WEBVTT - Meta on Trial & What Can Blue States Do? 0:00:02.759 --> 0:00:07.000 This is Bloomberg Law with June Grosseol from Bloomberg Radio. 0:00:08.640 --> 0:00:11.280 We're going to work with President Trump to push back 0:00:11.360 --> 0:00:14.560 on governments around the world. They're going after American companies 0:00:14.920 --> 0:00:16.279 and pushing to censor more. 0:00:17.079 --> 0:00:21.240 Meta's Mark Zuckerberg has been courting President Donald Trump since 0:00:21.239 --> 0:00:27.760 his election, scrapping his platform's content moderation policies on Facebook, Instagram, 0:00:27.960 --> 0:00:33.000 and threads, donating one million dollars to Trump's inauguration, and 0:00:33.120 --> 0:00:37.519 visiting the White House several times in recent weeks. Despite 0:00:37.560 --> 0:00:41.479 all that, the historic anti trust case against Meta that 0:00:41.720 --> 0:00:45.479 was started in the first Trump administration went to trial 0:00:45.560 --> 0:00:49.360 this week in Washington, d C. As the Federal Trade 0:00:49.400 --> 0:00:54.320 Commission tries to force Metta to divest Instagram and WhatsApp, 0:00:54.800 --> 0:00:58.560 and Mark Zuckerberg was the first witness the government called 0:00:58.960 --> 0:01:01.880 joining me is anti Trump? Law expert Harry First, a 0:01:01.960 --> 0:01:05.720 professor at NYU Law School, Harry, what's the main issue 0:01:05.800 --> 0:01:07.600 the FGC has to prove? Here? 0:01:08.080 --> 0:01:10.440 There are a few main issues. The first issue is 0:01:10.680 --> 0:01:14.600 the definition of the market. So the question is who 0:01:14.680 --> 0:01:17.760 are Facebook's competitors? That sort of in some ways a 0:01:17.840 --> 0:01:22.080 simple question. Who will consumers turn to? What sellers? If 0:01:22.160 --> 0:01:26.000 the sellers they're looking at offers a bad deal. Usually 0:01:26.000 --> 0:01:29.080 it's raises price, they switch to something else. We do 0:01:29.160 --> 0:01:31.760 this all the time. So the question is who are 0:01:31.800 --> 0:01:36.080 the rivals of Facebook and who do consumers switch to 0:01:36.680 --> 0:01:40.960 if they wanted to switch. Market definition always critical issue 0:01:41.000 --> 0:01:44.120 in any trust cases, and the first issue to resolve. 0:01:44.640 --> 0:01:47.680 The second issue is are they a monopolists in this market? 0:01:47.920 --> 0:01:50.560 You know, do they have a large enough share of 0:01:50.600 --> 0:01:53.000 the market. Is it hard to enter the market so 0:01:53.080 --> 0:01:55.559 they can sort of have power to do what they want? 0:01:56.080 --> 0:01:59.680 Do we see them doing the bad things that monopolists do, 0:02:00.080 --> 0:02:02.919 which often means, you know, selling something at a high price. 0:02:03.640 --> 0:02:07.280 Of course, Facebook says, hey, we give our thing away 0:02:07.320 --> 0:02:10.680 for free. So what's their problem? And then the third 0:02:10.680 --> 0:02:14.080 thing is, okay, if they are monopoly with monopoly power, 0:02:14.440 --> 0:02:19.480 have they engaged in anti competitive conduct that excludes competitors 0:02:19.560 --> 0:02:24.000 unreasonably from the market? Engage in some exclusion And so 0:02:24.080 --> 0:02:26.880 that's the third thing, and that's where the acquisitions of 0:02:27.160 --> 0:02:29.000 Instagram and WhatsApp come in. 0:02:30.080 --> 0:02:32.960 Let's start with the market definition, which was one of 0:02:33.000 --> 0:02:37.080 the key points Zuckerberg was questioned about. So tell us 0:02:37.120 --> 0:02:41.520 how the FTC and Meta are viewing the market. 0:02:42.320 --> 0:02:46.880 So the big argument is does Facebook compete with YouTube 0:02:46.880 --> 0:02:52.000 and Twitter, because YouTube and Twitter have huge numbers of users, 0:02:52.400 --> 0:02:58.560 and Facebook contends that the market is you know, whatever 0:02:58.600 --> 0:03:02.200 it was, maybe intoy eleven. Now there are lots of 0:03:02.280 --> 0:03:08.120 competitors and Facebook is doing things similar to particularly TikTok. 0:03:08.400 --> 0:03:11.840 So the Federal Trade Commission has called the market we 0:03:11.880 --> 0:03:15.799 always love these names and any trust, the Personal Social 0:03:15.880 --> 0:03:19.440 Networking Services market, and then they use an acronym, so 0:03:19.520 --> 0:03:23.320 you think it's something special, the PSN market, and basically 0:03:23.320 --> 0:03:26.600 that's friends and family, you know where Facebook started out 0:03:26.639 --> 0:03:31.799 putting people together and creating the social network, as the 0:03:31.880 --> 0:03:35.040 name of that movie was way back at the start. 0:03:35.600 --> 0:03:39.520 So this is the market now updated by name personal 0:03:39.600 --> 0:03:43.280 social Networking services, and the Federal Trade Commission says that's 0:03:43.280 --> 0:03:45.760 really the core of their services and it's not something 0:03:45.800 --> 0:03:50.680 that actually other platforms except for Instagram offer They don't 0:03:50.720 --> 0:03:53.920 really offer that sort of friends and family networking, and 0:03:54.040 --> 0:03:57.000 TikTok doesn't really follow people, but you know, not for 0:03:57.120 --> 0:03:59.960 keeping up on what your high school buddies are doing. 0:04:00.440 --> 0:04:04.040 So the first question is how how broad is that market? 0:04:04.400 --> 0:04:08.320 And it's complicated by a couple of things that Facebook's done. 0:04:08.600 --> 0:04:12.400 They do have a chat function, Messenger, so that might 0:04:12.440 --> 0:04:16.839 bring in you know, other you know chat platforms Apple 0:04:16.960 --> 0:04:20.880 for example. Or they do have reels, which are you know, 0:04:21.000 --> 0:04:25.120 these short videos. Of course that's TikTok, and that was 0:04:25.160 --> 0:04:28.599 an effort to compete with them. So Facebook says, hey, 0:04:29.040 --> 0:04:31.360 you know, lots of choices for consumers. They don't want 0:04:31.360 --> 0:04:35.120 to watch reels on Facebook, they go to TikTok and 0:04:35.200 --> 0:04:38.159 vice versa. So we have to include them in the market, 0:04:38.279 --> 0:04:41.440 says Meta. And you know, that's what a lot of 0:04:41.480 --> 0:04:45.240 the argument's going to be with data and consumer surveys 0:04:45.240 --> 0:04:49.400 and so forth. And the analogy that the Commission has 0:04:49.560 --> 0:04:53.400 used and I think will continue to use is supermarkets. 0:04:53.839 --> 0:04:57.240 So there was a famous case involving Whole Foods and 0:04:57.279 --> 0:05:02.200 an acquisition that Whole Foods did, and the market that 0:05:02.279 --> 0:05:06.280 the Federal Trade Commission called it and that they won 0:05:07.200 --> 0:05:14.320 was the PNOS market got it premium natural organic supermarkets. 0:05:14.760 --> 0:05:19.800 And when Whole Foods made this acquisition of another market 0:05:19.839 --> 0:05:22.960 like that, they said, ah, that's the market. Other supermarkets 0:05:22.960 --> 0:05:25.719 are not in this market, you know, like stopping shopper 0:05:26.160 --> 0:05:29.480 and so forth. And the court in which this case 0:05:29.560 --> 0:05:33.160 is being tried. The PC Circuit accepted that definition, and 0:05:33.200 --> 0:05:35.640 the point is sort of a simple one. Yeah, they've 0:05:35.640 --> 0:05:37.760 got lots of things in the supermarket, but you go 0:05:37.839 --> 0:05:42.440 to certain supermarkets sort of a core of users for 0:05:42.600 --> 0:05:45.200 a core of things. So you go to Whole Foods 0:05:45.200 --> 0:05:47.200 because you like to pay high prices. Oh wait a minute, 0:05:47.240 --> 0:05:50.200 that's wrong. You go to Whole Foods because you want 0:05:50.240 --> 0:05:54.560 the organic, natural, premium stuff that they specialize in, and 0:05:54.600 --> 0:05:57.279 then you buy milk. So you know, you go to 0:05:57.560 --> 0:06:00.599 Facebook because you want to communicate with your friends and 0:06:00.680 --> 0:06:03.039 family and then you know, maybe you'll look at some 0:06:03.120 --> 0:06:05.440 reels or maybe do some other things or what whatever 0:06:05.440 --> 0:06:07.880 other feeds they've got, but the core is still that. 0:06:08.320 --> 0:06:11.279 So that's going to be the legal and sort of 0:06:11.320 --> 0:06:14.920 factual contention that the parties are going to litigate over 0:06:15.320 --> 0:06:16.800 during the course of this trial. 0:06:17.120 --> 0:06:22.839 Yeah, and Zuckerberg said that Facebook's feed has turned away 0:06:22.839 --> 0:06:26.080 from family and friends and toward quote more of a 0:06:26.120 --> 0:06:28.960 broad discovery entertainment. 0:06:28.400 --> 0:06:34.440 Space, right, yeah, yeah, they sure we compete with television, Yeah, 0:06:34.480 --> 0:06:37.039 and tennis and the national football They're not going to 0:06:37.080 --> 0:06:40.120 go that far. But you know, the game if you 0:06:40.160 --> 0:06:42.680 want to call it that. But The idea is you 0:06:42.800 --> 0:06:46.000 broaden out. Consumers do have lots of choices, do do 0:06:46.120 --> 0:06:50.120 different things, and they you know, they don't only look 0:06:50.160 --> 0:06:55.159 at Facebook, and Facebook over time has tried to bring 0:06:55.240 --> 0:06:59.520 more things within its ecosystem, within the platform and to 0:06:59.600 --> 0:07:04.200 keep people centered on Facebook. So they're gone into virtual reality. 0:07:04.520 --> 0:07:09.080 That's why Zuckerberg renamed the company Meta because he wants 0:07:09.200 --> 0:07:13.200 the metaverse so true that you know, but that doesn't 0:07:13.240 --> 0:07:15.920 take away from the fact that they still sell groceries, 0:07:16.240 --> 0:07:18.880 you know. You know, they may want to have espressos, 0:07:18.920 --> 0:07:21.200 you know, in the grocery store, but they're not an 0:07:21.320 --> 0:07:24.440 espresso store, so you know, they still sell their core 0:07:24.520 --> 0:07:27.280 function and that's why people put up with all the 0:07:27.520 --> 0:07:33.200 junk pardon my French that they see with these ads constantly. 0:07:33.800 --> 0:07:37.280 Can barely find things, you know, summing through all the 0:07:37.320 --> 0:07:41.280 ads that you get fits, so people still stick with that. 0:07:42.400 --> 0:07:46.000 So how do you show that Meta is a monopolist? 0:07:46.520 --> 0:07:49.640 Yeah, this is a good question. A normal way is 0:07:49.960 --> 0:07:52.520 by what is referred to as the structure of the market. 0:07:52.600 --> 0:07:56.920 So what's their share of the market and how easier 0:07:57.000 --> 0:07:59.880 hard is it for others to enter the market and 0:08:00.200 --> 0:08:03.320 reduce their power. So if it's very easy to enter, 0:08:03.640 --> 0:08:06.080 and you have one hundred percent of the market, you 0:08:06.120 --> 0:08:08.840 don't really have much power because someone can come in 0:08:08.880 --> 0:08:12.600 tomorrow and just wreck your plans. So you sort of 0:08:12.600 --> 0:08:16.440 look at both things, and they'll measure shares by daily 0:08:16.760 --> 0:08:21.680 average users and monthly average users doors and mows. You know, 0:08:21.720 --> 0:08:24.240 how long do people stay, what's their engagement? They've got 0:08:24.280 --> 0:08:26.640 all sorts of data about that, and they're going to 0:08:26.680 --> 0:08:29.840 fight over how much of that time is spent on 0:08:30.440 --> 0:08:32.920 friends and family, and how much of that time is 0:08:32.920 --> 0:08:37.560 spent on let's say, reels or advertising or the news 0:08:37.559 --> 0:08:41.520 feed or whatever. And so maybe the share isn't so hard, 0:08:41.640 --> 0:08:45.480 so they'll look at market share. The judges already in 0:08:45.520 --> 0:08:49.240 the past have refused to dismiss the case on sort 0:08:49.280 --> 0:08:52.240 of arguments they don't have a monopoly share. But you 0:08:52.280 --> 0:08:54.240 have to work through the facts and now convince the 0:08:54.320 --> 0:08:57.199 judge with all the data and how easier heart is 0:08:57.240 --> 0:09:00.760 it to get in well. Last, and you try to 0:09:00.800 --> 0:09:06.000 start a PSN company, it's pretty tough given the number 0:09:06.000 --> 0:09:09.600 of users they have and the unwillingness of people to 0:09:10.040 --> 0:09:12.599 you know, sort of move all their photos and information 0:09:12.720 --> 0:09:15.600 to some other platform. There's another way of proving it. 0:09:15.679 --> 0:09:18.160 The other is you act like a monopolist. You have 0:09:18.240 --> 0:09:21.480 high prices. So since there are no prices, and the 0:09:21.480 --> 0:09:24.320 Federal Trade Commission is saying they take it out by 0:09:24.360 --> 0:09:27.960 degrading the product, they don't give us the privacy we'd like, 0:09:28.720 --> 0:09:32.600 and they increase the ad load so you get more 0:09:32.640 --> 0:09:35.840 and more ads. That seems like an easy one to me, 0:09:36.280 --> 0:09:39.320 for what little I use Facebook. But there'll as soon 0:09:39.400 --> 0:09:42.880 be some evidence and testimony about the extent to which, 0:09:42.920 --> 0:09:46.839 over time Facebook serves its users who think they're getting 0:09:46.880 --> 0:09:49.240 something for free, more and more ads that they've got 0:09:49.280 --> 0:09:53.760 to go through and maybe they'll click on. Facebook says, hey, 0:09:53.840 --> 0:09:56.320 that's a service. People love ads. I'll leave that to 0:09:56.360 --> 0:09:57.840 the judge to decide. 0:09:57.880 --> 0:10:03.040 But yeah, in the opening state, Meta's attorney said, quote, 0:10:03.200 --> 0:10:07.080 a lot of people find them useful, even entertaining. I 0:10:07.080 --> 0:10:09.120 guess I'm just not one of those people. 0:10:09.840 --> 0:10:14.520 Yeah, advertising, you know, is information, but good lord, ad 0:10:14.559 --> 0:10:17.480 load is just well anyway, they can argue over that, 0:10:17.720 --> 0:10:19.880 and they're going to, you know, make those arguments to 0:10:19.920 --> 0:10:23.079 the judge. But it strikes me as a heavy lift 0:10:23.240 --> 0:10:26.640 for Facebook at some point to say that all these 0:10:26.679 --> 0:10:30.520 ads which we serve you because you happen to have 0:10:30.600 --> 0:10:33.839 clicked on one thing and then that's all you see 0:10:33.880 --> 0:10:35.960 for a while. That that's a great thing. 0:10:36.840 --> 0:10:39.840 Stay with me, Harry coming up next on the Bloomberg 0:10:39.960 --> 0:10:43.439 Lawn Show, I'll continue this conversation with Professor Harry First 0:10:43.480 --> 0:10:48.320 of NYU Law School. How important is Zuckerberg's testimony and 0:10:48.400 --> 0:10:52.520 if the judge finds against Meta, my trump step in. 0:10:52.840 --> 0:10:56.280 I'm June Grosso. When you're listening to Bloomberg, I've been 0:10:56.280 --> 0:11:00.280 talking to Professor Harry First of NYU Law School. The 0:11:00.360 --> 0:11:07.000 FTC has some smoking gun emails from Meta executives, including Zuckerberg, 0:11:07.600 --> 0:11:11.840 particularly one from twenty twelve where he described the Instagram 0:11:11.880 --> 0:11:15.199 deal as a way to quote neutralize a competitor. 0:11:15.480 --> 0:11:17.960 Yeah, that's a good one. Yeah. I could see the 0:11:18.040 --> 0:11:23.320 lawyers looking at that going, oh my god, Zuckerberg, did 0:11:23.320 --> 0:11:25.560 you write that. There's a good reason why that would 0:11:25.559 --> 0:11:28.200 be called a smoking gun because it shows, you know, 0:11:28.760 --> 0:11:32.439 not every acquisition that a major platform or a monopoly, 0:11:32.559 --> 0:11:36.160 let's say, makes is illegal. It's not illegal for that reason. 0:11:36.520 --> 0:11:39.679 Firms make acquisitions all the time. The ones that are 0:11:39.720 --> 0:11:42.920 illegal in this context are those that are done to 0:11:43.120 --> 0:11:46.880 snuff out a threat to the monopolist. It's a, as 0:11:46.920 --> 0:11:49.480 they said, a buyer bury strategy. They would just buy 0:11:49.559 --> 0:11:52.760 up the competitions they were worried about. So on its 0:11:52.800 --> 0:11:55.599 face it could be neutral. Well, they made an acquisition, 0:11:55.679 --> 0:11:59.160 what the heck? And maybe they have some alleged good reasons. 0:11:59.400 --> 0:12:01.920 But then you re the email in Zuckerberg says, hey, 0:12:01.920 --> 0:12:04.560 we're you know, we're worried about this company. Let's we 0:12:04.640 --> 0:12:09.920 better buy it. And their effort at incorporating photographs into 0:12:10.320 --> 0:12:13.120 Facebook and making it the kind of thing that Instagram 0:12:13.200 --> 0:12:16.080 was doing was not going well. So they were really 0:12:16.080 --> 0:12:19.840 being challenged by Instagram. And you know, they responded to 0:12:19.880 --> 0:12:23.080 that challenge not by making a better product, but by 0:12:23.160 --> 0:12:28.400 buying their competitor. Classic move, but not a competitive move. 0:12:28.440 --> 0:12:31.720 It's an anti competitive move, so the government says, and 0:12:31.760 --> 0:12:34.040 so Mark Zuckerberg apparently said. 0:12:34.679 --> 0:12:38.040 Is Zuckerberg the most important witness or not? 0:12:38.520 --> 0:12:40.920 Really, It's hard for me to say exactly. I'm sure 0:12:40.920 --> 0:12:44.000 that Cheryl Sandberg, who ran a lot of the business, 0:12:44.280 --> 0:12:47.160 will be a very important witness. I mean, they have 0:12:47.640 --> 0:12:51.600 flashy emails from Zuckerberg, and I don't know who the 0:12:51.640 --> 0:12:55.240 more maybe some of the more current operating people, because 0:12:55.280 --> 0:12:57.960 one of the things sort of as a psychological point, 0:12:58.000 --> 0:13:00.640 I think the Commission's points the Commission going to make 0:13:01.120 --> 0:13:03.520 It's not a question that was then and this is now. 0:13:03.920 --> 0:13:06.960 It's a question of this as always. So they got 0:13:07.000 --> 0:13:11.440 their monopoly, they maintained it by these acquisitions, and then 0:13:11.520 --> 0:13:16.240 they've stuck as a monopolist, not as a real competitor. 0:13:16.360 --> 0:13:20.320 And you know, maybe their platforms have changed over time 0:13:20.400 --> 0:13:23.520 a little bit, but it's still the same basic playbook 0:13:24.520 --> 0:13:27.720 that they're following. So I'm looking to see you know, 0:13:27.800 --> 0:13:31.720 some that more recent testimony and some other executives have 0:13:31.800 --> 0:13:34.480 to say, but particularly Sheryl Samberg and. 0:13:34.400 --> 0:13:37.800 Matt Is arguing that Zuckerberg's past statements are no longer 0:13:37.920 --> 0:13:41.920 relevant because of competition from TikTok YouTube. 0:13:42.600 --> 0:13:45.840 Yeah, so that was then, this is now. So you know, 0:13:45.920 --> 0:13:49.320 he wrote that then and maybe he was concerned and 0:13:49.360 --> 0:13:52.080 maybe should have been, maybe shouldn't have been, But you know, 0:13:52.240 --> 0:13:56.360 now the competitive environment looks very different, and you know, 0:13:56.480 --> 0:14:00.719 we're in a world where particularly TikTok but also YouTube, 0:14:01.040 --> 0:14:04.880 you know, consumers have lots of choices when they you know, 0:14:05.080 --> 0:14:09.760 look at these media and less and less as the choice. 0:14:09.800 --> 0:14:11.880 Because I want to be sure, I'm in you know, 0:14:12.280 --> 0:14:15.760 a friends group with my grandma. It's I want these 0:14:15.840 --> 0:14:20.400 quick entertainment reels. I'm following performers. I want to know, 0:14:20.640 --> 0:14:23.880 you know, how to do something. And so the tension, 0:14:24.680 --> 0:14:27.720 which is, you know, in some sense what the limit 0:14:27.880 --> 0:14:32.720 is on what people can do, attention has shifted from 0:14:33.000 --> 0:14:37.280 you know, your father's or grandfather's product, which was Facebook, 0:14:37.600 --> 0:14:39.880 to you know, these other alternatives. 0:14:40.080 --> 0:14:44.240 Where does it fit in that the FTC had a 0:14:44.360 --> 0:14:48.880 chance to challenge the deals for Instagram in twenty twelve, 0:14:48.920 --> 0:14:51.200 then for whatsappened twenty fourteen. 0:14:52.400 --> 0:14:56.160 Well, so, first of all, legally it doesn't matter when 0:14:56.360 --> 0:15:00.000 the Federal Trade Commission or the Justice Department reviews emerge 0:15:00.680 --> 0:15:04.440 before it's consummated. All they do is look at it 0:15:04.440 --> 0:15:07.320 to see whether they want to bring suits in. They 0:15:07.360 --> 0:15:11.720 don't approve mergers, so in some sense it doesn't matter 0:15:11.760 --> 0:15:16.400 that they passed at that time, but it does cast 0:15:16.520 --> 0:15:21.920 a psychological poll a bit over the case. You know, well, 0:15:22.000 --> 0:15:24.400 if it was so obvious that this was, you know, 0:15:24.480 --> 0:15:27.600 trying to snuff out a Nason competitor, how come you 0:15:27.640 --> 0:15:31.040 didn't see it? Both of them? It's not like these things, 0:15:31.320 --> 0:15:34.280 you know, they didn't come across your desk you had 0:15:34.320 --> 0:15:37.440 never heard of Facebook. I mean, so I think that's 0:15:37.520 --> 0:15:41.480 part of the poll, even though that doesn't matter, and 0:15:42.600 --> 0:15:46.160 it can later turn into something that was any competitive. 0:15:46.840 --> 0:15:52.680 So what I'd assume that that Facebook will try to 0:15:52.720 --> 0:15:55.520 do is to say, well, that wasn't the deal. Then 0:15:56.000 --> 0:15:58.840 it wasn't clear they were nason competitors. You don't want 0:15:58.880 --> 0:16:03.440 to quash companies from acquiring small companies. It's important for innovation, 0:16:04.000 --> 0:16:07.320 and now to turn around, you know, a decade plus 0:16:07.440 --> 0:16:11.600 later and say guess what, now we don't like it. 0:16:11.840 --> 0:16:17.320 Maybe maybe that's not the best approach to antitrust. And 0:16:17.360 --> 0:16:20.640 it may come up, particularly even if it doesn't come 0:16:20.720 --> 0:16:23.520 up on liability directly, I'm sure that it's going to 0:16:23.560 --> 0:16:26.920 come up on remedy when they get to that that 0:16:28.400 --> 0:16:30.720 you know, time will be an important part of the 0:16:30.720 --> 0:16:34.040 theme in remedy. If Facebook does lose a. 0:16:34.040 --> 0:16:38.960 Trial, so remedy. Speaking of remedy, is it an existential 0:16:39.000 --> 0:16:42.080 threat to Meta or more than that? Estimates say that 0:16:42.120 --> 0:16:46.400 it earns about half of its advertising revenue from Instagram. 0:16:46.680 --> 0:16:49.880 Well, I don't know the exact numbers. That sounds plausible, 0:16:50.120 --> 0:16:53.480 and I don't know the extent to which those numbers 0:16:53.520 --> 0:16:58.120 are US only, you know, I mean, Facebook's worldwide, so 0:16:58.680 --> 0:17:04.600 an existential threat you know, probably not, but maybe a 0:17:04.680 --> 0:17:09.000 threat in terms of future development of AI. I don't 0:17:09.040 --> 0:17:12.720 know's it's obviously important. They certainly are fighting hard to 0:17:12.800 --> 0:17:17.200 hold on to both of these acquisitions. So if they 0:17:17.240 --> 0:17:23.120 do lose on liability, that's sort of an obvious remedy, 0:17:24.080 --> 0:17:27.400 but not necessarily going to be the one the court 0:17:27.440 --> 0:17:33.639 will accept. So the threat is a potential threat, important threat, 0:17:33.960 --> 0:17:37.879 But there are lots of steps before we would see, 0:17:38.040 --> 0:17:41.600 you know, an order to separate those companies, because. 0:17:41.440 --> 0:17:45.639 A breakup of that size hasn't happened since AT and 0:17:45.680 --> 0:17:47.040 T forty years ago. 0:17:47.560 --> 0:17:51.040 Well, we haven't taken on companies of this size. We 0:17:51.119 --> 0:17:56.280 did take on Microsoft, didn't order structural relief. The AT 0:17:56.400 --> 0:17:59.440 and T breakup was by agreement. I mean, it was 0:17:59.480 --> 0:18:02.240 a result of litigation in a sense, but it was 0:18:02.280 --> 0:18:07.439 not a decree entered by a court after losing a case. 0:18:08.280 --> 0:18:13.440 So we don't do divestitures that often, you know, not never, 0:18:14.480 --> 0:18:17.199 it does get done, but this is certainly of an 0:18:17.240 --> 0:18:21.040 important magnitude, and you know, puts the court in a 0:18:21.200 --> 0:18:26.040 difficult role of trying to separate companies that Facebook frankly 0:18:26.119 --> 0:18:29.720 has done its best to schmush together, to use the 0:18:29.840 --> 0:18:33.720 technical term. So I think that their operations are very 0:18:33.800 --> 0:18:38.040 integrated and part is I think probably a conscious effort 0:18:38.080 --> 0:18:42.439 to make it harder to disintegrate them. So yeah, it 0:18:42.440 --> 0:18:46.359 would be difficult. There's a famous line that divestiture is 0:18:46.400 --> 0:18:50.120 a remedy, not a penalty, and Jedge learning Hand said 0:18:50.160 --> 0:18:54.480 that after the alcoholic case. So even if they broke 0:18:54.560 --> 0:18:58.639 the law quote unquote found to have violate the Clayton Act, 0:18:59.040 --> 0:19:02.560 that doesn't mean that, you know, the government is entitled 0:19:03.000 --> 0:19:06.639 to this remedy. They still will have a tough fight 0:19:07.200 --> 0:19:08.920 to get the court to do this. 0:19:09.960 --> 0:19:14.040 Can we read anything into the fact that Judge Bosberg 0:19:14.200 --> 0:19:19.600 has sounded skeptical about the FTC's case. He dismissed the 0:19:19.680 --> 0:19:22.399 initial case in twenty twenty one, and in November he 0:19:22.480 --> 0:19:27.160 said the agency faces hard questions about whether it's claims 0:19:27.200 --> 0:19:29.719 can hold up in the crucible of trial. 0:19:30.240 --> 0:19:33.840 Right, Well, he's running the crucible so like an Arthur 0:19:33.880 --> 0:19:39.600 Miller play. So Judge Boseburg, just you know from reading 0:19:39.600 --> 0:19:46.280 his opinions, is sharp, he's critical. He is not a 0:19:46.280 --> 0:19:49.480 pushover for the government. But he's not a pushover for 0:19:49.520 --> 0:19:54.680 the defendants either, So you know, I read this as 0:19:54.720 --> 0:19:59.240 saying he'll come out with an opinion that will prove 0:19:59.480 --> 0:20:03.719 challenge for the losing party on appeal, wherever that is. 0:20:04.160 --> 0:20:06.959 And I don't predict that he's necessarily going to come 0:20:07.000 --> 0:20:10.680 out in favor of Facebook, frankly, because he's been willing 0:20:10.760 --> 0:20:14.080 to accept, at least as a legal matter, important arguments 0:20:14.119 --> 0:20:18.960 from the government and dismissed some of Facebook's defenses. And 0:20:19.480 --> 0:20:22.480 you know you're not going to fool a judge. 0:20:23.880 --> 0:20:28.960 Finally, Harry, So suppose Judge Bosburg does rule for the government. 0:20:29.560 --> 0:20:33.840 Mark Zuckerberg has been closing up to President Trump for 0:20:33.960 --> 0:20:37.399 a while now. Could Trump bail Meta out? 0:20:38.040 --> 0:20:41.360 I guess the answer is short, At least at this point, 0:20:42.040 --> 0:20:45.159 he has pretty much seized control. I don't know what 0:20:45.240 --> 0:20:48.680 you want to call it, a hostile takeover, whatever takeover 0:20:48.800 --> 0:20:52.400 of the Federal Trade Commission. He fired the two Democratic 0:20:52.760 --> 0:20:57.719 members of the commission. Two commissioners supposed to be balanced 0:20:58.119 --> 0:21:02.280 bipartisan commission fire the two for no reason other than 0:21:02.320 --> 0:21:06.720 the Democrats. The chair is slavish in his praise of 0:21:06.840 --> 0:21:09.800 the President. I think that's a fair word. I have 0:21:09.840 --> 0:21:14.040 to say. So, yes, I think Trump could very well 0:21:14.160 --> 0:21:17.919 order whatever he wanted to order, and if the chairman 0:21:18.040 --> 0:21:20.000 or the other commissioners didn't want to go along, you 0:21:20.040 --> 0:21:22.720 can just fire them. At least that's how he sees 0:21:22.760 --> 0:21:25.000 the law. It may turn out that that's not going 0:21:25.040 --> 0:21:27.520 to be the law. Maybe the Supreme Court is going 0:21:27.560 --> 0:21:31.679 to not take that final step in terms of ending 0:21:31.760 --> 0:21:36.280 the independence of regulatory agencies, but we'll have to see. 0:21:36.359 --> 0:21:39.760 That's in litigation. But if he has control, then he 0:21:40.160 --> 0:21:43.560 can do that. Even before he did try to pressure 0:21:43.680 --> 0:21:47.200 in his first administration, pressure the chair of the Federal 0:21:47.240 --> 0:21:50.960 Trade Commission, who resisted things. But now the ability and 0:21:51.000 --> 0:21:54.960 willingness of the chairman who resists whatever the president wants 0:21:55.040 --> 0:21:57.680 is zero. So we'll just have to see. That's said. 0:21:57.720 --> 0:22:00.800 I'm not quite sure I know or understand, and maybe 0:22:01.000 --> 0:22:04.560 the President doesn't either what he might want and what 0:22:04.640 --> 0:22:07.560 he would pressure the Federal Trade Commission to do. Obviously 0:22:08.000 --> 0:22:10.720 he's not pulled the plug on this litigation, which he 0:22:10.800 --> 0:22:13.920 could have, so we'll just have to see how it goes. 0:22:14.240 --> 0:22:16.320 So he's great to talk to you, Harry, Thanks so much. 0:22:16.800 --> 0:22:20.639 That's Professor Harry First of NYU Law School. Coming up 0:22:20.680 --> 0:22:23.960 next on the Bloomberg Law Show, it seems like President 0:22:24.000 --> 0:22:28.200 Trump is targeting blue states? How can they fight back? 0:22:29.080 --> 0:22:34.200 I'm June Grosso. When you're listening to Bloomberg, is President 0:22:34.240 --> 0:22:38.480 Trump's blue state bias? Showing some of his recent actions 0:22:38.520 --> 0:22:42.199 seem to be targeting blue states? Like a Department of 0:22:42.240 --> 0:22:48.199 Health and Human Services funding cutoff that closed offices in Boston, Chicago, 0:22:48.400 --> 0:22:52.720 New York City, San Francisco, and Seattle, all cities in 0:22:52.800 --> 0:22:56.359 blue states. But even if Trump is singling out blue 0:22:56.359 --> 0:23:00.359 states in his retribution campaign, what can they do about it? 0:23:00.880 --> 0:23:04.480 My guest is retired federal judge Nancy Gertner, a senior 0:23:04.600 --> 0:23:08.280 lecturer at Harvard Law School. She's a co author of 0:23:08.320 --> 0:23:12.879 a Bloomberg Law legal insight piece entitled Trump's Blue State 0:23:13.000 --> 0:23:17.119 Bias could rip the US apart? Judge, can you start 0:23:17.160 --> 0:23:22.640 by telling us about some of Trump's actions targeting blue states? 0:23:22.840 --> 0:23:27.119 Well, the most recent one was when he closed five 0:23:27.520 --> 0:23:34.119 of the ten AHHS offices, and significantly, the five were 0:23:34.160 --> 0:23:38.240 all in blue states. In addition, he has suspended the 0:23:38.280 --> 0:23:43.600 funding for various kinds of programs to hospitals. But really 0:23:43.800 --> 0:23:47.719 he's listening, we believe, only to the red states that 0:23:47.800 --> 0:23:51.720 are begging for these this to return. So there was 0:23:51.800 --> 0:23:54.680 you know, Katie Britt from I think it was Alabama 0:23:54.680 --> 0:23:57.439 calls him, you know, terre and state, and we believe 0:23:57.480 --> 0:24:00.680 that he will do that. So he's basically pulling out 0:24:00.920 --> 0:24:04.600 federal funds who advantage the red states over the blue 0:24:05.080 --> 0:24:06.720 and we think that that's going to be a pattern 0:24:06.840 --> 0:24:09.359 going forward. You know, the pattern has not been completed. 0:24:09.680 --> 0:24:13.320 We haven't seen all aspects of it, but clearly this 0:24:13.440 --> 0:24:15.639 is what we have seen so far, particularly the thing 0:24:15.720 --> 0:24:19.440 that happened ten days ago with respect to AHHS. I mean, 0:24:19.440 --> 0:24:23.679 why do you shut down the regional offices that do 0:24:23.840 --> 0:24:29.080 the most business, the most business namely you know, New York, Boston, 0:24:29.480 --> 0:24:33.000 San Francisco, Seattle. I think Chicago was one of them 0:24:33.040 --> 0:24:36.040 as well. I mean, it's really pretty transparent what's going on? 0:24:36.960 --> 0:24:39.480 And what does the Supreme Court said about the federal 0:24:39.520 --> 0:24:44.480 government's requirement to treat states the same? 0:24:45.440 --> 0:24:48.400 Well in a decision that I mostly disagreed with, which 0:24:48.440 --> 0:24:51.240 is the Shelby County decision that was dealing with the 0:24:51.400 --> 0:24:55.320 preclearance requirement of the voting right fact. The preclearance requirement 0:24:55.400 --> 0:24:58.840 of the voting right fact was a requirement that really 0:24:58.880 --> 0:25:03.639 reflected discrimination against black people that had occurred in certain 0:25:03.680 --> 0:25:07.119 states in the South, that was documented, that was well known. 0:25:07.480 --> 0:25:11.120 The Supreme Court eliminated Preclearance, which basically was a situation 0:25:11.200 --> 0:25:14.879 in which the government would review any changes in voting 0:25:14.960 --> 0:25:18.320 rights procedures in those states to make certain that it 0:25:18.359 --> 0:25:23.439 didn't continue to disadvantage black people or didn't redisadvantage black people. 0:25:23.880 --> 0:25:27.680 And what happened was the Court eliminated that preclearance requirement 0:25:27.760 --> 0:25:30.920 on the theory that there was a requirement of equal 0:25:31.000 --> 0:25:34.119