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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: We fight the woke and the legislatures. We fight the

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Speaker 2: woke and the schools. We fight the woke and the corporations.

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Speaker 2: We refuse to surrender to the woke mob. This state

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Speaker 2: is where woke goes to die.

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Speaker 3: Or maybe not, despite what Governor Ron DeSantis says over

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Speaker 3: and over, actually the courts in Florida are where his

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Speaker 3: anti woke laws go to die. Many of his most

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Speaker 3: controversial laws and his declared war on woke have faced

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Speaker 3: legal roadblocks. The latest is his ban on so called

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Speaker 3: woke company training, which restricts how private employers can train

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Speaker 3: their workers. The conservative Eleventh Circuit Court of Appeals unanimously

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Speaker 3: blocked that ban as unconstitutional for committing quote, the greatest

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Speaker 3: First Amendment sin penalizing speech based on viewpoints. Joining me

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Speaker 3: is First Amendment Law expert Eugene Wollick, a professor at

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Speaker 3: UCLA Law School, Eugene, can you tell us what this

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Speaker 3: particular anti woke law is about?

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Speaker 1: Sure?

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Speaker 4: So, this case involves a particular portion of the Florida

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Speaker 4: law that's called sometimes the Stop Woke Act. Doesn't deal

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Speaker 4: with other portions having to do, for example, with colleges

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Speaker 4: and universities and the like, has to do with its

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Speaker 4: restriction on employers, including private employers, and that restriction prohibits

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Speaker 4: employers from subjecting people as condition of employment to training

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Speaker 4: instruction or other such activities required activities that, among other things,

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Speaker 4: promote a certain set of beliefs. And those beliefs include

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Speaker 4: things like members of one race, color, sex, or national

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Speaker 4: origin are morally superior to others, or a person, by

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Speaker 4: virtue of his race or national origin is inherently racist, sexist,

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Speaker 4: or oppressive, or that a person's moral character or status

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Speaker 4: is privileged or oppressed is necessarily determined by race, color, sex,

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Speaker 4: and the like. So there's certain particular viewpoints that private

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Speaker 4: employers are not allowed to include or to teach as

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Speaker 4: part of compelled instruction for their employees.

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Speaker 3: What I'm conviused about, I mean, is there any private

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Speaker 3: employer teaching that one race is superior to the other

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Speaker 3: or any of the other things.

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Speaker 4: I'm not sure about the superior, but my understanding, and

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Speaker 4: I don't know the exact details, but my understanding is

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Speaker 4: that some suppose a diversity, equity and inclusion instruction does

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Speaker 4: talk about how well you know white people are privileged

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Speaker 4: whereas non whites or especially blacks are oppressed, or that

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Speaker 4: whites are inherently racist and that whites should be viewed

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Speaker 4: as oppressors. There are other things the law also includes,

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Speaker 4: like that members of particular group cannot and should not

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Speaker 4: attempt to treat others without respect to race, color, sex,

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Speaker 4: or national origin. I understanding is that some forms of

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Speaker 4: instruction do indeed say, look, it's impossible for us to

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Speaker 4: be colorblind, either in general, or it's impossible for white

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Speaker 4: to be colorblind. Another item that's covered by the law

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Speaker 4: is that they can't teach that a person there's responsibility

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Speaker 4: for or should be discriminated against because of actions committed

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Speaker 4: in the past by other members of the same race,

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Speaker 4: that's national origin and the like. Well there too, I

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Speaker 4: think some trainings do suggest that a race based affirmative

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Speaker 4: action is justified because whites in the past have oppressed blacks,

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Speaker 4: let's say, and therefore there needs to be a compensatory

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Speaker 4: preferential treatment and discrimination. Now, because of that.

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Speaker 3: The opponents of the law suit over its effects on

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Speaker 3: free speech, so basically just saying it was a free

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Speaker 3: speech violation.

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Speaker 4: Yes, that's right, And in particular, they said, look, this

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Speaker 4: law is viewpoint based. It doesn't just, for example, prohibit

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Speaker 4: employers from having mandatory education sessions that talk about politics

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Speaker 4: of any sort. Rather, it singles out particular viewpoints as

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Speaker 4: being prohibited in these kinds of education programs. And the

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Speaker 4: court says that viewpoint discrimination is the hardest to justify,

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Speaker 4: most likely unconstitutional form of speech restriction, and that the

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Speaker 4: law indeed unconstitutionally discriminated based on viewpoint and the Eleventh

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Speaker 4: Circuit panel agreed.

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Speaker 3: Florida argued that it was regulating employer's conduct, not speech,

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Speaker 3: and the court said, we reject this latest attempt to

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Speaker 3: control speech by recharacterizing it as conduct. Does that happen

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Speaker 3: often as a defense in these cases saying it's conduct?

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Speaker 4: Yeah, I think the government often tries to do this sometimes.

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Speaker 4: For example, laws that ban sexual orientation change therapy for

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Speaker 4: children have been justified as bans on conduct, even when

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Speaker 4: the therapy involved only basically speaking to the person role

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Speaker 4: in administering drugs and the like. Likewise, some other laws

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Speaker 4: that ban supposes cyber stalking, but cyberstalking in the form

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Speaker 4: of unwanted speech about a person. There sometimes are the

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Speaker 4: laws or injunctions that say, look, stop talking about this

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Speaker 4: person have been justified as restrictions on conduct. But the

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Speaker 4: court here says that that's not going to fly because

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Speaker 4: the only conduct here is conveying certain viewpoints. If, for example,

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Speaker 4: the law said well you can or require people to

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Speaker 4: be at work before eight am, let's say, well, okay,

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Speaker 4: that would not be a speech restriction. I would be

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Speaker 4: a conduct restriction. Various kinds of laws regulating the employment

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Speaker 4: relationship are conduct restrictions. But with the law says, look,

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Speaker 4: these are particular ideas, particular opinions. You cannot teach people. Well,

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Speaker 4: that's all about the speech, all about what the employer

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Speaker 4: is communicating, and therefort's a speech restriction.

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Speaker 3: Did anything in particular in the opinions stand.

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Speaker 4: Out to you, Well, I think it was a pretty

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Speaker 4: forceful repudiation of this kind of viewpoint discriminations. I will

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Speaker 4: say there was one thing in particular that might be

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Speaker 4: relevant also for future cases. One thing that Florida said

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Speaker 4: in the same of the lawyer said, look, there are

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Speaker 4: all all of these rulings about hostile work environments, supposed

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Speaker 4: racial harassment, where employers can be hell liable for racially

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Speaker 4: offensive or sexually or religiously offensive speech, even by their employee,

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Speaker 4: and especially by the employer itself. So there have been lawsuits,

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Speaker 4: for example, over people playing offensive and supposedly misogynistic perhaps

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Speaker 4: even actually misagionistic rap lyrics, or claims that it was

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Speaker 4: a racial harassment for people to say things that are

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Speaker 4: potentially racist, even if they're kind of political expression. So

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Speaker 4: Florida's argument was, look, it's established that it's okay to

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Speaker 4: restrict that kind of speech. Well, we want a restrict

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Speaker 4: speech that may create a racially hostile environment through these

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Speaker 4: forms of mandatory training. And the court said, well, you know,

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Speaker 4: Title seven is different as a part of this broader

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Speaker 4: as a discrimination law. But beyond that, even Title seven,

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Speaker 4: even these can racial harassment and sexual harassment principle, there

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Speaker 4: are valid concerns about how they collide with the First Amendment,

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Speaker 4: and that courts therefore must exercise special caution when applying

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Speaker 4: Title seven. The matter is involving traditionally protected areas of speech.

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Speaker 4: So I do think that might be helpful for the

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Speaker 4: future when it's sort of anti woke or non woke

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Speaker 4: each that leads to a lawsuit, This may well be

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Speaker 4: cited to say that, well, you know that is protected

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Speaker 4: by the First Amendment, then the government can impose liability

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Speaker 4: for so did.

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Speaker 3: They use a strict scrutiny standard?

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Speaker 4: Right, So, the court said, look, this is content discrimination,

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Speaker 4: but even worse, it's a viewpoint discrimination. Viewpoint discrimination is

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Speaker 4: generally unconstitutional. You know, maybe it might be constitutional if

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Speaker 4: it passes this exacting standard of strict scrutiny. But it

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Speaker 4: is rare that a regulation restriction in speech, even because

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Speaker 4: of its content, much less that it's viewpoint, will ever

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Speaker 4: be permissible. The Court was saying, and the courts that

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Speaker 4: in this case, you know, it doesn't pass strict scrutiny.

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Speaker 4: There's no compelling government interest in suppressing this kind of speech.

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Speaker 3: The Press secretary for Dissand has said they're reviewing all

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Speaker 3: options for a potential appeal. One of those options would

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Speaker 3: be the Supreme Court. Do you think the Supreme Court

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Speaker 3: would want to weigh in on a case like this.

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Speaker 4: You know, it's possible. Supreme Court does take a considerable

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Speaker 4: number First Amend cases because it thinks that First Amendment

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Speaker 4: rules are particularly important. I think it's pretty unlikely, just

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Speaker 4: because even in cases where a state challenges finding that

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Speaker 4: a law is unconstitutional. The Court usually prefers to wait

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Speaker 4: until there's a split of authority in lower courts. Circuit

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Speaker 4: split or say the Eleventh Circuit strikes down some law

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Speaker 4: and say the Eighth Circuit upholds a similar law where

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Speaker 4: it uses some legal analysis as inconsistent with the Eleventh

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Speaker 4: Circuit's decision. That's sort of a signal to the court

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Speaker 4: there is an important issue. It's likely to recur lower

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Speaker 4: courts are in disagreement, usually when there's kind of a

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Speaker 4: one off state law in which there aren't really a

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Speaker 4: lot of others like it and certainly no appellate decisions

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Speaker 4: dealing with it. When that gets struck down, that doesn't

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Speaker 4: lead the Supreme Court review, but it's possible.

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Speaker 3: So now, why is the state appealing the injunction of

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Speaker 3: the university restrictions separately?

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Speaker 4: Well, like many statutes, this is again what's colloquially called

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Speaker 4: the stoppuokak involved several very different kinds of restrictions. They

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Speaker 4: have a common theme, but just that they're in the

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Speaker 4: same statue, it doesn't mean they really can effectively be challenged,

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Speaker 4: even in the same lawsuits. So this lawsuit, for example,

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Speaker 4: was brought by an employer which said, look, you're restricting

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Speaker 4: our speech, but the employer doesn't have standing to challenge

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Speaker 4: the restriction on public university professor's speech. Conversely, the public

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Speaker 4: university professors are challenging the university portion of the law,

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Speaker 4: but they don't have standing to challenge the law that

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Speaker 4: lies to private employer's mandatory education. The important point is

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Speaker 4: this is a law that has several provisions in it.

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Speaker 4: The provisions are savable from each other in the sense

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Speaker 4: that they could be struck down or upheld individual. A

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Speaker 4: particular lawsuit is brought by people, usually who are affected

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Speaker 4: by one provision or another, and the judge in that

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Speaker 4: case can only deal with the particular provisions that are

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Speaker 4: being challenged there.

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Speaker 3: I mean, how big a victory is this for free

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Speaker 3: speech coming from a conservative appellate court. Noteworthy?

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Speaker 4: Yeah, it is noteworthy because it's a reminder that First

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Speaker 4: Amendment provides very strong protection against viewpoint discrimination by the government,

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Speaker 4: and that applies again whether it's discrimination against woke viewpoints

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Speaker 4: or against anti woke viewpoints. That generally speaking, the government

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Speaker 4: cannot restrict speech it staate on viewpoints, even when the

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Speaker 4: viewpoints have to do it with highly controversialised matters such

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Speaker 4: as race and sex and national origin, and even when

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Speaker 4: the viewpoints are offensive to many.

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Speaker 3: Thanks so much for your insights, Eugene. As always, that's

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Speaker 3: Professor Eugene Volik of UCLA Law School. Coming up next

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Speaker 3: on the Bloomberg Law Show, the lawyers who sued over

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Speaker 3: Elon Musk's excessive fifty six billion dollar pay pack now

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Speaker 3: want six billion dollars in Tesla stock as legal fees,

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Speaker 3: and later in the show, Elon Musk sues Open Ai

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Speaker 3: and it fights back with some of his own emails.

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Speaker 3: Remember you can always get the latest in legal news

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Speaker 3: practice of law, the business of law, the Future of law.

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Speaker 3: Visit Bloomberg Law dot Com. I'm June Grosso and you're

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Speaker 3: listening to Bloomberg six billion dollars in legal fees? That

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Speaker 3: how much the lawyers who argued that Elon Musk's fifty

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Speaker 3: six billion dollar pay package was excessive are asking for

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Speaker 3: their efforts. Oh, and they'll take those fees in Tesla stock. Please.

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Speaker 3: Even more astounding that unprecedented six billion dollar fee may

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Speaker 3: be allowable under Delaware law. Joining me is business law

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Speaker 3: expert Eric Talley, a professor at Columbia Law School. Six

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Speaker 3: billion dollars in legal fees. That would be an hourly

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Speaker 3: rate of two hundred eighty eight thousand, eight hundred eighty

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Speaker 3: eight dollars. I mean, where are they getting that from?

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Speaker 1: Well, once again, June, you and I have chosen the

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Speaker 1: wrong professions peers. But so here's it too late? I

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Speaker 1: don't know, It's never too late. One can always dream.

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Speaker 1: But here's where they're getting from. First of all, realized

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Speaker 1: that the outcome of the case was phenomenally large as well, right,

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Speaker 1: fifty six billion dollars, you know, in terms of compensation

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Speaker 1: package that is essentially then being clawed back. And so

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Speaker 1: the way that this case gets set up as well

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Speaker 1: as pretty much all shareholders litigation is that it is

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Speaker 1: brought on a contingency fee basis, which means that the

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Speaker 1: lawyers are going to basically self finance the entire action

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Speaker 1: until they get to the finish line of either a

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Speaker 1: settlement or in this case, a judgment an outcome, and

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Speaker 1: only then are they in a position where they can

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Speaker 1: try to petition the court for an award of attorney spees.

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Speaker 1: And so essentially you can almost think of the law

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Speaker 1: firms that bring these actions as almost being like venture

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Speaker 1: capital funds, right they invest in a bunch of different

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Speaker 1: projects at different lawsuits. Many of them are going to

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Speaker 1: be losers, so many of them are going to either

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Speaker 1: settle for nothing or they'll just have to be dropped,

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Speaker 1: and then other ones will pay off. So it's kind

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Speaker 1: of a high risk, high reward thing. And so it

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Speaker 1: is often the case that when there is one of

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Speaker 1: these cases that ends up resulting in a substantial judgment

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Speaker 1: that can be monetized. And this one is one contingency fee.

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Speaker 1: It looks in hindsight like an outrageous amount of hourly compensation,

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Speaker 1: but one also has to think about how to set

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Speaker 1: that off against a bunch of other factors, including risk,

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Speaker 1: including cost, including effort, including the hard aspects of bringing

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Speaker 1: a case of this type of complexity. And so when

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Speaker 1: you sort of back those out, most of the time,

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Speaker 1: these contingency fees end up looking a little bit smaller

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Speaker 1: on an hourly up basis because you've essentially had to

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Speaker 1: control for all the high probabilities that there were going

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Speaker 1: to be nothing at the end of the rainbow here.

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Speaker 1: So that's one of the factors that really controls in

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Speaker 1: any situation where there's a contingency fee award, when it's

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Speaker 1: not structured as an hourly rate. Pretty much all of

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Speaker 1: these plaintive shareholder litigation fees are based on some type

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Speaker 1: of a contingency arrangement.

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Speaker 3: And how have the Delaware courts been viewing these contingency

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Speaker 3: fees in stockholder actions Over.

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Speaker 1: The years, the courts have come up with sort of

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Speaker 1: a formula for thinking about when and under what circumstances

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Speaker 1: a contingency fee should be awarded, and how high it

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Speaker 1: should be, what percentage of the total award should be

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Speaker 1: paid over to the attorneys, and there the Delaware Courts

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Speaker 1: of you know, there's a long standing line of cases

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Speaker 1: and they're actually pretty current. They go back a long time,

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Speaker 1: but the most recent ones are within the last couple

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Speaker 1: of years. That basically say, look, there's several factors that

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Speaker 1: we look at. One of the factors we look at is,

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Speaker 1: you know, the value that is created for shareholders, and

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Speaker 1: you know, I guess one lens of this, you can say, well,

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Speaker 1: this was fifty six billion dollars worth of value that

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Speaker 1: was created to shareholders because those Tesla shareholders were able

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Speaker 1: to claw back a fifty six billion dollar stock award

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Speaker 1: payment that they would have had to share and now

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Speaker 1: they don't have to share it any A couple of

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Speaker 1: the other factors that go into it is you know,

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Speaker 1: how risky was it, how costly was it? What's the

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Speaker 1: reputation of the firms that are bringing this. Are they

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Speaker 1: kind of ambulance chaser type firms? Are they sophisticated sort

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Speaker 1: of firms. The thing that was kind of odd about

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Speaker 1: the case is that when you went down these factors,

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Speaker 1: the factors all seemed to point in the plaintiff's direction. Right,

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Speaker 1: this was a fairly substantial award, it was risky, it

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Speaker 1: was costly. Burnstein Lidewiz, who has lead counsel on. This

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Speaker 1: is one of probably the most sophisticated and high reputation

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Speaker 1: Planet off firms in the country. And so typically what

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Speaker 1: that would mean is that when you get to the

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Speaker 1: end of these factors, which the petition for fees went

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Speaker 1: through them one by one, if you check all the boxes,

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Speaker 1: make it to the very finish line, then the typical

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Speaker 1: norm in Delaware is to award something like thirty three percent,

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Speaker 1: like a third of the award the attorneys. Now that

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Speaker 1: would have been about that would have been about eighteen

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Speaker 1: billion dollars, and so I think that the attorneys when

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Speaker 1: they're drafting this sort of said, Okay, that's just a

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Speaker 1: big number, and so they kind of make a point

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Speaker 1: to saying, look, we're going to articulate all these factors.

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Speaker 1: We're going to say that that under existing law would

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Speaker 1: entitle us to a third, We're going to take a

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Speaker 1: third of a third or eleven percent. And that's what

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Speaker 1: they ended up at their five point eight or five

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Speaker 1: point nine billion dollar request.

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Speaker 3: But does it not seem ironic that they argued that

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Speaker 3: Musk's pay package was excessive and now they want a

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Speaker 3: chunk of it also excessive.

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Speaker 1: Yeah, it's kind of an interesting thing. I mean, I

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Speaker 1: guess you could run this in multiple directions.

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Speaker 3: Right.

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Speaker 1: One is to say that paypackage was so excessive that

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Speaker 1: when we prevailed. This is what the plaintiff attorneys would

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Speaker 1: argue that when we prevailed on having it nullified, we

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Speaker 1: created an excessive benefit to shareholders. And we can point

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Speaker 1: to that benefit, that fifty six billion dollar benefit that

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Speaker 1: inured to the non Elon Musk shareholders. So had the

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Speaker 1: pay package not been as exorbitant, then our fee would

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Speaker 1: not be as large. And we are then once again

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Speaker 1: doubling back and saying, and guess what, We're going to

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Speaker 1: take only a third of the fee that under the

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Speaker 1: sort of a cookie cutter approach we would presumptively be

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Speaker 1: entitled to. The fact of the matter, though, is you're

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Speaker 1: right too. And this is a gargantuan award. It's very,

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Speaker 1: very large. A lot of times you'll see big fights

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Speaker 1: over attorney spees that are in the hundreds of millions

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Speaker 1: of dollars, you know, three hundred four hundred million dollars.

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Speaker 1: Those are the ones that have generated the biggest fights

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Speaker 1: over whether those fees should go through or whether they

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Speaker 1: should be shaped down. But one of the big challenges

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Speaker 1: in this case is that the fifty six billion dollar

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Speaker 1: award is kind of the denominator against which all this

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Speaker 1: other stuff is measured, right, and we just haven't seen

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Speaker 1: a fifty six billion dollar award that has put itself

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Speaker 1: in this position where we're trying to figure out what's

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Speaker 1: the value of the attorney speed. And you know, there

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Speaker 1: are cases recently that have tried to contend with this

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Speaker 1: question of, you know, as the award gets bigger, should

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Speaker 1: the percentage go down? And the Delaware courts have generally

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Speaker 1: resisted that thus far, but that could be a factor

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Speaker 1: that factors into Chancellor McCormick's assessment of the fee request.

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Speaker 3: But Elon Musk may not be getting that fifty six

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Speaker 3: billion dollar pay package, but they have to redo his

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Speaker 3: pay package, right, so Tesla won't be keeping all of

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Speaker 3: that fifty six.

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Speaker 1: Billion Well, that I think really is the fifty six

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Speaker 1: billion dollar question too. The pay package itself was nullified,

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Speaker 1: which basically means that mister Musk was working maybe not

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Speaker 1: quite for free, because remember he owned twenty two percent

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Speaker 1: of the company, so any you know, ten billion dollar

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Speaker 1: increase in the value of the company is going to

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Speaker 1: get him two billion dollars worth of value that he

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Speaker 1: has already pocketed. But one of the things that I

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Speaker 1: think is one area where you know, one could sort

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Speaker 1: of kick this case around and try to think, you know, what,

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Speaker 1: where are the ways that it might have come out differently.

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Speaker 1: I think one area that it might have come out

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Speaker 1: differently is exactly on this point about whether if the

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Speaker 1: pay package is being nullified, does that mean that he's

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Speaker 1: entitled to nothing for the services that he provided to

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Speaker 1: Tesla over these years under the presumption that he was

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Speaker 1: going to be paid from this executive compensation package. And

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Speaker 1: so that itself is a type of a claim that

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Speaker 1: you will often see in cases where a contract gets nullified,

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Speaker 1: to say, look, if you're not going to let me

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Speaker 1: collect pursuant to the contract, let me at least make

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Speaker 1: out a claim of what was the benefit that I

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Speaker 1: conferred on the other side, and we can come up

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Speaker 1: with the fair terms. And so that argument, for example,

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Speaker 1: might end up culminating in finding with the fair value

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Speaker 1: of what Musk created for Tesla was you know, thirty

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Speaker 1: billion dollars or something like that, And so that would

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Speaker 1: then be kind of an offset that you often will

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Speaker 1: see in contrast cases at the end this case was

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Speaker 1: a little odd because you know, a lot of the

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Speaker 1: litigation gets compressed into a short amount of time and

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Speaker 1: people have to argue about all the different parts of

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Speaker 1: the case. And so the Tesla attorneys in this case,

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Speaker 1: mister Musk's attorneys in this case or sort of in

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Speaker 1: an odd position of sort of saying, hey, listen, pay

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Speaker 1: packages one hundred percent fair. You know, it was highly incentivized,

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Speaker 1: but that was exactly what the design was, and look

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Speaker 1: how well it paid off. It would be hard at

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Speaker 1: the same time to say, oh, by the way, this

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Speaker 1: was the fair and the unfair part. Right, It's kind

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Speaker 1: of hard to argue that the thing was entirely fair,

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Speaker 1: and at the same time you can distinguish between the

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Speaker 1: fair part and the unfair part. And so I think

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Speaker 1: the defense attorneys in this case sort of understandably decided

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Speaker 1: to make a strategic choice, but not even offering you know,

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Speaker 1: some alternative valuation that's less than fifty six billion dollars

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Speaker 1: of what the fair value of mister Musk services was.

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Speaker 1: But that ended up, you know, creating big problems for

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Speaker 1: them once liability was done, because there was no alternative

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Speaker 1: theory about what some sort of an offset should be

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Speaker 1: for the for the fair value of musk services. So

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Speaker 1: you know, it's conceivable that the Supreme Court of Delaware,

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Speaker 1: if this goes up on appeal to the Supreme Court,

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Speaker 1: which I suspect it will, will say, hey, hey, hey,

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Speaker 1: I know we want to send this back because we

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Speaker 1: want to hear a trial on this. It's called restitution, right,

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Speaker 1: This restitution theory a possibility, and realize that that bears

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Speaker 1: on these factors. One of the factors is how much

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Speaker 1: value that you create for stockholders. Well, right now we're

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Speaker 1: sitting at fifty six billion dollars worth of value that

399
00:22:14,680 --> 00:22:17,760
Speaker 1: got created to stockholders. But if say half of that

400
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Speaker 1: is going to be carved off an offset because of

401
00:22:20,440 --> 00:22:23,200
Speaker 1: a I don't know, a restitutionary claim, then maybe it's

402
00:22:23,240 --> 00:22:26,160
Speaker 1: only twenty eight billion dollars that you created for stockholders

403
00:22:26,600 --> 00:22:29,000
Speaker 1: or maybe even less. And so we don't really know

404
00:22:29,080 --> 00:22:31,760
Speaker 1: the answer that question, or the answer that question as

405
00:22:31,800 --> 00:22:36,200
Speaker 1: of now is there is no restitutionary offset and will.

406
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Speaker 3: There definitely be a restitutionary process.

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Speaker 1: This whole idea of sort of saying Okay, we're not

408
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Speaker 1: going to enforce the contract, but we'll let you make

409
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Speaker 1: a claim for your restitution of whatever benefits you did confer.

410
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Speaker 1: That's a highly judgment oriented determination. It is really left

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Speaker 1: up to the discretion of the judge, and there is

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Speaker 1: at least historically some precedent out there for judges saying, hey, hey,

413
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Speaker 1: I'm willing to let this, you know, go forward and

414
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Speaker 1: let you make your arguments about you know, your your

415
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Speaker 1: restitutionary interest, but I won't do it if you have

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Speaker 1: uncleaned hands, if you have been a naughty actor before,

417
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Speaker 1: and if you read the front you know, one hundred

418
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Speaker 1: and eighty pages of Chancellor McCormick's opinion, you know, one

419
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Speaker 1: could read that as saying Elon Musk and the board

420
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Speaker 1: members were naughty actors, so I'm not going to afford

421
00:23:28,440 --> 00:23:31,360
Speaker 1: them now the chance for a mulligan, essentially to try

422
00:23:31,359 --> 00:23:34,160
Speaker 1: to claim what their restitutionary interest is. Now, there are

423
00:23:34,200 --> 00:23:36,720
Speaker 1: cases that go both ways, and so, you know, I

424
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Speaker 1: think that's a little bit more of an issue of

425
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Speaker 1: law that one could imagine the Delaware Supreme Court disagreeing on.

426
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Speaker 1: But if that were to happen, if there were some

427
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Speaker 1: sort of an offset to the fifty six billion dollars

428
00:23:48,600 --> 00:23:51,720
Speaker 1: that's been returned to Tesla stockholders and Musk is able

429
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Speaker 1: to claw back some fraction of that in restitution, that's

430
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Speaker 1: going to cause the benefit of the stockholders to go

431
00:23:57,680 --> 00:24:00,439
Speaker 1: much further down that in principle than would have an

432
00:24:00,440 --> 00:24:03,520
Speaker 1: effect on the dollar value of the percentage that the

433
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Speaker 1: plaintiff's attorneys are trying to ask for.

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Speaker 3: It is unusual, is it not? For the legal team

435
00:24:09,960 --> 00:24:13,480
Speaker 3: is seeking to be paid by taking part of what

436
00:24:13,680 --> 00:24:16,480
Speaker 3: Musk is giving up, so testless stock.

437
00:24:17,680 --> 00:24:21,639
Speaker 1: It is definitely an unconventional request. It was not surprising

438
00:24:21,760 --> 00:24:24,440
Speaker 1: to me that they made a request of testleas stock

439
00:24:24,520 --> 00:24:28,080
Speaker 1: rather than money, in part because that is the very

440
00:24:28,440 --> 00:24:30,879
Speaker 1: remedy that they were seeking. You know, they were seeking

441
00:24:30,920 --> 00:24:33,520
Speaker 1: the return of stock. And if you then want to

442
00:24:33,520 --> 00:24:36,680
Speaker 1: translate that into what is eleven percent of the value

443
00:24:36,720 --> 00:24:38,880
Speaker 1: of that, well then you get another set of headaches

444
00:24:38,920 --> 00:24:41,760
Speaker 1: about how do you on what date do you value it?

445
00:24:41,800 --> 00:24:44,000
Speaker 1: And how do you value some of these you know,

446
00:24:44,240 --> 00:24:48,120
Speaker 1: options that haven't been fully vested yet and you know,

447
00:24:48,200 --> 00:24:52,280
Speaker 1: maybe underwater or at the money or you know, in

448
00:24:52,359 --> 00:24:54,359
Speaker 1: the money and so forth. So that ends up setting

449
00:24:54,440 --> 00:24:58,000
Speaker 1: up a huge number of valuation challenges that I think

450
00:24:58,040 --> 00:25:00,680
Speaker 1: on some level the plaintiffs said, you know, we don't

451
00:25:00,720 --> 00:25:02,800
Speaker 1: have to go there on the valuation challenges. If we

452
00:25:03,000 --> 00:25:05,520
Speaker 1: had petitioned for the return of money, then we'd want

453
00:25:05,520 --> 00:25:08,320
Speaker 1: eleven percent of the money. Repetition for the return of

454
00:25:08,320 --> 00:25:11,680
Speaker 1: a bunch of shares, we want eleven percent of the shares. Now,

455
00:25:11,880 --> 00:25:13,720
Speaker 1: on some level that makes sense. I think it might

456
00:25:13,760 --> 00:25:17,959
Speaker 1: also make sense from the business positioning right now of Tesla.

457
00:25:18,080 --> 00:25:21,639
Speaker 1: It's still very, very valuable company obviously, but you know,

458
00:25:21,720 --> 00:25:24,399
Speaker 1: the headwinds in the EV industry are now, you know,

459
00:25:24,560 --> 00:25:28,920
Speaker 1: definitely strong, and so you know, having the corporate sort

460
00:25:28,960 --> 00:25:32,280
Speaker 1: of till invaded by a cash award that has to

461
00:25:32,320 --> 00:25:35,560
Speaker 1: go out to planet's attorneys, that's a little bit harder still.

462
00:25:35,680 --> 00:25:38,280
Speaker 1: You know, Tesla could in principle to sell more stock

463
00:25:38,320 --> 00:25:40,720
Speaker 1: and pay for it that way. But you know, on

464
00:25:40,800 --> 00:25:43,920
Speaker 1: some level, even though it's unconventional, it just didn't surprise

465
00:25:44,000 --> 00:25:47,160
Speaker 1: me to see that the request was being made for stock,

466
00:25:47,440 --> 00:25:50,200
Speaker 1: which is the very thing that the planets were asking

467
00:25:50,200 --> 00:25:53,000
Speaker 1: for the return of, rather than cash. Now, it does

468
00:25:53,040 --> 00:25:56,119
Speaker 1: put kind of an interesting twist on what do you

469
00:25:56,240 --> 00:25:59,399
Speaker 1: do if you were a plaintiff side firm who just

470
00:25:59,480 --> 00:26:02,320
Speaker 1: has received a bunch of stock in a defendant that

471
00:26:02,400 --> 00:26:05,680
Speaker 1: you just sued and you're trying to you know, maybe

472
00:26:05,760 --> 00:26:07,760
Speaker 1: like build more business in the future, and some of

473
00:26:07,760 --> 00:26:10,639
Speaker 1: that business might be now suing that same company for

474
00:26:10,760 --> 00:26:12,960
Speaker 1: other things in the future. Well, now you're a big

475
00:26:13,000 --> 00:26:16,240
Speaker 1: stockholder of that company, do you really want to win,

476
00:26:16,280 --> 00:26:18,119
Speaker 1: because now it's going to hurt you in the pocketbook

477
00:26:18,400 --> 00:26:20,560
Speaker 1: with respect to the stock that you own. So my

478
00:26:20,760 --> 00:26:23,399
Speaker 1: sense is that even you know, if an award of

479
00:26:23,440 --> 00:26:28,119
Speaker 1: stock is approved and is effectively executed on the plane's

480
00:26:28,160 --> 00:26:32,399
Speaker 1: attorneys are probably going to be well advised to try

481
00:26:32,800 --> 00:26:36,920
Speaker 1: to unwind that position through sort of progressive sales of

482
00:26:37,000 --> 00:26:39,439
Speaker 1: those stocks out into the market so they are no

483
00:26:39,520 --> 00:26:42,840
Speaker 1: longer basically you know, big stockholders of the company that

484
00:26:42,960 --> 00:26:46,200
Speaker 1: they may end up suing again, you know, possibly for

485
00:26:46,400 --> 00:26:49,280
Speaker 1: how the company responds to this very judgment.

486
00:26:49,480 --> 00:26:52,400
Speaker 3: Stay with me, Eric, Coming up next on the Bloomberg

487
00:26:52,480 --> 00:26:55,760
Speaker 3: Law Show, I'll continue this conversation with Columbia Law School

488
00:26:55,800 --> 00:26:58,680
Speaker 3: professor Eric Talley, and we're going to be talking about

489
00:26:58,760 --> 00:27:03,120
Speaker 3: another lawsuit, this one brought by Musk against open AI.

490
00:27:03,600 --> 00:27:07,120
Speaker 3: The lawsuit's kind of iffy, and open AI is fighting

491
00:27:07,200 --> 00:27:11,000
Speaker 3: back with some of Musk's own emails. I'm June Grosso

492
00:27:11,160 --> 00:27:14,840
Speaker 3: and you're listening to Bloomberg, there's some chance that is

493
00:27:14,880 --> 00:27:16,800
Speaker 3: above zero that AI will kill us. Well, I think

494
00:27:16,800 --> 00:27:17,400
Speaker 3: it's low.

495
00:27:18,800 --> 00:27:19,040
Speaker 1: Chance.

496
00:27:19,359 --> 00:27:22,080
Speaker 3: What do you what's your first take on this lawsuit?

497
00:27:22,359 --> 00:27:26,800
Speaker 3: Elon Musk has always been among the most outspoken about

498
00:27:26,840 --> 00:27:30,800
Speaker 3: the dangers of AI, and now he's suing Open Ai

499
00:27:31,000 --> 00:27:35,679
Speaker 3: and it's CEO Sam Altman, alleging they violated the Artificial

500
00:27:35,760 --> 00:27:41,760
Speaker 3: intelligence startups founding mission by putting profit ahead of benefiting humanity.

501
00:27:42,240 --> 00:27:45,600
Speaker 3: I've been talking to Professor Eric Tally of Columbia Law School.

502
00:27:46,280 --> 00:27:51,119
Speaker 3: Eric Musk is apparently suing for Humanity for breach of contract,

503
00:27:51,280 --> 00:27:55,800
Speaker 3: breach of fiduciary duty, and claims of unfair business practices.

504
00:27:56,520 --> 00:27:58,320
Speaker 3: What's your first take on this lawsuit?

505
00:27:59,200 --> 00:28:03,159
Speaker 1: It's very creepy, creative June. It's a very creative lawsuit,

506
00:28:03,400 --> 00:28:07,040
Speaker 1: possibly so creative that it's hard to find law to

507
00:28:07,119 --> 00:28:10,960
Speaker 1: back it up. So here's part of the problem. And

508
00:28:11,000 --> 00:28:13,440
Speaker 1: you know, I teach contracts as well, and the key

509
00:28:13,600 --> 00:28:15,639
Speaker 1: ingredients to a breach of contracts suit is you have

510
00:28:15,720 --> 00:28:17,720
Speaker 1: to have a contract with the other side. The other

511
00:28:17,760 --> 00:28:19,800
Speaker 1: side then has to have breached the contract, and then

512
00:28:19,840 --> 00:28:21,639
Speaker 1: you have to be able to show damage it and

513
00:28:21,680 --> 00:28:24,359
Speaker 1: if any of those fail, you don't have a lawsuit.

514
00:28:24,480 --> 00:28:28,880
Speaker 1: And there's an argument that maybe all three are very

515
00:28:28,960 --> 00:28:31,160
Speaker 1: dodgy here, at least two of the three are very

516
00:28:31,240 --> 00:28:35,080
Speaker 1: dodgy here. So the first is like is there a contract? Well,

517
00:28:35,160 --> 00:28:38,000
Speaker 1: you know, in the complaint that was filed by mister Musk,

518
00:28:38,400 --> 00:28:41,480
Speaker 1: there certainly doesn't seem to be any document that says

519
00:28:41,520 --> 00:28:44,520
Speaker 1: here is the investment agreement, and here's the promises that

520
00:28:44,600 --> 00:28:48,160
Speaker 1: open ai are making, you know, but the exhibits that

521
00:28:48,240 --> 00:28:50,800
Speaker 1: were attached to the agreement that are supposed to, you know,

522
00:28:51,120 --> 00:28:54,400
Speaker 1: memorialize the existence of the contract, where like a bunch

523
00:28:54,480 --> 00:28:57,960
Speaker 1: of text message or email exchanges that you know, seemed

524
00:28:58,080 --> 00:29:01,600
Speaker 1: very preliminary and a little bit flat, dash and informal,

525
00:29:02,040 --> 00:29:06,680
Speaker 1: followed by basically a reproduction of the charter of open Ai,

526
00:29:06,800 --> 00:29:10,080
Speaker 1: which does have a purpose provision. And you know, there

527
00:29:10,160 --> 00:29:13,640
Speaker 1: is a set of interpretations out legal interpretation out there

528
00:29:13,720 --> 00:29:15,720
Speaker 1: says the charter of a company is in some ways

529
00:29:15,720 --> 00:29:20,280
Speaker 1: like a contract between the stockholders and the company itself.

530
00:29:20,560 --> 00:29:22,720
Speaker 1: But that's going to have to carry a heavy load

531
00:29:22,760 --> 00:29:27,080
Speaker 1: here because those preliminary email exchanges, that's kind of classic

532
00:29:27,480 --> 00:29:30,960
Speaker 1: example of a non contract, right, that kind of preliminary

533
00:29:31,040 --> 00:29:35,680
Speaker 1: language just isn't filled out enough to put any specificity

534
00:29:35,760 --> 00:29:39,320
Speaker 1: on what the underlying contract if there is one. Looks

535
00:29:39,400 --> 00:29:42,560
Speaker 1: like second thing is if there is a contract, who

536
00:29:42,600 --> 00:29:45,320
Speaker 1: would enforce that contract? Is this a contract that is,

537
00:29:45,560 --> 00:29:48,040
Speaker 1: you know, that is enforceable by one of the people

538
00:29:48,080 --> 00:29:51,240
Speaker 1: that basically paid money to a nonprofit, So they weren't

539
00:29:51,240 --> 00:29:54,040
Speaker 1: getting like stock stock or anything. Right, non profits don't

540
00:29:54,080 --> 00:29:58,000
Speaker 1: have stockholtures. So would it be sort of humanity that

541
00:29:58,120 --> 00:30:00,800
Speaker 1: if anyone has a cause of action here, it should

542
00:30:00,800 --> 00:30:05,120
Speaker 1: be humanity versus open AI. And Elon Musk is now

543
00:30:05,200 --> 00:30:09,400
Speaker 1: sort of appointing himself as a representative of humanity, I guess,

544
00:30:10,000 --> 00:30:11,760
Speaker 1: but you know, I think he's got to turn this

545
00:30:11,840 --> 00:30:14,760
Speaker 1: into know, this was a contract with me for me

546
00:30:14,840 --> 00:30:18,120
Speaker 1: to give you money under the expectation that you weren't

547
00:30:18,160 --> 00:30:21,040
Speaker 1: going to go out and I don't know, do profitable

548
00:30:21,160 --> 00:30:25,720
Speaker 1: things with it. And so so it's really hard to determine,

549
00:30:25,760 --> 00:30:28,520
Speaker 1: even if there is a contract, whether he's not standing too.

550
00:30:29,080 --> 00:30:33,000
Speaker 1: If he does, how do we know that open AI

551
00:30:33,400 --> 00:30:36,760
Speaker 1: hasn't done stuff for the good of humanity? Right? The

552
00:30:36,800 --> 00:30:39,240
Speaker 1: fact of the matter is, yes, when you were out

553
00:30:39,240 --> 00:30:43,040
Speaker 1: there as a nonprofit per se, you probably have to

554
00:30:43,080 --> 00:30:48,440
Speaker 1: engage in various types of transactions and relationships with other

555
00:30:48,520 --> 00:30:51,840
Speaker 1: players who are not nonprofit. That happens all the time, right,

556
00:30:51,880 --> 00:30:54,560
Speaker 1: And so if I agree that you invest money in

557
00:30:54,600 --> 00:30:58,520
Speaker 1: your nonprofit that's supposed to feed the homeless in Central Park,

558
00:30:58,800 --> 00:31:02,680
Speaker 1: I don't really have a complaint when you decide to

559
00:31:02,720 --> 00:31:06,120
Speaker 1: buy food from McDonald's, which is a poor profit company,

560
00:31:06,120 --> 00:31:08,640
Speaker 1: in order to execute on that. And so there is

561
00:31:08,720 --> 00:31:10,960
Speaker 1: a sort of a sense in which it's not even

562
00:31:11,040 --> 00:31:14,520
Speaker 1: clear that, you know, dealing with companies like Microsoft is

563
00:31:14,600 --> 00:31:19,400
Speaker 1: necessarily inconsistent with what that mission is, because the mission

564
00:31:19,560 --> 00:31:23,080
Speaker 1: that's in the charter is actually crafted pretty broadly to

565
00:31:23,120 --> 00:31:25,800
Speaker 1: give a lot of discretion on what to do. And

566
00:31:25,840 --> 00:31:28,320
Speaker 1: then you know, open Ai has recently posted a blog

567
00:31:28,360 --> 00:31:31,520
Speaker 1: post that basically said that Musk himself was kind of

568
00:31:31,600 --> 00:31:34,800
Speaker 1: needling them throughout before he departed the company to try

569
00:31:34,840 --> 00:31:37,240
Speaker 1: to get them to move in a more monetized direction,

570
00:31:37,400 --> 00:31:40,680
Speaker 1: including a potential merger with Tesla that he was pushing.

571
00:31:40,760 --> 00:31:43,640
Speaker 1: So there's almost a sense in which his own words

572
00:31:43,800 --> 00:31:46,640
Speaker 1: are likely to be used against him as to whether

573
00:31:46,800 --> 00:31:50,240
Speaker 1: anyone really understood this to be the type of contractual

574
00:31:50,280 --> 00:31:53,480
Speaker 1: obligation to be sort of the mother Teresa of data

575
00:31:53,560 --> 00:31:56,600
Speaker 1: that doesn't look like he even believed so long as

576
00:31:56,720 --> 00:31:58,600
Speaker 1: you know, there was a chance that Tesla might be

577
00:31:58,640 --> 00:31:59,920
Speaker 1: able to acquire Open AI.

578
00:32:00,400 --> 00:32:03,400
Speaker 3: So to put it in legal terms, the lawsuit is iffy.

579
00:32:03,920 --> 00:32:06,120
Speaker 3: And also, I mean you have the fact that he

580
00:32:06,320 --> 00:32:10,960
Speaker 3: has founded his own AI startup x of course he

581
00:32:11,040 --> 00:32:15,480
Speaker 3: loves the x XAI, and that's a for profit entity.

582
00:32:15,720 --> 00:32:19,040
Speaker 3: I don't know where that fits in just as another irony.

583
00:32:19,120 --> 00:32:21,760
Speaker 1: Perhaps, yeah, it probably dusted in as like sort of

584
00:32:21,840 --> 00:32:25,120
Speaker 1: additional evidence that mister Musk himself sort of had the

585
00:32:25,160 --> 00:32:29,440
Speaker 1: big use case view of generative AI as being part

586
00:32:29,560 --> 00:32:35,000
Speaker 1: of a profit generating enterprise that also coincidentally and simultaneously

587
00:32:35,400 --> 00:32:38,760
Speaker 1: would be creating benefits for humanity. And those things are

588
00:32:38,800 --> 00:32:42,320
Speaker 1: not always inconsistent with one another. But it does sort

589
00:32:42,360 --> 00:32:46,680
Speaker 1: of suggest that his mindset throughout this period of time,

590
00:32:46,720 --> 00:32:49,840
Speaker 1: including what he's doing now, seems to be very much

591
00:32:49,880 --> 00:32:55,040
Speaker 1: a mindset of harnessing these tools for purposes of generating

592
00:32:55,320 --> 00:32:58,640
Speaker 1: net revenues. And so to then sort of file this

593
00:32:58,720 --> 00:33:03,240
Speaker 1: lawsuit against AI for doing exactly that, it's somewhat reminiscent

594
00:33:03,320 --> 00:33:07,160
Speaker 1: of Casablanca character to Captain Renault, who proclaims that he

595
00:33:07,240 --> 00:33:10,520
Speaker 1: is shocked, shocked that there's gambling going on in this establishment, right,

596
00:33:10,560 --> 00:33:14,280
Speaker 1: It's just seems unlikely to be the case. Now, you know,

597
00:33:14,480 --> 00:33:17,400
Speaker 1: if open ai was formed as a nonprofit, so there's

598
00:33:17,440 --> 00:33:20,480
Speaker 1: a little bit more grab that to that argument, sort

599
00:33:20,480 --> 00:33:23,400
Speaker 1: of say, hey, no, no, I formed x as a

600
00:33:23,440 --> 00:33:25,880
Speaker 1: for profit. You formed this as a nonprofit. But does

601
00:33:25,920 --> 00:33:27,760
Speaker 1: that mean anything? And so you know, it's not like

602
00:33:27,760 --> 00:33:29,720
Speaker 1: there are no arguments, but boy, do you have to

603
00:33:29,760 --> 00:33:32,240
Speaker 1: reach deep into the pocket to find the types of

604
00:33:32,400 --> 00:33:36,440
Speaker 1: arguments that we conventionally go into a standard contract claim.

605
00:33:36,440 --> 00:33:38,440
Speaker 1: And by the way, we haven't even gotten to damages.

606
00:33:38,560 --> 00:33:41,000
Speaker 3: Right if oh the damages are crazy.

607
00:33:41,160 --> 00:33:41,880
Speaker 1: And who gets them?

608
00:33:41,960 --> 00:33:42,080
Speaker 4: Right?

609
00:33:42,080 --> 00:33:43,440
Speaker 1: Does humanity get the damages?

610
00:33:43,720 --> 00:33:44,320
Speaker 3: Apparently?

611
00:33:44,440 --> 00:33:45,040
Speaker 1: You must?

612
00:33:45,160 --> 00:33:48,400
Speaker 3: Apparently because open ai has to make its research and

613
00:33:48,520 --> 00:33:53,160
Speaker 3: technology open to the public prevent anyone, including Microsoft, which

614
00:33:53,200 --> 00:33:56,240
Speaker 3: by the way, has invested billions in open ai, from

615
00:33:56,240 --> 00:34:00,920
Speaker 3: benefiting financially from its technology. And also the Altman has

616
00:34:00,960 --> 00:34:03,360
Speaker 3: to give up all the money he's earned. But I mean,

617
00:34:03,440 --> 00:34:07,960
Speaker 3: this is like drama, drama, drama, that boardroom drama where

618
00:34:08,000 --> 00:34:12,719
Speaker 3: the company directors ousted Altman and then he was reinstated.

619
00:34:13,160 --> 00:34:14,960
Speaker 1: There is a lot of drama the dramas are not

620
00:34:15,200 --> 00:34:17,600
Speaker 1: completely separate, right. A lot of times when you you know,

621
00:34:17,640 --> 00:34:19,640
Speaker 1: sort of, you know, thinking about the various things that

622
00:34:19,680 --> 00:34:22,279
Speaker 1: Elon Bust does, it's it's kind of like that they

623
00:34:22,280 --> 00:34:25,160
Speaker 1: could be completely random, you know, sort of parapatetic things

624
00:34:25,160 --> 00:34:26,919
Speaker 1: that he's up to. But these are actually a little

625
00:34:26,920 --> 00:34:30,080
Speaker 1: bit more connected because the earlier drama with open Ai

626
00:34:30,480 --> 00:34:33,080
Speaker 1: was a little bit about a kind of an existential

627
00:34:33,120 --> 00:34:35,960
Speaker 1: crisis on exactly what the weight that the company was

628
00:34:36,000 --> 00:34:38,600
Speaker 1: going to place on, you know, doing business with for

629
00:34:38,760 --> 00:34:43,279
Speaker 1: profit entities versus essentially just being a big basket of

630
00:34:43,360 --> 00:34:46,399
Speaker 1: public goods. And so, you know, on some level, one

631
00:34:46,440 --> 00:34:50,040
Speaker 1: can view this lawsuit as kind of a reaction to

632
00:34:50,200 --> 00:34:53,840
Speaker 1: the internal reaction in open Ai, when you know, Altman

633
00:34:54,000 --> 00:34:57,160
Speaker 1: was kind of unceremoniously shown the door because some board

634
00:34:57,160 --> 00:34:59,840
Speaker 1: members sort of thought that the company had gone to

635
00:35:00,080 --> 00:35:03,319
Speaker 1: far in the direction of commercialization. But then so much

636
00:35:03,320 --> 00:35:07,839
Speaker 1: employee unrest and unrest generally ensued that you know, caused

637
00:35:07,920 --> 00:35:10,600
Speaker 1: him to basically come right back in and effectively, having

638
00:35:10,760 --> 00:35:14,440
Speaker 1: now won that internal skirmish, mister Musk has now decided

639
00:35:14,480 --> 00:35:17,160
Speaker 1: to turn it into an external skirmish. It's just not

640
00:35:17,200 --> 00:35:19,520
Speaker 1: clear that he has standing to do so, and so

641
00:35:19,560 --> 00:35:22,360
Speaker 1: it's just just an odd situation. My guess is his

642
00:35:22,480 --> 00:35:25,799
Speaker 1: best claim for damages is just the return of his

643
00:35:25,920 --> 00:35:29,160
Speaker 1: forty five million dollars, right, which is yet another kind

644
00:35:29,200 --> 00:35:31,960
Speaker 1: of restitutionary claim that that he can make. That's something

645
00:35:32,000 --> 00:35:34,000
Speaker 1: you can at least quantify in and stuff that he

646
00:35:34,080 --> 00:35:36,680
Speaker 1: paid in. But even that, you know, was he paying

647
00:35:36,680 --> 00:35:38,920
Speaker 1: it in under the assumption that there would never be

648
00:35:39,000 --> 00:35:42,879
Speaker 1: any involvement five big players like Microsoft. When you've got

649
00:35:42,880 --> 00:35:45,640
Speaker 1: these emails from him at the time he's making the investment,

650
00:35:45,960 --> 00:35:49,200
Speaker 1: the investment saying you can't just do this with one

651
00:35:49,280 --> 00:35:52,040
Speaker 1: hundred million dollars. You're going to need dollar denominations to

652
00:35:52,160 --> 00:35:54,279
Speaker 1: start with a B, and you're going to need to

653
00:35:54,320 --> 00:35:56,879
Speaker 1: get big players in to help you out here if

654
00:35:56,920 --> 00:35:59,719
Speaker 1: you have any chance of competing against Google. But who

655
00:35:59,719 --> 00:36:02,280
Speaker 1: are those big players are going to be? He suggested Tesla,

656
00:36:02,360 --> 00:36:05,560
Speaker 1: but Microsoft is definitely another one. And so you know,

657
00:36:05,760 --> 00:36:08,840
Speaker 1: the optic of the lawsuit as well also raise at

658
00:36:08,880 --> 00:36:10,960
Speaker 1: least the possibility that you know, we have this person

659
00:36:11,000 --> 00:36:14,239
Speaker 1: who is trying to you know, make a mark. Now,

660
00:36:14,360 --> 00:36:16,960
Speaker 1: I guess using X to be a big player in

661
00:36:17,080 --> 00:36:20,680
Speaker 1: generative AI, if you're trying to create some elbow room

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00:36:20,760 --> 00:36:23,120
Speaker 1: at that table. It's always good if you can elbow

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00:36:23,160 --> 00:36:25,200
Speaker 1: a couple of the big competitors in the face. And

664
00:36:25,239 --> 00:36:27,640
Speaker 1: maybe that's part of what's going on here as well. Like,

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00:36:27,719 --> 00:36:30,560
Speaker 1: you know, maybe this was deemed to be worth a

666
00:36:30,600 --> 00:36:34,880
Speaker 1: shot because it would essentially, you know, mecap Microsoft's stability

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00:36:35,040 --> 00:36:39,560
Speaker 1: to compete effectively in the generative AI space, leaving you

668
00:36:40,080 --> 00:36:42,719
Speaker 1: a smaller number of the Fang firm working on the

669
00:36:42,760 --> 00:36:45,440
Speaker 1: same project, and maybe creating a little bit more elbow

670
00:36:45,520 --> 00:36:48,600
Speaker 1: room for mister Musk to scoot up to the generative

671
00:36:48,640 --> 00:36:49,400
Speaker 1: AI table.

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00:36:49,640 --> 00:36:53,400
Speaker 3: Sounds a lot more realistic than benefiting humanity. I always

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00:36:53,480 --> 00:36:56,640
Speaker 3: enjoy our conversations, Eric, thanks so much for taking the time.

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Speaker 3: That's Professor Eric Tally of Columbia Law School. And that's

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Speaker 3: it for this edition of the Bloomberg Law Podcast. Remember

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00:37:03,880 --> 00:37:06,600
Speaker 3: you can always get the latest legal news by subscribing

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00:37:06,640 --> 00:37:10,080
Speaker 3: and listening to the show on Apple Podcasts, Spotify, and

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00:37:10,160 --> 00:37:14,200
Speaker 3: at Bloomberg dot com, Slash podcast Slash Law. I'm June

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00:37:14,200 --> 00:37:16,360
Speaker 3: Grosso and this is Bloomberg