Squawk Pod Host (2:24)

Plus, Washington's push to regulate prediction markets. OpenAI shutting down its video app Sora. And President Trump says the US And Iran are indeed in talks, though Iran denies it.

Joe Kernan (2:39)

We know about the fog of war. There's been a fog of diplomacy.

Squawk Pod Host (2:42)

It's Wednesday, March 25, 2026 and Squawk Pod begins right now.

Senator John Curtis (2:49)

Stand Becky by in three, two, one.

Becky Quick (2:54)

Good morning, everybody. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew is out today.

Joe Kernan (3:05)

The Associated Press is reporting Iran has received the Trump administration's plan to reach a ceasefire in the nearly month long Middle East War. We've been since Monday, we've been talking, conjecturing, going back and forth. And there's a pretty interesting take as we see a lot of times in the lead editorial in the Journal. It sums up everything we've been trying to sift through. And the title is the Fog of Diplomacy. So we know about the fog of war. There's been a fog of diplomacy in Iran, and it's interesting. They go on to say Mr. Trump's incentive was to calm the markets with news of diplomatic success. Iran's propaganda is the deny, deny, deny and keep the markets roiled. All this, though, has been happening as Marines are headed and Air Force and Air Force headed to. And that's where they go on to say, call it Trump style diplomacy. One hand extends at the beginning of the week while the other hand visibly winds up for a punch.

Becky Quick (4:11)

Yeah.

Joe Kernan (4:11)

Was this his plan all along? And we said that. Is it another one of those things where Iran can choose whether to test whether he's serious about this? They keep saying we're not talking, we're not talking. Well, they may get a chance to see what the consequences are.

Becky Quick (4:29)

Yeah, it's been really interesting because the fog of diplomacy includes the idea that we don't know who's in charge. You might be speaking with civilian leaders who aren't on the same page with the irg. So it's hard to say how this works. The place has kind of been blown apart in some ways.

Joe Kernan (4:47)

They go on to talk about that, too. We know supposedly who the guy is. Would the Guard follow him? The Revolutionary Guard follow him?

Becky Quick (4:55)

The Guard has some pretty strict rhetoric that they've been putting out themselves.

Joe Kernan (4:59)

It doesn't follow along with Mr. Galoboff.

Becky Quick (5:01)

Right. And the idea of what it would take to get to the table, what they're asking to get to the table is almost nonstarter on every one of the points that they've laid out. Everything from, you know, a legal agreement that the United States and Israel would never attack again, never attack them at all, to reparations, billions of dollars in reparations for the damages that have been done, to the idea that there would now be a toll booth that the Iranians run on these strait of Hormuz.

Joe Kernan (5:27)

$160 a barrel is what it's going through right now. That's what people are paying for, for Jeff, because they need it. They got it. They got to get through. And again, yesterday, New York Times, they like this word. Today, it's the Washington Post. This is the word whenever Trump says anything now in mainstream media, it's going

Becky Quick (5:44)

to be, well, I will say claims fits very nicely in a headline that

Joe Kernan (5:48)

does a one call. It does, but it also, it implies he's saying this.

Becky Quick (5:52)

We don't really believe shows that the Trump administration is saying this. What you're hearing from Iran is very different rhetoric and propaganda. You could call it whatever you want. But I will also say the market has been reading this as a repeat of what we saw last April with tariffs. And that was a situation where the President alone had the power to say this is on, this is off. It's a little more complex once you get into a wartime situation and you have to deal with not only other nations, but the idea that we don't even know who's in charge in Iran.

Joe Kernan (6:22)

But for those people that watched the President for the first term and this term, his critics say that he, you know, if you're generous, he exaggerates. If you're nasty, it's lie after lie after lie is what you hear. But it's sad that we got, we're in a default position now. We're mainstream media and a lot of people, the first knee jerk response is to believe Iran before you believe.

Becky Quick (6:47)

But I don't think using the word claims is suggesting, not just.

Joe Kernan (6:50)

I'm not talking about, just that I'm talking about in general. You haven't seen.

Becky Quick (6:56)

I've seen it. I've seen and depending on, there's different variations and different flavors.

Joe Kernan (7:01)

But this is a regime that for 47 years, in 47 years, all they've done is lie and kill people and support terrorism.

Becky Quick (7:10)

I'm not defending that.

Joe Kernan (7:12)

Any move the slightest bit to have.

Becky Quick (7:14)

I'm not defending that and I understand the point that this is Baghdad, Bob. Every time we hear them, it's just we don't know who the spokesperson is there. We don't know anything about what's going on.

Joe Kernan (7:22)

I've seen in certain political circles the fault has been to basically be defending Iran or saying, not defending him, but sort of taking the, you know, enemy of my enemy. If it has to do with Trump, I'll go with Iran.

AT&T Business Wireless Advertiser (7:37)

I don't know.

Becky Quick (7:37)

That's a pretty big stretch to take enemy as my enemy. With Iran.

Joe Kernan (7:41)

It is. That's why, that's, that's why I'm saying it's a pretty, it's pretty unbelievable. China is reportedly preventing two tech founders from leaving the country as regulators are examining whether Meta's acquisition of their company violated Chinese investment rules. The Financial Times says that two Singapore based co founders of AI agent company Manus were summoned to a meeting in Beijing earlier this month, but told afterwards that they couldn't leave because of a regulatory review. The FT says no formal investigation has been opened. No charges have been brought. Meta acquired mandis for $2 billion last year, but China is currently reviewing that deal. So I hope they they like China be there for a while. I guess that would be scary.

Becky Quick (8:33)

You've been just note to self, don't go if summoned. Yeah, okay. No, I'm going to stay in Singapore.

Joe Kernan (8:40)

I often thought of people that some people, the China hawks. I wouldn't recommend going and traveling there.

Becky Quick (8:47)

Well, although I guess the question is do they have family there too? Because that could be the threat. You've got to go back if you've OpenAI will shut down its video generation app Sora as it focuses more on business and coding. Sora briefly went viral last fall, but also raised alarms about copyrights in Hollywood as countless AI generated videos were posted of celebrities doing some pretty outlandish things. Disney made a billion dollar deal to bring its characters to Sora, but sources tell CNBC that that deal never closed.

Senator John Curtis (9:22)

Cheese will be next.

Squawk Pod Host (9:24)

Coming up on Squawkpod, bipartisan support for the Prediction Markets Are Gambling act with Republican Senator John Curtis.

Senator John Curtis (9:32)

We're not banning sports betting, we're just simply putting it in the right places to be regulated. And one of those places is in

Squawk Pod Host (9:39)

the state and Democrat Senator Adam Schiff.

Senator Adam Schiff (9:42)

We've seen reports, for example, recently that someone with 93% accurate accuracy has been predicting what's been going on in the Iran war. That's highly suggestive of insider trading. And when it could be done using blockchain, there's no way to really regulate that.

Squawk Pod Host (9:59)

Plus the DHS funding debacle on Capitol Hill and at airports around the country. It all comes down to ice.

Senator Adam Schiff (10:08)

It is also a false choice to say, well, we can't have a strong border unless we also allow indiscriminate immigration sweeps that cause chaos in our streets like we saw in Minneapolis.

Squawk Pod Host (10:20)

We'll be right back.

Square Advertiser (10:26)

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Dr. Guy Winch (11:26)

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Becky Quick (11:55)

Not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.

Raul Torres (12:19)

Sometimes AT&T business Wireless connecting changes everything.

Squawk Pod Host (12:28)

Welcome back to Squawk Pod from CNBC Today with Joe Kernan and Becky Quick.

Becky Quick (12:34)

Let's get to Washington, D.C. and the efforts there to try and hash out a deal to fund the Department of Homeland Security. Emily Wilkins joins us with the latest. Emily, got any good news for us?

Emily Wilkins (12:46)

Becky, I'm not sure the news is good. It's probably not bad though. Look, lawmakers, they're still hashing out these details for a proposal to end the Homeland Security shutdown and try to relieve those long lines at TS for TSA at airports. Senate GOP leaders, they're really right now behind this two part deal. First part would fund nearly all of DHS and the parts of ICE that address things like drug smuggling, human trafficking. It would end those long lines at airports. The second part, which would come later, would see Republicans go ahead and pass additional funding for ICE as well as portions of that Election Reform act that would be done through a process that doesn't require Democratic votes. But many Democrats have said that they don't like that first part. They don't want to fund any part of ice. Talking with Senator Tim Kaine yesterday and he told me that the agency already has plenty of funding to carry out all of its roles and doesn't need additional spending at this point. Here he is speaking with reporters.

Raul Torres (13:45)

They pre funded ice. So the lines that are stressing people out, the fact that we have coasties who are deployed on Navy ships where the sailors are getting paid and they're not, that we have states that are, you know, planning on emergency prep and FEMA is closed. Just open the agencies, for God's sake.

Emily Wilkins (14:04)

President Trump has also yet to firmly weigh in one way or the other on that proposal. He did say yesterday he has concerns about a compromise with Democrats but would take a closer look. Republicans told me they are confident that the president will ultimately back it, but it's clear that we have a ways to go before Democrats and Republicans have enough vote to pass a funding bill and stop these long lines at airports.

Becky Quick (14:28)

Guys, okay, you're not an official whip of either of the parties, Emily, but if you had to kind of do some math yourself and try and figure out when this might break, what would it take if we're still a long way off from being able to gather those votes?

Emily Wilkins (14:42)

Yeah, I think, Becky, the question is how many Democrats are willing to break with their party to end the bulk of this shutdown even if they don't get larger reforms when it comes to ICE and are willing to fund some of the maybe less controversial aspects of what ICE does, Republicans are betting that they can get to that magic number of seven. Maybe you wind up meeting eight Democrats who can cross the aisle. I think it is going to take more conversations throughout today. If there is a deadline that senators want to get home, at least by Friday, they don't want to be here another weekend. So that's where a lot of the pressure is coming from right now. Because otherwise they could be here for the next two weeks and forfeit their Easter recess. They were all planning to take.

Becky Quick (15:23)

I think my favorite piece of news that I heard today was that Delta has shut off its congressional perks program, where generally they will take a congressional member and escort them through so they don't have to wait in lines. And they've decided it's more important to focus on their staff and their customers at this point. So they have suspended that program.

Joe Kernan (15:44)

It's weird, Emily, because we keep hearing it's, you know, well, both sides, blah, blah, blah. But you just said it. Seven Democrats need to break with their party. That is keeping it closed. If it is a clean DHS funding where you didn't have a carve out where you weren't like stomping your feet and saying, give me this or we're going to close it. Very similar to the last shutdown. How did that work out? The last shutdown, the Unaffordable Care act never got those subsidies, never got the pandemic. They didn't do it when they had a chance to extend those subsidies. That never happened. The sun is still coming up every morning and they got nothing for it. For all the pain that they put everyone through in that last shutdown. And it's the same. We're seeing the same movie once again. I mean if you just want to cut the brass tax.

Emily Wilkins (16:33)

Yeah. And I mean, Joe, I should be clear that that sort of part one, it does include some reforms for ice, things like funding for body cameras, things that were already agreed. But it doesn't go nearly as far as many Democrats want to see. And what you heard from Majority Leader

Joe Kernan (16:47)

John Boone yesterday, this wasn't about reforming. This was about DHS funding during a war. A clean DHS funding which includes TSA and includes, yet includes ICE, but that's already funded until 2029 anyway. It could have been a clean funding. And this is a, this is extortion. Just like the last one was just extortion. Why would Republicans fold?

Emily Wilkins (17:11)

I mean, I think for a lot of Democrats, they believe that the American people were upset with some of the things that they've seen with ice, that the American people on their side are pushing for reforms. Obviously divisions within that, within the country right now. But at least Democrats feel like they have the leverage right now to continue to fight for and to push for it. But I think at the same point, yes you are pressure increase with TSA that could bring this to, to a close sooner rather than later.

Joe Kernan (17:36)

Yeah, they have leverage with the long lines. They're holding people extorting people with long airport lines to get something that they want that should be done at another time if they're really going to do it anyway. Emily, thank you.

Becky Quick (17:53)

A bipartisan group of senators is taking on the CFTC and prediction markets with new legislation. The Prediction Markets are Gambling act aims to clarify commodity markets are not casinos in their words and would officially ban sports style betting. Joining us right now are the authors of the legislation, Democratic Senator Adam Schiff and Republican Senator John Curtis. And gentlemen, welcome to both of you. Why don't we talk a little bit about where you all see eye to eye and why on this. And Senator Curtis, why don't you talk about your concern with access to these markets in your state of Utah.

Senator John Curtis (18:29)

Well, thank you. And first of all, let me say we're not banning sports betting. We're just simply putting it in the right places to be regulated. And one of those places is in the state. And as you alluded to, Utah does not allow gambling in any form. So it's one of the things that's real important to me is that we don't take this control away from Utah.

Becky Quick (18:47)

And Senator Schiff, you are concerned with what the CFTC has been doing with this? We've spoken with the CFTC chairman Mike Selig. He does seem to be putting it out there that this is legalized and they are going to be protecting this because they say that these are futures contracts.

Senator Adam Schiff (19:03)

Well, it's interesting because I asked the chairman about this during his confirmation hearings. Did he have a position on whether these contracts were gambling or sports betting? He said he didn't, that he was a tabula rasa, that he was going to leave it to the courts. But we're seeing something very different with him actively intervening to support these prediction markets, notwithstanding that they're really indistinguishable from sports betting. And in California we don't allow sports betting. It ought to be up to the states to decide what kind of gambling goes on within their state. This kind of end run around the law is encouraging vast amounts of gambling. We saw a billion dollars of trading in prediction contracts just over the super bowl alone. That's something that ought to be decided state by state and not decided for them by this industry.

Becky Quick (19:53)

Is part of the problem that this revenue, even if it's legalized, if sports gambling is legalized in a state, the revenue doesn't go back to the state. If it's going through these prediction markets like it might in some other situations too.

Senator John Curtis (20:06)

I would say revenue is a piece of it, but a much larger piece is who should be regulating this. Where that authority lies. I think we both feel strongly that is in the states. And I going back to this prediction market and whether or not it's gambling, look, if it's, if it acts like gambling, if it talks like gambling, it is gambling. Right. And that's been very clear where that belongs.

Senator Adam Schiff (20:28)

I would add too, in addition to the concern about revenue to the state when it is completely unregulated like this, you could have, you know, vast amounts of insider trading. People who have particular insights either because they're government officials or because they're the athletes themselves who can end up influencing the events they're betting on. We've seen reports, for example, recently that someone with 93% accurate accuracy has been predicting what's been going on in the Iran war. That's highly suggestive of insider trading. And when it could be done using blockchain. There's no way to really regulate that. At least it's not being regulated today. And we want to make sure that there is regulation of this.

Becky Quick (21:12)

Oh, sorry, sir. Go ahead.

Senator John Curtis (21:14)

Yeah, I was going to say you have to ask what could go wrong. Imagine betting on a high school athlete getting hurt the day of a high school game, right? Like that's why this needs the appropriate regulation. You could see how wrong that could go.

Becky Quick (21:27)

Kalshee itself took steps this week to say that. Or maybe it was polymark. It took steps to say that you couldn't have politicians betting on the outcome of their elections and that you couldn't have sports athletes but betting on their own sports. Is that enough, that level of self regulation or you all think the regulatory thrust really needs to be coming from Washington?

Senator Adam Schiff (21:49)

I don't think it's enough. Because it's one thing to say this is our policy. It's another actually to put into place the steps to make sure it's not happening on those platforms. You can say athletes can't bet on themselves, but if an athlete does, how will it be caught? What if an athlete's family member does? What if a government official's colleagues or family or staff bets on insider information? It's got to be more than an aspirational statement by these companies.

Becky Quick (22:17)

Let me ask you both the big question on this and obviously the opponents to these predictions. Markets are taking their fight not only through trying to influence legislators, but going through the courts too. And they have had some victories in the courts. If you want to do this, you have to pass the legislation. How much support do you have from your colleagues both in the Senate and then in the House if it were to make it to that point?

Senator John Curtis (22:40)

Well, this might be a good opportunity to use the prediction markets to bet on that. I actually think both of us feel that there's a lot of momentum on both sides of the aisle on this. And I think you're going to see further legislation not only from us, but from our colleagues on this to get our arms around it and make sure it's done properly.

Senator Adam Schiff (23:00)

I think that's exactly right. There's a lot of bipartisan interest and concern over this that makes this one of those rare opportunities for the parties to get together and do something meaningful. So I'm optimistic. It shouldn't really be left to litigation. Frankly, I think the law already makes this clear, but the CFTC chairman is moving in a completely different direction of essentially unlicensed, unregulated activity here. So the Congress will need to step in.

Becky Quick (23:27)

We should point out that at cnbc we have extended an open invitation both to kalshi and to Polymarket to join us right here on SquawkBox. And in full disclosure, we should point out that CNBC and Kalshi do have a commercial relationship that includes a CNBC minority investment. Gentlemen, I hear how much you agree with each other on this, but obviously there's a lot of areas where you disagree, too. Why don't we talk about DHS funding and where each of you stand? Do you think that we will reach an agreement soon that will begin to start paying those TSA agents who have gone without pay for almost a month?

Senator John Curtis (24:02)

Now, listen, we were actually talking about that together before the interview started. And I think this is one of those areas where we agree on so much more than we disagree. And I think those areas of disagreement are getting narrower and narrower. I think we all realize we've got to say solve this. And I think we're all committed to figure out how to get that last little bit across the finish line.

Becky Quick (24:21)

Meaning that you think a resolution. Go ahead, sir.

Senator Adam Schiff (24:23)

Yeah, I was going to say I hope that we can reach a resolution soon. But even if there are issues that are going to continue to divide us, like over ice and customs and border protection, we should make sure the TSA gets funded, that we deal with this urgent crisis at the airports, that I think we're in easy agreement on total alignment.

Senator John Curtis (24:42)

Yeah.

Becky Quick (24:43)

So should I assume that we would see something maybe potentially by the end of the week if you two can sit there and figure out a potential deal?

Senator John Curtis (24:49)

Well, if it were up to us, we'd be have it done by the end of this interview. But I know our colleagues are working hard and spending a lot of hours on this.

Joe Kernan (24:57)

Let me try this with you two. You two buddies, Jim Jordan. He actually points out that the Judiciary Committee passed the shutdown, the Sanctuary Policies act of 2026. There's 18 cities where there are sanctuary jurisdictions. In major cities, 31.5% of the population is in an area where you could have a sanctuary city, where federal laws, immigration laws are ignored. Do you think sanctuary cities are a normal part of doing business, Senator Schiff? Is that something that. Are you in favor of sanctuary cities? Let me just ask you that.

Senator Adam Schiff (25:39)

This is an issue. I think John and I will probably not agree on. But people need to understand what sanctuary city means. It doesn't mean, frankly as you're suggesting, that people are immune from the immigration laws in a sanctuary city. What it means is those cities have decided they want their law enforcement used to go after violent offenders. They don't want their law enforcement to become an arm of immigration authorities. And that's the right of every city to make that decision. How will they want to deploy their own law enforcement resources? The federal government can't simply compel local law enforcement to become ICE agents or border patrol agents. So that's a decision for each city to make. I respect that decision. Those communities have decided that they would rather have people come forward and report crime and be witnesses to crime even if they're undocumented than be afraid to and let crime proliferate. So that's a local decision and I

Joe Kernan (26:33)

support makes it impossible for federal immigration officials to do their job in those cities. And we've seen what the outcome they're not protected. You call the police and the police won't show up to help support the what do you think, Senator Curtis? And we wouldn't have this problem if 10 million plus illegal immigrants weren't let in during the last administration. What was the whole rationale for that in your view?

Senator John Curtis (27:01)

Well, yeah, listen, I can't answer that question. But I can tell you no one is a false narrative. They can't because the false narrative is that you can't have rule of law and compassion. And I think that's what our country is built on. I know those are Utah values and I really believe we can enforce the law. We can have rule of law, but we can also do it with compassion. I think that's where American people are a little bit uncomfortable with some of the things they've seen.

Joe Kernan (27:27)

I'm not sure. So you are in favor of sanctuary cities then, Senator?

Senator John Curtis (27:32)

That's not what I said. I said rule of law. Right. Rule of law is not a sanctuary city. But that's how you're not in favor.

Joe Kernan (27:39)

Are you in favor of Congressman Jordan's what he's going to be talking about with Would you vote yay on that if you got a chance.

Senator John Curtis (27:48)

Listen, I did in the House, by the way, I'm pretty sure we voted on that bill in the House a number of times. What you're not hearing is yes, rule of law is important. We have to have rule of law in this country. But compassion with that rule and law is not a mutually exclusive idea.

Joe Kernan (28:03)

Okay, the open border for the four years of the Biden administration. Was that compassion?

Senator John Curtis (28:08)

That is not compassion. No, no, that's terrible.

Joe Kernan (28:12)

That's ignoring the rule of law. Right? That's why we're in this mess right now.

Senator John Curtis (28:16)

That's ignoring the rule of law and ignoring compassion. It wasn't compassionate to encourage those people to come into our country undocumented and be subject to cartels garnishing their wages. It wasn't compassionate to tell them that if you. If you come here, you can have the American dream when they can't. So that's. That's why we're getting this wrong, right? Like, you got to understand what compassion is and what it's not.

Joe Kernan (28:36)

Would you try. Do we need then to anyone who's here illegally that hasn't committed a crime, Senator Curtis, should there be a path to citizenship? Is that what compassion means to you? Or should these people not be allowed to stay?

Senator John Curtis (28:49)

Well, then let me ask you a question. Is there any law, any rule broken in our country where we don't have a consequence defined? So why don't we have a consequence defined when it comes to coming into this country without documentation? We continue to allow these people to be here, but we haven't defined what their consequence is.

Joe Kernan (29:09)

So that. That's a. The action from. From policymakers.

Senator John Curtis (29:13)

Absolutely.

Joe Kernan (29:13)

All right, so what. What would you say we need to do then? What. What's your answer to that? I guess. Is it amnesty for.

Senator John Curtis (29:20)

So, first of all, you have to define amnesty, but any other crime that's committed here in our country, what the punishment is, is. We define what. We define what the punishment is, and we've. We've failed to do that in this case.

Joe Kernan (29:33)

Senator Schiff, I thought I'd be arguing with you, not Senator Curtis.

Senator Adam Schiff (29:39)

Look, I think we need strong enforcement of our laws, but we also need to enforce them with compassion. And I think it is also a false choice to say, well, we can't have a strong border unless we also allow indiscriminate immigration sweeps that cause chaos in our streets like we saw in Minneapolis. We should have a strong border, but we should also make sure that our ICE agents are operating lawfully, that they're not using excessive force, that they have warrants before they go into people's homes, that they're not racially profiling people. All of those things can be true at the same time, and that's what I'm advocating.

Joe Kernan (30:18)

The last two shutdowns that we've seen, one was about the expiring subsidies for pandemic era. You know, Obamacare subsidies. This is about, I don't know, I guess you'd call it compassion and enforcing immigration laws. Do you both think that preventing funding from other things like TSA or DHS during a war, is that the way that business should be conducted in Washington? Senator Schiff, would you want Republicans to do that, to get what they wanted in the normal funding of the. The government?

Senator Adam Schiff (30:52)

I think that before we fund, for example, ICE agents or Customs and Border Protection, we should insist on certain safeguards, namely, that they operate with the same standards. We ask of a local police department. We're asking neither more nor less than a local police department. So before I approve funding for those agencies, given the abuses we have seen, given the blood we've seen in the streets, that's something I want to see happen. Now, I don't to want. Want to hold up the rest of what DHS does. So I fully have supported and supported vote after vote. I think we've had 10 votes to fund TSA.

Joe Kernan (31:27)

It's a car.

Senator Adam Schiff (31:28)

Supported and offered.

Joe Kernan (31:30)

It's not a clean bill. It's not a clean DHA funding bill, which has been the business as usual for the way. The way it's usually done. Once again, business.

Senator Adam Schiff (31:39)

The business as usual right now is people getting killed in the streets. So I'm not for that business as usual. But I also don't want to see the Coast Guard funding held up or FEMA funding held up or TSA funding held up. And we should, I think, narrow down to the things we disagree and keep negotiating on that. With respect to other things, we should fund them. And I think most immediately we need to get those TSA security people paid and address those long lines at the airports.

Joe Kernan (32:09)

Senator Curtis, if I spent all my time in Utah, I don't think I'd ever leave. We were just. I mean, I've never seen topography or Moab and arches, but I digress. But that is what is a wonderland. Is that what's it called?

Senator John Curtis (32:28)

I'll tell you what, I actually wish you wouldn't say that because that's just going to bring more people to Utah and. But let me, let me just weigh in quickly on this, on this shutdown as well. I've been here for eight. Yeah, I've been here for eight years. I've seen more shutdowns than I can count. Not a single one of them has produced the results it was intended to produce. Shutdowns are bad. We punish the wrong people. And who we should be punishing are members of Congress. Let's take our pay away until we get this done. And listen, a lot of the objectives that are trying to reach through shutdowns, whether it's Republican shutdown or Democrat shutdown, should be reached through the legislative process, not by hostage. So I'm not a fan of shutdowns. I've never seen one that's been productive or accomplished its goal. And I think we need to move on and deal with this through the legislative process.

Joe Kernan (33:18)

But you just enabled the next shutdown by saying that you think things should be compassionate and that Republicans should fold. So I don't know where you stand.

Senator John Curtis (33:27)

I'm sorry, I don't understand your question.

Joe Kernan (33:28)

It just sounded to me like you, you, you're not in favor of the tactics that you're seeing from the Democrats right now with the ice, with not funding ice. But earlier it just sounded like you understood and that there should be a carve out. So I'm not sure which would would be.

Senator John Curtis (33:44)

Listen this, I don't know how it could be more clear. Shutdowns are a terrible way to reach your objective.

Joe Kernan (33:50)

Right.

Senator John Curtis (33:50)

So if that is your objective, you've come to the legislative table and let's get it done through the process.

Becky Quick (33:55)

I'm not sure we reached an agreement between the two of you on this

Joe Kernan (33:58)

interview, but it was good.

Becky Quick (33:59)

But we hope that we can see that happen soon.

Senator John Curtis (34:02)

Let's do it again.

Becky Quick (34:03)

Okay. Senator Schiff, Senator Curtis, thank you for your time. We appreciate it.

Squawk Pod Host (34:09)

Next up on Squawk Pod Meta ordered to pay $375 million for child safety violations in New Mexico and the company is vowing to appeal. New Mexico Attorney General Raul Torres joins us right after this break.

Raul Torres (34:26)

This is a company with a lot of technological know how with a lot of resources. And I think that the message that the jury delivered yesterday is that they need to do a whole lot more to make their users safe.

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Dr. Guy Winch (35:44)

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Squawk Pod Host (36:49)

This is Squawkpod.

Joe Kernan (36:52)

You're watching SquawkBox on CNBC. I'm Joe Kernan along with Becky Cook. Andrew's off this morning.

Becky Quick (36:57)

Meta has been ordered to pay $360 $75 million for child safety violations in New Mexico. The state's attorney general, Raul Torres, sued Meta in 2023 for misleading consumers about the safety of its platforms. It's the first standalone case by a state against the social media giant. Meta says that it will appeal. Attorney General Raul Torres joins us this morning. Attorney General, thank you for being with us. Let's talk about what happened here because this is the first time that a state has won against any big tech company in terms of trying to protect children. What's your takeaway?

Raul Torres (37:33)

Well, this is a landmark decision, and I think the jury delivered a message not only to Meta but to the entire industry that they expect a whole lot more in terms of creating safe spaces online for kids. And I think it's also time that Congress hears that same message and takes decisive action to try and regulate this space. Because we want accountability, we want safety, and what we want fundamentally is a safer space and a safer experience for our kids online.

Becky Quick (38:02)

You won. You overcame section 230 motions that meta and some of the other big tech companies have been protected by for decades at this point where they say, hey, it's not our content. We're just the bulletin board going all the way back to that CompuServe case. We're just the bulletin board. You can't expect us to, to be moderating this content. How did you overcome those motions?

Raul Torres (38:24)

Well, I think that's what makes this so historic. They've been hiding behind Section 230 for over two decades. As you know, that was a law that was passed back in a totally different era when technology and the landscape was completely different. Since that time, they have spent an enormous amount on lawyers and lobbyists to try to ensure that they aren't held responsible. We took a different approach in this case. Really focused in on the aspects of the product itself, the design features of the algorithm, the lack of age verification, the implementation of end to end encryption, all of which created an environment which was both dangerous for kids and addictive. But we also were able to show that the company's own safety team had been recommending for years and highlighting for years the dangers of these features. They were repeatedly ignored by Mr. Zuckerberg and other executives. I think fundamentally that's what made the difference in this case.

Becky Quick (39:19)

Yeah, I think the legal filings specifically that you're referring to and this kind of jumped out at me as well. His Zuckerberg's 2019 announcement to make Facebook messenger end to end encrypted by default would impact the ability to disclose to law enforcement some seven and a half million child sexual abuse material reports. And that was what internal emails, internal messages from Meta highlighted and that those were the type of messages that were being ignored.

Raul Torres (39:49)

Yeah, that's exactly right. And it was interesting that they moved fully to end to end encryption the day after we filed this lawsuit. And then in the middle of the trial, they actually made the announcement that they were going to unwind end to end encryption. I think in part it was just one more aspect of the decisions that have been happening inside the company which points to this default setting of prioritizing profits over safety in terms of ignoring safety recommendations from their own internal staff. And it's one of those things that really grabbed the jury's attention. I think it's noteworthy that this was a six week trial. The jury came back in less than a day. That's a pretty resounding message for Meta and for the entire industry.

Becky Quick (40:33)

Meta itself says that not only do they disagree with this verdict and they're going to appeal, but they say that they work very hard to keep people safe and that it's pretty tricky to weed out the bad actors when you have such large platforms. What's your response to that, well, this

Raul Torres (40:49)

is a company with a lot of technological know how, with a lot of resources. And I think that the message that the jury delivered yesterday is that they need to do a whole lot more to make their users safe, to create a safe environment. And fundamentally, they need to stop misleading customers and users about the safety of the platform.

Becky Quick (41:09)

This is not completed. The trial's second phase begins on May 4. That is not with the jury, that's just with a judge. What will that judge be determining?

Raul Torres (41:17)

Well, that's to examine the public nuisance claim which was bifurcated from the initial phase of the litigation. This will be a case made directly to the trial judge. We'll be talking about the public nuisance that we believe was created by the platform and the harm that flowed from that public nuisance. We could ask, and we will be asking for more financial relief for the state of New Mexico to remedy that, to help support our kids and create a safe digital environment. But more importantly, we're going to be asking for injunctive relief. That means changes to the design features of the platform itself, real age verification, changes to the algorithm and independent monitor to oversee those changes. And fundamentally a demand that they do business differently.

Becky Quick (42:02)

And New Mexico, they've said they're going to appeal. What's the next step in the appeal process? Where does, what court does that land in front of?

Raul Torres (42:09)

Well, we're focused now on the second phase of the trial.

Becky Quick (42:12)

I realize that, but what's the next step? We're about out of time. I just want to know where the next, where Meta's options are.

Raul Torres (42:18)

Well, Meta always has the option to appeal this. My recommendation to them would be to focus on the message that was sent by the jury and spend that time and money on making this safer.

Becky Quick (42:27)

Attorney General, where is the appeal? Where does it land? What court?

Raul Torres (42:31)

They would have to go through the Court of Appeals here in New Mexico

Becky Quick (42:34)

and then to the Supreme Court if they lose there. Attorney General Torres, thank you for your time. It's good to see you.

Raul Torres (42:40)

Thank you very much.

Squawk Pod Host (42:43)

That's Squawkpod for today. Thank you for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Weekday mornings on cnbc starting at 6am Eastern to get the best bits of that three hour TV show right into your ears in around 30 minutes. Follow Squawk Pod wherever you're listening now. We'll meet you right back here tomorrow. Have a great day.

Senator Adam Schiff (43:07)

We are clear.

Senator John Curtis (43:09)

Thanks, guys.

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