April 25, 2025 • 33 mins
Updates and our outlook on the various lawsuits challenging the Trump administration’s tariffs, with ramifications for retailers like Nike, automakers like Volkswagen and numerous other sectors, are among key catalysts that BI litigation and policy analysts are watching this week. The team also discussed various antitrust matters, including the ongoing FTC v. Meta trial, proceedings over remedies in the DOJ’s case against Google over search, and the recent court ruling for DOJ against Google concerning its ad tech. Congress returns next week and Republicans will pick up their efforts to pass a reconciliation bill to extend the 2017 Tax Cuts and Jobs Act. The European Commission’s light-touch fines issued on April 23 against Apple (€500 million) and Meta (€200 million) — for noncompliance with the Digital Markets Act (DMA) — suggest an easing of European regulatory pressure on US tech giants, though pending DMA probes into Alphabet and Apple still pose a risk.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:14):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg terminal.
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 we have
(00:37):
outlooks on more than ninety industries and one hundred market indices,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly check in
on the litigation and policy catalysts that we're watching and
that we think will impact companies across a number of
different sectors. My name is Elliot Stein. I'm an analyst
(00:57):
with the Bloomberg Intelligence covering litigation in the financial sector,
and I'll be your host for today, April twenty fifth,
twenty twenty five. And since things move very quickly these days,
especially when it comes to policies, we're recording this at
ten thirty am Eastern Time. Delighted today to be joined
by a handful of my colleagues on the Litigation and
(01:19):
Policy team. We have Nathan Dian and DC, we have
justin THEREESI and Holly from here in New York, and
we have Tamlin Basin out in London. You can find
all of our research on the Bloomberg terminal at BI
go and more specifically on our dashboard BI Laws Go.
All right, So I think, Holly, why don't we start
(01:40):
with you. You've been covering the growing number of lawsuits
that have been challenging President Trump's tariffs. There's several lawsuits
going on, and I think this week may have been
sort of the first time we have sort of a
preliminary ruling. Do you want to give us an update
on the k and where they are and how you
(02:02):
see them playing out?
Speaker 2 (02:04):
Sure?
Speaker 3 (02:04):
Thanks Elliott. So there are about five or six lawsuits
right now, and two of them have actually three of
them have been filed in the International Trade Court I
believe it's free. The rest have been filed in federal
courts around the country, and they're challenging some The first
(02:26):
lawsuit that was filed that we know about was filed
in early April, and it was challenging just the tariffs
on China. The next lawsuit challenged the reciprocal tariffs for
the Universal Tariff and then the other lawsuits and two
of them were filed by one of them was filed
(02:47):
by a group of states, and then the other one
was filed by the state of California challenge to all tariffs.
And so they're all, you know, they make very similar arguments,
and if you want to get into them, I can.
Speaker 1 (03:00):
Yeah, maybe maybe, I mean just quickly, maybe it makes
sense for you to just sort of outline. I mean,
there's basically like two main arguments. One is statutory. One's
constitutional right.
Speaker 2 (03:09):
Right.
Speaker 3 (03:10):
So first they stay that the statute the president relied on,
which was the International Emergency Economic Powers Act, doesn't authorize
the tariffs because which we call, yeah, AIPA. It's much
easier than that, that long, long name that gets is stuck.
So AIPA doesn't authorize the terriffs because it never even
(03:32):
mentions the word terraffs. And there are a bunch of
other statutes that provide very structured and reticulated ways to
impose tariffs, and they stay mentioned the word tariffs, and
this is not one of them. And so they say
this was a statute that was meant to deal with
emergencies and like imposed trade embargos and things like that.
(03:52):
It was not meant to impose like Adflorm's duties, and
you can you we know that because it doesn't mention
the word teriffs, and so that's one of the arguments.
The second argument is that on one lawsuit, a challenging
reciprol cold tariff says that the statute requires a national
(04:14):
emergency that poses an unusual and extraordinary threat. And that's
a quote from the statute, an unusual and extraordinary threat,
and this is not the trade deficit that was cited
as a basis for the reciprocal teriff. Is not an
unusual and extraordinary threat. It's been in existence for fifty years.
So this statute was definitely not meant to address an
(04:35):
emergency like that. Or this is not an emergency, so
it was not meant to address this situation like that.
Then the lawsuit challenging the tariffs on China say, they
don't contest, they don't claim that the illicit drugs and
unlawful migration that's the basis for that, that that emergency
(04:58):
is not an emergency, but they that the teriffs are
not necessary to address that emergency. And then finally, all
of the lawsuits argue that if AYIPA authorizes the terroriffs,
then Congress unconstitutionally delegated.
Speaker 1 (05:13):
As powers, right, And I mean your view is you
lean towards the terriffs, you know, sticky in, and that
the government will prevail in these lawsuits. But you do
think it's a close.
Speaker 3 (05:28):
Call, right, I do think it's a close call. So
we said that we think the teriffs will be upheld
because aipa's granted authority. It grants the president the power
to regulate imports, and we say that that encompasses the
power to impose tariffs. We also don't think the court
is going to want to wait into what constitutes an emergency.
(05:49):
They haven't in the past. They've been very reluctant to
the second and gets the president when it comes to
declarations of emergency. And the law doesn't constitutionally delegate power
because it provides called an intelligible principle to the president.
And in the one case in which two Supreme Court
justices indicated they want to revisit the so called non
delegation doctrine because this is a doctrine that hasn't been
(06:11):
you has been looked at for like I think over
seventy years or something like that. And in the one
case in which two justices said they may want to
revisit the doctrine and redefine it, they had a carve
out for situations where the President and Congress's powers overlapped
in areas wherehere they typically overlap, like and they explicitly
(06:33):
mentioned foreign affairs, and I think this is something like
that tariff powers, something like that. So I don't think
they're going to want to revisit that doctrine in a
case like this. So I said, these are going to
be up the law is going to be upheld. And
with regard to the recent rulings in the International Trade Court,
what happened there was the challengers came in, they filed
(06:54):
and what's called a TIRO temporary restraining order. They asked
the court and in a preliminary injunction they asked the
court to stay the terrorists right away immediately. So the
court then, within a quick turn and I think was
like a couple of days, said that they're not going
to grant a tierro the terrifts are still in place
(07:15):
because they did not find that the challengers showed that
they had an immediate immediate irreparable harm. So so ther
the TIRO last for fourteen days, and they said that
they did not show that they would be immediately harmed
in that fourteen day period because they none of them
claim that they even pay the terroriffs or were about
(07:37):
to pay the terriffs. And so that's an interesting issue
that's come up, is that, you know, do any of
these challengers have standing to sue the government over these terraffs?
Speaker 1 (07:47):
Right, So the court didn't even reach their issue of
likelihood of success on the marits, which is also part
of it to yours standard, right, So we're still left
hanging as to what the court is thinking on that.
What do you look for it next? In all these
lawsuits before we move on to justin.
Speaker 3 (08:05):
So there's a hearing on May thirteens on the on
the preliminary INJUNCTIONVID before the US International Trade Court.
Speaker 1 (08:15):
Where you used to work, right you should, right.
Speaker 3 (08:17):
Interns, Yeah, many eons ago. Let's not get into how
long ago that was. But but there's this hearing, and
so we should get some more insight on which way
the court's leaning, or we may get more insight on
which way the courts leaning and I think we'll get
a decision relatively quickly. I think this could be turned
around in two Q and then I do expect other
(08:40):
preliminary injunction motions to be filed. And there's you know,
the court the cases that have not been filed in
the US International Trade Court, the government is moving to
transfer them there, so before there's a preliminary injunction motion
or hearing, we'll have to see if it's transferred to
the U S I C.
Speaker 1 (08:58):
I T right on the argument that the Court of
International Trade has exclusive jurisdiction over all things tariffs. That's right, Yeah,
all right, that's great, So we'll we'll follow up probably
every week since there's so many cases. All right, thanks, Ally,
let's move on to Justin and all things anti trust,
(09:20):
lots lots of So Justin's been in DC for the
last two weeks basically following the FTC versus Meta trial,
but also in the same courthouse as our other anti
trust analyst, Jenry, who can't make it today because he's
still in the courthouse for the Google Search Remedies case.
So Justin maybe update us on both those cases. And
(09:43):
then there's also the Google ad Tech ruling that came out,
I don't know, in the last couple of weeks, right right, yeah,
tell us everything.
Speaker 2 (09:49):
You got it? So, so big tech is on trial
and everything is happening at exactly the same time, it
seems like. But yeah, I guess just you know, not
sure where to start, but I think Meta may makes
them the most sense and hop into Google from there.
But so, we just finished week two of the FTC's
trial of versus Meta Platforms and the allegations there that
Meta acted anti competitively to purchase what's happened Instagram a
(10:14):
long time ago, in twenty twelve and twenty fourteen, respectively,
and the government there is seeking a divestiture of those assets. So,
you know, I think we've always had this view that
with regards to that case, the FDC had some problems
with the way that it brought it. It's been a
long time since those acquisitions were closed. You know, there
are issues with the relevant product market, and there are
(10:34):
issues I think with the pro competitive justifications or the
things that really happened with those acquisitions since they took
place two weeks in a trial. It's certainly my view
that the that Meta certainly keeps its edge here and
the reason being that CEO Mark Zuckerberg in the first
week of trial did a great job in my view
in terms of explaining why Meta's actions with regard to
(10:56):
Instagram and WhatsApp, since they those acquisitions took place, you
know why they were actually good for those platforms. You know,
the improvements they made to Instagram, things like direct messaging,
things like real things like threads. All of those things
were added to the platform after the acquisition. So there
are those pro competitive things that happened to the platform
since metatook control. In terms of the actual product market
(11:19):
and the way the FTC defined it, they really chose
to bring that case about friends and family sharing they
call a personal social networking services market. The issue is,
since you know, since these acquisitions took place, you know,
well over a decade ago, things have changed. The use
case for a lot of these things aren't what they
used to be. Folks hop onto Instagram now and they
spend a lot more time, in terms of Meta testimony anyway,
(11:41):
looking at unconnected content like videos for folks they don't
know from creators they might not know in real life,
versus actually connecting with friends and family. So if that
core use change. If that core use has changed with
those products, then the market definition offered by the FDC
for those products really has taken kind of a backseat
to the realities of today. So in many ways, where
this case might have been successful a decade ago, the
(12:03):
realities of the marketplace have maybe tripped away at the
FTC's ability to bring it now.
Speaker 1 (12:08):
So yeah, that's kind I would say from personal experience,
I find that's happening more and more that I'm seeing
content offered to me on Instagram, Facebook of you know,
people I don't follow at all.
Speaker 2 (12:20):
Yeah, absolutely, And you know, I think really interesting too.
In testimony from from from Mark Zuckerberg and Cheryl Sandberg,
you know, the use of things like group texting also
is kind of you know that over I message that's
kind of replacing a lot of what folks used to
do through a traditional Facebook post. You know that that's
really grown unused to you know, I think I have
maybe at least ten group texts on my phone I
(12:41):
can think of right now between friends and family. We
can join on four month after the after the call,
not a problem. But you know, there's a lot more
communication happening that way now, and all of these apps.
There's kind of these share screens now too, where you
can take you know, a particular piece of content from
something like Reddit, from something like from something like this
(13:02):
coord and you can hit a link to share it
for through I Message or through Whatsappened, through all these
other means. So like that's sharing in many ways as
Meta has replaced a lot of the actual posting that
would happen ten plus years ago. So the market is changing.
That's been their testimony so far.
Speaker 1 (13:17):
Got it. So the trials two weeks in, it's just
expected to go roughly how long?
Speaker 2 (13:23):
Yeah, So you know, it could end up any any time.
So certainly you know into June that the judge has
has has allowed it to go through July fourth, if
that through July third, if that's actually needed, Whether or
not that happens, we'll see. But you know, I think,
you know, probably mid to late June is looking like
the end date for that.
Speaker 1 (13:40):
Trial and then a decision I guess sometime and later
in the year, I guess, yeah.
Speaker 2 (13:46):
I would say later in the year. Of course, appeals
after that. Either way, I think we can count on
that for all these cases.
Speaker 1 (13:52):
Got it? And so Okay, So that's FTC Meta. Yes,
Google Search remedies is going on in the same courthouse.
You're not. You're not in that court room because he
cannot be in two places at once. But our colleague, yeah,
our colleague Genry is and I assume she's updated you.
So do you want to relay what he has to say?
Speaker 2 (14:12):
Yeah, she has And you know, I think you know,
through the first week of trial of that particular remedies trial,
if you will, there's been a lot of testimony about
whether what the appropriate remedy would be. Now that Judge
Meta not to be confused of meta platforms in DC
has ruled out.
Speaker 1 (14:28):
How did they not assign him to the medicase. It's
like it's total missed opportunity.
Speaker 2 (14:33):
It's been confusing enough without him without him on the
medic caase. But you know, now that he's found that
Google has this monopolization issue or maintenance of monopolization issue
with search, now we step into this remedies phase here,
and you know, it seems our view has been that
even though the government's looking for a divestiture of Google Chrome,
it's unlikely that's going to happen. That seems more like
(14:54):
an opening solvo and similar to a negotiation in terms
of scaling back with the court's actually going to be
likely to do here in terms of a remedy. So
we think what's more likely is that sharing some user
data information, that kind of information that's allowed Google's algorithms
to develop and become as strong as they have with
nascent search engines or search engines that haven't really developed
(15:15):
the same degree, that's really what we're likely to see here,
and there are there has been a lot of testament
this week about ways to anonymize that data so that
privacy concerns was sharing it aren't an issue if the
court ultimately decides to go that way. And I think
in a lot of ways too, these exclusivity agreements, So
with companies like Apple, where Google Search is a default
(15:35):
search behind things like Safari or Siri, you know, Apple
gets paid twenty billion dollars a year from Google for
that to be the default kind of search mechanism behind
its platforms. So big issue for Apple if those agreements
are taken away, and those agreements were found in being
anti competitive, right, so there's a high possibility of thereose
payments up question mark, Does Apple stop using Google Search
(15:56):
behind Siri or Safari if they don't receive those payments,
that's a big question too. If Google Search has really
developed that strong better search might in some ways it
might still be into Apple's benefit to use Google Search
behind those platforms, even if it's not being compensated for
doing so. But we think those agreements are an issue,
and you know, also likely we see some sharing of
(16:17):
user data just so that you know, other search engines
can develop their algorithms in a way that they could
actually compete.
Speaker 1 (16:23):
And when should we expect the decision on these remedies.
Speaker 2 (16:27):
So slated for August of this year, that's what Judge
Meta has said. Whether or not at drags a little
bit later than that remains to be seen.
Speaker 1 (16:34):
So that that's when he'll issue a decision. He has said.
Speaker 2 (16:37):
That that that is that is the goal. That is
the goal. Whether or not we see that, we'll see
if that's actually the case.
Speaker 1 (16:43):
Gotcha, all right? So and then just quickly on on
the Google add Tech ruling, just quickly what was it
and what's next?
Speaker 2 (16:50):
Sure? Sure, absolutely so. So turning down to Eastern District
of Virginia Google add Tech, there was a trial on
the on monopolization issues with Google Google's advertising technology back
in September. The judge there last week found that Google
does have a monopoly in terms of the publisher ad
server side of its ad technology, so the cell side
of the advertising stack and the advertising exchange in the middle.
(17:13):
That kind of ties advertisers to the places where they're
placing their ads. Google ties those products together in such
a way that if you want real time ad demand,
the court said, you have to use Google's ad server
to get there, and that tie in many ways. That's
the problem the court had. The court, as we expected,
didn't think that the actual buy side where people look
to place advertising, had a monopoly there. We didn't think
(17:35):
the court would find an issue there. It seems to
be a very competitive market as opposed to the other side.
Speaker 1 (17:40):
Of the spectrum.
Speaker 2 (17:41):
So heading into a remedies phase there now, Judge Brinkham
on moves really quickly. We think September late September is
looking like the start of that remedy. Is hearing that's
what was proposed by the parties. She may want to
move even faster than that. She's serarly try to move
things along as fast as she can. At the moment,
we're not thinking it. Divestiture is likely there. And the
reason why it's a Google's adser for they operate in
(18:04):
things other than the digital app that the display advertising
that was an issue in this case. There's a whole
bunch of other ads that they transact in for video
ads and app ads that were not part of this litigation.
So to force the sale the entire thing seems a
little bit unlikely. We think snipping that tie I mentioned
between the two products is more likely to be a
remedy in this case.
Speaker 1 (18:24):
Got it? All right, that's a great update. Thanks justin.
When when do you head back to DC? A week?
Speaker 2 (18:29):
Yeah, a week from Monday, So can't wait for that.
Speaker 1 (18:31):
Yeah, all right, talking about DC, let's bring in Nathan Dean,
who is our chief policy analyst down in Washington. Nathan,
what's going on in DC these days?
Speaker 4 (18:44):
Well, it's not going to Actually it's a fairly quiet
week as Washington goes. But it's gonna kick off next
week because the Congress returns after their two week recess,
and I think the first thing to talk about is reconciliation.
You know, this is the effort from the Republicans to
extend the twenty seventeen Tax Cuts and Jobs Act. We've
talked about it before on this program, and obviously, if
(19:05):
anybody's listening, the one to get a little bit deeper
dive on that, we certainly can. But you know, what
we're gonna see next week is the start of the markups.
And so, as you remember, the House and the Senate
passed the same resolution, and in these resolutions, it went
to each one of the committees and said, go forth
in either identify areas that you're going to cut or
(19:26):
identify areas that you're going to increase the deficit aka
bring more benefits in this case, you know, and so forth.
Speaker 1 (19:33):
How many commits? How many committees? Does it go to?
Speaker 4 (19:36):
Eight on the House side? And I will have a
better answer after no, no, no, no, it's fine. Yeah,
it's several. And so you know, but for the listeners,
really the big one is the House Ways and Means Committee.
This is the one where they're going to essentially play
with all the taxes. And so when you think about
like increasing self deduction or changing the corporate tax, or
(19:58):
President Trump coming out in support of the millionaire's tax
just this morning, or going from the thirty nine point
six percent tax rate to the forty percent tax rate.
You know, this is where the House in Ways and
Means Committee is going to play. Now, the interesting thing
here is that just for next week, just note that
the only committee that we think the Judiciary Armed Services
(20:19):
Committee there meeting the Armed Services one. If you have,
you know, exposure to the defense contractor space, that's the
one to pay attention to because they're one of the
few committees that was told to increase the budget. Republicans
are seeking about one hundred and fifty billion dollars in
additional funding for border security and the defense. So again,
if you have the defense contractors in your portfolio, you
(20:40):
want to pay attention to that. But the House Ways
and Means Committee is the most big one to talk about,
and that is most likely going to take place in
mid March. The Republicans wont all this done by Memorial Day.
I don't think they're going to be able to do
it for a couple role of reasons. One, it's much
more difficult to actually come up with the specifics than
it is to have the resolution itself. It's very easy
(21:00):
to agree on a top line number, and that's what
they agreed on. But when the Republicans agreed in the
House to cut one point five trillion dollars, and the
Senate Republicans agreed to cut as a floor four billion
with a B. There's a substantial difference in how they're
actually going to approach this. So they have the overline
numbers agreed, but how much they're going to cut or
(21:22):
are they going to increase the deficit, that's a little
bit more difficult. So Speaker Johnson wants all this wrapped
up by Memorial Day. I don't think they're going.
Speaker 2 (21:29):
To do it.
Speaker 4 (21:30):
I'm telling clients as a joke, watch out for that
June twenty fourth of July first time frame, because that's
when I'm going on vacation, but more likely than not,
because the debt ceiling is involved here and the X
state is most likely late July August, look for that
July maybe post fourth of July ten frame of when
the Republicans actually come up with a deal. And for
(21:51):
what it's worth, our base case scenario that we're working
off at the moment is that because the Senate instructions
only have four billion as a floor, it's much easier
easier to tell your constituents today you're not going to
cut for something like Medicare sorry, Medicaid snap benefits, the
Inflectional Reduction Act. It's much easier to say we're not
going to cut that, and then they say, you know,
we're going to increase the deficit. So I think more
(22:15):
likely than not a deal is done, the deficit most
likely will increase. And for what it's worth, the Committee
for Financial Responsible Budgets said that if you take the
Senate plan as is, you're looking at a five point
three billion dollar deficit increase, not taking into account economic
growth or any other type of indirect benefits from that.
So again interesting there. The other thing, just really.
Speaker 1 (22:36):
Quick, how are they going to get the deficit hawks
to come on board?
Speaker 4 (22:40):
If that is how President Trump is going to do it?
Because President Trump is going to march over to Capitol Hill.
He's going to drag all those twenty or thirty Republican
deficit hawks. He's going to look them in the eye
and say, are you going to derail my plan? Are
you going to be the one?
Speaker 2 (22:55):
Because?
Speaker 4 (22:56):
And the reason why? And I'm this is more anecdotal here,
but it's just interesting. Story. Is that Representative Andy Biggs
from Arizona hates voting for continuing resolutions, did not like
voting for continuing resolutions, but he did back in March,
and what subsequently happened. President Trump endorsed him for his
governor race for Arizona. And so I do think that
(23:17):
while the deficit hawks are going to complain about it,
and I think certainly Representative Massi from Kentucky is not
going to support that, I do think the rest of
them will get in line because at the end of
the day, they need to get a deal done, and
if they get a deal done now before September thirtieth,
they can always come back next year and try it again.
But I would also just say that, you know, we're
(23:37):
working off of a permanent extension of these trump are
attacks cuts. Nothing says that you have to do it permanent.
You could always just come back and say we're only
going to do it for three to four years, get
us through the rest of the President Trump's administration, and
the price tag of that lower substantially. It makes it
much easier to pass. So a lot of things can
happen here, and I certainly think that, you know, but
(23:57):
we ultimately do think a deal is going to get
done because as if not, then the individual tax rates
go up in the end of the year. And President
Trump has already said he does not want a return
of President George HW. Bushes read my lips, no new taxes.
Speaker 1 (24:09):
Right, but the real deadline will be the dead ceiling
and running out of extraordinary measures.
Speaker 4 (24:15):
Yeah, exactly. I mean, if we get to a sitche
a scenario where the Republicans can't agree, they could always
just pull that out and try and do it in
a bipartisan fashion. But then you're allowing the Democrats to
come in and play, and the Republicans certainly don't want that.
And for what it's worth, just because I know we
have a lot of listeners in the New York, New Jersey,
Connecticut area. The Sault deduction right now, the caps at
(24:36):
ten thousand dollars. The idea here is that you will
go somewhere between twenty five to thirty thousand. But again
we'll see.
Speaker 1 (24:44):
Okay, great, all right, thanks Nathan. All right, let's wrap
up with Tamlin over across the Pond in London. Tamlin
covers all things tech regulation related to tech regulation in
the EU and also covers some patent and other IP
litigation here in the US, so the man of many
(25:06):
tech hats, but tam on this. I guess. Just a
couple of days ago, we saw the EU find Meta
and Apple about eight hundred million dollars right, seven hundred
million euros. What was that about? I know is related
to the Digital Markets Act, but maybe just tell us
a little.
Speaker 5 (25:21):
Bit more, thanks, Ellia. So earlier this week the European
Commission it finalized its first two probes under the Digital
Markets Act. As you said, and just a little bit
of stuck back. The Digital Markets Act is this broad,
sweeping new set of competition rules that took effect in
(25:42):
March of last year. The sort of basis for these
competition rules is the European Commission would identify technology gate keepers,
and these gatekeepers were firms that had oversized market power. Incidentally,
nearly all of them were American technology firms. Once you
were identified as a gatekeeper, there was this sort of
(26:02):
laundry list of dues and don't that the identified firms
had to comply with. If they didn't comply, then the
European Commission would have sort of direct enforcement power. Just
weeks after the DMA took effect, we did see them
launch these probes that we're going to talk about into
Apple and Meta, as well as some probes into Google.
(26:24):
So what happened was on Wednesday, the fine against Apple
was five hundred million euros. Against Meta it was two
hundred million euros. Now, these are really minuscule numbers compared
to what the European Commission could have fined. They could
have find each firm up to ten percent of their
(26:46):
total revenue from the previous years. The final was actually
zero global revenue. So we're talking tens of billions of
dollars in potential fines. The fines. Doing the math, it
was it was zero point one four percent of Apple's
revenue from twenty twenty four and zero point one three
percent for Metas. So this is smaller even than what
(27:07):
the percentage we are seeing under GDPR General Data Protection Regulation,
where you're only allowed to go up to four percent
of a firm's revenue. If you would have used that
same scale here, we would have seen fins of about doubleness.
So I think this really does kind of suggest that
the European Commission has sort of pivoted away from sort
of these potentially eye popping fines. However, that doesn't mean
(27:30):
the tech firms are off the hook, and the reason
is because there is a behavioral component to these actions.
So specifically, if you look at Apple, the focus of
the probe was on this sort of app store policies
that have sort of caught regulatory i are both here
in Europe as well as in the US, And specifically
is how on these restrictions that Apple places on app developers,
(27:55):
these sort of anti steering measures, And one of this
is is Apple is trying to control all communication between
the developers and end users within the app, meaning that
that developers can't sort of direct users away from the
app store to sort of potentially lower priced subscriptions on
where Apple maybe doesn't get sort of it's take rate.
(28:16):
What the Commission said here is is that you know,
Apple has obviously made some measures to open that up.
They said, you haven't gone far enough. You really have
to open the system up. Apple's going to have sixty
days to make those changes. For Meta, it's sort of
much less of an immediate change that's going to be required.
That's because the finding against Meta was on it's called
(28:37):
the consent or pay model. So essentially what the European
Commission has said, and this also sort of goes back
to GDPR, which was you were not allowed to condition
use of your app on a user's willingness to allow
their personal data to be used in order to serve
advertise advertisements. So Meta tried to comply with that by saying, Okay,
(28:58):
you can either consent to letting us use your data,
or you can pay a monthly subscription fee. Now, the
EU Commission has said that that's not necessarily a fair
you're sort of coercing users into allowing us them to
use your data. So here the Commission said that that
wasn't compliant with the DMA. However, Meta in November twenty
(29:22):
twenty four change its policy again and now it says
it's offering users a choice to use that for free,
and there's going to be ads that use less personalized data.
The Commission is still trying to determine whether that complies
with the DMA. However, what it does tell us is
that there's no immediate change to Meta now. Now, Apple
(29:42):
and Meta are pretty certain to appeal here. However, I
think this is still going to have to make the changes.
And again there's that six day day window. The reason
for that is they'd essentially have to almost meet the
tro standards that we talked about earlier in order to
get a reprieve on those on making those changes. I
think that's a bit unlikely here, And I think what
(30:07):
we're definitely seeing is did the Commission and probably significantly
into response to sort of President Trump's rhetoric against sort
of the fines of American tech firms. I think the
Commission made a very conscious decision to not go really
hard on the fines and maybe to lean a little
bit on the behavioral remedy, and they're hoping that that's
(30:28):
not going to further exacerbate tensions, but also continuing to
sort of try to demand and nudge technology firms into
complying with these new roles. I think that's what we're
seeing here.
Speaker 1 (30:39):
Interesting at some point you mentioned Google as well. They
weren't part of these fines, so are they still being investigated. Yeah.
Speaker 5 (30:44):
So there's two pinning probes of Google, and one is
very similar to the Apple one and the App store,
and basically it's another anti steering the way that Google
restricts developers in their own playstore ecosystem. That one we
didn't get initial findings until a few weeks ago, so
soone in the DMA, technically the commission has to endeavor
(31:07):
to finalize a probe within twelve months of it being launched.
So again, all these were launched in March of last year.
We just got the finalization in two of these. The
Google one we had the preliminary findings just a few
weeks ago. I think it's going to be another few
months until that's wrapped up. So one is on the
play Store. The other one, which is potentially more risky
(31:29):
for Google, it's on sort of self preferencing of its
own verticals and search results, so think of sort of
Google flights for sort of Expedia or Kayak, and the
way that it's ranking its verticals and those search results.
The commissions take so far has been that that's abusing
its market position to preserve its status in those search rankings.
(31:49):
So again we should get that in a few months.
And the other Apple one is on sort of this
app store destructure where it's proposed to charge sort of
fifty cents per downlae for apps orre to download apps,
any apps on app Store, And this is sort of
in response to a lot of pressure they've been getting
over that thirty or fifteen percent take right on apps.
Speaker 1 (32:10):
Got it all right? So we'll follow up on all
these things, you know, in a few weeks. I guess
all right. I think we're going to leave it there.
We're going to wrap up this episode of Votes and Verdicts.
As always, thank you for listening. If you have any
questions about any of the matters that we discussed on
this episode, please don't hesitate to reach out to us
at your convenience with any questions. As a reminder, you
(32:31):
can find all of our research on the Bloomberg terminal
at big or on our litigation and policy dashboard at
BI laws Go, and we encourage you to listen to
other episodes of Votes and Verdicts on whatever platform you'd
like to get your favorite podcasts. Thank you again for listening,
and have.
Speaker 6 (32:47):
A great day. Do you want to do
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and Policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg terminal.
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 we have
(00:37):
outlooks on more than ninety industries and one hundred market indices,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly check in
on the litigation and policy catalysts that we're watching and
that we think will impact companies across a number of
different sectors. My name is Elliot Stein. I'm an analyst
(00:57):
with the Bloomberg Intelligence covering litigation in the financial sector,
and I'll be your host for today, April twenty fifth,
twenty twenty five. And since things move very quickly these days,
especially when it comes to policies, we're recording this at
ten thirty am Eastern Time. Delighted today to be joined
by a handful of my colleagues on the Litigation and
(01:19):
Policy team. We have Nathan Dian and DC, we have
justin THEREESI and Holly from here in New York, and
we have Tamlin Basin out in London. You can find
all of our research on the Bloomberg terminal at BI
go and more specifically on our dashboard BI Laws Go.
All right, So I think, Holly, why don't we start
(01:40):
with you. You've been covering the growing number of lawsuits
that have been challenging President Trump's tariffs. There's several lawsuits
going on, and I think this week may have been
sort of the first time we have sort of a
preliminary ruling. Do you want to give us an update
on the k and where they are and how you
(02:02):
see them playing out?
Speaker 2 (02:04):
Sure?
Speaker 3 (02:04):
Thanks Elliott. So there are about five or six lawsuits
right now, and two of them have actually three of
them have been filed in the International Trade Court I
believe it's free. The rest have been filed in federal
courts around the country, and they're challenging some The first
(02:26):
lawsuit that was filed that we know about was filed
in early April, and it was challenging just the tariffs
on China. The next lawsuit challenged the reciprocal tariffs for
the Universal Tariff and then the other lawsuits and two
of them were filed by one of them was filed
(02:47):
by a group of states, and then the other one
was filed by the state of California challenge to all tariffs.
And so they're all, you know, they make very similar arguments,
and if you want to get into them, I can.
Speaker 1 (03:00):
Yeah, maybe maybe, I mean just quickly, maybe it makes
sense for you to just sort of outline. I mean,
there's basically like two main arguments. One is statutory. One's
constitutional right.
Speaker 2 (03:09):
Right.
Speaker 3 (03:10):
So first they stay that the statute the president relied on,
which was the International Emergency Economic Powers Act, doesn't authorize
the tariffs because which we call, yeah, AIPA. It's much
easier than that, that long, long name that gets is stuck.
So AIPA doesn't authorize the terriffs because it never even
(03:32):
mentions the word terraffs. And there are a bunch of
other statutes that provide very structured and reticulated ways to
impose tariffs, and they stay mentioned the word tariffs, and
this is not one of them. And so they say
this was a statute that was meant to deal with
emergencies and like imposed trade embargos and things like that.
(03:52):
It was not meant to impose like Adflorm's duties, and
you can you we know that because it doesn't mention
the word teriffs, and so that's one of the arguments.
The second argument is that on one lawsuit, a challenging
reciprol cold tariff says that the statute requires a national
(04:14):
emergency that poses an unusual and extraordinary threat. And that's
a quote from the statute, an unusual and extraordinary threat,
and this is not the trade deficit that was cited
as a basis for the reciprocal teriff. Is not an
unusual and extraordinary threat. It's been in existence for fifty years.
So this statute was definitely not meant to address an
(04:35):
emergency like that. Or this is not an emergency, so
it was not meant to address this situation like that.
Then the lawsuit challenging the tariffs on China say, they
don't contest, they don't claim that the illicit drugs and
unlawful migration that's the basis for that, that that emergency
(04:58):
is not an emergency, but they that the teriffs are
not necessary to address that emergency. And then finally, all
of the lawsuits argue that if AYIPA authorizes the terroriffs,
then Congress unconstitutionally delegated.
Speaker 1 (05:13):
As powers, right, And I mean your view is you
lean towards the terriffs, you know, sticky in, and that
the government will prevail in these lawsuits. But you do
think it's a close.
Speaker 3 (05:28):
Call, right, I do think it's a close call. So
we said that we think the teriffs will be upheld
because aipa's granted authority. It grants the president the power
to regulate imports, and we say that that encompasses the
power to impose tariffs. We also don't think the court
is going to want to wait into what constitutes an emergency.
(05:49):
They haven't in the past. They've been very reluctant to
the second and gets the president when it comes to
declarations of emergency. And the law doesn't constitutionally delegate power
because it provides called an intelligible principle to the president.
And in the one case in which two Supreme Court
justices indicated they want to revisit the so called non
delegation doctrine because this is a doctrine that hasn't been
(06:11):
you has been looked at for like I think over
seventy years or something like that. And in the one
case in which two justices said they may want to
revisit the doctrine and redefine it, they had a carve
out for situations where the President and Congress's powers overlapped
in areas wherehere they typically overlap, like and they explicitly
(06:33):
mentioned foreign affairs, and I think this is something like
that tariff powers, something like that. So I don't think
they're going to want to revisit that doctrine in a
case like this. So I said, these are going to
be up the law is going to be upheld. And
with regard to the recent rulings in the International Trade Court,
what happened there was the challengers came in, they filed
(06:54):
and what's called a TIRO temporary restraining order. They asked
the court and in a preliminary injunction they asked the
court to stay the terrorists right away immediately. So the
court then, within a quick turn and I think was
like a couple of days, said that they're not going
to grant a tierro the terrifts are still in place
(07:15):
because they did not find that the challengers showed that
they had an immediate immediate irreparable harm. So so ther
the TIRO last for fourteen days, and they said that
they did not show that they would be immediately harmed
in that fourteen day period because they none of them
claim that they even pay the terroriffs or were about
(07:37):
to pay the terriffs. And so that's an interesting issue
that's come up, is that, you know, do any of
these challengers have standing to sue the government over these terraffs?
Speaker 1 (07:47):
Right, So the court didn't even reach their issue of
likelihood of success on the marits, which is also part
of it to yours standard, right, So we're still left
hanging as to what the court is thinking on that.
What do you look for it next? In all these
lawsuits before we move on to justin.
Speaker 3 (08:05):
So there's a hearing on May thirteens on the on
the preliminary INJUNCTIONVID before the US International Trade Court.
Speaker 1 (08:15):
Where you used to work, right you should, right.
Speaker 3 (08:17):
Interns, Yeah, many eons ago. Let's not get into how
long ago that was. But but there's this hearing, and
so we should get some more insight on which way
the court's leaning, or we may get more insight on
which way the courts leaning and I think we'll get
a decision relatively quickly. I think this could be turned
around in two Q and then I do expect other
(08:40):
preliminary injunction motions to be filed. And there's you know,
the court the cases that have not been filed in
the US International Trade Court, the government is moving to
transfer them there, so before there's a preliminary injunction motion
or hearing, we'll have to see if it's transferred to
the U S I C.
Speaker 1 (08:58):
I T right on the argument that the Court of
International Trade has exclusive jurisdiction over all things tariffs. That's right, Yeah,
all right, that's great, So we'll we'll follow up probably
every week since there's so many cases. All right, thanks, Ally,
let's move on to Justin and all things anti trust,
(09:20):
lots lots of So Justin's been in DC for the
last two weeks basically following the FTC versus Meta trial,
but also in the same courthouse as our other anti
trust analyst, Jenry, who can't make it today because he's
still in the courthouse for the Google Search Remedies case.
So Justin maybe update us on both those cases. And
(09:43):
then there's also the Google ad Tech ruling that came out,
I don't know, in the last couple of weeks, right right, yeah,
tell us everything.
Speaker 2 (09:49):
You got it? So, so big tech is on trial
and everything is happening at exactly the same time, it
seems like. But yeah, I guess just you know, not
sure where to start, but I think Meta may makes
them the most sense and hop into Google from there.
But so, we just finished week two of the FTC's
trial of versus Meta Platforms and the allegations there that
Meta acted anti competitively to purchase what's happened Instagram a
(10:14):
long time ago, in twenty twelve and twenty fourteen, respectively,
and the government there is seeking a divestiture of those assets. So,
you know, I think we've always had this view that
with regards to that case, the FDC had some problems
with the way that it brought it. It's been a
long time since those acquisitions were closed. You know, there
are issues with the relevant product market, and there are
(10:34):
issues I think with the pro competitive justifications or the
things that really happened with those acquisitions since they took
place two weeks in a trial. It's certainly my view
that the that Meta certainly keeps its edge here and
the reason being that CEO Mark Zuckerberg in the first
week of trial did a great job in my view
in terms of explaining why Meta's actions with regard to
(10:56):
Instagram and WhatsApp, since they those acquisitions took place, you
know why they were actually good for those platforms. You know,
the improvements they made to Instagram, things like direct messaging,
things like real things like threads. All of those things
were added to the platform after the acquisition. So there
are those pro competitive things that happened to the platform
since metatook control. In terms of the actual product market
(11:19):
and the way the FTC defined it, they really chose
to bring that case about friends and family sharing they
call a personal social networking services market. The issue is,
since you know, since these acquisitions took place, you know,
well over a decade ago, things have changed. The use
case for a lot of these things aren't what they
used to be. Folks hop onto Instagram now and they
spend a lot more time, in terms of Meta testimony anyway,
(11:41):
looking at unconnected content like videos for folks they don't
know from creators they might not know in real life,
versus actually connecting with friends and family. So if that
core use change. If that core use has changed with
those products, then the market definition offered by the FDC
for those products really has taken kind of a backseat
to the realities of today. So in many ways, where
this case might have been successful a decade ago, the
(12:03):
realities of the marketplace have maybe tripped away at the
FTC's ability to bring it now.
Speaker 1 (12:08):
So yeah, that's kind I would say from personal experience,
I find that's happening more and more that I'm seeing
content offered to me on Instagram, Facebook of you know,
people I don't follow at all.
Speaker 2 (12:20):
Yeah, absolutely, And you know, I think really interesting too.
In testimony from from from Mark Zuckerberg and Cheryl Sandberg,
you know, the use of things like group texting also
is kind of you know that over I message that's
kind of replacing a lot of what folks used to
do through a traditional Facebook post. You know that that's
really grown unused to you know, I think I have
maybe at least ten group texts on my phone I
(12:41):
can think of right now between friends and family. We
can join on four month after the after the call,
not a problem. But you know, there's a lot more
communication happening that way now, and all of these apps.
There's kind of these share screens now too, where you
can take you know, a particular piece of content from
something like Reddit, from something like from something like this
(13:02):
coord and you can hit a link to share it
for through I Message or through Whatsappened, through all these
other means. So like that's sharing in many ways as
Meta has replaced a lot of the actual posting that
would happen ten plus years ago. So the market is changing.
That's been their testimony so far.
Speaker 1 (13:17):
Got it. So the trials two weeks in, it's just
expected to go roughly how long?
Speaker 2 (13:23):
Yeah, So you know, it could end up any any time.
So certainly you know into June that the judge has
has has allowed it to go through July fourth, if
that through July third, if that's actually needed, Whether or
not that happens, we'll see. But you know, I think,
you know, probably mid to late June is looking like
the end date for that.
Speaker 1 (13:40):
Trial and then a decision I guess sometime and later
in the year, I guess, yeah.
Speaker 2 (13:46):
I would say later in the year. Of course, appeals
after that. Either way, I think we can count on
that for all these cases.
Speaker 1 (13:52):
Got it? And so Okay, So that's FTC Meta. Yes,
Google Search remedies is going on in the same courthouse.
You're not. You're not in that court room because he
cannot be in two places at once. But our colleague, yeah,
our colleague Genry is and I assume she's updated you.
So do you want to relay what he has to say?
Speaker 2 (14:12):
Yeah, she has And you know, I think you know,
through the first week of trial of that particular remedies trial,
if you will, there's been a lot of testimony about
whether what the appropriate remedy would be. Now that Judge
Meta not to be confused of meta platforms in DC
has ruled out.
Speaker 1 (14:28):
How did they not assign him to the medicase. It's
like it's total missed opportunity.
Speaker 2 (14:33):
It's been confusing enough without him without him on the
medic caase. But you know, now that he's found that
Google has this monopolization issue or maintenance of monopolization issue
with search, now we step into this remedies phase here,
and you know, it seems our view has been that
even though the government's looking for a divestiture of Google Chrome,
it's unlikely that's going to happen. That seems more like
(14:54):
an opening solvo and similar to a negotiation in terms
of scaling back with the court's actually going to be
likely to do here in terms of a remedy. So
we think what's more likely is that sharing some user
data information, that kind of information that's allowed Google's algorithms
to develop and become as strong as they have with
nascent search engines or search engines that haven't really developed
(15:15):
the same degree, that's really what we're likely to see here,
and there are there has been a lot of testament
this week about ways to anonymize that data so that
privacy concerns was sharing it aren't an issue if the
court ultimately decides to go that way. And I think
in a lot of ways too, these exclusivity agreements, So
with companies like Apple, where Google Search is a default
(15:35):
search behind things like Safari or Siri, you know, Apple
gets paid twenty billion dollars a year from Google for
that to be the default kind of search mechanism behind
its platforms. So big issue for Apple if those agreements
are taken away, and those agreements were found in being
anti competitive, right, so there's a high possibility of thereose
payments up question mark, Does Apple stop using Google Search
(15:56):
behind Siri or Safari if they don't receive those payments,
that's a big question too. If Google Search has really
developed that strong better search might in some ways it
might still be into Apple's benefit to use Google Search
behind those platforms, even if it's not being compensated for
doing so. But we think those agreements are an issue,
and you know, also likely we see some sharing of
(16:17):
user data just so that you know, other search engines
can develop their algorithms in a way that they could
actually compete.
Speaker 1 (16:23):
And when should we expect the decision on these remedies.
Speaker 2 (16:27):
So slated for August of this year, that's what Judge
Meta has said. Whether or not at drags a little
bit later than that remains to be seen.
Speaker 1 (16:34):
So that that's when he'll issue a decision. He has said.
Speaker 2 (16:37):
That that that is that is the goal. That is
the goal. Whether or not we see that, we'll see
if that's actually the case.
Speaker 1 (16:43):
Gotcha, all right? So and then just quickly on on
the Google add Tech ruling, just quickly what was it
and what's next?
Speaker 2 (16:50):
Sure? Sure, absolutely so. So turning down to Eastern District
of Virginia Google add Tech, there was a trial on
the on monopolization issues with Google Google's advertising technology back
in September. The judge there last week found that Google
does have a monopoly in terms of the publisher ad
server side of its ad technology, so the cell side
of the advertising stack and the advertising exchange in the middle.
(17:13):
That kind of ties advertisers to the places where they're
placing their ads. Google ties those products together in such
a way that if you want real time ad demand,
the court said, you have to use Google's ad server
to get there, and that tie in many ways. That's
the problem the court had. The court, as we expected,
didn't think that the actual buy side where people look
to place advertising, had a monopoly there. We didn't think
(17:35):
the court would find an issue there. It seems to
be a very competitive market as opposed to the other side.
Speaker 1 (17:40):
Of the spectrum.
Speaker 2 (17:41):
So heading into a remedies phase there now, Judge Brinkham
on moves really quickly. We think September late September is
looking like the start of that remedy. Is hearing that's
what was proposed by the parties. She may want to
move even faster than that. She's serarly try to move
things along as fast as she can. At the moment,
we're not thinking it. Divestiture is likely there. And the
reason why it's a Google's adser for they operate in
(18:04):
things other than the digital app that the display advertising
that was an issue in this case. There's a whole
bunch of other ads that they transact in for video
ads and app ads that were not part of this litigation.
So to force the sale the entire thing seems a
little bit unlikely. We think snipping that tie I mentioned
between the two products is more likely to be a
remedy in this case.
Speaker 1 (18:24):
Got it? All right, that's a great update. Thanks justin.
When when do you head back to DC? A week?
Speaker 2 (18:29):
Yeah, a week from Monday, So can't wait for that.
Speaker 1 (18:31):
Yeah, all right, talking about DC, let's bring in Nathan Dean,
who is our chief policy analyst down in Washington. Nathan,
what's going on in DC these days?
Speaker 4 (18:44):
Well, it's not going to Actually it's a fairly quiet
week as Washington goes. But it's gonna kick off next
week because the Congress returns after their two week recess,
and I think the first thing to talk about is reconciliation.
You know, this is the effort from the Republicans to
extend the twenty seventeen Tax Cuts and Jobs Act. We've
talked about it before on this program, and obviously, if
(19:05):
anybody's listening, the one to get a little bit deeper
dive on that, we certainly can. But you know, what
we're gonna see next week is the start of the markups.
And so, as you remember, the House and the Senate
passed the same resolution, and in these resolutions, it went
to each one of the committees and said, go forth
in either identify areas that you're going to cut or
(19:26):
identify areas that you're going to increase the deficit aka
bring more benefits in this case, you know, and so forth.
Speaker 1 (19:33):
How many commits? How many committees? Does it go to?
Speaker 4 (19:36):
Eight on the House side? And I will have a
better answer after no, no, no, no, it's fine. Yeah,
it's several. And so you know, but for the listeners,
really the big one is the House Ways and Means Committee.
This is the one where they're going to essentially play
with all the taxes. And so when you think about
like increasing self deduction or changing the corporate tax, or
(19:58):
President Trump coming out in support of the millionaire's tax
just this morning, or going from the thirty nine point
six percent tax rate to the forty percent tax rate.
You know, this is where the House in Ways and
Means Committee is going to play. Now, the interesting thing
here is that just for next week, just note that
the only committee that we think the Judiciary Armed Services
(20:19):
Committee there meeting the Armed Services one. If you have,
you know, exposure to the defense contractor space, that's the
one to pay attention to because they're one of the
few committees that was told to increase the budget. Republicans
are seeking about one hundred and fifty billion dollars in
additional funding for border security and the defense. So again,
if you have the defense contractors in your portfolio, you
(20:40):
want to pay attention to that. But the House Ways
and Means Committee is the most big one to talk about,
and that is most likely going to take place in
mid March. The Republicans wont all this done by Memorial Day.
I don't think they're going to be able to do
it for a couple role of reasons. One, it's much
more difficult to actually come up with the specifics than
it is to have the resolution itself. It's very easy
(21:00):
to agree on a top line number, and that's what
they agreed on. But when the Republicans agreed in the
House to cut one point five trillion dollars, and the
Senate Republicans agreed to cut as a floor four billion
with a B. There's a substantial difference in how they're
actually going to approach this. So they have the overline
numbers agreed, but how much they're going to cut or
(21:22):
are they going to increase the deficit, that's a little
bit more difficult. So Speaker Johnson wants all this wrapped
up by Memorial Day. I don't think they're going.
Speaker 2 (21:29):
To do it.
Speaker 4 (21:30):
I'm telling clients as a joke, watch out for that
June twenty fourth of July first time frame, because that's
when I'm going on vacation, but more likely than not,
because the debt ceiling is involved here and the X
state is most likely late July August, look for that
July maybe post fourth of July ten frame of when
the Republicans actually come up with a deal. And for
(21:51):
what it's worth, our base case scenario that we're working
off at the moment is that because the Senate instructions
only have four billion as a floor, it's much easier
easier to tell your constituents today you're not going to
cut for something like Medicare sorry, Medicaid snap benefits, the
Inflectional Reduction Act. It's much easier to say we're not
going to cut that, and then they say, you know,
we're going to increase the deficit. So I think more
(22:15):
likely than not a deal is done, the deficit most
likely will increase. And for what it's worth, the Committee
for Financial Responsible Budgets said that if you take the
Senate plan as is, you're looking at a five point
three billion dollar deficit increase, not taking into account economic
growth or any other type of indirect benefits from that.
So again interesting there. The other thing, just really.
Speaker 1 (22:36):
Quick, how are they going to get the deficit hawks
to come on board?
Speaker 4 (22:40):
If that is how President Trump is going to do it?
Because President Trump is going to march over to Capitol Hill.
He's going to drag all those twenty or thirty Republican
deficit hawks. He's going to look them in the eye
and say, are you going to derail my plan? Are
you going to be the one?
Speaker 2 (22:55):
Because?
Speaker 4 (22:56):
And the reason why? And I'm this is more anecdotal here,
but it's just interesting. Story. Is that Representative Andy Biggs
from Arizona hates voting for continuing resolutions, did not like
voting for continuing resolutions, but he did back in March,
and what subsequently happened. President Trump endorsed him for his
governor race for Arizona. And so I do think that
(23:17):
while the deficit hawks are going to complain about it,
and I think certainly Representative Massi from Kentucky is not
going to support that, I do think the rest of
them will get in line because at the end of
the day, they need to get a deal done, and
if they get a deal done now before September thirtieth,
they can always come back next year and try it again.
But I would also just say that, you know, we're
(23:37):
working off of a permanent extension of these trump are
attacks cuts. Nothing says that you have to do it permanent.
You could always just come back and say we're only
going to do it for three to four years, get
us through the rest of the President Trump's administration, and
the price tag of that lower substantially. It makes it
much easier to pass. So a lot of things can
happen here, and I certainly think that, you know, but
(23:57):
we ultimately do think a deal is going to get
done because as if not, then the individual tax rates
go up in the end of the year. And President
Trump has already said he does not want a return
of President George HW. Bushes read my lips, no new taxes.
Speaker 1 (24:09):
Right, but the real deadline will be the dead ceiling
and running out of extraordinary measures.
Speaker 4 (24:15):
Yeah, exactly. I mean, if we get to a sitche
a scenario where the Republicans can't agree, they could always
just pull that out and try and do it in
a bipartisan fashion. But then you're allowing the Democrats to
come in and play, and the Republicans certainly don't want that.
And for what it's worth, just because I know we
have a lot of listeners in the New York, New Jersey,
Connecticut area. The Sault deduction right now, the caps at
(24:36):
ten thousand dollars. The idea here is that you will
go somewhere between twenty five to thirty thousand. But again
we'll see.
Speaker 1 (24:44):
Okay, great, all right, thanks Nathan. All right, let's wrap
up with Tamlin over across the Pond in London. Tamlin
covers all things tech regulation related to tech regulation in
the EU and also covers some patent and other IP
litigation here in the US, so the man of many
(25:06):
tech hats, but tam on this. I guess. Just a
couple of days ago, we saw the EU find Meta
and Apple about eight hundred million dollars right, seven hundred
million euros. What was that about? I know is related
to the Digital Markets Act, but maybe just tell us
a little.
Speaker 5 (25:21):
Bit more, thanks, Ellia. So earlier this week the European
Commission it finalized its first two probes under the Digital
Markets Act. As you said, and just a little bit
of stuck back. The Digital Markets Act is this broad,
sweeping new set of competition rules that took effect in
(25:42):
March of last year. The sort of basis for these
competition rules is the European Commission would identify technology gate keepers,
and these gatekeepers were firms that had oversized market power. Incidentally,
nearly all of them were American technology firms. Once you
were identified as a gatekeeper, there was this sort of
(26:02):
laundry list of dues and don't that the identified firms
had to comply with. If they didn't comply, then the
European Commission would have sort of direct enforcement power. Just
weeks after the DMA took effect, we did see them
launch these probes that we're going to talk about into
Apple and Meta, as well as some probes into Google.
(26:24):
So what happened was on Wednesday, the fine against Apple
was five hundred million euros. Against Meta it was two
hundred million euros. Now, these are really minuscule numbers compared
to what the European Commission could have fined. They could
have find each firm up to ten percent of their
(26:46):
total revenue from the previous years. The final was actually
zero global revenue. So we're talking tens of billions of
dollars in potential fines. The fines. Doing the math, it
was it was zero point one four percent of Apple's
revenue from twenty twenty four and zero point one three
percent for Metas. So this is smaller even than what
(27:07):
the percentage we are seeing under GDPR General Data Protection Regulation,
where you're only allowed to go up to four percent
of a firm's revenue. If you would have used that
same scale here, we would have seen fins of about doubleness.
So I think this really does kind of suggest that
the European Commission has sort of pivoted away from sort
of these potentially eye popping fines. However, that doesn't mean
(27:30):
the tech firms are off the hook, and the reason
is because there is a behavioral component to these actions.
So specifically, if you look at Apple, the focus of
the probe was on this sort of app store policies
that have sort of caught regulatory i are both here
in Europe as well as in the US, And specifically
is how on these restrictions that Apple places on app developers,
(27:55):
these sort of anti steering measures, And one of this
is is Apple is trying to control all communication between
the developers and end users within the app, meaning that
that developers can't sort of direct users away from the
app store to sort of potentially lower priced subscriptions on
where Apple maybe doesn't get sort of it's take rate.
(28:16):
What the Commission said here is is that you know,
Apple has obviously made some measures to open that up.
They said, you haven't gone far enough. You really have
to open the system up. Apple's going to have sixty
days to make those changes. For Meta, it's sort of
much less of an immediate change that's going to be required.
That's because the finding against Meta was on it's called
(28:37):
the consent or pay model. So essentially what the European
Commission has said, and this also sort of goes back
to GDPR, which was you were not allowed to condition
use of your app on a user's willingness to allow
their personal data to be used in order to serve
advertise advertisements. So Meta tried to comply with that by saying, Okay,
(28:58):
you can either consent to letting us use your data,
or you can pay a monthly subscription fee. Now, the
EU Commission has said that that's not necessarily a fair
you're sort of coercing users into allowing us them to
use your data. So here the Commission said that that
wasn't compliant with the DMA. However, Meta in November twenty
(29:22):
twenty four change its policy again and now it says
it's offering users a choice to use that for free,
and there's going to be ads that use less personalized data.
The Commission is still trying to determine whether that complies
with the DMA. However, what it does tell us is
that there's no immediate change to Meta now. Now, Apple
(29:42):
and Meta are pretty certain to appeal here. However, I
think this is still going to have to make the changes.
And again there's that six day day window. The reason
for that is they'd essentially have to almost meet the
tro standards that we talked about earlier in order to
get a reprieve on those on making those changes. I
think that's a bit unlikely here, And I think what
(30:07):
we're definitely seeing is did the Commission and probably significantly
into response to sort of President Trump's rhetoric against sort
of the fines of American tech firms. I think the
Commission made a very conscious decision to not go really
hard on the fines and maybe to lean a little
bit on the behavioral remedy, and they're hoping that that's
(30:28):
not going to further exacerbate tensions, but also continuing to
sort of try to demand and nudge technology firms into
complying with these new roles. I think that's what we're
seeing here.
Speaker 1 (30:39):
Interesting at some point you mentioned Google as well. They
weren't part of these fines, so are they still being investigated. Yeah.
Speaker 5 (30:44):
So there's two pinning probes of Google, and one is
very similar to the Apple one and the App store,
and basically it's another anti steering the way that Google
restricts developers in their own playstore ecosystem. That one we
didn't get initial findings until a few weeks ago, so
soone in the DMA, technically the commission has to endeavor
(31:07):
to finalize a probe within twelve months of it being launched.
So again, all these were launched in March of last year.
We just got the finalization in two of these. The
Google one we had the preliminary findings just a few
weeks ago. I think it's going to be another few
months until that's wrapped up. So one is on the
play Store. The other one, which is potentially more risky
(31:29):
for Google, it's on sort of self preferencing of its
own verticals and search results, so think of sort of
Google flights for sort of Expedia or Kayak, and the
way that it's ranking its verticals and those search results.
The commissions take so far has been that that's abusing
its market position to preserve its status in those search rankings.
(31:49):
So again we should get that in a few months.
And the other Apple one is on sort of this
app store destructure where it's proposed to charge sort of
fifty cents per downlae for apps orre to download apps,
any apps on app Store, And this is sort of
in response to a lot of pressure they've been getting
over that thirty or fifteen percent take right on apps.
Speaker 1 (32:10):
Got it all right? So we'll follow up on all
these things, you know, in a few weeks. I guess
all right. I think we're going to leave it there.
We're going to wrap up this episode of Votes and Verdicts.
As always, thank you for listening. If you have any
questions about any of the matters that we discussed on
this episode, please don't hesitate to reach out to us
at your convenience with any questions. As a reminder, you
(32:31):
can find all of our research on the Bloomberg terminal
at big or on our litigation and policy dashboard at
BI laws Go, and we encourage you to listen to
other episodes of Votes and Verdicts on whatever platform you'd
like to get your favorite podcasts. Thank you again for listening,
and have.
Speaker 6 (32:47):
A great day. Do you want to do
Host
Elliott Stein
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