1 00:00:00,480 --> 00:00:05,720 Speaker 1: You're listening to Bloomberg Law with June Grasso from Bloomberg Radio. 2 00:00:06,360 --> 00:00:09,160 Speaker 1: It was a new virtual experience for the four big 3 00:00:09,200 --> 00:00:13,840 Speaker 1: tech titans on Wednesday, five hours of often combative questions 4 00:00:13,880 --> 00:00:17,640 Speaker 1: from lawmakers who accuse them of using their company's immense 5 00:00:17,720 --> 00:00:22,680 Speaker 1: power to crush rivals and squash competition. The CEOs, Facebook's 6 00:00:22,680 --> 00:00:27,560 Speaker 1: Mark Zuckerberg, Apple's Tim Cook, Google's Sundar Pachai, and Amazon's 7 00:00:27,600 --> 00:00:31,320 Speaker 1: Jeff Bezos, whose platforms have a combined value of nearly 8 00:00:31,400 --> 00:00:36,000 Speaker 1: five trillion dollars, testified that their companies face tough competition. 9 00:00:36,680 --> 00:00:40,240 Speaker 1: Our business model is advertising, and we face intense competition. 10 00:00:40,680 --> 00:00:42,880 Speaker 1: I would describe it as a street fight for market 11 00:00:42,880 --> 00:00:46,760 Speaker 1: share in the smartphone business. Competition drives us tenovid and 12 00:00:46,800 --> 00:00:49,839 Speaker 1: it also leads to better products. We have a policy 13 00:00:49,840 --> 00:00:54,600 Speaker 1: against using seller specific data to aid our private label business, 14 00:00:55,480 --> 00:00:58,800 Speaker 1: but I can't guarantee you that that policy has never 15 00:00:58,880 --> 00:01:02,400 Speaker 1: been violated. Joining me as Jennifer Re Bloomberg Intelligence Senior 16 00:01:02,440 --> 00:01:06,760 Speaker 1: Litigation analyst, so Jender, the House Antitrust Subcommittee make the 17 00:01:06,840 --> 00:01:09,760 Speaker 1: case that the big tech companies use their power to 18 00:01:09,880 --> 00:01:13,120 Speaker 1: stifle competition and have to be reined in well to 19 00:01:13,240 --> 00:01:15,360 Speaker 1: some extent they did. I mean, what they showed is 20 00:01:15,400 --> 00:01:19,800 Speaker 1: that they have, through their investigation, found documents that suggests 21 00:01:20,080 --> 00:01:23,600 Speaker 1: that there has been anti competitive conductor or potentially anti 22 00:01:23,600 --> 00:01:27,039 Speaker 1: competitive conduct by these companies, and they highlighted some of 23 00:01:27,080 --> 00:01:29,839 Speaker 1: those documents. So, you know, but what we saw here 24 00:01:30,080 --> 00:01:34,800 Speaker 1: is a snippet, and antitrust really relies on, you know, 25 00:01:34,840 --> 00:01:38,720 Speaker 1: the totality of the evidence and all of the issues 26 00:01:38,959 --> 00:01:43,319 Speaker 1: and decisions with respect to different conducts and different contracts 27 00:01:43,319 --> 00:01:46,080 Speaker 1: and strategies of companies. So you know, we saw this 28 00:01:46,280 --> 00:01:49,440 Speaker 1: just a granule of really what needs to be looked 29 00:01:49,440 --> 00:01:52,280 Speaker 1: at to determine whether these companies are violating the anti 30 00:01:52,280 --> 00:01:55,200 Speaker 1: trust laws. But from this window that we saw with 31 00:01:55,640 --> 00:01:59,480 Speaker 1: Cherry Pick documents, yes, what they suggested is that these 32 00:01:59,520 --> 00:02:03,080 Speaker 1: companies have been ways abuse power in certain markets. Mark 33 00:02:03,160 --> 00:02:05,960 Speaker 1: Zuckerberg got the most questions and seemed to have the 34 00:02:06,000 --> 00:02:11,080 Speaker 1: toughest time, as representatives repeatedly cited internal documents to show 35 00:02:11,120 --> 00:02:15,280 Speaker 1: how Facebook has either copied or simply acquired competitors. Did 36 00:02:15,280 --> 00:02:18,480 Speaker 1: you warn Evan Spiegel, the founder of Snapchat, that Facebook 37 00:02:18,520 --> 00:02:20,480 Speaker 1: was in the process of cloning the features of his 38 00:02:20,560 --> 00:02:24,280 Speaker 1: company while also attempting to buy Snapchat congresswoman. I don't 39 00:02:24,320 --> 00:02:28,080 Speaker 1: remember those specific conversations, but that was also an area 40 00:02:28,120 --> 00:02:30,080 Speaker 1: where it was very clear that we were going to 41 00:02:30,120 --> 00:02:33,240 Speaker 1: be building something. And Zuckerberg was also grilled over the 42 00:02:33,280 --> 00:02:36,760 Speaker 1: acquisition of Instagram. How did he fare? Yeah, I think 43 00:02:36,880 --> 00:02:39,239 Speaker 1: if you think in terms of the four different companies 44 00:02:39,240 --> 00:02:42,840 Speaker 1: and which one came out the worst from an antitrust perspective, 45 00:02:43,120 --> 00:02:45,160 Speaker 1: you know, in my mind it would be Facebook, and 46 00:02:45,200 --> 00:02:48,079 Speaker 1: it would be this issue. I think Facebook, of these 47 00:02:48,080 --> 00:02:50,760 Speaker 1: four companies, is the one that's most at risk to 48 00:02:50,919 --> 00:02:54,639 Speaker 1: ultimately down the road, whether it's through enforcement or through legislation, 49 00:02:55,160 --> 00:02:59,880 Speaker 1: may face efforts to divest Instagram and or WhatsApp. And 50 00:03:00,360 --> 00:03:03,720 Speaker 1: what the representative was able to do was show documents 51 00:03:03,720 --> 00:03:07,560 Speaker 1: that suggested that the reason for buying Instagram was to 52 00:03:07,720 --> 00:03:11,200 Speaker 1: take out a rival. Now, again, as I said, antitrust 53 00:03:11,280 --> 00:03:13,840 Speaker 1: violations depend on the totality of the evidence, and so 54 00:03:13,919 --> 00:03:15,720 Speaker 1: we need to see what the other side of the 55 00:03:15,760 --> 00:03:18,120 Speaker 1: story is. And there's always more to a story. But 56 00:03:18,240 --> 00:03:20,919 Speaker 1: it doesn't look good, you know, if you go back 57 00:03:20,919 --> 00:03:24,280 Speaker 1: to the Microsoft case, which is sort of I guess, 58 00:03:24,280 --> 00:03:27,720 Speaker 1: the bible for how to move forward against these companies 59 00:03:27,800 --> 00:03:31,640 Speaker 1: on a question of illegal monopolization, you know, the standard 60 00:03:31,720 --> 00:03:34,600 Speaker 1: that was set out there was sort of shown to 61 00:03:34,639 --> 00:03:38,160 Speaker 1: be met in certain ways by the documents that were 62 00:03:38,160 --> 00:03:41,480 Speaker 1: shown and the responses that Mark Zuckerberg gave, you know, 63 00:03:41,560 --> 00:03:44,560 Speaker 1: and whether as a general matter, the exclusion of this 64 00:03:44,640 --> 00:03:49,000 Speaker 1: particular rival or threat is capable reasonably capable of helping 65 00:03:49,080 --> 00:03:52,120 Speaker 1: the exclude or maintain their monopoly that was the Facebook, 66 00:03:52,440 --> 00:03:55,600 Speaker 1: which seemingly it does. And whether or not, at the 67 00:03:55,680 --> 00:03:59,120 Speaker 1: time that the company was acquired, did it reasonably constitute 68 00:03:59,120 --> 00:04:01,440 Speaker 1: a NACAN threat And you know, it looks like it too, 69 00:04:01,480 --> 00:04:04,400 Speaker 1: because Mark Zuckerberg said yes that it did. So in 70 00:04:04,440 --> 00:04:08,680 Speaker 1: your mind, then Mark Zuckerberg didn't give a really good 71 00:04:08,840 --> 00:04:14,040 Speaker 1: answer or explanation for Facebook's actions that they were not 72 00:04:14,520 --> 00:04:18,320 Speaker 1: anti competitive. Well, he wasn't really given an opportunity. I mean, 73 00:04:18,360 --> 00:04:22,080 Speaker 1: the format really was much more of a cross examination 74 00:04:22,160 --> 00:04:25,080 Speaker 1: type format than it was information gathering. You know, with 75 00:04:25,160 --> 00:04:27,680 Speaker 1: each of the lawmakers only able to have five minutes 76 00:04:27,680 --> 00:04:29,640 Speaker 1: of questioning and wanting to get out all of the 77 00:04:29,760 --> 00:04:33,000 Speaker 1: questions they had in mind, they weren't really offering the 78 00:04:33,040 --> 00:04:37,440 Speaker 1: CEOs much time to explain anything. And so again what 79 00:04:37,520 --> 00:04:40,200 Speaker 1: we saw is part of the story and not all 80 00:04:40,320 --> 00:04:42,480 Speaker 1: the facts and not the entire story, And so it's 81 00:04:42,520 --> 00:04:46,719 Speaker 1: important what else is out there and what other reasons 82 00:04:47,000 --> 00:04:49,919 Speaker 1: Facebook may have had for deciding to acquire Instagram and 83 00:04:49,960 --> 00:04:52,480 Speaker 1: what it's other documents look like. At the time that 84 00:04:52,600 --> 00:04:56,120 Speaker 1: acquired the company. I mean, there were three different regulators, 85 00:04:56,160 --> 00:04:58,800 Speaker 1: or at least two different regulators that looked at this deal. 86 00:04:59,040 --> 00:05:01,400 Speaker 1: The FTC did look at it for some time. It 87 00:05:01,440 --> 00:05:03,839 Speaker 1: wasn't a long investigation. That looks like about four or 88 00:05:03,880 --> 00:05:07,320 Speaker 1: five months that they looked at the Instagram acquisition before 89 00:05:07,320 --> 00:05:09,520 Speaker 1: they cleared it. And I believe it was also the 90 00:05:09,640 --> 00:05:13,000 Speaker 1: UK antitrust regulator that looked at that deal and concluded 91 00:05:13,560 --> 00:05:17,000 Speaker 1: that the companies at the time didn't compete, that Instagram 92 00:05:17,000 --> 00:05:18,960 Speaker 1: didn't really have much of a foothold on the market, 93 00:05:18,960 --> 00:05:22,039 Speaker 1: and that it wasn't an anti competitive deal. So, you know, 94 00:05:22,080 --> 00:05:23,640 Speaker 1: we also have to go back and look at all 95 00:05:23,640 --> 00:05:26,280 Speaker 1: the documents that those two regulators were looking at at 96 00:05:26,279 --> 00:05:28,240 Speaker 1: the time of the deal to to look at the 97 00:05:28,279 --> 00:05:31,440 Speaker 1: whole story to understand what happened there. Tell me up 98 00:05:31,480 --> 00:05:34,280 Speaker 1: next on the Bloomberg Law Show, what are the prospects 99 00:05:34,320 --> 00:05:38,040 Speaker 1: for actual antitrust action by regulators? And we'll look at 100 00:05:38,040 --> 00:05:41,440 Speaker 1: the testimony of the CEOs of Amazon, Apple, and Google. 101 00:05:42,040 --> 00:05:44,600 Speaker 1: So my first question, Mr richis why does Google steal 102 00:05:44,760 --> 00:05:51,720 Speaker 1: content from honest businesses? Mr Chapman, with respect, I disagree 103 00:05:51,720 --> 00:05:55,440 Speaker 1: with that characterization. I'm June Rosso and this is Bloomberg. 104 00:05:59,640 --> 00:06:03,160 Speaker 1: For the last year, the House Judiciary's Antitrust Subcommittee has 105 00:06:03,160 --> 00:06:06,359 Speaker 1: been investigating the business practices of the tech giants for 106 00:06:06,400 --> 00:06:10,000 Speaker 1: anti competitive conduct that might lead to more regulation or 107 00:06:10,040 --> 00:06:14,560 Speaker 1: even breakups. That investigation showed on Wednesday, as the CEOs 108 00:06:14,600 --> 00:06:18,800 Speaker 1: of Amazon, Apple, Facebook, and Google faced some tough focused 109 00:06:18,880 --> 00:06:22,560 Speaker 1: questions backed up by a mountain of subpoena documents. The 110 00:06:22,680 --> 00:06:26,800 Speaker 1: chairman of the committee, David Ceceilini, challenged Google CEO Sundar 111 00:06:26,880 --> 00:06:31,800 Speaker 1: Pachai about tactics used to stifle competition. Investigation shows that 112 00:06:31,839 --> 00:06:35,480 Speaker 1: Google's response was to threaten to delist Yelp entirely. In 113 00:06:35,560 --> 00:06:37,800 Speaker 1: other words, the choice Google gave YELP was let us 114 00:06:37,800 --> 00:06:42,240 Speaker 1: steal your content or effectively disappear from the web. Stupid Chai. 115 00:06:42,440 --> 00:06:46,480 Speaker 1: Isn't that anti competitive? Congressman? Uh, you know, when I 116 00:06:46,560 --> 00:06:49,880 Speaker 1: run the company, I'm really focused on giving uses what 117 00:06:50,000 --> 00:06:53,080 Speaker 1: they want. We conduct ourselves to the highest standard. I've 118 00:06:53,120 --> 00:06:57,120 Speaker 1: been talking to Jennifer Ree, Bloomberg Intelligence senior litigation analyst, 119 00:06:57,920 --> 00:07:01,080 Speaker 1: it seemed as if PAI strong goal to answer the 120 00:07:01,200 --> 00:07:06,200 Speaker 1: questions about advertising tech, where the company built a dominant 121 00:07:06,240 --> 00:07:11,440 Speaker 1: position mostly through acquisitions, So explain that issue and how 122 00:07:11,480 --> 00:07:15,000 Speaker 1: he handled it. I think that overall he was generally 123 00:07:15,040 --> 00:07:17,960 Speaker 1: trying to follow what was probably guidance to stick with 124 00:07:18,040 --> 00:07:20,760 Speaker 1: his own talking points and where he might have had 125 00:07:20,800 --> 00:07:24,160 Speaker 1: difficulty answering a question, to go back to his own 126 00:07:24,440 --> 00:07:27,240 Speaker 1: storyline and what he wanted to say, and I think 127 00:07:27,280 --> 00:07:29,960 Speaker 1: that's what he was doing a bit there. But again, 128 00:07:30,200 --> 00:07:32,160 Speaker 1: you know, you have to go back and look. The 129 00:07:32,280 --> 00:07:34,880 Speaker 1: Double Click acquisition, which is part of this at tech 130 00:07:34,960 --> 00:07:40,000 Speaker 1: by was extensively and intensely investigated by want of the 131 00:07:40,040 --> 00:07:44,240 Speaker 1: antitrust authorities in the US, extensively and thoroughly looked at 132 00:07:44,280 --> 00:07:47,920 Speaker 1: before it was determined that video could go forward. And again, 133 00:07:48,000 --> 00:07:51,600 Speaker 1: all of the documents that are available today were available 134 00:07:51,640 --> 00:07:55,200 Speaker 1: to those regulators at that time, and so certainly mistakes 135 00:07:55,240 --> 00:07:57,320 Speaker 1: can be made. And maybe it was one of the 136 00:07:57,360 --> 00:08:00,120 Speaker 1: other smaller acquisitions down the chain, and not just the 137 00:08:00,160 --> 00:08:04,080 Speaker 1: Double Click acquisition that gave Google this control that they 138 00:08:04,080 --> 00:08:07,440 Speaker 1: seemed to have across that whole chain of distribution from 139 00:08:07,480 --> 00:08:10,400 Speaker 1: advertiser to publisher. But I don't think that he handled 140 00:08:10,400 --> 00:08:12,440 Speaker 1: it all that well. But I will say again what 141 00:08:12,480 --> 00:08:15,000 Speaker 1: I've said before that the format was really more like 142 00:08:15,080 --> 00:08:19,520 Speaker 1: a cross exam and without giving the CEOs much time 143 00:08:19,560 --> 00:08:23,560 Speaker 1: to really respond and explain away what they were doing 144 00:08:23,600 --> 00:08:25,840 Speaker 1: and what they were thinking and what the purpose for 145 00:08:25,920 --> 00:08:28,880 Speaker 1: some of the their conduct was. So no, I don't 146 00:08:28,880 --> 00:08:31,880 Speaker 1: think he came off very well there. And along with Facebook, 147 00:08:31,920 --> 00:08:33,800 Speaker 1: I would say Google has risk and they have risk 148 00:08:33,840 --> 00:08:36,439 Speaker 1: in that area, and we are aware that the Department 149 00:08:36,440 --> 00:08:39,120 Speaker 1: of Justice has looked at targeted that specific area, the 150 00:08:39,160 --> 00:08:42,880 Speaker 1: ad tech space, with respect to their own investigation, which 151 00:08:42,960 --> 00:08:46,200 Speaker 1: we understand may culminate in a lawsuit against Google or 152 00:08:46,240 --> 00:08:49,080 Speaker 1: some sort of an action against Google. This year. This 153 00:08:49,200 --> 00:08:53,160 Speaker 1: was Amazon CEO Jeff bezos first appearance at a congressional hearing. 154 00:08:53,480 --> 00:08:56,120 Speaker 1: Many of the questions to him focused on the company's 155 00:08:56,160 --> 00:09:00,200 Speaker 1: treatment of small merchants who use Amazon's online market ice 156 00:09:00,400 --> 00:09:05,280 Speaker 1: to reach customers. Here's Democratic Congresswoman Lucy macbeth asking questions 157 00:09:05,320 --> 00:09:09,800 Speaker 1: about frustrated sellers. If Amazon didn't have monopoly power over 158 00:09:09,840 --> 00:09:12,200 Speaker 1: these sellers, do you think they would choose to stay 159 00:09:12,280 --> 00:09:16,760 Speaker 1: in a relationship that is characterized by bullying, fear, and panic. 160 00:09:18,360 --> 00:09:22,200 Speaker 1: With all respect, Congresswoman, I do not accept the premise 161 00:09:22,240 --> 00:09:24,960 Speaker 1: of your question. You know, I would say that when 162 00:09:25,160 --> 00:09:29,480 Speaker 1: companies compete vigorously, they often are going to invoke fear 163 00:09:29,880 --> 00:09:33,959 Speaker 1: and even the concept of bullying among smaller competitors. I mean, 164 00:09:34,280 --> 00:09:38,560 Speaker 1: intense competition can engender that same reaction as can anti 165 00:09:38,559 --> 00:09:42,360 Speaker 1: competitive exclusionary conduct. I imagine there are suppliers to Walmart 166 00:09:42,880 --> 00:09:45,760 Speaker 1: that would say the exact same thing. I'm only guessing, 167 00:09:46,040 --> 00:09:48,840 Speaker 1: you know, it's scary to have to negotiate against such 168 00:09:48,840 --> 00:09:53,240 Speaker 1: a powerful company. And again we have these cherry picked documents. Now, 169 00:09:53,400 --> 00:09:56,320 Speaker 1: you know, I'm not saying that Amazon hasn't crossed the 170 00:09:56,400 --> 00:09:59,680 Speaker 1: line with respect to the way it treats online sellers, 171 00:10:00,040 --> 00:10:02,880 Speaker 1: But you'd also have to see what else is out 172 00:10:02,920 --> 00:10:05,040 Speaker 1: there and what everyone else is saying, and for each 173 00:10:05,040 --> 00:10:09,280 Speaker 1: of those sellers, what their particular situations were with respect 174 00:10:09,280 --> 00:10:12,120 Speaker 1: to the pushback that they got from Amazon. So I 175 00:10:12,160 --> 00:10:15,439 Speaker 1: would say once again that because antitrust and the decision 176 00:10:15,480 --> 00:10:19,240 Speaker 1: as to whether conduct is anti competitive really is fact intensive. 177 00:10:19,320 --> 00:10:22,319 Speaker 1: It's a fact intensive decision that's based on the totality 178 00:10:22,360 --> 00:10:25,360 Speaker 1: of evidence, and not just certain cherry picked items. You know, 179 00:10:25,480 --> 00:10:28,200 Speaker 1: you'd have to see everything else. But like some of 180 00:10:28,200 --> 00:10:31,800 Speaker 1: these other companies, what was highlighted does look problematic. So 181 00:10:31,840 --> 00:10:34,200 Speaker 1: it does suggest there could be a problem there, But 182 00:10:34,400 --> 00:10:37,360 Speaker 1: we just don't know the whole story. And until that 183 00:10:37,440 --> 00:10:40,280 Speaker 1: whole story comes out, which it would if there were 184 00:10:40,320 --> 00:10:42,400 Speaker 1: some sort of a trial against one of these companies, 185 00:10:42,520 --> 00:10:45,280 Speaker 1: you know, we can't really determine what the outcome might be. 186 00:10:45,720 --> 00:10:50,079 Speaker 1: Amazon has been accused of using data from independent sellers 187 00:10:50,360 --> 00:10:55,280 Speaker 1: to create copycat products, and they've categorically denied that until 188 00:10:55,320 --> 00:11:00,240 Speaker 1: this hearing, when Bazo said he couldn't guarantee that didn't happen. Yes, 189 00:11:00,280 --> 00:11:02,880 Speaker 1: that's right, and that's not helpful to him. It's definitely 190 00:11:02,920 --> 00:11:05,240 Speaker 1: not helpful to Amazon. I mean, I think the issue 191 00:11:05,280 --> 00:11:07,960 Speaker 1: was that there is a policy within Amazon, and it 192 00:11:08,000 --> 00:11:11,000 Speaker 1: looks like that policy may have been broken. This happens 193 00:11:11,000 --> 00:11:14,520 Speaker 1: in companies more often than it should, and it's at 194 00:11:14,559 --> 00:11:17,160 Speaker 1: least according to Bezos. They're still looking at it. After 195 00:11:17,200 --> 00:11:19,600 Speaker 1: the Wall Street Journal it reported on it. They're still 196 00:11:19,600 --> 00:11:22,880 Speaker 1: doing their own internal investigation to understand what happened. And 197 00:11:22,920 --> 00:11:25,280 Speaker 1: that's why he can't respond to it. But you know, 198 00:11:25,360 --> 00:11:27,600 Speaker 1: if in fact that is going on. It's not a 199 00:11:27,640 --> 00:11:30,600 Speaker 1: good sign for Amazon, and it's just yet more ammunition 200 00:11:30,800 --> 00:11:33,880 Speaker 1: to the extent that the Department of Justice or the 201 00:11:33,920 --> 00:11:37,240 Speaker 1: Federal Trade Commission decided to bring an enforcement action, or 202 00:11:37,760 --> 00:11:41,000 Speaker 1: Congress decides to go forward with some sort of legislation, 203 00:11:41,400 --> 00:11:44,120 Speaker 1: it's just yet more on in their arsenal as a 204 00:11:44,120 --> 00:11:47,920 Speaker 1: reason to do something like that. Apple and CEO Tim 205 00:11:47,960 --> 00:11:51,000 Speaker 1: Cook seemed to get the least heat, And the questions 206 00:11:51,000 --> 00:11:54,840 Speaker 1: were really based on the App Store, Sir, we have 207 00:11:55,040 --> 00:11:58,320 Speaker 1: never increased commissions in the store since the first day 208 00:11:58,320 --> 00:12:01,800 Speaker 1: it operated in two thousand, and there's nothing to you 209 00:12:01,960 --> 00:12:05,040 Speaker 1: from doing so, is it, no, sir? I disagree strongly 210 00:12:05,080 --> 00:12:08,480 Speaker 1: with that. There is a competition for developers, just like 211 00:12:08,520 --> 00:12:11,600 Speaker 1: there's a competition for customers. First, I think it's not 212 00:12:11,640 --> 00:12:14,880 Speaker 1: surprising that Apple got the least heat. I think of 213 00:12:14,920 --> 00:12:17,800 Speaker 1: all these companies, Apples at the least risk here and 214 00:12:17,920 --> 00:12:21,640 Speaker 1: its conduct is less sort of blatantly anti competitive to 215 00:12:21,640 --> 00:12:26,440 Speaker 1: the outside observer. The idea that it charges commission at 216 00:12:26,480 --> 00:12:28,440 Speaker 1: least in the beginning to some of the apps in 217 00:12:28,480 --> 00:12:31,800 Speaker 1: its app store, really, to me, isn't an anti trust 218 00:12:31,880 --> 00:12:34,240 Speaker 1: violation When a company has a product or a service 219 00:12:34,320 --> 00:12:36,400 Speaker 1: that they can price the way they want to. And 220 00:12:36,440 --> 00:12:39,840 Speaker 1: even if it's monopoly pricing, if they've achieved the monopoly lawfully, 221 00:12:40,040 --> 00:12:43,040 Speaker 1: they can lawfully price in the monopolistic manner. You know, 222 00:12:43,120 --> 00:12:46,320 Speaker 1: if they've achieved that monopoly unlawfully, that's a different thing. 223 00:12:46,400 --> 00:12:48,440 Speaker 1: But I'm not so sure that there are allegations that 224 00:12:48,520 --> 00:12:51,600 Speaker 1: the development of the app store in itself was an 225 00:12:51,640 --> 00:12:54,680 Speaker 1: unlawful monopoly. So I don't know that they got very 226 00:12:54,720 --> 00:12:57,320 Speaker 1: far with Apple on this and the other idea that 227 00:12:57,480 --> 00:12:59,920 Speaker 1: I think they were questioning Apple on that it might 228 00:13:00,080 --> 00:13:03,600 Speaker 1: treat different app developers differently. You know, companies strike different 229 00:13:03,679 --> 00:13:06,560 Speaker 1: kinds of deals with their suppliers all the time. This 230 00:13:06,640 --> 00:13:09,800 Speaker 1: doesn't necessarily violate the laws. You know, where a company 231 00:13:09,880 --> 00:13:13,160 Speaker 1: is supplying another company in bulk, they might get better 232 00:13:13,240 --> 00:13:16,640 Speaker 1: pricing than a company that isn't. That's negotiation, and I'm 233 00:13:16,679 --> 00:13:18,599 Speaker 1: not so sure that that rises to the level of 234 00:13:18,640 --> 00:13:21,760 Speaker 1: an antitrust violation. So of all of the companies, I 235 00:13:21,800 --> 00:13:24,600 Speaker 1: think Apple came out the most unscathed, and they don't 236 00:13:24,600 --> 00:13:27,199 Speaker 1: think that's surprising because I think that they're at the 237 00:13:27,240 --> 00:13:30,600 Speaker 1: lowest level of risk for an enforcement action to begin with. 238 00:13:31,040 --> 00:13:36,440 Speaker 1: There are state and federal antitrust investigations into these tech companies. 239 00:13:37,040 --> 00:13:40,720 Speaker 1: Which companies look like there might be some kind of 240 00:13:41,000 --> 00:13:44,440 Speaker 1: legal action taken against them. Well, my assumption is that 241 00:13:44,480 --> 00:13:47,320 Speaker 1: all four of these companies are under investigation by the 242 00:13:47,600 --> 00:13:50,240 Speaker 1: FTC and or d o J. The ones we know 243 00:13:50,400 --> 00:13:53,719 Speaker 1: for a fact are Google and Facebook because they've disclosed 244 00:13:53,720 --> 00:13:57,080 Speaker 1: that when these investigations go forward their confidentials less the 245 00:13:57,080 --> 00:14:00,240 Speaker 1: company discloses it or somehow it otherwise gets leaked. You know, 246 00:14:00,280 --> 00:14:02,559 Speaker 1: we don't know for sure, but they probably all for 247 00:14:02,760 --> 00:14:06,200 Speaker 1: have been under investigation. And what we know, because I 248 00:14:06,240 --> 00:14:09,439 Speaker 1: think the d o J has been somewhat transparent about it, 249 00:14:09,480 --> 00:14:13,400 Speaker 1: is that right now the most advanced investigation seems to 250 00:14:13,400 --> 00:14:15,960 Speaker 1: be against Google. And we've heard a lot about the 251 00:14:16,000 --> 00:14:20,080 Speaker 1: possibility of some complaint or challenge being filed against Google 252 00:14:20,160 --> 00:14:22,160 Speaker 1: this year. You know, I say some sort of complaint 253 00:14:22,240 --> 00:14:25,360 Speaker 1: or challenge because if it's challenged, there's always the possibility 254 00:14:25,360 --> 00:14:27,560 Speaker 1: of a settlement, although I tend to doubt it. I 255 00:14:27,600 --> 00:14:29,200 Speaker 1: think the d o J would like to bring a 256 00:14:29,280 --> 00:14:32,040 Speaker 1: lawsuit against Google, and they'd like to do that before 257 00:14:32,080 --> 00:14:34,960 Speaker 1: the election, So there's a good possibility we'll see that 258 00:14:35,240 --> 00:14:37,880 Speaker 1: and they could focus in this ad tex space. It 259 00:14:37,960 --> 00:14:40,640 Speaker 1: could also focus on other areas as well, but we 260 00:14:40,840 --> 00:14:42,960 Speaker 1: have heard a lot about the d o J looking 261 00:14:43,000 --> 00:14:45,240 Speaker 1: at this ad tech space and having some issues with 262 00:14:45,320 --> 00:14:48,640 Speaker 1: Google's control of sort of the whole supply chain there. 263 00:14:49,240 --> 00:14:52,360 Speaker 1: It also looks like the FTC may be fairly well 264 00:14:52,400 --> 00:14:55,960 Speaker 1: advanced with respect to its investigation of Facebook leaks that 265 00:14:56,000 --> 00:14:58,600 Speaker 1: are reported in the news that it's possible there could 266 00:14:58,640 --> 00:15:01,120 Speaker 1: be some sort of an action again Facebook as early 267 00:15:01,160 --> 00:15:03,960 Speaker 1: as the first quarter or maybe even the fourth quarter, 268 00:15:04,120 --> 00:15:07,960 Speaker 1: And that could be significant because I think of all 269 00:15:08,000 --> 00:15:11,560 Speaker 1: four companies, if any of the antitrust authorities are going 270 00:15:11,600 --> 00:15:15,000 Speaker 1: to go forward and seek a court ordered breakup, in 271 00:15:15,080 --> 00:15:18,000 Speaker 1: my mind, Facebook has the most risk for that. So 272 00:15:18,320 --> 00:15:21,320 Speaker 1: that could be an interesting development if that's the kind 273 00:15:21,360 --> 00:15:23,240 Speaker 1: of remedy that they look for, if they file a 274 00:15:23,280 --> 00:15:26,680 Speaker 1: lawsuit against Facebook. It looks like, you know, if Amazon 275 00:15:26,720 --> 00:15:29,320 Speaker 1: and Apple are actually being investigated, they're a little bit 276 00:15:29,360 --> 00:15:32,440 Speaker 1: farther behind, but it doesn't mean that there won't also 277 00:15:32,560 --> 00:15:35,840 Speaker 1: be actions brought against those two companies next year. The 278 00:15:35,880 --> 00:15:39,360 Speaker 1: instructive case here is Microsoft, and in the end, there 279 00:15:39,440 --> 00:15:42,880 Speaker 1: was no breakup of Microsoft. So what are the chances that, 280 00:15:42,960 --> 00:15:47,720 Speaker 1: let's say, Facebook would be required to divest Instagram or what'sapp. 281 00:15:48,160 --> 00:15:50,720 Speaker 1: It would be an uphill climb to get there in court. 282 00:15:50,840 --> 00:15:52,360 Speaker 1: And you said it, I mean, this is what we 283 00:15:52,400 --> 00:15:55,280 Speaker 1: saw in Microsoft. Microsoft was a really good case for 284 00:15:55,320 --> 00:15:58,360 Speaker 1: the Department of Justice. They did a good job. There 285 00:15:58,440 --> 00:16:01,400 Speaker 1: was a lot of evidence of these long list of 286 00:16:01,480 --> 00:16:05,760 Speaker 1: conduct and contracts and strategies that Microsoft engaged in that 287 00:16:05,840 --> 00:16:09,920 Speaker 1: we're just blatantly exclusionary and intended for no other reason 288 00:16:10,200 --> 00:16:12,520 Speaker 1: but to hurt its rival. You know, when asked what 289 00:16:12,720 --> 00:16:15,600 Speaker 1: is your business reason for doing this? In many cases, 290 00:16:15,640 --> 00:16:18,600 Speaker 1: Microsoft had nothing to say, and in some cases they 291 00:16:18,640 --> 00:16:20,800 Speaker 1: did have something to say, but whatever they were saying 292 00:16:20,880 --> 00:16:23,240 Speaker 1: was deemed to be a sham. So that's what has 293 00:16:23,280 --> 00:16:25,000 Speaker 1: to happen here. You have to look at the anti 294 00:16:25,000 --> 00:16:28,200 Speaker 1: competitive conduct in the harm and then balanced it against 295 00:16:28,200 --> 00:16:32,680 Speaker 1: whatever the pro competitive, legitimate business reasons for that exclusion was. 296 00:16:33,000 --> 00:16:35,120 Speaker 1: And so in Microsoft, where you had a case where 297 00:16:35,120 --> 00:16:38,880 Speaker 1: you really had this blatantly anti competitive conduct and no 298 00:16:39,080 --> 00:16:42,680 Speaker 1: flip side, no pro competitive business justification that could be 299 00:16:42,720 --> 00:16:46,320 Speaker 1: weighed against it. And even then the regulators weren't able 300 00:16:46,360 --> 00:16:48,680 Speaker 1: to achieve a breakup. You know, it's hard to see 301 00:16:48,720 --> 00:16:52,000 Speaker 1: what it's going to take to get there. But Microsoft 302 00:16:52,080 --> 00:16:55,480 Speaker 1: does lay out that possibility. You know what Microsoft in 303 00:16:55,560 --> 00:17:00,360 Speaker 1: the appellate decision, the decision that resulted in reversing um 304 00:17:00,440 --> 00:17:04,200 Speaker 1: the possibility of a breakup. What they said was that 305 00:17:04,560 --> 00:17:07,040 Speaker 1: it will be in the legal exercise of market power if, 306 00:17:07,560 --> 00:17:10,439 Speaker 1: as a general matter, the exclusion of that threat is 307 00:17:10,440 --> 00:17:13,720 Speaker 1: the type of conduct reasonably capable of contributing to the 308 00:17:13,720 --> 00:17:18,040 Speaker 1: defendants continued monopoly power. Well, you know, it's fairly easy 309 00:17:18,080 --> 00:17:21,320 Speaker 1: to say that's probably the case in Facebook situation. And 310 00:17:21,359 --> 00:17:23,480 Speaker 1: then the second standard they said is whether or not 311 00:17:23,600 --> 00:17:27,800 Speaker 1: that excluded company in this case, Instagram reasonably constituted in 312 00:17:27,880 --> 00:17:30,640 Speaker 1: Mason threat at the time that it was acquired. These 313 00:17:30,680 --> 00:17:33,639 Speaker 1: the two standards Microsoft lays out to say, First, is 314 00:17:33,640 --> 00:17:36,720 Speaker 1: it anti competitive? Doesn't violate the anti dress laws, and 315 00:17:37,680 --> 00:17:40,320 Speaker 1: it looks like Facebook fits into that. But then what 316 00:17:40,480 --> 00:17:44,720 Speaker 1: the Microsoft appellate court said was that the appropriate remedy 317 00:17:44,840 --> 00:17:48,639 Speaker 1: is a really difficult decision because dibesseture is only imposed 318 00:17:48,640 --> 00:17:51,920 Speaker 1: with great caution, and that's because it's long term efficacy 319 00:17:51,960 --> 00:17:55,800 Speaker 1: is rarely certain. An absent some measure of confidence that 320 00:17:55,880 --> 00:17:58,040 Speaker 1: there's been an actual loss to competition that has to 321 00:17:58,119 --> 00:18:02,359 Speaker 1: be Restored Wisdom Council against adopting that kind of radical 322 00:18:02,359 --> 00:18:05,760 Speaker 1: structural release. It's that clause in Microsoft. I think in 323 00:18:05,800 --> 00:18:08,160 Speaker 1: my mind that that makes a little bit tough here, 324 00:18:08,400 --> 00:18:11,400 Speaker 1: because it's so hard for any judge to look into 325 00:18:11,400 --> 00:18:14,240 Speaker 1: a crystal ball and to say, what's going to happen 326 00:18:14,280 --> 00:18:17,480 Speaker 1: if what what will happen if we require Facebook to 327 00:18:17,560 --> 00:18:21,840 Speaker 1: digest Instagram or WhatsApp? What what will happen to those companies? 328 00:18:22,200 --> 00:18:24,720 Speaker 1: And certainly a world in which those companies exist for 329 00:18:24,840 --> 00:18:27,880 Speaker 1: users and exist in the way they do, well capitalized 330 00:18:27,920 --> 00:18:30,040 Speaker 1: and with R and D behind them is a better 331 00:18:30,160 --> 00:18:33,680 Speaker 1: world where they cease to exist for consumers or exist 332 00:18:33,760 --> 00:18:35,720 Speaker 1: but not in the same shape that they're in now. 333 00:18:36,080 --> 00:18:38,399 Speaker 1: And I think that's a very difficult decision that that 334 00:18:38,520 --> 00:18:42,760 Speaker 1: judges are going to be very cautious about making. Thanks 335 00:18:42,880 --> 00:18:49,560 Speaker 1: jen that's Jennifer re Bloomberg Intelligence Senior litigation analyst. You're 336 00:18:49,640 --> 00:18:57,680 Speaker 1: listening to from Bloomberg Radio Bloomberg Law with June Grazzo Boolberg. 337 00:18:57,720 --> 00:19:01,840 Speaker 1: Postmates and door Dash are pushing a million dollar ballot 338 00:19:01,880 --> 00:19:05,920 Speaker 1: initiative to overturn a California law designed to force them 339 00:19:05,960 --> 00:19:09,680 Speaker 1: to treat rideshare and delivery drivers as employees. At the 340 00:19:09,760 --> 00:19:12,639 Speaker 1: same time, an elite legal team at Gibson, Dunn and 341 00:19:12,680 --> 00:19:15,920 Speaker 1: Crutcher is trying to avoid a court ruling they say 342 00:19:16,000 --> 00:19:19,480 Speaker 1: could decimate the f based business model playing the long 343 00:19:19,520 --> 00:19:23,560 Speaker 1: game in California courts. Joining me as Christopher for Bloomberg 344 00:19:23,680 --> 00:19:26,359 Speaker 1: Law team leader in the Business of Law, Chris tell 345 00:19:26,440 --> 00:19:29,399 Speaker 1: us about attorney Ted Boutros, who leads the go team 346 00:19:29,400 --> 00:19:33,679 Speaker 1: at Gibson Dunne. So. Ted Boutros is a partner at 347 00:19:33,760 --> 00:19:38,159 Speaker 1: Gibson Dune, which is a well known white chee law firm. Uh. 348 00:19:38,200 --> 00:19:41,920 Speaker 1: He's based in the Los Angeles office. Um. This is 349 00:19:41,960 --> 00:19:46,680 Speaker 1: a guy who is the Seasons litigator, high profile Southern 350 00:19:46,680 --> 00:19:50,760 Speaker 1: California attorney who's well known for representing a lot of 351 00:19:50,800 --> 00:19:54,240 Speaker 1: big name clients. He's also known for having like a 352 00:19:54,359 --> 00:19:58,760 Speaker 1: very noticeable shock whull head of white hair that's kind 353 00:19:58,760 --> 00:20:02,080 Speaker 1: of become his calling art in some legal circles. That's uh, 354 00:20:02,640 --> 00:20:05,240 Speaker 1: it's the way that people think of him. Uh. Um. 355 00:20:05,280 --> 00:20:07,320 Speaker 1: You know when you talk about Ted Ted bou trust, 356 00:20:07,359 --> 00:20:10,359 Speaker 1: that's one of the first things that comes up. Um. 357 00:20:10,359 --> 00:20:14,920 Speaker 1: But he's a famed First Amendment lawyer who these days 358 00:20:14,960 --> 00:20:18,440 Speaker 1: has spent a lot of time going up against President 359 00:20:18,480 --> 00:20:23,120 Speaker 1: Donald Trump and the Trump administration in court. Among other 360 00:20:23,240 --> 00:20:28,600 Speaker 1: notable clients, he recently represented Mary Trump, the president's nie, 361 00:20:28,880 --> 00:20:34,560 Speaker 1: as well as John Bolton, the president's former national security advisor, 362 00:20:34,800 --> 00:20:38,359 Speaker 1: in a pair of cases in which Trump was trying 363 00:20:38,400 --> 00:20:42,440 Speaker 1: to prevent the publication of tell All books. Who Trust 364 00:20:42,480 --> 00:20:45,359 Speaker 1: has also represented a number of media figures. He was 365 00:20:45,480 --> 00:20:49,439 Speaker 1: the lawyer for CNN in a case revolving around anchor 366 00:20:49,600 --> 00:20:53,919 Speaker 1: Jim maccassas the revocation of his press pat Uh. He 367 00:20:54,040 --> 00:20:58,080 Speaker 1: handled a similar case involving a reporter at Playboy, and 368 00:20:58,160 --> 00:21:04,880 Speaker 1: he's been involved in related litigation involving Rachel Maddow. So recently, 369 00:21:05,440 --> 00:21:09,640 Speaker 1: really a lot of his uh high profile has come 370 00:21:09,720 --> 00:21:12,880 Speaker 1: from those cases, these First Amendment cases. He's also an 371 00:21:12,880 --> 00:21:17,720 Speaker 1: outspoken Trump administration critic on Twitter. He's gone so far 372 00:21:17,880 --> 00:21:21,520 Speaker 1: as to offer to pick up the legal fees for 373 00:21:21,640 --> 00:21:26,400 Speaker 1: anyone who um finds himself in court on the other 374 00:21:26,480 --> 00:21:30,160 Speaker 1: end of the free speech lawsuit by the Trump administration, 375 00:21:30,200 --> 00:21:32,480 Speaker 1: and Boo Truck himself has said he will defend those 376 00:21:32,480 --> 00:21:36,040 Speaker 1: people in court free of charge. So so this is 377 00:21:36,040 --> 00:21:40,160 Speaker 1: somebody you've got a high profile. Also, self identified as 378 00:21:40,200 --> 00:21:44,359 Speaker 1: a liberal Democrat, has been involved in a number of 379 00:21:44,359 --> 00:21:48,520 Speaker 1: social related issues as well. Uh. He teamed up with 380 00:21:48,960 --> 00:21:51,440 Speaker 1: Ted Olsen, who is also a Gifts and Done partner 381 00:21:51,600 --> 00:21:56,000 Speaker 1: and a former George W. Bush Splicitor General, to challenge 382 00:21:56,040 --> 00:21:59,240 Speaker 1: California's ban on same sex marriage about a decade ago 383 00:21:59,720 --> 00:22:03,480 Speaker 1: and successfully had that overturned. He's a liberal Democrat, but 384 00:22:03,560 --> 00:22:07,640 Speaker 1: he represents big companies in court against a little guy 385 00:22:07,880 --> 00:22:11,240 Speaker 1: against environmental concerns. Or is that his firm that does that. 386 00:22:12,080 --> 00:22:15,199 Speaker 1: It's a little bit of both. So boot Trow himself also, 387 00:22:15,920 --> 00:22:18,800 Speaker 1: you know, a little more quietly, has also been representing 388 00:22:19,240 --> 00:22:21,840 Speaker 1: some of the biggest employers in the country in class 389 00:22:21,840 --> 00:22:25,120 Speaker 1: action litigation brought by workers who have said their labor 390 00:22:25,160 --> 00:22:28,680 Speaker 1: unemployment rights have been violated. Most notably was the case 391 00:22:28,720 --> 00:22:31,679 Speaker 1: called Walmart se. Dukes, which went all the way up 392 00:22:31,680 --> 00:22:35,359 Speaker 1: to the U. S. Supreme Court, who trusts Um argued 393 00:22:35,400 --> 00:22:39,040 Speaker 1: that case on behalf of Walmart, and he convinced the 394 00:22:39,040 --> 00:22:42,679 Speaker 1: Supreme Court to rule um that a large group of 395 00:22:42,720 --> 00:22:45,960 Speaker 1: thousands of Walmart workers who were doing for paid discrimination 396 00:22:46,119 --> 00:22:51,280 Speaker 1: and harassment simply couldn't do that all in one class 397 00:22:51,320 --> 00:22:55,040 Speaker 1: action lawsuit, and instead they had to bring individual lawsuits. 398 00:22:55,160 --> 00:22:57,400 Speaker 1: And that's a really good example of some of the 399 00:22:58,200 --> 00:23:03,280 Speaker 1: legal work that he's done, particularly in respect to defending 400 00:23:03,400 --> 00:23:07,880 Speaker 1: large corporations in court. UH. It's those sort of procedural 401 00:23:08,840 --> 00:23:12,800 Speaker 1: almost some some of his critics might say technicality, UH, 402 00:23:12,880 --> 00:23:16,399 Speaker 1: sort of the legal wrangling over the details UH and 403 00:23:16,440 --> 00:23:20,199 Speaker 1: the intricacies of the law rather than getting to the 404 00:23:20,280 --> 00:23:23,879 Speaker 1: actual accusations in any of those cases and and getting 405 00:23:23,880 --> 00:23:26,359 Speaker 1: to a judge saying whether or not, you know, the 406 00:23:26,359 --> 00:23:29,600 Speaker 1: employer actually violated the law here. And that's you know, 407 00:23:29,720 --> 00:23:33,280 Speaker 1: really been key part of his and and the rest 408 00:23:33,280 --> 00:23:36,960 Speaker 1: of the Gibsons Done UH playbooks in terms of defending 409 00:23:37,080 --> 00:23:40,240 Speaker 1: Uber and some of the other economy companies in court. 410 00:23:40,720 --> 00:23:44,520 Speaker 1: Do you know how many cases they've represented Uber and 411 00:23:44,600 --> 00:23:49,680 Speaker 1: Postmates and door Dash in Based on our analysis of 412 00:23:49,720 --> 00:23:53,360 Speaker 1: the DOCUS, it looks like roughly the Gibsons Done team 413 00:23:53,359 --> 00:23:58,440 Speaker 1: has represented Uber and roughly fifty cases they've represented UH 414 00:23:58,640 --> 00:24:02,439 Speaker 1: door Dash I think in something like fifteen, and I 415 00:24:02,440 --> 00:24:06,240 Speaker 1: want to say there were nine or so UH for Postmates. 416 00:24:06,400 --> 00:24:10,520 Speaker 1: And all of that litigation revolves around the same central 417 00:24:10,600 --> 00:24:13,960 Speaker 1: legal question that's really been dogging all of the gig 418 00:24:14,000 --> 00:24:16,960 Speaker 1: economy companies, and that is whether or not that the 419 00:24:17,080 --> 00:24:21,480 Speaker 1: drivers or couriers or food deliverers that these companies connect 420 00:24:21,560 --> 00:24:26,120 Speaker 1: with end users via their app platforms, Whether those workers 421 00:24:26,160 --> 00:24:31,000 Speaker 1: need to be classified as company employees or whether, as 422 00:24:31,080 --> 00:24:34,400 Speaker 1: the companies are doing now, UH, they can simply make 423 00:24:34,440 --> 00:24:39,920 Speaker 1: them independent contractors who are largely considered basically self employee entrepreneurs. 424 00:24:40,040 --> 00:24:43,560 Speaker 1: Is their strategy in these cases, just to avoid the 425 00:24:43,560 --> 00:24:48,560 Speaker 1: main question with procedural maneuvering, to avoid the question of 426 00:24:48,720 --> 00:24:53,520 Speaker 1: whether drivers are employees. There is and that's for a 427 00:24:53,560 --> 00:24:58,199 Speaker 1: couple of reasons. So number one, UH, the classification of 428 00:24:58,200 --> 00:25:03,240 Speaker 1: the drivers as h contractors is really a central part 429 00:25:03,280 --> 00:25:05,760 Speaker 1: of the business model. And if Uber and the other 430 00:25:05,840 --> 00:25:09,440 Speaker 1: companies were all of a sudden force to make those 431 00:25:09,520 --> 00:25:12,159 Speaker 1: drivers employees, they would have to pick up the tabs 432 00:25:12,160 --> 00:25:18,119 Speaker 1: where things like workers compensation, over time, minimum wages, unemployment insurance, 433 00:25:18,160 --> 00:25:21,280 Speaker 1: and they would also have to start kicking in tax money. 434 00:25:21,320 --> 00:25:24,320 Speaker 1: We see in New Jersey, for example, the state has 435 00:25:24,359 --> 00:25:28,400 Speaker 1: gone after Uber, alleging that the company should have been 436 00:25:28,440 --> 00:25:32,199 Speaker 1: classifying drivers as employees, and as a result of that 437 00:25:32,359 --> 00:25:35,120 Speaker 1: gets out on six hundred and fifty million dollars worth 438 00:25:35,200 --> 00:25:38,000 Speaker 1: of taxes. So we're talking about a ton of money here, 439 00:25:38,400 --> 00:25:41,159 Speaker 1: and that's why it's really important for the companies to 440 00:25:41,240 --> 00:25:45,399 Speaker 1: try to avoid a court ruling UH forcing them to 441 00:25:45,720 --> 00:25:49,320 Speaker 1: reclassify the drivers, and so they've done that. They've avoided 442 00:25:49,359 --> 00:25:52,280 Speaker 1: that in a couple of ways. One thing is arbitration. 443 00:25:52,720 --> 00:25:55,600 Speaker 1: That's gotten a lot of publicity the company's use of 444 00:25:55,760 --> 00:25:58,880 Speaker 1: arbitration agreement. So when drivers signed up for the platform 445 00:25:59,000 --> 00:26:01,760 Speaker 1: to start driving for Uber, they sign an agreement that 446 00:26:01,800 --> 00:26:03,960 Speaker 1: there's any discuse that they wind up having with the 447 00:26:04,000 --> 00:26:07,400 Speaker 1: company have to be taken to private arbitration. So that's 448 00:26:07,560 --> 00:26:11,800 Speaker 1: behind closed doors, not in court. Those rulings are subjects 449 00:26:11,800 --> 00:26:15,600 Speaker 1: to confidentiality, and so we really have very little idea 450 00:26:15,600 --> 00:26:17,840 Speaker 1: about how those are playing out. But what we do 451 00:26:17,920 --> 00:26:20,840 Speaker 1: know is that the debates over the legal disbuse over 452 00:26:20,960 --> 00:26:23,840 Speaker 1: arbitration have been sort of bin ponging around the courts, 453 00:26:24,280 --> 00:26:27,399 Speaker 1: and so you'll dedicate this has happened several times in 454 00:26:27,440 --> 00:26:31,040 Speaker 1: which the class actions filed, but the parties may spend 455 00:26:31,680 --> 00:26:35,359 Speaker 1: years or more just debating the question of whether or 456 00:26:35,440 --> 00:26:38,400 Speaker 1: not the case needs to go to arbitration without ever 457 00:26:38,440 --> 00:26:41,320 Speaker 1: getting to the question of whether or not the drivers 458 00:26:41,320 --> 00:26:44,760 Speaker 1: have to be classified as employees. So that's the main 459 00:26:45,080 --> 00:26:49,159 Speaker 1: tactics there, and we've seen that UM throughout California in 460 00:26:49,240 --> 00:26:52,919 Speaker 1: particular has been a battleground states for that. But in 461 00:26:52,960 --> 00:26:56,199 Speaker 1: addition to that, you know, Uber has been tactical in 462 00:26:56,320 --> 00:27:00,159 Speaker 1: terms of settling cases when they need to. There is 463 00:27:00,240 --> 00:27:03,800 Speaker 1: a long running case I think it's spanned seven years 464 00:27:03,880 --> 00:27:06,840 Speaker 1: and then finally will less than a year ago, Uber 465 00:27:07,440 --> 00:27:10,400 Speaker 1: agreed to settle that one for about twenty million dollars. 466 00:27:10,400 --> 00:27:12,240 Speaker 1: And so what the plane Eff lawyers say is that 467 00:27:12,280 --> 00:27:16,320 Speaker 1: they're using some strategic maneuvers in the settlement phase as well. 468 00:27:16,880 --> 00:27:20,520 Speaker 1: Because these are class actions, Uber is more often faced 469 00:27:20,560 --> 00:27:25,919 Speaker 1: with several similar lawsuits filed by different groups of drivers 470 00:27:25,960 --> 00:27:29,880 Speaker 1: and different attorneys representing those drivers. And what the Planets 471 00:27:29,920 --> 00:27:32,960 Speaker 1: attorneys say is that the company has used this reverse 472 00:27:33,000 --> 00:27:36,879 Speaker 1: auction strategy and which basically, uh they play the Planett 473 00:27:36,960 --> 00:27:39,879 Speaker 1: lawyers against each other to try to drive down the 474 00:27:39,880 --> 00:27:43,560 Speaker 1: settlement off reaching a settlement agreement with the lowest bidder 475 00:27:44,200 --> 00:27:46,800 Speaker 1: and then drafting that agreement in a way that it 476 00:27:46,840 --> 00:27:49,680 Speaker 1: applies to all of the cases and essentially knocks all 477 00:27:49,720 --> 00:27:52,360 Speaker 1: of them out in one self swoop. So those are 478 00:27:52,359 --> 00:27:55,480 Speaker 1: the two primary tools that they've been using to keep 479 00:27:55,520 --> 00:27:58,800 Speaker 1: these spaces from getting decided before a judge. As far 480 00:27:58,840 --> 00:28:01,840 Speaker 1: as we know, only one case and that was the 481 00:28:01,840 --> 00:28:05,520 Speaker 1: case involving actually grub hub drivers has ever been decided 482 00:28:05,560 --> 00:28:08,200 Speaker 1: by a court, and that was two or three years ago. 483 00:28:08,760 --> 00:28:12,720 Speaker 1: A magistrate judge in California said drub hub drivers in 484 00:28:12,800 --> 00:28:16,679 Speaker 1: fact are properly classified as contractors. They don't need to 485 00:28:16,720 --> 00:28:19,879 Speaker 1: be made employees. But what's interesting about that is that 486 00:28:20,480 --> 00:28:23,639 Speaker 1: since that decision, California is updated its law in a 487 00:28:23,680 --> 00:28:27,240 Speaker 1: way that most people think makes it much much harder 488 00:28:27,320 --> 00:28:32,280 Speaker 1: for company to continue treating drivers as contractors. Yeah, so 489 00:28:32,359 --> 00:28:35,600 Speaker 1: tell us about that is that the provision that authorizes 490 00:28:35,840 --> 00:28:40,040 Speaker 1: local government lawyers to intervene in these cases, it is 491 00:28:40,280 --> 00:28:43,840 Speaker 1: so a B five was a very contentious piece of 492 00:28:44,000 --> 00:28:48,600 Speaker 1: legislation that went into effect late flat year in California, 493 00:28:48,920 --> 00:28:51,640 Speaker 1: and the primary goal there by and large was to 494 00:28:51,720 --> 00:28:55,600 Speaker 1: make uber Lip and other gig company start treating their 495 00:28:55,840 --> 00:28:59,120 Speaker 1: their drivers as employees. And it created a bunch of 496 00:28:59,120 --> 00:29:01,600 Speaker 1: hoops that the comp they have to jump through if 497 00:29:01,600 --> 00:29:05,320 Speaker 1: they want to keep treating those drivers as contractors instead. 498 00:29:05,720 --> 00:29:09,040 Speaker 1: And the general thinking throughout the legal community is that 499 00:29:09,160 --> 00:29:11,200 Speaker 1: the companies are really gonna have a hard time meeting 500 00:29:11,200 --> 00:29:14,800 Speaker 1: that standards and are likely going to have to reclassify 501 00:29:14,800 --> 00:29:17,720 Speaker 1: the drivers as employees. And as a results of that, 502 00:29:17,880 --> 00:29:20,960 Speaker 1: the companies have banded together and pledged a hundred and 503 00:29:20,960 --> 00:29:24,280 Speaker 1: ten million dollars on the valid initiatives. So in November, 504 00:29:24,400 --> 00:29:27,120 Speaker 1: when voters go to the polls to vote in uh 505 00:29:27,200 --> 00:29:31,440 Speaker 1: state and local elections as well as the federal presidential 506 00:29:31,480 --> 00:29:35,000 Speaker 1: election um, they'll also be voting on a ballot initiative 507 00:29:35,520 --> 00:29:39,600 Speaker 1: which would essentially carve uver Lift and other gig companies 508 00:29:39,640 --> 00:29:42,080 Speaker 1: out of this new classification law of giving them a 509 00:29:42,160 --> 00:29:45,960 Speaker 1: legal shield. But what's interesting is that buried in A 510 00:29:46,080 --> 00:29:50,360 Speaker 1: B five is a provision that not only allows the state, 511 00:29:50,560 --> 00:29:53,920 Speaker 1: the California Attorney General, to enforce the law, but it 512 00:29:53,960 --> 00:29:57,560 Speaker 1: also gives the power of enforcement to local lawyers, so 513 00:29:57,720 --> 00:30:01,160 Speaker 1: city attorney, the district attorney, and the life which is 514 00:30:01,200 --> 00:30:04,160 Speaker 1: out of the ordinary. Typically state laws are enforced at 515 00:30:04,200 --> 00:30:06,920 Speaker 1: the state level by the by an attorney general. And 516 00:30:06,960 --> 00:30:09,760 Speaker 1: so what that means is that expands the pool of 517 00:30:09,840 --> 00:30:14,160 Speaker 1: government lawyers who are going after uber Lifts and other 518 00:30:14,240 --> 00:30:17,000 Speaker 1: gig companies now in court, and that could be a 519 00:30:17,000 --> 00:30:19,920 Speaker 1: bit of a game changer for boot Rows and the 520 00:30:19,920 --> 00:30:23,240 Speaker 1: Gibson's Done lawyers who are representing these companies because some 521 00:30:23,320 --> 00:30:26,960 Speaker 1: of the strategic moves they've been using are not likely 522 00:30:27,000 --> 00:30:29,640 Speaker 1: to have the same effects on government lawyers. Uh. And 523 00:30:29,680 --> 00:30:32,000 Speaker 1: there's a couple of reasons for that. Number One, the 524 00:30:32,240 --> 00:30:36,320 Speaker 1: arbitration agreements that the drivers signed don't apply to government 525 00:30:36,400 --> 00:30:39,720 Speaker 1: lawyers because the government doesn't sign those agreements. The lawyers 526 00:30:39,720 --> 00:30:43,280 Speaker 1: prosecuting those cases didn't sign those agreements, they're not bound 527 00:30:43,320 --> 00:30:46,280 Speaker 1: by arbitration and they're not forced to take those cases 528 00:30:46,720 --> 00:30:49,320 Speaker 1: to arbitration, so they can take those cases in court 529 00:30:49,800 --> 00:30:53,200 Speaker 1: and there's no real legal wrangling over the question of 530 00:30:53,320 --> 00:30:56,480 Speaker 1: arbitration at all. As a result of that. Number Two, 531 00:30:57,120 --> 00:30:59,520 Speaker 1: the incentive to settle is a lot different. So when 532 00:30:59,560 --> 00:31:02,440 Speaker 1: we're talking about the government lawyers, these are people who 533 00:31:02,480 --> 00:31:05,960 Speaker 1: are salaried attorneys who are paid by the government. They 534 00:31:06,000 --> 00:31:10,240 Speaker 1: have no personal financial incentive to settle here, Like they 535 00:31:10,240 --> 00:31:12,960 Speaker 1: don't get legal fees, they don't get a piece of 536 00:31:13,040 --> 00:31:15,960 Speaker 1: anything that that Uber would pay in settlement, and so 537 00:31:16,040 --> 00:31:19,200 Speaker 1: there's really little reason for them to agree to a 538 00:31:19,240 --> 00:31:23,800 Speaker 1: settlement unless Uber and the like, as part of that settlement, 539 00:31:23,840 --> 00:31:27,280 Speaker 1: would agree to reclassify the drivers as employees. And so 540 00:31:27,320 --> 00:31:30,640 Speaker 1: that really eliminates two of the major tools that that Uber, 541 00:31:30,720 --> 00:31:33,840 Speaker 1: Postmates and others have been used. Again court is Gibson 542 00:31:33,920 --> 00:31:38,120 Speaker 1: Done involved not only the litigation strategy, but in the 543 00:31:38,360 --> 00:31:41,920 Speaker 1: strategy you know, of getting a different law passed. Their 544 00:31:42,000 --> 00:31:45,960 Speaker 1: names have not shown up on the lobbying disclosures. The 545 00:31:46,160 --> 00:31:48,640 Speaker 1: companies that you might imagine have a small army of 546 00:31:49,200 --> 00:31:52,280 Speaker 1: lobbyists both in California and at the federal level trying 547 00:31:52,280 --> 00:31:56,520 Speaker 1: to get laws changed in their favor on this particular issue. 548 00:31:56,960 --> 00:32:00,560 Speaker 1: But certainly they're aware of it, and you know, just 549 00:32:00,720 --> 00:32:03,000 Speaker 1: by looking at some of the defensive tactics that they 550 00:32:03,160 --> 00:32:06,640 Speaker 1: used to try to slow things down avoid a ruling, 551 00:32:06,720 --> 00:32:08,800 Speaker 1: you can see where they're going with this. That the 552 00:32:08,880 --> 00:32:12,800 Speaker 1: roadmap really is, let's pump the brakes here, hope for 553 00:32:12,880 --> 00:32:15,640 Speaker 1: a win at the ballot box in November, and then 554 00:32:15,680 --> 00:32:18,760 Speaker 1: we'll go back and settle or try to resolve any 555 00:32:18,840 --> 00:32:22,480 Speaker 1: remaining litigation and we'll move forward from there. Did anyone 556 00:32:22,480 --> 00:32:27,840 Speaker 1: to Gibson Done comment on the strategy that you've written about, Yes, 557 00:32:28,280 --> 00:32:33,240 Speaker 1: they did. Um A declined an interview, but but via email. 558 00:32:33,720 --> 00:32:36,360 Speaker 1: Josh Lipschit, who was one of the main Gibson's Done 559 00:32:36,400 --> 00:32:40,360 Speaker 1: attorneys who's part of Ted Boutrous's team said that the 560 00:32:40,400 --> 00:32:44,320 Speaker 1: teams pure objective was simple and that's just to win 561 00:32:44,400 --> 00:32:49,880 Speaker 1: the cases. Um and he he he. And Sienna Evangelie, 562 00:32:49,920 --> 00:32:53,520 Speaker 1: who is another one of the top lawyers on the team, 563 00:32:53,680 --> 00:32:56,000 Speaker 1: did a couple of things that we've heard elsewhere, which is, 564 00:32:56,440 --> 00:32:59,479 Speaker 1: you know, the line from the companies is always, uh, 565 00:32:59,640 --> 00:33:02,440 Speaker 1: driver simply don't want to be employees. They like the 566 00:33:02,520 --> 00:33:06,040 Speaker 1: freedom that comes with being a contractor, which means they 567 00:33:06,040 --> 00:33:08,800 Speaker 1: can work when they want, where they want, and for 568 00:33:08,880 --> 00:33:12,320 Speaker 1: however long they want. UM. At the same time, they 569 00:33:12,360 --> 00:33:14,840 Speaker 1: sort of try to pour cold water on this idea 570 00:33:15,440 --> 00:33:18,440 Speaker 1: UM that they're using arbitration as any sort of shields. 571 00:33:19,080 --> 00:33:21,400 Speaker 1: They point out that, you know, the the terms of 572 00:33:21,440 --> 00:33:24,160 Speaker 1: the arbitration agreements are clear to drivers when the juice 573 00:33:24,200 --> 00:33:27,680 Speaker 1: to sign up, and they didn't really touch on the 574 00:33:27,680 --> 00:33:31,200 Speaker 1: reverse auction piece of it. UM. But in court filings 575 00:33:31,240 --> 00:33:34,280 Speaker 1: you can sort of piece together some of their thoughts 576 00:33:34,280 --> 00:33:38,360 Speaker 1: on that, which is essentially from the defense bars position. 577 00:33:38,920 --> 00:33:40,960 Speaker 1: You know, the companies are just getting hit with a 578 00:33:41,080 --> 00:33:46,360 Speaker 1: slew of class action which are often overlapping UM and 579 00:33:46,440 --> 00:33:51,080 Speaker 1: maybe brought by planis attorneys looking for some fees uh. 580 00:33:51,120 --> 00:33:55,480 Speaker 1: And then there from their perspective. They never, you know, 581 00:33:56,120 --> 00:33:59,600 Speaker 1: outwardly try to drive down the price, but certainly they're 582 00:33:59,600 --> 00:34:02,200 Speaker 1: looking settled these cases and if they can resolve them 583 00:34:02,200 --> 00:34:07,200 Speaker 1: on optimal terms, um, that's just good lawyering. Turning out 584 00:34:07,240 --> 00:34:10,880 Speaker 1: to a wildly different topic. What do we know about 585 00:34:11,040 --> 00:34:16,240 Speaker 1: Alex Rodriguez and Jennifer Lopez wanting to buy the Mets? 586 00:34:17,160 --> 00:34:19,720 Speaker 1: So we know that they're interested in purchasing the club. 587 00:34:20,560 --> 00:34:24,200 Speaker 1: It has been reported that they've made some initial offer 588 00:34:24,880 --> 00:34:28,600 Speaker 1: to buy the club from their long time owners earlier 589 00:34:28,640 --> 00:34:31,520 Speaker 1: this year, and we also know that they recently signed 590 00:34:31,600 --> 00:34:35,520 Speaker 1: up a new legal representation firm called Wattel, which is 591 00:34:35,560 --> 00:34:38,680 Speaker 1: a New York City firm that's known for being involved 592 00:34:38,719 --> 00:34:41,439 Speaker 1: in a wide variety of high profile deals, including those 593 00:34:41,480 --> 00:34:45,080 Speaker 1: involving some pro sports team purchases. It seemed that if 594 00:34:45,120 --> 00:34:47,920 Speaker 1: the Mets were going to get sold, what happened to 595 00:34:48,280 --> 00:34:51,720 Speaker 1: stop that? That's right, it's really been a long time coming. 596 00:34:52,040 --> 00:34:55,840 Speaker 1: Seems like even Cohen, the hedge fund manager here in 597 00:34:55,920 --> 00:34:59,200 Speaker 1: New York, was really the primary buyer and was likely 598 00:34:59,239 --> 00:35:02,799 Speaker 1: to purchase the team. That deal appeared to be as 599 00:35:02,840 --> 00:35:07,160 Speaker 1: good as done until in February Cohen abruptly backed out 600 00:35:07,239 --> 00:35:09,719 Speaker 1: talking at some of the terms of the deal, and 601 00:35:09,880 --> 00:35:13,800 Speaker 1: interestingly enough, in that round of negotiations, Cohen was also 602 00:35:14,120 --> 00:35:16,799 Speaker 1: represented by the folks that walked out, and so he 603 00:35:16,920 --> 00:35:19,839 Speaker 1: bowed out in February, and since that time has had 604 00:35:19,880 --> 00:35:22,399 Speaker 1: a change of heart. He'd come back trying to make 605 00:35:22,440 --> 00:35:25,879 Speaker 1: another play at purchasing the team, competing with A Rod 606 00:35:26,000 --> 00:35:28,800 Speaker 1: and j Lo, but of course this time around because 607 00:35:28,840 --> 00:35:31,920 Speaker 1: they're represented by wacked out Cohens in the market for 608 00:35:32,000 --> 00:35:36,680 Speaker 1: new legal representation. Thanks Chris. That's Chris op for Bloomberg Law, 609 00:35:36,719 --> 00:35:39,239 Speaker 1: team leader in the Business of Law. And that's it 610 00:35:39,320 --> 00:35:42,239 Speaker 1: for this edition of Bloomberg Law. I'm John Grosso and 611 00:35:42,400 --> 00:35:43,360 Speaker 1: this is Bloomberg