1 00:00:00,800 --> 00:00:03,920 Speaker 1: The jurors in Donald Trump's hush money trial have heard 2 00:00:03,960 --> 00:00:08,119 Speaker 1: the name Stormy Daniels countless times. Today they got to 3 00:00:08,160 --> 00:00:10,600 Speaker 1: hear from her as she took the witness stand and 4 00:00:10,720 --> 00:00:14,640 Speaker 1: offered a detailed and at times graphic account of a 5 00:00:14,720 --> 00:00:18,040 Speaker 1: sexual encounter she says she had with Trump in two 6 00:00:18,079 --> 00:00:21,400 Speaker 1: thousand and six that resulted in her being paid off 7 00:00:21,440 --> 00:00:25,360 Speaker 1: to keep silent during the presidential race ten years later, 8 00:00:25,880 --> 00:00:29,640 Speaker 1: and encounter Trump has denied. Joining me is former federal 9 00:00:29,680 --> 00:00:35,519 Speaker 1: prosecutor Michael Zelden. Why is Stormy Daniels' testimony important to 10 00:00:35,560 --> 00:00:36,280 Speaker 1: the prosecution. 11 00:00:37,200 --> 00:00:41,720 Speaker 2: Stormy Daniels serves several purposes. One, Donald Trump has repeatedly 12 00:00:41,760 --> 00:00:45,400 Speaker 2: said this never happened, and so to the extent that 13 00:00:45,440 --> 00:00:50,400 Speaker 2: she can say this happened, then were Trump to testify, 14 00:00:50,760 --> 00:00:55,080 Speaker 2: the jury has a basis to evaluate her testimony versus 15 00:00:55,080 --> 00:00:58,680 Speaker 2: his testimony. She also, I think, plays the role of 16 00:00:58,720 --> 00:01:04,040 Speaker 2: supporting the conversations that she had with Michael Cohen and 17 00:01:04,120 --> 00:01:08,880 Speaker 2: her understanding that Donald Trump was the payre in this transaction, 18 00:01:08,959 --> 00:01:12,639 Speaker 2: that Trump was intimately involved in it through her direct 19 00:01:12,680 --> 00:01:16,520 Speaker 2: conversations with Cohen, which Cohen will then testify to. So 20 00:01:16,880 --> 00:01:20,520 Speaker 2: I think she serves the purpose of helping the prosecution 21 00:01:20,680 --> 00:01:24,080 Speaker 2: say this story happened, helping the prosecution say there was 22 00:01:24,120 --> 00:01:27,760 Speaker 2: an imperative that Trump felt to get this story suppressed, 23 00:01:28,400 --> 00:01:31,280 Speaker 2: and from her dealings with Michael Cohen, it was her 24 00:01:31,400 --> 00:01:35,479 Speaker 2: complete understanding that Donald Trump was aware of this, involved 25 00:01:35,480 --> 00:01:39,760 Speaker 2: in it, and was the ultimate payre of the hush money. 26 00:01:41,080 --> 00:01:45,440 Speaker 1: So at different times she made Trump look almost ridiculous, 27 00:01:46,000 --> 00:01:48,720 Speaker 1: saying he was rude, arrogant, didn't know how to have 28 00:01:48,760 --> 00:01:54,320 Speaker 1: a conversation, and sleazy at many times. I mean, you know, 29 00:01:54,560 --> 00:01:58,640 Speaker 1: his questions about her sex life, and she rolled up 30 00:01:58,640 --> 00:02:01,600 Speaker 1: a magazine at one point and playfully spanked him. I mean, 31 00:02:01,840 --> 00:02:05,279 Speaker 1: is this the prosecution's attempt to get this before the jury, 32 00:02:05,320 --> 00:02:07,120 Speaker 1: to get in bad character. 33 00:02:06,760 --> 00:02:10,040 Speaker 2: Evidence in a sense, And in fact, the defense attorney 34 00:02:10,400 --> 00:02:13,760 Speaker 2: moved for a mistrial after lunch on the basis of 35 00:02:13,880 --> 00:02:17,240 Speaker 2: this sort of evidence. Remember, she says she walks into 36 00:02:17,280 --> 00:02:20,320 Speaker 2: his hotel suite, she thought that they were supposed to 37 00:02:20,360 --> 00:02:24,519 Speaker 2: be having dinner downstairs, and he comes out in silk pajamas. 38 00:02:24,800 --> 00:02:27,079 Speaker 2: Then later in the course of the evening, before they 39 00:02:27,280 --> 00:02:29,960 Speaker 2: eat dinner, she's in the bathroom. She comes out and 40 00:02:30,000 --> 00:02:33,560 Speaker 2: he's chained out of his clothes into boxer shorts and 41 00:02:33,600 --> 00:02:36,360 Speaker 2: a T shirt. So yes, it does make him look 42 00:02:36,960 --> 00:02:41,079 Speaker 2: like a predator. And remember he's sixty ish years old 43 00:02:41,120 --> 00:02:44,640 Speaker 2: at the time. She's twenty seven years old at the time. 44 00:02:45,440 --> 00:02:48,880 Speaker 2: It's on his turf. I think it really does make 45 00:02:48,960 --> 00:02:53,400 Speaker 2: him look bad. And that's why the prosecution, I think, 46 00:02:53,440 --> 00:02:56,720 Speaker 2: in part, wants it should he testify. They want to 47 00:02:56,760 --> 00:02:59,840 Speaker 2: have a counterbalance against what he's going to say about himself. 48 00:03:00,040 --> 00:03:02,760 Speaker 2: And that's also, of course why the defense move for 49 00:03:02,800 --> 00:03:07,000 Speaker 2: a mistrial, because it is so damning as a character matter. 50 00:03:07,720 --> 00:03:10,880 Speaker 1: So the judge said before her testimony, I agree that 51 00:03:10,919 --> 00:03:14,760 Speaker 1: she's got credibility issues, so the people have to establish 52 00:03:14,760 --> 00:03:18,720 Speaker 1: her credibility. Is he talking about the fact that she's 53 00:03:18,919 --> 00:03:22,799 Speaker 1: a porn star, the fact that she denied this at 54 00:03:22,840 --> 00:03:23,760 Speaker 1: one point. 55 00:03:24,000 --> 00:03:26,960 Speaker 2: Yeah, I think all of those things. One, she is 56 00:03:27,000 --> 00:03:31,160 Speaker 2: an adult actress, which is, you know, something that has 57 00:03:31,200 --> 00:03:34,880 Speaker 2: some negative connotations to it too. She is selling a 58 00:03:34,920 --> 00:03:37,680 Speaker 2: story which they're going to try to portray the defenses 59 00:03:37,720 --> 00:03:42,640 Speaker 2: as extortion. She denies it, and then she admits it. 60 00:03:42,760 --> 00:03:45,280 Speaker 2: Then she says she wants her story out, and then 61 00:03:45,320 --> 00:03:47,920 Speaker 2: she says she wants her story suppressed as long as 62 00:03:47,920 --> 00:03:50,360 Speaker 2: she gets paid for it. So there's a lot of 63 00:03:50,360 --> 00:03:55,040 Speaker 2: stuff there that is damaging as a character matter, and 64 00:03:55,200 --> 00:03:58,760 Speaker 2: the prosecutors want to say, look, there is stuff here 65 00:03:59,240 --> 00:04:03,680 Speaker 2: that's not ideal. But at the very bottom line, what 66 00:04:03,800 --> 00:04:08,120 Speaker 2: she's telling us is the truth, which can be corroborated 67 00:04:08,160 --> 00:04:12,360 Speaker 2: by other witnesses. And again, if Trump were to testify, 68 00:04:12,760 --> 00:04:16,279 Speaker 2: they have the counterweight against what he will say, presumably 69 00:04:16,320 --> 00:04:18,440 Speaker 2: which is consistent with what he said in the public, 70 00:04:18,600 --> 00:04:20,200 Speaker 2: which is this never happened. 71 00:04:20,680 --> 00:04:24,440 Speaker 1: There was testimony about all these things that the judge 72 00:04:24,680 --> 00:04:27,599 Speaker 1: at one point said that it wasn't necessary to go 73 00:04:27,680 --> 00:04:30,760 Speaker 1: into detail here, and then she went into all this detail. 74 00:04:31,279 --> 00:04:33,400 Speaker 1: Was she not prepped by the prosecution? 75 00:04:33,960 --> 00:04:36,520 Speaker 2: Well, I think she was prepped by the prosecution. I 76 00:04:36,560 --> 00:04:40,520 Speaker 2: think that she was probably nervous, and they're asking her 77 00:04:40,520 --> 00:04:43,360 Speaker 2: to tell a story of what happened, and she, you know, 78 00:04:43,400 --> 00:04:47,240 Speaker 2: in her mind's eye, is back in the moment reliving 79 00:04:47,640 --> 00:04:51,239 Speaker 2: that story. And I don't think she purposefully tried to 80 00:04:51,480 --> 00:04:55,160 Speaker 2: inject this so called salacious stuff in. But if you're 81 00:04:55,200 --> 00:04:57,599 Speaker 2: telling a story to you of what happened, which was 82 00:04:57,600 --> 00:05:00,440 Speaker 2: a traumatic story at age twenty seven, a sixty year 83 00:05:00,480 --> 00:05:03,960 Speaker 2: old man engage in what was consensual, but with a 84 00:05:04,000 --> 00:05:08,880 Speaker 2: really broad power dynamic between them. I think that, you know, 85 00:05:09,600 --> 00:05:12,800 Speaker 2: her telling it as it happened actually makes it appear 86 00:05:13,800 --> 00:05:17,479 Speaker 2: more believable than if it was very stylized in the 87 00:05:17,560 --> 00:05:20,279 Speaker 2: telling of the story with look rehearsed, and I don't 88 00:05:20,320 --> 00:05:23,160 Speaker 2: think that would have been helpful to her or the prosecution. 89 00:05:23,839 --> 00:05:29,120 Speaker 1: Could the salacious details backfire with some of the jurors 90 00:05:29,160 --> 00:05:34,400 Speaker 1: finding her account distasteful and that bleeds over into their 91 00:05:34,440 --> 00:05:36,400 Speaker 1: opinion of her testimony. 92 00:05:36,240 --> 00:05:39,480 Speaker 2: Well, they could, except I think she has basically come 93 00:05:39,640 --> 00:05:42,000 Speaker 2: across as you read her testimony. You're not in the 94 00:05:42,000 --> 00:05:44,800 Speaker 2: core rooms. I can't, you know, make eye contact with 95 00:05:44,839 --> 00:05:47,200 Speaker 2: her and see her body language. But as you read it, 96 00:05:47,640 --> 00:05:49,800 Speaker 2: she says, Look, I'm a seventeen year old kid. I 97 00:05:49,920 --> 00:05:51,880 Speaker 2: leave home. I didn't have a great upbringing. I was 98 00:05:51,920 --> 00:05:54,760 Speaker 2: sort of poor. I got involved in modeling and that 99 00:05:54,839 --> 00:05:59,600 Speaker 2: led to adult filmmaking, and here I am. You know, 100 00:05:59,640 --> 00:06:02,279 Speaker 2: this is who I am. You know I'm not apologizing 101 00:06:02,279 --> 00:06:04,719 Speaker 2: for it. You might not like my profession, but this 102 00:06:04,760 --> 00:06:08,719 Speaker 2: is who I am. That doesn't make me dishonest, that 103 00:06:09,120 --> 00:06:12,000 Speaker 2: makes me just who I am. And if you're going 104 00:06:12,040 --> 00:06:14,440 Speaker 2: to judge me for that, well you know, I can't 105 00:06:14,839 --> 00:06:15,320 Speaker 2: help that. 106 00:06:16,160 --> 00:06:19,200 Speaker 1: For about a year afterwards, he called her like once 107 00:06:19,279 --> 00:06:22,559 Speaker 1: a week, and his pet name for her was honey bunch. 108 00:06:23,120 --> 00:06:24,520 Speaker 1: How do you think the jury will see. 109 00:06:24,320 --> 00:06:32,080 Speaker 2: That their encounter, which started out as a consensual adult relationship, 110 00:06:32,120 --> 00:06:35,440 Speaker 2: a one night's stand, although I say the power differential 111 00:06:35,480 --> 00:06:39,719 Speaker 2: between them is profound, But she said immediately afterwards she 112 00:06:39,800 --> 00:06:43,640 Speaker 2: was completely embarrassed, embarrassed enough to not tell but her 113 00:06:43,680 --> 00:06:47,320 Speaker 2: closest friends to not tell her boyfriend. She was embarrassed. 114 00:06:47,839 --> 00:06:50,000 Speaker 2: He on the other hand, thought, well, this was good. 115 00:06:50,240 --> 00:06:52,719 Speaker 2: Let's keep it up, you know, honey bunch. Let's get 116 00:06:52,720 --> 00:06:56,480 Speaker 2: together when you're next in town. So I think he 117 00:06:56,560 --> 00:07:00,960 Speaker 2: was seeing this as an ongoing opportunity, irrespective of the 118 00:07:01,000 --> 00:07:03,200 Speaker 2: fact that he's married to Melania, and he didn't seem, 119 00:07:03,200 --> 00:07:05,920 Speaker 2: according to her testimony, to be plussed at all by 120 00:07:06,320 --> 00:07:08,120 Speaker 2: the fact that he was cheating on his wife. So 121 00:07:08,440 --> 00:07:11,520 Speaker 2: I don't know that it's inconsistent with who many people 122 00:07:11,520 --> 00:07:15,280 Speaker 2: believe Donald Trump is, as portrayed, perhaps best, on the 123 00:07:15,280 --> 00:07:16,600 Speaker 2: Access Hollywood tape. 124 00:07:16,680 --> 00:07:20,360 Speaker 1: How will the prosecution deal with the fact that she 125 00:07:20,560 --> 00:07:22,000 Speaker 1: was paid off for this story? 126 00:07:22,440 --> 00:07:26,240 Speaker 2: Well, they're gonna say that there's an arm length business 127 00:07:26,320 --> 00:07:32,120 Speaker 2: deal that this occurs and that it may be unseemly, 128 00:07:32,320 --> 00:07:35,760 Speaker 2: but as we heard from David Pecker, it occurs all 129 00:07:35,800 --> 00:07:39,400 Speaker 2: the time with famous stars Hulk Hogan and the likes 130 00:07:39,800 --> 00:07:43,640 Speaker 2: Karen McDougall. And she was just another person who was 131 00:07:43,760 --> 00:07:48,160 Speaker 2: capitalizing on a story to sell. You might not like that, 132 00:07:48,680 --> 00:07:53,000 Speaker 2: but look, people sell kiss and tell books all the time. 133 00:07:53,080 --> 00:07:55,480 Speaker 2: People make a fortune, you know, coming out of government 134 00:07:55,560 --> 00:07:58,520 Speaker 2: saying let me tell you the behind the scenes story, 135 00:07:58,560 --> 00:08:01,000 Speaker 2: what I did to save the union sort of stuff. 136 00:08:01,120 --> 00:08:04,680 Speaker 2: So how does she fit in differently than that? 137 00:08:05,360 --> 00:08:08,600 Speaker 1: I was surprised that the defense didn't object that much 138 00:08:08,800 --> 00:08:11,920 Speaker 1: while she was giving this testimony. Yet when it came 139 00:08:12,040 --> 00:08:14,840 Speaker 1: time to make the motion for a mistrial, part of 140 00:08:14,880 --> 00:08:17,720 Speaker 1: what they were objecting to were the salacious details in 141 00:08:17,760 --> 00:08:18,560 Speaker 1: her testimony. 142 00:08:19,440 --> 00:08:23,640 Speaker 2: Well, you can argue that they waved it, or that 143 00:08:24,160 --> 00:08:28,080 Speaker 2: they made a strategic choice, and whether they've waived or 144 00:08:28,120 --> 00:08:32,880 Speaker 2: made a strategic choice to allow this in somehow limits 145 00:08:32,920 --> 00:08:36,080 Speaker 2: there after the fact argument that we were prejudiced by it, 146 00:08:36,120 --> 00:08:40,080 Speaker 2: and we saw the judge denied it. So I think 147 00:08:40,120 --> 00:08:45,520 Speaker 2: though that on this questions of missionary position and pajamas 148 00:08:45,559 --> 00:08:49,040 Speaker 2: and boxer shorts and honeybunch and all that sort of stuff. 149 00:08:49,440 --> 00:08:53,320 Speaker 2: Her testilony is going to boil down to the fact 150 00:08:53,360 --> 00:08:56,720 Speaker 2: that it is credible that she had an affair with 151 00:08:56,800 --> 00:09:01,600 Speaker 2: Donald Trump, and it is credible that Mike Cohen and 152 00:09:01,640 --> 00:09:05,520 Speaker 2: she on behalf of Trump entered into a contract to 153 00:09:05,600 --> 00:09:08,480 Speaker 2: suppress her story. That's the heart of what the prosecution 154 00:09:08,640 --> 00:09:11,440 Speaker 2: needs to have the jury believe. All the other stuff 155 00:09:11,960 --> 00:09:15,160 Speaker 2: is essentially collateral to the main argument that they will make. 156 00:09:15,480 --> 00:09:18,800 Speaker 1: So the prosecution says they have about two more weeks 157 00:09:18,920 --> 00:09:21,520 Speaker 1: of trial, which was surprising, I think to a lot 158 00:09:21,520 --> 00:09:24,880 Speaker 1: of people. What do you think about the placement of 159 00:09:24,920 --> 00:09:27,160 Speaker 1: her as a witness? Does it say that Michael Cohen 160 00:09:27,240 --> 00:09:29,760 Speaker 1: is coming up next? Or can you see what they're 161 00:09:29,760 --> 00:09:31,120 Speaker 1: doing with their witnesses. 162 00:09:31,760 --> 00:09:34,640 Speaker 2: Yeah, they seem to be running a pattern of big 163 00:09:34,720 --> 00:09:40,960 Speaker 2: name then document evidence, big name than document evidence, and 164 00:09:41,000 --> 00:09:44,040 Speaker 2: so I'm not sure what the document evidence is that 165 00:09:44,120 --> 00:09:46,679 Speaker 2: will follow Stormy Daniels, but I expect that there will 166 00:09:46,720 --> 00:09:50,800 Speaker 2: be some additional low key people so that the jury 167 00:09:50,840 --> 00:09:54,560 Speaker 2: can catch its breath before they bring on Cohen. My 168 00:09:54,679 --> 00:09:58,120 Speaker 2: big question to myself is is Coen going to be 169 00:09:58,200 --> 00:10:01,520 Speaker 2: their cleanup hitter? Is he the last Hurrah? Or are 170 00:10:01,559 --> 00:10:04,240 Speaker 2: they going to put him on and then try to 171 00:10:04,280 --> 00:10:09,040 Speaker 2: introduce additional financial documents to support what he has to say. 172 00:10:09,120 --> 00:10:11,679 Speaker 2: That's I think a tricky decision for the prosecutors. 173 00:10:12,000 --> 00:10:14,080 Speaker 1: Yeah, I mean, would you want to end with Michael 174 00:10:14,160 --> 00:10:16,160 Speaker 1: Cohen because the defense is going to have a field 175 00:10:16,240 --> 00:10:16,760 Speaker 1: day with him? 176 00:10:17,240 --> 00:10:20,080 Speaker 2: Exactly. I wouldn't want to end with him. I would 177 00:10:20,200 --> 00:10:23,880 Speaker 2: want him to be somewhere in like the seventh inning, 178 00:10:23,960 --> 00:10:27,360 Speaker 2: if you will, and we can bring in Mariano Rivera. 179 00:10:27,840 --> 00:10:32,280 Speaker 2: If Michael Cohen is a seventh inning witness, who is 180 00:10:32,320 --> 00:10:36,000 Speaker 2: the Mariano Rivera? Who is their closer to make the 181 00:10:36,080 --> 00:10:39,160 Speaker 2: case to the jury that before closing arguments that they've 182 00:10:39,240 --> 00:10:41,240 Speaker 2: proved it beyond a reasonable doubt. And I just don't 183 00:10:41,240 --> 00:10:42,120 Speaker 2: know who that is yet. 184 00:10:42,480 --> 00:10:44,520 Speaker 1: It will be a while before that witness takes the 185 00:10:44,600 --> 00:10:48,360 Speaker 1: stand though, Thanks so much, Michael. That's former federal prosecutor 186 00:10:48,440 --> 00:10:51,840 Speaker 1: Michael Zelden. Coming up next on the Bloomberg Law Show. 187 00:10:52,120 --> 00:10:58,800 Speaker 1: The government's landmark anti trust case against Google. It's the 188 00:10:58,840 --> 00:11:02,679 Speaker 1: biggest anti trust challenge in more than two decades. The 189 00:11:02,720 --> 00:11:07,719 Speaker 1: federal government's antitrust case against Google. The government claims that 190 00:11:07,800 --> 00:11:12,080 Speaker 1: Google has illegally maintained a monopoly over online search and 191 00:11:12,160 --> 00:11:16,400 Speaker 1: related advertising. Judge Ammett Meta heard from more than fifty 192 00:11:16,440 --> 00:11:19,360 Speaker 1: witnesses in a ten week trial that wrapped up on 193 00:11:19,520 --> 00:11:24,520 Speaker 1: May third. However, closing arguments didn't take place until last week. 194 00:11:25,040 --> 00:11:28,920 Speaker 1: Joining me is Jennifer Reed, Bloomberg Intelligence Senior litigation analyst. 195 00:11:29,760 --> 00:11:33,080 Speaker 1: Jen Why are the closing arguments taking place so long 196 00:11:33,160 --> 00:11:34,559 Speaker 1: after the testimony? 197 00:11:35,120 --> 00:11:37,000 Speaker 3: You know, I think in this case, there was a 198 00:11:37,040 --> 00:11:40,920 Speaker 3: lot of evidence and complicated evidence, and I really think 199 00:11:40,960 --> 00:11:42,800 Speaker 3: he wanted to be able to go through it all, 200 00:11:42,880 --> 00:11:45,320 Speaker 3: to walk back through all the documents from the trial, 201 00:11:45,679 --> 00:11:48,760 Speaker 3: maybe go back through transcripts from the experts, to really 202 00:11:48,880 --> 00:11:51,559 Speaker 3: understand the case and understand the facts of the case 203 00:11:51,840 --> 00:11:55,680 Speaker 3: and understand what both sides were alleging before the closing arguments. 204 00:11:55,720 --> 00:11:58,280 Speaker 3: And I think that was really evident because he was 205 00:11:58,320 --> 00:12:00,640 Speaker 3: so active. I mean, some closing are arguments are just 206 00:12:00,679 --> 00:12:03,280 Speaker 3: the lawyers standing up making their case. There might be 207 00:12:03,320 --> 00:12:06,200 Speaker 3: a few questions, but he was questioning all of the 208 00:12:06,280 --> 00:12:08,760 Speaker 3: lawyers the entire way through, and it was very clear 209 00:12:09,120 --> 00:12:11,679 Speaker 3: that he was very well acquainted with the evidence and 210 00:12:11,800 --> 00:12:15,679 Speaker 3: very well acquainted with the precedent that both sides had cited. 211 00:12:15,840 --> 00:12:18,480 Speaker 3: In their various papers or that just you know, he 212 00:12:18,600 --> 00:12:21,680 Speaker 3: understood was relevant to the case, and I think that's 213 00:12:21,679 --> 00:12:23,120 Speaker 3: why he took so much time. 214 00:12:23,960 --> 00:12:27,920 Speaker 1: So he said, Judge Meta, the importance and significance of 215 00:12:27,960 --> 00:12:30,400 Speaker 1: this case is not lost on me, not only for 216 00:12:30,559 --> 00:12:34,440 Speaker 1: Google but for the public. Well, how important is this case? 217 00:12:35,400 --> 00:12:38,080 Speaker 3: Well, I think that has a lot of importance. First, 218 00:12:38,160 --> 00:12:42,880 Speaker 3: because it's actually the very first monopolization lawsuit the Department 219 00:12:42,920 --> 00:12:46,040 Speaker 3: of Justice has brought against a tech company since the 220 00:12:46,120 --> 00:12:48,520 Speaker 3: nineteen nineties. I mean, that's a long time. 221 00:12:48,679 --> 00:12:48,880 Speaker 2: Now. 222 00:12:48,920 --> 00:12:51,000 Speaker 3: I limit that to the Department of Justice because the 223 00:12:51,040 --> 00:12:54,760 Speaker 3: Federal Trade Commission did sue Qualcomm for monopolization back in 224 00:12:54,760 --> 00:12:57,760 Speaker 3: twenty seventeen, so we had that suit, But there was 225 00:12:57,960 --> 00:13:00,680 Speaker 3: just this long period of time where we had very 226 00:13:00,720 --> 00:13:05,440 Speaker 3: few government enforcement monopolization suits period, and nothing against the 227 00:13:05,480 --> 00:13:08,600 Speaker 3: tech companies. And this is the very first one. So 228 00:13:08,920 --> 00:13:11,880 Speaker 3: in some ways it kind of sets the tone. I 229 00:13:11,920 --> 00:13:13,560 Speaker 3: don't want to say it sets any kind of a 230 00:13:13,600 --> 00:13:16,080 Speaker 3: groundwork for the others to come, the trials to come 231 00:13:16,120 --> 00:13:20,560 Speaker 3: against Amazon, Meta, Google for other conduct, and Apple, because 232 00:13:20,600 --> 00:13:24,400 Speaker 3: we're talking about different markets, different companies, different kinds of conduct. 233 00:13:24,440 --> 00:13:27,280 Speaker 3: Really each case is quite different, but it kind of 234 00:13:27,320 --> 00:13:30,439 Speaker 3: sets the tone for going forward. And I think it's 235 00:13:30,440 --> 00:13:34,280 Speaker 3: also important because it's likely we don't know yet, but 236 00:13:34,360 --> 00:13:36,839 Speaker 3: it's likely that if the Department of Justice does win 237 00:13:36,880 --> 00:13:41,120 Speaker 3: on liability, that they'll seek some sort of a structural remedy, 238 00:13:41,200 --> 00:13:44,200 Speaker 3: some sort of a breakup of the company. And that 239 00:13:44,400 --> 00:13:46,680 Speaker 3: is also something that hasn't happened in a long time 240 00:13:47,040 --> 00:13:51,160 Speaker 3: and something that's very rarely tested out. And this judge 241 00:13:51,200 --> 00:13:52,960 Speaker 3: is going to be put to the test and we'll 242 00:13:52,960 --> 00:13:55,560 Speaker 3: have to see what happens with that. But it's important 243 00:13:55,600 --> 00:14:00,160 Speaker 3: for presidential reasons, for historical reasons, and I think it's 244 00:14:00,200 --> 00:14:02,760 Speaker 3: just the very first effort we're seeing in the US 245 00:14:03,160 --> 00:14:06,440 Speaker 3: to try to contain the power and the dominance of 246 00:14:06,480 --> 00:14:07,600 Speaker 3: a big tech platform. 247 00:14:08,440 --> 00:14:12,640 Speaker 1: So is the first question defying the market? Yes, just 248 00:14:12,679 --> 00:14:14,640 Speaker 1: to remind us why that's important. 249 00:14:15,200 --> 00:14:18,880 Speaker 3: Right, So, for any monopolization suit, there are a series 250 00:14:18,880 --> 00:14:21,680 Speaker 3: of steps that the plaintiff has to go through and 251 00:14:21,760 --> 00:14:24,160 Speaker 3: if they fail at any of one of those steps, 252 00:14:24,320 --> 00:14:27,360 Speaker 3: they lose the case. Right, So they have the burden 253 00:14:27,440 --> 00:14:30,760 Speaker 3: of proving what the relevant antitrust market is and what 254 00:14:30,800 --> 00:14:34,800 Speaker 3: that means is what is the sphere of competition? This 255 00:14:34,840 --> 00:14:38,400 Speaker 3: is about Google Search, the search engine. So what other 256 00:14:38,680 --> 00:14:43,640 Speaker 3: search services out there does Google compete with? And why 257 00:14:43,720 --> 00:14:46,040 Speaker 3: is that important, June is because the next step they 258 00:14:46,080 --> 00:14:48,480 Speaker 3: have to prove that Google has a monopoly in that market, 259 00:14:48,680 --> 00:14:50,480 Speaker 3: and you have to know who else is in the 260 00:14:50,480 --> 00:14:53,880 Speaker 3: market to determine the market shares and whether Google has monopoly. 261 00:14:54,080 --> 00:14:57,120 Speaker 3: So you start there and on that one, obviously, you 262 00:14:57,160 --> 00:15:01,760 Speaker 3: know the lawyers will disagree across everything contended by the plaintiffs, 263 00:15:01,880 --> 00:15:04,800 Speaker 3: but at least on this one, the Department of Justice 264 00:15:04,840 --> 00:15:07,800 Speaker 3: alleges that the market is general search services, and you 265 00:15:07,880 --> 00:15:11,760 Speaker 3: see very few competitors there. That's Google, it's being it's Duck, 266 00:15:11,840 --> 00:15:14,880 Speaker 3: duc Go. There was another entrant called Neba that has 267 00:15:14,920 --> 00:15:18,040 Speaker 3: exited the market. And these are the search engines where 268 00:15:18,080 --> 00:15:20,160 Speaker 3: you can go and ask them anything, Right, They're going 269 00:15:20,240 --> 00:15:22,440 Speaker 3: to scan the entire Internet, so you can go in 270 00:15:22,480 --> 00:15:25,480 Speaker 3: and look for anything. And what Google's argue here is 271 00:15:25,480 --> 00:15:27,600 Speaker 3: that no, no, no, no, no, the market's a lot broader 272 00:15:27,760 --> 00:15:29,880 Speaker 3: because some of the searches you can do on Google 273 00:15:29,960 --> 00:15:33,000 Speaker 3: you can also do elsewhere. You can search for items 274 00:15:33,040 --> 00:15:35,280 Speaker 3: you might want to shop or on Amazon. You can 275 00:15:35,320 --> 00:15:38,240 Speaker 3: search for travel deals on Kayak or any other number 276 00:15:38,240 --> 00:15:41,320 Speaker 3: of travel websites. So you have to consider those companies 277 00:15:41,320 --> 00:15:44,520 Speaker 3: our competitors too. So there's this argument about how broad 278 00:15:44,560 --> 00:15:47,520 Speaker 3: the market is, and that's important because the broader it is, 279 00:15:47,560 --> 00:15:51,520 Speaker 3: the lower Google's market share is, and DOJ has to 280 00:15:51,600 --> 00:15:54,960 Speaker 3: prove that that market share is somewhere up over sixty 281 00:15:55,040 --> 00:15:57,840 Speaker 3: or seventy percent in order to establish that it has 282 00:15:57,880 --> 00:15:58,560 Speaker 3: a monopoly. 283 00:16:00,160 --> 00:16:03,440 Speaker 1: Said, certainly, I don't think the average person would say, yeah, 284 00:16:03,680 --> 00:16:07,160 Speaker 1: Google and Amazon are the same. Is that a signal 285 00:16:07,280 --> 00:16:11,800 Speaker 1: that he's accepting the Justice Department's definition of the market? 286 00:16:12,000 --> 00:16:15,200 Speaker 3: I think for everything, for anything that they discussed at 287 00:16:15,240 --> 00:16:17,040 Speaker 3: this trial, this is the one area where I think 288 00:16:17,120 --> 00:16:19,560 Speaker 3: it's pretty clear where the judge is going to come out. 289 00:16:19,960 --> 00:16:22,320 Speaker 3: I think that you just highlighted I think one of 290 00:16:22,360 --> 00:16:24,960 Speaker 3: the most important statements that he made with respect to 291 00:16:25,000 --> 00:16:27,760 Speaker 3: the relevant market that suggests he's going to align with 292 00:16:27,800 --> 00:16:30,920 Speaker 3: the DOJ on this. He also ruled in a merger 293 00:16:31,040 --> 00:16:34,680 Speaker 3: trial when US Food Srancisco tried to merge that had 294 00:16:34,720 --> 00:16:37,960 Speaker 3: some similar concepts that were being discussed with respect to 295 00:16:38,000 --> 00:16:40,840 Speaker 3: the relevant market, whether some of the niche players that 296 00:16:40,920 --> 00:16:43,880 Speaker 3: could substitute were part of what the companies did, whether 297 00:16:43,920 --> 00:16:45,600 Speaker 3: they were in the market, and in that case, he 298 00:16:45,680 --> 00:16:48,320 Speaker 3: decided they were not, and so that would be aligned 299 00:16:48,360 --> 00:16:50,800 Speaker 3: with the judge siding with the DOJ on market here. 300 00:16:50,840 --> 00:16:52,960 Speaker 3: And I think, look, you and I can think about 301 00:16:52,960 --> 00:16:57,160 Speaker 3: this as consumers, and in my opinion, really Google doesn't 302 00:16:57,200 --> 00:17:00,240 Speaker 3: compete with Amazon for search. You know, even if I'm 303 00:17:00,240 --> 00:17:03,720 Speaker 3: searching to buy some item of clothing, I probably would 304 00:17:03,720 --> 00:17:05,840 Speaker 3: actually start on Google, even though I think some would 305 00:17:05,840 --> 00:17:07,960 Speaker 3: start on Amazon. But the fact of the matter is 306 00:17:08,000 --> 00:17:10,919 Speaker 3: you can't do on Amazon everything you can do on Google. 307 00:17:11,560 --> 00:17:14,600 Speaker 3: I agree, right, So I think the DJA wins on that. 308 00:17:14,840 --> 00:17:17,600 Speaker 1: The advertising part of this is that part of the 309 00:17:17,640 --> 00:17:19,080 Speaker 1: marketers at a different question. 310 00:17:19,480 --> 00:17:22,200 Speaker 3: So that's the second market. They've argued that Google's causing 311 00:17:22,200 --> 00:17:24,840 Speaker 3: harm in two different markets. So the first market is 312 00:17:24,880 --> 00:17:28,080 Speaker 3: this general search engine services market, and that was the 313 00:17:28,080 --> 00:17:30,760 Speaker 3: first day they talked about that. And the second market 314 00:17:30,880 --> 00:17:34,880 Speaker 3: is search advertising. Now, search advertising is different from other 315 00:17:34,920 --> 00:17:37,239 Speaker 3: advertising on the Internet. These are the ads that come 316 00:17:37,320 --> 00:17:39,840 Speaker 3: up when I do a search on Google, right, So 317 00:17:40,280 --> 00:17:44,240 Speaker 3: that's a specific kind of advertising because the advertiser has 318 00:17:44,240 --> 00:17:47,120 Speaker 3: an indication of what that user is interested in. I'm 319 00:17:47,119 --> 00:17:50,040 Speaker 3: doing a search, and let's say I'm searching for pickleball clothes, 320 00:17:50,200 --> 00:17:52,480 Speaker 3: you know, and I don't even know why. I hope 321 00:17:52,600 --> 00:17:55,359 Speaker 3: not because I don't play pickleball, so I don't even 322 00:17:55,400 --> 00:17:57,600 Speaker 3: know why I said that, but all my friends do. 323 00:17:58,440 --> 00:18:02,280 Speaker 3: But anyway, then the advertiser understands the user has this 324 00:18:02,359 --> 00:18:05,000 Speaker 3: interest in pickleball, right, so they can send this targeted 325 00:18:05,000 --> 00:18:08,000 Speaker 3: ad because there's this search, that kind of search. And 326 00:18:08,160 --> 00:18:12,040 Speaker 3: there was some evidence that advertisers view these general search 327 00:18:12,119 --> 00:18:15,639 Speaker 3: ads as different from putting ads elsewhere. Let's say I 328 00:18:15,640 --> 00:18:18,560 Speaker 3: OPENCNN dot com to read some news. There would be 329 00:18:18,600 --> 00:18:21,240 Speaker 3: different ads there. They view that as a different kind 330 00:18:21,280 --> 00:18:24,840 Speaker 3: of a target, right, and not substitutable. So what the 331 00:18:24,920 --> 00:18:28,439 Speaker 3: DJ's arguing is that general search ads are also that 332 00:18:28,640 --> 00:18:29,679 Speaker 3: is a relevant market. 333 00:18:30,680 --> 00:18:33,800 Speaker 1: So explain this comment to me. The judge said, unlike 334 00:18:33,880 --> 00:18:37,119 Speaker 1: wrapping a sandwich in newspaper instead of sell a faith, 335 00:18:37,640 --> 00:18:40,240 Speaker 1: if you move your ad money from Google to Amazon, 336 00:18:40,320 --> 00:18:43,800 Speaker 1: you're not wrapping your ad in newspaper, right. 337 00:18:43,960 --> 00:18:47,200 Speaker 3: So, in other words, when the Department of Justice is 338 00:18:47,240 --> 00:18:49,600 Speaker 3: trying to argue that no, no, no, no, no, you know, 339 00:18:49,960 --> 00:18:53,000 Speaker 3: advertisers can't substitute. They don't get the return on investment, 340 00:18:53,080 --> 00:18:56,760 Speaker 3: they can't substitute to some other website, he's saying, oh no, no, No, 341 00:18:56,800 --> 00:19:01,600 Speaker 3: Amazon is a great website, you know, Yelp a great website, Facebook, 342 00:19:02,160 --> 00:19:06,280 Speaker 3: you know, huge dominant social networking company that's hugely valuable 343 00:19:06,280 --> 00:19:09,240 Speaker 3: to the advertisers to advertise there. So what he's saying 344 00:19:09,320 --> 00:19:13,080 Speaker 3: is that it's not jump change as compared to advertising 345 00:19:13,119 --> 00:19:15,919 Speaker 3: on a Google search page. That it's very good and 346 00:19:15,960 --> 00:19:19,639 Speaker 3: it's almost equivalent. So it's less clear for that market 347 00:19:19,720 --> 00:19:21,879 Speaker 3: June whether or not the judge is going to accept 348 00:19:21,920 --> 00:19:23,280 Speaker 3: the DJ's market definition. 349 00:19:23,760 --> 00:19:27,480 Speaker 1: In twenty seventeen, Google ran an experiment over several weeks 350 00:19:27,480 --> 00:19:31,040 Speaker 1: and found it could increase prices five to fifteen percent 351 00:19:31,160 --> 00:19:34,560 Speaker 1: while still growing revenue. And he said that's something that 352 00:19:34,600 --> 00:19:36,120 Speaker 1: only a monopolist could. 353 00:19:35,880 --> 00:19:40,000 Speaker 3: Do, right, right, because in the precedent, the definition of 354 00:19:40,040 --> 00:19:43,600 Speaker 3: a monopolist is a company that has the power to 355 00:19:44,280 --> 00:19:49,040 Speaker 3: basically control price or reduce output without losing any profitability. 356 00:19:49,600 --> 00:19:53,159 Speaker 3: So this is evidence that Google can's the sort of 357 00:19:53,200 --> 00:19:56,120 Speaker 3: price anyway they want to for these search ads and 358 00:19:56,480 --> 00:19:59,560 Speaker 3: not lose profit by doing it, not have advertisers flee 359 00:20:00,080 --> 00:20:03,000 Speaker 3: go place their ads somewhere else. And that suggests that 360 00:20:03,080 --> 00:20:05,159 Speaker 3: they do have monopoly power and that that is a 361 00:20:05,200 --> 00:20:08,280 Speaker 3: relevant market because it suggests that the advertisers say, well, 362 00:20:08,560 --> 00:20:11,280 Speaker 3: I'm just going to accept that price increase because I 363 00:20:11,400 --> 00:20:14,800 Speaker 3: have to advertise here. There isn't some other substitute where 364 00:20:14,880 --> 00:20:16,879 Speaker 3: I'm going to get, you know, the return for my 365 00:20:16,920 --> 00:20:18,280 Speaker 3: investment that I will hear. 366 00:20:18,600 --> 00:20:21,359 Speaker 1: So what were some of the other questions that went 367 00:20:21,440 --> 00:20:24,040 Speaker 1: to whether Google is a monopolist? 368 00:20:24,280 --> 00:20:26,560 Speaker 3: So two different markets, so we're sort of talking about 369 00:20:26,600 --> 00:20:28,919 Speaker 3: two different things. But let's if we start with the 370 00:20:29,000 --> 00:20:32,080 Speaker 3: search engine market. You know, basically they just said, hey, 371 00:20:32,200 --> 00:20:34,280 Speaker 3: you know, if this is the market, they had evidence 372 00:20:34,320 --> 00:20:37,840 Speaker 3: that Google shares anywhere, you know, over eighty percent, And 373 00:20:37,880 --> 00:20:40,080 Speaker 3: I think, to us, that's not a big surprise, right 374 00:20:40,119 --> 00:20:42,800 Speaker 3: because your other options in the US are being inductucco 375 00:20:43,000 --> 00:20:45,280 Speaker 3: And I think I use Google all the time. Most 376 00:20:45,320 --> 00:20:47,160 Speaker 3: of the people I know use Google all the time, 377 00:20:47,440 --> 00:20:49,880 Speaker 3: so that's not a surprise. So I think they get 378 00:20:49,920 --> 00:20:53,520 Speaker 3: there there, you know, on the search advertising. If he 379 00:20:53,600 --> 00:20:56,760 Speaker 3: accepts that market and doesn't broaden the market out to 380 00:20:56,960 --> 00:21:00,280 Speaker 3: advertising elsewhere digitally and not just through a firstal that 381 00:21:00,320 --> 00:21:04,360 Speaker 3: cut the results page for search, then I think the 382 00:21:04,400 --> 00:21:07,840 Speaker 3: evidence that the DOJ presented that they have monopoly power 383 00:21:07,880 --> 00:21:10,480 Speaker 3: there was about this ability to kind of willing nearly 384 00:21:10,560 --> 00:21:14,040 Speaker 3: raise the price anytime they wanted, and any percentage that 385 00:21:14,080 --> 00:21:16,919 Speaker 3: they wanted without losing business or at least without losing 386 00:21:17,320 --> 00:21:21,680 Speaker 3: the profitability. So these are their ways of showing that 387 00:21:21,800 --> 00:21:24,600 Speaker 3: in these relevant markets, Google has monopoly power. Those are 388 00:21:24,600 --> 00:21:26,720 Speaker 3: the first two steps. That's not the end of the inquiry, 389 00:21:26,760 --> 00:21:28,840 Speaker 3: but those are the first two steps the dj has 390 00:21:28,880 --> 00:21:30,520 Speaker 3: to get through to get to the next step. 391 00:21:30,960 --> 00:21:32,920 Speaker 1: And the next step is have. 392 00:21:32,960 --> 00:21:36,720 Speaker 3: They engaged in an anti competitive conduct? Because June, it's 393 00:21:36,760 --> 00:21:39,000 Speaker 3: not illegal to have a monopoly, you know, it's not 394 00:21:39,160 --> 00:21:42,800 Speaker 3: illegal to have a monopoly positioned. So just proving that 395 00:21:42,840 --> 00:21:46,199 Speaker 3: Google has a monopoly position in these two markets is 396 00:21:46,280 --> 00:21:50,840 Speaker 3: not enough. There has to be exclusionary anti competitive conduct 397 00:21:50,920 --> 00:21:54,240 Speaker 3: intended to hold on to that monopoly. So it really 398 00:21:54,320 --> 00:21:59,679 Speaker 3: means conduct that has no other reason. There's no justification 399 00:21:59,720 --> 00:22:02,640 Speaker 3: for the conduct, but for to hold back my rivals 400 00:22:02,680 --> 00:22:05,639 Speaker 3: and hold on to my position. That's really what that is. 401 00:22:05,880 --> 00:22:08,199 Speaker 3: And so at the end of the day, if the 402 00:22:08,240 --> 00:22:10,720 Speaker 3: DOJ can get through those two steps, and I think 403 00:22:10,760 --> 00:22:14,159 Speaker 3: it can, it's going to be all about conduct. And 404 00:22:14,200 --> 00:22:17,399 Speaker 3: that's the most difficult question the judge is going to 405 00:22:17,440 --> 00:22:19,960 Speaker 3: have to answer, and very clearly the one he's struggling 406 00:22:20,040 --> 00:22:23,360 Speaker 3: with the most based on his questions and the closing arguments. 407 00:22:23,359 --> 00:22:27,080 Speaker 3: And I'm not surprised by that, because there's a very 408 00:22:27,119 --> 00:22:30,480 Speaker 3: fine line in any monopolization suit between conduct that is 409 00:22:30,520 --> 00:22:35,040 Speaker 3: anti competitive and conduct that's very highly competitive. And courts 410 00:22:35,200 --> 00:22:38,040 Speaker 3: across the country, you know, are very mixed on this. 411 00:22:38,760 --> 00:22:41,679 Speaker 3: The one set of facts for one judge might be 412 00:22:41,760 --> 00:22:44,199 Speaker 3: viewed as anti competitive conduct, while the same set of 413 00:22:44,240 --> 00:22:47,760 Speaker 3: facts by another might be viewed as not crossing that line. 414 00:22:47,880 --> 00:22:50,879 Speaker 3: And so it's a very difficult determination to make. And 415 00:22:51,000 --> 00:22:54,320 Speaker 3: here it's about the agreements or payments that Google makes. 416 00:22:54,480 --> 00:22:58,800 Speaker 3: Agreements plus payments to Apple and to OEMs, I think 417 00:22:58,840 --> 00:23:02,600 Speaker 3: into telecoms too, So to place Google Search as the 418 00:23:02,680 --> 00:23:06,679 Speaker 3: default behind Safari, let's say, or to place the Google 419 00:23:06,720 --> 00:23:10,119 Speaker 3: Search app on the phone as a condition that Samsung's 420 00:23:10,160 --> 00:23:12,800 Speaker 3: making the Android phone as a condition to getting the 421 00:23:12,840 --> 00:23:15,040 Speaker 3: other Google apps that really must be on the phone, 422 00:23:15,080 --> 00:23:17,000 Speaker 3: like YouTube and play Store and things like that. 423 00:23:17,720 --> 00:23:20,120 Speaker 1: Coming up next on the Bloomberg Law Show, I'll continue 424 00:23:20,119 --> 00:23:25,560 Speaker 1: this conversation with Bloomberg Intelligence Senior litigation analyst Jenniferree. We'll 425 00:23:25,560 --> 00:23:28,560 Speaker 1: talk about which way the judge may be leaning and 426 00:23:28,600 --> 00:23:31,720 Speaker 1: what the remedies might be if he finds against Google. 427 00:23:32,200 --> 00:23:36,719 Speaker 1: I'm June Grosso and this is Bloomberg in its biggest 428 00:23:36,800 --> 00:23:40,080 Speaker 1: anti trust challenge yet. Google is being sued by the 429 00:23:40,359 --> 00:23:44,080 Speaker 1: Justice Department and state attorneys general. It's a case that 430 00:23:44,240 --> 00:23:47,160 Speaker 1: could result in the breakup of the twenty five year 431 00:23:47,200 --> 00:23:51,120 Speaker 1: old company. I've been talking to Bloomberg Intelligence senior litigation 432 00:23:51,240 --> 00:23:55,119 Speaker 1: analyst Jennifer ree. So, Jen, what's Google's answer to the 433 00:23:55,200 --> 00:23:59,040 Speaker 1: question of whether they engaged in anti competitive conduct? 434 00:24:00,119 --> 00:24:03,320 Speaker 3: While Google's answer, and it's a good one, honestly, is that, well, 435 00:24:03,359 --> 00:24:06,880 Speaker 3: this isn't true. Foreclosure be just because we're set let's 436 00:24:06,880 --> 00:24:09,560 Speaker 3: say Safari. Let's say let's use Apple as the example. 437 00:24:10,160 --> 00:24:13,000 Speaker 3: Just because we're set as the default behind Safari, any 438 00:24:13,119 --> 00:24:15,280 Speaker 3: user can go in and change that at any time. 439 00:24:15,680 --> 00:24:18,439 Speaker 3: We have done nothing, We have put no conditions on 440 00:24:18,480 --> 00:24:22,600 Speaker 3: Apple to get their payment, to do anything through technological 441 00:24:22,640 --> 00:24:26,280 Speaker 3: means to prevent a user from changing that default. They 442 00:24:26,320 --> 00:24:28,280 Speaker 3: can change it to duc dot Goo, they can change 443 00:24:28,320 --> 00:24:30,720 Speaker 3: it to Bing. And in fact, you see people who 444 00:24:30,760 --> 00:24:33,920 Speaker 3: have Microsoft devices where Bing is set as the default 445 00:24:34,160 --> 00:24:37,159 Speaker 3: actually going in and changing that default to Google. This 446 00:24:37,320 --> 00:24:41,440 Speaker 3: is interchangeable. We're not blocking anybody if we had set 447 00:24:41,480 --> 00:24:44,720 Speaker 3: to Apple, you won't get your payment unless you block 448 00:24:44,840 --> 00:24:47,479 Speaker 3: users from changing that default. That might have been different. 449 00:24:47,960 --> 00:24:50,639 Speaker 3: That's a little bit more like the old Microsoft case 450 00:24:50,760 --> 00:24:54,240 Speaker 3: where Microsoft was blocking out Netscape and Java. It really 451 00:24:54,280 --> 00:24:57,560 Speaker 3: made it technologically impossible for somebody to use Netscape or 452 00:24:57,600 --> 00:25:02,320 Speaker 3: Java on an Intel based Windows operating System computer. So 453 00:25:02,880 --> 00:25:06,119 Speaker 3: that's where things diverge a little bit from Microsoft in 454 00:25:06,200 --> 00:25:09,000 Speaker 3: it starts to get tricky. And really what the DJ 455 00:25:09,200 --> 00:25:11,960 Speaker 3: has to prove is that these other search engines have 456 00:25:11,960 --> 00:25:15,359 Speaker 3: been for closed from the market, therefore harming them and 457 00:25:15,400 --> 00:25:20,520 Speaker 3: therefore harming consumers because consumers have lack of choice, a 458 00:25:20,600 --> 00:25:23,919 Speaker 3: lack of innovation, a lack of quality, maybe you know, 459 00:25:24,000 --> 00:25:27,480 Speaker 3: a lack of ability to have better privacy through searches, 460 00:25:27,680 --> 00:25:28,360 Speaker 3: things like that. 461 00:25:28,800 --> 00:25:31,200 Speaker 1: Judge Meta said he didn't see how an upstart could 462 00:25:31,320 --> 00:25:35,160 Speaker 1: entice Apple away from that lucrative partnership. I can't conceive 463 00:25:35,200 --> 00:25:38,679 Speaker 1: of a world in which some other competitor, particularly a 464 00:25:38,720 --> 00:25:43,560 Speaker 1: new competitor, could do that if Microsoft couldn't do it right. 465 00:25:43,640 --> 00:25:47,320 Speaker 3: So Microsoft tried hard to get that default position, to 466 00:25:47,760 --> 00:25:51,800 Speaker 3: negotiate with Apple to take that default position and pay Apple. 467 00:25:51,840 --> 00:25:54,400 Speaker 3: I mean Apple's getting paid about twenty billion dollars a year, 468 00:25:54,440 --> 00:25:58,280 Speaker 3: we understand from Google for this default positioning, and Microsoft 469 00:25:58,320 --> 00:26:01,160 Speaker 3: tried and they failed. And Apple would say, well, it's 470 00:26:01,200 --> 00:26:03,679 Speaker 3: because we want our users to have the best experience 471 00:26:03,680 --> 00:26:06,119 Speaker 3: when they open up that new iPhone and they go 472 00:26:06,160 --> 00:26:08,119 Speaker 3: into search and safari, we want them to have the 473 00:26:08,160 --> 00:26:10,639 Speaker 3: best search results, and we think Google Search is the best, 474 00:26:10,920 --> 00:26:13,439 Speaker 3: and that's why we've gone that route. I'm sure it 475 00:26:13,480 --> 00:26:16,119 Speaker 3: doesn't hurt that Google saying Apple twenty million dollars a 476 00:26:16,240 --> 00:26:18,960 Speaker 3: year for that. This is the issue when the judge 477 00:26:19,000 --> 00:26:23,000 Speaker 3: is basically pointing out, he's asking querying in his own head, 478 00:26:23,200 --> 00:26:28,280 Speaker 3: is this foreclosing or not right? Because it isn't technologically foreclosing. 479 00:26:28,480 --> 00:26:30,800 Speaker 3: People can go in and make the change, But does 480 00:26:30,840 --> 00:26:34,320 Speaker 3: it actually operate that way? Is it defacto exclusive? Does 481 00:26:34,359 --> 00:26:39,520 Speaker 3: it operate in an exclusionary way? And he's saying that one. 482 00:26:39,680 --> 00:26:42,600 Speaker 3: You know, if these defaults do operate that way in 483 00:26:42,680 --> 00:26:44,800 Speaker 3: g you're paying twenty billion for it, so it must 484 00:26:44,840 --> 00:26:48,399 Speaker 3: get you something, right, It's valuable to you for some reason. 485 00:26:49,160 --> 00:26:53,040 Speaker 3: It's blocking nascent competition because new competitors are simply not 486 00:26:53,080 --> 00:26:54,679 Speaker 3: going to try to enter the market when they know 487 00:26:54,720 --> 00:26:57,200 Speaker 3: they've got that huge barrier when they know they've got 488 00:26:57,200 --> 00:26:58,680 Speaker 3: to come in and try to be a really great 489 00:26:58,680 --> 00:27:02,160 Speaker 3: search engine to start, but then also pay Apple twenty 490 00:27:02,200 --> 00:27:05,440 Speaker 3: billion dollars to try to supplant Google Search as that default. 491 00:27:05,560 --> 00:27:07,959 Speaker 1: And where does it fit in that Google says, you know, 492 00:27:08,000 --> 00:27:11,639 Speaker 1: we're just better. And wasn't there something about a big 493 00:27:11,720 --> 00:27:15,080 Speaker 1: search on being is for Google something like that? 494 00:27:15,359 --> 00:27:18,679 Speaker 3: Yes, there was that the most often searched item on 495 00:27:18,800 --> 00:27:21,160 Speaker 3: being is Google Google Search. 496 00:27:21,280 --> 00:27:24,320 Speaker 1: So I mean, you know I've use both, You've used both. 497 00:27:24,359 --> 00:27:27,040 Speaker 1: A lot of people have, and they tend to go 498 00:27:27,160 --> 00:27:27,920 Speaker 1: back to Google. 499 00:27:28,280 --> 00:27:28,480 Speaker 2: Right. 500 00:27:28,560 --> 00:27:31,520 Speaker 3: So the argument is Google would say, obviously, we've put 501 00:27:31,560 --> 00:27:34,960 Speaker 3: in massive, massive amounts of R and D. We hire 502 00:27:35,000 --> 00:27:37,000 Speaker 3: the best people, we put a lot of money into it, 503 00:27:37,040 --> 00:27:40,320 Speaker 3: we are constantly innovating, we have great engineers. We've done 504 00:27:40,359 --> 00:27:42,600 Speaker 3: the best we can to make this a great product, 505 00:27:42,640 --> 00:27:45,400 Speaker 3: and we've succeeded. And there's nothing wrong with that. It's 506 00:27:45,440 --> 00:27:49,200 Speaker 3: perfectly legal, it's pro competitive. What the Department of Justice 507 00:27:49,240 --> 00:27:51,480 Speaker 3: has argued, and there was quite a bit of evidence 508 00:27:51,600 --> 00:27:54,760 Speaker 3: presented on this, is that the issue is though that 509 00:27:54,840 --> 00:27:58,679 Speaker 3: the default agreements that Google has has prevented the others 510 00:27:58,680 --> 00:28:01,960 Speaker 3: from getting better because his search learns. It's the old 511 00:28:02,080 --> 00:28:06,480 Speaker 3: artificial intelligence, not the newer generative AI. But each search 512 00:28:06,560 --> 00:28:09,359 Speaker 3: teaches the search engine, and each search makes the search 513 00:28:09,359 --> 00:28:12,280 Speaker 3: engine better. And so a search engine needs scale. They 514 00:28:12,320 --> 00:28:14,600 Speaker 3: need a high volume of searches in order to improve. 515 00:28:15,000 --> 00:28:18,560 Speaker 3: And by having those default positions, they kept being induct 516 00:28:18,600 --> 00:28:21,960 Speaker 3: Dutgo and any other smaller competitors that might have tried 517 00:28:22,000 --> 00:28:24,440 Speaker 3: to enter the market from getting the scale they needed 518 00:28:24,480 --> 00:28:27,000 Speaker 3: to actually improve and be as good as Google Search, 519 00:28:27,040 --> 00:28:29,199 Speaker 3: each over being search page, or at least making it 520 00:28:29,240 --> 00:28:31,320 Speaker 3: easier for them to advertise that way. 521 00:28:31,760 --> 00:28:35,800 Speaker 1: So in the summary, the attorney for the DOJ said 522 00:28:35,840 --> 00:28:41,080 Speaker 1: that the last tech monopoly decision Microsoft fits like a glove. 523 00:28:41,640 --> 00:28:46,720 Speaker 1: Google's lead litigator disagreed, of course right. He said, manufacturers 524 00:28:46,720 --> 00:28:49,720 Speaker 1: were coerced into deals and customers were spoon fed and 525 00:28:49,840 --> 00:28:53,000 Speaker 1: inferior product they didn't want. Google has one with a 526 00:28:53,040 --> 00:28:57,800 Speaker 1: superior product. I mean, how much does Microsoft that case 527 00:28:58,520 --> 00:28:59,280 Speaker 1: hang over this? 528 00:29:00,000 --> 00:29:00,120 Speaker 2: Oh? 529 00:29:00,200 --> 00:29:03,080 Speaker 3: I think it hangs over it enormously. I mean, first, 530 00:29:03,160 --> 00:29:05,720 Speaker 3: the judge made clear that it hangs over it enormously. 531 00:29:05,800 --> 00:29:08,080 Speaker 3: He made it clear that he has read that case 532 00:29:08,160 --> 00:29:10,720 Speaker 3: one in any case he's ever read, and that he 533 00:29:10,840 --> 00:29:13,240 Speaker 3: sees that as the precedent that he will follow and 534 00:29:13,280 --> 00:29:15,480 Speaker 3: needs to follow. I mean, there isn't very much out 535 00:29:15,480 --> 00:29:18,920 Speaker 3: there for him, so this is an important case for him. 536 00:29:19,280 --> 00:29:23,560 Speaker 3: There are similarities, There are absolutely similarities. There were many 537 00:29:23,640 --> 00:29:27,040 Speaker 3: many different types of conduct that Microsoft was accused of 538 00:29:27,120 --> 00:29:31,240 Speaker 3: in that case to try to maintain its monopoly and 539 00:29:31,280 --> 00:29:34,520 Speaker 3: operating systems, its Windows operating system. At the time, Apple 540 00:29:34,640 --> 00:29:38,600 Speaker 3: wasn't very big in computers, and amongst the many different 541 00:29:38,600 --> 00:29:41,760 Speaker 3: things it was doing was agreements that operated in an 542 00:29:41,760 --> 00:29:45,600 Speaker 3: exclusionary manner because they were paying Internet service providers a 543 00:29:45,640 --> 00:29:49,440 Speaker 3: lot of money to use Internet Explorer as the browser. 544 00:29:49,480 --> 00:29:52,440 Speaker 3: This was about browsers, not about search engines. To use 545 00:29:52,440 --> 00:29:55,960 Speaker 3: Internet Explorer and to install Internet Explorer and to block 546 00:29:56,000 --> 00:30:00,880 Speaker 3: out Netscape. Netscape and Java were a threat to Microsoft's 547 00:30:01,000 --> 00:30:04,440 Speaker 3: operating system monopoly, so in order to protect its operating 548 00:30:04,480 --> 00:30:07,640 Speaker 3: systems monopoly, it was trying to push out these other 549 00:30:07,680 --> 00:30:11,760 Speaker 3: two entities, which are considered middleware. So the judge said 550 00:30:11,840 --> 00:30:15,840 Speaker 3: those payments to these companies to install Internet Explore as 551 00:30:15,880 --> 00:30:20,280 Speaker 3: the default found similar were illegal, but that was deemed 552 00:30:20,280 --> 00:30:24,360 Speaker 3: to be illegal, and Microsoft's pro competitive justifications were deemed 553 00:30:24,360 --> 00:30:27,320 Speaker 3: to be a sham or pretextual or at least didn't 554 00:30:27,320 --> 00:30:30,200 Speaker 3: outweigh the harm from the agreements, and they were ordered, 555 00:30:30,360 --> 00:30:33,040 Speaker 3: at least originally because they ended up settling, but they 556 00:30:33,040 --> 00:30:35,800 Speaker 3: were ordered to drop those payments. They could not offer 557 00:30:35,880 --> 00:30:39,520 Speaker 3: anything of value to these Internet service providers and other 558 00:30:39,600 --> 00:30:43,920 Speaker 3: companies like AOL to install Internet Explorer as the default. 559 00:30:44,600 --> 00:30:47,680 Speaker 3: So that is a similarity, and so both sides are right, 560 00:30:48,120 --> 00:30:50,200 Speaker 3: but again there is a difference in that at the 561 00:30:50,280 --> 00:30:54,280 Speaker 3: time Netscape was actually considered a better product, Internet Explorer 562 00:30:54,800 --> 00:30:57,560 Speaker 3: was the inferior or at least many thought was the 563 00:30:57,560 --> 00:31:01,640 Speaker 3: inferior browser. And so it was Microsoft kind of forcing 564 00:31:01,680 --> 00:31:05,680 Speaker 3: this inferior product on the makers of these computers or 565 00:31:05,760 --> 00:31:08,520 Speaker 3: the entities that provided people access to the Internet on 566 00:31:08,560 --> 00:31:12,080 Speaker 3: the computers to block out a better product and really 567 00:31:12,160 --> 00:31:15,280 Speaker 3: forcing them because at the time it had this monopoly 568 00:31:15,400 --> 00:31:17,959 Speaker 3: for operating systems, and if you wanted the Windows operating 569 00:31:18,000 --> 00:31:20,440 Speaker 3: system and you wanted to install that in the computer 570 00:31:20,520 --> 00:31:22,640 Speaker 3: you're building, asn't noem yet you had to abide by 571 00:31:22,720 --> 00:31:23,760 Speaker 3: Microsoft's rules. 572 00:31:24,240 --> 00:31:27,040 Speaker 1: I know it's difficult, but do you have a feeling 573 00:31:28,440 --> 00:31:31,920 Speaker 1: I always ask you this. Yes, it's hard, because he 574 00:31:31,960 --> 00:31:34,280 Speaker 1: asked hard questions of both sides. 575 00:31:34,280 --> 00:31:37,040 Speaker 3: He really did. He played the devil's advocate across the board. 576 00:31:37,200 --> 00:31:39,840 Speaker 3: Outside of what we've talked about that it seemed pretty 577 00:31:39,840 --> 00:31:42,280 Speaker 3: clear he's going to align with the Department of Justice 578 00:31:42,320 --> 00:31:46,040 Speaker 3: on their market definition that very first step at least 579 00:31:46,080 --> 00:31:49,160 Speaker 3: on general search. Not as clear on advertising, but I 580 00:31:49,240 --> 00:31:51,880 Speaker 3: tend to think for both, he's probably going to align 581 00:31:51,920 --> 00:31:54,640 Speaker 3: with the DJ. It was really hard to say. So 582 00:31:54,760 --> 00:31:56,520 Speaker 3: what I did is I went back to the way 583 00:31:56,560 --> 00:31:58,920 Speaker 3: I felt at the end of trial. You know, after 584 00:31:59,000 --> 00:32:02,080 Speaker 3: observing the trial and listening to the evidence. I attended 585 00:32:02,080 --> 00:32:05,080 Speaker 3: some I read transcripts for some My gut there was 586 00:32:05,080 --> 00:32:07,840 Speaker 3: that the DOJ had the edge, that it's close because 587 00:32:07,880 --> 00:32:10,560 Speaker 3: it's a hard call to make on whether this conduct 588 00:32:10,600 --> 00:32:13,360 Speaker 3: is anti competitive or not, but that I lean toward 589 00:32:13,400 --> 00:32:16,680 Speaker 3: the DJ, and I'm sticking with that because the closing 590 00:32:16,760 --> 00:32:21,360 Speaker 3: arguments didn't really change that viewpoint after I'd seen all 591 00:32:21,400 --> 00:32:24,160 Speaker 3: the evidence, and I think June, it's because there was 592 00:32:24,240 --> 00:32:27,960 Speaker 3: a lot of fairly credible and strong evidence that defaults 593 00:32:27,960 --> 00:32:31,840 Speaker 3: are very important, that they're sticky, that most people don't 594 00:32:31,880 --> 00:32:34,320 Speaker 3: really know they can change them, or don't know how 595 00:32:34,360 --> 00:32:37,760 Speaker 3: to change them, or wouldn't bother to change them, And 596 00:32:38,720 --> 00:32:41,840 Speaker 3: then there was never a very good answer by Google 597 00:32:41,960 --> 00:32:45,120 Speaker 3: as to why, if you're just better and that's why 598 00:32:45,160 --> 00:32:48,480 Speaker 3: you have this strong market share, why you need to 599 00:32:48,480 --> 00:32:51,360 Speaker 3: pay that twenty billion for that default position more than 600 00:32:51,360 --> 00:32:53,840 Speaker 3: twenty billion because they're paying others beyond Apple, So the 601 00:32:53,880 --> 00:32:56,920 Speaker 3: twenty two twenty five whatever it is they're paying a year, 602 00:32:57,280 --> 00:33:00,080 Speaker 3: Why are you paying that for this default position? If 603 00:33:00,160 --> 00:33:03,320 Speaker 3: you can be dominant simply because you're just desired, consumers 604 00:33:03,360 --> 00:33:05,480 Speaker 3: want to use you and not the others, that you 605 00:33:05,520 --> 00:33:07,800 Speaker 3: don't need to pay that kind of money. And I 606 00:33:07,800 --> 00:33:10,080 Speaker 3: don't really feel like they ever had a very good 607 00:33:10,120 --> 00:33:13,440 Speaker 3: answer to that question. And that speaks volumes. And then 608 00:33:13,600 --> 00:33:17,920 Speaker 3: agreement doesn't have to be overtly exclusive to be illegal. 609 00:33:18,600 --> 00:33:21,360 Speaker 3: There is de facto exclusivity that we've seen in the 610 00:33:21,440 --> 00:33:24,560 Speaker 3: law that we've seen in precedent, where if it operates 611 00:33:24,880 --> 00:33:28,520 Speaker 3: in an exclusive manner right, even if it's not overtly exclusive, 612 00:33:28,560 --> 00:33:31,440 Speaker 3: as these are not, that can also be illegal. And 613 00:33:31,520 --> 00:33:35,880 Speaker 3: I think that's basically what that evidence showed with respect 614 00:33:35,960 --> 00:33:38,280 Speaker 3: to how sticky these are and the fact that Google's 615 00:33:38,320 --> 00:33:40,840 Speaker 3: paying so much for those positions, they are important for 616 00:33:40,920 --> 00:33:41,440 Speaker 3: some reason. 617 00:33:42,320 --> 00:33:47,040 Speaker 1: So Jen, if the judge decides in the Justice Department's favor, 618 00:33:47,040 --> 00:33:51,200 Speaker 1: the government's favor. Then there'll be another sort of mini trial. 619 00:33:51,640 --> 00:33:55,240 Speaker 3: Yeah, another hearing, probably a few days, I'm assuming down 620 00:33:55,280 --> 00:33:59,480 Speaker 3: the road with experts to discuss what the remedy should be, 621 00:33:59,480 --> 00:34:02,800 Speaker 3: and I think briefing before that, they'll probably ask the DOJ, well, 622 00:34:02,920 --> 00:34:05,680 Speaker 3: here's what we decided. What remedy do you think is appropriate? 623 00:34:05,960 --> 00:34:08,200 Speaker 3: And the DOJ will then advocate we don't know yet. 624 00:34:08,239 --> 00:34:10,680 Speaker 3: The DJ has been very vague. There's really no talk 625 00:34:10,719 --> 00:34:13,359 Speaker 3: about what the remedy should be. The DOJ has said 626 00:34:13,440 --> 00:34:16,279 Speaker 3: very little. So we'll get better clarity at that point 627 00:34:16,400 --> 00:34:18,600 Speaker 3: from the briefing on what the DOJ is looking for, 628 00:34:18,640 --> 00:34:21,640 Speaker 3: and then Google will probably oppose that, probably lay out 629 00:34:21,680 --> 00:34:24,239 Speaker 3: something they think would work and would be better, and 630 00:34:24,280 --> 00:34:25,840 Speaker 3: then the judge will have a hearing and have to 631 00:34:25,880 --> 00:34:29,120 Speaker 3: decide on that. That'll be yet another very difficult decision 632 00:34:29,160 --> 00:34:29,520 Speaker 3: to make. 633 00:34:29,840 --> 00:34:32,879 Speaker 1: What would some possible remedies be. I mean to get 634 00:34:32,960 --> 00:34:33,960 Speaker 1: rid of the deal with Apple. 635 00:34:34,400 --> 00:34:39,279 Speaker 3: When exclusive agreements are illegal, the most straightforward solution is 636 00:34:39,280 --> 00:34:42,479 Speaker 3: to get rid of the exclusive agreements, so that would 637 00:34:42,480 --> 00:34:45,759 Speaker 3: be straightforward. It is an odd solution in this case, though, 638 00:34:45,800 --> 00:34:49,879 Speaker 3: because it's basically saying the Google, which is already entrenched. Okay, hey, 639 00:34:49,880 --> 00:34:51,680 Speaker 3: you don't have to pay twenty two or twenty three 640 00:34:51,760 --> 00:34:53,800 Speaker 3: or whatever it is billion a year. You're going to 641 00:34:53,840 --> 00:34:55,880 Speaker 3: profit from that. And you know what, Apple's going to 642 00:34:55,880 --> 00:34:58,200 Speaker 3: get hurt, and Mozilla is going to get hurt. They 643 00:34:58,200 --> 00:35:01,800 Speaker 3: have Firefox and they have an agreement also, and maybe 644 00:35:01,800 --> 00:35:05,680 Speaker 3: even the OEMs like Samsung will get hurt. And maybe 645 00:35:05,840 --> 00:35:08,000 Speaker 3: maybe if you're going to hurt all those other companies, 646 00:35:08,000 --> 00:35:10,400 Speaker 3: that's going to trickle down to consumers and higher prices 647 00:35:10,400 --> 00:35:13,439 Speaker 3: for their iPhone or higher prices for their Android phone. 648 00:35:13,520 --> 00:35:15,120 Speaker 3: Like who knows, you know, you don't know what that 649 00:35:15,160 --> 00:35:18,160 Speaker 3: trickle down effect is going to be. So I think 650 00:35:18,160 --> 00:35:20,200 Speaker 3: that would be an odd solution. It is the most 651 00:35:20,239 --> 00:35:24,000 Speaker 3: typical we've seen exclusive dealing cases in the past where 652 00:35:24,000 --> 00:35:26,960 Speaker 3: the plaintiffs of one that's usually been the solution. And 653 00:35:27,040 --> 00:35:31,520 Speaker 3: when Microsoft finally settled, and so Microsoft in that case 654 00:35:31,680 --> 00:35:35,200 Speaker 3: voluntarily through the settlement, agreed to drop these payments it 655 00:35:35,239 --> 00:35:38,840 Speaker 3: was making to Internet service providers to set Internet Explore 656 00:35:38,840 --> 00:35:41,880 Speaker 3: as the default. So we don't have even you know, 657 00:35:41,960 --> 00:35:45,319 Speaker 3: other examples, the very few other cases where plaintiffs of 658 00:35:45,360 --> 00:35:48,000 Speaker 3: one that's been the answer to drop the agreements. This 659 00:35:48,040 --> 00:35:49,960 Speaker 3: would be a bit of an odd case. And other 660 00:35:50,000 --> 00:35:52,000 Speaker 3: option June might be what they've done in Europe, which 661 00:35:52,040 --> 00:35:54,839 Speaker 3: are these choice screens. So for a new Android phone, 662 00:35:54,880 --> 00:35:57,000 Speaker 3: if you open up a new Android phone, they would 663 00:35:57,000 --> 00:35:58,799 Speaker 3: give you a choice what do you want to set 664 00:35:58,840 --> 00:36:00,920 Speaker 3: is your default search engine? Do you want being duc 665 00:36:01,000 --> 00:36:04,160 Speaker 3: dot go, do you want Google or any other small 666 00:36:04,280 --> 00:36:06,440 Speaker 3: entities that may be out there, and then the user 667 00:36:06,480 --> 00:36:09,760 Speaker 3: picks as they set up their phone. That's another option 668 00:36:10,040 --> 00:36:12,480 Speaker 3: that the judge could impose here. We haven't seen it 669 00:36:12,600 --> 00:36:15,680 Speaker 3: do very much in Europe in terms of cutting into 670 00:36:15,760 --> 00:36:19,120 Speaker 3: Google's share, but again that could align with what Google 671 00:36:19,200 --> 00:36:22,000 Speaker 3: is saying that we're just better in consumers prefer us. 672 00:36:21,960 --> 00:36:22,160 Speaker 2: You know. 673 00:36:22,280 --> 00:36:25,200 Speaker 3: Another option could be sharing of data. That's one other 674 00:36:25,280 --> 00:36:28,080 Speaker 3: thing that's possible. There could be some privacy concerns there, 675 00:36:28,080 --> 00:36:30,480 Speaker 3: but it could be all this data you've collected through 676 00:36:30,480 --> 00:36:32,480 Speaker 3: all the millions of searches that have been done to 677 00:36:32,560 --> 00:36:34,879 Speaker 3: make you a better search engine. Share that with being 678 00:36:34,920 --> 00:36:37,480 Speaker 3: induc dot go, so they have the opportunity to try 679 00:36:37,480 --> 00:36:38,839 Speaker 3: to use that data to get better too. 680 00:36:39,560 --> 00:36:43,000 Speaker 1: It's always wonderful to hear your insights. Jen, That's Bloomberg 681 00:36:43,080 --> 00:36:48,200 Speaker 1: Intelligence Senior litigation analyst Jenniferree. I'm June Grosso. Stay with US. 682 00:36:48,200 --> 00:36:51,480 Speaker 1: Today's top stories and global business headlines are coming up 683 00:36:51,680 --> 00:36:52,320 Speaker 1: right now.