Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Senator and Democratic
Speaker 1: presidential hopeful Elizabeth Warren says she'll break up giant tech
Speaker 1: companies like Google, Facebook, and Amazon if she's elected in
Speaker 1: order to keep the marketplace competitive. Joining me is Jennifer Red,
Speaker 1: Bloomberg Intelligence Senior litigation analyst. So Jan Warren said that
Speaker 1: when someone gets excessive market dominance, they start to destroy
Speaker 1: the market competition. Does she have a point because I
Speaker 1: mean Google is a verb already and who could compete
Speaker 1: with Google or Facebook? Well, I'll say it's a matter
Speaker 1: of antitrust law, and no, she doesn't really have a point,
Speaker 1: because you know, after many, many, many years of lawsuits
Speaker 1: and suddy and application of the law to to business,
Speaker 1: you know what the Supreme Court has said more than
Speaker 1: once is that market dominance alone is not anti competitive
Speaker 1: and doesn't kill competition. But market dominance coupled with bad
Speaker 1: conduct and conduct that would foreclose other competitors that can
Speaker 1: violate the antitrust laws. And I think in terms of
Speaker 1: just a blank blanket statement that a dominance in in
Speaker 1: one um area, in one sector destroys other competition is
Speaker 1: just not really you know, most economists would tell you
Speaker 1: that you just you just can't say that that It's
Speaker 1: going to going to be a case by case basis,
Speaker 1: and it's going to depend on the companies and how
Speaker 1: that marketplace operates. How difficult would it be to do?
Speaker 1: Because she points to President Teddy Roosevelt trust busting, There's
Speaker 1: the breakup of a T and T in the late eighties.
Speaker 1: There's Glass Stiegel, which dealt with banks. It's been done before,
Speaker 1: it has been done before. But when you think about
Speaker 1: taking a company and breaking it up, you have to
Speaker 1: look at the structure of that company and how well
Speaker 1: integrated that company is to begin with. In this case,
Speaker 1: you have these internet platforms that are considered multi sided platforms,
Speaker 1: and it means both sides of the businesses to some
Speaker 1: extent depend on the other and the success of the other.
Speaker 1: And and one of the things that provides a good
Speaker 1: consumer benefit and free services free to search on Google
Speaker 1: and lower prices on Amazon, and free to participate in
Speaker 1: Facebook is the fact that they leverage some of these
Speaker 1: other sides of the business and the advertising side. So
Speaker 1: you know, when you think about A T and T,
Speaker 1: it is widely thought of as a fairly successful breakup,
Speaker 1: but one of the one of the very few um
Speaker 1: and in that case it may have been that it
Speaker 1: was just an easier to separate out the businesses that
Speaker 1: were at issue. In fact, A T and T is
Speaker 1: the one when it thought that it would be losing
Speaker 1: in court that suggested that option, separating those the local
Speaker 1: telephone service from the long distance rather than what what
Speaker 1: was actually being sought by the plaintiffs in that case.
Speaker 1: So so they thought it feasible. But it isn't always
Speaker 1: feasible for a very well integrated day company to be
Speaker 1: able to just break apart and then continue to offer
Speaker 1: the consumer benefits that it offers, and and it'll ruin
Speaker 1: many of the efficiencies that are built in. I want
Speaker 1: to get your reaction to something, she said. What she
Speaker 1: proposes is to prohibit platforms from both offering a marketplace
Speaker 1: for commerce and participating in the marketplace. So she said,
Speaker 1: you can be an umpire a platform, or you can
Speaker 1: own teams, but you can't be an umpire and own
Speaker 1: one of the teams that's in the game. So in
Speaker 1: other words, with the Facebook's tie up with WhatsApp, you
Speaker 1: would you would just separate them, Or Amazon's purchase of
Speaker 1: Whole Foods, no go right. You know. I thought about
Speaker 1: that analogy for quite a long time because I just
Speaker 1: don't actually see it as particularly applicable because sports and
Speaker 1: sports teams are very different than business. And if you
Speaker 1: think about business, for in many many different industries, many
Speaker 1: types of different plator industries and platforms and sectors, for
Speaker 1: many years, companies have competed as well as business with
Speaker 1: their rivals. You know, this is the way business generally works,
Speaker 1: and it would be very odd to me to to
Speaker 1: separate out internet platforms uh um from everything else. I mean,
Speaker 1: think about it. When you go to the grocery store.
Speaker 1: The grocery store is selling a product, but it also
Speaker 1: has its own private label products on the shelves, competing
Speaker 1: with the branded products offered by the grocery store. Costco,
Speaker 1: for example, has its own brand. I can think of
Speaker 1: so many other examples in agriculture and beef processing and
Speaker 1: chicken in many different industries, you know, this is how
Speaker 1: business thrives, and it would be too arbitrary to me
Speaker 1: to have a different kind of a rule for tech
Speaker 1: and internet platforms. Well, we'll see where it goes. It's
Speaker 1: become very popular. It's it's become popular to break to
Speaker 1: the idea of breaking them up. But let's turn to
Speaker 1: a current merger. Last Thursday, the Federal Communications Commission paused
Speaker 1: in its review of T mobiles purchase of Sprint, which
Speaker 1: has been on a review for eight months. What's happening. Well,
Speaker 1: you know, I think this is probably not a good
Speaker 1: sign for the deal. Now. Now, the fact that they
Speaker 1: paused is really large procedural because they've got a whole
Speaker 1: tranche of new documents and analyzes by T Mobile and
Speaker 1: Sprint that they really needed time to look at, and
Speaker 1: they needed to get out to the marketplace and get
Speaker 1: comments from from third parties. So they needed the time
Speaker 1: and they stopped the clock, and that's generally what they do.
Speaker 1: But the fact is, after eight months, as you just
Speaker 1: mentioned to now, supply new analysis and new information suggests
Speaker 1: to me that the old arguments aren't really working very
Speaker 1: well and that T Mobile is having a struggle convincing
Speaker 1: the regulators that this deal is not anti competitive, so
Speaker 1: that is probably a bad sign for the deal. Well,
Speaker 1: we've talked about this before about whether it's anti competitive.
Speaker 1: It would combine the third and fourth largest US wireless
Speaker 1: provider is in itself, that seems to be a really
Speaker 1: tough argument to make. And in fact, twice before that
Speaker 1: kind of deal it wasn't always three and four, but
Speaker 1: that kind of deal has been attempted um and and
Speaker 1: failed in front of these regulators, the FCC in the
Speaker 1: Department of Justice. I think this deal is a really
Speaker 1: close called June because from just to pure straightforward textbook
Speaker 1: antitrust perspective, it looks like an anti competitive deal. Now,
Speaker 1: where a deal might have the tendency to cause harm
Speaker 1: in a marketplace, which I think this deal superficially suggests,
Speaker 1: the companies have the option of showing the pro competitive
Speaker 1: efficient side of that deal and the benefits that will
Speaker 1: come out of that deal, and if the regulators think
Speaker 1: those benefits will outweigh the potential for harm, that deal
Speaker 1: can still get cleared. But you know, I know, I
Speaker 1: don't know a deal that has one out on that,
Speaker 1: and I think they have a tough argument here, and
Speaker 1: I think the odds aren't great. Now, that's the f
Speaker 1: c C that's put it on hold. Do we know
Speaker 1: what's happening at the Department of Justice with its review,
Speaker 1: So they're still in the middle of their review, and
Speaker 1: they must have some sort of a timing agreement with
Speaker 1: the companies because at this point, I would think that
Speaker 1: they have finished the in depth request for information called
Speaker 1: a second request, and usually what happens is once the
Speaker 1: companies finish it, it gives the d o J only
Speaker 1: thirty days, and I think we've probably passed that point,
Speaker 1: so the company is likely entered into a timing agreement.
Speaker 1: We don't know the term of that agreement, so we
Speaker 1: don't know where they are in their time clock. But
Speaker 1: the head of the d j's Anti Ross division has
Speaker 1: said that they are working closely with the f CC
Speaker 1: and somewhat aligning with the f c C. So I
Speaker 1: think we'll probably see decisions around the same time. All right, Well,
Speaker 1: and they're going to testify this week on Capitol Hill,
Speaker 1: So more about that. That's Jennifer Reid Bloomberg Intelligence senior
Speaker 1: litigation analysts. For more of Jen's analysis going to be
Speaker 1: I go on the Bloomberg terminal. Thanks for listening to
Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to
Speaker 1: the show on Apple podcast, SoundCloud, and on bloomberg dot
Speaker 1: com slash podcast. I'm June Brosso. This is Bloomberg