WEBVTT - Google Dodges Chrome Sale in Antitrust Case, Must Share Data 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence podcast. Catch US Live weekdays at ten am 0:00:14.640 --> 0:00:17.880 easterne on Apple Cocklay and Android Auto with the Bloomberg 0:00:17.960 --> 0:00:21.080 Business App. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.120 or watch US live on YouTube. 0:00:23.880 --> 0:00:26.079 Big news in a text bak Big news for Google 0:00:26.079 --> 0:00:29.360 and Apple on others. The US government proposal to break 0:00:29.400 --> 0:00:32.360 up Google did not get the support of the courts. Here, 0:00:32.400 --> 0:00:34.279 let's talk to an expert on this stuff. Jennifer Reed 0:00:34.320 --> 0:00:36.920 joins US here Senior Litigation. Now she covers all the 0:00:37.000 --> 0:00:39.040 antitrust stuff for Bloomberg Intelligence. 0:00:39.880 --> 0:00:42.640 It looks like this. Well, first of all, Jen, what 0:00:42.680 --> 0:00:44.000 did the court's rule? 0:00:44.760 --> 0:00:47.040 You know, really, the court aligned much more so with 0:00:47.120 --> 0:00:49.959 what Google proposed than what the Department of Justice proposed. 0:00:50.000 --> 0:00:53.560 No divestiture of Chrome or contingent divesture of Android because 0:00:53.560 --> 0:00:57.480 that was in there. Some data sharing, no exclusive agreements, 0:00:58.280 --> 0:01:02.560 some search syndication meaning search engine can basically provide results 0:01:02.560 --> 0:01:05.120 that just come straight from Google. Right, They're mimicking Google. 0:01:05.600 --> 0:01:09.000 The surprising thing though, here, and what was great for Apple, 0:01:09.360 --> 0:01:11.760 is that the judge said Google can could continue to 0:01:11.800 --> 0:01:13.480 pay for search default positions. 0:01:13.480 --> 0:01:14.200 That's with Apple. 0:01:14.280 --> 0:01:17.759 With Mozilla, it pays some OEMs to pre install Google 0:01:17.800 --> 0:01:20.720 Search on the Android phones that they group that they manufacture, 0:01:20.920 --> 0:01:22.959 and that I think was a really big surprise. 0:01:23.600 --> 0:01:26.360 How is this remedy consistent with the original ruling, with 0:01:26.400 --> 0:01:27.959 the original finding of the court. 0:01:28.440 --> 0:01:29.560 You know, I actually have a. 0:01:29.520 --> 0:01:32.399 Really big problem with aligning those two things because I 0:01:32.440 --> 0:01:35.440 don't think that it is. In terms of no chrome divestiture. 0:01:35.440 --> 0:01:37.640 I think it's very consistent. And Paul, you know, I've 0:01:37.680 --> 0:01:39.480 been on this show before and I've been saying for 0:01:39.520 --> 0:01:41.960 two years that there would not be a chrome divestiture 0:01:42.040 --> 0:01:45.520 ordered here. But where it's inconsistent is with this default position. 0:01:45.800 --> 0:01:49.120 Because having a monopoly is not illegal, but it's the 0:01:49.200 --> 0:01:52.600 conduct that maintains the monopoly that's exclusionary that is illegal. 0:01:52.680 --> 0:01:55.400 And what the judge found in that liability decision that 0:01:55.440 --> 0:01:58.600 the conduct that was illegal were the default agreements. Right, 0:01:58.800 --> 0:02:01.920 This was exclusionary. This kept other search engines from being 0:02:01.920 --> 0:02:04.760 able to grow and scale and get better. He's allowing 0:02:04.840 --> 0:02:07.080 those default positions to stay in place. Now it's a 0:02:07.120 --> 0:02:10.800 shorter term. It's only for one year. Theoretically, in one 0:02:10.880 --> 0:02:13.000 year or one year after that, other search engines that 0:02:13.040 --> 0:02:16.000 have improved can compete for that contract. But it's still 0:02:16.280 --> 0:02:18.680 odd to me that what is found to be legal 0:02:18.840 --> 0:02:19.960 is allowed to continue. 0:02:20.639 --> 0:02:21.880 Well, the stock market likes it. 0:02:22.280 --> 0:02:24.840 This is a company, it's got two point eight trillion 0:02:25.040 --> 0:02:27.400 dollars in market capital, it's up nine percent today. You 0:02:27.440 --> 0:02:32.080 just don't see that very often here. So what does 0:02:32.440 --> 0:02:35.840 this mean for just Silicon Valley in general? Can I 0:02:35.880 --> 0:02:39.440 sit back if I'm a CEO in Silicon Valiant saying, Hm, 0:02:39.440 --> 0:02:41.520 the courts are maybe a little bit more aligned with 0:02:41.760 --> 0:02:45.320 our industry how we think about the world than maybe 0:02:45.320 --> 0:02:45.760 the government. 0:02:46.760 --> 0:02:49.160 I would say that the way Silicon Valley can think 0:02:49.160 --> 0:02:51.360 about it is that this judge was cautious. And this 0:02:51.480 --> 0:02:54.760 judge did talk about needing to apply caution when you're 0:02:54.760 --> 0:02:58.680 dealing with tech markets and Silicon Valley companies because judges 0:02:58.720 --> 0:03:02.400 don't understand it want to impact the route, the innovation 0:03:02.600 --> 0:03:05.480 and the natural course of the industry, right, they don't 0:03:05.520 --> 0:03:08.120 want to distort that. And so it does suggest that 0:03:08.160 --> 0:03:10.399 it's more likely a judge is going to be cautious 0:03:10.639 --> 0:03:14.359 in future remedies for other cases. But what I think 0:03:14.400 --> 0:03:16.480 everybody has to keep in mind, because I've seen people 0:03:16.480 --> 0:03:18.320 talking about the fact that there's read through for some 0:03:18.360 --> 0:03:21.440 of these other monopolization cases. I don't really think that 0:03:21.520 --> 0:03:25.160 there is, because the facts are entirely different case by case, 0:03:25.200 --> 0:03:28.200 the markets are entirely different, and what made a divestitor 0:03:28.240 --> 0:03:31.919 remedy inappropriate here doesn't necessarily exist as a fact pattern. 0:03:32.000 --> 0:03:35.400 Let's say an FTCV Meta or usdojb Apple or the 0:03:35.440 --> 0:03:38.280 other DOJ case against Google in the ad tech space. 0:03:38.440 --> 0:03:40.760 Those are different cases with different facts, and I don't 0:03:40.800 --> 0:03:44.120 think that there's necessarily a read through that companies are 0:03:44.160 --> 0:03:46.440 safe from divestiture orders because of this one. 0:03:46.640 --> 0:03:50.720 Do we think that AI, the quickness and how it's 0:03:50.760 --> 0:03:54.240 developing played any kind of role in the judge's decision here? 0:03:54.440 --> 0:03:54.600 Oh? 0:03:54.640 --> 0:03:59.160 Absolutely. The judge even observed that in the liability hearing, 0:03:59.200 --> 0:04:01.480 which was now a year and a half or so ago, 0:04:01.680 --> 0:04:04.440 that AI barely came up at all other than by Google, 0:04:04.480 --> 0:04:06.320 it barely came up. But in the remedies hearing it 0:04:06.360 --> 0:04:08.760 was all about AI, and the witnesses were all AI, 0:04:08.800 --> 0:04:10.280 and he says it just shows in a year a 0:04:10.360 --> 0:04:12.480 year and a half how much things have changed, and 0:04:12.840 --> 0:04:15.880 the fact that you now have real competition to general 0:04:15.920 --> 0:04:18.360 search other than other general search engines, and I think 0:04:18.400 --> 0:04:19.480 that impacted him a lot. 0:04:20.320 --> 0:04:20.960 Stay with us. 0:04:21.080 --> 0:04:23.440 More from Bloomberg Intelligence coming up after this. 0:04:25.279 --> 0:04:29.000 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:04:29.080 --> 0:04:32.159 weekdays at ten am Eastern on Apple, Corplay and Android 0:04:32.160 --> 0:04:35.479 Auto with the Bloomberg Business app. Listen on demand wherever 0:04:35.520 --> 0:04:38.640 you get your podcasts, or watch us live on YouTube. 0:04:39.440 --> 0:04:41.680 So in Bloomberg News, Scarlett, I think if you get 0:04:41.960 --> 0:04:45.120 a b a green Bee nextra story, that means it's 0:04:45.160 --> 0:04:46.640 like an exclusive or breaking news. 0:04:46.680 --> 0:04:47.480 Yeah, great, a scoop. 0:04:47.920 --> 0:04:51.200 Okay, so that's a good thing, right that. 0:04:51.279 --> 0:04:53.560 It's a very good thing, you know, Yeah, reporter, you 0:04:53.560 --> 0:04:55.440 know who gets a lot of those green Bee things. 0:04:55.960 --> 0:04:57.640 He's walking to the Sucio Stuve. 0:04:57.440 --> 0:05:02.600 Mark Germy and it's usually about like textuff Apple particular stuff. 0:05:03.279 --> 0:05:05.360 And he's got another one today. I don't know. 0:05:06.240 --> 0:05:10.760 Apple's lead artificial intelligence researcher for robotics has departed the 0:05:10.800 --> 0:05:13.680 company to join the meta platforms. I feel like I've 0:05:13.680 --> 0:05:17.279 read this kind of piece from Mark almost on a 0:05:17.320 --> 0:05:18.120 weekly basis. 0:05:18.200 --> 0:05:19.919 Over you mean Apple losing on AI. 0:05:20.160 --> 0:05:22.160 Yeah, I mean people kind of walking out the door. 0:05:22.200 --> 0:05:23.520 At some point, it's got to be a problem even 0:05:23.520 --> 0:05:24.240 for the apples of the word. 0:05:24.279 --> 0:05:26.960 Mark Irmont juines is he's a managing editor for Global 0:05:27.040 --> 0:05:30.480 Consumer Technology Bloomberg News. He's usually out there in LA. 0:05:30.560 --> 0:05:32.560 But something's going on there because Mark Herman's here in 0:05:32.560 --> 0:05:35.040 New York. Who was the other dude we had on 0:05:36.520 --> 0:05:40.360 the entertainment Dude Shaw he was. He's in New York. 0:05:40.400 --> 0:05:41.840 So I don't know what's going on out there in LA. 0:05:41.880 --> 0:05:43.480 Maybe they're cleaning offices or something. 0:05:43.800 --> 0:05:46.400 No, we both have both have colleagues here, are all right? 0:05:46.520 --> 0:05:48.359 All right? Mark talked to us about Apple. 0:05:48.440 --> 0:05:51.200 Is it a problem that they're losing some of their 0:05:51.600 --> 0:05:54.240 AI folks, the robotics folks, that kind of thing. 0:05:54.279 --> 0:05:56.039 You don't typically see that too often. 0:05:56.120 --> 0:06:00.600 It's only a problem if it impacts the consumer. And 0:06:01.240 --> 0:06:05.480 right now, Apple's AI efforts are impacting the consumer because 0:06:05.520 --> 0:06:10.240 Apple Intelligence and Siri lag very much in comparison to 0:06:10.560 --> 0:06:14.479 competing products on other platforms. Now, this can all be 0:06:14.600 --> 0:06:17.600 turned around, right You've got the ability for Apple to 0:06:17.680 --> 0:06:20.640 do partnerships. I predict there'll be some sort of big 0:06:20.680 --> 0:06:23.880 AI partnership for Apple. I've reported that they're in talks 0:06:23.880 --> 0:06:26.400 with Google and an AI partnership I've reported they've been in 0:06:26.440 --> 0:06:30.000 talks with Anthropic and Open Ai on potential AI partnerships. 0:06:30.000 --> 0:06:32.520 They get one of those done, it's a different ballgame. 0:06:33.000 --> 0:06:35.560 They buy a company I reported first reported over the 0:06:35.560 --> 0:06:38.480 summer that they've talked to Mistral reported that they talk 0:06:38.560 --> 0:06:41.320 to Perplexity. I don't expect either of those deals to 0:06:41.360 --> 0:06:43.719 get done, but that certainly shows you where. 0:06:43.600 --> 0:06:44.520 Their head's at. 0:06:44.760 --> 0:06:47.599 Okay, if this all gets turned around with a major 0:06:47.640 --> 0:06:50.520 new version of Siri next year, if they get the 0:06:50.760 --> 0:06:54.520 Apple Intelligence pipeline heading in the right direction, if they 0:06:54.640 --> 0:06:57.640 buy and hire the right LLLM people, they could be 0:06:57.640 --> 0:06:59.719 in pretty good shape. Don't forget. Apple has the best 0:06:59.720 --> 0:07:03.240 ECO system, they have the best hardware, and they're able 0:07:03.240 --> 0:07:05.839 to deploy new features and operating system upgrades faster than 0:07:05.880 --> 0:07:09.360 any other company. And so at the end of the day, 0:07:09.400 --> 0:07:12.160 this is still their game to lose because there are 0:07:12.160 --> 0:07:15.239 so many levers they can pull, especially with their cash balance, 0:07:15.240 --> 0:07:16.120 to turn this thing around. 0:07:16.400 --> 0:07:18.440 So why haven't they done any of those things so far? 0:07:18.480 --> 0:07:20.920 Why are they waiting? What's the hold up? 0:07:21.280 --> 0:07:26.120 Well, you know Apple, Unfortunately for them, they're very tied 0:07:26.160 --> 0:07:29.560 to a couple cycles, right. They have their spring cycle, 0:07:30.040 --> 0:07:32.400 and then they have their fall cycle. The fall cycle 0:07:32.400 --> 0:07:35.280 has been set for some time. There's really no changing that. 0:07:35.280 --> 0:07:38.160 That's locked and loaded. You'll see the introduction of those 0:07:38.200 --> 0:07:41.720 products and those software features next Tuesday at the iPhone 0:07:41.760 --> 0:07:45.240 seventeen launch event. The spring is really the next opportunity 0:07:45.400 --> 0:07:48.000 for there to be major new features, right, that's when 0:07:48.000 --> 0:07:50.320 they're going to roll out pretty big update to iOS 0:07:50.360 --> 0:07:53.679 twenty six called iOS twenty six point four. At that time, 0:07:53.760 --> 0:07:56.280 I expect them to release an overhauled version of Siri 0:07:56.560 --> 0:07:58.320 that are going to fix a lot of these issues. 0:07:58.360 --> 0:08:01.200 That's a lot total now though it is a long time. Yeah, 0:08:01.240 --> 0:08:03.520 it is a long time. And the truth of the 0:08:03.520 --> 0:08:06.120 matter is is that the AI space runs far more 0:08:06.200 --> 0:08:08.360 quickly than even the mobile space. You saw a lot 0:08:08.400 --> 0:08:10.800 of innovation in the smartphone space in the last two decades. 0:08:11.160 --> 0:08:13.240 AI is moving ten times as fast as. 0:08:13.080 --> 0:08:16.960 That, and they're aware of that. They're smart people. I 0:08:16.960 --> 0:08:20.320 guess they've made the decision that they're comfortable with their timing. 0:08:20.800 --> 0:08:24.560 Did they run the risk of making a fun fundamental 0:08:24.720 --> 0:08:26.320 error in their judgment of that timing. 0:08:26.480 --> 0:08:28.760 I don't think they're comfortable with the timing. I think 0:08:28.800 --> 0:08:31.760 that the timing was actually even further out. I wasn't 0:08:31.840 --> 0:08:36.400 expecting a major new version of SERI with incredible enhancements 0:08:36.400 --> 0:08:39.240 for consumers, probably not until the end of twenty six 0:08:39.360 --> 0:08:42.520 or sometime even at the tail end of twenty twenty seven. 0:08:42.720 --> 0:08:44.280 So this is going to be happening at least six 0:08:44.320 --> 0:08:48.240 to twelve months sooner than Apple had originally planned. They 0:08:48.320 --> 0:08:51.920 are probably one or two years away if they did 0:08:51.960 --> 0:08:55.880 nothing of starting to bleed share to competing smartphones with 0:08:55.920 --> 0:08:58.440 major AI features right now. Let to tell you the truth. 0:08:58.480 --> 0:09:00.360 We talk about AI all day every day. It's very 0:09:00.360 --> 0:09:02.480 important to the market. It's very important for the current 0:09:02.480 --> 0:09:06.480 technology age. Nobody's buying phones because of AI or not 0:09:06.520 --> 0:09:09.720 because of AI, but we are moving towards that, and 0:09:09.760 --> 0:09:12.240 that is going to happen. It's one or two years away, 0:09:12.600 --> 0:09:14.400 and so if they're not in good shape by then, 0:09:14.520 --> 0:09:17.200 they're going to start being impacted not only in terms 0:09:17.240 --> 0:09:19.680 of what we talk about, not only on Wall Street 0:09:19.720 --> 0:09:22.959 in the stock market, but in actual purchasing decisions by consumers, 0:09:23.000 --> 0:09:24.880 because right now, consumers only care about a few things 0:09:24.880 --> 0:09:26.720 when they buy new phones. They want to fix their 0:09:26.760 --> 0:09:29.440 broken screen, they want a better. 0:09:29.240 --> 0:09:31.560 Camera, and they don't want to pay too much for 0:09:31.600 --> 0:09:33.839 it either. That's the other thing. I mean, we'll incorporating 0:09:33.880 --> 0:09:37.680 all these AI g wiz factors bring up the price 0:09:37.720 --> 0:09:41.000 to fifteen hundred dollars for your standard phone. That's something 0:09:41.000 --> 0:09:42.400 that consumers may not stand for. 0:09:42.640 --> 0:09:45.520 Well, to your point, it's a very good point. You 0:09:45.559 --> 0:09:50.240 may see AI cost drivers increase because in many cases 0:09:50.280 --> 0:09:55.200 it requires, especially on Apple's side, improve chips, more processing power, 0:09:55.520 --> 0:09:58.679 improve battery life, improve cameras to take advantage of these things. 0:09:58.920 --> 0:10:01.240 So you may see the core technologies in these devices 0:10:01.320 --> 0:10:04.719 actually go up in price in order to enable these 0:10:04.720 --> 0:10:08.160 next set of AI features. Because unlike Google and Open AI, 0:10:08.720 --> 0:10:12.440 Apple's less reliant on the cloud. It's really a hybrid model. 0:10:12.480 --> 0:10:14.560 So to your point that the core hard is very 0:10:14.559 --> 0:10:15.280 important here too. 0:10:16.080 --> 0:10:20.160 The Google legal announcement here the ruling obviously very positive 0:10:20.160 --> 0:10:22.280 for Google, but also positive for Apple to stocks up. 0:10:22.440 --> 0:10:25.480 Yeah, it's a big deal for Apple, and some people 0:10:25.480 --> 0:10:27.360 have said this is a bigger deal for Apple than Google. 0:10:27.440 --> 0:10:30.880 Is complete nonsense. To be honest with you, Google had 0:10:32.120 --> 0:10:34.080 hundreds of billions of dollars at stake here. 0:10:34.720 --> 0:10:35.600 They could have lost. 0:10:35.440 --> 0:10:40.000 Their ability to strike search agreements at all, default search agreements. 0:10:40.360 --> 0:10:43.920 They're basically giving up some data and pretty much nothing else. 0:10:43.960 --> 0:10:49.000 So massive win for Google, big win for Apple, gigantic 0:10:49.040 --> 0:10:50.560 win for the technology industry. 0:10:50.240 --> 0:10:52.600 Because you ask you that, yeah, you have precedent. 0:10:52.679 --> 0:10:54.640 Here is set now, so you know, Meta is probably 0:10:54.640 --> 0:10:56.800 in better shape than they would have been otherwise. You know, 0:10:56.840 --> 0:10:59.000 Apple has this DOJ trial too. You know that we've 0:10:59.120 --> 0:11:01.160 Google just had its moment. Apple's going to have its 0:11:01.160 --> 0:11:03.640 moment in a couple of years, and this sets a 0:11:03.679 --> 0:11:05.480 lot of the precedent for that. So at this point 0:11:05.840 --> 0:11:07.880 it's anyone's guess, but I would assume that Apple's going 0:11:07.920 --> 0:11:08.680 to get off scott free. 0:11:08.679 --> 0:11:13.040 Also, I mean so, I mean again in Silicon Valley, 0:11:13.080 --> 0:11:15.679 I got to think that this feels like a little 0:11:15.679 --> 0:11:17.640 bit of a little bit of a reset on the 0:11:17.679 --> 0:11:19.600 regulatory front, which was front and center. 0:11:19.640 --> 0:11:20.680 A little bit of a reset. 0:11:20.840 --> 0:11:23.000 You know, the European Union is still you know, going 0:11:23.040 --> 0:11:26.000 fast and furious. But if you're a technology consumer, this 0:11:26.000 --> 0:11:28.520 is amazing news. If you work at a technology company, 0:11:28.640 --> 0:11:31.760 if you invest in a technology company, if you're into technology, 0:11:31.800 --> 0:11:33.640 this is great news. These companies are going to be 0:11:33.720 --> 0:11:36.520 able to innovate at the pace that they want to 0:11:37.640 --> 0:11:40.160 and you know, move fast. And break things. 0:11:40.160 --> 0:11:43.280 I guess stay with us. More from Bloomberg Intelligence coming 0:11:43.360 --> 0:11:44.200 up after this. 0:11:46.360 --> 0:11:50.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:50.120 --> 0:11:53.240 weekdays at ten am Eastern on Apple, Cocklay and Android 0:11:53.240 --> 0:11:56.559 Auto with the Bloomberg Business App. Listen on demand wherever 0:11:56.600 --> 0:11:59.720 you get your podcasts, or watch us live on YouTube. 0:12:00.840 --> 0:12:04.360 Macy's on earnings, the department store chain lifted its outlook, 0:12:04.400 --> 0:12:07.480 but did take care to point out that the consumer 0:12:07.520 --> 0:12:10.720 is still feeling pretty cautious. So for more, let's bring 0:12:10.720 --> 0:12:14.480 in Emily Cohne. Emily is Bloomberg's consumer team leader, also 0:12:14.520 --> 0:12:17.640 a Big Red alum, graduated from Cornell University and was 0:12:17.679 --> 0:12:20.960 an editor at the Cornell Deli Sun to discuss Macy's 0:12:21.040 --> 0:12:23.800 latest results. So it sounds like a good news bad 0:12:23.840 --> 0:12:26.360 news kind of story, but investors are taking the good news. 0:12:26.120 --> 0:12:30.200 Here, Thanks Carlett. Yeah, maybe I would say cautiously optimistic. 0:12:31.080 --> 0:12:32.640 That's a favorite term of ou CEOs. 0:12:32.880 --> 0:12:33.880 I think this falls in. 0:12:33.840 --> 0:12:36.840 Line with what we've heard from other retailers. Shoppers are 0:12:36.920 --> 0:12:40.160 still shopping. Tony Spring told us on a caller earlier 0:12:40.160 --> 0:12:42.880 this morning. He used the word surgical, So they're being 0:12:42.920 --> 0:12:47.160 precise about what they're spending on being choosy. They called 0:12:47.200 --> 0:12:51.360 out home furnishings and apparel as strong sellers, also citing 0:12:51.440 --> 0:12:56.920 high demand for fine watches, jewelry, mattresses, so they are shopping. 0:12:57.200 --> 0:12:59.559 I think the main question I have is how long 0:12:59.600 --> 0:13:00.880 will this last? 0:13:01.440 --> 0:13:04.319 How promotional are some of these retailers. How promotions do 0:13:04.440 --> 0:13:06.040 they have to be? Because I know that goes right to 0:13:06.080 --> 0:13:06.520 the margin. 0:13:07.679 --> 0:13:10.160 Yeah, I mean, that's an interesting segue into Dollar Tree. 0:13:10.200 --> 0:13:14.200 I think Dollar Tree raised prices so far this year 0:13:14.200 --> 0:13:18.800 to offset the cost of tariffs, and shoppers felt that 0:13:19.040 --> 0:13:22.160 and that doesn't have that has a limit. There's only 0:13:22.200 --> 0:13:25.120 so far you can raise prices, and I think that 0:13:25.280 --> 0:13:27.440 is starting to eat away at their bottom line. They 0:13:27.480 --> 0:13:31.319 can't really raise prices that much anymore. I think these 0:13:31.360 --> 0:13:33.440 retailers are in a difficult spot. They want to keep 0:13:33.520 --> 0:13:37.600 let prices low because of how the consumer is feeling, 0:13:37.640 --> 0:13:40.239 but also their costs are up on account of tariffs. 0:13:40.640 --> 0:13:42.959 I would imagine Dollar Tree has a lot less cushion, 0:13:43.000 --> 0:13:46.120 as you say, to raise prices, given who they're targeting, 0:13:46.520 --> 0:13:48.520 and given how they're seeing a lot of higher end 0:13:48.520 --> 0:13:52.000 consumers trade down to Dollar Tree than a Macy's. Macy's 0:13:52.000 --> 0:13:55.560 did say explicitly that price increases are on the way, didn't. 0:13:55.360 --> 0:13:57.880 They Yes, they said that they've already started and that 0:13:57.920 --> 0:14:01.280 they're coming. But their sales are strong, and I think 0:14:01.720 --> 0:14:03.800 you know they're in the midst of a turnaround. There 0:14:03.840 --> 0:14:06.680 were signs that Tony Springs strategy is taking hold. 0:14:07.280 --> 0:14:09.000 Comp sales rose more at. 0:14:08.880 --> 0:14:12.480 His reimagined stores than they did overall. So I think 0:14:12.559 --> 0:14:17.600 that that's a good reason behind the stock jump this morning. 0:14:18.400 --> 0:14:21.680 What is a what's different about a quote unquote reimagine? 0:14:21.720 --> 0:14:22.320 Good question? 0:14:23.080 --> 0:14:25.000 I think that is a really good question. I think 0:14:25.240 --> 0:14:27.280 these are the stores where they believe that they can 0:14:27.320 --> 0:14:30.360 have the greatest edge. So they're they're doing a lot 0:14:30.480 --> 0:14:37.560 to reinvigorate sales. They're redesigning the stores, they're rethinking their assortment, 0:14:38.520 --> 0:14:41.440 and these are the stores that they say we should 0:14:41.480 --> 0:14:43.760 really watch. This is the future of Macy's. 0:14:44.000 --> 0:14:46.160 And Tony spring is also Cornell guy. 0:14:46.360 --> 0:14:49.360 Oh there you go, not big red gathering here. 0:14:49.560 --> 0:14:50.440 I didn't even know that. 0:14:51.560 --> 0:14:53.920 Let's put this into context. What we heard from Macy's, 0:14:53.920 --> 0:14:56.080 what we heard from Dollar Train, of course Dollar General 0:14:56.200 --> 0:14:59.360 earlier in the month, or was it this month or 0:14:59.400 --> 0:15:03.040 last last? In any case, what are we hearing from 0:15:03.040 --> 0:15:07.600 retailers overall, because investors are punishing some and rewarding others. 0:15:07.680 --> 0:15:10.000 Even though the message, I would say is fairly consistent 0:15:10.040 --> 0:15:13.800 that consumers are spending, they're just being really, really weary 0:15:13.800 --> 0:15:15.920 and careful. I think you nailed it. 0:15:15.960 --> 0:15:19.960 I think retailers continue to point to strong sales momentum. 0:15:20.360 --> 0:15:23.680 People are shopping even in the face of tariffs and 0:15:23.760 --> 0:15:27.640 threats of inflation. I think the question I have is 0:15:27.720 --> 0:15:31.400 knowing that retailers stock up months ahead of time, They 0:15:31.440 --> 0:15:34.880 had their inventory that they sold through now months ago, 0:15:35.120 --> 0:15:37.920 perhaps even before tariffs. I don't think we've really seen 0:15:38.320 --> 0:15:41.520 the full paths through of the costs of tariffs yet, 0:15:41.520 --> 0:15:44.280 and I think we'll continue to see that in the 0:15:44.280 --> 0:15:48.960 coming months, and especially during the all important holiday shopping season. 0:15:49.160 --> 0:15:49.720 Let's go there. 0:15:49.800 --> 0:15:52.560 What's Is there a consensus building to how the holiday 0:15:52.640 --> 0:15:53.840 season may shape up? 0:15:54.440 --> 0:16:01.040 It's still early. I think the outlook isn't great so far. 0:16:01.400 --> 0:16:04.120 Although Tony Spring did say that the back to school 0:16:04.280 --> 0:16:07.520 shopping season was he used the word good, and he 0:16:07.600 --> 0:16:10.440 said that back to school is generally a good bell 0:16:10.440 --> 0:16:13.760 weather for the holiday shopping season, So there was a 0:16:13.760 --> 0:16:17.440 slight note of optimism there, But not totally bullish. 0:16:18.000 --> 0:16:20.640 Emi you cover the consumer team or the team leader 0:16:20.800 --> 0:16:24.320 for this group, which company is most interesting is most 0:16:24.320 --> 0:16:26.880 exciting right now? Like who is leading the way in 0:16:26.960 --> 0:16:30.920 terms of being innovative and coming up with novel solutions 0:16:30.960 --> 0:16:33.760 to the persistent challenges that this industry faces. 0:16:34.840 --> 0:16:35.480 Yeah, for sure. 0:16:35.520 --> 0:16:37.760 I mean I think that discount retailers are really the 0:16:37.800 --> 0:16:41.160 ones to watch right now. So I'm really interested in 0:16:41.320 --> 0:16:45.880 TJ Max, Marshals. These are the companies that people really 0:16:45.920 --> 0:16:49.040 look to for deals. They have an interesting buying model 0:16:49.040 --> 0:16:52.560 where they're buying like the extra inventory that other retailers 0:16:52.600 --> 0:16:55.800 didn't sell, so they're a little bit isolated from the tariffs, 0:16:55.840 --> 0:16:58.320 and they also are benefiting from the fact that a 0:16:58.360 --> 0:17:01.680 lot of retailers bought a lot of stuff ahead of tariffs. 0:17:01.960 --> 0:17:05.080 I'm also really interested in the dollar stores. Dollar stores, 0:17:05.440 --> 0:17:08.199 you know, have a huge footprint there in these rural 0:17:08.960 --> 0:17:12.760 parts of the country that traditionally the big retailers don't reach. 0:17:13.440 --> 0:17:16.679 That has given them a big advantage. Now Amazon and 0:17:16.720 --> 0:17:19.879 Walmart are coming for those dollars from e commerce in 0:17:19.920 --> 0:17:23.399 a really big way. So I'm really interested in how 0:17:23.480 --> 0:17:26.320 these value retailers do. 0:17:26.440 --> 0:17:29.520 Any of those companies have a large online presence. 0:17:31.840 --> 0:17:34.280 While they are doing things like partnering with Uber Eats 0:17:34.320 --> 0:17:39.080 and delivery delivery services like that. But I think the 0:17:39.160 --> 0:17:41.760 main draw is like, if you're living in a rural 0:17:41.840 --> 0:17:43.720 part of the country, like the place that you go 0:17:43.840 --> 0:17:45.600 to buy a gallon of milk at the end of 0:17:45.600 --> 0:17:48.200 the day is your Dollar General, Like that's the store 0:17:48.200 --> 0:17:52.600 that you have. But increasingly Walmart and Amazon are looking 0:17:52.600 --> 0:17:54.960 to these rural areas as their last frontier. 0:17:55.400 --> 0:17:58.560 Stay with us. More from Bloomberg Intelligence coming up after this. 0:18:00.720 --> 0:18:04.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:04.480 --> 0:18:07.879 weekdays at ten am Eastern on Applecarplay and Android Auto 0:18:08.000 --> 0:18:11.040 with the Bloomberg Business app. Listen on demand wherever you 0:18:11.080 --> 0:18:14.080 get your podcasts, or watch us live on YouTube. 0:18:15.359 --> 0:18:20.159 Dollar Tree profit outlook disappoints investors. Here let's go to 0:18:20.240 --> 0:18:23.080 Jen Bartash's Bloomberg Intelligence senior al. She covers a lot 0:18:23.080 --> 0:18:26.920 of the retail names for Bloomberg Intelligence. Jen, what did 0:18:26.960 --> 0:18:29.520 you learn from Dollar Tree? 0:18:29.760 --> 0:18:33.120 Yeah, it's an interesting It's an interesting takeaway from Dollar 0:18:33.160 --> 0:18:35.480 Tree because a lot of what they talked about was 0:18:35.520 --> 0:18:39.159 bringing in hire income households. That's an echoing of what 0:18:39.200 --> 0:18:42.400 we've heard from a couple of the retailers, most notably Walmart. 0:18:43.080 --> 0:18:46.119 But at the same time, they're staying super conservative and so, 0:18:46.640 --> 0:18:49.879 you know, although they had a much stronger than expected quarter, 0:18:50.040 --> 0:18:52.960 I think there's a lot of anticipation that the second 0:18:52.960 --> 0:18:54.960 half of the year might be a lot harder for them. 0:18:55.480 --> 0:18:58.720 Right The outlook for this quarter on its own kind 0:18:58.720 --> 0:19:01.520 of underwhelmed investor, and a lot of that, the company 0:19:01.520 --> 0:19:04.360 says is tied to terror related costs. 0:19:05.240 --> 0:19:08.320 Exactly Scarlett and what they're talking about, and this is 0:19:08.320 --> 0:19:12.520 something that we're seeing across the retail sector broadly, is 0:19:12.560 --> 0:19:16.160 that the costs of tariffs have started to come in, 0:19:16.200 --> 0:19:18.679 but they really haven't fully hit yet. A lot of 0:19:18.720 --> 0:19:22.240 retailers are selling through inventory they bought when tariffs were 0:19:22.240 --> 0:19:25.240 at a different rate were not there, and as they're 0:19:25.200 --> 0:19:28.760 replenishing that inventory, it's becoming more expensive. It's getting harder 0:19:28.760 --> 0:19:31.159 to mitigate those costs, and they're starting to see some 0:19:31.280 --> 0:19:34.680 targeted price increases being passed through to consumers. We think 0:19:34.680 --> 0:19:36.600 that's only going to accelerate as we get into the 0:19:36.600 --> 0:19:37.560 second half of the year. 0:19:38.960 --> 0:19:42.399 So have you is there any consensus building at jenas 0:19:42.480 --> 0:19:45.800 to how much retailers are going to pass through terror 0:19:45.840 --> 0:19:48.920 related cost increases to consumers are kind of a rule 0:19:48.960 --> 0:19:51.240 of thumb being created. 0:19:51.760 --> 0:19:54.760 You know, I think for the most part, we're looking at, 0:19:54.840 --> 0:19:58.320 you know, between eighty and ninety percent can be mitigated 0:19:58.320 --> 0:20:01.920 by retailers at this point in time. Now, that does 0:20:02.000 --> 0:20:05.359 change whenever the tariff landscape changes. So when tariffs for 0:20:05.440 --> 0:20:08.719