behaving anti-competitively by using the app store to benefit their bottom line, at the expense of app developers and small businesses we continue to explore ways to address this concern facebook argues that apple will discourage people from accepting advertising. they allege that this is part of apple's plan to push apps and businesses to models that apple can take a cut from, such as subscriptions and in-app payments, which facebook says apple's update changes mean more money for apple and less free stuff for people now, with the prompt to opt out of all ad targeting, facebook says it would mean a return to more of a tv-style broad reach advertising. the social network says that would make it impossible for small businesses to efficiently reach consumers using facebook ads. they warn that small businesses saw sales decline by 60% when they couldn't use targeted advertising.

facebook saying it's speaking out on behalf of small businesses, but it did warn that its revenue would take a hit in the coming year if it does lose personalized advertising we're reaching out to apple for additional comment on this latest pushback from facebook on its operating system changes >> julia, this seems like an escalation that facebook is pushing here maybe they have to because what apple plans to do strikes at the core of facebook's business model. but facebook is making the case here that targeted advertising and the kind of data issues that we've seen facebook itself struggle with for years, that those are somehow inherently competitive and good for small business i don't buy that argument. i mean, i think the likes of facebook, if they tried hard enough, they could figure out a way to make money, do good advertising, without basing it on the level of personal data that they have >> well, they would argue, jon,

to play on the other hand, what facebook would argue is that they need to have some targeting in order to make it worthwhile for a small business to have effective advertising spend. now, if you're going to do tv-style advertising, you're procter & gamble, you're spending money for a big brand ad that you want to reach the whole nation, then it makes sense to not have as much targeting. facebook is saying if you're a small business and you want to reach people who want to buy a specific thing, that i as a woman in los angeles should see a different ad than a man living in iowa, they're saying once you eliminate that kind of targeting then the ads don't become as valuable anymore, which is not just obviously bad for facebook, but would make the ads almost useless for small businesses. >> and julia, that's key, right? the ads become less valuable, which is exactly what facebook is trying to avoid but let's look at this from the user point of view how many people like those targeted ads that can sometimes be a little bit invasive, to be

frank? the other question is where is google in all of this? it says targeted advertising, so i wonder if google doesn't come forward, does that hurt facebook's argument? there hasn't been that kind of history between apple and google, because their revenues, they are so linked together in ways that we're only learning the beginning of this year >> well, deirdre, in terms of the consumer response, facebook would say it's much better to show ads to people that are useful to them if you're targeting to buy a certain kind of slipper in my instagram feed because you know i'm sitting at home and i need new slippers, i would enjoy that kind of ad a lot more than some random ad for a product i would never want so facebook says that the consumer experience is better with targeted advertising, but one thing i want to point out here that is really interesting is that facebook has been under so much antitrust scrutiny, especially in the past week, with the attorneys general and

the ftc taking aim at facebook now they are levying the same antitrust allegation against apple. so really a lot of antitrust stuff and focus here and i think it's interesting they're shifting the focus of that spotlight back on their rival. >> well, see, julia, that was my question because the warning about engagement risk from facebook is not new. are we supposed to believe that this new blog post seven days after the state ags is not a giant attempt to deflect >> well, look, facebook has so many issues in terms of the regulatory oversight, but i think if you had to split it up into two major ones, it's privacy on one hand. they have had to deal with privacy concerns for years, going back to cambridge analytica, and on the other hand is antitrust issues. they say that, yes, maybe they could be better in terms of privacy around targeting, but if you are so pushing towards privacy that you eliminate all targeting that it's going to end up being an antitrust issue for

apple and also really bad for both small businesses and consumers. so i think this is the beginning of something that is going to continue to escalate guys, i also think it's interesting that we don't know when apple is actually planning to implement these changes that could have such broad ripple effects across the advertising landscape. >> julia, i still feel like this is a strong man argument that facebook is putting up there for a couple reasons one, the idea of differential privacy, apple talked a lot about it a couple of years ago, the idea that you can separate some of the data that you use to target information from the person that is supplying that data in order to protect their privacy. apple has worked on this and i think companies like facebook could do a lot more work on it that's one number two, in the past, like setting up this whole tv style thing, in the past ads were targeted to the content and not the person and there's differentiation to have among content they're seeing a golden age of all kinds of content on line, if

you target the advertising to the content people like, you can still reach them but when you're facebook or google, youtube, et cetera, right now, you don't have to because you've got data on people and you can use that. it's not necessarily so cut and dried, right, as facebook is trying to make it? >> well, yeah, not necessarily so cut and dry i think one thing is for sure, is that apple has always been taking the lead on the privacy front and we are sure to see this whole conversation, the fact that they're having this debate right now, no matter how it ends up, even if there is some sort of compromise between developers and facebook on one hand and apple on the other, we will be pushing towards more disclosure and more privacy. and i think that's sort of the way of the world right now if you look at the european privacy regulations, it's clear that's going to become more of a priority >> this does move the needle, julia. thank you for bringing it to us first. it's going to be the topic for our first guest this morning

an early investor in wish. we're going to talk ipos as well thanks for the time today. >> thanks for having me. >> and i see jenny freedman is joining us as well i wasn't sure if that shot was good jenny, it's great to have you, too. alda, i guess let's just talk about growing and evolving rivalries, a couple weeks ago was crm microsoft, now we've got this what do you make of this >> well, the -- first of all, i just wanted to introduce the partners, we're a venture firm and i wanted to welcome jenny. obviously there's tons of rivalries. we're here to discuss wish and wish has carved out a niche in the retail space that we're proud of and it appeals to a wide swath of customers who may

not necessarily have the budgets to afford higher-end items >> okay, and we're going to get to wish in a moment. i know you've got thoughts on wish specifically and the ipo market in general. jenny, can i turn to you on facebook/apple i don't know if you had a chance to listen to the last few minutes of coverage, but this argument about targeted ads. what do you think it means >> so i think this is extremely anticompetitive by apple and feels like an extreme abuse of market power so a few months ago i'm sure you remember epic games, the maker of fortnite, sued apple for using total control over the ios environment and the apps that are available to millions of people saying that apple is violating antitrust laws by banning fortnite for purchases that didn't flow through the app store. i think this is a clear sign that apple isn't worried one bit about that case. some people thought epic games, with a product as popular as fortnite, would be powerful enough to turn consumers against apple and make them back down.

but it will be interesting to see if facebook, which has 2.7 billion users, is powerful enough to actually fight a fight against apple's anticompetitive practices in a meaningful way. >> alda, to bring this back to wish, but also tie into the broader environment in which apple and facebook are dealing right now, very often, correct me if i'm wrong, there are two major business models that startups are going to come to you with either they're selling directly to the customer or they're going to be based on advertising and generating a big audience, a free audience that they can then generate ads from. the fight in this case is between the two biggest names in each one if you're an app selling directly to people, then you need apple if you are selling advertising or even if you're an e-commerce player that's trying to reach people, you need to place ads through facebook if the playing field gets disrupted as far as how these

models work, how much does it affect the startups that you partner with >> it affects them immensely i think that the run-up in advertising prices has been something we've been thinking about for quite some time and, you know, the common belief is that these competitive ad dynamics have been really priced to perfection. so in general there's a little bit of weariness that when we look at earlier stage companies that are telling us that they plan to monetize on sort of an advertising model, there's a little bit of difficulty in accepting that and a desire to see an expansion of different types of revenue streams >> jenny, facebook is making this all about small business, but this is really about access to personal data so if it comes down to who do we trust more with our data, apple or facebook, who do you think is

going to come out on top who are users going to side with >> good question i mean, for privacy purposes i refer apps that make money from in-app purchases apple, it's hard to compete against apple. i feel like we've all become desensitized to the fact that websites we visit and apps are selling our personal information. as you asked earlier, alda, i don't think that wish or apps that are similar to wish are going to be really affected because they don't rely on advertising for revenue. but for apps like facebook that make a lot of their money on advertising, this could stifle their growth we'll just have to see. >> alda, on wish i want you to place it in context for our viewers. amid the larger ipo environment right now, which i know you think is out of whack, at least on some metrics? >> absolutely. i really do think that the ipo market has been, to put it

succinctly, very crazy over the last few months. however, you know, wish definitely has similar characteristics to other ipos that we've seen. it has a strong and devoted following. it remains to be seen whether retail investors will flock to it obvious the customer base that wish has is a little different than airbnb or doordash, at least in terms of spending power. i think the ipo will do quite well, but it is an open question whether or not the retail demand is there. >> jenny, there was a time not long ago where you would be seen as crazy trying to enter the e-commerce market, which amazon so clearly was going to dominate, and even if you look at the traditional players like your walmart, home depo, target, et cetera, they're doing pretty well here. what does it say that investors seem poised to put this kind of

a valuation on a company that's a second or third-tier player at least size wise in the e-commerce space does that mean there's hope for this category and growth, or does it mean that the valuations have just gotten out of whack? jenny? >> oh, me, okay. i think this process needs to be revised. i think there are real inefficiencies with pricing and there's so much money being left on the table i know i sound like a broken record. >> i'm asking specifically about the fact that wish as an e-commerce player is coming into a market where there are huge players that have great efficiency, are not slowing down, but is still getting a pretty good valuation here what does that mean? >> so we'll see the outcome of wish and i think based on macro trends there's no better time than for a global e-commerce company like wish to go public e-commerce right now has surged during the pandemic and more

people than ever are using online marketplaces for essential and nonessential goods. the only cautions i have with wish are mostly fleeting, that they had issues with delayed shipments because of supply chain disruptions and they rely heavily on chinese merchants, whereas amazon and walmart don't. but regardless of the pandemic, revenues in q3 were up 30% year over year. so i don't think there's any reason to delay the process until next year. i think, to be honest, with all these crazy high valuations and no profitability, wish perfectly fits the bill for a 2020 ipo >> about those 2020 ipos, jenny -- yeah, both those crazy 2020 ipos, jenny, that you just alluded to, it has been a wild week with airbnb and doordash, some of the analysts are coming out and downgrading them pointing to

what you just mentioned. but is there disconnect? do you think that the wall street analyst is really valuing them on the basis of what they could become these aren't just travel and delivery companies, but platforms or ecosystems, so do you think that these valuations are out of control jenny, that's to you >> i wouldn't say that -- i mean, i think that this is the craziest ipo market we've seen since 2014 and it's the busiest year i think the momentum is going to continue into 2021 what i think right now is that there's so much access to capital, and when you're in a bull market everything seems to be working for growth companies. these big pops on first-day trading are indicative that we may be in too strong a bull market bankers are misreading the demand and the overall demand from the

robinhood investors, there is a mispricing it doesn't mean that the process is broken. it just needs to be changed. with interest rates this low in a slow-growing economy, investors are willing to pay for growth but it's hard to judge exactly how much they're willing to pay for higher multiples in growing markets. meanwhile, other people are buying for a quick flip. the best ipos are ones where there's stability between buyers and sellers and getting that right in certain markets is harder than in others. >> we're going to talk about robinhood a little later this hour and obviously the wave of liquidity that we're in. alda, jenny, thank you, guys appreciate it very much. >> thank you so much we're going to talk about robinhood real soon. more pressure on the company, this time from the state of massachusetts. the regulatobendr hi a complaint joins us next. stay with us ♪ ♪ >> announcer: "squawk alley" is

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robinhood under pressure this morning from massachusetts regulators kate rooney has the story. over to you. >> more regulatory headaches for robinhood and a complaint this morning. the state of massachusetts accuses the company of aggressive tactics in marketing inexperienced investors, manipulating those customers and failure to prevent frequent

outages on the platform. they highlight the revenue model, which is now standard in the industry, profit off of customer trades. according to regulators, that drove robinhood to give investors with no experience the ability to make, quote, potentially unlimited trades without properly sdrecreening t. they point to incentives like confetti raining down on the screen, letting users who use the app more often move up on waiting lists for certain products in massachusetts they say at least 670 inexperienced traders averaged at least five trades per day and in one example robinhood allowed a customer with no investment experience to make more than 12,000 trades in just six months. robinhood says that they disagree with those allegations and plan to defend the company vigorously they say they've worked to scale up those systems after outages they've made improvements to their options offering and added some more safeguards robinhood is also facing class action lawsuits from those outages in march and a reported

s.e.c. investigation into its revenue practices. meanwhile, they're getting closer to an ipo the company is targeting a listing for next year at a $20 billion valuation. they've raised more than a billion dollars in private markets this year with valuation of $11.7 billion back to you. >> kate, thanks for bringing that to us some of the numbers regarding volume is just incredible coming out of that complaint. with us is the massachusetts secretary of the commonwealth who filed that complaint secretary galvin, thanks for being with us this morning. >> happy to be with you. >> as kate just outlined, robinhood certainly has its flaws, but at the same time it has opened up financial markets trading to a group of people, a large group of people that previously did not have such access do you worry that your complaint risks closing it or limiting it to that group of people? >> not at all. i think what we really want to

make sure is these people are treated fairly we do not believe they are they're basically having the experience of trading, but it's a reckless experience because of the way that robinhood has treated them it's marketing itself to them as a device by which they can become wealthy without having the expertise or the skill clearly the practices that we outline in our complaint are dishonest and unethical and those are things we will not tolerate in massachusetts. we also believe they violate our state's fiduciary rule they're clearly not putting their customers first. the fact that as you noted in the lead to this piece, the number of outages, they've had over 70 outages this year. but the worst aspect of what they do, clearly, is the way they're gaming with investing, taking unsophisticated investors and making this into a game and causing them to suffer losses. they're bringing them on board on something they know nothing

about. they violated the company's own rules on trading options it's very clear that this is a reckless company when it comes to these investors they're interested in expanding their market base and they're not interested in serving their investors. >> at the same time, secretary, this is often a younger generation, and this is a generation that has been brought up on social media with some of these tendencies do you want to see that taken completely out of the app or are there ways they can tweak it that would be more responsible to their investors >> the most important thing is for them to be more responsible. could they manage to do both i hope they could. if they're going to remain in business in this state, i think it's important that they address these fundamental flaws in their approach you notedthe raining of confetti, the fact you're rewarded for frequent trades these are all aspects of their business model that are totally unacceptable >> speaking of other states and

regulator, how much coordination did you consider in filing this complaint? would this have been better off as a joint effort amongst different states in coordination with the s.e.c., or is that still in the works >> well, we certainly welcome any other state to do what they've done we had complaints from massachusetts investors which led us to do this. we also obviously have a history of consumer protection, for instance, the fiduciary rule is here in massachusetts and it's not in most other jurisdictions. we are operating in the interest of our massachusetts investors and residents. we do think it's a national problem. we're seeing, in fact, some of the frothiness in the marketplace itself is caused by this type of activity that is being encouraged by robinhood, people who don't know what they're doing, investing in things they don't really understand there's a hurt to the overall market as well but the immediate interest we have is helping our massachusetts investors, protecting them from

exploitation and making sure that when they invest, they realize it's a serious use of their own money with the hope of getting more. >> mr. secretary, i understand that massachusetts has this fiduciary rule, but do there need to be further rules, clearer regulations specifically for entities like robinhood? because it seems to me with this technology regime that we're in right now, it's pretty open to interpretation exactly how that applies to a business like robinhood. >> i agree with you. i think there does need to be -- the national marketplace needs to have better guidance and rules, but at this point we can only deal with the change of administration coming, obviously, but more than that it's more important. >> so what's the fix what can robinhood do in the near term to address your concerns >> stop engaging in some of the practices we outlined in our complaint. the reality is that the pandemic has contributed to their growth. people operating remotely from

their homes, being easy to reach, more enticed to go online and engage in day trading. it's not sophisticated trading they have taken an audience of very unsophisticated persons and exploited them that's the reality of the situation. does there need to be a national fix? yes, there does, but we're not going towait for that here in massachusetts. >> secretary, it's deirdre again. a few things you said in the last few moments, you said these are people who don't know what they're doing, they're unsophisticated. i actually know a lot of robinhood investors who would take issue with that statement and say that you should give them more credit they're doing things on different platforms, but they're smart and this is the way they're choosing how to do things >> well, it's not the technology what we're saying is if you look at the statistics that are revealed in the complaint, while there may be some individuals who do have the sophistication, you mentioned they're on other platforms as well, that may indicate a degree of experience.

many of the people attracted to robinhood and the tactics, clearly aim for the unsophisticated. so while we have some persons who are using this platform that clearly do know what they're doing, it's quite obvious that many do not. >> secretary galvin, thanks for being with us. we will certainly continue to follow the story, which has been a big one for us on this network. carl. watch twitter today. jpmorgan goes to overweight, a target of 65 as they look for improvements in online advertising, the ad technology engagement and so forth. they did cut it back in april when the stock was 26. that's a fresh six-year high don't go anywhere. t's new? -well, audrey's expecting... -twins! grandparents! we want to put money aside for them, so...change in plans. alright, let's see what we can adjust. ♪ we'd be closer to the twins. change in plans.

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welcome back, everybody. i'm sue herera here is your cnbc news update. the supreme court says it will hear a case on whether or not college athletes can be paid the ncaa is appealing a ruling that its limits on benefits for athletes violated antitrust laws in new york, four people died in a house fire overnight fire crews could only battle the flames from the outside of the home because the structure was too unstable intense flames ultimately collapsed the roof and in brittain for the first time, air pollution is being cited as a cause of death. a 9-year-old girl died of an asthma attack, which investigators say was aggravated by traffic fumes and high pollution levels activists, including the girl's mother, say children are still at risk from pollution that exceeds limits recommended by the world health organization. you are up to date that's the news update this hour jon, back to you. >> thank you by the way, everybody, wish opening for trade just moments

ago. you can see it there down about 5% in the first moments of trade. we'll have more on that debut in just a few minutes it's a reminder, ipos can actually go down let's turn back to the facebook and apple feud we told you about at the top of the hour with us now on the antitrust implications, former u.s. assistant attorney general and former intel general counsel doug, great to have you back so i hope that you've seen this response that facebook has to apple's moves to limit targeted advertising on its platform. facebook, which is itself the target of antitrust complaints, saying that apple is in antitrust hot water here what do you make of it >> well, i think facebook has been motivated in part by the new proposed rules, and it believes those rules are targeted largely at open platforms like facebook, google,

and perhaps amazon, and it wants to take apple down with it, or at least feel that it's subject to similar rules so i think a lot of that is posturing really over what's going on in the european commission >> they seem to be making the argument that it's sort of targeted advertising versus apple's platform power of being able to take a share of transactions that strikes me as possibly a bit of a strong man. aren't there ways to exist, have a business model without having targeted -- maybe that's not the question for you but does the antitrust issue have to be an either/or in the way they're framing it >> i don't think the targeted advertising problem that facebook faces right now in europe is principally an antitrust issue. there are two new proposed laws in europe. one is a digital services act which deals with controlling

illegal content and counterfeit merchandise sold online. the targeting business model comes up more on the competition side than on the illegal content side and there i don't think any of the new laws are directly aimed at targeted advertising as such. >> doug, i want to ask you broadly about those latest rules out of the eu. some of the most aggressive are fines up to 10% of annual revenue and potential orders for breakups can we look at those as a blueprint for what we might see here in america, particularly since we have seen echos of what's been done so far? >> it's possible the populist sentiment that doesn't like big, powerful companies in general and in particular doesn't like the powerful technology platforms, that certainly had more traction

in europe so far than in the united states and it is motivated, in part, i think by these two new proposed laws. in the united states there clearly is bipartisan support to some extent for laws that would reign in the technology platforms. we saw those in the reports of the house antitrust subcommittee about a month ago. but it's not at all clear that there's political will in the senate or even in the biden administration for the kinds of changes and regulations that are now being proposed in europe that remains to be seen. >> that's a good point, doug we talk about that a lot, what is the timeline here and it certainly feels like investors in these companies don't see regulation as a real threat any time soon would you say that's the case then, that we're more likely to see business altering regulations in the next, let's say, one to two years? is it going to be longer than that >> i think they're clearly going to need some changes in the

rules. the two pending lawsuits, against google and the ftc case against facebook will to some extent, particularly in the latter, will change the sense of what the rules are going forward for the platforms, even without changing the legislation and there might be change legislation. but i would be surprised if anything in the near future here, or even in europe, fundamentally threatens the business models of the major technology platforms i think over the long run they could make a difference. >> to that point, doug, i wonder, you know, facebook has framed -- or responded to the state ags and ftc by calling for a retroactive attempt. does that weaken the regulators at all or is that a nonstarter what do you make of that >> it's an issue that the ftc is

going to have to overcome. facebook will probably make an argument that the ftc now cannot proceed against them i think they'll lose the argument as a matter of law. in any event, you've got 46 states that filed a similar complaint on the same day and they wouldn't be barred that way. i do think that any judge looking at that case is going to be asking as a practical matter, what is different now, why are they here now when they weren't here eight years ago when facebook acquired instagram. i think the government has answers to that, principally that the rules have changed, they're now in a position to see the overall course of conduct and the pattern of acquisitions and other behaviors by facebook that creates a competition problem and that were not apparent eight years ago but i think it's a practical matter, if you're being a legal realist about this that's an obstacle that the government will have to overcome it won't be insurmountable, but

it doesn't help the case. >> it seems like a time machine strategy there doug, going back to the apple/facebook tiff that we see playing out, the strategy that facebook has perhaps taken to draw some fire away from itself, does that kind of thing tend to work >> well, it might. i don't understand the politics of europe well enough to know how this -- you know, this proposal will have to be approved by the european council and by the european parliament and i don't know how the votes line up there, whether there are friends and foes of apple that might be willing to carry facebook's water in the sense to say you can't do this unless you tighten the noose a little bit around apple, too. so it certainly is rhetorical material whether it has political legs, i

don't know. >> former u.s. assistant attorney general, thank you. >> thank you if you missed it yesterday, mackenzie scott, formerly the wife of jeff bezos, says she's donated more than $4 billion to charities. you can read why she did it and there's a list of organizations that you can donate to go to cnbc.com to see that we're back in a minute

dry ice, as you probably know by now, has taken on a new role in keeping the vaccine fresh amid distribution, but it does present a risk. >> there is a unique challenge dry ice is a solid form of cashin dioxide and over time it turns back into a gas. and too much co2 in a confined space can be hazardous it's why workers are wearing co2 detectors, one of which is made by honeywell. >> we're protecting workers, including those involved with vaccine packaging, shipping and storage. we're working with key transportation and logistics companies as well as vaccine manufacturers. >> honeywell says it's seen a 60% increase in shipments of its detecters in the past month and has been working to expand production to ensure there is enough supply. the industrial giant is also conducting tests with some

airlines where the shipping of dry ice requires special precautions. it's not just logistics and transportation players that are thinking, but pharmacies are investing as well. >> we have manufacturers that have been able to supply the locations that we are designated for dry ice and the intent of that is not only to help protect the team members where the dry ice is going to be stored, which is in the pharmacy area, but then in addition to that, the rest of the store. >> walgreens says almost 1,000 locations equipped with dry ice or locations to store the pfizer vaccine at that ultra cool temperature. deirdre. >> seema, thanks for that. social media back in the spotlight during the vaccine push several companies employed different strategies to combat misinformation on the vaccine. julia is back with us on that story. >> deirdre, after social media giants were blamed for spreading

vaccine misinformation that sparked a measles outbreak about two years ago, they are now taking everything they learned from that, as well as from battling election manipulation to elevate accurate information about vaccines and suppress the lies but the challenge is significant. there are an estimated 60 million followers of 447 anti-vaxx accounts that are monitored on facebook, instagram, twitter and youtube by the center for countering digital hate that's a nonprofit that tracks anti-vaxx misinformation across social media. so what are these platforms doing? well, facebook tells us it's removing false claims about vaccines debunked by public health officials, it's rejecting ads that discourage people from getting the vaccine, and it's also labeling posts about vaccines on facebook and instagram and encouraging its users to visit the cdc's website for information. now, google is launching a new feature in search that will start off in the united kingdom, so when people look up information about vaccines it will show them places to get

vaccines in their location youtube tells us it has removed more than 700,000 videos related to dangerous or misleading covid-19 medical information this comes after it has updated its policies to remove by videos containing misinformation. it's also directing users to reliable sources and connecting some of its content creators to health experts so they can help create helpful vaccine content tiktok said that it removes misinformation related to covid-19 and vaccines proactively, as well as through its users reporting content. it's also directing users to a content hub with official information. twitter does not yet have an official formal policy on vaccine information, but they say they're working on that. deirdre? >> thanks, julia lots of different strategies a reminder that we've seen these social media companies, you know, be really important tools for information, but also dangerous for misinformation this year. thanks for that. meanwhile, amazon not giving

up on the highly coveted jed icloud project from the pentagon, calling microsoft flawed and politically corrupt read more on cnbc.com. stay with us we're back in two. your daily dashboard from fidelity -- a visual snapshot of your investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity.

health care stocks are feeling the amazon effect today. >> yeah, in particular the telehealth stocks.

"business insider" reporting that amazon is looking to expand its virtual care platform that they did for their own employees about a year ago, they started they've expanded it statewide in washington state but according to "business insider", they've been looking to try to sell it to other employers, like zillow that's one of the ones that did confirm that amazon had approached them. it's still in the early stages, but it's something that they do want to offer. that today is pressuring deladoc and good rx announcing today that it was expanding its services to provide discounts to its members to also include telehealth visits as well. this is an area that has really taken off this year in the midst of the covid pandemic. a lot more acceptance by a lot of patients and also by a lot of facilities and a lot of these players are looking to try to do some sort of primary care

virtually and expand in that field so they don't just have that one hit from patients who use them amazon, we have seen, has ambitions in health care, but i would note it took them three years to build a pharmacy and s stages to build our amazon health in virtual services, it will take a lot of work. back over to you. >> bertha, good to keep in mind, thank you. sticking with health this afternoon, do not miss cnbc's annual healthy returns conference this year it will be live streamed our meg tirrell will sit down with dr. fauci and dr. moncef from "operation warp sedpe." head to cnbc.com/events to learn more university is where you belong.

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we are still awaiting the opening trade for upstart. with us ahead of the open, first on cnbc, is upstart's co-founder and ceo dave girard. good to have you this hasn't started trading yet

but let's help investors understand your business you're in lending and in the data business. what's the data set you're working with >> so, we are an ar lending platform that basically means applying ai to the problem of consumer lending. we do that by helping banks originate better loans, that are more accurate in terms of predicting who's likely to default, and that means using all sorts of data to have a more informed decision, and one that can result in letting banks approve two to three times as many borrowers as the same loss rates as they would otherwise. >> you say all sorts of data what kind of dates, aside from transactional data, are you talking about and where are you getting it >> so, the data is very broad. it certainly means the traditional data you would get from a credit report we use hundreds and hundreds of variables there. it also could mean where somebody's employed, the

industry they're in, their background with respect to education. there's more than 1,600 variables in our model, which is fairly unprecedented in lending to use such a broad amount of data it gives you a much better lens onto the consumer, and in the end helps you be much more accurate predicting if and when they may default on a loan >> that is fascinating where do loan officers normally have the largest blind spot? what mistakes do they normally make just by -- just from being human? >> well, you know, a lot of times -- it's been digitized historically it was somebody at a bank sitting across the desk from you asking you questions. today most lenders have at least digitized that process, at least in the consumer lending space. literally they're just using a handful of variables you can think of your credit score, maybe how many credit lines you have open, if you have any defaults or delinquencies,

but the idea of that being able to predict what can happen in the real world is a massive mismatch between a simplistic model and the sophistication of trying to figure out what might happen to that consumer, what might happen to that loan in the coming months and years. >> so, as we look at the current universe of delinquencies, charge-offs, reserves, the things that go wrong in lending, how much lower can that number potentially get? >> oh, it's incredible one way to sort of quantify it, if you thought about it as a system that was completely random as zero and a system that was kind of at 100, our view is most lending systems in the consumer world are at about two. we believe our system just reasonably is at about ten so, we're five times -- maybe four to eight times more accurate than a traditional lending system but we're only

10% towards what is theoretically possible there's always some randomness in the world so you can't get to 100% predictive but we're literally scratching the surface of what's possible with ai >> dave, something caught my eye in the i o prospectus it says while many look to be the bank of the future, instead of competing with banks we decided to partner with them what are your growth opportunities? and do you think that fintech companies, i'm thinking of some of the biggest ones like square and paypal, do you think they cannot displace banks in the future or they're trying to? >> well, certainly there's a bunch much finteches who are becoming banks or applying for bank charters and it may be a great path for them. i think it will be great for the economy overall if there's new bank formation, which there hasn't been in a very long time. that's a good trajectory for us, we're kind of a team a lot of us came out of google

we see us first and foremost as a technology company aiming to help banks that's really the path we have chosen we didn't apply for charter. we don't want to be a bank we see ai lending as one of the biggest transformations the industry will see in decades and we really want to be the partner to banks through that transition >> as you lean on artificial intelligence, how do you avoid market bias or discrimination? we've seen ai has trouble detecting diversity. lending has had its issues as well what are you doing to confront that >> there's good reasons to be worried about ai and bias and unfairness and, you know, our short answer is, you rigorously test for it our system has been designed, you know, since the early days and in working with regulators to automatically test and make sure that we do not introduce

bias or fairness into the model in a way that would be harmful to any group of consumer before with we push a new version in protection, it will test in advance and make sure it's not biased. we've been able to demonstrate to the cfpb that we pretty dramatically reduce the price of borrowing for every demographic group out there. >> dave, we do await the first trade in upstart thanks for being with us. >> thank you. >> all want to mention, carl, wish is down almost 7% at this hour as that begins trading. it's a reminder that that can actually happen. a stock can have an ipo and actually go down. >> yeah. >> amazing, isn't it >> you mentioned, the amazon effect as it pertains to wish

earlier. also some of the telehealth names like teledoc are down on reports that amazon is exploring maybe getting into that space. some names downgraded by stevens on the prospects of future competition. fed presser on the way cramer with the judge. let's get to "the half." >> casuwelcome to "the halftime report," i'm scott wapner. with only two weeks left in the trading year, are stocks primed for a final burst or in need of a rest we debate that with our investment committee joining me for the hour today are stephanie link, joe, jon najarian, degus from decatur capital management, and as carl said, cnbc's jim cramer, the host of "mad money." let's check stocks mixed picture. the dow dipped negative by nearly 40, the s&p and the nasdaq are positive. jim, what i usually like to do is sort of lay out the state of play i nt