Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 1: You can't always get what you want. You can't always
Speaker 1: get what you want Travel the Rolling Stones, Elton John
Speaker 1: and Phil Collins are just some of the rock stars
Speaker 1: who have complained about the Trump campaign using their hit
Speaker 1: songs at campaign events. Neil Young is even suing the
Speaker 1: campaign over it. But Eddie Grant has a more unusual
Speaker 1: complaint about the use of his signature hit Electric Avenue.
Speaker 1: In August, President Trump tweeted an animated ad that shows
Speaker 1: a high speed Trump train ray sing through a town
Speaker 1: while now President elect Joe Biden follows along slowly in
Speaker 1: a railroad hand car. Electric Avenue plays in the background
Speaker 1: with random odd snippets from Biden. Grant says he never
Speaker 1: licensed the song to Trump or his campaign, and he's
Speaker 1: suing for copyright infringement. My guest is intellectual property litigator
Speaker 1: Terence ross A partner captn Uten Rosenman. What would normally happen.
Speaker 1: Let's say I want to do a video and I
Speaker 1: want to use someone's music. Could I use small parts
Speaker 1: of it? Or do I have to get permission no
Speaker 1: matter what I use it for? So the way This
Speaker 1: would normally work is that the creator of the video
Speaker 1: would take it to a lawyer and a pain pre clearance,
Speaker 1: and the lawyer would analyze the video to determine whether
Speaker 1: or not a license for the music was required or not.
Speaker 1: In a very large number of cases, that determined that
Speaker 1: no license is required because the use being made in
Speaker 1: the video is a fair use after the copyright law
Speaker 1: therefore does not constant copyright infringement. Why do you think
Speaker 1: the Trump campaign just didn't get a license. I assume
Speaker 1: they obtained legal advice that they didn't have to. Quite frankly,
Speaker 1: that would be pretty good legal advice. Really, So what
Speaker 1: has the Trump campaign come back with in its response
Speaker 1: to the complaint? So the Trump campaign moves to dismiss
Speaker 1: the lawsuit, which in the federal court system is a
Speaker 1: mechanism for an early termination with prejudice based on a
Speaker 1: failure of the complaint to state a legal claim for relief.
Speaker 1: You know, the basis of the motion to dismiss on
Speaker 1: the Trump campaigns part is exclusively the fair use doctrine.
Speaker 1: The fair use doctrine is a well established legal principle
Speaker 1: under copyright law that's codified in the Copyright Act of
Speaker 1: nine that says there are instances in which a person
Speaker 1: may use a copyright at work without permission because there
Speaker 1: are public policy reasons why we as a society need
Speaker 1: to allow such use. Here, it strikes me that the
Speaker 1: fair used doctor and his tailor made or the defense
Speaker 1: of this lawsuit by the Trump campaign, if you look
Speaker 1: at the statute and the case law that is evolved
Speaker 1: around the fair use doctrine in the United States, a
Speaker 1: defendant would have to show four items are established to
Speaker 1: obtain a dismissal based on fair use, and those are
Speaker 1: that somehow the use of the copyright at work was
Speaker 1: transformed by their own use. Second, that somehow the nature
Speaker 1: of the copyright at work deserve less protection, Third, that
Speaker 1: very little of the copyright at work was actually used,
Speaker 1: and force that there is no impact or very little
Speaker 1: impact upon the market for the copyright at work. And
Speaker 1: the Trump campaign here as filed emotion in which it
Speaker 1: has argued that three of those four requirements for fair
Speaker 1: use are met under these facts and their forts entitled
Speaker 1: to have the lawsuit dismissed with prejudice. R. Cavenue I
Speaker 1: believe was forty seconds out of a fifty second video.
Speaker 1: Does that matter. It matters a lot. The measurement you
Speaker 1: use for that prong of the fair use test is
Speaker 1: how much was used Visa v. The copyright at work.
Speaker 1: The copyright at work was over three minutes long and
Speaker 1: about forty seconds were used in this animated video by
Speaker 1: the Trump campaign, and in past cases that level of
Speaker 1: usage has been held as a matter of law to
Speaker 1: be sufficiently limited to justify invocation and fair use. Doctor Grants, Attorney,
Speaker 1: says that the Trump campaign should have gotten a synchronization
Speaker 1: license to sink the music to the video. Is that
Speaker 1: a separate question? Now not necessarily. You only need a
Speaker 1: license if there is copyright infringement going on. So the
Speaker 1: fair use doctrine here, if the court finds it to
Speaker 1: be applicable, would give the Trump campaign a complete pass
Speaker 1: on this lawsuit. This lawsuit would go away, and the
Speaker 1: synchronization license issue, whether or not it's required or not required,
Speaker 1: probably would be required if there was copyright infringement. That
Speaker 1: would only come up if the plaintiff can get passed
Speaker 1: this fair use defense. Cherry explain why the Trump campaign
Speaker 1: says this video was a transformative use of electric avenue
Speaker 1: So June in the second Circuit. That element of a
Speaker 1: fair use doctrine is often regarded as the most important element,
Speaker 1: and the Trump campaign takes it on in its motion
Speaker 1: to dismiss right up front, knowing what the law in
Speaker 1: the second circuit, which includes New York City is, and
Speaker 1: they say that what they've done here with the song
Speaker 1: is taking a tiny portion of it and repurposed it
Speaker 1: for political purposes in an animated video that attacks the
Speaker 1: Biden candidacy. And the case for this being a transformedive
Speaker 1: use as a legal matter is very strong. There are
Speaker 1: past instances in this court in which small portions of
Speaker 1: songs have been used in this way with pictures or video,
Speaker 1: and the court is how that that does indeed constitute
Speaker 1: transformedtive use. Of particular importance here is the repurposing of
Speaker 1: the song from a popular entertainment media to a political
Speaker 1: use in the context of a specific campaign, and that
Speaker 1: is going to be a very strong argument for the
Speaker 1: Trump campaign that the fair use doctrine should apply here.
Speaker 1: It must frustrate the artists to have their work used,
Speaker 1: even if it's transformed, to have it used in ways
Speaker 1: that they don't agree with or by people they don't
Speaker 1: agree with. Yes, It really does have represented many artists
Speaker 1: who come to me with that complaint, and it is
Speaker 1: a genuine line, heart felt concerned that they expressed and
Speaker 1: should be respected. But you have to understand that in
Speaker 1: order to prevent the copyright hack from being turned into
Speaker 1: some sort of mechanism for censoring speech, we have to
Speaker 1: allow at the margins for this sort of fair use.
Speaker 1: We cannot judge the fair use based on our politics,
Speaker 1: or our morality or any other subjective criteria. We have
Speaker 1: to really focus on the fact that this Further's First
Speaker 1: Amendment right by allowing such fair you heely Young is
Speaker 1: also sue Trump's campaign for playing his songs Roughing in
Speaker 1: the Free World and Devil's Sidewalk at rallies, saying he
Speaker 1: can't allow his music to be used as a theme
Speaker 1: song for a divisive un American campaign. Is this also
Speaker 1: a copyright infringement lawsuit? So at its core, it is
Speaker 1: a copyright lawsuit, but it's really based on licensing law.
Speaker 1: This is not something that's new to this particular campaign cycle.
Speaker 1: Recording artists have complained about the use of their music
Speaker 1: for several decades now, specifically the use at rallies, live
Speaker 1: appearances by candidate as well as in political commercials, and
Speaker 1: so it's not really something new. So Neil Young contends
Speaker 1: that at a Trump rally in June in Tulsa, Oklahoma,
Speaker 1: two of his song were played apparently in their hole
Speaker 1: at the rally as part of hyping up the crowd,
Speaker 1: and that the Trump campaign in doing that did not
Speaker 1: have a license to play the songs and did not
Speaker 1: have Neil Young's authorization to play the songs. Could the
Speaker 1: Trump campaign to be operating under the theory that they
Speaker 1: have an ask cap a general license from as CAP
Speaker 1: or b m I. So when Donald Trump first announced
Speaker 1: that he was running for president in two thousands fifteen,
Speaker 1: this campaign but to the license on the song that
Speaker 1: was played as he famously descended the escalator Trump Power
Speaker 1: to make the announcement, and the performer of that song complained,
Speaker 1: but the fact remained that it was not copyright in
Speaker 1: French because the Trump campaign had obtained a license to
Speaker 1: perform the song in public and was therefore entitled to
Speaker 1: do so. And that's the problem typically with all of
Speaker 1: these recording artists bringing lawsuits against politicians. The way the
Speaker 1: business has worked since is that recording artists, in order
Speaker 1: to obtain licensing revenues, give the licensing rights to one
Speaker 1: of several large licensing organizations, and they then go out
Speaker 1: and vigorously enforced the copyright laws against anybody playing that
Speaker 1: artists music in public and generate quite a lot of revenue.
Speaker 1: What they will tell the world is that you don't
Speaker 1: need to get in trouble with us. You can come
Speaker 1: and get a blanket license to perform the music of
Speaker 1: all of our artists in our stable and in that
Speaker 1: way have protection from any copyright infringement lawsuits. And so
Speaker 1: many advertising agencies, many venues, particularly stadiums, will go out
Speaker 1: and obtain these blanket licenses. And in the complaint that
Speaker 1: Neil Young has brought against the Trump campaign, he goes
Speaker 1: out of his way to point app that although the
Speaker 1: venue where this Trump rally and post local helmet took
Speaker 1: place did have a license, that under the terms of
Speaker 1: that license, a third party coming in and using the
Speaker 1: venue could not take advantage of the license, and therefore
Speaker 1: the Trump campaign was unlicensed. And this is a common
Speaker 1: mistake that organizations coming in and renting a venue make,
Speaker 1: thinking that they're entitled to piggyback on the ASCAP license
Speaker 1: that the venue has. The venue has that license in
Speaker 1: order to play music during intermissions and as the crowds
Speaker 1: coming in, But that does not give the third party
Speaker 1: organization in this case Trump organs as the right piggieback
Speaker 1: on it. They needed, arguably to take their own license
Speaker 1: to play the Neelly Young music, and Neil Young contends
Speaker 1: that they did not have such a license. Can an
Speaker 1: artist like Neil Young instruct as CAP or b m
Speaker 1: I that he doesn't want his music licensed to the
Speaker 1: Trump campaign, So June, that's a great question, um, and
Speaker 1: the one and one that has not been resolved yet
Speaker 1: by the courts and has to be at some point.
Speaker 1: In the nineteen forties, UM, the United States government brought
Speaker 1: antitrust lawsuits against a SCAP and b m I, saying
Speaker 1: that in effect that they were monopolizing the business of
Speaker 1: music because they would pick and choose who they wanted
Speaker 1: to license to and in that way be able to
Speaker 1: drive up UM the prices for the licensing. UM. The
Speaker 1: Rather than take that lawsuit through the courts, UMSCOT b
Speaker 1: m I entered into what it called antitrust consent decrees,
Speaker 1: and under the terms of those decrees, which are still
Speaker 1: in effect, eight years later, the both of them are
Speaker 1: required to license any song or portfolio songs upon request.
Speaker 1: They do not get to pick and choose. And therefore,
Speaker 1: if and artists took that position, it may very well
Speaker 1: expose a scap or b am I too ant I
Speaker 1: trust considerations. There are artists who are now trying to
Speaker 1: do exactly that, and they will probably in the long
Speaker 1: run face some sort of legal consequences as they continue
Speaker 1: insist on doing this, and it does threaten the very
Speaker 1: nature of these consent decrees. An artists who wants to
Speaker 1: UM be able to pick and choose who can license
Speaker 1: their works, and in particular to discriminate amongst political candidates
Speaker 1: or political campaigns, probably needs to take their songs out
Speaker 1: of a step and be a mindset their own licensing
Speaker 1: UM organizations. So the artists, by the way, a very
Speaker 1: good defense here to the for the Trump campaign UM
Speaker 1: to argue that UH that Neil Young was not free
Speaker 1: under the antitrust laws and under that consent degree too
Speaker 1: UM deny them UM a license and could have limiting
Speaker 1: effect upon any damages or injunction that gets issued. Is
Speaker 1: there any case to be made that this implies a
Speaker 1: false endorsement by the artist to have their music played
Speaker 1: at a Trump rally. So that's an argument that you
Speaker 1: hear recording artists make all the time in this context,
Speaker 1: that somehow they are being pegged at supporting this candidate.
Speaker 1: It is a cause of action that only exists in
Speaker 1: hands full of states, and it would be difficult one
Speaker 1: to make in this context. I think the American public
Speaker 1: is arguably sophisticated and not to understand that music gets
Speaker 1: used to sell all sorts of products, including candidates for office,
Speaker 1: and that does not necessarily imply an endorsement by the
Speaker 1: performing artist of whatever that product is, or in this
Speaker 1: case a candidate um So it would be a difficult
Speaker 1: cause of action to make, even in those states in
Speaker 1: which it is available as a cause of action. So
Speaker 1: it appears that the Eddie Grant lawsuit might be dismissed
Speaker 1: on a motion to dismiss before you really get into
Speaker 1: discovery and any kind of heavy litigation. But what about
Speaker 1: the Neily Young lawsuit? So June the motion is smiss
Speaker 1: brought in the Eddie Grant case by the Trump Organization
Speaker 1: has a long pedigree in the in that federal court.
Speaker 1: It is regularly allowed because all you do is look
Speaker 1: at the face the complaint and the facts as alleged
Speaker 1: by the copyright owner, and it's relatively easy to determine
Speaker 1: whether or not the fair use doctrine has the factual
Speaker 1: predicates on the face of complaint um to be considered
Speaker 1: at an early point in case. And that's probably a
Speaker 1: good thing here for the Trump organization. I think that
Speaker 1: lawsuits likely to be resolved relatively quickly without discovery. In contrast,
Speaker 1: the Nenal Young lawsuit will turn on a lot of
Speaker 1: details in the facts that are not evident on the
Speaker 1: face of the complaint and therefore going to require factual
Speaker 1: discovery and likely to be um long and dragged out,
Speaker 1: and may take as much as a few years to
Speaker 1: to decide if it isn't dropped in the interim given
Speaker 1: the results of the election. Thanks Terry. That's Terence Ross,
Speaker 1: a partner Caton Uchen Rosenman. The United States versus Google,
Speaker 1: it will be an epic antitrust court battle as the
Speaker 1: government tries to prove that Google illegally monopolized Internet search.
Speaker 1: It's just the beginning of what's expected to be a
Speaker 1: long battle, with the government having the burden of proving
Speaker 1: several elements to make at its case. Joining me is
Speaker 1: Sam Weinstein, a professor Cardozo Law School and a former
Speaker 1: official in the Justice Department's antitrust Division. First, the government
Speaker 1: has to prove that Google has monopoly power in the market.
Speaker 1: And it's laid out three markets, that's right. So the
Speaker 1: government's alleging three markets, right. So one is general search services,
Speaker 1: which is what we think of when we enter a
Speaker 1: search term into Google. And then a search advertising market,
Speaker 1: which is a general market for search advertising. And something
Speaker 1: they call general search text advertising, which is the ads
Speaker 1: that show up on the top of your Google results page,
Speaker 1: right of sponsored ads above the organic so called organic peoples. Right. So,
Speaker 1: in the way these cases work, as the government has
Speaker 1: to allege these markets and then shows they are indeed markets, right,
Speaker 1: and then that Google has monopoly power in these markets,
Speaker 1: right WHI would be something about a seven share, And
Speaker 1: you know, Google will contest these market definitions. They will
Speaker 1: say that the markets are broader then the government is alleging,
Speaker 1: and Google wants them to be broader because then their
Speaker 1: share drops, and you know, in particular and search advertising
Speaker 1: and general search text advertising, I imagine Google will push
Speaker 1: back hard that those are relevant markets. Right, Google will
Speaker 1: say advertising dollars are distributing amongst things like billboards and
Speaker 1: podcasts and television, right, And that's the market general advertising,
Speaker 1: not not an internet not a search based advertising market.
Speaker 1: So then is it just the judge's decision what the
Speaker 1: market is? And for Google's monopoly share? Is that easy
Speaker 1: to figure out? I mean the numbers? So right, it's
Speaker 1: a good question. Right, So the fact finder, it's in
Speaker 1: front of the judge and tromp. The jury will determine
Speaker 1: in the end what the market is. And you know,
Speaker 1: if you say, for instance, let's say the market is
Speaker 1: general search, and I think that's an easier market for
Speaker 1: the god want to prove, there's going to be data
Speaker 1: out there that economists will put together to say how
Speaker 1: many searches are done a year in the United States
Speaker 1: and how many of those go to Google. Um, that's
Speaker 1: Google's percentage of general search. So that's pretty straightforward advertising.
Speaker 1: I think. Also, if in fact the finders fact in
Speaker 1: the case agrees that the market is search advertising, an
Speaker 1: economist will come along and say, well, the next number
Speaker 1: of dollars are spent on search advertising this year, and
Speaker 1: these are how many dollars want to Google, and here's
Speaker 1: Google's percentage, and that's how they would determine Google's percentage
Speaker 1: of you above or below seven sever five percent not
Speaker 1: a magic number, but the case will suggests you have
Speaker 1: to be above sent five percent, so you know that.
Speaker 1: The steps would be defining the role that market first
Speaker 1: and then proving Google share that levant market. Google earned
Speaker 1: se of search advertising revenue in the US, according to
Speaker 1: a report by E Markett. If that number holds, does
Speaker 1: that mean that Google is not a monopoly in that market?
Speaker 1: The parties would fight about this, right, So there's no
Speaker 1: hard and fast number. I used. Seven percent is a
Speaker 1: shorthand be because there is some case law saying you
Speaker 1: know above stating his pipercent probably is a monopoly share.
Speaker 1: But that's a moving target, right, so a judge or
Speaker 1: the journy will decide what the Probably the judge will
Speaker 1: decide what the appropriate legal standard is. But I think
Speaker 1: is a good shorthand for monopoly power. So if the
Speaker 1: government can prove Google is a monopoly and at least
Speaker 1: one market, then it has to show that Google illegally
Speaker 1: keeps control of that market. And the suit focuses on
Speaker 1: the billions of dollars that Google pays each year to
Speaker 1: make sure it's search engine is the default on mobile
Speaker 1: phones and web browsers. So, any monopolization case, what we
Speaker 1: call Section to at the Sherman Act, has two parts.
Speaker 1: The plainests. In this case, the government has a burden
Speaker 1: to prove two things. One is monopoly power. Let's we
Speaker 1: just talked about, right, so a certain share of a
Speaker 1: relevant market. And the second is some bad acts, some
Speaker 1: bad conduct that either allowed to defend it, to acquire
Speaker 1: or to maintain the monopoly share. And this is a
Speaker 1: monopoly maintenance case. So the alleged bad conduct is a
Speaker 1: few ease of agreements that the government is saying Google
Speaker 1: uses to maintain its monopoly shia and it does so unlawfully.
Speaker 1: On their face, when you hear about those agreements, they
Speaker 1: sound like Google's locking in the market. So what could
Speaker 1: Google come back with as a legitimate reason for those
Speaker 1: So I mean, I think if I'm Google, let me
Speaker 1: just lay out a little bit what will happen on
Speaker 1: the on the context side of the case. Right, the
Speaker 1: government has a burden to come forward with an allegation
Speaker 1: of anti competitive conduct. And here we'll just say for
Speaker 1: shorthand is these various agreements like preinstallation agreements for the
Speaker 1: search engine, revenue sharing agreements right with the big phone manufacturers.
Speaker 1: So the government's going to allege that those are anti
Speaker 1: competitive agreements, and Google can then attack the governments of
Speaker 1: the anti competitive theory, and Google will come back with
Speaker 1: its own pro competitive explanations. Right, So let's first talk
Speaker 1: about the government's theory. The government's theory is that these
Speaker 1: agreements lock in distribution for Google, lockout distribution for the
Speaker 1: Google's rivals, right, raised rivals costs to try to get
Speaker 1: their search engines to consumers. So if I'm Google, I
Speaker 1: think the first thing I'm going to argue is, well,
Speaker 1: that's not really what's happening, right, That's not how consumers
Speaker 1: actually choose search engines. So to me, this case many
Speaker 1: people have made this observation harkens back to the Microsoft came.
Speaker 1: In the Microsoft case, one of the allegations among many
Speaker 1: was that Microsoft ups for closed distribution of rival Internet
Speaker 1: browsers by locking up space on the hard drive the
Speaker 1: ali apps. Right, people making this has looked similar. Right,
Speaker 1: these agreements allegedly locked up space on the phone or
Speaker 1: on your computer. From what you see as a default
Speaker 1: is Google search engine. But Google is pretty straightforward. Counter
Speaker 1: argument is you can switch anytime if you don't like Google.
Speaker 1: It's a clicker way to do DUC dot go, which
Speaker 1: I think it's a pretty powerful argument. Now, it could
Speaker 1: be the government has alleged facts here when we don't
Speaker 1: see the backup for it, that consumers don't switch right
Speaker 1: that once you see on your phone Google is the default,
Speaker 1: that you're not going to switch over to DUC dot go.
Speaker 1: But it does seem pretty easy, a lot easier than
Speaker 1: it was in the Microsoft case to switch. So that's
Speaker 1: one thing I'm going to say if I'm Google. Those
Speaker 1: thing I'm going to say if I'm Google, and this
Speaker 1: is before I even get to my pro competitive justifications,
Speaker 1: is so you know the reason why consumers use Google,
Speaker 1: it's because we're really really good. It's true we have
Speaker 1: these agreements in place, but even if we didn't have them,
Speaker 1: consumers prefer us. That's probably pretty persuasive argument, you know,
Speaker 1: need to feel plays out right, But the government has
Speaker 1: to draw a link between these agreements and Google's monopoly,
Speaker 1: share them and Google to try to break that causation
Speaker 1: link by saying we're just really good. So that's if
Speaker 1: I'm Google. That's why I'm arguing to sort of overcome
Speaker 1: the government's prema facial case, right, their initial assertion that
Speaker 1: these agreements are any competitive. And then I'm going to say, okay, course,
Speaker 1: if you don't buy that, I have pro competitive justifications
Speaker 1: to agreement. Right, So what could that be? You know,
Speaker 1: it's a little unclear, right, So this is I think
Speaker 1: a little harder for Google. What is pro competitive about
Speaker 1: these agreements? Well, maybe it produces some certainty for them.
Speaker 1: Maybe it protects the Android operating system from being broken
Speaker 1: by third party apps. Right, you can imagine some explanation.
Speaker 1: It's a little harder for me to get there. We'll
Speaker 1: let to see what Google does explain with the rule
Speaker 1: of reason analysis is that the judge is going to
Speaker 1: use sure the great question. Right, So the rule of reason.
Speaker 1: You know, you can think of this a balancing test, right,
Speaker 1: And but it's it's done step by step. So first step,
Speaker 1: as the government says, hey, this conduct you're doing, defendant
Speaker 1: is anti competitive. Here's why we think it's any competitive.
Speaker 1: And then the defending gets to come back and say, no,
Speaker 1: first of all, we're gonna attack your assertions government that
Speaker 1: this is anti competitive. Second, we're going to show that's
Speaker 1: actually permpetitive. And then if if the defendant can come
Speaker 1: forth to some plausible pro competitive justifications that in the
Speaker 1: third steps the judge will determine will weigh the anti
Speaker 1: competitive conduct against the pro competitive justifications and come out
Speaker 1: one way or the other. So that's the theory behind
Speaker 1: the rule of reason. Why we're weighing what's bad about
Speaker 1: the conduct against what's good about the conduct. In reality,
Speaker 1: that hardly ever happens. In most cases, the judge will
Speaker 1: say something like, all I see here is any competitive conduct.
Speaker 1: I don't see any po competive justification or vice versa. Right,
Speaker 1: All I see here is pro competitive good here, And
Speaker 1: I don't really say anything negative? Right? And why because
Speaker 1: it's very hard to weigh, right, how do you weigh?
Speaker 1: But essentially are apples? Are these are not measurable things?
Speaker 1: How much anti competitive harm versus pro competitive benefit of right?
Speaker 1: But that's the theory that it's a it's a way
Speaker 1: tests for the judge. It seems like the implication would
Speaker 1: be that it harmed competition there, but the government also
Speaker 1: has to show that it harmed consumers. Thank you raised.
Speaker 1: An interesting is on a good point. Right, So it's
Speaker 1: not enough for the government to allege that these distribution
Speaker 1: agreements harmed Google's rivals. Andre's law doesn't care about that.
Speaker 1: Andel's law only cares about consumers. So the government has
Speaker 1: to have a theory for why even if Google's rivals
Speaker 1: are being harmed. But that's bad for us, bad for consumers, right,
Speaker 1: And and there are a couple of theories in the
Speaker 1: case going to this point. Right, So when we think
Speaker 1: about end users like you and me, what is harmful
Speaker 1: to us about these distribution agreements. Well, maybe we're getting
Speaker 1: less innovation. Right, Maybe if these distribution agreements were in place,
Speaker 1: we'd see more duck dot goes who might protect our
Speaker 1: privacy better, we have more choice. Right, that's the theory
Speaker 1: for consumer harms on the search side. On the advertising side,
Speaker 1: the consumer harm is clearer. Right if if the government
Speaker 1: can prove that Google is unlawfully maintainance monopoly in search
Speaker 1: advertising or general search text advertising. If I'm an advertising
Speaker 1: on my rates are going up and I'm getting less
Speaker 1: good service, right, that's just like you know, a classic
Speaker 1: monopoly problem. Right, If there are more competitors out there
Speaker 1: advertising rates with fall, I pay less I get better service. Right.
Speaker 1: But but in both cases, the government has to show
Speaker 1: not only that the rivals are being harmed, but that consumers,
Speaker 1: either end users like you and me or advertisers are
Speaker 1: being hard How do they do that when Google is
Speaker 1: free to consumers? So how do they proved that consumers
Speaker 1: are harmed? Yeah, so end users like you and me?
Speaker 1: It's hard, right for those those reasons that you say,
Speaker 1: we it's it's I'll put quotes around free. It's a
Speaker 1: quote free product that's not really free, right because you
Speaker 1: give Google your data. Um, but we're not paying cash, right,
Speaker 1: so it's difficult to prove that we're you know, we're
Speaker 1: paying the monopoly price for this service. So it's tricky, right.
Speaker 1: The government has to make a nuanced argument, and you
Speaker 1: can see and their claims that they're claiming is you
Speaker 1: and I are getting less good service essentially a quality
Speaker 1: adjusted price that's lower than if there was more competition. Right,
Speaker 1: So I'm not making this cognimer specsticulately. Theoretically Google doesn't
Speaker 1: do a good job protecting our class right solve their data.
Speaker 1: If there was more competition, that would be less of that,
Speaker 1: or our data would be buying more highly to get
Speaker 1: money for it. That's the kind of nuanced argument have
Speaker 1: to make for an end user. Again, for advertisers, it's
Speaker 1: a much clearer argument, right if Google is the only
Speaker 1: game in town and search advertising on paying more if
Speaker 1: I'm an advertiser than I would if there were by competitors.
Speaker 1: Is Google's response just we're better or is there a
Speaker 1: different response? Yeah, I mean, so Google got a bunch
Speaker 1: of entry points here for their argument. One is we're
Speaker 1: just better, So the distribution agreements, there's no causation here
Speaker 1: with our monopoly position. We have a monopoly position because
Speaker 1: we have the best product, not that argument, And I
Speaker 1: think a lot of people would agree right that they
Speaker 1: have the best search engine. So that's that's one argument.
Speaker 1: Another argument that if I'm Google, I'm making is that
Speaker 1: two consumers like you and me end users, we're not
Speaker 1: really being harmed, that there is choice. You and I
Speaker 1: could easily switch to duct Tecto or to being You
Speaker 1: and I aren't tired of by any agreements. We can
Speaker 1: do whatever we want, So if we really like those
Speaker 1: other search engines, we could easily swem. That's two arguments
Speaker 1: I'm making up on Google. It's a little tougher in
Speaker 1: the in the advertising side right where the advertisers are
Speaker 1: paying in money, And if you know, we haven't seen
Speaker 1: the evidence yet, but I'm sure the government will have
Speaker 1: an economist come and say, look, advertisers paying a lot
Speaker 1: more money thybel in the competitive market, right, That's that's
Speaker 1: harder to attack. So if I'm Google, my argument there's
Speaker 1: gonna be based on, hey, you've you've defined the market wrong.
Speaker 1: That In fact, advertising is a market that includes television
Speaker 1: and billboards and you know what's on the subway and
Speaker 1: podcasts right and and in that market we have a
Speaker 1: very small ship. Do you see one side or the
Speaker 1: other having an advantage here where it looks like their
Speaker 1: side is stronger. So it's a little bit hard to
Speaker 1: say without seeing more evidence. Good government, I think has
Speaker 1: a certainly a plausible theory here, particularly in search. So
Speaker 1: I think it's we're playing out the government's case here
Speaker 1: in search. It's pretty clear or maybe not that difficult
Speaker 1: to prove that Google has an opplipition in search, and
Speaker 1: these agreements, as you said, sort of on their faith
Speaker 1: and look bad. Google's paying a lot of money to
Speaker 1: Apple and to Android manufacturers to make them the exclusive
Speaker 1: search engine, and you asked, why are they paying all
Speaker 1: that money? What are they getting for that? So I
Speaker 1: think that the government has put together, you know, sort
Speaker 1: of a plausible case on search. Search advertising is a
Speaker 1: little harder, I think, just because of the market definition issue.
Speaker 1: You know, what is the market there? What is what
Speaker 1: is Google share? But if the government could prove that
Speaker 1: the shares is big and that the market is narrow,
Speaker 1: then the government have a strong case there too. So
Speaker 1: I would say that the government's case is certainly plausible. Right.
Speaker 1: Google has some arrows and square though, And I think
Speaker 1: what we were talking about before that there will will
Speaker 1: fight on market desfinition as to advertising, but you know,
Speaker 1: as to search, they're going to fight about our consumers haunt. Right,
Speaker 1: And again I would come back to this argument that
Speaker 1: they will certainly make which is you and I can
Speaker 1: choose whatever search engine we want. We're not being harmed.
Speaker 1: We choose Google for the most part because we like
Speaker 1: it better. What remedies is the government seeking if it
Speaker 1: wins the case, it does speak speak remedies right at
Speaker 1: the end of the complaint. So the government says that
Speaker 1: it wants to enjoin these practices, these alleged any competitive practices,
Speaker 1: which are the distribution agreements and pre installation agreements and
Speaker 1: revenue sharing agreements. And then they ask for this catch
Speaker 1: all what you often see or maybe always seen interested
Speaker 1: which please enter any other preliminary relief or permanent relief
Speaker 1: that's appropriate to restore competition in these markets. Right, So
Speaker 1: we're asking for the government are asking for injunctions on
Speaker 1: the conduct that we've laid out here that's bad, and
Speaker 1: then we want anything else you can give us that
Speaker 1: will restore competition. And they also say, the government does
Speaker 1: we ask you court to enter structural relief as needed
Speaker 1: to curinate in a competitive talks. So structural relief is
Speaker 1: generally breaking up a company in some way or another, right,
Speaker 1: So spinning off a portion of the company. Now, that's
Speaker 1: interesting that that that's in there, this prayer for structural relief.
Speaker 1: And there's a couple of ways you can look at that.
Speaker 1: One is they have it the government has in their
Speaker 1: just in case, right and just in case that the
Speaker 1: judge is so inclined, or that they have some other
Speaker 1: theory coming where they're going to tie the bad conduct
Speaker 1: to a theory in which the a way to fix
Speaker 1: that bad connected to break up Google. Now, I don't
Speaker 1: see anything in this complaint that gets you from A
Speaker 1: to B R get you from the bad acts to
Speaker 1: breaking up Google. Nonetheless, it's there in the in the
Speaker 1: request for release, but that's probably wouldn't take that too seriously,
Speaker 1: you know. I think the standard response to a case
Speaker 1: of remedial response to a case like this is to
Speaker 1: enjoy the practices right to say stop. The court will
Speaker 1: order the defendant to stop doing what they were doing. Now,
Speaker 1: I should just point out here that the government can't
Speaker 1: ask for money in an answers case brought by the
Speaker 1: governments a civil case. What all the government can get
Speaker 1: is some kind of injunctive relief or structure relief or
Speaker 1: conduct relief right. Essentially, stop what you're doing, or we're
Speaker 1: gonna break you up something like that. They can't get money.
Speaker 1: But what can happen is this, For instance, the government
Speaker 1: wins the course of the believe your theory, we can
Speaker 1: get the government's right that private parties will follow on
Speaker 1: and bring their own lossters asking for monetary relief right,
Speaker 1: but in this case there will be no monetary relief.
Speaker 1: So in the government's case, the standard is we want
Speaker 1: an injunction. You want an injunction against the bad conduct,
Speaker 1: and that that was seemed to me here to be
Speaker 1: the appropriate relief of the government table to its kids.
Speaker 1: I mean, settlement is always a possibility, but is it
Speaker 1: likely here a settlement as this case goes on and on,
Speaker 1: So it's always hard to say it right what the
Speaker 1: parties are thinking, And you know, often it depends on
Speaker 1: how the case appears to be going, right. But sure,
Speaker 1: you know many many ancest cases settle, very very few
Speaker 1: of the trial, right, So you know it's Google decides
Speaker 1: at some point this isn't worth it to us, We're
Speaker 1: getting too much bad pr We'll just end these practices.
Speaker 1: We we believe in our product. I can see that happening, right,
Speaker 1: We believe we'll keep sharing because we're so good. You
Speaker 1: could see that happening. That would be a settlement here,
Speaker 1: that might end the case. But I just don't think
Speaker 1: we'll know for some time why the whether the party
Speaker 1: of going to settle. Thanks for being in the Bloomberg
Speaker 1: Law Show. That's Sam Winstein, professor at Cardozo Law School.
Speaker 1: That's it for this edition of the Bloomberg Law Show.
Speaker 1: Remember you can always hit the latest legal news on
Speaker 1: our Bloomberg Lawn podcast. You can find them on iTunes, SoundCloud,
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