Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by the Litigation and Policy team at Bloomberg Intelligence, the
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Speaker 1: Bloomberg Intelligence has five hundred analysts and strategists working across
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Speaker 1: business policy and law, and today's our weekly check in
Speaker 1: on the litigation and policy catalysts that we're watching and
Speaker 1: that we think will impact companies across a number of
Speaker 1: different sectors. My name is Elliot Stein. I'm an analyst
Speaker 1: with the Bloomberg Intelligence covering litigation in the financial sector,
Speaker 1: and I'll be your host for today, April twenty fifth,
Speaker 1: twenty twenty five. And since things move very quickly these days,
Speaker 1: especially when it comes to policies, we're recording this at
Speaker 1: ten thirty am Eastern Time. Delighted today to be joined
Speaker 1: by a handful of my colleagues on the Litigation and
Speaker 1: Policy team. We have Nathan Dian and DC, we have
Speaker 1: justin THEREESI and Holly from here in New York, and
Speaker 1: we have Tamlin Basin out in London. You can find
Speaker 1: all of our research on the Bloomberg terminal at BI
Speaker 1: go and more specifically on our dashboard BI Laws Go.
Speaker 1: All right, So I think, Holly, why don't we start
Speaker 1: with you. You've been covering the growing number of lawsuits
Speaker 1: that have been challenging President Trump's tariffs. There's several lawsuits
Speaker 1: going on, and I think this week may have been
Speaker 1: sort of the first time we have sort of a
Speaker 1: preliminary ruling. Do you want to give us an update
Speaker 1: on the k and where they are and how you
Speaker 1: see them playing out?
Speaker 2: Sure?
Speaker 3: Thanks Elliott. So there are about five or six lawsuits
Speaker 3: right now, and two of them have actually three of
Speaker 3: them have been filed in the International Trade Court I
Speaker 3: believe it's free. The rest have been filed in federal
Speaker 3: courts around the country, and they're challenging some The first
Speaker 3: lawsuit that was filed that we know about was filed
Speaker 3: in early April, and it was challenging just the tariffs
Speaker 3: on China. The next lawsuit challenged the reciprocal tariffs for
Speaker 3: the Universal Tariff and then the other lawsuits and two
Speaker 3: of them were filed by one of them was filed
Speaker 3: by a group of states, and then the other one
Speaker 3: was filed by the state of California challenge to all tariffs.
Speaker 3: And so they're all, you know, they make very similar arguments,
Speaker 3: and if you want to get into them, I can.
Speaker 1: Yeah, maybe maybe, I mean just quickly, maybe it makes
Speaker 1: sense for you to just sort of outline. I mean,
Speaker 1: there's basically like two main arguments. One is statutory. One's
Speaker 1: constitutional right.
Speaker 2: Right.
Speaker 3: So first they stay that the statute the president relied on,
Speaker 3: which was the International Emergency Economic Powers Act, doesn't authorize
Speaker 3: the tariffs because which we call, yeah, AIPA. It's much
Speaker 3: easier than that, that long, long name that gets is stuck.
Speaker 3: So AIPA doesn't authorize the terriffs because it never even
Speaker 3: mentions the word terraffs. And there are a bunch of
Speaker 3: other statutes that provide very structured and reticulated ways to
Speaker 3: impose tariffs, and they stay mentioned the word tariffs, and
Speaker 3: this is not one of them. And so they say
Speaker 3: this was a statute that was meant to deal with
Speaker 3: emergencies and like imposed trade embargos and things like that.
Speaker 3: It was not meant to impose like Adflorm's duties, and
Speaker 3: you can you we know that because it doesn't mention
Speaker 3: the word teriffs, and so that's one of the arguments.
Speaker 3: The second argument is that on one lawsuit, a challenging
Speaker 3: reciprol cold tariff says that the statute requires a national
Speaker 3: emergency that poses an unusual and extraordinary threat. And that's
Speaker 3: a quote from the statute, an unusual and extraordinary threat,
Speaker 3: and this is not the trade deficit that was cited
Speaker 3: as a basis for the reciprocal teriff. Is not an
Speaker 3: unusual and extraordinary threat. It's been in existence for fifty years.
Speaker 3: So this statute was definitely not meant to address an
Speaker 3: emergency like that. Or this is not an emergency, so
Speaker 3: it was not meant to address this situation like that.
Speaker 3: Then the lawsuit challenging the tariffs on China say, they
Speaker 3: don't contest, they don't claim that the illicit drugs and
Speaker 3: unlawful migration that's the basis for that, that that emergency
Speaker 3: is not an emergency, but they that the teriffs are
Speaker 3: not necessary to address that emergency. And then finally, all
Speaker 3: of the lawsuits argue that if AYIPA authorizes the terroriffs,
Speaker 3: then Congress unconstitutionally delegated.
Speaker 1: As powers, right, And I mean your view is you
Speaker 1: lean towards the terriffs, you know, sticky in, and that
Speaker 1: the government will prevail in these lawsuits. But you do
Speaker 1: think it's a close.
Speaker 3: Call, right, I do think it's a close call. So
Speaker 3: we said that we think the teriffs will be upheld
Speaker 3: because aipa's granted authority. It grants the president the power
Speaker 3: to regulate imports, and we say that that encompasses the
Speaker 3: power to impose tariffs. We also don't think the court
Speaker 3: is going to want to wait into what constitutes an emergency.
Speaker 3: They haven't in the past. They've been very reluctant to
Speaker 3: the second and gets the president when it comes to
Speaker 3: declarations of emergency. And the law doesn't constitutionally delegate power
Speaker 3: because it provides called an intelligible principle to the president.
Speaker 3: And in the one case in which two Supreme Court
Speaker 3: justices indicated they want to revisit the so called non
Speaker 3: delegation doctrine because this is a doctrine that hasn't been
Speaker 3: you has been looked at for like I think over
Speaker 3: seventy years or something like that. And in the one
Speaker 3: case in which two justices said they may want to
Speaker 3: revisit the doctrine and redefine it, they had a carve
Speaker 3: out for situations where the President and Congress's powers overlapped
Speaker 3: in areas wherehere they typically overlap, like and they explicitly
Speaker 3: mentioned foreign affairs, and I think this is something like
Speaker 3: that tariff powers, something like that. So I don't think
Speaker 3: they're going to want to revisit that doctrine in a
Speaker 3: case like this. So I said, these are going to
Speaker 3: be up the law is going to be upheld. And
Speaker 3: with regard to the recent rulings in the International Trade Court,
Speaker 3: what happened there was the challengers came in, they filed
Speaker 3: and what's called a TIRO temporary restraining order. They asked
Speaker 3: the court and in a preliminary injunction they asked the
Speaker 3: court to stay the terrorists right away immediately. So the
Speaker 3: court then, within a quick turn and I think was
Speaker 3: like a couple of days, said that they're not going
Speaker 3: to grant a tierro the terrifts are still in place
Speaker 3: because they did not find that the challengers showed that
Speaker 3: they had an immediate immediate irreparable harm. So so ther
Speaker 3: the TIRO last for fourteen days, and they said that
Speaker 3: they did not show that they would be immediately harmed
Speaker 3: in that fourteen day period because they none of them
Speaker 3: claim that they even pay the terroriffs or were about
Speaker 3: to pay the terriffs. And so that's an interesting issue
Speaker 3: that's come up, is that, you know, do any of
Speaker 3: these challengers have standing to sue the government over these terraffs?
Speaker 1: Right, So the court didn't even reach their issue of
Speaker 1: likelihood of success on the marits, which is also part
Speaker 1: of it to yours standard, right, So we're still left
Speaker 1: hanging as to what the court is thinking on that.
Speaker 1: What do you look for it next? In all these
Speaker 1: lawsuits before we move on to justin.
Speaker 3: So there's a hearing on May thirteens on the on
Speaker 3: the preliminary INJUNCTIONVID before the US International Trade Court.
Speaker 1: Where you used to work, right you should, right.
Speaker 3: Interns, Yeah, many eons ago. Let's not get into how
Speaker 3: long ago that was. But but there's this hearing, and
Speaker 3: so we should get some more insight on which way
Speaker 3: the court's leaning, or we may get more insight on
Speaker 3: which way the courts leaning and I think we'll get
Speaker 3: a decision relatively quickly. I think this could be turned
Speaker 3: around in two Q and then I do expect other
Speaker 3: preliminary injunction motions to be filed. And there's you know,
Speaker 3: the court the cases that have not been filed in
Speaker 3: the US International Trade Court, the government is moving to
Speaker 3: transfer them there, so before there's a preliminary injunction motion
Speaker 3: or hearing, we'll have to see if it's transferred to
Speaker 3: the U S I C.
Speaker 1: I T right on the argument that the Court of
Speaker 1: International Trade has exclusive jurisdiction over all things tariffs. That's right, Yeah,
Speaker 1: all right, that's great, So we'll we'll follow up probably
Speaker 1: every week since there's so many cases. All right, thanks, Ally,
Speaker 1: let's move on to Justin and all things anti trust,
Speaker 1: lots lots of So Justin's been in DC for the
Speaker 1: last two weeks basically following the FTC versus Meta trial,
Speaker 1: but also in the same courthouse as our other anti
Speaker 1: trust analyst, Jenry, who can't make it today because he's
Speaker 1: still in the courthouse for the Google Search Remedies case.
Speaker 1: So Justin maybe update us on both those cases. And
Speaker 1: then there's also the Google ad Tech ruling that came out,
Speaker 1: I don't know, in the last couple of weeks, right right, yeah,
Speaker 1: tell us everything.
Speaker 2: You got it? So, so big tech is on trial
Speaker 2: and everything is happening at exactly the same time, it
Speaker 2: seems like. But yeah, I guess just you know, not
Speaker 2: sure where to start, but I think Meta may makes
Speaker 2: them the most sense and hop into Google from there.
Speaker 2: But so, we just finished week two of the FTC's
Speaker 2: trial of versus Meta Platforms and the allegations there that
Speaker 2: Meta acted anti competitively to purchase what's happened Instagram a
Speaker 2: long time ago, in twenty twelve and twenty fourteen, respectively,
Speaker 2: and the government there is seeking a divestiture of those assets. So,
Speaker 2: you know, I think we've always had this view that
Speaker 2: with regards to that case, the FDC had some problems
Speaker 2: with the way that it brought it. It's been a
Speaker 2: long time since those acquisitions were closed. You know, there
Speaker 2: are issues with the relevant product market, and there are
Speaker 2: issues I think with the pro competitive justifications or the
Speaker 2: things that really happened with those acquisitions since they took
Speaker 2: place two weeks in a trial. It's certainly my view
Speaker 2: that the that Meta certainly keeps its edge here and
Speaker 2: the reason being that CEO Mark Zuckerberg in the first
Speaker 2: week of trial did a great job in my view
Speaker 2: in terms of explaining why Meta's actions with regard to
Speaker 2: Instagram and WhatsApp, since they those acquisitions took place, you
Speaker 2: know why they were actually good for those platforms. You know,
Speaker 2: the improvements they made to Instagram, things like direct messaging,
Speaker 2: things like real things like threads. All of those things
Speaker 2: were added to the platform after the acquisition. So there
Speaker 2: are those pro competitive things that happened to the platform
Speaker 2: since metatook control. In terms of the actual product market
Speaker 2: and the way the FTC defined it, they really chose
Speaker 2: to bring that case about friends and family sharing they
Speaker 2: call a personal social networking services market. The issue is,
Speaker 2: since you know, since these acquisitions took place, you know,
Speaker 2: well over a decade ago, things have changed. The use
Speaker 2: case for a lot of these things aren't what they
Speaker 2: used to be. Folks hop onto Instagram now and they
Speaker 2: spend a lot more time, in terms of Meta testimony anyway,
Speaker 2: looking at unconnected content like videos for folks they don't
Speaker 2: know from creators they might not know in real life,
Speaker 2: versus actually connecting with friends and family. So if that
Speaker 2: core use change. If that core use has changed with
Speaker 2: those products, then the market definition offered by the FDC
Speaker 2: for those products really has taken kind of a backseat
Speaker 2: to the realities of today. So in many ways, where
Speaker 2: this case might have been successful a decade ago, the
Speaker 2: realities of the marketplace have maybe tripped away at the
Speaker 2: FTC's ability to bring it now.
Speaker 1: So yeah, that's kind I would say from personal experience,
Speaker 1: I find that's happening more and more that I'm seeing
Speaker 1: content offered to me on Instagram, Facebook of you know,
Speaker 1: people I don't follow at all.
Speaker 2: Yeah, absolutely, And you know, I think really interesting too.
Speaker 2: In testimony from from from Mark Zuckerberg and Cheryl Sandberg,
Speaker 2: you know, the use of things like group texting also
Speaker 2: is kind of you know that over I message that's
Speaker 2: kind of replacing a lot of what folks used to
Speaker 2: do through a traditional Facebook post. You know that that's
Speaker 2: really grown unused to you know, I think I have
Speaker 2: maybe at least ten group texts on my phone I
Speaker 2: can think of right now between friends and family. We
Speaker 2: can join on four month after the after the call,
Speaker 2: not a problem. But you know, there's a lot more
Speaker 2: communication happening that way now, and all of these apps.
Speaker 2: There's kind of these share screens now too, where you
Speaker 2: can take you know, a particular piece of content from
Speaker 2: something like Reddit, from something like from something like this
Speaker 2: coord and you can hit a link to share it
Speaker 2: for through I Message or through Whatsappened, through all these
Speaker 2: other means. So like that's sharing in many ways as
Speaker 2: Meta has replaced a lot of the actual posting that
Speaker 2: would happen ten plus years ago. So the market is changing.
Speaker 2: That's been their testimony so far.
Speaker 1: Got it. So the trials two weeks in, it's just
Speaker 1: expected to go roughly how long?
Speaker 2: Yeah, So you know, it could end up any any time.
Speaker 2: So certainly you know into June that the judge has
Speaker 2: has has allowed it to go through July fourth, if
Speaker 2: that through July third, if that's actually needed, Whether or
Speaker 2: not that happens, we'll see. But you know, I think,
Speaker 2: you know, probably mid to late June is looking like
Speaker 2: the end date for that.
Speaker 1: Trial and then a decision I guess sometime and later
Speaker 1: in the year, I guess, yeah.
Speaker 2: I would say later in the year. Of course, appeals
Speaker 2: after that. Either way, I think we can count on
Speaker 2: that for all these cases.
Speaker 1: Got it? And so Okay, So that's FTC Meta. Yes,
Speaker 1: Google Search remedies is going on in the same courthouse.
Speaker 1: You're not. You're not in that court room because he
Speaker 1: cannot be in two places at once. But our colleague, yeah,
Speaker 1: our colleague Genry is and I assume she's updated you.
Speaker 1: So do you want to relay what he has to say?
Speaker 2: Yeah, she has And you know, I think you know,
Speaker 2: through the first week of trial of that particular remedies trial,
Speaker 2: if you will, there's been a lot of testimony about
Speaker 2: whether what the appropriate remedy would be. Now that Judge
Speaker 2: Meta not to be confused of meta platforms in DC
Speaker 2: has ruled out.
Speaker 1: How did they not assign him to the medicase. It's
Speaker 1: like it's total missed opportunity.
Speaker 2: It's been confusing enough without him without him on the
Speaker 2: medic caase. But you know, now that he's found that
Speaker 2: Google has this monopolization issue or maintenance of monopolization issue
Speaker 2: with search, now we step into this remedies phase here,
Speaker 2: and you know, it seems our view has been that
Speaker 2: even though the government's looking for a divestiture of Google Chrome,
Speaker 2: it's unlikely that's going to happen. That seems more like
Speaker 2: an opening solvo and similar to a negotiation in terms
Speaker 2: of scaling back with the court's actually going to be
Speaker 2: likely to do here in terms of a remedy. So
Speaker 2: we think what's more likely is that sharing some user
Speaker 2: data information, that kind of information that's allowed Google's algorithms
Speaker 2: to develop and become as strong as they have with
Speaker 2: nascent search engines or search engines that haven't really developed
Speaker 2: the same degree, that's really what we're likely to see here,
Speaker 2: and there are there has been a lot of testament
Speaker 2: this week about ways to anonymize that data so that
Speaker 2: privacy concerns was sharing it aren't an issue if the
Speaker 2: court ultimately decides to go that way. And I think
Speaker 2: in a lot of ways too, these exclusivity agreements, So
Speaker 2: with companies like Apple, where Google Search is a default
Speaker 2: search behind things like Safari or Siri, you know, Apple
Speaker 2: gets paid twenty billion dollars a year from Google for
Speaker 2: that to be the default kind of search mechanism behind
Speaker 2: its platforms. So big issue for Apple if those agreements
Speaker 2: are taken away, and those agreements were found in being
Speaker 2: anti competitive, right, so there's a high possibility of thereose
Speaker 2: payments up question mark, Does Apple stop using Google Search
Speaker 2: behind Siri or Safari if they don't receive those payments,
Speaker 2: that's a big question too. If Google Search has really
Speaker 2: developed that strong better search might in some ways it
Speaker 2: might still be into Apple's benefit to use Google Search
Speaker 2: behind those platforms, even if it's not being compensated for
Speaker 2: doing so. But we think those agreements are an issue,
Speaker 2: and you know, also likely we see some sharing of
Speaker 2: user data just so that you know, other search engines
Speaker 2: can develop their algorithms in a way that they could
Speaker 2: actually compete.
Speaker 1: And when should we expect the decision on these remedies.
Speaker 2: So slated for August of this year, that's what Judge
Speaker 2: Meta has said. Whether or not at drags a little
Speaker 2: bit later than that remains to be seen.
Speaker 1: So that that's when he'll issue a decision. He has said.
Speaker 2: That that that is that is the goal. That is
Speaker 2: the goal. Whether or not we see that, we'll see
Speaker 2: if that's actually the case.
Speaker 1: Gotcha, all right? So and then just quickly on on
Speaker 1: the Google add Tech ruling, just quickly what was it
Speaker 1: and what's next?
Speaker 2: Sure? Sure, absolutely so. So turning down to Eastern District
Speaker 2: of Virginia Google add Tech, there was a trial on
Speaker 2: the on monopolization issues with Google Google's advertising technology back
Speaker 2: in September. The judge there last week found that Google
Speaker 2: does have a monopoly in terms of the publisher ad
Speaker 2: server side of its ad technology, so the cell side
Speaker 2: of the advertising stack and the advertising exchange in the middle.
Speaker 2: That kind of ties advertisers to the places where they're
Speaker 2: placing their ads. Google ties those products together in such
Speaker 2: a way that if you want real time ad demand,
Speaker 2: the court said, you have to use Google's ad server
Speaker 2: to get there, and that tie in many ways. That's
Speaker 2: the problem the court had. The court, as we expected,
Speaker 2: didn't think that the actual buy side where people look
Speaker 2: to place advertising, had a monopoly there. We didn't think
Speaker 2: the court would find an issue there. It seems to
Speaker 2: be a very competitive market as opposed to the other side.
Speaker 1: Of the spectrum.
Speaker 2: So heading into a remedies phase there now, Judge Brinkham
Speaker 2: on moves really quickly. We think September late September is
Speaker 2: looking like the start of that remedy. Is hearing that's
Speaker 2: what was proposed by the parties. She may want to
Speaker 2: move even faster than that. She's serarly try to move
Speaker 2: things along as fast as she can. At the moment,
Speaker 2: we're not thinking it. Divestiture is likely there. And the
Speaker 2: reason why it's a Google's adser for they operate in
Speaker 2: things other than the digital app that the display advertising
Speaker 2: that was an issue in this case. There's a whole
Speaker 2: bunch of other ads that they transact in for video
Speaker 2: ads and app ads that were not part of this litigation.
Speaker 2: So to force the sale the entire thing seems a
Speaker 2: little bit unlikely. We think snipping that tie I mentioned
Speaker 2: between the two products is more likely to be a
Speaker 2: remedy in this case.
Speaker 1: Got it? All right, that's a great update. Thanks justin.
Speaker 1: When when do you head back to DC? A week?
Speaker 2: Yeah, a week from Monday, So can't wait for that.
Speaker 1: Yeah, all right, talking about DC, let's bring in Nathan Dean,
Speaker 1: who is our chief policy analyst down in Washington. Nathan,
Speaker 1: what's going on in DC these days?
Speaker 4: Well, it's not going to Actually it's a fairly quiet
Speaker 4: week as Washington goes. But it's gonna kick off next
Speaker 4: week because the Congress returns after their two week recess,
Speaker 4: and I think the first thing to talk about is reconciliation.
Speaker 4: You know, this is the effort from the Republicans to
Speaker 4: extend the twenty seventeen Tax Cuts and Jobs Act. We've
Speaker 4: talked about it before on this program, and obviously, if
Speaker 4: anybody's listening, the one to get a little bit deeper
Speaker 4: dive on that, we certainly can. But you know, what
Speaker 4: we're gonna see next week is the start of the markups.
Speaker 4: And so, as you remember, the House and the Senate
Speaker 4: passed the same resolution, and in these resolutions, it went
Speaker 4: to each one of the committees and said, go forth
Speaker 4: in either identify areas that you're going to cut or
Speaker 4: identify areas that you're going to increase the deficit aka
Speaker 4: bring more benefits in this case, you know, and so forth.
Speaker 1: How many commits? How many committees? Does it go to?
Speaker 4: Eight on the House side? And I will have a
Speaker 4: better answer after no, no, no, no, it's fine. Yeah,
Speaker 4: it's several. And so you know, but for the listeners,
Speaker 4: really the big one is the House Ways and Means Committee.
Speaker 4: This is the one where they're going to essentially play
Speaker 4: with all the taxes. And so when you think about
Speaker 4: like increasing self deduction or changing the corporate tax, or
Speaker 4: President Trump coming out in support of the millionaire's tax
Speaker 4: just this morning, or going from the thirty nine point
Speaker 4: six percent tax rate to the forty percent tax rate.
Speaker 4: You know, this is where the House in Ways and
Speaker 4: Means Committee is going to play. Now, the interesting thing
Speaker 4: here is that just for next week, just note that
Speaker 4: the only committee that we think the Judiciary Armed Services
Speaker 4: Committee there meeting the Armed Services one. If you have,
Speaker 4: you know, exposure to the defense contractor space, that's the
Speaker 4: one to pay attention to because they're one of the
Speaker 4: few committees that was told to increase the budget. Republicans
Speaker 4: are seeking about one hundred and fifty billion dollars in
Speaker 4: additional funding for border security and the defense. So again,
Speaker 4: if you have the defense contractors in your portfolio, you
Speaker 4: want to pay attention to that. But the House Ways
Speaker 4: and Means Committee is the most big one to talk about,
Speaker 4: and that is most likely going to take place in
Speaker 4: mid March. The Republicans wont all this done by Memorial Day.
Speaker 4: I don't think they're going to be able to do
Speaker 4: it for a couple role of reasons. One, it's much
Speaker 4: more difficult to actually come up with the specifics than
Speaker 4: it is to have the resolution itself. It's very easy
Speaker 4: to agree on a top line number, and that's what
Speaker 4: they agreed on. But when the Republicans agreed in the
Speaker 4: House to cut one point five trillion dollars, and the
Speaker 4: Senate Republicans agreed to cut as a floor four billion
Speaker 4: with a B. There's a substantial difference in how they're
Speaker 4: actually going to approach this. So they have the overline
Speaker 4: numbers agreed, but how much they're going to cut or
Speaker 4: are they going to increase the deficit, that's a little
Speaker 4: bit more difficult. So Speaker Johnson wants all this wrapped
Speaker 4: up by Memorial Day. I don't think they're going.
Speaker 2: To do it.
Speaker 4: I'm telling clients as a joke, watch out for that
Speaker 4: June twenty fourth of July first time frame, because that's
Speaker 4: when I'm going on vacation, but more likely than not,
Speaker 4: because the debt ceiling is involved here and the X
Speaker 4: state is most likely late July August, look for that
Speaker 4: July maybe post fourth of July ten frame of when
Speaker 4: the Republicans actually come up with a deal. And for
Speaker 4: what it's worth, our base case scenario that we're working
Speaker 4: off at the moment is that because the Senate instructions
Speaker 4: only have four billion as a floor, it's much easier
Speaker 4: easier to tell your constituents today you're not going to
Speaker 4: cut for something like Medicare sorry, Medicaid snap benefits, the
Speaker 4: Inflectional Reduction Act. It's much easier to say we're not
Speaker 4: going to cut that, and then they say, you know,
Speaker 4: we're going to increase the deficit. So I think more
Speaker 4: likely than not a deal is done, the deficit most
Speaker 4: likely will increase. And for what it's worth, the Committee
Speaker 4: for Financial Responsible Budgets said that if you take the
Speaker 4: Senate plan as is, you're looking at a five point
Speaker 4: three billion dollar deficit increase, not taking into account economic
Speaker 4: growth or any other type of indirect benefits from that.
Speaker 4: So again interesting there. The other thing, just really.
Speaker 1: Quick, how are they going to get the deficit hawks
Speaker 1: to come on board?
Speaker 4: If that is how President Trump is going to do it?
Speaker 4: Because President Trump is going to march over to Capitol Hill.
Speaker 4: He's going to drag all those twenty or thirty Republican
Speaker 4: deficit hawks. He's going to look them in the eye
Speaker 4: and say, are you going to derail my plan? Are
Speaker 4: you going to be the one?
Speaker 2: Because?
Speaker 4: And the reason why? And I'm this is more anecdotal here,
Speaker 4: but it's just interesting. Story. Is that Representative Andy Biggs
Speaker 4: from Arizona hates voting for continuing resolutions, did not like
Speaker 4: voting for continuing resolutions, but he did back in March,
Speaker 4: and what subsequently happened. President Trump endorsed him for his
Speaker 4: governor race for Arizona. And so I do think that
Speaker 4: while the deficit hawks are going to complain about it,
Speaker 4: and I think certainly Representative Massi from Kentucky is not
Speaker 4: going to support that, I do think the rest of
Speaker 4: them will get in line because at the end of
Speaker 4: the day, they need to get a deal done, and
Speaker 4: if they get a deal done now before September thirtieth,
Speaker 4: they can always come back next year and try it again.
Speaker 4: But I would also just say that, you know, we're
Speaker 4: working off of a permanent extension of these trump are
Speaker 4: attacks cuts. Nothing says that you have to do it permanent.
Speaker 4: You could always just come back and say we're only
Speaker 4: going to do it for three to four years, get
Speaker 4: us through the rest of the President Trump's administration, and
Speaker 4: the price tag of that lower substantially. It makes it
Speaker 4: much easier to pass. So a lot of things can
Speaker 4: happen here, and I certainly think that, you know, but
Speaker 4: we ultimately do think a deal is going to get
Speaker 4: done because as if not, then the individual tax rates
Speaker 4: go up in the end of the year. And President
Speaker 4: Trump has already said he does not want a return
Speaker 4: of President George HW. Bushes read my lips, no new taxes.
Speaker 1: Right, but the real deadline will be the dead ceiling
Speaker 1: and running out of extraordinary measures.
Speaker 4: Yeah, exactly. I mean, if we get to a sitche
Speaker 4: a scenario where the Republicans can't agree, they could always
Speaker 4: just pull that out and try and do it in
Speaker 4: a bipartisan fashion. But then you're allowing the Democrats to
Speaker 4: come in and play, and the Republicans certainly don't want that.
Speaker 4: And for what it's worth, just because I know we
Speaker 4: have a lot of listeners in the New York, New Jersey,
Speaker 4: Connecticut area. The Sault deduction right now, the caps at
Speaker 4: ten thousand dollars. The idea here is that you will
Speaker 4: go somewhere between twenty five to thirty thousand. But again
Speaker 4: we'll see.
Speaker 1: Okay, great, all right, thanks Nathan. All right, let's wrap
Speaker 1: up with Tamlin over across the Pond in London. Tamlin
Speaker 1: covers all things tech regulation related to tech regulation in
Speaker 1: the EU and also covers some patent and other IP
Speaker 1: litigation here in the US, so the man of many
Speaker 1: tech hats, but tam on this. I guess. Just a
Speaker 1: couple of days ago, we saw the EU find Meta
Speaker 1: and Apple about eight hundred million dollars right, seven hundred
Speaker 1: million euros. What was that about? I know is related
Speaker 1: to the Digital Markets Act, but maybe just tell us
Speaker 1: a little.
Speaker 5: Bit more, thanks, Ellia. So earlier this week the European
Speaker 5: Commission it finalized its first two probes under the Digital
Speaker 5: Markets Act. As you said, and just a little bit
Speaker 5: of stuck back. The Digital Markets Act is this broad,
Speaker 5: sweeping new set of competition rules that took effect in
Speaker 5: March of last year. The sort of basis for these
Speaker 5: competition rules is the European Commission would identify technology gate keepers,
Speaker 5: and these gatekeepers were firms that had oversized market power. Incidentally,
Speaker 5: nearly all of them were American technology firms. Once you
Speaker 5: were identified as a gatekeeper, there was this sort of
Speaker 5: laundry list of dues and don't that the identified firms
Speaker 5: had to comply with. If they didn't comply, then the
Speaker 5: European Commission would have sort of direct enforcement power. Just
Speaker 5: weeks after the DMA took effect, we did see them
Speaker 5: launch these probes that we're going to talk about into
Speaker 5: Apple and Meta, as well as some probes into Google.
Speaker 5: So what happened was on Wednesday, the fine against Apple
Speaker 5: was five hundred million euros. Against Meta it was two
Speaker 5: hundred million euros. Now, these are really minuscule numbers compared
Speaker 5: to what the European Commission could have fined. They could
Speaker 5: have find each firm up to ten percent of their
Speaker 5: total revenue from the previous years. The final was actually
Speaker 5: zero global revenue. So we're talking tens of billions of
Speaker 5: dollars in potential fines. The fines. Doing the math, it
Speaker 5: was it was zero point one four percent of Apple's
Speaker 5: revenue from twenty twenty four and zero point one three
Speaker 5: percent for Metas. So this is smaller even than what
Speaker 5: the percentage we are seeing under GDPR General Data Protection Regulation,
Speaker 5: where you're only allowed to go up to four percent
Speaker 5: of a firm's revenue. If you would have used that
Speaker 5: same scale here, we would have seen fins of about doubleness.
Speaker 5: So I think this really does kind of suggest that
Speaker 5: the European Commission has sort of pivoted away from sort
Speaker 5: of these potentially eye popping fines. However, that doesn't mean
Speaker 5: the tech firms are off the hook, and the reason
Speaker 5: is because there is a behavioral component to these actions.
Speaker 5: So specifically, if you look at Apple, the focus of
Speaker 5: the probe was on this sort of app store policies
Speaker 5: that have sort of caught regulatory i are both here
Speaker 5: in Europe as well as in the US, And specifically
Speaker 5: is how on these restrictions that Apple places on app developers,
Speaker 5: these sort of anti steering measures, And one of this
Speaker 5: is is Apple is trying to control all communication between
Speaker 5: the developers and end users within the app, meaning that
Speaker 5: that developers can't sort of direct users away from the
Speaker 5: app store to sort of potentially lower priced subscriptions on
Speaker 5: where Apple maybe doesn't get sort of it's take rate.
Speaker 5: What the Commission said here is is that you know,
Speaker 5: Apple has obviously made some measures to open that up.
Speaker 5: They said, you haven't gone far enough. You really have
Speaker 5: to open the system up. Apple's going to have sixty
Speaker 5: days to make those changes. For Meta, it's sort of
Speaker 5: much less of an immediate change that's going to be required.
Speaker 5: That's because the finding against Meta was on it's called
Speaker 5: the consent or pay model. So essentially what the European
Speaker 5: Commission has said, and this also sort of goes back
Speaker 5: to GDPR, which was you were not allowed to condition
Speaker 5: use of your app on a user's willingness to allow
Speaker 5: their personal data to be used in order to serve
Speaker 5: advertise advertisements. So Meta tried to comply with that by saying, Okay,
Speaker 5: you can either consent to letting us use your data,
Speaker 5: or you can pay a monthly subscription fee. Now, the
Speaker 5: EU Commission has said that that's not necessarily a fair
Speaker 5: you're sort of coercing users into allowing us them to
Speaker 5: use your data. So here the Commission said that that
Speaker 5: wasn't compliant with the DMA. However, Meta in November twenty
Speaker 5: twenty four change its policy again and now it says
Speaker 5: it's offering users a choice to use that for free,
Speaker 5: and there's going to be ads that use less personalized data.
Speaker 5: The Commission is still trying to determine whether that complies
Speaker 5: with the DMA. However, what it does tell us is
Speaker 5: that there's no immediate change to Meta now. Now, Apple
Speaker 5: and Meta are pretty certain to appeal here. However, I
Speaker 5: think this is still going to have to make the changes.
Speaker 5: And again there's that six day day window. The reason
Speaker 5: for that is they'd essentially have to almost meet the
Speaker 5: tro standards that we talked about earlier in order to
Speaker 5: get a reprieve on those on making those changes. I
Speaker 5: think that's a bit unlikely here, And I think what
Speaker 5: we're definitely seeing is did the Commission and probably significantly
Speaker 5: into response to sort of President Trump's rhetoric against sort
Speaker 5: of the fines of American tech firms. I think the
Speaker 5: Commission made a very conscious decision to not go really
Speaker 5: hard on the fines and maybe to lean a little
Speaker 5: bit on the behavioral remedy, and they're hoping that that's
Speaker 5: not going to further exacerbate tensions, but also continuing to
Speaker 5: sort of try to demand and nudge technology firms into
Speaker 5: complying with these new roles. I think that's what we're
Speaker 5: seeing here.
Speaker 1: Interesting at some point you mentioned Google as well. They
Speaker 1: weren't part of these fines, so are they still being investigated. Yeah.
Speaker 5: So there's two pinning probes of Google, and one is
Speaker 5: very similar to the Apple one and the App store,
Speaker 5: and basically it's another anti steering the way that Google
Speaker 5: restricts developers in their own playstore ecosystem. That one we
Speaker 5: didn't get initial findings until a few weeks ago, so
Speaker 5: soone in the DMA, technically the commission has to endeavor
Speaker 5: to finalize a probe within twelve months of it being launched.
Speaker 5: So again, all these were launched in March of last year.
Speaker 5: We just got the finalization in two of these. The
Speaker 5: Google one we had the preliminary findings just a few
Speaker 5: weeks ago. I think it's going to be another few
Speaker 5: months until that's wrapped up. So one is on the
Speaker 5: play Store. The other one, which is potentially more risky
Speaker 5: for Google, it's on sort of self preferencing of its
Speaker 5: own verticals and search results, so think of sort of
Speaker 5: Google flights for sort of Expedia or Kayak, and the
Speaker 5: way that it's ranking its verticals and those search results.
Speaker 5: The commissions take so far has been that that's abusing
Speaker 5: its market position to preserve its status in those search rankings.
Speaker 5: So again we should get that in a few months.
Speaker 5: And the other Apple one is on sort of this
Speaker 5: app store destructure where it's proposed to charge sort of
Speaker 5: fifty cents per downlae for apps orre to download apps,
Speaker 5: any apps on app Store, And this is sort of
Speaker 5: in response to a lot of pressure they've been getting
Speaker 5: over that thirty or fifteen percent take right on apps.
Speaker 1: Got it all right? So we'll follow up on all
Speaker 1: these things, you know, in a few weeks. I guess
Speaker 1: all right. I think we're going to leave it there.
Speaker 1: We're going to wrap up this episode of Votes and Verdicts.
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Speaker 6: A great day. Do you want to do