Accusing facebook of misleading investors as the doj launches this antitrust review. Corporate earnings going to be weighing on some stocks at least this morning boeing and caterpillar disappoint trade worries remain u. P. S. Shares sinking ahead of the open. Profits soaring more than 13 for the quarter. David abney joins us first on cnbc this hour facebook up first. Three different Government Agencies today, the ftc formally announcing that record 5 billion settlement with the company over privacy violations, imposing new requirement oz on Mark Zuckerberg and making structural changes to the board the s. E. C. Simultaneously announcing 100 million settlement accusing the company of misleading investors about the misuse of user data. And lastly, last night, the doj is opening a broad review of Tech Companies, that will scrutinize leading Online Market platforms. Didnt name any specific companies, but obviously facebook, amazon, alphabet are all in play. Of the alphabet soup, what is most important here . Facebook is a demonstration of what happens when a u. S. Government is displeased with the company. I think this is very strict. Theyre basically reaching in. And saying, okay, listen, were changing the way you run your company. Were actually literally going to monitor you, were going to insist that you sign off on certain things were going to go after you if you violate. David, i look at this, is there anything left that they didnt do to zuckerberg they didnt put an ankle bracelet on him. Right . I dont think he i think he can leave the house without being monitored. This is my perspective when you look at governance and we all know Mark Zuckerberg has super voting, he controls this company through his super voting shares. But theyre getting around that when it comes to privacy one of the more interesting parts of this, we heard bits of it, but looking at it in print, it establishes an independent Privacy Committee of facebooks board of directors, removing unfettered control by facebook ceo Mark Zuckerberg over decisions affecting user privacy. Youll have members of the Privacy Committee, independent, and appointed by an independent nominating committee of the board, and they can only be fired by supermajority of the board of directors thats moving outside zuckerbergs control. This is what happens when you dont put in a socalled grownup i was saying, listen, tony west in there from justice, a retired federal judge, you need to take care of these things ahead of it this government, this government, this Republican Trump government, put somebody in. A 32 vote. The democrats on the Minority Side blanket immunity for executives they complain. No restraints on the Business Model. They see this differently than you do. I still think it is corporate america. They have done a great job yes, they paid the price for violating your privacy but i cant remember other than when bristolmyers, when they put they did not like the way bristolmyers handled rebates. Remember, they handled the negotiations and concede it was like they bought off some companies, they didnt want to do generic. This is the first time ive seen since then this is extraordinarily tough. You think the fine is 9 of last years revenue. Does that strike you as being abusive . No. But the guy runs the company and now there is a major part of the company, he doesnt run. It is a Committee Committee of the board of directors. But they will not, in other words, he wont be able it replace them at his own whim, which he can as the control shareholder conceivably. Sounds like what they were going to do with tesla. With the s. E. C. Listen of all of the 5 billion number which we have known about now for quite some time penny here, penny there, there is reaching into the board. It is interesting. Arent you shocked . It is strong. It is shocking. It is strong. I think that is fair to say. You got to take care couple that with the stories today about the increased focus of the department of justice on all of the Big Technology players. And including facebook, of course the ftc continuing its own investigations as well and we do know that the big tech is certainly under the microscope to some extent, unclear where it all ends up. Where are their friends democrats hate them, republicans hate them. The customers dont seem to hate them. Dont think we have seen any havent seen an exodus of that. No. Ive not washington, in is really the only thing im seeing the republicans and democrats really agree on, you can say the debt ceiling. But these guys, equal opportunity hate fest. What does it mean for the performance of the companies and their stocks is there going to be a discount you have to apply for the possibility. Facebook is an outlier because of the privacy deal. To the larger antitrust question of facebook, alphabet, amazon, throw apple in there, it is under investigation as well. Do you have to apply some sort of a discount . This is years before you get any sort of decision by the antitrust authorities as to whether they want to pursue a case. I think it provides a discount in the sense that youre looking over your shoulder every second lets say guzuckerberg comes up with a great idea. We got to run this by people this is not something lets say they did had a version of augmented reality that made your facebook look older. They might say lets see is this a good thing or a bad thing . Yes, i think it stifles innovation, yes. Yes, i think it stifles innovation, yes, bristolmyers had the same problem was not the same after they appointed a monitor. Youre not the same. Does it also stifle the misuse of user data . Yeah, absolutely. Thats a positive for who for users. Not for facebook shareholders for users, yeah, absolutely i forgot if youre a shareholder, of facebook, youre saying, okay, wasnt the fine enough the answer is no the government is reaching in. It does not do that except for incremental cases, david criminal cases yeah. Just department. What they call the conduct relief here as they say, unprecedented in the history of the ftc, specific to the board committee. You think there is any regulation inflation because of the turf war developing between ftc and doj . Wow just a battle to be tough. Trying to look tough. I guess so. But can we come back and say this was a government that was supposed to be antiregulation this government is so pro does the president know that his government is pro regulation ive seen this there is deregulation of anything involving the environment is deregulated thats true whatever you want to do there. Warming thing, yeah spew into the air maybe they dont like single use plastic bags we should wait for dow chemical. Im astonished i am astonished that there is this kind of intervention. If i were zuckerberg, i would say, listen, get me, i dont know, get me retired federal judge, ill put them in the office next to me. And ill run everything. What are you doing im reading an important text thank you. The dog is fine as were talking facebook, we do have special former special counselor mueller before house judiciary. Kayla tausche is watching that the former special Counsel Robert Mueller gave a nine minute Opening Statement where he reiterated his commitment not to veer from the text of his 448 page report, that commitment was reiterated in a letter from the department of justice. Earlier this week. He also set some boundaries for his questioning today and said certain things are off limit, like the reason the fbi opened the russia investigation in the first place and that controversial dossier put together by former british spy christopher steel. That being said, he also committed to the legal bedrock of the report, this opinion from the office of the Legal Counsel that said a sitting president cannot be charged with a crime, he said that was his and the special counsels Office Decision then back in march and it remains his decision today. But the democratic chair of the Committee Jerry Nadler asked what happens once President Trump leaves office. Is it correct if you had concluded that the president committed the crime of obstruction you could not state that in your report or here today . I would say you i could the statement would be that you would not indict and you would not indict because under the olc opinion, a sitting president , excuse me, cannot be indicted. Unconstitutional. You could not state that because of the olc opinion if that would have been your conclusion. The opinion with some guide, yes. Under the department of justice policy, the president could be prosecuted for obstruction of justice crimes after he leaves office, correct . True. Thank you so this hearing is going to be something of a rorschach test, democrats want to use this hearing as a way to inform the wide swath of the American Public that is not familiar with the contents of the report, specifically the second section which deals with potential obstruction of justice republicans on the other hand want to focus on the first section, where there was a finding that the president and members of his family and his campaign did not collude with the russian government to win the 2016 election. They want to explore that. They also want to explore the potential integrity of the investigation. And the people that Robert Mueller hired to help conduct this investigation and thats where were seeing the line of questioning fall even in the first few minutes. Carl we expect that to be a big part of it, kayla, thank you well come back to kayla for updates later in the morning that will be part of this, guys, the response to accusations that muellers team was made up of lawyers with an agenda of some sort. Yeah. The washington, all over the place. Im trying to factor in muellers testimony into the price churnings ratio of s p thats harder to find. Im still stunned about what happened to facebook got to go back to 2003, Chris Christie put a federal judge retired federal judge on the board of bristol and found out that internal, internal, bristol was violating the law. Changed the whole company, got rid of dolan got to look, im not this is not Elizabeth Warren. It is what you would do. This is compared to what Elizabeth Warren would do. Im not sure. I think Elizabeth Warren in terms of the board in terms of what corporate governance, i think it is Elizabeth Warren like corporate she is not trying to break up facebook. Alphabet, yes. Amazon web service would have to compete against amazon im busy getting ready for fresh youre frustrating me it is a complex story well be dealing with. Complex im just i want to make sure it is right. This is a truly invasive action against a company that may have violated privacy, but has been a it is you dont get to be the faang for nothing. So, wait, their market cap absolves them of Corporate Responsibility no. Look, if people if the customer felt that they were that it was a destruction of their own privacy, why are they still there . Thats the bigger question. Yes thats what im saying hes got to do the tmobile. They already broke that. Didnt they already break that that was mean. That was very mean. My own guy. Were a team, remember. I know. Im stunned. Thanks for that there is no i in team ive known that for years. Well get to faber on telecom. Well get to earnings from boeing, to caterpillar, to u. P. S. , both of those stocks are going to take about half of the loss on the dow at the open. Well talk to david abney of u. P. S. Also this hour. Back in a minute tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Dto experiencer gthrilling performance. Now, at the lexus golden opportunity sales event. Get 0. 9 apr for 60 months on all 2019 models. Experience amazing at your lexus dealer. Tmobile, deutsche telekom, sprint, dish, they have reached an agreement for a settlement underwhich a Consent Decree will be entered into by tmobile to allow it to move forward with its acquisition of sprint. Others have done that as well. We have been reporting on this for quite some time. The deal itself, well, fairly straightforward, if you want, though certainly a high level of complexity basically involves 5 billion being paid to tmobile sprint by dish, 1. 4 billion for the prepaid wireless business. Theyll pay that at close. Another 3. 6 billion will be paid over time for spectrum. The hope is the expectation is that in entering into this Consent Decree, which may be shared with us tomorrow, though you do need a court to sign off on it, you will create a fourth competitor in the wireless business dish really has been out there with plenty of spectrum to have been a competitor already as a fifth competitor but now the expectation and hope is that it really will be a robust fourth competitor this is a tough Consent Decree in speaking to some people who are both familiar with it, and with the history of these kinds of agreements. It is a tough one. And of course the question will then turn to the states that have also sued to block this deal and whether they believe it is tough enough for them to give up their cases to say, okay, were willing to live with this. The trial for the states begins on october 7th the expectation on the parties is they can close this deal early in the Fourth Quarter of this year. And they do still need the Public Utility Commission of california to sign on. But that is seen as not necessarily a formality, but expectation that will come in the next month or so so theyre moving forward. Tmobile says it will have the same synergy numbers as what im hearing according to people familiar with the negotiations here it will still have a 43 billion net present value on synergies, 6 billion annual run rate no change, some had speculated, will they change the terms with sprint no change whatsoever in the terms with sprint. And so as soon as tomorrow and you never know this can move a little, as soon as tomorrow we may see the actual consent decread decr decree, the deal announced with these parties and the question will be what does it mean for dish will they have a partner that comes in last wook last week i identified one key issue, change and control of dish wireless. And whether or not if a Cable Company were to actually buy control of it, would they still have access . They resolve that. It is complicated. Any Financial Investor is exempted they can also they can keep voting control that is sell 45 economic control, one company and 45 to another company. The mbno regardless would stay in place with a twoyear winddown they resolve that, they resolve everything now the question is what is dish going to be able to do with this business will they represent a true fourth competitor . Will they bring in a deep pocketed investor at close or down the road in thelike amazon this is justice. The ftc has done these things. They did it by the way with drugstores they got that wrong. They did it with supermarkets, they got that wrong. They give someone a business and then they just screw it up, like hagan, on the safe way deal. This reminds me more of Constellation Brands when they got madella and corona they wouldnt give this deal unless they know dish has something up its sleeve. Three years unlimited capacity into the Tmobile Network and that will pair down over time. Dish has to build this thing make it happen 5g, nationwide, very well may need a partner the change and control provisions have been dealt with on the mbno. But what im hearing more and more from some investors in this sector is that they think it is uninvestable generally f y lgen. Do you want to own verizon or at t, which reported numbers this morning at t is Free Cash Flow not bad Free Cash Flow not bad theyre by the way pointing to, what, 28 billion range of Free Cash Flow guidance for at t, guys dividend payout of 50 weird oest quote from randall, stevenson, saying were going to look at buying back stock. Are they kidding . Were going to take a look at it. Will you stop i may have to go down there and be the cfo of that company hes a good cfo. Thats ridiculous. Wireless. No, it is not uninvestable. Dish has got something up its sleeve or they wouldnt have gone there they cant afford to thats my point you have four competitors, one of which has nobody on its network, 5g nationwide network why would you not think thats not good thats bad thats why would you not think that is not a bad thing. Dish cant it is a good thing for at t i would rather have them say, listen, well put additional money to find the next game of thrones. Honestly stevenson. We got to get him on the show. That is so ill advised. Well look at the dt sub numbers, theyre atrocious can you imagine dish talking to, say Parent Company of this network . Alphabet, they cant seem to grow anything. Amazon, they have to split the company up with Elizabeth Warren i dont know david, i have i told people it buy constellation constellation was a wine company. Okay and when they were finished they became the Fastest Growing beer company. It is a win for dish you know those guys better than anybody. I see why