Bloomberg Audio Studios, podcasts, radio news. Right now, in one federal courthouse in DC, two of the world's biggest tech companies are facing reckoning. On the second floor, Meta, the company behind Facebook, Instagram, and WhatsApp, is up against monopoly charges filed by the Federal Trade Commission. And two floors up is Google, which recently lost to anti trust cases and is now awaiting a judgment that could lead to
a breakup of the company. Both cases are part of the US government's growing anti trust enforcement push that's been putting increasing pressure on big tech.
It's kind of stunning that this is the one issue, this anti tech sentiment. We know they're powerful, we need to do something about it. That is like the most bipartisan topic now and in the past ten years.
I want to say that's Sarah Fryer, a Bloomberg technology editor who's been following these cases.
This is really driven a strange thread of collaboration between Republicans and Democrats over the years, from the first Trump administration to the Biden administration and now in the second Trump administration. Trying to tie it all up with a bow.
Today on the show Big Tech Is on Trial, how the monopoly claims against Google and Meta could reshape the industry and the way we use the Internet for decades to come. I'm Sarah Holder, and this is the big take from Bloomberg News. I am thrilled to be sitting down with two of Bloomberg's eminent Sarah's. We have Sarah Fryer. She's a technology editor for Bloomberg and the author of No Filter, The Inside Story of Instagram. Welcome Sarah, Thanks for having me and Sarah Forden our second Sarah or
our third, depending on how you're counting. She oversees legal news at Bloomberg, and she's been covering Google and its court battles since twenty ten. Thank you for being here.
Thank you for having me.
Sarah Fryer.
You've been on the tech beat for a while, and you've traced how big tech companies have been under increasing scrutiny in recent years, including in the anti trust space. What led us to this moment? Why are Google and Meta in court facing monopoly lawsuits at roughly the same time.
I think it's a combination of a few really important things. The government has gotten a lot smarter about the level of power that these companies have and how they're wielding it. A lot of the first awakening of these companies and what they've done was centered around the consumer experience. It was stuff around privacy, content moderation. You know, did they
let Russia manipulate the twenty sixteen presidential election? But these anti trust trials over the years, the government's gotten really smart about exactly what makes these companies tech. For Meta, the trial centers around how Mark Zuckerberg built his empire, literally the secret sauce of like why his company got
so big and powerful. The Google trial is centered around search, their power and search and what they can do to remedy what they've now declared to be an illegal monopoly power, as well as attech, which is how they make most of their revenues.
Just just take a step back and follow on what Sarah Fryer said. Another reason it took a long time to get here was that these companies are primarily offering free services, and typically anti trust law had looked at price and are things getting more expensive for consumers? So they had to really revisit how they're looking at these companies.
And so what you have now are you two behemoth tech platforms they're making goodzillions of dollars every year on people's data and information, and so that sort of became
the new currency in these cases. And the government and a trust of forcers have taken a long time to study these markets, so both the search market and how advertising works in search, and the social networking market, and so it represents a longer term building of appreciating how big and powerful these companies came and how unfettered they were.
Sarah Fordon, I want to take a closer look at the Google trial. Judges have already ruled in two separate cases that Google is a monopoly. One case involves Google Search, the other is tied to the company's ad technology. As you mentioned, we're now in the remedy stage of the first trial, the one that involved Google search monopoly. So what are the proposed remedies here?
Yeah, so that trial is now in its final week. The judge's been hearing arguments from both sides, and the DOJ wants Google to sell off its Chrome browser. That is probably the most dramatic remedy proposal. And while Google argues that has nothing to do with the harms in this case and the monopoly over search, the government says that the browser is really the gateway to the Internet, and so that's vital for that to be opened up to competition. The other thing that the government wants is
for Google to share data related to search queries. And then the third area is the government wants a judge to ban Google from doing any kind of exclusive search agreements the way it had with Apple and with Samsung, so that Google was the default browser and search engine on people's smartphones.
So that's the search monopoly case, which is in its final week. Can you explain big picture why the DOJ believes Google has been anti competitive in its ad sales.
Yeah. So this was a separate, a totally separate case that was brought under the Biden administration. And this case looks at the pipeline of technology that Google controls and underpins its ability to serve ads on the web. And over the years, it acquired a number of companies, including one called double Click and one called ad Mold, which allows it to control the whole transaction. And the issue
there is that it's not transparent at all. It's a very opaque process, so nobody can actually see how the prices are formed and how the decisions about the cost of ads are made. It allows Google to collect what the government calls in a monopoly rents, and that means that publishers are making less money, and it means that advertisers are spending more money, and those costs ultimately get
passed on to consumers. So the government is alleging that this system, because it's so powerfully controlled by Google, really is operating to the detriment of consumers.
Very broadly, and Sarah fryar, these cases are ostensibly at their core about search and ad sales products and functions that have been Google's core offerings for years, but AI has also become a signific can factor here in these cases too. Can you talk about how this case has been looking at Google's investments in AI and how the company might have to shift its strategy in the AI space in the wake of these anti trust rulings.
That's so key here, I mean in terms of AI. The judge in this search case says he wants to consider that in his remedy for this problem. And a couple of things have come up in the case that make Google look pretty bad. One is that they have these very expensive deals with Samsung. Google said this on the stand, they have these deals with Samsung to have their Gemini AAI pre installed on phones. Now judges have twice ruled those kinds of exclusive pre installed deals illegal.
Google's doing it anyway for the next big market. The other thing that's really become clear in this remedies trial is how Google already has such extreme step ahead in the AI realm because of the data it has on the search. If you are a website that has your content index by Google Search, you are opting into being
used in Google's AI training. There's no way to opt out of that, besides opting out of being discoverable on Google Search, which is the government argue is basically equivalent with the Internet, right.
Yeah, And if I can just jump in here, I mean, the dj is extremely concerned that the advent of AI could quickly allow Google to further entrench its monopoly. On the other hand, they're trying to walk a very fine line. They don't want to hold back like emerging technology either, and so for example, they decided not to ban Google from acting as an investor in new AI enterprises. So Google as a VC investor to help start up new
AI ventures. They're going to let that go ahead because they want Google to compete with Microsoft and Apple and the others who are quickly developing.
Well, Sarah, I want to switch gears to talk about Meta. While the US government has already won twice against Google, the case against Meta is still ongoing right now, we're about halfway through. Can you just help us understand what landed Meta in court and what's been litigated so far.
There is a strategy that the FTC is highlighting here from Mark Zuckerberg and his way of growing companies. They're concerned that he is seeing a competitor to his business crop up, get traction, build their network effect, and out of fear that his company will get overtaken by them or lose some users to them, he just acquires them or tries to copy them. And he's done this over
and over and over. So the two acquisitions that are most in focus in this trial or the Instagram acquisition in twenty twelve and then What's acquisition in twenty fourteen, which was pretty much inspired by the success of the
Instagram acquisition. This is complicated for the FTC because at the time, the FTC was given an opportunity to give a stamp of approval on these acquisitions, and they said, go forth, we you know, we're not going to challenge this, And so Meta's trying to say, you know, you're trying to speak has passed?
Does Meta still seem like it's going to win this case? Have the dynamic shifted?
Well?
Meta would would say they're pretty confident. But I think that the emails that have surfaced, it is true that Zuckerberg and his leaders were constantly looking behind their shoulders to see if anyone was catching up with them in the race, and constantly trying to think, how can we either crush them, buy them, build our own version of this. So the FTC has been very good at showing that the problem is their market definition for what they consider to be metas monopoly. It's this kind of made up
category personal social networking. They say that in their market definition, the social networks that Meta owns only compete with snap, which makes Snapchat in MIUI, which is I don't even I don't even know, I haven't heard of that one. And if you're a modern user of social media, that's kind of ridiculous.
Sarah Forden, what's your take?
So the case all of these anti trust cases will ultimately turn on what the judge accepts as the market definition, and so here the FTC is arguing that meta occupies dominates the space for personal social networking that's basically sharing with friends and family. So when you want to share something with friends and family, you'll go to Facebook. And the key thing is going to be also what the competitors, so medicaying, well, we compete with TikTok, we compete with
all these other platforms. The key thing is and be what those competitors say about who they perceive as competition. So are they competing with Facebook or are they just doing their own thing?
After the break the political jockeying behind the scenes of these anti trust trials and what the case's outcomes could mean for social media and search, I want to talk about the politics and I want to talk about the implications of these trials, Sarah Fordan anti trust enforcement of big tech, as you both talked about, has been a rare example of continuity across both the Biden and Trump administrations. Can you explain the politics at play here?
Yeah, what we're seeing is really a sea change in antitrust enforcement that's built up over at least the last ten plus years, and it's a shift whereby both Republicans and Democrats have started to see corporate solidation broadly and corporate power in the tech sector specifically really grow to be very powerful. So the Democrats will look at consumer harm, whereas the Republican started to see that these companies were so powerful they felt they were a suppressing conservative speech.
And yet, even though they're coming from very different perspectives, the one thing they agree on is that these companies have gotten too big and too powerful, and it's time to put some guardrails in place.
Sarah Friar, You've been tracking Mark Zuckerberg's relationship with Trump and his lobbying efforts. Can you talk about whether they've failed.
Well. I think a lot of the big tech leaders thought of Trump as a transactional president. They have been to dinner with Trump, They've been to his inauguration, They've donated to initiatives he cares about, and so that is something that they hoped, especially Mark Zuckerberg, HOTE would help them have an audience. Zuckerberg has had some luck in getting Trump and JD Vance to talk about what Europe's doing and saying that Europe shouldn't be holding back our
American tech companies. They have had some success in getting the administration to agree that big tech in America should be the winner of the global AI race, not those companies in China, right, But it really hasn't worked on anti trusts Google, Meta, Apple, Amazon, like, they're still all completely in the crosshairs on that topic. And Zuckerberg personally tried to get Trump to let Meta settle this case and the FTC and Trump weren't willing to go for it.
Well, I want to talk about what the outcomes of these trials could mean for people who use the Internet or use these social media and tech platforms. If Google had to sell off Chrome, for example, or if the metatrial doesn't go its way, what would that mean for someone trying to make a search going on Instagram.
I think that first of all, whatever happens is going to take a long time to happen, because the resolution of the trial will come and then Google will likely appeal it, and then there's going to be some back and forth. But Apple last week was forced to allow app creators in its app store to receive payments in other ways than through iPhones, and notoriously Apple takes a large cut of the payments that go through the app store, So this is going to hit them in terms of
their revenue. So I think we might see more things like that, like little parts of their operations that seem kind of, Oh, this is just the way it's always worked. I'm used to this as a consumer, realizing that it doesn't have to be that way. We don't have to have our Chrome browser following us around the entire Internet and tracking everything we do in every other website to personalize our results. And with the FTC case, the most dramatic possible outcome is a spin off of Instagram and
WhatsApp from Meta. That would be like, absolutely unheard of in the history of the Internet that a deal that's more than ten years old gets undone. I just can't even imagine, because they have done so much on the back end to integrate those products. Certainly they could disentangle them, but they'd both fight very hard.
But I guess the government's argument in all of these cases is that it's better for consumers if there's more competition, if there's less monopoly activity. That's kind of the core of these arguments, right, Yeah, the.
Goal of these remedies exactly as Sarah said, is to make a better experience for consumers. So imagine if you could choose from four or five browsers, and maybe there's one that really protects your data, maybe there's one that gives you a better experience. If they're competing, then there they've got more incentive to try to get your eyeballs and get you to use them. So they're going to be more creative and more innovative.
Right, Well, we're already kind of getting a sense of how the search landscape could be changing. On Wednesday, Apple's senior vice president of Services testified at the Google trial and he said that while he believes Google should remain the default in their browser Safari, he also said that the company is looking at revamping Safari to focus on AI powered search engines. So for what did you make of that? What does it say about Google's future as sort of this dominant search player.
Well, it was concerning enough to send Google stock down. The market is recognizing that if Apple thinks that there's a threat to Google's dominance, then there probably is one. You know, the Apple is looking at other options including they said Perplexity, Open Ai, these other chatbots that if people have turned to you as their gateweight information on the web. That said, we have to consider that Apple
has skin in the game here. They get twenty billion dollars a year from Google to have Google be the default on its search and on iPhones. And by framing this Google deal as part of this very competitive landscape where you know, it makes sense for Google to pay Apple twenty billion dollars to be the default search on iPhones, they're preserving that twenty billion in their balance sheet.
What about the government, what are they taking away from how these trials are going so far, and how might it influence the future cases they might bring.
I mean, we've already seen these two landmark decisions against Google, so that's already on precedent. We haven't seen this level of a case since they tried to break up Microsoft. What we have here potentially is a real game changer. So if the government wins, they're going to be emboldened and they're going to, you know, feel more confident about
pursuing other complex cases. And they have a ticket Master case out there, they have the Apple case that's in progress, they have an Amazon case, and they're also looking at other sectors like healthcare, So there potentially could really be a wave of more antitrust enforcement. If they lose, that could probably have a chilling effect because these cases are long, they're difficult, they're complex, they're costly, so we could really see a sea change in either direction depending how these
cases go. Well.
Sarah, Sarah, thank you so much for being.
Here, Thanks for having me, Thanks for having us.
This is the Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Alex tie. It was edited by Tracy Samuelson and Joshua Brustein. It was fact checked by Rachel Lewis Chrisky and mixed and sound designed by Alex Sugia. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Conso. Our deputy executive producer is Julia Weaver. Our executive producer is Nicole beemsterbor Sage Bauman is Bloomberg's
head of Podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.