The 404 Media Podcast (Premium Feed)

Joseph: 00:03

Hello, and welcome to the four zero four Media Podcast where we bring you unparalleled access in the worlds both online and IRL. Four zero four Media is journalist founded company and needs your support. To subscribe, go to 404Media.co. As well as bonus content every single week, subscribers also get access to additional episodes where we respond to the best comments. Gain access access to that content at 404media.co.

Joseph: 00:28

I'm your host, Joseph, and with me are two of the other four zero four media cofounders. The first being Emmanuel Mayberg Hello. And Jason Kebler.

Jason: 00:38

Hey. Good to be here.

Joseph: 00:40

Yeah. Good

Jason: 00:40

to not be hosting.

Joseph: 00:42

Oh, is that what you did last time I had this in chat?

Jason: 00:45

No. When you're when you're not here, we just don't do it at all. It's we have a robot ask us questions.

Joseph: 00:51

I mean, yeah. I go on holiday. You outsource me to a robot. That sounds that sounds fine to me. I'm back.

Joseph: 00:59

Jason, what is this first story we're gonna talk about?

Jason: 01:04

So this is your story. It's called Elon Musk, and Elon Musk is in quotes here because it's a username, which we'll get into. Elon Musk was a prolific money launderer for hackers and drug traffickers. It was secretly the FBI. Joseph, this is a really great story based on a lot of court documents and just, like, sourcing and reporting that you did over the course of a few weeks.

Jason: 01:27

So this person was named Elon Musk, WHM. So who was he? And I guess, what is WHM?

Joseph: 01:37

Yeah. Look. Straight up. I'm not gonna say Elon Musk, WHM for the entire podcast. I'm just gonna say Elon Musk.

Joseph: 01:45

You all know we're not talking about the actual Musk. It's a username that this person took. But the WHM refers to White House Market, which is one of these dark web marketplaces like Silk Road, like AlphaBay. And to be honest, I covered those places a lot back in twenty thirteen, fourteen, fifteen, but they're still going. You know?

Joseph: 02:10

I just don't think people pay that much attention to them anymore. I'm not sure about the size of these ones, but, you know, some of them got pretty substantial after Silk Road and actually a lot lot bigger. But that was just one of these marketplaces where Elon Musk advertised his services. And what he offered was something which I think is really overlooked by a lot of the technology press, which is this crucial cog in the underground economy. So let's say you're a drug trafficker or a hacker and you have all of this Bitcoin that you've got from selling your drugs or hacking to companies, that's all well and good.

Joseph: 02:46

But you can't really do anything with it. You know? You can't go up to every Lamborghini dealership or whatever and try to buy with Bitcoin or Monero. They're probably not they're not gonna accept it and that looks pretty weird anyway. Right?

Joseph: 02:59

So you need to convert that crypto into cash. That presents a real problem for criminals because if they just go do it at Coinbase or something, they're gonna ask for ID. And then, you know, maybe get a fake ID, whatever, but there's a lot of friction there. And Coinbase or Binance are gonna give information to the authorities. So what Elon Musk offers is you send me your Bitcoin, and I would just send you cash physically in the mail.

Joseph: 03:28

No no your customer KYC, no ID, and you can anonymously cash out your crypto.

Jason: 03:35

So one thing one detail in this story that I thought was really good is that a lot of the times the cash was sent within the pages of children's books. Is that that's right.

Joseph: 03:45

Yeah. So what happened at the start of the investigation is the FBI start doing all of these undercover buys because, you know, Elon Musk is advertising this stuff on the dark web, but we have no idea where he is. So they do a bunch of buys for a thousand dollars here, $2,000 there. It all goes to this post box, somewhere in Kentucky, and they open it up and it just looks like children's books or in some cases, the pages of children's books sort of taped together, sort of, you know, relatively innocuous looks somewhat normal. You then open those up and there are envelopes in size, two envelopes, one inside the other.

Joseph: 04:24

You get through those, and then that's where the cash is. Now, obviously, whoever's shipping this money has done that to try to mask it so it doesn't get caught in transit, that sort of thing. But it is pretty funny that, yeah, they were shipped in children's books. I really tried to do that with this article because as you say, the vast majority is based on court documents and it wasn't like I just went to Pacer, the US court records website and just downloaded a bunch of records and wrote it. This was spread across dozens and dozens of dockets that weren't immediately obviously connected.

Joseph: 04:59

I had to figure out, oh, this case is actually part of this case, and there's sort of a spider web of all of these different dockets going on. And you get lots of details like that, like the children's books, some of the money mills we'll talk about, the guy buying Mercedes, all of that sort of thing.

Jason: 05:15

Right. So the FBI wasn't just investigating Elon Musk, WHM, or or I mean, maybe that was their ultimate target, but they, like, they in the start, they identified a single person. How did they do that? And then what happened after they sort of identified this one? I guess you'd call him a money launderer or or an accused money launderer, but how, how did they identify him?

Joseph: 05:41

Yeah. So with all of these undercover buys where all of this cash is arriving at the post box, they they find that it keeps being shipped from different places in New York, like these villages and towns sort of in Upstate New York. They kind of gloss over this in the court records, I'm not a % sure. But what seems to have happened is that they zeroed in on that area because all of these packages keep coming from there and then eventually, they managed to perform physical surveillance on this person who they believe is shipping the packages. This person, they arrest him a little while later.

Joseph: 06:18

They burst into his apartment. They shout his name. He then comes out from the bedroom. He's living with a parent or his parents, it seems. We don't actually name him in the article because it turns out later that he actually flips and becomes a confidential human source for the FBI and for the authorities.

Joseph: 06:38

And, you know, it just didn't seem right naming that person even though you can figure it out if you piece all of the balls of different documents together. But what they do there is almost like a very old school investigation. Right? You think about the dark web and all this technical stuff and actually, there is a real world component because there are real people moving physical cash around and they've identified someone shipping this cash. They then flip him and then that's a way to investigate the rest of the money laundering ring.

Joseph: 07:08

And this person who we call Eric puts on a camera, I think a microphone as well, and they go and continue basically laundering money while the FBI is monitoring them. And that would often involve going to a grocery store, car park, or something like that and picking up or moving a hundred thousand dollars to $300,000 at once. So while the FBI was buying a grand or 2 here or there, it's obvious that the money laundering ring is actually much much bigger and and moving much much more money. And there's that physical part and then also in these conversations with Elon Musk because of course, with the undercover buys, the FBI is posing as a drug trafficker online. They follow the blockchain, which shows all of the Bitcoin transactions, and they're able to figure out or estimate, I guess, that something like $90,000,000 is moving through this guy's cryptocurrency accounts.

Joseph: 08:07

It's a huge money laundering ring. And well, this was actually a long time ago now, I think in 2013, but long time readers and listeners may remember an article we wrote way back then about a money laundering ring in New York. Oh, that was really interesting because they were exchanging cryptocurrency for cash and all that sort of thing. It turns out it was this one. We didn't know that at the time, but now I've pieced together all of these other court documents and it's, oh, this is a even bigger case than that somehow.

Jason: 08:41

Right. And so they eventually identify who they believe to be Elon Musk, and they essentially trick him into flying to The United States. Is that right?

Joseph: 08:55

Yeah. And I was kind of blown away by this, but through the confidential human source in the money laundering organization, they get a WhatsApp number. They get they actually get a lot of phone numbers and all that sort of thing, which is one of the main numbers he communicates with. They then do all of these different search warrants and court orders. They do one with Uber, I PayPal, Binance for sure as well.

Joseph: 09:22

And they eventually, identify this 30 year old or late twenties, Indian national with the surname Murika. I hope I'm pronouncing that correctly. Apologies if I'm not. But they they figure out it's him, and he's off in India. And they're figuring out, well, how do we get him here?

Joseph: 09:42

And it turns out he'd made a ton of applications to visit The US, over the years, and they always denied. We don't really know why they were denied, but they always were. And now this time, when he makes another application, the FBI clearly communicates with the state department and says, hey, approve it. And you go through the court documents and it says, the only reason the state department approved this travel authorization was because the agency knew that this person was gonna be arrested. Now, I'm sure that happens.

Joseph: 10:13

You know, I'm sure there are cases if you just look around. But that was the first time I've seen that in the court record where it's like, well, we're just gonna approve him. So he comes to the country, and then we're going to arrest him. But they lure him over, and then, of course, it's after they arrest him, the the story actually gets really, really interesting.

Jason: 10:32

Yeah. I mean, that I know that was a lot of lead up, but basically, they they arrest this person who is supposedly Elon Musk, WHM, and then they basically take over his persona. And they they run his money laundering business for a year.

Joseph: 10:51

Yeah. So I guess I guess to back up briefly, I came across this case because somebody sent me a court record that we'll talk about in a second, and then I worked it backwards. I was trying to figure out, who is this money launderer that the FBI took over? And that led me to the Elon Musk case. It was announced in January, but didn't really get much coverage at all.

Joseph: 11:15

So I went back from that and then brought all the court records together and figured it out. And what happened is that the FBI takes it over and I managed to actually have the prosecutor's office confirm to me that they ran it for eleven months, nearly a year. And honestly, I was pretty surprised by that. From reading the court records, I was estimating with the timeline I had in front of me, well, it looks like they they ran it for at least three, four, maybe six months, something like that. But it really blew me away that they said, that they ran it for eleven.

Joseph: 11:54

And during that time, they investigated Elon Musk's customers or I guess the FBI's customers, now. And the FBI didn't get back to me. I did speak to the prosecutor's office, as I said, and they were quite hazy on the details, but they did say the investigation looked into, drug traffickers in Miami, a robbery at Knife Point in San Francisco, and then lots of hacking investigations as well. The prosecutors wouldn't say whether those investigations were specifically before they took over the account or after they took over the account. They just said there were investigations both before and after.

Jason: 12:33

So Right. I I mean, there's shades here of DarkWire, the incredible true story of the largest sting operation ever Mhmm. A book by Joseph Cox, where the FBI we talked about it a lot, but the FBI took over a an encrypted cell phone company. And this is just the latest of, like, the FBI secretly running criminal organizations for, like, sometimes months or years at a time. And in the in the meantime, it's like crimes are being committed.

Jason: 13:01

It sometimes takes them quite a while to start arresting people. Can you talk about some of the the other ones that you've covered?

Joseph: 13:08

Yeah. So, yes, there is the Anom case, n a n o m, whereas you say they took over an embryonic encrypted phone company, put a backdoor in, and then used that to white out the world. That was thousands of devices, something like nine to 12,000 depending at the point in time. You have that. You have when the FBI launched its own cryptocurrency secretly.

Joseph: 13:32

You know, they didn't come out and say this is the FBI coin. It was it was a covert operation to catch people doing pump and dump schemes. I didn't cover that at the time, but I definitely took notice when it came out and there was a press release about it. And the other one is one I got obsessed with years ago back when we were at motherboard, writing there when the FBI took over a child abuse website on the dark web, and they ran it for two weeks in order to deliver malware to visitors of that website. All of these cases are shades of gray.

Joseph: 14:07

You know, it's not black and white. You can on one side see, oh, well, the f you'd see why the FBI would do that. They wanna flip criminal infrastructure against criminals and use that as an avenue to target them. On the other side, they are arguably facilitating criminal activity at least for a period of time. So with the dark web child abuse site, they were serving child abuse material to, child abusers and allowing them to access that.

Joseph: 14:32

With a non, they were facilitating drug trafficking and assassinations. And in my book that you mentioned, you know, at least one person was killed through an assassination planned on that app. I guess the pump and dump one is a little bit sort of not as extreme as those, although I need to look into it. But here, if all of the cases we've connected are accurate I mean, the FBI is running the money laundering operation, and in order to do that, you have to send criminals money. So you obviously, so they don't suspect it, but also that you get their physical address.

Joseph: 15:07

And there's one case in there which it it at least lines up on the timeline, And they say that this alleged hacker from Scattered Spider, the prolific hacking collective, communicated with a money laundering service on Telegram that they didn't realize was an undercover FBI operation. And this alleged hacker originally asked for $50,000 and they upped it to $75,000. And the FBI mailed the cash to them, It got their physical address and whatever, and this person went on to flash a bunch of cash on Snapchat. And these are violent criminals. They do very high profile hacking operations.

Joseph: 15:50

They steal a lot of money, and they also conduct physical violence against one another and members of the public. And yes, of course, this operation was done in order to investigate these people, but you can't dance around the fact that it facilitated them in some way as well. And there's tension there And, you know, some people will fall on one side, some people fall on the other, maybe some in the middle, but you have to, like, address that tension because this is wild. You know? It's really, really crazy.

Jason: 16:19

Yeah. So, I mean, in this case, there's drug trafficking, prosecutions in Miami, a robbery in San Francisco, and then, you know, a lot of hacking. And then, you know, some, like, pretty high profile hackers were wrapped up in this. Right?

Joseph: 16:39

Yeah. I mean, the main one that we point to is the scattered spider investigation, but the authorities are remaining very, very tight lipped on this. And, of course, originally, I started to figure out the contours of this operation, I would love to speak to the agents, even if it's the agents of the US Postal Inspection Service who were part of the undercover buys, of course, the FBI or the prosecutors, and I would love to talk to the the money mules as well. It's been a while since I covered a case where everybody basically doesn't talk except the prosecutors very, very briefly in a in a in a few emails with me. Defense lawyers wouldn't get back to me.

Joseph: 17:25

The people who actually did some of the crimes didn't get back to me. FBI didn't. USPIS didn't either. And I've figured out why that is. It's because when you go through the court transcripts, the prosecutors explicitly say, we haven't done a press release about this because there's ongoing investigations.

Joseph: 17:47

And now the Elon Musk persona, has retired. I sent a DM on Telegram, and it doesn't it doesn't look like it delivered. So whoever is in control of that FBI hasn't responded, to my request for comment. But that's is gonna maybe not snowball, but more will come out about this. You know, give it, I don't know, couple of months, something like that.

Joseph: 18:12

I'm sure there'll be a big splashy press release saying how the FBI did this, but they really don't wanna talk about it for the moment. And I guess just the last thing I'll say before we go to the next segment is that another reason they may not wanna talk about it is because authorities did some pretty controversial stuff here beyond running the money laundering operation While conversing with Elon Musk in an undercover capacity, they sent the person some YouTube links in an attempt to, you know, build rapport, that sort of thing. The authorities then demanded that Google turnover the IP addresses and identifying information of everybody who watched those YouTube videos over like an eight day period, something like that. And Forbes actually covered that demand a while ago because they found an unsealed court record, but they didn't they didn't have all of the context which now we've built upon after Forbes reporting as well. And experts that Forbes spoke to at the time is like, well, that's unconstitutional because you may have just done basically some search warrant or court order that implicates a bunch of people because they happen to watch a YouTube video, which thousands of people have already watched.

Joseph: 19:19

So there's a ton of stuff in the story. I definitely recommend people go read the full thing because we're almost just scratching the surface. It's a 3,500 word piece. But, yeah, it it was a fun one. I'm glad we could get it out.

Jason: 19:34

Yeah. I mean, the last thing I'll say is just like, you know, you as you mentioned, you've covered the FBI doing the kinda secretly running these criminal organizations or posing as criminals or running, like, criminal infrastructure over the years. And every time you do it, I'm like, oh, well, they've they've done everything now. And it it was funny when you wrote this piece. I was like, oh, I guess they I hadn't thought about them running a a dark web money laundering operation.

Jason: 20:01

And surely the next time this happens, I will be surprised again. But I I mean, I have to say, like, I'm running out of ideas for things that the the FBI can can run secretly without people knowing in order to entrap criminals.

Joseph: 20:17

Yeah. I guess a VPN or something would be a good one. Like, I feel like that must have happened, and we just don't know about it. But you're right. They will they will leverage any criminal infrastructure they can to flip it against them.

Joseph: 20:29

That brings up all sorts

Jason: 20:30

of issues. Tried to run Tor exit nodes before possibly?

Joseph: 20:34

Yes. Well

Jason: 20:35

Or they the Carnegie Mellon thing. Maybe we don't shouldn't get into it. But years ago, they they tried to unmask Tor traffic by doing something with Carnegie Mellon, which had control of some TOR exit nodes, I believe.

Joseph: 20:48

Yeah. Back in around 2014, and that's how they unmasked Silk Road 2. I was actually looking back into that case because I feel like it's been long enough. If you're listening, you know more about that, please let me know. It's it's, you know, ten years at this point, so I think we should go back and, try and get the full story on that.

Joseph: 21:04

Let's leave that there because we have a jam packed segment about tariffs and Trump deliberately didn't put the front of the show because people be like, oh, good. We're gonna have a podcast not about politics. Well, now you're here. We're gonna bait and switch you because we actually have a ton of stuff left in the other people aren't really covering or at least from our perspective. We'll be right back after this.

Joseph: 21:41

Alright. And we are back. Let's keep these stories short because there's a a lot to get through from a lot of different angles. The first one is written by both Emmanuel and Jason, think. Big tech backed Trump for acceleration.

Joseph: 21:58

They got a decel president instead. Emmanuel, I I guess you can start us off here. Who backed Trump in big tech and and why did they do that? And then we'll get to the decel part. Like, what who did it and what were they after initially?

Emanuel: 22:12

Obviously, Elon Musk, who is in the administration at Doge doing all the slashing of government agencies, but also Andreessen Horowitz, the venture capital firm backing some of the biggest tech companies in the world. Mark Andreessen specifically is very vocal and is advising the administration. David Sachs, who is one of the PayPal mafia people and has a podcast about tech and is also in the administration now as the cryptocurrency and AI czar. And as you can tell by me saying they all have some kind of role in the administration and what they do there. The reason they back Trump is well, their stated reason is that they are for technological progress, they're for innovation, they are very focused on AI right now, both in terms of their ideals and their politics, but their business as well.

Emanuel: 23:14

And they thought that the Biden administration, Lena Khan's FTC, various laws that they tried to pass, and executive orders that the Biden administration tried to pass on regulating AI, all of that was not helping AI develop, wasn't making America very competitive globally in AI. And Trump, who is anti regulation, anti big government, anti welfare, is not very concerned about the energy and carbon costs of training huge AI models, he would be better for the cause. And they backed him financially. They backed him publicly, and they all got to play a role in the administration in some fashion or a lot of them did, but that I don't think worked out like they wanted.

Joseph: 24:14

No. Right now, we have these mounting tariffs as a recording. There's more than a % tariff on China and then all all of this other all of this other stuff as well. But what do you mean that Trump is decel? And I think you should probably define that because I don't think most people know that service.

Emanuel: 24:32

Yeah. So all the people I describe fall into this camp in technology, but more specifically around AI, that's all about acceleration. And the idea there is that humanity has sort of stagnated in innovation and the way for us to make society better and make everybody prosper is to really push forward on developing technologies faster than we have been in the past few decades and with a particular focus on AI. And in order to do that, they think you have to lift a lot of the government regulations. It's sort of upend how we do a lot of things in in this country and globally.

Emanuel: 25:18

So that's the accelerationist camp, and they use the term decel as a derogatory term to refer to anyone who stands in their way. So they want to accelerate and push forward and, broadly speaking, liberals, democrats, the left, people who are worried about climate change, people who are for some sort of austerity when it comes to energy, They're all decelerating and are referred to as decel. And then there's also this big concept of degrowth where you don't want to just slow things down. You want to kind of scale back humanity's footprint as a whole, which I mean, this is a more extreme position, but it's one that they point out a lot, which is they're, like, pronatalist and they want more people because we're gonna max out the population of of the planet and then go to other planets, and all this is gonna be possible because of space travel and AI and infinite energy and yada yada yada. And then there are some camps in the left that are like, well, actually, we're not going anywhere.

Emanuel: 26:30

This is our only planet, and the only way to make it sustainable in the long term is to reduce the population of humanity on the planet overall. And, yeah, that that's also obviously like a decel degrowth position.

Joseph: 26:46

Yeah. And Trump isn't exactly promoting growth right now with company stocks tumbling, free trade being a thing of the past, and of course, there's a the sub headline of the article, which I'll just read out because it's so good. Effective accelerationists didn't just accidentally shoot themselves in the foot. They methodically blew off each of their toes with a 50 caliber sniper rifle. Who came up with a 50 caliber sniper rifle?

Joseph: 27:13

They couldn't decide if it was a manual or Jason.

Emanuel: 27:15

Obviously, it's me, the gamer. But I was corrected, and I was told that, you would not be able to do that with the 50 cal. You you blow off your whole leg immediately with Yeah. But I

Joseph: 27:25

think I think you know that.

Emanuel: 27:27

I know. Whatever. It's okay. It's all good. I appreciate the I appreciate the the gun nuts who pointed that out to me.

Emanuel: 27:33

Yeah. Okay. Sure.

Jason: 27:35

I mean, we'll we'll get into it in the other stories, I think. They're they're all kind of tied together, but, like, a a big part of of, you know, decel versus accelar versus, you know, globalism versus not is, like, even with something like clean energy, you know, you have, like, really cheap solar panels coming out of China, for example, and that that has, like, led to, like, a a huge increase in capacity, in The United States and elsewhere. And you have, like, this kind of global competition where there's a theory that and it's a pretty good theory, I think, that you have, like, American companies competing against companies from all over the world, and tariffs are like an artificial barrier on that. And so if you are trying to get, like, the best and brightest ideas to rise to the top, you sort of want free trade. You want American companies to be able to take advantage of, you know, inexpensive labor, the manufacturing capabilities of other countries, etcetera, etcetera.

Jason: 28:38

You have a more, like, interconnected world. And, you know, there's a there's some good and some bad that comes with that. But I think that sort of putting up across the board tariffs means there's, like, more hurdles to that. And so if you are an accelerationist who says, we really need to invest in the future of technology, broadly speaking, you know, that you have kind of these Silicon Valley folks who will complain about competition from China, but, like, a new innovation from China in artificial intelligence, for example, that can quickly become incorporated into American artificial intelligence. So and you can take that across, like, any sort of technology.

Jason: 29:26

And by putting up tariffs, like, you're making all of that kind of a a lot harder. And you have an entire, you know, class of people who say, if we're gonna stop climate change, like, you sort of need a race toward, like, a technological utopia. And I'm not saying that that is what we need because I think it's, like, far more complex than that, but Trump is undoubtedly decelerationist with these tariffs, as opposed to the alternative.

Emanuel: 29:56

Yeah. So you asked about, like, what Trump said, and I think, as we've said since 2016 or 2015, it really doesn't matter what he says. It's what he's doing. And I think when he was talking in the campaign, he was aligning himself with these people and was like, yeah, I'm pro AI and I'm pro cryptocurrency and I'm pro innovation and all this stuff. So in terms of what he says, he's for this stuff.

Emanuel: 30:18

They're on the same page. But in reality, this has been a disaster. And it's a disaster for reasons that Jason could get into in a in a moment and and and that he covers very well in his stories. But you're just the the the protectionist, isolationist policies that Trump is implementing, even on a long enough timeline where they do onshore a lot of these jobs that over the decades have been exported to other countries, it's it's fundamentally a worldview that is incompatible with this kind of utopian techno utopian techno optimist utopian, vision that these people have because in order to colonize other planets and do cold fusion and cloning and biotech and all this stuff, it's it's a global effort. It's a society wide effort that requires free trade.

Emanuel: 31:18

And requires all these specialized manufacturing hubs, right? It's like you get ships coming out of Taiwan and you get the rare earth minerals coming out of parts of Africa, and it's just that we can't build this stuff without leveraging all of humanity. And then on top of that, as we've reported over the last few weeks, a lot of this development comes from academia, and it comes out of government agencies. Like, the all all the technologies that we are now leveraging, nuclear, semiconductors, they're all originally born out of, like, government projects or government subsidies. And certainly, the greatest minds in the world who are coming to this country in order to go to the the best universities in the world and all the policies about cutting funding to universities and deporting students for their politics, that's just also inherently incompatible with with accelerationism.

Emanuel: 32:29

And I'm checking Twitter all day just to see if, like, all these people that I mentioned have said anything about this, and they either have not said anything, they're just, like, totally quiet. Marc Andreessen has not tweeted in more than a week, Or they're starting to say, like, hey, these tariffs are not good. Like, let's find a way out of this tariff strategy as soon as possible because this is going to destroy my value, it's gonna destroy my companies, and it's gonna destroy our vision for the future.

Jason: 32:58

Yeah. And, I mean, last thing on this and then, you know, some of the other stories will be quicker is that I think a lot of Silicon Valley has been expecting deregulation across the board, which is very good for stock prices usually. And there's not been that many IPOs in Silicon Valley, you know, in recent years. So I think you had a lot of venture capitalists really, like, pushing for Trump, waiting for all these, like, tech companies to be deregulated, and they have been in some ways. But then you add tariffs on top of it, and you have all this uncertainty that Emmanuel is talking about.

Jason: 33:34

So people don't want to IPO. So they don't get their x's. So they don't get their money. And then the other thing is that tariffs are, like, worse than regulations. They're they're a type of regulation in many ways, but if you know what the regulations are, the argument goes, you can, like, work around them.

Jason: 33:52

You can capture them. You can lobby against them. And, you know, if you're big enough, you can kind of continue doing your business. Whereas if you have a tariff one day and then no tariff the next day and then a different tariff the next day, it's like you don't know where to build your factory, you don't know how to do your supply chains, And so it ends up having the effect of being, like, worse than any sort of regular regulation because you don't even know what the rules are going to be, and therefore, you can't run your business.

Joseph: 34:21

Yeah. And that's all very important, especially, you know, about academic and health research and all of that. But the switch to is gonna probably get more expensive, and I think we need to we need to focus on that. This is a story from Jason. Sea of idiocy, economists say Trump tariffs will raise prices switch to and everything else.

Joseph: 34:43

You've actually wrote this like pretty early on in the first batch of the tariff announcement. And look, I know I said a % earlier, who knows what tariffs are when you're listening to this right now. I'm not even gonna get specific. It could change in literally twenty minutes. I don't know.

Joseph: 34:55

So there's no point. Just imagine there's tariffs. Okay? There probably is. How's it gonna affect the price of the switch to, Jason?

Jason: 35:02

Yeah. So, I mean, it sounds frivolous, but, like, the day that the tariffs were announced, Liberation Day was also the day that the Switch two was announced, which is just, you know, massively anticipated consumer tech product. And notably, Nintendo shifted a lot of its manufacturing from China to Vietnam and Cambodia in part seemingly to try to avoid tariffs, which tariffs on China, which a lot of tech companies have done. Like, Apple has moved a lot of its manufacturing to Vietnam, India, other countries that are not China because there's less tariffs there. And, actually, a lot of Chinese companies have set up, like, I I guess you'd call them subsidiaries or shell corporations in, like, Mexico, Vietnam, etcetera.

Jason: 35:46

So a lot of these factories, like, in Vietnam are sort of, like, assembling Chinese products and then importing them to The US at lower rates. So in any case, it's just like I I emailed a bunch of economics professors. You know, I talked to someone at Harvard. I talked to someone at Princeton. And I said, like, what is gonna happen here?

Jason: 36:07

Because I thought it would be an interesting, like, microcosm of what is gonna happen to a lot of other things. And, you know, with the caveat that all of them said, we aren't sure what's gonna happen with any individual product, they said, you know, like, even though Nintendo announced a release date and a price, which is $449 in The United States, they were maybe planning on having some tariffs, but they certainly weren't planning on having, like, 50% tariffs, 80% tariffs. Like, who knows what the tariffs are going to be? And so some of the professors I spoke to said, like, it's entirely possible that Nintendo will increase the price. And others said, you know, maybe Nintendo will eat the tariffs, like, take a a less like, a hit on the profitability of the Switch or take a bigger loss on the Switch.

Jason: 37:00

We don't know how much it it costs to make a Switch two. But traditionally, video games consoles have been sold at a loss, and then companies make up that price with from all the games that you buy. And so there's some people saying like, oh, well, maybe they'll just, like, take even a bigger loss on the Switch two hardware and and make money. And then lo and behold, the next day Nintendo announces that it's, you know, canceling not canceling preorders, but it's not gonna it's gonna delay preordering for the Nintendo Switch two. And so

Joseph: 37:30

In The US. Right? In The US. In The US.

Jason: 37:32

And so Yeah. Presumably, like, we don't really know, you know, if the console itself is going to be delayed, if Nintendo is going to try to shift manufacturing somewhere else, if it's gonna raise the price, if it's going to release the Nintendo Switch two globally, but not in The US to start, which would seem crazy. But, I mean, these are kind of unprecedented times.

Emanuel: 37:59

Yeah. I think historically, Nintendo is the only console maker that doesn't sell at a loss. They either break even or make a small profit, and that just has been their strategy for several cycles.

Jason: 38:13

It's because they're selling old hardware. Am I right?

Emanuel: 38:15

I mean, they they they push power, less than their competitors and in order to, like, you know, make cleaner margins. But so so that's a good like, it might cost around what is it? $4.50 is the price?

Joseph: 38:35

Yeah. Right now.

Emanuel: 38:36

So it's like, it's probably it probably costs something around that. But for them to say all they want at this point is to get as many preorders as possible in order to start counting on that money to come in once the console launches. So for them to pull out of what I assume is the biggest market in the world for their business is so, so dire. And Nintendo was the first to do it, but as, like, some of our other stories show, not the last.

Jason: 39:12

Yeah. Let's mention the Framework laptop here. So Framework is a repairable, upgradable laptop that is made by a California company but manufactured in Taiwan. And they announced on Monday that they're gonna stop selling the entry level Framework laptop in The United States because they said, like they straight up said that they planned for a world where there was zero tariff on Taiwan. And that that's the world that they existed in previously, and they can't count on that anymore.

Jason: 39:44

So they're no longer selling it to people in The US. I think Razer just announced the the laptop manufacturer that that they're going to pull some

Joseph: 39:53

Ray products. Razer pauses direct laptop sales in The US as new tariffs loom was a headline just before we started recording.

Emanuel: 40:01

Razer manufacturer of, like, high end gaming PC hardware.

Joseph: 40:08

Yeah. So you have those. And I'm sure look. While recording, there's probably another one we've missed, and there's gonna be more in the coming days. The Nintendo delaying of the preorders was insane and I think unprecedented, at least in my memory.

Joseph: 40:24

I don't remember something like that. Then we're seeing it in the high end consumer electronics and then maybe it's going to trickle down to other stuff. Right? And talking about other stuff, you know, much more widely used technology, is the iPhone, obviously. And there's this idea, and I don't have it verbatim in front of me, so correct me if I'm wrong, Jason.

Joseph: 40:45

But generally, the idea is that with these tariffs, of course, manufacturing will move to The US, at least that's the Trump administration's hope, and that could include Apple. And magically magically, a factory is gonna appear, and then Americans are all gonna be screwing the screws into iPhones and that sort of thing. You wrote this piece, which was very good. A US made iPhone is pure fantasy. Why is that?

Jason: 41:11

Yeah. So maybe let's play the clip here. It's secretary of commerce Howard Lutnick on CBS's Face the Nation. So here's the clip. Great American workers.

Jason: 41:21

You know, we are probably on other networks. So that's

Joseph: 41:24

a box.

Jason: 41:25

Millions of people well, remember, the army of millions and millions of human beings screwing in little little screws to make iPhones, that kind of thing is gonna come to America. And then, like, immediately after I published this article, Trump said that he believes that iPhones can be made in The United States. And this is like an idea that pops up every couple years. There was a big push to try to make Mac Pros in The United States, and Apple did do that for a little while. Like, it's been a goal of every president since, I believe, Obama to for Apple to, like, bring some manufacturing back to The US.

Jason: 42:06

And it has brought some assembly back to The US. It has a factory in Austin, Texas where, you know, they do some Mac Pros, but not all Mac Pros, which are like the very high end, like, $5,000 desktop computers. And, you know, I've reported on supply chains, on mining, on the iPhone in particular and the repair industry for a long time and also Apple's sort of, like, environmental record, how the iPhone is made, like labor issues around it, so on and so forth. And it's just ludicrous to suggest that Apple is going to somehow move iPhone manufacturing to The United States. And it's not clear what that would even mean.

Jason: 42:54

You know, you could possibly bring iPhone assembly to The United States. Like, that is theoretically possible, I guess, where you would hire a bunch of Americans to do the little screws. But the components in the iPhone, like, I think that you need to realize the iPhone is one of the most complicated and just miracle of modern engineering and modern supply chains. It's the most complicated device, like, ever made at the scale that it's made. It's just like this tiny little box that has, you know, hundreds of different types of metals and minerals and sensors and components inside of it.

Jason: 43:40

My friend, our friend Brian Merchant wrote this book called the one device that's about all of the components that are inside the iPhone and where they came to be and where they come from. And it's truly just like a global thing. You know, every year, Apple releases information about its suppliers. This is like a 28 page PDF, like tiny tiny type that just says, here are all the manufacturers that we work with. Almost all of them are in countries that are not The United States and you're talking about, you know, the circuit boards, the superconductors, the the chips, the memory, like, the Bluetooth, whatever.

Jason: 44:24

Like, all of that stuff. You what I'm talking The inside of the phone is being made by, like, of companies all over the world. And so even if it was ultimately assembled in The United States, it still all of these components are gonna be subject to tariffs. You know, they have to release information about all of the mines that they work with, where all of the metals and rare earth minerals come from. So The United States has one single mine in California that does rare earth minerals, which, you know, these are things like neodymium and other things that I'm blanking on the names of right now that do, like, touchscreen capacitive touch and things like that.

Jason: 45:09

And it's like these come from largely China, but all over the world. They released this document that says that they get tin, gold, and two other minerals from 79 different countries, 200 different refineries and smelters all over the world. And so the idea that just you're gonna snap your fingers and suddenly be able to do all of that in The United States is ludicrous. I think that, you know, tariffs may very well push Apple to make more of the phone in The United States and to try to do more in The United States, but that's a really long process. And there's been reports that Apple flew, like, three giant planes full of iPhones to The United States today to avoid tariffs because the deadline for when these go into effect is Wednesday.

Jason: 46:07

And so it's just like this is there's gonna be a lot of pain regardless of of sort of what happens here.

Joseph: 46:16

Yeah. Apparently, it's five planes Five planes. Filled with iPhones, which is nuts. And then last thing I'll say just before we started recording, The US Press Press Secretary said, you know, these jobs could, quote, absolutely come to The US. And this this was specific about iPhone manufacturing.

Joseph: 46:36

Quote, Trump believes we have the labor, we have the workforce, we have the resources to do it. And then, you know, the press press secretary said Apple's investments in The US, well, they wouldn't have done those if they didn't think there was potential for growth in The US. They might just do that, one, because they were already doing it. Actually, before the Trump administration, there was already a lot of movement there. Also, fuck it.

Joseph: 46:57

What else are gonna do? You gotta do it. Otherwise, you're get completely screwed.

Jason: 47:01

Right. So, I mean, let me let me talk about the labors part really quickly because, you know, Howard Lutnick was like, oh, we're just gonna make robots that will assemble the iPhones, and Americans will make those robots.

Emanuel: 47:13

Oh, okay.

Jason: 47:14

Okay. First of all, it's like the like, we don't have that expertise here. Like, TSMC who makes, you know, superconductors and famously now has a factory in Arizona had to import people from Taiwan on special visas, which, you know, not a great time to immigrate to The United States right now. In order to build that factory, Foxconn was supposed to build a factory in Wisconsin, spent billions of dollars doing it, and it never went into effect. And half of the people who work at TSMC, now that it is open, are Taiwanese.

Jason: 47:49

And the reason for that is, like, there there's just not the expertise in The United States right now. And so, you know, it's possible that, you know, with reskilling and, you know, it's it's called reshoring where you're bringing manufacturing back to The United States, I think it's like a laudable goal, and there's ways of doing it. And, you know, Joe Biden's CHIPS Act was doing a lot of that. There's been a lot of incentives over the years where people are bringing that sort of expertise to The US and are training people how to do it. But that's a long it's a long process.

Jason: 48:21

It's like China, Vietnam, Cambodia, etcetera. They've been doing this for decades at this point. And that is they have a an education system and a training system that, you know, has allowed them to make really high-tech factories over there. We don't have that to the same extent here. And right now, Apple still like, Apple's manufacturing partners because it has a lot of different companies that make different components.

Jason: 48:47

There's 1,400,000 people who do that, and it's like you have one you have essentially one factory in Arizona, TSMC, and they can't even find enough Americans to staff that one factory at this point. So laudable goal, but it's just like I don't see it. It's it's gonna take a really long time for something like this to come fully back to The United States. And what happens in the meantime? It's like you have Apple flying five planes worth of iPhones here.

Jason: 49:18

Well, what happens when the new phone is supposed to come out in September, or next year, or the year after that? Like, this is a multiyear process, and the tariffs are here now. So I don't know what's gonna happen, but it it doesn't seem good.

Joseph: 49:32

Yeah. Stuff's gonna get crazy. Alright. We'll leave that there. If you're listening to the free version of the podcast on that, play us out.

Joseph: 49:40

But if you are a paying four zero four media subscriber, we're gonna talk about that new Facebook book that Meta is trying to silence and why Jason in particular, thinks it's really important. You can subscribe and gain access to that content at 404media.co. We'll be right back after this. Alright. And we are back in the subscribers only section.

Joseph: 50:15

We don't normally do segments like this. You know, we don't really talk about books that came at well, unless it's one of ours, I guess. We don't really do that and Well, that being said, I emailed Not emailed. I interviewed Byron Tao who wrote his really, really good book, Means of Control about the location data industry, so we do it sometimes. Anyway, you wrote this article, Jason, called Careless People.

Joseph: 50:41

Is the book about Facebook I've wanted for a decade? For those who don't know, who wrote this book and why did Facebook try to silence it before before we get to like what you really like about it? Book club.

Jason: 50:55

Yeah. So this is our first entry into the four zero four Media Book Club. Careless People was written by Sarah Wynn Williams, who is a New Zealander who worked at Facebook for, I believe, like, six years from, I think, 2011 through, like, 2017. And the book gets into this, but basically, she pitched Facebook over and over and over again trying to become Facebook's diplomat is how she described it. So she used to work at the United Nations, and she described working at the United Nations as being very boring and not you know, she was, like, doing these reports that no one was reading and things like that.

Jason: 51:40

And she saw the impact that Facebook was having globally, and so she started just emailing Facebook executives over and over and over again saying, like, you really need to think about how your product is impacting countries all over the world because they're gonna try to start regulating you and you need to get ahead of this. You need to, like, have a global strategy. Mark Zuckerberg needs to start meeting with different presidents. You need to make sure that you're not gonna get blocked in these countries. You're you need to make sure that you're not gonna, you know, face fines and regulations in these company in these countries, so on and so forth.

Jason: 52:16

And so she eventually gets hired and, you know, starts out very idealistic. You know, she talks about, you know, the first time that Mark Zuckerberg or Sheryl Sandberg, like, interacts with any head of state. And I believe it was actually the prime minister of New Zealand where it was like a, you know, a favor because New Zealand is not that big of a country and she worked in a United Nations capacity. So the prime minister came to Menlo Park headquarters of Facebook, and she started, you know, introducing them, so on and so forth. And it sort of spirals up from there to, like, she is going to Myanmar to, like, meet with the military junta because they were trying to block Facebook, like, in the early days, and she goes there by herself to try to get the the platform, like, unblocked there.

Jason: 53:10

She, like, goes into the Colombian jungle as part of Internet.org, which was Mark Zuckerberg's plan to deliver, like, drone Internet and free Internet to developing countries, trying to just, like, do some photo ops with the president there. And it's it's just like really wild book about how Facebook deals with controversies all over the world.

Joseph: 53:38

And sort of the overarching thesis or at least like the the thing that people are pulling out is that Mark Zuckerberg and I guess Sheryl Sandberg from that time as well and other executives, they're just like not that serious or or what is it? Is it that they think they know what they're doing but they don't or they they're also aware they're kind of all over the place? Like, what what's that that people are pulling out?

Jason: 54:02

Yeah. I mean, it's a mix of a of a variety of things. I think that there's been a focus on the fact that, you know, Sheryl Sandberg allegedly sexually harassed Sarah Wynn Williams and so did Joel Kaplan, is now a really, like, mega executive at Facebook. But, ultimately, these are not huge parts of the book. Like, that's what's being pulled out because I think that those are really, like they're relatively salacious and and horrifying things.

Jason: 54:35

And and they are talked about in the book, but for the most part, it's about how, first of all, like, Facebook wasn't aware of all of the damage that it was doing in countries all over the world. And then when it became aware of the damage that it was doing, it was just like, well, we gotta fix it so that we can keep having our user numbers go up so that we can have more growth, so that we can have a higher stock price, so that so that so that. And as someone who has reported on Facebook for a long time and, you know, Joseph, so have you and Emmanuel too. But I think, specifically, I went to Facebook headquarters in 2018 for a series of stories that you started doing and then we started working on together about Facebook's content moderation. And I met with a lot of Facebook executives there about things like Facebook being credibly accused of facilitating genocide in Myanmar, of things like people doing violent things on Facebook Live, about just like their content moderation policies in general.

Jason: 55:47

And it was like a really tricky and weird trip for me where I talked to all of these executives on the record, and they were all extremely media trained where they were trying not to say anything interesting at all. They were just trying to be like as bland as possible. But then they would say something thinking that they're being very bland and I would be like, that is a crazy thing for you to say. Like, I cannot believe you just said that.

Joseph: 56:15

Do you have an example? I mean, the piece beside 10,000 words.

Jason: 56:19

Yeah. So I mean, the example for me was I was talking to the head of content moderator training at Facebook, And we had talked to content moderators for this story about how they had to look at violent content at, you know, sexual content that was like sexual violence, things like that. You know, things like child sexual abuse material, terrorism videos, beheading videos, and people were saying that they had PTSD from this and they had you know, it was very, very upsetting. And there was like all of these labor rights groups saying, like, this is really bad stuff. And so I asked the head of training for these content moderators, like, what are you doing about this?

Jason: 57:07

Like, people are saying that this is really taxing on them mentally. And he said that they were they had essentially created a dark room at some of these content moderation headquarters where, like, stressed out content moderators could go in and, quote, chillax and just like take a break. And he said that as though it were the most normal thing in the world and then just kept talking. And I I was like, I've done a lot of interviews with people where if they say something that they shouldn't say or that is crazy, they stop themselves and like, oh my god. Like Right.

Jason: 57:44

What are you doing? And it's like there was no recognition from that person. There was no recognition from the PR person that was there. There was no recognition from anyone that that is like a crazy thing to say. And that quote in particular stuck with me for years.

Jason: 58:01

And then the other one was about the Burmese genocide situation, which we don't have time to get into. But basically, they were unable to parse Burmese, the Burmese language, because they're they just couldn't read it. Wasn't anybody speak the

Joseph: 58:18

language, literally.

Jason: 58:19

Well, they didn't have anyone to speak the language, but they also literally their artificial intelligence systems couldn't parse it because Burmese was not in Unicode, which is like how you code a text on the Internet and on computers. And so they simply couldn't parse it at all. And I was like, oh, that's really bad. Like, why why is that? And they're like, oh, well, we're working on it, but we're not sure if we'll be able to solve this problem.

Jason: 58:44

And I was like, you you can't just say you're not sure if you'll be able to fix this. Like, you've been accused by the United Nations of helping to facilitate a genocide. And they're like, we'll just, figure it out. And so I know this is like a a long story, but basically, it's like, I left that and for years, I've been thinking to myself, like, why are people at that company like that? Right.

Jason: 59:11

And Careless People answers that question. It's just like they're either one, totally oblivious, like they don't know because they're careless, or they do know and it's standing in the way of profits and growth and all that sort of thing. And so, for me, it felt like an incredibly cathartic book because it's an executive who was in these rooms, who was there for a long time saying, like, this is nuts. Like, this is what it's like, and this is nuts.

Joseph: 59:45

And just last thing, maybe you already said this, but just to check. You did email asking for an interview. Of course, we offer, but that's not possible. Right? Is there any clarity on, like, where we are with or do we not know yet at

Jason: 59:58

the moment? So, you know, this is the book that Facebook doesn't want you to read. It's like they

Joseph: 01:00:04

With every publisher and every marketing department of a publisher would fucking kill for that to happen to them, basically.

Jason: 01:00:12

And that's what everyone is saying now. It's like, it's the book Facebook doesn't want you to read because they essentially filed an injunction against Sarah Wynn Williams alleging that it violated her nondisperagement clause in her employment contract. And so while that's being leg while that's being litigated by an arbitrator, she is under a gag order, meaning she can't talk about it at all. But the book is still out there. And interestingly, like, I listened to the audiobook, which I would recommend because it's pretty easy to follow.

Jason: 01:00:44

It's not that long. She has a cool New Zealand accent. But

Joseph: 01:00:50

Even at two x speed?

Jason: 01:00:53

Even at two x speed. Okay. 1.7 x. And I thought it was cool because she's been, like, literally silenced by Facebook, but she already recorded the book and that's not part of the gag order. So you can, like, hear her voice talking about it, and I thought that that was cool.

Jason: 01:01:09

I think that there are things to to think about. It's like she worked there for a long time. She made a lot of money. You know, it took her a long time to put this book out. She does look, pretty good in the book.

Jason: 01:01:22

Like, she's Right. She's relatively kind to herself. At the same time, I think it's a very brave book because it definitely pulls no punches. As far as I know, she's like the highest level person at Facebook that's ever spoken out in this way. It's like, you know, she was talking daily to Mark Zuckerberg and Sheryl Sandberg for years and years and years.

Jason: 01:01:49

And so I thought that perspective was a really needed one and I just enjoyed the book. I thought it was a good book.

Joseph: 01:01:57

Yeah. I mean, it definitely sounds like it fills a gap even if I don't know. You may not agree with everything. Haven't read it yet, I probably will get around to. I've I've read the Shira Frankel and Cecilia Kang, an ugly truth book, and I love that.

Joseph: 01:02:11

But this sounds so different that you're probably worth reading, you know, a bunch of them. Because it's such a massive company with such massive consequences on the world that you can't get it even in this careless people book or you can't get it in your Times book, you know.

Jason: 01:02:27

Right. I I think it's a different thing than a reported book is is what I would say. It's like, it's very very difficult to report a book on Facebook and there's some really good ones. But this is like a woman who worked there in her own words about what she was thinking about when things were happening, about the things that she saw, about how her feelings changed over years. It's kind of like a longitudinal study, which in science is like, you take people at one point in time and then you stay with them for years and years and years and you see their outcomes and how things change.

Jason: 01:03:04

Whereas I think that there's some really good reported books that will have a bunch of different perspectives, but they're no matter how good of a reporter you are, you're never gonna be directly in someone's head, and that's what I appreciated about this.

Joseph: 01:03:19

Yeah. For sure. That makes sense. Alright. Thank you for joining this episode of the four zero four media book club.

Joseph: 01:03:26

Emmanuel can bring the next book, I guess, or Sam or I don't know. We'll figure something out.

Jason: 01:03:32

Dude, I bet people would like a book club.

Joseph: 01:03:34

We should actually maybe think about that.

Jason: 01:03:36

If you want a book club, let us know. We'll Yeah. And we'll we'll think about it.

Joseph: 01:03:41

Yeah. Because this would be for paying subscribers and I I don't know. Okay. Getting ahead of ourselves. If you're actually generally interested something in that, let us know.

Joseph: 01:03:49

Alright. And with that, I'll play us out. As a reminder, four zero four media is journalist founded and supported by subscribers. If you do wish to subscribe to four zero four media and directly support our work, please go to 404media.co. You'll get unlimited access to our articles and an ad free version of this podcast.

Joseph: 01:04:09

You'll also get to listen to the subscribers only section where we talk about a bonus story each week. This podcast is made in partnership with Kaleidoscope. Another way to support us is by leaving a five star rating and review for the podcast. That stuff really helps us out. This has been four zero four Media.

Joseph: 01:04:25

We will see you again next week.