Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. President Trump has
Speaker 1: blocked what would have been the largest tech deal in
Speaker 1: US history, Broadcom's one seventeen billion dollar hostel takeover of Qualcom.
Speaker 1: This was just the fifth time since that a US
Speaker 1: president stopped a foreign take over an American firm on
Speaker 1: national security grounds. Trump issued the executive order after a
Speaker 1: recommendation from the Committee on Foreign Investment in the US
Speaker 1: Joining me from our Bloomberg San Francisco Studios is Matt Lawson,
Speaker 1: Bloomberg Intelligence litigation analyst Matt. In his executive order, Trump said,
Speaker 1: there's credible evidence that leads me to believe that Broadcom,
Speaker 1: by acquiring called Welcome, might take action that threatens to
Speaker 1: impair the national security of the United States. What is
Speaker 1: that evidence? You know. The one of the problems with
Speaker 1: with these investigations, the CIFIUS Investigations Committee Foreign Investment in
Speaker 1: the U S is there's not a whole lot of
Speaker 1: transparency as to what they're looking at. Specifically, it's largely
Speaker 1: it looks to be largely directed to the development of
Speaker 1: five G and next generation wireless communication devices. UM. There's
Speaker 1: a lot of concern about who is leading the way
Speaker 1: and developing this these technologies, what it could mean for UM,
Speaker 1: for data privacy, for security, for espionage, etcetera. And so
Speaker 1: I think that there's there's large concern that consolidation among
Speaker 1: either businesses that do of a lot of work in
Speaker 1: China or Chinese own businesses. Not that Broadcom is a
Speaker 1: Chinese own business, but there's a concern that UM that
Speaker 1: movements of those technologies abroad would compromise US interests. So
Speaker 1: this does come in the wake of Trump's announced of
Speaker 1: tariffs on steel and aluminum. But are you saying that
Speaker 1: blocking the Broadcom takeover has less to do with his
Speaker 1: general protectionist stance and is more focused on technology or
Speaker 1: on China. I would say it's a little bit of both.
Speaker 1: I mean, there's certainly a protectionist flavor to it. You know,
Speaker 1: Qualcom is you know US company. They have a very
Speaker 1: strong foothold in the development of five G and next
Speaker 1: generation technologies. They are UM the leader in developing the
Speaker 1: chip sets that will drive next generation devices, and so
Speaker 1: given the Trump administration's focus on developing infrastructure and leading
Speaker 1: the way in five G in the US, it makes
Speaker 1: sense to to keep those businesses isolated from from foreign interests.
Speaker 1: So it has a little bit to do with the
Speaker 1: tech and it also has a little bit to do
Speaker 1: with the with the overall economic goals of the administration
Speaker 1: to be a little bit more protectionist and a little
Speaker 1: bit more US focused. This move by a president to
Speaker 1: stop a hostile bid for a company was unprecedented in
Speaker 1: that Ciffius intervened in the middle of a proxy fight
Speaker 1: rather than waiting for a formal purchase agreement. Are there
Speaker 1: any concerns that could set a precedent for future deals? Yeah,
Speaker 1: I think that's That's largely everyone's concern right now. Is
Speaker 1: you know, the president jumped the gun a little bit.
Speaker 1: I think is is kind of how people are viewing this. Typically,
Speaker 1: CIFIUS will review, they'll issue UM a ruling or suggested
Speaker 1: remedial order. Sometimes companies can can siphon off business segments
Speaker 1: to UH to address any national security concerns. But here
Speaker 1: you kind of had the president hop in and just
Speaker 1: put an end to the deal before a complete Siffius,
Speaker 1: before the the CIFIUS process could run its run its course.
Speaker 1: And so as you're looking at future M and A activity,
Speaker 1: future joint ventures, etcetera, I think, you know, tech companies
Speaker 1: are going to be scratching their heads a little bit
Speaker 1: and and being overly cautious before they enter into these
Speaker 1: kind of deals for fear that the president or or
Speaker 1: SIPHIUS may take a more aggressive stance on blocking the deals.
Speaker 1: At least a half dozen tech deals have collapsed during
Speaker 1: the Trump administration in the face of concerns raised by CIPHIUS.
Speaker 1: So do you expect that any deal that could give
Speaker 1: China and edge in critical technology will be blocked in
Speaker 1: the name of national security? You know, certainly as we're
Speaker 1: looking at developments in five G, there's been a lot
Speaker 1: of skepticism looking at you know, Chinese handset makers and
Speaker 1: ship makers and network infrastructure companies like Huawei Zte have
Speaker 1: been explicitly called out by by lawmakers, UM and government officials.
Speaker 1: So it's it's going to be a touchy subject moving forward, UM.
Speaker 1: You know, especially if there's a lot of development in
Speaker 1: next generation wireless, both in UH in a pack and
Speaker 1: and in the US kind of moving in parallel. Will
Speaker 1: be interesting to see how policymakers decide to to approach
Speaker 1: this moving forward. And is there a move by policymakers
Speaker 1: to actually expand the reach of Scythius There is, there's
Speaker 1: there's discussion about expanding UM the scope and a little
Speaker 1: bit of the authority of Scifius moving forward. UM. You know,
Speaker 1: Cifius already has pretty broad jurisdiction UM when it comes
Speaker 1: to looking at foreign investments and potential control over US
Speaker 1: interests UM. And so lawmakers are you know, have considered
Speaker 1: expanding that, especially as there are growing concerns over different
Speaker 1: types of data security technology, access to information kind of
Speaker 1: who can UM influence the tech on on both sides,
Speaker 1: both the developments and then also the utilization. So lawmakers
Speaker 1: are certainly looking at expanding their their grip on controlling
Speaker 1: those types of technologies and investments moving forward. So, Matt,
Speaker 1: what's next for Qualcom? Yeah, So with the with the
Speaker 1: broad Calm drama out of the way, UM qual calms shareholders,
Speaker 1: I think we'll start focusing back on the licensing business.
Speaker 1: Qual Com has been in a global licensing dispute with
Speaker 1: Apple over appropriate royalty rates. About a third of Qualcom's
Speaker 1: revenue and two thirds of its profitability prior to this
Speaker 1: dispute came from patent licensing. Apple says Qualcom is charging
Speaker 1: rates that are too high on these assets, and as
Speaker 1: a result, Qualcom is being bled out by about four
Speaker 1: billion a year in unpaid royalties from Apple and Apples
Speaker 1: contract manufacturers. So the focus is now on this dispute.
Speaker 1: Can Qualcom turn the corner? Can they do a deal
Speaker 1: with Apple and resolve this widespread litigation um and kind
Speaker 1: of move the company forward. I think that's what a
Speaker 1: lot of people are gonna be focusing on for you
Speaker 1: have a very tough job. You have a very tough
Speaker 1: job keeping track of technology litigation today because there's so
Speaker 1: much of it. Just in in about forty five seconds,
Speaker 1: when could we see progress in the Apple lawsuits? Yeah?
Speaker 1: So overall their forty four Apple lawsuits, there maybe a
Speaker 1: couple more that I'm that I'm missing across eight different countries.
Speaker 1: We're looking at trials and some initial decisions either at
Speaker 1: the end of the second quarter and probably in the
Speaker 1: second half of the year. From We're looking at Germany, China,
Speaker 1: and there should be a US International Trade Commission trial
Speaker 1: in June. So those are the next catalyst coming up.
Speaker 1: Sure to keep you busy and me busy as well.
Speaker 1: Thanks so much, Matt, Always a pleasure to have you on.
Speaker 1: That's Matt Larsenit's Bloomberg Intelligence Litigation Analyst. For more of
Speaker 1: his analysis, you can go to d I go on
Speaker 1: the Bloomberg terminal. Polls are open in Pennsylvania's eighteen district
Speaker 1: as a national political spotlight, Shaun's on a special election
Speaker 1: in a district that may not exist soon. The first
Speaker 1: special House election of the year pits Democrat Connor Lamb
Speaker 1: against Republican ricks A Cone in a district that President
Speaker 1: Trump won by twenty points, but the race is too
Speaker 1: close to call. The special election was triggered by the
Speaker 1: resignation of Republican Congressman Tim Murphy following allegations he asked
Speaker 1: a woman to end her pregnancy. Joining me as its fault.
Speaker 1: Professor at Columbia Law School and an expert in election law,
Speaker 1: rich This is a district where the Democrats didn't even
Speaker 1: field a candidate in the last two congressional elections. If
Speaker 1: Lamb wins or even comes close, what does that indicate well,
Speaker 1: it indicates uh, he continuing trend in a number of
Speaker 1: the special elections we've seen over the last year or so.
Speaker 1: Gewargia Democrats, all the Democrats in general have They haven't
Speaker 1: always won, but they have almost consistently outperformed their prior
Speaker 1: records and almost all the special elections that have been held,
Speaker 1: uh in since the middle of last year. This is
Speaker 1: a district that Republicans have won for I don't know
Speaker 1: about twenty years. And Trump went down there and over
Speaker 1: the weekend and really did some heavy campaigning for the candidate.
Speaker 1: So he really does he really have a lot at
Speaker 1: stake here. Well, it would be a big embarrassment to
Speaker 1: lose this district. As you point out, the district has
Speaker 1: been in Republican hands for about twenty years. Uh. Last
Speaker 1: time in the Democrats didn't even put up a nominee. Uh.
Speaker 1: Trump took the district by twenty points. Romney took it
Speaker 1: by about the same in twelve UM. It is on
Speaker 1: average about more Republican than the country as a whole,
Speaker 1: So to lose it would be quite embarrassing. Now people
Speaker 1: are talking about this and other elections as an indicator
Speaker 1: for the mid terms, but the mid terms are still
Speaker 1: eight months away and a lot can happen between them.
Speaker 1: And now do you look at these elections as indicators.
Speaker 1: It's premature. I mean, um, I mean they tell us
Speaker 1: what they tell us. They tell us that as these
Speaker 1: other elections have shown this that in the recent months
Speaker 1: there are the Republicans are not as popular as they
Speaker 1: once were, and the president may be pulling things down again.
Speaker 1: They've they've won a lot of their special elections, but
Speaker 1: they've simply won them by an hour of margins than
Speaker 1: in the past. And of course they say this, they
Speaker 1: lost the Alabama seat. Now, unless there's last minute reversal
Speaker 1: by the courts, the eighteenth district will soon cease to
Speaker 1: exist in its current form. Explain what's happened there? Sure so, um,
Speaker 1: there was a lawsuit was brought challenging the Pennsylvania Congressional
Speaker 1: district plan as heavily gerrymander in favor of the Republicans. Uh.
Speaker 1: Since the plan was adopted back in the beginning of
Speaker 1: this decade, Republicans of the state has eighteen districts. Republicans
Speaker 1: have consistently won thirteen, leaving the Democrats five. This is
Speaker 1: a state which is pretty much a swing state and
Speaker 1: when Democratics for president the less several elections until the
Speaker 1: most recently until sixteen when Trump took it. It currently
Speaker 1: has a Democratic governor. It has one Democratic senator. Pennsylvania
Speaker 1: is a classic swing state, but it's congressional delegation has
Speaker 1: been heavily weighted Republican, largely due to the nature of
Speaker 1: the map and so the Pennsylvania courts. The Pennsylvania this
Speaker 1: was litigated in the Pennsylvania state courts under their their
Speaker 1: state constitutions guarantees of free speech and equal protection. That
Speaker 1: court concluded that this district was impermissively unconstitutionally gerrymandered and
Speaker 1: ordered a new plan to be developed. The legislature didn't
Speaker 1: do that. They pointed a special master. He came up
Speaker 1: with a plan which they reproved, which would, as you say,
Speaker 1: it's basically eliminate this district in its current form, in
Speaker 1: effect dividing it amongst so splitting it uh in two
Speaker 1: different ways. The district which is kind of a hybrid
Speaker 1: suburban and rural district, and the suburban part would become
Speaker 1: more more suburban, the rural part become more rural. Now,
Speaker 1: is there any likelihood that that Pennsylvania Supreme Court decision
Speaker 1: would be reversed. It's possible. Republicans have been challenging the
Speaker 1: Pennsylanian Supreme Court is of course the highest court in
Speaker 1: the state, so no state court can reverse it. Reublicans
Speaker 1: have tried to get the U. S. Supreme Court to
Speaker 1: take on the case. So far the court has declined.
Speaker 1: The Court declined to enter it by issuing a temporary
Speaker 1: restraining order blocking the thus the Pennsylvania Court to add decision. Uh,
Speaker 1: there's now another appeal pending. It would be unusual to
Speaker 1: step in, but you know it's not out of the question. Um.
Speaker 1: The new map that you've been talking about will slit,
Speaker 1: as you said, most of the current eighteenth district into
Speaker 1: the four and the seventeenth district. If Scone wins, he
Speaker 1: said he would seek re election in the fourteenth district.
Speaker 1: Is that a good choice for him? That I believe
Speaker 1: is the more rural one as the rural part of
Speaker 1: the districts. I understand that the district has a is
Speaker 1: about in a suburban area and about in a rural area.
Speaker 1: And I think, um, and this is how Republicans because
Speaker 1: it's kind of uh, sort of deluded the suburban vote,
Speaker 1: which is pretty evenly balanced between Republicans and Democrats, by
Speaker 1: combining with a much more Republican area. So most yes,
Speaker 1: he would most likely one in the rural district, uh,
Speaker 1: leaving um and and in effect r probably become better
Speaker 1: for him. Uh if if he, if he wins and
Speaker 1: then become and runs in the new fourteen, we should
Speaker 1: say that the winner will still have to run again
Speaker 1: in November. That's right, right? Whoever will take office? I
Speaker 1: guess Wednesday. Maybe he says, how quickly they concertify the results,
Speaker 1: Maybe it's like a little longer than that will only
Speaker 1: serve until the end of this year. They will the
Speaker 1: regularly scheduled election in November will be held in this
Speaker 1: person will only serve until the end of the year,
Speaker 1: So Lamb. Though he hasn't said anything, some election experts
Speaker 1: say he's likely to run in the sevente district, where
Speaker 1: there is an incumbent Republicans. Will that be a tough
Speaker 1: battle for him, probably, but that district will become more
Speaker 1: democratic entities now and he will be able to take
Speaker 1: with him part of the current district. So in other words,
Speaker 1: that that all the districts will have the same names
Speaker 1: but different contents. So the seventeenth district that will that
Speaker 1: will be whether be an election in November, will not
Speaker 1: be today's seventeenth district. And there is a belief that
Speaker 1: once UH, if the districts go forward as under the
Speaker 1: new plan, that district will be a lot more democt,
Speaker 1: a lot more balance than maybe more pro democratic than
Speaker 1: it is now. Rich Just UH, briefly, what cases are
Speaker 1: involving voting are we waiting for Supreme Court decisions in Well,
Speaker 1: basically there are two cases that the Supreme Court has taken.
Speaker 1: One of the Wisconsin case, the Guild case, which was
Speaker 1: a challenge to the entire map of the state legislative
Speaker 1: map in Wisconsin and brings the most comprehensive UH proposal
Speaker 1: for the Supreme Court to get into the reviewing of
Speaker 1: partisan gerrymandering. There's also a challenge to a specific district
Speaker 1: in Maryland. So the district in Wisconsin was a Republican gerrymanager,
Speaker 1: the one in Maryland was a democratic one in which
Speaker 1: a previously Republican congressional district was reconfigured to allow Democrats
Speaker 1: to win. That that case has a different theory targeting
Speaker 1: just a specific district Uh, and focuses on the district
Speaker 1: lines and on the stated intent. And then there is
Speaker 1: the possibility that they might take on this reviewing the
Speaker 1: Pennsylvania decision with going to the Pennsylvania a congressional plan,
Speaker 1: which would make things even more complicated. Uh, if they
Speaker 1: had to, if they took it on, how could they
Speaker 1: really take it on and uh make it make it
Speaker 1: work before they could do it now? In other words,
Speaker 1: the most likely they would is that they would block
Speaker 1: the court decision, let the district continue on its current lines,
Speaker 1: and probably hear it next Hall. It's hard to imagine
Speaker 1: that they could actually have a full blown hearing on
Speaker 1: at this point. So again, you never know. We we'll
Speaker 1: talk again soon. Thank you, rich that's Richard for Fault, Professor,
Speaker 1: Columbia Law School. Thanks for listening to the Bloomberg Law Podcast.
Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
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