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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. Senator and Democratic

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Speaker 1: presidential hopeful Elizabeth Warren says she'll break up giant tech

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Speaker 1: companies like Google, Facebook, and Amazon if she's elected in

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Speaker 1: order to keep the marketplace competitive. Joining me is Jennifer Red,

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Speaker 1: Bloomberg Intelligence Senior litigation analyst. So Jan Warren said that

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Speaker 1: when someone gets excessive market dominance, they start to destroy

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Speaker 1: the market competition. Does she have a point because I

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Speaker 1: mean Google is a verb already and who could compete

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Speaker 1: with Google or Facebook? Well, I'll say it's a matter

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Speaker 1: of antitrust law, and no, she doesn't really have a point,

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Speaker 1: because you know, after many, many, many years of lawsuits

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Speaker 1: and suddy and application of the law to to business,

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Speaker 1: you know what the Supreme Court has said more than

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Speaker 1: once is that market dominance alone is not anti competitive

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Speaker 1: and doesn't kill competition. But market dominance coupled with bad

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Speaker 1: conduct and conduct that would foreclose other competitors that can

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Speaker 1: violate the antitrust laws. And I think in terms of

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Speaker 1: just a blank blanket statement that a dominance in in

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Speaker 1: one um area, in one sector destroys other competition is

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Speaker 1: just not really you know, most economists would tell you

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Speaker 1: that you just you just can't say that that It's

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Speaker 1: going to going to be a case by case basis,

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Speaker 1: and it's going to depend on the companies and how

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Speaker 1: that marketplace operates. How difficult would it be to do?

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Speaker 1: Because she points to President Teddy Roosevelt trust busting, There's

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Speaker 1: the breakup of a T and T in the late eighties.

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Speaker 1: There's Glass Stiegel, which dealt with banks. It's been done before,

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Speaker 1: it has been done before. But when you think about

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Speaker 1: taking a company and breaking it up, you have to

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Speaker 1: look at the structure of that company and how well

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Speaker 1: integrated that company is to begin with. In this case,

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Speaker 1: you have these internet platforms that are considered multi sided platforms,

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Speaker 1: and it means both sides of the businesses to some

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Speaker 1: extent depend on the other and the success of the other.

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Speaker 1: And and one of the things that provides a good

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Speaker 1: consumer benefit and free services free to search on Google

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Speaker 1: and lower prices on Amazon, and free to participate in

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Speaker 1: Facebook is the fact that they leverage some of these

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Speaker 1: other sides of the business and the advertising side. So

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Speaker 1: you know, when you think about A T and T,

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Speaker 1: it is widely thought of as a fairly successful breakup,

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Speaker 1: but one of the one of the very few um

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Speaker 1: and in that case it may have been that it

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Speaker 1: was just an easier to separate out the businesses that

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Speaker 1: were at issue. In fact, A T and T is

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Speaker 1: the one when it thought that it would be losing

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Speaker 1: in court that suggested that option, separating those the local

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Speaker 1: telephone service from the long distance rather than what what

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Speaker 1: was actually being sought by the plaintiffs in that case.

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Speaker 1: So so they thought it feasible. But it isn't always

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Speaker 1: feasible for a very well integrated day company to be

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Speaker 1: able to just break apart and then continue to offer

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Speaker 1: the consumer benefits that it offers, and and it'll ruin

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Speaker 1: many of the efficiencies that are built in. I want

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Speaker 1: to get your reaction to something, she said. What she

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Speaker 1: proposes is to prohibit platforms from both offering a marketplace

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Speaker 1: for commerce and participating in the marketplace. So she said,

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Speaker 1: you can be an umpire a platform, or you can

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Speaker 1: own teams, but you can't be an umpire and own

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Speaker 1: one of the teams that's in the game. So in

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Speaker 1: other words, with the Facebook's tie up with WhatsApp, you

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Speaker 1: would you would just separate them, Or Amazon's purchase of

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Speaker 1: Whole Foods, no go right. You know. I thought about

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Speaker 1: that analogy for quite a long time because I just

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Speaker 1: don't actually see it as particularly applicable because sports and

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Speaker 1: sports teams are very different than business. And if you

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Speaker 1: think about business, for in many many different industries, many

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Speaker 1: types of different plator industries and platforms and sectors, for

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Speaker 1: many years, companies have competed as well as business with

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Speaker 1: their rivals. You know, this is the way business generally works,

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Speaker 1: and it would be very odd to me to to

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Speaker 1: separate out internet platforms uh um from everything else. I mean,

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Speaker 1: think about it. When you go to the grocery store.

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Speaker 1: The grocery store is selling a product, but it also

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Speaker 1: has its own private label products on the shelves, competing

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Speaker 1: with the branded products offered by the grocery store. Costco,

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Speaker 1: for example, has its own brand. I can think of

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Speaker 1: so many other examples in agriculture and beef processing and

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Speaker 1: chicken in many different industries, you know, this is how

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Speaker 1: business thrives, and it would be too arbitrary to me

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Speaker 1: to have a different kind of a rule for tech

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Speaker 1: and internet platforms. Well, we'll see where it goes. It's

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Speaker 1: become very popular. It's it's become popular to break to

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Speaker 1: the idea of breaking them up. But let's turn to

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Speaker 1: a current merger. Last Thursday, the Federal Communications Commission paused

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Speaker 1: in its review of T mobiles purchase of Sprint, which

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Speaker 1: has been on a review for eight months. What's happening. Well,

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Speaker 1: you know, I think this is probably not a good

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Speaker 1: sign for the deal. Now. Now, the fact that they

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Speaker 1: paused is really large procedural because they've got a whole

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Speaker 1: tranche of new documents and analyzes by T Mobile and

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Speaker 1: Sprint that they really needed time to look at, and

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Speaker 1: they needed to get out to the marketplace and get

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Speaker 1: comments from from third parties. So they needed the time

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Speaker 1: and they stopped the clock, and that's generally what they do.

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Speaker 1: But the fact is, after eight months, as you just

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Speaker 1: mentioned to now, supply new analysis and new information suggests

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Speaker 1: to me that the old arguments aren't really working very

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Speaker 1: well and that T Mobile is having a struggle convincing

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Speaker 1: the regulators that this deal is not anti competitive, so

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Speaker 1: that is probably a bad sign for the deal. Well,

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Speaker 1: we've talked about this before about whether it's anti competitive.

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Speaker 1: It would combine the third and fourth largest US wireless

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Speaker 1: provider is in itself, that seems to be a really

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Speaker 1: tough argument to make. And in fact, twice before that

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Speaker 1: kind of deal it wasn't always three and four, but

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Speaker 1: that kind of deal has been attempted um and and

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Speaker 1: failed in front of these regulators, the FCC in the

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Speaker 1: Department of Justice. I think this deal is a really

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Speaker 1: close called June because from just to pure straightforward textbook

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Speaker 1: antitrust perspective, it looks like an anti competitive deal. Now,

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Speaker 1: where a deal might have the tendency to cause harm

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Speaker 1: in a marketplace, which I think this deal superficially suggests,

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Speaker 1: the companies have the option of showing the pro competitive

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Speaker 1: efficient side of that deal and the benefits that will

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Speaker 1: come out of that deal, and if the regulators think

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Speaker 1: those benefits will outweigh the potential for harm, that deal

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Speaker 1: can still get cleared. But you know, I know, I

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Speaker 1: don't know a deal that has one out on that,

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Speaker 1: and I think they have a tough argument here, and

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Speaker 1: I think the odds aren't great. Now, that's the f

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Speaker 1: c C that's put it on hold. Do we know

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Speaker 1: what's happening at the Department of Justice with its review,

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Speaker 1: So they're still in the middle of their review, and

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Speaker 1: they must have some sort of a timing agreement with

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Speaker 1: the companies because at this point, I would think that

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Speaker 1: they have finished the in depth request for information called

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Speaker 1: a second request, and usually what happens is once the

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Speaker 1: companies finish it, it gives the d o J only

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Speaker 1: thirty days, and I think we've probably passed that point,

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Speaker 1: so the company is likely entered into a timing agreement.

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Speaker 1: We don't know the term of that agreement, so we

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Speaker 1: don't know where they are in their time clock. But

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Speaker 1: the head of the d j's Anti Ross division has

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Speaker 1: said that they are working closely with the f CC

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Speaker 1: and somewhat aligning with the f c C. So I

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Speaker 1: think we'll probably see decisions around the same time. All right, Well,

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Speaker 1: and they're going to testify this week on Capitol Hill,

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Speaker 1: So more about that. That's Jennifer Reid Bloomberg Intelligence senior

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Speaker 1: litigation analysts. For more of Jen's analysis going to be

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Speaker 1: I go on the Bloomberg terminal. Thanks for listening to

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Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to

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Speaker 1: the show on Apple podcast, SoundCloud, and on bloomberg dot

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Speaker 1: com slash podcast. I'm June Brosso. This is Bloomberg