WEBVTT - Kalshi/SCOTUS, DOJ/Google, Nvidia Antitrust 0:00:15.320 --> 0:00:18.520 Hello, and welcome to the Votes and Verdicts podcast hosted 0:00:18.579 --> 0:00:22.209 by the litigation and policy team at Bloomberg Intelligence, the 0:00:22.230 --> 0:00:25.530 investment research platform of Bloomberg LP on the Bloomberg Terminal. 0:00:26.070 --> 0:00:30.290 Bloomberg Intelligence has 500 analysts and strategists working across the 0:00:30.310 --> 0:00:33.650 globe and focused on all major markets. Our coverage includes 0:00:33.690 --> 0:00:36.530 over 2,000 equities and credits, and we have outlooks on 0:00:36.550 --> 0:00:40.390 more than 90 industries and 100 market indices, currencies, and 0:00:40.450 --> 0:00:45.050 commodities that This podcast series examines the intersection of business 0:00:45.170 --> 0:00:48.270 policy and law. My name is Elliot Stein. I'm an 0:00:48.430 --> 0:00:52.310 analyst with BI covering litigation in the financial sector. I'm 0:00:52.330 --> 0:00:55.090 delighted today, as always, to be joined by a few 0:00:55.110 --> 0:00:58.520 of my BI colleagues. And just to date stamp this, 0:00:58.580 --> 0:01:03.500 today is September 10th, 2026. And this is our weekly 0:01:03.560 --> 0:01:06.779 look at some of the more important litigation and policy 0:01:06.819 --> 0:01:09.840 catalysts that our team is watching and that we think 0:01:09.860 --> 0:01:12.660 will impact companies across a number of different sectors in 0:01:12.700 --> 0:01:15.280 the coming weeks. As always, you can find all of 0:01:15.360 --> 0:01:19.080 our research on the Bloomberg Terminal at BI Go, and 0:01:19.100 --> 0:01:22.020 you can find our litigation and policy dashboard on the 0:01:22.040 --> 0:01:26.660 Bloomberg Terminal at BI Laws Go. So I think I'll 0:01:26.700 --> 0:01:29.270 kick it off today with a few things I'm watching 0:01:29.330 --> 0:01:33.890 before I bring in a pair of my colleagues. First, 0:01:34.290 --> 0:01:40.890 in litigation over prediction markets, This litigation has finally arrived 0:01:40.950 --> 0:01:45.030 at the Supreme Court's doorstep, and that's because the state 0:01:45.050 --> 0:01:48.830 of New Jersey filed its cert petition on September 2nd, 0:01:49.630 --> 0:01:52.950 asking the high court to review a Third Circuit appeals 0:01:52.990 --> 0:01:57.110 court decision from April that held that the CFTC has 0:01:57.250 --> 0:02:02.080 exclusive jurisdiction to regulate sports event contracts like those offered 0:02:02.120 --> 0:02:06.220 by Calsi for sports. Listeners who may not be as 0:02:06.360 --> 0:02:11.139 familiar with the cases as others are, New Jersey and 0:02:11.220 --> 0:02:14.359 several dozen other states are seeking to ban sports event 0:02:14.440 --> 0:02:19.510 contracts under their state gambling laws. There's been a mountain 0:02:19.650 --> 0:02:22.790 of litigation over this in recent months, and we now 0:02:22.830 --> 0:02:26.209 have at least a partial circuit split because the Ninth 0:02:26.310 --> 0:02:29.620 Circuit Court of Appeals at the end of August held 0:02:29.680 --> 0:02:33.389 that sports event contracts don't meet the definition of swaps 0:02:33.510 --> 0:02:37.510 under the federal commodities laws, and therefore state gambling laws 0:02:37.930 --> 0:02:41.049 are not preempted. And as of last night, it looks 0:02:41.090 --> 0:02:44.510 like Robinhood has filed its own cert petition seeking review 0:02:44.970 --> 0:02:47.870 of that Ninth Circuit decision as well. So we have 0:02:47.889 --> 0:02:51.770 a couple cert petitions now pending in the Supreme Court 0:02:52.030 --> 0:02:55.959 on this issue. In terms of timing, Kalshi has until 0:02:56.100 --> 0:03:00.609 October 8th to respond immediately. to New Jersey's petition. And 0:03:00.630 --> 0:03:03.950 I expect the Supreme Court will decide roughly in the 0:03:04.010 --> 0:03:06.890 middle of the fourth quarter, call it mid to late 0:03:06.970 --> 0:03:12.470 November potentially, as to whether or not it'll take these cases. 0:03:12.850 --> 0:03:16.750 I'd be surprised if the Supreme Court doesn't take these cases, 0:03:16.850 --> 0:03:20.530 just given the different outcomes we've seen in the Third 0:03:20.570 --> 0:03:23.330 Circuit and the Ninth Circuit, that's known as a circuit split. 0:03:24.130 --> 0:03:27.460 And we've had multiple different decisions at the trial court 0:03:27.500 --> 0:03:31.600 level as well. And then just overall, I think CalSheet 0:03:31.720 --> 0:03:34.420 and its prediction market peers have the better legal arguments. 0:03:35.180 --> 0:03:38.140 And I expect them to prevail, though it's obviously a 0:03:38.160 --> 0:03:41.740 close issue since these cases at the trial court level 0:03:41.800 --> 0:03:45.190 have mostly been going in favor of the states. If 0:03:45.210 --> 0:03:48.230 you want to learn more about these cases or reach 0:03:48.330 --> 0:03:51.310 out with questions, feel free. My research on this is 0:03:51.450 --> 0:03:54.400 on the Bloomberg Terminal. and we have a deep dive 0:03:54.640 --> 0:03:57.500 on prediction markets, which is broader than just the litigation 0:03:57.740 --> 0:03:59.860 as well. All right, a second case I want to 0:03:59.920 --> 0:04:02.520 talk about, and I'm only going to talk about three, 0:04:02.540 --> 0:04:07.900 so bear with me a little. This one involves entities 0:04:07.920 --> 0:04:12.970 related to President Trump, which sued Capital One, the bank. 0:04:13.030 --> 0:04:16.130 I wrote about it this week because Capital One has 0:04:16.350 --> 0:04:21.590 a pending motion to dismiss. The lawsuit accuses the bank 0:04:21.650 --> 0:04:26.419 of closing the Trump family business accounts for political reasons 0:04:26.620 --> 0:04:31.110 after the events of January 6th, 2021. The Trump entities 0:04:31.150 --> 0:04:34.350 were allowed to engage in early discovery in order to 0:04:34.390 --> 0:04:38.810 try to bolster their complaint. And they've probably gotten a 0:04:38.850 --> 0:04:41.510 little bit closer to making out a plausible claim that 0:04:41.570 --> 0:04:46.990 Capital One acted in bad faith by potentially using money 0:04:47.029 --> 0:04:50.710 laundering concerns as a pretext to close the accounts. I 0:04:50.730 --> 0:04:56.180 still don't think it's enough. to overcome language in the 0:04:56.220 --> 0:05:00.560 bank's account agreements that give Capital One the right to 0:05:00.600 --> 0:05:04.320 close accounts for any reason at all. It's very broad language. 0:05:04.360 --> 0:05:08.360 It gives Capital One a lot of discretion. So I 0:05:08.660 --> 0:05:10.460 still think at the end of the day, Capital One 0:05:10.580 --> 0:05:14.470 will win its motion to dismiss this lawsuit. And this 0:05:14.490 --> 0:05:18.750 is sort of part of the overall milieu of ongoing 0:05:19.710 --> 0:05:26.700 investigations by federal agencies looking into several banks over debanking, 0:05:26.740 --> 0:05:30.380 which is closing accounts for improper reasons or political reasons. 0:05:31.260 --> 0:05:34.750 But in the Capital One case specifically, I think there 0:05:34.770 --> 0:05:36.950 will be a ruling or a hearing on the bank's 0:05:37.029 --> 0:05:39.950 motion to dismiss in the coming weeks. And then just finally, 0:05:40.010 --> 0:05:42.589 the third case I want to talk about briefly has 0:05:42.630 --> 0:05:46.830 to do with New York City's rent freeze on rent-stabilized apartments, 0:05:47.710 --> 0:05:50.760 which was approved back in June. A handful of New 0:05:50.800 --> 0:05:55.719 York City landlords sued the city's rent guidelines board, challenging 0:05:55.760 --> 0:06:00.849 that rent freeze, alleging that the freeze was the result 0:06:00.890 --> 0:06:05.430 of a sham process with a predetermined outcome. I went 0:06:05.470 --> 0:06:08.750 to a hearing on September 2nd, and based on my 0:06:08.770 --> 0:06:12.840 assessment of that hearing on the landlord's motion for a 0:06:12.940 --> 0:06:16.220 preliminary injunction to stop the rent freeze from going into effect, 0:06:16.890 --> 0:06:18.770 My takeaway is that I don't think the judge is 0:06:18.950 --> 0:06:22.140 going to stop the law, the rent freeze, from taking effect. 0:06:22.680 --> 0:06:25.920 It goes into effect essentially on October 1st. And the 0:06:25.940 --> 0:06:27.760 reason is I don't think it's clear at this point 0:06:27.779 --> 0:06:31.870 that the landlords are likely to succeed on their claims 0:06:32.310 --> 0:06:36.530 that the rent guidelines board acted improperly. I do, however, 0:06:36.650 --> 0:06:40.230 think that the court is likely to order some sort 0:06:40.270 --> 0:06:44.630 of expedited discovery and will eventually hold an evidentiary hearing 0:06:44.710 --> 0:06:47.849 to determine if the board you know, was coerced by 0:06:47.890 --> 0:06:51.529 the mayor's office or failed to act independently or otherwise 0:06:52.089 --> 0:06:55.110 lacked a rational basis for its action. But at the 0:06:55.150 --> 0:06:57.110 end of the day, I think the landlords are going 0:06:57.130 --> 0:07:01.470 to have an uphill climb because the Rent Guidelines Board has, again, 0:07:01.550 --> 0:07:06.130 very broad discretion to implement its policy. And it's entitled 0:07:06.230 --> 0:07:09.870 to deference, essentially, if there's a rational basis in the 0:07:09.930 --> 0:07:13.630 record for its action. Just in terms of why this 0:07:13.650 --> 0:07:18.770 case matters for lenders in particular, The rent freeze could 0:07:18.830 --> 0:07:23.590 lead to landlord loan defaults, which in turn shrink collateral 0:07:23.630 --> 0:07:28.500 value at lenders. Just one example is Amalgamated, the bank, 0:07:29.280 --> 0:07:33.280 for which every 1% increase in net charge-offs of its 0:07:33.320 --> 0:07:37.860 New York City rent-regulated portfolio could impact about 5% of 0:07:37.860 --> 0:07:43.770 2027 earnings per share. All right. I have spoken long enough, so... 0:07:44.540 --> 0:07:46.180 But if you have any questions about the cases I 0:07:46.220 --> 0:07:49.320 discussed or any other litigation in the financial sector, just 0:07:49.420 --> 0:07:52.590 feel free to reach out to me, Elliot Stein, eaststein26 0:07:52.690 --> 0:07:55.810 at Bloomberg.net. Or if you're on the terminal, just IB me. 0:07:56.870 --> 0:08:00.170 But let me bring in one of my two colleagues 0:08:00.190 --> 0:08:03.040 who are on this call, Justin Teresi. You there? 0:08:03.610 --> 0:08:04.870 I'm here. What's going on, Elliot? 0:08:04.890 --> 0:08:05.850 How are you doing? 0:08:06.290 --> 0:08:07.130 I'm doing okay. 0:08:07.150 --> 0:08:07.730 Busy week. 0:08:07.790 --> 0:08:09.440 It's always a busy week. I feel like the short 0:08:09.510 --> 0:08:12.440 ones after a holiday, but yeah, that's how it goes. 0:08:12.620 --> 0:08:17.260 Yeah, so Justin covers many things, including some antitrust cases 0:08:17.380 --> 0:08:20.810 for us, one of which was the Justice Department's case 0:08:20.870 --> 0:08:25.910 against Google over Google's ad tech stack. And Justin, you 0:08:25.950 --> 0:08:30.280 got a ruling September 2nd. I believe. Actually, I was, 0:08:30.440 --> 0:08:32.900 I think, in court on that rent freeze case when 0:08:32.980 --> 0:08:38.510 I saw it come through. You know, it sounds like 0:08:39.790 --> 0:08:41.930 the ruling was under seal. So you sort of just 0:08:41.980 --> 0:08:45.270 have the big takeaways there. But like the worst case 0:08:45.290 --> 0:08:48.380 scenario for Google was avoided, but maybe come in and 0:08:48.440 --> 0:08:50.719 tell us more about what you know so far. 0:08:51.040 --> 0:08:54.270 Yeah, yeah. I think that's definitely the right takeaway from 0:08:54.429 --> 0:08:57.690 the ruling that came out last Wednesday. Look, so Google 0:08:57.710 --> 0:09:00.270 dodges a breakup again. That is the big news here 0:09:00.320 --> 0:09:02.780 with the remedies ruling from the Google ad tech case. 0:09:03.620 --> 0:09:06.960 that came out last Wednesday, September 2nd. We were waiting 0:09:06.980 --> 0:09:09.040 a long time on this. Frankly, I think the biggest 0:09:09.080 --> 0:09:11.250 surprise was how long it took to get the ruling 0:09:11.260 --> 0:09:15.990 on the remedies versus the actual outcome from them. We 0:09:16.010 --> 0:09:18.990 had a trial on the remedies that concluded last November. 0:09:19.010 --> 0:09:22.590 A little bit of time went by here. I think 0:09:22.620 --> 0:09:24.580 we were kind of questioning whether we were right with 0:09:24.640 --> 0:09:26.500 our call that a breakup was going to be avoided 0:09:26.540 --> 0:09:28.860 because of how long it was taking to get this ruling. 0:09:29.340 --> 0:09:31.380 But end of the day, it looks like the court 0:09:31.700 --> 0:09:34.180 has adopted what it says so far in its sealed 0:09:34.720 --> 0:09:37.920 opinion that, you know, it's adopted most of the party's 0:09:38.160 --> 0:09:41.579 behavioral remedies that were suggested in the case. We don't 0:09:41.620 --> 0:09:43.420 really know what that means yet, though. And I think 0:09:43.460 --> 0:09:45.920 in terms of client interest and what we're hearing for 0:09:45.940 --> 0:09:49.280 Arrival's ability to really get into this marketplace, we're really 0:09:49.300 --> 0:09:51.570 going to have to wait and see what those remedies 0:09:51.610 --> 0:09:55.410 look like when they're released sometime next week, likely after 0:09:55.450 --> 0:09:55.900 September 16th. 0:09:56.590 --> 0:10:01.760 So question, because I didn't look at, here, the order 0:10:01.880 --> 0:10:06.020 that was released, but based on how you described it, 0:10:06.240 --> 0:10:08.440 it sounds like it didn't really say much. So how 0:10:08.460 --> 0:10:11.200 do you know that the worst case scenario was avoided? Yeah, 0:10:11.240 --> 0:10:13.340 I mean, I think the worst case scenario from Google's 0:10:13.380 --> 0:10:16.710 perspective would have been this ordered divestiture of portions of 0:10:16.790 --> 0:10:19.650 its ad tech stack, right? And that we know was 0:10:19.710 --> 0:10:22.030 not part of the order. The court very briefly said 0:10:22.090 --> 0:10:24.800 last week that structural remedies like that are off the 0:10:24.840 --> 0:10:27.620 table and that most of the behavioral remedies were accepted 0:10:27.660 --> 0:10:29.360 by the court. But again, we really just don't know 0:10:29.380 --> 0:10:31.140 what that means yet. And I think a lot of 0:10:31.220 --> 0:10:35.370 what I'm hearing from clients in terms of interest relates to, 0:10:35.830 --> 0:10:38.530 will those behavioral remedies that are ordered by the court, 0:10:38.830 --> 0:10:41.150 will they be stayed during an appellate process that could 0:10:41.190 --> 0:10:43.820 go on for years here before between the Fourth Circuit 0:10:43.860 --> 0:10:47.400 and potential Supreme Court review of the case. So really, 0:10:47.420 --> 0:10:50.819 I think it depends on just how far the judge 0:10:50.960 --> 0:10:54.710 went with her behavioral remedies, how much they align with 0:10:54.730 --> 0:10:57.450 the actual relevant markets that were alleged by the Department 0:10:57.470 --> 0:11:00.050 of Justice in the case. Are they touching aspects of 0:11:00.130 --> 0:11:03.110 Google's ad tech stack that really are separate and apart 0:11:03.130 --> 0:11:06.609 from just the desktop display ads that really were at 0:11:06.650 --> 0:11:08.429 the heart of this case? And when I say that, 0:11:08.470 --> 0:11:12.040 I'm talking about mobile app ads or mobile browser ads, 0:11:12.120 --> 0:11:14.800 those really weren't included in the relevant market here in 0:11:14.820 --> 0:11:17.760 the litigation. So to the extent that those behavioral remedies 0:11:18.300 --> 0:11:22.200 touch those kinds of ad platforms that really are outside 0:11:22.600 --> 0:11:25.140 the relevant market of the case, I think Google probably 0:11:25.160 --> 0:11:28.360 has a stronger shot with its appeal. And if that's 0:11:28.420 --> 0:11:32.360 the case too, really, I think the Fourth Circuit steps 0:11:32.400 --> 0:11:34.319 back and says some of these things get stayed while 0:11:34.340 --> 0:11:36.140 we're pending the appeals process. 0:11:36.160 --> 0:11:36.300 Got it. 0:11:36.320 --> 0:11:39.580 And when do you expect the full remedies decision to 0:11:39.650 --> 0:11:41.240 be released unsealed? 0:11:41.840 --> 0:11:44.500 So it'll be next week. I think September 16th is 0:11:44.600 --> 0:11:46.960 when the parties have to have their motions for redaction 0:11:47.000 --> 0:11:49.720 submitted to the court. Look, I think clock's ticking here. 0:11:49.740 --> 0:11:52.020 So I think relatively fast, the court would probably rule 0:11:52.080 --> 0:11:54.480 on those and do the redactions to the extent that 0:11:54.760 --> 0:11:58.520 they're justified. So I would think sometime the week of 0:11:58.559 --> 0:11:59.400 September 14th after the 16th. 0:11:59.500 --> 0:12:03.859 And then after that, you expect appeals by both sides 0:12:03.980 --> 0:12:05.100 or just Google, you think? 0:12:05.610 --> 0:12:08.800 So that's a really interesting question, actually. The DOJ, all 0:12:08.840 --> 0:12:11.020 they had to say about the sealed order last week 0:12:11.080 --> 0:12:14.040 is that, you know, the remedies really were going to 0:12:14.080 --> 0:12:17.319 have this impactful mark on the marketplace itself, right? And, 0:12:17.400 --> 0:12:19.450 you know, whether or not that's true, we'll see what 0:12:19.470 --> 0:12:22.890 the remedies say next week. But Google, I think, absolutely 0:12:22.950 --> 0:12:25.410 appeals this either way, because, you know, end of the day, 0:12:25.450 --> 0:12:27.810 there still is all this private litigation out there that 0:12:27.890 --> 0:12:31.000 is really stemming from the DOJ's claims. And the extent 0:12:31.030 --> 0:12:33.599 to which I think those are, you know, claim preclusion 0:12:33.640 --> 0:12:37.540 or issue preclusion applies to those cases really depend in 0:12:37.559 --> 0:12:40.300 a lot of ways on whether or not, you know, 0:12:40.340 --> 0:12:42.800 the liability ruling is chipped away at all by the 0:12:42.820 --> 0:12:43.360 Fourth Circuit. 0:12:43.400 --> 0:12:43.710 Got it. 0:12:43.760 --> 0:12:44.020 Got it. 0:12:44.260 --> 0:12:47.150 All right. Anything else about that case or do you 0:12:47.170 --> 0:12:49.670 want to move on to other things in the antitrust world? 0:12:50.050 --> 0:12:50.830 We can move on. 0:12:50.870 --> 0:12:52.209 I think, you know, we might have some more to 0:12:52.250 --> 0:12:53.980 say about Google in the next week or two, but 0:12:54.000 --> 0:12:55.500 I think that's about all we know at the moment. 0:12:55.520 --> 0:12:58.079 Do you want to talk beef or NVIDIA? Yeah, let's 0:12:58.120 --> 0:13:01.250 talk big beef. We can talk NVIDIA after that. But yeah, 0:13:01.290 --> 0:13:03.870 big beef is, you know, it's on the radar. I think, 0:13:03.890 --> 0:13:06.510 you know, it's on everybody's radar. mind, I think, from 0:13:06.530 --> 0:13:09.329 the perspective of pocketbooks, both for consumers and for the 0:13:09.390 --> 0:13:14.620 ranchers who are involved with this process. But we're seeing 0:13:14.660 --> 0:13:17.140 more and more executive action on this issue. And no 0:13:17.179 --> 0:13:19.920 surprise there. I think affordability is a big theme heading 0:13:19.980 --> 0:13:24.199 into the midterms here. And we've seen some activity around 0:13:24.240 --> 0:13:26.800 this in the past few months. Last Friday, there was 0:13:26.840 --> 0:13:31.920 an executive order where the White House basically was saying, look, ranchers, 0:13:32.040 --> 0:13:35.570 you're able to sell your products now over interstate lines. 0:13:35.990 --> 0:13:38.170 You know, there were a lot of regulations involved with 0:13:38.190 --> 0:13:41.400 that previously that might have hobbled that approach in terms of, 0:13:41.429 --> 0:13:43.650 you know, inspectors and what have you from the FDA 0:13:43.690 --> 0:13:46.360 or from the USDA. Whether or not that's good from 0:13:46.380 --> 0:13:51.459 the perspective of, you know, healthy, clean proteins entering the marketplace, 0:13:51.500 --> 0:13:54.780 that's a question for another time. Um, but I think 0:13:54.800 --> 0:13:57.540 this is really a move in many ways to, you know, 0:13:57.570 --> 0:14:00.429 appease those ranchers and consumers who, who are really a 0:14:00.830 --> 0:14:03.870 crucial voting block here for the midterms coming up. Um, 0:14:03.950 --> 0:14:06.449 and from an antitrust standpoint, you know, we kind of 0:14:06.470 --> 0:14:08.630 had a laugh about this last Friday, but you know, 0:14:08.650 --> 0:14:10.850 there was a white house signing event for the executive 0:14:10.950 --> 0:14:13.859 order where the president said, Oh, you know, these, these 0:14:13.920 --> 0:14:16.660 beef companies here, they're, they're really acting as a monopoly 0:14:16.679 --> 0:14:19.120 in the space and monopolies tend to be just one company, 0:14:19.160 --> 0:14:20.460 not several of them acting together. 0:14:20.520 --> 0:14:20.740 Right. 0:14:20.780 --> 0:14:25.340 But, um, You know, it's interesting from the standpoint of, 0:14:25.430 --> 0:14:27.500 you know, what would this actually look like if there 0:14:27.520 --> 0:14:30.820 are antitrust investigations and enforcement down the road? I think 0:14:30.860 --> 0:14:33.700 it's really an issue of price fixing or collusion, not 0:14:33.800 --> 0:14:37.160 one of monopolization, different sections of the statute altogether. But, 0:14:37.780 --> 0:14:40.650 you know, how this actually plays out and if it does, 0:14:40.750 --> 0:14:42.650 you know, at some point prior to or after the election. 0:14:43.250 --> 0:14:45.290 really remains to be seen. There were a lot of 0:14:45.350 --> 0:14:48.590 issues that were similar in the egg space, but we 0:14:48.610 --> 0:14:51.619 had a settlement there without litigation. And part of the 0:14:51.660 --> 0:14:55.140 settlement terms involved egg companies donating 50 million eggs to 0:14:55.660 --> 0:14:58.360 places nationwide. And it seems like there's actually some head 0:14:58.400 --> 0:15:00.640 scratching right now as to how that actually rolls out. 0:15:00.740 --> 0:15:04.000 But whether or not something similar happens with regard to 0:15:04.020 --> 0:15:06.950 beef or other proteins, that remains to be seen. 0:15:06.990 --> 0:15:11.270 Got it. And you put out a note this morning discussing... 0:15:11.730 --> 0:15:16.830 news overnight about a Justice Department investigation of NVIDIA. Do 0:15:16.850 --> 0:15:17.710 you want to just talk about that? 0:15:17.930 --> 0:15:21.100 Yeah, sure. I think this is probably not something that's 0:15:21.130 --> 0:15:24.720 very material at all, to be quite frank. But there 0:15:24.800 --> 0:15:28.560 were news reports that came out last evening suggesting that 0:15:28.580 --> 0:15:32.280 the DOJ was looking into a licensing agreement that NVIDIA 0:15:32.740 --> 0:15:36.680 entered with AI startup Brock back in December, not to 0:15:36.700 --> 0:15:40.240 be confused with XAI's Brock, a completely separate company altogether. 0:15:40.260 --> 0:15:43.140 And different spellings too, I believe. Yes, correct. This is 0:15:43.520 --> 0:15:47.870 GROQ versus GROK. So I think that's probably the most 0:15:47.930 --> 0:15:50.530 important thing to point out talking about all of this. 0:15:50.970 --> 0:15:53.630 But look, this really rides a theme we've been seeing 0:15:53.690 --> 0:15:56.140 with one of the few areas where we have seen 0:15:56.180 --> 0:16:00.440 some interest by the DOJ and FTC over the past year. 0:16:00.460 --> 0:16:03.960 This involves this whole concept of an acquihire, where what 0:16:04.000 --> 0:16:07.970 you're seeing is these kind of licensing agreements or other 0:16:08.050 --> 0:16:11.450 deal structures where things are happening like employees moving from 0:16:11.550 --> 0:16:14.450 one company to another or IP moving from one company 0:16:14.490 --> 0:16:18.390 to another that might otherwise trigger some kind of a 0:16:18.470 --> 0:16:21.920 merger review under the Hart-Scott-Rodino Act. But instead of filing 0:16:21.940 --> 0:16:24.560 for that review with the government, they're structuring in such 0:16:24.600 --> 0:16:26.820 a way where it's not quite an acquisition. So they 0:16:26.860 --> 0:16:28.940 seem to be trying to get around that review by 0:16:28.980 --> 0:16:33.010 the government. We had, you know, FTC chair, Andrew Ferguson 0:16:33.050 --> 0:16:36.490 was on Bloomberg TV this past January and really, you know, 0:16:36.510 --> 0:16:38.750 stated that, you know, his view that there was no 0:16:38.810 --> 0:16:41.630 need for companies to try to evade this process anymore, 0:16:41.650 --> 0:16:44.150 that the company was, that the government was really open 0:16:44.200 --> 0:16:47.180 to working with companies to resolve issues they have around 0:16:47.220 --> 0:16:50.520 these things before having to, you know, proceed to litigation 0:16:50.560 --> 0:16:53.320 or something like that. So, You know, it just seems 0:16:53.360 --> 0:16:55.180 to be a thread and a theme we're seeing here. 0:16:55.240 --> 0:16:57.060 But even, you know, in the New York Times piece 0:16:57.100 --> 0:17:01.200 last evening that broke this story, sources speaking with the 0:17:01.240 --> 0:17:04.610 Times there indicated that any kind of unwinding of this 0:17:04.720 --> 0:17:07.929 licensing agreement is probably not on the table. And instead, 0:17:07.970 --> 0:17:10.830 at worst, it would probably involve just fines for any 0:17:10.869 --> 0:17:12.989 Hart-Scott-Rodino Act violations, if there are any. 0:17:13.030 --> 0:17:13.330 Got it. 0:17:13.470 --> 0:17:13.690 All right. 0:17:13.869 --> 0:17:16.909 Good stuff. Well, we'll stay tuned on all that in 0:17:16.990 --> 0:17:21.570 future Votes and Predicts episodes. All right. Thanks, Justin. Matt Schadenhelm, 0:17:21.609 --> 0:17:25.290 let's bring you in. Matt covers TMT litigation and policy 0:17:25.330 --> 0:17:29.600 for us out of Washington, D.C. So, Matt, the TikTok ban, 0:17:29.640 --> 0:17:33.420 it's sort of fallen out of the news. I feel 0:17:33.440 --> 0:17:40.600 like a year ago, it was dominating your... But you 0:17:40.619 --> 0:17:42.060 put out a note, actually, I think just this morning 0:17:42.119 --> 0:17:44.690 as well, that there's still a legal challenge sort of 0:17:44.730 --> 0:17:48.250 hovering in the shadows. But is that anything investors should 0:17:48.270 --> 0:17:48.670 care about? 0:17:48.770 --> 0:17:51.570 Yeah, you probably thought I was done with this. You 0:17:51.590 --> 0:17:52.820 wouldn't have to hear from me anymore. 0:17:52.840 --> 0:17:53.360 I did, yeah. 0:17:55.020 --> 0:17:58.240 And I think it probably is mostly done, but I 0:17:58.300 --> 0:18:01.940 think investors should keep an eye on this lawsuit. So, 0:18:02.660 --> 0:18:06.040 you know, you'll remember about this whole saga is, you know, 0:18:06.280 --> 0:18:11.940 Congress kind of had strict language about requiring a divestiture 0:18:12.000 --> 0:18:15.980 by a certain time, and it had certain conditions on that. 0:18:16.220 --> 0:18:19.850 And the Trump administration kind of you know, was sort 0:18:19.890 --> 0:18:23.670 of loose in terms of actually following the strict language 0:18:24.170 --> 0:18:28.959 of the law. All this led to in September of 0:18:29.000 --> 0:18:33.640 last year, so almost a year ago, the Trump administration 0:18:33.700 --> 0:18:36.919 put out an executive order that said, look, we figured 0:18:37.020 --> 0:18:42.950 out an arrangement. We approved this divestiture of TikTok to 0:18:42.990 --> 0:18:49.030 a U.S.-run entity. And that effectively, you know, was... the 0:18:49.130 --> 0:18:53.130 end of it from the Trump administration's perspective. And then 0:18:53.280 --> 0:18:57.880 in January, the deal actually happened of this year for 0:18:57.920 --> 0:19:03.300 that U.S. entity to take over the U.S. operations of TikTok. 0:19:03.780 --> 0:19:07.920 A lawsuit was filed in March challenging that, challenging everything 0:19:07.980 --> 0:19:12.119 really about how the Trump administration handled the entire TikTok 0:19:12.420 --> 0:19:16.859 saga and including whether this divestiture actually honors the terms 0:19:16.900 --> 0:19:21.909 of the law at all. because ByteDance still retains a 0:19:21.970 --> 0:19:26.140 lot of control in this whole setup. And I think 0:19:26.160 --> 0:19:31.459 the most interesting thing is if indeed ByteDance still controls 0:19:31.520 --> 0:19:36.889 the algorithm that runs the thing, Does that honor the 0:19:36.950 --> 0:19:39.780 terms of the law? Basically, the law said there can 0:19:39.820 --> 0:19:44.120 be no operational relationship between the new U.S. entity and ByteDance. 0:19:44.660 --> 0:19:49.959 And here there clearly is some sort of relationship. And 0:19:50.000 --> 0:19:54.260 so really interesting legal questions about whether the whole thing 0:19:54.780 --> 0:19:58.199 is consistent with what Congress said or not that the D.C. 0:19:58.240 --> 0:20:00.490 Circuit now has before it. 0:20:00.780 --> 0:20:03.199 I mean, you make it sound like there is some 0:20:03.220 --> 0:20:05.770 sort of viable claim there. So why hasn't it really 0:20:05.790 --> 0:20:06.330 gone anywhere? 0:20:06.490 --> 0:20:10.710 Yeah, so it's moving slowly. So all that's happened so 0:20:10.770 --> 0:20:14.870 far in the case is that the DOJ attempted to 0:20:14.990 --> 0:20:17.350 get the whole thing thrown out right away and said, look, 0:20:17.890 --> 0:20:22.060 you plaintiffs, you don't have legal standing and you sued 0:20:22.119 --> 0:20:24.020 too late. And so we're not even going to talk 0:20:24.080 --> 0:20:25.980 about the merits of your claims. Just throw the whole 0:20:26.020 --> 0:20:30.270 thing out. And the D.C. Circuit Emotions Panel looked at 0:20:30.350 --> 0:20:34.170 that in June and said, no, we're not going to 0:20:34.210 --> 0:20:37.859 throw it out yet. Let's defer that to the full 0:20:37.980 --> 0:20:42.180 merits panel. So, you know, that's a small, a very 0:20:42.260 --> 0:20:45.420 small win for the challengers to keep the case alive. 0:20:45.540 --> 0:20:47.620 And so what that means now in terms of timing 0:20:47.880 --> 0:20:50.760 is that the case is likely to proceed to full 0:20:50.859 --> 0:20:54.710 briefing that hasn't started yet. So that's likely to we're 0:20:54.730 --> 0:20:57.590 going to see briefs on all of this probably in 0:20:57.630 --> 0:21:00.170 the fourth quarter into the first quarter of next year. 0:21:00.190 --> 0:21:03.429 Then it's I think it's fairly likely that you see 0:21:03.470 --> 0:21:07.409 an oral argument on it, maybe the second quarter of 0:21:07.450 --> 0:21:12.100 the year. And then so potentially a decision after after 0:21:12.130 --> 0:21:15.100 that in the second half of next year on all this. 0:21:15.660 --> 0:21:19.740 And are the issues that are teed up, do they 0:21:19.780 --> 0:21:21.960 include the merits or is it limited to just sort 0:21:21.980 --> 0:21:24.639 of the threshold issues of standing and statute of limitations? 0:21:25.000 --> 0:21:28.550 Very likely the briefing will cover all of it. So 0:21:28.660 --> 0:21:33.870 I think we will see substantial briefing from the government 0:21:34.030 --> 0:21:39.570 trying to limit this to standing and statute of limitations issues. 0:21:39.650 --> 0:21:42.590 And That's going to be its primary defense. But I 0:21:42.690 --> 0:21:45.460 do think we're also going to see briefing on the merits. 0:21:45.560 --> 0:21:48.879 So that's sort of interesting that very likely all of 0:21:48.940 --> 0:21:52.680 this is going to be before a three-judge panel to 0:21:53.000 --> 0:21:55.740 take up, if it wanted to, to actually get into 0:21:55.850 --> 0:21:58.810 the meat of the issue. I'm not sure that's likely, though. 0:21:59.609 --> 0:22:01.090 You know, I really think the government. 0:22:04.220 --> 0:22:08.190 It's procedural arguments here that, hey, you sued way too 0:22:08.230 --> 0:22:11.479 late on this. You plaintiffs don't really have standing rights. 0:22:12.280 --> 0:22:16.129 to challenge this, I think those are likely going to 0:22:16.170 --> 0:22:20.490 be easy hooks for the court to grab onto and say, look, 0:22:20.530 --> 0:22:23.800 this isn't our thing. Congress could do something about this 0:22:23.840 --> 0:22:27.480 if it wants to, but we're courts of limited jurisdiction 0:22:28.240 --> 0:22:31.419 and this is not for us to get in the 0:22:31.460 --> 0:22:35.390 middle of at this stage. That seems most likely. But 0:22:35.690 --> 0:22:40.820 in theory, the court could find legal standing, could find, no, 0:22:40.940 --> 0:22:44.140 it's not filed too late, and there's no way this 0:22:44.180 --> 0:22:47.260 complies with the actual terms of the law. They could 0:22:47.300 --> 0:22:49.960