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Speaker 1: This is Bloomberg Law.

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Speaker 2: Are plaintiff's leries involved in a kind of competition in Congress?

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Speaker 2: Force a judicial code on the justices?

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Speaker 1: Interviews with prominent attorneys in Bloomberg Legal Experts.

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Speaker 2: My guest is former federal prosecutor Robert min Joining me

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Speaker 2: is Bloomberg Law reporter Kyle Janner.

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Speaker 1: And analysis of important legal issues, cases and headlines.

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Speaker 2: Is it unusual a grand jury like this to suspect

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Speaker 2: people aren't telling the truth? One of the first times

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Speaker 2: the Justice Department has called for the breakup of a

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Speaker 2: major company.

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Speaker 1: Bloomberg Law with June Grasso from Bloomberg Radio.

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Speaker 3: Welcome to Bloomberg Law on Bloomberg Radio. I'm Madison Mills

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Speaker 3: in for June Grasso. Today we're talking about how a

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Speaker 3: conservative supermajority is affecting the Supreme Court and reshaping the

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Speaker 3: US as a result. Plus later in the show, three

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Speaker 3: men convicted of acting as Chinese agents in New York City.

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Speaker 3: We're going to talk about that and the latest congressional bill,

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Speaker 3: target AI aims to work towards regulation, but is it

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Speaker 3: gonna work. We're gonna discuss all of that and more

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Speaker 3: on the program, But first let's start with the highest

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Speaker 3: court in the land, because the Supreme Court has had

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Speaker 3: a strain of decisions that have tested the core principles

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Speaker 3: of American democracy, leaving American citizens skeptical about the Court

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Speaker 3: as a result. Here to discuss is Bloomberg New Supreme

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Speaker 3: Court reporter, Greg's store. Greg, thanks so much for being

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Speaker 3: with us as always, you've covered the Supreme Court for

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Speaker 3: a while. Talk to me about what you would say

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Speaker 3: is the single biggest differentiating factor of this court versus

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Speaker 3: the other Supreme courts.

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Speaker 4: That you've covered, well, Madison, it starts with that six

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Speaker 4: 's three conservative majority that you mentioned, because that's what

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Speaker 4: lets them do all the other things. And what we've

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Speaker 4: seen as a court that has been pretty aggressive in

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Speaker 4: asserting its own powers, sometimes taking them away from other branches,

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Speaker 4: and really reshaping American law without seemingly worrying too much

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Speaker 4: about what the public reacts.

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Speaker 3: Is And talk to me about that public reaction. How

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Speaker 3: big of a shift would you say you've seen in

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Speaker 3: terms of the public perception of the Supreme Court.

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Speaker 4: Yeah, the Court's public standing is at or near record lows,

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Speaker 4: and that is driven primarily by really low approval ratings

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Speaker 4: among Democrats and liberals, you know, it's what's causing that.

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Speaker 4: You know, the polls don't necessarily show that, but certainly

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Speaker 4: all these big divisive decisions, the abortion decision being the

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Speaker 4: biggest one last year, but also all these ethics controversies

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Speaker 4: that we've had floating around. We've seen the Court's approval

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Speaker 4: numbers dip since the revelations about Clarence Thomas a few

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Speaker 4: months ago, and now, of course we're seeing some new

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Speaker 4: ones involving Justice sam Alito.

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Speaker 3: Do we know which of those two is having more

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Speaker 3: of an impact in terms of public perception. Is it

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Speaker 3: the sentiment surrounding the decisions of the court or the

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Speaker 3: personal ethics violations and allegations about those violations of individuals

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Speaker 3: on the court that's driving public perception.

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Speaker 4: It's really hard to say, you know, if I'm guessing,

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Speaker 4: and I'll just say this is a guest, just kind

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Speaker 4: of based on looking at the numbers and when they shift,

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Speaker 4: it's roughly equal parts both. Certainly, there are people who

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Speaker 4: are already predisposed to be skeptical of the Court and

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Speaker 4: what it's doing. And so maybe when somebody who doesn't

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Speaker 4: like the Court's abortion decision then reads about luxury vacations

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Speaker 4: taken by Clarence Thomas. That's all the more reason for

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Speaker 4: them to say, I don't approve of what the Court

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Speaker 4: is doing. So in some ways the two issues sort of,

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Speaker 4: you know, overlap with one with one another and kind

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Speaker 4: of build on one another.

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Speaker 3: Well, also, we talked earlier, and as you said, it's

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Speaker 3: this six ' three division of a conservative majority in

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Speaker 3: the Court, but you know it's not technically supposed to

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Speaker 3: be a political body, as you know very well, are

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Speaker 3: we seeing that politicization of the Supreme Court getting more

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Speaker 3: and more intense as the years go.

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Speaker 4: On, Yeah, very much so. And depending on which side

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Speaker 4: you talked to, will start at a different point in

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Speaker 4: describing how we got here, but certainly where we ended

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Speaker 4: up is the six most conservative justices on the Court

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Speaker 4: are all Republican appointees. The three most liberal are all

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Speaker 4: Democratic appointees. If there's another vacancy that comes up, nobody

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Speaker 4: will expect Joe Biden to nominate somebody who's anything other

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Speaker 4: than a liberal justice. And that's a dynamic we didn't

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Speaker 4: used to have Back twenty years ago, there were Republican

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Speaker 4: appointed justices whom we would describe as liberals because they

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Speaker 4: turn out not to be exactly what the Republican Party

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Speaker 4: was expecting when they were nominated, and going a little

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Speaker 4: farther back, you could find Democratic appointed justices who were

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Speaker 4: conservative on at least some issues, and that phenomenon just

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Speaker 4: doesn't exist anymore.

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Speaker 3: So, given that, are we expecting or do you anticipate

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Speaker 3: sort of changes to come in terms of how the

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Speaker 3: makeup of the court is decided and just kind of

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Speaker 3: the you know, tradition of the court in general. Do

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Speaker 3: you see any changes to that happening.

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Speaker 4: It's really hard to see how we as a society

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Speaker 4: get out of this particular box we're in. You know,

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Speaker 4: we've you know, essentially now in a world where you know,

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Speaker 4: Republicans are saying, for example, if if there's another vacancy

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Speaker 4: when Joe Biden is president, if they are able to

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Speaker 4: block confirmation in the in the Senate, they will do that.

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Speaker 4: You know, Democrats of course have talked about adding seats

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Speaker 4: to the court, but no indication there is the kind

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Speaker 4: of political will you would need to make that happen.

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Speaker 4: And some of these justices, you know, of course, they

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Speaker 4: have life tenures. So you know, the justices appointed by

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Speaker 4: Donald Trump are all you know well south of sixty

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Speaker 4: and conserve for several more decades.

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Speaker 3: Well, Greg, one thing that you also talk about in

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Speaker 3: your story, which folks can find on Bloomberg dot com

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Speaker 3: and on the terminal of course, about the aggressive Supreme

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Speaker 3: Court reshaping the US is just the kind of growth

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Speaker 3: of the power of the Supreme Court. Are there any

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Speaker 3: decisions that the Court has made that you can talk

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Speaker 3: to us about that have extended and expanded that power.

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Speaker 4: Yeah. The easiest place to think about this with with

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Speaker 4: regard to is that phenomenon is regarding the EPA. So

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Speaker 4: a series of decisions we have seen. The Court last

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Speaker 4: year restricted the EPA's authority over climate change in terms

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Speaker 4: of regulating emissions coming out of power plants. This term,

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Speaker 4: the Court sharply curtailed the EPA's authority over to protect

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Speaker 4: wetlands and took potentially tens of millions of wetlands out

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Speaker 4: of out of the scope of the Clean Water Act.

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Speaker 4: And then next term the Court has a case that's

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Speaker 4: a little more kind in the legal weeds, but is

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Speaker 4: really important that they're considering overturning a precedent that has

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Speaker 4: given agencies a certain amount of leeway when they interpret

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Speaker 4: statutes and you know all told what that means is

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Speaker 4: the agencies are able to do less than they were

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Speaker 4: able to, and the Supreme Court now is more the

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Speaker 4: final arbiter of what the agencies can and cannot do well.

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Speaker 3: And speaking of that power as well, it just feels

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Speaker 3: like there's we're kind of in a different era and

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Speaker 3: you talk about this in the story than we were

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Speaker 3: when the Supreme Court was originated. You know, I think

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Speaker 3: about the use of quill pens in the courtroom, for example,

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Speaker 3: do you see any of those sort of I don't

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Speaker 3: want to say smaller, but those little traditions changing over

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Speaker 3: time to kind of at least indicate to the public

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Speaker 3: that there is some evolution happening with the Supreme Court.

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Speaker 4: Well, this is a court that is very resistant to

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Speaker 4: changing its long standing practices. Now one thing that has

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Speaker 4: changed is, you know, arguments, which used to be it

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Speaker 4: used to be the only people who could hear the

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Speaker 4: arguments were the few hundred people who could pack into

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Speaker 4: the courtroom. Now they live stream the arguments and that

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Speaker 4: has you know, provided a certain amount of transparency now

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Speaker 4: that they were sort of forced into that because of

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Speaker 4: the realities of the pandemic when they were holding arguments

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Speaker 4: by phone. But they're still resisting other things that could

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Speaker 4: make the court more transparent, for example, cameras in the courtroom.

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Speaker 4: No indication that they're anywhere close to allowing that.

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Speaker 3: So what are the big questions that the Court is

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Speaker 3: going to be answering this cycle that you can let

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Speaker 3: us in on.

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Speaker 4: Yes, there are. There are several very big cases the

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Speaker 4: Court's going to be deciding in the next week and

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Speaker 4: a half or so. Perhaps the biggest one is one

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Speaker 4: that could abolish the use of race in college admissions.

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Speaker 4: The Court's being asked to overturn a couple precedents that

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Speaker 4: that say universities can do that for the sake of

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Speaker 4: achieving campus to diversity. The Court is also considering striking

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Speaker 4: down President Biden's student loan release policy, which would forgive

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Speaker 4: at least in part, loans held by some forty million people.

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Speaker 4: There's a big case involving the intersection of free speech

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Speaker 4: rights and LGBTQ rights. There's a very big case involving

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Speaker 4: who gets to set the rules for federal elections. So

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Speaker 4: it's going to be a very busy next week and

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Speaker 4: a half and it will tell us a lot more

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Speaker 4: about whether the Court wants to continue being as aggressive

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Speaker 4: in the use of its powers as it has been

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Speaker 4: in the past.

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Speaker 3: And really quickly here, Greg, what's next when it comes

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Speaker 3: to the ethics questions of some of the Supreme Court justices.

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Speaker 4: Well, we had this new story from Republica about Justice Alito,

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Speaker 4: and there's going to be a lot of fallout from that.

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Speaker 4: They the report is that he took a fishing vacation

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Speaker 4: with somebody who eventually had business before the Court. Didn't

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Speaker 4: disclose that. There's give me a lot more talk about

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Speaker 4: trying to impose a code of conduct on the Supreme Court.

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Speaker 3: All right, Greg, Well, thank you so much as always

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Speaker 3: for joining us to break down all things the Supreme

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Speaker 3: Court in the United States. That was Greg's store Bloomberg

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Speaker 3: News reporter joining us from Washington as always to talk

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Speaker 3: about the Supreme Court. Really important coverage from him and

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Speaker 3: the rest of our DC team about the decisions to

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Speaker 3: come from the Supreme Court. As he was mentioning there,

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Speaker 3: we've got student loans on the docket, affirmative actions, so

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Speaker 3: a lot of really big questions that are going to

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Speaker 3: be shaping the future of democracy in the US, and

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Speaker 3: a lot of other factors there so really important to watch.

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Speaker 3: Coming up, we're going to talk about the future of

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Speaker 3: AI regulation in DC.

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Speaker 5: That's next.

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Speaker 3: I'm Madison Mills in for June Grasso on Bloomberg Law

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Speaker 3: this week, and this is Bloomberg.

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Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.

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Speaker 3: We're going to move from Washington up here to New

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Speaker 3: York City because a retired NYPD sergeant and two others

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Speaker 3: were convicted as agents of China. Those three men were

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Speaker 3: also pressuring dissidents to return to China from the US

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Speaker 3: as well. So here to discuss all of the details

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Speaker 3: of this is Bloomberg News reporter Patricia Hurtado joining us

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Speaker 3: by phone. Patricia, thank you so much for coming on

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Speaker 3: the show. Just give me the lowdown here for those

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Speaker 3: who haven't been familiar with this story.

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Speaker 5: What do we need to know?

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Speaker 6: Well, at Brooklyn federal jury heard a three week trial

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Speaker 6: and deliberated for two days in a case that accused

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Speaker 6: a retired NYPD police sergeant and two other men with

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Speaker 6: acting as a legal agents of the Chinese government to

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Speaker 6: pressure dissidents to return to China.

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Speaker 3: And what does this mean for those three men in

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Speaker 3: terms of what's next for them? What happens?

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Speaker 6: Well, they all three faced substantial prison time. One of them,

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Speaker 6: the former cop, faces at least twenty years and possible

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Speaker 6: the twenty year prison term substantial time for anybody. And

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Speaker 6: this was the first case to go to trial brought

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Speaker 6: by the US government making these allegations, which are pretty

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Speaker 6: serious if you think about it. It's that the Chinese

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Speaker 6: government sent operatives or had operatives acting on their behalf

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Speaker 6: to pressure and induce former Chinese nationals who moved to

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Speaker 6: the US and show up on their doorsteps and spy

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Speaker 6: on them.

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Speaker 3: That's yeah, that's really interesting. Do we know any of

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Speaker 3: the details of what that operation sort of looked like

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Speaker 3: and anything else you can tell us about what would

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Speaker 3: go on with that.

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Speaker 6: Well, the government has brought several cases and the Eastern

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Speaker 6: District of New York, which includes neighborhoods include you know,

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Speaker 6: Chinatowns in both Brooklyn Sunset Park as well as in

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Speaker 6: Fleshing Queens. They have brought other cases involving activity they

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Speaker 6: allege has been you know, people acting on behalf of

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Speaker 6: the Chinese government, including enslaving people to build and do

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Speaker 6: work on a house that was owned by an estate

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Speaker 6: that was owned by the Chinese government. But this case

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Speaker 6: basically alleges that they people were being monitored. This former

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Speaker 6: police sergeant was accused and the jury found that he

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Speaker 6: access law enforcement databases to find out information about where

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Speaker 6: these people lived and would show up and track their cars.

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Speaker 6: And these people were getting messages and letters in their

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Speaker 6: mail basically threatening them. So you know, the idea that

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Speaker 6: there's this big brother is watching all the way from

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Speaker 6: China is quite shocking to some some people, of course.

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Speaker 7: Yeah.

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Speaker 3: And this was called Operation fox Hunt by the Chinese government,

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Speaker 3: is that correct?

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Speaker 6: Yes, yes, And it was basically the US government alleges

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Speaker 6: that this with this initiative you know, hatched by the

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Speaker 6: Chinese Ministry of Public Security, so they were basically they're

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Speaker 6: also accused of even establishing a police and the legal

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Speaker 6: police station in New York to basically, uh, you know,

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Speaker 6: monitor people and and spy on them. And that was

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Speaker 6: according to direct case that was just filed in April. So,

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Speaker 6: I mean, the allegations that these people were even hired

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Speaker 6: a former cop who's not Asian to use his access

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Speaker 6: to law enforcement databases, it's shocking, you know that.

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Speaker 5: Right, And that's former cop that's Michael McMahon.

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Speaker 6: Correct, that's correct, that's correct.

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Speaker 3: So to what extent is this news that we're talking about,

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Speaker 3: Michael McMahon and the two other men convicted as agents

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Speaker 3: of China? How connected, if at all, is that to

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Speaker 3: the secret police station in New York City that others

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Speaker 3: were arrested Regarding.

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Speaker 6: Well, that case, it's an out growth. It's also brought

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Speaker 6: by several prosecutors in Brooklyn, and that case is basically

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Speaker 6: an iteration of the similar activity. If you want to

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Speaker 6: think about it, it's more possibly egregious activity, right, I

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Speaker 6: don't know which ones do you think is worse? Having

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Speaker 6: a private secret police station in Chinatown in Lower Manhattan

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Speaker 6: or having people travel around and show up on doorsteps.

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Speaker 6: The testimony in this case, this most recent case that

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Speaker 6: just got made, was they were showing up at the

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Speaker 6: doorstep of this man, his wife and his daughter in

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Speaker 6: New Jersey and showing up in the doorstep, and she

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Speaker 6: was getting their family was getting mail, and at one point,

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Speaker 6: one of the victims testify they got a letter that

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Speaker 6: was basically suggesting that they would be better off committing

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Speaker 6: suicide than staying in the US.

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Speaker 3: Oh my gosh, yeah, and talk to me about the victims,

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Speaker 3: then did they go to the police and did they

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Speaker 3: feel comfortable doing that? How did how did they kind

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Speaker 3: of come forward?

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Speaker 6: The evidence did so that even China caused an inner

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Speaker 6: Pole read notice to be filed with the International Police

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Speaker 6: Group that said complained about on behalf of China that

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Speaker 6: these three people were wanted by China. So if you

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Speaker 6: can imagine that your inner pol is looking for you,

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Speaker 6: but it's all cooked up, that's wild, you know, to

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Speaker 6: think eventually these the victims were reached, reached the law enforcement,

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Speaker 6: the allegations reached law enforcement, and there's been a couple

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Speaker 6: of cases you know, that have been brought by the

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Speaker 6: US government under the Trump started under the Trump ad

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Speaker 6: administration called the China Initiative, which is basically also brought

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Speaker 6: cases including alleging that the Chinese telecommunications giant called Huawei

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Speaker 6: Technologies was also spying, but that was corporate espionage basically.

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Speaker 6: So you know, it seems like all kinds of initiative.

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Speaker 6: Let's not just go after the Chinese people. We believe

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Speaker 6: our dissidents in the US running from controversy or is

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Speaker 6: trying to escape controversy or oppression in China, but also

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Speaker 6: let's operate in the US and spy on American technology.

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Speaker 6: So there's two cases that were brought, one of them

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Speaker 6: in Seattle and one of them in Federal court in

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Speaker 6: Brooklyn that's also pending as part of this China initiative.

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Speaker 6: So you know, it's some of the cases have been

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Speaker 6: very have been unsuccessful, and the US has had to

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Speaker 6: drop them. But you know, there's just seems like with

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Speaker 6: the current situation of the status of the US China relations,

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Speaker 6: which are chili you know, it has been frosty in

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Speaker 6: the past, and certainly the China Initiative was an outgrowth

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Speaker 6: of the Trump administrations that China was not to be trusted, right.

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Speaker 3: Well, you mentioned kind of the context here, and it's

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Speaker 3: so important to note this is coming after you know,

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Speaker 3: Blincoln has just been in Beijing and had a surprise

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Speaker 3: meeting with Chinese President Shiji Pain thirty five minute meeting

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Speaker 3: towards the end of his two day visit there, and

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Speaker 3: Chinese officials sort of blasting the US after that meeting,

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Speaker 3: kind of talking about the US tampering with its political

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Speaker 3: promises on Taiwan again after that meeting, So that context

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Speaker 3: is important.

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Speaker 5: And then of course from the Bloomberg side of things.

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Speaker 3: What we cover is the importance of the business impact

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Speaker 3: when it comes to things like semiconductors and the chips

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Speaker 3: race and the Chips war. Really, so that context is

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Speaker 3: just uh making these making these interactions between the US

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Speaker 3: and China even even more Chile as you mentioned, Patricia.

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Speaker 6: And you know, the one thing you can say is

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Speaker 6: that while this initiative was underway, there were a lot

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Speaker 6: of cases brought. And I think many of our readers

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Speaker 6: would remember that Menglan Huts she was the CFO of Huawei.

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Speaker 6: She's arrested at the request of the US on charges

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Speaker 6: in Vancouver, Canada, and she fought the case vehemently from

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Speaker 6: from the and was a Brooklyn federal case. So while

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Speaker 6: the case against the company still pending, she was allowed

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Speaker 6: to go home after in a plea deal. But in

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Speaker 6: meanwhile the China Initiative brought, and I should say the

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Speaker 6: China Initiative which was pretty you know, uh hard iron

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Speaker 6: fisted by the Trump administration. The DOJ now has scrapped

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Speaker 6: the China Initiative. Under the Biden administration, many people felt

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Speaker 6: that it was a little too hard, hard nosed on it.

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Speaker 3: So, yeah, lots to cover there. Patricia, thank you so

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Speaker 3: much for joining us and talking.

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Speaker 5: It all through. We really appreciate it.

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Speaker 3: That was Patricia Hurtado, our Bloomberg News reporter on this story.

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Speaker 3: Next up, we're talking AI regulations. To stick around. I'm

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Speaker 3: Madison Mills and this is Bloomberg.

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Speaker 1: You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.

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Speaker 3: It wouldn't be a Bloomberg show without us talking about

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Speaker 3: artificial intelligence, and of course, with all the power of AI,

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Speaker 3: you could say that comes with great responsibility. That's one

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Speaker 3: reason we're hearing and seeing a lot of regulation questions

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Speaker 3: popping up in Congress to try and hedge against any

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Speaker 3: issues to come with AI. So here to discuss this

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Speaker 3: with us is Bloomberg Intelligence analyst Matthew Schuttenhelm. Thank you

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Speaker 3: so much for being with us. Matt really appreciate it.

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Speaker 3: I'm going to take a page out of Jay Powell's

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Speaker 3: book from his comments in Congress today. He talked about

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Speaker 3: how if you drive car, if you're driving somewhere, you

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Speaker 3: might start off really fast and slow down a little

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Speaker 3: bit once you're getting closer to your destination.

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Speaker 5: So not a big speeder.

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Speaker 3: J Powell when it comes to AI regulation, Are we

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Speaker 3: just leaving the house for the road trip or are

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Speaker 3: we Are we getting close to the destination?

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Speaker 6: Yeah?

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Speaker 8: I think we are. We're not even out of the

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Speaker 8: house yet. Yeah, yeah, we're starting to get ready. And

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Speaker 8: and you know, it's this is such a tough thing

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Speaker 8: for Congress to take on because it's it's so new,

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Speaker 8: and it's so technical, and and then it then once

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Speaker 8: you know, down the road, it starts to become more political.

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Speaker 8: So Congress has struggled so much to regulate big tech,

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Speaker 8: and now it has this whole new concept of this

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Speaker 8: whole new big thing that it wants to go after,

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Speaker 8: but it has very little concept right now of one

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Speaker 8: the technology and to the problems that might come up.

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Speaker 8: So so fashioning a regulatory regime to address that is

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Speaker 8: is just a daunting problem for for Congress.

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Speaker 5: And you mentioned big tech.

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Speaker 3: How unique is it that AI executives and officials, the

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Speaker 3: big movers in AI are kind of on board to

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Speaker 3: work with Congress as compared with the big tech thing.

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Speaker 4: That we saw.

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Speaker 8: Yeah, I mean, they've definitely been a lot of resistance

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Speaker 8: from big tech in terms of you know, resisting data

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Speaker 8: privacy regulation. But you've also seen like companies like like

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Speaker 8: Meta Facebook being you know, supportive of at least publicly,

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Speaker 8: and so that that we've often seen that distinction said okay,

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Speaker 8: regulate us, give us something, and even Congress couldn't, couldn't

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Speaker 8: do that. You're seeing that here as well, where where

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Speaker 8: the companies are are are coming in and saying, look,

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Speaker 8: we want to support, you know, a reasonable approach to

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Speaker 8: using this technology. You as lawmakers should impose something reasonable.

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Speaker 8: But then I think in behind the scenes, it's it's

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Speaker 8: often a different story when when when regulators are starting

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Speaker 8: to put together sort of aggressive regulation. I think you

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Speaker 8: see a different tone from the companies as that plays out.

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Speaker 3: So talk to me about what some of the proposed

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Speaker 3: legislation right now is looking like.

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Speaker 8: Yeah, so it's very early days right now, So I

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Speaker 8: think so far we've seen I think two bipartisan bills

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Speaker 8: introduced since the first hearing in the Senate last month,

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Speaker 8: and one of those has to deal with Section two thirty,

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Speaker 8: the liability shield that has been a big deal in

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Speaker 8: big tech in terms of shielding companies from lawsuits, and

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Speaker 8: lawmakers want to get out in front of that with

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Speaker 8: AI and say, look, we don't want this liability shield

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Speaker 8: to apply to AI. If people are harmed because of AI,

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Speaker 8: people should be able to sue over that. So that's

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Speaker 8: the first bill that's sort of out of the gate.

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Speaker 8: I don't know that that's a huge deal. I don't

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Speaker 8: know that the courts are you going to be jumping

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Speaker 8: into AI litigation really really fast, And even if they did,

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Speaker 8: I'm not sure Section two thirty would would be much

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Speaker 8: of a shield. I think there's a strong argument that

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Speaker 8: Section two thirty shouldn't apply to AI, even without Congress

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Speaker 8: saying that in new legislation. And then the second bill

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Speaker 8: that we're seeing right now is sort of I think

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Speaker 8: something that might catch on, and it's the idea of

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Speaker 8: proposing a commission of about twenty people from the industry,

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Speaker 8: from privacy groups and things like that to slow down

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Speaker 8: and take a look at this in a comprehensive manner

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Speaker 8: and issue a couple reports over the next two years

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Speaker 8: to say, Okay, what is it that AI can do,

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Speaker 8: what should we be concerned about, and how should we

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Speaker 8: think about regulating it? And as you think through the

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Speaker 8: difficulty of the problem, as we started talking about earlier,

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Speaker 8: that might be Congress's best chance is sort of let's

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Speaker 8: slow down, let's have some experts, you know, look at this,

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Speaker 8: and after that commission does its work over a year

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Speaker 8: or two, maybe Congress then is in a better position

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Speaker 8: to adopt real regulations of things that matter.

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Speaker 3: Talk to me about Section two thirty again. You mentioned

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Speaker 3: that AI maybe should not be.

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Speaker 5: Part of that. Why is that?

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Speaker 8: Yeah, so I think I think there's a pretty strong

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Speaker 8: argument that Section two thirty shouldn't apply to AI. Section

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Speaker 8: two thirty has played its most important role in saying

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Speaker 8: that when when a user posts something on social media,

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Speaker 8: the user is responsible for that post. You can't sue

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Speaker 8: Meta or Google because they hosted the content that I posted.

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Speaker 8: You know that was harmful, you can sue me. You

441
00:25:49,520 --> 00:25:54,240
Speaker 8: can't sue Meta or Google for that. And I think

442
00:25:55,119 --> 00:25:57,560
Speaker 8: in the AI context it's not as clear that that

443
00:25:57,600 --> 00:26:01,359
Speaker 8: would happen as often it's it's it's probably the case

444
00:26:01,359 --> 00:26:06,720
Speaker 8: where the AI is putting is the speaker more than

445
00:26:07,240 --> 00:26:10,679
Speaker 8: a third party. And so, especially with courts sort of

446
00:26:11,200 --> 00:26:14,359
Speaker 8: reluctant to expand Section two thirty, they's sort of a

447
00:26:14,400 --> 00:26:17,640
Speaker 8: trend against that. I tend to think that if these

448
00:26:17,720 --> 00:26:20,560
Speaker 8: cases start getting into the courts, the courts are going

449
00:26:20,640 --> 00:26:24,840
Speaker 8: to be skeptical about extending the liability shield to AI anyway,

450
00:26:24,880 --> 00:26:27,959
Speaker 8: and I think they're mostly going to hold the AI

451
00:26:28,119 --> 00:26:31,320
Speaker 8: companies responsible. That doesn't mean the AA companies would lose

452
00:26:31,480 --> 00:26:34,680
Speaker 8: those lawsuits. It just means they wouldn't have this extra

453
00:26:34,760 --> 00:26:37,800
Speaker 8: shield on top to throw out the lawsuits right out

454
00:26:37,800 --> 00:26:38,200
Speaker 8: of the gate.

455
00:26:38,480 --> 00:26:40,240
Speaker 5: Yeah, okay, that makes a lot of sense.

456
00:26:40,440 --> 00:26:44,280
Speaker 3: And then going over to like you mentioned the idea

457
00:26:44,280 --> 00:26:46,960
Speaker 3: of the National AI Commission Act and Congress kind of

458
00:26:46,960 --> 00:26:51,080
Speaker 3: bringing in twenty members to look at AI's risks. Just

459
00:26:51,119 --> 00:26:53,479
Speaker 3: a curveball question that occurred to me here is you know,

460
00:26:53,960 --> 00:26:56,399
Speaker 3: Congress got a lot of flak from inviting Sam Bankman

461
00:26:56,480 --> 00:26:59,920
Speaker 3: freed to DC to advise them on what cryptoregulation could

462
00:27:00,080 --> 00:27:02,560
Speaker 3: look like. Is there any potential threat of that or

463
00:27:02,600 --> 00:27:04,439
Speaker 3: would this be a little bit different?

464
00:27:04,560 --> 00:27:07,720
Speaker 8: Yeah, so I think, you know, it's it's a tough

465
00:27:07,720 --> 00:27:11,240
Speaker 8: one because I think the more that that Congress invites

466
00:27:11,359 --> 00:27:14,960
Speaker 8: industry in to be a part of this conversation about

467
00:27:15,000 --> 00:27:18,399
Speaker 8: regulation should look like, the more likely it's going to

468
00:27:19,000 --> 00:27:24,160
Speaker 8: result in regulation that isn't all that disruptive to the industry,

469
00:27:24,240 --> 00:27:28,200
Speaker 8: and so that and so it's it's this constant balance

470
00:27:28,720 --> 00:27:31,199
Speaker 8: that that Congress has to do because if it if

471
00:27:31,240 --> 00:27:34,160
Speaker 8: it ignores industry and says, well we got this, well

472
00:27:34,200 --> 00:27:36,600
Speaker 8: we'll go do the regulation ourselves. They don't know how to.

473
00:27:36,760 --> 00:27:39,399
Speaker 8: They don't they don't really understand the technology enough to

474
00:27:39,440 --> 00:27:42,480
Speaker 8: do it. So in my view, you know, you would

475
00:27:42,560 --> 00:27:45,720
Speaker 8: open yourself up to more criticism as if you do this,

476
00:27:45,920 --> 00:27:48,000
Speaker 8: But I think it might be the only way for

477
00:27:48,119 --> 00:27:51,399
Speaker 8: Congress to get itself up to speed on this technology.

478
00:27:51,480 --> 00:27:55,200
Speaker 8: Is is is at least in the preliminary stages, partnering

479
00:27:55,240 --> 00:27:59,040
Speaker 8: with industry to some extent and trying to understand both

480
00:27:59,119 --> 00:28:01,320
Speaker 8: you know, what what the good that can come of this,

481
00:28:01,480 --> 00:28:03,760
Speaker 8: but also what are the risks that they should be

482
00:28:03,760 --> 00:28:06,680
Speaker 8: thinking about. I think Congress really needs to slow down

483
00:28:06,760 --> 00:28:09,040
Speaker 8: and invite industry in to be a part of that conversation.

484
00:28:09,320 --> 00:28:12,000
Speaker 3: Yeah, it's such a good point because we've seen historically

485
00:28:12,080 --> 00:28:14,359
Speaker 3: that it can be difficult for Congress to get a

486
00:28:14,400 --> 00:28:15,120
Speaker 3: handle on some.

487
00:28:15,040 --> 00:28:17,520
Speaker 5: Of these absolutely these big tech shifts.

488
00:28:17,640 --> 00:28:20,880
Speaker 3: Yeah, I want to talk to you too about any

489
00:28:20,960 --> 00:28:24,560
Speaker 3: headwinds this could cause for AI growth because you do

490
00:28:24,600 --> 00:28:27,720
Speaker 3: sit on our Bloomberg Intelligence team as a litigation analyst.

491
00:28:28,400 --> 00:28:31,359
Speaker 3: Should investors be worried about DC moves.

492
00:28:31,880 --> 00:28:34,639
Speaker 8: You know, I really wouldn't be overly concerned. I think

493
00:28:34,760 --> 00:28:38,280
Speaker 8: this is going to be a hot topic for years

494
00:28:38,320 --> 00:28:40,600
Speaker 8: to come, I think, And so you're going to what

495
00:28:40,640 --> 00:28:45,280
Speaker 8: you're going to see is the constant barrage of headlines about,

496
00:28:45,560 --> 00:28:49,280
Speaker 8: you know, what does this technology do and what should

497
00:28:49,280 --> 00:28:52,240
Speaker 8: we be doing about it? And so we are literally

498
00:28:52,440 --> 00:28:56,080
Speaker 8: one hearing in on Capitol Hill on this, you know,

499
00:28:56,200 --> 00:28:59,160
Speaker 8: and there's going to be I think multiple This is

500
00:28:59,200 --> 00:29:02,760
Speaker 8: going to be a regular part of the conversation and

501
00:29:02,920 --> 00:29:05,920
Speaker 8: that's not going to go away anytime soon. But what

502
00:29:05,960 --> 00:29:09,080
Speaker 8: we've seen from the big tech effort, you know, the

503
00:29:09,120 --> 00:29:14,000
Speaker 8: effort to impose data privacy legislation, and how that's just failed.

504
00:29:14,160 --> 00:29:17,880
Speaker 8: And it's just very hard for Congress right now to

505
00:29:18,320 --> 00:29:22,360
Speaker 8: reach consensus on this stuff. And Europe's moving ahead, and

506
00:29:22,520 --> 00:29:24,600
Speaker 8: I think, you know, I think Europe's likely to move

507
00:29:24,960 --> 00:29:28,520
Speaker 8: first on some of this stuff and and and the US,

508
00:29:28,560 --> 00:29:32,320
Speaker 8: just like on on on GDPR and and and data privacy.

509
00:29:32,400 --> 00:29:34,320
Speaker 8: I think the US is probably going to be playing

510
00:29:34,400 --> 00:29:37,280
Speaker 8: catch up a little bit there as Europe moves ahead.

511
00:29:37,640 --> 00:29:41,680
Speaker 8: But in my view, just the difficulty of getting your

512
00:29:41,720 --> 00:29:44,600
Speaker 8: head around this technology and the problems and then the

513
00:29:44,640 --> 00:29:48,720
Speaker 8: politics overlaid on top of that. It's difficult to see

514
00:29:49,080 --> 00:29:52,880
Speaker 8: Congress doing anything that would be really materially disruptive, and

515
00:29:52,920 --> 00:29:56,680
Speaker 8: in part because they don't want to thwart this technology,

516
00:29:56,920 --> 00:29:58,520
Speaker 8: you know, and drive it elsewhere.

517
00:29:58,680 --> 00:30:00,200
Speaker 5: Right right, It's a really good point.

518
00:30:00,520 --> 00:30:04,000
Speaker 3: Matt Shuttenhelm, Bloomberg Intelligence litigation analyst, thank you so much

519
00:30:04,000 --> 00:30:07,200
Speaker 3: for joining us. Really important points there on the challenges

520
00:30:07,480 --> 00:30:11,000
Speaker 3: and opportunities perhaps that come with regulating AI. But makes

521
00:30:11,040 --> 00:30:13,160
Speaker 3: a lot of sense that Congress would not want to

522
00:30:13,160 --> 00:30:13,880
Speaker 3: move too quickly.

523
00:30:13,920 --> 00:30:14,120
Speaker 6: There.

524
00:30:14,360 --> 00:30:16,840
Speaker 5: I'm Madison Mills, and this is Bloomberg.

525
00:30:24,440 --> 00:30:29,640
Speaker 1: You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.

526
00:30:31,240 --> 00:30:33,520
Speaker 3: All right, we got to move over to Seattle now

527
00:30:33,560 --> 00:30:37,400
Speaker 3: to talk about Amazon, because the FTC suing Amazon for

528
00:30:37,480 --> 00:30:40,920
Speaker 3: making it difficult to cancel those Amazon Prime accounts. If

529
00:30:40,920 --> 00:30:42,560
Speaker 3: you're like me, you got that account when you were

530
00:30:42,600 --> 00:30:45,400
Speaker 3: in college and have had it ever since. So here

531
00:30:45,400 --> 00:30:48,800
Speaker 3: to discuss the situation with US is Spencer Sober. He is,

532
00:30:48,880 --> 00:30:53,640
Speaker 3: of course, our Amazon eBay expert based in Seattle for US. Spencer,

533
00:30:53,680 --> 00:30:56,320
Speaker 3: thanks for hopping on the call. Talk me through this

534
00:30:56,440 --> 00:30:57,760
Speaker 3: latest news from the FTC.

535
00:31:00,080 --> 00:31:02,320
Speaker 7: The FTC more broadly, is just trying to crack down

536
00:31:02,360 --> 00:31:05,280
Speaker 7: in general on any of these kind of online subscriptions.

537
00:31:05,640 --> 00:31:07,840
Speaker 7: You know, there's people get them for meals, for a

538
00:31:07,880 --> 00:31:11,960
Speaker 7: variety of things, for movie tickets, and of course Amazon Prime,

539
00:31:12,000 --> 00:31:14,560
Speaker 7: which people pay you know, one hundred and thirty nine

540
00:31:14,600 --> 00:31:17,080
Speaker 7: dollars a year poor or fifteen dollars a month for

541
00:31:18,480 --> 00:31:21,720
Speaker 7: and so what basically the gist of it is it

542
00:31:21,720 --> 00:31:24,520
Speaker 7: should be as easy to cancel one of these things

543
00:31:24,560 --> 00:31:27,200
Speaker 7: as it is to sign up, and there's often a

544
00:31:27,280 --> 00:31:30,520
Speaker 7: pretty significant difference. You know, Amazon makes it very simple

545
00:31:30,840 --> 00:31:32,920
Speaker 7: to sign up for Prime. If you're not a Prime

546
00:31:32,920 --> 00:31:34,920
Speaker 7: member and you're shopping on the site, they've bombarred you

547
00:31:35,000 --> 00:31:37,680
Speaker 7: with suggestions would you like to join Prime and get

548
00:31:37,680 --> 00:31:40,040
Speaker 7: free shipping and this and that and highlight all of

549
00:31:40,080 --> 00:31:42,160
Speaker 7: the benefits. But then if you decide you no longer

550
00:31:42,200 --> 00:31:44,920
Speaker 7: want it, they send you into what's internally called like

551
00:31:44,960 --> 00:31:48,800
Speaker 7: this iliad loop, you know, which refers to this Greek

552
00:31:48,880 --> 00:31:52,080
Speaker 7: poem of the you know, the saga along the Trojan War,

553
00:31:52,280 --> 00:31:54,480
Speaker 7: you know, and you have to go through screen after

554
00:31:54,520 --> 00:31:57,560
Speaker 7: screen after screen trying to trying to cancel your membership.

555
00:31:57,960 --> 00:31:59,720
Speaker 7: And so you know, this is part of a broader

556
00:31:59,800 --> 00:32:04,160
Speaker 7: cre down around those practices, both a very high profile company.

557
00:32:04,280 --> 00:32:07,080
Speaker 3: Yeah, you never want your Amazon shopping experience to be

558
00:32:07,160 --> 00:32:09,960
Speaker 3: remniscent of the Trojan war. I doubt that that's in

559
00:32:10,000 --> 00:32:11,720
Speaker 3: the best interest of Amazon.

560
00:32:11,800 --> 00:32:13,320
Speaker 5: Here, talk me through.

561
00:32:13,520 --> 00:32:17,280
Speaker 3: This isn't the only FTC suit against Amazon, right now,

562
00:32:17,320 --> 00:32:18,480
Speaker 3: talk me through some of the others.

563
00:32:19,720 --> 00:32:23,760
Speaker 7: Well, the FTC has been looking very broadly, cast a

564
00:32:23,840 --> 00:32:28,200
Speaker 7: really wide net around all of the big tech companies,

565
00:32:28,240 --> 00:32:32,960
Speaker 7: you know, Amazon, Google, Apple, Facebook in Amazon in particular.

566
00:32:33,040 --> 00:32:37,440
Speaker 7: Things that they've been looking at is, you know, are

567
00:32:37,440 --> 00:32:39,480
Speaker 7: they a monopoly you know, if you just you know,

568
00:32:39,560 --> 00:32:43,800
Speaker 7: are they causing consumer harm by having too much control

569
00:32:43,840 --> 00:32:46,600
Speaker 7: over online shopping in the in the US? And then

570
00:32:46,680 --> 00:32:50,640
Speaker 7: other things like is Amazon Web Services monopoly? You know,

571
00:32:50,640 --> 00:32:55,920
Speaker 7: their cloud computing division. Do they squeeze their merchants? There's

572
00:32:55,960 --> 00:32:58,720
Speaker 7: about two million merchants that sell things on Amazon. Are

573
00:32:58,720 --> 00:33:03,040
Speaker 7: they squeezing them on fairly or using coercive tactics? So

574
00:33:03,040 --> 00:33:06,200
Speaker 7: they're really looking at Amazon in a variety of ways.

575
00:33:06,320 --> 00:33:08,960
Speaker 3: Yeah, So where does this leave Amazon in terms of

576
00:33:08,960 --> 00:33:10,760
Speaker 3: what they need to do next?

577
00:33:10,800 --> 00:33:11,080
Speaker 5: Here?

578
00:33:11,240 --> 00:33:16,080
Speaker 3: Because Amazon already changed its process for canceling prime subscriptions, right,

579
00:33:16,160 --> 00:33:18,640
Speaker 3: So do. They just need to keep making changes to

580
00:33:18,760 --> 00:33:22,000
Speaker 3: try and sort of pre adjust before any other issues

581
00:33:22,040 --> 00:33:25,000
Speaker 3: come up from the FTC. What's their standing right now.

582
00:33:26,240 --> 00:33:28,560
Speaker 7: Yeah, they did a few months ago change the site

583
00:33:28,600 --> 00:33:30,920
Speaker 7: to try to simplify it, and this was while the

584
00:33:31,000 --> 00:33:35,640
Speaker 7: FTC investigation was going on. They were also they also

585
00:33:35,720 --> 00:33:39,040
Speaker 7: faced action in the European Union for similar issue. So

586
00:33:39,080 --> 00:33:41,640
Speaker 7: the European Union is generally a little bit ahead of

587
00:33:41,680 --> 00:33:44,160
Speaker 7: the US in terms of cracking down on this kind

588
00:33:44,160 --> 00:33:46,200
Speaker 7: of stuff. So yeah, they're going to try to tweak it.

589
00:33:46,360 --> 00:33:48,880
Speaker 7: I mentioned with Amazon, they generally want to do just

590
00:33:49,040 --> 00:33:51,720
Speaker 7: enough and not anymore to keep the regulators at day.

591
00:33:52,160 --> 00:33:54,200
Speaker 7: You know, we could see some kind of fine or

592
00:33:54,240 --> 00:33:57,280
Speaker 7: settlement with the FTC where they make a payment, and

593
00:33:57,320 --> 00:34:01,440
Speaker 7: it could even involve some sort of marginal rebate to consumers.

594
00:34:01,440 --> 00:34:03,040
Speaker 7: You know. I mean it's like two thirds of US

595
00:34:03,080 --> 00:34:07,680
Speaker 7: households belong to Amazon Prime, so they even if they

596
00:34:07,680 --> 00:34:10,920
Speaker 7: did have some you know, staggering figure as a settlement,

597
00:34:11,239 --> 00:34:13,400
Speaker 7: you know, every US consumer is going to maybe get

598
00:34:13,440 --> 00:34:14,120
Speaker 7: a book or two.

599
00:34:14,680 --> 00:34:18,440
Speaker 3: Yeah, final thirty seconds here, Spencer. We've been talking a

600
00:34:18,480 --> 00:34:20,680
Speaker 3: lot about subscriptions and the impact that they have on

601
00:34:20,719 --> 00:34:24,440
Speaker 3: the stock price of these companies, particularly Netflix, coming to mind.

602
00:34:25,000 --> 00:34:28,280
Speaker 3: Any chance of news like this impacting Amazon's share price

603
00:34:28,440 --> 00:34:29,400
Speaker 3: or not so much.

604
00:34:30,400 --> 00:34:34,279
Speaker 7: It doesn't seem to have affected it. I mean, the

605
00:34:34,320 --> 00:34:37,200
Speaker 7: bottom line is that it's very popular. And I've been

606
00:34:37,200 --> 00:34:39,160
Speaker 7: covering Amazon a long time and I've rarely heard this

607
00:34:39,239 --> 00:34:43,080
Speaker 7: complaint from consumers. They have a very high customer retention rate.

608
00:34:43,120 --> 00:34:45,719
Speaker 7: A few people, I think, try to cancel because they're

609
00:34:45,719 --> 00:34:49,000
Speaker 7: satisfied with the membership. It's something like more than ninety

610
00:34:49,000 --> 00:34:51,560
Speaker 7: percent of all customers who try a free trial membership

611
00:34:51,920 --> 00:34:53,080
Speaker 7: stay with it. There you go.

612
00:34:53,200 --> 00:34:55,480
Speaker 3: All right, Spencer, thank you so much for joining us

613
00:34:55,480 --> 00:34:58,880
Speaker 3: and coming on to talk about the FTC lawsuit against Amazon.

614
00:34:58,920 --> 00:35:01,280
Speaker 5: We really appreciate. Again.

615
00:35:01,480 --> 00:35:03,839
Speaker 3: Really interesting to note because I mean, like Spencer was saying,

616
00:35:03,840 --> 00:35:06,279
Speaker 3: I've never tried to cancel my Amazon membership, but some

617
00:35:06,320 --> 00:35:08,560
Speaker 3: people do. All right, this is Bloomberg Law.

618
00:35:08,600 --> 00:35:10,480
Speaker 5: I'm Madison Mills, and this is Bloomberg