WHEN: Today, Thursday, May 5th
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Expedia Chairman Barry Diller that aired on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) and "Squawk Alley" (M-F, 11AM-12PM ET) today, Thursday, May 5th. Following are links to the video on CNBC.com:http://video.cnbc.com/gallery/?video=3000515313 and http://video.cnbc.com/gallery/?video=3000515317.
All references must be sourced to CNBC.
DILLER ON DONALD TRUMP BEING EVIL
There's nobody I've ever known in politics ever that has been – that has risen to national – I mean, to the presidency, that was actually of evil character. I mean, there's been incompetence. There's been, with Nixon, Nixon-ness, but –
Simon Hobbs: Why do you say he's evil? Why is he actually evil?
Diller: Because anybody who attacks people in the manner that he attacks people – anybody who would do that, anybody who – if I have a disagreement with you or I think you don't like me, I don't have the right to find out the vulnerability that I think could make you miserable and that is just completely unfair. I don't have that right. He has that as a natural state. I call that evil. That is evil.
DILLER ON DONALD TRUMP
Barry Diller: I said I'd either leave the country or join the resistance, which I said about six months ago, seven months ago. I've decided I'm not leaving the country, for sure, if he's President, which I still think is impossible. But I will join the resistance. As will everyone who is sentient.
Simon Hobbs: What does that mean, join the resistance?
DILLER ON TRAVEL AND EXPEDIA HISTORY
Expedia had been in business for a couple of years and actually, the leader was Travelocity at the time. That was really the first one that went in. But Expedia came in and undercut them essentially. And so, I saw it, and I went to Steve Ballmer at Microsoft and I said, "what are you guys doing? You don't want to own this thing. This is stupid. This is not your business, you got – it's public because the guys who ran it convinced you that they should have their own little currency, but it is a waste of your time. I'll buy your position." And he said yes. So we did. And we did it literally, closed the deal and on September 11ththe world changed. Ceased to exist for that, you know, next few weeks. And we had an out clause. We could not go forward with the deal because we had a material adverse change thing that if anything happened between – and we said, we sat around and said, "should we do it?" And somebody said, "if there's life, there's travel." I said, "that's true." So we bought it on literally, with that knowledge. And then, of course, travel came back.
DILLER ON AIRBNB
Simon Hobbs: What does Airbnb do to you? Some say as Airbnb maybe it goes into the public market and it has to grow, well maybe it will take on some of the hotel inventory from the big hotels as well, therefore, where does that leave Expedia and Priceline?
Barry Diller: Airbnb and Homeway are going to take pieces out of the standard vertical hotel business, right? But they aren't going to take it all away. People are still going to – hotels provide, you know, what we know of as hotels. A building with 20 floors and 200 rooms or 40 floors and 500 rooms or whatever it is. And all of the services that go in that. That's appealing to business travelers, of course, and a lot of leisure travelers in urban centers. If you want a vacation, you have four kids and you don't want to be stuck in two rooms in this big vertical thing, you have other alternatives. I don't think – a lot of people say Airbnb is really going to take away from hotels. It will take some, but it is not going to take their business away.
DILLER ON INVESTMENTS
Hobbs: Both you and Priceline have made acquisitions. When Priceline makes an acquisition, it tends to bolt the management onto what it's got and bolt the technology onto what it's got. You took a very different decision. Fundamentally different in that you would have one technology platform. It took time and it look a lot of money –
Diller: Huge. Huge amount of money.
Hobbs: And some say you almost lost your CEO in that process. It was quite painful, wasn't it?
Diller: Oh, it was horrible. We went through three years – we had not really invested in technology. What happens in most of these internet companies is everybody works 24 hours, 7 days a week to get audience, etc. They don't pay much attention to infrastructure. So we had to change our entire infrastructure to be able to actually deliver our services. That took a huge amount of capital – at least 1.5 billion, 1.7 billion of actual tech capital to achieve that. Now we have the ability to buy Orbitz, to you know, buy Travelocity. To integrate them into our service. So it turned out to be a good investment. But like all that stuff, it is painful.
Hobbs: Why do you keep buying companies and then – you buy the brand as you just said, and strip out the back office and fill them with the inventory that, broadly, you've already got. Why don't you spend those billions advertising the brands that you have?
Diller: Well, because the thing is – first of all, we can't advertise more. We don't think. I mean, we advertise, I think, somewhat efficiently. Who could ever say that you get total efficiency with advertising would be a fool. So the idea of us buying brands that have traffic, and then putting them into our more efficient system that they have just simply by scale, it is just very good economics. And also, each of the brands has a resonance of its own and one brand does not serve all, we believe.
DILLER ON ARTIFICIAL INTELLIGENCE
I find myself on a Google site, that has a microphone on it and I don't know what it is actually called. And you simply talk into it, and you say tell me what happens when you have sinusitis. And an answer comes back. An audio answer. It hears you in natural language and it responds. And that, when you think about it – you think about it two years, five years, seven years ago, you'd say well how do you do that? That is an intelligent – there is intelligence. It's tech, it's all tech, it's numbers. But it is intelligence. Artificial intelligence is just the next advance. Much more, to me in an evolutionary way, than is VR because virtual reality, to me, it's a nice whistle, but it's not a profound thing. But the ability of these services to be able to serve you in ways that to you appears like magic – that is why artificial intelligence when it relates to travel, when it relates to being able to essentially serve you without even your understanding how and give you a result that delights you, that's magic.
Simon Hobbs: Elon Musk says we should be scared. Should we be scared?
Barry Diller: Yeah, if you take artificial intelligence to its natural conclusion, then in fact, you have smarter beings than we are who can walk and talk and kill and control.
DILLER ON DREAMWORKS
Simon Hobbs: What did you think when you found out that DreamWorks was being sold to Comcast? Do you still talk to Jeff Katzenberg?
Barry Diller: Oh yeah, yeah. Yes, of course I do. And I was very happy to congratulate him. I thought it was necessary. I thought it was little sad, you know, not overwhelmingly, but –
Hobbs: Why is it sad?
Diller: Well because, look, DreamWorks started when it was the whole thing, which was movies, television, animation and several other things, as an alternative to the closed major studio system. It was a new studio with big dreams. And for life reasons, god knows you could've have gotten three smarter people together. But for life reasons, interest reasons, changing times reasons, that dream of building that into an independent major company essentially didn't work out. Didn't work out because literally the members of that consortium all had their – their interests were – they were not interested as time went in the same things. So I thought, that is a little sad. But by the way, how can you be sad? Steven Spielberg is making great movies and seems very happy. David Geffen wakes up happy, goes to sleep happy, has a great fortune that he is going to give away. And Jeffrey Katzenberg for ten years built animation, and wrote to me the day – because I congratulated him – he said, "I can't wait to get on to the new adventure." So Jeffrey is going to have a third act.
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