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Speaker 1: Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: Welcome to Bloomberg Law on Bloomberg Radio. I'm Madison Mills
Speaker 3: in for June Grasso. Today we're talking about how a
Speaker 3: conservative supermajority is affecting the Supreme Court and reshaping the
Speaker 3: US as a result. Plus later in the show, three
Speaker 3: men convicted of acting as Chinese agents in New York City.
Speaker 3: We're going to talk about that and the latest congressional bill,
Speaker 3: target AI aims to work towards regulation, but is it
Speaker 3: gonna work. We're gonna discuss all of that and more
Speaker 3: on the program, But first let's start with the highest
Speaker 3: court in the land, because the Supreme Court has had
Speaker 3: a strain of decisions that have tested the core principles
Speaker 3: of American democracy, leaving American citizens skeptical about the Court
Speaker 3: as a result. Here to discuss is Bloomberg New Supreme
Speaker 3: Court reporter, Greg's store. Greg, thanks so much for being
Speaker 3: with us as always, you've covered the Supreme Court for
Speaker 3: a while. Talk to me about what you would say
Speaker 3: is the single biggest differentiating factor of this court versus
Speaker 3: the other Supreme courts.
Speaker 4: That you've covered, well, Madison, it starts with that six
Speaker 4: 's three conservative majority that you mentioned, because that's what
Speaker 4: lets them do all the other things. And what we've
Speaker 4: seen as a court that has been pretty aggressive in
Speaker 4: asserting its own powers, sometimes taking them away from other branches,
Speaker 4: and really reshaping American law without seemingly worrying too much
Speaker 4: about what the public reacts.
Speaker 3: Is And talk to me about that public reaction. How
Speaker 3: big of a shift would you say you've seen in
Speaker 3: terms of the public perception of the Supreme Court.
Speaker 4: Yeah, the Court's public standing is at or near record lows,
Speaker 4: and that is driven primarily by really low approval ratings
Speaker 4: among Democrats and liberals, you know, it's what's causing that.
Speaker 4: You know, the polls don't necessarily show that, but certainly
Speaker 4: all these big divisive decisions, the abortion decision being the
Speaker 4: biggest one last year, but also all these ethics controversies
Speaker 4: that we've had floating around. We've seen the Court's approval
Speaker 4: numbers dip since the revelations about Clarence Thomas a few
Speaker 4: months ago, and now, of course we're seeing some new
Speaker 4: ones involving Justice sam Alito.
Speaker 3: Do we know which of those two is having more
Speaker 3: of an impact in terms of public perception. Is it
Speaker 3: the sentiment surrounding the decisions of the court or the
Speaker 3: personal ethics violations and allegations about those violations of individuals
Speaker 3: on the court that's driving public perception.
Speaker 4: It's really hard to say, you know, if I'm guessing,
Speaker 4: and I'll just say this is a guest, just kind
Speaker 4: of based on looking at the numbers and when they shift,
Speaker 4: it's roughly equal parts both. Certainly, there are people who
Speaker 4: are already predisposed to be skeptical of the Court and
Speaker 4: what it's doing. And so maybe when somebody who doesn't
Speaker 4: like the Court's abortion decision then reads about luxury vacations
Speaker 4: taken by Clarence Thomas. That's all the more reason for
Speaker 4: them to say, I don't approve of what the Court
Speaker 4: is doing. So in some ways the two issues sort of,
Speaker 4: you know, overlap with one with one another and kind
Speaker 4: of build on one another.
Speaker 3: Well, also, we talked earlier, and as you said, it's
Speaker 3: this six ' three division of a conservative majority in
Speaker 3: the Court, but you know it's not technically supposed to
Speaker 3: be a political body, as you know very well, are
Speaker 3: we seeing that politicization of the Supreme Court getting more
Speaker 3: and more intense as the years go.
Speaker 4: On, Yeah, very much so. And depending on which side
Speaker 4: you talked to, will start at a different point in
Speaker 4: describing how we got here, but certainly where we ended
Speaker 4: up is the six most conservative justices on the Court
Speaker 4: are all Republican appointees. The three most liberal are all
Speaker 4: Democratic appointees. If there's another vacancy that comes up, nobody
Speaker 4: will expect Joe Biden to nominate somebody who's anything other
Speaker 4: than a liberal justice. And that's a dynamic we didn't
Speaker 4: used to have Back twenty years ago, there were Republican
Speaker 4: appointed justices whom we would describe as liberals because they
Speaker 4: turn out not to be exactly what the Republican Party
Speaker 4: was expecting when they were nominated, and going a little
Speaker 4: farther back, you could find Democratic appointed justices who were
Speaker 4: conservative on at least some issues, and that phenomenon just
Speaker 4: doesn't exist anymore.
Speaker 3: So, given that, are we expecting or do you anticipate
Speaker 3: sort of changes to come in terms of how the
Speaker 3: makeup of the court is decided and just kind of
Speaker 3: the you know, tradition of the court in general. Do
Speaker 3: you see any changes to that happening.
Speaker 4: It's really hard to see how we as a society
Speaker 4: get out of this particular box we're in. You know,
Speaker 4: we've you know, essentially now in a world where you know,
Speaker 4: Republicans are saying, for example, if if there's another vacancy
Speaker 4: when Joe Biden is president, if they are able to
Speaker 4: block confirmation in the in the Senate, they will do that.
Speaker 4: You know, Democrats of course have talked about adding seats
Speaker 4: to the court, but no indication there is the kind
Speaker 4: of political will you would need to make that happen.
Speaker 4: And some of these justices, you know, of course, they
Speaker 4: have life tenures. So you know, the justices appointed by
Speaker 4: Donald Trump are all you know well south of sixty
Speaker 4: and conserve for several more decades.
Speaker 3: Well, Greg, one thing that you also talk about in
Speaker 3: your story, which folks can find on Bloomberg dot com
Speaker 3: and on the terminal of course, about the aggressive Supreme
Speaker 3: Court reshaping the US is just the kind of growth
Speaker 3: of the power of the Supreme Court. Are there any
Speaker 3: decisions that the Court has made that you can talk
Speaker 3: to us about that have extended and expanded that power.
Speaker 4: Yeah. The easiest place to think about this with with
Speaker 4: regard to is that phenomenon is regarding the EPA. So
Speaker 4: a series of decisions we have seen. The Court last
Speaker 4: year restricted the EPA's authority over climate change in terms
Speaker 4: of regulating emissions coming out of power plants. This term,
Speaker 4: the Court sharply curtailed the EPA's authority over to protect
Speaker 4: wetlands and took potentially tens of millions of wetlands out
Speaker 4: of out of the scope of the Clean Water Act.
Speaker 4: And then next term the Court has a case that's
Speaker 4: a little more kind in the legal weeds, but is
Speaker 4: really important that they're considering overturning a precedent that has
Speaker 4: given agencies a certain amount of leeway when they interpret
Speaker 4: statutes and you know all told what that means is
Speaker 4: the agencies are able to do less than they were
Speaker 4: able to, and the Supreme Court now is more the
Speaker 4: final arbiter of what the agencies can and cannot do well.
Speaker 3: And speaking of that power as well, it just feels
Speaker 3: like there's we're kind of in a different era and
Speaker 3: you talk about this in the story than we were
Speaker 3: when the Supreme Court was originated. You know, I think
Speaker 3: about the use of quill pens in the courtroom, for example,
Speaker 3: do you see any of those sort of I don't
Speaker 3: want to say smaller, but those little traditions changing over
Speaker 3: time to kind of at least indicate to the public
Speaker 3: that there is some evolution happening with the Supreme Court.
Speaker 4: Well, this is a court that is very resistant to
Speaker 4: changing its long standing practices. Now one thing that has
Speaker 4: changed is, you know, arguments, which used to be it
Speaker 4: used to be the only people who could hear the
Speaker 4: arguments were the few hundred people who could pack into
Speaker 4: the courtroom. Now they live stream the arguments and that
Speaker 4: has you know, provided a certain amount of transparency now
Speaker 4: that they were sort of forced into that because of
Speaker 4: the realities of the pandemic when they were holding arguments
Speaker 4: by phone. But they're still resisting other things that could
Speaker 4: make the court more transparent, for example, cameras in the courtroom.
Speaker 4: No indication that they're anywhere close to allowing that.
Speaker 3: So what are the big questions that the Court is
Speaker 3: going to be answering this cycle that you can let
Speaker 3: us in on.
Speaker 4: Yes, there are. There are several very big cases the
Speaker 4: Court's going to be deciding in the next week and
Speaker 4: a half or so. Perhaps the biggest one is one
Speaker 4: that could abolish the use of race in college admissions.
Speaker 4: The Court's being asked to overturn a couple precedents that
Speaker 4: that say universities can do that for the sake of
Speaker 4: achieving campus to diversity. The Court is also considering striking
Speaker 4: down President Biden's student loan release policy, which would forgive
Speaker 4: at least in part, loans held by some forty million people.
Speaker 4: There's a big case involving the intersection of free speech
Speaker 4: rights and LGBTQ rights. There's a very big case involving
Speaker 4: who gets to set the rules for federal elections. So
Speaker 4: it's going to be a very busy next week and
Speaker 4: a half and it will tell us a lot more
Speaker 4: about whether the Court wants to continue being as aggressive
Speaker 4: in the use of its powers as it has been
Speaker 4: in the past.
Speaker 3: And really quickly here, Greg, what's next when it comes
Speaker 3: to the ethics questions of some of the Supreme Court justices.
Speaker 4: Well, we had this new story from Republica about Justice Alito,
Speaker 4: and there's going to be a lot of fallout from that.
Speaker 4: They the report is that he took a fishing vacation
Speaker 4: with somebody who eventually had business before the Court. Didn't
Speaker 4: disclose that. There's give me a lot more talk about
Speaker 4: trying to impose a code of conduct on the Supreme Court.
Speaker 3: All right, Greg, Well, thank you so much as always
Speaker 3: for joining us to break down all things the Supreme
Speaker 3: Court in the United States. That was Greg's store Bloomberg
Speaker 3: News reporter joining us from Washington as always to talk
Speaker 3: about the Supreme Court. Really important coverage from him and
Speaker 3: the rest of our DC team about the decisions to
Speaker 3: come from the Supreme Court. As he was mentioning there,
Speaker 3: we've got student loans on the docket, affirmative actions, so
Speaker 3: a lot of really big questions that are going to
Speaker 3: be shaping the future of democracy in the US, and
Speaker 3: a lot of other factors there so really important to watch.
Speaker 3: Coming up, we're going to talk about the future of
Speaker 3: AI regulation in DC.
Speaker 5: That's next.
Speaker 3: I'm Madison Mills in for June Grasso on Bloomberg Law
Speaker 3: this week, and this is Bloomberg.
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 3: We're going to move from Washington up here to New
Speaker 3: York City because a retired NYPD sergeant and two others
Speaker 3: were convicted as agents of China. Those three men were
Speaker 3: also pressuring dissidents to return to China from the US
Speaker 3: as well. So here to discuss all of the details
Speaker 3: of this is Bloomberg News reporter Patricia Hurtado joining us
Speaker 3: by phone. Patricia, thank you so much for coming on
Speaker 3: the show. Just give me the lowdown here for those
Speaker 3: who haven't been familiar with this story.
Speaker 5: What do we need to know?
Speaker 6: Well, at Brooklyn federal jury heard a three week trial
Speaker 6: and deliberated for two days in a case that accused
Speaker 6: a retired NYPD police sergeant and two other men with
Speaker 6: acting as a legal agents of the Chinese government to
Speaker 6: pressure dissidents to return to China.
Speaker 3: And what does this mean for those three men in
Speaker 3: terms of what's next for them? What happens?
Speaker 6: Well, they all three faced substantial prison time. One of them,
Speaker 6: the former cop, faces at least twenty years and possible
Speaker 6: the twenty year prison term substantial time for anybody. And
Speaker 6: this was the first case to go to trial brought
Speaker 6: by the US government making these allegations, which are pretty
Speaker 6: serious if you think about it. It's that the Chinese
Speaker 6: government sent operatives or had operatives acting on their behalf
Speaker 6: to pressure and induce former Chinese nationals who moved to
Speaker 6: the US and show up on their doorsteps and spy
Speaker 6: on them.
Speaker 3: That's yeah, that's really interesting. Do we know any of
Speaker 3: the details of what that operation sort of looked like
Speaker 3: and anything else you can tell us about what would
Speaker 3: go on with that.
Speaker 6: Well, the government has brought several cases and the Eastern
Speaker 6: District of New York, which includes neighborhoods include you know,
Speaker 6: Chinatowns in both Brooklyn Sunset Park as well as in
Speaker 6: Fleshing Queens. They have brought other cases involving activity they
Speaker 6: allege has been you know, people acting on behalf of
Speaker 6: the Chinese government, including enslaving people to build and do
Speaker 6: work on a house that was owned by an estate
Speaker 6: that was owned by the Chinese government. But this case
Speaker 6: basically alleges that they people were being monitored. This former
Speaker 6: police sergeant was accused and the jury found that he
Speaker 6: access law enforcement databases to find out information about where
Speaker 6: these people lived and would show up and track their cars.
Speaker 6: And these people were getting messages and letters in their
Speaker 6: mail basically threatening them. So you know, the idea that
Speaker 6: there's this big brother is watching all the way from
Speaker 6: China is quite shocking to some some people, of course.
Speaker 7: Yeah.
Speaker 3: And this was called Operation fox Hunt by the Chinese government,
Speaker 3: is that correct?
Speaker 6: Yes, yes, And it was basically the US government alleges
Speaker 6: that this with this initiative you know, hatched by the
Speaker 6: Chinese Ministry of Public Security, so they were basically they're
Speaker 6: also accused of even establishing a police and the legal
Speaker 6: police station in New York to basically, uh, you know,
Speaker 6: monitor people and and spy on them. And that was
Speaker 6: according to direct case that was just filed in April. So,
Speaker 6: I mean, the allegations that these people were even hired
Speaker 6: a former cop who's not Asian to use his access
Speaker 6: to law enforcement databases, it's shocking, you know that.
Speaker 5: Right, And that's former cop that's Michael McMahon.
Speaker 6: Correct, that's correct, that's correct.
Speaker 3: So to what extent is this news that we're talking about,
Speaker 3: Michael McMahon and the two other men convicted as agents
Speaker 3: of China? How connected, if at all, is that to
Speaker 3: the secret police station in New York City that others
Speaker 3: were arrested Regarding.
Speaker 6: Well, that case, it's an out growth. It's also brought
Speaker 6: by several prosecutors in Brooklyn, and that case is basically
Speaker 6: an iteration of the similar activity. If you want to
Speaker 6: think about it, it's more possibly egregious activity, right, I
Speaker 6: don't know which ones do you think is worse? Having
Speaker 6: a private secret police station in Chinatown in Lower Manhattan
Speaker 6: or having people travel around and show up on doorsteps.
Speaker 6: The testimony in this case, this most recent case that
Speaker 6: just got made, was they were showing up at the
Speaker 6: doorstep of this man, his wife and his daughter in
Speaker 6: New Jersey and showing up in the doorstep, and she
Speaker 6: was getting their family was getting mail, and at one point,
Speaker 6: one of the victims testify they got a letter that
Speaker 6: was basically suggesting that they would be better off committing
Speaker 6: suicide than staying in the US.
Speaker 3: Oh my gosh, yeah, and talk to me about the victims,
Speaker 3: then did they go to the police and did they
Speaker 3: feel comfortable doing that? How did how did they kind
Speaker 3: of come forward?
Speaker 6: The evidence did so that even China caused an inner
Speaker 6: Pole read notice to be filed with the International Police
Speaker 6: Group that said complained about on behalf of China that
Speaker 6: these three people were wanted by China. So if you
Speaker 6: can imagine that your inner pol is looking for you,
Speaker 6: but it's all cooked up, that's wild, you know, to
Speaker 6: think eventually these the victims were reached, reached the law enforcement,
Speaker 6: the allegations reached law enforcement, and there's been a couple
Speaker 6: of cases you know, that have been brought by the
Speaker 6: US government under the Trump started under the Trump ad
Speaker 6: administration called the China Initiative, which is basically also brought
Speaker 6: cases including alleging that the Chinese telecommunications giant called Huawei
Speaker 6: Technologies was also spying, but that was corporate espionage basically.
Speaker 6: So you know, it seems like all kinds of initiative.
Speaker 6: Let's not just go after the Chinese people. We believe
Speaker 6: our dissidents in the US running from controversy or is
Speaker 6: trying to escape controversy or oppression in China, but also
Speaker 6: let's operate in the US and spy on American technology.
Speaker 6: So there's two cases that were brought, one of them
Speaker 6: in Seattle and one of them in Federal court in
Speaker 6: Brooklyn that's also pending as part of this China initiative.
Speaker 6: So you know, it's some of the cases have been
Speaker 6: very have been unsuccessful, and the US has had to
Speaker 6: drop them. But you know, there's just seems like with
Speaker 6: the current situation of the status of the US China relations,
Speaker 6: which are chili you know, it has been frosty in
Speaker 6: the past, and certainly the China Initiative was an outgrowth
Speaker 6: of the Trump administrations that China was not to be trusted, right.
Speaker 3: Well, you mentioned kind of the context here, and it's
Speaker 3: so important to note this is coming after you know,
Speaker 3: Blincoln has just been in Beijing and had a surprise
Speaker 3: meeting with Chinese President Shiji Pain thirty five minute meeting
Speaker 3: towards the end of his two day visit there, and
Speaker 3: Chinese officials sort of blasting the US after that meeting,
Speaker 3: kind of talking about the US tampering with its political
Speaker 3: promises on Taiwan again after that meeting, So that context
Speaker 3: is important.
Speaker 5: And then of course from the Bloomberg side of things.
Speaker 3: What we cover is the importance of the business impact
Speaker 3: when it comes to things like semiconductors and the chips
Speaker 3: race and the Chips war. Really, so that context is
Speaker 3: just uh making these making these interactions between the US
Speaker 3: and China even even more Chile as you mentioned, Patricia.
Speaker 6: And you know, the one thing you can say is
Speaker 6: that while this initiative was underway, there were a lot
Speaker 6: of cases brought. And I think many of our readers
Speaker 6: would remember that Menglan Huts she was the CFO of Huawei.
Speaker 6: She's arrested at the request of the US on charges
Speaker 6: in Vancouver, Canada, and she fought the case vehemently from
Speaker 6: from the and was a Brooklyn federal case. So while
Speaker 6: the case against the company still pending, she was allowed
Speaker 6: to go home after in a plea deal. But in
Speaker 6: meanwhile the China Initiative brought, and I should say the
Speaker 6: China Initiative which was pretty you know, uh hard iron
Speaker 6: fisted by the Trump administration. The DOJ now has scrapped
Speaker 6: the China Initiative. Under the Biden administration, many people felt
Speaker 6: that it was a little too hard, hard nosed on it.
Speaker 3: So, yeah, lots to cover there. Patricia, thank you so
Speaker 3: much for joining us and talking.
Speaker 5: It all through. We really appreciate it.
Speaker 3: That was Patricia Hurtado, our Bloomberg News reporter on this story.
Speaker 3: Next up, we're talking AI regulations. To stick around. I'm
Speaker 3: Madison Mills and this is Bloomberg.
Speaker 1: You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: It wouldn't be a Bloomberg show without us talking about
Speaker 3: artificial intelligence, and of course, with all the power of AI,
Speaker 3: you could say that comes with great responsibility. That's one
Speaker 3: reason we're hearing and seeing a lot of regulation questions
Speaker 3: popping up in Congress to try and hedge against any
Speaker 3: issues to come with AI. So here to discuss this
Speaker 3: with us is Bloomberg Intelligence analyst Matthew Schuttenhelm. Thank you
Speaker 3: so much for being with us. Matt really appreciate it.
Speaker 3: I'm going to take a page out of Jay Powell's
Speaker 3: book from his comments in Congress today. He talked about
Speaker 3: how if you drive car, if you're driving somewhere, you
Speaker 3: might start off really fast and slow down a little
Speaker 3: bit once you're getting closer to your destination.
Speaker 5: So not a big speeder.
Speaker 3: J Powell when it comes to AI regulation, Are we
Speaker 3: just leaving the house for the road trip or are
Speaker 3: we Are we getting close to the destination?
Speaker 6: Yeah?
Speaker 8: I think we are. We're not even out of the
Speaker 8: house yet. Yeah, yeah, we're starting to get ready. And
Speaker 8: and you know, it's this is such a tough thing
Speaker 8: for Congress to take on because it's it's so new,
Speaker 8: and it's so technical, and and then it then once
Speaker 8: you know, down the road, it starts to become more political.
Speaker 8: So Congress has struggled so much to regulate big tech,
Speaker 8: and now it has this whole new concept of this
Speaker 8: whole new big thing that it wants to go after,
Speaker 8: but it has very little concept right now of one
Speaker 8: the technology and to the problems that might come up.
Speaker 8: So so fashioning a regulatory regime to address that is
Speaker 8: is just a daunting problem for for Congress.
Speaker 5: And you mentioned big tech.
Speaker 3: How unique is it that AI executives and officials, the
Speaker 3: big movers in AI are kind of on board to
Speaker 3: work with Congress as compared with the big tech thing.
Speaker 4: That we saw.
Speaker 8: Yeah, I mean, they've definitely been a lot of resistance
Speaker 8: from big tech in terms of you know, resisting data
Speaker 8: privacy regulation. But you've also seen like companies like like
Speaker 8: Meta Facebook being you know, supportive of at least publicly,
Speaker 8: and so that that we've often seen that distinction said okay,
Speaker 8: regulate us, give us something, and even Congress couldn't, couldn't
Speaker 8: do that. You're seeing that here as well, where where
Speaker 8: the companies are are are coming in and saying, look,
Speaker 8: we want to support, you know, a reasonable approach to
Speaker 8: using this technology. You as lawmakers should impose something reasonable.
Speaker 8: But then I think in behind the scenes, it's it's
Speaker 8: often a different story when when when regulators are starting
Speaker 8: to put together sort of aggressive regulation. I think you
Speaker 8: see a different tone from the companies as that plays out.
Speaker 3: So talk to me about what some of the proposed
Speaker 3: legislation right now is looking like.
Speaker 8: Yeah, so it's very early days right now, So I
Speaker 8: think so far we've seen I think two bipartisan bills
Speaker 8: introduced since the first hearing in the Senate last month,
Speaker 8: and one of those has to deal with Section two thirty,
Speaker 8: the liability shield that has been a big deal in
Speaker 8: big tech in terms of shielding companies from lawsuits, and
Speaker 8: lawmakers want to get out in front of that with
Speaker 8: AI and say, look, we don't want this liability shield
Speaker 8: to apply to AI. If people are harmed because of AI,
Speaker 8: people should be able to sue over that. So that's
Speaker 8: the first bill that's sort of out of the gate.
Speaker 8: I don't know that that's a huge deal. I don't
Speaker 8: know that the courts are you going to be jumping
Speaker 8: into AI litigation really really fast, And even if they did,
Speaker 8: I'm not sure Section two thirty would would be much
Speaker 8: of a shield. I think there's a strong argument that
Speaker 8: Section two thirty shouldn't apply to AI, even without Congress
Speaker 8: saying that in new legislation. And then the second bill
Speaker 8: that we're seeing right now is sort of I think
Speaker 8: something that might catch on, and it's the idea of
Speaker 8: proposing a commission of about twenty people from the industry,
Speaker 8: from privacy groups and things like that to slow down
Speaker 8: and take a look at this in a comprehensive manner
Speaker 8: and issue a couple reports over the next two years
Speaker 8: to say, Okay, what is it that AI can do,
Speaker 8: what should we be concerned about, and how should we
Speaker 8: think about regulating it? And as you think through the
Speaker 8: difficulty of the problem, as we started talking about earlier,
Speaker 8: that might be Congress's best chance is sort of let's
Speaker 8: slow down, let's have some experts, you know, look at this,
Speaker 8: and after that commission does its work over a year
Speaker 8: or two, maybe Congress then is in a better position
Speaker 8: to adopt real regulations of things that matter.
Speaker 3: Talk to me about Section two thirty again. You mentioned
Speaker 3: that AI maybe should not be.
Speaker 5: Part of that. Why is that?
Speaker 8: Yeah, so I think I think there's a pretty strong
Speaker 8: argument that Section two thirty shouldn't apply to AI. Section
Speaker 8: two thirty has played its most important role in saying
Speaker 8: that when when a user posts something on social media,
Speaker 8: the user is responsible for that post. You can't sue
Speaker 8: Meta or Google because they hosted the content that I posted.
Speaker 8: You know that was harmful, you can sue me. You
Speaker 8: can't sue Meta or Google for that. And I think
Speaker 8: in the AI context it's not as clear that that
Speaker 8: would happen as often it's it's it's probably the case
Speaker 8: where the AI is putting is the speaker more than
Speaker 8: a third party. And so, especially with courts sort of
Speaker 8: reluctant to expand Section two thirty, they's sort of a
Speaker 8: trend against that. I tend to think that if these
Speaker 8: cases start getting into the courts, the courts are going
Speaker 8: to be skeptical about extending the liability shield to AI anyway,
Speaker 8: and I think they're mostly going to hold the AI
Speaker 8: companies responsible. That doesn't mean the AA companies would lose
Speaker 8: those lawsuits. It just means they wouldn't have this extra
Speaker 8: shield on top to throw out the lawsuits right out
Speaker 8: of the gate.
Speaker 5: Yeah, okay, that makes a lot of sense.
Speaker 3: And then going over to like you mentioned the idea
Speaker 3: of the National AI Commission Act and Congress kind of
Speaker 3: bringing in twenty members to look at AI's risks. Just
Speaker 3: a curveball question that occurred to me here is you know,
Speaker 3: Congress got a lot of flak from inviting Sam Bankman
Speaker 3: freed to DC to advise them on what cryptoregulation could
Speaker 3: look like. Is there any potential threat of that or
Speaker 3: would this be a little bit different?
Speaker 8: Yeah, so I think, you know, it's it's a tough
Speaker 8: one because I think the more that that Congress invites
Speaker 8: industry in to be a part of this conversation about
Speaker 8: regulation should look like, the more likely it's going to
Speaker 8: result in regulation that isn't all that disruptive to the industry,
Speaker 8: and so that and so it's it's this constant balance
Speaker 8: that that Congress has to do because if it if
Speaker 8: it ignores industry and says, well we got this, well
Speaker 8: we'll go do the regulation ourselves. They don't know how to.
Speaker 8: They don't they don't really understand the technology enough to
Speaker 8: do it. So in my view, you know, you would
Speaker 8: open yourself up to more criticism as if you do this,
Speaker 8: But I think it might be the only way for
Speaker 8: Congress to get itself up to speed on this technology.
Speaker 8: Is is is at least in the preliminary stages, partnering
Speaker 8: with industry to some extent and trying to understand both
Speaker 8: you know, what what the good that can come of this,
Speaker 8: but also what are the risks that they should be
Speaker 8: thinking about. I think Congress really needs to slow down
Speaker 8: and invite industry in to be a part of that conversation.
Speaker 3: Yeah, it's such a good point because we've seen historically
Speaker 3: that it can be difficult for Congress to get a
Speaker 3: handle on some.
Speaker 5: Of these absolutely these big tech shifts.
Speaker 3: Yeah, I want to talk to you too about any
Speaker 3: headwinds this could cause for AI growth because you do
Speaker 3: sit on our Bloomberg Intelligence team as a litigation analyst.
Speaker 3: Should investors be worried about DC moves.
Speaker 8: You know, I really wouldn't be overly concerned. I think
Speaker 8: this is going to be a hot topic for years
Speaker 8: to come, I think, And so you're going to what
Speaker 8: you're going to see is the constant barrage of headlines about,
Speaker 8: you know, what does this technology do and what should
Speaker 8: we be doing about it? And so we are literally
Speaker 8: one hearing in on Capitol Hill on this, you know,
Speaker 8: and there's going to be I think multiple This is
Speaker 8: going to be a regular part of the conversation and
Speaker 8: that's not going to go away anytime soon. But what
Speaker 8: we've seen from the big tech effort, you know, the
Speaker 8: effort to impose data privacy legislation, and how that's just failed.
Speaker 8: And it's just very hard for Congress right now to
Speaker 8: reach consensus on this stuff. And Europe's moving ahead, and
Speaker 8: I think, you know, I think Europe's likely to move
Speaker 8: first on some of this stuff and and and the US,
Speaker 8: just like on on on GDPR and and and data privacy.
Speaker 8: I think the US is probably going to be playing
Speaker 8: catch up a little bit there as Europe moves ahead.
Speaker 8: But in my view, just the difficulty of getting your
Speaker 8: head around this technology and the problems and then the
Speaker 8: politics overlaid on top of that. It's difficult to see
Speaker 8: Congress doing anything that would be really materially disruptive, and
Speaker 8: in part because they don't want to thwart this technology,
Speaker 8: you know, and drive it elsewhere.
Speaker 5: Right right, It's a really good point.
Speaker 3: Matt Shuttenhelm, Bloomberg Intelligence litigation analyst, thank you so much
Speaker 3: for joining us. Really important points there on the challenges
Speaker 3: and opportunities perhaps that come with regulating AI. But makes
Speaker 3: a lot of sense that Congress would not want to
Speaker 3: move too quickly.
Speaker 6: There.
Speaker 5: I'm Madison Mills, and this is Bloomberg.
Speaker 1: You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: All right, we got to move over to Seattle now
Speaker 3: to talk about Amazon, because the FTC suing Amazon for
Speaker 3: making it difficult to cancel those Amazon Prime accounts. If
Speaker 3: you're like me, you got that account when you were
Speaker 3: in college and have had it ever since. So here
Speaker 3: to discuss the situation with US is Spencer Sober. He is,
Speaker 3: of course, our Amazon eBay expert based in Seattle for US. Spencer,
Speaker 3: thanks for hopping on the call. Talk me through this
Speaker 3: latest news from the FTC.
Speaker 7: The FTC more broadly, is just trying to crack down
Speaker 7: in general on any of these kind of online subscriptions.
Speaker 7: You know, there's people get them for meals, for a
Speaker 7: variety of things, for movie tickets, and of course Amazon Prime,
Speaker 7: which people pay you know, one hundred and thirty nine
Speaker 7: dollars a year poor or fifteen dollars a month for
Speaker 7: and so what basically the gist of it is it
Speaker 7: should be as easy to cancel one of these things
Speaker 7: as it is to sign up, and there's often a
Speaker 7: pretty significant difference. You know, Amazon makes it very simple
Speaker 7: to sign up for Prime. If you're not a Prime
Speaker 7: member and you're shopping on the site, they've bombarred you
Speaker 7: with suggestions would you like to join Prime and get
Speaker 7: free shipping and this and that and highlight all of
Speaker 7: the benefits. But then if you decide you no longer
Speaker 7: want it, they send you into what's internally called like
Speaker 7: this iliad loop, you know, which refers to this Greek
Speaker 7: poem of the you know, the saga along the Trojan War,
Speaker 7: you know, and you have to go through screen after
Speaker 7: screen after screen trying to trying to cancel your membership.
Speaker 7: And so you know, this is part of a broader
Speaker 7: cre down around those practices, both a very high profile company.
Speaker 3: Yeah, you never want your Amazon shopping experience to be
Speaker 3: remniscent of the Trojan war. I doubt that that's in
Speaker 3: the best interest of Amazon.
Speaker 5: Here, talk me through.
Speaker 3: This isn't the only FTC suit against Amazon, right now,
Speaker 3: talk me through some of the others.
Speaker 7: Well, the FTC has been looking very broadly, cast a
Speaker 7: really wide net around all of the big tech companies,
Speaker 7: you know, Amazon, Google, Apple, Facebook in Amazon in particular.
Speaker 7: Things that they've been looking at is, you know, are
Speaker 7: they a monopoly you know, if you just you know,
Speaker 7: are they causing consumer harm by having too much control
Speaker 7: over online shopping in the in the US? And then
Speaker 7: other things like is Amazon Web Services monopoly? You know,
Speaker 7: their cloud computing division. Do they squeeze their merchants? There's
Speaker 7: about two million merchants that sell things on Amazon. Are
Speaker 7: they squeezing them on fairly or using coercive tactics? So
Speaker 7: they're really looking at Amazon in a variety of ways.
Speaker 3: Yeah, So where does this leave Amazon in terms of
Speaker 3: what they need to do next?
Speaker 5: Here?
Speaker 3: Because Amazon already changed its process for canceling prime subscriptions, right,
Speaker 3: So do. They just need to keep making changes to
Speaker 3: try and sort of pre adjust before any other issues
Speaker 3: come up from the FTC. What's their standing right now.
Speaker 7: Yeah, they did a few months ago change the site
Speaker 7: to try to simplify it, and this was while the
Speaker 7: FTC investigation was going on. They were also they also
Speaker 7: faced action in the European Union for similar issue. So
Speaker 7: the European Union is generally a little bit ahead of
Speaker 7: the US in terms of cracking down on this kind
Speaker 7: of stuff. So yeah, they're going to try to tweak it.
Speaker 7: I mentioned with Amazon, they generally want to do just
Speaker 7: enough and not anymore to keep the regulators at day.
Speaker 7: You know, we could see some kind of fine or
Speaker 7: settlement with the FTC where they make a payment, and
Speaker 7: it could even involve some sort of marginal rebate to consumers.
Speaker 7: You know. I mean it's like two thirds of US
Speaker 7: households belong to Amazon Prime, so they even if they
Speaker 7: did have some you know, staggering figure as a settlement,
Speaker 7: you know, every US consumer is going to maybe get
Speaker 7: a book or two.
Speaker 3: Yeah, final thirty seconds here, Spencer. We've been talking a
Speaker 3: lot about subscriptions and the impact that they have on
Speaker 3: the stock price of these companies, particularly Netflix, coming to mind.
Speaker 3: Any chance of news like this impacting Amazon's share price
Speaker 3: or not so much.
Speaker 7: It doesn't seem to have affected it. I mean, the
Speaker 7: bottom line is that it's very popular. And I've been
Speaker 7: covering Amazon a long time and I've rarely heard this
Speaker 7: complaint from consumers. They have a very high customer retention rate.
Speaker 7: A few people, I think, try to cancel because they're
Speaker 7: satisfied with the membership. It's something like more than ninety
Speaker 7: percent of all customers who try a free trial membership
Speaker 7: stay with it. There you go.
Speaker 3: All right, Spencer, thank you so much for joining us
Speaker 3: and coming on to talk about the FTC lawsuit against Amazon.
Speaker 5: We really appreciate. Again.
Speaker 3: Really interesting to note because I mean, like Spencer was saying,
Speaker 3: I've never tried to cancel my Amazon membership, but some
Speaker 3: people do. All right, this is Bloomberg Law.
Speaker 5: I'm Madison Mills, and this is Bloomberg