WEBVTT - High Court Will Consider Compensation for College Athletes 0:00:00.320 --> 0:00:05.120 This is Bloomberg Law with June Grasso from Bloomberg Radio. 0:00:12.840 --> 0:00:16.400 The Sound of Large Madness a big business for the 0:00:16.520 --> 0:00:20.840 National College Athletic Association, bringing nearly a billion dollars in 0:00:20.920 --> 0:00:24.759 revenue last year, but zero to the players. The Supreme 0:00:24.840 --> 0:00:27.159 Court has agreed to consider the latest effort to have 0:00:27.240 --> 0:00:30.800 the n C double As amateurism rules declared a violation 0:00:30.840 --> 0:00:33.920 of the antitrust laws, something that could up end the 0:00:34.040 --> 0:00:37.920 multibillion dollar business model for college sports. Joining me is 0:00:37.960 --> 0:00:40.880 Audrey Anderson, who had the higher education practice at bass 0:00:41.040 --> 0:00:45.040 Barian Sims so Aurey. The Justices will review the Ninth 0:00:45.040 --> 0:00:49.360 Circuit decision that allowed student athletes to be compensated as 0:00:49.400 --> 0:00:52.080 long as it was tied to education. What's the n 0:00:52.120 --> 0:00:57.680 C double as argument for overturning that decision? The argument 0:00:58.120 --> 0:01:04.360 is that when you're looking at a rule that promote amateurism, 0:01:04.720 --> 0:01:06.760 the court should give the m C double A some 0:01:07.040 --> 0:01:12.040 leeway because without those rules, the products that the n 0:01:12.120 --> 0:01:16.240 C double A is putting forward college athletics won't exist. 0:01:16.440 --> 0:01:20.120 So an antitrust law, there is a doctrine that says 0:01:20.200 --> 0:01:23.480 if you have a joint venture, which is what college 0:01:23.480 --> 0:01:27.280 athletics is, all the colleges come together to put forward 0:01:27.319 --> 0:01:30.520 this product of college athletics. Because you have a joint venture, 0:01:30.920 --> 0:01:34.120 the participants in that joint venture are allowed some leeway 0:01:34.240 --> 0:01:39.080 to put together rules or agreements that allow the joint 0:01:39.120 --> 0:01:41.839 venture to exist, and the courts are supposed to give 0:01:41.880 --> 0:01:44.680 those participants some leeway. So the n C double as 0:01:44.760 --> 0:01:48.560 argument is, Hey, the Ninth Circuit was much too strict 0:01:48.680 --> 0:01:52.840 in the way it reviewed our amateurism rule in this case. 0:01:53.280 --> 0:01:56.720 Why are both sides saying there please? The court took 0:01:56.800 --> 0:02:00.800 this case at the trial court level. The Ninth Circuit 0:02:01.320 --> 0:02:04.520 neither side got everything it wanted, So both sides there 0:02:04.560 --> 0:02:09.520 pleased because the plaintiffs, the student athletes, wanted much more. 0:02:10.160 --> 0:02:13.800 They wanted full out what we call pay for play. 0:02:14.240 --> 0:02:18.440 All they got was that they could be given benefits 0:02:18.560 --> 0:02:23.280 tied to education, and even those benefits that were tied 0:02:23.320 --> 0:02:27.200 to education, if they were cash or cash like, they're 0:02:27.240 --> 0:02:31.280 limited an amount. So it's conceivable that the Supreme Court 0:02:31.320 --> 0:02:35.680 would say that the Ninth Circuit was not strict enough 0:02:35.720 --> 0:02:39.120 in the way it looked at the MP double A rules, 0:02:39.160 --> 0:02:43.520 and you can still have a collegiate market with even 0:02:43.639 --> 0:02:47.320 fewer limits on the benefits the college athletes are able 0:02:47.360 --> 0:02:52.000 to obtain. Does the courts decision in an n C 0:02:52.320 --> 0:02:55.440 double A case tell us anything about how it might 0:02:55.480 --> 0:02:58.280 decide the current case. Well, I think the two sides 0:02:58.320 --> 0:03:01.480 have very different views. I mean answer to that question June, 0:03:01.680 --> 0:03:05.960 that four case gives us very limited information and how 0:03:06.000 --> 0:03:10.200 the Court will approach this case. Because when the Court 0:03:10.320 --> 0:03:14.000 was talking about the rules around amateurism in the nineteen 0:03:14.000 --> 0:03:17.720 eighty four case, they were looking at rules about television contracts. 0:03:17.800 --> 0:03:20.440 So they were only talking about the rules about amateurism 0:03:20.520 --> 0:03:25.040 to distinguish them from rules about TV contracts. A lot 0:03:25.080 --> 0:03:27.680 of people called that language in the nineteen eight four 0:03:27.760 --> 0:03:31.960 case dicta not binding legal les. In addition to that, 0:03:32.120 --> 0:03:36.000 the facts of college athletics have changed really dramatically in 0:03:36.040 --> 0:03:39.120 the last thirty six years, and that's important when you're 0:03:39.120 --> 0:03:43.320 doing an antitrust analysis. Could a decision by the Supreme 0:03:43.360 --> 0:03:47.960 Court change the structure of college sports and the relationship 0:03:48.080 --> 0:03:52.560 between college athletes and their schools. It definitely could. If 0:03:52.600 --> 0:03:58.440 the Supreme Court held that the courts have free reign 0:03:58.680 --> 0:04:02.760 to be very intrusive in reviewing the rules. The m 0:04:02.960 --> 0:04:06.600 double A tries to put forward about what an amateur 0:04:06.800 --> 0:04:10.880 is or what kind of commercial relationships a student athlete 0:04:10.880 --> 0:04:14.800 can have with its college and still participate in college athletics. 0:04:14.840 --> 0:04:17.880 That could really change things. If the point if one 0:04:18.080 --> 0:04:21.840 full out, that is, student athletes can be paid for 0:04:21.880 --> 0:04:25.800 their participation in college athletics, and the n C Double 0:04:25.839 --> 0:04:29.440 A can't stop that, that would upend everything. I'd be 0:04:29.480 --> 0:04:32.640 really surprised if the Supreme Court went that far, But 0:04:32.920 --> 0:04:37.159 in any event, this could really change up what happens 0:04:37.240 --> 0:04:41.360 in college athletics. So minor Supreme Court decision put an 0:04:41.480 --> 0:04:45.960 end to this controversy over amateurism. Whatever happens in this case, 0:04:46.360 --> 0:04:48.960 it's only one battle front for the m C Double A. 0:04:49.520 --> 0:04:52.159 Even if they were to win this case and the 0:04:52.240 --> 0:04:55.279 Court were to say yes as an antitrust matter, the 0:04:55.360 --> 0:04:58.920 m C Double A gets to define what amateurism means. 0:04:59.600 --> 0:05:04.320 The state legislatures are making laws saying that college athletes 0:05:04.400 --> 0:05:08.359 can get unlimited amounts of money from third parties for 0:05:08.440 --> 0:05:11.760 selling their name, image, and likeness, and that changes the 0:05:11.800 --> 0:05:14.680 way that college sports looks quite a bit, and the 0:05:14.760 --> 0:05:17.960 Supreme Court's decision isn't going to do anything to change 0:05:18.080 --> 0:05:22.440 those efforts. Is already in the process of changing its 0:05:22.520 --> 0:05:26.240 rules to allow athletes to be compensated for the use 0:05:26.240 --> 0:05:30.800 of their names, images, and likenesses. Yes, they have proposed 0:05:31.000 --> 0:05:35.360 some changed rules to allow student athletes to get some 0:05:35.720 --> 0:05:40.120 limited compensation for name, image and likeness rights. But I 0:05:40.160 --> 0:05:43.599 don't think that the rule changes will satisfy the state 0:05:43.680 --> 0:05:47.240 legislatures who have already passed laws. They're just not enough. 0:05:47.600 --> 0:05:51.120 As long as there's so much money in college athletics 0:05:51.160 --> 0:05:54.680 that's going to the coaches and the universities and not 0:05:54.920 --> 0:05:57.480 to the student athletes, the n C double A is 0:05:57.520 --> 0:06:00.560 gonna have to withstand the pressure and of courts and 0:06:00.640 --> 0:06:03.880 from the state legislatures to do something more to allow 0:06:04.000 --> 0:06:07.960 college athletes to more directly benefit. That's Audrey Anderson of 0:06:08.040 --> 0:06:12.960 Bassbarian SIMS. If there were any lingering doubts about the 0:06:12.960 --> 0:06:16.600 government's inclination to go after the tech giants, that's been 0:06:16.680 --> 0:06:21.159 resoundingly settled, with antitrust actions escalating the final weeks of 0:06:21.160 --> 0:06:25.400 the year. Google is facing three antitrust lawsuits and Facebook 0:06:25.480 --> 0:06:29.400 to lawsuits. And the lawsuits against Facebook by the Federal 0:06:29.440 --> 0:06:32.479 Trade Commission and a group of forty six states seek 0:06:32.600 --> 0:06:36.240 to break up the social media giant, alleging that Facebook 0:06:36.320 --> 0:06:40.480 thwarted competition to protect its monopoly. Here's New York Attorney 0:06:40.480 --> 0:06:43.960 General Leticia James. No company should have this much unchecked 0:06:44.000 --> 0:06:49.680 power over our personal information and our social interactions. Joining 0:06:49.680 --> 0:06:52.680 me is antitrust expert Harry First, a professor at n 0:06:52.800 --> 0:06:55.760 y U Law School. Harry tell us the basics of 0:06:55.839 --> 0:06:59.800 the government suits. There are two cases files, and their 0:07:00.000 --> 0:07:02.880 pretty much the same, although not completely the same, one 0:07:02.920 --> 0:07:05.240 by the Federal Trade Commission and the other by a 0:07:05.279 --> 0:07:10.040 group of states, And the basics are of two parts. 0:07:10.120 --> 0:07:15.520 It looks at al Facebook has maintained its monopoly position 0:07:15.720 --> 0:07:21.800 in the personal social network market by first of all, 0:07:21.840 --> 0:07:27.680 acquiring aggressive startup competitors that might challenge it in one 0:07:27.680 --> 0:07:32.680 way or another, and second by conduct which says will 0:07:32.720 --> 0:07:36.360 allow you developers to work with us on our platform 0:07:37.000 --> 0:07:40.120 and interoperate with us, as long as you don't challenge 0:07:40.120 --> 0:07:43.360 our what they call core functionality. You know, get too 0:07:43.360 --> 0:07:47.240 close to being a real competitor rather than an addition 0:07:47.600 --> 0:07:50.640 to what we offer. So those are the two basic 0:07:50.840 --> 0:07:54.920 aspects on the first. With regard to acquisitions, as I 0:07:54.960 --> 0:07:57.920 think is well known, the focus has been on two 0:07:57.960 --> 0:08:01.040 major acquisitions for which face Book paid a lot of 0:08:01.080 --> 0:08:06.600 money Instagram and what's that The state complaints adds a 0:08:06.720 --> 0:08:11.120 bunch of other acquisitions to the list. Facebook has acquired 0:08:11.160 --> 0:08:14.000 a lot of companies over time, I guess, but the 0:08:14.040 --> 0:08:18.960 basic focus has been on those two, and for somewhat 0:08:19.040 --> 0:08:23.800 different reasons. Zookerberg particularly, but others of Facebook were concerned 0:08:24.360 --> 0:08:29.040 that they posed a direct competitive challenge to the dominance 0:08:29.120 --> 0:08:33.160 that Facebook had already achieved, and it was easier to 0:08:33.320 --> 0:08:36.320 buy them than compete with them. Those are the basic 0:08:36.480 --> 0:08:39.880 aspects of both complaints. Does the government have to prove 0:08:40.040 --> 0:08:44.840 that Facebook bought the companies bought What's Happen Instagram to 0:08:44.960 --> 0:08:50.040 kill competition? That is their theory. Yes, so the theory 0:08:50.320 --> 0:08:54.400 realize a lot on internal documents at this point, at 0:08:54.480 --> 0:08:58.000 least the complaints that presented um a lot of emails, 0:08:58.240 --> 0:09:02.480 presumably will also be uh interviews, depositions, and at some 0:09:02.600 --> 0:09:05.680 point perhaps at the trial um as to what the 0:09:05.720 --> 0:09:10.520 purpose was of these acquisitions. And also presumably they'll have 0:09:10.559 --> 0:09:15.079 some outside experts which verifies that this wasn't paranoia. By 0:09:15.080 --> 0:09:20.320 the legitimate concern that these upstarts might challenge what they're doing, 0:09:20.800 --> 0:09:23.520 they are making out a case that these weren't just 0:09:24.040 --> 0:09:28.440 um sort of neutral acquisitions to advance their business, but 0:09:28.559 --> 0:09:33.440 we're really done to suppress a competitor that could be PETI. 0:09:34.160 --> 0:09:38.880 The state's complaint also quotes from former Instagram CEO Kevin 0:09:39.000 --> 0:09:42.880 Sistram asking an Instagram investor if Zuckerberg was likely to 0:09:42.880 --> 0:09:46.840 go into destroy mode if he was turned down. Sistrom said, 0:09:46.920 --> 0:09:50.520 quote bottom line, I don't think we'll ever escape the 0:09:50.520 --> 0:09:53.880 wrath of Mark in the government trying to paint a 0:09:53.920 --> 0:09:57.520 picture of Zuckerberg here and why. I think there's a 0:09:57.520 --> 0:10:02.880 degree of personalization, you know, Zuckerberg's personality as as there 0:10:03.000 --> 0:10:06.880 was in the Microsoft litigation in the ninety nineties when 0:10:06.920 --> 0:10:09.800 it was Bill Gates who was in control and you know, 0:10:09.840 --> 0:10:13.600 and what he was trying to do. So this idea 0:10:13.760 --> 0:10:18.839 that Zuckerberg had developed a reputation, as you know, the 0:10:19.040 --> 0:10:23.200 estate's complaints says buy or bury strategy. Either you know, 0:10:23.280 --> 0:10:25.120 you sell out to us, or we're going to make 0:10:25.160 --> 0:10:30.520 your competitive life miserable. And yet there's some there's some 0:10:30.600 --> 0:10:33.760 focus on him, which is legitimate since is the head 0:10:33.800 --> 0:10:36.760 of the company. There are other emails from other people, 0:10:36.840 --> 0:10:41.640 of course, and um presumably there will be others, but yeah, 0:10:41.640 --> 0:10:44.960 it's to try to show, you know, this wasn't done 0:10:45.000 --> 0:10:49.199 to advance competition, but to suppress it correctly if I'm wrong. 0:10:49.240 --> 0:10:52.520 But there were also emails of Bill Gates in the 0:10:52.600 --> 0:10:55.880 Microsoft trial, weren't there? Don't they learn that they can't 0:10:55.880 --> 0:10:59.880 put anything in emails? You know, the most wonderful thing 0:11:00.360 --> 0:11:06.080 about anti trust litigation is how familiar it is. Writing 0:11:06.240 --> 0:11:10.520 things that damage your case preceded the development of email. 0:11:10.720 --> 0:11:12.440 And you know it used to be just harder to 0:11:12.520 --> 0:11:16.280 find these documents because you had to physically search through files. 0:11:16.320 --> 0:11:19.360 But I mean it's seriously, literally, from the beginning of 0:11:19.400 --> 0:11:23.559 the anti trust laws, statements that business executives have made 0:11:23.600 --> 0:11:26.560 in one way or another have been used to hang 0:11:26.640 --> 0:11:29.240 them and to show intent. And so the courts often 0:11:29.360 --> 0:11:32.880 say that intent isn't relevant. We look at objective facts. 0:11:33.080 --> 0:11:37.400 But intent does help you understand what the facts mean 0:11:37.679 --> 0:11:41.079 and has always played a role. And John D. Rockefeller 0:11:41.120 --> 0:11:43.760 and putting together Standard Oil used the same sort of 0:11:43.800 --> 0:11:45.760 fact that he would say, Look, if you don't sell 0:11:45.800 --> 0:11:48.080 out to me, I'm just going to cut prices on 0:11:48.160 --> 0:11:50.720 you completely and push you out of business. So you 0:11:50.760 --> 0:11:54.120 really don't have a choice, and Zuckerberg didn't. Basically the 0:11:54.200 --> 0:11:57.360 same thing, and of reviss easy you sell us to us, 0:11:57.440 --> 0:11:59.719 or We're just going to copy all your features and 0:12:00.040 --> 0:12:02.840 you won't be able to survive. So yeah, they keep 0:12:02.880 --> 0:12:07.000 writing these things, thank god, and anti trustfers keep finding them. 0:12:07.640 --> 0:12:12.320 Facebook says one of the arguments is that these apps 0:12:12.400 --> 0:12:17.200 needed Facebook's investment to reach their current levels of success. 0:12:18.080 --> 0:12:21.240 Is that a good argument for Facebook? I mean it 0:12:21.360 --> 0:12:24.679 is an argument they will make. They haven't the opportunity. 0:12:24.679 --> 0:12:28.360 I mean, obviously the one sided document, we're reading these 0:12:28.400 --> 0:12:32.440 two complaints and so um they have a response, which is, 0:12:32.880 --> 0:12:36.240 you know, after we acquired them, we've invested a lot 0:12:36.240 --> 0:12:39.199 of money in making them better, money that these companies 0:12:39.760 --> 0:12:43.559 might not have been able to get, and a degree 0:12:43.559 --> 0:12:46.960 of interoperabilities these companies couldn't have achieved on their own. 0:12:47.080 --> 0:12:51.640 So the bottom line for consumers is that consumers are 0:12:51.679 --> 0:12:55.160 better off, not worth off. Um, and these companies have 0:12:55.240 --> 0:12:58.880 been developed in in ways that are quite helpful. Now, 0:12:59.559 --> 0:13:02.520 whether that's true or not, it will be tested in 0:13:02.679 --> 0:13:05.320 court as well. You know, then they can they make 0:13:05.360 --> 0:13:07.600 that argument. I do, they can make an argument that 0:13:07.640 --> 0:13:12.600 they've invested in these companies. Um. The Instagram case may 0:13:12.640 --> 0:13:16.520 be easier to make than what'sapp UM. I think there 0:13:16.559 --> 0:13:20.880 was a lot of UM disagreement with the old UM 0:13:21.160 --> 0:13:26.280 management of what's up to what that application should be UM. 0:13:26.360 --> 0:13:30.160 But this is fodder for the trial and it is 0:13:30.200 --> 0:13:35.400 a plausible legal argument. Like the Google case, consumers don't 0:13:35.440 --> 0:13:40.120 pay anything to use Facebook. What kind of challenge does 0:13:40.160 --> 0:13:45.040 that pose to the government in proving its case right, Well, 0:13:45.240 --> 0:13:49.320 two answers. One answer is that the government complaints make 0:13:49.400 --> 0:13:52.960 an effort to show what the consumer harm was. I mean, 0:13:53.360 --> 0:13:57.000 obviously they cannot say the consumers are paying more than 0:13:57.040 --> 0:14:01.320 they should. Although there's there's a staphisticate an argument that 0:14:02.280 --> 0:14:08.520 Facebook should pay consumers because you know that you sometimes 0:14:08.520 --> 0:14:13.160 companies actually by customers because they make money that way 0:14:13.160 --> 0:14:15.680 by having more of them, and so that would not 0:14:16.040 --> 0:14:19.680 you know, the price of zero maybe more than than 0:14:19.760 --> 0:14:24.240 it should be, if you understand what I'm saying, UM. 0:14:24.320 --> 0:14:27.200 But that is not the argument the government's banking and 0:14:27.240 --> 0:14:30.200 wisely so, what the government is trying to do is 0:14:30.280 --> 0:14:35.280 to say something that many people have said, and that UM, 0:14:35.320 --> 0:14:38.000 you know, value to consumers is not just the price, 0:14:38.560 --> 0:14:42.960 but quality and innovations, which is sort of similar, but 0:14:43.160 --> 0:14:46.760 they're non price qualities that that are important. You know, 0:14:46.800 --> 0:14:51.680 there was the famous Hershey bar example where Hershey didn't 0:14:51.960 --> 0:14:55.320 change the price of the Hershey bar, they just cut 0:14:55.360 --> 0:14:59.520 down the size of the bar. Uh. So Um, that's 0:14:59.560 --> 0:15:03.080 basically arguments are making. The price is zero, but the 0:15:03.120 --> 0:15:08.040 product keeps being degraded and you get, um, consumers get 0:15:08.120 --> 0:15:12.040 less value for it, so um, you don't get as 0:15:12.120 --> 0:15:16.720 many choices your your choices on privacy have been changed 0:15:16.800 --> 0:15:22.640 over time to be less favorable to consumers. The States argue, interestingly, 0:15:22.680 --> 0:15:27.080 I think that the ad load has changed so that 0:15:27.200 --> 0:15:30.560 you get more ads now, um than you used to. 0:15:31.440 --> 0:15:35.560 And they have apparently an email saying that this is 0:15:35.600 --> 0:15:41.160 a tax on consumers who wants more ads. But um, 0:15:41.200 --> 0:15:44.600 apparently they have data that show that the amounts of 0:15:44.640 --> 0:15:48.320 ads that you have to scroll through has increased. And 0:15:48.360 --> 0:15:52.640 that's another way of saying the prices increased. Um. And 0:15:53.080 --> 0:15:55.520 you know, so I think a judge is gonna have 0:15:55.640 --> 0:15:59.160 to be convinced that not to look just as price, 0:15:59.600 --> 0:16:05.960 but other aspects non price, all the aspects of the product. 0:16:06.000 --> 0:16:09.400 So that's that's one answer. The second answer is the 0:16:09.440 --> 0:16:13.240 idea that you have to prove an effect on price 0:16:13.480 --> 0:16:19.040 is actually not legally required, and um, the last major 0:16:19.480 --> 0:16:23.360 case like this, which is Microsoft UM. There was never 0:16:23.400 --> 0:16:28.680 any proof of effect on price. Never. It was all 0:16:28.760 --> 0:16:35.200 about UM squashing a nascent competitor, you know, helping to 0:16:35.200 --> 0:16:39.760 push them out of business through various UM tactics that 0:16:40.000 --> 0:16:44.280 Microsoft pursued and UM in some ways very similar to 0:16:44.360 --> 0:16:48.440 what the government's arguing here, but never an argument that 0:16:49.640 --> 0:16:52.920 price was suspective. We look back now, we say the 0:16:53.000 --> 0:16:58.600 government actually approved both the acquisition of Instagram in and 0:16:58.680 --> 0:17:03.320 What'sapp in twenty fourteen. And Facebook is using that as 0:17:03.320 --> 0:17:08.080 a response to the government saying, yes, this is what 0:17:08.160 --> 0:17:10.959 they call an inconvenient Well I call it an inconvenient 0:17:11.080 --> 0:17:16.840 half true. So legally that's actually untrue. The government did 0:17:16.920 --> 0:17:20.320 not approve these acquisitions. What the government does when it 0:17:20.400 --> 0:17:24.000 reviews acquisitions, what the US government does others are difference. 0:17:24.040 --> 0:17:27.439 Actually the US government does is it decides whether to 0:17:27.640 --> 0:17:31.800 sue or not. It doesn't approve a merger. It's very 0:17:31.840 --> 0:17:35.880 clear that it doesn't. And the government, as Godlines says 0:17:35.920 --> 0:17:38.159 that all they do is they decide whether it is 0:17:38.200 --> 0:17:41.359 to so they decided not to sue. They didn't approve 0:17:41.400 --> 0:17:44.400 the mergers. And there have been cases whereas the government 0:17:44.440 --> 0:17:48.840 goes back after the mergers completed and bring suit because 0:17:49.040 --> 0:17:52.359 the problem with a merger is that you're trying to 0:17:52.440 --> 0:17:55.760 predict what competition is going to look like in the future, or, 0:17:55.800 --> 0:17:58.199 as one recent judge says, you know, I've got to 0:17:58.200 --> 0:18:02.000 have a crystal ball, and that's tough. You know, it's 0:18:02.000 --> 0:18:05.879 hard to predict the future. So that's sometimes a high burden. Now, 0:18:06.080 --> 0:18:08.600 there are cases where the government is allowed to do 0:18:08.800 --> 0:18:12.240 legally to do afterwards and say, you know what, look 0:18:12.240 --> 0:18:14.760 at what's happened. We don't have to guess at what 0:18:14.880 --> 0:18:18.280 the effect was on competition. Now we know, oh my god, 0:18:18.320 --> 0:18:20.840 we better we can do something about it. So the 0:18:20.840 --> 0:18:24.760 government is legally allowed to do that. So that's why 0:18:24.760 --> 0:18:27.480 I say it's an inconvenient half truth. The government did, 0:18:27.640 --> 0:18:31.480 they have to see itself, did review both of these mergers, 0:18:31.480 --> 0:18:35.879 decide not to challenge them, as the Europeans did as well, 0:18:36.040 --> 0:18:41.400 except the Europeans actually approved under European competition. So as 0:18:41.480 --> 0:18:45.359 a tactical matter of course, Facebook is going to say, 0:18:45.520 --> 0:18:49.240 and as summary of plausibility looks, um, we make a 0:18:49.240 --> 0:18:51.040 lot of actisy, You're going to go back and just 0:18:51.200 --> 0:18:53.680 examine a few of them to say ah, we're gonna 0:18:53.720 --> 0:18:56.800 start to overturn this, overturn that. That's not the way 0:18:56.800 --> 0:18:59.720 the law is supposed to work. It's a problem with 0:18:59.800 --> 0:19:04.159 the narrative. But there are responses to that that the 0:19:04.200 --> 0:19:07.040 government plants are going to have. In particular, you know 0:19:07.160 --> 0:19:10.840 all those emails, they didn't have them, and they made 0:19:10.840 --> 0:19:14.920 the decisions on Instagram and on What's App. Facebook made 0:19:14.960 --> 0:19:18.000 some promises about what it wouldn't do and then proceeded 0:19:18.040 --> 0:19:21.760 to break the promises. So I'm not so fast. Facebook. 0:19:21.880 --> 0:19:25.000 You weren't straight with us when we reviewed the mergers 0:19:25.119 --> 0:19:28.760 and now we know their effects. This is always the headline. 0:19:28.800 --> 0:19:33.360 The government is asking for a breakup of Facebook by 0:19:33.400 --> 0:19:37.040 spinning off Instagram and What's App. How big a hurdle 0:19:37.119 --> 0:19:41.439 is that for the government reorganizing or breaking them up? 0:19:42.000 --> 0:19:44.560 It depends on whether you like the polite or their 0:19:44.600 --> 0:19:50.800 colloquial is always are hurdle for the government. Now past 0:19:50.960 --> 0:19:54.680 history in monopoly cases, which is what this position does, 0:19:54.960 --> 0:19:58.639 mostly is that when there are break up, if you 0:19:58.760 --> 0:20:04.120 can break up accompanied by the divisions that it has acquired, 0:20:04.359 --> 0:20:07.119 so that in effect you're just sort of unbreaking them 0:20:07.119 --> 0:20:11.960 but not completely reorganizing them. That considered more likely easier 0:20:12.000 --> 0:20:14.199 to do, sort of thinks of the lego set. I 0:20:14.240 --> 0:20:17.320 can't you know you can take the blocks apart and 0:20:17.480 --> 0:20:21.399 you know there were blocks together. That's more plausible. Now 0:20:21.560 --> 0:20:24.800 Facebook has made efforts of the recent path, maybe the 0:20:24.880 --> 0:20:28.679 last year or so, to integrate both companies more fully. 0:20:28.720 --> 0:20:33.120 Whatever exactly that means. I'm not sure into Facebook as 0:20:33.119 --> 0:20:38.160 a unitary company. I think anticipating laws and so they're 0:20:38.160 --> 0:20:41.320 going to say that technically you can say, we can 0:20:41.359 --> 0:20:45.639 invest these companies, but this is tremendously disruptive and costly 0:20:45.960 --> 0:20:49.280 and will end up harming consumers by giving us, you know, 0:20:49.400 --> 0:20:54.160 a less valuable Facebook or less valuable Instagram analyss valuable. 0:20:54.200 --> 0:20:57.840 What's that? So, judge, even if you find we violated 0:20:58.160 --> 0:21:01.399 the law, this is not an appropriate remedy. It's a 0:21:01.400 --> 0:21:04.240 harmful remedy. And what you should do is just enter 0:21:04.280 --> 0:21:07.600 in order stopping us from whatever bad conduct you found, 0:21:07.920 --> 0:21:10.560 and that should cure the problems. So I think that's 0:21:10.680 --> 0:21:13.359 roughly how the arguments might go. But the government is 0:21:13.400 --> 0:21:17.920 not committed to reorganizing Facebook this way. They might learn 0:21:18.000 --> 0:21:21.080 that there's a better way to break Facebook up into 0:21:21.640 --> 0:21:25.560 smaller companies that should compete with each other. But that's 0:21:25.640 --> 0:21:28.439 the future. Yet, as we talked about, the government is 0:21:28.520 --> 0:21:32.480 also filed an anti trust suit against Google, which case 0:21:32.600 --> 0:21:37.640 has a better chance in court? Google or Facebook, they 0:21:37.880 --> 0:21:41.560 both faced similar issues the free goods the consumers side, 0:21:41.960 --> 0:21:47.280 so that's similar. They are different business practices. I think Google, 0:21:47.320 --> 0:21:51.320 as we discussed, is sort of more straight forward legally 0:21:51.440 --> 0:21:55.639 because these were contractual agreements for the Android operating system, 0:21:56.119 --> 0:21:59.080 and in that sense sort of is even closer to 0:21:59.240 --> 0:22:04.000 the Microsoft facts and litigations. Facebook is similar to Microsoft too, 0:22:04.040 --> 0:22:07.600 because it's also an effort to suppress the nation competitor, 0:22:07.960 --> 0:22:11.119 but instead of one tactic, you know the question that 0:22:11.160 --> 0:22:13.720 people raised as well as to post Facebook has decided 0:22:13.760 --> 0:22:17.159 to acquire the upstart brows or Netscape instead of just 0:22:17.160 --> 0:22:19.120 trying to push them out of business, then we look 0:22:19.200 --> 0:22:23.359 just like Facebook. So they both have similarities to the 0:22:23.480 --> 0:22:27.080 Microsoft case, and each of them are a little different. 0:22:27.359 --> 0:22:29.600 So I'm not quite sure how to answer that. I 0:22:29.640 --> 0:22:32.840 think they're both plausible cases, and we'll just have to 0:22:32.840 --> 0:22:35.240 see what the strength of the facts are when these 0:22:35.440 --> 0:22:38.320 cases or if these cases go to trial. Thanks for 0:22:38.359 --> 0:22:41.159 being on the Bloomberg Laws Show, Harry. That's Professor Harry 0:22:41.240 --> 0:22:45.119 First of n y U Law School. TikTok is one 0:22:45.119 --> 0:22:47.440 of the most popular apps in the world, with more 0:22:47.440 --> 0:22:51.439 than one hundred million US users. A panel of judges 0:22:51.520 --> 0:22:54.600 on the DC Court of Appeals has signal skepticism of 0:22:54.640 --> 0:22:58.760 the Trump administration's continuing efforts to ban new downloads of 0:22:58.800 --> 0:23:02.520 the Chinese owned video sharing app, making it unlikely that 0:23:02.640 --> 0:23:06.159 any TikTok ban will go into effect. Joining me is 0:23:06.160 --> 0:23:10.480 a nat Alambeck, Assistant professor at Case Western Reserve University 0:23:10.600 --> 0:23:15.320 School of Law. Any insight into why TikTok has not 0:23:15.440 --> 0:23:18.720 been able to close a deal with an American buyer, Well, 0:23:19.119 --> 0:23:21.920 I mean, I'm just speculating, but I would think that 0:23:21.960 --> 0:23:24.840 these are a few things that are going on. One 0:23:25.200 --> 0:23:29.199 could be that they're waiting for a different administration. I 0:23:29.280 --> 0:23:33.359 doubt that, but maybe they're stalling. Another one could be 0:23:33.480 --> 0:23:36.240 that the deal has to go through and there's a 0:23:36.280 --> 0:23:39.280 lot that's involved. Is there going to be divestment of 0:23:39.320 --> 0:23:41.480 the ownership, how is that going to be? How is 0:23:42.040 --> 0:23:45.880 um information of investors going to protect it? Who's gonna 0:23:45.920 --> 0:23:50.040 know what? How do they make sure that, you know, 0:23:50.119 --> 0:23:53.520 if they stay involved, they don't have access to that information? 0:23:53.560 --> 0:23:56.880 That the government wants to protect. I'm just assuming that 0:23:56.880 --> 0:23:59.720 that's why it's taking a lot of time. It needs 0:23:59.760 --> 0:24:03.800 to be approved. They need to figure all that information out. 0:24:04.640 --> 0:24:07.680 The deadline set by the Trump administration for requiring byte 0:24:07.760 --> 0:24:11.560 Dance to sell TikTok has passed. What does it signal 0:24:11.960 --> 0:24:14.600 that the government hasn't gone to court to force a 0:24:14.640 --> 0:24:19.680 divestiture to meet means that the government for now, Again 0:24:19.800 --> 0:24:23.119 we could be surprised, right, but for now, it means 0:24:23.160 --> 0:24:26.719 that the government is not pressing on this. But again, 0:24:26.840 --> 0:24:29.720 like I said, it could mean that there's a deal 0:24:29.760 --> 0:24:32.440 in the work that we don't know about. It could 0:24:32.520 --> 0:24:35.560 mean that the governments decided not to continue to take 0:24:35.600 --> 0:24:38.439 actions on this and they're waiting for the next administration. 0:24:39.440 --> 0:24:42.480 It could mean that there's other actions that the government's 0:24:42.480 --> 0:24:44.480 going to take. For example, I don't know if you saw, 0:24:44.560 --> 0:24:47.720 but recently the sec as I asked TikTok and other 0:24:47.760 --> 0:24:52.639 companies to ask for information on how are they protecting 0:24:52.680 --> 0:24:56.120 the users privacy? What are they doing with information they're 0:24:56.119 --> 0:25:00.640 aggregating on users. There could be several things, but one 0:25:00.680 --> 0:25:03.840 thing is clear and that the government you know, has 0:25:03.920 --> 0:25:07.480 this deadline. They extended the deadline. The deadline has passed, 0:25:08.040 --> 0:25:13.160 but they haven't done anything since. Explain why two federal judges, 0:25:13.840 --> 0:25:17.760 one in Washington, d C. And one in Pennsylvania, blocked 0:25:17.920 --> 0:25:24.640 the Commerce Department from prohibiting new downloads of TikTok, right, 0:25:24.720 --> 0:25:27.200 And and that's very good that you said that, because 0:25:27.240 --> 0:25:30.360 we really need to separate the things. We need to separate. 0:25:30.400 --> 0:25:33.560 On the one hand, these two orders, right, the one 0:25:33.760 --> 0:25:37.879 order was to divest and the other order was the band, 0:25:38.119 --> 0:25:42.439 and that is on on app stores and to allow 0:25:42.560 --> 0:25:46.959 new users to download the app. And the issue is 0:25:47.040 --> 0:25:51.320 really with regards to the second, and that is censorship, right, 0:25:51.440 --> 0:25:56.520 censorship of speech, censorship of social media applications. And there's 0:25:56.560 --> 0:26:01.520 a concern here of privacy of national security. Explain for 0:26:01.600 --> 0:26:05.840 us what the issue was during the oral arguments of 0:26:05.920 --> 0:26:08.600 the d C circuits. There are a few issues. One 0:26:08.600 --> 0:26:13.320 of the issues is with regard to UM the I 0:26:13.480 --> 0:26:18.600