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Are Trump Tariffs Legal & Google's Antitrust Appeal · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosseo from Bloomberg Radio.
0:08
Speaker 1: President Donald Trump has taken executive action to threaten or
0:13
Speaker 1: impose new tariffs on imports from Canada, Mexico, and China,
0:18
Speaker 1: rattling stock markets and supply chains in the process of
0:22
Speaker 1: the tariff whiplash. On Saturday, Trump declared a national emergency
0:27
Speaker 1: under the International Emergency Economic Powers Act, saying the tariffs
0:32
Speaker 1: are necessary to deal with the threat from fentanyl and
0:35
Speaker 1: illegal immigration at the borders.
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Speaker 2: And in one case, they're sending massive amounts of fentanyl,
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Speaker 2: killing hundreds of thousands of people a year with the fentanyl,
0:45
Speaker 2: and in the other two cases, they're making it possible
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Speaker 2: for this poison to get in.
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Speaker 1: But Canadian Prime Minister Justin Trudeau disputed Trump's contentions.
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Speaker 3: Let me reiterate it. Our border is safe and secure,
1:00
Speaker 3: and less than one percent of fentanyl and illegal crossings
1:03
Speaker 3: into the United States come from Canada. We're committed to
1:07
Speaker 3: keeping it that way by addressing current challenges and strengthening
1:11
Speaker 3: our capacity.
1:12
Speaker 1: It's the first time a president has ever used the
1:15
Speaker 1: nineteen seventy seven law to impose tariffs, although other presidents
1:20
Speaker 1: have used it to implement embargoes and sanctions. So far,
1:24
Speaker 1: Trump has implemented ten percent levies on China, delayed plans
1:29
Speaker 1: to hit Mexico and Canada with a twenty five percent
1:32
Speaker 1: duty tax, and suggested that he's coming for the European
1:36
Speaker 1: Union next. My guest is Timothy Brightbill, a partner at
1:39
Speaker 1: Riley Wine and co chair of the firm's international trade practice.
1:44
Speaker 1: This is a novel use of AIPA. Tell us about
1:47
Speaker 1: what Trump did.
1:49
Speaker 4: The executive orders cited the International Emergency Economic Powers Act,
1:54
Speaker 4: which does give broad authority to the president to claire
2:00
Speaker 4: and international emergency and then to take whatever action is
2:05
Speaker 4: necessary to address that emergency. AIPA authorizes the president to
2:11
Speaker 4: regulate imports when the president declarees a national emergency, and
2:16
Speaker 4: it's most often used to impose economic sanctions on foreign actors.
2:22
Speaker 4: So when the President cited the illegal immigration at the
2:26
Speaker 4: border and the situation with respect to Sentinel, he was
2:30
Speaker 4: couching the emergency in those terms.
2:34
Speaker 1: So does there have to be a causal connection between
2:38
Speaker 1: the emergency and the tariffs? I mean, do the tariffs
2:42
Speaker 1: have to be targeted to combat the emergency?
2:46
Speaker 4: The courts have generally deferred to the president's ability to
2:51
Speaker 4: declare an emergency and to respond accordingly. So it's a
2:57
Speaker 4: bit unclear, and this is someone untested waters. But we
3:02
Speaker 4: saw during the first administration the president's declaration of imports
3:08
Speaker 4: of steel and aluminum under a different law, section two
3:12
Speaker 4: thirty two, were a threat to US national security, and
3:17
Speaker 4: the courts that reviewed that decision largely upheld it.
3:20
Speaker 1: Why didn't he use that law this time?
3:23
Speaker 4: Well, for one thing, Section two thirty two, which was
3:27
Speaker 4: the basis for the steel and aluminum tariffs, requires an
3:30
Speaker 4: investigation by the Commerce Department, also in close coordination with
3:34
Speaker 4: the Defense Department, and in the first Trump administration that
3:38
Speaker 4: took almost a year before the investigation was completed and
3:43
Speaker 4: the tariffs announced. Similarly, Section three ZHO one of the
3:47
Speaker 4: Trade Laws, which was the basis for the tariffs on
3:51
Speaker 4: China of twenty five percent on hundreds of billions of
3:55
Speaker 4: dollars worth of goods, also requires a lengthy investigation by
4:00
Speaker 4: the US Trade Representative's office. So the use of AEPA
4:04
Speaker 4: was to allow the President to act very quickly and
4:07
Speaker 4: without an investigation by the Commerce Department, the US Trade Representative,
4:13
Speaker 4: or any other US government agency.
4:15
Speaker 1: I mean, it seems like. In this case, as with
4:18
Speaker 1: many of his other executive orders, president Trump is trying
4:22
Speaker 1: to jump start his agenda by using the law in
4:26
Speaker 1: novel ways.
4:27
Speaker 4: Yes, I think this administration came in very prepared to
4:31
Speaker 4: test all the various legal tools in the toolbox, and
4:36
Speaker 4: in fact, there may be more than a half a
4:38
Speaker 4: dozen different trade related laws that the administration might use
4:43
Speaker 4: during the next four years. Of those, AIPA is one
4:47
Speaker 4: of the two laws that can allow the president to
4:49
Speaker 4: take almost immediate action. The other is there's another provision
4:54
Speaker 4: called Section one twenty two of the Trade Act, which
4:57
Speaker 4: relates to Balance of Payments Authority, and that also would
5:01
Speaker 4: allow the president emergency powers to address large and serious
5:06
Speaker 4: US balance of payments deficits and temporary import surcharges of
5:12
Speaker 4: up to fifteen percent. That authority, however, only lasts for
5:16
Speaker 4: one hundred and fifty days unless Congress approves an extension.
5:20
Speaker 4: So again, AIPA made sense in terms of something fast
5:24
Speaker 4: acting but also not requiring further intervention by Congress.
5:28
Speaker 1: I mean, here you have a Congress that's seemingly not
5:31
Speaker 1: going to object to almost anything that Trump does, but
5:35
Speaker 1: doesn't the Constitution give Congress the sole authority to regulate
5:41
Speaker 1: US trade, not the president.
5:44
Speaker 4: Well, that's true. The Constitution does give Congress the power
5:48
Speaker 4: to regulate foreign trade, but then Congress has over time
5:53
Speaker 4: delegated much of that authority to the President and to
5:57
Speaker 4: the executive branch. To the point, now, the US Trade
6:02
Speaker 4: Representative has the lead role in negotiating treaties, and other
6:06
Speaker 4: agencies have lead roles on international trade as well. So yes,
6:11
Speaker 4: there's a constitutional issue, but at the same time, Congress
6:14
Speaker 4: has delegated a good deal of that power to the
6:17
Speaker 4: executive branch. Interestingly, eight years ago, when the steel and
6:22
Speaker 4: aluminum tariffs were put in place, many of members of
6:26
Speaker 4: Congress were concerned that the President had exceeded his authority,
6:31
Speaker 4: and there were proposals to change Section two thirty two
6:34
Speaker 4: to take away some of that authority. None of those
6:37
Speaker 4: proposals ever moved forward, and so today the situation is
6:41
Speaker 4: the same as it was four to eight years ago,
6:43
Speaker 4: with the President still having sweeping powers to determine whether
6:47
Speaker 4: imports are a threat to national security.
6:51
Speaker 1: Well, he's considering steel triffs coming up, so maybe there'll
6:57
Speaker 1: be another chance to litigate that issue. So the US
7:01
Speaker 1: Supreme Court has established this major questions doctrine, and it
7:07
Speaker 1: directs courts, as you know, to reject an agency's interpretation
7:11
Speaker 1: of a statute when it presents an issue of great
7:13
Speaker 1: political or economic significance. It was used to strike down
7:18
Speaker 1: several Biden administration policies, some that were said to be
7:21
Speaker 1: based on emergencies, his eviction moratorium and vaccine mandate during COVID,
7:27
Speaker 1: his rules on greenhouse gases in twenty twenty two, and
7:30
Speaker 1: his planned to cancel student loan debt in twenty twenty three.
7:34
Speaker 1: So could the courts use that doctrine to invalidate this
7:38
Speaker 1: teriff action.
7:40
Speaker 4: I think it's important to note that these types of
7:43
Speaker 4: international trade issues almost never reach the US Supreme Court,
7:49
Speaker 4: and all of the recent questions about the president's ability
7:54
Speaker 4: to use tariffs have been upheld by the Court of
7:58
Speaker 4: International Trade in New York, three judge panels of that court,
8:02
Speaker 4: as well as the Court of Appeals for the Federal Circuit.
8:05
Speaker 4: So it is very unlikely that a question relating to
8:11
Speaker 4: tariffs or the president's authority to declare an emergency or
8:16
Speaker 4: a national security situation would be ruled on by the
8:21
Speaker 4: Supreme Court.
8:22
Speaker 1: You said, and that judges are not likely to second
8:25
Speaker 1: guess a president on what constitutes an emergency. Do courts
8:29
Speaker 1: ever go beyond what the president says is a is
8:32
Speaker 1: an emergency to look at whether it really is well.
8:37
Speaker 4: It was notable that during the Section two thirty two
8:41
Speaker 4: appeals relating to steel and aluminum, there were three judge
8:45
Speaker 4: panels of the court, and although the court did uphold
8:48
Speaker 4: the president's action, at least one of the judges filed
8:53
Speaker 4: a separate opinion to note the concern that perhaps the
8:59
Speaker 4: actions were not taken with respect to national security, but
9:04
Speaker 4: solely to address unfair trade practices, which would normally be
9:08
Speaker 4: done under different laws anti dumping and countervailing duty laws.
9:12
Speaker 4: So there was some doubt at least among some of
9:15
Speaker 4: the judges, even as they upheld President Trump's decision in
9:19
Speaker 4: the prior administration.
9:21
Speaker 1: Because Trump, when he was announcing these tariffs was also
9:25
Speaker 1: talking about trade deficits and putting tariffs on chips and
9:29
Speaker 1: oil and gas and steel, and that sounds more like
9:33
Speaker 1: economic reasons.
9:35
Speaker 4: Well true, and of course I think the announcements were
9:38
Speaker 4: very careful to mention items that are important under AIPA.
9:43
Speaker 4: That the president in announcing these tariffs on Mexico, Canada,
9:50
Speaker 4: and China specifically mentioned sentinel trafficking, specifically eliminated small volume
9:58
Speaker 4: shipments and those subjects to tariffs, and took steps to
10:04
Speaker 4: cite the extraordinary threat posed by illegal aliens and drugs,
10:09
Speaker 4: including pentanol, as the basis for the tariffs that were announced.
10:15
Speaker 1: As we've said, this is a novel use of this law.
10:18
Speaker 1: Was President Nixon's use of the predecessor law to AEPA
10:25
Speaker 1: in nineteen seventy one to impose ten percent tariff on
10:29
Speaker 1: all imports to deal with a monetary crisis. Was that
10:33
Speaker 1: the closest any president has come to this action.
10:37
Speaker 4: That's right. The law that preceded AEBA did result in
10:43
Speaker 4: tariffs imposed by President Nixon, but AEPA has not yet
10:47
Speaker 4: been used for that purpose.
10:49
Speaker 1: And a court did uphold that this seems to change
10:54
Speaker 1: almost from moment to moment. But tell us what the
10:56
Speaker 1: status of the tariffs is right now.
10:58
Speaker 4: As of today, the tariffs on Canada and Mexico were
11:03
Speaker 4: paused or suspended for thirty days while the situation at
11:08
Speaker 4: the border is addressed. The ten additional tariffs on China
11:13
Speaker 4: are still in place, and China has announced retaliatory tariffs.
11:17
Speaker 4: Now again, the two countries are talking and negotiating, and
11:21
Speaker 4: it is at least possible that there will be a
11:23
Speaker 4: similar pause after those negotiations, but we just don't know
11:27
Speaker 4: at this point.
11:28
Speaker 1: President Trump talked about, you know, there may be some
11:31
Speaker 1: pain for the American people. Do tariffs normally help or
11:35
Speaker 1: hurt the situation for consumers?
11:39
Speaker 4: Well, I think targeted tariffs do not necessarily result in inflation.
11:46
Speaker 4: You know, we bring trade cases against China all the
11:49
Speaker 4: time on solar panels, on golf carts, on wood products,
11:54
Speaker 4: on steel, and the International Trade Commission has found heatedly
12:00
Speaker 4: that that has not resulted in harm or increasing consumer prices,
12:07
Speaker 4: a very very modest effect. Enny, But of course, broad
12:10
Speaker 4: based tariffs across all three countries are a different story.
12:16
Speaker 4: And you saw the stock markets react very negatively on Monday.
12:23
Speaker 4: And President Trump, I think is sensitive to wanting to
12:28
Speaker 4: maintain economic strength and not wanting to harm the stock market,
12:33
Speaker 4: and so even those tariffs are a centerpiece of his
12:37
Speaker 4: economic plan and he's likely to continue to pursue them,
12:42
Speaker 4: but he also will always have an eye on the
12:44
Speaker 4: economy in the stock market. At the same time, I
12:46
Speaker 4: believe it.
12:47
Speaker 1: Looks like he's using the tariffs to negotiate with Canada
12:50
Speaker 1: and Mexico and China.
12:52
Speaker 4: There's some degree of that, but we're also telling clients
12:55
Speaker 4: don't assume that the tariffs are just to get a
12:58
Speaker 4: better deal, for example, in the US Mexico Canada agreement negotiations,
13:04
Speaker 4: which are scheduled to start next year. Again, tariffs are
13:08
Speaker 4: valuable to this administration as a part of the overall
13:12
Speaker 4: economic plan, not just as a negotiating tool. So both
13:17
Speaker 4: are involved. But it's a mistake, I think, to underestimate
13:22
Speaker 4: the president's actual willingness to use tariffs, not just to
13:26
Speaker 4: threaten them.
13:27
Speaker 1: So we mention what a court might do or not do.
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Speaker 1: Is it likely that any group that's affected would even
13:35
Speaker 1: bring a lawsuit.
13:36
Speaker 4: In this case, I think it's entirely possible. I don't
13:40
Speaker 4: have any knowledge of that, but I could see certain
13:43
Speaker 4: industry trade associations or broader business groups perhaps filing a challenge,
13:49
Speaker 4: or perhaps specific companies and industries as well. So it
13:53
Speaker 4: wouldn't surprise me if there is a legal challenge and
13:56
Speaker 4: even possibly an attempt to get an injunction on any
13:59
Speaker 4: terra that are put into effect. But at the same time,
14:03
Speaker 4: for the reasons I've mentioned, I think it is an
14:06
Speaker 4: uphill battle. Given the deference that courts usually give to
14:10
Speaker 4: the president in areas of economic emergencies or national security issues, it.
14:16
Speaker 1: Seems like it would have to be a brave judge
14:18
Speaker 1: to issue an injunction in this case.
14:21
Speaker 4: Well, there are a lot of judges in the country,
14:24
Speaker 4: so I can see some that might be willing to
14:27
Speaker 4: take that on.
14:28
Speaker 1: That is true, So what's your take on this?
14:31
Speaker 5: Long term?
14:32
Speaker 4: We're advising our clients to stay vigilant. I think if
14:37
Speaker 4: the first two weeks or any indication, trade is going
14:40
Speaker 4: to be an extremely important issue for this administration. And
14:44
Speaker 4: President Trump already laid out his priorities in his America
14:49
Speaker 4: First Trade Policy Memo, issued really very early in his administration.
14:54
Speaker 4: There's going to be a great deal of activity between
14:57
Speaker 4: now in April as the administration works on a series
15:01
Speaker 4: of reports to outline and highlight their priorities, whether it
15:07
Speaker 4: relates to trade deficits, to unfair trade practices, currency manipulation,
15:13
Speaker 4: current and future trade agreements. The list goes on and on.
15:17
Speaker 4: So trade is going to be a critically important issue,
15:21
Speaker 4: and so we're advising our clients on all sides of
15:24
Speaker 4: this to be vigilant and ready to react at a
15:28
Speaker 4: moment's notice.
15:30
Speaker 1: Because that's how fast things change in the Trump administration.
15:33
Speaker 1: Thanks so much for being on the show. That's Timothy Brightbill,
15:37
Speaker 1: co chair of the International Trade practice at Wiley Rhin.
15:41
Speaker 1: Google went to a San Francisco federal appeals court to
15:44
Speaker 1: try to get it to overturn a jury verdict that
15:47
Speaker 1: had declared its app store for Android smartphones was an
15:51
Speaker 1: illegal monopoly, but the three judges appeared skeptical. Joining me
15:56
Speaker 1: is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst. EPIC filed
16:02
Speaker 1: separate antitrust cases against Apple and Google on the same
16:05
Speaker 1: day in August twenty twenty, and they resulted in dramatically
16:10
Speaker 1: different outcomes.
16:12
Speaker 5: So tell us about that, yes, right, And that's one
16:14
Speaker 5: of the issues in the appeal that Google just argued yesterday.
16:18
Speaker 5: So what EPIC is really going after with both of
16:21
Speaker 5: these companies is the fact that each one of them,
16:23
Speaker 5: on their mobile devices, their phones only allow people users
16:27
Speaker 5: to download apps. On Apple, it's through the App Store,
16:30
Speaker 5: and on Google it's through the Playstore. And what EPIC
16:32
Speaker 5: really wants is to be able to be a distributor
16:35
Speaker 5: on those devices and have its own app store, so
16:37
Speaker 5: if people want to download an app, they could go
16:39
Speaker 5: to Epic store. And the other thing that Epic objected
16:42
Speaker 5: to that both of them do is force users when
16:45
Speaker 5: they buy an app or make an in app purchase
16:47
Speaker 5: in the Playstore or app store to use Google's or
16:49
Speaker 5: Apples billing payment systems. Right, so Epic challenge both of them.
16:54
Speaker 5: Now they operate their businesses when it comes to the
16:56
Speaker 5: app store in the Playstore very differently. And the Epic
17:00
Speaker 5: lawsuit against Apple went to trial at bench trial before
17:03
Speaker 5: a judge only, and the Epic versus Google went before
17:06
Speaker 5: a jury. And yes, they came out with very different results.
17:10
Speaker 5: And part of the reason is because they did something
17:13
Speaker 5: in anti trust that's called define the relevant market differently. Now,
17:16
Speaker 5: in anti trust cases, the relevant market can make or
17:19
Speaker 5: break a case, and in these cases it actually did
17:22
Speaker 5: because what the relevant market is is a threshold determination
17:26
Speaker 5: of the sphere of competition. How do these companies that
17:29
Speaker 5: compete that are alleged to be harming competition, well, what
17:33
Speaker 5: is the sphere of competition that they're harming? And the
17:35
Speaker 5: Apple case, what Epic tried to say is that it's
17:39
Speaker 5: just the distribution of apps on iOS devices. And in
17:42
Speaker 5: the Google case, they said, well, it's the distribution of
17:45
Speaker 5: apps on Android devices. The judge decided that they had
17:49
Speaker 5: not defined the market properly. In the Epic versus Apple case,
17:52
Speaker 5: she said, no, no, no, Epic, you have games, you
17:55
Speaker 5: distribute games, you create games, and you want to sell games.
17:59
Speaker 5: This is about about mobile digital gaming transactions. Where can
18:03
Speaker 5: a consumer play a mobile digital game. So what she
18:07
Speaker 5: said was it's broader than just Apple, and because you
18:10
Speaker 5: failed to define the market properly, kind of everything else
18:14
Speaker 5: that followed with respect to the evidence that Epic presented
18:17
Speaker 5: in that trial didn't really work because they presented evidence
18:20
Speaker 5: of market power in just an iOS market and evidence
18:24
Speaker 5: of anti competitive effects in just an iOS market. And
18:26
Speaker 5: so what the judge said is, well, this market was wrong.
18:29
Speaker 5: It's a broader market than that, and so you failed
18:32
Speaker 5: to prove that these things happened in this broader market. Apple,
18:35
Speaker 5: you win. That's basically what happened. Now, she did find
18:38
Speaker 5: that Apple violated one California state law against unfair competition,
18:42
Speaker 5: but that was really separate from all of this. In
18:44
Speaker 5: the Google case, the jury found pretty much exactly the opposite.
18:48
Speaker 5: They said, oh no, no, no, the market is the
18:50
Speaker 5: relevant market for antitrust purposes is app distribution and Android
18:54
Speaker 5: devices and billing systems, billing payment systems in the play store.
18:59
Speaker 5: Those are the relevant markets focused on just Google, which
19:03
Speaker 5: is a narrower market than what was found by the
19:05
Speaker 5: judge and Epic Versus Apple. And what that resulted in
19:09
Speaker 5: is the jury finding that Google has they have a
19:11
Speaker 5: monopoly if it's just them, and that's it. Of course
19:13
Speaker 5: they have a monopoly, and everything else followed from there.
19:16
Speaker 5: And in that monopoly they illegally maintain the monopoly through
19:19
Speaker 5: various agreements, they have various conduct that they undertook, and
19:22
Speaker 5: so you had these very opposite outcomes. And this is
19:25
Speaker 5: one of the things that Google argues that the judges
19:27
Speaker 5: should have viewed this as issue preclusion, meaning you never
19:32
Speaker 5: ever should have let the jury decide in the Epic
19:34
Speaker 5: versus Google case about the relevant market because it had
19:37
Speaker 5: previously been decided by a judge.
19:39
Speaker 1: Were the judges receptive to Google's arguments.
19:42
Speaker 5: I'll be honest, after listening to the arguments yesterday, I
19:45
Speaker 5: do think Google's going to lose on that. And I
19:48
Speaker 5: think it's because what the judges said is, look your
19:51
Speaker 5: ecosystems and the way you operate in the business. Apple
19:54
Speaker 5: versus Google is quite different. Apple's a walled garden. They're
19:57
Speaker 5: vertically integrated. They do everything themselves. They have their own
20:00
Speaker 5: operating system, they build their own phones. They operate as
20:04
Speaker 5: a walled garden. They don't license their technology Google. You
20:07
Speaker 5: do not. You have an operating system that you own Android,
20:11
Speaker 5: and you license it to a whole bunch of makers
20:14
Speaker 5: Android phones, and consumers buy those phones from those makers.
20:18
Speaker 5: You have agreements with those makers of phones that the
20:21
Speaker 5: jury saw as anti competitive. And I think where the judges,
20:25
Speaker 5: at least two of them were going is that they
20:27
Speaker 5: saw the sort of the factual differences in the way
20:29
Speaker 5: the two companies operate in the market as different enough
20:33
Speaker 5: that it wasn't an issue precluding matter that it was
20:36
Speaker 5: okay in this instance. I think this is how the
20:39
Speaker 5: panel will come out it was okay in this instance
20:41
Speaker 5: to allow the jury to evaluate again what the market
20:45
Speaker 5: was that Google competed in. From a logical perspective, it
20:48
Speaker 5: doesn't seem to make much sense.
20:49
Speaker 1: Often in anti trust cases, it's a judge who makes
20:52
Speaker 1: the market definition. Leaving that to a jury will lead
20:56
Speaker 1: to inconsistent results. They're not looking at what Apple did,
20:58
Speaker 1: They're just looking at what Google did, and so it
21:01
Speaker 1: does seem like Google is being given an unfair shake here,
21:05
Speaker 1: But the judges didn't seem to think that. Judge Gabriel
21:09
Speaker 1: Sanchez said, even if Google does vigorously compete with Apple,
21:13
Speaker 1: that doesn't mean Google can create its own ecosystem where
21:17
Speaker 1: it acts as a monopolist through the Google play Store,
21:21
Speaker 1: and Judge Danielle Farrest said, there are clear factual differences
21:25
Speaker 1: between the Android world and the Apple world, and all
21:29
Speaker 1: of your arguments sort of brushed that aside, But there
21:33
Speaker 1: isn't a case where they're comparing both of them. Something
21:35
Speaker 1: seems off here. I don't know what it is, but
21:37
Speaker 1: something seems off.
21:38
Speaker 5: So I would agree with you that something seems off
21:40
Speaker 5: because from a logical if you're just thinking about this logically,
21:44
Speaker 5: in one case, you say Apple competes against Google, it
21:47
Speaker 5: competes broadly, and you're saying Google does not, and that
21:51
Speaker 5: doesn't make much sense. But at the end of the day,
21:53
Speaker 5: if you look at what the legal requirements are for
21:56
Speaker 5: issue preclusion, to say this has already been a side,
22:00
Speaker 5: it can't be decided again. I think that the judges
22:03
Speaker 5: felt that this didn't quite meet those requirements, that there
22:05
Speaker 5: was enough differences in the factual matter that we're behind
22:09
Speaker 5: these allegations and the way the companies do business that
22:12
Speaker 5: they don't see it that way. So it could be
22:15
Speaker 5: a very odd situation where we come out with these
22:17
Speaker 5: kind of competing decisions. And it's strange because in a way,
22:21
Speaker 5: with Apple's walled garden, it's actually more restrictive than Google
22:25
Speaker 5: because Google does license out this Android. Other OEMs make
22:29
Speaker 5: the phone, and some of them do put Samsung's own
22:32
Speaker 5: app store on Google's phone, and Google does allow that.
22:35
Speaker 5: Now it does pay some of these OEMs incentives to
22:37
Speaker 5: not do that or to at least favor the play store.
22:40
Speaker 5: That was one of the issues that came up. But
22:42
Speaker 5: it is a more open system than Apple's system, and
22:45
Speaker 5: so where Apples is competing less essentially, and here we're
22:48
Speaker 5: saying Apple's competing more. So it is a strange outcome.
22:51
Speaker 1: So Google also argued that they should have been entitled
22:55
Speaker 1: to a trial by the judge rather than the jury,
22:58
Speaker 1: so they made a set up before this and that
23:01
Speaker 1: sort of changed things.
23:03
Speaker 5: Yeah, it is very confusing, and it really comes out
23:06
Speaker 5: of having a complicated procedural background. There is a constitutional
23:10
Speaker 5: right for a plaintiff to have a trial by jury
23:12
Speaker 5: if they want to. Where they're asking for monetary damages,
23:15
Speaker 5: they're asking to pay me for my losses. And in
23:18
Speaker 5: this case, you had many plaintiffs that sued Google over
23:23
Speaker 5: the same thing, the same conduct, and all of those
23:25
Speaker 5: cases got combined, they got consolidated. It was really common,
23:28
Speaker 5: you know, if you bring the same claim different plaintiffs,
23:30
Speaker 5: you get consolidated in one case. It's judicial economy. Most
23:34
Speaker 5: of those plaintiffs, except Epic, asked for monetary damages, that's
23:38
Speaker 5: what they were seeking. Epic was only seeking an injunction. Google,
23:41
Speaker 5: you have to change your conduct. We're not looking for money.
23:43
Speaker 5: We want you to change your conduct. Where are plaintiffs
23:46
Speaker 5: only seeking an injunction? They don't necessarily have the right
23:49
Speaker 5: to a jury trial. But there were so many plaintiffs
23:51
Speaker 5: in the beginning, it was a given that it would
23:53
Speaker 5: be a jury trial because they had asked for one.
23:55
Speaker 5: So Google did not object. As a matter of fact,
23:58
Speaker 5: there were a number of filings along the way. This
24:00
Speaker 5: is as you said, been going since twenty twenty, where
24:02
Speaker 5: it sort of maybe could be interpreted as Google consenting
24:05
Speaker 5: to the jury. But over time, one by one, Google
24:08
Speaker 5: settled with all of these other plaintiffs. There were states,
24:11
Speaker 5: there were developers that were consumers, and Match dot Com
24:14
Speaker 5: and Match was the last plaintiff other than Epic to settle,
24:17
Speaker 5: leaving only Epic. And once Match was out, there were
24:20
Speaker 5: no longer any claims to be tried where a plaintiff
24:23
Speaker 5: was seeking money damages. And at that point Google said
24:25
Speaker 5: we didn't want to go before a jury, we want
24:27
Speaker 5: to go before a judge. And the judge denied that motion.
24:30
Speaker 5: This was on the eve of trial. He said it
24:32
Speaker 5: was too late and that it would be prejudicial to Epic.
24:35
Speaker 5: And this Google basically is arguing that was wrong. We
24:39
Speaker 5: should not have been forced to go in front of
24:40
Speaker 5: a jury. We objected to the jury. It was wrong
24:44
Speaker 5: for the judge to deny that request. It wouldn't have
24:46
Speaker 5: been prejudicial, and we should have been allowed ad bench trial.
24:49
Speaker 5: And I think in this case the judges were a
24:51
Speaker 5: little more sympathetic to that argument than they were to
24:53
Speaker 5: the issue proclusion argument. It's possible they might be on
24:56
Speaker 5: Google side on that.
24:57
Speaker 1: One Google's lawyer pointed out, the judge wrote something like
25:01
Speaker 1: a two hundred page opinion and the jury answered fourteen questions.
25:05
Speaker 1: So there's a huge difference in having a judge decide
25:08
Speaker 1: an anti trust case. And I always think that anti
25:11
Speaker 1: trust cases are better decided by judges than juries because
25:15
Speaker 1: of the technicalities and complexities. So what the judges, seeming
25:20
Speaker 1: sympathetic about the jury trial issue, might they reverse?
25:24
Speaker 5: You know, I'm not so sure that it would end
25:26
Speaker 5: up in a reversal. What one of the judges suggested
25:29
Speaker 5: and they may be thinking about, is that the jury
25:32
Speaker 5: decision could be treated as an advisory jury. There are
25:35
Speaker 5: advisory juries. They come up with their opinion and their
25:37
Speaker 5: decision and it's not binding on the judge. The judge
25:40
Speaker 5: also sat and heard all the evidence that was presented
25:42
Speaker 5: to the jury. He can use it any way he
25:45
Speaker 5: wants to, But then he has to issue a long
25:48
Speaker 5: detailed conclusion statement of facts, conclusions of law, you know,
25:52
Speaker 5: justifying the endgame, justifying that end decision, rather than the
25:57
Speaker 5: few questions the jury answered. Some of them were just
26:00
Speaker 5: check markting yes or no. So it's very it's very vague.
26:05
Speaker 1: Let's say Google loses. I'm sure if they lose, they're
26:08
Speaker 1: going to try to appeal to the full nine circus.
26:10
Speaker 1: They'll appeal to the Supreme Court. But what did the
26:12
Speaker 1: judge order below in this case?
26:15
Speaker 5: Yeah, the injunction is fairly broad. I think I was
26:18
Speaker 5: surprised by the breadth of the injunction. And Google is
26:21
Speaker 5: also appealing the injunction some of the measures as improper.
26:24
Speaker 5: So Google is being forced to basically stop paying these
26:27
Speaker 5: OEMs to prefer Google's products and stop conditioning access to
26:32
Speaker 5: certain Google apps that these OEMs may want to pre installed,
26:35
Speaker 5: like YouTube on also installing Google Play Front and Center
26:38
Speaker 5: and nobody else, so, you know, you kind of give
26:41
Speaker 5: more freedom to the OEMs to do what they want to.
26:43
Speaker 5: With respect to playstores, I think the bigger piece of it, though,
26:46
Speaker 5: was that Google's required to distribute through its own playstore
26:50
Speaker 5: other app stores, so, in other words, distribute your own competitors,
26:53
Speaker 5: put them in your playstore, so users can download another
26:56
Speaker 5: app store that they can switch to and not use
26:59
Speaker 5: Playstore anymore. And not only that, they were required to
27:02
Speaker 5: hand over their entire catalog of apps to these new distributors,
27:07
Speaker 5: these news stores unless a developer objects. You know, developer
27:10
Speaker 5: has the right to say I don't want to be
27:11
Speaker 5: in some of these other app stores. So this is
27:14
Speaker 5: really pretty big deal. It's three years, which isn't very long,
27:17
Speaker 5: but it's still a pretty significant impact on Google. I
27:22
Speaker 5: think it will cost, according to Google, a lot of
27:25
Speaker 5: time and a lot of money to do this, and
27:27
Speaker 5: it also, according to Google, makes the phones less safe
27:31
Speaker 5: and less protected because they don't have as much ability
27:34
Speaker 5: to scan an entire app store as they do to
27:37
Speaker 5: scan a single app, you know, to check it for
27:39
Speaker 5: whether it's fraud, whether you know it's fake, et cetera, right,
27:43
Speaker 5: and how much it might harm a user. So they've
27:46
Speaker 5: objected to that because they said generally in antitrust companies
27:49
Speaker 5: don't have a duty to deal with their competitors. They
27:52
Speaker 5: don't have a duty to just hand over their proprietary
27:55
Speaker 5: materials to a competitor. And this is part of what
27:58
Speaker 5: they argued in their oral arguments. And I think that
28:01
Speaker 5: there weren't as many questions about the breadth of the
28:04
Speaker 5: injunction and whether or not it was appropriate. But it's
28:08
Speaker 5: possible that the judges may also be thinking about the
28:11
Speaker 5: injunction and whether the terms were too onerous.
28:16
Speaker 1: So now let's just put this in perspective. This was
28:18
Speaker 1: the first anti trust case that Google lost. Then we
28:21
Speaker 1: go to the huge antitrust case filed by the Justice
28:24
Speaker 1: Department that Google also lost. Tell us where that case stands.
28:29
Speaker 5: So yeah, there are actually two others. One that has
28:32
Speaker 5: a verdict a liability decision, and one that we're waiting
28:34
Speaker 5: on which is quite delayed. We thought it would come
28:36
Speaker 5: out by December. Here we are in February. So in
28:39
Speaker 5: the Department of Justice suit against Google over monopolization of search,
28:45
Speaker 5: the illegal monopoly maintenance of its search engine right Google Search. Essentially,
28:51
Speaker 5: Google was found to have basically been paying browsers right
28:57
Speaker 5: like Safari, other browsers their search access points to install
29:02
Speaker 5: as the default in back of that people don't see it,
29:04
Speaker 5: but to install Google Search as the search engine. Right.
29:07
Speaker 5: So if somebody clicks on Safari right off the bat,
29:09
Speaker 5: they do a search in Safari, they're using Google Search.
29:12
Speaker 5: They just may not know it. Now people can go
29:14
Speaker 5: into their computer, their phone, they can change that default
29:16
Speaker 5: search search engine. Most users don't know that or don't
29:20
Speaker 5: know how to do that. And all of these agreements.
29:22
Speaker 5: Google's paying quite a lot of money, by the way,
29:24
Speaker 5: to Apple, I think over twenty billion a year to
29:26
Speaker 5: install Google Search as the default. So these payments were
29:30
Speaker 5: found and the way also Google was treating the OEMs
29:33
Speaker 5: that make the phones were found to be illegal. Google
29:36
Speaker 5: was illegally maintaining its monopoly in search, kind of blocking
29:39
Speaker 5: out being blocking out duc dot Go, blocking out any
29:42
Speaker 5: other nascent competitor that might want to come along. They
29:45
Speaker 5: were found liable for doing this. Now we're in what's
29:48
Speaker 5: called the remedy phase now, because now what's left is
29:50
Speaker 5: for a judge to decide, well, what is the remedy
29:52
Speaker 5: going to be? What am I going to force Google
29:54
Speaker 5: to do? There will be hearings this spring on that
29:57
Speaker 5: I think probably about a week. Can never en it's
30:00
Speaker 5: never ending. Boy oh boy, it's taken a long time.
30:03
Speaker 5: It took a year for the liability decision to come out.
30:06
Speaker 5: It will take another year for the remedy decision because
30:08
Speaker 5: the judge said he expects to rule in August after
30:11
Speaker 5: these hearings in the spring, talking to experts. And this
30:13
Speaker 5: is a big deal because the Department of Justice did
30:16
Speaker 5: ask as part of the remedy for Google to be
30:18
Speaker 5: forced to sell Chrome, which is a pretty big deal.
30:21
Speaker 5: I don't think it's going to land there. I don't
30:23
Speaker 5: think that's what the judge is going to do here.
30:25
Speaker 5: I think that's probably overkill, given this is really just
30:28
Speaker 5: about paying other browsers and other search access points to
30:32
Speaker 5: install Google as the default. Seems to me, the way
30:34
Speaker 5: to fix that is say you can't pay them anymore
30:36
Speaker 5: to install Google searches the default. There may be some
30:39
Speaker 5: other requirements to allow some interoperability or share some of
30:43
Speaker 5: the data from all the searches that have been conducted
30:45
Speaker 5: with some of these search competitors, to allow them to
30:48
Speaker 5: try to improve their own to improve being or improve
30:51
Speaker 5: doc dot Go. But I don't think it's going to
30:54
Speaker 5: turn into a divestiture situation. And you also have the
30:57
Speaker 5: change in administration that could impact this. It was Biden's
31:01
Speaker 5: Department of Justice that put in their remedy request for
31:03
Speaker 5: Google to be sold. And even though you know our
31:06
Speaker 5: president does tend to change his mind, he has already
31:10
Speaker 5: commented that he doesn't necessarily think that that's really what
31:14
Speaker 5: should happen. He does think Google needs to be punished,
31:16
Speaker 5: that's what he said actually in a Bloomberg interview, but
31:19
Speaker 5: that maybe breaking it up is going too far, particularly
31:22
Speaker 5: because we're focused he's focused on competing with China in
31:25
Speaker 5: the tech world. So it's possible that his Department of Justice,
31:29
Speaker 5: once it's really up and running, will amend their remedy request,
31:32
Speaker 5: maybe take the divestiture off the table. I don't think
31:36
Speaker 5: it was going to happen anyway, though, So that's one
31:38
Speaker 5: and the other one is the ad tech case. This
31:40
Speaker 5: is the Department of Justice, and I should say states
31:42
Speaker 5: were aligned with the Department of Justice and all of
31:44
Speaker 5: these cases too as plaintiffs, many states. And that case
31:49
Speaker 5: is basically challenging Google's conduct in the ad tech space,
31:53
Speaker 5: which isn't really a space that we as just users
31:56
Speaker 5: of technology every day really understand. But these are the
31:59
Speaker 5: services and products and software that are used by digital
32:02
Speaker 5: advertisers and publishers to connect together for the advertiser to
32:05
Speaker 5: place the advertiser on a publisher's site in the right place,
32:08
Speaker 5: targeted to the right users. And there are a bunch
32:10
Speaker 5: of different products along the way, and Google owns all
32:14
Speaker 5: of them and has dominance for some of them. The
32:17
Speaker 5: allegation there is that Google is essentially because it has
32:21
Speaker 5: control over this whole chain and nobody else really does.
32:24
Speaker 5: There are other competitors for certain pieces, it can shuffle
32:27
Speaker 5: those products, the publishers trying to sell their space, and
32:30
Speaker 5: the advertiser trying to sell the ad it can push
32:33
Speaker 5: it through all of its own products, therefore taking the
32:35
Speaker 5: fee all along the way. Right, So that case, we
32:39
Speaker 5: do think also will be a liability decision likely against Google,
32:44
Speaker 5: and we're waiting to.
32:45
Speaker 1: Hear Google certainly not doing well at the trial stage.
32:48
Speaker 1: Maybe they'll do better at the appellate stage. Always great
32:52
Speaker 1: to have you on, Jen, Thanks so much. That's Bloomberg
32:54
Speaker 1: Intelligence Senior Litigation Analyst, Jennifer Free. And that's it for
32:59
Speaker 1: this addition of the Bloomberg Law Show. Remember you can
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