Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by the Litigation and Policy team at Bloomberg Intelligence, the
Speaker 1: investment research platform of Bloomberg LP on the Bloomberg Terminal.
Speaker 1: Bloomberg Intelligence has five hundred analysts and strategists working across
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Speaker 1: business policy and law, and today's our weekly look at
Speaker 1: the litigation and policy catalysts that we're currently watching and
Speaker 1: that we think will impact companies across a number of
Speaker 1: different sectors. My name's Elliott Stein. I'm an analyst with
Speaker 1: Bloomberg Intelligence covering litigation in the financials sector, and I'm
Speaker 1: delighted today as always to be joined by several of
Speaker 1: my Bloomberg Intelligence colleagues. And as always, you can find
Speaker 1: all of our research on the Bloomberg terminal at BI
Speaker 1: go and more specifically on our Litigation and Policy Dashboard,
Speaker 1: which is available at BI space laws Go. I'm going
Speaker 1: to time stamp this today is July thirty. First, it's
Speaker 1: three pm. Things move quickly, especially when we're talking about
Speaker 1: things like tariffs, so it's important to time stamp this
Speaker 1: and to get the conversation going. Let me bring in
Speaker 1: one of my colleagues, Holly Frome, who covers a lot
Speaker 1: of different litigation and policy issues in the consumer and
Speaker 1: industrial sectors, but in particular, she's been covering the lawsuits
Speaker 1: that have been challenging the Trump administration's tariffs and today,
Speaker 1: just a few hours ago in the Federal Circuit, there
Speaker 1: was an important hearing by all of the judges of
Speaker 1: the Federal Circuit concerning a decision by the Court of
Speaker 1: International Trade from late May that struck down President Trump's
Speaker 1: reciprocal tariffs and also those concerning sentinel trafficking. But I
Speaker 1: don't want to step on Holly's toes. I'll let her
Speaker 1: talk about the hearing in these cases more specifically. So Holly,
Speaker 1: why don't you come in and sort of tell us
Speaker 1: what your takeaways are from the hearing today?
Speaker 2: Thanks Elliot.
Speaker 3: So, I think a group of the judges, especially during
Speaker 3: the first part of the argument, seem to be concerned
Speaker 3: about the government's argument that the emergency statute allows for teriffs.
Speaker 3: This statue, you know, one of the judges said that
Speaker 3: the statute doesn't mention the word tariffs. Another judge said that,
Speaker 3: you know, if we assume that the president can impose
Speaker 3: these tariffs, that would upset the entire you know, statutory
Speaker 3: regime that imposes tariffs, that allows you know, Congress to
Speaker 3: import tariffs.
Speaker 2: And another thing.
Speaker 3: They said, there there are a whole bunch of statutes
Speaker 3: in the Code, in section nineteen of the Code that
Speaker 3: allow for tariffs and specifically mentioned either the word tariffs
Speaker 3: or duties. So this statute doesn't mention that that word
Speaker 3: at all. And that's something that the court was focusing on,
Speaker 3: and I think the government was just trying to say that,
Speaker 3: you know, the regulated imports language has been construed to
Speaker 3: allow a bunch of different things, and if you look
Speaker 3: at regulated imports alongside of you know, the other actions
Speaker 3: the emergency statue allows the president to take, this is
Speaker 3: you know, sort of a lesser power than than the
Speaker 3: powers he can use under that statute. So I think
Speaker 3: that's one of the concerns that you know, that that
Speaker 3: a group of the judges seem to be concerned about.
Speaker 1: And when you're talking about the statute in question. This
Speaker 1: is IEPA, Right, International Economic Emergency Powers Act, that's right.
Speaker 1: And the language you were talking about it has language
Speaker 1: saying that president under certain circumstances, right, if there's like,
Speaker 1: you know, an extraordinary event or an emergency of some sort.
Speaker 3: Yeah, the language is like an unusual an emergency that
Speaker 3: poses an unusual and extraordinary threat to national security or
Speaker 3: the economy.
Speaker 2: He can quote regulate importation.
Speaker 1: And that's the language that the government's hanging it's had on.
Speaker 1: And so you don't think there's a majority of judges
Speaker 1: at the hearing today that bought that argument from the government.
Speaker 3: I think that if they're going to find for the challengers,
Speaker 3: it's going to be on that argument. In other words,
Speaker 3: like I don't think that they're comfortable that any of
Speaker 3: the judges were comfortable saying that the trade deficit is
Speaker 3: not an emergency, which is something that I was saying,
Speaker 3: that the trade deficit doesn't appear to be an emergency
Speaker 3: that meets ayep as you know, requirements. I don't think
Speaker 3: the judges are going to rest their their hat on that.
Speaker 3: I think that if they're going to find for challengers,
Speaker 3: they're going to find that AEP but doesn't authorize terraffs
Speaker 3: at all, in which case both reciprocal tariffs and fentanyl
Speaker 3: trafficking terrorifts are unlawful. When I was counting, I think
Speaker 3: I counted about six judges who had this problem. And
Speaker 3: there are I think ten that are I'm sorry, eleven
Speaker 3: that are on that panel. So that would be a majority.
Speaker 1: So you think in some ways they might go, they
Speaker 1: might go farther than the Court of International Trade and
Speaker 1: essentially say that APA doesn't allow for terrifts at all.
Speaker 1: I think so interesting. And so when do you expect
Speaker 1: a ruin?
Speaker 2: I said, in August or early September.
Speaker 1: Okay, and inevitably this is destined for the Supreme Court
Speaker 1: no matter what happens, right, yes, And so how do
Speaker 1: you see that planet?
Speaker 3: I think, you know, nothing's changed my mind about you know,
Speaker 3: the oral ar even today didn't change my mind about
Speaker 3: what I think will happen at the Supreme Court. And
Speaker 3: I think that the Supreme Court will be the only
Speaker 3: court that finds that the trade deficit is not an emergency.
Speaker 3: Uh So I think that they'll say that the reciprocal
Speaker 3: terrorists are unlawful on those grounds. But nobody has challenged,
Speaker 3: and even today, I think they were talking about other
Speaker 3: ways to find pentanal trafficking tariffs unlawful. Besides finding that
Speaker 3: it's not an emergency. No, nobody has said that the
Speaker 3: fentanyl crisis is not an emergency. And for that reason,
Speaker 3: I think that the Supreme Court, you know, is not
Speaker 3: going to reach that issue. They're just going to decide
Speaker 3: whether the tariffs deal with the fentinal crisis. And I
Speaker 3: don't think they're going to want to allow courts to
Speaker 3: or or they're gonna they're going to either approve or
Speaker 3: disapprove of that reasoning.
Speaker 2: In which the the the.
Speaker 3: International Trade Court said that that the tariffs don't deal
Speaker 3: with them. And I don't think that the Supreme Court
Speaker 3: is going to want to allow courts to address whether,
Speaker 3: you know, actions taken in response to emergencies deal with
Speaker 3: the emergency. So I think they're going to reverse on
Speaker 3: those grounds and reinstate the fentanyl trafficking terriffs.
Speaker 1: Interesting. So, then at the end of the day, whenever
Speaker 1: this gets us to the Supreme Court, presumably towards the
Speaker 1: end of this year, you think the Supreme Court will
Speaker 1: strike down the so called reciprocal tariffs, but allow the
Speaker 1: President to impose the fentanyl related teriffs, and thinks, so, okay, great,
Speaker 1: all right, well we shall stay tuned. All right, let's
Speaker 1: move on from tariffs. We'll stick with DC though. Let's
Speaker 1: bring in Nathan Dean, who covers a whole slew of
Speaker 1: policy issues for US out of Washington. Nathan, you wrote
Speaker 1: yesterday that the odds of a government shut down dunt
Speaker 1: dun duh at the end of September have increased to
Speaker 1: forty percent. That's not an insignificant number. So tell us
Speaker 1: what you're seeing and why you think that.
Speaker 4: Yeah, so, you know, I think you know, the general
Speaker 4: expectation is when you get to one of these things,
Speaker 4: you know, when the government runs out of money, which
Speaker 4: is in this case, the fiscal year ends on September thirtieth,
Speaker 4: you know, the general thought is you have a continuing resolution.
Speaker 4: Because look, Congress is nowhere near finalizing its twelve appropriations bills.
Speaker 4: I was actually just looking at the current status of it.
Speaker 4: Ten of them have passed, sorry, two of them have
Speaker 4: passed the House, obviously on bipartisan lines. The rest haven't
Speaker 4: even come up for votes yet, and there's still just
Speaker 4: past the committee level. Which means when Congress comes back
Speaker 4: from their August recess, they essentially have like three or
Speaker 4: four weeks to put all of this together to finalize
Speaker 4: inappropriations bills. So it ain't gonna happen. So I think
Speaker 4: the solution is what do you get when you have
Speaker 4: a continuing resolution? Well, you get a kick of the can.
Speaker 4: But this situation is a little bit different because the
Speaker 4: Democrats spent all last week before the House left. The
Speaker 4: Senate's still here, but the House was is gone. Before
Speaker 4: they left. The Senate leadership and House leadership over the
Speaker 4: Democratic Party spent some time talking about what to do
Speaker 4: in terms of this funding fight, because there are a
Speaker 4: lot of folks on the progressive side that want to
Speaker 4: fight President Trump. And one of the easiest ways you
Speaker 4: can do that is through the appropriations process, because you know,
Speaker 4: the Republicans are dictating what the bills look like. They're
Speaker 4: going to come in. They're going to say here's our
Speaker 4: appropriations for next year, and you can essentially say to
Speaker 4: President Trump, no, we're not going to play, We're going
Speaker 4: to shut the government down. The challenge is is that politically,
Speaker 4: every party that has been seen shutting the government down
Speaker 4: for the last ten years has a political price for it.
Speaker 4: Obviously not to the point where people are going to
Speaker 4: remember this when they get to the November midterms, but
Speaker 4: you know, when you're talking about momentum and momentum swings,
Speaker 4: you know it's going to be a very difficult position
Speaker 4: for the Democrats to be in if the Republicans come
Speaker 4: to them say here's a continuing resolution that is clean ish,
Speaker 4: you know, just call it clean clean ish, and it's
Speaker 4: gonna be very difficult. Now, the one thing I would
Speaker 4: throw in here is is that if the omb decides
Speaker 4: to put additional recissions packages in play, that could fire
Speaker 4: up the Democrats because if you recall, you know, Congress
Speaker 4: has passed a nine billion dollar recissions package that takes
Speaker 4: away funds from USAID rail stations of MPR for example.
Speaker 4: Not that big of a deal when you talk about
Speaker 4: a budget that's in the trillions, But because recissions avoids
Speaker 4: the filibuster and is a majority vote in the House
Speaker 4: and majority vote in the Senate, if the Republicans try
Speaker 4: that again in September, political roadblocks from political rhetoric is
Speaker 4: going to increase, and we're going to have to take
Speaker 4: a closer look the last thing I'll say though, is
Speaker 4: is that you know, just from the investment point of view,
Speaker 4: you will see a lot of headline risk, and you'll
Speaker 4: see headlines in the news that say, like shutdown may
Speaker 4: spook markets or so forth like that. There is no
Speaker 4: market impact to government shutdowns. In the thirty days shutdown
Speaker 4: it occurred under the first Trump administration, the S and
Speaker 4: P yes declined about three to four percent right after
Speaker 4: the shutdown, but by the time the shutdown ended, it
Speaker 4: was up like fifteen percent.
Speaker 1: The only thing that we actually something we want to
Speaker 1: shut down why yeah.
Speaker 4: I mean, I'm well, for those of you in New York,
Speaker 4: you may, but for me wants to take my kids
Speaker 4: to the zoo, I'm gonna say no shutdown because it
Speaker 4: means I can't get into the museums. But and I'll
Speaker 4: say a little bit of the secret sauce here, just
Speaker 4: you know, every time we get a shutdown, we do
Speaker 4: get calls from people saying, look, we're trying to figure
Speaker 4: out what impacts, if any, that were of this shutdown.
Speaker 4: And I said, outside of small contractors and people who
Speaker 4: are furloughed, it's very difficult because even large defense contractors,
Speaker 4: you know, yes, they have their separate issues with impoundment
Speaker 4: and you know recisions, but even large defense contractors are
Speaker 4: usually funded on a two year basis. So if you're
Speaker 4: thinking of like the Boeans, the Raytheons, the Lockey Martins
Speaker 4: and so forth, studexos, you know, they're they're usually covered.
Speaker 4: And the last thing on a shutdown is that you know,
Speaker 4: a lot of traders don't get information from the FEDS,
Speaker 4: like the Commitment of Traders report from the CFTC or
Speaker 4: the Bureau of Statistics reports and so forth. All that stops,
Speaker 4: and so you may have to learn how to trade
Speaker 4: for a couple of days without having that info.
Speaker 1: Got it. So you think if there's like more recisions packages,
Speaker 1: that increases the likelihood of a shutdown, Yeah, But if
Speaker 1: there isn't, if we don't see those, then maybe it's not. Yeah.
Speaker 4: I mean, ultimately, the reason why one shuts the government
Speaker 4: down is they want to get political gains from it.
Speaker 4: And when Senator Schumer has this position where you know,
Speaker 4: let's just continue to let policies play out and then
Speaker 4: we'll develop a strategy in twenty twenty six, it's going
Speaker 4: to be a tall task for him to come back
Speaker 4: and say, right, I think it's going to be politically
Speaker 4: advantageous to shut the government down right now. It certainly
Speaker 4: would play up to the base. But what's the endgame strategy.
Speaker 4: Let's say you shut the government down and President Trump says, okay,
Speaker 4: we've got a government shutdown. Eighty five percent of the
Speaker 4: government is now non essential, deemed non essential. Why do
Speaker 4: they have to come back? You know, if they're not essential,
Speaker 4: then why do they have to come back? And the
Speaker 4: other thing I just point out here is that if
Speaker 4: there's no endgame strategy here, how do you get out
Speaker 4: of it? Because if you're seen folding two three weeks
Speaker 4: later and you don't get anything in return, that's almost
Speaker 4: as bad as you know, not doing it anything at all.
Speaker 4: So I just again, I'm not seeing the road path
Speaker 4: here for a shutdown, despite the fact that a lot
Speaker 4: of Democratic congressmen and women have been going on Bloomberg
Speaker 4: Television saying that they're going to welcome a shutdown.
Speaker 1: Alright, it makes for good, good talking points, good politics,
Speaker 1: as you said, but at the end of the day,
Speaker 1: risky path to follow. All right, thanks Nathan. All Right,
Speaker 1: let's turn to anti trust. We have our two anti
Speaker 1: trust analysts on this episode, we're going to start with
Speaker 1: Jen ree Jan. Let's talk a couple of different issues. First,
Speaker 1: the Dick Sporting Goods and its acquisition of foot Locker
Speaker 1: for two and a half billion dollars back in May.
Speaker 1: You put out a note last week saying you think
Speaker 1: antitrust clearance might come by mid August. Why don't you
Speaker 1: tell us what you're thinking? Is there?
Speaker 2: Sure? We go from government shut down to Dick's spoorting goods.
Speaker 1: It's a natural segue, a.
Speaker 2: Natural segue, you know. It is a little bit sticking
Speaker 2: my neck out a little bit saying that I think
Speaker 2: this probably could get clearance in August. And the reason
Speaker 2: is because a deal like this would normally take something
Speaker 2: from the signing in May that you mentioned to a
Speaker 2: decision would normally take something more like eleven months. Yeah,
Speaker 2: because you know, everybody knows what these companies do, and
Speaker 2: you all know superficially that they compete. They both sell
Speaker 2: athletic shoes. You know you could go to either one
Speaker 2: to buy a pair of sneakers and ideal yeah, and
Speaker 2: we do, right, And they sell related apparel. And when
Speaker 2: you have retailers that merge, those reviews can take time
Speaker 2: and The reason is because it's really like a thousand
Speaker 2: mini mergers that have to be assessed because people aren't
Speaker 2: going to drive from California do Illinois to buy the shoes,
Speaker 2: and what the FTC's looking at our brick and mortar
Speaker 2: stores not necessarily buying them buying something on the internet.
Speaker 2: And so they're just drawing little circles all over the
Speaker 2: country where these both of these companies have stores and
Speaker 2: then asking what their market shas are and who else
Speaker 2: competes and that kind of an assessment. Yeah, it takes
Speaker 2: a long time. But here's the thing that's happened. These
Speaker 2: companies did something recently called a poll and refile. Now,
Speaker 2: what that is is when they decide to merge, they
Speaker 2: have to notify that deal to the government. That's what
Speaker 2: the law says, and once they do, the government has
Speaker 2: thirty days to make their decision as to whether to
Speaker 2: just clear the deal or to get into a very long,
Speaker 2: in depth investigation the thing I'm talking about that can
Speaker 2: take eleven months, and the companies are not voluntarily allowed
Speaker 2: to give the FTC more time than those thirty days.
Speaker 2: But one way they can give them an extra thirty
Speaker 2: days is by pulling the notification, canceling it essentially and
Speaker 2: refiling it because they're restarting that new thirty days now.
Speaker 2: During the Biden administration, doing that didn't really mean anything, right,
Speaker 2: It didn't mean much at all other than companies adding
Speaker 2: thirty days.
Speaker 1: And the reason is.
Speaker 2: Because it was sort of wrote that the FTC and
Speaker 2: DJ in that administration was just asking for more time
Speaker 2: from companies and looking for these notifications and refilings, and
Speaker 2: it didn't necessarily mean the company could get clearance after
Speaker 2: that second filing. It didn't necessarily mean they'd get out
Speaker 2: of that in depth investigation. But I think this FTC
Speaker 2: now is different. I haven't seen I don't think a
Speaker 2: pull and refile yet in this administration. But I think
Speaker 2: by doing it, the companies probably got signals from the
Speaker 2: FTC that maybe they just needed about another thirty days
Speaker 2: to get comfortable with the two companies I know they
Speaker 2: have said they don't really view themselves as being all
Speaker 2: that competitive because they have a different demographic that shops
Speaker 2: in their stores. One is a mall store always and
Speaker 2: one is a non mall store always, So they say,
Speaker 2: if you really dig in FTC, we don't compete as
Speaker 2: much as you think we do and where we do compete,
Speaker 2: there are a lot of other competitors regionals, Mom and pops,
Speaker 2: et cetera. So it may be a very good sign
Speaker 2: here that they could get cleared after that second thirty
Speaker 2: days expires. And the other possibility I'm thinking about is
Speaker 2: that this FTC has been very vocal about telling companies,
Speaker 2: if you do have an overlap that could be problematic,
Speaker 2: come to us early. Just walk right in as soon
Speaker 2: as you file, show us where that overlap is, offer
Speaker 2: up your remedy, your divestitures, and maybe we can't just
Speaker 2: get this done fast. And it's possible that Dix did
Speaker 2: something like that where they walked in said here are
Speaker 2: the regions where we overlap, here's where there are to
Speaker 2: other competitors, this is what we're willing to divest. Let's
Speaker 2: just work on that for thirty days and make this
Speaker 2: all go away. So either way, we're going to hear
Speaker 2: in mid augustether this deal is cleared or whether an
Speaker 2: in depth investigation is opened.
Speaker 1: Very interesting, and you know what, I never really it
Speaker 1: never dawned on me that foot Locker is only in
Speaker 1: malls and Dix is only not in malls. But yeah,
Speaker 1: It's like one of those revelations like when you first realize,
Speaker 1: you know, like the FedEx logo has that like a
Speaker 1: arrow in it.
Speaker 2: Exactly, and you know, I started looking into it, and
Speaker 2: they are actually a lot more small competitors to these
Speaker 2: companies than you would think. Different regions have different companies,
Speaker 2: but each region kind of has another sort of equivalent
Speaker 2: to Dix and other you know, specialty shoe stores that
Speaker 2: where you go in and you get fitted for the
Speaker 2: right running shoes or the right basketball shoes. So you know,
Speaker 2: I think competition maybe wrote more robust in a lot
Speaker 2: of regions than people think.
Speaker 1: All right, good stuff. Let's the other thing I wanted
Speaker 1: to ask you about, which you've talked about on this
Speaker 1: podcast before. But now we're like really getting close to
Speaker 1: sort of the d day that you expect. And this
Speaker 1: is in the Justice Department's antitrust case against Google oversearch issues,
Speaker 1: monopolization issues, and you'll expect a remedy pretty much any
Speaker 1: day at this point.
Speaker 2: Yeah, really, I think early August. The judge that August,
Speaker 2: it could be any time doesn't even have to be August.
Speaker 2: Judges aren't held to what they.
Speaker 1: Say, well did he say which August.
Speaker 2: So but I do think it's going to be August.
Speaker 2: I think it'll be in the first few weeks. And
Speaker 2: that kind of was confirmed because just the other day
Speaker 2: there was an order on the docket where the judge
Speaker 2: asked Google to submit a brief by August first that
Speaker 2: just explained some differences between some of its proposals in
Speaker 2: its own remedy proposal, and so that suggests to me
Speaker 2: he's really working on it hard now and he's kind
Speaker 2: of on the detail and he's going to get something
Speaker 2: out in you know, before middle August. So right, this
Speaker 2: is about that liability decision against Google that came down
Speaker 2: last year that it was paying third parties to set
Speaker 2: Google as the default, essentially was illegal and was pushing
Speaker 2: out other rival general search engines which weren't able to
Speaker 2: gain scale because Google had these agreements and sort of
Speaker 2: blocked up that position. And the DOJ really asked the
Speaker 2: judge for a very long list of measures to be
Speaker 2: imposed on Google, including the big one that we hear
Speaker 2: about to force Google to sell Chrome. Now that's really
Speaker 2: the big thing I think people are waiting to hear.
Speaker 2: But aside from that, they are actually still also pretty
Speaker 2: drastic the DJs asked Google to share user click and
Speaker 2: query data with general search engine rivals, It's search index,
Speaker 2: it's search text ad data with both rivals and advertisers,
Speaker 2: to syndicate search results, and to employ choice screens for
Speaker 2: Google's properties like Android and Chrome, and to be of
Speaker 2: course prohibited from paying anything of value to these third
Speaker 2: parties for these default positions or to favor Google Search.
Speaker 2: And I think the same would probably extend to AI.
Speaker 2: Google's AI product, Gemini as well. It cannot pay other
Speaker 2: companies to set Gemini as the default or to exclude
Speaker 2: rival AI chatbots. And then they want a technical committee
Speaker 2: that would oversee this that would mostly be controlled the DOJ.
Speaker 1: When you say the DOJ, this is the Trump administration's DOJ, right.
Speaker 2: Okay, Yes, Now, the first set of remedies were proposed
Speaker 2: by the Biden DOJ, and the Trump DOJ did revise those,
Speaker 2: but only very very slightly. Really, they asked for pretty
Speaker 2: much the exact same subset of measures. They dropped out
Speaker 2: what they want. What the Biden administration wanted that DOJ
Speaker 2: dropped was sort of pre approval for any AI investments
Speaker 2: that Google makes.
Speaker 1: Okay, right, And I mean what just struck me was that,
Speaker 1: you know, there've been these news reports of a couple
Speaker 1: senior Justice Department officials and the Anti Trust Division who
Speaker 1: were sort of forced to leave because I think they
Speaker 1: want to be more aggressive on the M and A front,
Speaker 1: right in terms of anti trust enforcement. But here we
Speaker 1: have like a pretty aggressive, you know, position by the
Speaker 1: Justice Department, at least with respect to Google's search. So
Speaker 1: it does seem to be maybe a little bit of
Speaker 1: an economy which you've talked about, I think many time
Speaker 1: times and how it's going to be idiosyncratic, but somewhat
Speaker 1: of a dichotomy between M and A enforcement and monopolization enforcement,
Speaker 1: particularly in the tech sector. Yeah.
Speaker 2: I mean, I think that the administration probably wants to
Speaker 2: look somewhat business friendly, and that plays out in the
Speaker 2: M and A space, But with respect to these big
Speaker 2: tech platforms, they have not been a friend to most
Speaker 2: of the GOP that consider them to have censored conservative
Speaker 2: viewpoints and promoted more liberal viewpoints, and so they have
Speaker 2: a bone to pick with big tech and big tech platforms,
Speaker 2: and I think that we're sort of seeing that play
Speaker 2: out with all of these lawsuits where we have not
Speaker 2: yet mostly brought by the Biden administration. But we haven't
Speaker 2: yet seen any letup or any talks of settlement or
Speaker 2: going easier on any of these companies yet, got.
Speaker 1: It, all right? Good stuff, all right, So, since we're
Speaker 1: talking tech and anti trust, that's a good segue to
Speaker 1: Justin and to talk about anti trust and everyone's favorite topic,
Speaker 1: artificial intelligence. Last week, the Trump administration released its AI
Speaker 1: Action Plan, and Justin you wrote following that that the
Speaker 1: Trump AII plan reduces anti trust enforcement risk for companies
Speaker 1: like Nvidia and Microsoft. And I know there were, you know,
Speaker 1: they were among companies previously being investigated for potential anti
Speaker 1: trust viorations. But maybe maybe you can tell us a
Speaker 1: little bit more about your thinking and what it was
Speaker 1: and that AI Action Plan specifically that really reduces risk
Speaker 1: for these companies.
Speaker 5: Yeah, yeah, thanks Elliott. You know, I think I think
Speaker 5: the introduction to the AI Action Plan that came out
Speaker 5: last week probably frames the situation here really well. So
Speaker 5: if everyone remembers drill, baby, drill, we're now moving into build, baby,
Speaker 5: build when it comes to AI. That's a direct quote
Speaker 5: from the second paragraph of the introduction to the AI
Speaker 5: Action Plan that came out last week. But you know,
Speaker 5: generally what we're seeing here is this, There is no
Speaker 5: question that this set of policy directives issued by the
Speaker 5: White House last week is really concerned with American dominance
Speaker 5: in AI. It specifically calls that China, I think it's
Speaker 5: and with foreign entities in general on their growth around
Speaker 5: the AI issue. And look that it's light on actual
Speaker 5: specifics about regulation should be and what programs might look like,
Speaker 5: but it certainly is giving marching orders to executive agencies
Speaker 5: to go forward, I think in several different ways. Whether
Speaker 5: it be with energy infrastructure, whether it be with supply
Speaker 5: chain management, government contracting, you name it. It's a directive to
Speaker 5: go forward with the creation of regulation and programs that
Speaker 5: are really fostering the growth of AI. And I think
Speaker 5: the way that that relates to antitrust and what we're
Speaker 5: seeing there is the following, and that is in the
Speaker 5: sense that the plan itself says the FTC should review
Speaker 5: investigations that were started under the Biden administration that could
Speaker 5: really hamper or burden AI. Right, And that's really broad obviously, right,
Speaker 5: what does that mean? But I think you know the
Speaker 5: takeaway from that is that you know, it's not a
Speaker 5: free pass for big tech. But when we're talking about
Speaker 5: AI specifically. There seems to be a concern here that
Speaker 5: that you know, that anti trust enforcement could really hard,
Speaker 5: really take an unnecessary swipe at the growth of AI
Speaker 5: dominance by the US, right, so that that's that's kind
Speaker 5: of the gist of of the report itself. But you know,
Speaker 5: I think companies specifically that are effected here though you know,
Speaker 5: news broke last year that in the in the fall
Speaker 5: that the FTC was investigating Microsoft. But you know that
Speaker 5: that investigation super broad, right, not just AI we're talking
Speaker 5: about here, and I think specifically that involved Microsoft's investment
Speaker 5: in open Ai. Also we're looking at, you know, things
Speaker 5: like cloud computing and software bundling, all that other stuff
Speaker 5: that that might be a concern of Microsoft. I think
Speaker 5: that stuff probably still goes on. Chair Ferguson's comments around
Speaker 5: those investigations were very strong and supportive back in March.
Speaker 5: It's really a carve out here, I think in many
Speaker 5: ways for for AI.
Speaker 1: It welf interesting And so what are you sort of
Speaker 1: looking for next? Because a lot of a lot of
Speaker 1: these investigations, you know, are not you know, the developments
Speaker 1: are not publicly disclosed. I mean, I suppose companies could
Speaker 1: say something about them if it's favorable, But you know,
Speaker 1: what are you looking for?
Speaker 5: Yeah, so, I think it's a lot of the reading
Speaker 5: of the tea leaves here. I think, you know, the
Speaker 5: reporting has certainly suggested that there's an uptick and lobbying
Speaker 5: around these issues here. I think that's not necessarily surprising.
Speaker 5: I think when I'm talking about looking at reading the
Speaker 5: tea leaves, the comments last week by the President, right
Speaker 5: just saying, hey, you know, I thought about breaking up Nvidia,
Speaker 5: but you know, I opted against it when I realized
Speaker 5: it'd be kind of hard, you know. I think things
Speaker 5: like that obviously set the tone with where we're headed
Speaker 5: with these reported investigations. You know. But again, the contours
Speaker 5: of that are really interesting. You know, if we're not
Speaker 5: talking about something like a breakup, are we still talking
Speaker 5: about changes to the company's behavior. Are we still concerned
Speaker 5: with the way they might be bundling some of their products.
Speaker 4: I don't know.
Speaker 5: I think it's fair to say that that relationship exists.
Speaker 5: It's a strong relationship in the line of communication between
Speaker 5: tech companies and the White House seems to be open,
Speaker 5: But the actual contourst there. It's really a lot of
Speaker 5: the reading of the tea leaves and you know, as
Speaker 5: you implied Elliott, these investigations, they are confidential. And the
Speaker 5: report itself, the AI Action Plan, it was really focused
Speaker 5: on things that started to Underbiden. If they're investigations that
Speaker 5: started under the Trump administration, at our chair ferguson the FTC,
Speaker 5: it doesn't really encompass those. And we just don't know
Speaker 5: and want to know if there's new investigations related to
Speaker 5: tech or AI that could fall into that bucket of
Speaker 5: things that are excluded.
Speaker 1: Got it, Well, we will rely on you to read
Speaker 1: the tea leaves and tell us what they say.
Speaker 5: Yeah, absolutely good stuff.
Speaker 1: I think we're gonna leave it there. We will wrap
Speaker 1: up this episode of Votes and Verdicts. Thank you so
Speaker 1: much for listening. If you have any questions about any
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