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CNBC Exclusive: CNBC Transcript: Facebook’s Sheryl Sandberg and Mike Schroepfer Speak with CNBC’s Julia Boorstin on “Closing Bell” Today

WHEN: Today, Wednesday, June 1st

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Facebook COO Sheryl Sandberg and Facebook CTO Mike Schroepfer live from Recode's Code conference on CNBC's "Closing Bell" (M-F, 3PM-5PM ET) with Julia Boorstin today, Wednesday, June 1st. Video of the interview will be available on CNBC.com.

All references must be sourced to CNBC.

JULIA BOORSTIN: THANK YOU SO MUCH FOR JOINING US. YOU JUST LEFT THE STAGE WHERE THERE WERE QUITE A FEW QUESTIONS ABOUT THE ROLE OF PETER THIEL ON THE BOARD. HE OF COURSE HAS BEEN FUNDING A LAWSUIT AGAINST GAWKER. NOW AND YOU SAID HE WILL REMAIN ON YOUR BOARD AND BUT FACEBOOK HAS BECOME AN INCREASINGLY IMPORTANT PLATFORM FOR NEWS AND ITS AN OPEN PLATFORM WHY SHOULD SOMEONE WHO WANTS TO TAKE DOWN A JOURNALISTIC INSTITUTION BE ON YOUR BOARD?

SHERYL SANDBERG: PETER DID WHAT HE DID AS AN INDEPENDENT CITIZEN. WE DIDN'T KNOW ABOUT IT AND IT CERTAINLY WASN'T USING ANY FACEBOOK RESOURCES. WE ARE AN OPEN PLATFORM. WE ARE INCREASINGLY WHERE PEOPLE SHARE AND WHERE THEY CONNECT TO THEIR FRIENDS AND CONNECT TO THE NEWS OUTLETS THEY WANT TO HEAR FROM. AND THAT IS REALLY IMPORTANT FOR US. GAWKER IS ONE OF OUR BETA PARTNER ON ONE OF OUR PROGRAMS WE HAVE AND THEY REMAIN AN ACTIVE PARTNER OF OURS.

BOORSTIN: BUT NOW THAT YOU FOUND OUT ABOUT WHAT PETER DID DOES THAT CHANGE YOUR PERSPECTIVE ON HAVING HIM ON THE BOARD?

SANDBERG: WE HAVE A LOT OF STRONG AND INDEPENDENT BOARD MEMBERS AND THEY DO SOMETHING OUTSIDE OF FACEBOOK CERTAINLY THIS IS NOT SOMETHING FACEBOOK WOULD DO OR SUPPORT AND NOT AN ACTION WE WOULD TAKE.

BOORSTIN: THE OTHER BIG TOPIC MAKING HEADLINES AND ALSO GENERATING CONVERSATION HERE AT CODE IS ALL OF THIS CONTROVERSY OVER THE QUESTION OF WHETHER OR NOT THERE WAS BIAS IN THE TRENDING TOPICS THAT FACEBOOK PUTS IN PEOPLE'S NEWS FEED. WERE YOU SURPRISED BY THE KIND OF OUTCRY THERE WAS?

SANDBERG: WE HAVE A RESPONSIBILITY. WE HAVE AN OPEN PLATFORM. IT HAS TO BE ONE FOR ALL IDEAS AND I THINK THERE IS CONCERN OUT THERE THAT SILICON VALLEY HAS A LIBERAL BIAS. SO THE FACT THAT CONSERVATIVES WERE WORRIED IS SOMETHING WE TOOK REALLY SERIOUSLY. WE CLARIFIED WHAT TRENDING TOPICS WAS. WE EXPLAINED TO PEOPLE THAT NEWS FEED THE BIGGEST PRODUCT ON FACEBOOK IS ALGORITHMICALLY BASED AND MOST IMPORTANTLY WE SAT DOWN WITH THE CONSERVATIVES WHO WERE WORRIED AND ABLE TO EXPLAIN WHAT WE DO, HOW WE DO IT AND LISTEN TO THEM AND THAT DIALOGUE WILL CONTINUE.

BOORSTIN: WHAT DO YOU THINK OF THE RESPONSE TO THAT FIRST MEETING?

SANDBERG: I THINK IT WAS VERY POSITIVE. MOST OF THE PEOPLE WHO BECAME PUBLISHED AND TALKED ABOUT HOW THEY WERE GRATEFUL FOR THE CHANCE TO TALKS TO US AND MORE IMPORTANTLY GRATEFUL FOR THE UNDERSTANDING OF WHAT WE WERE DOING AND WHAT WE WERE NOT DOING.

BOORSTIN: NOW SCHROEP YOU OVERSEE ARTIFICIAL INTELLIGENCE DOES THIS CONTROVERSY MAKE YOU THINK THERE IS A PRIORITY IN CREATING A KIND OF A.I. FOR TRENDING TOPICS IN THE NEWS FEED SO YOU WOULDN'T NEED HUMAN CREATORS AT ALL?

MIKE SCHROEPFER: WELL I THINK THE THING TO REMEMBER IN THE NEWS FEED IT IS REALLY DOMINATED BY WHAT YOU SEE THERE IS DEPENDENT ON WHO YOU FRIEND AND WHAT PAGES YOU LIKE. YOU CAN SEE THIS FOR YOURSELF BY UNLIKING ALL OF THE PAGES YOU CURRENTLY LIKE AND LIKING A BUNCH OF NEW ONES AND RELOAD YOUR NEWS FEED. YOU WILL SEE VERY VERY DIFFERENT CONTENT. SO A LOT OF WHAT WE FOCUS ON EVEN WITH AI. IS HOW CAN WE GET BETTER AT FIGURING OUT SPECIFICALLY YOU WANT AND MAKING SURE YOU SEE EXACTLY WHAT YOU ARE INTERESTED IN AND DOING THAT AS BEST AS WE CAN.

BOORSTIN: IS THERE A WORLD WHERE COULD CREATE AN A.I. WHERE YOU WOULDN'T NEED HUMAN CURATORS.

SCHROEPFER: THE NEWS FEED AGAIN IS NOT HUMAN CURATED THE NEWS FEED IS PURELY ALGORITHMICALLY GENERATED AND BASED ON THE INFORMATION OF WHAT YOU FOLLOW, WHAT PAGES YOU LIKE WHAT FRIENDS YOUR HAVE.. AND THAT'S THE PRIMARY USE CASE FOR THE PRODUCT THAT WHY YOU ARE IN THERE TO SEE WHAT'S GOING ON WITH FRIENDS AND WHAT'S GOING ON THE SITES AND PAGES YOU ARE INTERESTED?

BOORSTIN: ARTIFICIAL INTELLIGENCE HAS BEEN A VERY HOT TOPIC HERE AND YESTERDAY JEFF BEZOS TALKED ABOUT HOW THEY ARE INVESTING HEAVILY IN A.I. AMAZON ECHO AS WELL AS THE ALEXA SOFTWARE. DO YOU EVER SEE FACEBOOK CREATING SOMETHING SIMILAR.

SCHROEPFER: WE'RE INVESTED VERY HEAVILY IN A.I. EVEN TWO YEARS AGO MARK SHOWED UP AT ONE OF THE PREMIER ACADEMIC CONFERENCESFOR ARTIFICIAL INTELLIGENCE TO TALK ABOUT OUR PLANS AND THE RESEARCH LAB WE'VE BUILT THAT'S WORKING ON A.I. AND USING A.I ON PRODUCTS EVERY DAY TO MAKE IT BETTER SO PEOPLE CAN CONNECT WITH EACH OTHER. 800 MILLION PEOPLE A MONTH ARE ABLE TO SEE A POST IN SOMEONE ELSE'S LANGUAGE TRANSLATED TO THEIRS AND CAN READ IT AND APPLYING A.I. EVERY SINGLE DAY TO MAKE SURE THAT PEOPLE CAN CONNECT IN A WAY THEY WANT TO CONNECT ON FACEBOOK.

BOORSTIN: WHAT ABOUT THE NEXT GENERATION OF A.I OF INTERACTING THROUGH A VOICE INTERFACE SUPER CONVERSATIONAL WHERE DOES THAT FIT INTO FACEBOOK?

SCHROEPFER: YOU ARE STARTING TO SEE SOME OF THIS IN OUR MESSENGER BOUGHT PLATFORM. WHERE THERE ARE WAYS FOR DEVELOPERS TO PLUG AND WORK WITH US IN MESSENGER SO YOU CAN REQUEST AN UBER YOU CAN FIND OUT IF ONE OF THE 50 MILLION BUSINESSES ON FACEBOOK ARE OPEN FOR BUSINESS TODAY. AND INSTEAD OF TRYING TO SEARCH AROUND ON THE INTERFACE YOU CAN JUST WRITE A MESSAGE. I THINK THERE IS TREMENDOUS OPPORTUNITY ON FACEBOOK FOR PEOPLE TO FIND EXPERIENCES BY MESSAGING THROUGH FACEBOOK MESSENGER.

BOORSTIN: BUT NO HARDWARE IN THE WORKS?

SCHROEPFER: WE'RE WORKING ON LOTS OF STUFF.

BOORSTIN: SHERYL, SINCE THE LAST TIME WE SPOKE ON CNBC, WE'VE SEEN THE EXPLOSION OF LIVE VIDEO THROUGH FACEBOOK LIVE. WE SAW IT RECENTLY WITH THIS CHEWBACCA MOM VIDEO. SOMETHING LIKE 155 MILLION VIEWS. HOW DO YOU TRANSLATE ALL OF THOSE VIEWS INTO REVENUE FOR FACEBOOK.

SANDBERG: OUR BUSINESS WORKS THAT PEOPLE USE FACEBOOK, THEY USE IT TO SHARE AND CONNECT. THEY SPEND THEIR TIME WITH US AND THEN WE ARE ABLE TO SERVE THEM RELEVANT ADS FOR THINGS THEY WANT TO SEE. IT IS REALLY EXCITING WHAT'S HAPPENING WITH VIDEO. WHAT YOU SEE IS AS PEOPLE SHARE MORE THERE IS ALSO AN INCREASING VISUALIZATION. THE ORIGINAL FACEBOOK POSTS WERE JUST TEXTS. AND THEN PHOTOS AND NOW THERE'S VIDEO. AND SOMETHING SO POWERFUL ABOUT THE LIVE VIDEO PLATFORM. AND AS PEOPLE SPEND MORE TIMES WITH US WE WILL HAVE MORE AD INVENTORY AND THAT IS GOOD FOR BUSINESS AS WELL.

BOORSTIN: AND ONE THING WE HAVE SEEN IS NEWS OUTLET LIKES CNBC DO BROADCASTS ON FACEBOOK LIVE. THERE ARE BROADCASTS GOING ON FROM INSIDE HERE. HOW DO YOU CONVINCE THESE PREMIUM CONTENT PROVIDERS THEY CAN MAKE MONEY IF THEY PUT CONTENT ON FACEBOOK LIVE.

SANDBERG: WELL WHAT'S HAPPENING IN THE WORLD OF CONTENT IS THAT THE DISTRIBUTION MECHANISMS ARE CHANGING. EVERYONE IS WALKING AROUND WITH A PHONE AND THAT PHONE HAS IMMENSE POWER. EVEN TWO YEARS AGO, MOST PEOPLE AT THIS CONFERENCE COULDN'T HAVE SHOT AND LOADED AND TAKEN A VIDEO AS EASILY. AND I'VE SEEN YOU DO FACEBOOK LIVES FROM YOUR PHONE. SO WE CAN SEE THE POWER OF THAT TECHNOLOGY. AND OVER TIME, WE'LL WORK WITH PEOPLE ON MONETIZATION AS WELL. I THINK WHAT CONTENT PROVIDERS WANT IS TO MAKE SURE THAT THEIR CONTENT GETS DISTRIBUTED. YOU WANT TO REACH YOUR AUDIENCE, YOUR AUDIENCE WANTS TO HEAR FROM YOU. AND WE ARE GOING TO BE A PART OF THAT.

BOORSTIN: FACEBOOK HAS BEEN GROWING ITS AD REVENUE, BUT THAT MEANS THERE IS EVEN MORE PRESSURE TO MAINTAIN THAT GROWTH. HOW ARE YOU GOING TO KEEP UP THAT KIND OF GROWTH THAT WE'VE SEEN?

SANDBERG: I THINK THE STORY OF OUR BUSINESS RIGHT NOW IS THE STORY OF THE SHIFT TO MOBILE. AND WE'RE EXCITED ABOUT THE PROGRESS WE'VE MADE. WE HAVE 50 MILLION SMALL BUSINESSES WHICH USE OUR FACEBOOK FREE PRODUCT ON A MONTHLY BASIS. 3 MILLION ARE NOW ADVERTISERS. 200,000 ADVERTISERS ON INSTAGRAM AND THAT'S BEEN GREAT AND THE GROWTH IS SOMETHING WE REALLY APPRECIATE WITH OUR PARTNERS. ON THE OTHER HAND, WE STILL REPRESENT A PRETTY SMALL FRACTION OF MOST MARKETERS BUDGETS, EVEN OUR LARGEST CUSTOMERS, COMPARED TO THE AMOUNT OF TIME THEY SPEND. SO FOR THE FIRST TIME THE LINES CROSSED THREE YEARS AGO, THE AVERAGE AMERICAN NOW SPENDS 4 HOURS PER DAY ON TV AND THEY SPEND 5 AND THREE QUARTER HOURS ON MOBILE. WE HAVE A SUPER BOWL ON THE U.S. IN MOBILE EVERY DAY. AND SO OUR OPPORTUNITY AND OUR CHALLENGE IS TO HELP MARKETERS MAKE THE SHIFT TO BE WHERE CONSUMERS ARE.

BOORSTIN: BUT THERE IS THIS PERSISTENT QUESTION ABOUT MEASUREMENT AND HOW YOU MEASURE A VIDEO VIEW. IS IT THREE SECONDS? IS IT MORE? HOW DO YOU ANSWER THOSE CONCERNS?

SANDBERG: THE BEST FORM OF MEASUREMENT IS WHEN WE HELP MARKETERS MEASURE WHAT THEY ACTUALLY CARE ABOUT, WHICH ARE END SALES OF THEIR PRODUCTS. AND WE WORK ON THAT. WE HAVE ADVERTISING PRODUCTS WHICH CAN HELP YOU MEASURE IF YOU ARE A CAR COMPANY ALL THE WAY THROUGH SOMEONE SEEING AN AD ALL THE WAY THROUGH TO PURCHASE. AND WE INCREASINGLY HAVE TO WORK WITH ADVERTISERS, CLIENT BY CLIENT, COMPANY BY COMPANY, TO HELP THEM MEASURE THE RESULTS THEY WANT TO SEE.

BOORSTIN: WE'VE SEEN SNAPCHAT GROW ITS AD REVENUE AND ITS USERS, PARTICULARLY MILLENNIALS. IS THAT A THREAT?

SANDBERG: I REMEMBER, I DID THIS CONFERENCE WITH MARK EIGHT YEARS AGO AND MARK SAID THEN, AND HE STILL BELIEVES, THAT THE SOCIAL THING IS GOING TO BE BIG. AND THAT MEANS THERE IS GOING TO BE MORE SOCIAL PRODUCTS. AND CERTAINLY, PEOPLE ARE USING FACEBOOK A LOT, THEY ARE USING INSTAGRAM, THEY ARE USING MESSENGER, THEY ARE USING WHAT'S APP, AND THEY ARE ALSO USING OTHER PRODUCT LIKES SNAPCHAT. FACEBOOK REMAINS THE BEST PLACE IN THE WORLD TO GET THE LARGEST AUDIENCE OF TEENS AND WE ARE PROUD OF THAT. BUT WE ALSO KNOW WE NEED TO EXECUTE. WE NEED TO CONTINUE TO WORK HARD, INVEST, BUILD PRODUCTS OVER THREE, FIVE AND TEN YEAR TIME FRAME – WE HAVE A VERY LONG VIEW THAT KEEP OUR AUDIENCE AND THE PEOPLE ENGAGED.

BOORSTIN: YOU AND SHERYL DID A JOB SWITCH FOR THREE DAYS.

SCHROEPFER: YES WE DID.

BOORSTIN: SCHROEPFER, WHAT DID YOU LEARN FROM YOUR EXPERIENCE IN HER SHOES ABOUT WHAT KINDS OF PRODUCTS FACEBOOK SHOULD BE DEVELOPING? IS IT AN ALTERNATIVE TO SNAPCHAT?

SCHROEPFER: WELL, A LOT OF WHAT I LEARNED IS HOW MUCH TIME AND ENERGY SHERYL AND HER TEAM SPEND TRYING TO MAKE OUR PARTNERS AND ADVERTISERS SUCCESSFUL. I MEAN, IT WAS MEETING AFTER MEETING. MEETING WITH A PARTNER TRYING TO UNDERSTAND WHAT THEY NEED FROM THE PLATFORM, WHAT MORE WE COULD BE DOING FOR THEM AND HOW MUCH SHE SPENDS TIME ON THAT. I DON'T KNOW WHAT YOU FOUND IN YOUR DAY AS ME. DID YOU GET TO GO IN VR?

SANDBERG: I DID. YOU KNOW, I SPENT – WE THINK OF OUR BUSINESS IN THREE, FIVE AND TEN YEAR TIME HORIZONS. THREE YEARS, OUR CURRENT BUSINESS OPTIMIZING IT, CONTINUING TO GROW IT. FIVE YEARS, MESSENGER, WHAT'S APP, OUR NEW BUSINESSES, BRINGING THEM ONLINE, REACHING A BILLION PEOPLE AND MONETIZING. AND TEN YEARS, INVESTMENTS IN CORE TECHNOLOGY, IN VR, IN A.I. I THINK THE BUSINESS SIDE, THE SIDE OF THE COMPANY I WORK WITH MORE OF OUR DECISIONS ARE REALLY IN THAT THREE AND FIVE YEAR TIME FRAME. WE DON'T MAKE AS MANY TEN YEAR DECISIONS AND SITTING IN SCHROEPFER'S SHOES, I REALIZE HOW FAR OUT YOU HAVE TO BE WILLING TO THINK.

BOORSTIN: BUT WHEN YOU HAVE THESE CONVERSATIONS WITH BRANDS, WITH ADVERTISERS, WHAT ARE YOU HEARING THAT THEY WANT? IS IT MORE PRODUCTS LIKE SNAPCHAT? LIKE THE LENSES, BRANDED LENSES? DO YOU FEEL LIKE YOU CAN TAKE THINGS BACK TO THE PRODUCT SIDE AND SAY HERE IS WHAT WE NEED TO DO NOW?

SANDBERG: WE WORK VERY CLOSELY TOGETHER. WE SIT TOGETHER, ALONG WITH MARK. BOTH SIDES OF THE COMPANY WORK INCREDIBLY CLOSELY TOGETHER. YOU KNOW, WE HAVE OUR REGULAR MEETINGS OF ADVERTISING. THAT IS OBVIOUSLY THE SALES AND MARKETERS AND THE PRODUCT AND THE DESIGNERS AND THE ENGINEERS. WHAT WE HEAR FROM MARKETERS IS THAT THEY KNOW THEY NEED TO BE WHERE CONSUMERS ARE. THEY KNOW THAT THEY WANT TO SERVE THE RIGHT AD TO THE RIGHT PERSON AT THE RIGHT TIME AND MEASURE RESULTS ALL WAY THROUGH TO SALE. AND IT IS UP TO US TO HELP THEM DO IT.

BOORSTIN: NOW SHERYL, INSIDE THERE, KARA SWISHER ASKED YOU IF YOU WANTED TO BE CEO OF DISNEY. AND YOU SAID YOU LOVED YOUR JOB.

SANDBERG: I LOVE MY JOB.

BOORSTIN: BUT IN TERMS OF BEING A ROLE MODEL FOR WOMEN, DO YOU THINK YOU COULD BE AN EVEN MORE POWERFUL ROLE MODEL IF YOU WERE CEO OF A MAJOR PUBLIC COMPANY?

SANDBERG: SOMETIMES PEOPLE ASK ME IF I'M GOING TO LEAN INTO SOMETHING ELSE OTHER THAN FACEBOOK. MY ANSWER AS ALWAYS, I'M DOING ALL THE LEANING IN I CAN. I REALLY LOVE FACEBOOK. IT'S BEEN 8 INCREDIBLE YEARS AND I THINK I HAVE A LONG ROAD AHEAD OF ME WITH – I WORK WITH MY CLOSEST FRIENDS, I WORK WITH SCHROEPFER, I WORK WITH CHRIS, I WORK WITH MARK, AND I REALLY BELIEVE IN OUR VISION. OUR VISION IS WE ARE GOING TO GIVE PEOPLE THE POWER TO SHARE AND MAKE THE WORLD A LITTLE BIT SMALLER AND MORE CONNECTED AND I THINK WE'RE DOING THAT ON A DAILY BASIS.

BOORSTIN: SO NO JOB CHANGES?

SANDBERG: NO JOB CHANGES.

BOORSTIN: SHERYL AND SCHROEPFER, THANK YOU BOTH SO MUCH FOR JOINING US. WE REALLY APPRECIATE IT.

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