Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay I'm Emily checking San Francisco in This is
Speaker 1: Bloomberg Technology. Coming up in the next hour, pinterest shares
Speaker 1: soaring after hours, revenue meeting estimates with a forecast for
Speaker 1: so modest growth is becoming order. More on the future
Speaker 1: of pinterest in the social and e commerce landscape under
Speaker 1: its new CEO just a moment, plus the future of
Speaker 1: big tech antitrust maybe better getting closer. Over the next hour,
Speaker 1: we will explore the American Innovation and Choice Act and
Speaker 1: how this could be the bill that gets enough bipartisan
Speaker 1: support to put big tech in its place, and how
Speaker 1: do you balance innovation and regulation when it comes to crypto.
Speaker 1: We will ask the former Assistant d o J Attorney
Speaker 1: General where he weighs in on this rapidly evolving debate.
Speaker 1: All of that in a moment, But first I want
Speaker 1: to bring in role hit called Carney MKM Partners Managing Director.
Speaker 1: So row is this where we are that we're expecting
Speaker 1: such bad news when pinterest meets expectations and forecasts modest
Speaker 1: growth that the state shares go bonkers. I think it's
Speaker 1: a it's a fact. It's a function of two things.
Speaker 1: One is obviously the fundamentals, and I think equally important
Speaker 1: is Elliott's press release. Um, so expectations were low, they're
Speaker 1: getting lower. Interest was trading as if it's going out
Speaker 1: of business, to be honest, not like a growth company.
Speaker 1: And now they jump over a very low bar. And
Speaker 1: I think the most important thing here is the third
Speaker 1: quarter of revenue outlook. Facebook is telling us sequential declines,
Speaker 1: Snap is telling us sequential declines in the revenues, and
Speaker 1: Pinterest comes along and says, okay, we might grow sequentially.
Speaker 1: So this is uh, this is something not what people
Speaker 1: have expected. On top of that, Elliott gives you this
Speaker 1: presidentally is about Pinterest, them being the largest shareholder in pinterest.
Speaker 1: So I think a lot of bad news was priced
Speaker 1: in and here we here we are up twenty persons.
Speaker 1: You of course have a big leadership change that's happened
Speaker 1: at pincer as the co founder, longtime CEO Ben Silverman
Speaker 1: out Bill Ready of Google long time payments executive is in.
Speaker 1: How do you see Pinterests challenges differing from what's facing
Speaker 1: Facebook and snap um Painters has always been a tweener.
Speaker 1: There is always a debate between are they a real
Speaker 1: social media company or are they a company that is
Speaker 1: just singularly focused on a single person's hobbies needs and
Speaker 1: going down the funnel of what they may want to
Speaker 1: buy to convert their hobbies and needs into want and
Speaker 1: uh and put ads in front of them. So as
Speaker 1: we go down the funnel, Pinteress is doing what they
Speaker 1: need to do, putting shopping on the social media platform,
Speaker 1: putting payments, tagging along some of the bells and whistles
Speaker 1: along with it. But I think they've been doing it
Speaker 1: very slowly. If Bill Ready comes in, he has a
Speaker 1: very complimentary skill set. You talked about well he was
Speaker 1: advent more Bradery, now you talk about Google Commerce. So
Speaker 1: he's bringing a very commerce oriented skill set here. And
Speaker 1: that's what probably is something to be excited about. And
Speaker 1: we'll be watching it from the sidelines here now Petters
Speaker 1: is of course it's a much smaller player than of
Speaker 1: course Meta, you know, even Snap and Twitter. But do
Speaker 1: you see what what's happening here as some sort of
Speaker 1: broader signal about what's happening in the broader economy or
Speaker 1: with digital adspent um. Broadly, we are quite certain the
Speaker 1: digital AdSpend is shifting slowly downwards, the pie shrinking in
Speaker 1: there the pie. I think market share is shifting. For example,
Speaker 1: we think that Google is getting a little bit of
Speaker 1: extra market share away from so some of the social
Speaker 1: media platforms, as Google is more bottom of funlance, searches
Speaker 1: doing well. Search tends to do better in recessions, and
Speaker 1: tends to do better when advertisers getting very very cautious
Speaker 1: about end um. That's what is happening. But when Pinterest,
Speaker 1: it's a very small player, it could just be a
Speaker 1: play on Okay, what do you think some of the
Speaker 1: suburban moms are thinking about holiday shopping? That could be
Speaker 1: they're not completely pessimistic about it. So that's if you
Speaker 1: look at engagement on Pinterest, I think that may be
Speaker 1: the only leading in data. But it's still too small
Speaker 1: for us to make a macro call right now. All right,
Speaker 1: you do cover Uber and Left. We're expecting their earnings
Speaker 1: out later this week as well. What are you looking
Speaker 1: for their um? Again? I think in terms of Uber,
Speaker 1: we prefer Uber versus Left, but both companies should have
Speaker 1: should have earnings that should probably exceed expectations. I think
Speaker 1: the biggest kind of question mark. There are two question
Speaker 1: marks in front of investors. Do higher gas prices way
Speaker 1: on drivers? We think so yes? And how does that
Speaker 1: translate into driver incentives? That's been a very big debate.
Speaker 1: We think that's been a way on the staff tomorrow
Speaker 1: for Uber. And the second question is with inflation, with
Speaker 1: consumer discretionaries spend with rising right share prices, how does
Speaker 1: that rain do on the share of wallet for right sharing?
Speaker 1: We think that is very basiliant. So with that, for
Speaker 1: that we give them a checkmouk a question amount for
Speaker 1: driving incentives? What we like heading into earnings tomorrow? All right,
Speaker 1: hit called Carney Mcam partners. Thank you so much for
Speaker 1: joining us. Of course, we'll be across Uber, Lift and
Speaker 1: many more companies reporting this week. We compete hard, we
Speaker 1: compete fairly. We try to be the best. We have
Speaker 1: fierce competition at the developers side and the customer SIDEBC
Speaker 1: vigorous competition. Our business model is advertising and we faced
Speaker 1: intense competition. We don't have a dominant share in any market.
Speaker 1: We have a policy against using individual seller data to
Speaker 1: compete with our private label. I would describe it as
Speaker 1: a street fight for market share in the smartphone business.
Speaker 1: I've been clear that Instagram was a competitor. It wouldn't
Speaker 1: surprise me. Refilexus sometimes does promote our own products. Competition
Speaker 1: drives us to history shows that if we don't keep innovating,
Speaker 1: someone will replace every company here today Mark Zuckerberg, Jeff Bezos,
Speaker 1: Sundar Pachai, and Tim Cook just two years ago testifying
Speaker 1: it a virtual hearing focused on big tech power in
Speaker 1: two years later, regulators and lawmakers are still considering rules
Speaker 1: that will rain in big tech's biggest players. In an
Speaker 1: effort to boost competition and protect consumers, The American Innovation
Speaker 1: and Choice on Line Act would bar major platforms from
Speaker 1: giving advantages to their own products over those of rivals.
Speaker 1: This is the legislation proposed by Senators Clobuscher and Grassley
Speaker 1: last year. Joining me now David Kapatrick, founder and editor
Speaker 1: in chief of Teconomy, as well as bloombergs Emily Burnbaum
Speaker 1: in d C, who covers big tech anti tries, Emily,
Speaker 1: let's start with you set the stage for us. Because
Speaker 1: there've been so many competing bills, so many competing approaches
Speaker 1: here but this one seems to be gaining steam. Talk
Speaker 1: to us about what klobus are actually have proposed and
Speaker 1: the status of it at this moment. Yeah. So there
Speaker 1: was a wide array of tech related anti trust build
Speaker 1: that passed the House Fishery Committee UH last year. Since then,
Speaker 1: the conversation is coalesced around. UM. This legislation you're talking about,
Speaker 1: the American Innovation and Choice Online Act. UM. It would
Speaker 1: prevent the companies from UH giving preference to their own products.
Speaker 1: So for instance, on you know, Amazon, UH, Amazon's e
Speaker 1: commerce platform, it couldn't privilege its own private label products
Speaker 1: over UM products from small businesses that rely on its platform. UM.
Speaker 1: Right now. You know, there was a huge amount of
Speaker 1: momentum behind this legislation. UM. There was serious talk that
Speaker 1: this legislation is going to get a vote this summer. UM,
Speaker 1: and Chuck Schumer himself had pledged to put it on
Speaker 1: the floor. UM in the early summer. It didn't happen.
Speaker 1: Now we have a week till August resets. It's not
Speaker 1: going to be happening this week. His office has confirmed,
Speaker 1: and we reported recently that he told a group of
Speaker 1: donors that it wasn't going to happen, but now people
Speaker 1: are looking to fall potentially in September. Um, this legislation
Speaker 1: might come to a vote, but that's a very unusual
Speaker 1: time for bills to be considered a mid terms though. UM,
Speaker 1: it's all up in the air right now. Interested indeed, David,
Speaker 1: that big tech stance on big tech could become you know,
Speaker 1: a real issue for voters, uh in the November midterms
Speaker 1: after so many years of figuring out how to regulate them.
Speaker 1: What do you make of this particular bill and how
Speaker 1: it could impact these companies. First of all, I loved
Speaker 1: your montage at the beginning of the segment. It was
Speaker 1: quite amusing. Uh. To be honest, I don't think even
Speaker 1: though surveys show that most consumers slash voters do feel
Speaker 1: that tech companies are too powerful, I don't think this
Speaker 1: kind of issue is anywhere near the top of the
Speaker 1: agenda for voters in general. So I think legislators do
Speaker 1: have to be careful as they're taking actions that might
Speaker 1: seem based on hearings they've had, etcetera, to be rational
Speaker 1: ones that they don't annoy the voters that put them
Speaker 1: in office. Because the problem with regulating Amazon, Apple, Google,
Speaker 1: Meta etcetera. Is these services are essentially as present in
Speaker 1: people's lives as government itself, so you don't want to
Speaker 1: mess with them lightly. Now, I do think many of
Speaker 1: the things that were demonstrated in especially the House hearings
Speaker 1: were egregious. That quote from Bezos just based on reporting
Speaker 1: that we've seen elsewhere and some of the evidence that
Speaker 1: the hearing is flat wrong. They do preference their own
Speaker 1: products at Amazon, so some things need to be fixed.
Speaker 1: But I just worry that we have a sledgehammer here
Speaker 1: and maybe we need like a very fine tooth nail,
Speaker 1: you know, and find nail in a very little hammer. Emily,
Speaker 1: what do you make of that? And and talk to
Speaker 1: us about how sentiment towards big tech has changed since.
Speaker 1: I mean, we're still too we're too long years now
Speaker 1: away from that, A lot has changed and it doesn't
Speaker 1: look good for tech. Yeah, sentiment soured on the big
Speaker 1: tech companies, you know. It started souring in twenty six
Speaker 1: UM mostly related to concerns around than Facebook now Meta Um,
Speaker 1: and it's only continued to become more and more politically
Speaker 1: potent to UM, you know, put yourself in opposition to
Speaker 1: the major tech companies, you know, as part of a
Speaker 1: broader sort of anti corporate push UM during the Biden
Speaker 1: administration and during the Biden presidency. UM. So uh at
Speaker 1: this point, UM, the major message that's being pushed by
Speaker 1: the tech companies is, um, this is not what your
Speaker 1: voters care about. Um. They are running um uh tens
Speaker 1: of millions of dollars worth of ads. We did account
Speaker 1: um this week. They've spent a hundred and twenty million
Speaker 1: dollars on advertising, essentially trying to convince voters. Um, you know,
Speaker 1: Congress is trying to meddle in your phone while so
Speaker 1: many other more important things are going on, you know,
Speaker 1: inflation and uh, the and uh you know gas prices
Speaker 1: that affect you. Why are they looking at this and
Speaker 1: so Um It's yet to be seen if that's a
Speaker 1: winning argument, but it definitely was voting enough that Schumer
Speaker 1: didn't put the those up for vote. Now, David, I
Speaker 1: want to get your thoughts on this latest action from
Speaker 1: the FTC suing Meta over its attempt to buy this
Speaker 1: fairly small VR company within unlimited. The FTC is now
Speaker 1: challenging this, and we've learned that, uh, the FTC filed
Speaker 1: this lawsuit because Lena Khan wanted to do it, even
Speaker 1: though her staff disagreed. What do you make of this
Speaker 1: that it seems the FTC, or at least Lena con
Speaker 1: is determined not to let Meta grow by acquisition like
Speaker 1: it did with Instagram? And what's that? Really good question?
Speaker 1: But before I answer, I just want to make it
Speaker 1: clear I don't intend to echo industry talking points about
Speaker 1: this big bill. I do think the industry has made
Speaker 1: enormous errors and and there's huge resentment against big tech,
Speaker 1: big corporate generally, as as the other Emily said, but
Speaker 1: I just think it's very risky to just go after
Speaker 1: these companies wholesale the way they're doing it. But back
Speaker 1: to Meta and within at the moment, I think that
Speaker 1: Meta has made so many mistakes and gotten so many
Speaker 1: people angry that there is going to be support for
Speaker 1: almost any pushback against that particular company, And to some extent,
Speaker 1: I think even on the other bill, one of the
Speaker 1: reasons so many legislators are so willing to go after
Speaker 1: the entire group of companies is because Meta slash Facebook's
Speaker 1: crimes are really so vividly obvious that it seems justified
Speaker 1: to go after quote unquote big tech. But I think
Speaker 1: It's going to be very hard for Zuckerberg to get
Speaker 1: any kind of significant acquisition through with Lena khan Um
Speaker 1: in there. And certainly maybe he'll even succeed in ultimately
Speaker 1: achieving this acquisition, but everything is gonna encounter pushback. And
Speaker 1: one other point I just want to make. Let's not
Speaker 1: forget what's happening in Europe with the Digital Markets Act
Speaker 1: Digital Services Act, which is very parallel to some of
Speaker 1: the efforts being made in the US, and which is
Speaker 1: further along legislative Absolutely, Europe is a whole another hour
Speaker 1: long show in itself. Emily, I gotta ask you, what
Speaker 1: are the chances the FTC can stop this latest Meta deal,
Speaker 1: even though it is smaller scale. Yeah. I think a
Speaker 1: lot of experts looking at this particular lawsuit by the
Speaker 1: FTC are saying this is a very novel theory, um
Speaker 1: because essentially they're not challenging um. You know, they're not
Speaker 1: saying Meta is currently monopoly in the virtual reality space.
Speaker 1: Is saying that this acquisition could set the stage for
Speaker 1: them monopolize and get another market. This is a sort
Speaker 1: of untested and a new way of approaching acquisitions. Um.
Speaker 1: So there's a lot the you know, there's a lot
Speaker 1: of people who are skeptical about how winning this argument
Speaker 1: could be under correct antitrust laws. But it's not even
Speaker 1: about blocking this particular acquisition. Um. It's it's more a
Speaker 1: show of course by Nina Kan's FTC. You know, she said,
Speaker 1: you have to bring cases even if you're not going
Speaker 1: to win them, because that's how, you know, if you
Speaker 1: change practices within particular industries. Um. And that's how you
Speaker 1: kind of like, you know, put fear in companies that
Speaker 1: they make these kinds of acquisitions. Well, certainly an interesting
Speaker 1: step by the FTC, and we'll be watching to see
Speaker 1: how that one plays APT bloom Examily, bern Bam. Thank you,
Speaker 1: along with our Teconomy founder and editor in chief David Kirkpatrick.
Speaker 1: So much here to continue to discuss over months and
Speaker 1: I'm sure years. Meantime, the White House has urged China
Speaker 1: not to escalate tensions in the with the US in
Speaker 1: response to how Speaker Nancy Pelosi's expected visit to Taiwan,
Speaker 1: signaling that the Biden administration is preparing for Beijing to retaliate.
Speaker 1: A Pelosi visit would be a landmark move by a
Speaker 1: US official and raise the risk of a military confrontation
Speaker 1: given China's view that Taiwan is part of its territory.
Speaker 1: The White House detailed possible actions China could take in
Speaker 1: response to Pelosi's trip, including firing missiles into the Taiwan
Speaker 1: straight Pelosi's office has yet to officially confirm her visit
Speaker 1: and coming up Activision results also out. Where does it's
Speaker 1: deal with microstos stand will give you an update on that. Next,
Speaker 1: this is Bloomberg. Let's get back to earnings and shares
Speaker 1: of Activision? Is there a touch higher in late training
Speaker 1: after the video GameMaker posted sales and been expectations, but
Speaker 1: had little to say about its pending deal with Microsoft
Speaker 1: or at Ludlow. Here with the top lines, let's talk
Speaker 1: about the numbers. First, Where are we so better than expected?
Speaker 1: Revenue one point six four billion dollars? Very nice, but
Speaker 1: context down fifteen percent from a year ago, Earnings half
Speaker 1: what they were a year ago. And you know, it's
Speaker 1: a weird situation for Activision Blizzard right with depending acquisition.
Speaker 1: But the reality is that the video games instruced is
Speaker 1: not as strong right now as it was last year.
Speaker 1: You know Call of Duty Vanguard, which came out in
Speaker 1: the fall has performed poorly. That's had an impact on
Speaker 1: the company's finances, and frankly, we're all at home anymore.
Speaker 1: I've stopped playing as much video games as many video
Speaker 1: games and some of their competitors, like Halo, for example,
Speaker 1: have just done better to gravitate what interest there is.
Speaker 1: How much of this has to do with uncertainty surrounding
Speaker 1: the deal. I mean, this would be the biggest acquisition
Speaker 1: in the last year at least, and we don't know
Speaker 1: if it's going to happen or not, so I think
Speaker 1: merger arbitrary specialists that Bloomberg spoken to say the odds
Speaker 1: of it going through around sevent Bloomberg Intelligence think there's
Speaker 1: going to be tough, but it will ultimately go through.
Speaker 1: And if you look at the stock, you know it's game.
Speaker 1: Since the deals announced, it trades a significant discount to
Speaker 1: the A share that were offered. But it's a mega deal,
Speaker 1: and you know, we always thought there would be regulatory scrutiny,
Speaker 1: and investors seem confident. But as we've learned with well,
Speaker 1: let's not go their Twitter and mask anything could happen
Speaker 1: with a deal of this size. Activision has also been
Speaker 1: dealing with some cultural issues. There's questions about the future
Speaker 1: of CEO Bobby Kolda stays on Microsoft or if this
Speaker 1: deal is the start of his swansan. Yeah, And what
Speaker 1: analysts a point to is that Microsoft went into the
Speaker 1: deal with their eyes open, So it seems you know
Speaker 1: that they bought the company or said they would buy
Speaker 1: the company of the time that that was going through.
Speaker 1: The biggest kind of world card is one Lena can
Speaker 1: I think you were just discussing in the last blog
Speaker 1: as this sort of general appetite to look at big
Speaker 1: tech deals. In the first quarter, the FTC asked both
Speaker 1: sides for evidence. We thought we'd get responses on Monday
Speaker 1: as part of earnings, but in the earnings statement they
Speaker 1: just said, Hey, as is normal, we're pending a deal. Sorry,
Speaker 1: can't comment, can't give you any more information. Maybe by
Speaker 1: the fourth quarters what bloom bag intelligence things will get
Speaker 1: some more detail here. Well, its interest is to see,
Speaker 1: Lena can't scrutinizing a much smaller deal between Meta and uh,
Speaker 1: you know, a small VR company, and not to have
Speaker 1: the same kind of scrutiny of Microsoft and Activision yet
Speaker 1: that we know of. Yet again, we're in a pretty
Speaker 1: primary stage and the deal is on tracked close in June,
Speaker 1: which you know, given the new cycle, seems a very
Speaker 1: long way away. And don't think it. This isn't just
Speaker 1: us story. The cmn UK announced early July they're looking
Speaker 1: at this. This is a global player. Activation has partners
Speaker 1: in China with Nettes. It's going to get a lot
Speaker 1: of attention alright, a lot at stake at Bloodlow. Thank
Speaker 1: you for that update. I think simply because you've been
Speaker 1: successful in a few different businesses doesn't somehow mean that
Speaker 1: you have a napped from market power. It just means
Speaker 1: you've been successful in a couple of different customer experiences.
Speaker 1: I look at the opportunity we provide. I look at
Speaker 1: the skills people are learning through YouTube, you know. I
Speaker 1: feel like everywhere when I go talk to people and
Speaker 1: and providing access to information and knowledge, I think we'll
Speaker 1: end up being on the right side of history as well.
Speaker 1: I don't think big by itself is bad or but
Speaker 1: competition is good. And every business, in particular the businesses
Speaker 1: that are large and have high scale. The unintended consequences
Speaker 1: of your scale cannot be dealt after the fact. They
Speaker 1: need to be dealt while you're scaling. Regulation will have
Speaker 1: an important role to play here. I think privacy regulation
Speaker 1: is important. In the areas like AI regulation will be important.
Speaker 1: Some thoughts there from my interviews with various big text
Speaker 1: CEOs in the last eighteen months. As big tech regulation
Speaker 1: is still pending in Washington, can Congress rain in these
Speaker 1: major platforms well. The American Innovation and Choice Online Act
Speaker 1: is Congress's first major effort to regulate big since the
Speaker 1: inception of the Internet, and it has bipartisan support. Here's
Speaker 1: the bills leading Democratic sponsor, Senator Amy Klobuchar. At some point,
Speaker 1: if there's no competition, these companies are allowed to become
Speaker 1: these monopolistic, dominant um providers. And in the case of
Speaker 1: a t n T, no one wanted to destroy a
Speaker 1: t n T. They just wanted to make sure that
Speaker 1: new competitors can develop. Votes could come before November's mid terms,
Speaker 1: and if it passes, what does it mean for big tech? Really?
Speaker 1: Let's discuss that and more with the Chamber of Progress
Speaker 1: founder and CEO. Adam Kovakovitch, a long time former Google
Speaker 1: executive and Charlotte's Laman competition policy director at Public Knowledge,
Speaker 1: an organization that works to promote freedom of expression and
Speaker 1: an open Internet. So Charlotte will start with you. What's
Speaker 1: your sense of this bill? Does it go far enough? Yes?
Speaker 1: I think it would be a huge step forward. Of course,
Speaker 1: there is a lot more that we are hoping and
Speaker 1: happen in the future, but being able to stop the
Speaker 1: anti competitive discrimination that these companies are engaging in to
Speaker 1: prevent small competitors from getting a fair shot would make
Speaker 1: a huge difference towards promoting competition and making sure that
Speaker 1: consumers actually have access to the best products. Adam, would
Speaker 1: you agree or does this bill go too far? Respectfully disagree?
Speaker 1: I I have great respect for Charlotte, but we disagree
Speaker 1: on this one. Look, I think this this bill is
Speaker 1: languishing for a pretty simple reason, which is that what
Speaker 1: it's proposing to do just isn't that popular if you
Speaker 1: look at another space, which is drugs. Right now, in contrast,
Speaker 1: Congress is on the verge of passing an extremely popular
Speaker 1: regulatory change over the objections of the pharmaceutical industry, which
Speaker 1: is allowing Medicare to negotiate drug prices. That's something that
Speaker 1: voters have been clamoring for for decades. It's their pocketbooks.
Speaker 1: They've have senators about it at town hall meetings. Tech
Speaker 1: regulation isn't like that. I think we see the polls
Speaker 1: show that the public favors regulation of big tech platforms
Speaker 1: in general. But this bill does something in particular that's
Speaker 1: not particularly popular, which is banned big tech from offering
Speaker 1: vertically integrated services like Google Maps, Amazon Basics. And it's
Speaker 1: always been clear why smaller companies like Yelp and Spotify
Speaker 1: and match would benefit from that law. But I think
Speaker 1: senators have sort of seen for themselves of the last
Speaker 1: couple of months that no voters are really marching on
Speaker 1: Washington to demand big changes to Google search results or
Speaker 1: Amazon Prime and and that's just the reality. Charlotte, how
Speaker 1: do you respond to that? So I think it may
Speaker 1: not be yet a household discussion about um competition and antitrust,
Speaker 1: But I think what people notice is that these products
Speaker 1: are not serving them. They might not know that that
Speaker 1: is because of a lack of competition, because, uh, these
Speaker 1: gatekeepers don't have to face the new entrepreneurs who sometimes
Speaker 1: have better ideas, and that's why we're stuck with the
Speaker 1: same old products. UM. So, I think, you know, people
Speaker 1: are learning, and that's part of the effort of advocacy
Speaker 1: for this legislation. People are learning what the root causes
Speaker 1: and that it's a lack of competition. But I think
Speaker 1: people are are familiar with the results of that lack
Speaker 1: of competition because they see it every day in these
Speaker 1: products that are no longer innovating in the way that
Speaker 1: we really should see in this space, Adam, We've seen
Speaker 1: big tech kind of stepping up its efforts to lobby
Speaker 1: lawmakers as this bill inches closer. You've got Amazon News
Speaker 1: today hiring a top Republican Congressional aid on its lobbying side.
Speaker 1: You have Apple spending more on antitrust lobby lobbying than
Speaker 1: ever so fartherest here in Tim Cooke himself personally going
Speaker 1: to Washington. Just how scared is big tech of this
Speaker 1: particular bill. Well, it's not something they love. And I
Speaker 1: think again there's a pretty simple reason, which is that
Speaker 1: if you look at the number of people in this
Speaker 1: country who are happy and satisfied with their iPhone, with
Speaker 1: their Google search results, with Amazon, we're talking about hundreds
Speaker 1: of millions of people. And I do think there is
Speaker 1: something about politics that sort of rewards, you know, kind
Speaker 1: of the vocal activists few over the kind of the
Speaker 1: happy many. And I think that's one of the dynamics
Speaker 1: of this debate, that there's a lot of people who
Speaker 1: are not paying attention to this debate at all. What
Speaker 1: do I think would be pretty upset if they're those
Speaker 1: products change? And so I think in some ways the
Speaker 1: companies are kind of in this position, and it's not
Speaker 1: it's awkward, but they're in this position. Of course they're
Speaker 1: defending themselves, but they're also defending sort of they're happy
Speaker 1: customers at the same time. What do you make of
Speaker 1: that argument, Charlotte, that you know, supporters of big tech
Speaker 1: or you know, regular people maybe actually wouldn't want these
Speaker 1: things to be happening if they understood what is to
Speaker 1: be fair a very complicated set of issues, right. I
Speaker 1: don't think that's right. I think the reason that the
Speaker 1: Czech companies don't like this legislation is that it's much
Speaker 1: easier for them if they don't have to face fair competition. Um.
Speaker 1: Right now, they can rest on their laurels and they
Speaker 1: can use anti competitive tools to prova competition from getting
Speaker 1: a fair shot against them, and that is a lot
Speaker 1: easier for them. I understand that, but I think consumers
Speaker 1: really would be better served by fair competition and by
Speaker 1: making sure that those alternatives that are out there or
Speaker 1: in cases you know, are unable to get funded, making
Speaker 1: sure that those alternatives actually get a chance to thrive.
Speaker 1: I think consumers will really benefit from those new innovations
Speaker 1: that we would see if there was fair competition in
Speaker 1: this space. On that note, I'm curious what you both
Speaker 1: think of the FTC challenging Meta's attempts to buy this
Speaker 1: VR company within unlimited Uh. It sounds like Lena Khan
Speaker 1: moved forward with this challenge despite her staff recommending against it. Adam,
Speaker 1: is this, you know, the FTC trying to prevent Facebook
Speaker 1: slash Meta from resting on its laurels and not innovating
Speaker 1: and trying to innovate by buying instead of building. Look,
Speaker 1: I think the case is more rooted in politics than
Speaker 1: the laws. You said. Her staff attorneys recommended against this case,
Speaker 1: and this is coming on a week right where Meta
Speaker 1: actually their revenue was down. Everythink everybody knows that they're
Speaker 1: facing pretty existential competition from TikTok, right, and so I
Speaker 1: think one of the things you see in this new
Speaker 1: case is that the FTC had to draw a very
Speaker 1: narrow market definition in order to make this argument that
Speaker 1: the Meta was monopolizing. And they said that Meta was
Speaker 1: monopolizing when they called the market for VR fitness apps right,
Speaker 1: and they did something similar in their VR dedicated fitness apps.
Speaker 1: They did something similar in their case against Meta over
Speaker 1: the Instagram and WhatsApp uh deals, and the judge in
Speaker 1: that case said that they had failed to prove the
Speaker 1: market definition. I think in this case, I predict the
Speaker 1: judge is going to say they drew the market too narrowly.
Speaker 1: It's a little bit like saying that, like fruit Loops
Speaker 1: has monopolized, you know, the market for rainbow colored fruity cereal. Well,
Speaker 1: that's not its own market right to compete. Competes against
Speaker 1: fruity pebbles and frosted flakes and lucky charms and bagels
Speaker 1: and English muffins, and judges know that, right. And so
Speaker 1: I think this case is is I think likely to
Speaker 1: fall into a similar trap of defining a market too narrowly. Charlotte,
Speaker 1: what do you think about this FTC challenge? It certainly
Speaker 1: has a ring of of of of some skeptics who
Speaker 1: think maybe the Instagram and what's app deals should never
Speaker 1: have happened. So first, I really don't think we should
Speaker 1: read too much into this idea that the staff were overruled. UM.
Speaker 1: I worked at the FTC. I know that there are
Speaker 1: usually many staff involved in an investigation like this. UM.
Speaker 1: I think it's not at all clear from these unofficial leaks. Uh,
Speaker 1: you know what the view of the staff was. And
Speaker 1: there's a lot of staff with their name on this complaint,
Speaker 1: so I think they stand behind it. UM. And I
Speaker 1: think it's a strong argument. Uh. I'm so glad to
Speaker 1: see that the FTC is UM not waiting to see UM,
Speaker 1: you know, not letting this one go by as they
Speaker 1: have so many times before. I imagine, uh, you know,
Speaker 1: ten years from now, maybe we'll be so glad that
Speaker 1: this was the merger where the FTC decided to step in.
Speaker 1: It is a situation of uncertainty, and part of what
Speaker 1: I think is really needed to improve antitrust enforcement today
Speaker 1: is bringing those cases and situations of uncertainty, especially in
Speaker 1: tech markets, were not always going to be completely sure UM.
Speaker 1: But what economists have seen is that the prior strategy
Speaker 1: of wave and see and UM not bringing a case
Speaker 1: in situations of uncertainty really lead to so many more
Speaker 1: mergers going through than should have, and the economic theory
Speaker 1: that new competitors were going to come in and compete
Speaker 1: away those monopoly rents just wasn't right. That's not what happened.
Speaker 1: It turns out that the costs of inaction are much
Speaker 1: higher than the costs of action. So I think they're
Speaker 1: absolutely making the right decision here, and I was glad
Speaker 1: to see it. Interesting now there are some potential big
Speaker 1: concessions that big tech could make. We have seen some
Speaker 1: concessions over the last several weeks potentially to divert the spotlight.
Speaker 1: But one of those adam is Google potentially offering to
Speaker 1: spin off its ad business to fend off anti trust scrutiny.
Speaker 1: How likely is that. I don't know how likely that is.
Speaker 1: I think one of the things that this is come
Speaker 1: up is in this context of this d j uh
Speaker 1: investigation supposedly of Google's ad tech business. One of the
Speaker 1: things that's interesting to me about that is that the
Speaker 1: Texas Attorney General already has a lawsuit that has pretty
Speaker 1: advanced against Google over the same topic. Uh, And so
Speaker 1: it's interesting to me to see that that that um,
Speaker 1: that kind of happening in parallel I don't know what
Speaker 1: to make in terms of kind of how that will unfold.
Speaker 1: But um, but but we'll see if the d J
Speaker 1: takes that step. Given that the Texas a G is prosecuting,
Speaker 1: Sometimes to enforcers say well, you know that's an issue
Speaker 1: that another enforcement agency has already tackling, so well, you know,
Speaker 1: maybe maybe we focus on some other issue in our investigations.
Speaker 1: All right, Well, much here to continue to discuss. But
Speaker 1: thank you both for waning in Adam Kovakovitch of the
Speaker 1: Chamber of Progress as well as Charlotte Sliman Public Knowledge.
Speaker 1: Appreciate it. Okay, coming up the regulation that could becoming
Speaker 1: to crypto making, Del Raheem, a partner at lath and
Speaker 1: Watkins and a former d o J Assistant Attorney General,
Speaker 1: is with us. Next this is Bloomberg. Instead of doing
Speaker 1: this regulation by enforcement, we should be looking at the
Speaker 1: legislative process. If you raise money from the public and
Speaker 1: and that public is anticipating based on your efforts, uh,
Speaker 1: some profit that comes into the securities laws. The laws
Speaker 1: around determining what a security are is very complex. I
Speaker 1: would stay with talking to industry groups, I was like,
Speaker 1: we need to self regulate or the regulators are coming
Speaker 1: and when you look back, there was very little self regulation.
Speaker 1: We want to make sure that we have thoughtful regulatory
Speaker 1: frameworks so that these industries can survive and thrive. Let's
Speaker 1: take a view on another bursioning tech industry that is
Speaker 1: primed for more regulation, and that is crypto. I want
Speaker 1: to bring in Making Del Rahee now partner at Latham
Speaker 1: and Watkins and former Assistant Attorney General for the Justice
Speaker 1: Department's Antitrust Division under the Trump administration. He oversaw the
Speaker 1: review and resolution of hundreds of mergers and acquisition and
Speaker 1: played a vital role in building the Antitrust divisions engagement
Speaker 1: with its international counterparts. Making. Thank you so much for
Speaker 1: joining us. I've wanted to interview you for a long time,
Speaker 1: and I'm so curious what you make of the debate
Speaker 1: uh in the crypto universe right now about how to
Speaker 1: balance innovation and regulation. Obviously, there's been a ton of
Speaker 1: volatility in this space, there have been bankruptcies, but also
Speaker 1: a ton of enthusiasm. What's the right balance? Well, thanks
Speaker 1: first of all for having me on. It's it's interesting
Speaker 1: there's this debate that you know, whenever you have a
Speaker 1: foundational technology that could disrupt incumbent players. There's a big debate,
Speaker 1: and the legislative process is that it's a very slow
Speaker 1: process because you need a lot of education. You need
Speaker 1: to educate the policy members, the policy makers, members of
Speaker 1: Congress and others about exactly what it does and what
Speaker 1: should they be afraid of to get in there. Of course,
Speaker 1: I think the less regulation you have, especially at the
Speaker 1: infancy of a new technology, the greater, uh the innovation
Speaker 1: that is going to be surrounding that. Of course, if
Speaker 1: there's abuses, that's when regulations should come in, but not
Speaker 1: to come in early at the early stages of developing
Speaker 1: a new foundational technology like blockchain. And so you've you've
Speaker 1: seen a lot of changes in the marketplace. Of course,
Speaker 1: it's largely related to cryptocurrencies rather than the broader space
Speaker 1: of blockchain that has many applications. So President Bind's Crypto
Speaker 1: Executive Order, for example, what's your view on that from
Speaker 1: an antitrust perspective. Look, I think one of the very
Speaker 1: positive things about the executive Order it brings the whole
Speaker 1: of government. It it's the views of different folks looks
Speaker 1: at competition area. The area that I'm very much concerned
Speaker 1: about is making sure that you know, regulation UH is
Speaker 1: not put in place where you have you know, static
Speaker 1: regulation x anti UH that puts UH you know, that
Speaker 1: puts shackles on the on the engineers and the business
Speaker 1: models rather than letting get developed into its full potential.
Speaker 1: And what I'm hoping is that different aspects of the government. So,
Speaker 1: of course there's this very important role for the SEC
Speaker 1: and the CFTC and and those types of agencies that
Speaker 1: regulated from investment standpoint, but there's also an important role
Speaker 1: for the Departments of Commerce and Department of Justice, particularly
Speaker 1: the Antitrust Division, to ensure that the regulations will allow
Speaker 1: maximum competition and provide the greatest incentives for further innovation.
Speaker 1: This is the technology that I think has uh infinite
Speaker 1: potential to really disrupt many areas and provide efficiencies that
Speaker 1: ultimately benefit consumers, such as lowering transaction costs. Sure, now
Speaker 1: we've seen firms like f t X take on a
Speaker 1: lot more of the market, striking deals left and right.
Speaker 1: Is that something that we should be worried about from
Speaker 1: an anti trust perspective or are there other red flags
Speaker 1: that you see? It's it's look, there's a market that's
Speaker 1: just developing. So there's gonna be some winners, there's going
Speaker 1: to be some losers, and it's going to develop. Uh.
Speaker 1: You know, you're you're probably not fold enough like I
Speaker 1: am to remember back in two thousand, right at the
Speaker 1: height of the Internet bubble, where you had everything, you know,
Speaker 1: you PLoP the name added dot com to it, and
Speaker 1: all of a sudden, it's a billion dollar company. Not
Speaker 1: all of them survived because they didn't have all the
Speaker 1: essential elements. So I think the industry is going through
Speaker 1: some changes. And some transactions are very good because it
Speaker 1: allows for some technologies or some engineers and other talent
Speaker 1: to be absorbed into something another entity that could be productive.
Speaker 1: So I don't I think every transaction needs to be
Speaker 1: looked at on its own specific facts and its own
Speaker 1: specific merits. And that's what the antitrust laws do. They
Speaker 1: don't look at it holistically about you know, a bunch
Speaker 1: of acquisitions, Uh, whether they're bad or good. We look
Speaker 1: at the effects of that transaction. What's your view on
Speaker 1: the Klobuchar grass Lee bill designed to reign in big
Speaker 1: tech is not the correct framework by which big tech
Speaker 1: should be regulated. Look, I think it's it's a difficult
Speaker 1: one because there's the there's existing law, and there's a
Speaker 1: number of litigation that is that is ongoing, both in
Speaker 1: the United States and abroad, and I won't comment on that,
Speaker 1: but the legislative process whenever you are going to impact
Speaker 1: ahead of time. Uh, this is really industrial policy. This
Speaker 1: is not really anti trust laws that are being proposed.
Speaker 1: You're making a policy judgment call about certain businesses. There's
Speaker 1: gonna be some harms because you're gonna lose some efficiencies
Speaker 1: when those business practices are precluded. Uh, And those are
Speaker 1: judgment calls that policy makers are making. There's gonna be
Speaker 1: some harm to consumers by some aspects of these bills.
Speaker 1: And there's you know, for example, there's another legislation that
Speaker 1: makes illegal every merger that's worth folk that's worth over
Speaker 1: five billion dollars. That just doesn't make a whole lot
Speaker 1: of sense to me. And some of these bills, they
Speaker 1: really need to be refined. There needs to be um
Speaker 1: a lot of debate about this. There isn't. I don't
Speaker 1: think the requisite amount of proper debate and the implications
Speaker 1: of all these bills has been had there in Congress yet. Okay,
Speaker 1: then what's your view on the state of antitrust enforcement.
Speaker 1: More broadly, under the Biden administration, Look, President Biden came it.
Speaker 1: He issued an executive order from the White House to
Speaker 1: the agencies and also to every regulated regulated industry agency.
Speaker 1: Every executive branch has to look at it for competition purposes.
Speaker 1: I think that's good. That is fine to look at, uh,
Speaker 1: you know, the competitive effects and impacts of your regulatory actions.
Speaker 1: What I don't like is that if particular industries are
Speaker 1: just targeted. I don't think that's that should be the goal.
Speaker 1: And I hope that the two antitrust agencies, the enforcement agencies,
Speaker 1: the Federal Trade Commission and Department of Justice, look at
Speaker 1: each case, each transaction, each company, and the effects of
Speaker 1: the conduct that they have, rather than trying to target
Speaker 1: you know, you pick your name, big tech, big health, big,
Speaker 1: whatever it might be. Big in a capitalist system is
Speaker 1: not bad big behaving badly as bad as I've in
Speaker 1: a sophomoric way described once so quickly. What's your take
Speaker 1: on on Lena con and in her latest approach, we've
Speaker 1: learned about the FTC challenging metas attempt to acquire within
Speaker 1: unlimited a VR company, and obviously she's you know, she's
Speaker 1: certainly made it clear she wants to take on big,
Speaker 1: big tech quickly. Do you think that she is going
Speaker 1: to succeed? Well, look, I had an old mentor, Jack M. Lenny,
Speaker 1: who was the head of the Motion Pictures of Association
Speaker 1: and a colorful guy, and once he told me making
Speaker 1: you can tell a man to go to hell getting
Speaker 1: him there's a whole different story. My experience in law
Speaker 1: enforcement is that you can say you know you're gonna
Speaker 1: break up any company you want, or any industry you've
Speaker 1: got to. You have to develop the facts, develop the law,
Speaker 1: and go prove it in court. That's not always very
Speaker 1: easy to do. I think they have taken on their looked,
Speaker 1: taken a hard look at some cases. But I think,
Speaker 1: as they have found in the past year and a half,
Speaker 1: actually bringing specific cases and winning them in court, it's
Speaker 1: not as easy as saying, so you know why, because
Speaker 1: we're a country of law laws and there's precedent of
Speaker 1: the antitrust laws out there. I commend them for pushing
Speaker 1: the envelope within the boundaries of the ball, but I
Speaker 1: think success is going to be a challenge unless the
Speaker 1: facts and the laws are there. That is a metaphor
Speaker 1: that I will remember. Thank you, Makon del Raheem, partner
Speaker 1: at Lataman Watkins, former d o J assistant attorney in general.
Speaker 1: Thank you for weighing in a Twitter shareholder hit Elon
Speaker 1: Musque with a class action lawsuit, effectively joining Twitter's bid
Speaker 1: to hold him to a forty four billion dollar deal.
Speaker 1: Investor Luigi Crispo calling out Musk's quote lane rationales for
Speaker 1: renegging on this contract, accusing the billionaire fabricating excuses to
Speaker 1: get out of the buy up. He's seeking a court
Speaker 1: order compelling Musk to consummate that deal. And that does it.
Speaker 1: For this edition of Bloomberg techn Apology coming up tomorrow,
Speaker 1: we're gonna be sitting down with Uber CEO Dara Kazra Shy.
Speaker 1: We're gonna talk about earnings and his plans to turn
Speaker 1: Uber into a super app. Is it working? And don't
Speaker 1: forget to check out our podcast wherever you get your podcasts.
Speaker 1: I'm Emily Changing in San Francisco. This is Plumberg