1 00:00:02,759 --> 00:00:09,800 Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio. Anthropic, 2 00:00:09,960 --> 00:00:14,480 Speaker 1: the AI company is suing the Trump administration to stop 3 00:00:14,520 --> 00:00:19,400 Speaker 1: what it calls an unlawful campaign of retaliation. The Pentagon 4 00:00:19,520 --> 00:00:24,400 Speaker 1: designated Anthropic as a supply chain risk following a dispute 5 00:00:24,400 --> 00:00:28,320 Speaker 1: over limits the company wants on how its products are used, 6 00:00:29,000 --> 00:00:33,800 Speaker 1: in particular, its technology not being used for mass surveillance 7 00:00:33,840 --> 00:00:38,239 Speaker 1: of Americans or to power fully autonomous weapons. It's the 8 00:00:38,280 --> 00:00:41,280 Speaker 1: first time the federal government is known to have used 9 00:00:41,280 --> 00:00:45,960 Speaker 1: the designation against a US company. Anthropic is asking a 10 00:00:46,040 --> 00:00:49,880 Speaker 1: court to issue a preliminary injunction to block the government's 11 00:00:49,960 --> 00:00:53,519 Speaker 1: ban while the legal fight plays out. My guest is 12 00:00:53,640 --> 00:00:57,280 Speaker 1: Dorothy Lund, a professor at Columbia Law School and co 13 00:00:57,360 --> 00:01:01,240 Speaker 1: director of the school's Ira M. Milstein Center for Global 14 00:01:01,320 --> 00:01:07,280 Speaker 1: Markets and Corporate Ownership. Dorothy Defense Secretary Pete Hegsif designated 15 00:01:07,360 --> 00:01:12,480 Speaker 1: Anthropic as a national security supply chain risk. That's a 16 00:01:12,520 --> 00:01:16,520 Speaker 1: designation that's usually used to bar companies that are linked 17 00:01:16,560 --> 00:01:18,000 Speaker 1: to foreign adversaries. 18 00:01:18,720 --> 00:01:20,760 Speaker 2: Yeah, this is quite unusual. I think this is the 19 00:01:20,760 --> 00:01:24,320 Speaker 2: first time in US history that an American company has 20 00:01:24,600 --> 00:01:27,040 Speaker 2: been given this designation. So if you look at the 21 00:01:27,920 --> 00:01:32,120 Speaker 2: companies typically on this list, it's companies with ties to China, 22 00:01:32,280 --> 00:01:35,360 Speaker 2: ties to Russia that you know, the government wants to 23 00:01:35,400 --> 00:01:38,800 Speaker 2: say there's particular risks. You know, we would be very 24 00:01:38,840 --> 00:01:41,760 Speaker 2: cautious about contracting you know, this Chinese company or this 25 00:01:41,840 --> 00:01:45,520 Speaker 2: Russian company. It's never happened before that US company has 26 00:01:45,720 --> 00:01:47,200 Speaker 2: been given this designation. 27 00:01:48,200 --> 00:01:51,320 Speaker 1: What are the grounds for Anthropics suit against the government. 28 00:01:51,840 --> 00:01:56,600 Speaker 2: My understanding is that essentially Anthropic is saying this designation 29 00:01:56,760 --> 00:01:59,480 Speaker 2: is not being given for the right reasons. Instead, this 30 00:01:59,560 --> 00:02:05,840 Speaker 2: is fora for our refusal to accede to certain demands 31 00:02:05,840 --> 00:02:07,960 Speaker 2: that you made that we didn't want to accede to. 32 00:02:08,240 --> 00:02:12,200 Speaker 2: So you have it really identified a security threat that 33 00:02:12,240 --> 00:02:17,240 Speaker 2: would cause us to really deserve this label. Instead, you're 34 00:02:17,280 --> 00:02:21,000 Speaker 2: just punishing us and retaliating against us for not going 35 00:02:21,000 --> 00:02:23,320 Speaker 2: along with what you've demanded from us in a way 36 00:02:23,320 --> 00:02:24,840 Speaker 2: that violates our rights. 37 00:02:25,000 --> 00:02:29,880 Speaker 1: Anthropic had said that it refused to remove guard rails 38 00:02:30,520 --> 00:02:35,040 Speaker 1: against its technology being used for mass surveillance of Americans 39 00:02:35,280 --> 00:02:39,840 Speaker 1: or to power fully autonomous weapons. Can companies like this 40 00:02:40,600 --> 00:02:44,079 Speaker 1: when they're dealing with, you know, depending on the military, 41 00:02:44,320 --> 00:02:47,760 Speaker 1: put in sort of reservations like that in their contracts. 42 00:02:48,240 --> 00:02:51,960 Speaker 2: Yeah. You know, the typical sort of thinking here is that, 43 00:02:52,240 --> 00:02:55,600 Speaker 2: you know, it's a matter of corporate governance or you know, 44 00:02:55,720 --> 00:02:59,760 Speaker 2: corporate decision making for a company that is providing a 45 00:03:00,000 --> 00:03:03,720 Speaker 2: service to set certain guardrails on that, right. You know, 46 00:03:03,919 --> 00:03:07,760 Speaker 2: this should only be used in certain ways. And the client, 47 00:03:07,919 --> 00:03:11,520 Speaker 2: even if the client is the Pentagon, the client has 48 00:03:11,560 --> 00:03:13,440 Speaker 2: the right to say, well, I don't want to work 49 00:03:13,480 --> 00:03:16,560 Speaker 2: with you. I don't like this contractual limitation that you've 50 00:03:16,600 --> 00:03:19,760 Speaker 2: given me. But I can break my contract with you. 51 00:03:19,840 --> 00:03:21,919 Speaker 2: I can go with somebody else, and you know, we'll 52 00:03:21,960 --> 00:03:25,400 Speaker 2: deal with whatever repercussion to the contract says about that. 53 00:03:25,760 --> 00:03:28,639 Speaker 2: But this is how things work in the free world, right, 54 00:03:28,760 --> 00:03:32,920 Speaker 2: And it's sort of another interesting moment where the Trump administration. 55 00:03:33,760 --> 00:03:39,640 Speaker 2: You know, historically the conservative ideology has been very accepting 56 00:03:39,680 --> 00:03:42,960 Speaker 2: of this idea that private markets will lead to the 57 00:03:43,000 --> 00:03:45,720 Speaker 2: right results. Right, you wouldn't want to have the government 58 00:03:45,920 --> 00:03:50,560 Speaker 2: interfering with private markets. And if a private entity doesn't 59 00:03:50,600 --> 00:03:54,200 Speaker 2: want to do a deal on certain terms, you know, 60 00:03:54,360 --> 00:03:56,440 Speaker 2: that's that and the market will sort it out there. 61 00:03:56,520 --> 00:03:58,480 Speaker 2: Maybe there'll be somebody else that's willing to provide that 62 00:03:58,520 --> 00:04:01,360 Speaker 2: product at that price or that's service under those terms, 63 00:04:01,760 --> 00:04:05,400 Speaker 2: but that the government wouldn't then, you know, try to 64 00:04:05,480 --> 00:04:08,040 Speaker 2: get into that space and influence it. And so I 65 00:04:08,040 --> 00:04:10,720 Speaker 2: think it's sort of this interesting moment again of the 66 00:04:10,960 --> 00:04:15,840 Speaker 2: Trump administration doing something that historically conservative politicians have not 67 00:04:16,000 --> 00:04:18,719 Speaker 2: wanted to do, which is to interfere with markets and 68 00:04:18,760 --> 00:04:22,040 Speaker 2: sort of how markets set prices and terms and contracting. 69 00:04:22,080 --> 00:04:24,680 Speaker 2: Parties that don't like it can walk away, but there's 70 00:04:24,760 --> 00:04:26,960 Speaker 2: nobody forced to contract with anybody else. 71 00:04:27,600 --> 00:04:32,240 Speaker 1: The government filed papers in opposition to Anthropics motion for 72 00:04:32,320 --> 00:04:37,240 Speaker 1: a preliminary injunction, and it said that Anthropics showed hostility 73 00:04:37,760 --> 00:04:41,400 Speaker 1: in its negotiations with the Pentagon and that led the 74 00:04:41,440 --> 00:04:46,200 Speaker 1: government to question whether it was a trusted partner and quote, 75 00:04:46,279 --> 00:04:49,240 Speaker 1: for national security reasons, the terms of service for a 76 00:04:49,360 --> 00:04:55,960 Speaker 1: plaintiff Anthropic PBC's artificial intelligence technology have become unacceptable to 77 00:04:56,040 --> 00:04:59,760 Speaker 1: the executive branch. But the government didn't point to anything 78 00:04:59,800 --> 00:05:04,520 Speaker 1: that would be a security justification for the designation as 79 00:05:04,520 --> 00:05:08,320 Speaker 1: a supply chain risk, so it sort of missed the point. 80 00:05:08,760 --> 00:05:12,240 Speaker 2: Yeah, and just back to where we started in this conversation. 81 00:05:13,040 --> 00:05:17,359 Speaker 2: You know, the idea of somebody posing a supply chain risk, 82 00:05:17,520 --> 00:05:20,760 Speaker 2: is this idea of like you know, foreign infiltration, the 83 00:05:20,800 --> 00:05:23,840 Speaker 2: idea that some foreign government that is hostile to the 84 00:05:23,920 --> 00:05:27,719 Speaker 2: United States is going to get some information or some 85 00:05:27,880 --> 00:05:32,680 Speaker 2: advantage by virtue of this you know, organization freely contacting 86 00:05:32,680 --> 00:05:34,800 Speaker 2: in the United States. So even under the terms that 87 00:05:34,880 --> 00:05:37,919 Speaker 2: the government is bringing up in its lawsuit, the idea 88 00:05:38,000 --> 00:05:41,279 Speaker 2: that there's hostility towards the government, it doesn't really even 89 00:05:41,360 --> 00:05:44,919 Speaker 2: speak to this idea of you know, foreign infiltration. It 90 00:05:45,040 --> 00:05:48,560 Speaker 2: just sounds like, you know, negotiations didn't go so well. 91 00:05:49,000 --> 00:05:52,720 Speaker 2: And so again I think the hook to the designation 92 00:05:53,040 --> 00:05:54,599 Speaker 2: seems to be quite tenuous. 93 00:05:55,240 --> 00:05:58,640 Speaker 1: Anthropic is asking the court for a preliminary injunction, as 94 00:05:58,720 --> 00:06:02,760 Speaker 1: I mentioned, saying it could damage the company's reputation and 95 00:06:02,880 --> 00:06:06,960 Speaker 1: cause multiple billions of dollars in losses this year. The 96 00:06:07,080 --> 00:06:11,039 Speaker 1: hurdles to get a preliminary injunction are high. Do you 97 00:06:11,080 --> 00:06:13,400 Speaker 1: think Anthropic might clear those hurdles? 98 00:06:13,839 --> 00:06:17,760 Speaker 2: Typically a preliminary injunction an order to win, you have 99 00:06:17,800 --> 00:06:21,560 Speaker 2: to show that without getting this injunction, there's going to 100 00:06:21,600 --> 00:06:24,800 Speaker 2: be irreparable harm, and there has to be a strong 101 00:06:24,960 --> 00:06:27,479 Speaker 2: likelihood of winning on the merits right. And by the way, 102 00:06:27,520 --> 00:06:30,440 Speaker 2: this harm can't be something that can be fixed after 103 00:06:30,480 --> 00:06:34,320 Speaker 2: the fact using money damages and so I think here 104 00:06:34,400 --> 00:06:35,560 Speaker 2: in this case, I think this is a really a 105 00:06:35,640 --> 00:06:38,320 Speaker 2: good example of where a preliminary injunction would make a 106 00:06:38,360 --> 00:06:40,880 Speaker 2: lot of sense. You know, I think, Okay, so open 107 00:06:40,920 --> 00:06:44,279 Speaker 2: Aye is going to lose this government contract, right the 108 00:06:44,440 --> 00:06:48,520 Speaker 2: Department of Defense, and so that is hundreds of millions 109 00:06:48,520 --> 00:06:51,160 Speaker 2: of dollars, but it's you know, ultimately not a big deal. 110 00:06:51,200 --> 00:06:55,040 Speaker 2: But I think the bigger impact here is the government's 111 00:06:55,080 --> 00:06:59,760 Speaker 2: demand that no federal agency do work with Anthropic and 112 00:06:59,839 --> 00:07:03,880 Speaker 2: all also that other third party entities that contractor the 113 00:07:03,920 --> 00:07:08,080 Speaker 2: government also stopped doing business and Nthropic and that for 114 00:07:08,279 --> 00:07:11,600 Speaker 2: a company that is in an early stage of growth 115 00:07:12,120 --> 00:07:15,960 Speaker 2: that is, you know, in a really competitive race AI race, 116 00:07:16,080 --> 00:07:18,960 Speaker 2: not just in the United States but also globally, for 117 00:07:19,040 --> 00:07:23,000 Speaker 2: them to sort of be blacklisted like this is really 118 00:07:23,080 --> 00:07:26,440 Speaker 2: quite harmful. I mean, you know, I think they're prommentators 119 00:07:26,480 --> 00:07:28,400 Speaker 2: who've looked at this and said, this is the equivalent 120 00:07:28,440 --> 00:07:32,400 Speaker 2: of giving Anthropic the death penalty. And I don't think 121 00:07:32,400 --> 00:07:35,960 Speaker 2: that's a real exaggeration. I think, you know, in this moment, 122 00:07:35,960 --> 00:07:39,640 Speaker 2: for Anthropic to lose the ability to contract with a 123 00:07:39,720 --> 00:07:44,000 Speaker 2: broad swath of entities would really be damaging. It might 124 00:07:44,040 --> 00:07:45,520 Speaker 2: not be able to recover from that. 125 00:07:45,680 --> 00:07:50,000 Speaker 1: Forgetting the legalities for a moment. Even if Anthropic wins 126 00:07:50,080 --> 00:07:53,760 Speaker 1: and this is lifted this ban, I mean, is any 127 00:07:54,080 --> 00:07:57,360 Speaker 1: agency in the government and the Trump administration then going 128 00:07:57,400 --> 00:08:01,240 Speaker 1: to start doing business with Anthropic knowing how the Trump 129 00:08:01,320 --> 00:08:06,000 Speaker 1: administration feels about Anthropic, I mean, what the consequences are 130 00:08:06,080 --> 00:08:08,040 Speaker 1: even if it wins this lawsuit. 131 00:08:08,760 --> 00:08:13,520 Speaker 2: For sure, I think the Trump administration really believes in loyalty, 132 00:08:13,920 --> 00:08:17,120 Speaker 2: and now that they've sort of been given this scarlet 133 00:08:17,200 --> 00:08:22,280 Speaker 2: letter by President Trump and Pete Hegsas, I'm sure that 134 00:08:23,040 --> 00:08:27,119 Speaker 2: you know loyalists and individuals across the government will be 135 00:08:27,440 --> 00:08:30,640 Speaker 2: wary to work with Anthropic. I think you know the 136 00:08:30,640 --> 00:08:35,079 Speaker 2: government has directed all federal agencies to stop using Anthropic, 137 00:08:35,600 --> 00:08:38,600 Speaker 2: So I think your intuition is right there. Although I 138 00:08:38,600 --> 00:08:42,120 Speaker 2: think you know the consequences for Anthropic, although that's not great, 139 00:08:42,559 --> 00:08:46,680 Speaker 2: there's a much broader market, right Anthropic is looking to 140 00:08:46,880 --> 00:08:50,200 Speaker 2: a lot of different places for clients, including other governments, 141 00:08:50,760 --> 00:08:54,040 Speaker 2: you know, other corporate clients. And by the way, there's 142 00:08:54,080 --> 00:08:57,280 Speaker 2: been a little bit of backlash already against open AI 143 00:08:58,080 --> 00:09:00,960 Speaker 2: in the wake of their signing up a deal with 144 00:09:01,040 --> 00:09:03,600 Speaker 2: the government so you know, you could imagine that I 145 00:09:03,600 --> 00:09:06,480 Speaker 2: don't know quite how this would sort out. Would Anthropic 146 00:09:06,559 --> 00:09:09,880 Speaker 2: be rewarded by some swath of clients for sticking to 147 00:09:09,960 --> 00:09:12,679 Speaker 2: its guns and would be able to make up that 148 00:09:12,800 --> 00:09:17,160 Speaker 2: loss in the future maybe, And will Open Air I 149 00:09:17,200 --> 00:09:20,960 Speaker 2: suffer some backlash for its decision to kind of get 150 00:09:21,000 --> 00:09:25,040 Speaker 2: in there and essentially poach this client. Maybe. So I 151 00:09:25,040 --> 00:09:26,640 Speaker 2: think it's just not clear how this is all going 152 00:09:26,720 --> 00:09:27,240 Speaker 2: to shake out. 153 00:09:27,960 --> 00:09:33,240 Speaker 1: Other tech companies have filed legal briefs to support Anthropic. 154 00:09:33,600 --> 00:09:37,200 Speaker 1: Do you think that there is a concern that if 155 00:09:37,240 --> 00:09:42,599 Speaker 1: this punitive label on Anthropic sticks, that it would establish 156 00:09:42,720 --> 00:09:43,479 Speaker 1: a precedent. 157 00:09:44,360 --> 00:09:44,600 Speaker 3: Oh? 158 00:09:44,679 --> 00:09:48,679 Speaker 2: Yeah, absolutely. I mean, we're already in a moment. It's 159 00:09:48,760 --> 00:09:54,439 Speaker 2: sort of unprecedented moment in American history of executive branch 160 00:09:54,559 --> 00:09:58,080 Speaker 2: interference with private markets. And I don't want to say 161 00:09:58,120 --> 00:10:01,120 Speaker 2: this is only a feature of this administration. That's happened 162 00:10:01,120 --> 00:10:04,160 Speaker 2: in during the Biden administration and prior administrations as well, 163 00:10:04,200 --> 00:10:06,920 Speaker 2: but I think we've really seen the Trump administration take 164 00:10:06,960 --> 00:10:11,080 Speaker 2: this to new heights. And so I'm sure tech executives 165 00:10:11,080 --> 00:10:13,600 Speaker 2: all over are looking at this and saying, we don't 166 00:10:13,640 --> 00:10:16,280 Speaker 2: want to be in a situation where we don't want 167 00:10:16,280 --> 00:10:19,360 Speaker 2: to agree to certain terms with the US government, whether 168 00:10:19,400 --> 00:10:22,319 Speaker 2: it be price or substance, and then the US government 169 00:10:22,440 --> 00:10:24,640 Speaker 2: basically puts us on a list that ensures that we 170 00:10:24,720 --> 00:10:27,200 Speaker 2: can't survive. You know, I think that's a scary thought. 171 00:10:27,240 --> 00:10:29,160 Speaker 2: That's a scary path to lock down. And I think, 172 00:10:29,440 --> 00:10:32,240 Speaker 2: you know, even beyond just sort of the typical tech company, 173 00:10:32,360 --> 00:10:35,160 Speaker 2: I think AI companies should be looking at this moment 174 00:10:35,200 --> 00:10:37,680 Speaker 2: and be quite chilled because I think, you know, the 175 00:10:37,720 --> 00:10:42,960 Speaker 2: AI industry is looking down the barrel of a complex 176 00:10:43,200 --> 00:10:46,839 Speaker 2: relationship with government. You know, it could be some people say, well, 177 00:10:46,920 --> 00:10:49,800 Speaker 2: because this technology is so important, it should be nationalized. 178 00:10:50,240 --> 00:10:52,080 Speaker 2: Others say, you know, this is going to have to 179 00:10:52,120 --> 00:10:56,000 Speaker 2: be really carefully regulated, and so those regulations haven't come. 180 00:10:56,040 --> 00:10:58,800 Speaker 2: And I think Anthropic thought, well, let's get in with 181 00:10:58,840 --> 00:11:02,079 Speaker 2: the government and hopefully will have some ability to influence 182 00:11:02,440 --> 00:11:04,640 Speaker 2: the path and future direction of how this goes. And 183 00:11:04,640 --> 00:11:06,680 Speaker 2: it didn't work out so well for them. So again 184 00:11:06,720 --> 00:11:09,520 Speaker 2: I think, you know, for the subset of tech executives, 185 00:11:09,559 --> 00:11:12,880 Speaker 2: they are also working in art official intelligence. You know, 186 00:11:12,920 --> 00:11:15,920 Speaker 2: this is sort of a chilling moment because it's just 187 00:11:16,000 --> 00:11:20,559 Speaker 2: showing you how the government is really willing to go 188 00:11:20,679 --> 00:11:24,440 Speaker 2: far and interfering with private markets and they're functioning, and 189 00:11:24,480 --> 00:11:27,000 Speaker 2: it to just again the people that say, well, artificial 190 00:11:27,000 --> 00:11:29,599 Speaker 2: intelligence should be subject to really burden some regulation and 191 00:11:29,640 --> 00:11:32,160 Speaker 2: a lot of government interference. It's suggests that, yeah, the 192 00:11:32,160 --> 00:11:33,840 Speaker 2: Trump administration is on board for that. 193 00:11:34,480 --> 00:11:37,800 Speaker 1: Does it fit in anywhere that the government is using 194 00:11:38,280 --> 00:11:42,520 Speaker 1: Anthropics AI in the war where they ran right now? 195 00:11:43,559 --> 00:11:46,400 Speaker 2: Yeah, So I think this is a way in which 196 00:11:47,000 --> 00:11:53,679 Speaker 2: this decision for the government to not just decide you know, okay, sure, 197 00:11:53,760 --> 00:11:56,760 Speaker 2: maybe Pete Hegsath doesn't like how the conversations are going 198 00:11:56,800 --> 00:12:00,120 Speaker 2: with Anthropic Maybe Pete Hegxsast says, we don't like all 199 00:12:00,120 --> 00:12:03,080 Speaker 2: these conversations are going. We no longer want to work 200 00:12:03,120 --> 00:12:05,000 Speaker 2: with them going forward, and let's let's figure out a 201 00:12:05,000 --> 00:12:07,319 Speaker 2: way to sort of disentangle this. You know, this this 202 00:12:07,520 --> 00:12:10,440 Speaker 2: second step though, of trying to basically to coapitate this 203 00:12:10,559 --> 00:12:14,520 Speaker 2: company that is really providing a valuable service for the 204 00:12:14,640 --> 00:12:19,200 Speaker 2: US military and it's ongoing operations that I think most 205 00:12:19,240 --> 00:12:24,080 Speaker 2: sensible people think there aren't great replacements available. So, you know, 206 00:12:24,120 --> 00:12:26,640 Speaker 2: this is sort of a moment where government is handcapping 207 00:12:26,679 --> 00:12:31,160 Speaker 2: its own military and causing the military. You know, if 208 00:12:31,200 --> 00:12:34,239 Speaker 2: you have everything sort of up and running on Anthropic, 209 00:12:34,360 --> 00:12:38,040 Speaker 2: to then pivot to a completely different platform that most 210 00:12:38,080 --> 00:12:41,360 Speaker 2: people think is not as well cut out for this task. 211 00:12:41,440 --> 00:12:46,440 Speaker 2: You know, that's a time consuming, distracting, burdens expensive endeavor. 212 00:12:47,000 --> 00:12:49,120 Speaker 2: So to sort of handicap yourself like that and then 213 00:12:49,360 --> 00:12:52,640 Speaker 2: sort of again this is Anthropic is one of the 214 00:12:52,679 --> 00:12:57,760 Speaker 2: most important and vital artificial intelligence companies that's produced in America, right, 215 00:12:57,840 --> 00:13:02,400 Speaker 2: So it's also handicapping a home grown champion company in 216 00:13:02,480 --> 00:13:06,840 Speaker 2: this race for AI dominance. So again, it's sort of 217 00:13:06,880 --> 00:13:11,320 Speaker 2: a funny strategy on multiple fronts. And you know, if 218 00:13:11,320 --> 00:13:14,000 Speaker 2: we want to be generous to the US government, sure 219 00:13:14,080 --> 00:13:17,040 Speaker 2: that's totally within their right. If they think that their 220 00:13:17,120 --> 00:13:19,880 Speaker 2: contracting party has terms that they don't want to bide by, 221 00:13:20,000 --> 00:13:21,880 Speaker 2: that you know, you have the right to walk away. 222 00:13:21,880 --> 00:13:24,960 Speaker 2: But then to take this extra step of kneecapping them 223 00:13:25,280 --> 00:13:26,679 Speaker 2: is just bizarre. 224 00:13:27,320 --> 00:13:30,680 Speaker 1: It may be bizarre, but is it unusual for the 225 00:13:30,760 --> 00:13:34,680 Speaker 1: Trump administration? And what's the real goal here? 226 00:13:34,840 --> 00:13:36,280 Speaker 2: But I think this gets back to where we started 227 00:13:36,320 --> 00:13:38,240 Speaker 2: to with a sort of free speech element. You know, 228 00:13:38,280 --> 00:13:40,480 Speaker 2: the goal I think in this moment is to send 229 00:13:40,520 --> 00:13:45,200 Speaker 2: a message to the market, which is your failure to 230 00:13:45,520 --> 00:13:50,040 Speaker 2: bend the knee is going to cause huge punitive repercussions. 231 00:13:50,120 --> 00:13:50,360 Speaker 1: Right. 232 00:13:50,600 --> 00:13:53,600 Speaker 2: That's a message that they're trying to send. And it's 233 00:13:53,640 --> 00:13:57,840 Speaker 2: just sort of funny from a conservative, quote unquote conservative 234 00:13:58,040 --> 00:14:03,280 Speaker 2: executive because the tip conservative ideology here is like what 235 00:14:03,559 --> 00:14:05,520 Speaker 2: markets sort themselves out. We're not going to We're not 236 00:14:05,559 --> 00:14:08,680 Speaker 2: going to have a heavy handed government thumb on how 237 00:14:09,280 --> 00:14:12,920 Speaker 2: markets work. Right, And so in this moment, you know, 238 00:14:12,960 --> 00:14:16,200 Speaker 2: it's almost like we're seeing something from a playbook of 239 00:14:16,320 --> 00:14:18,959 Speaker 2: a you know, a socialist country or something like that, 240 00:14:19,080 --> 00:14:22,280 Speaker 2: where fuelty to the executive is everything. 241 00:14:22,760 --> 00:14:25,160 Speaker 1: Well, we'll see what the court thinks about this. A 242 00:14:25,240 --> 00:14:29,080 Speaker 1: hearing is scheduled for next Tuesday. Thanks so much for 243 00:14:29,160 --> 00:14:33,440 Speaker 1: joining me, Dorothy. That's Columbia Law School professor Dorothy Lund. 244 00:14:34,480 --> 00:14:37,680 Speaker 1: The dust is settled, with Paramount winning the bidding war 245 00:14:38,000 --> 00:14:41,600 Speaker 1: for Warner Brothers Discovery with an offer that valued the 246 00:14:41,640 --> 00:14:45,560 Speaker 1: company at about one hundred eleven billion dollars, including debt, 247 00:14:45,920 --> 00:14:51,960 Speaker 1: for the acquisition of the entire company wbd's film library, studio, 248 00:14:52,080 --> 00:14:56,560 Speaker 1: and HBO Max streaming service, as well as its cable assets, 249 00:14:56,600 --> 00:15:01,440 Speaker 1: including CNN. The Jonstice Department's Anti Trump division didn't take 250 00:15:01,480 --> 00:15:04,960 Speaker 1: any action to delay the closing of the deal before 251 00:15:05,040 --> 00:15:09,040 Speaker 1: the termination of the statutory waiting period. But that doesn't 252 00:15:09,080 --> 00:15:12,920 Speaker 1: stop the DOJ from stepping in, and the States can 253 00:15:13,040 --> 00:15:17,080 Speaker 1: also step in and investigate the deal, which is exactly 254 00:15:17,120 --> 00:15:21,560 Speaker 1: what California Attorney General Rob Bonta says is happening. My 255 00:15:21,600 --> 00:15:25,960 Speaker 1: guest is Anti Trust attorney Richard Wolfram, why you think 256 00:15:26,120 --> 00:15:30,200 Speaker 1: the Justice Department didn't take any action at all to 257 00:15:30,280 --> 00:15:32,400 Speaker 1: delay the closing of this deal. 258 00:15:33,360 --> 00:15:38,920 Speaker 3: The Justice Department looked at two primary markets, although we 259 00:15:39,040 --> 00:15:43,120 Speaker 3: don't know because all it did was take no action, 260 00:15:43,840 --> 00:15:47,080 Speaker 3: and in taking no action, it issues no statement. And 261 00:15:47,480 --> 00:15:51,320 Speaker 3: it presumably looked at the streaming market and the market 262 00:15:51,440 --> 00:15:55,560 Speaker 3: for the studios themselves. There are five big studios in 263 00:15:55,640 --> 00:15:59,480 Speaker 3: the streaming market. What the THEJ and the FTC do 264 00:15:59,760 --> 00:16:03,160 Speaker 3: to when we assess mergers is look at the concentration. 265 00:16:03,360 --> 00:16:08,560 Speaker 3: There are various angles or criteria by which to assess 266 00:16:08,680 --> 00:16:12,560 Speaker 3: the change in concentration, and in this case, simply adding 267 00:16:12,640 --> 00:16:17,760 Speaker 3: up the streaming markets you get less than thirty percent. 268 00:16:18,360 --> 00:16:23,120 Speaker 3: Thirty percent is viewed traditionally under a Seminole Supreme Court 269 00:16:23,440 --> 00:16:28,400 Speaker 3: antitrust case called Philadelphia National Bank as the minimum threshold 270 00:16:29,280 --> 00:16:34,360 Speaker 3: beyond which a concentration would trigger a presumption of illegality 271 00:16:34,800 --> 00:16:38,880 Speaker 3: under Section seven of the Clayton Act. It is a prophylactic, 272 00:16:39,360 --> 00:16:43,920 Speaker 3: kind of prospectively looking statute that says that a merger 273 00:16:43,960 --> 00:16:46,760 Speaker 3: could be illegal if the effect of the merger may 274 00:16:46,800 --> 00:16:51,560 Speaker 3: be substantially to affect competition. There are other criteria, as 275 00:16:51,600 --> 00:16:55,640 Speaker 3: an economic test called the Hirfindhal Hirschmann tests. Another way 276 00:16:55,680 --> 00:16:57,880 Speaker 3: of looking at would be a loss of head to 277 00:16:57,920 --> 00:17:02,880 Speaker 3: head competition. They did not use that. Interestingly, the DOJ 278 00:17:03,320 --> 00:17:06,240 Speaker 3: did rely on a loss of head to head competition 279 00:17:06,320 --> 00:17:10,040 Speaker 3: in the HPE Juniper merger, but that's a longer story. 280 00:17:10,359 --> 00:17:14,159 Speaker 3: The second market would be the studio consolidation, and in 281 00:17:14,400 --> 00:17:19,520 Speaker 3: overall percentages that also, by some measures, and I have 282 00:17:19,600 --> 00:17:23,160 Speaker 3: no inside information, but by most measures, that also would 283 00:17:23,240 --> 00:17:27,679 Speaker 3: come under thirty percent. And the HHIS also would not 284 00:17:27,720 --> 00:17:31,680 Speaker 3: trigger the presumption of ilegality under section seven. So that's 285 00:17:31,720 --> 00:17:36,320 Speaker 3: why I think that the DOJ did not act. Interestingly, 286 00:17:36,400 --> 00:17:40,120 Speaker 3: there is another element to this, and that is the 287 00:17:40,160 --> 00:17:45,000 Speaker 3: inclusion of CNN in the purchase. It was not to 288 00:17:45,000 --> 00:17:47,919 Speaker 3: be included in the Netflix deal. It was going to 289 00:17:47,960 --> 00:17:51,879 Speaker 3: be divested or hived off to another separate company with 290 00:17:51,920 --> 00:17:53,520 Speaker 3: the other cable channels. 291 00:17:54,119 --> 00:17:57,480 Speaker 1: Last week we saw the state step in to continue 292 00:17:57,600 --> 00:18:02,560 Speaker 1: the Live Nation antitrust trial after the federal government settled. 293 00:18:02,960 --> 00:18:05,200 Speaker 1: So might the states step in here as well? 294 00:18:05,880 --> 00:18:10,639 Speaker 3: Yes. The Attorney General for California, Rob Banta, announced two 295 00:18:10,640 --> 00:18:15,320 Speaker 3: Fridays ago that California is investigating. He said the deal 296 00:18:15,440 --> 00:18:18,199 Speaker 3: is not done or it's not over, and he is 297 00:18:19,040 --> 00:18:22,679 Speaker 3: enlisting other states. Prominently New York and Illinois have been mentioned. 298 00:18:22,720 --> 00:18:25,400 Speaker 3: I wouldn't be surprised if there were not others, And 299 00:18:25,640 --> 00:18:28,240 Speaker 3: I think the states have a bone in their teeth, 300 00:18:28,359 --> 00:18:33,080 Speaker 3: to put it a little crudely, because of this recent 301 00:18:33,200 --> 00:18:36,280 Speaker 3: example of the settlement by the DOJ in the Live 302 00:18:36,400 --> 00:18:39,720 Speaker 3: Nation case, and there is a lot of smoke around 303 00:18:40,200 --> 00:18:44,280 Speaker 3: how that happened. It appears to have happened without any 304 00:18:45,119 --> 00:18:50,280 Speaker 3: consultation with the forty attorney team of the DOJ on 305 00:18:50,400 --> 00:18:52,679 Speaker 3: the case or with the states. And now as we 306 00:18:52,760 --> 00:18:56,520 Speaker 3: have something like thirty two or thirty three states with 307 00:18:56,640 --> 00:19:00,199 Speaker 3: the District of Columbia pursuing it and they're stepping into that, 308 00:19:00,520 --> 00:19:03,639 Speaker 3: into that vacuum, they see this as part of a trend. 309 00:19:03,840 --> 00:19:09,360 Speaker 3: So I think that absolutely the states are interested in this, 310 00:19:10,160 --> 00:19:14,440 Speaker 3: I think they will be re examining several of these perspectives. 311 00:19:14,560 --> 00:19:17,000 Speaker 3: I don't think they're going to have an easy time 312 00:19:17,240 --> 00:19:21,919 Speaker 3: in showing any presumptive illegality with respect to the streaming market. 313 00:19:21,960 --> 00:19:25,480 Speaker 3: And by the way, Rob Monta has articulated these two 314 00:19:25,560 --> 00:19:29,240 Speaker 3: markets in particular, I think that they may have some arguments. 315 00:19:29,280 --> 00:19:32,000 Speaker 3: I'm not advocating, but I think they have some arguments 316 00:19:32,640 --> 00:19:35,960 Speaker 3: with respect to the studio consolidation. The figure I've seen 317 00:19:36,280 --> 00:19:40,919 Speaker 3: among the five majors is that a combined Paramount Warner 318 00:19:41,480 --> 00:19:45,879 Speaker 3: entity would have something like twenty seven percent of the market. 319 00:19:46,440 --> 00:19:49,600 Speaker 3: That doesn't ring the bell under that Philadelphia National Bank 320 00:19:50,119 --> 00:19:56,960 Speaker 3: threshold standard that I mentioned, nor likely under the HHI analysis, 321 00:19:57,160 --> 00:20:00,439 Speaker 3: But there's a breakdown of that and their pros cons 322 00:20:00,480 --> 00:20:03,320 Speaker 3: about that. So that twenty seven percent sort of represents 323 00:20:03,680 --> 00:20:07,919 Speaker 3: the total revenue across all business lines of the studios. 324 00:20:08,240 --> 00:20:13,200 Speaker 3: If that is broken down into theatrical movie gross receipts, 325 00:20:13,960 --> 00:20:17,199 Speaker 3: then that percentage defined as a sub market amounts to 326 00:20:17,280 --> 00:20:21,440 Speaker 3: something like forty percent. You've got a large percentage of 327 00:20:21,480 --> 00:20:25,159 Speaker 3: those big five, So that becomes a concern in the 328 00:20:25,359 --> 00:20:29,120 Speaker 3: HHIS in that case would trigger a presumption of illegality. 329 00:20:29,680 --> 00:20:34,080 Speaker 3: Then the question becomes who is getting hurt, where is 330 00:20:34,119 --> 00:20:37,720 Speaker 3: the competition being affected, and who does that effect. 331 00:20:38,119 --> 00:20:40,359 Speaker 1: You're going to stay with me, Richard. Coming up, we're 332 00:20:40,400 --> 00:20:44,359 Speaker 1: going to talk more about what might happen, including whether 333 00:20:44,440 --> 00:20:48,360 Speaker 1: the States may step in. I'm June Grosso and you're 334 00:20:48,440 --> 00:20:54,680 Speaker 1: listening to bloom. Paramount won the bidding for Warner Brothers 335 00:20:54,800 --> 00:20:58,840 Speaker 1: Discovery with an offer that valued the company at approximately 336 00:20:58,880 --> 00:21:03,160 Speaker 1: one hundred and eleven billion dollars including debt, and included 337 00:21:03,200 --> 00:21:07,920 Speaker 1: the acquisition of the entire company. The Justice Department's Anti 338 00:21:08,000 --> 00:21:11,760 Speaker 1: Trust's division didn't take any action to delay the closing 339 00:21:11,800 --> 00:21:14,680 Speaker 1: of the deal, but that doesn't stop the DOJ from 340 00:21:14,760 --> 00:21:18,399 Speaker 1: stepping in, and the States can also step in and 341 00:21:18,520 --> 00:21:23,040 Speaker 1: investigate the deal, which is what California Attorney General Rob 342 00:21:23,080 --> 00:21:27,280 Speaker 1: Bonta recently announced that state was doing. I've been talking 343 00:21:27,280 --> 00:21:31,280 Speaker 1: to Anti trust attorney Richard Wolfram. If the States step in, 344 00:21:31,359 --> 00:21:33,479 Speaker 1: would this end up then going to trial? 345 00:21:34,119 --> 00:21:40,720 Speaker 3: Not necessarily, I mean, there's always room for negotiation and signaling. 346 00:21:41,480 --> 00:21:46,119 Speaker 3: The States could present to the party's a form of 347 00:21:46,160 --> 00:21:49,560 Speaker 3: a complaint or say that they're going to sue, but 348 00:21:49,640 --> 00:21:53,679 Speaker 3: they won't. If the parties would agree to certain conditions 349 00:21:54,080 --> 00:21:57,000 Speaker 3: or else they sue they actually file, which of course 350 00:21:57,080 --> 00:21:59,960 Speaker 3: makes it a more meaningful kind of threat, and then 351 00:22:00,320 --> 00:22:03,760 Speaker 3: you know, we would see how that plays out. As 352 00:22:03,800 --> 00:22:07,120 Speaker 3: far as any conditioning that they might seek, I mean, 353 00:22:07,160 --> 00:22:10,280 Speaker 3: of course they could seek and might articulate it in 354 00:22:10,320 --> 00:22:12,840 Speaker 3: such a way as to express the desire to enjoin 355 00:22:12,920 --> 00:22:16,919 Speaker 3: the merger completely. The likelihood of their being able to 356 00:22:16,960 --> 00:22:20,679 Speaker 3: do that is I think very small. The question is, 357 00:22:21,200 --> 00:22:24,600 Speaker 3: as often happens in these mergers, you know, what part 358 00:22:24,600 --> 00:22:27,440 Speaker 3: of this could be carved out and where competition could 359 00:22:27,480 --> 00:22:28,960 Speaker 3: be preserved as they see it. 360 00:22:29,280 --> 00:22:33,919 Speaker 1: The biggest concern we've seen, especially among Democratic lawmakers, is 361 00:22:34,400 --> 00:22:39,159 Speaker 1: the independence of CNN, considering that the Ellison family is 362 00:22:39,200 --> 00:22:43,480 Speaker 1: one of the President's biggest allies and mega donors, and 363 00:22:43,640 --> 00:22:48,440 Speaker 1: we've seen changes at CBS since they took over, and 364 00:22:48,680 --> 00:22:52,720 Speaker 1: Paramount CEO David Ellison has said some conflicting things about CNN. 365 00:22:53,080 --> 00:22:55,960 Speaker 1: I mean, would that be one point? Is there a 366 00:22:56,000 --> 00:22:59,080 Speaker 1: way to solve that without disrupting the deal? 367 00:23:00,080 --> 00:23:03,240 Speaker 3: Well, it would disrupt the deal. I don't think there's 368 00:23:03,280 --> 00:23:06,040 Speaker 3: any way to solve it without disrupting the deal. From 369 00:23:06,040 --> 00:23:11,239 Speaker 3: the perspective of Paramount, because they want CNN. You know, 370 00:23:11,359 --> 00:23:14,920 Speaker 3: query why they want CNN. You know, it has its 371 00:23:14,960 --> 00:23:21,080 Speaker 3: own financial issues. I understand Query, it's independence financially to 372 00:23:21,080 --> 00:23:24,040 Speaker 3: stand on its own, but assuming it can, it's not 373 00:23:24,200 --> 00:23:28,040 Speaker 3: going to be a great provider of revenue for Paramount. 374 00:23:28,840 --> 00:23:31,160 Speaker 3: So why do they want it so badly? And the 375 00:23:31,359 --> 00:23:35,719 Speaker 3: points you mentioned suggests exactly why they do want it 376 00:23:35,760 --> 00:23:40,000 Speaker 3: so badly, So they're not necessarily going to sort of say, okay, fine, 377 00:23:40,080 --> 00:23:43,399 Speaker 3: we can you know, get rid of CNN. And David 378 00:23:43,400 --> 00:23:49,120 Speaker 3: Ellison has made statements both to the effect that they're 379 00:23:49,160 --> 00:23:54,480 Speaker 3: looking to transform it from a news casting perspective, possibly 380 00:23:54,480 --> 00:23:58,119 Speaker 3: from an editorial perspective, and he is also more recently 381 00:23:58,160 --> 00:24:05,280 Speaker 3: stated that he promises the editorial independence of CNN. It 382 00:24:05,440 --> 00:24:08,119 Speaker 3: is one thing, I think, and it's a distinction that 383 00:24:08,160 --> 00:24:11,480 Speaker 3: has to be drawn finally, to promise the editorial independence. 384 00:24:11,520 --> 00:24:15,200 Speaker 3: So in this case, presumably that would mean between CBS, 385 00:24:15,680 --> 00:24:20,520 Speaker 3: whose history under Paramount is now pretty clear, and with 386 00:24:20,600 --> 00:24:23,800 Speaker 3: the appointment of Barry Weiss as the editor in chief 387 00:24:23,880 --> 00:24:29,320 Speaker 3: and as bias Onbudsman, and now there's apparently already an 388 00:24:29,359 --> 00:24:32,719 Speaker 3: appointment of someone with no experience in this area. I 389 00:24:32,760 --> 00:24:37,720 Speaker 3: believe at or promised to be for CNN of a 390 00:24:37,800 --> 00:24:41,360 Speaker 3: bias on budsman. So independence from CBS is one thing, 391 00:24:41,760 --> 00:24:46,359 Speaker 3: but control over editorial content from above is another question. 392 00:24:46,760 --> 00:24:49,879 Speaker 3: I think they's somewhat distinct, and he has he David 393 00:24:49,960 --> 00:24:52,119 Speaker 3: Ellison has said what we want to do is appeal 394 00:24:52,200 --> 00:24:55,240 Speaker 3: to the broad seventy percent of the market. That is, 395 00:24:55,520 --> 00:24:57,000 Speaker 3: you know, sort of on the left and sort of 396 00:24:57,040 --> 00:24:58,760 Speaker 3: on the right, and it's in the middle. We just 397 00:24:58,800 --> 00:25:02,160 Speaker 3: want the truth. We're in the truth business. What could 398 00:25:02,200 --> 00:25:05,000 Speaker 3: happen This is just theoretical. I don't know what the 399 00:25:05,000 --> 00:25:09,200 Speaker 3: States intend or if they're going after this, but typically 400 00:25:09,720 --> 00:25:13,919 Speaker 3: in a situation where the enforcer looks in order to 401 00:25:13,960 --> 00:25:16,679 Speaker 3: preserve competition, as they see the need to do that, 402 00:25:18,119 --> 00:25:22,840 Speaker 3: they may seek to divest a division where they see 403 00:25:22,840 --> 00:25:26,800 Speaker 3: an overlap of competition, or they may condition the merger 404 00:25:27,240 --> 00:25:32,119 Speaker 3: on guarantees through a firewall of some kind of you know, 405 00:25:32,200 --> 00:25:35,600 Speaker 3: independence of decision making. So in this case, that would 406 00:25:35,640 --> 00:25:42,080 Speaker 3: mean a firewall where CNN preserves its editorial independence. The 407 00:25:42,160 --> 00:25:46,439 Speaker 3: reliability of that is what is in question. And given 408 00:25:46,600 --> 00:25:50,200 Speaker 3: the alliance of the lessons and you know, with the administration, 409 00:25:50,600 --> 00:25:53,560 Speaker 3: that becomes a more acute question. 410 00:25:54,720 --> 00:25:59,320 Speaker 1: The jump administration has appeared to be a lax enforcer 411 00:25:59,560 --> 00:26:03,600 Speaker 1: of the anti trust laws. We talked about the Live 412 00:26:03,760 --> 00:26:08,400 Speaker 1: Nation settlement. After only four days of trial, the head 413 00:26:08,440 --> 00:26:13,200 Speaker 1: of the Antitrust Division was fired. Assuming this deal goes 414 00:26:13,320 --> 00:26:17,000 Speaker 1: through in years to come, if a new administration comes 415 00:26:17,000 --> 00:26:20,440 Speaker 1: in and doesn't like the deal, can they do anything 416 00:26:20,480 --> 00:26:22,200 Speaker 1: about it or is it too late? 417 00:26:22,760 --> 00:26:27,359 Speaker 3: It's not too late. Under the Hart Scott Redino Act, 418 00:26:27,880 --> 00:26:32,280 Speaker 3: which is the pre merger Notification Act that sets out 419 00:26:32,280 --> 00:26:36,560 Speaker 3: the procedures for review and the timing and so forth 420 00:26:37,040 --> 00:26:39,840 Speaker 3: a deal. The approval of a deal is never done. 421 00:26:40,400 --> 00:26:43,800 Speaker 3: The eggs could be scrambled, and there is precedent for 422 00:26:43,920 --> 00:26:48,440 Speaker 3: cases where they have been scrambled. It's a case called 423 00:26:48,440 --> 00:26:53,000 Speaker 3: the Chicago Bridge and Iron. The FTC went back after 424 00:26:53,400 --> 00:26:58,520 Speaker 3: the deal was consummated, after there had been a mixing 425 00:26:58,880 --> 00:27:03,680 Speaker 3: of divisions, and they saw that there was conduct as 426 00:27:03,720 --> 00:27:07,360 Speaker 3: a result of the merger that violated, in their view, 427 00:27:07,440 --> 00:27:09,800 Speaker 3: the anti trest laws, and they went in and they 428 00:27:10,000 --> 00:27:12,480 Speaker 3: undid it. Obviously, that's hard to do and it's a 429 00:27:12,560 --> 00:27:15,919 Speaker 3: rare thing, but it can happen. And so you know, 430 00:27:16,000 --> 00:27:19,520 Speaker 3: if there were let's just say, an administration with a 431 00:27:19,560 --> 00:27:23,399 Speaker 3: different view, a more aggressive view on this particular deal. 432 00:27:23,800 --> 00:27:27,120 Speaker 3: For instance, it could go back if it found that 433 00:27:27,400 --> 00:27:29,520 Speaker 3: in its view again that there was a violation of 434 00:27:29,560 --> 00:27:31,879 Speaker 3: Section seven of the Clayton Act. You know, it's a 435 00:27:32,000 --> 00:27:35,440 Speaker 3: very rare and difficult thing to show. Let me also 436 00:27:35,600 --> 00:27:40,919 Speaker 3: mention the states they have separate independent jurisdiction to enforce 437 00:27:40,960 --> 00:27:44,600 Speaker 3: the anti trest laws, separate from the federal authorities, and 438 00:27:44,680 --> 00:27:47,120 Speaker 3: they can sue under their own statutes, but they can 439 00:27:47,160 --> 00:27:50,600 Speaker 3: also sue under the federal statutes. And there's also another 440 00:27:50,880 --> 00:27:54,960 Speaker 3: technical thing to consider. Are they able to get documents? 441 00:27:55,000 --> 00:27:58,600 Speaker 3: How can they get documents from the second request review 442 00:27:59,160 --> 00:28:03,800 Speaker 3: that the deal undertook, and typically that's done by a 443 00:28:03,840 --> 00:28:06,920 Speaker 3: waiver by the parties. The parties i think would see 444 00:28:06,960 --> 00:28:10,359 Speaker 3: it as in their interest to cooperate with that. And 445 00:28:10,440 --> 00:28:14,480 Speaker 3: the second is what's the burden of persuasion for the 446 00:28:15,280 --> 00:28:18,440 Speaker 3: states to go ahead and what's the timing for them 447 00:28:18,680 --> 00:28:21,120 Speaker 3: going ahead? And the timing would be that Bonta has 448 00:28:21,200 --> 00:28:24,560 Speaker 3: said that this is on a really fast track and 449 00:28:24,640 --> 00:28:27,040 Speaker 3: he was specifically asked does that mean you'll try to 450 00:28:27,080 --> 00:28:29,879 Speaker 3: step in in months or weeks? And he said weeks. 451 00:28:30,480 --> 00:28:33,760 Speaker 3: And the showing that the states have to make to 452 00:28:33,960 --> 00:28:36,639 Speaker 3: preliminarily and join, you know, to try to stop the 453 00:28:36,680 --> 00:28:39,400 Speaker 3: thing in its tracks while they do a further review. 454 00:28:39,960 --> 00:28:44,720 Speaker 3: Is considerably higher than for the government. The government needs 455 00:28:44,760 --> 00:28:49,440 Speaker 3: to show only general public interest harm. The States need 456 00:28:49,520 --> 00:28:52,440 Speaker 3: to show specifically anti trust injury, which means they need 457 00:28:52,480 --> 00:28:57,040 Speaker 3: to show harm to their citizens, you know, both economically 458 00:28:57,080 --> 00:29:00,960 Speaker 3: and perhaps when we talk about CNN again more general way. 459 00:29:01,240 --> 00:29:03,560 Speaker 3: I think they can probably satisfy that, but it is 460 00:29:03,600 --> 00:29:05,600 Speaker 3: a higher burden and tell. 461 00:29:05,480 --> 00:29:09,120 Speaker 1: Us how viewpoint diversity plays in the States. 462 00:29:09,480 --> 00:29:13,120 Speaker 3: Might be interested in what we might generally call the 463 00:29:13,160 --> 00:29:18,840 Speaker 3: marketplace of ideas, otherwise known as the viewpoint diversity. It 464 00:29:18,960 --> 00:29:21,920 Speaker 3: is interesting and I think sort of most illuminating to 465 00:29:21,960 --> 00:29:26,000 Speaker 3: see what the DOJ did. In July. A group called 466 00:29:26,360 --> 00:29:30,920 Speaker 3: Children's Health it's an advocacy group in which RFK Junior 467 00:29:31,040 --> 00:29:35,160 Speaker 3: was involved before he became Secretary of HHS sued major 468 00:29:35,360 --> 00:29:40,480 Speaker 3: media outlets Washington Post, BBC, Reuters, some others for allegedly 469 00:29:40,520 --> 00:29:46,280 Speaker 3: colluding with major digital platforms to censor the anti vaccination 470 00:29:46,440 --> 00:29:50,560 Speaker 3: and other views of the plaintiff, and the DOJ weighed 471 00:29:50,600 --> 00:29:53,040 Speaker 3: in with what's called the statement of interest not on 472 00:29:53,080 --> 00:29:55,320 Speaker 3: the merits of the case, not saying how they thought 473 00:29:55,360 --> 00:29:57,960 Speaker 3: it should come out, but on the law, and what 474 00:29:58,000 --> 00:30:02,800 Speaker 3: they said was that the edged censorship would violate the 475 00:30:02,840 --> 00:30:04,720 Speaker 3: anti trest law as if there was an agreement that 476 00:30:04,840 --> 00:30:09,320 Speaker 3: was shown because it suppresses viewpoint diversity, that is, the 477 00:30:09,440 --> 00:30:13,920 Speaker 3: viewpoints of the plaintiffs as to these medical issues. In 478 00:30:13,960 --> 00:30:19,040 Speaker 3: the case of CNN, the question is not that antitrust 479 00:30:19,160 --> 00:30:22,720 Speaker 3: would be supporting the views or you might say the 480 00:30:22,760 --> 00:30:27,480 Speaker 3: positioning of CNN, but rather its importance. It's almost sort 481 00:30:27,480 --> 00:30:30,680 Speaker 3: of like the obscenity test. We know that CNN has 482 00:30:30,720 --> 00:30:35,320 Speaker 3: an important place in the media landscape for viewpoint diversity, 483 00:30:35,600 --> 00:30:38,400 Speaker 3: and not as an anti trust technical point, but you 484 00:30:38,440 --> 00:30:40,680 Speaker 3: could you know, people are pretty much aware that to 485 00:30:40,720 --> 00:30:44,840 Speaker 3: the right is Fox, to the left is ms formerly MSNBC, 486 00:30:45,040 --> 00:30:48,520 Speaker 3: and there's CNN. It has global scope, it's twenty four 487 00:30:48,520 --> 00:30:51,400 Speaker 3: to seven. I think, however, you measure it whether it's 488 00:30:51,440 --> 00:30:55,640 Speaker 3: broadcast news and cable as a market or you know, digital, 489 00:30:55,800 --> 00:30:58,560 Speaker 3: and in the first CNN is about twenty percent. If 490 00:30:58,600 --> 00:31:04,320 Speaker 3: it's digital, CNN is number one. If its independence were compromised, 491 00:31:04,920 --> 00:31:08,320 Speaker 3: then that is a serious hit that I think the 492 00:31:08,400 --> 00:31:13,520 Speaker 3: DOJ would have to be recognizing as something that is 493 00:31:13,560 --> 00:31:18,960 Speaker 3: important to it. Albeit that it did not raise this point, 494 00:31:19,000 --> 00:31:22,520 Speaker 3: you know, in effectively clearing the deal and taking no action. 495 00:31:23,440 --> 00:31:26,400 Speaker 3: Why it didn't you know, people can have assumptions, but 496 00:31:26,520 --> 00:31:30,560 Speaker 3: there is a significant precedent which the DOJ itself cited 497 00:31:30,600 --> 00:31:34,400 Speaker 3: going back at least fifty years, on which this advocacy 498 00:31:34,440 --> 00:31:37,920 Speaker 3: of viewpoint diversity stands. And then simply that, you know, 499 00:31:38,040 --> 00:31:40,680 Speaker 3: California and the other states would have to show that 500 00:31:41,400 --> 00:31:46,480 Speaker 3: any suppression of that constitutes the essential finding that's required 501 00:31:46,680 --> 00:31:50,320 Speaker 3: of antitrust injury. That this is it is a form 502 00:31:50,400 --> 00:31:55,440 Speaker 3: of non economic competition. In a number of newspaper cases, 503 00:31:55,800 --> 00:31:58,720 Speaker 3: what the courts have articulated, like in two newspapers in 504 00:31:58,760 --> 00:32:02,520 Speaker 3: a town, they've adulated both economic injury let's say, the 505 00:32:02,560 --> 00:32:07,760 Speaker 3: loss of advertising with that consolidation, but also editorial and 506 00:32:07,840 --> 00:32:12,000 Speaker 3: so this is a very challenging issue, but I think 507 00:32:12,080 --> 00:32:16,000 Speaker 3: also an extremely important one, and particularly at this time 508 00:32:16,160 --> 00:32:16,840 Speaker 3: in the country. 509 00:32:17,040 --> 00:32:20,520 Speaker 1: Well, we'll be watching to see whether the California ag 510 00:32:21,000 --> 00:32:24,920 Speaker 1: takes action within a few weeks. That's Anti Trust attorney 511 00:32:25,040 --> 00:32:27,720 Speaker 1: Richard Wolfram, And that's it for this edition of the 512 00:32:27,760 --> 00:32:30,720 Speaker 1: Bloomberg Law Show. Remember you can always get the latest 513 00:32:30,760 --> 00:32:33,840 Speaker 1: legal news on our Bloomberg Law podcast. You can find 514 00:32:33,880 --> 00:32:38,480 Speaker 1: them on Apple Podcasts, Spotify, and at www dot bloomberg 515 00:32:38,520 --> 00:32:42,320 Speaker 1: dot com, slash podcast, slash Law, and remember to tune 516 00:32:42,320 --> 00:32:45,560 Speaker 1: into The Bloomberg Law Show every weeknight at ten pm 517 00:32:45,640 --> 00:32:49,200 Speaker 1: Wall Street Time. I'm June Grosso and you're listening to 518 00:32:49,240 --> 00:32:49,760 Speaker 1: Bloomberg 519 00:32:52,280 --> 00:32:52,320 Speaker 3: A