WEBVTT - SBF Testimony, Google Antitrust and AI 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:09.000 --> 0:00:12.680 The prosecution and defense have rested their cases in the 0:00:12.720 --> 0:00:16.919 trial of Sam bankman Fried, who's accused of masterminding a 0:00:17.040 --> 0:00:21.440 multi billion dollar fraud at FTX. Bankman Fried spent two 0:00:21.520 --> 0:00:24.680 and a half days on the witness stand, testimony that's 0:00:24.720 --> 0:00:28.080 crucial to his hopes of avoiding a conviction in decades 0:00:28.080 --> 0:00:31.560 behind bars. But during his last hours on the stand, 0:00:31.880 --> 0:00:35.839 he struggled through a withering cross examination by the prosecutor 0:00:36.200 --> 0:00:39.440 joining me is Bloomberg Legal reporter Bob van Vories, who 0:00:39.479 --> 0:00:43.320 was in the courtroom for his testimony, was SBF able 0:00:43.600 --> 0:00:48.080 to establish any part of his case for the jury. 0:00:48.440 --> 0:00:51.080 Well, he did get up on the stand. I think 0:00:51.159 --> 0:00:54.720 he was able to humanize himself in front of the jury. 0:00:54.840 --> 0:00:58.640 I think he was able to give his perspective on 0:00:58.720 --> 0:01:03.200 a lot of transacts that prosecutors had tried to make 0:01:03.280 --> 0:01:07.800 look very sinister. And I think he was successful in 0:01:08.080 --> 0:01:11.040 giving his own perspective to some of the things that 0:01:11.240 --> 0:01:14.399 went on at FTX and now need a research. But 0:01:14.959 --> 0:01:19.600 I do think that on cross examination today yesterday, he 0:01:19.880 --> 0:01:22.399 gave back some of the games he had made on 0:01:22.440 --> 0:01:27.600 the direct testimony just inevitably, the prosecution asked him the 0:01:27.640 --> 0:01:31.320 difficult questions and the questions where they had evidence that 0:01:31.520 --> 0:01:35.000 maybe countered or undercut some of the points that he 0:01:35.120 --> 0:01:37.840 was trying to make out direct. It's difficult to know 0:01:38.920 --> 0:01:42.800 whether the decision to go on the stand and submit 0:01:42.880 --> 0:01:45.320 himself to the host of questioning was a good one, 0:01:45.400 --> 0:01:49.360 whether he benefited more than that he suffered. But the 0:01:49.440 --> 0:01:53.080 question of whether he provided enough testimony to get over 0:01:53.120 --> 0:01:56.080 the hump of countering the story that was told by 0:01:56.120 --> 0:02:01.960 the three cooperating witnesses, the former executive at FTX and Alameda, 0:02:02.080 --> 0:02:05.160 it seems like he probably wasn't able to do that. 0:02:06.320 --> 0:02:08.320 So there was this picture of him in the opening 0:02:08.360 --> 0:02:13.600 statements where the prosecution painted him as a criminal mastermind 0:02:14.080 --> 0:02:19.520 and the defense painted him as a hapless executive. Which 0:02:19.560 --> 0:02:22.160 picture do you think fits him better at the end 0:02:22.200 --> 0:02:22.440 of the. 0:02:22.400 --> 0:02:25.959 Day, It's difficult to say, because there was a balance 0:02:26.040 --> 0:02:31.160 between the two. Certainly, he presented himself as somebody who 0:02:31.240 --> 0:02:35.520 was too busy running FTX to be able to pay 0:02:35.520 --> 0:02:40.040 attention to what was going on at Alamede Research. Prosecutors 0:02:40.040 --> 0:02:44.720 claimed that Alameda Research were billions of dollars of FTX 0:02:44.760 --> 0:02:48.320 customer money and used it for all kinds of things, 0:02:48.320 --> 0:02:53.200 including for expensive real estate for venture capital investments. However, 0:02:53.280 --> 0:02:59.359 that counter with is very sort of precise style of speaking, 0:02:59.680 --> 0:03:04.920 his understanding of many many aspects in great detail of 0:03:05.000 --> 0:03:08.120 his business, and so he had to sort of walk 0:03:08.120 --> 0:03:11.160 a tightrope of on the one hand, not knowing what 0:03:11.240 --> 0:03:13.560 was going on, but on the other hand seeming like 0:03:13.600 --> 0:03:16.639 somebody who generally did know everything that was going on. 0:03:17.480 --> 0:03:21.960 Did he make any really damaging admissions during cross He. 0:03:22.040 --> 0:03:26.640 Did admit to elements that the prosecutors already knew that 0:03:26.720 --> 0:03:31.080 the prosecutors were already able to prove with documents and 0:03:31.400 --> 0:03:35.280 through previous testimony. There were some things that would have 0:03:35.440 --> 0:03:38.480 been very hard for him to deny, and so he 0:03:38.520 --> 0:03:42.920 did it in those nights. But I think perhaps one 0:03:42.960 --> 0:03:46.120 of the most damaging aspects of his testimony was when 0:03:46.160 --> 0:03:50.800 he was asked the very difficult question, he would become evasive, 0:03:50.960 --> 0:03:55.280 he would become he would quarrel with the questioning. He 0:03:55.880 --> 0:04:00.680 I don't think was able to credibly answer questions that 0:04:00.720 --> 0:04:06.120 were directed towards the most damaging evidence against him in 0:04:06.200 --> 0:04:08.360 other people's testimonies. 0:04:07.680 --> 0:04:10.360 And when he testified about the people who flipped. Did 0:04:10.360 --> 0:04:13.520 he appear antagonistic, No, not at all. 0:04:13.560 --> 0:04:19.040 He testified fairly gently about his former friends and co 0:04:19.120 --> 0:04:24.119 executives at FTX and Alameda, particularly Caroline Ellison, his former 0:04:24.200 --> 0:04:28.599 girlfriend who he put in her job as CEO of Alameda. 0:04:28.839 --> 0:04:34.440 He was very understanding complementary in his direct testimony, but 0:04:34.520 --> 0:04:38.040 he certainly had to come around to blaming her for 0:04:38.800 --> 0:04:44.880 not heading Alameda's risk at the time when he wanted 0:04:44.880 --> 0:04:49.440 her to do that. Also for not being able to 0:04:49.680 --> 0:04:52.200 sort of keep tabs on the amount of money that 0:04:52.680 --> 0:04:57.480 Alameda was borrowing from FTX. So again, for him, it 0:04:57.560 --> 0:05:00.119 was kind of a type book. He needed to blame her. 0:05:00.720 --> 0:05:03.120 But she was somebody who I think presented a very 0:05:03.160 --> 0:05:06.880 sympathetic face to the jury, and I think they believed 0:05:06.880 --> 0:05:09.440 her testimony. So it was very difficult, I think, for 0:05:09.520 --> 0:05:12.000 as SBF to do both of those things at the 0:05:12.040 --> 0:05:12.520 same time. 0:05:13.000 --> 0:05:16.880 Were the jurors paying close attention to him at all times? 0:05:16.920 --> 0:05:21.240 Did they get lost in this cross examination that at 0:05:21.240 --> 0:05:22.760 times seemed painstaking? 0:05:23.320 --> 0:05:25.680 There were certainly times in the testimony when he was 0:05:25.760 --> 0:05:29.359 covering technical aspects and when he was talking about financial 0:05:29.440 --> 0:05:33.279 transactions that were maybe not quite as accessible to the 0:05:33.360 --> 0:05:36.320 jury that they seemed a little more disengaged, But when 0:05:36.360 --> 0:05:40.720 he was talking about the most important parts of his testimony, 0:05:41.000 --> 0:05:46.240 and particularly on cross examination by Assistant US Attorney Danielle Sassoon, 0:05:46.839 --> 0:05:50.960 she was very focused in her questions. She was just 0:05:51.120 --> 0:05:56.560 relentless in coming back at him and asking questions, following 0:05:56.640 --> 0:06:01.200 up on logical implications of what his testimony was. She 0:06:01.440 --> 0:06:04.920 had him, particularly this morning, really kind of had him 0:06:04.960 --> 0:06:09.479 on the ropes with her, you know, questioning over and over, 0:06:10.000 --> 0:06:12.400 and the jury was paying attention to that. 0:06:13.040 --> 0:06:17.880 Did he come across as sympathetic or friendly that one 0:06:18.000 --> 0:06:21.640 juror or two might think, I don't want to send 0:06:21.680 --> 0:06:22.559 this guy to jail. 0:06:23.120 --> 0:06:26.479 I think for sure he made sense for him to 0:06:26.520 --> 0:06:29.159 take the stand, you know, being able to connect to 0:06:30.320 --> 0:06:33.480 the jury at least on some level. Before he took 0:06:33.480 --> 0:06:36.560 the stand on Friday, they had not heard a word 0:06:36.560 --> 0:06:39.560 from him. They'd just seen him sitting at the defense table, 0:06:39.680 --> 0:06:42.760 watching just like they were watching everything that was going on. 0:06:43.080 --> 0:06:45.040 So I think he was able to sort of present 0:06:45.160 --> 0:06:49.440 himself sympathetically to some extent, But I'm not sure he 0:06:49.520 --> 0:06:53.799 was able to break through and counter the prosecution case, 0:06:54.040 --> 0:06:55.880 which is what he needs to do to be able 0:06:55.920 --> 0:06:56.800 to be acquitted here. 0:06:57.279 --> 0:06:59.400 That question will be in the hands of the jury 0:06:59.480 --> 0:07:04.479 probably by Thursday, with closing arguments tomorrow. Thanks so much, 0:07:04.520 --> 0:07:08.240 Bob for that look from inside the courtroom. That's Bloomberg 0:07:08.360 --> 0:07:12.320 Legal reporter Bob van Voris. It's the biggest US anti 0:07:12.320 --> 0:07:16.760 trust case since the Justice Department went after Microsoft twenty 0:07:16.800 --> 0:07:20.400 five years ago. The government has spent six weeks presenting 0:07:20.480 --> 0:07:24.200 evidence in its case, contending that Google pays off tech 0:07:24.240 --> 0:07:29.000 companies to lock out rival search engines to smother competition 0:07:29.120 --> 0:07:32.640 and innovation. But now it's Google's turn, and the defense 0:07:32.680 --> 0:07:37.320 put on its star witness on Monday, Google CEO Sundhor Pichai, 0:07:37.720 --> 0:07:41.160 who defended his company's practice of paying Apple and other 0:07:41.280 --> 0:07:44.880 tech companies to make Google the default search engine on 0:07:45.000 --> 0:07:48.720 their devices, saying the intent was to make the user 0:07:48.800 --> 0:07:53.679 experience seamless and easy. Joining me is anti trust expert 0:07:53.720 --> 0:07:57.880 Harry First, a professor at NYU Law School. The government 0:07:58.080 --> 0:08:02.160 spent so much time zetting its case, do you think 0:08:02.240 --> 0:08:07.800 they drew a strong enough line between Google's actions and 0:08:08.600 --> 0:08:10.360 measurable harm to consumers? 0:08:11.120 --> 0:08:16.360 Well, that's a great question, because it isn't clear as 0:08:16.560 --> 0:08:20.480 you are saying it. What that's through line is to consumers. 0:08:20.560 --> 0:08:22.800 And one of the problems in the tech cases are, 0:08:23.280 --> 0:08:25.720 by and large, a lot of consumers, like these companies, 0:08:25.960 --> 0:08:29.920 you know, become reliant on Google for searches and you know, 0:08:30.240 --> 0:08:33.160 just use it all the time. It's become a verb. 0:08:33.760 --> 0:08:38.680 So that's a hard task and legally not necessarily one 0:08:38.720 --> 0:08:41.760 the government has to carry. So what the government has 0:08:41.800 --> 0:08:47.560 to carry is that Google has improperly excluded competition, that 0:08:47.640 --> 0:08:51.640 it has a monopoly and has excluded competition and thereby 0:08:51.720 --> 0:08:55.480 maintained it and excluded it by improper means rather than 0:08:55.480 --> 0:08:59.480 by competition on the merits. So that's really the task. 0:08:59.559 --> 0:09:02.440 The task isn't to show that we get bad searches 0:09:02.640 --> 0:09:06.160 or that our search results are litered with ads or 0:09:06.200 --> 0:09:10.320 any of those things. It's really to show that Google 0:09:10.360 --> 0:09:14.720 has made a strong effort to sort of cement itself 0:09:15.120 --> 0:09:17.760 in as the leader. You know, all paths are going 0:09:17.800 --> 0:09:21.040 to lead to Google, and that it's done that through 0:09:21.120 --> 0:09:25.880 any competitive means, rather than by competing with having just 0:09:25.920 --> 0:09:27.120 simply the best product. 0:09:27.760 --> 0:09:30.320 Do you think the government has gotten close to that? 0:09:31.480 --> 0:09:34.640 Well, Looming large in all of this is the amount 0:09:34.679 --> 0:09:39.280 of money that Google paid for these defaults, and you know, 0:09:39.520 --> 0:09:42.200 sort of the easy argument, or the direct argument is, 0:09:42.280 --> 0:09:45.319 if you're so good, why did you pay twenty six 0:09:45.440 --> 0:09:49.680 billion dollars to ensure that consumers use your product? 0:09:49.679 --> 0:09:49.839 Why? 0:09:49.920 --> 0:09:51.840 I just put it in front of them and consumers 0:09:51.880 --> 0:09:55.000 will say, hey, yeah, I like that one. And you know, 0:09:55.400 --> 0:09:57.640 what are you getting for your twenty six billion dollars? 0:09:57.880 --> 0:10:00.959 And I think that's that's a big h for Google 0:10:01.520 --> 0:10:05.240 and big plus I think for the government. You know, 0:10:05.520 --> 0:10:08.880 companies do rational things. They don't throw money away for nothing. 0:10:09.320 --> 0:10:11.559 So what do they think they're getting, Well, something they 0:10:11.559 --> 0:10:14.839 can't get through competition on the merits, which is cementing 0:10:14.880 --> 0:10:20.560 in that loyalty. Because defaults are really important in consumer behavior. 0:10:20.800 --> 0:10:24.720 Does it seem as if Google has learned from the 0:10:24.800 --> 0:10:27.280 lessons of the Microsoft case. 0:10:28.920 --> 0:10:34.960 That is a question tinged with irony. So Google started 0:10:35.000 --> 0:10:37.320 out by saying, you know, we're going to be the 0:10:37.360 --> 0:10:41.240 good company, We're not going to be Microsoft. And in fact, 0:10:41.400 --> 0:10:45.839 they took advantage of the remedy decree in the Microsoft 0:10:45.920 --> 0:10:52.199 case to make sure that as Windows was being updated 0:10:52.240 --> 0:10:56.760 and new versions were in that Microsoft Search engine, which 0:10:56.840 --> 0:10:59.480 was not called being at the time, would not be 0:10:59.559 --> 0:11:03.680 cement in is the default in Windows that consumers would 0:11:03.720 --> 0:11:07.960 be able to get to Google and choose it. So 0:11:08.600 --> 0:11:11.880 they were concerned to be sure, and one point there 0:11:12.000 --> 0:11:15.160 was some interaction with District Court that was, you know, 0:11:15.520 --> 0:11:20.920 supervising to create to make sure that Microsoft didn't use 0:11:21.280 --> 0:11:25.880 or build in a default that would exclude Google. So 0:11:26.280 --> 0:11:29.640 they understand the value, and they understand competition, and they 0:11:29.640 --> 0:11:33.000 wanted to get their product in front of consumers to use. 0:11:33.440 --> 0:11:37.920 But as time went on, as happens, you know, monopolies 0:11:39.200 --> 0:11:44.080 a heady thing. So having cemented their position, they wanted 0:11:44.120 --> 0:11:46.880 to keep it and keep it by whatever means. 0:11:47.160 --> 0:11:51.640 So here we are something that they might have learned 0:11:51.679 --> 0:11:55.280 from the Microsoft case. People are pointing to the importance 0:11:55.320 --> 0:11:58.800 of not having a paper trail. The Justice Department has 0:11:58.880 --> 0:12:05.240 implied that Google automatically deleted messages for that reason. How 0:12:05.280 --> 0:12:08.440 important do you think that is to the judge who's 0:12:08.480 --> 0:12:09.840 going to design this case. 0:12:10.320 --> 0:12:12.760 You know, I think in the end this isn't going 0:12:12.840 --> 0:12:15.200 to sway the judge particularly one way or the other. 0:12:15.679 --> 0:12:18.000 I think, you know, the governments tried to say that, 0:12:18.559 --> 0:12:22.000 you know, particularly early on, Google was very concerned about 0:12:22.360 --> 0:12:27.200 the language used in emails and you know, not saying 0:12:27.320 --> 0:12:31.240 things like we have to cut off their air supply, 0:12:31.600 --> 0:12:35.200 like one of the Microsoft people allegedly did you know 0:12:35.280 --> 0:12:38.600 with regard to Netscape, it's nascent competitor at the time, 0:12:39.040 --> 0:12:41.880 so they were aware, and you know, maybe this was 0:12:41.920 --> 0:12:45.200 done intentionally, maybe it wasn't. Who knows that this doesn't 0:12:45.200 --> 0:12:48.040 look great. I think in the end this is not 0:12:48.160 --> 0:12:53.199 going to be determinative. I think there are important legal 0:12:53.240 --> 0:12:57.720 issues that are going to be more important for this judge. 0:12:58.400 --> 0:13:01.480 One disagreement in the case has been over a search 0:13:01.559 --> 0:13:06.239 engine's quote scale, the amount of data collects from websites 0:13:06.280 --> 0:13:09.720 and users. So explain explain the scale argument. 0:13:10.600 --> 0:13:13.160 Well, this is a very interesting argument, I think is 0:13:13.200 --> 0:13:15.760 one of the important arguments in the case. And in 0:13:15.800 --> 0:13:18.960 some ways it cuts two ways. So the government says, 0:13:19.080 --> 0:13:22.120 you know, so why is it important for Google to 0:13:22.360 --> 0:13:24.560 keep it as a default and to you know, have 0:13:24.679 --> 0:13:27.400 all paths lead to Google. Well, obviously it's important for 0:13:27.520 --> 0:13:31.079 revenue and you know, for their advertising revenue. But more important, 0:13:31.320 --> 0:13:34.480 the more searches they get, the more they build up 0:13:34.520 --> 0:13:39.080 their base of searches of information about people, about things, 0:13:39.120 --> 0:13:42.800 about all sorts of things, and that this enables them 0:13:42.840 --> 0:13:48.760 to constantly update the search function and makes the search 0:13:48.880 --> 0:13:53.200 engine in some ways better and better. And what they're 0:13:53.240 --> 0:13:56.640 trying to do basically is make sure that other search 0:13:56.679 --> 0:14:01.079 engines never get that scale, never get to be of 0:14:01.120 --> 0:14:05.120 a size where where they can have the base of 0:14:05.240 --> 0:14:09.959 data that will enable them to provide searches of equality 0:14:10.160 --> 0:14:15.680 that equal Google. So it explains Google's motivation for wanting 0:14:15.720 --> 0:14:19.720 to keep being small or other competitors small. On the 0:14:19.720 --> 0:14:22.600 other hand, it does play into the notion that bigger 0:14:22.840 --> 0:14:27.360 maybe better. And you know, how far does the scale go? 0:14:28.000 --> 0:14:30.880 Would Google be even better if it had all the 0:14:31.080 --> 0:14:34.320 data in the world and there were no other search engines. 0:14:34.800 --> 0:14:39.880 So the government doesn't want to quite say that. Now. Google, 0:14:39.920 --> 0:14:42.680 on the other hand, doesn't want to quite say that 0:14:43.640 --> 0:14:47.240 scale is the reason why they're so good, So they 0:14:47.280 --> 0:14:50.720 want to downplay the scale argument a little bit and 0:14:50.880 --> 0:14:53.000 say no, no, no, no, we're not trying to deprive them 0:14:53.000 --> 0:14:55.800 of scale. The reason why we're so good is what 0:14:55.840 --> 0:14:59.479 we do with the data. It's not just having it. 0:14:59.480 --> 0:15:02.560 It's all the money we put into the engineering of 0:15:02.600 --> 0:15:05.360 figuring out the best algorithms, the best way to use 0:15:05.400 --> 0:15:08.880 the data. So it isn't just a question of scale, 0:15:09.280 --> 0:15:12.200 that's not just this thing that keeps us better. So 0:15:12.760 --> 0:15:15.160 it's sort of an argument that's fun in a way. 0:15:15.200 --> 0:15:18.480 Google could use the scale argument to say, Aha, we're 0:15:18.480 --> 0:15:21.760 better off with monopoly. But that's a hard legal argument 0:15:21.840 --> 0:15:24.280 to make. There's room in the law for saying that, 0:15:24.320 --> 0:15:27.120 by the way, but it's not the best argument to 0:15:27.120 --> 0:15:30.400 put in front of a judge. And the government doesn't 0:15:30.400 --> 0:15:33.480 want to say scale is so important that we're better 0:15:33.520 --> 0:15:37.680 off with a monopoly. So it's an argument. And here's 0:15:38.080 --> 0:15:42.800 where I'm not quite sure the testimony shows us what's true. 0:15:43.320 --> 0:15:47.640 It's not clear where the scale economies, and so I'm 0:15:47.640 --> 0:15:50.600 not sure. Maybe Google doesn't know. And this has been 0:15:50.600 --> 0:15:54.320 true in other cases Facebook, for example, you know how 0:15:54.320 --> 0:15:57.400 big does Facebook have to be? Amazon? Any of these 0:15:57.600 --> 0:16:01.880 companies that rely on data are where points where you know, 0:16:02.000 --> 0:16:05.760 economies of scale just diminished and getting bigger doesn't necessarily 0:16:05.800 --> 0:16:09.040 make you better. In manufacturing, there are you know, that's 0:16:09.080 --> 0:16:14.400 a commonplace in manufacturing, But for data not so clear. 0:16:15.480 --> 0:16:20.720 Some internal Google emails show that executives were mindful of 0:16:20.720 --> 0:16:26.200 avoiding keywords like market share in their records. Is this 0:16:26.280 --> 0:16:29.720 case about market share or does scale take the place 0:16:29.720 --> 0:16:30.640 of market share. 0:16:31.680 --> 0:16:35.200 Well, the answer is not either. 0:16:35.080 --> 0:16:37.640 Or so I'm wrong on both counts. 0:16:38.240 --> 0:16:41.320 No, you're right on both camps. It is about market share. 0:16:41.360 --> 0:16:44.240 So for the law, you have to show two things 0:16:44.280 --> 0:16:47.840 to violate Section two of the Shermanac, which is the monopoly. 0:16:47.920 --> 0:16:50.440 Section one is that you are a monopoly, that you 0:16:50.520 --> 0:16:54.200 have monopoly power in a relevant market. That's the language. 0:16:54.240 --> 0:16:58.520 So that's market share, not only market share, but that's 0:16:58.560 --> 0:17:02.840 a key determinant of whether you're a monopolist. So government 0:17:02.880 --> 0:17:07.000 exhibits show Google with eighty nine to ninety some percent 0:17:07.200 --> 0:17:11.400 of the market, being with three percent, So market share 0:17:11.480 --> 0:17:15.280 is the first indication that you have monopoly power. You 0:17:15.280 --> 0:17:18.240 have most of the market. So market share is important. 0:17:18.240 --> 0:17:22.040 And I can understand if you were counseling you know, Google, 0:17:22.080 --> 0:17:25.080 you would say, look, don't say great, we have our 0:17:25.160 --> 0:17:28.040 share is as high as it can get. You know, 0:17:28.119 --> 0:17:30.959 it's just doesn't sound good. But of course, in the end, 0:17:31.000 --> 0:17:35.680 this doesn't depend on you know, some emails claiming it. 0:17:35.680 --> 0:17:39.240 It depends on the data. And you can find you know, 0:17:39.280 --> 0:17:42.840 the exhibits that the government has put together they're online, 0:17:42.920 --> 0:17:46.760 which show very high market shairs based on data put 0:17:46.800 --> 0:17:50.320 together by you know, other companies like stat Counter. So 0:17:50.840 --> 0:17:53.280 that is the first thing. Market share scale goes to 0:17:53.920 --> 0:17:58.439 this strategy question of you know, why they're trying to 0:17:58.760 --> 0:18:02.159 what they're going to gain by keeping others small, you know, 0:18:02.200 --> 0:18:05.040 other than a lot of money, which is important, but 0:18:05.440 --> 0:18:08.040 you know this competitive edge that is going to be 0:18:08.080 --> 0:18:09.000 hard to overcome. 0:18:09.840 --> 0:18:15.399 Interesting is the focus on artificial intelligence. The Department of 0:18:15.600 --> 0:18:20.119 Justice says that Google was way ahead in generative AI 0:18:20.280 --> 0:18:24.480 and chose not to release the technology sooner because of 0:18:24.560 --> 0:18:27.159 fear of losing its monopoly on search. 0:18:28.640 --> 0:18:31.960 I haven't seen that as dominant in argument. That's an 0:18:32.000 --> 0:18:36.280 interesting argument, hard to you know, it is an argument 0:18:36.359 --> 0:18:40.480 about monopolist that they control the pace of innovation and 0:18:40.560 --> 0:18:45.840 they don't want their current products cannibalized by new products 0:18:45.880 --> 0:18:49.880 that will only you know, take away market share and 0:18:49.920 --> 0:18:53.280 not help them. So in one sense, that could very 0:18:53.280 --> 0:18:57.600 well be AI. And you know, major economists have argued 0:18:57.920 --> 0:19:02.240 this point in terms of the ability and willingness of 0:19:02.280 --> 0:19:06.720 monopolis to innovate. Now at this point, you know, there 0:19:06.760 --> 0:19:09.160 may be other explanations for why they would be cautious 0:19:09.160 --> 0:19:13.040 with AI. And everybody seems to be jumping into the 0:19:13.119 --> 0:19:15.840 AI race, and they may want to turn it the 0:19:15.880 --> 0:19:19.520 other way. You know, don't worry so much about Google 0:19:19.560 --> 0:19:24.840 because you know, Being is featuring chat, GPT, and they've 0:19:24.880 --> 0:19:28.840 made this big investment in artificial intelligence, and you know 0:19:28.960 --> 0:19:31.199 they're going to have searches are going to be fantastic. 0:19:31.600 --> 0:19:35.120 You know that competition is just coming tomorrow. 0:19:35.760 --> 0:19:39.520 A contrast between this trial and the Microsoft trial seems 0:19:39.520 --> 0:19:43.640 to be the testimony of the CEOs. Apparently, Sundar Prashai 0:19:43.840 --> 0:19:48.520 took the stand and was cool, calm and collected, unlike 0:19:48.560 --> 0:19:51.160 what we saw from Bill Gates so many years ago. 0:19:51.680 --> 0:19:55.760 He talked about that search deal with Apple and said 0:19:56.560 --> 0:19:59.720 we fiercely compete on so many products, and that the 0:19:59.760 --> 0:20:02.679 meta when they decided that was tense. At times, we 0:20:02.760 --> 0:20:06.720 continue to have moments of tension between the companies. Is 0:20:06.760 --> 0:20:08.000 that enough? I don't know. 0:20:08.800 --> 0:20:13.200 Well, nice try, Yeah, I'm tempted to. You know, the 0:20:13.200 --> 0:20:17.400 old point when the elephants danced, the fleas get crushed. 0:20:17.880 --> 0:20:21.640 So I don't know. Yeah, I'm sure that they are 0:20:21.680 --> 0:20:26.240 in some way frenemies, as the word might be. These platforms, 0:20:26.800 --> 0:20:31.040 major platforms have points of competition and points of cooperation, 0:20:31.520 --> 0:20:34.400 But in some sense that doesn't matter all that much. 0:20:34.520 --> 0:20:38.639 What matters is this point of cooperation on search and 0:20:38.680 --> 0:20:43.800 the payments, which you know also acted to dissuade Apple 0:20:44.640 --> 0:20:48.280 from developing its own search engine. So you know, they 0:20:48.320 --> 0:20:50.639 could cooperate a lot of things, which isn't necessarily the 0:20:50.640 --> 0:20:53.280 greatest thing in the world or competing a lot of things, 0:20:53.720 --> 0:20:56.080 but the focus here is on search. 0:20:56.760 --> 0:20:58.879 I saw this analysis and I want to pass it 0:20:58.920 --> 0:21:02.199 by you that much of the Justice Department's case is 0:21:02.280 --> 0:21:06.680 based on documents, emails, and other records from Google itself, 0:21:07.040 --> 0:21:11.520 while Google's case so far seems to be executives testifying 0:21:11.600 --> 0:21:14.400 and contesting the conclusions from those records. 0:21:15.040 --> 0:21:18.520 So they'll have their experts. You know, they're economists. They've 0:21:18.520 --> 0:21:21.680 got a computer scientist on now, you know, they'll have that. 0:21:22.280 --> 0:21:25.919 But sort of a standard way these trials seem to 0:21:25.960 --> 0:21:30.280 be going in recent years is the government has experts 0:21:30.359 --> 0:21:35.080 talking about the industry, how persuasive or not. They're experts 0:21:35.119 --> 0:21:39.359 talking about the industry, and sometimes industry experts, but that's 0:21:39.400 --> 0:21:44.119 often counterweighted by people from the companies themselves. And this 0:21:44.240 --> 0:21:47.040 is often the case in mergers. For example, you know, 0:21:47.240 --> 0:21:51.360 high level executives who are very persuasive and come in 0:21:51.600 --> 0:21:55.320 and do often convince judges that what they've done is 0:21:55.520 --> 0:21:59.199 you know, rational business behavior, you know, done not to 0:21:59.280 --> 0:22:04.040 exclude compet but to advance competition. And the people who 0:22:04.640 --> 0:22:09.520 rise in these companies are often very skilled, you know, communicators. 0:22:09.720 --> 0:22:15.960 So in the Microsoft activision case, that merger case, you know, 0:22:15.960 --> 0:22:20.040 there were high level Microsoft executives testifying. Now they're also 0:22:20.080 --> 0:22:23.119 executives testifying for the government here, so it makes an 0:22:23.600 --> 0:22:27.280 bit of an interesting contrast to most merger cases. So 0:22:27.359 --> 0:22:31.440 you did have Microsoft testifying on behalf of the government. 0:22:32.119 --> 0:22:35.840 And but Shaw seemed to be one of those good communicators. 0:22:36.440 --> 0:22:40.000 He started his testimony talking about his childhood in India, 0:22:40.440 --> 0:22:45.240 then studying at Stanford University and joining Google in two 0:22:45.240 --> 0:22:48.680 thousand and four as a product manager for Google Toolbar. 0:22:49.880 --> 0:22:52.280 Yeah, well, it would have been better for the government 0:22:52.320 --> 0:22:54.399 if they had a good villain. You know, these stories 0:22:54.440 --> 0:22:56.560 are always better with villains. So Bill Gates was a 0:22:56.560 --> 0:23:00.000 great villain, and Mark Zuckerberg would be a great villain. 0:23:00.560 --> 0:23:05.320 But you know, for Google, no villains really of that sense. 0:23:05.400 --> 0:23:09.840 So yeah, the government doesn't have that part of the narrative. 0:23:10.200 --> 0:23:13.679 Is it too soon to tell which side has the 0:23:13.680 --> 0:23:14.720 better case? So far? 0:23:15.560 --> 0:23:18.400 Hard to say. I think there were issues that the 0:23:18.520 --> 0:23:24.720 judge wrote about. There was a motion made by Google 0:23:24.880 --> 0:23:26.800 and I think by the government to end the case 0:23:26.840 --> 0:23:30.440 before trial, motion for summary judgment, and the judge addressed 0:23:30.440 --> 0:23:33.040 some of the issues that he felt were in contention 0:23:33.440 --> 0:23:36.600 at trial. And these are legal issues, so, you know, 0:23:36.640 --> 0:23:40.040 I think it remains to be seen how the judge 0:23:40.080 --> 0:23:42.560 is going to decide that, and he's pushed as I 0:23:42.600 --> 0:23:45.800 read the reports of the trial, you know, push some 0:23:45.880 --> 0:23:50.800 of the witnesses on these issues, particularly whether it really 0:23:50.840 --> 0:23:54.160 makes a difference. Would have made a difference in market shares, 0:23:54.280 --> 0:23:58.159 in Google's position in the market, or in beings if 0:23:58.200 --> 0:24:01.960 these defaults weren't there, And depending on the legal standard 0:24:02.040 --> 0:24:05.399 that he applies, this could be a very important issue. 0:24:05.440 --> 0:24:07.920 And it's not a behavioral issue so much as a 0:24:08.119 --> 0:24:11.760 well but for these defaults, what would the world look like? 0:24:12.119 --> 0:24:14.600 I believe the judge is going to make his decision 0:24:14.800 --> 0:24:18.720 in December, so we'll find out all this soon enough. 0:24:18.960 --> 0:24:22.240 Thanks so much, Harry. That's Professor Harry First of NYU 0:24:22.320 --> 0:24:27.320 Law School. Coming up next, the Executive Order on artificial intelligence. 0:24:27.720 --> 0:24:28.639 This is Bloomberg. 0:24:29.400 --> 0:24:31.720 We're going to see more technological change in the next 0:24:31.760 --> 0:24:34.720 ten maybe next five years, and we've seen in the 0:24:34.840 --> 0:24:39.160 last fifty years, and that's a fact. As the most 0:24:39.160 --> 0:24:44.240 consequential technology are our time, artificial intelligence is accelerating that change. 0:24:44.280 --> 0:24:46.160 It's going to accelerate at warp speed. 0:24:46.640 --> 0:24:50.399 On Monday, President Joe Biden signed an executive Order on 0:24:50.600 --> 0:24:54.399 artificial Intelligence that he says will make the development of 0:24:54.440 --> 0:24:59.399 AI safer for Americans. Among other things, it establishes standards 0:24:59.400 --> 0:25:04.040 for secure in privacy protections and requires developers to safety 0:25:04.080 --> 0:25:07.800 test new models. Joining me is Reggie Babin, Senior counsel 0:25:07.840 --> 0:25:13.040 at Ach and Gump. How important is this executive order 0:25:13.080 --> 0:25:17.520 in light of the skyrocketing use of AI in recent months. 0:25:18.040 --> 0:25:20.920 That's a good opening question. I would say it is 0:25:21.640 --> 0:25:25.480 significant for two reasons. At a minimum, it serves as 0:25:25.600 --> 0:25:29.440 a clear signal to the world of what the President 0:25:29.480 --> 0:25:33.280 and this administration's priorities are as it relates to artificial intelligence. 0:25:33.320 --> 0:25:36.800 There's been a bit of a vacuum of sorts on 0:25:37.359 --> 0:25:39.680