WEBVTT - Alphabet, Amazon, Apple and Meta Antitrust Showdown Status 0:00:15.600 --> 0:00:20.160 Big tech platforms Alphabet, Amazon, Apple, and Meta are all 0:00:20.160 --> 0:00:24.000 feeling the sting of the Biden administration's aggressive anti trust enforcers. 0:00:24.440 --> 0:00:26.560 All four have been sued by the US Department of 0:00:26.720 --> 0:00:30.159 Justice or the Federal Trade Commission for alleged monopolization, and 0:00:30.240 --> 0:00:32.720 the DOJ just notched a win in one of its 0:00:32.720 --> 0:00:35.920 cases against Google. What are these lawsuits about, where do 0:00:36.000 --> 0:00:38.839 they stand, and what's next. This is a Votes and 0:00:38.920 --> 0:00:39.640 Verdicts Brief. 0:00:40.120 --> 0:00:43.839 Welcome to Votes and Verdicts hosted by Bloomberg Intelligence, part 0:00:43.880 --> 0:00:47.680 of Bloomberg's Research department, comprised of five hundred analysts and 0:00:47.720 --> 0:00:52.559 strategists working across all major world markets. Our coverage includes 0:00:52.600 --> 0:00:55.720 over two thousand equities and credits, as well as outlooks 0:00:55.760 --> 0:00:59.640 on more than nine d industries, one hundred market indices, currencies, 0:00:59.640 --> 0:01:02.880 and come. In this podcast series, we talk about the 0:01:02.920 --> 0:01:07.399 intersection of business policy and law. I'm Justin Teresi, a 0:01:07.440 --> 0:01:11.959 litigation and policy analyst with Bloomberg Intelligence covering anti trust matters. 0:01:11.920 --> 0:01:15.080 And I'm Jennifer Ree, a senior analyst that also covers 0:01:15.160 --> 0:01:17.240 US anti trust litigation and policy. 0:01:17.560 --> 0:01:21.039 Our Votes and Verdicts Brief series highlights our research reports 0:01:21.080 --> 0:01:24.440 on the Bloomberg terminal, giving listeners a quick takeaway to 0:01:24.480 --> 0:01:28.959 help grasp key litigation or policy topics covered in that research. Today, 0:01:29.040 --> 0:01:31.039 my colleague Jen and I are going to talk about 0:01:31.120 --> 0:01:34.479 ongoing government anti trust actions against the four big tech 0:01:34.520 --> 0:01:38.000 platforms Jen mentioned at the start of the podcast, providing 0:01:38.040 --> 0:01:41.160 a snapshot of each case and where it stands. So Jen, 0:01:41.360 --> 0:01:45.040 so much going on here. Obviously, Let's start with Google, 0:01:45.080 --> 0:01:48.680 since the company faces two anti trust monopolization suits right 0:01:48.720 --> 0:01:51.680 now brought by the United States Department of Justice, and 0:01:51.760 --> 0:01:54.520 Google just lost one of them. That was the first 0:01:54.560 --> 0:01:57.880 suit brought against the company by DOJ back in twenty twenty, 0:01:58.120 --> 0:02:01.960 and it targeted Google's conduct relation to its search engine business. 0:02:02.200 --> 0:02:04.240 Can you give us a short summary of that ruling 0:02:04.280 --> 0:02:04.720 in the suit? 0:02:05.360 --> 0:02:08.400 Sure? Justin and you are right. That ruling was just 0:02:08.560 --> 0:02:12.400 issued against Google on August fifth. Pretty big deal since 0:02:12.720 --> 0:02:15.760 it's one of the first monopolization cases brought by the 0:02:15.800 --> 0:02:19.000 DOJ since Microsoft all the way back in the nineteen nineties. 0:02:19.639 --> 0:02:22.480 And here the judge determined that Google has monopoly power 0:02:22.520 --> 0:02:25.640 and markets for general search services and something called general 0:02:25.639 --> 0:02:28.239 search text ads. Those are the ads that you see 0:02:28.280 --> 0:02:29.760 when you do a search and they come up at 0:02:29.800 --> 0:02:32.600 the top of the search results page and they say sponsored. 0:02:32.600 --> 0:02:35.480 They kind of look like search results. So the judge 0:02:35.520 --> 0:02:39.160 also decided that Google had engaged in illegal conduct intended 0:02:39.160 --> 0:02:43.000 to maintain those monopolies, because just having that monopoly in 0:02:43.040 --> 0:02:45.960 search isn't illegal. It's all about the conduct and what 0:02:46.040 --> 0:02:48.560 Google is doing to try to either get to that 0:02:48.639 --> 0:02:51.520 monopoly or maintain the monopoly. So the crux of the 0:02:51.560 --> 0:02:55.160 conduct in this case was these distribution agreements Google had 0:02:55.200 --> 0:02:58.359 with a number of third parties, and Google would pay 0:02:58.400 --> 0:03:01.079 these companies a lot of money to set Google Search 0:03:01.280 --> 0:03:03.840 Engine as a default for most of the access points 0:03:03.840 --> 0:03:07.160 on the Internet. So specifically, the company paid about twenty 0:03:07.200 --> 0:03:10.600 six billion a year to companies like Apple and Mozilla, 0:03:10.960 --> 0:03:14.120 as well as makers of Android phones and sellers of phones, 0:03:14.560 --> 0:03:17.720 so that people accessing the web using these browsers or 0:03:17.720 --> 0:03:21.760 these devices were automatically using Google Search, sometimes without even 0:03:21.800 --> 0:03:25.040 knowing it. And the judge determined that those agreements were 0:03:25.080 --> 0:03:28.680 exclusionary because what they did is they foreclosed other search 0:03:28.680 --> 0:03:32.120 engine competitors like Being or duc duc Go, And what 0:03:32.200 --> 0:03:34.960 that did is it prevented those competitors from gaining the 0:03:35.000 --> 0:03:38.080 scale they needed to improve because essentially the more searches 0:03:38.080 --> 0:03:39.840 that are done in the search engine, the better the 0:03:39.840 --> 0:03:44.160 search engine becomes. This decision was only on liability, so 0:03:44.200 --> 0:03:47.560 that means just deciding was Google doing something illegal or not, 0:03:47.720 --> 0:03:50.800 So there wasn't really evidence directly focused on what the 0:03:50.840 --> 0:03:54.960 appropriate remedies would be at trials should Google lose the case. 0:03:56.200 --> 0:03:58.080 Right, So, I think a lot of people this week 0:03:58.160 --> 0:04:00.920 generally scratching their heads and they're saying, you know, given 0:04:00.920 --> 0:04:03.400 that this was just kind of a determination that Google 0:04:03.440 --> 0:04:06.560 broke the law, what really happens next? And how long 0:04:06.640 --> 0:04:08.560 do you think it'll be before there's some kind of 0:04:08.600 --> 0:04:11.360 indication about what kind of an injunction might be issued, 0:04:11.360 --> 0:04:12.640 what that might look like. 0:04:13.040 --> 0:04:14.880 Yeah, you know, justin I even think this might be 0:04:14.920 --> 0:04:17.520 the tougher part of the case, And usually proving that 0:04:17.560 --> 0:04:20.760 somebody is engaged in illegal monopolization is pretty tall task 0:04:20.839 --> 0:04:23.280 for a plaintiff, but we managed to do that here. 0:04:23.320 --> 0:04:25.760 But right the what is the remedy going to be 0:04:25.800 --> 0:04:29.280 to fix this? I think that's very complicated. And what's 0:04:29.279 --> 0:04:31.839 going to happen here at least is we're starting out 0:04:31.839 --> 0:04:34.599 with a hearing on September sixth, But that's just to 0:04:34.640 --> 0:04:37.120 hammer out a schedule. So that's not really about what 0:04:37.160 --> 0:04:39.040 the remedies would be. It's just to say, what's our 0:04:39.080 --> 0:04:41.520 schedule going forward in order to try to determine what 0:04:41.560 --> 0:04:44.480 the remedy should be. And I think the whole process 0:04:44.560 --> 0:04:46.839 is going to take. We should expect at least six months, 0:04:47.279 --> 0:04:50.000 probably longer. I mean, we don't have very good examples, 0:04:50.080 --> 0:04:52.680 but that's about how much time I think they'll need. 0:04:53.400 --> 0:04:56.000 In the meantime, Google's definitely going to appeal this decision 0:04:56.000 --> 0:04:58.640 on liability, and I assume what they will also do 0:04:58.720 --> 0:05:01.679 is seek to stay this whole process pending the appeal, 0:05:02.240 --> 0:05:04.960 But that alone could take another twelve to eighteen months. 0:05:05.000 --> 0:05:07.800 So what I think is most likely is that the 0:05:07.880 --> 0:05:10.760 judge goes forward with this remedy's process just to decide 0:05:10.800 --> 0:05:14.400 on what they should be, but stays their actual implementation 0:05:14.600 --> 0:05:16.080 until the appeal has been decided. 0:05:16.800 --> 0:05:19.640 Got it? So, I mean nothing in litigation happens overnight. 0:05:19.720 --> 0:05:23.080 I think we all know that's the case, right right, 0:05:23.400 --> 0:05:25.160 So I have to ask next, what do you think 0:05:25.160 --> 0:05:26.839 Google's chances are on the appeal? 0:05:27.000 --> 0:05:28.760 You know, I think they're low. I think it's a 0:05:28.800 --> 0:05:32.600 really well reasoned decision. It wasn't really novel or unique. 0:05:32.600 --> 0:05:35.200 It wasn't really a stretch under the antitrust laws. It 0:05:35.240 --> 0:05:37.800 was based on a traditional anti trust theory of harm. 0:05:38.160 --> 0:05:40.160 And I think also to the extent that some of 0:05:40.200 --> 0:05:42.800 the judges calls were based on his view and interpretation 0:05:42.920 --> 0:05:46.200 of the evidence that was presented, such as his rejection 0:05:46.320 --> 0:05:50.320 of Google's offered justifications for these default agreements. The appellate 0:05:50.400 --> 0:05:52.760 judges will have to give those calls deference because it's 0:05:52.800 --> 0:05:55.040 based on an interpretation of the evidence that the trial 0:05:55.080 --> 0:05:58.320 court heard, not the appeals court judges. And that's a 0:05:58.320 --> 0:05:59.520 pretty high standard. 0:05:59.200 --> 0:06:02.960 For rehearsal Right, it makes sense, makes sense. So with 0:06:03.080 --> 0:06:05.679 this behind us, now, so there's this second case against 0:06:05.680 --> 0:06:08.280 Google by the DOJ that I have to say, from 0:06:08.320 --> 0:06:11.760 my own perspective, is super complicated. I'm still diving into 0:06:11.800 --> 0:06:13.880 this case, and says you and I have discussed. I'll 0:06:13.880 --> 0:06:17.200 be attending the trial in September for the next Google 0:06:17.240 --> 0:06:19.680 case while you're attending the trial here in New York 0:06:19.760 --> 0:06:22.880 for FTC's case against Tapestry and Capri looking to break 0:06:22.920 --> 0:06:25.839 to block that merger. But the suit against Google, it 0:06:25.880 --> 0:06:28.280 deals with ad tech products. And still I am very 0:06:28.400 --> 0:06:30.760 much still getting up to speed on the case itself. 0:06:31.040 --> 0:06:32.839 Can you tell us about that suit and where it 0:06:32.880 --> 0:06:33.640 stands right now? 0:06:33.839 --> 0:06:35.760 I'll tell you justin I'm so glad you're going to 0:06:35.760 --> 0:06:38.039 that trial because it really. 0:06:38.000 --> 0:06:40.160 Be careful what you wish for. Jed the careful what 0:06:40.200 --> 0:06:40.680 you wish for. 0:06:41.360 --> 0:06:43.839 So in this case, the DOJ and a number of 0:06:43.839 --> 0:06:46.240 states along with it, sue Google. This was in the 0:06:46.279 --> 0:06:49.640 first quarter of twenty twenty three. Over how it operates, 0:06:49.640 --> 0:06:52.600 As you said, it's ad tech business. Ad tech products 0:06:52.640 --> 0:06:55.360 are pretty complicated, and you know, they're not used by 0:06:55.360 --> 0:06:57.680 everyday people like us, so we don't really know how 0:06:57.720 --> 0:07:01.880 they work, not at all. Really. They're used by digital 0:07:01.920 --> 0:07:04.680 advertisers and publishers to buy and sell the ads and 0:07:04.720 --> 0:07:07.080 impressions that we see on the websites when we're on 0:07:07.240 --> 0:07:11.480 the internet, right, And these products basically consist of sort 0:07:11.480 --> 0:07:13.440 of what we call a stack of products. There's an 0:07:13.480 --> 0:07:16.440 AD server that's used by large publishers to manage their 0:07:16.440 --> 0:07:18.760 inventory of I think of it as sort of space 0:07:18.840 --> 0:07:21.640 on their websites. And then they're ad buying tools on 0:07:21.680 --> 0:07:24.720 the other end that are used by advertisers to connect 0:07:24.760 --> 0:07:26.840 to an ad exchange, and the ad exchange is what 0:07:26.920 --> 0:07:29.440 sits right in between, and it's a real time auction 0:07:29.600 --> 0:07:34.000 marketplace that matches multiple buyers and multiple sellers to actually 0:07:34.000 --> 0:07:37.200 complete a transaction. Show that ad when you justin go 0:07:37.320 --> 0:07:40.560 to let's say CNN dot com or some other website. 0:07:41.560 --> 0:07:43.320 All of this is called the ad tech stack, and 0:07:43.360 --> 0:07:48.120 Google owns products across that entire stack. So the allegation here, 0:07:48.120 --> 0:07:50.000 because remember I said in the other case, it's all 0:07:50.000 --> 0:07:52.400 about conduct. Really, I mean, obviously you have to first 0:07:52.560 --> 0:07:55.640 prove that a company has a monopoly position, but once 0:07:55.720 --> 0:07:59.520 that's done, it's about conduct. And the allegation here is 0:07:59.600 --> 0:08:02.280 that Google's engaged in this very long list of sort 0:08:02.320 --> 0:08:06.760 of different strategies, initiatives and product changes that sort of 0:08:06.840 --> 0:08:09.960 all in different ways end up kind of manipulating this 0:08:10.120 --> 0:08:14.480 process to favor Google, so it keeps them, it keeps 0:08:14.520 --> 0:08:18.520 customers within Google stack using its products, kind of ensures 0:08:18.560 --> 0:08:21.760 that the actual transaction takes place on Google's at exchange, 0:08:21.840 --> 0:08:25.400 and then extracts fees all along the way. And that's 0:08:25.560 --> 0:08:28.240 kind of a general way of talking about a lot 0:08:28.240 --> 0:08:31.600 of allegations that are actually quite nitty gritty and complicated. 0:08:33.120 --> 0:08:34.800 The case is going to trial, as you mentioned in 0:08:34.840 --> 0:08:38.320 September in the Eastern District of Virginia. It's going to 0:08:38.360 --> 0:08:41.160 be a bench trial before a judge, and the judges 0:08:41.200 --> 0:08:44.000 in that district. I mean, as you know, justin move pretty. 0:08:43.760 --> 0:08:46.760 Fast, right right, rocket docketive sorts. 0:08:46.520 --> 0:08:50.120 Rocket docket, right. So I'm thinking, I mean guessing maybe 0:08:50.120 --> 0:08:52.480 a decision could even be issued within six months or 0:08:52.559 --> 0:08:55.320 so of trial completing. But we know that's just a guess. 0:08:56.559 --> 0:08:58.400 And once that trial's done, we're going to be asking 0:08:58.440 --> 0:09:01.640 you what you think is going to happen case I haven't. 0:09:01.640 --> 0:09:03.480 I think it's a good case for the DOJ, But 0:09:03.800 --> 0:09:05.360 as you know, we have to see what happens in 0:09:05.400 --> 0:09:07.440 trial and what the evidence look like looks like to 0:09:07.440 --> 0:09:09.240 make a better call. And I can't wait to hear 0:09:09.280 --> 0:09:10.000 what you think of it. 0:09:10.320 --> 0:09:12.320 Yeah, and I'm really hoping to have some of some 0:09:12.400 --> 0:09:15.320 opinions sorted out by then too, That is my hope anyway. 0:09:16.040 --> 0:09:18.959 So there are other lawsuits really similar to this one 0:09:19.000 --> 0:09:21.839 pending against Google as well, and we know there's one 0:09:21.880 --> 0:09:24.319 brought by a group of state attorneys general and a 0:09:24.400 --> 0:09:28.079 proposed class action by publishers and advertisers. It's pretty much 0:09:28.120 --> 0:09:31.679 the same issues. So how come there's some simultaneous litigations 0:09:31.720 --> 0:09:34.199 happening over the same thing in different courts. 0:09:34.520 --> 0:09:37.440 It's really a crazy situation, and I don't endy Google 0:09:37.559 --> 0:09:41.360 for the position it's in. So usually, as is the 0:09:41.400 --> 0:09:43.560 case when the government sues a large company, or even 0:09:43.640 --> 0:09:47.120 when the reports break that the government's investigating a company 0:09:47.160 --> 0:09:50.720 from monopilization, the aggrieved buyers of the products in this case, 0:09:50.720 --> 0:09:54.160 the publishers and advertisers will sue for monetary damages. In 0:09:54.160 --> 0:09:56.600 this case, they did actually sue first while the dj 0:09:56.800 --> 0:10:00.600 was still investigating and hadn't yet filed their suit. All 0:10:00.640 --> 0:10:03.760 of those suits were consolidated into one litigation, but the 0:10:03.760 --> 0:10:06.959 federal government is exempt from that consolidation process, so when 0:10:06.960 --> 0:10:09.120 the Department of Justice brought their own suit, it was 0:10:09.160 --> 0:10:12.240 separate and they were able to keep it separate. Now. Also, 0:10:12.520 --> 0:10:15.840 seventeen states that were led by Texas also sued, and 0:10:15.880 --> 0:10:17.880 this is all pretty much over the same products, the 0:10:17.920 --> 0:10:22.319 same conduct, the ad tech stack, the manipulation. These states 0:10:22.440 --> 0:10:25.760 sued before the DOJ as well, and originally their suit 0:10:25.960 --> 0:10:28.960 was consolidated with the publishers and advertisers suit in a 0:10:29.000 --> 0:10:31.480 New York court, but then the states were able to 0:10:31.520 --> 0:10:34.000 move it back to Texas, where it was originally filed 0:10:34.280 --> 0:10:36.840 after a new law went into effect in December of 0:10:36.840 --> 0:10:40.840 twenty twenty two. That was called the State Antitrust Enforcement 0:10:40.920 --> 0:10:42.960 Venue Act, and it was signed into law as part 0:10:43.000 --> 0:10:45.240 of the omnibus spending bill at the end of twenty 0:10:45.280 --> 0:10:48.280 twenty two. So what that did is it made the 0:10:48.320 --> 0:10:53.320 state attorney general anti Truss actions exempt from consolidation just 0:10:53.440 --> 0:10:56.400 like the federal government. Right, so Texas got their case 0:10:56.480 --> 0:10:59.200 moved back. Means we have three different suits in three 0:10:59.200 --> 0:11:02.200 different courts, and even though the DOJ suit was brought 0:11:02.240 --> 0:11:04.280 after all of these, as I mentioned, it's in the 0:11:04.360 --> 0:11:08.200 Rocket docket, so it's moving faster. The Texas suit is 0:11:08.200 --> 0:11:10.800 scheduled to go to trial in March of twenty twenty five, 0:11:11.120 --> 0:11:13.240 and the private suits are way behind that and don't 0:11:13.280 --> 0:11:16.160 have a trial scheduled yet. But the upshot is that 0:11:16.240 --> 0:11:18.960 Google's in this unfortunate position of having defended the same 0:11:19.000 --> 0:11:22.520 case in three different courts and three different trials, assuming 0:11:22.520 --> 0:11:24.040 no settlements of any of them. 0:11:24.400 --> 0:11:27.080 Got I got it, so really complicated issues, and I 0:11:27.080 --> 0:11:30.280 think some really complicated procedure to go along with it. 0:11:30.280 --> 0:11:32.959 It sounds like that really doesn't look to be resolved 0:11:32.960 --> 0:11:34.800 for maybe the next few years. 0:11:34.840 --> 0:11:35.600 Yeah, I think so. 0:11:36.120 --> 0:11:38.640 Yeah, yeah, but so I should ask too, how about 0:11:38.720 --> 0:11:41.280 meta or we'll go with a Facebook for the purposes 0:11:41.320 --> 0:11:44.680 of this podcast. But I understand Facebook was first hued 0:11:44.720 --> 0:11:48.199 by the Trump administration's FTC quite a while ago, now 0:11:48.240 --> 0:11:52.200 obviously from monopolization, and that matter is still being continued 0:11:52.200 --> 0:11:55.040 by the current FTC. What's going on in that case 0:11:55.080 --> 0:11:56.040 and where does that stand? 0:11:56.240 --> 0:11:58.440 Yeah, so that has been pretty slow moving when you 0:11:58.480 --> 0:12:02.319 think about it long it's been out there. The allegation 0:12:02.480 --> 0:12:04.360 in this case, I think that doesn't get a lot 0:12:04.360 --> 0:12:07.920 of press attention these days, but it is a big deal. 0:12:08.600 --> 0:12:11.920 The allegation is that Facebook has engaged in strategies to 0:12:12.000 --> 0:12:16.600 target potential competitive threats to its social networking dominance. Now 0:12:16.600 --> 0:12:18.520 I'm going to say dominance because at the time this 0:12:18.679 --> 0:12:21.120 was brought it was dominant, but TikTok has changed for 0:12:21.160 --> 0:12:22.320 a little bit in the meantime. 0:12:22.600 --> 0:12:24.640 The whole New world, yes, the whole New world. 0:12:24.679 --> 0:12:27.920 But anyway, what Facebook was doing was looking for new 0:12:27.960 --> 0:12:31.560 startups in social networking. Our companies are kind of adjacent 0:12:31.640 --> 0:12:33.920 to social networking, and then buying them up before they 0:12:33.920 --> 0:12:36.600 could become a competitive force. At least that's the allegation, 0:12:37.160 --> 0:12:40.920 and the FTC is targeting two specific acquisitions that Facebook 0:12:40.960 --> 0:12:45.360 has made, Instagram and WhatsApp. So the FTC claims Facebook 0:12:45.400 --> 0:12:49.040 originally tried to compete with Instagram by improving its own product, 0:12:49.320 --> 0:12:51.720 but then ultimately chose just to buy it rather than 0:12:51.760 --> 0:12:54.400 to compete with it, and likewise with What's App, and 0:12:54.440 --> 0:12:57.880 the allegation is that both could have eventually become competitors 0:12:57.880 --> 0:13:01.720 in social networking over time. In the lawsuit, the FTC 0:13:01.800 --> 0:13:04.280 is seeking a court order that one or both of 0:13:04.280 --> 0:13:07.640 these companies be divested. Now, I should say this lawsuit's 0:13:07.840 --> 0:13:12.280 pretty controversial because it wasn't a unanimous decision by the FTC. 0:13:13.000 --> 0:13:16.240 Unlike the Department of Justice, the FTC is run by 0:13:16.240 --> 0:13:19.120 five commissioners when they have a full slate, and when 0:13:19.160 --> 0:13:21.240 they decide to sue, it's by vote and it has 0:13:21.280 --> 0:13:23.120 to be a majority vote. So this was a three 0:13:23.160 --> 0:13:27.319 to two vote, with two Republicans of the three dissenting, 0:13:27.920 --> 0:13:31.679 and they had policy concerns because the FTC had previously 0:13:31.720 --> 0:13:35.640 evaluated these acquisitions, it had the authority to review mergers 0:13:35.640 --> 0:13:38.240 before they close, right it still does, and had cleared 0:13:38.240 --> 0:13:41.160 both of the deals so one commissioner at least wrote 0:13:41.200 --> 0:13:43.760 that it's bad policy to undermine the integrity of this 0:13:43.840 --> 0:13:48.120 pre merger notification review process, particularly given that these companies 0:13:48.120 --> 0:13:50.679 rely on a clearance decision and then move forward as 0:13:50.679 --> 0:13:54.280 a merging business. Right now, we're in what's called the 0:13:54.320 --> 0:13:58.640 summary judgment phase of this case, and that's where the 0:13:58.640 --> 0:14:01.760 defendants can once again try to get the case dismissed. 0:14:01.800 --> 0:14:04.600 And I actually think there's some possibility here Facebook could 0:14:04.600 --> 0:14:08.120 win a dismissal before trial in this phase. And I 0:14:08.200 --> 0:14:11.920 say that because when the judge sustained the second complaint 0:14:12.080 --> 0:14:14.760 early on in a motion to dismiss, what he said 0:14:14.880 --> 0:14:16.720 was that the agency is going to face a tall 0:14:16.800 --> 0:14:20.080 task to prove its allegations. And he noted that what 0:14:20.120 --> 0:14:22.760 the FTC has to show is that these acquisitions harmed 0:14:22.840 --> 0:14:27.440 the competitive process and harmed consumers. But because Facebook, Instagram, 0:14:27.480 --> 0:14:30.440 and WhatsApp are all free to consumers, what the FDC 0:14:30.560 --> 0:14:32.560 is going to have to show is that the harm 0:14:32.640 --> 0:14:36.400 is that it resulted in poorer quality, less choice, less innovation. 0:14:37.200 --> 0:14:39.840 And these are hard to prove, and that's particularly hard 0:14:39.880 --> 0:14:42.800 given that Facebook's invested in the products and grown them 0:14:42.840 --> 0:14:45.640 since having acquired them. And they're both really very popular. 0:14:45.680 --> 0:14:49.920 Consumers like those products. So the briefing is ongoing, as 0:14:49.920 --> 0:14:52.920 I said, and I would expect a decision maybe toward 0:14:52.960 --> 0:14:56.000 the end of this year or in the first half ultimately. 0:14:56.040 --> 0:14:57.840 In terms of a trial, there is no trial date 0:14:57.920 --> 0:14:59.000 set yet in this case. 0:14:59.480 --> 0:15:03.280 Okay, So moving on to the next big bad tech platform. 0:15:04.520 --> 0:15:08.960 Apparently the antire trust enforcers didn't want Amazon or Apple 0:15:09.040 --> 0:15:11.600 to feel left out, it looks like so they've both 0:15:11.640 --> 0:15:15.240 been accused of monopolistic conduct as well, but the cases 0:15:15.240 --> 0:15:18.400 are not as developed as the ones against Google and Facebook, right, 0:15:18.440 --> 0:15:20.520 I mean, let's start with Apple. What's going on there? 0:15:20.600 --> 0:15:21.200 Right now? 0:15:21.240 --> 0:15:23.920 This is the newest case, and I actually think one 0:15:23.960 --> 0:15:26.200 of the weakest to get the big tech platforms. It 0:15:26.280 --> 0:15:29.200 was just filed this past March after a really long 0:15:29.280 --> 0:15:32.800 investigation by the DOJ, and like the other suits, a 0:15:32.840 --> 0:15:36.240 number of states have joined it. And Apple's basically accused 0:15:36.280 --> 0:15:39.080 of engaging in a series of actions that profit the 0:15:39.120 --> 0:15:42.720 company but aren't useful or beneficial for customers, and are 0:15:42.720 --> 0:15:45.560 intended to make it hard to switch to an Android phone. 0:15:46.440 --> 0:15:48.480 There are several examples. I'm not going to run through 0:15:48.520 --> 0:15:51.080 all of them, but there are things like Apple refusing 0:15:51.240 --> 0:15:54.640 to allow super apps. Super apps are apps that provide 0:15:54.720 --> 0:15:58.080 broad functionality in a single app, and the DOJ claims 0:15:58.120 --> 0:16:01.200 that super apps would reduce the users dependence on the 0:16:01.200 --> 0:16:04.560 iPhone and the operating system and the app store because 0:16:04.600 --> 0:16:06.760 if they act as sort of a middleware, right, allow 0:16:06.840 --> 0:16:09.160 developers to kind of go around the operating system and 0:16:09.200 --> 0:16:11.520 the users to go around the operating system. And then 0:16:11.560 --> 0:16:15.240 one other example, because gaming is so popular, are cloud 0:16:15.360 --> 0:16:19.480 streaming game apps. So Apple allows games on the device obviously, 0:16:19.520 --> 0:16:22.320 but not the apps that allow you to play games 0:16:22.320 --> 0:16:25.840 stream through the cloud. So according to the DOJ, these 0:16:25.920 --> 0:16:28.800 kinds of apps would decrease the importance of expensive hardware 0:16:28.880 --> 0:16:31.480 for people who want to play high compute games, and 0:16:31.520 --> 0:16:33.320 it would allow a serious gamer to play on a 0:16:33.400 --> 0:16:36.920 less expensive smartphone. So again it's the idea of keeping 0:16:36.920 --> 0:16:39.880 people on the Apple phone and getting them not to 0:16:39.920 --> 0:16:43.200 switch those. As I said, those are just a few examples, 0:16:43.480 --> 0:16:45.760 So this is a really new case. We're just in 0:16:45.800 --> 0:16:48.560 the motion to dismiss stage. I think they're still a 0:16:48.600 --> 0:16:51.640 few years of litigation ahead of us. The briefing on 0:16:51.680 --> 0:16:55.000 the motion to dismiss won't be done till October you know, 0:16:55.000 --> 0:16:57.520 maybe we'll get in an opinion probably at some point 0:16:57.520 --> 0:17:00.040 next year, maybe in the first half. You know. So 0:17:00.120 --> 0:17:02.840 it's pretty easy to surpass, survive in motion to dismiss. 0:17:02.880 --> 0:17:06.400 There's a very low bar there, and so I would 0:17:06.400 --> 0:17:08.800 suspect the case will survivive. I don't know about its 0:17:08.840 --> 0:17:11.440 long term survival, but I think it'll least get into 0:17:11.480 --> 0:17:13.560 the thick of litigation. And we've got a couple of 0:17:13.600 --> 0:17:14.840 years ahead of us on that one. 0:17:15.560 --> 0:17:20.000 Okay, okay, another drawn out litigation. It sounds like, I mean, 0:17:20.200 --> 0:17:22.520 so the last but certainly not least you know, how 0:17:22.520 --> 0:17:26.280 about Amazon? It seems like Amazon is consumer friendly at 0:17:26.359 --> 0:17:29.400 least in terms of the convenience and involves for users 0:17:29.440 --> 0:17:32.600 and quick delivery. I know, I use Amazon Prime myself. 0:17:32.680 --> 0:17:34.919 I mean, you know, I think a lot of folks do. 0:17:35.440 --> 0:17:37.520 But what is it that Amazon is doing that the 0:17:37.640 --> 0:17:41.560 FTC particularly have views as a violation of monopolization laws. 0:17:41.920 --> 0:17:44.439 Yeah, you know, justin it's probably shameful how many Amazon 0:17:44.480 --> 0:17:46.040 boxes show up at my house. 0:17:46.240 --> 0:17:48.760 All the time, all the time. I can't keep track anymore. 0:17:48.880 --> 0:17:49.640 J I really wow. 0:17:50.880 --> 0:17:53.840 Right, so we are back to the Federal Trade Commission now, right, 0:17:53.920 --> 0:17:56.720 So this suit was brought by the Commission in September 0:17:56.760 --> 0:17:59.720 of twenty twenty three, like the others, joined by several 0:17:59.760 --> 0:18:03.240 state and in this case, the FTC is accusing Amazon 0:18:03.400 --> 0:18:07.280 of engaging in anti competitive conduct to maintain a monopoly 0:18:07.359 --> 0:18:09.760 in two different markets. One of them is the online 0:18:09.800 --> 0:18:13.120 superstore market that encompasses the e commerce business that's us 0:18:13.200 --> 0:18:15.960 buying products right. And then the other market is an 0:18:16.040 --> 0:18:19.800 online marketplace service market, and that's Amazon's third party business 0:18:20.080 --> 0:18:23.520 that connects sellers with online buyers, so allowing third party 0:18:23.560 --> 0:18:28.720 sellers to sell on its platform. So Amazon allegedly has 0:18:28.720 --> 0:18:32.760 illegally monopolized these markets through two distinct practices, and the 0:18:32.800 --> 0:18:36.000 first is what the FTC is calling anti discounting conduct. 0:18:36.200 --> 0:18:38.320 I kind of think of it as as price parity 0:18:38.400 --> 0:18:41.880 or most Favored Nation clause. But in the allegation here 0:18:41.920 --> 0:18:46.520 is that Amazon generally requires or pushes sellers to offer 0:18:46.560 --> 0:18:49.439 the lowest price on Amazon, and they can't offer the 0:18:49.440 --> 0:18:52.119 product on some other website for a lower price, but 0:18:52.160 --> 0:18:54.119 it might be less expensive for them to sell it 0:18:54.160 --> 0:18:58.280 on that other website. And what this does is artificially 0:18:58.280 --> 0:19:02.760 inflates prices on these other rival retailers. Then the second 0:19:02.880 --> 0:19:07.040 conduct that the FTC's targeting is that Amazon allegedly coerces 0:19:07.080 --> 0:19:10.040 sellers to use its fulfillment services for a fee, of course, 0:19:10.400 --> 0:19:12.679 if they want to be eligible for Amazon Prime, and 0:19:12.760 --> 0:19:15.800 Prime is obviously really valuable for companies that are selling 0:19:15.840 --> 0:19:18.840 products on the platform. Now, the really interesting thing to 0:19:18.880 --> 0:19:21.080 me about this case is that very similar claims were 0:19:21.080 --> 0:19:23.159 made against the company in the UK and the EU, 0:19:23.280 --> 0:19:24.920 and Amazon managed. 0:19:24.640 --> 0:19:26.680 To settle both of those cases, okay. 0:19:26.520 --> 0:19:29.200 Right, and it agreed to a bunch of behavioral changes. 0:19:29.960 --> 0:19:33.520 It'll give vendors equal placement alongside Amazon's own goods near 0:19:33.720 --> 0:19:36.639 what's called the buybox. That's a feature that's very beneficial 0:19:36.640 --> 0:19:39.600 for sellers. It also pledged that it wouldn't use rival 0:19:39.640 --> 0:19:42.679 sellers marketplace data to gain an unfair advantage when it 0:19:42.680 --> 0:19:45.440 sells its own products. And it's also going to allow 0:19:45.520 --> 0:19:48.760 third party businesses to negotiate the rates directly with other 0:19:48.840 --> 0:19:51.719 providers of Prime delivery services, so that way, essentially they 0:19:51.760 --> 0:19:54.800 don't have to use fulfillment by Amazon. So it seems 0:19:54.920 --> 0:19:56.879 like this case could settle at some point in the 0:19:56.880 --> 0:19:59.840 future because that's kind of a blueprint, and we'll know, 0:20:00.240 --> 0:20:02.160 you know, as time goes by, how things are working 0:20:02.200 --> 0:20:04.560 out with all of those commitments that Amazon made in 0:20:04.600 --> 0:20:07.080 Europe as the months go by, and I think there's 0:20:07.119 --> 0:20:10.920 particularly a potential for a settlement if the personnel of 0:20:11.000 --> 0:20:14.560 the FTC changes with a change in administration. But you know, 0:20:14.760 --> 0:20:17.080 like the DOJ's case against Apple, this one is in 0:20:17.160 --> 0:20:19.520 early stages. It's got a long way to go. It 0:20:19.560 --> 0:20:22.000