WEBVTT - Pence to Challenge Subpoena With Novel Defense 0:00:03.160 --> 0:00:07.960 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:10.840 --> 0:00:14.120 Former Vice President Mike Penns has spoken and written about 0:00:14.240 --> 0:00:18.439 conversations he had with former President Donald Trump about why 0:00:18.520 --> 0:00:22.760 he wouldn't follow Trump's demands to reject Electoral College votes 0:00:22.800 --> 0:00:26.119 from key swing states. When he oversaw the joint session 0:00:26.160 --> 0:00:30.400 of Congress to certify Joe Biden's victory on January six, 0:00:32.000 --> 0:00:36.280 picked up the phone and the President asked me where 0:00:36.280 --> 0:00:39.520 I was on the electoral account that would take place 0:00:39.560 --> 0:00:44.000 that day. And I told him, despite what you issued 0:00:44.080 --> 0:00:46.279 last night from your campaign, Mr President, you know, I've 0:00:46.280 --> 0:00:49.479 been very clear, but I don't have the authority to 0:00:49.640 --> 0:00:54.000 reject votes. And I reminded him we both took an 0:00:54.000 --> 0:00:57.080 oath to support and defend the constitution of the United States. 0:00:58.240 --> 0:00:59.880 I told him it was a promise that I may 0:01:01.800 --> 0:01:06.240 to the American people and to Almighty God. Now. Special 0:01:06.280 --> 0:01:09.440 Counsel Jack Smith wants to hear from Pence as part 0:01:09.480 --> 0:01:12.760 of his investigation into efforts by Trump and others to 0:01:12.840 --> 0:01:17.880 overturn the presidential election. He subpoenaed Pence to appear before 0:01:17.880 --> 0:01:21.199 the grand jury, but the former Vice president says he'll 0:01:21.240 --> 0:01:25.039 fight the subpoena using a novel legal theory around his 0:01:25.240 --> 0:01:28.000 role as President of the Senate and the section of 0:01:28.000 --> 0:01:31.800 the Constitution known as the speech or debate Clause. Joining 0:01:31.840 --> 0:01:35.160 me is national security expert Bradley Moss, a partner Mark 0:01:35.280 --> 0:01:38.920 Zad Brad and his memoir, Pence revealed that he was 0:01:39.040 --> 0:01:42.280 part of a number of conversations where Trump and his 0:01:42.560 --> 0:01:48.400 legal advisors were pushing claims about widespread voter fraud or 0:01:48.760 --> 0:01:52.160 floating novel legal theories that could be used to keep 0:01:52.200 --> 0:01:55.200 Trump in the White House. And in a Wall Street 0:01:55.280 --> 0:01:58.320 Journal opinion piece, Pennce said he told Trump that it 0:01:58.320 --> 0:02:00.640 would be illegal for him to interfere in the count 0:02:00.720 --> 0:02:04.200 during an Oval office meeting with lawyer John Eastman. So 0:02:04.240 --> 0:02:07.640 how can he claim privilege? Hasn't he waived it? So 0:02:07.680 --> 0:02:10.040 what he could argue is that he can only be 0:02:10.120 --> 0:02:14.280 forced to testify regarding those matters that he's already disclosed. 0:02:14.360 --> 0:02:18.000 And obviously what he put into the memoir, what he 0:02:18.440 --> 0:02:21.560 discussed in the op ed isn't truly of the interest. 0:02:21.600 --> 0:02:24.239 I mean, it's relevant, it's certainly something that the Special 0:02:24.280 --> 0:02:26.720 Council's team would want on the record and under oath, 0:02:27.120 --> 0:02:30.839 but it's not the critical pieces of information. What they 0:02:30.960 --> 0:02:34.200 want are things such as what Mike Pence and Donald 0:02:34.200 --> 0:02:37.519 Trump said to each other in private on those phone calls, 0:02:37.520 --> 0:02:39.840 including in the final hours and the last day or 0:02:39.840 --> 0:02:43.240 so leading up to January six, where there was no 0:02:43.320 --> 0:02:45.840 other aid with Mike Pence. We know he said in 0:02:45.880 --> 0:02:47.720 his staff out of the room. We know there was 0:02:47.800 --> 0:02:50.600 staff with Donald Trump, but they didn't hear what Mike 0:02:50.639 --> 0:02:54.000 Pence said. And that's the kind of information that the 0:02:54.040 --> 0:02:56.760 Special Council will be going after, and that Mike Pence 0:02:56.800 --> 0:03:00.480 has not disclosed anywhere. So Pence is going to fight 0:03:00.520 --> 0:03:03.839 the subpoena using the argument that he was acting as 0:03:03.960 --> 0:03:08.640 President of the Senate during the January six insurrection and 0:03:08.840 --> 0:03:13.120 invoking the speech or debate clause. Tell us more about 0:03:13.120 --> 0:03:16.840 his argument. So it's a novel argument. It's an interesting one. 0:03:16.880 --> 0:03:19.560 You know, constitutional scholars will get a kick out of it, 0:03:19.919 --> 0:03:22.000 but there's not a lot in the way of any 0:03:22.040 --> 0:03:25.400 kind of real precedent to guide anybody as to how 0:03:25.440 --> 0:03:28.280 it would play out. So, yes, under the Constitution, the 0:03:28.360 --> 0:03:31.760 vice president it kind of has two roles. One, obviously 0:03:31.840 --> 0:03:34.800 is the executive branch role under Article two of the Constitution, 0:03:35.320 --> 0:03:38.600 very limited authorities. But that's what the role is set 0:03:38.640 --> 0:03:40.839 up to do. The other one is what is set 0:03:40.880 --> 0:03:43.680 up under Article one of the Constitution, which deals with Congress, 0:03:43.680 --> 0:03:45.960 and that is that the Vice President serves as the 0:03:46.000 --> 0:03:49.040 President of the Senate, you know, can break ties things 0:03:49.080 --> 0:03:53.680 like that, and also of course ultimately convenes and presides 0:03:53.800 --> 0:03:57.960 over the certification of the electoral votes to decide who 0:03:58.040 --> 0:04:01.600 is the next president. So is this sort of non 0:04:01.640 --> 0:04:05.839 frivolous argument that because of the dual roles, he can 0:04:05.960 --> 0:04:09.360 argue that he was acting in that legislative capacity. He 0:04:09.480 --> 0:04:13.920 was fulfilling a legislative activity, and therefore any discussions he 0:04:14.000 --> 0:04:18.320 had about and leading up to his actions on January 0:04:18.400 --> 0:04:21.279 six in that role would be covered by the speech 0:04:21.320 --> 0:04:25.640 and debate clause. It's never been done before. There's been 0:04:25.720 --> 0:04:29.560 some limited arguments on this in court, such as the 0:04:29.920 --> 0:04:33.640 just Department invoked that same clause de protect mini civil suit. 0:04:34.200 --> 0:04:36.760 It's unclear how it would play out here in a 0:04:36.800 --> 0:04:41.000 criminal context. We really don't know. You have to assume 0:04:41.080 --> 0:04:44.120 to some extent, you know, Jack Smith, the Special Council's 0:04:44.120 --> 0:04:46.920 team has played out the legal arguments and decided they 0:04:46.920 --> 0:04:49.680 have sufficient grounds to move forward if it's challenged on 0:04:49.720 --> 0:04:54.560 its basis it protects legislators from certain law enforcement actions 0:04:54.600 --> 0:04:58.040 if the conduct is related to their legislative duties. Right, 0:04:58.160 --> 0:05:01.240 So would this protect him if you know, he was 0:05:01.279 --> 0:05:05.480 having conversations with Trump that were not exactly related to 0:05:05.520 --> 0:05:09.359 his legislative duties. That happened, you know, before the Capitol attack, 0:05:09.560 --> 0:05:12.400 that happened in the White House. So again that's where 0:05:12.440 --> 0:05:15.240 there there's limited case, lot of guide as the most 0:05:15.279 --> 0:05:18.560 recent sort of guy posts we have is what Senator 0:05:18.600 --> 0:05:21.200 Lindsey Graham dealt with dot in Georgia when he fought 0:05:21.320 --> 0:05:26.160 Fulton County the piano to testify before that special grand jury. 0:05:26.240 --> 0:05:31.440 He was partially successful. The courts ultimately include that even 0:05:31.920 --> 0:05:35.760 informal sort of you know, fact finding efforts done by 0:05:36.040 --> 0:05:40.679 Lindsey Graham in his legislative capacity during those phone calls 0:05:40.680 --> 0:05:44.039 he had with Georgia officials were sufficiently you know, within 0:05:44.040 --> 0:05:46.479 the scope of legislative activity and he couldn't be forced 0:05:46.560 --> 0:05:50.760 to testify about it. But beyond that, separate actions such 0:05:50.760 --> 0:05:53.960 as what was described as you know, cajoling and you know, 0:05:54.200 --> 0:05:57.680 trying to extore the Secretary of State down Georgia to 0:05:57.839 --> 0:06:00.840 throw out votes things along those lines. That is something 0:06:00.839 --> 0:06:03.640 the courts concluded would not fall within the scope of 0:06:03.720 --> 0:06:06.960 legislative activity and therefore he could be questioned about it, 0:06:06.960 --> 0:06:10.080 and he ultimately was what he said. We don't know yet. 0:06:10.120 --> 0:06:12.160 We're waiting to see what we find out on Thursday 0:06:12.440 --> 0:06:14.240 when some of this grand jury report comes out in 0:06:14.279 --> 0:06:18.040 from Georgia. But that's kind of where this is likely going, 0:06:18.240 --> 0:06:20.600 is that what Pence is trying to do is get 0:06:20.640 --> 0:06:23.359 the scope of this subpoena ultimately narrowed. This is my 0:06:23.480 --> 0:06:27.080 view where he's realistically doing this, get it narrowed, parcel 0:06:27.160 --> 0:06:30.480 out what can and cannot be asked of him, sort 0:06:30.480 --> 0:06:33.480 of narrowed down where the Special Council can go with this, 0:06:33.600 --> 0:06:36.600 and then he'll respond as necessary. Apparently there have been 0:06:36.640 --> 0:06:40.480 months of negotiations with the Special Counsel and and Pence 0:06:40.520 --> 0:06:42.800 his lawyers, and they haven't been able to come to 0:06:43.200 --> 0:06:47.440 any resolution. Obviously, or the Special Council wouldn't have taken 0:06:47.480 --> 0:06:50.520 this step. Do you think a court would be better 0:06:50.640 --> 0:06:53.320 able to parse it out? I think part of that 0:06:53.440 --> 0:06:56.520 is politics and optics that obviously Mike Pence is going 0:06:56.560 --> 0:07:00.400 to run for president. He can't be seen as you 0:07:00.440 --> 0:07:05.200 know voluntarily complying with the Justice Department's investigation here, or 0:07:05.320 --> 0:07:08.680 lest he you know, anger some of that very conservative 0:07:08.720 --> 0:07:11.640 base that obviously he's going to be courting um in 0:07:11.680 --> 0:07:14.160 the primaries for the presidential race, so he's got at 0:07:14.240 --> 0:07:16.160 least put up some sort of fight. We have no 0:07:16.200 --> 0:07:18.800 idea what the negotiations look like between his team and 0:07:18.800 --> 0:07:21.760 the Special Council. Maybe a Special Council's team wasn't willing 0:07:21.800 --> 0:07:25.480 to narrow things sufficiently, and pensive team thought they had 0:07:25.560 --> 0:07:28.800 sufficient basis, you know, in court to get it further narrowed. 0:07:29.120 --> 0:07:33.320 We just don't know, but at a minimum, I'm not 0:07:33.520 --> 0:07:36.920 shocked heeps putting up some sort of legal fight. He 0:07:36.960 --> 0:07:39.880 has to do that for politics of nothing else. How 0:07:39.920 --> 0:07:42.080 long will it take for a fight like this to 0:07:42.200 --> 0:07:43.800 play out in the courts? I mean, there want to 0:07:43.800 --> 0:07:47.160 be appeals, it might go to Supreme Court. So the 0:07:47.240 --> 0:07:50.280 good news is because this is a criminal matter, because 0:07:50.320 --> 0:07:52.400 there's you know, a pending grand jury. It's not like 0:07:52.440 --> 0:07:55.040 a civil action where it could take months years. You 0:07:55.080 --> 0:07:57.760 think about the Lindsay Graham matter that was handled in 0:07:57.800 --> 0:08:01.320 a couple of months. So you know, let's say there's 0:08:01.320 --> 0:08:04.960 a court action that's filed this week to quash the subpoena. 0:08:05.560 --> 0:08:09.200 You know, we're in February. It's very plausible to imagine 0:08:09.440 --> 0:08:11.960 this being resolved, even to get all the way up 0:08:11.960 --> 0:08:15.800 to the Supreme Court, no later than mayor June. I 0:08:15.840 --> 0:08:19.040 don't think you'll actually take that long. I have a 0:08:19.080 --> 0:08:22.080 feeling this is, just like I said, a negotiating tactic 0:08:22.160 --> 0:08:25.200 to narrow down the scope of what's going to be asked. 0:08:25.440 --> 0:08:27.600 But this will certainly if he moves the quash, it 0:08:27.640 --> 0:08:30.120 will delay things for weeks, if not month, But if 0:08:30.160 --> 0:08:34.600 not going to be you know, outcome determinative comps. Lawyers 0:08:34.640 --> 0:08:38.720 say that he intends to exert executive privilege to fight 0:08:38.840 --> 0:08:42.440 the Special Council subpoena of Pence. There seemed to be 0:08:42.480 --> 0:08:46.960 several problems with that one. This is a criminal investigation, 0:08:47.040 --> 0:08:51.760 isn't it correct? So he certainly can invoke it. That 0:08:51.920 --> 0:08:56.680 is still his right and in his standing to invoke it, 0:08:56.720 --> 0:08:59.120 but it will likely fail in to be far weak 0:08:59.200 --> 0:09:02.760 er legal case ace than what Pence is apparently considering 0:09:02.840 --> 0:09:07.040 doing with the speech and debate clause argument. The executive 0:09:07.040 --> 0:09:09.800 privilege claim here would come back to the Supreme Court 0:09:09.880 --> 0:09:13.520 precedent from the seventies with Nixton. Even there, the Supreme 0:09:13.559 --> 0:09:16.760 Court concluded that if there is a compelling interest that 0:09:16.840 --> 0:09:20.960 the Justice departments inquiry into criminal activity would override an 0:09:21.000 --> 0:09:27.120 incumbent president's legitimate, otherwise legitimate executive privilege claims, there's no 0:09:27.200 --> 0:09:30.079 reason to believe that argument would somehow hold up here, 0:09:30.440 --> 0:09:32.600 And that's probably why Pence isn't really going with that 0:09:32.720 --> 0:09:35.839 line of argument. If anything would be a throwaway, the 0:09:35.920 --> 0:09:38.640 legislative activity one is a far more interesting one, far 0:09:38.720 --> 0:09:41.920 more legally confusing one, which is the late things longer. 0:09:42.280 --> 0:09:46.560 And Trump has attempted to claim executive privilege several times 0:09:46.600 --> 0:09:49.880 to try to block the House January six committee, apparently 0:09:49.920 --> 0:09:54.160 also to try to block some testimony to the federal 0:09:54.160 --> 0:09:57.319 grand jury. Has he been successful in any of those, 0:09:58.200 --> 0:10:00.800 for the ones that have been made public, No, he 0:10:00.920 --> 0:10:05.000 has not. He has at most potentially narrowed some things 0:10:05.040 --> 0:10:08.000 that obviously the grand jury procedes because their secret A 0:10:08.040 --> 0:10:10.160 lot of that. We don't know what's gone on behind 0:10:10.240 --> 0:10:12.920 the scene. We know people who have gone through testify 0:10:13.040 --> 0:10:15.280 before the grand jury, we don't know the extent to 0:10:15.280 --> 0:10:18.560 which they actually were allowed to answer questions, to what 0:10:18.679 --> 0:10:21.880 extent there were fights over executive privilege in terms of 0:10:21.920 --> 0:10:25.160 they invoked it at the Grand jury proceeding itself, and 0:10:25.200 --> 0:10:27.160 then there was additional fighting behind the scenes. We just 0:10:27.200 --> 0:10:30.559 don't know. It still remains secret, but in the public fights, 0:10:30.720 --> 0:10:33.360 especially with the January six Committee and then his fight 0:10:33.440 --> 0:10:37.200 with Nara over the turnover of documents the Generous Sex Committee, 0:10:37.320 --> 0:10:39.520 we know that the former president failed time and time 0:10:39.559 --> 0:10:43.720 again in those regards. Let's turn to the Special Council's 0:10:43.880 --> 0:10:48.720 inquiry into the classified documents found at Trump's marrow La 0:10:48.920 --> 0:10:53.320 go Home. Apparently Trump's team turned over an empty folder 0:10:53.400 --> 0:10:58.400 mark classified. And here's what Trump attorney Timothy Parla Tory 0:10:58.600 --> 0:11:04.080 said about that m folder on CNN. The folder is 0:11:04.360 --> 0:11:06.520 kind of one of the more humorous aspects of this 0:11:06.559 --> 0:11:10.319 whole thing. Uh, this is not a classified folder. This 0:11:10.400 --> 0:11:12.760 is a folder that when my team went through and 0:11:12.840 --> 0:11:15.760 searched and they wrote up their report which we turned 0:11:15.760 --> 0:11:19.160 over to d o J, they saw it's a It's 0:11:19.200 --> 0:11:23.839 a folder Manola folder that says classified Evening Summary on it. 0:11:24.559 --> 0:11:27.960 And it was in the President's bedroom. He has one 0:11:28.000 --> 0:11:31.440 of those landline telephones next to his bed and it 0:11:31.440 --> 0:11:33.480 has a blue light on it, and he keeps them 0:11:33.520 --> 0:11:35.719 up at night, so he took the Minola folder and 0:11:35.800 --> 0:11:37.840 put it over it so that it would keep the 0:11:38.120 --> 0:11:41.000 light down so you can sleep at night. And it's 0:11:41.120 --> 0:11:44.840 just this folder. It says classified Evening Evening Summary on it. 0:11:44.920 --> 0:11:49.200 Is not a classification marking. It's not anything that is 0:11:49.240 --> 0:11:52.000 controlled in any way. There's nothing illegal about it. There's 0:11:52.000 --> 0:11:55.480 nothing in it. And when d J found out about it, 0:11:55.520 --> 0:11:58.000 they went crazy and they said, hey, actually gave me 0:11:58.040 --> 0:12:00.480 a spiana to say, give us over this empty folder. 0:12:00.960 --> 0:12:04.120 That means nothing. I mean, I'm just wondering where that 0:12:04.160 --> 0:12:08.000 came from and why. So, yeah, this this was a 0:12:08.120 --> 0:12:12.040 very clever little piece of media technique and tactics by 0:12:12.080 --> 0:12:14.600 the Trump lawyer trying to use this the red herring 0:12:14.640 --> 0:12:16.559 to make it sound like all we're talking about is 0:12:16.559 --> 0:12:19.959 a bunch of you know, former folders. Now, so there 0:12:20.080 --> 0:12:23.400 was a folder at issue that apparently was labeled as 0:12:23.440 --> 0:12:27.520 classified Evening Briefing that was not turned over. We don't 0:12:27.520 --> 0:12:29.319 know the extent of what was what kind of marketings 0:12:29.320 --> 0:12:31.280 were on it, but let's be clear if the folder 0:12:31.320 --> 0:12:33.880 was empty, and all it was is the Manilla folder 0:12:33.920 --> 0:12:36.440 with the original markings on it. The folder itself is 0:12:36.480 --> 0:12:39.040 not classified it shouldn't have been in its possession anyways, 0:12:39.080 --> 0:12:41.600 and if it's subject speed, you turn it over anyways. 0:12:41.920 --> 0:12:45.040 But that's not a classified document, it's an empty folder. 0:12:45.640 --> 0:12:52.480 The documents that were returned over in January two, in June, 0:12:53.360 --> 0:12:55.600 and then we ultimately see in August of twenty two, 0:12:55.960 --> 0:12:59.240 those are what remains the issue of true criminal liability. 0:12:59.280 --> 0:13:02.199 Those weren't empty full there's those were documents. Those were 0:13:02.200 --> 0:13:05.560 documents with proper classification markings on them. That's what the 0:13:05.600 --> 0:13:09.000 true liability. This was just a little interesting media ployed 0:13:09.000 --> 0:13:12.040 by the Trump lawyer, which was clever, but ultimately irrelevant 0:13:12.040 --> 0:13:16.120 from a legal standpoint. Now we know that classified documents 0:13:16.200 --> 0:13:19.920 have been found at President Biden's home and former office, 0:13:20.600 --> 0:13:23.320 and at Mike Pence's home. Here's what Penn said in 0:13:23.400 --> 0:13:28.599 January about the discovery of classified documents at his Indiana residence. 0:13:29.040 --> 0:13:31.920 Those classified documents should not have been in my personal residence. 0:13:33.240 --> 0:13:38.800 Mistakes were made, and I take full responsibility. There's a 0:13:38.840 --> 0:13:43.360 special counsel for the Trump classified documents. There's a special 0:13:43.440 --> 0:13:47.679 counsel for the Biden classified documents. Do you think that 0:13:47.720 --> 0:13:50.760 Attorney General Merrick Garland is going to appoint a special 0:13:50.800 --> 0:13:55.600 counsel for the Pence documents as well. So if Mike 0:13:55.679 --> 0:13:59.680 Pence ultimately does announce a run for president, I ex 0:14:00.040 --> 0:14:03.160 act there will be an appointment of a special counsel, 0:14:03.200 --> 0:14:07.240 if only to remain consistent with what Mark Garland has 0:14:07.280 --> 0:14:10.520 been doing. He announced one for Donald Trump only after 0:14:10.559 --> 0:14:14.079 Trump announced his candidacy for the presidency. He announced one 0:14:14.160 --> 0:14:17.280 for President Joe Biden because it is the president and 0:14:17.280 --> 0:14:20.080 I its it advanced the point where it was looking 0:14:20.120 --> 0:14:22.880 like it was going to be at a potentially criminal inquiry, 0:14:23.200 --> 0:14:25.800 and it's the sitting president, so there was a concern 0:14:26.000 --> 0:14:29.120 about the conflict of interest. I understood why Marrick Garland 0:14:29.120 --> 0:14:31.320 did that. Mike Pence is not running yet. If he 0:14:31.360 --> 0:14:33.760 were to announced tomorrow, I would fully expect that they 0:14:33.760 --> 0:14:36.640 would shortly thereafter being announcement of a special counsel for 0:14:36.720 --> 0:14:39.720 the Pence document I don't expect anything to come about 0:14:39.920 --> 0:14:42.760 criminal wise with respect of the Pence doctor stuff and 0:14:42.800 --> 0:14:46.200 Brod your final thoughts on Pence's challenge to the grand 0:14:46.240 --> 0:14:51.040 jury subpoena. Legal academics are you know, popping the pop corps. 0:14:51.320 --> 0:14:54.200 But now it's an abstract legal discussion. It most of 0:14:54.240 --> 0:14:56.720 what it is and it's a fascinating one. It's possibly 0:14:56.720 --> 0:14:59.040 got a flesh out some really interesting guide posts, an 0:14:59.120 --> 0:15:01.840 article one article authorities. He's going to testify in some 0:15:02.040 --> 0:15:06.080 limited regard. Thanks so much, Brad. That's Bradley Moss apartment, 0:15:06.200 --> 0:15:11.120 Mark Zade. The Federal Trade Commission has halted its in 0:15:11.200 --> 0:15:17.200 house lawsuit challenging Meta platforms acquisition of VR developer Within Unlimited. 0:15:17.720 --> 0:15:21.440 This follows a federal judge denying the FTC's motion for 0:15:21.600 --> 0:15:25.920 preliminary injunction to halt the deal after a trial. Joining 0:15:25.920 --> 0:15:29.240 me to look behind this reprieve for Meta is Bloomberg 0:15:29.240 --> 0:15:33.520 Intelligence senior litigation analyst Jennifer ree So. Meta has a 0:15:33.640 --> 0:15:38.840 history of buying up promising VR technology, including Beat Games 0:15:38.880 --> 0:15:43.040 and Oculus, and it's reminiscent of Facebook's early purchase of 0:15:43.160 --> 0:15:47.200 Instagram and What'sapp. So tell us about the FTC suing 0:15:47.240 --> 0:15:51.480 to stop Meta from purchasing Within. Now, you're exactly right, June. 0:15:51.600 --> 0:15:54.400 Meta does have this history of acquisitions, particularly in the 0:15:54.480 --> 0:15:57.800 VR space, and I think the FTC is really concerned 0:15:57.840 --> 0:16:00.080 about what has happened in the last ten years with 0:16:00.120 --> 0:16:02.400 big tech platforms that they kind of swallow up these 0:16:02.400 --> 0:16:05.760 small nascent companies that might have grown into big companies 0:16:05.760 --> 0:16:07.840 and been their competitors, and they're trying to nip this 0:16:07.880 --> 0:16:10.160 stuff in the bud now. So what they're looking at 0:16:10.200 --> 0:16:13.320 today are Meta's ambitions in the virtual reality space, and 0:16:13.320 --> 0:16:15.640 they understand that they really want to be the leader 0:16:15.680 --> 0:16:18.280 there and they think fitness apps in the virtual reality 0:16:18.320 --> 0:16:20.840 space are very important. So what they did here is 0:16:20.880 --> 0:16:23.440 they tried to stop Meta from buying a small company 0:16:23.520 --> 0:16:27.280 within which makes this virtual reality fitness app because they 0:16:27.360 --> 0:16:29.440 said that Meta could do this on their own and 0:16:29.520 --> 0:16:31.920 that would increase competition if Meta did it, rather than 0:16:31.960 --> 0:16:34.680 buying up an entity that it might compete within the future. 0:16:35.080 --> 0:16:37.840 So what they did is they relied on this theory 0:16:37.880 --> 0:16:41.120 that they don't compete today Meta and this company within 0:16:41.200 --> 0:16:43.240 that they want to buy, but hey, they could compete 0:16:43.240 --> 0:16:46.640 in the future, and so the deal, the acquisition is 0:16:46.760 --> 0:16:51.720 anti competitive because of that potential competition possibility. Here, the 0:16:51.800 --> 0:16:55.880 judge accepted that theory but still ruled against the FTC. 0:16:56.400 --> 0:16:59.960 Why right, And I will say that the judge accepting 0:17:00.080 --> 0:17:02.520 the theory was really a win in this case for 0:17:02.680 --> 0:17:05.679 the FDC. I mean, I think they're probably pretty happy 0:17:05.720 --> 0:17:07.760 with where they came out here even though they lost 0:17:07.800 --> 0:17:10.439 the battle in a way. You know, Meta won the battle, 0:17:10.480 --> 0:17:13.000 but may have lost the war here because this theory, 0:17:13.240 --> 0:17:17.200 this potential competition theory is is an old theory. It's 0:17:17.240 --> 0:17:19.640 never really been endorsed by the Supreme Court, and there's 0:17:19.680 --> 0:17:22.440 some that say it's really not a valid theory. Um 0:17:22.560 --> 0:17:24.960 Meta argued that it wasn't a valid theory, and they 0:17:25.000 --> 0:17:27.280 also argued that even if it is a valid theory, 0:17:27.480 --> 0:17:30.120 the standard by which you have to prove that there'd 0:17:30.119 --> 0:17:32.960 be potential competition is very high. So in this case, 0:17:33.040 --> 0:17:34.679 not only did the court say, you know, this is 0:17:34.680 --> 0:17:37.160 a valid theory. You know, even though the case law 0:17:37.200 --> 0:17:39.560 is from the nineteen seventies and we haven't really seen 0:17:39.600 --> 0:17:41.679 anything since then, this is a valid theory that the 0:17:41.760 --> 0:17:45.199 FDC can rely on. A merger can be anti competitive 0:17:45.640 --> 0:17:48.520 even if one of the companies, the buyer, is only 0:17:48.560 --> 0:17:51.639 a potential entrant into the market and doesn't compete today. 0:17:51.920 --> 0:17:53.439 And I think that was a big step for the 0:17:53.440 --> 0:17:56.280 FTC to get that ruling. And the court also said 0:17:56.640 --> 0:17:58.760 that the standard isn't as high as Meta says it 0:17:58.800 --> 0:18:01.080 has to be. For them to prove that right, they 0:18:01.080 --> 0:18:04.520 have to prove some reasonable probability that the buyer would 0:18:04.600 --> 0:18:06.679 enter the market. They don't have to go beyond that. 0:18:06.720 --> 0:18:10.800 They don't have to show parallel conduct or oligobalistic conduct 0:18:10.840 --> 0:18:12.879 in the market today, which is what Meta had argued. 0:18:13.160 --> 0:18:15.400 So that's a win for the FTC because it gives 0:18:15.400 --> 0:18:18.479 it a blueprint for future cases. In line of that, 0:18:18.560 --> 0:18:21.840 why did the judge rule against the FTC in stopping 0:18:21.880 --> 0:18:25.159 the merger? So basically what the judge ruled here is 0:18:25.160 --> 0:18:27.600 the evidence simply didn't show Ben that there was a 0:18:27.640 --> 0:18:31.000 reasonable probability that they would have entered this dedicated VR 0:18:31.160 --> 0:18:35.120 fitness app market but for the acquisition of Within. They 0:18:35.280 --> 0:18:38.000 looked at all the evidence, the testimony and the documents. 0:18:38.080 --> 0:18:40.600 What it showed, the judge said, is that Meta thought 0:18:40.640 --> 0:18:43.200 about it, they contemplated it um and they thought about 0:18:43.240 --> 0:18:46.520 lots of possibilities in terms of getting into VR fitness, 0:18:46.520 --> 0:18:48.800 but that they would not have entered that. The FTC 0:18:48.920 --> 0:18:51.680 didn't show that they probably would have entered if they 0:18:51.680 --> 0:18:53.959 didn't buy Within. So this was a failure on the 0:18:53.960 --> 0:18:56.639 facts and on the evidence, and not a failure on 0:18:56.680 --> 0:18:59.360 the legal theory. And I think June, that's probably why 0:18:59.400 --> 0:19:02.639 the FTC chosen not to appeal right, because it's a 0:19:02.640 --> 0:19:06.760 lot harder on appeal to reverse a lower courts finding 0:19:06.760 --> 0:19:08.880 of facts based on the evidence. They are the ones 0:19:08.920 --> 0:19:11.080 that looked at the documents, the lower court judge, they're 0:19:11.119 --> 0:19:13.800 the ones that heard the testimony, and they're listening to 0:19:13.840 --> 0:19:16.720 that and reading the documents and determining how they think 0:19:16.720 --> 0:19:19.480 they shake out. The appellate panel can't really do that. 0:19:19.800 --> 0:19:22.080 So if the FTC were arguing, well, they made an 0:19:22.160 --> 0:19:24.840 error of law here, the appellate panel would have more 0:19:24.880 --> 0:19:27.479 discretion right to reverse the lower court, but not in 0:19:27.480 --> 0:19:30.000 this case, And in fact, the FTC is probably pretty 0:19:30.000 --> 0:19:33.040 happy with where they came out on the law. The FTC. 0:19:33.280 --> 0:19:36.560 You can challenge mergers on two tracks in the federal 0:19:36.640 --> 0:19:40.480 court system and in house. So could the FTC have 0:19:40.600 --> 0:19:43.720 tried to stop the deal in a process before an 0:19:43.720 --> 0:19:48.879 FTC administrative judge. Yes, absolutely, and that process was ongoing, 0:19:49.000 --> 0:19:51.440 and by the way, if it had continued, the FTC 0:19:51.520 --> 0:19:54.119 stopped it. But had it continued, the hearings would have 0:19:54.160 --> 0:19:56.840 started yesterday, and there was scheduled to start on February. 0:19:57.800 --> 0:20:00.680 I think what happened here is that it's much harder 0:20:00.720 --> 0:20:03.760 to prove the case in this internal proceeding, which is 0:20:03.760 --> 0:20:06.480 called a Part three than it was in the lower 0:20:06.560 --> 0:20:09.399 court in the hearing which was just for a preliminary junction. 0:20:09.440 --> 0:20:12.679 The standard is higher. So in court where they just lost, 0:20:12.960 --> 0:20:16.200 they really only had to show, well, there was some 0:20:16.359 --> 0:20:20.159 reasonable questions on the merits. Maybe it was fair to 0:20:20.280 --> 0:20:22.240 dig in deep Burg to see if they would have 0:20:22.280 --> 0:20:25.520 success to prove that this deal is anti competitive. But 0:20:25.600 --> 0:20:28.240 in the internal proceeding they really have to show that 0:20:28.280 --> 0:20:32.080 the deal itself would substantially less in competition. So it's 0:20:32.119 --> 0:20:34.600 it's harder to prove and so in this case, I 0:20:34.640 --> 0:20:37.240 think if you can't prove it with the lower standard, 0:20:37.320 --> 0:20:39.800 you probably can't prove it with the more difficult standard. 0:20:39.840 --> 0:20:42.840 And also the companies have closed, so once they're integrated 0:20:42.880 --> 0:20:45.600 and closed, it's much harder later, even if you win 0:20:45.640 --> 0:20:47.720 in court to get an order to unwind. So I 0:20:47.720 --> 0:20:50.720 think that's probably why they stopped. They withdrew the Part 0:20:50.760 --> 0:20:54.480 three and said we're done, and FTC spokesperson said the 0:20:54.600 --> 0:20:57.879 f GC is still deciding whether or not to continue 0:20:57.920 --> 0:21:00.960 an in house trial before the admit strative judge, so 0:21:01.040 --> 0:21:03.600 they could revive the challenge. Do you think there's any 0:21:03.760 --> 0:21:07.720 chance that they would I think it's probably unlikely. First 0:21:07.720 --> 0:21:10.280 of all, as I said, the deals closed, the companies 0:21:10.320 --> 0:21:12.960 are going to integrate. So even if they went before 0:21:13.000 --> 0:21:15.159 the judge and nine months from now or ten months 0:21:15.200 --> 0:21:18.159 from now they had a decision that was good for them, 0:21:18.200 --> 0:21:20.760 I doubt the judge would actually unwind the deal because 0:21:20.760 --> 0:21:24.000 it's just, you know, you're unscrambling the eggs um. And also, 0:21:24.160 --> 0:21:27.080 they recently lost in front of the Administrative Law judge 0:21:27.080 --> 0:21:30.119 a somewhat similar suit based on potential competition, and they 0:21:30.200 --> 0:21:32.639 may be worried that what they'll come out with is 0:21:32.680 --> 0:21:35.400 worse than what they've come out with from the district court. 0:21:35.480 --> 0:21:38.960 So I suspect they probably won't. You know, I always 0:21:39.320 --> 0:21:43.280 have heard that these agencies have an easier time before 0:21:43.440 --> 0:21:48.399 their own in house judges than in federal court. But 0:21:48.600 --> 0:21:51.720 you're saying the standards were higher before the in house judge. 0:21:52.080 --> 0:21:54.480 So in this case, the standard was higher because the 0:21:54.560 --> 0:21:57.679 FTC was seeking just a preliminary injunction, so they're not 0:21:57.800 --> 0:22:00.920 seeking an order that the deal is anti competitive. They're 0:22:00.960 --> 0:22:03.720 simply asking a judge to look at the likelihood that 0:22:03.800 --> 0:22:06.040 they could win on the merits, the likelihood that they 0:22:06.040 --> 0:22:09.280 could prove in a bigger and more drawn out proceeding 0:22:09.560 --> 0:22:12.480 that the deal would violate the antitrust laws, and all 0:22:12.600 --> 0:22:15.119