1 00:00:02,759 --> 00:00:07,000 Speaker 1: This is Bloomberg Law with June Grosseol from Bloomberg Radio. 2 00:00:08,640 --> 00:00:11,280 Speaker 1: We're going to work with President Trump to push back 3 00:00:11,360 --> 00:00:14,560 Speaker 1: on governments around the world. They're going after American companies 4 00:00:14,920 --> 00:00:16,279 Speaker 1: and pushing to censor more. 5 00:00:17,079 --> 00:00:21,240 Speaker 2: Meta's Mark Zuckerberg has been courting President Donald Trump since 6 00:00:21,239 --> 00:00:27,760 Speaker 2: his election, scrapping his platform's content moderation policies on Facebook, Instagram, 7 00:00:27,960 --> 00:00:33,000 Speaker 2: and threads, donating one million dollars to Trump's inauguration, and 8 00:00:33,120 --> 00:00:37,519 Speaker 2: visiting the White House several times in recent weeks. Despite 9 00:00:37,560 --> 00:00:41,479 Speaker 2: all that, the historic anti trust case against Meta that 10 00:00:41,720 --> 00:00:45,479 Speaker 2: was started in the first Trump administration went to trial 11 00:00:45,560 --> 00:00:49,360 Speaker 2: this week in Washington, d C. As the Federal Trade 12 00:00:49,400 --> 00:00:54,320 Speaker 2: Commission tries to force Metta to divest Instagram and WhatsApp, 13 00:00:54,800 --> 00:00:58,560 Speaker 2: and Mark Zuckerberg was the first witness the government called 14 00:00:58,960 --> 00:01:01,880 Speaker 2: joining me is anti Trump? Law expert Harry First, a 15 00:01:01,960 --> 00:01:05,720 Speaker 2: professor at NYU Law School, Harry, what's the main issue 16 00:01:05,800 --> 00:01:07,600 Speaker 2: the FGC has to prove? Here? 17 00:01:08,080 --> 00:01:10,440 Speaker 1: There are a few main issues. The first issue is 18 00:01:10,680 --> 00:01:14,600 Speaker 1: the definition of the market. So the question is who 19 00:01:14,680 --> 00:01:17,760 Speaker 1: are Facebook's competitors? That sort of in some ways a 20 00:01:17,840 --> 00:01:22,080 Speaker 1: simple question. Who will consumers turn to? What sellers? If 21 00:01:22,160 --> 00:01:26,000 Speaker 1: the sellers they're looking at offers a bad deal. Usually 22 00:01:26,000 --> 00:01:29,080 Speaker 1: it's raises price, they switch to something else. We do 23 00:01:29,160 --> 00:01:31,760 Speaker 1: this all the time. So the question is who are 24 00:01:31,800 --> 00:01:36,080 Speaker 1: the rivals of Facebook and who do consumers switch to 25 00:01:36,680 --> 00:01:40,960 Speaker 1: if they wanted to switch. Market definition always critical issue 26 00:01:41,000 --> 00:01:44,120 Speaker 1: in any trust cases, and the first issue to resolve. 27 00:01:44,640 --> 00:01:47,680 Speaker 1: The second issue is are they a monopolists in this market? 28 00:01:47,920 --> 00:01:50,560 Speaker 1: You know, do they have a large enough share of 29 00:01:50,600 --> 00:01:53,000 Speaker 1: the market. Is it hard to enter the market so 30 00:01:53,080 --> 00:01:55,559 Speaker 1: they can sort of have power to do what they want? 31 00:01:56,080 --> 00:01:59,680 Speaker 1: Do we see them doing the bad things that monopolists do, 32 00:02:00,080 --> 00:02:02,919 Speaker 1: which often means, you know, selling something at a high price. 33 00:02:03,640 --> 00:02:07,280 Speaker 1: Of course, Facebook says, hey, we give our thing away 34 00:02:07,320 --> 00:02:10,680 Speaker 1: for free. So what's their problem? And then the third 35 00:02:10,680 --> 00:02:14,080 Speaker 1: thing is, okay, if they are monopoly with monopoly power, 36 00:02:14,440 --> 00:02:19,480 Speaker 1: have they engaged in anti competitive conduct that excludes competitors 37 00:02:19,560 --> 00:02:24,000 Speaker 1: unreasonably from the market? Engage in some exclusion And so 38 00:02:24,080 --> 00:02:26,880 Speaker 1: that's the third thing, and that's where the acquisitions of 39 00:02:27,160 --> 00:02:29,000 Speaker 1: Instagram and WhatsApp come in. 40 00:02:30,080 --> 00:02:32,960 Speaker 2: Let's start with the market definition, which was one of 41 00:02:33,000 --> 00:02:37,080 Speaker 2: the key points Zuckerberg was questioned about. So tell us 42 00:02:37,120 --> 00:02:41,520 Speaker 2: how the FTC and Meta are viewing the market. 43 00:02:42,320 --> 00:02:46,880 Speaker 1: So the big argument is does Facebook compete with YouTube 44 00:02:46,880 --> 00:02:52,000 Speaker 1: and Twitter, because YouTube and Twitter have huge numbers of users, 45 00:02:52,400 --> 00:02:58,560 Speaker 1: and Facebook contends that the market is you know, whatever 46 00:02:58,600 --> 00:03:02,200 Speaker 1: it was, maybe intoy eleven. Now there are lots of 47 00:03:02,280 --> 00:03:08,120 Speaker 1: competitors and Facebook is doing things similar to particularly TikTok. 48 00:03:08,400 --> 00:03:11,840 Speaker 1: So the Federal Trade Commission has called the market we 49 00:03:11,880 --> 00:03:15,799 Speaker 1: always love these names and any trust, the Personal Social 50 00:03:15,880 --> 00:03:19,440 Speaker 1: Networking Services market, and then they use an acronym, so 51 00:03:19,520 --> 00:03:23,320 Speaker 1: you think it's something special, the PSN market, and basically 52 00:03:23,320 --> 00:03:26,600 Speaker 1: that's friends and family, you know where Facebook started out 53 00:03:26,639 --> 00:03:31,799 Speaker 1: putting people together and creating the social network, as the 54 00:03:31,880 --> 00:03:35,040 Speaker 1: name of that movie was way back at the start. 55 00:03:35,600 --> 00:03:39,520 Speaker 1: So this is the market now updated by name personal 56 00:03:39,600 --> 00:03:43,280 Speaker 1: social Networking services, and the Federal Trade Commission says that's 57 00:03:43,280 --> 00:03:45,760 Speaker 1: really the core of their services and it's not something 58 00:03:45,800 --> 00:03:50,680 Speaker 1: that actually other platforms except for Instagram offer They don't 59 00:03:50,720 --> 00:03:53,920 Speaker 1: really offer that sort of friends and family networking, and 60 00:03:54,040 --> 00:03:57,000 Speaker 1: TikTok doesn't really follow people, but you know, not for 61 00:03:57,120 --> 00:03:59,960 Speaker 1: keeping up on what your high school buddies are doing. 62 00:04:00,440 --> 00:04:04,040 Speaker 1: So the first question is how how broad is that market? 63 00:04:04,400 --> 00:04:08,320 Speaker 1: And it's complicated by a couple of things that Facebook's done. 64 00:04:08,600 --> 00:04:12,400 Speaker 1: They do have a chat function, Messenger, so that might 65 00:04:12,440 --> 00:04:16,839 Speaker 1: bring in you know, other you know chat platforms Apple 66 00:04:16,960 --> 00:04:20,880 Speaker 1: for example. Or they do have reels, which are you know, 67 00:04:21,000 --> 00:04:25,120 Speaker 1: these short videos. Of course that's TikTok, and that was 68 00:04:25,160 --> 00:04:28,599 Speaker 1: an effort to compete with them. So Facebook says, hey, 69 00:04:29,040 --> 00:04:31,360 Speaker 1: you know, lots of choices for consumers. They don't want 70 00:04:31,360 --> 00:04:35,120 Speaker 1: to watch reels on Facebook, they go to TikTok and 71 00:04:35,200 --> 00:04:38,159 Speaker 1: vice versa. So we have to include them in the market, 72 00:04:38,279 --> 00:04:41,440 Speaker 1: says Meta. And you know, that's what a lot of 73 00:04:41,480 --> 00:04:45,240 Speaker 1: the argument's going to be with data and consumer surveys 74 00:04:45,240 --> 00:04:49,400 Speaker 1: and so forth. And the analogy that the Commission has 75 00:04:49,560 --> 00:04:53,400 Speaker 1: used and I think will continue to use is supermarkets. 76 00:04:53,839 --> 00:04:57,240 Speaker 1: So there was a famous case involving Whole Foods and 77 00:04:57,279 --> 00:05:02,200 Speaker 1: an acquisition that Whole Foods did, and the market that 78 00:05:02,279 --> 00:05:06,280 Speaker 1: the Federal Trade Commission called it and that they won 79 00:05:07,200 --> 00:05:14,320 Speaker 1: was the PNOS market got it premium natural organic supermarkets. 80 00:05:14,760 --> 00:05:19,800 Speaker 1: And when Whole Foods made this acquisition of another market 81 00:05:19,839 --> 00:05:22,960 Speaker 1: like that, they said, ah, that's the market. Other supermarkets 82 00:05:22,960 --> 00:05:25,719 Speaker 1: are not in this market, you know, like stopping shopper 83 00:05:26,160 --> 00:05:29,480 Speaker 1: and so forth. And the court in which this case 84 00:05:29,560 --> 00:05:33,160 Speaker 1: is being tried. The PC Circuit accepted that definition, and 85 00:05:33,200 --> 00:05:35,640 Speaker 1: the point is sort of a simple one. Yeah, they've 86 00:05:35,640 --> 00:05:37,760 Speaker 1: got lots of things in the supermarket, but you go 87 00:05:37,839 --> 00:05:42,440 Speaker 1: to certain supermarkets sort of a core of users for 88 00:05:42,600 --> 00:05:45,200 Speaker 1: a core of things. So you go to Whole Foods 89 00:05:45,200 --> 00:05:47,200 Speaker 1: because you like to pay high prices. Oh wait a minute, 90 00:05:47,240 --> 00:05:50,200 Speaker 1: that's wrong. You go to Whole Foods because you want 91 00:05:50,240 --> 00:05:54,560 Speaker 1: the organic, natural, premium stuff that they specialize in, and 92 00:05:54,600 --> 00:05:57,279 Speaker 1: then you buy milk. So you know, you go to 93 00:05:57,560 --> 00:06:00,599 Speaker 1: Facebook because you want to communicate with your friends and 94 00:06:00,680 --> 00:06:03,039 Speaker 1: family and then you know, maybe you'll look at some 95 00:06:03,120 --> 00:06:05,440 Speaker 1: reels or maybe do some other things or what whatever 96 00:06:05,440 --> 00:06:07,880 Speaker 1: other feeds they've got, but the core is still that. 97 00:06:08,320 --> 00:06:11,279 Speaker 1: So that's going to be the legal and sort of 98 00:06:11,320 --> 00:06:14,920 Speaker 1: factual contention that the parties are going to litigate over 99 00:06:15,320 --> 00:06:16,800 Speaker 1: during the course of this trial. 100 00:06:17,120 --> 00:06:22,839 Speaker 2: Yeah, and Zuckerberg said that Facebook's feed has turned away 101 00:06:22,839 --> 00:06:26,080 Speaker 2: from family and friends and toward quote more of a 102 00:06:26,120 --> 00:06:28,960 Speaker 2: broad discovery entertainment. 103 00:06:28,400 --> 00:06:34,440 Speaker 1: Space, right, yeah, yeah, they sure we compete with television, Yeah, 104 00:06:34,480 --> 00:06:37,039 Speaker 1: and tennis and the national football They're not going to 105 00:06:37,080 --> 00:06:40,120 Speaker 1: go that far. But you know, the game if you 106 00:06:40,160 --> 00:06:42,680 Speaker 1: want to call it that. But The idea is you 107 00:06:42,800 --> 00:06:46,000 Speaker 1: broaden out. Consumers do have lots of choices, do do 108 00:06:46,120 --> 00:06:50,120 Speaker 1: different things, and they you know, they don't only look 109 00:06:50,160 --> 00:06:55,159 Speaker 1: at Facebook, and Facebook over time has tried to bring 110 00:06:55,240 --> 00:06:59,520 Speaker 1: more things within its ecosystem, within the platform and to 111 00:06:59,600 --> 00:07:04,200 Speaker 1: keep people centered on Facebook. So they're gone into virtual reality. 112 00:07:04,520 --> 00:07:09,080 Speaker 1: That's why Zuckerberg renamed the company Meta because he wants 113 00:07:09,200 --> 00:07:13,200 Speaker 1: the metaverse so true that you know, but that doesn't 114 00:07:13,240 --> 00:07:15,920 Speaker 1: take away from the fact that they still sell groceries, 115 00:07:16,240 --> 00:07:18,880 Speaker 1: you know. You know, they may want to have espressos, 116 00:07:18,920 --> 00:07:21,200 Speaker 1: you know, in the grocery store, but they're not an 117 00:07:21,320 --> 00:07:24,440 Speaker 1: espresso store, so you know, they still sell their core 118 00:07:24,520 --> 00:07:27,280 Speaker 1: function and that's why people put up with all the 119 00:07:27,520 --> 00:07:33,200 Speaker 1: junk pardon my French that they see with these ads constantly. 120 00:07:33,800 --> 00:07:37,280 Speaker 1: Can barely find things, you know, summing through all the 121 00:07:37,320 --> 00:07:41,280 Speaker 1: ads that you get fits, so people still stick with that. 122 00:07:42,400 --> 00:07:46,000 Speaker 2: So how do you show that Meta is a monopolist? 123 00:07:46,520 --> 00:07:49,640 Speaker 1: Yeah, this is a good question. A normal way is 124 00:07:49,960 --> 00:07:52,520 Speaker 1: by what is referred to as the structure of the market. 125 00:07:52,600 --> 00:07:56,920 Speaker 1: So what's their share of the market and how easier 126 00:07:57,000 --> 00:07:59,880 Speaker 1: hard is it for others to enter the market and 127 00:08:00,200 --> 00:08:03,320 Speaker 1: reduce their power. So if it's very easy to enter, 128 00:08:03,640 --> 00:08:06,080 Speaker 1: and you have one hundred percent of the market, you 129 00:08:06,120 --> 00:08:08,840 Speaker 1: don't really have much power because someone can come in 130 00:08:08,880 --> 00:08:12,600 Speaker 1: tomorrow and just wreck your plans. So you sort of 131 00:08:12,600 --> 00:08:16,440 Speaker 1: look at both things, and they'll measure shares by daily 132 00:08:16,760 --> 00:08:21,680 Speaker 1: average users and monthly average users doors and mows. You know, 133 00:08:21,720 --> 00:08:24,240 Speaker 1: how long do people stay, what's their engagement? They've got 134 00:08:24,280 --> 00:08:26,640 Speaker 1: all sorts of data about that, and they're going to 135 00:08:26,680 --> 00:08:29,840 Speaker 1: fight over how much of that time is spent on 136 00:08:30,440 --> 00:08:32,920 Speaker 1: friends and family, and how much of that time is 137 00:08:32,920 --> 00:08:37,560 Speaker 1: spent on let's say, reels or advertising or the news 138 00:08:37,559 --> 00:08:41,520 Speaker 1: feed or whatever. And so maybe the share isn't so hard, 139 00:08:41,640 --> 00:08:45,480 Speaker 1: so they'll look at market share. The judges already in 140 00:08:45,520 --> 00:08:49,240 Speaker 1: the past have refused to dismiss the case on sort 141 00:08:49,280 --> 00:08:52,240 Speaker 1: of arguments they don't have a monopoly share. But you 142 00:08:52,280 --> 00:08:54,240 Speaker 1: have to work through the facts and now convince the 143 00:08:54,320 --> 00:08:57,199 Speaker 1: judge with all the data and how easier heart is 144 00:08:57,240 --> 00:09:00,760 Speaker 1: it to get in well. Last, and you try to 145 00:09:00,800 --> 00:09:06,000 Speaker 1: start a PSN company, it's pretty tough given the number 146 00:09:06,000 --> 00:09:09,600 Speaker 1: of users they have and the unwillingness of people to 147 00:09:10,040 --> 00:09:12,599 Speaker 1: you know, sort of move all their photos and information 148 00:09:12,720 --> 00:09:15,600 Speaker 1: to some other platform. There's another way of proving it. 149 00:09:15,679 --> 00:09:18,160 Speaker 1: The other is you act like a monopolist. You have 150 00:09:18,240 --> 00:09:21,480 Speaker 1: high prices. So since there are no prices, and the 151 00:09:21,480 --> 00:09:24,320 Speaker 1: Federal Trade Commission is saying they take it out by 152 00:09:24,360 --> 00:09:27,960 Speaker 1: degrading the product, they don't give us the privacy we'd like, 153 00:09:28,720 --> 00:09:32,600 Speaker 1: and they increase the ad load so you get more 154 00:09:32,640 --> 00:09:35,840 Speaker 1: and more ads. That seems like an easy one to me, 155 00:09:36,280 --> 00:09:39,320 Speaker 1: for what little I use Facebook. But there'll as soon 156 00:09:39,400 --> 00:09:42,880 Speaker 1: be some evidence and testimony about the extent to which, 157 00:09:42,920 --> 00:09:46,839 Speaker 1: over time Facebook serves its users who think they're getting 158 00:09:46,880 --> 00:09:49,240 Speaker 1: something for free, more and more ads that they've got 159 00:09:49,280 --> 00:09:53,760 Speaker 1: to go through and maybe they'll click on. Facebook says, hey, 160 00:09:53,840 --> 00:09:56,320 Speaker 1: that's a service. People love ads. I'll leave that to 161 00:09:56,360 --> 00:09:57,840 Speaker 1: the judge to decide. 162 00:09:57,880 --> 00:10:03,040 Speaker 2: But yeah, in the opening state, Meta's attorney said, quote, 163 00:10:03,200 --> 00:10:07,080 Speaker 2: a lot of people find them useful, even entertaining. I 164 00:10:07,080 --> 00:10:09,120 Speaker 2: guess I'm just not one of those people. 165 00:10:09,840 --> 00:10:14,520 Speaker 1: Yeah, advertising, you know, is information, but good lord, ad 166 00:10:14,559 --> 00:10:17,480 Speaker 1: load is just well anyway, they can argue over that, 167 00:10:17,720 --> 00:10:19,880 Speaker 1: and they're going to, you know, make those arguments to 168 00:10:19,920 --> 00:10:23,079 Speaker 1: the judge. But it strikes me as a heavy lift 169 00:10:23,240 --> 00:10:26,640 Speaker 1: for Facebook at some point to say that all these 170 00:10:26,679 --> 00:10:30,520 Speaker 1: ads which we serve you because you happen to have 171 00:10:30,600 --> 00:10:33,839 Speaker 1: clicked on one thing and then that's all you see 172 00:10:33,880 --> 00:10:35,960 Speaker 1: for a while. That that's a great thing. 173 00:10:36,840 --> 00:10:39,840 Speaker 2: Stay with me, Harry coming up next on the Bloomberg 174 00:10:39,960 --> 00:10:43,439 Speaker 2: Lawn Show, I'll continue this conversation with Professor Harry First 175 00:10:43,480 --> 00:10:48,320 Speaker 2: of NYU Law School. How important is Zuckerberg's testimony and 176 00:10:48,400 --> 00:10:52,520 Speaker 2: if the judge finds against Meta, my trump step in. 177 00:10:52,840 --> 00:10:56,280 Speaker 2: I'm June Grosso. When you're listening to Bloomberg, I've been 178 00:10:56,280 --> 00:11:00,280 Speaker 2: talking to Professor Harry First of NYU Law School. The 179 00:11:00,360 --> 00:11:07,000 Speaker 2: FTC has some smoking gun emails from Meta executives, including Zuckerberg, 180 00:11:07,600 --> 00:11:11,840 Speaker 2: particularly one from twenty twelve where he described the Instagram 181 00:11:11,880 --> 00:11:15,199 Speaker 2: deal as a way to quote neutralize a competitor. 182 00:11:15,480 --> 00:11:17,960 Speaker 1: Yeah, that's a good one. Yeah. I could see the 183 00:11:18,040 --> 00:11:23,320 Speaker 1: lawyers looking at that going, oh my god, Zuckerberg, did 184 00:11:23,320 --> 00:11:25,560 Speaker 1: you write that. There's a good reason why that would 185 00:11:25,559 --> 00:11:28,200 Speaker 1: be called a smoking gun because it shows, you know, 186 00:11:28,760 --> 00:11:32,439 Speaker 1: not every acquisition that a major platform or a monopoly, 187 00:11:32,559 --> 00:11:36,160 Speaker 1: let's say, makes is illegal. It's not illegal for that reason. 188 00:11:36,520 --> 00:11:39,679 Speaker 1: Firms make acquisitions all the time. The ones that are 189 00:11:39,720 --> 00:11:42,920 Speaker 1: illegal in this context are those that are done to 190 00:11:43,120 --> 00:11:46,880 Speaker 1: snuff out a threat to the monopolist. It's a, as 191 00:11:46,920 --> 00:11:49,480 Speaker 1: they said, a buyer bury strategy. They would just buy 192 00:11:49,559 --> 00:11:52,760 Speaker 1: up the competitions they were worried about. So on its 193 00:11:52,800 --> 00:11:55,599 Speaker 1: face it could be neutral. Well, they made an acquisition, 194 00:11:55,679 --> 00:11:59,160 Speaker 1: what the heck? And maybe they have some alleged good reasons. 195 00:11:59,400 --> 00:12:01,920 Speaker 1: But then you re the email in Zuckerberg says, hey, 196 00:12:01,920 --> 00:12:04,560 Speaker 1: we're you know, we're worried about this company. Let's we 197 00:12:04,640 --> 00:12:09,920 Speaker 1: better buy it. And their effort at incorporating photographs into 198 00:12:10,320 --> 00:12:13,120 Speaker 1: Facebook and making it the kind of thing that Instagram 199 00:12:13,200 --> 00:12:16,080 Speaker 1: was doing was not going well. So they were really 200 00:12:16,080 --> 00:12:19,840 Speaker 1: being challenged by Instagram. And you know, they responded to 201 00:12:19,880 --> 00:12:23,080 Speaker 1: that challenge not by making a better product, but by 202 00:12:23,160 --> 00:12:28,400 Speaker 1: buying their competitor. Classic move, but not a competitive move. 203 00:12:28,440 --> 00:12:31,720 Speaker 1: It's an anti competitive move, so the government says, and 204 00:12:31,760 --> 00:12:34,040 Speaker 1: so Mark Zuckerberg apparently said. 205 00:12:34,679 --> 00:12:38,040 Speaker 2: Is Zuckerberg the most important witness or not? 206 00:12:38,520 --> 00:12:40,920 Speaker 1: Really, It's hard for me to say exactly. I'm sure 207 00:12:40,920 --> 00:12:44,000 Speaker 1: that Cheryl Sandberg, who ran a lot of the business, 208 00:12:44,280 --> 00:12:47,160 Speaker 1: will be a very important witness. I mean, they have 209 00:12:47,640 --> 00:12:51,600 Speaker 1: flashy emails from Zuckerberg, and I don't know who the 210 00:12:51,640 --> 00:12:55,240 Speaker 1: more maybe some of the more current operating people, because 211 00:12:55,280 --> 00:12:57,960 Speaker 1: one of the things sort of as a psychological point, 212 00:12:58,000 --> 00:13:00,640 Speaker 1: I think the Commission's points the Commission going to make 213 00:13:01,120 --> 00:13:03,520 Speaker 1: It's not a question that was then and this is now. 214 00:13:03,920 --> 00:13:06,960 Speaker 1: It's a question of this as always. So they got 215 00:13:07,000 --> 00:13:11,440 Speaker 1: their monopoly, they maintained it by these acquisitions, and then 216 00:13:11,520 --> 00:13:16,240 Speaker 1: they've stuck as a monopolist, not as a real competitor. 217 00:13:16,360 --> 00:13:20,320 Speaker 1: And you know, maybe their platforms have changed over time 218 00:13:20,400 --> 00:13:23,520 Speaker 1: a little bit, but it's still the same basic playbook 219 00:13:24,520 --> 00:13:27,720 Speaker 1: that they're following. So I'm looking to see you know, 220 00:13:27,800 --> 00:13:31,720 Speaker 1: some that more recent testimony and some other executives have 221 00:13:31,800 --> 00:13:34,480 Speaker 1: to say, but particularly Sheryl Samberg and. 222 00:13:34,400 --> 00:13:37,800 Speaker 2: Matt Is arguing that Zuckerberg's past statements are no longer 223 00:13:37,920 --> 00:13:41,920 Speaker 2: relevant because of competition from TikTok YouTube. 224 00:13:42,600 --> 00:13:45,840 Speaker 1: Yeah, so that was then, this is now. So you know, 225 00:13:45,920 --> 00:13:49,320 Speaker 1: he wrote that then and maybe he was concerned and 226 00:13:49,360 --> 00:13:52,080 Speaker 1: maybe should have been, maybe shouldn't have been, But you know, 227 00:13:52,240 --> 00:13:56,360 Speaker 1: now the competitive environment looks very different, and you know, 228 00:13:56,480 --> 00:14:00,719 Speaker 1: we're in a world where particularly TikTok but also YouTube, 229 00:14:01,040 --> 00:14:04,880 Speaker 1: you know, consumers have lots of choices when they you know, 230 00:14:05,080 --> 00:14:09,760 Speaker 1: look at these media and less and less as the choice. 231 00:14:09,800 --> 00:14:11,880 Speaker 1: Because I want to be sure, I'm in you know, 232 00:14:12,280 --> 00:14:15,760 Speaker 1: a friends group with my grandma. It's I want these 233 00:14:15,840 --> 00:14:20,400 Speaker 1: quick entertainment reels. I'm following performers. I want to know, 234 00:14:20,640 --> 00:14:23,880 Speaker 1: you know, how to do something. And so the tension, 235 00:14:24,680 --> 00:14:27,720 Speaker 1: which is, you know, in some sense what the limit 236 00:14:27,880 --> 00:14:32,720 Speaker 1: is on what people can do, attention has shifted from 237 00:14:33,000 --> 00:14:37,280 Speaker 1: you know, your father's or grandfather's product, which was Facebook, 238 00:14:37,600 --> 00:14:39,880 Speaker 1: to you know, these other alternatives. 239 00:14:40,080 --> 00:14:44,240 Speaker 2: Where does it fit in that the FTC had a 240 00:14:44,360 --> 00:14:48,880 Speaker 2: chance to challenge the deals for Instagram in twenty twelve, 241 00:14:48,920 --> 00:14:51,200 Speaker 2: then for whatsappened twenty fourteen. 242 00:14:52,400 --> 00:14:56,160 Speaker 1: Well, so, first of all, legally it doesn't matter when 243 00:14:56,360 --> 00:15:00,000 Speaker 1: the Federal Trade Commission or the Justice Department reviews emerge 244 00:15:00,680 --> 00:15:04,440 Speaker 1: before it's consummated. All they do is look at it 245 00:15:04,440 --> 00:15:07,320 Speaker 1: to see whether they want to bring suits in. They 246 00:15:07,360 --> 00:15:11,720 Speaker 1: don't approve mergers, so in some sense it doesn't matter 247 00:15:11,760 --> 00:15:16,400 Speaker 1: that they passed at that time, but it does cast 248 00:15:16,520 --> 00:15:21,920 Speaker 1: a psychological poll a bit over the case. You know, well, 249 00:15:22,000 --> 00:15:24,400 Speaker 1: if it was so obvious that this was, you know, 250 00:15:24,480 --> 00:15:27,600 Speaker 1: trying to snuff out a Nason competitor, how come you 251 00:15:27,640 --> 00:15:31,040 Speaker 1: didn't see it? Both of them? It's not like these things, 252 00:15:31,320 --> 00:15:34,280 Speaker 1: you know, they didn't come across your desk you had 253 00:15:34,320 --> 00:15:37,440 Speaker 1: never heard of Facebook. I mean, so I think that's 254 00:15:37,520 --> 00:15:41,480 Speaker 1: part of the poll, even though that doesn't matter, and 255 00:15:42,600 --> 00:15:46,160 Speaker 1: it can later turn into something that was any competitive. 256 00:15:46,840 --> 00:15:52,680 Speaker 1: So what I'd assume that that Facebook will try to 257 00:15:52,720 --> 00:15:55,520 Speaker 1: do is to say, well, that wasn't the deal. Then 258 00:15:56,000 --> 00:15:58,840 Speaker 1: it wasn't clear they were nason competitors. You don't want 259 00:15:58,880 --> 00:16:03,440 Speaker 1: to quash companies from acquiring small companies. It's important for innovation, 260 00:16:04,000 --> 00:16:07,320 Speaker 1: and now to turn around, you know, a decade plus 261 00:16:07,440 --> 00:16:11,600 Speaker 1: later and say guess what, now we don't like it. 262 00:16:11,840 --> 00:16:17,320 Speaker 1: Maybe maybe that's not the best approach to antitrust. And 263 00:16:17,360 --> 00:16:20,640 Speaker 1: it may come up, particularly even if it doesn't come 264 00:16:20,720 --> 00:16:23,520 Speaker 1: up on liability directly, I'm sure that it's going to 265 00:16:23,560 --> 00:16:26,920 Speaker 1: come up on remedy when they get to that that 266 00:16:28,400 --> 00:16:30,720 Speaker 1: you know, time will be an important part of the 267 00:16:30,720 --> 00:16:34,040 Speaker 1: theme in remedy. If Facebook does lose a. 268 00:16:34,040 --> 00:16:38,960 Speaker 2: Trial, so remedy. Speaking of remedy, is it an existential 269 00:16:39,000 --> 00:16:42,080 Speaker 2: threat to Meta or more than that? Estimates say that 270 00:16:42,120 --> 00:16:46,400 Speaker 2: it earns about half of its advertising revenue from Instagram. 271 00:16:46,680 --> 00:16:49,880 Speaker 1: Well, I don't know the exact numbers. That sounds plausible, 272 00:16:50,120 --> 00:16:53,480 Speaker 1: and I don't know the extent to which those numbers 273 00:16:53,520 --> 00:16:58,120 Speaker 1: are US only, you know, I mean, Facebook's worldwide, so 274 00:16:58,680 --> 00:17:04,600 Speaker 1: an existential threat you know, probably not, but maybe a 275 00:17:04,680 --> 00:17:09,000 Speaker 1: threat in terms of future development of AI. I don't 276 00:17:09,040 --> 00:17:12,720 Speaker 1: know's it's obviously important. They certainly are fighting hard to 277 00:17:12,800 --> 00:17:17,200 Speaker 1: hold on to both of these acquisitions. So if they 278 00:17:17,240 --> 00:17:23,120 Speaker 1: do lose on liability, that's sort of an obvious remedy, 279 00:17:24,080 --> 00:17:27,400 Speaker 1: but not necessarily going to be the one the court 280 00:17:27,440 --> 00:17:33,639 Speaker 1: will accept. So the threat is a potential threat, important threat, 281 00:17:33,960 --> 00:17:37,879 Speaker 1: But there are lots of steps before we would see, 282 00:17:38,040 --> 00:17:41,600 Speaker 1: you know, an order to separate those companies, because. 283 00:17:41,440 --> 00:17:45,639 Speaker 2: A breakup of that size hasn't happened since AT and 284 00:17:45,680 --> 00:17:47,040 Speaker 2: T forty years ago. 285 00:17:47,560 --> 00:17:51,040 Speaker 1: Well, we haven't taken on companies of this size. We 286 00:17:51,119 --> 00:17:56,280 Speaker 1: did take on Microsoft, didn't order structural relief. The AT 287 00:17:56,400 --> 00:17:59,440 Speaker 1: and T breakup was by agreement. I mean, it was 288 00:17:59,480 --> 00:18:02,240 Speaker 1: a result of litigation in a sense, but it was 289 00:18:02,280 --> 00:18:07,439 Speaker 1: not a decree entered by a court after losing a case. 290 00:18:08,280 --> 00:18:13,440 Speaker 1: So we don't do divestitures that often, you know, not never, 291 00:18:14,480 --> 00:18:17,199 Speaker 1: it does get done, but this is certainly of an 292 00:18:17,240 --> 00:18:21,040 Speaker 1: important magnitude, and you know, puts the court in a 293 00:18:21,200 --> 00:18:26,040 Speaker 1: difficult role of trying to separate companies that Facebook frankly 294 00:18:26,119 --> 00:18:29,720 Speaker 1: has done its best to schmush together, to use the 295 00:18:29,840 --> 00:18:33,720 Speaker 1: technical term. So I think that their operations are very 296 00:18:33,800 --> 00:18:38,040 Speaker 1: integrated and part is I think probably a conscious effort 297 00:18:38,080 --> 00:18:42,439 Speaker 1: to make it harder to disintegrate them. So yeah, it 298 00:18:42,440 --> 00:18:46,359 Speaker 1: would be difficult. There's a famous line that divestiture is 299 00:18:46,400 --> 00:18:50,120 Speaker 1: a remedy, not a penalty, and Jedge learning Hand said 300 00:18:50,160 --> 00:18:54,480 Speaker 1: that after the alcoholic case. So even if they broke 301 00:18:54,560 --> 00:18:58,639 Speaker 1: the law quote unquote found to have violate the Clayton Act, 302 00:18:59,040 --> 00:19:02,560 Speaker 1: that doesn't mean that, you know, the government is entitled 303 00:19:03,000 --> 00:19:06,639 Speaker 1: to this remedy. They still will have a tough fight 304 00:19:07,200 --> 00:19:08,920 Speaker 1: to get the court to do this. 305 00:19:09,960 --> 00:19:14,040 Speaker 2: Can we read anything into the fact that Judge Bosberg 306 00:19:14,200 --> 00:19:19,600 Speaker 2: has sounded skeptical about the FTC's case. He dismissed the 307 00:19:19,680 --> 00:19:22,399 Speaker 2: initial case in twenty twenty one, and in November he 308 00:19:22,480 --> 00:19:27,160 Speaker 2: said the agency faces hard questions about whether it's claims 309 00:19:27,200 --> 00:19:29,719 Speaker 2: can hold up in the crucible of trial. 310 00:19:30,240 --> 00:19:33,840 Speaker 1: Right, Well, he's running the crucible so like an Arthur 311 00:19:33,880 --> 00:19:39,600 Speaker 1: Miller play. So Judge Boseburg, just you know from reading 312 00:19:39,600 --> 00:19:46,280 Speaker 1: his opinions, is sharp, he's critical. He is not a 313 00:19:46,280 --> 00:19:49,480 Speaker 1: pushover for the government. But he's not a pushover for 314 00:19:49,520 --> 00:19:54,680 Speaker 1: the defendants either, So you know, I read this as 315 00:19:54,720 --> 00:19:59,240 Speaker 1: saying he'll come out with an opinion that will prove 316 00:19:59,480 --> 00:20:03,719 Speaker 1: challenge for the losing party on appeal, wherever that is. 317 00:20:04,160 --> 00:20:06,959 Speaker 1: And I don't predict that he's necessarily going to come 318 00:20:07,000 --> 00:20:10,680 Speaker 1: out in favor of Facebook, frankly, because he's been willing 319 00:20:10,760 --> 00:20:14,080 Speaker 1: to accept, at least as a legal matter, important arguments 320 00:20:14,119 --> 00:20:18,960 Speaker 1: from the government and dismissed some of Facebook's defenses. And 321 00:20:19,480 --> 00:20:22,480 Speaker 1: you know you're not going to fool a judge. 322 00:20:23,880 --> 00:20:28,960 Speaker 2: Finally, Harry, So suppose Judge Bosburg does rule for the government. 323 00:20:29,560 --> 00:20:33,840 Speaker 2: Mark Zuckerberg has been closing up to President Trump for 324 00:20:33,960 --> 00:20:37,399 Speaker 2: a while now. Could Trump bail Meta out? 325 00:20:38,040 --> 00:20:41,360 Speaker 1: I guess the answer is short, At least at this point, 326 00:20:42,040 --> 00:20:45,159 Speaker 1: he has pretty much seized control. I don't know what 327 00:20:45,240 --> 00:20:48,680 Speaker 1: you want to call it, a hostile takeover, whatever takeover 328 00:20:48,800 --> 00:20:52,400 Speaker 1: of the Federal Trade Commission. He fired the two Democratic 329 00:20:52,760 --> 00:20:57,719 Speaker 1: members of the commission. Two commissioners supposed to be balanced 330 00:20:58,119 --> 00:21:02,280 Speaker 1: bipartisan commission fire the two for no reason other than 331 00:21:02,320 --> 00:21:06,720 Speaker 1: the Democrats. The chair is slavish in his praise of 332 00:21:06,840 --> 00:21:09,800 Speaker 1: the President. I think that's a fair word. I have 333 00:21:09,840 --> 00:21:14,040 Speaker 1: to say. So, yes, I think Trump could very well 334 00:21:14,160 --> 00:21:17,919 Speaker 1: order whatever he wanted to order, and if the chairman 335 00:21:18,040 --> 00:21:20,000 Speaker 1: or the other commissioners didn't want to go along, you 336 00:21:20,040 --> 00:21:22,720 Speaker 1: can just fire them. At least that's how he sees 337 00:21:22,760 --> 00:21:25,000 Speaker 1: the law. It may turn out that that's not going 338 00:21:25,040 --> 00:21:27,520 Speaker 1: to be the law. Maybe the Supreme Court is going 339 00:21:27,560 --> 00:21:31,679 Speaker 1: to not take that final step in terms of ending 340 00:21:31,760 --> 00:21:36,280 Speaker 1: the independence of regulatory agencies, but we'll have to see. 341 00:21:36,359 --> 00:21:39,760 Speaker 1: That's in litigation. But if he has control, then he 342 00:21:40,160 --> 00:21:43,560 Speaker 1: can do that. Even before he did try to pressure 343 00:21:43,680 --> 00:21:47,200 Speaker 1: in his first administration, pressure the chair of the Federal 344 00:21:47,240 --> 00:21:50,960 Speaker 1: Trade Commission, who resisted things. But now the ability and 345 00:21:51,000 --> 00:21:54,960 Speaker 1: willingness of the chairman who resists whatever the president wants 346 00:21:55,040 --> 00:21:57,680 Speaker 1: is zero. So we'll just have to see. That's said. 347 00:21:57,720 --> 00:22:00,800 Speaker 1: I'm not quite sure I know or understand, and maybe 348 00:22:01,000 --> 00:22:04,560 Speaker 1: the President doesn't either what he might want and what 349 00:22:04,640 --> 00:22:07,560 Speaker 1: he would pressure the Federal Trade Commission to do. Obviously 350 00:22:08,000 --> 00:22:10,720 Speaker 1: he's not pulled the plug on this litigation, which he 351 00:22:10,800 --> 00:22:13,920 Speaker 1: could have, so we'll just have to see how it goes. 352 00:22:14,240 --> 00:22:16,320 Speaker 2: So he's great to talk to you, Harry, Thanks so much. 353 00:22:16,800 --> 00:22:20,639 Speaker 2: That's Professor Harry First of NYU Law School. Coming up 354 00:22:20,680 --> 00:22:23,960 Speaker 2: next on the Bloomberg Law Show, it seems like President 355 00:22:24,000 --> 00:22:28,200 Speaker 2: Trump is targeting blue states? How can they fight back? 356 00:22:29,080 --> 00:22:34,200 Speaker 2: I'm June Grosso. When you're listening to Bloomberg, is President 357 00:22:34,240 --> 00:22:38,480 Speaker 2: Trump's blue state bias? Showing some of his recent actions 358 00:22:38,520 --> 00:22:42,199 Speaker 2: seem to be targeting blue states? Like a Department of 359 00:22:42,240 --> 00:22:48,199 Speaker 2: Health and Human Services funding cutoff that closed offices in Boston, Chicago, 360 00:22:48,400 --> 00:22:52,720 Speaker 2: New York City, San Francisco, and Seattle, all cities in 361 00:22:52,800 --> 00:22:56,359 Speaker 2: blue states. But even if Trump is singling out blue 362 00:22:56,359 --> 00:23:00,359 Speaker 2: states in his retribution campaign, what can they do about it? 363 00:23:00,880 --> 00:23:04,480 Speaker 2: My guest is retired federal judge Nancy Gertner, a senior 364 00:23:04,600 --> 00:23:08,280 Speaker 2: lecturer at Harvard Law School. She's a co author of 365 00:23:08,320 --> 00:23:12,879 Speaker 2: a Bloomberg Law legal insight piece entitled Trump's Blue State 366 00:23:13,000 --> 00:23:17,119 Speaker 2: Bias could rip the US apart? Judge, can you start 367 00:23:17,160 --> 00:23:22,640 Speaker 2: by telling us about some of Trump's actions targeting blue states? 368 00:23:22,840 --> 00:23:27,119 Speaker 3: Well, the most recent one was when he closed five 369 00:23:27,520 --> 00:23:34,119 Speaker 3: of the ten AHHS offices, and significantly, the five were 370 00:23:34,160 --> 00:23:38,240 Speaker 3: all in blue states. In addition, he has suspended the 371 00:23:38,280 --> 00:23:43,600 Speaker 3: funding for various kinds of programs to hospitals. But really 372 00:23:43,800 --> 00:23:47,719 Speaker 3: he's listening, we believe, only to the red states that 373 00:23:47,800 --> 00:23:51,720 Speaker 3: are begging for these this to return. So there was 374 00:23:51,800 --> 00:23:54,680 Speaker 3: you know, Katie Britt from I think it was Alabama 375 00:23:54,680 --> 00:23:57,439 Speaker 3: calls him, you know, terre and state, and we believe 376 00:23:57,480 --> 00:24:00,680 Speaker 3: that he will do that. So he's basically pulling out 377 00:24:00,920 --> 00:24:04,600 Speaker 3: federal funds who advantage the red states over the blue 378 00:24:05,080 --> 00:24:06,720 Speaker 3: and we think that that's going to be a pattern 379 00:24:06,840 --> 00:24:09,359 Speaker 3: going forward. You know, the pattern has not been completed. 380 00:24:09,680 --> 00:24:13,320 Speaker 3: We haven't seen all aspects of it, but clearly this 381 00:24:13,440 --> 00:24:15,639 Speaker 3: is what we have seen so far, particularly the thing 382 00:24:15,720 --> 00:24:19,440 Speaker 3: that happened ten days ago with respect to AHHS. I mean, 383 00:24:19,440 --> 00:24:23,679 Speaker 3: why do you shut down the regional offices that do 384 00:24:23,840 --> 00:24:29,080 Speaker 3: the most business, the most business namely you know, New York, Boston, 385 00:24:29,480 --> 00:24:33,000 Speaker 3: San Francisco, Seattle. I think Chicago was one of them 386 00:24:33,040 --> 00:24:36,040 Speaker 3: as well. I mean, it's really pretty transparent what's going on? 387 00:24:36,960 --> 00:24:39,480 Speaker 2: And what does the Supreme Court said about the federal 388 00:24:39,520 --> 00:24:44,480 Speaker 2: government's requirement to treat states the same? 389 00:24:45,440 --> 00:24:48,400 Speaker 3: Well in a decision that I mostly disagreed with, which 390 00:24:48,440 --> 00:24:51,240 Speaker 3: is the Shelby County decision that was dealing with the 391 00:24:51,400 --> 00:24:55,320 Speaker 3: preclearance requirement of the voting right fact. The preclearance requirement 392 00:24:55,400 --> 00:24:58,840 Speaker 3: of the voting right fact was a requirement that really 393 00:24:58,880 --> 00:25:03,639 Speaker 3: reflected discrimination against black people that had occurred in certain 394 00:25:03,680 --> 00:25:07,119 Speaker 3: states in the South, that was documented, that was well known. 395 00:25:07,480 --> 00:25:11,120 Speaker 3: The Supreme Court eliminated Preclearance, which basically was a situation 396 00:25:11,200 --> 00:25:14,879 Speaker 3: in which the government would review any changes in voting 397 00:25:14,960 --> 00:25:18,320 Speaker 3: rights procedures in those states to make certain that it 398 00:25:18,359 --> 00:25:23,439 Speaker 3: didn't continue to disadvantage black people or didn't redisadvantage black people. 399 00:25:23,880 --> 00:25:27,680 Speaker 3: And what happened was the Court eliminated that preclearance requirement 400 00:25:27,760 --> 00:25:30,920 Speaker 3: on the theory that there was a requirement of equal 401 00:25:31,000 --> 00:25:34,119 Speaker 3: treatment of all states. And so if that is a 402 00:25:34,200 --> 00:25:38,320 Speaker 3: principle reaffirmed now only a few years ago, then Trump 403 00:25:38,400 --> 00:25:42,560 Speaker 3: simply does not have the right to discriminate against blue 404 00:25:42,560 --> 00:25:45,920 Speaker 3: states in favor of red. He can't use the federal 405 00:25:46,320 --> 00:25:50,399 Speaker 3: spending power to disadvantage blue states at the expense of red. 406 00:25:51,400 --> 00:25:53,879 Speaker 2: I've lost track of how many of his executive orders 407 00:25:53,920 --> 00:25:57,800 Speaker 2: have been challenged, and many of them have been found 408 00:25:57,800 --> 00:26:02,600 Speaker 2: to be unlawful or unconstantitutional by lower courts. But the 409 00:26:02,640 --> 00:26:07,119 Speaker 2: administration has not been following all the orders of the 410 00:26:07,160 --> 00:26:11,040 Speaker 2: lower courts. Have we reached a constitutional crisis yet? 411 00:26:11,560 --> 00:26:13,800 Speaker 3: I don't think there's any doubt that we are in 412 00:26:13,840 --> 00:26:16,879 Speaker 3: a constitutional crisis, whatever the name you put on it. 413 00:26:17,320 --> 00:26:19,479 Speaker 3: I don't think that there's any doubt so far, there 414 00:26:19,520 --> 00:26:22,920 Speaker 3: isn't a situation, you know, with a Southern politician now 415 00:26:22,960 --> 00:26:26,800 Speaker 3: barring federal truths from coming into Mississippi or Georgia or 416 00:26:26,840 --> 00:26:29,720 Speaker 3: Alabama or anything like that. That's not what we have 417 00:26:29,840 --> 00:26:32,960 Speaker 3: seen yet. What we have seen, as with for example, 418 00:26:33,320 --> 00:26:36,679 Speaker 3: the most recent case of mister Abrago Garcia, this is 419 00:26:36,720 --> 00:26:42,000 Speaker 3: an individual who is wrongly deported to El Salvador. What 420 00:26:42,040 --> 00:26:46,000 Speaker 3: we have seen is the government effectively ignoring a Supreme 421 00:26:46,040 --> 00:26:51,879 Speaker 3: Court decision. We've seen the government effectively ignoring decisions of 422 00:26:51,960 --> 00:26:56,119 Speaker 3: the lower courts. We've seen sophistry an outright lying. The 423 00:26:56,200 --> 00:26:58,919 Speaker 3: sophistry is describing the Spring Court's decision in a way 424 00:26:58,960 --> 00:27:02,359 Speaker 3: which is patently false, patently false. You know, they're saying 425 00:27:02,440 --> 00:27:05,600 Speaker 3: things like the Supreme Court, in dealing with the Abrallo 426 00:27:05,720 --> 00:27:09,600 Speaker 3: Parcia case, didn't really demand that the government do anything, 427 00:27:09,680 --> 00:27:14,119 Speaker 3: but only they can passively make certain that if Elsa 428 00:27:14,280 --> 00:27:16,320 Speaker 3: was a release as a man, he could come into 429 00:27:16,359 --> 00:27:19,320 Speaker 3: the countries. I mean, that's absolutely not what the Supreme 430 00:27:19,359 --> 00:27:22,160 Speaker 3: Court said. It's not at all what the Supreme Court said, 431 00:27:22,520 --> 00:27:26,720 Speaker 3: So that's sort of really sophistry in dealing with Supreme 432 00:27:26,760 --> 00:27:30,879 Speaker 3: Court decisions, and then there's been outright ignoring and disobedience 433 00:27:30,960 --> 00:27:35,240 Speaker 3: of them. You know, in the cases involving the funding freeze, 434 00:27:35,400 --> 00:27:38,879 Speaker 3: a court will require that the funding be restored, the 435 00:27:39,240 --> 00:27:43,800 Speaker 3: losses dealing with the funding freezes on government funds across 436 00:27:43,800 --> 00:27:47,280 Speaker 3: the country, and the government is just ignoring it, just 437 00:27:47,320 --> 00:27:51,080 Speaker 3: ignoring it, requiring you know, courts to essentially get to 438 00:27:51,119 --> 00:27:55,600 Speaker 3: the point to the moment of contempt. So I don't 439 00:27:55,600 --> 00:27:58,280 Speaker 3: think there's any question we're in a constitutional crisis when 440 00:27:58,280 --> 00:28:02,800 Speaker 3: the government can as they did in the Oval Office 441 00:28:03,000 --> 00:28:08,160 Speaker 3: yesterday in the meeting with El Salvador Buquele about again 442 00:28:08,200 --> 00:28:11,840 Speaker 3: this gentleman Albrego Garcia, when the government can lie flat 443 00:28:11,880 --> 00:28:15,200 Speaker 3: out that he had been found to be an MS 444 00:28:15,320 --> 00:28:20,760 Speaker 3: thirteen member, not true anywhere that the government can lie 445 00:28:20,920 --> 00:28:24,680 Speaker 3: about his arrangements with Bouquele. I don't think there's any 446 00:28:24,720 --> 00:28:26,800 Speaker 3: doubt that we're in a constitutional crisis. 447 00:28:27,240 --> 00:28:30,760 Speaker 4: You talk about the misinterpretation of the Supreme Court decision, 448 00:28:30,800 --> 00:28:34,120 Speaker 4: not only by the Attorney General Pam Bondi, but by 449 00:28:34,160 --> 00:28:37,080 Speaker 4: Stephen Miller, who said the Supreme Court rule for US 450 00:28:37,800 --> 00:28:39,280 Speaker 4: unanimously right. 451 00:28:39,560 --> 00:28:42,600 Speaker 3: Again, this is not even close to true. It's just 452 00:28:42,640 --> 00:28:45,280 Speaker 3: not even when the Supreme Court says the government has 453 00:28:45,320 --> 00:28:48,760 Speaker 3: to facilitate its return, and clearly in the context of 454 00:28:48,800 --> 00:28:51,880 Speaker 3: a decision that is about how there was no right 455 00:28:52,040 --> 00:28:55,280 Speaker 3: to deport him, when they say he has to facilitate 456 00:28:55,320 --> 00:28:59,520 Speaker 3: his return, that doesn't mean, well, El Salvador, if you 457 00:28:59,600 --> 00:29:03,640 Speaker 3: wish to send him, we will allow him in. It's 458 00:29:03,720 --> 00:29:06,560 Speaker 3: clear that it's meant more than that. It meant affirmative 459 00:29:06,600 --> 00:29:10,560 Speaker 3: steps to right or wrong. The government was responsible for 460 00:29:10,640 --> 00:29:13,520 Speaker 3: a wrong and they had to take affirmative steps to 461 00:29:13,560 --> 00:29:16,200 Speaker 3: write it. I mean. Also, the notion that this is 462 00:29:16,240 --> 00:29:20,080 Speaker 3: a foreign policy issue is pure poppycock. This is a 463 00:29:20,080 --> 00:29:25,720 Speaker 3: commercial issue. This is not like returning Brittany Griner from Russia, 464 00:29:26,040 --> 00:29:30,000 Speaker 3: which was a matter of delicate diplomatic negotiations. This is 465 00:29:30,040 --> 00:29:33,920 Speaker 3: about a commercial contract between a two big dictator and 466 00:29:34,000 --> 00:29:38,080 Speaker 3: the United States dealing with a contract for six million 467 00:29:38,160 --> 00:29:42,440 Speaker 3: dollars to receive deportees from the United States. And clearly 468 00:29:42,600 --> 00:29:46,320 Speaker 3: the United States has rights under the contract and the 469 00:29:46,440 --> 00:29:49,960 Speaker 3: United States has power if in the meeting before the 470 00:29:50,000 --> 00:29:54,480 Speaker 3: public meeting yesterday, Trump had said to Bouquele return this guy, 471 00:29:55,240 --> 00:29:58,200 Speaker 3: it would have been over. It would have been over. 472 00:29:58,920 --> 00:30:01,360 Speaker 3: And the fact that they don't need and think that 473 00:30:01,480 --> 00:30:05,640 Speaker 3: this is a wrong that needs to be righted is stunning. 474 00:30:06,280 --> 00:30:09,640 Speaker 2: So in the article you talk about tax dollars, how 475 00:30:09,680 --> 00:30:12,560 Speaker 2: could Blue states use the taxes they pay into the 476 00:30:12,640 --> 00:30:14,680 Speaker 2: treasury to retaliate. 477 00:30:15,200 --> 00:30:18,560 Speaker 3: Every state is an employer, and it is oftentimes the 478 00:30:18,640 --> 00:30:22,440 Speaker 3: major employer in any given state. And as with any employer, 479 00:30:22,520 --> 00:30:26,320 Speaker 3: the state has to withhold money for federal taxes. And 480 00:30:26,400 --> 00:30:28,840 Speaker 3: in the case of the Blue states that we mentioned, 481 00:30:29,360 --> 00:30:31,680 Speaker 3: it is a substantial amount of money. In fact, as 482 00:30:31,720 --> 00:30:36,480 Speaker 3: we note in the article, the Blue states are net donors. 483 00:30:36,520 --> 00:30:39,240 Speaker 3: In other words, they give more money to the federal 484 00:30:39,280 --> 00:30:42,400 Speaker 3: government than they get in the form of services. Now, 485 00:30:42,800 --> 00:30:45,760 Speaker 3: it would be illegal, and I have to say that 486 00:30:46,120 --> 00:30:51,080 Speaker 3: quite candidly, for the Blue States to withhold federal dollars. 487 00:30:51,120 --> 00:30:54,760 Speaker 3: In other words, the withholding that you do on your taxes, 488 00:30:55,120 --> 00:30:57,520 Speaker 3: you withhold for the purpose of turning it over to 489 00:30:57,680 --> 00:31:01,520 Speaker 3: the federal government at the appropriate time. This would be 490 00:31:01,600 --> 00:31:05,920 Speaker 3: illegal to withhold it, frankly, until the government makes the 491 00:31:06,040 --> 00:31:09,440 Speaker 3: allocations among the states equal. It would certainly be illegal. 492 00:31:09,680 --> 00:31:12,440 Speaker 3: But it is leverage what we say, and the piece 493 00:31:12,520 --> 00:31:15,840 Speaker 3: is that the government, if they continue to favor Red 494 00:31:15,880 --> 00:31:20,720 Speaker 3: states over blue, will be acting illegally and unconstitutionally, and 495 00:31:20,800 --> 00:31:23,760 Speaker 3: so we speculate that this is something the Blue states 496 00:31:23,800 --> 00:31:26,480 Speaker 3: could do, although it is illegal. 497 00:31:26,560 --> 00:31:29,880 Speaker 2: And California has a ballot issue where voters are already 498 00:31:30,040 --> 00:31:31,840 Speaker 2: considering this right. 499 00:31:31,880 --> 00:31:35,280 Speaker 3: There's a ballid issue where the voters are not considering 500 00:31:35,600 --> 00:31:40,200 Speaker 3: withholding tax dollars, California ballot initiative goes even further. The 501 00:31:40,280 --> 00:31:45,840 Speaker 3: ballot initiative is to secede from the Union, which is extraordinary. 502 00:31:45,960 --> 00:31:49,760 Speaker 3: It's asking the voters to endorse the idea of secession. 503 00:31:49,840 --> 00:31:53,800 Speaker 3: It's not clear what legal authority that would have, but 504 00:31:53,960 --> 00:31:57,520 Speaker 3: that's certainly what California voters are indulging in. Again, you know, 505 00:31:57,640 --> 00:32:00,880 Speaker 3: both withholding federal tax dollars and obviously seceding from the 506 00:32:01,000 --> 00:32:05,680 Speaker 3: Union are patently illegal. But the notion here is the 507 00:32:05,720 --> 00:32:11,080 Speaker 3: government is behaving illegally. Were they to punish Massachusetts and California, 508 00:32:11,080 --> 00:32:14,160 Speaker 3: for example, in favor of the Red states, the government 509 00:32:14,280 --> 00:32:19,200 Speaker 3: is behaving blatantly illegally. And to your question about constitutional crisis, 510 00:32:19,440 --> 00:32:23,440 Speaker 3: there's a question. When the government behaves illegally, citizens have 511 00:32:23,520 --> 00:32:26,200 Speaker 3: to decide what to do. Citizens have to decide what 512 00:32:26,320 --> 00:32:30,520 Speaker 3: the appropriate response is. And make no mistake, this government 513 00:32:30,720 --> 00:32:34,360 Speaker 3: is behaving illegally on numbers of fronts, as numbers of 514 00:32:34,440 --> 00:32:35,600 Speaker 3: federal courts have found. 515 00:32:36,240 --> 00:32:40,600 Speaker 2: Do you think that this is the most serious constitutional 516 00:32:40,640 --> 00:32:42,920 Speaker 2: crisis we face since the Civil War? 517 00:32:43,360 --> 00:32:46,320 Speaker 3: I think that that's true. It's one thing to have, 518 00:32:46,680 --> 00:32:50,719 Speaker 3: you know, the pictures of the Southern States defying a 519 00:32:51,000 --> 00:32:57,320 Speaker 3: constitutional directive to desegregate, requiring troops to be sent to 520 00:32:57,480 --> 00:33:01,920 Speaker 3: Southern states to enforce the prog vision against segregation. That 521 00:33:02,040 --> 00:33:06,000 Speaker 3: was a confrontation as between a unified federal government and 522 00:33:06,200 --> 00:33:12,040 Speaker 3: particular states. This is a confrontation between the federal government 523 00:33:12,160 --> 00:33:16,840 Speaker 3: as a whole individuals, and a confrontation between the federal 524 00:33:16,880 --> 00:33:19,760 Speaker 3: government as a whole and the states. It's about to 525 00:33:19,840 --> 00:33:24,120 Speaker 3: involve almost every aspect of our lives. The federal government 526 00:33:24,160 --> 00:33:27,600 Speaker 3: is asserting control over universities. The federal government is seeking 527 00:33:27,600 --> 00:33:31,080 Speaker 3: to control who is in the country and who is not, 528 00:33:31,520 --> 00:33:34,840 Speaker 3: seeking to control who is a citizen, and flouting the 529 00:33:34,880 --> 00:33:38,200 Speaker 3: Constitution in numbers of ways. So I mean this is 530 00:33:38,400 --> 00:33:41,800 Speaker 3: both the scope of the disobedience the scope of the 531 00:33:41,880 --> 00:33:46,480 Speaker 3: violations by the federal government on every front. So yes, 532 00:33:46,520 --> 00:33:49,160 Speaker 3: I would call it the most serious constitutional crisis in 533 00:33:49,320 --> 00:33:49,960 Speaker 3: the Civil War. 534 00:33:50,680 --> 00:33:55,040 Speaker 2: It seems like Trump threatens and it seems like he's winning. 535 00:33:54,720 --> 00:33:58,440 Speaker 4: In a lot of respects because, for example, law firms 536 00:33:58,640 --> 00:34:01,320 Speaker 4: the biggest law firms in the country, you have decided 537 00:34:01,360 --> 00:34:06,000 Speaker 4: to give him close to a billion dollars in free 538 00:34:06,080 --> 00:34:10,560 Speaker 4: legal services, and you have universities that have capitulated to 539 00:34:10,640 --> 00:34:14,520 Speaker 4: his demands. So it seems like there's less fighting back. 540 00:34:15,080 --> 00:34:17,319 Speaker 3: Well, I think we're beginning to see something different. And 541 00:34:17,400 --> 00:34:20,600 Speaker 3: let me make a more general point. So, the strength 542 00:34:20,600 --> 00:34:23,760 Speaker 3: of the United States is not just in representative government, 543 00:34:23,880 --> 00:34:28,760 Speaker 3: not just having Congress and the president elected by the people, 544 00:34:29,440 --> 00:34:32,360 Speaker 3: not just having local governments. The strength of the United 545 00:34:32,400 --> 00:34:38,040 Speaker 3: States is also having civil society, namely organizations like universities 546 00:34:38,400 --> 00:34:41,560 Speaker 3: and law firms that are independent of the government. They 547 00:34:41,800 --> 00:34:46,400 Speaker 3: stand for principles that the government can't control. So what 548 00:34:46,480 --> 00:34:49,160 Speaker 3: Trump has done is he's taken over the government we 549 00:34:49,239 --> 00:34:52,080 Speaker 3: elected him. That was the product of the voters, namely 550 00:34:52,120 --> 00:34:54,920 Speaker 3: that he has the House of Representatives, the Senate, and 551 00:34:55,000 --> 00:34:58,080 Speaker 3: the Lighthouse. But the judges are supposed to be independent, 552 00:34:58,120 --> 00:35:01,200 Speaker 3: and the judges have been holding the judges have reflected 553 00:35:01,200 --> 00:35:04,520 Speaker 3: that independence. What he is doing is trying to dismantle 554 00:35:04,560 --> 00:35:07,800 Speaker 3: civil society. And the way you dismantle civil society is 555 00:35:07,840 --> 00:35:12,080 Speaker 3: you dismantle the universities, and you dismantle the law firms. 556 00:35:12,160 --> 00:35:14,680 Speaker 3: Not dismantle exactly, but you sort of tried to co 557 00:35:14,760 --> 00:35:18,000 Speaker 3: opt the law firms. I think we're seeing a change now. 558 00:35:18,440 --> 00:35:20,759 Speaker 3: I think there was a certain kind of shock at 559 00:35:20,800 --> 00:35:23,960 Speaker 3: the beginning of this administration. People didn't quite understand how 560 00:35:24,000 --> 00:35:26,120 Speaker 3: far he was prepared to go. I think as the 561 00:35:26,160 --> 00:35:30,719 Speaker 3: firms that have sued the government for its illegal actions, 562 00:35:30,800 --> 00:35:35,719 Speaker 3: like Wilmer Hale, like Perkins Kohi, like the latest one 563 00:35:35,800 --> 00:35:39,080 Speaker 3: is Susman Godfrey, the firms that have stood up to 564 00:35:39,120 --> 00:35:41,479 Speaker 3: the government I think are going to be the wave 565 00:35:41,560 --> 00:35:45,720 Speaker 3: of the future. Three hundred and forty six retired federal 566 00:35:45,719 --> 00:35:50,360 Speaker 3: and state judges have signed on to brief supposing the 567 00:35:50,400 --> 00:35:55,040 Speaker 3: government's actions with respect to Perkins COOHI. Numbers and numbers 568 00:35:55,080 --> 00:35:58,800 Speaker 3: of people have signed on from all walks of life 569 00:35:58,920 --> 00:36:01,680 Speaker 3: to a Meeks brief. So the law firms, I think 570 00:36:01,880 --> 00:36:05,640 Speaker 3: are beginning to learn a different lesson. And Harvard's example 571 00:36:05,760 --> 00:36:10,000 Speaker 3: yesterday of standing up to Trump, I think will forecast 572 00:36:10,080 --> 00:36:13,680 Speaker 3: other universities doing exactly the same thing. I think that 573 00:36:13,719 --> 00:36:16,400 Speaker 3: people there was a certain amount of shock. Surely he 574 00:36:16,480 --> 00:36:19,880 Speaker 3: didn't mean to go as far as he went, was 575 00:36:19,960 --> 00:36:23,279 Speaker 3: the sense, And the answer is yes, he has an 576 00:36:23,320 --> 00:36:24,400 Speaker 3: indeed further. 577 00:36:24,400 --> 00:36:27,399 Speaker 2: Thanks so much for joining me tonight. That's retired Judge 578 00:36:27,480 --> 00:36:31,200 Speaker 2: Nancy Gertner a lecture at Harvard Law School. You can 579 00:36:31,239 --> 00:36:34,760 Speaker 2: read her column on the Bloomberg Terminal. It's entitled Trump's 580 00:36:34,760 --> 00:36:39,600 Speaker 2: bluestate bias could rip the US apart. And that's it 581 00:36:39,680 --> 00:36:42,239 Speaker 2: for this edition of The Bloomberg Law Show. Remember you 582 00:36:42,280 --> 00:36:44,720 Speaker 2: can always get the latest legal news on our Bloomberg 583 00:36:44,840 --> 00:36:48,440 Speaker 2: Law Podcast. You can find them on Apple Podcasts, Spotify, 584 00:36:48,640 --> 00:36:53,680 Speaker 2: and at www dot Bloomberg dot com, slash podcast slash Law, 585 00:36:54,080 --> 00:36:56,680 Speaker 2: And remember to tune into The Bloomberg Law Show every 586 00:36:56,719 --> 00:37:00,840 Speaker 2: weeknight at ten pm Wall Street Time in grosso and 587 00:37:00,880 --> 00:37:07,399 Speaker 2: you're listening to Bloomberg mm hmm