April 11, 2025 • 23 mins
A preview of the upcoming trial in which the FTC is challenging Meta’s acquisitions of Instagram and WhatsApp as anticompetitive, as well as a preview of a remedy hearing in the DOJ vs. Google search, were among the key catalysts that BI litigation and policy analysts are watching this week. Though divestitures are at risk in the FTC case, we think Meta has the better of arguments heading into trial. We also discussed how the Senate Commerce Committee took action on two of President Donald Trump’s nominees for the National Telecommunications and Information Administration and the Federal Communications Commission. Finally, we discussed how House Republicans delivered a key win for the Trump administration in advancing a budget resolution that we believe will eventually end with extending the 2017 Tax Cuts and Jobs Act.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team here at Bloomberg Intelligence,
the investment research platform of Bloomberg LP. Bloomberg Intelligence has
five hundred analysts and strategists working across the globe and
focused on all major markets. Our coverage includes over two
thousand equities and credits and have outlooks on more than
ninety industries, one hundred market industries, currencies and commodities. This
(00:38):
podcast series examines the intersection of business policy and law.
I'm Nathan Dean, an analysts with Bloomberg Intelligence covering policy,
and I'll be the host of today's episode, which we
are recording on April tenth, twenty twenty five. So today
we're going to start with two court cases slash hearings
that we're covering, and then we'll end up with an
update on what we've seen in the congressional based as
(00:59):
we can buy. Now, if you're listening to us, you
know that President Donald Trump has temporarily dodged tariffs for
He's put it at ten percent for most countries, but
obviously he's hit China with harder with one hundred and
twenty five percent. While we're not going to talk about
tariffs in today's episode, if you do have a Bloomberg terminal,
we continue to suggest that you type BI tariff or
BI tariffs go into your turminal to get all the
(01:21):
updates of what our analysts are thinking in terms of
tariffs and the upcoming earning seasons and how it will
all play out. So with that, let's turn back to
the courts, and I'm going to bring in Jennifer Ree,
our senior anti trust analyst. Jen when we were talking
about what to talk about on this call, you said
in our ib chat, I can preview the upcoming hearing
on remedies in the DOJ versus Google search matter. So
(01:43):
let's go with that question first. Can you preview the
upcoming hearing on remedies and the DOJ Google search matter
and explain what the case is for those of us,
including me, that don't know what it's about.
Speaker 2 (01:53):
Yes, sure, Nathan, and right, good to not talk about
tariffs or think about tariffs for a few minutes. Right,
So Google is about to go back into court against
the Department of Justice. That's on April twenty one, for
about three weeks. So just as the background What this
is is the second phase of a matter that was
actually tried back in the end of twenty twenty three,
(02:14):
and this was the Department of Justice and a group
of states challenging Google for illegal alleged illegal monopoly maintenance
of its search engine and search text advertising. That closing
arguments for that were in May, and then there was
a decision last August against the DOJ again holding that
it illegally maintained its monopolies for search and search text advertising.
(02:36):
All that is are those are the ads that come
up when you actually do a search on Google, and
there's some that are text and some that are images.
These are the ones that are text, and it kind
of goes hand in hand with search. If you have
most of the searches, you're going to be selling most
of the search text advertising. So how did Google do this?
Mostly what the judge said was that Google's payment to
(02:58):
third parties for default positions for Google Search at most
search access points blocked out its competitors. So what they
mean is that Google was paying about twenty billion a
year to Apple so that Google Search was set is
the default behind Safari. If you open up Safari, you
do a search you're actually using Google search engine and
(03:18):
also Android device phone device makers, so they want to
license Android, they want to make an Android mobile phone. Well,
Google would say, but you got to put Google Search
front and center, and you can't install any of our
search engine competitors, like being our duc dot Go. So
by doing this, the court said, Google kind of tied
up the vast majority of search access points. Really, all
(03:40):
you're left with is Microsoft, because Google's not going to
get an agreement with Microsoft to put it behind you know,
Internet Explore. I guess now it's called Edge because Microsoft's
going to put being there. So now what's happening is
the next hearing is to say, all right, you're guilty.
What are we going to do about it? What's the remedy?
And the Department of Justice has really asked for all
lot a long list of sort of drastic and complex remedies.
(04:04):
I think they're very much swinging for the fences. These
remedies sound scary. I don't believe they expect to get
quite a few of them, particularly the most drastic. But look,
when it's a negotiation, you've got to put everything out
there to be happy with the middle ground. Right, So
first I think the most obvious one is they're saying, hey,
no more payments for this default position. You've got to
open up this market to some of your competitors. And
(04:25):
that means you also can't make payments or other inducements
to pro hit it anybody from pre installing as a
default one of your competitors. And so this would be
no payments to Apple, no payments to Mozilla for Firefox,
to telecoms, to Android makers.
Speaker 3 (04:41):
Et cetera.
Speaker 2 (04:43):
And they also can't use their ownership of Android to
also push for sort of other Google products or the
bundling of its other products. They also have to give
prior notice to the DJ. This is what the DJ
is asking for. This hasn't been decided yet for investments
or partnerships with IT and any search competitors or company
that controls a search access point for a generative AI product. Now,
(05:06):
it doesn't mean that Google won't be able to make
these investments. It just means they're going to have to
go to the DJ first and pretty much give it
the right to approve or disapprove or maybe place conditions
on the investment. Now, the big one divest Chrome. DJ
says this is necessary to break up this monopoly and
to really open up the marketplace and possibly down the
(05:26):
road Android if Google abuses its ownership of and Android
in ways that you know, counter the injunction. Now, the
other options are some data sharing with qualified competitors. This
includes things like search indexes, add data, some user side
data so long as user privacy is protected, choice screens,
(05:46):
which has been used in Europe on existing in New
Android to Bose devices and in Google Chrome. And then
last I think, also allowing publishers or content content creators
to easily opt out from having their content used for
search index or to train an AI model. So this
is what they're asking for. I don't think they're going
to get most of that, Nathan, but that's what the
(06:07):
hearing is going to be about. It'll be both sides
presenting evidence as to why these are the necessary remedies
in Google providing evidence and testimony as to why they
don't make sense and they could have bad, unintended consequences
for consumers. I think the most likely remedy will be
the first one, just saying hey, no more payments for default.
I think maybe choice screens could be implemented something like that,
(06:31):
and maybe some data sharing. I'm not so sure about
that one. I was to say, I primarily think it'll
be limited because this judge is adhering to Microsoft, which
sets a precedent forum. It's in hit that circuit, and
the Microsoft court really counseled against to have caution with
these kinds of remedies.
Speaker 1 (06:48):
So, just to make sure I got it right, you
said this was going to be three weeks.
Speaker 2 (06:52):
Three weeks but nonconsecutive, So it'll start April twenty one,
but it won't wrap up until May, and then closing
arguments will be later on May thirtieth.
Speaker 1 (06:59):
So how do you advise a Bloomberg client or is
anybody listening right now if they wanted to try follow this?
Speaker 3 (07:05):
What are you know?
Speaker 1 (07:07):
Is there like a rhythm to this? How are you
covering this?
Speaker 3 (07:09):
Like?
Speaker 1 (07:09):
How would you advise them that they monitor this?
Speaker 3 (07:12):
Well?
Speaker 2 (07:12):
I think it's really important not to be reactionary because
the news will be, you know, play by play each
day saying something happened great, that something happened bad, and
then the judge will issue is decision, and I think
the market will react. What everybody should think about is
the fact that once that decision is issued, no matter
what it is, Google will appeal both liability and the
remedy decision, and probably the remedy will be stayed depending
(07:35):
the appeal. Meaning there's not really going to be an
impact for another year or two and people need to
keep that in mind. And our appellate courts tend to
be conservative. So if this judge does do something drastic,
I think Google has a shot at getting it pulled back.
Speaker 3 (07:48):
Well that's good insight and good to note.
Speaker 1 (07:50):
Okay, so let's let's turn it over to Justin Treesy,
our other anti trust analyst. We have a mad A
trial coming up. What's at stake? What are you looking
for in the Meida world?
Speaker 4 (08:00):
Yeah? Yes, so I think as far as anti trust
trials go, Nathan, this one here has got every bit
of drama and intrigue I think you could want. Right, So,
what the government here, the FTC is looking for is
a divestiture of Instagram and WhatsApp two properties of metas
like closed a long time ago. Right, Whatsappen was closed
back in twenty fourteen, Instagram back in twenty twelve. So
(08:22):
really long standing operations here that are now under the
meta umbrella. Zuckerberg is coming to testify this trial of
things precede as planned the trials before. Judge James Bosburgh's
been in the news like crazy lately with regard to
a lot of things coming out from the administration. So
all those facets make for a really interesting case. But
at the end of the day here, like I said,
these deals closed a long time ago, over over a decade.
(08:44):
At this point, state claims against Meta around these anti
trust issues were already dismissed and what the FDC is
because they were brought too late. But that same requirement
doesn't apply to the federal government when it's bringing these
kinds of cases. So what's that issue here is that,
you know, really what the govern is saying is that
these purchases made by Meta were done really for anti
(09:04):
competitive reasons and claus it's anti competitive harm to the
marketplace and to consumers, basically alleging that the reason behind
these purchases was to really nip competition in the bud
before I had a chance to grow and flourish to
compete against Meta directly. But you know, I think we
can expect to this trial here, Meta is going to
really offer all these pro competitive business justifications for why
(09:25):
these acquisitions were good for the marketplace and the FDC
from an anti trust law perspective, we really think that
the claim, the way it's bringing the case about what
the relevant product market is, it's really discounting a lot
of realities in the marketplace and how it operates today,
and that if that market can't be sustained at trial,
it's pretty much game over for the FTC. So all
(09:46):
of that's coming to kind of coming together and as
toue here for the trial beginning next week, and I'll say,
ultimately from our perspective right now, we really give Meta
the edge. There's this sixty percent chance we think at
this point anyway that it is victoria us and all
the claims in defending all the claims against it. But again,
you know, it's trial and anything can really roll out
one way or the other, and you just don't know
(10:07):
sometimes until things get underway.
Speaker 3 (10:09):
So two questions for you. One is WhatsApp still thing.
Speaker 4 (10:13):
Yeah, that's a good question, you know. And what's really
interesting here, right is that you know, Meta paid or
Facebook at the time, paid nineteen billion dollars to close
that deal to acquire WhatsApp back in twenty fourteen.
Speaker 3 (10:24):
And only one billion.
Speaker 4 (10:25):
Dollars to purchase Instagram, So, you know, really interesting from
that financial perspective, the way the deal's kind.
Speaker 1 (10:31):
Of rolled out back then.
Speaker 3 (10:32):
You know.
Speaker 4 (10:32):
But I think one other thing, you know, I haven't
mentioned too is, you know, there's all this talk now
too about Zuckerberg meeting with President Trump and maybe, you know,
trying to support the trial from even taking place and
make some kind of a settlement with the government. I
think that's still unlikely, but when we're seeing things like
that in the headlines, obviously, that raises the chances of
some kind of a deal more than where it was
even you know, a month ago.
Speaker 1 (10:52):
I would say, you know, and I almost said that,
I said that in jest, but that was actually a
really great answer to a question that was said in
jest by My other question is is that you said
sixty percent chance. Can you just give us one or
two things that could potentially happen next week or during
this trial that would immediately flip you into the forty
percent category. If there's something like is there like a
(11:14):
code word the judge would say, or anything that would
make you go, ohh.
Speaker 3 (11:18):
I got to change this back to my note.
Speaker 4 (11:20):
Yeah, you know, so that's a really great question, and
I would say, you know, really what's on the line
here with what I said about the FTC and whether
it defied the product marketed issue here the right way?
You know, I think that that's really going to be
part and parcel to how the case rolls out. And
last week, you know, I attended a technology tutorial that
that Meta present different Judge Boseberg, who during that tutorial
(11:42):
set he's never used any of these social media products
ever before, and aside from his his kids actually showing
him posts that they had made using Facebook or Instagram
over the years, he has no relationship with these technological
tools at all. So that's going to be interesting to see.
But during this tutorial that they that they held last
Friday in DC, you know, Metta really did a great job.
(12:02):
I think it's showing these similarities between things like feeds
when you open an app on even YouTube or TikTok
for example, which the FTC left out of this product
market as competitors that are operating in this personal social
media network services space. So that being the case, that's
what I'm watching for. If it seems like Meta is
really convincing the court that the property is like that
(12:25):
that the FTC left out of the product market actually
are competing with those that are in the product market
for Facebook. That's really going to push things even further
into Meta's favor. I think at the trial itself.
Speaker 3 (12:36):
That sounds good.
Speaker 1 (12:37):
Okay, So let's say goodbye to our New York based
friends and let's move to one of our Washingtonian based analysts,
Matt Schattenhelm. Matt, you were watching Congress this week, you
were watching the Senate Commerce Committee. We saw action on
two Trump nominees, one for the National Telecommunications and Information
Administration that you may have to explain to our listeners
what the NTIA actually does, and there for the Federal
(13:00):
Communications Commission. So can you walk us through what happened
and what does that mean for the TMT cover companies.
Speaker 3 (13:06):
That you're covering. Yeah, thanks Nathan.
Speaker 5 (13:09):
Yeah, So to development Wednesday of April ninth on Trump
nominees that are important in the TMT space. So, yeah,
nt i A is the federal agency, a small federal
agency that's responsible for managing the federal government spectrum. But
(13:29):
it's also particularly important because it's managing a broadband funding
program A forty two billion dollar broadband funding program that
the that that started under the Biden administration but never
got around actually passing out the money. And the Trump
(13:50):
nominee who was before the Senate Commerce Committee, aar L Roth,
has been appointed to lead that agency and one of
the big projects on her plate is finishing the distribution
of the forty two billion dollars in funding. And there's
(14:10):
been a big push from Republicans to revamp how the
Biden administration structured that program, and instead of prioritizing fiber projects,
there's been a push to make it more technology neutral.
And what that would mean as a practical matter is
(14:32):
that a much larger percentage of that forty two billion
dollars could go to satellite companies like Elon, Musk, Starlink,
and so it would be a likely and negative for
fiber based companies like cable operators who would be going
after that money. So Ariel Roth, the nominee, has championed
(14:55):
that cause of being technologically neutral as opposed to simply
prioritizing fiber. She got a vote from the Senate Commerce
Committee on Wednesday that cleared her from that important first step,
and so now she awaits a final vote on the
Senate floor. As soon as that happens, she can move
(15:18):
ahead with this important work on the broadband funding project.
So and the other one that also in the same
hearing the Senate Commerce Committee took up was the FCC
nominee from President Trump, Olivia Trustee. Right now, the FCC
is divided two to two, two Republicans to two Democrats,
(15:40):
and she would break that tie and make it three
to two for Republicans. And why that's really important is
because none of the controversial stuff can get through until
the Republicans have a majority. And high on the list
of potential importance controversial things is broad broadcast deregulation. Uh
(16:04):
TV broadcasters have been subject to strict ownership limits for
decades that other competing companies in the video space internet
streamers don't face, and broadcasters have said, look, this is
crazy that we're still subject to these limits.
Speaker 3 (16:22):
UH you should ease them.
Speaker 5 (16:24):
And I think Brendan Kahr at the FCC is going
to be on board with that, and we're going to
see some pretty significant rule makings from the FCC to
ease those rules. Olivia trust is likely going to be
a vote in support of those rulemakings.
Speaker 3 (16:38):
She had.
Speaker 5 (16:39):
She had a question yes at the hearing that that
touched on that and she and she seemed generally supportive
of a deregulatory approach. So the hearing before the committee
on Wednesday went well for her. Uh, some pushback from
from Democrats on some issues, but not real strong. So
(16:59):
she shouldn't have a lot of trouble getting through.
Speaker 3 (17:01):
And like then Ariel Roth.
Speaker 5 (17:03):
She'll get a vote from the full Senate and she
should be on board at the FCC in the second
quarter of the year.
Speaker 3 (17:10):
No, that sounds good.
Speaker 1 (17:12):
And you know, I was watching a couple of hearing
myself this week. You know, we had obviously the US
Trade Representative Jamison Greer testifying to Senate Finance in the
House fin Ways and Means Committee, but it was on tariffs,
and obviously lots of things happening on tariffs.
Speaker 3 (17:26):
I'll just leave it that.
Speaker 1 (17:28):
But just today we saw Senate in the Senate Banking
Committee Michelle Bowman, who is President Trump's nominee to be
the next FED Vice Chair for supervision. She testified with
along with four other individuals. She actually only got a
couple of questions, nothing really groundbreaking or that would dramatically
change her outlooks. So I anticipate she'll get confirmed in
the next couple of weeks, and I think the Senate's
(17:50):
going to be spending a lot of time to try
and get a lot more of these regulatory leaders into
office over the next few weeks once they come back
from their Easter recess.
Speaker 3 (17:58):
On April twenty eighth, Son, thank you very much for
your piece. Really appreciate it.
Speaker 1 (18:02):
And I'm going to end here by talking a little
bit about what we just saw this morning, again recording
this on April tent in terms of the House adoption
of the Senate Budget resolution plan to extend the Trump
era tax cuts. So the situation is this is that
here we are April tenth. Now the House and the
Senate have both passed the Senate Resolution for extending the
(18:24):
Trump era tax cuts to in order to extend these
tax cuts, this was originally from twenty seventeen, which used reconciliation.
Speaker 3 (18:31):
That's time to do that.
Speaker 1 (18:33):
You're looking around four to four and after trillion dollars,
you know, the Senate resolution calls for an additional one
point five trillion dollars in terms of additional tax cuts.
So four point three to four point five current status
status quo extensions one point five and additional tax cuts.
Speaker 3 (18:51):
But then under the.
Speaker 1 (18:53):
Idea of reconciliation, these tech cuts, these tax extensions have
to be offset. Now, if you are on the Senate
Republican side, you know they're adopting this new procedural process,
if you will, we're rather than trying to offset it
and pass it in terms of trying to find like
(19:13):
for like moneies, they're essentially saying that the current policy
is the current policy, and therefore the cost of it
is essentially zero. So you go from four point three
to four point five trillion dollars to zero. Now, the
House wasn't exactly on board with this idea because in
terms of the cost estimates for both of these plans,
the House originally wanted to cut two trillion dollars worth
(19:36):
of things, so think of things like Medicaid that benefits
the Inflation Reduction Act, and the Senate plan had four
billion with a B as a floor for cuts, meaning
they would cut at least four billion, but mostly higher. Now,
this was somewhat challenging for a lot of the House
Republicans to come on board with. They weren't too thrilled
about this. We saw President Trump on April ninth, way in,
(19:58):
we saw Speaker John sin s way in just this
morning on April tenth. But the House ultimately did adopt
the vote. The budget had one Republican voting against it,
and it was two hundred and sixteen to two hundred
and fourteen due to the fact that there were two
Democratic lawmakers who have passed over the last couple of months.
Speaker 3 (20:17):
And they have open seats. So where are we going
right now? Well, this is not a bill, This is
not legislation.
Speaker 1 (20:23):
This doesn't have any specific language in this, but this
does allow the momentum to keep going, and this does
allow for both parties to negotiate on the specifics. Now,
if you ask me, and because you're listening to this episode,
you are asking me, you know, what do I think
is going to happen? I think Congress and by means
the Republicans, are going to pass this resolution sometime between
(20:45):
June and September. In that the Trump era tax cuts
will be extended, and in that I think there will
be one point five trillion dollars worth of tax cuts.
Think of things like no taxes on tips, no taxes
on over time. Maybe additional changes we'll see as the
committees come up with their work. But I also think
(21:06):
that there's going to be minimal changes to the current
programs that are outlined earlier, like Medicaid, which is very
important for the healthcare companies that benefits, very important for
Walmart and Kroger and Albertson's, and the Inflation Reduction Act
very important for those solar companies. I just don't think
that there is much going to be much in the
way of changes Medicaid. We saw Senator Josh Holly come
(21:28):
out and say, don't touch this that benefits. We saw
House ad Committee Chairman Glenn Thompson come out and say
very few changes here, and then for the IRA. Just
this morning, for Republicans including Senator Tom Tillis of North Carolina,
sent the letter saying don't touch the Inflation Reduction Act.
Where I'm going with this and where I'm going on
this eight minute ramble is that I do think that
(21:49):
there's a big chance you're going to see a deficit
inducing bill at the end of this year. Because even
though the House Republicans there's about thirty of them, are
not comfortable with increasing the deficit. I do believe President
Trump's message of economic growth plus money coming in from tariffs,
plus you just better do this, because I'm going to
say you better do this is going to eventually convince
them to get past the line. So I originally thought
(22:11):
September October would be the timeframe of this. But the
last thing to keep in mind is that embedded in
this is five billion dollars to increase the debt ceiling,
and if you believe Treasury, the X date for that
debt ceiling is most likely going to be in July
and August, so this would have to wrap up before that.
So Congress is now out until.
Speaker 3 (22:31):
The April twenty eighth.
Speaker 1 (22:32):
They'll come back and then you'll start to see the
specifics of exactly how they're going to do this. But again,
there's really nothing here saying you have to do something
except for the debt ceiling and then the increase at
the end of this year. So I know that was
a lot, but with that, I'm just going to say
thank you very much for listening. Let's end it there.
We really appreciate it, and if we can ever be
of service, please don't hesitate to reach out to us
(22:53):
on the Bloomberg Terminal instant Bloomberg US.
Speaker 3 (22:55):
We call it IB.
Speaker 1 (22:57):
Send us an IB, send us a message, reach out
to us on social media like LinkedIn.
Speaker 3 (23:02):
UH.
Speaker 1 (23:02):
We're always here to help you and we'd love to assist.
Speaker 3 (23:04):
So thank you again and have a wonderful day.
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team here at Bloomberg Intelligence,
the investment research platform of Bloomberg LP. Bloomberg Intelligence has
five hundred analysts and strategists working across the globe and
focused on all major markets. Our coverage includes over two
thousand equities and credits and have outlooks on more than
ninety industries, one hundred market industries, currencies and commodities. This
(00:38):
podcast series examines the intersection of business policy and law.
I'm Nathan Dean, an analysts with Bloomberg Intelligence covering policy,
and I'll be the host of today's episode, which we
are recording on April tenth, twenty twenty five. So today
we're going to start with two court cases slash hearings
that we're covering, and then we'll end up with an
update on what we've seen in the congressional based as
(00:59):
we can buy. Now, if you're listening to us, you
know that President Donald Trump has temporarily dodged tariffs for
He's put it at ten percent for most countries, but
obviously he's hit China with harder with one hundred and
twenty five percent. While we're not going to talk about
tariffs in today's episode, if you do have a Bloomberg terminal,
we continue to suggest that you type BI tariff or
BI tariffs go into your turminal to get all the
(01:21):
updates of what our analysts are thinking in terms of
tariffs and the upcoming earning seasons and how it will
all play out. So with that, let's turn back to
the courts, and I'm going to bring in Jennifer Ree,
our senior anti trust analyst. Jen when we were talking
about what to talk about on this call, you said
in our ib chat, I can preview the upcoming hearing
on remedies in the DOJ versus Google search matter. So
(01:43):
let's go with that question first. Can you preview the
upcoming hearing on remedies and the DOJ Google search matter
and explain what the case is for those of us,
including me, that don't know what it's about.
Speaker 2 (01:53):
Yes, sure, Nathan, and right, good to not talk about
tariffs or think about tariffs for a few minutes. Right,
So Google is about to go back into court against
the Department of Justice. That's on April twenty one, for
about three weeks. So just as the background What this
is is the second phase of a matter that was
actually tried back in the end of twenty twenty three,
(02:14):
and this was the Department of Justice and a group
of states challenging Google for illegal alleged illegal monopoly maintenance
of its search engine and search text advertising. That closing
arguments for that were in May, and then there was
a decision last August against the DOJ again holding that
it illegally maintained its monopolies for search and search text advertising.
(02:36):
All that is are those are the ads that come
up when you actually do a search on Google, and
there's some that are text and some that are images.
These are the ones that are text, and it kind
of goes hand in hand with search. If you have
most of the searches, you're going to be selling most
of the search text advertising. So how did Google do this?
Mostly what the judge said was that Google's payment to
(02:58):
third parties for default positions for Google Search at most
search access points blocked out its competitors. So what they
mean is that Google was paying about twenty billion a
year to Apple so that Google Search was set is
the default behind Safari. If you open up Safari, you
do a search you're actually using Google search engine and
(03:18):
also Android device phone device makers, so they want to
license Android, they want to make an Android mobile phone. Well,
Google would say, but you got to put Google Search
front and center, and you can't install any of our
search engine competitors, like being our duc dot Go. So
by doing this, the court said, Google kind of tied
up the vast majority of search access points. Really, all
(03:40):
you're left with is Microsoft, because Google's not going to
get an agreement with Microsoft to put it behind you know,
Internet Explore. I guess now it's called Edge because Microsoft's
going to put being there. So now what's happening is
the next hearing is to say, all right, you're guilty.
What are we going to do about it? What's the remedy?
And the Department of Justice has really asked for all
lot a long list of sort of drastic and complex remedies.
(04:04):
I think they're very much swinging for the fences. These
remedies sound scary. I don't believe they expect to get
quite a few of them, particularly the most drastic. But look,
when it's a negotiation, you've got to put everything out
there to be happy with the middle ground. Right, So
first I think the most obvious one is they're saying, hey,
no more payments for this default position. You've got to
open up this market to some of your competitors. And
(04:25):
that means you also can't make payments or other inducements
to pro hit it anybody from pre installing as a
default one of your competitors. And so this would be
no payments to Apple, no payments to Mozilla for Firefox,
to telecoms, to Android makers.
Speaker 3 (04:41):
Et cetera.
Speaker 2 (04:43):
And they also can't use their ownership of Android to
also push for sort of other Google products or the
bundling of its other products. They also have to give
prior notice to the DJ. This is what the DJ
is asking for. This hasn't been decided yet for investments
or partnerships with IT and any search competitors or company
that controls a search access point for a generative AI product. Now,
(05:06):
it doesn't mean that Google won't be able to make
these investments. It just means they're going to have to
go to the DJ first and pretty much give it
the right to approve or disapprove or maybe place conditions
on the investment. Now, the big one divest Chrome. DJ
says this is necessary to break up this monopoly and
to really open up the marketplace and possibly down the
(05:26):
road Android if Google abuses its ownership of and Android
in ways that you know, counter the injunction. Now, the
other options are some data sharing with qualified competitors. This
includes things like search indexes, add data, some user side
data so long as user privacy is protected, choice screens,
(05:46):
which has been used in Europe on existing in New
Android to Bose devices and in Google Chrome. And then
last I think, also allowing publishers or content content creators
to easily opt out from having their content used for
search index or to train an AI model. So this
is what they're asking for. I don't think they're going
to get most of that, Nathan, but that's what the
(06:07):
hearing is going to be about. It'll be both sides
presenting evidence as to why these are the necessary remedies
in Google providing evidence and testimony as to why they
don't make sense and they could have bad, unintended consequences
for consumers. I think the most likely remedy will be
the first one, just saying hey, no more payments for default.
I think maybe choice screens could be implemented something like that,
(06:31):
and maybe some data sharing. I'm not so sure about
that one. I was to say, I primarily think it'll
be limited because this judge is adhering to Microsoft, which
sets a precedent forum. It's in hit that circuit, and
the Microsoft court really counseled against to have caution with
these kinds of remedies.
Speaker 1 (06:48):
So, just to make sure I got it right, you
said this was going to be three weeks.
Speaker 2 (06:52):
Three weeks but nonconsecutive, So it'll start April twenty one,
but it won't wrap up until May, and then closing
arguments will be later on May thirtieth.
Speaker 1 (06:59):
So how do you advise a Bloomberg client or is
anybody listening right now if they wanted to try follow this?
Speaker 3 (07:05):
What are you know?
Speaker 1 (07:07):
Is there like a rhythm to this? How are you
covering this?
Speaker 3 (07:09):
Like?
Speaker 1 (07:09):
How would you advise them that they monitor this?
Speaker 3 (07:12):
Well?
Speaker 2 (07:12):
I think it's really important not to be reactionary because
the news will be, you know, play by play each
day saying something happened great, that something happened bad, and
then the judge will issue is decision, and I think
the market will react. What everybody should think about is
the fact that once that decision is issued, no matter
what it is, Google will appeal both liability and the
remedy decision, and probably the remedy will be stayed depending
(07:35):
the appeal. Meaning there's not really going to be an
impact for another year or two and people need to
keep that in mind. And our appellate courts tend to
be conservative. So if this judge does do something drastic,
I think Google has a shot at getting it pulled back.
Speaker 3 (07:48):
Well that's good insight and good to note.
Speaker 1 (07:50):
Okay, so let's let's turn it over to Justin Treesy,
our other anti trust analyst. We have a mad A
trial coming up. What's at stake? What are you looking
for in the Meida world?
Speaker 4 (08:00):
Yeah? Yes, so I think as far as anti trust
trials go, Nathan, this one here has got every bit
of drama and intrigue I think you could want. Right, So,
what the government here, the FTC is looking for is
a divestiture of Instagram and WhatsApp two properties of metas
like closed a long time ago. Right, Whatsappen was closed
back in twenty fourteen, Instagram back in twenty twelve. So
(08:22):
really long standing operations here that are now under the
meta umbrella. Zuckerberg is coming to testify this trial of
things precede as planned the trials before. Judge James Bosburgh's
been in the news like crazy lately with regard to
a lot of things coming out from the administration. So
all those facets make for a really interesting case. But
at the end of the day here, like I said,
these deals closed a long time ago, over over a decade.
(08:44):
At this point, state claims against Meta around these anti
trust issues were already dismissed and what the FDC is
because they were brought too late. But that same requirement
doesn't apply to the federal government when it's bringing these
kinds of cases. So what's that issue here is that,
you know, really what the govern is saying is that
these purchases made by Meta were done really for anti
(09:04):
competitive reasons and claus it's anti competitive harm to the
marketplace and to consumers, basically alleging that the reason behind
these purchases was to really nip competition in the bud
before I had a chance to grow and flourish to
compete against Meta directly. But you know, I think we
can expect to this trial here, Meta is going to
really offer all these pro competitive business justifications for why
(09:25):
these acquisitions were good for the marketplace and the FDC
from an anti trust law perspective, we really think that
the claim, the way it's bringing the case about what
the relevant product market is, it's really discounting a lot
of realities in the marketplace and how it operates today,
and that if that market can't be sustained at trial,
it's pretty much game over for the FTC. So all
(09:46):
of that's coming to kind of coming together and as
toue here for the trial beginning next week, and I'll say,
ultimately from our perspective right now, we really give Meta
the edge. There's this sixty percent chance we think at
this point anyway that it is victoria us and all
the claims in defending all the claims against it. But again,
you know, it's trial and anything can really roll out
one way or the other, and you just don't know
(10:07):
sometimes until things get underway.
Speaker 3 (10:09):
So two questions for you. One is WhatsApp still thing.
Speaker 4 (10:13):
Yeah, that's a good question, you know. And what's really
interesting here, right is that you know, Meta paid or
Facebook at the time, paid nineteen billion dollars to close
that deal to acquire WhatsApp back in twenty fourteen.
Speaker 3 (10:24):
And only one billion.
Speaker 4 (10:25):
Dollars to purchase Instagram, So, you know, really interesting from
that financial perspective, the way the deal's kind.
Speaker 1 (10:31):
Of rolled out back then.
Speaker 3 (10:32):
You know.
Speaker 4 (10:32):
But I think one other thing, you know, I haven't
mentioned too is, you know, there's all this talk now
too about Zuckerberg meeting with President Trump and maybe, you know,
trying to support the trial from even taking place and
make some kind of a settlement with the government. I
think that's still unlikely, but when we're seeing things like
that in the headlines, obviously, that raises the chances of
some kind of a deal more than where it was
even you know, a month ago.
Speaker 1 (10:52):
I would say, you know, and I almost said that,
I said that in jest, but that was actually a
really great answer to a question that was said in
jest by My other question is is that you said
sixty percent chance. Can you just give us one or
two things that could potentially happen next week or during
this trial that would immediately flip you into the forty
percent category. If there's something like is there like a
(11:14):
code word the judge would say, or anything that would
make you go, ohh.
Speaker 3 (11:18):
I got to change this back to my note.
Speaker 4 (11:20):
Yeah, you know, so that's a really great question, and
I would say, you know, really what's on the line
here with what I said about the FTC and whether
it defied the product marketed issue here the right way?
You know, I think that that's really going to be
part and parcel to how the case rolls out. And
last week, you know, I attended a technology tutorial that
that Meta present different Judge Boseberg, who during that tutorial
(11:42):
set he's never used any of these social media products
ever before, and aside from his his kids actually showing
him posts that they had made using Facebook or Instagram
over the years, he has no relationship with these technological
tools at all. So that's going to be interesting to see.
But during this tutorial that they that they held last
Friday in DC, you know, Metta really did a great job.
(12:02):
I think it's showing these similarities between things like feeds
when you open an app on even YouTube or TikTok
for example, which the FTC left out of this product
market as competitors that are operating in this personal social
media network services space. So that being the case, that's
what I'm watching for. If it seems like Meta is
really convincing the court that the property is like that
(12:25):
that the FTC left out of the product market actually
are competing with those that are in the product market
for Facebook. That's really going to push things even further
into Meta's favor. I think at the trial itself.
Speaker 3 (12:36):
That sounds good.
Speaker 1 (12:37):
Okay, So let's say goodbye to our New York based
friends and let's move to one of our Washingtonian based analysts,
Matt Schattenhelm. Matt, you were watching Congress this week, you
were watching the Senate Commerce Committee. We saw action on
two Trump nominees, one for the National Telecommunications and Information
Administration that you may have to explain to our listeners
what the NTIA actually does, and there for the Federal
(13:00):
Communications Commission. So can you walk us through what happened
and what does that mean for the TMT cover companies.
Speaker 3 (13:06):
That you're covering. Yeah, thanks Nathan.
Speaker 5 (13:09):
Yeah, So to development Wednesday of April ninth on Trump
nominees that are important in the TMT space. So, yeah,
nt i A is the federal agency, a small federal
agency that's responsible for managing the federal government spectrum. But
(13:29):
it's also particularly important because it's managing a broadband funding
program A forty two billion dollar broadband funding program that
the that that started under the Biden administration but never
got around actually passing out the money. And the Trump
(13:50):
nominee who was before the Senate Commerce Committee, aar L Roth,
has been appointed to lead that agency and one of
the big projects on her plate is finishing the distribution
of the forty two billion dollars in funding. And there's
(14:10):
been a big push from Republicans to revamp how the
Biden administration structured that program, and instead of prioritizing fiber projects,
there's been a push to make it more technology neutral.
And what that would mean as a practical matter is
(14:32):
that a much larger percentage of that forty two billion
dollars could go to satellite companies like Elon, Musk, Starlink,
and so it would be a likely and negative for
fiber based companies like cable operators who would be going
after that money. So Ariel Roth, the nominee, has championed
(14:55):
that cause of being technologically neutral as opposed to simply
prioritizing fiber. She got a vote from the Senate Commerce
Committee on Wednesday that cleared her from that important first step,
and so now she awaits a final vote on the
Senate floor. As soon as that happens, she can move
(15:18):
ahead with this important work on the broadband funding project.
So and the other one that also in the same
hearing the Senate Commerce Committee took up was the FCC
nominee from President Trump, Olivia Trustee. Right now, the FCC
is divided two to two, two Republicans to two Democrats,
(15:40):
and she would break that tie and make it three
to two for Republicans. And why that's really important is
because none of the controversial stuff can get through until
the Republicans have a majority. And high on the list
of potential importance controversial things is broad broadcast deregulation. Uh
(16:04):
TV broadcasters have been subject to strict ownership limits for
decades that other competing companies in the video space internet
streamers don't face, and broadcasters have said, look, this is
crazy that we're still subject to these limits.
Speaker 3 (16:22):
UH you should ease them.
Speaker 5 (16:24):
And I think Brendan Kahr at the FCC is going
to be on board with that, and we're going to
see some pretty significant rule makings from the FCC to
ease those rules. Olivia trust is likely going to be
a vote in support of those rulemakings.
Speaker 3 (16:38):
She had.
Speaker 5 (16:39):
She had a question yes at the hearing that that
touched on that and she and she seemed generally supportive
of a deregulatory approach. So the hearing before the committee
on Wednesday went well for her. Uh, some pushback from
from Democrats on some issues, but not real strong. So
(16:59):
she shouldn't have a lot of trouble getting through.
Speaker 3 (17:01):
And like then Ariel Roth.
Speaker 5 (17:03):
She'll get a vote from the full Senate and she
should be on board at the FCC in the second
quarter of the year.
Speaker 3 (17:10):
No, that sounds good.
Speaker 1 (17:12):
And you know, I was watching a couple of hearing
myself this week. You know, we had obviously the US
Trade Representative Jamison Greer testifying to Senate Finance in the
House fin Ways and Means Committee, but it was on tariffs,
and obviously lots of things happening on tariffs.
Speaker 3 (17:26):
I'll just leave it that.
Speaker 1 (17:28):
But just today we saw Senate in the Senate Banking
Committee Michelle Bowman, who is President Trump's nominee to be
the next FED Vice Chair for supervision. She testified with
along with four other individuals. She actually only got a
couple of questions, nothing really groundbreaking or that would dramatically
change her outlooks. So I anticipate she'll get confirmed in
the next couple of weeks, and I think the Senate's
(17:50):
going to be spending a lot of time to try
and get a lot more of these regulatory leaders into
office over the next few weeks once they come back
from their Easter recess.
Speaker 3 (17:58):
On April twenty eighth, Son, thank you very much for
your piece. Really appreciate it.
Speaker 1 (18:02):
And I'm going to end here by talking a little
bit about what we just saw this morning, again recording
this on April tent in terms of the House adoption
of the Senate Budget resolution plan to extend the Trump
era tax cuts. So the situation is this is that
here we are April tenth. Now the House and the
Senate have both passed the Senate Resolution for extending the
(18:24):
Trump era tax cuts to in order to extend these
tax cuts, this was originally from twenty seventeen, which used reconciliation.
Speaker 3 (18:31):
That's time to do that.
Speaker 1 (18:33):
You're looking around four to four and after trillion dollars,
you know, the Senate resolution calls for an additional one
point five trillion dollars in terms of additional tax cuts.
So four point three to four point five current status
status quo extensions one point five and additional tax cuts.
Speaker 3 (18:51):
But then under the.
Speaker 1 (18:53):
Idea of reconciliation, these tech cuts, these tax extensions have
to be offset. Now, if you are on the Senate
Republican side, you know they're adopting this new procedural process,
if you will, we're rather than trying to offset it
and pass it in terms of trying to find like
(19:13):
for like moneies, they're essentially saying that the current policy
is the current policy, and therefore the cost of it
is essentially zero. So you go from four point three
to four point five trillion dollars to zero. Now, the
House wasn't exactly on board with this idea because in
terms of the cost estimates for both of these plans,
the House originally wanted to cut two trillion dollars worth
(19:36):
of things, so think of things like Medicaid that benefits
the Inflation Reduction Act, and the Senate plan had four
billion with a B as a floor for cuts, meaning
they would cut at least four billion, but mostly higher. Now,
this was somewhat challenging for a lot of the House
Republicans to come on board with. They weren't too thrilled
about this. We saw President Trump on April ninth, way in,
(19:58):
we saw Speaker John sin s way in just this
morning on April tenth. But the House ultimately did adopt
the vote. The budget had one Republican voting against it,
and it was two hundred and sixteen to two hundred
and fourteen due to the fact that there were two
Democratic lawmakers who have passed over the last couple of months.
Speaker 3 (20:17):
And they have open seats. So where are we going
right now? Well, this is not a bill, This is
not legislation.
Speaker 1 (20:23):
This doesn't have any specific language in this, but this
does allow the momentum to keep going, and this does
allow for both parties to negotiate on the specifics. Now,
if you ask me, and because you're listening to this episode,
you are asking me, you know, what do I think
is going to happen? I think Congress and by means
the Republicans, are going to pass this resolution sometime between
(20:45):
June and September. In that the Trump era tax cuts
will be extended, and in that I think there will
be one point five trillion dollars worth of tax cuts.
Think of things like no taxes on tips, no taxes
on over time. Maybe additional changes we'll see as the
committees come up with their work. But I also think
(21:06):
that there's going to be minimal changes to the current
programs that are outlined earlier, like Medicaid, which is very
important for the healthcare companies that benefits, very important for
Walmart and Kroger and Albertson's, and the Inflation Reduction Act
very important for those solar companies. I just don't think
that there is much going to be much in the
way of changes Medicaid. We saw Senator Josh Holly come
(21:28):
out and say, don't touch this that benefits. We saw
House ad Committee Chairman Glenn Thompson come out and say
very few changes here, and then for the IRA. Just
this morning, for Republicans including Senator Tom Tillis of North Carolina,
sent the letter saying don't touch the Inflation Reduction Act.
Where I'm going with this and where I'm going on
this eight minute ramble is that I do think that
(21:49):
there's a big chance you're going to see a deficit
inducing bill at the end of this year. Because even
though the House Republicans there's about thirty of them, are
not comfortable with increasing the deficit. I do believe President
Trump's message of economic growth plus money coming in from tariffs,
plus you just better do this, because I'm going to
say you better do this is going to eventually convince
them to get past the line. So I originally thought
(22:11):
September October would be the timeframe of this. But the
last thing to keep in mind is that embedded in
this is five billion dollars to increase the debt ceiling,
and if you believe Treasury, the X date for that
debt ceiling is most likely going to be in July
and August, so this would have to wrap up before that.
So Congress is now out until.
Speaker 3 (22:31):
The April twenty eighth.
Speaker 1 (22:32):
They'll come back and then you'll start to see the
specifics of exactly how they're going to do this. But again,
there's really nothing here saying you have to do something
except for the debt ceiling and then the increase at
the end of this year. So I know that was
a lot, but with that, I'm just going to say
thank you very much for listening. Let's end it there.
We really appreciate it, and if we can ever be
of service, please don't hesitate to reach out to us
(22:53):
on the Bloomberg Terminal instant Bloomberg US.
Speaker 3 (22:55):
We call it IB.
Speaker 1 (22:57):
Send us an IB, send us a message, reach out
to us on social media like LinkedIn.
Speaker 3 (23:02):
UH.
Speaker 1 (23:02):
We're always here to help you and we'd love to assist.
Speaker 3 (23:04):
So thank you again and have a wonderful day.
Host
Elliott Stein
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