like those are confidential deal terms, but they were significant and we're very pleased with it >> it seems like the key thing here is flexibility, the idea that studios can decide on a movie by movie basis how they're going to handle that distribution but you've made this deal with universal, universal also made this deal with amc do you expect to make similar deals with this flexible windowing with other studios as

well >> julia, we've kind of labeled it dynamic windows and we have been talking to multiple studios for months, actually some even pre-covid, about a dynamic windowing structure in which it wouldn't be one size fits all, meaning that for a small or medium-sized movie that might be a minimum of 17, which could become 24 or 31. and for the big tent pole franchise films, the 31 days is critical again, that's a minimum. we would expect that some of these movies, universal has some great franchise films coming, would actually stay in the theatres beyond 31 days because it's in universal's financial interest to do so. >> mark, good morning. it's jon forte my first thought on the critical side is maybe under this system small films are going to have less time to make a splash, a movie that takes a long time to catch on, word-of-mouth, might

never really get the chance to have a decent run in theatres. is that right? >> jon, i don't think so we have thousands of screens across the country and throughout latin america as well and we have plenty of room to accommodate those smaller independent films. and we're very dedicated to that we have an arts program in specific theatres and specific screens within our theatres that are dedicated to those independent films. so i don't think that's going to be a problem for cinemark to be able to continue to service those movies. >> there is the question of when you'll have mass audiences returning. from what i understand, only about half of the theatres nationwide of all the chains in the country are open right now there are major markets like new york and los angeles that have no plans to open soon. when do you expect your movie-going audience to come back so a $50 million open is even an option

>> thank you for that. right now we have about 75% of our theatres open. so we're much further penetrated and every theatre that is allowed to be open is, in fact, open and once some of those governmental and municipal requirements are loosened, when it's safe to return, we will open those theatres within a matter of days so we look at this and -- just one point that i would love to bring because it's a key data point, in japan and in china where the virus has been contained, they have released high-profile local content movie to absolutely record box office in the past month. in japan a movie called "a demon slayer" opened at $50 million in japan alone and it's on its way to becoming the biggest movie of all time, domestic or foreign. so what that says is when the virus is contained and clearly it's going to be in 2021, you

just did a great segment on the vaccines when that happens and big high-profile movies return, people are anxious to come back, as proven in both japan and china over the last couple of months >> well, mark, we hope you'll join us again as more of your theatres, as the remainder of your theatres are able to open thank you so much for taking the time with us today. >> thank you very much appreciate it. it's a tale of two retailers as we go to the break, target and lowe's going in opposite direction. a beat on the top and bottom line powering shares of target, while lowe's did miss by a penny. we'll keep an eye on both of those names when "squawk alley" comes back don't go away. the path forward is sponsored by adyen business, not boundaries at fidelity, you get personalized wealth planning

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i'm sue herera here is your cnbc news update at this hour. minnesota's governor is expected to close gyms and limit bars and restaurants to takeout and delivery service in a move to slow the spread of covid-19. multiple reports say the restrictions will last four weeks. a new study finds a majority of people who recover from covid-19 maintain immunity for months and could keep it for years. researchers looked at results from 185 people, however the study has not been peer reviewed in michigan the settlement for the flint water crisis now tops $640 million. the agreement over damages from lead tainted water had been sent to a judge for preliminary approval and the nra is paying $2.5 million in fines to settle charges that it sold insurance illegally. a new york state agency charged the nra sold the insurance without a license and concealed how it kept some premiums for itself you are up to date that's the news update this

hour jon, i'll send it back to you. >> thank you, sue. we were talking theatres and box office and apple getting two thumbs up for laptops running its new m-1 chips. this is a big deal for apple's holiday sales and potentially rewrites the script on the pc chip business. we're joined by joanne na stern and john gruber. good morning we were talking about this before, i wanted to see your reviews. you don't give out a lot of raves just unnecessarily, but it seems fair to say these laptops blew you away. >> i don't know if i've ever been in love with a laptop, but i think i'm in love with these laptops, which is a very weird thing to say on live television. but here i am, because there were so many things over the laptop development over the last 20 years that hadn't changed sure, they got faster, battery life got better. but heat, fan noise, batteries

that last actually days, those were not things that they typically got from windows and intel systems, or even mac systems powered by intel but here we have laptops that considerably change what we've known about laptops. they're quiet, cool, and they run all day. >> john, this is sort of the impossible situation in a way. we're used to these tradeoffs between power, between battery life and then between compatibility with existing apps you can't have all three generally, but they seem to have achieved this. it seems to me like this is the biggest technological shift that i can recall from apple since they got the next step and built the mac operating system and ios on top of that work. >> yeah, it's rare for us to be so say, oh, my gosh, you have to go back 25 years for something this seismic, but it really is and the funny thing about it is

the new laptops look exactly the same as the ones that they were selling a week ago there's no difference on the outside. the difference is entirely on the inside but it really is that seismic of a change the analogy i used earlier this week, the old saying that you can have your cake and eat it, too. but this is really like having your cake, eating it, too, and being able to share it with your friends in terms of there is no trade-off. you get the all-day battery life, it never gets hot. you don't have to really do anything special you don't have to turn your brightness down. you don't have to turn off your email so it's not running in the background you don't have to do any of that and the sharing it with your friends part of the extension of the analogy is the compatibility that, yes, there's this technical shift under the hood where they're using entirely different architecture, but as a user, whether you're a technical user or just a plain consumer user, your existing software

just works you don't have to do anything different. >> i'm going to jump in to say here, i want to add one thing to my review. one thing is not perfect i am making this call. i am on the m-1 mac book pro right now, but i am not using the web gram because i do not want viewers to see me through a -- can i say craptastic? >> we'll allow it? >> the web cam is really unacceptable it's a 720 p camera. we are all on zoom all day you don't look good on it. so i have an actual camera hooked up to this machine and it's running cool and quiet. i'm running a bunch of things, but i have a giant camera sitting in front of me >> i'm on the m-1 camera >> and that's why i look so much better >> as a second strike player, they waited to do certain things

in phones, they clearly waited to do things in television now they've waited to do things in engineering with chips in terms of going vertical. do you see this as an extension of all of that >> yeah, they've always been a measure twice, cut once company, maybe measure three times, cut once the story i've heard a long time ago was that steve jobs had a philosophy, and i know he's been gone for awhile. but basically if you wanted to create a disruption, it wasn't enough to be a little bit better you really needed to wait until you were ten times better. and that's hyperbole from steve jobs, but waiting until you can make a colossal improvement to make a transition is sort of the apple way as opposed to, say, making this transition three or four years ago, which is probably around the timeline where it would have been an even

transition, where they could have made this and the performance would have been the same, but it wouldn't have been this overwhelming, oh, my god, you've got all-day battery life, it's totally different than it was just a week ago. >> what's amazing here, john, is i don't think i've ever seen two guests agree so unanimously that a product is so great. i don't think i've ever seen two guests agree so unanimously on anything my question is this. t except for the web cam we won't forget that part. half of the new kpurs being sold by apple are being bought by first-time mac buyers and i wonder if you think this will be instrumental in not just getting mac users to upgrade, but in converting people to be mac users. >> yes, i definitely think this is going to fuel more people to think about -- if we were going to buy a windows and intel

system, i definitely think there are enough improvements here, and not talking about the operating system or software, talking about pure hardware gains to look at these on shelves and say i'm going to go now with a mac, i'm going to change my software and change using the different operating system for these hardware gains. i think there's a significant up-sell there. one thing to point out, though, is right now there is not support yet for windows on these machines or there is coming support, so that's a little bit hazy those that like to run windows on macs, that is a big question mark at this point. >> i want to clarify that you are on an m-1 laptop you look better than craptastic to me, so we might have to visit that particular evaluation but i'm curious your thoughts on the broader impact on the chip system, because it seems to me that both microsoft as the windows maker and other pc makers are now going to be

forced to go back to the drawing board, draw up new blueprints for how they can use arm chips or some kind of custom work with intel and amd to squeeze for performance out of their machines and compete with this, right? >> yeah, i think so. and apple sort of goes out of its way and a little bit of it is marketing and a little bit of it is truthful that they don't really use the word arm. they're calling these things apple silicone arm is sort of an implementation detail for example, qualcomm makes the best arm chips for android phones those chips are great for phones really, i think by most objective measures they're not as good as the chips apple makes for its own phones, but those chips aren't really suitable for making laptops like these or mac minis, and the other thing to remember is that for apple this is just the start. they've promised already, and apple doesn't usually talk about the future, but they've already

said they're moving the entire mac lineup to these chips. they've started with the consumer models, best-selling models but they're going to move everything, including the pro work station desktops to these chips, too, which they haven't spoken about those future chips. but that means they've got chips like these in the line for desktop professional, video editing, that sort of thing. >> that's scary, because usually in the past they come out with a desktop chips first because laptops you're more constrained with space, with thermals. so the fact that they came out with laptops like this that have the thermal performance that you mentioned and exactly what you're saying, john, wow, 2021 is going to be interesting thank you. >> thanks for having me. >> thank you keep your eye on bitcoin today. we got above 18 k for a bit there in what has been a remarkable compback for the

cryptocurrency in the last several weeks. now at the highest level since to 17. the all-time high is 19640 we're back in a moment by techgy and human ingenuity, we can make it work for you and your business. ♪

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this week, we haven't even gotten to twitter's new feature yesterday called fleets. it's answer to snapchat and instagram stories with a similar premise, the message disappears after 24 hours twitter users noticed that since

the launch back in 2013 the story's idea has been copied of course by instagram, what's app, messenger, youtube, linkedin, and now twitter, although i think, julia, there's a little confusion still on how exactly you fleet instead of tweet >> yes, well, i think the whole question is whether or not this format, maybe it will be popular, but maybe it won't be so useful for advertisers. of course the idea of a message that deletes in 24 hours is not going to lend itself to as much content for advertisers. jon, the other thing i've heard, i've read that there was some interest and curiosity about fleets and so much so that it actually slowed down the service for twitter users, which of course, jon, is not going to be a good thing if you're trying to get a new feature off the ground. >> has this gone too far everybody is launching stories linkedin did it a few weeks ago, like the -- everybody is copying snap on this one for so long that it's hard to remember where

this even started. is this going to be a flash in the pan like vertical video, which was supposed to take over everything, but didn't or do you think this is like the new form of social media communication where five years from now people will be like, a tweet, i don't know what that is i just have fleets >> oh, i think tweets are here to stay. i think the question is more, jon, whether people are actually worried enough about their digital footprint that they're not going to want to have their messages sticking around forever, and whether they feel more comfortable posting something that is going to disappear after just 24 hours. what do you think, jon what is your bet >> i think you're right. i'll go with you on that one >> okay, shifting gears, more from dealbook, when epic game ceo tim sweeney sits down and talks about what he thinks of pls new app store rules. that's coming in just about 15 minutes. stay with us in case you missed it is

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welcome back the government's paycheck protection program has been ground zero for fraud. nearly 100 people have been attempted with trying to steal $240 million now cnbc has learned how some of that money is being digitally laundered through popular apps

used every day legally to send and receive funds. here's kayla on the trail of what police call the money mules. >> i've never seen in my 28 years' experience the amount of fraud that i've seen currently. >> reporter: in this music video new york rapper brags about getting rich by stealing unemployment covid benefits. they say it was made just for entertainment. the rapper is facing three felony charges for obtaining more than $1.2 million in those benefits some of the money accessed on cash app transactions. he has pled not guilty and his attorney declined to comment. >> faster payment means faster fraud. >> reporter: secret service supervisor says fraudsters can ak sets cash app, vemno and paypal to move back and forth. the c.a.r.e.s. act, an easy target the secret service has more than

700 pending criminal investigations into covid-related fraud and they increasingly involve one of these apps how easy has this type of fraud been to conduct for these type of criminals >> extremely easy because of the online application process that's in place, that ability makes it something that they can do remotely and then direct that to different money mules across the current. >> reporter: here's how it works. criminals illegal apply for and obtain funds from a program like the paycheck protection program. once the money hits, they bounce it to another account and then another. obscuring the money trail making it harder to trace thousands of law enforcement working across the country may be no match for the scope and speed of the fraud under way >> we have seen an explosion of fraud. >> now you get to hide behind a digital device. >> reporter: the coral springs police department say criminals are also using money using the apps targeting people hit hard

by the pandemic. fraudsters solicit innocent victims on social media promising help with bills through cash app, or free money, just district message for details. >> they'll get you hooked. they'll be like, listen, that $1 you send me, i can make it $10 they'll be like, okay, what is there to lose? >> reporter: in these surveillance videos, a suspect is cashing out money at a florida atm. the money came from fraudulent checks with funds sent through cash app by an unwitting victim. >> you send the money. they could disappear they'll block you and you cannot talk to them anymore >> it's made it very easy to steal a victim's funds and then transfer it. not only to one location but then to another and another. >> reporter: was it inevitable when those programs got passed that there would be fraud or something congress could have and should have done to put guardrails and oversight in the programs to keep this from happening? >> it was inevitable, just the amount of money you're going to

have different criminal organizations and individuals, basic scam artists that will try to take advantage of that. >> reporter: cash app says it continues to bolster fraud-fighting resources with investments and new staff and technology paypal, which owns venmo is aggressive with fighting fraud in what it calls enhanced transaction monitoring which tracks unusual patterns on the platform zell says once a consumer reports a suspicious incident, it works with banks and credit unions to stop that activity from happening in the future carl >> such an important story there's the fraud element. yesterday the journal did this piece on companies that got loans and went bankrupt anyway do we think all of this was a function of the speed that this program was set up in? >> reporter: yes

and lawmakers are forthright if that they sacrificed some guardrails in order to get this money into people's hands more quickly. it should be noted in terms of the overall size of these programs, when you have trillions of dollars in stimulus that reached, in many cases, businesses, the amount of money being used fraudulently is a fraction of 1% a lot of banks say they would be envious of that rate themselves. >> such a fascinating report there. i'm wondering as you read those responses from those different companies, venmo, paypal and zell, i wonder if they have to enable consumers to operate on their platforms to prevent this type of thing from happening >> reporter: i think it comes down to these rules called know your customers these big institutions are forced to comply with regulations where they essentially know everything about their customer to try to protect against this type of

activity the apps don't require the same level of disclosure and information that these universal banks that deposit heavy banks require from their customers so i think at the very least there could be a push for some of these apps to have a little more checks and balances in place for the people who are actually using them. >> kayla, you got some response from the makers of these apps. any cautionary sense of what congress might do differently? i mean, i know you were just talking about the volume of money and the percentages. boy, it sure seems like there are going to be plenty of people just waiting to take advantage of this again with the next round of stimulus. >> reporter: they've talked about what they could do in the future to keep this from happening but there seems to be an expectation that because there is still a need to get the money into people's hands quickly, that you have these online applications.

they don't want people coming into banks and applying for them in person. they don't want them showing up on the doorstep of the small business administration because of the pandemic, so they have to keep the online application process in place they want to be able to get the money out quickly. it is those dynamics here that have sort of enabled a lot of this activity to happen, carl. >> thanks to you let's get to the judge with cramer and the half. >> carl, thanks so much. welcome to "the halftime report." the dow nears 30,000 that milestone raising the question of which stocks will work best in the months ahead. we debate that with our investment committee joining me for the hour today, joe, stephanie link, jon najarian and jim cramer, the host of "mad money." let's take a look at stocks first. watching the dow about 100 or so points away. a little more than that now from dow