WEBVTT - A Judge Ruled Google Monopolized Search. Then Came AI

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. At the start of

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<v Speaker 1>the year, things were not looking great for Google. Last August,

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<v Speaker 1>a federal judge had made a big ruling.

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<v Speaker 2>A federal judge in Washington rule that Google's search engine

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<v Speaker 2>has been illegally exploiting its dominance to squash competition and

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<v Speaker 2>stifle innovation.

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<v Speaker 1>The question remaining was what to do about it. The

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<v Speaker 1>judge is going to decide what kind of changes must

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<v Speaker 1>be imposed to make a more competitive landscape. The Justice Department,

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<v Speaker 1>which brought that lawsuit in the first place, propose some

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<v Speaker 1>remedies for the judge to consider. Google could break up

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<v Speaker 1>its search business and sell off Chrome. It could stop

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<v Speaker 1>paying companies like Apple for preferential treatment. On Tuesday, the

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<v Speaker 1>judge reached his decision, but instead of the big sweeping

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<v Speaker 1>rebuke of Google's business that some were expecting.

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<v Speaker 2>Google gets to kind of just continue with business as usual.

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<v Speaker 1>Sarah fryar at its technology coverage for Bloomberg and has

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<v Speaker 1>been covering Google's antitrust trial, and she says the outcome

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<v Speaker 1>in this case speaks to the new challenges that come

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<v Speaker 1>with regulating big tech in the age of AI.

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<v Speaker 2>We should be reading this as a huge win for

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<v Speaker 2>Google and a huge loss for the DOJ.

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<v Speaker 1>I'm Sarah Holder, and this is the big take from

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<v Speaker 1>Bloomberg News Today on the show, what this week's landmark

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<v Speaker 1>Google ruling means for the company, its competitors, and for

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<v Speaker 1>future attempts to break up big tech. The Department of

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<v Speaker 1>Justice first launched its case against Google back in twenty twenty,

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<v Speaker 1>arguing that through exclusive contracts with device makers like Apple

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<v Speaker 1>and Samsung, the company held a monopoly in the online

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<v Speaker 1>search space, and Bloomberg Big Tech editor Sarah Fryer says

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<v Speaker 1>their case was widely agreed to be a strong one. Well,

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<v Speaker 1>they were.

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<v Speaker 2>Making the case that Google has so much power over

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<v Speaker 2>how we consume information online, and that they've built that

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<v Speaker 2>power through anti competitive means. In Google's case, Google catted

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<v Speaker 2>that by saying we are the best. We have the

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<v Speaker 2>best search engine. That's why people want to use it. It's

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<v Speaker 2>not that we're a monopoly.

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<v Speaker 1>The US district judge hearing the case, judge on a Meta,

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<v Speaker 1>didn't buy Google's argument. Last year, he ruled in the

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<v Speaker 1>government's favor, saying Google was indeed a monopolist. The judge

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<v Speaker 1>then had to rule on the best way to address

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<v Speaker 1>Google's anti competitive behavior. The trial was set for the spring,

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<v Speaker 1>and on Tuesday, the judge announced his decision.

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<v Speaker 2>Judge on Meta ruled that Google will have to give

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<v Speaker 2>some of its data from search to quote unquote qualified competitors,

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<v Speaker 2>and that's kind of the only thing that Google has

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<v Speaker 2>to do. Metta was guy who really came out and

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<v Speaker 2>called Google a monopoly first, and people were expecting him

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<v Speaker 2>to come down hard. It just completely blew us away.

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<v Speaker 2>How this ruling was very gentle. It was very very

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<v Speaker 2>much a bullet dodge by Google.

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<v Speaker 1>The DOJ had suggested that the judge break up the

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<v Speaker 1>company forced Google to spin off its Chrome browser. The

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<v Speaker 1>judge didn't ultimately go that far. The DOJ also wanted

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<v Speaker 1>Google to end its partnership with Apple. Google's been paying

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<v Speaker 1>the company roughly twenty billion dollars a year to keep

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<v Speaker 1>Google Search is the default on iPhones. The judge decided

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<v Speaker 1>to let them keep that contract. So what made Judge Meta,

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<v Speaker 1>the same judge that just last year ruled Google was

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<v Speaker 1>a monopoly, stopped short of breaking Google up. Well, he

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<v Speaker 1>says it has to do with the rise of another

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<v Speaker 1>technology that can compete with the company on search.

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<v Speaker 2>AI Meta was trying to come up with a solution

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<v Speaker 2>for Google's monopoly status that took into account the AI era,

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<v Speaker 2>Because the government when they bring these cases and they

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<v Speaker 2>want to solve these problems, it take so long to

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<v Speaker 2>build this case. They're basically dealing with the Google of

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<v Speaker 2>a few years ago in their initial argument, and then

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<v Speaker 2>technology changes in the world moves ahead, and it has

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<v Speaker 2>been in the past couple of years the most transformative

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<v Speaker 2>time for Google since the mobile boom, since the mobile

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<v Speaker 2>phone era, this AI era, but for Google itself, like

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<v Speaker 2>this is I think even more transformative because it really

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<v Speaker 2>the AI era really gets at the core of what

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<v Speaker 2>Google does, which is providing answers to people who have

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<v Speaker 2>questions on the Internet.

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<v Speaker 1>How exactly did the changing AI race factor into Judge

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<v Speaker 1>Meta's decision to reject the government's push to break up Google.

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<v Speaker 1>What did he write in his judgment?

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<v Speaker 2>He wrote that he was swayed by the arguments that

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<v Speaker 2>Google is in this transition right now, that the mounting

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<v Speaker 2>competition for wanting answers on the intranet, the market could

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<v Speaker 2>kind of correct this monopoly given time to correct it,

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<v Speaker 2>just through sheer better options than classic Google search, and

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<v Speaker 2>you're already seeing that somewhat in consumer behavior. One of

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<v Speaker 2>the things that Apple said during the trial, Atiq said

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<v Speaker 2>was that there has been some reduction in Google searches

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<v Speaker 2>on Apple in favor of some AI related searches. So

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<v Speaker 2>when you're looking at the biggest antitrust ruling in decades,

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<v Speaker 2>this is like really a landmark case. You can break

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<v Speaker 2>a lot if you decide to come down too hard.

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<v Speaker 2>And it really seems that Meta was trying to take

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<v Speaker 2>an approach where he didn't want to shape the new

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<v Speaker 2>market that was budding and growing and building itself too much.

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<v Speaker 1>Because I'm curious also if you can put this into

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<v Speaker 1>context of how fast this AI fueled search transition happened, Like,

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<v Speaker 1>do you think the judge could have come to a

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<v Speaker 1>different conclusion a year ago, six months ago, two years ago.

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<v Speaker 2>I think if the same trial was happening even a

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<v Speaker 2>few months ago, the outcome would be different. Google might

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<v Speaker 2>have had to spin off Chrome, they might have had

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<v Speaker 2>to adjust it's data sharing more more severely. We all

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<v Speaker 2>sort of expected that they would have to stop paying

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<v Speaker 2>Apple for preference. It has become so clear that there

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<v Speaker 2>are now other ways that people want to search on

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<v Speaker 2>the Internet, and that the market is maybe a more

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<v Speaker 2>influential force in Google's future than the government or the

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<v Speaker 2>courts will be.

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<v Speaker 1>Google avoided the harshest outcome and its anti trust ruling,

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<v Speaker 1>but the company was ordered to make some concessions. After

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<v Speaker 1>the break, we dig into what that ruling could mean

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<v Speaker 1>for users, companies, and the future of government regulation on

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<v Speaker 1>big tech. Google dodged a bullet this week when Judge

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<v Speaker 1>am At Meta ruled that it didn't have to sell

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<v Speaker 1>off its browser Chrome as part of the government's antitrust

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<v Speaker 1>suit against the company, But the judge did say Google

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<v Speaker 1>needs to make a few key changes to its business.

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<v Speaker 1>While Google was able to keep its existing twenty billion

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<v Speaker 1>dollar plus contract with Apple, it can no longer make

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<v Speaker 1>exclusive deals with companies like it. Google will also have

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<v Speaker 1>to share online search data with its competitors. Here's Bloomberg

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<v Speaker 1>Tech editor Sarah Fryer.

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<v Speaker 2>This was a subject that came up a lot during

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<v Speaker 2>the trial that Google one of the reasons that it

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<v Speaker 2>this monopoly is so powerful and so entrenched in the

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<v Speaker 2>way we use the internet is because they're the place

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<v Speaker 2>where everyone lists their websites. If you're not on Google,

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<v Speaker 2>you're essentially not on the searchable Internet and the websites

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<v Speaker 2>you know, they all give their data to Google. Google

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<v Speaker 2>has this repository of information their index, and that that

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<v Speaker 2>has helped them into the AI era because they have

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<v Speaker 2>all this information that they can train on. They can

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<v Speaker 2>make their models better given this omnission view they have

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<v Speaker 2>of the Internet. And so one thing that the government

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<v Speaker 2>proposed is that Google could share some of that data

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<v Speaker 2>with qualified competitors. Now he didn't stay specifically who those

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<v Speaker 2>competitors would be, but you can imagine like open AI, Perplexity,

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<v Speaker 2>duc dot Go, some of those other browser companies and

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<v Speaker 2>other AI search companies, so that there would be more

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<v Speaker 2>of a level playing field going forward.

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<v Speaker 1>How would they use that data? They would do that.

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<v Speaker 2>Data to train their models, especially if it was like

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<v Speaker 2>data about what users were searching for, what people were

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<v Speaker 2>interested in. I mean, that could all help people's AI

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<v Speaker 2>models get better and smarter about how to serve their users.

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<v Speaker 1>So how does that ruling around data affect users? Are

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<v Speaker 1>their privacy concerns? Here? Will the average Googler kind of

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<v Speaker 1>like feel the effects of that data being shared in

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<v Speaker 1>more places?

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<v Speaker 2>Well. In its initial statement about the ruling, Google said

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<v Speaker 2>that it did have privacy concerns. But if you look

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<v Speaker 2>at the ruling, what they actually will have to share

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<v Speaker 2>is like a limited snapshot of basically the bones of

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<v Speaker 2>what makes up search. I don't think that that's going

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<v Speaker 2>to be very helpful to these competitors at all. Like

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<v Speaker 2>it might be interesting to them, but I don't think

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<v Speaker 2>that that's really going to serve the purpose of helping

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<v Speaker 2>them better their models or their products in the way

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<v Speaker 2>that they had hoped. Which is why you're seeing a

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<v Speaker 2>lot of third parties and watchdogs come out today and say,

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<v Speaker 2>you know, this ruling is so so mild that it

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<v Speaker 2>doesn't change anything. It doesn't help us at all get

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<v Speaker 2>into a place where big tech is held accountable. Right.

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<v Speaker 1>One of Google's competitors, Gabriel Weinberg, the CEO of DOUC

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<v Speaker 1>dot Go, called the ruling a nothing burger. Yeah.

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<v Speaker 2>Well, a lot of the responses on the side is

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<v Speaker 2>like what was all this for, you know, like there

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<v Speaker 2>was a lot of excitement around, like this is a

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<v Speaker 2>company that has become so powerful, it's become part of

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<v Speaker 2>the infrastructure of society. We've been through years of Congress

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<v Speaker 2>having caring for these companies and actually not making many

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<v Speaker 2>laws or any laws to hold them accountable. We've been

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<v Speaker 2>through years of politicians saying that something would happen. Finally

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<v Speaker 2>the DJ takes it on, They take it seriously, they

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<v Speaker 2>bring it to this conclusion where a judge declarism and monopoly.

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<v Speaker 2>There's finally remedies trial. I mean, you can imagine how

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<v Speaker 2>excited all of these these competitors and you know, entities

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<v Speaker 2>who really want tech accountability, how excited they got. And

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<v Speaker 2>there was a lot of hope that something would change.

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<v Speaker 2>And so the disappointment that the anti tech power, anti

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<v Speaker 2>monopoly crowd is feeling is very palpable. But it's also like,

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<v Speaker 2>you know, in the context of this this AI boom,

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<v Speaker 2>which is I think the first thing to really threaten

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<v Speaker 2>Google's dominance since it became so powerful, Well.

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<v Speaker 1>What kind of precedent could this set for how the

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<v Speaker 1>government goes after other tech companies. Obviously there's the sense

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<v Speaker 1>of disappointment, maybe a fear that it takes the wind

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<v Speaker 1>out of its sales a little bit. But but what

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<v Speaker 1>do you see coming down the line when it comes

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<v Speaker 1>to future anti trust cases.

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<v Speaker 2>Well, there's a lot of future anti trust cases coming around.

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<v Speaker 2>You know, even for Google. There's a trial on their

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<v Speaker 2>ad tech monopol Another remedies trial for the ad tech

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<v Speaker 2>ruling that says that they have a knopoly and ad

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<v Speaker 2>technology that's going to be in late September early October.

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<v Speaker 2>It's a different judge, so it really will be up

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<v Speaker 2>to that judge to decide whether they want to go

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<v Speaker 2>harsher or less harsh. Meta just went through its own

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<v Speaker 2>antitrust trial that is maybe an even wilder outcome that

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<v Speaker 2>the government is pursuing. The government wants a breakup of Meta,

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<v Speaker 2>so they spin off Instagram and WhatsApp undoing acquisitions that

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<v Speaker 2>were done more than a decade ago.

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<v Speaker 1>That's Meta, the company that owns Facebook. Not I'm at Meta,

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<v Speaker 1>the judge overseeing the Google trial.

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<v Speaker 2>I don't imagine a future where Instagram, at WhatsApp or

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<v Speaker 2>are forced to break off from Meta. It just it

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<v Speaker 2>seems like that it would have a chilling effect on

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<v Speaker 2>all of m and a activity in tech, which could

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<v Speaker 2>be bad for younger companies. If companies knew that their

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<v Speaker 2>acquisitions could just be undone, ten or thirteen years later,

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<v Speaker 2>we may not get breakups of big tech companies. Like

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<v Speaker 2>if this is how this judge is ruling, it's really

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<v Speaker 2>kind of a tricky time because AI is changing so

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<v Speaker 2>much so even the kinds of things that the government

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<v Speaker 2>was arguing about, like what makes these products so sticky

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<v Speaker 2>and so entrenched and therefore part of a monopoly. The

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<v Speaker 2>reality today is that the industry has moved in a

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<v Speaker 2>direction where these products are not as the government described

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<v Speaker 2>them anymore, like twenty eighteen meta, right, right, twenty eighteen

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<v Speaker 2>META is not twenty twenty five META. And that's when

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<v Speaker 2>the case started, right. The companies have to evolve or

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<v Speaker 2>they die. And so to come out and say like

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<v Speaker 2>this is the way the industry works and this is

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<v Speaker 2>how it's going to continue to work, that is just wrong.

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<v Speaker 1>Well, I want to talk about the political calculus here,

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<v Speaker 1>because we've spoken before about how antitrust enforcement has been

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<v Speaker 1>one of the few things both Republicans and Democrats in

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<v Speaker 1>recent years have seen as a priority. Why exactly is

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<v Speaker 1>that And do you think that bipartisan energy around breaking

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<v Speaker 1>up big tech will continue as Trump's term progresses.

0:14:15.679 --> 0:14:20.040
<v Speaker 2>I mean, I think we have seen a massive change

0:14:20.640 --> 0:14:26.400
<v Speaker 2>from Trump's first administration to his second. Now, we cannot

0:14:26.440 --> 0:14:31.680
<v Speaker 2>forget that the tech lash, the big tech blowback, the

0:14:31.720 --> 0:14:35.840
<v Speaker 2>push to hold these companies accountable, really started during the

0:14:35.880 --> 0:14:39.440
<v Speaker 2>Trump administration. Everyone agreed that these companies needed to be

0:14:39.480 --> 0:14:42.280
<v Speaker 2>held accountable, but they didn't agree on why and what

0:14:42.320 --> 0:14:45.120
<v Speaker 2>to do about it. And so we went through these

0:14:45.400 --> 0:14:51.040
<v Speaker 2>years of extreme enthusiasm for getting CEOs to give Congressional

0:14:51.080 --> 0:14:56.080
<v Speaker 2>testimony building the beginnings of these anti trust cases. These

0:14:56.080 --> 0:15:00.000
<v Speaker 2>probes started during the first Trump administration and nothing really happened.

0:15:00.320 --> 0:15:04.720
<v Speaker 2>But it is one of the rare components of Trump's

0:15:04.760 --> 0:15:09.000
<v Speaker 2>administration that carried over throughout the entire Biden administration, and

0:15:09.040 --> 0:15:14.200
<v Speaker 2>the Biden DOJ and FTC were very enthusiastic about these

0:15:14.240 --> 0:15:18.240
<v Speaker 2>anti trust cases, and Congress continued to be enthusiastic about

0:15:18.240 --> 0:15:22.520
<v Speaker 2>holding tech companies accountable. Still nothing changed. So here we

0:15:22.560 --> 0:15:25.960
<v Speaker 2>are in the second Trump administration and the mood is different.

0:15:26.160 --> 0:15:29.440
<v Speaker 2>The mood is different for two reasons. One reason is

0:15:29.760 --> 0:15:34.600
<v Speaker 2>the companies now understand what it takes to get on

0:15:34.760 --> 0:15:37.240
<v Speaker 2>Trump's good side, and what it takes again on Trump's

0:15:37.240 --> 0:15:40.880
<v Speaker 2>good side is playing by his rules, going and meeting

0:15:40.920 --> 0:15:44.480
<v Speaker 2>with him face to FaceTime. For instance, Tim Cook, the

0:15:44.480 --> 0:15:49.440
<v Speaker 2>CEO of Apple, making an announcement with Trump on investments. Whereas,

0:15:49.640 --> 0:15:52.840
<v Speaker 2>like in the first Trump administration, executives didn't really want

0:15:52.880 --> 0:15:55.400
<v Speaker 2>to be so cozy with the Trump administration because they

0:15:55.440 --> 0:15:58.520
<v Speaker 2>knew their employees for the most part, who were protesting

0:15:59.000 --> 0:16:02.560
<v Speaker 2>a lot of the policy. So that's factor one. Factor

0:16:02.560 --> 0:16:06.480
<v Speaker 2>two is AI. I think that the executives all have

0:16:06.720 --> 0:16:11.880
<v Speaker 2>an incentive to show Trump that it's the US versus

0:16:11.960 --> 0:16:16.120
<v Speaker 2>China for the future of this new technology, and if

0:16:16.640 --> 0:16:19.320
<v Speaker 2>the US is going to win, they need a lot

0:16:19.360 --> 0:16:24.520
<v Speaker 2>of government help, data center build outs and import export rules.

0:16:24.600 --> 0:16:28.640
<v Speaker 2>So I think that's that's the other factors, like regulation

0:16:29.000 --> 0:16:31.800
<v Speaker 2>on AI. They're trying to say, we can't do that

0:16:31.880 --> 0:16:35.600
<v Speaker 2>right now. The industry is booming. We need to see

0:16:35.600 --> 0:16:37.560
<v Speaker 2>how this shakes out, and we need to do as

0:16:37.640 --> 0:16:40.400
<v Speaker 2>much as we can to win it before somebody else does.

0:16:41.000 --> 0:16:44.920
<v Speaker 2>As for next steps, Google said it will appeal the

0:16:44.960 --> 0:16:48.560
<v Speaker 2>initial ruling that said that they're monopoly. They're going to

0:16:49.080 --> 0:16:52.000
<v Speaker 2>get together with the government side and the judge and

0:16:52.040 --> 0:16:55.080
<v Speaker 2>they're all going to talk about the outcomes that the

0:16:55.160 --> 0:16:57.200
<v Speaker 2>judges asked for, and then there's going to be a

0:16:57.320 --> 0:17:00.920
<v Speaker 2>final ruling where we get like much more more granular

0:17:00.960 --> 0:17:04.919
<v Speaker 2>clarity on what from the judge's memo turns into the

0:17:05.040 --> 0:17:05.960
<v Speaker 2>ultimate ruling.

0:17:08.720 --> 0:17:11.679
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