WEBVTT - Catalysts for Apple, Alphabet, GSK, and Visa 0:00:14.440 --> 0:00:17.759 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:17.800 --> 0:00:20.960 by the Litigation and Policy team at Bloomberg Intelligence, the 0:00:20.960 --> 0:00:26.600 investment research platform of Bloomberg LP. This podcast series examines 0:00:26.640 --> 0:00:30.600 the intersection of business policy and law, and today we'll 0:00:30.640 --> 0:00:33.440 be looking at the litigation and policy catalysts that we're 0:00:33.479 --> 0:00:36.400 watching in June twenty twenty four and that we think 0:00:36.440 --> 0:00:40.440 will impact companies across a number of different sectors. My 0:00:40.520 --> 0:00:43.680 name is Elliot Stein. I'm a senior litigation analyst covering 0:00:43.760 --> 0:00:47.160 litigation in the financial sector, and I'll be your host 0:00:47.240 --> 0:00:50.960 for today May thirty first, twenty twenty four. If you 0:00:50.960 --> 0:00:53.080 have any questions about any of the matters that we'll 0:00:53.120 --> 0:00:56.600 be talking about on this episode, please don't hesitate to 0:00:56.640 --> 0:01:01.040 reach out to us at your convenience with questions. So 0:01:01.080 --> 0:01:04.840 we'll be discussing a handful of sectors today. First, we'll 0:01:04.880 --> 0:01:09.520 start with our TMT litigation and policy analyst, Matt Shettenhelm, 0:01:09.840 --> 0:01:12.720 who's waiting for a Supreme Court decision concerning how the 0:01:12.760 --> 0:01:16.759 First Amendment shields companies like Google, Meta and other big 0:01:16.800 --> 0:01:20.840 tech platforms from regulation. Matt will also update us on 0:01:21.000 --> 0:01:25.880 lobbying efforts by broadband Internet service providers to extend federal 0:01:25.920 --> 0:01:31.000 subsidies for low income Americans. After that, Justin Teresi will 0:01:31.040 --> 0:01:33.640 tell us about an upcoming hearing seeking approval of a 0:01:33.720 --> 0:01:37.399 thirty billion dollars settlement between Visa and MasterCard on the 0:01:37.400 --> 0:01:40.679 one hand and merchants on the other hand, in decades 0:01:40.760 --> 0:01:47.160 long antitrust litigation over interchange fees. Sticking with antitrust, jen 0:01:47.280 --> 0:01:50.400 Ree will then update us on the Justice Department versus 0:01:50.440 --> 0:01:54.520 Google Search case, where she expects a liability verdict very soon, 0:01:55.080 --> 0:01:57.240 as well as a key ruling that she expects in 0:01:57.360 --> 0:02:02.600 Epic versus Apple litigation over app store rules. I'll then 0:02:02.680 --> 0:02:06.840 talk about the latest in litigation challenging the CFPB's rule 0:02:06.960 --> 0:02:10.680 capping credit card late fees, and I'll also talk about 0:02:10.720 --> 0:02:15.480 a ruling I expect in litigation challenging the SEC's private 0:02:15.560 --> 0:02:21.639 funds rule. After that, Holly Frome, who covers nonpatent healthcare litigation, 0:02:21.840 --> 0:02:25.040 among other things, will tell us what she's watching for 0:02:25.200 --> 0:02:30.400 in cases alleging that Zantac causes cancer. After that, Dwayne Wright, 0:02:30.480 --> 0:02:33.919 who covers healthcare policy in Washington, d C for US, 0:02:34.280 --> 0:02:38.160 will tell us about bipartisan support to expand the inflation 0:02:38.280 --> 0:02:42.400 reduction acts, orphan drug exemption, and whether it's enough to 0:02:42.480 --> 0:02:45.560 pass Congress this year. And then last but not least, 0:02:45.600 --> 0:02:49.440 we'll end with Nathan Dean, our financials policy analyst in DC, 0:02:50.040 --> 0:02:52.200 and he'll tell us what's going on with a major 0:02:52.320 --> 0:02:56.960 crypto bill making its way through Congress. As always, all 0:02:57.000 --> 0:03:00.359 of our research is available on the Bloomberg terminal at 0:03:00.440 --> 0:03:04.400 big And just a quick word about Bloomberg Intelligence for 0:03:04.480 --> 0:03:07.880 those who don't know. We are the investment research platform 0:03:08.000 --> 0:03:12.200 on the Bloomberg terminal, providing in depth research on industries, companies, 0:03:12.240 --> 0:03:15.800 and markets and delivering key data from bi analysts in 0:03:15.880 --> 0:03:19.560 their given industries. All right, So with all that, let's 0:03:19.560 --> 0:03:21.120 get started with the content. 0:03:21.760 --> 0:03:22.120 Matt. 0:03:22.280 --> 0:03:24.760 Let's start with you and talk about the Supreme Court 0:03:24.840 --> 0:03:29.120 and big tech platforms. Google, Meta and other big tech 0:03:29.120 --> 0:03:31.920 companies are set to get a key decision from the 0:03:31.960 --> 0:03:36.040 Supreme Court about how the First Amendment shields them from regulation. 0:03:36.560 --> 0:03:39.680 You expect the companies to win on the most important questions, 0:03:39.680 --> 0:03:41.960 but can you sort of remind us what this case 0:03:42.040 --> 0:03:42.400 is about? 0:03:44.080 --> 0:03:47.160 Yeah, thanks Elliott. Yeah, we are expecting a decision in 0:03:47.360 --> 0:03:51.360 June in these cases, and they concerned laws in Florida 0:03:51.400 --> 0:03:55.880 and Texas that were really motivated by political concerns, but 0:03:56.520 --> 0:04:01.800 they have a significant business impact depending on how they 0:04:01.840 --> 0:04:04.720 will be decided. Basically, the laws were driven by the 0:04:04.960 --> 0:04:08.960 by the concern that Alphabet and Meta have an anti 0:04:09.040 --> 0:04:14.480 conservative bias. But fundamentally, the laws effectively try to make 0:04:14.640 --> 0:04:19.320 the platforms operate as common carriers or as passive hosts. 0:04:19.880 --> 0:04:24.640 That and they would be potentially subject to liability lawsuits 0:04:24.760 --> 0:04:28.520 if they remove content in a way that is biased 0:04:28.760 --> 0:04:33.239 or one sided, that if they aren't passive in passing 0:04:33.279 --> 0:04:36.640 along content. And that's a huge deal for the companies 0:04:36.680 --> 0:04:42.280 because content moderation is critical to how these companies operate 0:04:42.320 --> 0:04:46.040 their businesses. They're flooded with social media content, and if 0:04:46.080 --> 0:04:52.120 they can't make editorial choices to prioritize or to deprioritize content, 0:04:52.800 --> 0:04:58.679 that risk jeopardizing the experience for users and ultimately for advertisers, 0:04:58.760 --> 0:05:01.080 which is fundamental to their business. 0:05:02.800 --> 0:05:05.840 I feel like it's popular to criticize big tech companies 0:05:05.880 --> 0:05:07.960 these days, but but it seems like you like the 0:05:08.000 --> 0:05:09.839 company's chances here. Can you tell us why? 0:05:10.560 --> 0:05:10.839 Yeah? 0:05:11.000 --> 0:05:14.200 So so? I mean, despite the politics, you know, sort 0:05:14.240 --> 0:05:18.240 of the bipartisan you know, inclination to go after these companies. 0:05:18.279 --> 0:05:22.840 The Court is still very protective of the First Amendments 0:05:23.000 --> 0:05:25.760 and and I don't think you're going to see a 0:05:25.800 --> 0:05:28.200 majority of the Court that is willing to say that 0:05:28.320 --> 0:05:35.160 these companies don't have First Amendment rights as they operate 0:05:35.360 --> 0:05:39.360 as content moderators. I think there's going to be a 0:05:39.400 --> 0:05:43.000 decision from the Court that that that solidifies that principle, 0:05:43.040 --> 0:05:47.080 and that's important for the companies. And you know, it's 0:05:47.160 --> 0:05:50.239 not a total win, a huge win, because a big 0:05:50.279 --> 0:05:53.400 win could wipe out the potential to do, you know, 0:05:53.480 --> 0:05:56.760 a lot of regulation of these companies, but it will 0:05:57.000 --> 0:06:00.360 at least knock out these sorts of laws that force 0:06:00.480 --> 0:06:03.640 the companies to be common carriers. And I think that's 0:06:03.720 --> 0:06:07.720 important for the business model going forward. Based on the 0:06:07.760 --> 0:06:13.040 February oral argument, I had Justices Kavanaugh, Roberts, Kagan, and 0:06:13.200 --> 0:06:18.039 Barrett all pretty strongly inclined to protect that principle, and 0:06:18.080 --> 0:06:21.440 I think Justices Soda, Mayor, and Jackson will go along 0:06:21.480 --> 0:06:25.479 with them. Three justices, Justices Alito, Thomas, and Gorsich, I 0:06:25.480 --> 0:06:28.080 think are probably more likely to rule for the States. 0:06:28.200 --> 0:06:30.480 So at the end of the day, I expect a 0:06:30.560 --> 0:06:34.640 ruling in June that is supportive of the key and 0:06:34.720 --> 0:06:39.039 most important principle for these companies, but still leaves room 0:06:39.080 --> 0:06:40.400 for regulation going forward. 0:06:41.560 --> 0:06:45.520 Got it all right, Matt, Let's turn to policy. It 0:06:45.560 --> 0:06:47.760 seems like the path is a little shaky for an 0:06:47.760 --> 0:06:51.320 extension of the Affordable Connectivity Program in Congress this year. 0:06:52.480 --> 0:06:54.880 I guess the program runs out of money this month, 0:06:54.920 --> 0:06:57.720 and it has, but it has bipartisan support. So why 0:06:57.800 --> 0:06:59.960 do you think Congress won't pass an extension. 0:07:00.160 --> 0:07:02.039 Yeah, this is one that kind of leaves you shaking 0:07:02.080 --> 0:07:05.880 your head because you have lawmakers on both sides saying 0:07:05.960 --> 0:07:11.360 we need to extend this program, and yet Congress hasn't 0:07:11.560 --> 0:07:15.200 been able to do so. And my take, I'm at 0:07:15.240 --> 0:07:17.880 twenty percent right now whether they can do an extension. 0:07:17.880 --> 0:07:21.520 As you said, the money runs out in May, and 0:07:22.080 --> 0:07:25.120 so there was a real push to get this done 0:07:25.320 --> 0:07:30.800 as part of the FAA reauthorization that ultimately didn't get done. 0:07:31.240 --> 0:07:33.720 And so now it's just it's I think you're going 0:07:33.760 --> 0:07:37.280 to see continued pressure from some lawmakers to try to 0:07:37.320 --> 0:07:42.160 get something done, but there's real resistance from House Republicans 0:07:42.240 --> 0:07:47.680 and certain Senate Republicans to include this. I think it's 0:07:47.760 --> 0:07:50.160 unlikely to get done. This year. They're trying to get 0:07:50.200 --> 0:07:54.880 it seven billion dollars of additional funding for twenty twenty four, 0:07:56.160 --> 0:07:59.000 and it's significant for company like Charter that has five 0:07:59.120 --> 0:08:04.320 million subscribeds that benefit from this program. But I just 0:08:04.440 --> 0:08:07.400 don't think it looks good in terms of any sort 0:08:07.400 --> 0:08:11.760 of vehicle to pass this year. More likely in twenty 0:08:11.800 --> 0:08:14.160 twenty five twenty twenty six, there's going to be a 0:08:14.280 --> 0:08:18.120 remake of all of the FCC's universal several service programs. 0:08:18.120 --> 0:08:20.760 I think this gets wrapped into that. But kind of 0:08:20.760 --> 0:08:23.800 bad news, I think in terms of the prospects for 0:08:23.880 --> 0:08:24.960 an extension this year. 0:08:26.040 --> 0:08:28.320 I guess it wouldn't be the first time that Congress 0:08:28.400 --> 0:08:31.120 leaves people shaking their heads, right, which I guess is 0:08:31.160 --> 0:08:36.360 better than leaving people shaking their fists. All right, thanks Matt, Okay, justin, 0:08:36.440 --> 0:08:39.079 let's bring you in. Why don't you come in? Tell 0:08:39.120 --> 0:08:42.600 us what's going on with this thirty billion dollar interchange 0:08:42.640 --> 0:08:46.080 fees settlement between Visa and MasterCard on the one hand, 0:08:46.080 --> 0:08:48.240 merchants on the other hand. It feels like this case 0:08:48.280 --> 0:08:50.360 has been going on forever. What's the latest? 0:08:50.679 --> 0:08:53.320 Yeah, Eliet, absolutely right. This case has now been going 0:08:53.360 --> 0:08:56.320 on for almost two decades. The litigations older than my 0:08:56.400 --> 0:08:58.480 law degree. And I've been doing this for a little while. 0:08:58.600 --> 0:09:00.880 So when we say the case is old, that certainly 0:09:00.960 --> 0:09:03.920 is not an understatement. But what we're seeing now in 0:09:03.960 --> 0:09:07.320 this case, it's a thirty billion dollar equitable relief class 0:09:07.640 --> 0:09:11.360 proposed settlement between Visa and a MasterCard and issuing and 0:09:11.400 --> 0:09:14.040 banks that issue credit cards or Chase, Bank of America 0:09:14.080 --> 0:09:16.560 and the like on the one hand, and then several 0:09:16.760 --> 0:09:19.600 merchants who accept those credit cards as are forms of 0:09:19.800 --> 0:09:22.880 as a form of payment nationwide. There's a June thirteenth 0:09:22.960 --> 0:09:27.360 preliminary approval hearing set before Judge Brode, Chief Judge Brodie 0:09:27.720 --> 0:09:29.880 in the Eastern District of New York where this has 0:09:29.920 --> 0:09:33.800 been pending now for almost twenty years. But first and foremost, 0:09:33.800 --> 0:09:36.720 what are interchange fees? So these are the fees that 0:09:36.800 --> 0:09:40.920 are collected by issuing banks whenever there's a credit card 0:09:40.920 --> 0:09:44.439 transaction that occurs, and those typically range between one percent 0:09:44.720 --> 0:09:48.000 and three percent of the total transaction costs. How that 0:09:48.120 --> 0:09:50.800 works is that cheaper credit cards are those credit cards 0:09:50.880 --> 0:09:54.040 you see that don't have really any rewards associated with them, 0:09:54.080 --> 0:09:56.520 so just a straight away credit card. But there's cards 0:09:56.559 --> 0:09:58.199 that we all know and love the ones that come 0:09:58.240 --> 0:10:01.720 to airline miles or cash back wards. Those typically carry 0:10:01.760 --> 0:10:04.640 a higher interchange fee with them every time the card 0:10:04.720 --> 0:10:07.360 is swiped, so more money going to the issuing bank 0:10:07.360 --> 0:10:10.960 when those cards are used. So what the issue here 0:10:11.160 --> 0:10:12.840 is too, is that, you know, a few years ago, 0:10:12.880 --> 0:10:15.120 there was a settlement that folks might remember with this 0:10:15.240 --> 0:10:18.800 case two and then address a monetary damages class. And 0:10:18.840 --> 0:10:20.840 the way to think about that versus what's on the 0:10:20.880 --> 0:10:24.120 table now is the previous settlement that was approved by 0:10:24.120 --> 0:10:26.960 the court was one that really addressed the past harms, 0:10:26.960 --> 0:10:28.720 you know, the damage that had already been done to 0:10:28.760 --> 0:10:33.760 folks by virtue of these alleged antitrust harms when issuers 0:10:33.800 --> 0:10:36.679 collect at these interchange fees. What we're looking at now 0:10:36.720 --> 0:10:39.160 in this settlement is really an attempt to address the 0:10:39.200 --> 0:10:42.679 future harms that could happen if rules aren't changed in 0:10:42.720 --> 0:10:45.240 the way that these fees are collected, and what the 0:10:45.280 --> 0:10:48.400 fees and the rates associated with them actually are moving forward. 0:10:48.960 --> 0:10:51.160 So moving into kind of the details of the settlement 0:10:51.320 --> 0:10:54.520 very complicated, but what proponents of the deal say is 0:10:54.520 --> 0:10:57.880 that currently less than twenty percent of all transactions nationwide 0:10:57.960 --> 0:11:01.240 can be surcharged right now with the fees passed on 0:11:01.320 --> 0:11:03.800 to consumers. So what the deal would do when it 0:11:03.800 --> 0:11:07.480 would raise that percentage in ninety six percent, and when 0:11:07.520 --> 0:11:10.680 it's also say that the deal opens interchange fee competition 0:11:11.000 --> 0:11:15.040 between those issuing banks who actually collect the fees. What 0:11:15.120 --> 0:11:20.160 would permit is discounting un surcharges, so basically steering customers 0:11:20.200 --> 0:11:22.800 to use what would be less costly cards, those cards 0:11:22.800 --> 0:11:25.640 that might not have those rewards associated with them, and 0:11:25.720 --> 0:11:28.440 discounting could happen both on the product level, so that's 0:11:28.440 --> 0:11:31.880 the individual cards, you know, an airline rewards card versus 0:11:31.920 --> 0:11:35.560 a different non reward bearing card issued by the same issuer. 0:11:36.040 --> 0:11:38.840 Discounting could also happen on the issuing level, so bank 0:11:38.920 --> 0:11:42.280 to bank, you know, being accepted a particular merchant. And 0:11:42.280 --> 0:11:45.800 then also it can be discounting could be happening on 0:11:46.280 --> 0:11:49.440 a more branded type as well, so kind of splintered 0:11:49.440 --> 0:11:52.920 across the different types of discounting that can happen to 0:11:52.960 --> 0:11:55.800 the terms of the deal. But perhaps most importantly and 0:11:55.880 --> 0:11:59.160 where that thirty billion dollar figure comes from, is the 0:11:59.200 --> 0:12:02.040 fact that for a five year term there'd be a 0:12:02.040 --> 0:12:05.800 cap on these interchange fees. What's actually charged to merchants 0:12:05.800 --> 0:12:08.440 by the issuing bank. It couldn't be raised for five years, 0:12:08.480 --> 0:12:10.680 and that would be effective on the date of preliminary 0:12:10.720 --> 0:12:13.800 approval if the deal reaches that point this month. It 0:12:13.800 --> 0:12:17.000 would also roll back the existing fees by three to 0:12:17.080 --> 0:12:20.280 four basis points per merchant, and then a seven basis 0:12:20.280 --> 0:12:23.280 point reduction on the average fees that are collected in 0:12:23.320 --> 0:12:26.440 that five year period. It also removes some of the 0:12:26.480 --> 0:12:30.120 limitations in the agreements between merchants and the credit card 0:12:30.200 --> 0:12:33.480 companies that would limit the ability to collect SIR charges 0:12:33.520 --> 0:12:36.840 on Visa and MasterCards when the same aren't collected for amex. 0:12:36.880 --> 0:12:40.560 If the merchant also accepts for payment, and then it 0:12:40.559 --> 0:12:42.840 also gives them a little bit more flexibility as to 0:12:42.880 --> 0:12:45.840 whether or not to accept a particular company's digital wallet 0:12:45.920 --> 0:12:48.480 like Apple Pay or Google Pay if a merchant isn't 0:12:48.520 --> 0:12:51.280 necessarily in favor of the terms for those wallets when 0:12:51.280 --> 0:12:54.720 they accept them at their point of sale. So what 0:12:54.760 --> 0:12:58.560 we're seeing here too is a situation where buying groups 0:12:58.559 --> 0:13:00.800 from merchants are also part of the deal. So what 0:13:00.840 --> 0:13:03.680 that does is smaller merchants that might not have a 0:13:03.720 --> 0:13:06.400 strong negotiating ability when they go to make a deal 0:13:06.440 --> 0:13:08.400 with the credit card company as to the terms of 0:13:08.400 --> 0:13:11.440 their acceptance, can band together and hope to get a 0:13:11.440 --> 0:13:14.560 better deal than they would otherwise. Larger merchants typically are 0:13:14.559 --> 0:13:17.680 having an easier time getting more favorable terms. But again, 0:13:18.040 --> 0:13:20.560 all of this is only valid for five years. The cap, 0:13:20.720 --> 0:13:24.640 the rollbacks, the terms that make acceptance favorable in terms 0:13:24.640 --> 0:13:26.920 of Visa MasterCard even when they might not be able 0:13:26.920 --> 0:13:29.800 to for Amex, the buying groups, all of that is 0:13:29.840 --> 0:13:32.680 a five year term here, and the question then becomes, 0:13:32.720 --> 0:13:35.640 does this just open the door to future litigation after 0:13:35.679 --> 0:13:38.200 that five year period. Do we see appause in this 0:13:38.240 --> 0:13:41.720 twenty year litigation and then the restarts again five years later, 0:13:41.800 --> 0:13:44.200 or is this really the finality that everybody's looking for 0:13:44.240 --> 0:13:46.480 at this point. So that's one big question is whether 0:13:46.559 --> 0:13:49.440 or not this deal can actually be approved. But really, 0:13:49.640 --> 0:13:51.960 you know, I think standing in opposition here to the 0:13:52.000 --> 0:13:54.679 deal are a lot of big retailers who say, not 0:13:54.760 --> 0:13:57.319 so fast. What we're really getting out of this deal 0:13:57.480 --> 0:14:00.000 isn't so much at all. We've just got an over 0:14:00.120 --> 0:14:02.400 or some summary judgment motions that were opposed by the 0:14:02.440 --> 0:14:05.480 credit card companies. We're try already, and what we could 0:14:05.480 --> 0:14:07.800 do now is take us swipe with these these rules 0:14:07.800 --> 0:14:10.280 and their entirety. So why would we accept the settlement 0:14:10.320 --> 0:14:12.920 at this point that limits these rules for a five 0:14:13.040 --> 0:14:15.840 year term when what we're doing is trying to eliminate 0:14:15.880 --> 0:14:19.360 these rules as anti competitive altogether in the first place. 0:14:19.800 --> 0:14:20.520 So that's the. 0:14:20.600 --> 0:14:21.360 Argument they're making. 0:14:21.400 --> 0:14:21.560 Now. 0:14:21.680 --> 0:14:23.880 Large retailers are saying, we should be able to opt 0:14:23.880 --> 0:14:26.240 out from this deal. We should be able to continue 0:14:26.240 --> 0:14:28.280 forward on our own. We're ready to do so. We've 0:14:28.360 --> 0:14:31.680 just gone over some Rey judgment and that's what's on 0:14:31.720 --> 0:14:34.360 the table here in terms of the deal. Isn't aren't 0:14:34.400 --> 0:14:36.840 really making a financial impact on our business and the 0:14:36.880 --> 0:14:39.600 way that these fees are collected anyway, They note that 0:14:39.800 --> 0:14:42.880 role the rollback associated with the fees actually reduces the 0:14:42.920 --> 0:14:45.720 fees to a point the tire when the litigation even 0:14:45.760 --> 0:14:48.360 began in two thousand and five, So really, what is 0:14:48.400 --> 0:14:50.920 the what is the benefit here for a larger retailer? 0:14:51.880 --> 0:14:54.200 And also, I think an important aspect of this too 0:14:54.360 --> 0:14:57.720 is that compliance with existing state laws is really questionable 0:14:58.160 --> 0:15:00.240 under the terms of the deal. There's a whole a 0:15:00.240 --> 0:15:02.720 lot out there in terms of stay consumer protection statutes 0:15:02.760 --> 0:15:05.040 that needs to be addressed and it's unclear whether the 0:15:05.120 --> 0:15:07.440 terms of the deal really have taken that into account 0:15:08.360 --> 0:15:11.479 last week. Kind of looking forward here from a prediction standpoint, 0:15:11.960 --> 0:15:14.360 if the deal is going to have opt outs to it, 0:15:14.400 --> 0:15:18.240 and these larger folks like Walmart, Target, Starbucks can walk 0:15:18.280 --> 0:15:20.440 away and say we're going to go it alone here, 0:15:20.720 --> 0:15:23.440 and smaller merchants still have this ability to continue on 0:15:23.520 --> 0:15:26.119 with the settlement, it makes sense for them to participate 0:15:26.240 --> 0:15:29.000 right now because from a standpoint of kind of insurance, 0:15:29.680 --> 0:15:31.640 how this works is they'll be able to take advantage 0:15:31.680 --> 0:15:36.320 of things like buying groups and surcharging customers right now. Well, 0:15:36.760 --> 0:15:39.040 the larger folks still duke it out and say, hey, 0:15:39.160 --> 0:15:41.120 you know, we're going to fight these rules as being 0:15:41.160 --> 0:15:43.640 anti competitive on their face. So in the meantime, smaller 0:15:43.720 --> 0:15:46.000 folks get to take advantage of the of the lay 0:15:46.000 --> 0:15:48.240 of the land. Larger folks fight it out, and if 0:15:48.240 --> 0:15:50.720 the deal is anti competitive for them, it's anti competitive 0:15:50.720 --> 0:15:52.840 for everybody. 0:15:53.160 --> 0:15:56.520 And just remind us again, what's the date that you're watching. 0:15:56.960 --> 0:15:58.920 Yeah, so it's going to be June thirteenth, is the 0:15:59.000 --> 0:16:02.000 preliminary approval here. Planning to attend that in person wouldn't 0:16:02.080 --> 0:16:03.920 be surprised if it gets pushed back, But you know, 0:16:03.960 --> 0:16:06.480 I think that's going to be a pivotal date here 0:16:06.840 --> 0:16:09.720 for whether preliminary approval happens. And important to mention too, 0:16:10.080 --> 0:16:13.680 the Second Circuit turned rejected the first attempt at this 0:16:13.760 --> 0:16:17.560 deal years ago, saying that there was an inadequate representation 0:16:17.640 --> 0:16:20.040 of everybody in the class here. And I think for 0:16:20.080 --> 0:16:22.680 the same reasons that we're seeing here that could be 0:16:22.720 --> 0:16:25.560 a problem in the sense that the smaller merchants and 0:16:25.600 --> 0:16:28.560 their interests really are being covered by the plaintiff's council 0:16:28.600 --> 0:16:32.240 here who's who's really fought for this deal to be approved. 0:16:32.600 --> 0:16:36.080 But the larger folks, led by National Retail Federation and others, 0:16:36.080 --> 0:16:39.120 are saying, yes, that's great for small emerchants, but our 0:16:39.160 --> 0:16:41.360 interests really aren't accounted for right now, and the way 0:16:41.400 --> 0:16:42.400 to settlem is laid out. 0:16:43.760 --> 0:16:44.160 Got it? 0:16:44.200 --> 0:16:47.040 Thanks? Justin all right, Jen, let's bring you in and 0:16:47.520 --> 0:16:49.720 you know we'll stick with anti trust. Why don't you 0:16:49.720 --> 0:16:52.480 come in give us an update on the DOJ versus 0:16:52.560 --> 0:16:56.280 Google case and the Epic Games versus Apple case. Since 0:16:56.280 --> 0:16:58.720 you're what you're you're waiting for key decisions in both 0:16:58.760 --> 0:16:59.400 those cases. 0:17:00.480 --> 0:17:01.840 Yeah, sure, thanks Elliott. 0:17:02.720 --> 0:17:06.520 So we'll start with Epic Games versus Apple, because like 0:17:06.600 --> 0:17:08.800 what Justin was just talking about with credit cards, it 0:17:08.840 --> 0:17:11.800 has to do with fees also charged by a big company. 0:17:12.960 --> 0:17:15.800 This lawsuit was filed by Epic Games against Apple over 0:17:15.840 --> 0:17:19.000 Apple's rules and policies with respect to its app store, 0:17:19.040 --> 0:17:21.600 and everybody thought it was pretty much done in January 0:17:21.880 --> 0:17:25.320 this past January, because that's when the Supreme Court refused 0:17:25.320 --> 0:17:28.280 both companies' requests for a review of an appeals court 0:17:28.320 --> 0:17:31.640 decision that affirmed the trial court. But somehow the companies 0:17:31.640 --> 0:17:34.439 have managed to continue the fight. And that is because 0:17:34.480 --> 0:17:37.040 when the Supreme Court denied review, it meant Apple had 0:17:37.080 --> 0:17:39.720 to comply with an injunction that was issued by the 0:17:39.760 --> 0:17:43.159 trial court, and that injunction directed Apple to eliminate something 0:17:43.200 --> 0:17:46.800 called its anti steering rules for app developers because it 0:17:46.840 --> 0:17:49.600 was found that they violate a California state law against 0:17:49.680 --> 0:17:52.520 un their business practices. Now, I should say Apple won 0:17:52.560 --> 0:17:55.840 on all the other claims, including the federal laws and antitrust, 0:17:55.840 --> 0:17:59.040 but this one law they were found to violate. And 0:17:59.119 --> 0:18:02.879 what these anti STI rules were, essentially were rules that 0:18:02.960 --> 0:18:06.719 banned developers from communicating with any of their users that 0:18:06.760 --> 0:18:08.639 the user could buy the app or make an in 0:18:08.720 --> 0:18:12.679 that purchase more cheaply for less a lower price in 0:18:12.720 --> 0:18:15.679 the developer's website instead of in the app store. So 0:18:15.760 --> 0:18:18.320 the purpose of the injunction was to open a path 0:18:18.359 --> 0:18:20.520 for developers to be able to offer apps and in 0:18:20.560 --> 0:18:23.560 that purchase is at lower prices to consumers, because if 0:18:23.560 --> 0:18:26.960 the consumer bought through the developer's website, the developer doesn't 0:18:27.000 --> 0:18:29.639 have to pay Apples fifteen to thirty percent fee. That's 0:18:29.680 --> 0:18:33.080 what it charges some developers fifteen percent, some thirty percent 0:18:33.960 --> 0:18:36.760 if the purchase is made through the app Store. So 0:18:37.119 --> 0:18:40.240 what Apple did in order to comply with the injunction 0:18:40.400 --> 0:18:44.040 was to tell developers, sure, you can steer customers, no problem, 0:18:44.240 --> 0:18:46.640 but if a user clicks out of the app Store 0:18:46.680 --> 0:18:49.080 to make the purchase in your website, hey, by the way, 0:18:49.119 --> 0:18:51.240 you still have to pay us twelve to twenty seven 0:18:51.280 --> 0:18:54.520 percent fees. So, given that most developers have to pay 0:18:54.560 --> 0:18:57.320 about three percent to a payment processor to handle the 0:18:57.320 --> 0:18:59.960 transaction in their own website, they're not able to do 0:19:00.160 --> 0:19:02.320 their costs and therefore they're not able to reduce the 0:19:02.359 --> 0:19:05.560 price to consumer. So while Apple didn't really technically violate 0:19:05.600 --> 0:19:08.400 the Judge's order. It certainly violated the spirit of the order, 0:19:08.680 --> 0:19:11.679 and Epic challenged Apple's compliance, and now the judge has 0:19:11.680 --> 0:19:14.720 been holding hearings on this that the last or at 0:19:14.800 --> 0:19:18.520 least the penultimate hearing is actually this afternoon morning because 0:19:18.520 --> 0:19:22.439 it's in California, but for me, this afternoon, and I 0:19:22.440 --> 0:19:24.800 think the judge is probably going to decide pretty quickly. 0:19:24.840 --> 0:19:26.879 That's why I think will have a decision in June. 0:19:27.320 --> 0:19:31.960 She's clearly been very angry with Apple, so she's made 0:19:31.960 --> 0:19:35.040 that very clear through the hearings. She's been hard on 0:19:35.040 --> 0:19:37.679 the Apple witnesses, and I think Apple will probably be 0:19:37.760 --> 0:19:40.720 held in contempt of court and also have to change 0:19:40.760 --> 0:19:42.840 the way it's complying with the injunction, and I think 0:19:42.880 --> 0:19:45.400 that's going to result in some forced. 0:19:45.119 --> 0:19:46.520 Reduction of those fees. 0:19:47.119 --> 0:19:48.800 I don't think a judge is ever going to tell 0:19:48.800 --> 0:19:51.119 Apple what they can charge, but I do think what 0:19:51.240 --> 0:19:53.199 she's going to do is say, look, you've got to 0:19:53.240 --> 0:19:56.960 provide some justification or basis for the value that you 0:19:57.040 --> 0:20:00.119 provide developers in allowing distribution through your app store and 0:20:00.200 --> 0:20:02.600 with respect to the use of your IP, and then 0:20:02.640 --> 0:20:05.200 you can sort of charge in a way that's commensurate. 0:20:04.720 --> 0:20:06.399 With that value. 0:20:06.640 --> 0:20:08.560 Now, I think it's unclear what that's going to be, 0:20:08.560 --> 0:20:10.120 but it's highly likely it's going to be a lot 0:20:10.200 --> 0:20:12.720 less than the twelve to twenty seven percent charge now, 0:20:13.160 --> 0:20:16.320 so that could be a pretty significant hit on Apple's revenues. 0:20:16.960 --> 0:20:19.720 And I do think a decision will probably come in June, 0:20:19.760 --> 0:20:21.520 maybe July, but more likely June. 0:20:22.119 --> 0:20:25.520 Got it all right, Let's turn to doj versus Google 0:20:25.960 --> 0:20:29.960 and the company's search business. This was the first major 0:20:30.040 --> 0:20:32.760 monopolization suit brought by the Justice Department, I think in 0:20:32.800 --> 0:20:34.880 several years. You want to give us a brief summary 0:20:34.920 --> 0:20:36.320 of the case and its timeline. 0:20:36.680 --> 0:20:41.120 Sure, it actually is the first monopolization suit, as you said, 0:20:41.160 --> 0:20:44.320 brought and tried in many, many years. So it's significant 0:20:44.400 --> 0:20:46.399 in both the anti trust and business world, and it 0:20:46.440 --> 0:20:48.520 could really bring changes about to the way we use 0:20:48.560 --> 0:20:50.520 our computers, tablets, and mobile phones. 0:20:51.240 --> 0:20:52.800 This was tried last September. 0:20:53.040 --> 0:20:55.560 Closing arguments were held in May, and that's why I 0:20:55.640 --> 0:20:58.200 think a decision could issue any day, because even though 0:20:58.240 --> 0:21:00.680 we just had closing arguments, that judge had about six 0:21:00.720 --> 0:21:03.320 months in between to review the evidence. And I think 0:21:03.359 --> 0:21:05.920 he knows it's important and he's going to really try 0:21:05.920 --> 0:21:08.600 to get it out. It could slip into July sometime 0:21:08.640 --> 0:21:11.520 in second half, but it's also possible in May, and 0:21:11.640 --> 0:21:14.439 just a quick recap of this case. Google was sued 0:21:14.480 --> 0:21:17.520 for monopoly maintenance with respect to its dominant position in 0:21:17.600 --> 0:21:21.679 search and certain search advertising. The primary accusation is that 0:21:21.760 --> 0:21:25.000 it blocked search engine competitors, which are really just being 0:21:25.000 --> 0:21:27.879 in duc dung go, primarily in the US, by paying 0:21:27.920 --> 0:21:31.160 off third parties to install Google Search as the default 0:21:31.160 --> 0:21:34.000 search engine pretty much wherever a search engine is needed, 0:21:34.040 --> 0:21:36.680