Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot Com. It is time for Bloomberg Opinion,
Speaker 1: and I'm excited now to welcome our next guest, Admiral
Speaker 1: James Stabrita's retired Navy admiral, former military commando of NATO
Speaker 1: and of course Bloomberg Opinion columnist. Admiral what is the
Speaker 1: thing that most keeps you up at night right now?
Speaker 1: I mean there's a plethora smore gas board if you like,
Speaker 1: things that I'm sure bother you and questions that you're
Speaker 1: trying to answer. But the particular one right now as
Speaker 1: we are, what three weeks out from the election, First
Speaker 1: and foremost, it's the distinct possibility of real turbulence domestically
Speaker 1: here in the United States after the election, and let's
Speaker 1: hope for a clean win on election eve, but I
Speaker 1: think that's unlikely and therefore there'll be court challenges and
Speaker 1: so what worries me, Vonnie and keeps me awake at
Speaker 1: night at the moment, and the things I worry about
Speaker 1: in the international sphere is that an opponent might take
Speaker 1: advantage of this period of weeks or even months of turbulence.
Speaker 1: I think it will resolve by inauguration day one where
Speaker 1: or the other. But you could see China making a
Speaker 1: move on Taiwan. You could see Iran doing something in
Speaker 1: the Arabian Gulf. You could see North Korea rattle a
Speaker 1: saber as they did just a couple of days ago,
Speaker 1: rolling out a new I CBM. So that sense of
Speaker 1: potential turbulence in the near term is the first thing
Speaker 1: I worry about, and the second one, less obvious, is
Speaker 1: cyber um. We have moved so many things into the
Speaker 1: cyber world, Vanni. I am concerned that our opponents might
Speaker 1: take advantage of that. And if you merge those two
Speaker 1: things together, concern about cyber and that turbulence after the election,
Speaker 1: I think we're headed into a period of vulnerability. That's
Speaker 1: what keeps me awake at night right now. Why wouldn't
Speaker 1: those opponents take advantage, Admiral, Can you give us reasons
Speaker 1: why it would not be in their interest to do thus,
Speaker 1: because long term, uh, the United States will come out
Speaker 1: of this period capable, ready to respond. We have the
Speaker 1: most capable military in the world, so we have military deterres.
Speaker 1: We still have the strongest economy in the world. It
Speaker 1: will come out somewhat battered, as I don't need to
Speaker 1: tell a blue Berg columnist, and China is having a
Speaker 1: better swifter recovery. But I wouldn't bet against the United
Speaker 1: States in the long term. So I think our opponents
Speaker 1: are smart enough. I hope to realize that we have
Speaker 1: the military capability, we have the economic kept and lastly,
Speaker 1: we have that network of allies, partners and friends around
Speaker 1: the world. I think it would be foolish for China
Speaker 1: to make a move. I think it would be a
Speaker 1: mistake for Iran to do so, or Russia. But you
Speaker 1: still have to account for and pay attention to that possibility.
Speaker 1: What's the apparatus that's already up and running that these
Speaker 1: countries would have to tamp down in order to sort
Speaker 1: of comply with international accepted practices. Pre election, I mean,
Speaker 1: we already know that China and Russia have huge troll farms,
Speaker 1: and you know, a huge apporatus basically designed to interfere
Speaker 1: in any election all over the world should they wish to.
Speaker 1: Is there any evidence to suggest that they might tamp
Speaker 1: that down. I don't think so, because at the end
Speaker 1: of the day, there's this sort of sense that, oh,
Speaker 1: the Russians and the Chinese are working to reelect Donald Trump.
Speaker 1: I don't think that's quite right. I think what the
Speaker 1: Russians in the Chinese are doing is to try and
Speaker 1: create real divisions in American society, and they will do
Speaker 1: that as you a, using social media, primarily, but also
Speaker 1: using actual incidents. I think as we get closer to
Speaker 1: the election, I could foresee, for example, a false flag
Speaker 1: operation where hundreds of ballots are suddenly discovered in a dumpster.
Speaker 1: It's entirely possible a physical act like that could be
Speaker 1: undertaken by our opponents, as well as all the social
Speaker 1: network problems that you've just addressed, and no, there are
Speaker 1: no international sanctions that can be applied uniformly. That's why
Speaker 1: it's important that the United States and clear signals to
Speaker 1: these nations that we will respond in the moment, will
Speaker 1: defend better, and we will also respond potentially after the
Speaker 1: election when we sort out what has happened, and then
Speaker 1: take action in the cyber world against those who have
Speaker 1: attacked US. Now, Admiral Cebidas, you have a great column
Speaker 1: out on the Boomberg today. COVID commission is crucial for
Speaker 1: a US recovery. You say, an investigation of the p
Speaker 1: that makes it into scientists, doctors, and gasp, a big
Speaker 1: pharma executive explained to us, you know who might put
Speaker 1: this together given that we're not quite sure who will
Speaker 1: be leading the country. There's a lane doc session at
Speaker 1: some point, and then there'll be, you know, either another
Speaker 1: four years with President Trump or four years with President Biden.
Speaker 1: So what how would this work? Well, let's look at history.
Speaker 1: Um After Pearl Harbor, where hundred Americans shockingly died on
Speaker 1: December seven, there was a national commission set up by
Speaker 1: the Congress. After the nine eleven events where three thousand
Speaker 1: Americans died, there was a national commission set up by
Speaker 1: the Congress. I think we're going to see the same thing.
Speaker 1: We're now at two hundred fifteen thousand Americans dead, probably
Speaker 1: by inauguration will be north of three hundred thousand. Most
Speaker 1: observers think, so there has to be accountability. We have
Speaker 1: to look back and see how did this happen, just
Speaker 1: like we did at Pearl Harbor, just like we did
Speaker 1: at kind of eleven. And more importantly, we've got to
Speaker 1: look forward so that it never happens again. What are
Speaker 1: the practical things we need to do to prepare ourselves
Speaker 1: for this so how it would happen? And I think
Speaker 1: this will happen. Whoever is in office after January will
Speaker 1: be a congressional push because all of us, all of
Speaker 1: us who are American citizens, are to demand that our
Speaker 1: national government focus on this. And the Congress is very
Speaker 1: well equipped with the tools to do this. They could
Speaker 1: appoint to leaders to set it up. You pick about
Speaker 1: a dozen commissioners I lay out in the article, uh
Speaker 1: some ideas for what it would look like, and you
Speaker 1: give them. You know this won't be instant work. You
Speaker 1: give them about two years to put this together. The
Speaker 1: Pearl Harbor Commission took five, Eleven took three. I think
Speaker 1: we can do this in two years. It will be
Speaker 1: perhaps the significant such commission American history. You've got to
Speaker 1: do it all right, well, I imagine it's coming at
Speaker 1: some point and our thanks to you, it's a mustery
Speaker 1: today COVID commission crucial for US recovery. Retired Admiral James
Speaker 1: Stabida's former NATO military commander, it is time now to
Speaker 1: have a look at a big tech. Of course, big
Speaker 1: tech has been dominating markets basically, even if it hasn't
Speaker 1: been dominating casual conversation outside of markets. But certainly that
Speaker 1: might start to change once we start to get Congress
Speaker 1: looking into the regulation of big tech. Let's bring in
Speaker 1: Mark Douglas, who CEO of Steel House. He is currently
Speaker 1: in Istanbul, but he is based generally in s in
Speaker 1: l A. So Mark, thank you so much for joining.
Speaker 1: First of all, talked to us about Istanbul. What's it
Speaker 1: like at the moment um. It's bustling, So it's the
Speaker 1: weather is great and there are a ton of people
Speaker 1: on the street. Everyone's wearing masks and the feels great.
Speaker 1: I've been traveling all over the world during COVID, so
Speaker 1: that I got here two days ago. Yeah, it's pretty
Speaker 1: amazing how the Eastern European countries are treating this slightly
Speaker 1: differently from some of the rest of the countries in
Speaker 1: the world. And uh, you know, Turkey would be sort
Speaker 1: of a little bit in that group. So talk to
Speaker 1: us about regulating big tech and what you anticipate will
Speaker 1: see over the next few days two weeks in Congress.
Speaker 1: I mean, we're in a sort of strange period where
Speaker 1: you know, senators are up for re election, we're obviously
Speaker 1: re electing a president or electing a president, and there's
Speaker 1: a lot of uncertainty. Is it the best time to
Speaker 1: be doing this? Well, I think the reasons they're doing
Speaker 1: it are legitimate. I mean, these large companies Apple, Amazon, Google,
Speaker 1: and Facebook and maybe even a few others, they legitimately
Speaker 1: do have monopoly power. I think Apple is kind of
Speaker 1: trying to fly a bit under the radar, but um,
Speaker 1: they have probably the biggest monopoly, which is the app
Speaker 1: store and the thirty percent fee that they charge, and
Speaker 1: a complete monopoly on getting apps on into your iOS devices.
Speaker 1: But I think all these companies are vulnerable, and I
Speaker 1: think it's it's legitimate to kind of investigate them and
Speaker 1: try to find solutions that ultimately create more competition and
Speaker 1: are better for consumers in the long term. Who's most
Speaker 1: at risk of having to change what they're doing? So
Speaker 1: maybe you know, breaking off the piece or you know,
Speaker 1: spinning off a piece. Yeah, I think Apple is. So
Speaker 1: when you look at someone like Amazon and Google, I
Speaker 1: think the big complaints are mainly about their search results.
Speaker 1: Amazon when you go shopping, and Google obviously with Google Search.
Speaker 1: But Apple's entire business model that them breaking the two
Speaker 1: trillion dollar mark in market gap is essentially based on
Speaker 1: them having a complete monopoly on um what gets on
Speaker 1: your onto your iPhone and the and the things they charge.
Speaker 1: And if if the US kind of the as government
Speaker 1: kind of interferes with them, it's gonna take some time.
Speaker 1: I think that kind of really starts at disrupted the
Speaker 1: heart of their business model, which was has been driving
Speaker 1: their market cap. They'll obviously survive, they may have to
Speaker 1: charge lower fees, but that and you look at bundles
Speaker 1: they're introducing, like Apple One, the Apple one bundle, which
Speaker 1: is basically you know whether you watch it, read it,
Speaker 1: listen to it, yet they them or or now Apple
Speaker 1: Fitness is part of that bundle like that could potentially
Speaker 1: get attacked also by the US government, So so they
Speaker 1: are I think the most vulnerable. What's for the senator is,
Speaker 1: I mean, don't all senators want to keep big tech
Speaker 1: on site in some way? Well, I mean the it's
Speaker 1: a big driver for the US economy. So on the
Speaker 1: one hand, you want to keep um, these big companies
Speaker 1: who are create a lot of jobs and generate UM
Speaker 1: a lot you wanna Essentially you don't want to really
Speaker 1: harm them and allow competition from outside of the United States. Um,
Speaker 1: if you're kind of like a pro America first type
Speaker 1: type senator. But I mean it's it's legitimate concerns. I
Speaker 1: think ultimately tech is an easy target everyone. It's a
Speaker 1: like do nothing right type environment right now, especially with
Speaker 1: the topic of censorship and what should be allowed on
Speaker 1: social media, talking about Facebook and Instagram and what shouldn't
Speaker 1: be allowed. So you know, with that bigger talk topic,
Speaker 1: that bigger target and a lot of people being kind
Speaker 1: of angry at social media, I mean, it's easy to
Speaker 1: join their bandwagon and and try to leverage it to
Speaker 1: create a kind of populist sentiment towards your candidacy. I mean,
Speaker 1: you sort of got the impression that no matter what happens,
Speaker 1: these talks are going to keep going higher anyway. Um,
Speaker 1: nothing has dented them up to now. What's your sense
Speaker 1: of where they go on I'm talking about basically Apple
Speaker 1: and Alphabet I guess yeah, I think well, I think
Speaker 1: Amazon is by far the biggest. Apple used to be
Speaker 1: the biggest innovator. Um. I think people think of Apple
Speaker 1: as an innovator now, but the last real product they
Speaker 1: introduced that had any level of success with the Apple
Speaker 1: Watching two thousand fourteen. Now it's just cycles of evolution
Speaker 1: rather than you know, something really innovative. But um, Amazon
Speaker 1: continues to be the big innovator with the success they've
Speaker 1: had with the Echo and a lot of the acquisitions
Speaker 1: that they've done. So I think, UM, I I think
Speaker 1: ultimately Amazon is you know, kind of retakes the top
Speaker 1: spot as the most valuable company, and the others are
Speaker 1: playing catch up. Google is kind of being attacked from
Speaker 1: all sides, um again by Amazon. In terms of Amazon's
Speaker 1: app business, Um, that search business is obviously like they
Speaker 1: have no competition basically worldwide except for China with the
Speaker 1: search business. So I think, UM, I don't think they will.
Speaker 1: They're not as vulnerable as as someone like Apple is,
Speaker 1: and may be to a lesser extent Amazon. Speaking of Apple,
Speaker 1: we have, of course a big event tomorrow. There's a
Speaker 1: lot going on tomorrow, including some enemy Cony Barrett hearings
Speaker 1: on the Hill. But at the same time, and a
Speaker 1: lot of people will be looking at Apple's launch and
Speaker 1: we're meant to get some more phones. What do you
Speaker 1: think is going to happen? Mark? What have you heard?
Speaker 1: And will people upgrade? Yeah? So the Apple twelve is
Speaker 1: the big announcement. I think there's no secret on that.
Speaker 1: The probably the most innovative thing coming out of the
Speaker 1: Apple twelve announcement is the strong rumors that there's going
Speaker 1: to be a new Apple Mini and which will bring
Speaker 1: the price point down to essentially half. Remember when Apple
Speaker 1: introduced the Apple X, everyone was complaining about how expensive
Speaker 1: it was. I mean, the phone costs more than like
Speaker 1: Apple's lowering computer. And so now they're introducing a phone
Speaker 1: at half the price point. And what's really interesting about
Speaker 1: that think really key to watch is Apple is a
Speaker 1: lot of their profit is increasingly coming from the services,
Speaker 1: and so the Apple One bundle on an Apple Mini,
Speaker 1: I think the Apple wants a subscription from every household
Speaker 1: essentially in the world, and so they are bringing down
Speaker 1: the price point to their products in order to get
Speaker 1: to encourage more people to get an Apple one subscription.
Speaker 1: And also with Apple Fitness Plus, which hasn't been launched yet,
Speaker 1: I mean, they're now going after Peloton and other fitness companies.
Speaker 1: So it's all about that kind of ongoing revenue stream
Speaker 1: after you buy the device. So it's a really smart
Speaker 1: move to bring low, low priced iPhone, current model, low
Speaker 1: price iPhone and then essentially make hundreds of dollars a
Speaker 1: year more in the monthly subscription fees that you're gonna
Speaker 1: pay for for all forms of entertainment and business that
Speaker 1: that they want you to beg Mark, we're out of time.
Speaker 1: But is it a wild success even in pandemic times?
Speaker 1: Say that question one of my time. I comminue people
Speaker 1: buy it even when cash is low in pandemic times. Um,
Speaker 1: I don't think the I think the example twelves are
Speaker 1: a bit of a diet. I mean, they were introducing
Speaker 1: five G but essentially a lot of people seem to
Speaker 1: be the pole. The polling is saying that people want
Speaker 1: to buy them, So I guess they're going to be successful.
Speaker 1: All right, thank you so much for joining us. Mark
Speaker 1: Douglas is a CEO of Steel House. Let's see tomorrow
Speaker 1: what actually emerges from that Apple event. We appreciate Mark's
Speaker 1: time today. All right, it is time now to get
Speaker 1: to one of our old chestnuts. Bill Smeade, always love
Speaker 1: having you on the program. Bill Smide is CEO and
Speaker 1: CIO of Smade Capital Management, and Bill, I'm sure you
Speaker 1: have varying opinions on everything that's happening this week. Having
Speaker 1: been in the market so long, what is the one
Speaker 1: thing that markets will concentrate on this week? Well, thanks
Speaker 1: for having us, Monny. The the markets are concentrating on
Speaker 1: um what I call COVID misery investments, and they are
Speaker 1: exacerbating a trend of concentrating capital in the vast monopoly
Speaker 1: UH companies, and they just doesn't seem to be any
Speaker 1: end to the urge on the part of investors to
Speaker 1: uh extrapolate what is going on far out into the future.
Speaker 1: So Bill, I mean, I know that you invest slightly
Speaker 1: differently to sort of watching the day to day news
Speaker 1: headlines anyway, as do the same you know, most investors
Speaker 1: for the long haul. But at the same time, you
Speaker 1: have to wonder which of these macro events could really
Speaker 1: change the dynamic in the market. Is there one out there? Well, Actually,
Speaker 1: what happens is below the surface economics actually do change.
Speaker 1: So for example, you would expect stock prices to peak
Speaker 1: at the point where the prospects for the industry appear
Speaker 1: to people to be the most favorable. And with all
Speaker 1: of people being afraid of catching COVID and kind of
Speaker 1: self quarantining, the reliance on the large tech companies will
Speaker 1: probably never be higher, I would guess, than at this
Speaker 1: moment in time. So it only makes sense that those
Speaker 1: stocks are very high right now because the prospects for
Speaker 1: their profits due to the current circumstances. But at the
Speaker 1: same time that's going on, it also lays the groundwork
Speaker 1: for superior economics in other areas where the stock prices
Speaker 1: are extremely low. And that's our job is to to
Speaker 1: figure out where economics are very favorable and then uh
Speaker 1: and then adjust appropriately. Have you making any adjustments? We are,
Speaker 1: and it's just painful, Vinnie. We are tacking away from
Speaker 1: investments that we've made in the last three to ten
Speaker 1: years that are becoming too popular because of how popular
Speaker 1: growth stocks are. We're taking money from there and applying
Speaker 1: it to favorable economics in places like energy, in places
Speaker 1: like uh real estate and and by the way, that's
Speaker 1: the two worst performing sectors today, so you know and
Speaker 1: and uh so I'll give you one example. It was
Speaker 1: announced that Warren Buffett's lieutenant Ted Wessler now owns almost
Speaker 1: six percent of Dillard's department stores, and the stock has
Speaker 1: soared today thirty. Uh. Well, we own two companies that
Speaker 1: are landlords to Dillard's. So if he if he likes Dillard's,
Speaker 1: he'd probably like the landlords, and that would be Simon
Speaker 1: Properties and mace Rich. Just in the Phoenix Valley where
Speaker 1: I am, there are seven dillard stores at seven separate
Speaker 1: mace Rich properties, and uh I counted, I think Simon
Speaker 1: has seventeen dillard stores. So while they're really excited about Dillard's,
Speaker 1: they aspies their landlords, and I would suggest that the
Speaker 1: two should go in tandem. Well, explain that to me,
Speaker 1: because I've just been looking at mass Ridge and Simon
Speaker 1: Poverty Group and obviously the stocks you know, plummeted and
Speaker 1: march and they haven't really recovered since. And I think
Speaker 1: the question is okay. So Dillard's might be okay, and
Speaker 1: Dillards might be able to pay his rent, but what
Speaker 1: about all of the other tenants. Why are you still
Speaker 1: bullish on these real estate companies? Well, first of all,
Speaker 1: they are very close to uh most American population, and
Speaker 1: so there's two possibilities here. One is that two or
Speaker 1: three years from now, the virus is gone, vaccinations are enforced,
Speaker 1: and cures or whoever had it have come to pass,
Speaker 1: and then people go back to something that's a new normal,
Speaker 1: but but closer to the way we used to live.
Speaker 1: And under that environment, these people own very attractive property
Speaker 1: in some of the most attractive places in the United States, uh, Florida, Texas, California, Arizona.
Speaker 1: That that's where people are moving, uh to the sun
Speaker 1: Belt and and that's that's where they own a lot
Speaker 1: of properties. And uh So the answer is, um, this
Speaker 1: idea that we're all just going to huddle in our
Speaker 1: house and do nothing for the next five years and
Speaker 1: spend all of our money and never leave the house,
Speaker 1: and spend all of our time on on electronic devices
Speaker 1: and be anti social. I just think it's it's it's
Speaker 1: highly unlikely it's worth making some investments with a very
Speaker 1: high reward potential that the risk has been taken out
Speaker 1: by depressed prices. All right, Bill, thank you so much.
Speaker 1: Bill Smead is CEO and c IO of Sneed Capital Management.
Speaker 1: Until they're talking about some of the real estate companies
Speaker 1: and It's really interesting to hear the different opinions on
Speaker 1: on this, because of course you get those that same
Speaker 1: malls are dead, and you get those that say no,
Speaker 1: I mean, they might be in a little bit of
Speaker 1: a lull period, but at some point we'll have to
Speaker 1: get back to something akin to the life that we
Speaker 1: had been living. All right, and this portion of Bloomberg
Speaker 1: markets now concentrating on big tech and break up potentially
Speaker 1: in the future. Let's bring in Steven Strauss, who joins
Speaker 1: US from Princeton University's Woodrow Wilson School of Public and
Speaker 1: International Affairs, where he is a visiting professor. Stephen, you know,
Speaker 1: you're a sort of ahead of the game on this,
Speaker 1: but the US is a little more let's say, wide reaching.
Speaker 1: I mean, the US could actually mandate for these companies
Speaker 1: to start breaking themselves apart. Do you see that even
Speaker 1: potentially happening. It's going to be a long where um
Speaker 1: if if history is any guy, I looked up some
Speaker 1: of the numbers. Breaking up Stairard Oil was about corny
Speaker 1: year process. The IBM anti trust litigation like years. The
Speaker 1: A T and T anti trust litigation went about ten years,
Speaker 1: and Microsoft anti trust went about ten years, and particularly
Speaker 1: in the technology sector, it's not standing still. I mean
Speaker 1: there have been some rueful jokes at by the time,
Speaker 1: particularly the Microsoft IBM cases were settled, the original basis
Speaker 1: for the cases were essentially irrelevant. That's actually quite stunning.
Speaker 1: I mean, that's really really stunning. Is that a testament
Speaker 1: to the ability of these companies to put up a defense,
Speaker 1: an argument for how they should be how they are?
Speaker 1: And if that's the case, are we looking at something similar? Um,
Speaker 1: it's certainly a comment on you know, these companies can
Speaker 1: afford the best lawyers in the world. Um. You know,
Speaker 1: the American legal system has many virtue speed is not
Speaker 1: necessarily among them. So I mean think about the process.
Speaker 1: First there's the trial and the court. Whoever loses will
Speaker 1: appeal it. Then there's another round of appeals. I mean,
Speaker 1: it just it can go on for a very long time. Again,
Speaker 1: past performance is not a necessarily a predictor of future results,
Speaker 1: but looking at the historical record, and it was a
Speaker 1: side point, there's a general feeling that to really take
Speaker 1: on these companies there may need some changes to the legislation.
Speaker 1: So that's going to have to get through Congress. Okay,
Speaker 1: when you say the legislation of what legislation exactly are
Speaker 1: we talking about. Well, the antitrust legislation we currently have
Speaker 1: on the books, you know, originally dates the nineteenth century.
Speaker 1: It was last updated during the nineteen seventies. Uh So,
Speaker 1: for example, one of the things that the House is suggesting,
Speaker 1: he's rewriting the antitrust laws so that if they're unfairly
Speaker 1: treating their suppliers, they're kind of crushing their suppliers, it
Speaker 1: will easier, it'll be easier to take action against them.
Speaker 1: Most of antitrust at this point is oriented towards are
Speaker 1: consumers being heard. Whereas the issue with Amazon, for example,
Speaker 1: is there's a strong argument that what it's doing is
Speaker 1: harming its suppliers. Um, you did so for a lot
Speaker 1: of different reasons. Um, you know, they'd like to change
Speaker 1: the laws on Facebook. Other companies can't buy without proving
Speaker 1: that doing so well enhanced competition and health consumers. Yeah,
Speaker 1: so there's certainly possibility of action under interesting law. I mean,
Speaker 1: Google's market share and search is something like which and
Speaker 1: which certainly presents an antitrust issue. And indeed, rumor mill
Speaker 1: I think more than rumor mill. At this point, the
Speaker 1: Department of justice is looked. Justice is looking at initiating
Speaker 1: a antitrust action against Google. Yeah, I mean these companies,
Speaker 1: do they have a plan B in case they're forced
Speaker 1: or are they just you know, do they have that
Speaker 1: little humility that they're not even thinking that they might
Speaker 1: be forced? Well, I mean it depends. I mean, it's
Speaker 1: a question. It's a smart movie. One maneuver on their
Speaker 1: part might be thinking about, Look, we don't want ten
Speaker 1: years of litigation, is or something relatively straightforward we can do.
Speaker 1: But honestly, from their point of view, given that, you know,
Speaker 1: I'm assuming their lawyers are pointing out to them that
Speaker 1: litigation is a process, there's gonna be years before any
Speaker 1: of the settles. I'm not sure I would be making
Speaker 1: any major plans to split up. Um, they might be
Speaker 1: making plans to be better, nicer competitors while you're in litigation.
Speaker 1: Probably the last thing you want to be do, want
Speaker 1: to be seen doing, is something that's viewed as anti competitive.
Speaker 1: People tend to get Microsoft partially got its big start
Speaker 1: because IBM was in the middle of antitrust litigation and
Speaker 1: wanted to be seen as being friendly to a smaller
Speaker 1: software company. Are there any precedents here when it comes
Speaker 1: to you know, the law. Well, I mean in what
Speaker 1: sense to mean precedence. I mean, we've certainly we ever
Speaker 1: broken up a big company before successfully and permanently. Um well,
Speaker 1: Standard Oil was broken up. H and T was split
Speaker 1: into seven companies. Microsoft, Microsoft, I'm sorry, IBM was forced
Speaker 1: to spin off some subsidiaries. Um so, yeah, I mean
Speaker 1: it's been done. At the side point, it's not necessarily
Speaker 1: bad for the companies, at least some argument that the
Speaker 1: antitrust litigation forced them to rethink their business models. They
Speaker 1: may become more lucrative after the fact. Yeah, I mean,
Speaker 1: I suppose Amazon is is the one that most people
Speaker 1: interact with most. I mean, obviously Apple for those who
Speaker 1: you know can afford to use the Apple Uh equals
Speaker 1: here if you like. But you know, you could imagine
Speaker 1: a world in which Amazon splits up and each part
Speaker 1: of it is totally viable and successful on its own. Yeah,
Speaker 1: I mean, you could think of Amazon being split off
Speaker 1: cloud computing, which you can make an argument really has
Speaker 1: nothing to do with the retail operation anyway, split up
Speaker 1: the retail operation into vertical silos, the fulfillment centers, the
Speaker 1: retail front end, Um, there are lots of ways to
Speaker 1: think about splitting these companies up, but I mean the
Speaker 1: reality is it's going to be years of litigation before
Speaker 1: anyone gets to that point. And the other reality is
Speaker 1: it's I mean, it's the intention, right, so you split
Speaker 1: them up in order for there to be more choice
Speaker 1: and for all companies to be better actors because they
Speaker 1: have you know, peers in their group and they're sort
Speaker 1: of forced to be better actors for their consumers. But
Speaker 1: that won't necessarily happen even if these companies are split up. No,
Speaker 1: I mean, you know, there are certain things you might
Speaker 1: expect if you split them up, probably more intense competition.
Speaker 1: I mean, the amount of profits that you know, Google, Facebook, etcetera.
Speaker 1: Make are quite impressive, and it's hard to justify those
Speaker 1: profits in any other way except that their quasi monopolies.
Speaker 1: So one issue might be, you know, they have to
Speaker 1: compete more on price, they have to think about different models. Um.
Speaker 1: I mean again, to some extent to Google, you are
Speaker 1: the product, I am the product, and they take our
Speaker 1: data for free. If they're in a more intense competition situation,
Speaker 1: they might actually have to think about, well, how do
Speaker 1: we pay people for data fascinating. My god. Yeah, well,
Speaker 1: I'm certainly god. They'll haven't give it away all of
Speaker 1: it already then, because there is still something left to buy.
Speaker 1: Our thanks to you very much, as Steven Stroiless, for
Speaker 1: joining us there, and we do hope you'll come back
Speaker 1: and take us through this process because no doubt, some
Speaker 1: of it will be easy to understand, but there will
Speaker 1: be a lot of it that won't be easy to
Speaker 1: understand for the layman. Steven Stiles is visiting professor at
Speaker 1: Princeton University's at Woodrow Wilson School of Public and International Affairs,
Speaker 1: joining us there. Do continue to listen to Bloomberg Markets
Speaker 1: throughout the afternoon. You will be taken through all of
Speaker 1: the Columbus Stay News if you like, Bloomberg Business Week
Speaker 1: taking place a little bit later on. My co host
Speaker 1: Baul Sweeney is on that show this week and next
Speaker 1: week Bloomberg Business Week filling in in the afternoons on
Speaker 1: Bloomberg Radio. Thanks for listening to Bloomberg Markets podcast. You
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or
Speaker 1: whatever podcast platform you prefer. I'm Bonnie Quinn, I'm on
Speaker 1: Twitter at Bonnie Quinn and I'm Baul Sweeney. I'm on
Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always
Speaker 1: catch us worldwide at Bloomberg Radio