WEBVTT - Microsoft Rises after 2Q Beat, the DOJ Sues Google 0:00:14.160 --> 0:00:17.200 I'm Caroline Highe at Broomberg Studio right here in San Francisco, 0:00:17.239 --> 0:00:19.520 and me Lovelow, also in San Francisco. This is Blombo 0:00:19.600 --> 0:00:22.960 Technology and Caroline Tech. Earnings are here Texas Instruments. Microsoft. 0:00:23.079 --> 0:00:25.680 The market treading water until those numbers hit, and this 0:00:25.760 --> 0:00:27.639 is why we're in San Francisco for this week. This 0:00:27.720 --> 0:00:29.960 is why we look at what is already some optimism, 0:00:30.040 --> 0:00:32.760 some hope, as a futures market already signaling it. Let's 0:00:32.800 --> 0:00:36.480 talk about all those headlines Microsoft rising after profit Cloud 0:00:36.560 --> 0:00:39.840 revenues they've beat estimates. Plus the Justice Department in eight 0:00:39.920 --> 0:00:43.239 states are suing to break up Google's a business, and 0:00:43.320 --> 0:00:46.920 senators blast ticket masters CEO over soaring ticket prices and 0:00:46.920 --> 0:00:50.839 a terrible customer experience. Let's flip it on the Microsoft, 0:00:50.840 --> 0:00:53.120 because this is the key name. The first megacat to 0:00:53.280 --> 0:00:56.760 report profit was the focus strong fiscal second quarter at 0:00:56.760 --> 0:00:59.480 EPs at two dollars thirty two cents to share above 0:00:59.520 --> 0:01:01.920 and list expectations. The other way of looking at it 0:01:01.960 --> 0:01:04.399 is that actually EPs did not drop as much from 0:01:04.400 --> 0:01:06.480 the same period a year ago as the street had 0:01:06.480 --> 0:01:08.840 been looking for the broadest story. If you look into 0:01:08.840 --> 0:01:11.360 my Bloomberg terminal. When we talk about that bottom line 0:01:11.560 --> 0:01:14.479 was the performance in strength in as your cloud. How 0:01:14.480 --> 0:01:17.520 often has that unit, Carol been in the headlines of 0:01:17.600 --> 0:01:19.280 late And that's what we'll go straight to first with 0:01:19.360 --> 0:01:23.200 Jeffreys analyst Brent Hill, who has a by rating on Microsoft. 0:01:23.600 --> 0:01:26.000 Welcome to the show. Brent. Simple question to start with 0:01:26.160 --> 0:01:28.760 this is once again as you're saving the day, isn't it? Yes? 0:01:28.920 --> 0:01:33.000 As here's one component. Office was also very good. I 0:01:33.040 --> 0:01:39.000 think the balance of growth and profitability is keeping Microsoft alive. Remember, 0:01:39.040 --> 0:01:42.160 going into the print, everyone was super fearful that Nidela 0:01:42.760 --> 0:01:45.480 had shared, you know, a textra up for two years. 0:01:45.560 --> 0:01:48.520 The US was going to get worse. So they certainly 0:01:48.600 --> 0:01:52.120 brought expectations down in front of the print, but delivered 0:01:52.520 --> 0:01:55.080 what was in okay quarter. No one was going to 0:01:55.160 --> 0:01:58.560 do backfloods over these numbers. There's no question technology spence 0:01:59.120 --> 0:02:01.680 slowing in the get worse in the back. After the year, 0:02:01.720 --> 0:02:04.640 they have another quarter of to tough comps, so you know, 0:02:04.760 --> 0:02:07.840 let's let's let's not not break up the champagne glasses 0:02:08.240 --> 0:02:12.440 at this point. But it relative to the fear way 0:02:12.480 --> 0:02:15.600 better than expected. Yeah. I think that's an interesting point. 0:02:15.639 --> 0:02:17.840 I think when we look at asual the business a 0:02:17.880 --> 0:02:21.000 hundred basis points better than than guided, then you kind 0:02:21.000 --> 0:02:24.080 of think about this idea that I think EPs drop 0:02:24.120 --> 0:02:25.799 six and a half percent. The street was looking for 0:02:25.840 --> 0:02:28.760 a seven point five pc drop year on year. When 0:02:28.760 --> 0:02:30.480 we look forward to the rest of the year, what 0:02:30.680 --> 0:02:33.720 is this story for Microsoft with this broader economy. Is 0:02:33.720 --> 0:02:37.200 it going to have to rely on its cloud business? Yeah, 0:02:37.240 --> 0:02:39.080 I mean it's all about the cloud. I mean, there's 0:02:39.080 --> 0:02:42.359 no other story here. Uh, it is the cloud. Um. 0:02:42.400 --> 0:02:44.920 I think as we go deeper into the year, I 0:02:44.919 --> 0:02:48.639 think this concept of I T budgets are shrinking? Can 0:02:48.680 --> 0:02:52.760 Microsoft do more with less? And what we're hearing in 0:02:52.800 --> 0:02:55.040 a lot of the interviews is ce I O s 0:02:55.040 --> 0:02:59.799 are continuing to consolidate their spend onto Microsoft. Microsoft has 0:02:59.800 --> 0:03:03.880 been vicious about contract renewals. They don't budge when when 0:03:03.919 --> 0:03:06.440 ce IO is trying to renew. So relative to a 0:03:06.760 --> 0:03:11.360 overall tech environment that is slowing into can Microsoft is 0:03:11.400 --> 0:03:15.400 going to do relatively better in that environment? And and 0:03:15.440 --> 0:03:19.120 it's about consolidation in taking spend from other vendors. So 0:03:19.240 --> 0:03:21.639 I think other vendors are in a way worse position. 0:03:22.080 --> 0:03:26.560 The portfolio, the durability of the revenue. The quality of 0:03:26.560 --> 0:03:29.800 this management team should be able to cut through this. 0:03:29.960 --> 0:03:33.000 But I think really investors are trying to ask, you know, 0:03:33.040 --> 0:03:34.760 what do I pay for the stock that's got ten 0:03:34.800 --> 0:03:37.760 dollars of earning power trains out of mid twenty multiple. 0:03:37.840 --> 0:03:40.840 So it's not exactly cheap, it's not expensive, it's just 0:03:40.920 --> 0:03:42.640 kind of right in the middle. So I think that's 0:03:42.640 --> 0:03:46.000 a concern. Okay, so your price target, of course, Brend, 0:03:46.280 --> 0:03:48.840 is to eighty. What takes us that? And what do 0:03:48.840 --> 0:03:50.280 you want to hear on the coolt I think we 0:03:50.320 --> 0:03:53.880 continue on to hear about they haven't guided in this release, 0:03:53.880 --> 0:03:57.080 so we need to hear guidance. Uh and and that 0:03:57.600 --> 0:04:00.560 are things you know. Nidella said this that things may 0:04:00.560 --> 0:04:03.160 get worse inside the US, what's happening in the US 0:04:03.240 --> 0:04:06.600 market and the rest of the world. Ultimately, can they 0:04:06.600 --> 0:04:10.480 commit to double digit growth? They've talked about a framework 0:04:10.520 --> 0:04:13.760 of having double digit growth with margin improvement. Can they 0:04:13.800 --> 0:04:17.240 hold that? And so I think overall everyone is really 0:04:17.279 --> 0:04:20.599 just all eyes on what's going to actually happen with 0:04:20.960 --> 0:04:24.839 with overall growth for the rest of the year. Brent, 0:04:25.600 --> 0:04:28.040 You'll be sticking with us, Brent, Phille just hold on 0:04:28.040 --> 0:04:30.600 one moment, because we've got another key technology news of 0:04:30.640 --> 0:04:33.520 the day, we've got to digest Justice Department eight States 0:04:33.680 --> 0:04:37.040 as well also in Google over the search giants ad dominance. 0:04:37.240 --> 0:04:39.680 Blomberg's Emily bern Broum is with us in d C. 0:04:40.279 --> 0:04:44.320 Having the details for US, Emily taken away. What overall 0:04:44.480 --> 0:04:49.200 is the argument coming from the United States against Google? Right? 0:04:49.320 --> 0:04:53.000 So today the Justice Department in eight US States announced 0:04:53.040 --> 0:04:56.920 their long awaited case against Google. UM. They're alleging that 0:04:57.000 --> 0:05:01.599 Google has abused its dominance in online marketing. UM that 0:05:02.000 --> 0:05:06.320 for every one dollar that advertisers spend on its litany 0:05:06.400 --> 0:05:10.599 of online advertising tools, UM, Google takes thirty cents, So 0:05:10.720 --> 0:05:15.360 essentially that they have UM, they've harmed competition online, They've 0:05:15.400 --> 0:05:19.320 made life harder and were expensive for advertisers. UM. And 0:05:19.480 --> 0:05:21.840 this is the second case that the Justice farm it 0:05:21.920 --> 0:05:25.600 has brought against Google. UM and some experts say this 0:05:25.680 --> 0:05:29.039 is UM potentially a more winning case. UM. And I 0:05:29.120 --> 0:05:31.880 know everyone in the tech industry is watching really closely. 0:05:32.640 --> 0:05:36.280 They certainly including Google, which has itself responded E many member, 0:05:36.520 --> 0:05:38.560 we thank you for that. And NETS get the take 0:05:38.600 --> 0:05:41.080 of Jeffreysans Brentville, who has a by rating on the 0:05:41.120 --> 0:05:44.840 Google parent alphabet and regulatory headwins. We know they're abound 0:05:44.839 --> 0:05:47.599 for many a tech name. But from your perspective, the 0:05:47.640 --> 0:05:50.680 fact that Google is saying there isn't sort of legal 0:05:50.720 --> 0:05:55.159 founding for this, do you agree. Look every legal case 0:05:55.240 --> 0:05:57.599 it's calmed, they thown away around it, and so it 0:05:57.640 --> 0:05:59.640 hasn't slowed them down yet. I don't think this is 0:05:59.680 --> 0:06:02.320 gonna low down. It's hard to handicap the case, to 0:06:02.320 --> 0:06:06.960 be honest, um, but we've been living with regulatory headwinds 0:06:06.960 --> 0:06:09.800 and the Internet for so long. Um, it's really hard 0:06:09.800 --> 0:06:11.760 to handicap. I don't believe this is going to have 0:06:11.800 --> 0:06:14.520 any impact. Ultimately, at the end of the day, Google's 0:06:14.520 --> 0:06:18.760 providing service that's helping us as consumers get places, find items. 0:06:18.880 --> 0:06:22.480 I do not right now have any belief that this 0:06:22.560 --> 0:06:25.679 will have any material impact in the business. Um. There's 0:06:25.720 --> 0:06:29.240 been tons of legal scare tactics. UM, So right now 0:06:29.279 --> 0:06:31.240 it's really hard to handicap. And I think this is 0:06:31.279 --> 0:06:33.880 why Google's training at such a low multiple, as everyone's 0:06:33.920 --> 0:06:37.000 concerned at some point could something happen. We we there's 0:06:37.040 --> 0:06:39.839 been no precedents that it has any had any issue 0:06:39.839 --> 0:06:42.440 on side the core business that has slowed them down 0:06:42.880 --> 0:06:46.080 still far, I mean, Brent Google said in a blog 0:06:46.120 --> 0:06:49.240 post that the lawsuit quote attempts to pick winners and 0:06:49.360 --> 0:06:52.760 losers in a highly competitive advertising technology sector. They say 0:06:52.839 --> 0:06:57.159 logic duplicates an unfounded lawsuit by the Texas Attorney General, 0:06:57.520 --> 0:07:01.200 much of which was recently dismissed by federal art is 0:07:01.240 --> 0:07:04.880 this though, Brent, Even if they managed to win, it's 0:07:04.920 --> 0:07:07.839 a cost headache, but it's also perhaps costing them in 0:07:07.920 --> 0:07:09.960 terms of innovation. Is it just a distraction? What do 0:07:10.040 --> 0:07:13.280 you worry about the opportunity cost hit? Yeah, it's a distraction. 0:07:13.360 --> 0:07:16.320 They're they're focused on innovation. Their innovation has not dropped. 0:07:16.320 --> 0:07:18.880 I mean, it's like every other turn we hear some 0:07:19.000 --> 0:07:21.960 legal case. And again this has been across Internet, across 0:07:21.960 --> 0:07:23.880 a lot of tech names. It has not cost them 0:07:23.880 --> 0:07:27.400 any innovation yet and ultimately they broke up pieces of 0:07:27.440 --> 0:07:30.520 the business to be a concern, but so far we 0:07:30.600 --> 0:07:33.840 just haven't seen it. So really, in our opinion, not 0:07:33.920 --> 0:07:36.560 much to say at this point other than it's a 0:07:36.600 --> 0:07:39.680 distraction and their job and they have done this very 0:07:39.680 --> 0:07:41.760 well is kept their eyes on the road and kept focused. 0:07:42.920 --> 0:07:45.720 I'm looking at the share reaction during Tuesday's session with 0:07:45.800 --> 0:07:50.520 down one point seven all told, once the market had closed. 0:07:51.000 --> 0:07:53.400 This is a department the DJ that looked at this 0:07:53.600 --> 0:07:55.800 under the Trump administration, it continues to look at it 0:07:55.880 --> 0:07:59.520 under the Biden administration. When you're an analyst covering this stock, 0:08:00.040 --> 0:08:03.920 how much is the risk of serious action with serious 0:08:04.000 --> 0:08:09.320 results modeled into your price target. It's modeled in because 0:08:09.400 --> 0:08:11.880 you have a multiple that now is training at a 0:08:12.000 --> 0:08:15.360 very big discount. So I don't think anyone that's investing 0:08:15.400 --> 0:08:18.160 the Internet names is investing right now with all the 0:08:18.240 --> 0:08:20.800 understanding that this is an issue. This is an issue 0:08:20.840 --> 0:08:23.280 for Amazon, it's an issue for Microsoft, It's an issue 0:08:23.320 --> 0:08:27.119 for Facebook and Meta UH, it goes across the board. 0:08:27.160 --> 0:08:29.720 So I don't really see an issue that is going 0:08:29.800 --> 0:08:33.880 to create at this point a big concern. And again, 0:08:33.920 --> 0:08:38.120 you've seen Google stock or the last decade, UH continue 0:08:38.160 --> 0:08:40.920 to power higher. So we'll keep an eye on it. 0:08:41.240 --> 0:08:43.760 We're certainly cognizant of it, but but so far, I 0:08:43.760 --> 0:08:45.920 don't think there's enough for us to really hang or 0:08:45.960 --> 0:08:48.840 hat on anything at this point. And the other story 0:08:48.880 --> 0:08:51.400 dominating the headlines is layoffs. You know, we cannot get 0:08:51.400 --> 0:08:54.960 away from alphabet and Google being another company that is 0:08:55.080 --> 0:08:58.559 that is pulling back what surprise Caroline and I with 0:08:58.720 --> 0:09:02.040 some of the specific airs, even off ficial intelligence where 0:09:02.040 --> 0:09:05.920 competition with Microsoft is heating up again. What do you 0:09:05.960 --> 0:09:09.200 think that means for Alphabet's business, the action it's taken 0:09:09.200 --> 0:09:12.800 on headcount reduction. They needed it. They hired, you know, 0:09:12.840 --> 0:09:16.280 in the mid twenty growth rate. So we think this 0:09:16.360 --> 0:09:21.280 is pretty common, Microsoft, Amazon, everyone is taking action the 0:09:21.400 --> 0:09:23.679 environment sloin for tech. They all have to slow their 0:09:23.679 --> 0:09:27.000 head count and they all have to effectively go through 0:09:27.040 --> 0:09:30.320 and really re examine who they've hired and not everyone's 0:09:30.360 --> 0:09:33.320 gonna work in any business, right, So at least five 0:09:33.360 --> 0:09:36.120 percent of this is just removing hires that don't work. 0:09:36.400 --> 0:09:40.200 The other five percent plus is trimming. We're not discounting 0:09:40.240 --> 0:09:43.800 there's going to be potentially more changes to headcount. I 0:09:43.840 --> 0:09:46.040 think that that is a still open and I think 0:09:46.240 --> 0:09:49.040 we we expect more cuts to happen across tech. So 0:09:49.120 --> 0:09:51.920 I think this is the first wave, but I think 0:09:51.960 --> 0:09:54.199 this is very common, and to be honest, I think 0:09:54.200 --> 0:09:56.840 Google should have acted faster than one of the last 0:09:56.880 --> 0:10:00.280 ones to jump in the cost cut pool. Salesforce. You 0:10:00.280 --> 0:10:04.640 go through the list, everyone's really dying they have indeed, 0:10:04.760 --> 0:10:07.280 and we'll still see if Morris to come. Brent, so 0:10:07.320 --> 0:10:10.160 great to have you across these two key stories. Brent Hill, 0:10:10.200 --> 0:10:13.320 he's Jeffrey's analyst. Meanwhile, let's get to another key story. 0:10:13.480 --> 0:10:16.800 Rupert Murdock is scrapping plans for a proposed merger between 0:10:16.840 --> 0:10:20.080 Fox and News Corp. Murdock had, of course sent plans 0:10:20.120 --> 0:10:23.040 to put back together a media empire, then he split 0:10:23.120 --> 0:10:25.640 back in but he indicated that he and his son 0:10:25.720 --> 0:10:28.800 Lachlin have determined that a combination is not optimal for 0:10:28.800 --> 0:10:31.120 the shareholders of Fox and News Corp. At this time. 0:10:31.160 --> 0:10:34.080 The Murdock family, remember, has about thirteen nine voting stake 0:10:34.240 --> 0:10:47.920 in both News Corps and approximately of Fox Bank of America. 0:10:48.040 --> 0:10:51.080 Some stock compensation being announced and for those who are 0:10:51.160 --> 0:10:54.720 earning up to half a million, so five hundred thousand dollars, 0:10:54.920 --> 0:10:57.640 they are now eligible to receive once again a pool 0:10:57.679 --> 0:11:02.040 of restrict restricted stock. This is rewarding basically a majority 0:11:02.240 --> 0:11:05.359 of the entire EMP employee base, which was to about 0:11:05.920 --> 0:11:09.440 who are earning five or below, so still sticking to 0:11:09.520 --> 0:11:12.520 that reward compensation to try and keep their talent, even 0:11:12.559 --> 0:11:16.400 though they saw some downdraft on their revenues of let's 0:11:16.400 --> 0:11:19.800 shift gears, and let's talk about staff and relationships with 0:11:19.800 --> 0:11:24.520 with executives elsewhere. Alphabet apparently is illegally using return to 0:11:24.559 --> 0:11:27.680 office policies as a tool to try to derail YouTube 0:11:27.720 --> 0:11:30.800 contract workers from organizing in Texas, As, all according to 0:11:30.840 --> 0:11:33.880 a complaint filed by the Alphabet Workers Union on Tuesday. 0:11:34.120 --> 0:11:37.160 Bloom Mark Bergen joins us Now for more on this, 0:11:37.360 --> 0:11:42.320 and Mark fascinating that we're seeing this move. Who of 0:11:42.520 --> 0:11:45.920 YouTube are trying to organize? What parts of the business? 0:11:45.920 --> 0:11:48.040 What kind of contract us. Yeah, these are contract workers 0:11:48.040 --> 0:11:51.040 for YouTube Music, which is their Spotify competitor. They're based 0:11:51.040 --> 0:11:53.480 in Texas and they're alleging here of this complaint to 0:11:53.520 --> 0:11:56.480 the Natural Labor Board that as soon as they started 0:11:56.520 --> 0:11:59.760 ramping up their unionization effort, they got calls to come 0:11:59.760 --> 0:12:01.800 back to the office and if they didn't come back 0:12:01.840 --> 0:12:05.320 that they might find themselves determinated as Googles, we remember 0:12:05.400 --> 0:12:07.080 as one of those companies that has this three day 0:12:07.080 --> 0:12:10.520 a week policy, um that they're sort of enforcing. It's 0:12:10.640 --> 0:12:13.000 unclear house strictly they're enforcing it. In this case, it 0:12:13.080 --> 0:12:16.400 seems to be pretty strict. Here in the Bay area. 0:12:17.200 --> 0:12:22.360 Lots of Alphabet employees, lots of Google employees, lots of 0:12:22.360 --> 0:12:26.319 them are contractors. That's what's been surprising, especially in the 0:12:26.559 --> 0:12:30.400 recent headlines around layoffs, that's become a flashpoint for the company. 0:12:30.480 --> 0:12:33.840 Why why is this an issue? It's something that's come 0:12:33.920 --> 0:12:36.200 up in from a lot of their full time employees 0:12:36.240 --> 0:12:38.720 that have complained here that they have this this two 0:12:38.760 --> 0:12:40.839 tier system where their contract workers they don't have the 0:12:40.880 --> 0:12:43.560 same benefits, they don't have the same equity as a 0:12:43.600 --> 0:12:46.439 regular sort of Google engineer might have. You know, this 0:12:46.520 --> 0:12:48.599 is sort of like you were just talking about regulation 0:12:48.800 --> 0:12:51.680 with the big tech companies sort of baked into like you, 0:12:51.720 --> 0:12:54.000 We're seeing this at Apple right with their retail employees, 0:12:54.000 --> 0:12:56.959 were seeing this an Amazon, their warehouse workers, Microsoft their 0:12:57.040 --> 0:13:00.520 video game employees, and then various parts of the Alphabet 0:13:00.640 --> 0:13:05.920 Google empire um have been raising this issue around contract workers. 0:13:05.920 --> 0:13:09.520 In this complaint, they explicitly said, no, Alphabet, you are 0:13:09.600 --> 0:13:13.559 the joint employer as an addition to Cognizant, which is 0:13:13.600 --> 0:13:16.480 the actual employer. That's something that that Google Alphabet has 0:13:16.480 --> 0:13:19.360 actually pushed back on in court filings and said no, no, 0:13:19.520 --> 0:13:22.600 we're not the employer here. This is the contractor to 0:13:22.760 --> 0:13:24.800 the employer. Dig into that a little bit more because 0:13:24.840 --> 0:13:28.520 representatives of both Alphabet and Cognizant didn't immediately re sponsor 0:13:28.520 --> 0:13:31.800 request or comment. But ultimately this is about the contractors 0:13:32.160 --> 0:13:35.439 being employed through Cognizant and Alphabet trying to say that 0:13:35.800 --> 0:13:38.080 we were sort of a step removed here. Yeah, this 0:13:38.120 --> 0:13:41.080 is something I mean, it's not just the tech industry, 0:13:41.080 --> 0:13:43.360 but they've adapted this practice reason in the decades. You 0:13:43.360 --> 0:13:45.280 know'll be interesting to see with the layoffs you're just 0:13:45.320 --> 0:13:49.079 talking about. Uh, it's more like you know, Google YouTube, 0:13:49.120 --> 0:13:51.520 they still want to grow YouTube music, still wants to 0:13:51.559 --> 0:13:54.880 compete with Spotify. They still want hundreds and thousands of 0:13:54.880 --> 0:13:57.400 employees out there that do with these workers in Texas 0:13:57.400 --> 0:14:00.000 to which is actually come through the library to make sure, 0:14:00.040 --> 0:14:01.360 Like that's what I was going to ask you. I mean, 0:14:01.520 --> 0:14:05.160 is there a specific job function that their argument allows 0:14:05.200 --> 0:14:08.080 them to leverage this rule in the return to office argument? 0:14:08.200 --> 0:14:10.120 And what is it that they're doing. Yeah, my understanding 0:14:10.120 --> 0:14:12.599 of these workers, they're not like the content moderators that 0:14:12.640 --> 0:14:15.439 YouTube that will screen for violent footage or child pornography. 0:14:15.520 --> 0:14:17.920 They're actually like looking at, oh this video is the 0:14:18.040 --> 0:14:21.040 music video? This one's not this Mudia music video comes 0:14:21.080 --> 0:14:23.440 up from this label. Right, These are all these kind 0:14:23.440 --> 0:14:27.000 of behind the scenes ghosts in the machine laborers that 0:14:27.400 --> 0:14:29.600 the YouTube relies on. You. My guess is they might 0:14:29.600 --> 0:14:32.200 actually have to rely on these people more now that 0:14:32.280 --> 0:14:35.040 they just cut twelve thousand full time employees. All right, 0:14:35.080 --> 0:14:37.160 Bloomberg's Mark Berg, and thank you very much as you 0:14:37.160 --> 0:14:40.320 want to stick with Alphabet and its research lab deep mind, 0:14:40.480 --> 0:14:42.680 it's taking a hit outside of the U S. The 0:14:42.760 --> 0:14:46.600 AI unit will close it's Edmonton, Alberta outpost and lay 0:14:46.600 --> 0:14:49.480 off some operational staff in the UK as part of 0:14:49.520 --> 0:14:52.040 the tech giants recent effort to cost costs that we've 0:14:52.080 --> 0:14:55.120 just been talking about. Impacted engineers and researchers will be 0:14:55.160 --> 0:14:58.600 offered the option to relocate to other offices for those 0:14:58.600 --> 0:15:01.800 and other roles unfortunate carry will be laid off. Meanwhile, 0:15:01.840 --> 0:15:04.800 coming up, let's flick gears and look at innovation coming 0:15:04.840 --> 0:15:07.440 from Amazon. It's a five dollar a month subscription for 0:15:07.520 --> 0:15:11.920 generic drugs. Latest venture coming from that in commerce giants, Bloomberg. 0:15:30.400 --> 0:15:32.440 So you pay a hundred and thirty nine dollars a 0:15:32.480 --> 0:15:34.760 year for Amazon Prime in the US, would you pay 0:15:34.760 --> 0:15:37.880 another five dollars a month for a drug subscription service 0:15:38.000 --> 0:15:41.280 from Amazon. The e commerce giant has started r x Pass. 0:15:41.320 --> 0:15:42.880 You have to be a Prime member and you can 0:15:43.000 --> 0:15:46.080 order from a menu of fifty three generic medications, which 0:15:46.120 --> 0:15:49.440 Amazon says can treat more than eighty health conditions. R 0:15:49.600 --> 0:15:52.040 x Pass is available in most US states, but if 0:15:52.040 --> 0:15:55.200 you're in California, Pennsylvania, in Texas, you're going to have 0:15:55.240 --> 0:15:59.280 to wait the pitch low priced simple medications on a 0:15:59.320 --> 0:16:03.560 monthly basis, but you can't use government insurance. And it's 0:16:03.600 --> 0:16:07.080 not clear what's new in Amazon subscription offering. The tech 0:16:07.120 --> 0:16:11.480 giants already offered Amazon Pharmacy since where Prime users can 0:16:11.520 --> 0:16:15.400 already pay for subscriptions using their insurance, or you can 0:16:15.400 --> 0:16:19.640 get discounts on medicine if you want to pay cash. 0:16:20.680 --> 0:16:23.200 So this is a Bloomberg story that caughter I on 0:16:23.200 --> 0:16:26.480 Tuesday morning, mostly because I thought i'd heard it before. 0:16:26.560 --> 0:16:31.120 Amazon announced back in Amazon Pharmacy, where you can use 0:16:31.160 --> 0:16:33.680 insurance and if you choose not to pay a bit 0:16:33.680 --> 0:16:36.600 of cash, but you get a big discount on on drugs. 0:16:36.600 --> 0:16:38.200 So this is very similar, but it seems to be 0:16:38.240 --> 0:16:40.880 that subscription part of it, and there was some reaction 0:16:40.920 --> 0:16:43.520 out there today to this news. There was particularly from 0:16:43.720 --> 0:16:47.200 competitors stocks which fell unsurprisingly. Good our X has been 0:16:47.240 --> 0:16:49.240 a company that time and time again, when we've questioned 0:16:49.240 --> 0:16:51.920 the CEO, he said, look, Amazon is not our threat. 0:16:51.960 --> 0:16:54.080 We can be innovative. But now a lot of analysts 0:16:54.080 --> 0:16:56.440 are out there and saying, well, innovate because if you 0:16:56.480 --> 0:16:59.760 think about what Amazon is offering five dollars and months, 0:17:00.080 --> 0:17:02.400 it's not going to compete versus Good or X if 0:17:02.440 --> 0:17:04.920 you're ordering just one drug, but if you if you're 0:17:05.119 --> 0:17:08.400 ordering one to three, five dollars a month is really 0:17:08.480 --> 0:17:10.800 cheap versus what they're going to be. As we said 0:17:10.800 --> 0:17:13.159 in the piece, you can't use government insurance. There was 0:17:13.200 --> 0:17:15.600 another part of that which was interesting. Not available in 0:17:15.640 --> 0:17:19.919 California or Texas, in other ways, the country's most popular states. 0:17:19.960 --> 0:17:22.359 And Amazon actually did not give us an explanation as 0:17:22.400 --> 0:17:25.639 to why, which I thought was interesting. Kind of got 0:17:26.119 --> 0:17:27.760 check it and think there must be to do with 0:17:27.960 --> 0:17:31.960 regulation or signing off, crossing the t s, donning the eyes. 0:17:32.000 --> 0:17:34.199 But overall, this is a company that has time and 0:17:34.200 --> 0:17:36.920 time again focusing on how we can become more addicted 0:17:37.000 --> 0:17:40.359 to prime well seemingly by offering some healthcare that's the 0:17:40.400 --> 0:17:51.120 way to do it. Google has engaged in exclusionary conduct 0:17:51.119 --> 0:17:55.679 just severely weakened, if not destroy competition in the air 0:17:55.800 --> 0:17:59.720 deck industry. As detailed in our complaint. We alleged that 0:18:00.160 --> 0:18:04.440 was an a competitive CONDAC extends to three significant elements 0:18:04.560 --> 0:18:10.159 of the digital ad buying process. US Attorney General Merrit Garland. 0:18:10.160 --> 0:18:12.840 They're speaking at a press conference on Tuesday, so let's 0:18:12.840 --> 0:18:14.720 get right back to that key story of the day, 0:18:14.760 --> 0:18:18.280 the US lawsuit to break up Google's ad unit. Let's 0:18:18.320 --> 0:18:20.320 bring in an expert in the space. David Cohen, CEO 0:18:20.359 --> 0:18:23.720 of the Interactive Advertising Bureau, an organization that develops industry standards, 0:18:23.720 --> 0:18:27.400 conducts research, provides legal support for the online advertising industry. 0:18:27.520 --> 0:18:30.600 Both about seven hundred members in fact, including Google, but 0:18:30.640 --> 0:18:34.200 also Netflix, Twitter, Metas, Spotify, many many more. Just off 0:18:34.200 --> 0:18:37.399 the back of your annual leadership meeting, David, and I 0:18:37.400 --> 0:18:40.040 know you can't speak as if your Google, but tell 0:18:40.119 --> 0:18:43.200 us everyone must have been discussing this from your perspective. 0:18:43.440 --> 0:18:47.080 How does the advertising tech world currently function? Is it 0:18:47.800 --> 0:18:50.240 a competitive space? Well, it's great to be here and 0:18:50.280 --> 0:18:52.879 thank you for the question. We just hosted about twelve 0:18:52.960 --> 0:18:57.439 hundred folks in Marco Island across the digital ecosystem, and 0:18:57.480 --> 0:19:01.639 we had two and a half days of conversation around privacy, 0:19:01.760 --> 0:19:06.280 public policy, address ability, the future of streaming. UM A 0:19:06.280 --> 0:19:09.960 healthy and open and supported ecosystem, I will tell you 0:19:10.160 --> 0:19:12.919 from where we sit UM, and we we kind of 0:19:12.960 --> 0:19:16.160 go out to our membership every year with a a survey. 0:19:16.200 --> 0:19:19.840 There is widespread belief that there is healthy competition. We 0:19:19.840 --> 0:19:23.480 have a very very long tale in the Internet aid ecosystem. 0:19:23.560 --> 0:19:27.160 We have millions of small businesses that rely upon advertising, 0:19:27.200 --> 0:19:29.840 and yes we do have some larger players. But this 0:19:29.880 --> 0:19:34.640 news which actually just wrote today, I certainly did see it. UM. 0:19:34.680 --> 0:19:37.639 We have not dived into it, dove into it in 0:19:37.680 --> 0:19:41.160 any way, just finished our conference about two hours ago, 0:19:41.280 --> 0:19:45.159 but obviously we'll be closely watching. What was interesting is 0:19:45.200 --> 0:19:48.080 that many have used the anecdote that this is like 0:19:48.200 --> 0:19:51.840 City Bank or Goldman owning the New York Stock Exchange. 0:19:52.200 --> 0:19:54.560 How is it different? Can you get us under the 0:19:54.600 --> 0:19:58.960 skin of how the infrastructure that Alphabet owns and operates 0:19:59.000 --> 0:20:02.760 It's different from say a bank owning the Nicely there 0:20:02.800 --> 0:20:06.719 are there are lots of companies that own multiple parts 0:20:06.920 --> 0:20:09.800 of the tech ecosystem, of the supply chain in the 0:20:09.880 --> 0:20:14.160 digital ecosystem and the and the end beneficiary is consumers. 0:20:14.840 --> 0:20:19.520 Consumers like convenience, they're like lower price, they like its supported, 0:20:19.600 --> 0:20:24.199 they like free internet, they like free information, entertainment, communications. 0:20:24.560 --> 0:20:27.480 There are there are lots of examples of this beyond 0:20:27.720 --> 0:20:31.040 just Google. Um, so I'm not sure why it's It's 0:20:31.080 --> 0:20:34.880 not just a Google situation. Folks do play on both 0:20:34.880 --> 0:20:37.560 sides of the equation, and the end recipient of that 0:20:37.800 --> 0:20:40.800 is a consumer winning. Hey, David, Let's let me come 0:20:40.800 --> 0:20:45.080 at it this way. The d J states alleges that 0:20:45.240 --> 0:20:48.840 Alphabet or Google in particular, dominates the market for search, 0:20:49.200 --> 0:20:54.440 but also dominates the market for advertising technology. You lead 0:20:54.560 --> 0:20:59.199 an industry association for advertising. Does Google dominate the market 0:20:59.280 --> 0:21:03.640 for advertising technology? There was a report that recently came 0:21:03.640 --> 0:21:05.040 out I believe it was in the Wall Street Journal 0:21:05.040 --> 0:21:10.240 about a month ago that reported that between Google and Meta, 0:21:10.680 --> 0:21:14.480 they represent less than fifty of the ad supported ecosystem 0:21:14.560 --> 0:21:17.359 in the US. That is a change, that is a 0:21:17.520 --> 0:21:22.000 decrease over time. Are there players that have significant influence 0:21:22.040 --> 0:21:26.000 and significant share? Yes, in lots of cases in the industry, 0:21:26.000 --> 0:21:31.200 whether you talk about detergent chocolate, autos, there are lots 0:21:31.200 --> 0:21:35.440 of examples of leading players that have significant market share. 0:21:35.680 --> 0:21:38.520 I do not think the AD supported ecosystem is any 0:21:38.560 --> 0:21:42.320 different than other categories. Of course, David, you're the Interactive 0:21:42.320 --> 0:21:45.399 Advertising Bureau CEO, and I know one thing top of 0:21:45.440 --> 0:21:47.560 your mind right now is streaming. It was interesting this 0:21:47.600 --> 0:21:50.960 weekend gone actually Lucas Shaw how In l a our 0:21:51.000 --> 0:21:54.760 correspondent covering that industry, interviewed the new CEOs of Netflix, 0:21:54.960 --> 0:21:57.919 and I'm paraphrasing, but they basically said they got to 0:21:57.960 --> 0:22:00.520 an ad supported tier and they got to add tizing 0:22:00.760 --> 0:22:03.119 when they realized they better get moving because of the 0:22:03.160 --> 0:22:07.240 competitive landscape. Where do we stand with the streamers, those 0:22:07.320 --> 0:22:11.040 newer players and those longer legacy players, and how they 0:22:11.080 --> 0:22:14.800 are contributing to that marketplace. It represented a lot of 0:22:14.800 --> 0:22:17.399 our conversation over the past two and f days. In fact, 0:22:17.440 --> 0:22:20.879 we had Jeremy Gorman from Netflix as a speaker on 0:22:20.920 --> 0:22:24.040 the stage. She talked about their UH. They're getting into 0:22:24.040 --> 0:22:27.320 the AD supported streaming space. It's still early days. They 0:22:27.359 --> 0:22:30.440 have a minimum viable product and they're very excited about 0:22:30.440 --> 0:22:34.480