WEBVTT - IRA, Drug Pricing, Tech Antitrust, EchoStar: Votes and Verdicts 0:00:15.800 --> 0:00:19.119 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:19.120 --> 0:00:22.600 by the Litigation and Policy team at Bloomberg Intelligence, the 0:00:22.640 --> 0:00:26.360 investment research platform of Bloomberg LP on the Bloomberg terminal. 0:00:26.800 --> 0:00:30.640 Bloomberg Intelligence has five hundred analysts and strategists working across 0:00:30.680 --> 0:00:34.400 the globe and focused on all major markets. Our coverage 0:00:34.400 --> 0:00:37.239 includes over two thousand equities and credits, and we have 0:00:37.320 --> 0:00:40.800 outlooks on more than ninety industries and one hundred market indices, 0:00:40.840 --> 0:00:45.800 currencies and commodities. This podcast series examines the intersection of 0:00:45.840 --> 0:00:49.680 business policy and law, and today is our weekly check 0:00:49.720 --> 0:00:53.240 in on the litigation and policy catalysts that we're watching 0:00:53.320 --> 0:00:56.200 and that we think will impact companies across a number 0:00:56.200 --> 0:00:59.840 of different sectors. My name's Elliott Stein. I'm an analyst 0:00:59.840 --> 0:01:04.040 with Bloomberg Intelligence covering litigation in the financial sector. Today 0:01:04.120 --> 0:01:08.680 is May fifteenth. It's around three pm Eastern daylight time. 0:01:09.040 --> 0:01:12.640 Since things move very quickly these days, we always think 0:01:12.720 --> 0:01:15.760 it's a good idea to timestamp things because some of 0:01:15.800 --> 0:01:17.959 what we say maybe out of date within an hour. 0:01:18.880 --> 0:01:21.520 I'm delighted today to be joined by a handful of 0:01:21.560 --> 0:01:25.560 my colleagues on the litigation and policy team, and as always, 0:01:25.560 --> 0:01:27.720 you can find all of our research on the Bloomberg 0:01:27.800 --> 0:01:32.480 terminal at big and more specifically on our litigation and 0:01:32.520 --> 0:01:36.160 Policy dashboard, which is available at BI Laws. 0:01:36.560 --> 0:01:36.600 Go. 0:01:37.720 --> 0:01:41.520 All right, so Nathan Dean, let's bring you in. Nathan 0:01:41.680 --> 0:01:46.320 is our financials policy analyst, but does a lot more 0:01:46.400 --> 0:01:49.440 than that. Covers a lot of things policy related, including 0:01:49.760 --> 0:01:55.640 all this stuff about reconciliation and tax cuts and the budget. Nathan, 0:01:55.840 --> 0:01:59.760 what is going on with reconciliation? I mean, there's a 0:01:59.800 --> 0:02:02.080 lot going on in the news, and I have a 0:02:02.080 --> 0:02:04.080 hard time tracking it, but I know you're all over it. 0:02:04.080 --> 0:02:05.680 It seems to me like there's a lot of competing 0:02:05.760 --> 0:02:10.960 interests between the deficit hawks, the Salt Caucus, those who 0:02:10.960 --> 0:02:14.360 are against Medicaid cuts. How are the Republicans going to 0:02:14.360 --> 0:02:15.200 thread the needle here? 0:02:15.520 --> 0:02:18.040 Apologize, folks. I was just on mute, and now that 0:02:18.080 --> 0:02:21.200 I've unmuted, I am going to get into Elliott's question. 0:02:21.320 --> 0:02:24.359 It's twenty twenty five and people still forget to unmute themselves. 0:02:24.400 --> 0:02:26.360 I was up on the Capitol Hill today and the 0:02:26.400 --> 0:02:28.880 amount of times that the witnesses didn't press the button 0:02:29.400 --> 0:02:32.680 and the millmakers were like leaning over and going pl 0:02:32.720 --> 0:02:33.359 with the button. 0:02:33.360 --> 0:02:35.560 Please, by the way, shout out you were on the 0:02:35.639 --> 0:02:39.400 hill because our colleague Guy Rid Jersey was testifying there today. 0:02:39.720 --> 0:02:42.560 So if anybody wants to go back, How's Financial Services Committee, 0:02:42.560 --> 0:02:46.560 mateenth one of the most interesting subcommittees that I've ever 0:02:46.560 --> 0:02:50.240 been a part of anyway. But to answer your question 0:02:50.280 --> 0:02:52.560 on the reconciliation and Dwayne, feel free to jump in 0:02:52.600 --> 0:02:55.920 here because Dwayne's covering the Medicaid cuts side of this 0:02:56.000 --> 0:02:58.520 as well, and that's such a really big piece here. 0:02:58.720 --> 0:03:01.239 He said, there's three committee that really happened this week, 0:03:01.280 --> 0:03:03.560 and that was the House Energy and Commerce Committee that 0:03:03.639 --> 0:03:07.200 was seeking to cut things like the Inflation Reduction Act provisions, 0:03:07.280 --> 0:03:09.960 the grant provisions, the carrots if you will, of the 0:03:09.960 --> 0:03:13.880 IRA plus the Medicaid portion that Dwayne covers. You have 0:03:13.919 --> 0:03:17.160 the House ad Committee, which covers the cuts of approximately 0:03:17.200 --> 0:03:20.680 two hundred and thirty billion for snap Benefits also known 0:03:20.720 --> 0:03:23.239 as formerly known as food Stamp. And then you have 0:03:23.320 --> 0:03:25.360 the House Ways and Means Committee, which is the tax 0:03:25.400 --> 0:03:28.919 provisions of this bill. Now, the provisions came out, the 0:03:29.000 --> 0:03:31.840 legislation came out, and to make this a two minute 0:03:31.840 --> 0:03:34.360 answer as opposed to a thirty minute answer, We were 0:03:34.360 --> 0:03:38.000 most surprised by how nice this bill was to the 0:03:38.040 --> 0:03:42.280 solar and wind industry, the renewables industry. In the IRA 0:03:42.440 --> 0:03:45.880 portion of this, for example, there's been and look, if 0:03:45.920 --> 0:03:47.200 you talk to some of the folks on the Hill, 0:03:47.240 --> 0:03:50.480 they will certainly say that this guts the Inflation Reduction Act. 0:03:50.480 --> 0:03:52.560 And they may not be wrong, because it does cut 0:03:52.640 --> 0:03:54.680 a lot of the grants and the loans and stuff 0:03:54.680 --> 0:03:57.520 of the IRA. But what they did is and for example, 0:03:57.560 --> 0:03:59.480 instead of getting rid of this tax credit called the 0:03:59.480 --> 0:04:02.200 forty five, which is key for the solar industry, they 0:04:02.240 --> 0:04:05.160 phased it out one year earlier. Even the wind industry, 0:04:05.160 --> 0:04:07.760 which President Trump does not like, the wind industry still 0:04:07.840 --> 0:04:10.320 has a little bit better of a phase out than 0:04:10.360 --> 0:04:13.240 the elimination. Now there is eliminations in here, though, of 0:04:13.320 --> 0:04:15.720 tax credits like the electric Vehicle tax credit, so for 0:04:15.800 --> 0:04:18.720 like Tesla for GM. You know, under this bill this 0:04:19.400 --> 0:04:23.560 tax credit for individuals purchasing evs would go away. So 0:04:23.800 --> 0:04:26.640 obviously there's a lot of moving parts here. For the 0:04:26.640 --> 0:04:28.320 folks that live in New York and New Jersey and 0:04:28.320 --> 0:04:30.520 Connecticut that are listening to this, you know, the salt 0:04:30.560 --> 0:04:34.080 deduction is certainly important. The salt deduction is currently a 0:04:34.120 --> 0:04:37.160 ten thousand dollars cap on state and local tax deductions. 0:04:37.960 --> 0:04:40.320 In this bill, they've offered it up to thirty thousand 0:04:40.360 --> 0:04:42.960 dollars with income phaseouts, which means that if you make 0:04:43.000 --> 0:04:44.880 more than a certain amount I think it's one hundred 0:04:44.880 --> 0:04:48.000 thousand dollars is when it begins to phase out, then 0:04:48.120 --> 0:04:51.680 obviously that salt deduction goes down. Now, the Salty Caucus, 0:04:51.720 --> 0:04:54.719 if you will, led by Representative Mike Lawler of New York, 0:04:55.000 --> 0:04:58.160 has been meeting with leadership in this speaker House Speaker 0:04:58.160 --> 0:05:00.320 Mike Johnson to try and come up with it's a 0:05:00.360 --> 0:05:03.839 better solution. The general thought here is a fifty thousand, 0:05:03.920 --> 0:05:07.200 but I just saw earlier today that the Chairman of 0:05:07.200 --> 0:05:09.560 House Weeds and Means Committee said to the Salty Caucus 0:05:09.680 --> 0:05:12.960 essentially take thirty or not. So we'll see what happens there. 0:05:13.000 --> 0:05:15.400 But they do have a lot of leverage they being 0:05:15.440 --> 0:05:18.080 the Salty Caucus, So I do anticipate that this will 0:05:18.080 --> 0:05:20.760 go up to about fifty thousand, maybe sixty four thousand, 0:05:21.200 --> 0:05:24.839 and then way it's potential for income phase outs. Now 0:05:24.880 --> 0:05:27.440 going forward, this is where the challenge is is because 0:05:28.760 --> 0:05:31.320 it has to go to the House Budget Committee, and 0:05:31.720 --> 0:05:33.599 one member of the House Budget Committee has already said 0:05:33.600 --> 0:05:37.200 they're going to vote no. And you know, but that's 0:05:37.200 --> 0:05:39.680 within our expectations. We think there are a lot more 0:05:39.720 --> 0:05:42.279 political hiccups coming. This bill is not the final bill. 0:05:42.320 --> 0:05:45.839 There's a lot of amendments coming. We think the House 0:05:45.880 --> 0:05:48.400 can eventually get to a point of agreement. And again 0:05:48.440 --> 0:05:50.080 this is this is you know, there's a lot of 0:05:50.080 --> 0:05:52.719 other folks around Washington who think it can't get done. 0:05:53.160 --> 0:05:54.960 But if it is going to get done, it would 0:05:54.960 --> 0:05:57.320 probably happen in June. It then goes to the Senate 0:05:57.520 --> 0:05:59.400 Senata says, thank you very much, they throw it out, 0:05:59.400 --> 0:06:01.400 they do whatever they want, They jam the House anyway, 0:06:01.680 --> 0:06:03.880 and then they potentially could try and get this wrapped 0:06:03.920 --> 0:06:06.719 up by the late July if the dead ceiling is included. 0:06:06.760 --> 0:06:08.680 If the dead ceiling is not included and they can't 0:06:08.680 --> 0:06:11.000 come to an agreement, the dead ceiling gets stripped out, 0:06:11.080 --> 0:06:13.800 and then this gets pushed off to probably October November. 0:06:13.960 --> 0:06:16.920 But ultimately something will happen that will increase or at 0:06:16.960 --> 0:06:20.880 least stave off those tax increases. And as of right now, 0:06:21.360 --> 0:06:23.880 our thesis is, you know, there are some cuts to 0:06:24.000 --> 0:06:27.120 snap benefits, and I'll let towain talking about Medicaid. And 0:06:27.440 --> 0:06:29.800 you know, it's the Inflation Reduction Act, but it's not 0:06:29.839 --> 0:06:31.839 as bad as it could have been for the sector's recover. 0:06:32.560 --> 0:06:35.479 Why do you think they were not as harsh as 0:06:35.480 --> 0:06:37.359 you expected on solar and wind. 0:06:37.960 --> 0:06:40.760 I think it was more of a realistic expectation on 0:06:40.800 --> 0:06:43.719 the Republican part to like, look times of the essence here. 0:06:44.040 --> 0:06:46.320 We could vote to just strip it all out, but 0:06:46.400 --> 0:06:48.359 we know that the Senate is going to jam us 0:06:48.440 --> 0:06:51.160 up anyway. And Senator Tom Tillis in North Carolina has 0:06:51.160 --> 0:06:53.120 already sent a letter and he had three other Republican 0:06:53.160 --> 0:06:56.039 senators joining him, which is four, which is already puts 0:06:56.040 --> 0:06:58.200 you in the no camp. They sent the letter to 0:06:58.240 --> 0:07:00.840 the House essentially saying, don't touch dan for Reduction Act. 0:07:01.000 --> 0:07:03.920 I have a plant being built in my district or 0:07:03.960 --> 0:07:07.200 in my state, don't touch it. And so I think 0:07:07.279 --> 0:07:09.880 they realized that there were going to be some people 0:07:09.960 --> 0:07:12.400 that are fighting tooth and nail in this. It's much easier, 0:07:12.400 --> 0:07:15.600 and I've said this multiple multiple times, it's much easier 0:07:15.600 --> 0:07:19.320 to vote to increase the deficit borrow today, pay for 0:07:19.400 --> 0:07:22.040 later than it is to vote to cut somebody's benefit. 0:07:22.080 --> 0:07:23.120 That's going to happen today. 0:07:23.440 --> 0:07:25.400 But how do you then get the deficit hawks on board? 0:07:25.440 --> 0:07:27.720 And they're just going to suck it up to give 0:07:27.920 --> 0:07:29.760 President President Trump will win. 0:07:30.160 --> 0:07:32.280 I think President Trump at a certain point has to use 0:07:32.280 --> 0:07:35.200 the bully pulpit, and I think the bully pulpit can 0:07:35.200 --> 0:07:38.440 get the deficit hawks in line. And look, Senator Ron 0:07:38.520 --> 0:07:41.120 Johnson Wisconsin came out and said this the way they're 0:07:41.160 --> 0:07:44.320 doing this right now, it does not cut enough. And 0:07:44.360 --> 0:07:47.920 he said I'd be an automatic no vote. So but again, 0:07:48.000 --> 0:07:50.120 you're at fifty three. You can only afford to lose 0:07:50.120 --> 0:07:52.280 three in the report in the Senate. But that's why 0:07:52.800 --> 0:07:55.040 for all the discussions we're having on this bill right now, 0:07:55.280 --> 0:07:56.920 we really have to see what the Senate comes up with, 0:07:56.960 --> 0:07:58.800 because they're going to be the ones that ultimately drive 0:07:58.920 --> 0:08:01.120 what the final package looks like. 0:08:01.200 --> 0:08:04.720 Yeah, got it all right? Good stuff, Dwayne, Why don't 0:08:04.720 --> 0:08:06.360 you jump in here too. I don't know if you 0:08:06.400 --> 0:08:08.920 want to pick up on any of this related to 0:08:09.120 --> 0:08:12.440 the IRA and Medicaid. And then obviously, the other big 0:08:12.480 --> 0:08:15.600 issue this week was executive order that President Trump signed 0:08:15.960 --> 0:08:20.080 I think on Monday regarding most favorite nation status for drugs, 0:08:20.720 --> 0:08:22.920 and you had a nice note out on the terminal 0:08:22.960 --> 0:08:26.680 today with the headline quote how Trump's MFN might find 0:08:26.680 --> 0:08:30.200 its way into IRA drug negotiations end quote. So it 0:08:30.240 --> 0:08:32.480 all sort of ties in together, it seems. 0:08:33.640 --> 0:08:37.199 Yeah. So thanks, I'll pick up where Nathan leftoff and 0:08:37.600 --> 0:08:42.600 talk about the Medicaid ACA side of things. I think 0:08:42.920 --> 0:08:46.400 when you think about the hospitals and the health insurers, 0:08:47.559 --> 0:08:51.839 they probably did better than folks maybe thought going into this. 0:08:51.920 --> 0:08:55.000 So if you think about the hospitals and you know, 0:08:55.040 --> 0:08:58.440 thinking about HCA's and tenants of the world, the biggest 0:08:58.720 --> 0:09:02.680 concerns they had were how Medicare pays for services and 0:09:03.240 --> 0:09:06.440 outpatient and patient settings. They're different, and there's been a 0:09:06.440 --> 0:09:10.200 desire to to close that gap, which could have been 0:09:10.240 --> 0:09:15.160 a worst case scenario or outcome one hundred and fifty 0:09:15.200 --> 0:09:17.840 billion dollars over ten years. That's a lot of lost 0:09:17.960 --> 0:09:21.160 revenue coming from the hospital secutor that's not in there. 0:09:21.640 --> 0:09:26.640 There are provisions relating to how states pay for their 0:09:27.320 --> 0:09:31.880 portion of Medicaid spending, the scheme that's called provider taxes. 0:09:32.920 --> 0:09:35.360 There are limits in current law, and there was some 0:09:35.440 --> 0:09:40.079 fear amongst providers that there be lower limits on that, 0:09:40.200 --> 0:09:43.080 so that requires states to pony up more money to 0:09:43.080 --> 0:09:47.680 fund their program that's not in there. But there's a 0:09:47.720 --> 0:09:51.600 limit on a new provider taxes, so to the extent 0:09:51.679 --> 0:09:56.079 that there is a recession or a budget shortfall, these 0:09:56.080 --> 0:09:59.320 states can't rely on those kind of schemes to fund 0:09:59.360 --> 0:10:02.640 their Medicaid. And there are some other things on the 0:10:02.679 --> 0:10:06.200 hospital side, but by and large they do fairly well 0:10:06.240 --> 0:10:09.959 coming out of this bill. On the health insurance side, 0:10:10.000 --> 0:10:14.640 I think people will gravitate to the number of people 0:10:14.679 --> 0:10:18.720 who will be uninsured compared to if this bill hadn't 0:10:18.760 --> 0:10:22.760 passed or the policies hadn't passed don't pass and it's 0:10:22.840 --> 0:10:25.719 roughly about seven to eight million people over a ten 0:10:25.760 --> 0:10:30.400 year period. Now that's probably on the face of it, 0:10:30.520 --> 0:10:33.120 that's not good for those individual people. But when you 0:10:33.160 --> 0:10:37.720 think about how Republicans get there by not going after 0:10:37.760 --> 0:10:41.480 the Medicaid expansion program, which there was some fear there, 0:10:41.920 --> 0:10:44.720 block raining was never really a fear, but some other 0:10:45.360 --> 0:10:49.880 issues or other policies. They do implement work requirements for 0:10:50.000 --> 0:10:53.440 the Medicaid population and there are some significant savings there, 0:10:53.440 --> 0:10:57.600 but that by and large everybody assumed what happened. So 0:10:57.840 --> 0:11:02.120 while most of these savings do come from Medicaid. It's 0:11:02.240 --> 0:11:05.280 not as bad as it could be, but it's still 0:11:05.360 --> 0:11:07.840 going to be a challenge, especially when you think about 0:11:07.920 --> 0:11:11.120 for ensures. What's not in this bill and may never 0:11:11.200 --> 0:11:14.680 happen is an expansion of the or extension of the 0:11:14.720 --> 0:11:18.200 ACA subsidies that expire at the end of the year. 0:11:18.320 --> 0:11:23.320 So it's probably a good outcome for hospitals, a mixed 0:11:23.320 --> 0:11:27.640 outcome for insurers. But to Nathan's point, this is just 0:11:27.760 --> 0:11:31.400 the first step. We're early innings, and depending on how 0:11:31.440 --> 0:11:34.800 the conversations go with the Deaf sitt Hawks and the Senate, 0:11:35.320 --> 0:11:37.400 some of these policies that we're talking about now that 0:11:37.440 --> 0:11:41.240 aren't in the bill may find their way into the 0:11:42.160 --> 0:11:44.680 version that goes to the President for a signature. So 0:11:46.640 --> 0:11:49.080 we'll be following this as this plays out over the 0:11:49.080 --> 0:11:53.680 coming coming weeks and months. But I do want to 0:11:53.720 --> 0:11:57.559 flag two things that are drug pricing related. One of 0:11:57.600 --> 0:12:01.800 them is actually in the Higher or the Reconciliation Bill 0:12:01.840 --> 0:12:08.200 and providing some expansion of protections for operent drugs from 0:12:08.240 --> 0:12:11.320 price cuts in the IRA. I think that's low hanging fruit, 0:12:11.440 --> 0:12:15.120 and we may see in addition to that some protections 0:12:15.160 --> 0:12:19.000 for drugs based on how long they've been on the market, 0:12:19.000 --> 0:12:23.560 the whole pill penalty, small molecule versus large molecule disparity, 0:12:23.960 --> 0:12:27.120 that's not in there, but this could find its way 0:12:27.160 --> 0:12:28.800 in there. I think it will at the end of 0:12:28.840 --> 0:12:33.200 the day now going to Monday or earlier in the 0:12:33.240 --> 0:12:39.360 week where the President announced his most Favored Nations policy. 0:12:39.960 --> 0:12:42.520 I think it's let's say a couple of things. One, 0:12:43.720 --> 0:12:46.360 no surprise that the president's going down this wrote. He 0:12:46.480 --> 0:12:50.080 tried to do this during his first term. He wasn't 0:12:50.120 --> 0:12:53.480 able to the court's blockne this time around, there was 0:12:53.480 --> 0:12:56.760 a lot of fear of the worst case outcome that 0:12:56.840 --> 0:13:00.280 he was going to actually implement an MFN on the 0:13:00.320 --> 0:13:04.240 spot and start the rulemaking process. That didn't really happen either, 0:13:04.320 --> 0:13:08.520 which is why we saw the pharma stocks search after 0:13:08.559 --> 0:13:12.840 his announcement. So, like any executive order, it doesn't have 0:13:12.920 --> 0:13:17.480 the force of law. But this executive order is defanged 0:13:17.480 --> 0:13:22.439 in a lot of ways because it really says HHS 0:13:22.480 --> 0:13:28.600 Secretary Kennedy start to discussion on forcing companies to set 0:13:28.640 --> 0:13:32.920 their prices to those overseas and there's little detail as 0:13:32.960 --> 0:13:39.440 to the size and scope of those drugs and there's 0:13:39.520 --> 0:13:44.000 also little detail of what happens if the farmer companies 0:13:44.040 --> 0:13:48.000 don't negotiate those prices down, and so there's the threat 0:13:48.040 --> 0:13:50.920 of rulemaking down the road. In my view, this is 0:13:50.960 --> 0:13:53.960 all is set up for the Inflation Reduction Act, because 0:13:54.640 --> 0:14:01.960 negotiation is on the next fifteen party. Drugs are already underway, 0:14:02.480 --> 0:14:05.200 and while the IRI Statute doesn't have anything in there 0:14:05.240 --> 0:14:10.280 about mfn or OUs prices, there's nothing stopping them. The 0:14:10.360 --> 0:14:15.280 administration I basically looking over to Canada or any European country, 0:14:15.360 --> 0:14:18.320 Australia or whatever, basically saying well, this is what they're paying. 0:14:19.200 --> 0:14:21.080 We'll do an average. We're not going to tell you 0:14:21.240 --> 0:14:23.960 that's what we're doing because that's not in the statute, 0:14:24.280 --> 0:14:29.440 but we'll get there eventually. And if it's all about optics, 0:14:30.280 --> 0:14:33.720 the objects of making demands and the objects of getting 0:14:33.720 --> 0:14:35.600 what you say you want it at the beginning of 0:14:35.640 --> 0:14:39.400 the conversation, this is a perfect setup for in November, 0:14:39.440 --> 0:14:43.200 when those prices are announced, the President basing saying, hey, look, 0:14:43.400 --> 0:14:46.560 I told the companies to come in and negotiate prices 0:14:46.600 --> 0:14:49.480 that are closer to what they're paying overseas, and I 0:14:49.520 --> 0:14:52.120 got it now. I think if you're following the IRA. 0:14:52.760 --> 0:14:54.840 It's take your or leave it for these drug companies, 0:14:54.880 --> 0:14:56.640 and if you don't like it, you can pull all 0:14:56.680 --> 0:14:59.920 your products from the Medicare program. It's not going to happen. 0:15:01.280 --> 0:15:03.960 So we'll see at the end of the day how 0:15:04.040 --> 0:15:06.720 far the President and the White House are willing to 0:15:06.760 --> 0:15:11.200 go to drive down prices, because one central key component 0:15:11.240 --> 0:15:14.600 of this is the IRA sets a ceiling but not 0:15:14.640 --> 0:15:18.000 a floor. So time will tell how they're willing to 0:15:18.040 --> 0:15:18.600 go about this. 0:15:19.240 --> 0:15:22.040 Do you anticipate lawsuits and do you think there's any 0:15:22.120 --> 0:15:24.040 legal problems with that approach? 0:15:24.640 --> 0:15:29.120 Well, so we know that there are lawsuits now over 0:15:29.320 --> 0:15:35.800 various definitions of the IRA. I think everything is on 0:15:35.840 --> 0:15:40.360 the table for litigation as it relates to as it 0:15:40.400 --> 0:15:44.400 relates to the law, and pricing in and of itself 0:15:45.040 --> 0:15:48.760 was not an issue once Biden announced. But if we 0:15:48.840 --> 0:15:53.080 start to see huge discounts off of net prices that 0:15:53.240 --> 0:15:58.200 actually do resemble what's being paid overseas, and the rationale 0:15:58.280 --> 0:16:01.480 for setting those prices in really clear, I think the 0:16:01.520 --> 0:16:04.840 door is open to that. But the truck companies have 0:16:04.920 --> 0:16:10.960 been very unsuccessful so far. Lawsuit sure, it's possible. How 0:16:11.000 --> 0:16:14.880 successful they'd be You know we'll have to wait and 0:16:14.920 --> 0:16:15.440 say got it? 0:16:16.000 --> 0:16:19.760 All right, great stuff, all right, thanks to Wayne. All right, 0:16:19.840 --> 0:16:24.600 let's bring in uh Jenree and Justin TREESI our anti 0:16:24.640 --> 0:16:28.520 trust analysts. They've both been down in DC for I 0:16:28.560 --> 0:16:32.360 don't know, it seems like a while now, several weeks. Right, 0:16:32.440 --> 0:16:34.760 you're you're, You're both in the same courthouse, but in 0:16:34.800 --> 0:16:40.520 different courtrooms, analysts passing in the night. I guess in 0:16:40.560 --> 0:16:44.200 the halls of the what is it the Brett Perryman Building? 0:16:44.320 --> 0:16:45.920 Is that all right? Pretty much? 0:16:45.960 --> 0:16:49.240 Pretty pretty man? Yeah, I always mess that up. Okay, 0:16:49.240 --> 0:16:50.640 which one of you wants to go first? 0:16:51.080 --> 0:16:51.240 Well? 0:16:51.320 --> 0:16:54.120 I will, This is Jen. I will say that given 0:16:54.160 --> 0:16:57.280 how many computer scientists from mi T were testifying at 0:16:57.320 --> 0:16:59.120 my trial, it seemed longer than three weeks. 0:17:00.000 --> 0:17:01.080 Sounds like a set up for a joke. 0:17:01.240 --> 0:17:03.080 It was a little bit like an episode of Big 0:17:03.120 --> 0:17:07.680 Bang Theory. So right, switching gears and moving to something 0:17:07.680 --> 0:17:10.600 that's even slower than Capitol Hill. And that's anti dress litigation. 0:17:11.640 --> 0:17:14.560 What I was listening to at the courthouse in Washington, 0:17:14.600 --> 0:17:17.840 d C. Was a remedies hearing in the United States 0:17:17.880 --> 0:17:22.160 Department of Justice lawsuit against Google over illegal monopoly maintenance 0:17:22.160 --> 0:17:25.479 of its search engine. Now it's a remedies hearing because 0:17:25.640 --> 0:17:27.480 for anyone who may not know, I mean, it's been 0:17:27.520 --> 0:17:30.680 widely publicized, but for anyone who may not know. Back 0:17:30.680 --> 0:17:33.040 in the third quarter of twenty twenty four, a judge 0:17:33.119 --> 0:17:36.480 ruled that Google was illegally maintaining its monopoly and search 0:17:36.640 --> 0:17:39.719 and search search text ads, and it was doing this 0:17:39.760 --> 0:17:42.920 by basically blocking out search engine rifles, being and Duck 0:17:43.000 --> 0:17:45.160 dot Go really are the main two rivals it has 0:17:45.200 --> 0:17:47.840 in the search engine world, and it was doing that 0:17:47.960 --> 0:17:53.760 by sort of creating agreements, getting into agreements that were 0:17:53.800 --> 0:17:56.680 taking all of the search access points available to consumers, 0:17:56.880 --> 0:18:00.440 search apps, browser apps, sery, alexa, et cetera. They pay 0:18:00.440 --> 0:18:03.440 the browser developers billions of dollars to place Google Search 0:18:03.480 --> 0:18:06.600 as the default option, right, and they also were giving 0:18:06.640 --> 0:18:09.879 revenue shares for advertising revenues to the OEMs, the makers 0:18:09.880 --> 0:18:12.720 of the Android bones to pre install Chrome and pre 0:18:12.800 --> 0:18:15.560 install Google Search and not to install rival browsers or 0:18:15.600 --> 0:18:17.919 search engines. And so what this really meant is that 0:18:17.960 --> 0:18:21.120 the only time people used bing or Ductugo was really 0:18:21.119 --> 0:18:23.800 if the person went in and took the steps to 0:18:23.880 --> 0:18:25.919 change their default, which a lot of people don't know 0:18:25.960 --> 0:18:28.040 they can do or don't know how to do, or 0:18:28.080 --> 0:18:31.120 maybe they use the Microsoft Edge browser and things already 0:18:31.280 --> 0:18:34.480 the default there. But really those two companies weren't getting 0:18:34.520 --> 0:18:36.639 a lot of searches and they couldn't improve without the 0:18:36.720 --> 0:18:38.919 data that they would get from the searches. So now 0:18:39.440 --> 0:18:41.240 the judge has to decide what to do about it, 0:18:41.320 --> 0:18:44.440 and the DJ's really asked for an extensive list of actions. 0:18:44.640 --> 0:18:46.959 They want the judge to force Google to sell Chrome, 0:18:47.200 --> 0:18:49.720 that would be a big one. They want to force 0:18:50.040 --> 0:18:52.800 Google to share a lot of user and advertiser data 0:18:52.920 --> 0:18:57.400 as well as it's search index with these rival search engines. 0:18:57.720 --> 0:19:00.640 And they want Google to be prohibited from provider anything 0:19:00.640 --> 0:19:03.640 of value to browsers or OEMs or other third parties 0:19:03.840 --> 0:19:07.240 to essentially favor Google Search and disfavor competitor search engines. 0:19:07.280 --> 0:19:09.800 They want to remove these barriers to entry right and 0:19:09.840 --> 0:19:12.639 break down these walls so that others can new search 0:19:12.640 --> 0:19:17.440 engines could come in, AI can flourish, because because AI 0:19:17.520 --> 0:19:20.679 actually does work with search engines, it's not really a replacement. 0:19:20.800 --> 0:19:23.239 I kind of learned in this trial. And and by 0:19:23.280 --> 0:19:25.440 the way, all of these remedies would extend to Google's 0:19:25.440 --> 0:19:28.640 AI products as well, and you know, right and right now, 0:19:28.680 --> 0:19:31.119 we learned that it is currently in the process of 0:19:31.200 --> 0:19:35.000 asking OEMs to pre install its Gemini chatbot app in 0:19:35.040 --> 0:19:37.200 the Android phones that they make, and also they're trying 0:19:37.240 --> 0:19:39.240 to get an agreement with Apple for Gemini to be 0:19:39.280 --> 0:19:42.960 part of Apple Intelligence. Apple Intelligence doesn't have a large 0:19:43.000 --> 0:19:46.320 language model behind it, so it's basically got an agreement 0:19:46.359 --> 0:19:49.520 already now with open Ai, and it will make agreements 0:19:49.560 --> 0:19:52.440 maybe with Perplexity, maybe with Gemini so that people use 0:19:52.440 --> 0:19:55.240 Apple Intelligence and want access to that sort of broader 0:19:55.320 --> 0:19:58.040 AI product, confuse to use one of those others. 0:19:58.560 --> 0:19:58.919 Wow. 0:19:59.320 --> 0:20:00.439 Yeah, it's a big deal. 0:20:00.560 --> 0:20:01.520 Yeah, it's a big deal. 0:20:01.600 --> 0:20:04.159 It really is. And of course Google says all of 0:20:04.160 --> 0:20:06.760 this is overkill and it should be able to do 0:20:06.880 --> 0:20:08.159 really whatever it wants to. 0:20:08.280 --> 0:20:10.600 And I mean, but they were unliable, so I mean 0:20:10.640 --> 0:20:13.120 they must they must have, they must have to come 0:20:13.160 --> 0:20:16.160 up with sort of some sort of remedy, but not 0:20:16.359 --> 0:20:17.679 anything that egregious. 0:20:17.760 --> 0:20:19.800 You know, that's exactly right, Elliot. What they're saying is, well, 0:20:19.800 --> 0:20:22.120 we should really be able to keep paying revenue shares 0:20:22.440 --> 0:20:24.919 for companies that use Google Search, but just make it 0:20:24.960 --> 0:20:28.359 non exclusive, right, in the bath past, these agreements were exclusive. 0:20:28.600 --> 0:20:31.280 We should just make it non exclusive. So in other words, OEMs, 0:20:31.680 --> 0:20:33.480 we're not going to make and put any conditions on 0:20:33.520 --> 0:20:36.480 you pre installing Gemini. You can you can have Android, 0:20:36.720 --> 0:20:38.960 you have the license to Android, you can have YouTube, 0:20:39.000 --> 0:20:41.800 you can put Chrome on, you can put Gemini on, 0:20:41.840 --> 0:20:43.560 but we're not going to tell you can't put open 0:20:43.640 --> 0:20:47.680 Ai on or Perplexity or anybody else, right, which is 0:20:47.720 --> 0:20:50.640 what they kind of did before. So you know, our 0:20:50.720 --> 0:20:53.560 view after listening to the trial and reading transcripts, really 0:20:53.640 --> 0:20:55.680 is that the judge, I think, as you would expect, 0:20:55.800 --> 0:20:57.400 is going to meet them in the middle. That's what 0:20:57.520 --> 0:20:59.320 I think, and I thought that going in and I 0:20:59.320 --> 0:21:01.760 still think it coming out. I don't think Google's going 0:21:01.760 --> 0:21:03.840 to have to sell Chrome. I do think it's going 0:21:03.880 --> 0:21:05.760 to have to share some of its search data, which 0:21:05.800 --> 0:21:08.040 it really doesn't want to, but I think it will, 0:21:09.000 --> 0:21:11.960 and also stop paying for this preferential and default treatment 0:21:11.960 --> 0:21:14.320 for Google Search. And I do think the judge is 0:21:14.359 --> 0:21:17.080 probably going to require Google to provide choice screens as 0:21:17.080 --> 0:21:20.240 well for default search engines. For Chrome users can't bores 0:21:20.240 --> 0:21:22.639 Apple to do anything with Safari, but Chrome is a 0:21:22.680 --> 0:21:27.240 Google product. Now Google internally modeled the impact of loss 0:21:27.240 --> 0:21:29.760 of default positions at a net loss of twenty eight 0:21:29.800 --> 0:21:33.560 to thirty two billion dollars, So that's a pretty big impact. 0:21:33.680 --> 0:21:36.040 I was surprised by that because I would think even 0:21:36.119 --> 0:21:39.440 without paying for those default positions, people will still continue 0:21:39.440 --> 0:21:43.720 to use BING. Nonetheless, it'll be about what people do 0:21:43.760 --> 0:21:46.400