WEBVTT - Did Tech Titans Head Off Legal Action or Provoke It? 0:00:00.480 --> 0:00:05.720 You're listening to Bloomberg Law with June Grasso from Bloomberg Radio. 0:00:06.360 --> 0:00:09.160 It was a new virtual experience for the four big 0:00:09.200 --> 0:00:13.840 tech titans on Wednesday, five hours of often combative questions 0:00:13.880 --> 0:00:17.640 from lawmakers who accuse them of using their company's immense 0:00:17.720 --> 0:00:22.680 power to crush rivals and squash competition. The CEOs, Facebook's 0:00:22.680 --> 0:00:27.560 Mark Zuckerberg, Apple's Tim Cook, Google's Sundar Pachai, and Amazon's 0:00:27.600 --> 0:00:31.320 Jeff Bezos, whose platforms have a combined value of nearly 0:00:31.400 --> 0:00:36.000 five trillion dollars, testified that their companies face tough competition. 0:00:36.680 --> 0:00:40.240 Our business model is advertising, and we face intense competition. 0:00:40.680 --> 0:00:42.880 I would describe it as a street fight for market 0:00:42.880 --> 0:00:46.760 share in the smartphone business. Competition drives us tenovid and 0:00:46.800 --> 0:00:49.839 it also leads to better products. We have a policy 0:00:49.840 --> 0:00:54.600 against using seller specific data to aid our private label business, 0:00:55.480 --> 0:00:58.800 but I can't guarantee you that that policy has never 0:00:58.880 --> 0:01:02.400 been violated. Joining me as Jennifer Re Bloomberg Intelligence Senior 0:01:02.440 --> 0:01:06.760 Litigation analyst, so Jender, the House Antitrust Subcommittee make the 0:01:06.840 --> 0:01:09.760 case that the big tech companies use their power to 0:01:09.880 --> 0:01:13.120 stifle competition and have to be reined in well to 0:01:13.240 --> 0:01:15.360 some extent they did. I mean, what they showed is 0:01:15.400 --> 0:01:19.800 that they have, through their investigation, found documents that suggests 0:01:20.080 --> 0:01:23.600 that there has been anti competitive conductor or potentially anti 0:01:23.600 --> 0:01:27.039 competitive conduct by these companies, and they highlighted some of 0:01:27.080 --> 0:01:29.839 those documents. So, you know, but what we saw here 0:01:30.080 --> 0:01:34.800 is a snippet, and antitrust really relies on, you know, 0:01:34.840 --> 0:01:38.720 the totality of the evidence and all of the issues 0:01:38.959 --> 0:01:43.319 and decisions with respect to different conducts and different contracts 0:01:43.319 --> 0:01:46.080 and strategies of companies. So you know, we saw this 0:01:46.280 --> 0:01:49.440 just a granule of really what needs to be looked 0:01:49.440 --> 0:01:52.280 at to determine whether these companies are violating the anti 0:01:52.280 --> 0:01:55.200 trust laws. But from this window that we saw with 0:01:55.640 --> 0:01:59.480 Cherry Pick documents, yes, what they suggested is that these 0:01:59.520 --> 0:02:03.080 companies have been ways abuse power in certain markets. Mark 0:02:03.160 --> 0:02:05.960 Zuckerberg got the most questions and seemed to have the 0:02:06.000 --> 0:02:11.080 toughest time, as representatives repeatedly cited internal documents to show 0:02:11.120 --> 0:02:15.280 how Facebook has either copied or simply acquired competitors. Did 0:02:15.280 --> 0:02:18.480 you warn Evan Spiegel, the founder of Snapchat, that Facebook 0:02:18.520 --> 0:02:20.480 was in the process of cloning the features of his 0:02:20.560 --> 0:02:24.280 company while also attempting to buy Snapchat congresswoman. I don't 0:02:24.320 --> 0:02:28.080 remember those specific conversations, but that was also an area 0:02:28.120 --> 0:02:30.080 where it was very clear that we were going to 0:02:30.120 --> 0:02:33.240 be building something. And Zuckerberg was also grilled over the 0:02:33.280 --> 0:02:36.760 acquisition of Instagram. How did he fare? Yeah, I think 0:02:36.880 --> 0:02:39.239 if you think in terms of the four different companies 0:02:39.240 --> 0:02:42.840 and which one came out the worst from an antitrust perspective, 0:02:43.120 --> 0:02:45.160 you know, in my mind it would be Facebook, and 0:02:45.200 --> 0:02:48.079 it would be this issue. I think Facebook, of these 0:02:48.080 --> 0:02:50.760 four companies, is the one that's most at risk to 0:02:50.919 --> 0:02:54.639 ultimately down the road, whether it's through enforcement or through legislation, 0:02:55.160 --> 0:02:59.880 may face efforts to divest Instagram and or WhatsApp. And 0:03:00.360 --> 0:03:03.720 what the representative was able to do was show documents 0:03:03.720 --> 0:03:07.560 that suggested that the reason for buying Instagram was to 0:03:07.720 --> 0:03:11.200 take out a rival. Now, again, as I said, antitrust 0:03:11.280 --> 0:03:13.840 violations depend on the totality of the evidence, and so 0:03:13.919 --> 0:03:15.720 we need to see what the other side of the 0:03:15.760 --> 0:03:18.120 story is. And there's always more to a story. But 0:03:18.240 --> 0:03:20.919 it doesn't look good, you know, if you go back 0:03:20.919 --> 0:03:24.280 to the Microsoft case, which is sort of I guess, 0:03:24.280 --> 0:03:27.720 the bible for how to move forward against these companies 0:03:27.800 --> 0:03:31.640 on a question of illegal monopolization, you know, the standard 0:03:31.720 --> 0:03:34.600 that was set out there was sort of shown to 0:03:34.639 --> 0:03:38.160 be met in certain ways by the documents that were 0:03:38.160 --> 0:03:41.480 shown and the responses that Mark Zuckerberg gave, you know, 0:03:41.560 --> 0:03:44.560 and whether as a general matter, the exclusion of this 0:03:44.640 --> 0:03:49.000 particular rival or threat is capable reasonably capable of helping 0:03:49.080 --> 0:03:52.120 the exclude or maintain their monopoly that was the Facebook, 0:03:52.440 --> 0:03:55.600 which seemingly it does. And whether or not, at the 0:03:55.680 --> 0:03:59.120 time that the company was acquired, did it reasonably constitute 0:03:59.120 --> 0:04:01.440 a NACAN threat And you know, it looks like it too, 0:04:01.480 --> 0:04:04.400 because Mark Zuckerberg said yes that it did. So in 0:04:04.440 --> 0:04:08.680 your mind, then Mark Zuckerberg didn't give a really good 0:04:08.840 --> 0:04:14.040 answer or explanation for Facebook's actions that they were not 0:04:14.520 --> 0:04:18.320 anti competitive. Well, he wasn't really given an opportunity. I mean, 0:04:18.360 --> 0:04:22.080 the format really was much more of a cross examination 0:04:22.160 --> 0:04:25.080 type format than it was information gathering. You know, with 0:04:25.160 --> 0:04:27.680 each of the lawmakers only able to have five minutes 0:04:27.680 --> 0:04:29.640 of questioning and wanting to get out all of the 0:04:29.760 --> 0:04:33.000 questions they had in mind, they weren't really offering the 0:04:33.040 --> 0:04:37.440 CEOs much time to explain anything. And so again what 0:04:37.520 --> 0:04:40.200 we saw is part of the story and not all 0:04:40.320 --> 0:04:42.480 the facts and not the entire story, And so it's 0:04:42.520 --> 0:04:46.719 important what else is out there and what other reasons 0:04:47.000 --> 0:04:49.919 Facebook may have had for deciding to acquire Instagram and 0:04:49.960 --> 0:04:52.480 what it's other documents look like. At the time that 0:04:52.600 --> 0:04:56.120 acquired the company. I mean, there were three different regulators, 0:04:56.160 --> 0:04:58.800 or at least two different regulators that looked at this deal. 0:04:59.040 --> 0:05:01.400 The FTC did look at it for some time. It 0:05:01.440 --> 0:05:03.839 wasn't a long investigation. That looks like about four or 0:05:03.880 --> 0:05:07.320 five months that they looked at the Instagram acquisition before 0:05:07.320 --> 0:05:09.520 they cleared it. And I believe it was also the 0:05:09.640 --> 0:05:13.000 UK antitrust regulator that looked at that deal and concluded 0:05:13.560 --> 0:05:17.000 that the companies at the time didn't compete, that Instagram 0:05:17.000 --> 0:05:18.960 didn't really have much of a foothold on the market, 0:05:18.960 --> 0:05:22.039 and that it wasn't an anti competitive deal. So, you know, 0:05:22.080 --> 0:05:23.640 we also have to go back and look at all 0:05:23.640 --> 0:05:26.280 the documents that those two regulators were looking at at 0:05:26.279 --> 0:05:28.240 the time of the deal to to look at the 0:05:28.279 --> 0:05:31.440 whole story to understand what happened there. Tell me up 0:05:31.480 --> 0:05:34.280 next on the Bloomberg Law Show, what are the prospects 0:05:34.320 --> 0:05:38.040 for actual antitrust action by regulators? And we'll look at 0:05:38.040 --> 0:05:41.440 the testimony of the CEOs of Amazon, Apple, and Google. 0:05:42.040 --> 0:05:44.600 So my first question, Mr richis why does Google steal 0:05:44.760 --> 0:05:51.720 content from honest businesses? Mr Chapman, with respect, I disagree 0:05:51.720 --> 0:05:55.440 with that characterization. I'm June Rosso and this is Bloomberg. 0:05:59.640 --> 0:06:03.160 For the last year, the House Judiciary's Antitrust Subcommittee has 0:06:03.160 --> 0:06:06.359 been investigating the business practices of the tech giants for 0:06:06.400 --> 0:06:10.000 anti competitive conduct that might lead to more regulation or 0:06:10.040 --> 0:06:14.560 even breakups. That investigation showed on Wednesday, as the CEOs 0:06:14.600 --> 0:06:18.800 of Amazon, Apple, Facebook, and Google faced some tough focused 0:06:18.880 --> 0:06:22.560 questions backed up by a mountain of subpoena documents. The 0:06:22.680 --> 0:06:26.800 chairman of the committee, David Ceceilini, challenged Google CEO Sundar 0:06:26.880 --> 0:06:31.800 Pachai about tactics used to stifle competition. Investigation shows that 0:06:31.839 --> 0:06:35.480 Google's response was to threaten to delist Yelp entirely. In 0:06:35.560 --> 0:06:37.800 other words, the choice Google gave YELP was let us 0:06:37.800 --> 0:06:42.240 steal your content or effectively disappear from the web. Stupid Chai. 0:06:42.440 --> 0:06:46.480 Isn't that anti competitive? Congressman? Uh, you know, when I 0:06:46.560 --> 0:06:49.880 run the company, I'm really focused on giving uses what 0:06:50.000 --> 0:06:53.080 they want. We conduct ourselves to the highest standard. I've 0:06:53.120 --> 0:06:57.120 been talking to Jennifer Ree, Bloomberg Intelligence senior litigation analyst, 0:06:57.920 --> 0:07:01.080 it seemed as if PAI strong goal to answer the 0:07:01.200 --> 0:07:06.200 questions about advertising tech, where the company built a dominant 0:07:06.240 --> 0:07:11.440 position mostly through acquisitions, So explain that issue and how 0:07:11.480 --> 0:07:15.000 he handled it. I think that overall he was generally 0:07:15.040 --> 0:07:17.960 trying to follow what was probably guidance to stick with 0:07:18.040 --> 0:07:20.760 his own talking points and where he might have had 0:07:20.800 --> 0:07:24.160 difficulty answering a question, to go back to his own 0:07:24.440 --> 0:07:27.240 storyline and what he wanted to say, and I think 0:07:27.280 --> 0:07:29.960 that's what he was doing a bit there. But again, 0:07:30.200 --> 0:07:32.160 you know, you have to go back and look. The 0:07:32.280 --> 0:07:34.880 Double Click acquisition, which is part of this at tech 0:07:34.960 --> 0:07:40.000 by was extensively and intensely investigated by want of the 0:07:40.040 --> 0:07:44.240 antitrust authorities in the US, extensively and thoroughly looked at 0:07:44.280 --> 0:07:47.920 before it was determined that video could go forward. And again, 0:07:48.000 --> 0:07:51.600 all of the documents that are available today were available 0:07:51.640 --> 0:07:55.200 to those regulators at that time, and so certainly mistakes 0:07:55.240 --> 0:07:57.320 can be made. And maybe it was one of the 0:07:57.360 --> 0:08:00.120 other smaller acquisitions down the chain, and not just the 0:08:00.160 --> 0:08:04.080 Double Click acquisition that gave Google this control that they 0:08:04.080 --> 0:08:07.440 seemed to have across that whole chain of distribution from 0:08:07.480 --> 0:08:10.400 advertiser to publisher. But I don't think that he handled 0:08:10.400 --> 0:08:12.440 it all that well. But I will say again what 0:08:12.480 --> 0:08:15.000 I've said before that the format was really more like 0:08:15.080 --> 0:08:19.520 a cross exam and without giving the CEOs much time 0:08:19.560 --> 0:08:23.560 to really respond and explain away what they were doing 0:08:23.600 --> 0:08:25.840 and what they were thinking and what the purpose for 0:08:25.920 --> 0:08:28.880 some of the their conduct was. So no, I don't 0:08:28.880 --> 0:08:31.880 think he came off very well there. And along with Facebook, 0:08:31.920 --> 0:08:33.800 I would say Google has risk and they have risk 0:08:33.840 --> 0:08:36.439 in that area, and we are aware that the Department 0:08:36.440 --> 0:08:39.120 of Justice has looked at targeted that specific area, the 0:08:39.160 --> 0:08:42.880 ad tech space, with respect to their own investigation, which 0:08:42.960 --> 0:08:46.200 we understand may culminate in a lawsuit against Google or 0:08:46.240 --> 0:08:49.080 some sort of an action against Google. This year. This 0:08:49.200 --> 0:08:53.160 was Amazon CEO Jeff bezos first appearance at a congressional hearing. 0:08:53.480 --> 0:08:56.120 Many of the questions to him focused on the company's 0:08:56.160 --> 0:09:00.200 treatment of small merchants who use Amazon's online market ice 0:09:00.400 --> 0:09:05.280 to reach customers. Here's Democratic Congresswoman Lucy macbeth asking questions 0:09:05.320 --> 0:09:09.800 about frustrated sellers. If Amazon didn't have monopoly power over 0:09:09.840 --> 0:09:12.200 these sellers, do you think they would choose to stay 0:09:12.280 --> 0:09:16.760 in a relationship that is characterized by bullying, fear, and panic. 0:09:18.360 --> 0:09:22.200 With all respect, Congresswoman, I do not accept the premise 0:09:22.240 --> 0:09:24.960 of your question. You know, I would say that when 0:09:25.160 --> 0:09:29.480 companies compete vigorously, they often are going to invoke fear 0:09:29.880 --> 0:09:33.959 and even the concept of bullying among smaller competitors. I mean, 0:09:34.280 --> 0:09:38.560 intense competition can engender that same reaction as can anti 0:09:38.559 --> 0:09:42.360 competitive exclusionary conduct. I imagine there are suppliers to Walmart 0:09:42.880 --> 0:09:45.760 that would say the exact same thing. I'm only guessing, 0:09:46.040 --> 0:09:48.840 you know, it's scary to have to negotiate against such 0:09:48.840 --> 0:09:53.240 a powerful company. And again we have these cherry picked documents. Now, 0:09:53.400 --> 0:09:56.320 you know, I'm not saying that Amazon hasn't crossed the 0:09:56.400 --> 0:09:59.680 line with respect to the way it treats online sellers, 0:10:00.040 --> 0:10:02.880 But you'd also have to see what else is out 0:10:02.920 --> 0:10:05.040 there and what everyone else is saying, and for each 0:10:05.040 --> 0:10:09.280 of those sellers, what their particular situations were with respect 0:10:09.280 --> 0:10:12.120 to the pushback that they got from Amazon. So I 0:10:12.160 --> 0:10:15.439 would say once again that because antitrust and the decision 0:10:15.480 --> 0:10:19.240 as to whether conduct is anti competitive really is fact intensive. 0:10:19.320 --> 0:10:22.319 It's a fact intensive decision that's based on the totality 0:10:22.360 --> 0:10:25.360 of evidence, and not just certain cherry picked items. You know, 0:10:25.480 --> 0:10:28.200 you'd have to see everything else. But like some of 0:10:28.200 --> 0:10:31.800 these other companies, what was highlighted does look problematic. So 0:10:31.840 --> 0:10:34.200 it does suggest there could be a problem there, But 0:10:34.400 --> 0:10:37.360 we just don't know the whole story. And until that 0:10:37.440 --> 0:10:40.280 whole story comes out, which it would if there were 0:10:40.320 --> 0:10:42.400 some sort of a trial against one of these companies, 0:10:42.520 --> 0:10:45.280 you know, we can't really determine what the outcome might be. 0:10:45.720 --> 0:10:50.079 Amazon has been accused of using data from independent sellers 0:10:50.360 --> 0:10:55.280 to create copycat products, and they've categorically denied that until 0:10:55.320 --> 0:11:00.240 this hearing, when Bazo said he couldn't guarantee that didn't happen. Yes, 0:11:00.280 --> 0:11:02.880 that's right, and that's not helpful to him. It's definitely 0:11:02.920 --> 0:11:05.240 not helpful to Amazon. I mean, I think the issue 0:11:05.280 --> 0:11:07.960 was that there is a policy within Amazon, and it 0:11:08.000 --> 0:11:11.000 looks like that policy may have been broken. This happens 0:11:11.000 --> 0:11:14.520 in companies more often than it should, and it's at 0:11:14.559 --> 0:11:17.160 least according to Bezos. They're still looking at it. After 0:11:17.200 --> 0:11:19.600 the Wall Street Journal it reported on it. They're still 0:11:19.600 --> 0:11:22.880 doing their own internal investigation to understand what happened. And 0:11:22.920 --> 0:11:25.280 that's why he can't respond to it. But you know, 0:11:25.360 --> 0:11:27.600 if in fact that is going on. It's not a 0:11:27.640 --> 0:11:30.600 good sign for Amazon, and it's just yet more ammunition 0:11:30.800 --> 0:11:33.880 to the extent that the Department of Justice or the 0:11:33.920 --> 0:11:37.240 Federal Trade Commission decided to bring an enforcement action, or 0:11:37.760 --> 0:11:41.000 Congress decides to go forward with some sort of legislation, 0:11:41.400 --> 0:11:44.120 it's just yet more on in their arsenal as a 0:11:44.120 --> 0:11:47.920 reason to do something like that. Apple and CEO Tim 0:11:47.960 --> 0:11:51.000 Cook seemed to get the least heat, And the questions 0:11:51.000 --> 0:11:54.840 were really based on the App Store, Sir, we have 0:11:55.040 --> 0:11:58.320 never increased commissions in the store since the first day 0:11:58.320 --> 0:12:01.800 it operated in two thousand, and there's nothing to you 0:12:01.960 --> 0:12:05.040 from doing so, is it, no, sir? I disagree strongly 0:12:05.080 --> 0:12:08.480 with that. There is a competition for developers, just like 0:12:08.520 --> 0:12:11.600 there's a competition for customers. First, I think it's not 0:12:11.640 --> 0:12:14.880 surprising that Apple got the least heat. I think of 0:12:14.920 --> 0:12:17.800 all these companies, Apples at the least risk here and 0:12:17.920 --> 0:12:21.640 its conduct is less sort of blatantly anti competitive to 0:12:21.640 --> 0:12:26.440 the outside observer. The idea that it charges commission at 0:12:26.480 --> 0:12:28.440 least in the beginning to some of the apps in 0:12:28.480 --> 0:12:31.800 its app store, really, to me, isn't an anti trust 0:12:31.880 --> 0:12:34.240 violation When a company has a product or a service 0:12:34.320 --> 0:12:36.400 that they can price the way they want to. And 0:12:36.440 --> 0:12:39.840 even if it's monopoly pricing, if they've achieved the monopoly lawfully, 0:12:40.040 --> 0:12:43.040 they can lawfully price in the monopolistic manner. You know, 0:12:43.120 --> 0:12:46.320 if they've achieved that monopoly unlawfully, that's a different thing. 0:12:46.400 --> 0:12:48.440 But I'm not so sure that there are allegations that 0:12:48.520 --> 0:12:51.600 the development of the app store in itself was an 0:12:51.640 --> 0:12:54.680 unlawful monopoly. So I don't know that they got very 0:12:54.720 --> 0:12:57.320 far with Apple on this and the other idea that 0:12:57.480 --> 0:12:59.920 I think they were questioning Apple on that it might 0:13:00.080 --> 0:13:03.600 treat different app developers differently. You know, companies strike different 0:13:03.679 --> 0:13:06.560 kinds of deals with their suppliers all the time. This 0:13:06.640 --> 0:13:09.800 doesn't necessarily violate the laws. You know, where a company 0:13:09.880 --> 0:13:13.160 is supplying another company in bulk, they might get better 0:13:13.240 --> 0:13:16.640 pricing than a company that isn't. That's negotiation, and I'm 0:13:16.679 --> 0:13:18.599 not so sure that that rises to the level of 0:13:18.640 --> 0:13:21.760 an antitrust violation. So of all of the companies, I 0:13:21.800 --> 0:13:24.600 think Apple came out the most unscathed, and they don't 0:13:24.600 --> 0:13:27.199 think that's surprising because I think that they're at the 0:13:27.240 --> 0:13:30.600 lowest level of risk for an enforcement action to begin with. 0:13:31.040 --> 0:13:36.440 There are state and federal antitrust investigations into these tech companies. 0:13:37.040 --> 0:13:40.720 Which companies look like there might be some kind of 0:13:41.000 --> 0:13:44.440 legal action taken against them. Well, my assumption is that 0:13:44.480 --> 0:13:47.320 all four of these companies are under investigation by the 0:13:47.600 --> 0:13:50.240 FTC and or d o J. The ones we know 0:13:50.400 --> 0:13:53.719 for a fact are Google and Facebook because they've disclosed 0:13:53.720 --> 0:13:57.080 that when these investigations go forward their confidentials less the 0:13:57.080 --> 0:14:00.240 company discloses it or somehow it otherwise gets leaked. You know, 0:14:00.280 --> 0:14:02.559 we don't know for sure, but they probably all for 0:14:02.760 --> 0:14:06.200 have been under investigation. And what we know, because I 0:14:06.240 --> 0:14:09.439 think the d o J has been somewhat transparent about it, 0:14:09.480 --> 0:14:13.400 is that right now the most advanced investigation seems to 0:14:13.400 --> 0:14:15.960 be against Google. And we've heard a lot about the 0:14:16.000 --> 0:14:20.080 possibility of some complaint or challenge being filed against Google 0:14:20.160 --> 0:14:22.160 this year. You know, I say some sort of complaint 0:14:22.240 --> 0:14:25.360 or challenge because if it's challenged, there's always the possibility 0:14:25.360 --> 0:14:27.560 of a settlement, although I tend to doubt it. I 0:14:27.600 --> 0:14:29.200 think the d o J would like to bring a 0:14:29.280 --> 0:14:32.040 lawsuit against Google, and they'd like to do that before 0:14:32.080 --> 0:14:34.960 the election, So there's a good possibility we'll see that 0:14:35.240 --> 0:14:37.880 and they could focus in this ad tex space. It 0:14:37.960 --> 0:14:40.640 could also focus on other areas as well, but we 0:14:40.840 --> 0:14:42.960 have heard a lot about the d o J looking 0:14:43.000 --> 0:14:45.240 at this ad tech space and having some issues with 0:14:45.320 --> 0:14:48.640 Google's control of sort of the whole supply chain there. 0:14:49.240 --> 0:14:52.360 It also looks like the FTC may be fairly well 0:14:52.400 --> 0:14:55.960 advanced with respect to its investigation of Facebook leaks that 0:14:56.000 --> 0:14:58.600 are reported in the news that it's possible there could 0:14:58.640 --> 0:15:01.120 be some sort of an action again Facebook as early 0:15:01.160 --> 0:15:03.960 as the first quarter or maybe even the fourth quarter, 0:15:04.120 --> 0:15:07.960 And that could be significant because I think of all 0:15:08.000 --> 0:15:11.560 four companies, if any of the antitrust authorities are going 0:15:11.600 --> 0:15:15.000 to go forward and seek a court ordered breakup, in 0:15:15.080 --> 0:15:18.000 my mind, Facebook has the most risk for that. So 0:15:18.320 --> 0:15:21.320 that could be an interesting development if that's the kind 0:15:21.360 --> 0:15:23.240 of remedy that they look for, if they file a 0:15:23.280 --> 0:15:26.680 lawsuit against Facebook. It looks like, you know, if Amazon 0:15:26.720 --> 0:15:29.320 and Apple are actually being investigated, they're a little bit 0:15:29.360 --> 0:15:32.440 farther behind, but it doesn't mean that there won't also 0:15:32.560 --> 0:15:35.840 be actions brought against those two companies next year. The 0:15:35.880 --> 0:15:39.360 instructive case here is Microsoft, and in the end, there 0:15:39.440 --> 0:15:42.880 was no breakup of Microsoft. So what are the chances that, 0:15:42.960 --> 0:15:47.720 let's say, Facebook would be required to divest Instagram or what'sapp. 0:15:48.160 --> 0:15:50.720 It would be an uphill climb to get there in court. 0:15:50.840 --> 0:15:52.360 And you said it, I mean, this is what we 0:15:52.400 --> 0:15:55.280 saw in Microsoft. Microsoft was a really good case for 0:15:55.320 --> 0:15:58.360 the Department of Justice. They did a good job. There 0:15:58.440 --> 0:16:01.400 was a lot of evidence of these long list of 0:16:01.480 --> 0:16:05.760 conduct and contracts and strategies that Microsoft engaged in that 0:16:05.840 --> 0:16:09.920 we're just blatantly exclusionary and intended for no other reason 0:16:10.200 --> 0:16:12.520 but to hurt its rival. You know, when asked what 0:16:12.720 --> 0:16:15.600 is your business reason for doing this? In many cases, 0:16:15.640 --> 0:16:18.600 Microsoft had nothing to say, and in some cases they 0:16:18.640 --> 0:16:20.800 did have something to say, but whatever they were saying 0:16:20.880 --> 0:16:23.240 was deemed to be a sham. So that's what has 0:16:23.280 --> 0:16:25.000 to happen here. You have to look at the anti 0:16:25.000 --> 0:16:28.200 competitive conduct in the harm and then balanced it against 0:16:28.200 --> 0:16:32.680 whatever the pro competitive, legitimate business reasons for that exclusion was. 0:16:33.000 --> 0:16:35.120 And so in Microsoft, where you had a case where 0:16:35.120 --> 0:16:38.880 you really had this blatantly anti competitive conduct and no 0:16:39.080 --> 0:16:42.680 flip side, no pro competitive business justification that could be 0:16:42.720 --> 0:16:46.320 weighed against it. And even then the regulators weren't able 0:16:46.360 --> 0:16:48.680 to achieve a breakup. You know, it's hard to see 0:16:48.720 --> 0:16:52.000 what it's going to take to get there. But Microsoft 0:16:52.080 --> 0:16:55.480 does lay out that possibility. You know what Microsoft in 0:16:55.560 --> 0:17:00.360 the appellate decision, the decision that resulted in reversing um 0:17:00.440 --> 0:17:04.200 the possibility of a breakup. What they said was that 0:17:04.560 --> 0:17:07.040 it will be in the legal exercise of market power if, 0:17:07.560 --> 0:17:10.439 as a general matter, the exclusion of that threat is 0:17:10.440 --> 0:17:13.720 the type of conduct reasonably capable of contributing to the 0:17:13.720 --> 0:17:18.040 defendants continued monopoly power. Well, you know, it's fairly easy 0:17:18.080 --> 0:17:21.320 to say that's probably the case in Facebook situation. And 0:17:21.359 --> 0:17:23.480 then the second standard they said is whether or not 0:17:23.600 --> 0:17:27.800 that excluded company in this case, Instagram reasonably constituted in 0:17:27.880 --> 0:17:30.640 Mason threat at the time that it was acquired. These 0:17:30.680 --> 0:17:33.639 the two standards Microsoft lays out to say, First, is 0:17:33.640 --> 0:17:36.720 it anti competitive? Doesn't violate the anti dress laws, and 0:17:37.680 --> 0:17:40.320 it looks like Facebook fits into that. But then what 0:17:40.480 --> 0:17:44.720 the Microsoft appellate court said was that the appropriate remedy 0:17:44.840 --> 0:17:48.639 is a really difficult decision because dibesseture is only imposed 0:17:48.640 --> 0:17:51.920 with great caution, and that's because it's long term efficacy 0:17:51.960 --> 0:17:55.800 is rarely certain. An absent some measure of confidence that 0:17:55.880 --> 0:17:58.040 there's been an actual loss to competition that has to 0:17:58.119 --> 0:18:02.359 be Restored Wisdom Council against adopting that kind of radical 0:18:02.359 --> 0:18:05.760 structural release. It's that clause in Microsoft. I think in 0:18:05.800 --> 0:18:08.160 my mind that that makes a little bit tough here, 0:18:08.400 --> 0:18:11.400 because it's so hard for any judge to look into 0:18:11.400 --> 0:18:14.240 a crystal ball and to say, what's going to happen 0:18:14.280 --> 0:18:17.480 if what what will happen if we require Facebook to 0:18:17.560 --> 0:18:21.840 digest Instagram or WhatsApp? What what will happen to those companies? 0:18:22.200 --> 0:18:24.720 And certainly a world in which those companies exist for 0:18:24.840 --> 0:18:27.880 users and exist in the way they do, well capitalized 0:18:27.920 --> 0:18:30.040 and with R and D behind them is a better 0:18:30.160 --> 0:18:33.680 world where they cease to exist for consumers or exist 0:18:33.760 --> 0:18:35.720 but not in the same shape that they're in now. 0:18:36.080 --> 0:18:38.399 And I think that's a very difficult decision that that 0:18:38.520 --> 0:18:42.760 judges are going to be very cautious about making. Thanks 0:18:42.880 --> 0:18:49.560 jen that's Jennifer re Bloomberg Intelligence Senior litigation analyst. You're 0:18:49.640 --> 0:18:57.680 listening to from Bloomberg Radio Bloomberg Law with June Grazzo Boolberg. 0:18:57.720 --> 0:19:01.840 Postmates and door Dash are pushing a million dollar ballot 0:19:01.880 --> 0:19:05.920 initiative to overturn a California law designed to force them 0:19:05.960 --> 0:19:09.680 to treat rideshare and delivery drivers as employees. At the 0:19:09.760 --> 0:19:12.639 same time, an elite legal team at Gibson, Dunn and 0:19:12.680 --> 0:19:15.920 Crutcher is trying to avoid a court ruling they say 0:19:16.000 --> 0:19:19.480 could decimate the f based business model playing the long 0:19:19.520 --> 0:19:23.560 game in California courts. Joining me as Christopher for Bloomberg 0:19:23.680 --> 0:19:26.359 Law team leader in the Business of Law, Chris tell 0:19:26.440 --> 0:19:29.399 us about attorney Ted Boutros, who leads the go team 0:19:29.400 --> 0:19:33.679 at Gibson Dunne. So. Ted Boutros is a partner at 0:19:33.760 --> 0:19:38.159 Gibson Dune, which is a well known white chee law firm. Uh. 0:19:38.200 --> 0:19:41.920 He's based in the Los Angeles office. Um. This is 0:19:41.960 --> 0:19:46.680 a guy who is the Seasons litigator, high profile Southern 0:19:46.680 --> 0:19:50.760 California attorney who's well known for representing a lot of 0:19:50.800 --> 0:19:54.240 big name clients. He's also known for having like a 0:19:54.359 --> 0:19:58.760 very noticeable shock whull head of white hair that's kind 0:19:58.760 --> 0:20:02.080 of become his calling art in some legal circles. That's uh, 0:20:02.640 --> 0:20:05.240 it's the way that people think of him. Uh. Um. 0:20:05.280 --> 0:20:07.320 You know when you talk about Ted Ted bou trust, 0:20:07.359 --> 0:20:10.359 that's one of the first things that comes up. Um. 0:20:10.359 --> 0:20:14.920 But he's a famed First Amendment lawyer who these days 0:20:14.960 --> 0:20:18.440 has spent a lot of time going up against President 0:20:18.480 --> 0:20:23.120 Donald Trump and the Trump administration in court. Among other 0:20:23.240 --> 0:20:28.600 notable clients, he recently represented Mary Trump, the president's nie, 0:20:28.880 --> 0:20:34.560 as well as John Bolton, the president's former national security advisor, 0:20:34.800 --> 0:20:38.359 in a pair of cases in which Trump was trying 0:20:38.400 --> 0:20:42.440 to prevent the publication of tell All books. Who Trust 0:20:42.480 --> 0:20:45.359 has also represented a number of media figures. He was 0:20:45.480 --> 0:20:49.439 the lawyer for CNN in a case revolving around anchor 0:20:49.600 --> 0:20:53.919 Jim maccassas the revocation of his press pat Uh. He 0:20:54.040 --> 0:20:58.080 handled a similar case involving a reporter at Playboy, and 0:20:58.160 --> 0:21:04.880 he's been involved in related litigation involving Rachel Maddow. So recently, 0:21:05.440 --> 0:21:09.640 really a lot of his uh high profile has come 0:21:09.720 --> 0:21:12.880 from those cases, these First Amendment cases. He's also an 0:21:12.880 --> 0:21:17.720 outspoken Trump administration critic on Twitter. He's gone so far 0:21:17.880 --> 0:21:21.520 as to offer to pick up the legal fees for 0:21:21.640 --> 0:21:26.400 anyone who um finds himself in court on the other 0:21:26.480 --> 0:21:30.160 end of the free speech lawsuit by the Trump administration, 0:21:30.200 --> 0:21:32.480 and Boo Truck himself has said he will defend those 0:21:32.480 --> 0:21:36.040 people in court free of charge. So so this is 0:21:36.040 --> 0:21:40.160 somebody you've got a high profile. Also, self identified as 0:21:40.200 --> 0:21:44.359 a liberal Democrat, has been involved in a number of 0:21:44.359 --> 0:21:48.520 social related issues as well. Uh. He teamed up with 0:21:48.960 --> 0:21:51.440 Ted Olsen, who is also a Gifts and Done partner 0:21:51.600 --> 0:21:56.000 and a former George W. Bush Splicitor General, to challenge 0:21:56.040 --> 0:21:59.240 California's ban on same sex marriage about a decade ago 0:21:59.720 --> 0:22:03.480 and successfully had that overturned. He's a liberal Democrat, but 0:22:03.560 --> 0:22:07.640 he represents big companies in court against a little guy 0:22:07.880 --> 0:22:11.240 against environmental concerns. Or is that his firm that does that. 0:22:12.080 --> 0:22:15.199 It's a little bit of both. So boot Trow himself also, 0:22:15.920 --> 0:22:18.800 you know, a little more quietly, has also been representing 0:22:19.240 --> 0:22:21.840 some of the biggest employers in the country in class 0:22:21.840 --> 0:22:25.120 action litigation brought by workers who have said their labor 0:22:25.160 --> 0:22:28.680 unemployment rights have been violated. Most notably was the case 0:22:28.720 --> 0:22:31.679 called Walmart se. Dukes, which went all the way up 0:22:31.680 --> 0:22:35.359 to the U. S. Supreme Court, who trusts Um argued 0:22:35.400 --> 0:22:39.040 that case on behalf of Walmart, and he convinced the 0:22:39.040 --> 0:22:42.679 Supreme Court to rule um that a large group of 0:22:42.720 --> 0:22:45.960 thousands of Walmart workers who were doing for paid discrimination 0:22:46.119 --> 0:22:51.280 and harassment simply couldn't do that all in one class 0:22:51.320 --> 0:22:55.040 action lawsuit, and instead they had to bring individual lawsuits. 0:22:55.160 --> 0:22:57.400 And that's a really good example of some of the 0:22:58.200 --> 0:23:03.280 legal work that he's done, particularly in respect to defending 0:23:03.400 --> 0:23:07.880 large corporations in court. UH. It's those sort of procedural 0:23:08.840 --> 0:23:12.800