1 00:00:00,000 --> 00:00:04,080 Speaker 1: When you're talking about the tech giants Apple, Google, Facebook, Microsoft, 2 00:00:04,120 --> 00:00:07,440 Speaker 1: and Amazon, you talk in terms of billions of dollars. 3 00:00:07,720 --> 00:00:10,480 Speaker 1: They occupy the top five spots in the ranks of 4 00:00:10,520 --> 00:00:14,120 Speaker 1: the largest US companies by market capitalization, and they're growing. 5 00:00:14,560 --> 00:00:17,239 Speaker 1: They also dominate so many parts of our lives, and 6 00:00:17,280 --> 00:00:20,480 Speaker 1: they've escaped regulation in the US for quite some time. 7 00:00:21,000 --> 00:00:23,400 Speaker 1: But things may be changing for the tech giants. Have 8 00:00:23,520 --> 00:00:26,000 Speaker 1: you noticed They've been facing a lot of criticism lately, 9 00:00:26,040 --> 00:00:29,280 Speaker 1: and some lawmakers are now pushing for regulations for the 10 00:00:29,320 --> 00:00:33,680 Speaker 1: tech companies in several areas. For example, Democratic Senators Amy 11 00:00:33,720 --> 00:00:38,400 Speaker 1: Klobuchar and Mark Warner and Republican John McCain are sponsoring 12 00:00:38,479 --> 00:00:43,360 Speaker 1: legislation to regulate online political advertising. Warner explained why on 13 00:00:43,440 --> 00:00:47,559 Speaker 1: Bloomberg TV this week, and what we're saying is digital 14 00:00:47,560 --> 00:00:51,000 Speaker 1: advertising rules have not kept up with the rules and 15 00:00:51,080 --> 00:00:54,400 Speaker 1: already governed for example, TV and radio, so we want 16 00:00:54,440 --> 00:00:57,680 Speaker 1: to simply make sure there's the same kind of disclosure rules. 17 00:00:57,680 --> 00:01:00,480 Speaker 1: Somebody goes out there and runs at camp ann add 18 00:01:00,560 --> 00:01:02,800 Speaker 1: four against me, I ought to be able to go 19 00:01:02,880 --> 00:01:05,120 Speaker 1: look at that ad at some point. There ought to 20 00:01:05,120 --> 00:01:08,960 Speaker 1: be some kind of tagline. Twitter, Google and Facebook are 21 00:01:09,040 --> 00:01:12,200 Speaker 1: schedule to testify at three congressional hearings next week on 22 00:01:12,319 --> 00:01:16,480 Speaker 1: Russian meddling in the election. My guests are Jennifer Ree, 23 00:01:16,560 --> 00:01:20,520 Speaker 1: senior litigation analyst for Bloomberg Intelligence, and Mark Patterson, Professor 24 00:01:20,560 --> 00:01:24,360 Speaker 1: at Forham University School of Law. Mark, are the tech 25 00:01:24,440 --> 00:01:28,080 Speaker 1: giants showing flaws as they gain more and more power? 26 00:01:28,160 --> 00:01:33,000 Speaker 1: How do you account for this new criticism of them? 27 00:01:33,040 --> 00:01:37,240 Speaker 1: I don't think they're showing flaws that they didn't have before. 28 00:01:37,360 --> 00:01:42,120 Speaker 1: I think that it's just that as they as you've said, 29 00:01:42,160 --> 00:01:44,080 Speaker 1: they've become a bigger and bigger part of our lives, 30 00:01:44,120 --> 00:01:49,280 Speaker 1: so the flaws become more apparent and more pervasive. I think, Um, 31 00:01:49,320 --> 00:01:52,160 Speaker 1: a lot of people have been concerned about these sorts 32 00:01:52,160 --> 00:01:54,760 Speaker 1: of issues for a long time. Um, it's just that 33 00:01:54,800 --> 00:01:58,760 Speaker 1: now they've become is significant enough that it's hard for 34 00:01:58,800 --> 00:02:02,240 Speaker 1: anyone not to notice the And when Facebook and Google 35 00:02:02,320 --> 00:02:05,600 Speaker 1: came out forcefully against a bill that would hold companies 36 00:02:05,640 --> 00:02:09,960 Speaker 1: accountable for hosting sex trafficking on their websites, what did 37 00:02:10,000 --> 00:02:17,040 Speaker 1: the reaction to that show? The reaction to Google and Yeah, 38 00:02:17,120 --> 00:02:22,320 Speaker 1: the reaction to their objecting to that hard. That's that's 39 00:02:22,320 --> 00:02:26,880 Speaker 1: a particularly difficult one to discuss just because you know it. 40 00:02:27,680 --> 00:02:33,520 Speaker 1: Their position against the proposed law suggests that there, you know, 41 00:02:34,360 --> 00:02:37,520 Speaker 1: could be interpreted to suggest they're not as hostile to 42 00:02:37,639 --> 00:02:40,600 Speaker 1: sex trafficking, but of course they are. Um they're concerned 43 00:02:40,600 --> 00:02:43,560 Speaker 1: about unintended consequences of that law and how it's going 44 00:02:43,600 --> 00:02:46,280 Speaker 1: to affect their business model in other respects, and so 45 00:02:46,639 --> 00:02:50,400 Speaker 1: it's just very difficult for them to express the concerns 46 00:02:50,520 --> 00:02:55,160 Speaker 1: that we all might think have some legitimacy without making 47 00:02:55,200 --> 00:02:57,840 Speaker 1: it look like they're taking a position that none of 48 00:02:57,919 --> 00:03:02,560 Speaker 1: us would accept. Jen Yelp has filed a new federal 49 00:03:03,080 --> 00:03:07,120 Speaker 1: antitrust complaint against Google. Tell us about that, Well, it 50 00:03:07,160 --> 00:03:09,280 Speaker 1: looks like what Yelp has done is gone to the 51 00:03:09,320 --> 00:03:13,480 Speaker 1: ftc UM to seek to ask the ftc to look 52 00:03:13,520 --> 00:03:17,160 Speaker 1: into whether or not Google might be violating some commitments 53 00:03:17,200 --> 00:03:19,800 Speaker 1: that the company made several years ago to the Commission 54 00:03:20,200 --> 00:03:23,400 Speaker 1: UM in response to a long investigation the Commission had done. 55 00:03:23,680 --> 00:03:27,200 Speaker 1: And the Commission closed this investigation in about two thousand thirteen, 56 00:03:27,520 --> 00:03:30,200 Speaker 1: and they found they look at many practices of Google, 57 00:03:30,400 --> 00:03:33,240 Speaker 1: and they found that some of those practices on balance 58 00:03:33,560 --> 00:03:36,640 Speaker 1: were more pro competitive than anti competitive, even if they 59 00:03:36,720 --> 00:03:39,440 Speaker 1: did bring some harm. But they did find that that 60 00:03:39,520 --> 00:03:42,680 Speaker 1: there were certain things Google was doing that caused them concern, 61 00:03:42,960 --> 00:03:45,920 Speaker 1: and one of those concerned Yelp, but it affected Yelp, 62 00:03:45,960 --> 00:03:48,560 Speaker 1: but had to do with scraping the content of others 63 00:03:48,640 --> 00:03:51,680 Speaker 1: like yelps content and actually using it in their own verticals, 64 00:03:51,920 --> 00:03:54,960 Speaker 1: using images or something like that from Yelp, that that 65 00:03:55,040 --> 00:03:57,520 Speaker 1: would go into the own the searches, their own verticals 66 00:03:57,560 --> 00:03:59,760 Speaker 1: when people would do a search. And what they did 67 00:03:59,800 --> 00:04:02,400 Speaker 1: was a promise that companies like Yelp could opt out. 68 00:04:02,440 --> 00:04:04,880 Speaker 1: And what Yelp is saying as well, it's not happening 69 00:04:04,960 --> 00:04:07,880 Speaker 1: because we are now finding that our images are showing 70 00:04:07,960 --> 00:04:10,600 Speaker 1: up in some of Google's verticals and they're violating this, 71 00:04:10,640 --> 00:04:13,840 Speaker 1: and you need to look into this. And Democratic Senator 72 00:04:13,920 --> 00:04:17,920 Speaker 1: Richard Blumenthal of Connecticut is calling for reopening the FTC 73 00:04:18,120 --> 00:04:24,760 Speaker 1: probe into Google's possible anti competitive abuses. Mark EU antitrust 74 00:04:25,000 --> 00:04:28,800 Speaker 1: regulators find Google a record two point seven billion dollars 75 00:04:29,000 --> 00:04:33,200 Speaker 1: in June as it investigated the companies and continues to 76 00:04:33,360 --> 00:04:37,359 Speaker 1: the company's dominance in searches and smartphones. Why isn't the 77 00:04:37,400 --> 00:04:42,760 Speaker 1: same thing happening in the US. Well, the I mean 78 00:04:43,480 --> 00:04:46,360 Speaker 1: part of it is I think that the US investigation 79 00:04:46,480 --> 00:04:50,239 Speaker 1: came after the US one, although it was overlapped because 80 00:04:50,240 --> 00:04:52,840 Speaker 1: it was so long, and so Google's power is more 81 00:04:52,880 --> 00:04:55,960 Speaker 1: apparent than it was before. Google's power is also more 82 00:04:56,000 --> 00:04:59,680 Speaker 1: apparent in its market share is greater in Europe that 83 00:05:00,120 --> 00:05:04,320 Speaker 1: in the US. And Europe is just more willing to 84 00:05:04,400 --> 00:05:08,720 Speaker 1: regulate dominant firms than than we are in the US. 85 00:05:08,760 --> 00:05:13,080 Speaker 1: And so I think those are the primary reasons. It's 86 00:05:13,160 --> 00:05:15,920 Speaker 1: just that they have their own laws that differ somewhat 87 00:05:15,960 --> 00:05:20,120 Speaker 1: from ours, and that puts puts Google in a tougher position. 88 00:05:21,040 --> 00:05:24,080 Speaker 1: Do you agree, Jen, Because of course Bloomenthal is another 89 00:05:24,120 --> 00:05:26,599 Speaker 1: senator who's saying, you know, if they can do it 90 00:05:26,640 --> 00:05:28,839 Speaker 1: in the EU, why aren't we doing it here? Oh? No, 91 00:05:29,080 --> 00:05:31,440 Speaker 1: that's exactly right. I mean, the e U s competition 92 00:05:31,520 --> 00:05:34,040 Speaker 1: laws are different from the United States competition laws, and 93 00:05:34,080 --> 00:05:37,120 Speaker 1: they've developed over time in a different manner. They have 94 00:05:37,200 --> 00:05:41,080 Speaker 1: a different focus. There are many similarities. But um, you know, 95 00:05:41,120 --> 00:05:43,480 Speaker 1: as Mark was just saying, when they're looking at abuse 96 00:05:43,520 --> 00:05:46,440 Speaker 1: of dominance, they are definitely in Europe much more willing 97 00:05:46,880 --> 00:05:51,480 Speaker 1: to go after conduct that might be hampering smaller rivals 98 00:05:51,560 --> 00:05:53,520 Speaker 1: in Europe than we may be in the US. And 99 00:05:53,520 --> 00:05:56,039 Speaker 1: in the US we are focused on when you're looking 100 00:05:56,040 --> 00:05:59,360 Speaker 1: at unilateral conduct of a company that that might be monopolistic, 101 00:05:59,600 --> 00:06:03,080 Speaker 1: you know, we are asking have they engaged in some specific, 102 00:06:03,480 --> 00:06:07,520 Speaker 1: you know, exclusionary conduct that had no legitimate business purpose 103 00:06:07,760 --> 00:06:10,400 Speaker 1: other than to harm competitors, and has that caused harm 104 00:06:10,400 --> 00:06:13,680 Speaker 1: in the market, and has that harm outweighed whatever whatever 105 00:06:13,720 --> 00:06:16,400 Speaker 1: benefit might come from that conduct? And I think it's 106 00:06:16,440 --> 00:06:19,920 Speaker 1: just a different analysis. I've been talking with Jennifer Ree, 107 00:06:19,920 --> 00:06:23,520 Speaker 1: a senior litigation analyst for Bloomberg Intelligence, and Professor Mark 108 00:06:23,560 --> 00:06:26,920 Speaker 1: Patterson of Fordham University School of Law about the tech 109 00:06:26,960 --> 00:06:31,120 Speaker 1: giants and the regulatory challenges they may be facing. Now. 110 00:06:31,440 --> 00:06:34,800 Speaker 1: Three of the tech giants, Facebook, Twitter, and Google are 111 00:06:34,839 --> 00:06:40,600 Speaker 1: going to be testifying next week at three different UH committees, 112 00:06:41,040 --> 00:06:44,000 Speaker 1: and one of the committees is Lindsey Graham's and he said, 113 00:06:44,000 --> 00:06:47,760 Speaker 1: when it comes to Facebook advertising and social media advertising, 114 00:06:47,839 --> 00:06:52,600 Speaker 1: it's the wild wild West. Mark. They have spent a 115 00:06:52,680 --> 00:06:54,640 Speaker 1: lot of money. They they put a lot of money 116 00:06:54,680 --> 00:06:59,880 Speaker 1: aside to lobby politicians. What do what are the chat 117 00:07:00,320 --> 00:07:04,760 Speaker 1: is that this bill that mandates new transparency for online 118 00:07:04,800 --> 00:07:10,560 Speaker 1: political advertising will actually be able to be passed. Well, 119 00:07:10,600 --> 00:07:13,840 Speaker 1: I can't sort of handicap the congressional prospects. But I 120 00:07:14,280 --> 00:07:19,760 Speaker 1: think that you know, over the last decade, the these 121 00:07:20,000 --> 00:07:23,880 Speaker 1: tech companies have been given more protections and more freedom 122 00:07:24,000 --> 00:07:29,400 Speaker 1: than the analogous companies in the traditional media industry, and 123 00:07:30,360 --> 00:07:32,880 Speaker 1: at some point that's likely to end. I mean that 124 00:07:32,960 --> 00:07:36,960 Speaker 1: policy was adopted to try to promote internet commerce, um 125 00:07:37,000 --> 00:07:40,640 Speaker 1: and I think we all recognize that internet commerce is 126 00:07:40,640 --> 00:07:43,440 Speaker 1: is a viable proposition at this point, and so it 127 00:07:43,520 --> 00:07:47,640 Speaker 1: may be time to to to make the regulations of 128 00:07:47,800 --> 00:07:53,840 Speaker 1: online and offline media more comparable. Jen there was a 129 00:07:53,960 --> 00:07:58,560 Speaker 1: Yale Law Journal article by Lena Kahn who argued that 130 00:07:58,920 --> 00:08:01,840 Speaker 1: the modern view of and trust laws, which were conceived 131 00:08:01,880 --> 00:08:05,120 Speaker 1: under the Reagan administration over emphasizing low prices as a 132 00:08:05,160 --> 00:08:07,920 Speaker 1: test for whether a company is gaining too much market power, 133 00:08:08,520 --> 00:08:11,840 Speaker 1: are old, too old fashioned, and it was an argument 134 00:08:11,880 --> 00:08:15,840 Speaker 1: for a complete reconception of antitrust laws to deal with 135 00:08:16,040 --> 00:08:19,480 Speaker 1: something like the rise of Amazon. Is there a debate 136 00:08:19,800 --> 00:08:24,320 Speaker 1: in the community about what the antitrust laws are doing? 137 00:08:25,000 --> 00:08:26,880 Speaker 1: And I think that there is, And and June, I 138 00:08:26,880 --> 00:08:29,240 Speaker 1: think what this comes out of there's a general feeling, 139 00:08:29,360 --> 00:08:32,280 Speaker 1: I believe out there that these big tech companies are 140 00:08:32,280 --> 00:08:34,720 Speaker 1: just getting too big and too powerful, and I think 141 00:08:34,760 --> 00:08:40,319 Speaker 1: sometimes that scares people, UM, and people ask what should 142 00:08:40,320 --> 00:08:41,760 Speaker 1: be done about it? And I know that there are 143 00:08:41,800 --> 00:08:43,880 Speaker 1: those out there that believe will anti trust should be 144 00:08:43,880 --> 00:08:46,199 Speaker 1: doing something about it. And and either they believe it 145 00:08:46,240 --> 00:08:48,360 Speaker 1: isn't or they believe that it or they believe that 146 00:08:48,400 --> 00:08:51,800 Speaker 1: it can't and that things need to be changed. You know, UM, 147 00:08:51,920 --> 00:08:56,240 Speaker 1: anti trust is meant to to ensure healthy marketplaces and 148 00:08:56,320 --> 00:08:59,920 Speaker 1: ensure that these companies aren't behaving in an anti competitive manner. 149 00:09:00,040 --> 00:09:03,120 Speaker 1: But as our current acting to your person of the 150 00:09:03,160 --> 00:09:07,200 Speaker 1: FTC has stated, it's not necessarily a panacea for you know, 151 00:09:07,280 --> 00:09:10,920 Speaker 1: all of the sort of socioeconomic issues that we may have. UM, 152 00:09:11,000 --> 00:09:13,720 Speaker 1: whether or not it needs to be changed, I'd actually 153 00:09:13,720 --> 00:09:17,440 Speaker 1: love to hear the professor's perspective on this. UM. I 154 00:09:17,480 --> 00:09:19,880 Speaker 1: believe personally that it is a tool that can do 155 00:09:19,960 --> 00:09:22,920 Speaker 1: its job, but it may not. It may not be 156 00:09:23,000 --> 00:09:24,920 Speaker 1: tailored to do what a lot of people out there 157 00:09:24,960 --> 00:09:27,320 Speaker 1: believe it should be doing. Maybe that isn't the purpose 158 00:09:27,360 --> 00:09:32,520 Speaker 1: of antitrust. Mark, what do you think? Well, I'm on 159 00:09:32,600 --> 00:09:35,680 Speaker 1: record with a recent book arguing that antitrust law could 160 00:09:35,679 --> 00:09:38,320 Speaker 1: deal with these things. UM, I think the trick is 161 00:09:38,400 --> 00:09:43,280 Speaker 1: though it's information just doesn't work like other goods work. Um, 162 00:09:43,360 --> 00:09:46,520 Speaker 1: and particularly information that is provided largely for free doesn't 163 00:09:46,559 --> 00:09:50,079 Speaker 1: work the way that the sale of other goods for 164 00:09:50,080 --> 00:09:52,680 Speaker 1: for money works. And so an I trust law needs 165 00:09:52,679 --> 00:09:56,080 Speaker 1: to adapt to both free markets and UH, which you 166 00:09:56,120 --> 00:09:58,840 Speaker 1: know is almost a contradiction in terms and adapt I 167 00:09:58,880 --> 00:10:02,840 Speaker 1: think more importantly to to what's important and information, and 168 00:10:02,960 --> 00:10:05,920 Speaker 1: that is quality of the information more than it is price. 169 00:10:06,000 --> 00:10:08,640 Speaker 1: And that was part of a. Lena Khan's position in 170 00:10:08,720 --> 00:10:11,360 Speaker 1: that piece too, So so I agree with Jen. I 171 00:10:11,400 --> 00:10:15,040 Speaker 1: think that and I trust can do this, but it 172 00:10:15,200 --> 00:10:18,200 Speaker 1: requires a lot of work, or at least it appears 173 00:10:18,200 --> 00:10:20,480 Speaker 1: that ant I trust can do this. Ultimately, it might 174 00:10:20,520 --> 00:10:23,920 Speaker 1: be that we need to adapt anti trust or or 175 00:10:23,960 --> 00:10:27,520 Speaker 1: adopt other laws if an I trust, it turns out, 176 00:10:27,559 --> 00:10:31,559 Speaker 1: can't address the satisfactorily. Jen. The scale of these companies 177 00:10:31,600 --> 00:10:34,920 Speaker 1: and the money they have. Does that also mean that, 178 00:10:34,960 --> 00:10:37,640 Speaker 1: in the current state of affairs, that they can just 179 00:10:38,000 --> 00:10:42,360 Speaker 1: fight these anti competitive challenges, pay regulatory fines and keep 180 00:10:42,400 --> 00:10:45,040 Speaker 1: on going. Well, it does mean that, and I think 181 00:10:45,080 --> 00:10:48,680 Speaker 1: that that that bothers some people because these hefty fines, 182 00:10:48,760 --> 00:10:50,520 Speaker 1: Even when you look at the large fine that was 183 00:10:50,559 --> 00:10:54,040 Speaker 1: imposed on Google by the European Commission recently. You know, 184 00:10:54,280 --> 00:10:57,000 Speaker 1: they can pay the fine and really move on and 185 00:10:57,040 --> 00:11:00,560 Speaker 1: without even a dent in or a scar. And and 186 00:11:00,600 --> 00:11:02,719 Speaker 1: I think this is part of the concern. And in 187 00:11:02,840 --> 00:11:06,280 Speaker 1: many believe that until the antitrust laws do something structural, 188 00:11:06,559 --> 00:11:10,840 Speaker 1: whether whether until there's something that's done structurally, that they'll 189 00:11:10,880 --> 00:11:13,520 Speaker 1: go on doing whatever they want and move on un 190 00:11:13,559 --> 00:11:16,280 Speaker 1: federal Uh, you know, I'm not again, I'm not really 191 00:11:16,280 --> 00:11:18,680 Speaker 1: so sure that's the case. I think if you see 192 00:11:19,000 --> 00:11:22,240 Speaker 1: two years ago, there were behavioral restrictions that were placed 193 00:11:22,240 --> 00:11:25,160 Speaker 1: on Google, and and those restrictions did go into effect, 194 00:11:25,160 --> 00:11:28,360 Speaker 1: and YELP might believe now that things aren't exactly right, 195 00:11:28,600 --> 00:11:32,320 Speaker 1: but they did change the marketplace for certain players in 196 00:11:32,360 --> 00:11:35,040 Speaker 1: other areas well. We'll see what happens with the EU, 197 00:11:35,160 --> 00:11:38,600 Speaker 1: which seems to be very very aggressive in this area 198 00:11:38,600 --> 00:11:41,360 Speaker 1: in a shopping comparison. I want to thank both of 199 00:11:41,400 --> 00:11:44,080 Speaker 1: you for being on Bloomberg Law. That's Jennifer Reese and 200 00:11:44,080 --> 00:11:47,120 Speaker 1: your litigation analyst for Bloomberg Intelligence. You can find more 201 00:11:47,120 --> 00:11:49,360 Speaker 1: of her analysis by going to be I go on 202 00:11:49,400 --> 00:11:52,920 Speaker 1: the Bloomberg terminal. And Professor Mark Patterson, a Form University's 203 00:11:52,920 --> 00:11:56,120 Speaker 1: School of Law. His new book is called Antitrust Law 204 00:11:56,160 --> 00:11:59,520 Speaker 1: and the New Economy, Google YELP, Libor and the Control 205 00:11:59,600 --> 00:12:02,520 Speaker 1: of Formation. Thank you both for being on Bloomberg Law. 206 00:12:03,080 --> 00:12:05,839 Speaker 1: Coming up on Bloomberg Law. T SA agents can now 207 00:12:05,880 --> 00:12:09,440 Speaker 1: search your cell phone or electronic devices legally at airports, 208 00:12:09,440 --> 00:12:11,439 Speaker 1: but the A c. L U is asking a federal 209 00:12:11,520 --> 00:12:14,440 Speaker 1: appeals court to require a warrant before such a search.