Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Big tech is
Speaker 1: under attack, and it's a bipartisan assault from multiple places
Speaker 1: over a range of grievances that underscores the kind of
Speaker 1: reckoning the companies could face in the future. Four of
Speaker 1: the biggest US tech firms, Amazon, Facebook, Google, and Apple
Speaker 1: defended themselves before the House Antitrust Subcommittee yesterday. Chairman David
Speaker 1: Cicilini was obviously prepared for his attack on Amazon, suggesting
Speaker 1: it uses its control over data to thwart competition on
Speaker 1: its platform. Do you use consumer data to favor Amazon products?
Speaker 1: Because before you answer that, analysts estimate that between eighty
Speaker 1: and of sales go to the Amazon by box, So
Speaker 1: you collect all the stata about the most popular products
Speaker 1: where they're selling, and you're saying you don't use that
Speaker 1: in any way to change an algorithm to support the
Speaker 1: sale of Amazon branded products. The answer was no. A
Speaker 1: little explanation joining me as Bloomberg Intelligence Senior litigation analyst
Speaker 1: Jennifer Reid. So, Jen, this was the four big tech
Speaker 1: companies facing this tough questioning from the panel. Was the
Speaker 1: bottom line, the concern about sheer size and the dominance
Speaker 1: of these firms. You know, yes and no. So overall, yes,
Speaker 1: this is all beginning and all of these investigations are
Speaker 1: starting because there are general concerns about the dominance, the
Speaker 1: size of these companies, their power, uh, their ability to
Speaker 1: to hinder arrivals and small arrivals and new entrants. But
Speaker 1: you know, an antitrust is fact specific and its conduct specific,
Speaker 1: and I think many of the committee members recognize that.
Speaker 1: So to some extent, some of them started getting into
Speaker 1: very detailed conduct. For instance, what we just heard with
Speaker 1: Cicilyne talking about Amazon and what Amazon does. And there
Speaker 1: were even some questions about Apple and why a prompt
Speaker 1: for Apple's iCloud for NS comes up when you go
Speaker 1: into an Apple device. So so it was both UH
Speaker 1: and they are going to have to get into the
Speaker 1: specifics if something is to be done along the lines
Speaker 1: of antitrust here to curb these companies, because monopolistic conduct
Speaker 1: has has to do with conduct and it's very fact specific.
Speaker 1: So which company faced the most criticism and which the
Speaker 1: least well in the hearing yesterday, I think Amazon really
Speaker 1: had the most heat, for sure, and I would say
Speaker 1: Facebook the least. And while that might sound surprising, that's
Speaker 1: probably because Yeah, but the thing is, Facebook's problems are
Speaker 1: really more rooted in privacy concerns and and this was
Speaker 1: an antitrust hearing, so there was certainly um questioning a
Speaker 1: Facebook as to who how much competition it has in
Speaker 1: social media and Facebook really had a little bit of
Speaker 1: trouble answering that question. Um, But like I said, the
Speaker 1: privacy concerns the bigger issue for Facebook, and with Amazon
Speaker 1: faced a lot of heat, I would say Apple the
Speaker 1: least so well, and we know Facebook was facing its
Speaker 1: own problems over its attempt to have cryptocurrency or another committee. So, um,
Speaker 1: is this criticism by lawmakers likely to go anywhere? I
Speaker 1: mean past legislation there there there seems to be biportistans
Speaker 1: support here, That's right, and I think that's the ultimate
Speaker 1: goal here. So this hearing was the second hearing and
Speaker 1: what is meant to be a series of antitrust hearings
Speaker 1: and an investigation because that could include a subpoena and
Speaker 1: getting documents from these companies. Uh. And the goal is
Speaker 1: to understand if there's a problem, how to solve the
Speaker 1: problem and weather legislation makes sense, and then how to
Speaker 1: craft that legislation. So it's going to be difficult and
Speaker 1: it's going to be somewhat of a long process, but
Speaker 1: that is the idea here. Some people were saying this
Speaker 1: hearkens back to Microsoft when when Bill Gates appeared before
Speaker 1: the Senate in and then Microsoft was the target of
Speaker 1: a government lawsuit. Uh. Short time later two months later.
Speaker 1: Is that likely to happen here when there are four
Speaker 1: different companies. Well, first of all, we have to remember
Speaker 1: with the Microsoft situation that Bill Gates appeared in n
Speaker 1: to testify, but the Department of Justice had been investigating
Speaker 1: Microsoft since So timing wise, they have been investigating five years,
Speaker 1: and I think the lawsuit by the Department of Justice
Speaker 1: would have been brought and was getting set up for
Speaker 1: that time period, you know, whether Bill Gates had testified
Speaker 1: at that time or not. We're at a different place
Speaker 1: with these big four tech companies because if there are
Speaker 1: investigations ongoing already by the Federal Trade Commission, and Department
Speaker 1: of Justice. They are likely at very beginning stages and
Speaker 1: those investigations take years, not always five years, but definitely years.
Speaker 1: Um So we have ongoing in parallel tracks, is this
Speaker 1: house look into the market power and the impact of
Speaker 1: that power on competition, and possibly FTC in Department of
Speaker 1: Justice investigations. So at the end of the day, we
Speaker 1: don't know where that will lead us to whether the
Speaker 1: Department of Justice and FTC will find that each of
Speaker 1: these four companies in the in the areas in which
Speaker 1: they each have some power, have engaged in conduct that
Speaker 1: is deemed to be illegal under the anti trust laws,
Speaker 1: or whether they may find that just one of them has.
Speaker 1: But it's going to be the fruits of these investigations,
Speaker 1: the evidence they pull, documents, data, testimony that will lead
Speaker 1: them to a place where they either settle, do nothing,
Speaker 1: or bring a suit. So, and we've discussed before how
Speaker 1: there was news that the Justice Department in the FTC
Speaker 1: sort of divvied up the companies in order to to
Speaker 1: start investigating them. Now, as you mentioned, and as Republican
Speaker 1: Jim Senson Brenner said that just because of business is big,
Speaker 1: that doesn't mean it's bad and anti trust law doesn't
Speaker 1: exist to punish businesses because they're big. But isn't that
Speaker 1: what most Americans think of as anti trust that they're
Speaker 1: going to break up the big companies? Absolutely, and they say, hey,
Speaker 1: that company has a monopoly, and isn't it isn't it
Speaker 1: unlawful to have a monopoly. But Jim Sense and Brenner
Speaker 1: actually stated the law as it exists currently, and I
Speaker 1: think that's why they're taking this look because they understand
Speaker 1: how the laws developed and what our law says. Our
Speaker 1: Supreme Court has said it is not illegal to obtain
Speaker 1: a monopoly, and it's not even illegal to charge high
Speaker 1: prices monopoly prices that if the market will bear it,
Speaker 1: and if a company has a lawful monopoly, And I
Speaker 1: think the question becomes, well, then do we need legislation
Speaker 1: because the state of the law doesn't necessarily give us
Speaker 1: a lot of flexibility in going after these companies. But
Speaker 1: the biggest issue is that you have these companies providing
Speaker 1: great benefits for consumers, free products, lower prices, and that's
Speaker 1: going to be the biggest battle because anti trust law
Speaker 1: is really meant to protect consumers against higher prices. Now
Speaker 1: the EU has opened a form they're always ahead of us.
Speaker 1: There market the stayers is always ahead of us. As
Speaker 1: far as anti trust, they opened a formal investigation into
Speaker 1: Amazon's due role as retailer and online platform, which was
Speaker 1: sort of what Cicilini was getting into yesterday. Yes, absolutely,
Speaker 1: The question is if if you're playing on the platform,
Speaker 1: you're the referee but are also competing, how is that
Speaker 1: fair and is that a conflict of interest? Now we've
Speaker 1: done that in the United States. You know, we often
Speaker 1: are vertically integrated companies. UM, we we participate in you know,
Speaker 1: let's say in a market, in a retail store where
Speaker 1: they're selling a private label product that competes against a
Speaker 1: branded product in that store, they are the distributor as
Speaker 1: well as competing. So that occurs, and that is okay,
Speaker 1: it's not necessarily conflict of interest. But if Amazon is
Speaker 1: doing something, um, taking competitively sensitive information let's say of
Speaker 1: a rival seller, that could be a problem, or demoting
Speaker 1: that seller's products and using it to advantage itself, that
Speaker 1: might be a problem. And yet people like those low prices,
Speaker 1: as you mentioned, so we'll see what happens. That's Bloomberg
Speaker 1: Intelligence Senior litigation analyst Jennifer read Thanks for listening to
Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to
Speaker 1: the show on Apple podcast US, SoundCloud, and on bloomberg
Speaker 1: dot com slash podcast. I'm June Brosso. This is Bloomberg
Speaker 1: m